HighPoint notes gain; Diamond Sports declines; AMC continues rise; Hertz, Peabody down

By Cristal Cody

Tupelo, Miss., Feb. 25 – HighPoint Resources Corp.’s paper traded up 3 points in strong secondary activity on Thursday.

The company’s 8¾% notes due 2025 (C/C/) and 7% senior notes due 2022 (C/C/) were both quoted at 53 bid, according to a market source.

The natural gas and oil exploration company announced in November that it agreed to merge with Bonanza Creek Energy, Inc. in a debt-for-equity exchange transaction valued at about $376 million.

The companies plan to commence a registered exchange offer and consent solicitation and simultaneous solicitation of a pre-packaged plan of reorganization under Chapter 11 bankruptcy for the merger.

If the minimum participation condition on the exchange is not met, HighPoint intends to file for Chapter 11 bankruptcy to execute the pre-packaged plan and complete the merger.

A special HighPoint shareholders meeting is scheduled for March 12 to approve the merger and pre-packaged plan.

HighPoint expects the transaction to close in the first quarter under the exchange offer and consent solicitation or no later than the second quarter under the pre-packaged plan.

Diamond Sports declines

Diamond Sports Group LLC’s bonds continued to drop in secondary trading on Thursday as the company contemplates a distressed debt exchange or redemption, sources said.

The company’s 5 3/8% senior secured notes due 2026 (Ba3/CCC+) declined 1¼ points to 74¼ bid after trading down 1 point in the prior session. The notes are 2¾ points softer week to date.

Diamond Sports Group’s 6 5/8% senior notes due 2027 (B3/CCC-) traded about ½ point lower at 53¼ bid, 3½ points softer week to date.

Parent company Sinclair Broadcast Group, Inc. reported fourth-quarter results and gave 2021 revenue and earnings guidance for Diamond Sports Group on Wednesday, prompting a release from S&P Global Ratings that said it views Diamond Sports’ capital structure as unsustainable.

S&P said the company reported during the earnings conference call in the prior session that it remains interested in liability management initiatives, which could include a debt exchange or redemption, actions S&P would view as tantamount to a default.

AMC bonds tick higher

Distressed movie theater owner AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) climbed another 2½ points to 80 bid during the session, according to a market source.

The notes were up nearly 4 points on Wednesday and are trading more than 11 points better week to date.

At the start of the year, the issue was quoted at 27 bid.

The company’s notes have rallied this week on the announcement that New York City will reopen theaters on March 5 at 25% capacity.

Hertz gives back

In other distressed trading, bankrupt car rental company Hertz Corp.’s 5½% notes due 2024 fell 2¼ points to 77¼ bid, a market source said.

The notes remain 5½ points better on the week.

Hertz filed for Chapter 11 bankruptcy in May.

Peabody remains soft

Distressed coal producer Peabody Energy Corp.’s 6 3/8% senior secured notes due 2025 (Caa1/CCC-) softened further on Thursday, trading ¾ point lower at 49½ bid, a market source said.

The notes have declined almost 10 points since the start of February.

In January, Peabody Energy completed a distressed exchange of its 6% secured notes due 2022 for new 10% secured notes due 2024 and 8½% secured notes due 2024.

Peabody Energy said in a 10-K filing with the Securities and Exchange Commission on Tuesday that the pandemic continues to impact demand and pricing for the global coal markets, noting it experienced negative cash flows from operations for the year ended Dec. 31.

The company emerged from a Chapter 11 bankruptcy restructuring in 2017.

Oil prices were mixed on Thursday with energy bonds in the distressed space mostly better on the day.

North Sea Brent crude oil futures for April deliveries fell 16 cents to settle at $66.88 a barrel.

West Texas intermediate crude oil for April deliveries rose 31 cents to settle at $63.53 a barrel.

Oil and gas drilling contractor Nabors Industries Inc.’s 5¾% senior notes due 2025 (Caa2/CCC-) headed out up 2½ points at 80 bid after trading 2½ points higher in the prior session, according to a market source.

Overall market tone turned weaker during the session with the Nasdaq down 3.52% and the S&P 500 off 2.45% at the close.

The iShares iBoxx High Yield Corporate Bond ETF fell 81 cents, or 0.93%, to end at $86.70.

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