AMC bonds gain on preferred offer; Embarq recovers some losses; Rite Aid declines

By Cristal Cody

Tupelo, Miss., Sept. 26 – AMC Entertainment Holdings, Inc.’s paper rallied following the company’s announcement Monday that it plans to sell up to 425 million of its new preferred equity units.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) added 3 points on strong trading totaling more than $10 million.

AMC’s common stock closed down 14.52%.

Embarq Corp.’s 7.995% notes due 2036 (Caa2/BB/BB) regained some ground after giving back more than 24 points in the prior week.

The notes were up more than 6 points on the day.

Oil continued to slide over Monday’s session, while stocks fared little better.

West Texas Intermediate crude oil benchmark futures for November deliveries, which declined $4.75 on Friday, settled Monday down $2.03 at $76.71 a barrel.

The S&P 500 index closed 1.03% lower.

The iShares iBoxx High Yield Corporate Bond ETF dropped 85 cents, or 1.18%, to $71.28.

Volatility also was on the rise over the day.

The CBOE Volatility index increased 7.82% to 32.26.

In other secondary action, Medline Industries, LP’s paper saw some of the day’s heaviest trading, a source said.

Medline’s 5¼% notes due 2029 (Caa1/B-) were down 1¾ points at 76 1/8 bid and yielding over 10% on more than $18 million of volume.

Otherwise, distressed secondary supply overall stayed light through the day with paper in the emerging markets space among the busiest names, a source said.

Rite Aid Corp.’s 7.7% senior debentures due 2027 (Caa2/CCC-/CCC) dropped 4¼ points in light activity totaling about $1 million.

AMC higher

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) climbed 3 points to 75½ bid by Monday afternoon, a source said.

Volume was strong with $10.3 million of paper reported traded.

The company’s common stock closed down 14.52% at $6.83.

AMC said in the regulatory filing on Monday that Citigroup Global Markets Inc. is the sales agent on its offering of up to 425 million of preferred equity units.

AMC paid stockholders a special dividend of one AMC preferred equity unit for each share of AMC class A common stock on Aug. 19.

The Leawood, Kan.-based movie theater owner and gold and silver mine investor plans to use the proceeds from the preferred offering to repay, refinance, redeem or repurchase existing debt.

Embarq notes up

Embarq’s 7.995% notes due 2036 (Caa2/BB/BB) recovered more than 6¼ points on Monday to trade with a 56 handle on secondary volume of nearly $14 million, a source said.

Embarq’s notes plunged more than 24 points in the prior week, while its credit default swap spreads also widened nearly 100 basis points.

The Overland Park, Kan.-based telecommunications company will become a subsidiary of Connect Holding II LLC, doing business as Brightspeed, in connection with its acquisition from Lumen Technologies, Inc. by Apollo Global Management, Inc. funds.

Rite Aid declines

Rite Aid’s 7.7% senior debentures due 2027 (Caa2/CCC-/CCC) were quoted down 4¼ points at 65½ bid by the close on Monday, a source said.

Secondary supply was light on about $1 million of volume.

The issue was included in a tender offer Rite Aid completed in June for up to $150 million of its 7½% senior secured notes due 2025, 6 7/8% debentures due 2028 and the 7.7% senior debentures due 2027.

The Camp Hill, Pa.-based drug retailer’s CDS spreads widened more than 200 bps in the prior week ended Wednesday.

Distressed returns off

S&P U.S. High Yield Corporate Distressed Bond index one-day returns remained soft on Friday at minus 1.24%, compared to minus 1.03% on Thursday, 0.39% on Wednesday, minus 0.19% on Tuesday and 0.44% at the start of the prior week.

Month-to-date total returns dropped to minus 3.65% as the week closed, versus minus 2.44% on Thursday, minus 1.43% on Wednesday, minus 1.81% on Tuesday and minus 1.62% at the week’s start.

Year-to-date total returns declined on Friday to minus 23.97% from minus 23.02% on Thursday, minus 22.22% on Wednesday, minus 22.53% on Tuesday and minus 22.38% in the Sept. 19 session.

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