Qurate, QVC bonds slide on weak earnings; AMC improves as focus shifts to new lawsuit

By Cristal Cody

Tupelo, Miss., March 1 – Paper from Qurate Retail Inc. and subsidiary QVC Inc. sank early in secondary trading on Wednesday after the company reported heavy fiscal 2022 losses and continued to mostly move lower by the close.

Qurate Retail’s 8½% senior debentures due 2029 (B3/CCC) dropped 5 points.

QVC’s 5.45% senior secured notes due 2034 (Ba3/B+) traded down more than 4 points going out.

Overall market tone remained mostly soft on Wednesday. The S&P 500 index fell 0.47%.

The iShares iBoxx High Yield Corporate Bond ETF declined 21 cents, or 0.28%, to $73.87.

The CBOE Volatility index edged down 0.24% to $20.65.

AMC Entertainment Holdings, Inc.’s paper improved in thin trading as the market absorbed the company’s after-market release of its fourth-quarter earnings report on Tuesday.

“We expect the company to continue raising cash with its equity while chipping away at its massive debt balance,” Wedbush Securities analysts Alicia Reese and Michael Pachter said in a note on Wednesday.

Near-term focus in AMC “shifts to the shareholder vote” on March 14 and the pension fund lawsuit against the company, B. Riley Securities, Inc. analyst Eric Wold said in a note on Wednesday.

Shareholders are expected “to approve the conversion proposals and for the dissident lawsuit argument to become moot,” Wold said.

AMC will host the special meeting for shareholders of AMC common stock and AMC preferred equity to vote on three proposals, including to increase the number of authorized shares of common stock and to approve an amendment to undertake a reverse stock split at a ratio of one share of common stock for every 10 shares of common stock that also will permit the full conversion of all outstanding shares of series A preferred stock into shares of common stock.

The company faces a lawsuit from Allegheny County Employees’ Retirement System alleging that AMC issuing AMC preferred equity, or APE, circumvented AMC shareholders’ will to not further dilute shares, according to the Wedbush note.

“The case will be brought before a judge on April 27, and as we understand it, AMC will have to wait for the judge’s approval to effect the proposals should they pass at the shareholder meeting,” the analysts said.

Qurate, QVC decline

Qurate Retail’s 8½% senior debentures due 2029 (B3/CCC) dropped 5 points to 40¾ bid in the wake of the company’s earnings post, a market source said.

QVC’s 5.45% senior secured notes due 2034 (Ba3/B+) were down 4½ points by the close at 47¼ bid after shedding 3 points earlier in the day.

QVC is operated by West Chester, Pa.-based media company Qurate Retail, formerly known as Liberty Interactive Corp.

Qurate reported Wednesday that fourth-quarter revenue fell 13%, while full-year 2022 revenue was down 14%.

The company had a fourth-quarter loss of $51 million, improved from $215 million of losses in the fourth quarter of 2021. Qurate saw heavy full-year 2022 losses at $2.59 billion following $340 million of income in 2021.

AMC bonds up

AMC Entertainment’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) traded about ¾ point better Wednesday afternoon at 52½ bid in post-earnings release trading, a source said.

The bonds were down ½ point on Tuesday and more than 1¾ points lower on Monday.

AMC reported fourth-quarter and full-year 2022 losses after the market closed on Tuesday.

The Leawood, Kan.-based movie theater owner’s shares fell 8% to $6.57 on Wednesday.

Wedbush Securities analysts Reese and Pachter maintained a $2 12-month price target on the company’s stock in Wednesday’s note.

AMC is majority owned by Wanda Group, a privately held Chinese conglomerate.

Distressed returns pared

S&P U.S. High Yield Corporate Distressed Bond index one-day returns slipped to 0.32% on Tuesday from 0.54% at the start of the week.

Month-to-date returns improved on Tuesday to 1.03% from 0.72% on Monday.

Quarterly and year-to-date total returns also were higher on Tuesday at 9.11% from 8.76% in Monday’s session.

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