California Resources better on exchange offer; Intelsat falls as more revenue sought

By James McCandless

San Antonio, Feb. 21 – As the week came to a close, energy and telecom names saw the bulk of the distressed space’s attention.

California Resources Corp.’s notes performed better after the company announced an exchange offer for three series of notes.

Sector peer Valaris plc’s issues declined following the release of a worse-than-expected fourth-quarter earnings report.

As oil futures shifted lower, Whiting Petroleum Corp.’s and Southwestern Energy Co.’s paper varied in direction.

Meanwhile, in telecom, Intelsat SA’s notes fell as the company seeks more revenue from a coming C-band spectrum auction.

Wireline communicator Frontier Communications Corp.’s issues diverged.

Retail name L Brands, Inc.’s paper saw gains a day after the company announced the resignation of its CEO and an asset sale.

Cosmetics producer Revlon, Inc.’s notes were under pressure.

Elsewhere, in the pharmaceutical space, Endo International plc’s issues slid at the end of the week.

CalRes better

California Resources’ notes performed better as the week finished, traders said.

The 6% senior notes due 2024 picked up 3 points to close at 26 bid. The 8% senior secured notes due 2022 gained ¾ point to close at 28¾ bid.

Late Thursday, the Los Angeles-based independent oil and gas producer announced an offer to exchange three series of notes, Prospect News reported.

The offer includes the $1,808,327,000 outstanding 8% senior secured second-lien notes due 2022, the $99,996,300 outstanding 5½% senior notes due 2021 and the $144,279,000 outstanding 6% senior notes due 2024.

The company plans to issue $454 million principal amount of new term loans and common stock warrants, and $275 million principal amount of Royalty notes and class B common shares of Royalty.

“There was a lot of activity in the energy space today, centered around this,” a trader said.

Valaris down

Sector peer Valaris’ issues declined by the end of the day, market sources said.

The 5.2% senior notes due 2025 dipped 4½ points to close at 44½ bid. The 7¾% senior notes due 2026 lost 2¼ points to close at 46¾ bid.

After the close on Thursday, the London-based contract driller released a worse-than-expected third-quarter earnings report.

The company reported an earnings loss of $1.55 per share, wider than the $1.31 per share loss that was expected by analysts.

Revenues came in at $512 million, representing a decline from the previous quarter.

“Drillers are in a bad spot right now,” a trader said. “That will probably continue through the end of the year.”

The company said that it expects to report negative cash flows for the year, showing a $277 million negative cash flow for the previous year.

Futures lower

As oil futures were sent lower, distressed energy names differed in direction, traders said.

West Texas Intermediate crude oil futures for April delivery lopped off 50 cents to settle at $53.38 per barrel.

North Sea Brent crude oil futures for April delivery finished at $58.50 per barrel after an 81 cent drop.

Denver-based producer Whiting Petroleum’s paper was flat to lower.

The 6¼% senior notes due 2023 held level to close at 58½ bid. The 6 5/8% senior notes due 2026 fell 1¾ points to close at 48¾ bid.

Spring, Tex.-based peer Southwestern Energy’s notes also moved in different directions.

The 7½% senior notes due 2026 shed 1½ points to close at 83¼ bid. The 7¾% senior notes due 2027 tacked on 1 point to close at 85 bid.

Intelsat falls

Meanwhile, in the telecom space, Intelsat’s issues fell, market sources said.

Intelsat Luxembourg SA’s 8 1/8% senior notes due 2023 shaved off ½ point to close at 45½ bid. The 9½% senior notes due 2023 drifted ¼ point to close at 67 bid.

This week, the Luxembourg-based satellite operator has seen heightened activity as it angles for more revenue from a C-band spectrum auction.

In the weeks after the Federal Communications Commission outlined that Intelsat would receive around $4.85 billion in revenue, the company has argued that it should receive $1 billion more.

The move is a break from its C-Band Alliance cohorts, which Intelsat argues would be defunct going forward.

Last week, hedge fund Appaloosa Management disclosed a new 2.1% stake in the company.

With the disclosure, manager David Tepper sent a letter to the board of directors advocating for a bankruptcy filing in order to negotiate with the FCC for higher revenues.

Norwalk, Conn.-based wireline name Frontier’s paper was flat to lower.

The 10½% senior notes due 2022 closed level at 49½ bid. The 11% senior paper due 2025 dropped 1 point to close at 49 bid.

L Brands gains

Retailer L Brands’ notes saw gains, traders said.

The 6¾% senior notes due 2036 rose 2¼ points to close at 106¾ bid. The 5¼% senior notes due 2028 improved by ¼ point to close at 100 bid.

In a long-coming shift, the Columbus, Ohio-based retailer announced this week that it would sell a 55% stake in its Victoria’s Secret brand to private equity firm Sycamore Partners.

The deal, when closed, would net the company $525 million.

At the same time, long-time chairman and chief executive officer Leslie Wexner said that he would resign from both positions once the deal closes.

Activist investors had pushed the asset sale for months.

New York-based cosmetics name Revlon’s issues were under pressure.

The 5¾% senior notes due 2021 slipped 1 point to close at 83¼ bid. The 6¼% senior notes due 2024 shed ¾ point to close at 39 bid.

Endo slides

Elsewhere, in the pharmaceutical space, Endo’s paper edged lower, market sources said.

The 6% senior notes due 2025 moved lower by ¼ point to close at 77 bid. The 6% senior paper due 2023 lost ¼ point to close at 82 bid.

The Dublin-based generic drug maker’s structure has trended positively at the tail end of the week after announcing the appointment of a new CEO.

The company named Blaise Coleman to the position. Coleman had previously served as executive vice president and chief financial officer.

© 2015 Prospect News.
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