Mallinckrodt debt trades lower after settlement finalized; Superior Energy active

By James McCandless

San Antonio, Sept. 30 – The new week in the distressed market began with attention paid to pharma and energy names.

Mallinckrodt plc’s notes moved lower after the company announced that it had finalized a settlement with two Ohio counties.

Sector peer Endo International plc’s issues improved as the company agreed to drop a lawsuit against the Food and Drug Administration.

In energy, Superior Energy Services, Inc.’s paper varied in the wake of the delisting of its common stock.

As oil futures fell, distressed oil and gas names McDermott International, Inc.’s, Chesapeake Energy Corp.’s and Transocean Ltd.’s notes followed suit.

Telecom names Frontier Communications Corp.’s and Intelsat SA’s issues saw diverging movements.

Retailer Rite Aid Corp.’s paper weakened during the day’s activity.

Mallinckrodt lower

Mallinckrodt’s notes were seen moving lower on Monday, traders said.

The 5 5/8% senior notes due 2023 lost 1½ points to close at 32 bid. The 5½% senior notes due 2025 fell 1 point to close at 29½ bid.

On Monday morning, the Staines-upon-Thames, England-based drug maker said that it had finalized a $30 million settlement with the Ohio counties of Cuyahoga and Summit.

The deal was tentatively reached earlier this month as the two entities had opened litigation against the company over opioid epidemic-related charges.

Of the settlement, $24 million will be paid in cash with the rest as donated medical supplies.

The prospect of opioid-related lawsuits and potential settlements has tightened the company’s liquidity, leading to a drawdown of its remaining credit facility and selling its contract manufacturing arm.

Endo improves

Sector peer Endo’s issues improved, market sources said.

The 6% senior notes due 2023 improved by ¼ point to close at 61¾ bid. The 6% senior notes due 2025 garnered ½ point to close at 59 bid.

After a two-year argument over bulk compounding, Dublin-based pharmaceutical name Endo announced that it was dropping its suit against the FDA.

In 2017, the company had filed the suit to challenge an agency policy authorizing the bulk compounding of drugs.

Endo argued that the rule was tantamount to allowing compounding pharmacies to copy vasopressin, an active ingredient in its Vasostrict product.

In March, the FDA determined that there was no clinical need to compound vasopressin, effectively siding with the company.

Superior Energy eyed

Meanwhile, in the energy space, Superior Energy’s paper varied in direction, traders said.

The 7 1/8% senior notes due 2021 slid ½ point to close at 67½ bid. The 7¾% senior paper due 2024 improved by ½ point to close at 59 bid.

Last week, the Houston-based oilfield services provider said that its common stock had been delisted from the New York Stock Exchange, with the exchange citing “abnormally low price levels.”

The first notice of a potential delisting was received on Aug. 12, when the company said that it would consider a stock split or other solutions to remedy the issue.

The company will also be appealing the NYSE decision.

Oil names fall

As oil futures were pushed under, distressed oil and gas tranches followed, market sources said.

Crude prices dropped after a Saudi Aramco executive said Monday that output at a facility attacked earlier in the month had been fully restored.

West Texas Intermediate crude oil futures for November delivery lost $1.84 to settle the day at $54.07 per barrel.

North Sea Brent crude oil futures for November delivery slid to $60.78 per barrel after a $1.13 drop.

Houston-based oil and gas engineering company McDermott’s notes followed the sector trend.

The 10 5/8% senior notes due 2024 shaved off ¾ point to close at 23¾ bid.

Oklahoma City-based oil and gas producer Chesapeake Energy’s issues were similarly under pressure.

The 8% senior notes due 2025 dropped 2¾ points to close at 72 bid. The 8% senior notes due 2027 dived 5¾ points to close at 67¾ bid.

Steinhausen, Switzerland-based contract driller Transocean’s paper moved lower.

The 7½% senior notes due 2026 shed 2¼ points to close at 89 bid.

Frontier, Intelsat diverge

Telecom name Frontier’s notes saw diverging movements, traders said.

The 10½% senior notes due 2022 slipped ½ point to close at 46¼ bid. The 11% senior notes due 2025 garnered ¼ point to close at 46¼ bid.

Recently, the Norwalk, Conn.-based wireline communications name told creditors that it would be presenting them with a reorganization plan soon.

The company had previously stoked worries of a default until it said it would pay hundreds of millions in debt payments.

Meanwhile, Luxembourg-based satellite operator Intelsat’s issues traded flat to slightly lower.

Intelsat Jackson Holdings SA’s 5½% senior notes due 2023 shaved off ¼ point to close at 93¾ bid. Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 held level at 83½ bid.

Rite Aid weaker

Retailer Rite Aid’s paper finished Monday on the weaker side, market sources said.

The 6 1/8% senior notes due 2023 fell ¼ point to close at 79½ bid.

Last week, the Camp Hill, Pa.-based drug store chain released its second-quarter earnings report, highlighted by mixed results.

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

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