Hertz notes decline as company hires advisers; Whiting eyed amid restructuring plan

By James McCandless

San Antonio, April 24 – Companies scrambling to stay afloat in several sectors affected by the coronavirus pandemic marked the Friday trading session.

Hertz Global Holdings, Inc.’s notes were seen losing as the company hires restructuring advisers to avoid a bankruptcy filing.

Meanwhile, in oil and gas, Whiting Petroleum Corp.’s issues varied after filing a restructuring plan with majority support from its creditors.

Sector peer Chesapeake Energy Corp.’s paper was lifted after receiving a ratings downgrade.

Oil futures finished the week on a positive push, as did Occidental Petroleum Corp.’s and Gulfport Energy Corp.’s notes.

In the retail space, J.C. Penney Co., Inc.’s issues diverged amid reports that the company is working to secure bankruptcy funding.

Department store name L Brands, Inc.’s paper saw mixed activity as the company filed a complaint against a buyer of its Victoria’s Secret unit.

Elsewhere, utilities company PG&E Corp.’s notes capped the week under water.

Telecom name Frontier Communications Corp.’s issues were pushed down.

Hertz notes sink

Hertz’s notes were seen losing as the afternoon came to an end, traders said.

The 7 5/8% senior notes due 2022 cratered 13 points to close at 33 bid. The 5½% senior notes due 2024 dipped 3¼ points to close at 22½ bid.

The two tranches combined to see about $25 million change hands.

Late Thursday night, news broke that the Estero, Fla.-based car rental company has hired debt restructuring advisers in order to rework its balance sheet and stave off a bankruptcy filing.

The company currently holds about $17 billion in debt.

The advisor, Moelis & Co., is charged with coming up with ways to boost liquidity without having to file for Chapter 11.

“They could restructure out of court, but it’s hard to see,” a trader said. “The most likely thing is the pre-packaged filing.”

Earlier this week, Hertz announced that it would lay off 10,000 workers due to market weakness caused by the coronavirus.

The company and other car rental names have been pushing for financial rescue packages from the government, though no progress has been made.

Whiting varies

Meanwhile, in the oil and gas space, Whiting Petroleum’s issues varied, market sources said.

The 6¼% senior notes due 2023 shaved off ¼ point to close at 9½ bid. The 6 5/8% senior notes due 2026 gained 1½ points to close at 10½ bid.

During the Friday session, the Denver-based independent oil and gas producer announced that it has entered into a restructuring support agreement with some holders of its 1.25% convertible senior notes due 2020, 5¾% senior notes due 2021, 6¼% senior notes due 2023 and 6 5/8% senior notes due 2026, Prospect News reported.

As part of the agreed upon plan, the company would reduce its debt by more than $2.3 billion by exchanging all of its senior notes and some general unsecured claims for 97% of new equity.

The company filed for Chapter 11 bankruptcy at the beginning of April.

Chesapeake lifted

Sector peer Chesapeake Energy’s paper was lifted, traders said.

The 7% senior paper due 2024 picked up 2 points to close at 6½ bid. The 11½% paper due 2025 garnered 2 points to close at 9 bid.

The Oklahoma City-based oil and gas producer received a ratings downgrade from Moody’s Investors Service on Friday.

The agency slashed the company’s corporate family rating, probability of default rating, speculative grade liquidity rating and issue-level ratings.

The outlook was revised to negative.

Moody’s cited the company’s eroding liquidity, production declines, weak commodities prices, limited access to capital and the high likelihood of restructuring.

Oil rises

Oil futures finished the week on a positive push, followed by distressed energy names, market sources said.

West Texas Intermediate crude oil futures for June delivery added 44 cents to settle the week at $16.94 per barrel.

North Sea Brent crude oil futures for June delivery ended at $21.44 per barrel after an 11 cent rise.

Houston-based peer Occidental Petroleum’s notes followed futures higher.

The 2.9% senior notes due 2024 jumped up 5 points to close at 75 bid. The 2.7% senior notes due 2022 tacked on 2¾ points to close at 84¾ bid.

Oklahoma City-based producer Gulfport Energy’s issues joined the trend.

The 6 5/8% senior notes due 2023 rose 2¼ points to close at 50 bid.

J.C. Penney diverges

In the retail space, J.C Penney’s paper diverged in direction, traders said.

The 5 7/8% senior secured paper due 2023 improved by 1 point to close at 50 bid. The 5.65% senior notes due 2020 slid 3¼ points to close at 12¾ bid.

After the close on Thursday, reports indicated that the Plano, Tex.-based retailer is in advanced talks to secure bankruptcy funding.

The company is seeking between $800 million and $1 billion as part of the funding package.

Last week, the company said that it would not pay a $12 million interest payment, entering into a 30-day forbearance period to start talks with its creditors.

Last month, the retailer was among many in the sector to announce indefinite closures of retail locations in the wake of the pandemic.

L Brands mixed

Department store name L Brands’ notes also saw mixed results, market sources said.

The 6¾% senior notes due 2036 gained 2 points to close at 71 bid. The 5¼% senior notes due 2028 fell 1¾ points to close at 67½ bid.

On Thursday, the Columbus, Ohio-based retail chain owner filed a complaint in court against private equity firm Sycamore Partners for wanting to terminate a proposed sale.

The firm said on Wednesday that it wanted to scrap the plan to purchase a 55% stake in Victoria’s Secret for $525 million due to reduced market value of the company.

Analysts on Thursday said that the deal was likely to be completed, calling the move by Sycamore an opening position in a negotiation.

PG&E down

Elsewhere, utilities provider PG&E’s issues capped the week under water, traders said.

The 6.05% notes due 2034 lost 4 points to close at 105¾ bid.

This week, William Johnson said that he would resign as the San Francisco-based bankrupt electric utility’s chief executive officer on June 30, the same date that the company expects to exit from bankruptcy.

Board member William Smith will assume the role until a permanent replacement is found.

Frontier notes off

Telecom services name Frontier’s paper was pushed down, market sources said.

The 10½% senior notes due 2022 were docked ½ point to close at 31 bid. The 11% paper due 2025 shed 1 point to close at 30½ bid.

This week, the Norwalk, Conn.-based wireline communications company’s debt structure remained a favorite in distressed telecom trading.

The company received more attention after filing for bankruptcy on April 14, reaching an agreement with its creditors to cut its debt by more than $10 billion.

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