Community Health trades as it revises near-term notes; Sears active on results of private exchange

By James McCandless

San Antonio, March 21 – Traders reported another slow day in trading in the distressed debt market Wednesday.

Community Health Systems, Inc. notes were active again in a strong showing for the week. The company announced Wednesday that it intends to refinance its 2019 and 2020 bond maturities.

Issues in Sears Holdings Corp. came alive as it announced the results of a private exchange of a portion of several.

Frontier Communications Corp. continues to dominate trading in the distressed telecom sector, bolstered by recent positive news.

Intelsat SA contributed more volume in the telecom space. Mallinckrodt plc made up for some of the volume in healthcare. Amid another upswing for oil futures, Northern Oil and Gas Inc. and Ensco plc drove much of the activity in the distressed energy sector.

Community Health eyes refinancing

Franklin, Tenn.-based hospital operator Community Health Systems announced plans Wednesday to facilitate refinancing of its near-term bond maturities by revising their terms, market sources confirmed, while also repaying term loan debt with proceeds from divestitures (see related story elsewhere in this issue).

Last week, the company announced that it had hired asset management firm Lazard, Citibank and JPMorgan Chase to help manage its debt while warning shareholders about potential future asset sales.

“So far, they are making all of the moves of a company that wants to come out of the trouble they are in,” a trader said.

The 7 1/8% notes due 2020 lost about 5 points to close just below 75 bid. The 6 7/8% notes due 2022 shaved off ½ point to close at 57½ bid.

Sears active on exchange results

In what traders described as another part of the virtually impossible task of staving off bankruptcy, Hoffman Estates, Ill.-based retailer Sears announced the results of a private exchange for some notes, including a portion of its 6 5/8% senior second-lien notes and $625 million 8% senior subordinated notes due 2019 in exchange for newer debt. (see related story elsewhere in this issue).

The 6 5/8% issues due 2018 traded down about 1½ points to close near 70 bid. The 8% notes due 2029 lost about 5½ points to close at 28 bid.

Frontier trades

Norwalk, Conn.-based wireline telecom name Frontier Communications paper saw more trading Wednesday, a market source confirmed, trending positively since announcing that it would be ending its quarterly dividend to focus on debt repayment.

The 7 5/8% paper due 2024 rose about 2 points to close at 61¾ bid. The 10½% paper due 2022 picked up ½ point to close at 88 bid. The 11% paper due 2025 lost about ¼ point to close under 80½ bid.

Elsewhere in distressed telecom, Luxembourg-based satellite communications company Intelsat continued to be a volume favorite.

The Intelsat Jackson SA 5½% notes due 2023 rose ½ point to close at 81 bid. The 7¼% notes due 2020 jumped up about 1 point to close at 94¼.

Britain-based drug maker Mallinckrodt continued its run of high volume trading, having received an increased amount of attention since recently completing the $1.2 billion acquisition of Rockville, Md.-based medical applications firm Sucampo Pharmaceuticals.

The 4¾% issues due 2023 climbed about 2½ points to close just under 80¾ bid.

Oil futures continued to bounce back from recent losses as some distressed energy names were heavily traded.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas saw its 8% paper due 2020 edged up ¼ point to close at 95¼ bid.

Britain based oil driller Ensco’s 5¾% bonds due 2044 lost about ¾ point to close around 66¼ bid.

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