PG&E active as creditors up investment bid; Superior Energy declines after delisting

By James McCandless

San Antonio, Sept. 27 – Keeping up the week’s prevailing trend, the distressed debt space spent Friday’s session focusing on news-driven names.

PG&E Corp.’s notes varied in trading after a group of creditors said that it was willing to increase its investment bid that would result in control of the company.

In oil and gas, Superior Energy Services, Inc.’s issues declined after it received notice of its common stock being delisted from the New York Stock Exchange.

As futures dipped, Chesapeake Energy Corp.’s and Transocean Ltd.’s paper joined the trend while California Resources Corp.’s notes diverged.

Drug store name Rite Aid Corp.’s issues headed lower a day after the company issued its second-quarter earnings report.

Retail-focused REIT CBL & Associates Properties, Inc.’s paper saw mixed movements as it becomes the target of an activist investor.

Dairy producer Dean Foods Co.’s notes were improving.

In telecom, Frontier Communications Corp.’s issues moved in different directions.

PG&E eyed

PG&E’s notes saw varying activity at the Friday close, traders said.

The 5.8% senior notes due 2037 shaved off ¼ point to close at 112¾ bid. The 6.05% notes due 2034 rose ½ point to close at 113¾ bid.

The two tranches combined to see about $35 million on the tape.

On Wednesday, a group of the San Francisco-based bankrupt electric utility’s bondholders filed a plan in bankruptcy court that states their preparedness to invest $29.2 billion in the name.

The plan would give the creditors new debt and a controlling equity stake.

It would also set up two trusts, one for $14.5 billion to pay individual wildfire victims and one for $11 billion to pay insurance claims.

“At this point, it is attractive,” a trader said. “The judge could decide to let this plan go forward if it provides the best remedy for all parties.”

The company is arguing to remain the sole entity with the right to propose and enact a restructuring plan, a matter that will be decided in a hearing next month.

In another court filing on Wednesday, PG&E asked the court to extend that right to Nov. 29.

Superior Energy declines

In the oil and gas space, Superior Energy’s issues declined, market sources said.

The 7 1/8% senior notes due 2021 fell 2 points to close at 68 bid. The 7¾% senior notes due 2024 dipped 1¼ points to close at 58½ bid.

After the close on Friday, the Houston-based oilfield services provider announced that it received a notice from the NYSE stating that its common stock had been delisted and its trading suspended due to “abnormally low price levels.”

The company received its first notice of a potential delisting on Aug. 12.

It also said that it would be exploring a number of options, including a reverse stock split and an appeal of the NYSE’s decision.

Oil names down

As crude futures saw a dip, distressed energy paper followed the trend, traders said.

A combination of a faster-than-expected recovery for Saudi oil output and worries of slow growth in China weighed on futures.

West Texas Intermediate crude oil futures for November delivery slid 50 cents to end the week at $55.91 per barrel.

North Sea Brent crude oil futures for November delivery settled at $61.91 per barrel after an 83 cent contraction.

Oklahoma City-based independent oil and gas producer Chesapeake Energy’s paper saw negativity.

The 8% senior notes due 2027 shifted lower by ¾ point to close at 73½ bid. The 8% senior notes due 2025 lost 2 points to close at 74¾ bid.

Steinhausen, Switzerland-based contract driller Transocean’s notes followed the sector’s trend.

The 6.8% senior notes due 2038 slipped 2 points to close at 62½ bid.

Los Angeles-based producer California Resources’ issues diverged.

The 6% senior notes due 2024 improved by 2¼ points to close at 39¼ bid. The 8% senior secured notes due 2022 fell 1 point to close at 51¼ bid.

Rite Aid lower

Drug store name Rite Aid’s paper was seen heading lower, market sources said.

The 6 1/8% senior paper due 2023 gave back 1¾ points, snapping a three-day positive streak and closing at 79¾ bid.

The Camp Hill, Pa.-based retail chain’s structure was lifted in part due to the early Thursday release of its second-quarter earnings report.

The company reported a 12 cents per share profit and $5.37 billion in revenues.

Earnings expectations were beat while revenues were underwhelming.

CBL notes mixed

Meanwhile, CBL’s notes saw mixed movements, traders said.

The 5¼% senior notes due 2023 declined by 1¾ points to close at 70 bid. The 4.6% senior notes due 2024 added 1¾ points to close at 66 bid.

This week, news broke that an activist investor has acquired a large stake in the Chattanooga, Tenn.-based real estate investment trust.

Michael Ashner is known for investing in distressed names with an eye on debt restructurings and asset sales.

As of late August, Ashner owns 5.97% of the company’s common stock.

Dean Foods improves

Food producer Dean Foods’ issues spent the session improving, market sources said.

The 6½% senior notes due 2023 picked up ¾ point to close at 52¼ bid.

The Dallas-based dairy products producer saw more turmoil after announcing that its chief financial officer had resigned her position.

Frontier eyed

In telecom, Frontier’s paper moved in different directions, traders said.

The 10½% senior paper due 2022 shaved off ¼ point to close at 46¾ bid. The 11% senior paper due 2025 garnered ¼ point to close at 46 bid.

After questions of its ability to make its most recent debt payments were quelled, the market waits for the Norwalk, Conn.-based wireline communications name to present a restructuring plan to its creditors.

Some stakeholders have already warned the company that a bankruptcy would not be in their best interest.

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