Hertz notes drop as Donlen purchase agreement reached; AMC eyed in theater space

By James McCandless

San Antonio, Nov. 30 – Kicking off a new week in the distressed debt market, the focus returned to travel and entertainment tranches.

Hertz Global Holdings, Inc.’s notes dropped after the company reached an agreement to sell the assets of a subsidiary.

Meanwhile, AMC Entertainment Holdings, Inc.’s issues varied after theaters reported dismal weekend box office results.

Sector peer Cinemark Holdings, Inc.’s paper fared better.

While oil futures started the week declining, Occidental Petroleum Corp.’s, Transocean Ltd.’s and Antero Resources Corp.’s notes diverged.

In the retail space, Nordstrom, Inc.’s issues were trending lower in the wake of its latest earnings report.

Air travel name United Airlines Holdings, Inc.’s paper saw mixed results while American Airlines Group Inc.’s notes drifted downward.

Hertz trades lower

Hertz’s notes dropped during Monday’s activity, traders said.

The 6¼% senior notes due 2022 fell 4 points to close at 43 bid. The 5½% senior notes due 2024 declined by 4½ points to close at 43½ bid.

On Monday morning, the Estero, Fla.-based car rental company announced that it had entered into a stock and asset purchase agreement to sell substantially all of the assets of its wholly owned subsidiary, Donlen Corp., to Athene Holding Ltd.

The deal was made for an anticipated cash payment of $825 million, subject to adjustments for fleet equity, working capital and assumed debt.

Under those assumptions, Hertz anticipates a purchase price at closing of at least $875 million.

Concurrently, news broke that Hertz and subsidiary Hertz Holdings Netherlands BV entered into a lock-up agreement relating to an agreement-in-principle with Hertz Holdings Netherlands’ largest bondholders for a long-term restructuring and recapitalization of the company’s European operations.

Under the transaction, Hertz International Ltd. will issue €250 million of senior secured notes in order to raise new money financing.

Theaters in focus

Meanwhile, theater operator AMC’s issues varied, market sources said.

The 5 7/8% senior subordinated notes due 2026 rose ¾ point to close at 18¾ bid. The 5¾% senior subordinated notes due 2025 shaved off ¼ point to close at 17¾ bid.

At the beginning of the week, the Leawood, Kan.-based movie theater chain’s structure was under pressure after the release of the holiday weekend’s box office results.

Ticket sales were reported to be just $17 million over the previous five days, substantially lower than the $262 million from the same period last year.

The company’s tranches have been bolstered in the last few weeks after a handful of pharmaceutical firms announced coronavirus vaccine candidates with high levels of efficacy.

In the preceding months, the company had systematically reopened its locations after keeping them shuttered at the onset of the pandemic. Despite its efforts to drum up business, consumer demand has remained low.

Plano, Tex.-based sector peer Cinemark’s paper fared better.

The 5 1/8% senior notes due 2022 grabbed ¼ point to close at 97¼ bid. The 4 7/8% senior notes due 2023 tacked on ¼ point to close at 95 bid.

Oil names diverge

While oil futures started the week declining, distressed energy tranches diverged, traders said.

West Texas Intermediate crude oil futures for January delivery gave up 19 cents to settle at $45.34 per barrel.

North Sea Brent crude oil futures for February delivery finished at $47.88 per barrel after a 37 cent haircut.

Houston-based independent oil and gas producer Occidental Petroleum’s notes saw a divergence.

The 2.9% senior notes due 2024 held level to close at 93¼ bid. The 2.7% senior notes due 2022 dipped ½ point to close at 98½ bid.

Steinhausen, Switzerland-based contract driller Transocean’s issues also split apart.

The 7½% senior notes due 2031 moved up ½ point to close at 28½ bid. The 7¼% senior notes due 2025 closed level at 40 bid.

Denver-based E&P Antero Resources’ paper took separate paths.

The 5 1/8% senior notes due 2022 shed ¼ point to close at 95 bid. The 5 5/8% senior notes due 2023 reached up 2 points to close at 90 bid.

Nordstrom declines

In the retail space, Nordstrom’s notes were trending lower, market sources said.

The 5% senior notes due 2044 slipped ½ point to close at 89¼ bid.

The Seattle-based department store chain’s structure has spent the last few trading days backing off of recent gains following the release of its latest earnings report.

For the third quarter, the company showed a profit of 22 cents per share and revenues of $3.09 billion.

Online sales spiked by 37%, making up a majority of total sales for Q3.

Nordstrom also reported a 20% reduction in overhead.

Airlines active

United Airlines’ issues saw mixed results as the session concluded, traders said.

The 5% senior notes due 2024 gained 1½ points to close at 100 bid. The 4¼% senior notes due 2022 were docked ¼ point to close at 100¼ bid.

As the airline industry prepares to weather a holiday season with government officials discouraging travel, the Chicago-based carrier’s issues remained a focal point in trading.

Last week, the company said that it would raise capital by selling 25.3 million shares of common stock.

The company has been looking for capital injections as it waits for the federal government to pass a new round of payroll stimulus.

Fort Worth-based peer American Airlines’ paper drifted downward.

The 5% senior notes due 2022 declined by 1¼ points to close at 83 bid. The 11¾% senior paper due 2025 gave up ½ point to close at 111 bid.

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