Valaris notes decline after board settlement; Tenneco lower amid continued review

By James McCandless

San Antonio, Jan. 27 – Distressed debt trading was marked by overarching negativity on Monday as worries about the coronavirus spread.

Valaris plc’s notes declined after the company announced a settlement with a large shareholder over the makeup of its board of directors.

As oil futures kicked off the week falling, Laredo Petroleum, Inc.’s, Chesapeake Energy Corp.’s and Southwestern Energy Co.’s issues followed suit.

In the automotive space, Tenneco Inc.’s paper shifted lower as the company continues a strategic alternatives review with a new adviser.

Meanwhile, in telecom, Intelsat SA’s notes dipped as a satellite it operates runs the risk of explosion in orbit after a malfunction.

Sector peer Frontier Communications Corp.’s issues varied in direction.

Utilities name PG&E Corp.’s paper was trailing, tapering off recent gains following a restructuring deal with creditors.

Retailer Rite Aid Corp.’s notes saw gains in the midst of an exchange offer.

Valaris down

Valaris’ notes were seen declining through Monday, traders said.

The 7¾% senior notes due 2026 lost 3 points to close at 47½ bid. The 8% senior notes due 2024 dipped 1 point to close at 60 bid.

Early Monday, the London-based contract driller announced that it had reached a settlement with large shareholder Luminus Management over the composition of its board of directors.

As part of the settlement, Valaris appointed Luminus executive Adam Weitzman to its board in exchange for the fund maintaining its 18.7% ownership and supporting the company’s board member candidates in an upcoming shareholder meeting.

Last month, Luminus said that it would push for replacing the board of directors at its next shareholder meeting after upping its stake in the name from 4.5%.

Oil futures fall

Oil futures kicked off the week falling, triggering similar movements from distressed energy issues, market sources said.

As markets became concerned over the spread of the coronavirus, energy saw the brunt of the negativity.

West Texas Intermediate crude oil futures for March delivery fell $1.05 to settle the day at $53.14 per barrel.

North Sea Brent crude oil futures for March delivery ended at $59.32 per barrel following a $1.37 drop.

Tulsa, Okla.-based independent oil and gas producer Laredo Petroleum’s issues followed futures lower.

The 9½% senior notes due 2025 shed 3¼ points to close at 90 bid.

Oklahoma City-based producer Chesapeake Energy’s paper joined the overarching trend.

The 11½% paper due 2025 crashed 11 points to close at 80 bid. The 7% senior notes due 2024 moved down 3¾ points to close at 52½ bid.

Spring, Tex.-based peer Southwestern Energy’s notes were under water.

The 7¾% senior notes due 2027 gave back 4 points to close at 82½ bid.

“Everything was down today, but energy bonds got the worst of it,” a trader said.

Tenneco lower

In the automotive space, Tenneco’s issues shifted lower, traders said.

The 5% senior notes due 2026 shaved off ¾ point to close at 87¾ bid.

In an announcement Monday morning, the Lake Forest, Ill.-based auto parts producer said that its strategic alternatives review was ongoing and added Lazard as an independent financial adviser.

Tenneco also said that part of the review involves analyzing its current plan to spin off its aftermarket and ride performance segment.

Additionally, Tenneco appointed a new board member and raised its 2019 revenue outlook to $17.35 billion from $17.25 billion.

Intelsat notes dip

Meanwhile, in telecom, Intelsat’s paper took a dip, market sources said.

Intelsat (Luxembourg) SA’s 8 1/8% senior paper due 2023 lopped off 1 point to close at 56¼ bid. Intelsat Jackson Holdings SA’s 5½% senior paper due 2023 shaved off ¾ point to close at 85 bid.

The Luxembourg-based satellite operator’s structure saw a new round of increased scrutiny after news broke on Friday that a satellite it maintains malfunctioned in orbit, carrying the risk of exploding.

DirecTV, which owns the satellite, said that it suffered an anomaly that damaged its batteries.

Norwalk, Conn.-based wireline communications name Frontier’s notes varied in direction.

The 10½% senior notes due 2022 fell ½ point to close at 44½ bid. The 11% senior notes due 2025 picked up ¼ point to close at 45 bid.

PG&E trails

Utilities name PG&E’s issues trailed as the session ended, traders said.

The 6.05% notes due 2034 slipped ½ point to close at 114 bid.

Over the last few trading days, the San Francisco-based bankrupt electric utility’s issues have seen heightened attention from the market after the company struck a compromise deal concerning restructuring with major creditors.

After months of jockeying over dueling restructuring plans, the company agreed to terms with creditors over interest payments, make-whole payments and debt structure changes.

In exchange, the creditor group agreed to withdraw its restructuring plan and support PG&E’s.

Despite the development, the plan is still opposed by California governor Gavin Newsom, who argues that the plan as it stands does not comply with state regulations.

Rite Aid edges up

Retailer Rite Aid’s paper gained by the close, market sources said.

The 6 1/8% senior notes due 2023 inched up ¼ point to close at 91½ bid.

In the midst of an exchange offer, the Camp Hill, Pa.-based drug store chain received a ratings downgrade on Friday.

Fitch Ratings downgraded the 2023 notes and affirmed a stable outlook despite noting operational challenges and market pressures.

Early last week, the company reported $1,633,938,000 of the existing 2023 notes had been tendered for new 7½% senior secured notes due 2025.

© 2015 Prospect News.
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