Hertz mixed; Tullow Oil active; Shelf Drilling up; Mallinckrodt slips; Endo gains

By Cristal Cody

Tupelo, Miss., May 7 – Hertz Corp.’s bonds remained mixed on Friday ahead of a potential auction following a rival bid to fund the company’s Chapter 11 bankruptcy reorganization plan.

The company’s 6¼% senior notes due 2022 gained 2½ points to 102½ bid in heavy secondary volume, a source said.

The notes are down from the 104 bid area in the same session last week but well up from the 52 bid range from the start of 2021.

Hertz’s 7% senior notes due 2028 traded at the 96¼ bid area in light volume, mostly unchanged from a week ago.

The issue has improved from trading in the 48 bid range as the year opened.

Hertz Global Holdings, Inc. announced Wednesday that a revised proposal from affiliates of Knighthead Capital Management LLC, Certares Opportunities LLC and Apollo Capital Management, LP to provide equity capital to fund its Chapter 11 exit is superior to the previous proposal with its existing plan sponsors, affiliates of Centerbridge Capital Partners, LP, Warburg Pincus LLC and Dundon Capital Partners, LLC.

The Estero, Fla.-based car rental operator said it will comply with bankruptcy court procedures to establish bidding and auction procedures on the submission of alternative plan proposals, among other criteria, and will hold an auction on Monday if the current plan sponsors informed Hertz by Friday of a counteroffer.

Hertz said in a statement on Tuesday the rival proposal considers funding Hertz's plan of reorganization through direct common stock investments totaling $2.9 billion, direct preferred stock investments totaling $1.5 billion and a rights offering to raise $1.36 billion.

The revised proposal also includes an amended plan of reorganization that contemplates payment in full of all secured and unsecured funded debt and provides holders of common stock with 50 cents per share in cash and either 10-year warrants for an aggregate of 10% of the reorganized company or, for eligible stockholders, the possibility of subscribing for shares of common stock in the rights offering.

The company filed for Chapter 11 bankruptcy on May 22, 2020 in the U.S. Bankruptcy Court for the District of Delaware.

Tullow Oil active

Overall market tone was stronger despite the weaker April jobs report from the U.S. Department of Labor on Friday.

The iShares iBoxx High Yield Corporate Bond ETF rose 6 cents to close at $87.33.

April ended without a “single default” and the first such month in two years, according to a BofA Securities, Inc. research note on Friday.

Distressed oil and gas bonds were active as oil prices improved, a source said.

London-based oil and gas explorer Tullow Oil plc’s 7% senior notes due 2025 (Caa2/CCC+) traded at 85½ bid.

The issue has seen thin secondary volume year to date but is up from the 70¾ bid range quoted in early January.

On Thursday, Tullow Oil priced $1.8 billion of new five-year senior secured notes (B3/B-) at par to yield 10¼%.

West Texas intermediate crude oil benchmark futures for June deliveries settled Friday up 19 cents to $64.90 a barrel.

North Sea Brent crude oil futures for July delivery also rose 19 cents to settle at $68.28 a barrel.

Dubai-based offshore driller Shelf Drilling Holdings Ltd.’s 8¼% senior notes due 2025 (Caa3/CCC+) improved ¼ point to 78 bid during the session after adding 2½ points on Thursday.

Mallinckrodt trades lower

Elsewhere, bankrupt pharmaceuticals maker Mallinckrodt plc’s 5¾% notes due 2022 slipped ¼ point to 61¼ bid after dropping 1½ points in the prior session, a source said Friday.

The notes are down 6¾ points week to date.

Mallinckrodt, which has principal offices in Dublin and St. Louis, filed for Chapter 11 bankruptcy on Oct. 12.

A hearing on the company’s Chapter 11 plan of reorganization and disclosure statement is scheduled for May 26 in the U.S. Bankruptcy Court for the District of Delaware.

The company said it has reached an agreement with a group of first-lien term lenders holding about $1.3 billion of its outstanding first-lien term loans to support its restructuring support agreement.

Endo bonds higher

In other distressed pharmaceuticals issues active Friday, Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) traded about ¼ point higher to 76 bid, a source said.

The notes are down about ½ point on the week after climbing more than 8 points in the prior week.

Endo’s 6% notes traded at the start of the year at 84 bid.

On Thursday, parent Dublin-based pharmaceuticals maker Endo International plc reported better-than-expected first-quarter earnings results.

CBL notes better

Bankrupt real estate investment trust CBL & Associates LP’s bonds remained better on Friday, a source said.

CBL’s 5¼% notes due 2023 were up about 1 point to 58¼ bid, about 1¾ points higher from the same session a week ago.

The company reported April 30 that it received approval to enter into an amended restructuring support agreement and intends to file an amended Chapter 11 plan.

The Chattanooga, Tenn.-based owner and developer of malls and shopping centers expects to eliminate more than $1.6 billion of debt under its restructuring plan.

CBL and 176 affiliated companies filed for Chapter 11 bankruptcy on Nov. 1 and Nov. 2 in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.