Mallinckrodt notes improve; Talen Energy Supply, Shelf Drilling unchanged; GTT soft

By Cristal Cody

Tupelo, Miss., March 10 – Pharmaceuticals maker Mallinckrodt plc’s 5 5/8% senior notes due 2023 climbed in heavy trading volume Wednesday after the bankrupt company announced an agreement reached with lenders.

The notes were quoted trading early at 59 7/8 bid before climbing in the afternoon to 60 3/8 bid, a source said.

The issue was last seen Friday up 2 points at 54¼ bid.

Mallinckrodt (/D/) filed for Chapter 11 bankruptcy in October in the U.S. Bankruptcy Court for the District of Delaware.

In a motion filed in February, Mallinckrodt said it had reached an agreement with restructuring support agreement parties to pursue a plan of reorganization.

The company received approval on Feb. 25 to extend filing a bankruptcy restructuring plan until Aug. 9.

On Wednesday, Mallinckrodt said in a press release that it has reached agreement with an ad hoc group of first-lien term lenders holding about $1.3 billion of its outstanding first-lien term loans to support the company's restructuring support agreement.

The agreement is based on providing new term loan financing to replace the first-lien term loans.

Talen, Shelf Drilling flat

Energy bonds were mixed but mostly steady over Wednesday’s session, according to market sources.

Talen Energy Supply LLC’s 6½% senior notes due 2025 (B3/CCC+/B) were unchanged in strong trading during the session at 84 bid, a source said.

The company is scheduled to hold a conference call on Thursday to discuss its fourth-quarter and fiscal year 2020 results, as well as provide an update on the impacts of the February winter storm that caused widespread energy problems in Texas.

Elsewhere, Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) were flat at 74¾ bid on Wednesday, a market source said.

The notes are up about ¼ point from Friday.

Shelf Drilling is marketing a $300 million offering of senior secured notes due 2024 via an investor call on Thursday to in part redeem all of its 8¾% senior secured notes due 2024.

West Texas intermediate crude oil for May deliveries added 43 cents on Wednesday to settle at $64.44 a barrel over the day.

North Sea Brent crude oil futures for May deliveries rose 38 cents to settle at $67.90.

Overall market tone was mostly stronger on Wednesday.

The iShares iBoxx High Yield Corporate Bond ETF rose 27 cents, or 0.31%, to $86.38.

Chongqing Energy quiet

Chongqing Energy Investment Group Co., Ltd.’s 5 5/8% senior notes due 2022 (//C) were not active in secondary trading on Wednesday, a source said.

The distressed notes were last seen in the prior week at 45 bid.

On Wednesday, Fitch Ratings downgraded the bonds to C from BBB and dropped the company’s long-term foreign-currency issuer default rating to RD from BBB.

The Chongqing, China-based coal, electricity and other energy products developer announced on Tuesday that its repayment obligations under an onshore letter of credit and a bank draft were overdue.

GTT down on year

GTT Communications, Inc.’s 7.875% senior notes due 2024 (/C/) were last seen trading Tuesday at 20½ bid, according to a market source on Wednesday.

The notes have softened from the 40 bid range at the start of the year.

On Monday, Fitch Ratings downgraded the Tyson, Va.-based telecommunications and internet services provider to CC from CCC and withdrew the debt ratings.

The downgrade reflects Fitch's expectation that a restructuring or a distressed debt exchange is likely to occur in the next year.

Exela notes rally

Meanwhile, Exela Technologies, Inc.’s bonds continued to see strong gains on Wednesday after the company announced in the prior session a new $90 million 10-year contract, according to a market source.

The company’s 10% senior secured notes due 2023 (Caa3/CCC-), issued by debt financing arm Exela Intermediate LLC, jumped 4¼ points to 39¼ bid.

The bonds headed out on Tuesday up 2 points at 35 bid.

Exela, an Irving, Tex.-based business process automation company, announced it won the contract to manage claims and correspondence for an unnamed major U.S. health insurance company through its PCH Global digital exchange platform.

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