Hercules Offshore’s loss wider than expected, bonds come in; Cliffs debt mixed; NII notes rise

By Stephanie N. Rotondo

Phoenix, Oct. 23 – The distressed bond market remained on an upward climb Thursday, but there were some names that bucked the positive trend.

Hercules Offshore Inc. released its third quarter earnings ahead of the market’s open. Though the company showed better-than-expected revenue, it posted a wider-than-expected loss.

In the mining space, Cliffs Natural Resources Inc. was mixed. The company’s debt has failed to hold on to gains earned at the end of last week and investors are looking to the company’s earnings release on Monday.

NII Holdings Inc., however, was following the day’s trend. New court filings showed that the company’s creditor committee was looking to hire legal and financial advisors, as talks regarding the company’s restructuring plan move forward.

Hercules’ earnings miss

Hercules Offshore reported third-quarter results on Thursday, beating revenue expectations, but missing on earnings per share.

The offshore oil drilling company’s debt declined on the back of the earnings.

A trader said the 11 3/8% notes fell a point to 65½, while the 7½% notes due 2021 weakened by over 2 points to 67¾.

Hercules posted a loss per share of 7 cents, over the 5 cent-loss analysts had predicted. But revenue came to $221.9 million, better than the $217.89 million estimated by analysts.

Still, revenue was down 1.5% year over year.

In the same quarter of the previous year, the company reported earnings per share of 11 cents.

Meanwhile, sector peer Paragon Offshore plc bonds were also coming down.

A trader saw both the 7¼% notes due 2024 and the 6¾% notes due 2022 falling 1½ points to close at 81.

In a related space, private oil exploration and development company Samson Investment Co.’s 9¾% notes due 2020 declined 2 points to 80¼.

Cliffs ends mixed

With earnings slated for Monday, Cliffs Natural Resources’ bonds were mixed in Thursday trading.

Investors are growing more concerned about declining iron ore prices, as well as a $6 billion non-cash asset impairment charge the company has already disclosed.

A trader said the 4 7/8% notes due 2021 closed down a quarter-point at 71, according to a trader. The 4.8% notes due 2020 were meantime up a quarter-point at 71.

The 5.9% notes due 2020 finished half a point higher at 75½.

The earnings will be released Monday and a conference call is scheduled for Tuesday.

NII firm yet again

Creditors involved in NII Holdings’ bankruptcy case are looking to hire legal and financial advisors to aid them in negotiations on a restructuring plan.

A trader said the 8 7/8% notes due 2019 improved “4 points from about a week ago,” to end at 32. The 7 5/8% notes due 2021 inched up a quarter-point to 20¼.

And, the 10% notes due 2016 finished up nearly 2 points to 31¾.

NII’s bonds have been climbing higher all week, though on no fresh news. Earlier in the week, a trader noted that the company was still in talks with creditors regarding its restructuring plan and that the gains could be based on how those are going.

In filings made Wednesday, the creditor committee asked the judge overseeing the company’s bankruptcy case to approve hiring Kramer Levin Naftalis & Frankel LLP as its legal counsel and FTI Consulting, Inc. as its financial adviser.

As legal advisor, Kramer Levin will act as the committee’s primary spokesman while assisting and advising it in any negotiations with NII and the investigation of the company’s financial standing.

FTI will meantime review all of the financial disclosures made by NII on behalf of the committee, assist it in the review of the company’s financial statements and identify potential areas for cost saving. The firm will also give advice as to the ongoing restructuring negotiations.

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