AMC jumps in heavy trading; GEO notes on mend; Peabody higher; Transocean, Ensign up

By Cristal Cody

Tupelo, Miss., June 3 – AMC Entertainment Holdings, Inc.’s bonds saw heavy trading action in the distressed secondary market on Thursday as its stock dropped nearly 18% over the session.

AMC’s 12% second-lien senior secured notes due 2026 (Ca/C) jumped 3¼ points to hit 100¾ bid on $50.75 million of paper traded, a source said.

The notes edged up ½ point on Wednesday on nearly $25 million of trading volume.

AMC’s 5¾% senior subordinated notes due 2025 (Ca/C) also rose 1 3/8 points to 81 5/8 bid on $11.42 million of secondary supply.

The notes traded Wednesday up ½ point on more than $16.5 million of secondary volume.

AMC’s stock has soared this year from its 52-week low of $1.91 but closed down 17.92% at $51.34 on Thursday.

Online trading platform Capital Com (UK) Ltd. said in a press release on Thursday that over the past two weeks, more than 63% of trades executed by U.K. traders with the company have been in financial derivatives linked to shares in AMC.

“This is a significant jump from last month when just 23% of all first-time trades executed by U.K. clients were derivatives transactions on AMC,” the company said. “U.K. clients have been piling into the popular AMC trade this week with more than 82% of traders taking a long position in the so-called meme stock. Trading derivatives on AMC has been the top-traded market and instrument on the platform so far this week.”

The Leawood, Kan.-based movie theater owner reopened the majority of its theaters in March within Covid-19 guidelines and raised approximately $428 million in a registered offering of 43 million shares of class A common stock in May.

In January, AMC raised or signed commitment letters to receive $917 million of new equity and debt capital and issued $100 million of guaranteed first-lien secured notes due 2026.

GEO notes stronger

GEO Group Inc.’s bonds have been on the mend after declining about 4 to 5 points in the prior week following S&P Global Ratings’ downgrade, a source reported.

GEO’s 6% senior notes due 2025 (B2/CCC) headed out at 65 bid, up more than 2½ points, on $3 million of trading activity.

The issue declined to 60 7/8 bid in the prior week following the downgrade.

S&P dropped the bond ratings by two notches on May 25, noting the company has borrowed all of its remaining revolving credit facility availability and is building large cash balances in a strategy that usually precedes a debt exchange.

GEO’s bonds have softened since January after president Joe Biden instructed the U.S. Department of Justice to not renew contracts with privately operated prison operators.

The Boca Raton, Fla.-based real estate investment trust that specializes in secure and processing facilities and electronic monitoring has retained Lazard Financial Advisory and Skadden, Arps, Slate, Meagher & Flom LLP to assess alternatives for its capital structure.

Peabody heads higher

St. Louis-based coal producer Peabody Energy Corp.’s bonds remained better on Thursday following S&P’s downgrade due to a distressed debt-for-equity exchange, a source said.

The 6 3/8% notes due 2025 (Caa1/D) added ¾ point to trade at 60¾ bid going out.

The notes rose about 1 3/8 points on Wednesday and have rallied from trading at 42 bid at the end of April.

S&P dropped the company’s ratings to SD from CCC+ and downgraded the notes to D from CCC-.

The downgrade follows Peabody’s completion of a $26.2 million debt-for-equity exchange with certain holders of its 2022 notes for common equity.

S&P said it considers the transaction as distressed and tantamount to a default because the common equity has a junior ranking compared to the senior notes.

Transocean, Ensign gain

Overall market tone weakened ahead of the Labor Department’s May jobs report on Friday.

The iShares iBoxx High Yield Corporate Bond ETF fell 17 cents to close Thursday at $87.08.

Oil prices softened.

North Sea Brent crude oil futures for August deliveries dropped 4 cents to settle at $71.31 a barrel.

West Texas intermediate crude oil benchmark futures for July deliveries fell 2 cents to settle at $68.81 a barrel, while August deliveries declined 3 cents to settle at $68.60 a barrel.

In the secondary market, Transocean Inc.’s bonds were up about 1½ to 2¼ points over the day, a source said.

The Vernier, Switzerland-based offshore driller’s 8% notes due 2027 (Ca/CCC) were quoted trading 1½ points better at 78½ bid on $4 million of secondary volume.

Transocean’s 7½% notes due 2031 (C/CCC-/) headed out at up 2¼ points at 63 bid on $1 million of trading supply.

Calgary, Alta.-based oilfield servicer Ensign Energy Services, Inc.’s 9¼% senior notes due 2024 (Caa2/CCC+) improved 2 points on the day to 82½ bid on $2 million of trading action, a source reported.

Bermuda- and Houston-based oil and gas drilling contractor Nabors Industries Ltd.’s 7¼% senior notes due 2026 (Caa1/CCC-/B) also rose more than 1¼ points to 92½ bid on $2.3 million of issues traded.

Elsewhere in the distressed energy space, The Woodlands, Tex., and Allentown, Pa.-based power company Talen Energy Supply LLC’s 6% senior notes due 2036 (B3/CCC+/B) dropped 2 5/8 points to 61 bid in thin trading, a source said.

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