Mallinckrodt active in pharma space; EP Energy notes improve after skipped payment

By James McCandless

San Antonio, Sept. 11 – The distressed debt space saw trading on Wednesday that was mostly a holdover of Tuesday’s patterns.

Mallinckrodt plc’s notes varied amid developing news of an industry peer coming to a blanket settlement over thousands of opioid-related lawsuit claims.

Sector peer Teva Pharmaceutical Industries Ltd.’s issues also diverged.

In oil and gas, EP Energy Corp.’s paper moved upward in the wake of the company’s decision to skip an interest payment.

Elsewhere in energy, McDermott International Inc.’s and Valaris plc’s notes were higher as Whiting Petroleum Corp.’s issues dipped with oil futures.

Utilities name PG&E Corp.’s bonds saw a positive day as the company proposes a restructuring plan.

Dairy name Dean Foods Co.’s notes were also on an upward trend.

Meanwhile, in real estate, Realogy Holdings Corp.’s issues were pushing upward.

Mallinckrodt, Teva active

Mallinckrodt’s notes varied during the Wednesday session, traders said.

The 5½% senior notes due 2025 shaved off ¼ point to close at 33½ bid. The 4 7/8% senior notes due 2020 added ½ point to close at 72½ bid.

The Staines-upon-Thames, England-based drug producer’s structure remained active on Wednesday amid shifts in the pharma space.

News broke on Wednesday afternoon that industry peer Purdue Pharma has reached a tentative settlement in over 2,000 cases that would see the company pay out $10 billion to $12 billion.

The deal involves Purdue filing for bankruptcy.

Mallinckrodt is experiencing its own strife over potential settlements and a lack of capital, announcing on Tuesday that it would sell its contract drug manufacturing unit for $250 million to private equity firm H.I.G. Capital.

It also recently hired restructuring advisers as it considers a distressed exchange.

“Mallinckrodt has a lot less capital to work with,” a trader said.

Last week, the company announced a $30 million settlement with two Ohio counties over similar claims.

Petach Tikva, Israel-based sector peer Teva’s issues also saw a divergence.

The 2.8% senior notes due 2028 improved by 2½ points to close at 86 bid. The 2.2% senior notes due 2021 held level at 93¼ bid.

EP Energy gains

In oil and gas, EP Energy’s paper moved upward, market sources said.

The 7¾% senior secured notes due 2026 gained 1¼ points to close at 78½ bid.

On Monday, the Houston-based independent oil and gas producer said that it would skip an interest payment totaling $7 million on the 7¾% senior notes due 2022 issued by its EP Energy LLC and Everest Acquisition Finance Inc. subsidiaries.

After the 30-day grace period, the nonpayment would trigger a cross-default and cross-acceleration.

Oil names trend upward

Elsewhere in the energy space, distressed oil names went higher as futures declined, traders said.

Houston-based oil and gas construction name McDermott’s notes pushed higher.

The 10 5/8% senior notes due 2024 added ¼ point to close at 72¼ bid.

London-based contract driller Valaris’ issues also improved.

Rowan Cos. plc’s 4 7/8% senior notes due 2022 picked up 3 points to close at 83 bid. The Rowan 4¾% senior notes due 2024 rose ½ point to close at 65¾ bid.

Denver-based producer Whiting Petroleum’s paper shifted lower.

The 6¼% senior notes due 2023 dropped ¾ point to close at 80¾ bid. The 6 5/8% senior notes due 2026 fell ½ point to close at 75½ bid.

After a report of a sharp drop in U.S. crude inventories, oil futures declined.

West Texas Intermediate crude oil futures for October delivery gave back $1.65 to settle at $55.75 per barrel.

North Sea Brent crude oil futures for November delivery finished the day at $60.81 after a $1.57 loss.

PG&E positive

Utilities name PG&E’s notes continued on a positive streak on Wednesday, market sources said.

The 6.05% notes due 2034 garnered 2 points to close at 110½ bid.

The San Francisco-based bankrupt electric utility filed a reorganization plan late Monday to exit bankruptcy next year.

As part of the plan, the company would cap wildfire victim liabilities at $18 billion.

It also calls for new debt and equity.

“There are more details coming so the real fight over it hasn’t started yet,” a trader said.

The company plans to file a more detailed plan by the end of the month.

Dean Foods rises

In dairy, Dean Foods’ issues saw a third straight day of gains, traders said.

The 6½% senior notes due 2023 improved by 2¼ points to close at 50¼ bid.

The Dallas-based dairy producer’s structure has seen better trading since announcing last Friday that it had concluded its months-long strategic alternatives review.

The company said that it would not sell the company and would instead stick to executing its operating plan under its new chief executive officer.

Realogy improves

Meanwhile, Realogy’s paper was pushing upward, market sources said.

The 9 3/8% senior notes due 2027 shot up 2 points to close at 91¾ bid.

In the last week, the Madison, N.J.-based real estate name has been embroiled in a dispute with sector peer Compass.

Realogy issued a statement over the weekend denying claims that it was in talks to be sold to or merge with Compass.

The company sued Compass in June over price-fixing.

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