Exela Technologies lower after ratings downgrade; Revlon notes weaken in retail sector

By James McCandless

San Antonio, Aug. 16 – The distressed debt space saw modest activity to close out the week, with news-driven names moving the most.

Exela Technologies, Inc.’s notes declined after being issued a ratings downgrade during the Friday session.

In retail, Revlon, Inc.’s issues were dipping as the market reacts to the company’s hiring of a financial adviser for a strategic alternatives review.

Sector peer J.C. Penney Co., Inc.’s paper diverged in trading a day after the company put out its second-quarter earnings report.

Meanwhile, CommScope Holding Co., Inc.’s notes improved after news broke that it won a patent case.

Pharma name Mallinckrodt plc’s issues saw another positive day on the back of the results of a clinical trial.

Generics producer Teva Pharmaceutical Industries Ltd.’s paper varied in direction.

As oil futures saw gains, Whiting Petroleum Corp.’s notes improved while Chesapeake Energy Corp.’s paper slipped.

Exela down

Exela’s notes were seen declining during the Friday session, traders said.

The 10% senior secured notes due 2023 lost 1¾ points to close at 62 bid.

On Friday, S&P Global Ratings issued downgrades for the Irving, Tex.-based business software provider.

The agency cut Exela’s overall rating to CCC+ from B- and lowered its senior secured credit facility rating, citing its view that the company’s capital structure is unsustainable to the point that it is at increased risk for a restructuring over the next 12 months.

In the second quarter, the company reported a loss of 22 cents per share where analyst had been expecting a narrower 5 cents per share loss.

After a string of negative quarters, the company’s capital structure has been trading at its lowest levels since issuance, according to market data.

Retailers eyed

In the retail space, Revlon’s issues were seen dipping, market sources said.

The 5¾% senior notes due 2021 shaved off ½ point to close at 89½ bid. The 6¼% notes due 2024 fell 1 point to close at 56½ bid.

During the day on Friday, a large shareholder of the New York City-based cosmetics producer confirmed news Thursday that the company has hired outside adviser Goldman Sachs to help conduct a strategic alternatives review.

MacAndrews and Forbes disclosed the move in a regulatory filing.

In the latest in a series of lackluster quarters, the company showed a loss of 99 cents per share and revenues of $570.2 million.

Plano, Tex.-based department store chain J.C. Penney’s paper was largely flat.

The 5 7/8% senior secured paper due 2023 held level at 83 bid. The 8 5/8% paper due 2025 tacked on 1 point to close at 49½ bid.

In its own earnings report, the retailer reported a loss of 18 cents per share.

CommScope up

Meanwhile, telecom name CommScope’s notes improved, traders said.

The 5% senior notes due 2027 edged up ¼ point to close at 81½ bid.

News broke on Thursday that the Hickory, N.C.-based telecom company won a favorable decision from the Patent Trial and Appeal Board against Dali Wireless.

The board ruled that Dali was infringing on five of the company’s patents related to digital distributed antenna systems.

On the same day, S&P issued a downgrade for the company and its CommScope Inc. subsidiary.

Mallinckrodt gains

Pharma name Mallinckrodt’s issues saw another positive day, market sources said.

The 4¾% senior notes due 2023 garnered 2¾ points to close at 53½ bid. The 5 5/8% notes due 2023 rose 1¼ points to close at 54¾ bid.

On Thursday, the 4¾% notes picked up 2¼ points.

The Staines-Upon-Thames, U.K.-based drug company’s positive swing over the last few days has been spurred on by its announcement of positive results from a phase 3 clinical trial of new drug terlipressin.

Petach Tikva, Israel-based generics producer Teva’s paper varied in direction.

The 2.8% senior paper due 2023 slid ¾ point to close at 80 bid. The 3.15% notes due 2026 picked up 1 point to close at 72½ bid.

Oil skews up

As oil futures saw small gains, some distressed energy tranches trended upward, traders said.

Denver-based independent oil and gas producer Whiting Petroleum’s notes gained.

The 6¼% senior notes due 2023 added 1¾ points to close at 83¼ bid. The 6 5/8% notes due 2026 picked up 1¼ points to close at 77 bid.

Oklahoma City-based sector peer Chesapeake Energy’s paper slipped.

The 8% senior notes due 2025 traded down 1¼ points to close at 73 bid. The 5½% paper due 2026 lost ½ point to close at 60½ bid.

West Texas Intermediate crude oil futures for September delivery added 40 cents to end the week at $54.87 per barrel.

North Sea Brent crude oil futures for October delivery finished Friday at $58.64 per barrel after a 41 cent gain.

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