Rite Aid up as exchange offer starts; Range Resources better on drilling, dividend news

By James McCandless

San Antonio, Jan. 7 – Tuesday’s distressed debt activity centered on shifts in retail and energy names.

Rite Aid Corp.’s notes gained after the company started an exchange offer for its 2023 senior tranches.

Retailer Bed Bath & Beyond Inc.’s issues varied in direction.

Meanwhile, oil and gas producer Range Resources Corp.’s paper saw a bump after announcing cuts to its drilling budget and dividend.

As oil futures gave back some of Monday’s gains, California Resources Corp.’s and Antero Resources Corp.’s notes declined while Whiting Petroleum Corp.’s issues diverged.

Propane name Ferrellgas Partners, LP’s paper improved as the company and its creditors prepare for restructuring talks.

Elsewhere, in telecom, Intelsat SA’s and GTT Communications, Inc.’s notes ended the day in a higher position.

Rite Aid gains

Rite Aid’s notes gained by the close of Tuesday activity, traders said.

The 6 1/8% senior notes due 2023 improved by 1¼ points to close at 91¾ bid.

By the close, the notes saw about $27 million changing hands.

On Tuesday, the Camp Hill, Pa.-based drug store chain commenced an offer to exchange up to $600 million of its outstanding $1,753,490,000 6 1/8% notes for newly issued 7½% senior secured notes due 2025, Prospect News reported.

The offering is meant to extend the maturity date of a portion of the old notes to July 2025 from April 2023.

Last month, the company surprised analysts with positive third-quarter results, showing a 54 cents per share profit where 3 cents per share was expected.

Union, N.J.-based sector peer Bed Bath & Beyond’s long-term notes varied in direction.

The 5.165% senior notes due 2044 held level at 73¾ bid. The 4.915% senior notes due 2034 shaved off ¼ point to close at 79 bid.

Range Resources up

Meanwhile, energy name Range Resources’ paper was bumped higher, market sources said.

The 4 7/8% senior notes due 2025 gained 2½ points to close at 88 bid.

The Fort Worth, Tex.-based independent oil and gas producer announced early Tuesday morning that it will reduce the amount it plans to spend on drilling in 2020 by 29%.

It also said that it would be suspending its dividend, hoping to save about $20 million from the measure.

The developments are part of the company’s stated focus to reduce its debt.

The company’s debt structure has seen pressure in the last year as weakness in the energy space and overleverage hamper distressed energy names.

Oil trends lower

As oil futures backed off of recent gains, distressed energy names followed, traders said.

West Texas Intermediate crude oil futures for February delivery gave back 57 cents to finish at $62.70 per barrel.

North Sea Brent crude oil futures for March delivery settled at $68.27 per barrel after a 64 cent dip.

Los Angeles-based producer California Resources’ notes declined.

The 6% senior notes due 2024 dropped 6¼ points to close at 37¾ bid. The 8% senior secured notes due 2022 slipped 3¼ points to close at 46 bid.

Denver-based peer Antero Resources’ issues moved with the sector.

The 5 5/8% senior notes due 2023 fell 1½ points to close at 77½ bid.

Whiting Petroleum, another Denver-based producer, saw its paper diverge in direction.

The 6¼% senior notes due 2023 shed 1¼ points to close at 90 bid. The 6 5/8% senior paper due 2026 rose 1¼ points to close at 75¼ bid.

Ferrellgas better

Propane name Ferrellgas’ notes improved by the end of the day, market sources said.

The 6½% senior notes due 2021 inched up ¼ point to close at 87¼ bid. The 6¾% senior notes due 2023 added ¼ point to close at 85½.

News broke on Friday that the Overland Park, Kan.-based propane seller and its creditors are organizing in preparation for restructuring talks as bonds worth $357 million come due in June.

“It hasn’t been trading much in a while but it got a little bump over the last few days,” a trader said. “Most likely, there will be a restructure before June.”

In its most recent earnings report in December, the company reported a loss of 46 cents per share, edging out expectations of a 58 cents per share loss.

Intelsat, GTT higher

Elsewhere, in the telecom space, Intelsat’s issues moved into a higher position, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 picked up 1 point to close at 61 bid. The 9½% senior notes due 2023 garnered 1 point to close at 72¼ bid.

As ambiguity persists for the Luxembourg-based satellite operator and others on the terms of a C-band spectrum auction, recent analysis suggests that the proceeds from an auction would be lucrative.

A Monday note from New Street Research suggested that revenues could total $50 billion.

How those revenues would be distributed is up for debate, as the Federal Communications Commission has yet to set the auction rules.

McLean, Va.-based cloud networking name GTT Communications’ paper also tracked better.

The 7 7/8% senior notes due 2024 improved by 1½ points to close at 78¼ bid.

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