Frontier notes up amid bankruptcy talk; California Resources gains in energy space

By James McCandless

San Antonio, March 10 – In contrast to Monday’s dive, the distressed debt space saw some recovery in Tuesday trading.

Frontier Communications Corp.’s notes were moving up despite reports indicating that the company is preparing to file for bankruptcy.

Sector peer Intelsat SA’s issues were also carried higher.

Meanwhile, in oil and gas, California Resources Corp.’s paper made gains as the company adjusts its capital investments.

A bounce back in crude futures was also seen in Whiting Petroleum Corp.’s, Chesapeake Energy Corp.’s and Antero Resources Corp.’s notes.

In the retail space, Revlon, Inc.’s issues varied after the company announced a debt refinancing and layoffs.

Drug store chain Rite Aid Corp.’s paper shifted upward.

Utilities name PG&E Corp.’s notes dropped after news broke that it has reached a settlement with the Federal Emergency Management Agency.

Frontier, Intelsat up

Frontier’s notes were moving up as the day came to an end, traders said.

The 10½% senior notes due 2022 jumped up 8 points to close at 43 bid. The 11% senior notes due 2025 shot up 11½ points to close at 43 bid.

News reports on Tuesday indicated that the Norwalk, Conn.-based wireline telecom name is preparing to file for Chapter 11 bankruptcy.

The company plans to forgo coupon payments on March 15, which would trigger a 30-day forbearance period.

Discussions are being held to secure potential debtor-in-possession financing and establish a restructuring plan that would slash debt and give control of the name to creditors.

“I think it will file closer to the end of the 30-day grace period,” a trader said. “They have a lot of debt they’ve been trying to tackle for months. A restructure always seemed like the likely option.”

Luxembourg-based satellite operator Intelsat’s issues were also carried higher.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 rose 5 points to close at 37¼ bid. The 9½% senior notes due 2023 picked up ½ point to close at 50½ bid.

CalRes gains

Meanwhile, in oil and gas, California Resources’ paper made gains, market sources said.

The 6% senior notes due 2024 garnered 1 point to close at 12½ bid. The 8% senior secured paper due 2022 improved by 1½ points to close at 10¼ bid.

Late Monday, the Los Angeles-based independent oil and gas producer announced that it would reduce its capital investments to a level that maintains the mechanical integrity of its operations.

The adjustment is in response to recent downward shifts in the commodities markets that has lowered the price of crude oil.

The company says that the company has stopped investments in internally funded field development and growth projects until it sees “a higher degree of market clarity.”

“It is very unlikely that they get on the other side of this unscathed,” a trader said. “They will very likely file before the summer.”

Oil bounces

Crude futures bounced back on Tuesday, taking distressed energy names with them, traders said.

West Texas Intermediate crude oil futures for April delivery jumped up $3.23 to settle the session at $34.36 per barrel.

North Sea Brent crude oil futures for May delivery finished at $37.22 per barrel after a $2.86 pickup.

Denver-based producer Whiting Petroleum’s notes trended higher.

The 6¼% senior notes due 2023 improved by 3¾ points to close at 19¾ bid. The 6 5/8% senior notes due 2026 tacked on ¾ point to close at 16¼ bid.

Oklahoma City-based peer Chesapeake Energy’s issues were also seen tracking higher.

The 11½% notes due 2025 rose 2½ points to close at 24½ bid.

Antero Resources, another Denver-based producer, saw its paper end in better positions.

The 5 1/8% senior notes due 2022 shot up 11¼ points to close at 53¼ bid. The 5 3/8% senior notes due 2021 moved up 7¾ points to close at 75¼ bid.

Revlon, Rite Aid eyed

In the retail space, Revlon’s notes varied in direction, market sources said.

The 5¾% senior notes due 2021 shaved off ¾ point to close at 96¼ bid. The 6¼% senior notes due 2024 jumped up 10¾ points to close at 42 bid.

After the close on Monday, the New York-based cosmetics producer announced that it had entered into a binding commitment letter with Jefferies Finance LLC as administrative agent for up to $850 million of senior secured term loan facilities, Prospect News reported.

The facilities will consist of an up to $300 million term loan and an up to $550 million term loan.

Other cost cutting measures, including layoffs of about 1,000 employees, are expected to save the company between $200 million and $230 million by the end of 2022.

The company said that it would continue to work with adviser Goldman Sachs on exploring strategic alternatives.

Camp Hill, Pa.-based drug store chain Rite Aid’s issues shifted upward.

The 6 1/8% senior notes due 2023 added 1½ points to close at 89¾ bid.

PG&E notes drop

Utilities name PG&E’s paper dropped by the session’s end, traders said.

The 6.05% notes due 2034 slid 4¾ points to close at 111½ bid.

The decline comes after the San Francisco-based bankrupt electric utility announced that it had reached a $1 billion settlement with FEMA for services provided during recent wildfires.

Originally, FEMA had petitioned the company for $1 billion, but the new deal reduces the claims for the sake of prioritizing settlement payments for wildfire victims.

Concurrently, California’s Office of Emergency Services agreed to drop a similar claim.

The deal requires court approval.

© 2015 Prospect News.
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