Transocean notes in focus after amendment news; Hertz trades higher in secondary market

By James McCandless

San Antonio, Dec. 1 – The distressed debt session saw the energy sector take most of the market’s attention.

Transocean Ltd.’s notes varied in direction after the company announced that it had amended some financing documents and implemented reorganization transactions.

Sector peer Occidental Petroleum Corp.’s issues diverged after receiving an analyst downgrade during the session.

As oil futures saw a slide, Antero Resources Corp.’s and Callon Petroleum Co.’s paper both tracked higher.

Meanwhile, car rental name Hertz Global Holdings, Inc.’s notes improved a day after the company announced a purchase agreement for certain assets.

In the theater space, AMC Entertainment Holdings, Inc.’s issues slipped while Cinemark Holdings, Inc.’s paper rose.

Air carriers United Airlines Holdings, Inc.’s and American Airlines Group Inc.’s notes moved in different directions.

Transocean varies

Transocean’s notes varied in direction through the session, traders said.

The 7½% senior notes due 2031 dropped ½ point to close at 28 bid. The 7½% senior notes due 2026 improved by 1¾ points to close at 31¾ bid.

Early Tuesday, the Steinhausen, Switzerland-based contract driller made amendments to some of its financing documents and implemented internal reorganization transactions to resolve default allegations relating to its 7¼% senior notes due 2025 and 8% senior notes due 2027, Prospect News reported.

The Transocean Mid Holdings entities have been eliminated and the Transocean Holdings entities directly hold the equity interests of the Transocean Asset Holdings entities.

The company said that any claim under existing financing documents relating to a transfer of the assets of the Transocean Holdings entities from prior transactions has been rendered moot and cured.

“There is still some turmoil and uncertainty in the oil sector,” a trader said. “But we should start to see more increases in oil prices entering the new year.”

In its recent third-quarter earnings report, Transocean showed a loss of 11 cents per share and $773 million of revenues.

Occidental flat to higher

Sector peer Occidental Petroleum’s issues diverged, market sources said.

The 2.9% senior notes due 2024 garnered ¼ point to close at 93½ bid. The 2.7% senior notes due 2022 held level to close at 98½ bid.

During Tuesday’s activity, the Houston-based independent oil and gas producer received an analyst downgrade.

An analyst at UBS cut the rating on the company’s common stock to sell from neutral.

In a note, the analyst said “the downgrade is based on valuation.”

The analyst went on to say that Occidental “will remain focused on reducing its absolute debt and leverage metrics” going forward.

Oil names higher

As oil futures saw a slide, distressed energy names tracked higher, traders said.

West Texas Intermediate crude oil futures for January delivery saw a 79 cent cut to settle at $44.55 per barrel.

North Sea Brent crude oil futures for February delivery finished at $47.42 per barrel after a 46 cent dip.

Denver-based producer Antero Resources’ paper went against the grain.

The 5 1/8% senior notes due 2022 grabbed 1 point to close at 96 bid. The 5% senior notes due 2025 reached up 1¼ points to close at 81¼ bid.

Houston-based E&P company Callon Petroleum’s notes also moved to higher ground.

The 6 1/8% senior notes due 2024 added 1 point to close at 42 bid. The 6 3/8% senior notes due 2026 inched up ¼ point to close at 35½ bid.

Hertz improves

Meanwhile, travel name Hertz’s issues were seen improving, market sources said.

The 6¾% senior notes due 2022 moved up ¾ point to close at 43¾ bid. The 5½% senior notes due 2024 garnered ½ point to close at 44 bid.

The Estero, Fla.-based car rental company’s structure was positive a day after announcing that it had entered into a stock and asset purchase agreement to sell 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, which could bring the purchase price to $875 million at closing.

Also, 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.

AMC slips, Cinemark rises

In the theater space, AMC’s paper declined, traders said.

The 12% notes due 2026 shaved off ¼ point to close at 26¼ bid.

On Tuesday, the Leawood, Kan.-based movie theater operator’s paper continued to see negativity after low numbers were reported in the previous weekend’s box office.

Ticket sales over the Thanksgiving holiday were reported at $17 million, well below the $262 million from the same period last year.

Plano, Tex.-based theater chain Cinemark’s notes rose.

The 5 1/8% senior notes due 2022 reached up ¾ point to close at 98 bid. The 4 7/8% senior notes due 2023 added ½ point to close at 95½ bid.

Airlines in focus

Air carrier United Airlines’ issues yielded mixed results, market sources said.

The 5% senior notes due 2024 were docked ¾ point to close at 99¼ bid. The 4¼% senior notes due 2022 were lifted ¼ point to close at 100½ bid.

The Chicago-based air travel giant and others in the sector remain in a holding pattern, starved of capital as federal payroll stimulus remains stalled in negotiations.

Last week, the company commenced a sale of 25.3 million shares of common stock, aiming to raise up to $1 billion.

Fort Worth-based peer American Airlines’ paper also moved on separate tracks.

The 5% senior notes due 2022 improved by 1¼ points to close at 84¼ bid. The 11¾% senior paper due 2025 shed 1¼ points to close at 109¾ bid.

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