AMC paper gains in heavy secondary trading; CommScope notes decline; Enviva plunges

By Cristal Cody

Tupelo, Miss., Nov. 9 – AMC Entertainment Holdings, Inc.’s bonds climbed in heavy post-earnings trading on Thursday, while its stock slid after the issuer filed a prospectus at the start of the day to offer up to $350 million of class A common stock.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) jumped 2½ points in secondary action that topped $51 million.

The move theater owner reported after the market closed Wednesday better-than-expected third-quarter income and revenue.

“With the reported resolution of the SAG-AFTRA strike Wednesday evening, we would expect improved clarity around the 2024+ film slate in the coming weeks and increased confidence in AMC’s ability to push through any slate shortfalls given the strengthened balance sheet,” B. Riley Securities, Inc. analyst Eric Wold said in a note Thursday. “We maintain our Neutral rating and $15 PT.”

CommScope Holding Co., Inc.’s paper dropped as secondary trading ramped up in the name over the day.

CommScope’s 6% senior notes due 2025 (Caa1/CCC+) fell 1 point on $29 million of paper changing hands Thursday.

One of the day’s most newly distressed names was Enviva Partners, LP after the company posted third-quarter losses, a shake-up in leadership and withdrew its guidance for the year.

Enviva’s 6½% senior notes due 2026 (B3/B-) plunged 31¾ points on more than $60 million of bonds traded.

The company’s stock (NYSE: EVA) dove nearly 80%.

Risk-off tone climbed with stock indices down across the board and Treasury yields up 10 basis points to 12 bps on Thursday.

The S&P 500 index dropped 0.81%, with the iShares iBoxx High Yield Corporate Bond ETF down 46 cents, or 0.62%, to $73.70.

The benchmark 10-year Treasury note yield jumped 10 bps to 4.63%.

The CBOE Volatility index rose 5.81% to 15.29.

AMC higher

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) went out 2½ points better on Thursday at 81½ bid on $51.3 million of trading, a source said.

The issue added nearly 2½ points on more than $11 million of volume in the prior session.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) edged up more than 1/8 point to around 71½ bid on $16.2 million of notes traded Thursday.

On Wednesday, the bonds rose over ¾ point on $3 million of secondary activity.

Some of AMC’s ricks includes its “significant debt balance,” Wold notes.

“With a significant debt balance and a number of debt tranches maturing in the coming years, the company may not have the liquidity to push through the industry recovery without seeking additional capital at terms that may not be attractive to the company,” according to the note Thursday.

AMC reported after the market closed Wednesday strong third-quarter revenue and positive income after heavy losses in 2022.

The company said in the prospectus filed Thursday that its stock this year has ranged from an intraday low of $7.05 a share on Sept. 11 to an intraday high of $85.30 on Feb. 28 and warned investors against investing “unless you are prepared to incur the risk of losing all or a substantial portion of your investment.”

In August, the company conducted a reverse stock split.

The Leawood, Kan.-based movie theater owner’s stock (NYSE: AMC) closed down 13.68% to $8.71.

CommScope declines

CommScope Technologies LLC’s 6% senior notes due 2025 (Caa1/CCC+) fell 1 point to head out at 74½ bid on $29 million of paper changing hands Thursday, a source said.

CommScope, Inc.’s 8¼% senior notes due 2027 (Caa1/CCC+) were flat at 46 bid in light trading totaling $3 million.

The 5% senior notes due 2027 (Caa1/CCC+) declined about ½ point to 37½ bid also on $3 million of volume.

The Hickory, N.C.-based network infrastructure manufacturer reported in the prior week that it expects preliminary third-quarter losses and adjusted its 2023 EBITDA forecast downward.

Shares (Nasdaq: COMM) closed flat at $1.57.

Enviva sinks

Enviva Partners’ 6½% senior notes due 2026 (B3/B-) plunged 31¾ points to hit 32½ bid on Thursday on $60.63 million of reported bonds traded, a source said.

The yield was 72.71%.

The bonds earlier were seen down 32¼ points at 32 bid and a 73.78% yield on $56.6 million of trading during the session.

Enviva reported Thursday a third-quarter loss of $85.2 million, 67% higher than the loss of $18.3 million in the same period last year. Revenue declined 5.1% in the quarter.

The company also announced it has changed its leadership positions and appointed a new interim chief executive officer, as well as engaged advisers for a review of alternatives to strengthen its capital structure, improve liquidity, address contractual obligations and increase long-term profits.

Enviva said it is evaluating potential alternatives to maintain its compliance with the covenants and restrictions under its senior secured credit facility.

The Bethesda, Md.-based industrial wood pellets manufacturer withdrew its previous guidance for 2023 and said it now expects “significantly higher” net losses for the full year and possibly weaker fourth-quarter results since “higher spot prices have not materialized.”

The company’s stock (NYSE: EVA) plummeted 77.86% to 85 cents on Thursday.

Distressed returns soften

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns softened to minus 0.07% on Wednesday from 0.36% on Tuesday but remained up from minus 0.21% on Monday.

Month-to-date total returns were 1.21% midweek, compared to 1.28% on Tuesday and 0.92% at the start of the week.

Year-to-date distressed total returns were 11.85% on Wednesday versus 11.92% on Tuesday and 11.52% on Monday.

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