PHI notes drop after bankruptcy filing; EP Energy issues crater after earnings report

By James McCandless

San Antonio, March 15 – To cap off the week, energy names were the focus of the Friday distressed session.

PHI, Inc.’s notes dropped after the company filed for Chapter 11 bankruptcy as some of its debt matured.

Sector peer Bristow Group Inc.’s issues were also negative.

Elsewhere in energy, EP Energy Corp.’s paper cratered after reporting a loss for the fourth-quarter.

Little movement in oil futures led to non-uniform trading as California Resources Corp.’s notes closed mixed, Denbury Resources Inc.’s issues declined and Halcon Resources Corp.’s paper rose.

Meanwhile, MDC Partners Inc.’s notes were pushing higher after reporting earnings and the completion of a chief executive officer search.

In healthcare, Endo International plc and Mallinckrodt plc’s issues were better.

PHI drops

PHI’s notes dropped in the Friday session, traders said.

The 5¼% notes due 2019 fell 2½ points to close at 57½ bid.

Early Friday, the Lafayette, La.-based offshore transportation company filed for Chapter 11 bankruptcy.

The filing came after it failed to address the $500 million outstanding of the 5¼% notes that matured Friday.

The company said that it plans to exit bankruptcy in summer 2019 with a sustainable debt structure and is holding ongoing discussions with creditors to reach that goal.

Following the news, S&P Global Ratings lowered the company’s issuer credit rating and senior unsecured issue-level rating.

Fitch downgraded its issuer default rating and senior unsecured debt ratings.

The company’s paper had been under pressure in recent months after PHI terminated a tender offer for the outstanding notes in October.

“From what management has said, they seem to be confident that they’ll get through this all right,” a trader said. “But this sector is in the dumps.”

Houston-based sector peer Bristow’s issues were also negative.

The 6¼% notes due 2022 lost 5 points to close at 18½ bid.

EP Energy craters

Meanwhile, EP Energy’s paper saw a precipitous drop, market sources said.

The 8% paper due 2024 cratered 11 points to close at 54½ bid. The 8% paper due 2025 lost 13½ points to close at 27½ bid.

After the close on Thursday, the Houston-based independent oil and gas producer released its fourth-quarter earnings report.

The company posted a loss of 13 cents per share, matching analyst predictions.

It beat revenue estimates, however, with $479 million for the quarter.

Also reported was a $1.1 billion non-cash impairment in its Permian Basin assets.

Oil mixed

Other distressed energy tranches were mixed in direction as crude futures saw a slight decline, traders said.

Los Angeles-based producer California Resources’ notes ended mixed.

The 6% notes due 2024 picked up 4½ points to close at 69½ bid. The 8% notes due 2022 shaved off 1 point to close at 78 bid.

Houston-based sector peer Denbury’s issues declined.

The 7½% notes due 2024 lost 1½ points to close at 86½ bid. The 5½% notes due 2022 fell 1½ points to close at 75¼ bid.

Houston-based producer Halcon’s paper ended the session better.

The 6¾% paper due 2025 added 1¾ points to close at 53½ bid.

At the end of the week, West Texas Intermediate crude oil futures for April delivery lost 9 cents to finish at $58.52 per barrel.

North Sea Brent crude oil futures for May delivery closed on Friday at $67.16 per barrel after declining 7 cents.

MDC up

Elsewhere, MDC Partners’ notes sustained a positive track, market sources said.

The 6½% notes due 2024 gained 2¾ points to close at 84 bid.

On Friday morning, the New York-based marketing name issued its fourth-quarter earnings report, posting a loss of $1.48 per share.

Late Thursday, the company announced that Stagwell Group had purchased a minority stake in the name for $100 million and its founder would be appointed CEO of MDC Partners.

Endo, Mallinckrodt better

In the pharmaceutical space, Endo’s issues were climbing, traders said.

The 5 3/8% notes due 2023 tacked on ¼ point to close at 84 bid.

The Dublin-based drug maker saw heightened attention after announcing a series of debt refinancing transactions on Thursday.

At the crux of its plans is a $1.5 billion issue of eight-year senior secured notes.

Staines-Upon-Thames, U.K.-based sector peer Mallinckrodt’s paper was also gaining.

The 4¾% paper due 2023 jumped 2 points to close at 80½ bid.

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