AMC paper soft ahead of stock split; Rite Aid moves lower; Cano Health bonds pressured

By Cristal Cody

Tupelo, Miss., Aug. 21 – AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) saw strong trading on Monday after a court denied an objector’s request to halt the company’s plans later this week for its preferred stock.

The bonds were one of the day’s most active distressed issues trading on nearly $13 million of volume.

The issue has softened less than 1 point from a week ago.

AMC’s stock sank over 23% in heavy trading.

Stocks were mixed on Monday but showing signs of a rebound after staying depressed last week.

The Nasdaq, down more than 3% last week, closed up 1.56% on Monday.

The iShares iBoxx High Yield Corporate Bond ETF fell 2 cents, or 0.03%, to $74.07.

The CBOE Volatility index retreated 0.97% to 17.13.

Rite Aid Corp.’s 8% senior secured notes due 2026 (Caa3/CCC-/B) dropped 1 1/8 points in mostly light trading on Monday.

The notes were among the day’s biggest losers in the secondary market, a source said.

Rite Aid’s bonds have given back more than 2 points from where they traded last week.

In the distressed health care space, Cano Health LLC’s 6¼% senior notes due 2028 (Ca/C) improved less than ¼ point over the session in thin trading following a downgrade from Moody’s Investors Service.

The bonds went out Friday about 7 points lower on the week as the company looks for a buyer for the business or its assets.

AMC lower on week

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) were quoted at 76 1/8 bid on $12.8 million of trading on Monday, a source said.

The yield was 21.77%.

The issue has softened from trading at 77 bid in the same session last week after the company posted its post-court ruling plans for its preferred equity.

AMC intends to increase the total number of authorized shares of its class A common stock and effect a reverse stock split at a ratio of one share of class A common stock for every 10 shares of class A common stock – effective Thursday.

The reverse stock split and share increase will allow the conversion of all of AMC’s outstanding preferred equity units into shares of class A common stock.

AMC said it expects the APEs to be delisted from the New York Stock Exchange and cease trading on Friday.

The company announced in regulatory filings on Aug. 14 that the Delaware Court of Chancery approved the settlement of a shareholder lawsuit brought by Allegheny County Employees’ Retirement System over the issuance of preferred stock.

On Monday, the Delaware Chancery Court denied an interlocutory appeal filed Wednesday to halt the conversion, noting the objector “identified issues for appeal that can be decided post-closing without risking the serious harm that AMC might suffer if settlement approval is delayed.”

The Leawood, Kan.-based movie theater owner’s common stock (NYSE: AMC) slid 23.72% by the close to $3.12 in heavy trading totaling more than 112 million shares versus the average volume of less than 30 million shares.

AMC’s preferred stock (NYSE: APE) dropped 6.6% on Monday to $2.12 on more than 93 million shares traded, compared to an average trading volume of under 18 million shares.

Rite Aid paper dips

Rite Aid’s 8% senior secured notes due 2026 (Caa3/CCC-/B) dropped 1 1/8 points to head out at 54 5/8 bid on $3.4 million of volume on Monday, a source said.

The yield was 31.32%.

The issue has declined from where it traded with a 57 bid handle in the same session last week.

Last week, Rite Aid’s credit default swap spreads gapped out 4,538 basis points for the period ended Wednesday to 16,340 bps, according to a Moody’s report.

The retailer’s CDS spreads widened 1,069 bps the previous week and 1,060 bps a week earlier.

The Camp Hill, Pa.-based drugstore chain’s stock (NYSE: RAD) closed Monday down 9.58% at $1.51.

Cano Health softens

Cano Health’s 6¼% senior notes due 2028 (Ca/C) improved less than ¼ point on Monday to around the 35¼ bid area in thin trading, a source said.

The bonds went out Friday about 7 points lower on the week.

Cano Health announced when it reported second-quarter results Aug. 10 steep quarterly losses and it is pursuing and evaluating interest in a sale of the company or its assets.

The Miami-based primary care provider has started to divest its non-core assets, including plans to exit 17 medical center operations in California, New Mexico and Illinois by the fall. Also in the third quarter, Cano Health said it will cut its workforce by 17%.

The company withdrew its fiscal year 2023 guidance provided May 9.

On Monday, Moody’s downgraded Cano Health and warned there is a high probability of bankruptcy or substantial restructuring.

Cano Health, Inc.’s stock (NYSE: CANO) closed the day 17% lower at 31 cents. The stock’s 52-week high was $9.75.

Distressed returns drop

The S&P U.S. High Yield Corporate Distressed Bond index one-day total returns slid to minus 0.34% on Friday. One-day total returns were minus 0.5% on Thursday, 0.1% on Wednesday, minus 0.05% on Tuesday and 0.41% at the start of the prior week.

Month-to-date total returns declined to 1.22% on Friday from 2.04% at the start of the week.

Year-to-date distressed total returns dropped Friday to 16.34% from 16.74% in the prior session and 17.28% at the week’s start.

© 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.