Rite Aid notes mixed after management shuffle; Halcon issues sink on poor earnings report

By James McCandless

San Antonio, March 13 –Trading in the distressed market swirled around retail and telecom names on Wednesday.

Rite Aid Corp.’s notes were mixed after the company announced several top management departures.

Sector peer Neiman Marcus Group, Inc.’s issues were also mixed.

In oil and gas, Halcon Resources Corp.’s paper sunk after posting lackluster fourth-quarter earnings results.

Oil future positivity spelled out similar results for California Resources Corp.’s, Weatherford International plc’s and EP Energy Corp.’s notes.

Away from oil, coal producer Murray Energy Corp.’s issues improved.

Elsewhere, in telecom, Frontier Communications Corp.’s paper continued to move higher as its new issue traded.

Meanwhile, Intelsat SA’s notes were also positive.

Rite Aid, Neiman mixed

Rite Aid’s notes were mixed in Wednesday’s session, traders said.

The 6 1/8% notes due 2023 fell 1 point to close at 84 bid. The 7.7% notes due 2027 picked up 3¼ points to close at 67¾ bid.

After the close on Tuesday, the Camp Hill, Pa.-based drug store chain announced that chief executive officer John Standley would be resigning from his post, but would remain in the position until a new CEO is named.

Chief financial and operating officers Darren Karst and Kermit Crawford are also leaving the company.

Concurrently, Rite Aid announced that it would be slashing 400 corporate positions.

“A version of this was bound to happen sooner or later,” a trader said. “The way they botched that Albertsons merger put them here. They’re trying to restore confidence so this is the first step.”

Dallas-based sector peer Neiman Marcus’ issues were also mixed.

The 8% notes due 2021 were level at 55½ bid. The 7 1/8% notes due 2028 shot up 7¾ points to close at 77¾ bid.

On Tuesday, the company reported total Q2 revenue of $1.39 billion, a reduction from the $1.59 billion reported at the same time last year.

Halcon sinks

Elsewhere, in energy, Halcon’s paper saw a precipitous drop, market sources said.

The 6¾% paper due 2025 sunk 13½ points to close at 60 bid.

Late Tuesday, the Houston-based independent oil and gas producer released a lackluster fourth-quarter earnings report.

It reported a 9 cent per share loss against estimates of a 10 cent per share loss.

It also posted quarterly revenue of $60.34 million, well below analyst predictions.

“Halcon got destroyed today,” a trader said.

Oil names gain

Popular oil names followed the positive trajectory set by crude futures, traders said.

Los Angeles-based producer California Resources’ notes improved.

The 6% notes due 2024 added 1½ points to close at 70¾ bid. The 8% notes due 2022 jumped 2½ points to close at 79 bid.

Baar, Switzerland-based oilfield services provider Weatherford’s issues followed the trend.

The 8¼% notes due 2023 rose ¾ point to close at 69¼ bid. The 9 7/8% notes due 2024 improved by 1 point to close at 71½ bid.

Houston-based peer EP Energy’s paper also closed better.

The 7¾% paper due 2026 tacked on ¾ point to close at 86 bid.

On Wednesday, West Texas Intermediate crude oil futures for April delivery closed $1.39 better, settling at $58.26 per barrel.

North Sea Brent crude oil futures for May delivery ended the session at $67.55 per barrel following an 88 cent increase.

Murray gains

Away from oil, Murray Energy’s notes gained, market sources said.

The 11¼% notes due 2021 picked up 4 points to close at 44 bid.

“They’ve been on the quieter side of things for the last few weeks but they’re picking up steam,” a trader said. “There’s quite a bit of talk about a distressed exchange. Creditors are already looking at the 2021 maturities and aren’t too confident.”

Frontier, Intelsat rise

Meanwhile, in telecom, Frontier’s issues ended higher, traders said.

The 11% notes due 2025 gained ½ point to close at 66¼ bid. The 10½% notes due 2022 picked up ¾ point to close at 75 bid.

The Norwalk, Conn.-based wireline communications name’s structure has been part of the focus of the distressed space this week as it priced a $1.65 billion issue of eight-year first-lien senior secured notes.

Luxembourg-based satellite operator Intelsat’s paper was also on the rise.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 edged up ¼ point to close at 91¼ bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 gained 1 point to close at 78½ bid.

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