PetSmart gains as attempts made to calm creditors; Northern Oil declines after note exchange announced

By James McCandless

San Antonio, June 13 – Traders reported another low-volume day in the distressed debt market Wednesday with pockets of activity in popular names.

PetSmart, Inc. notes traded up as the company tries to quell creditor worries about its recent transfer of 36.5% of its stake in e-commerce arm Chewy.com out of the hands of creditors.

Northern Oil and Gas, Inc. issues fell a day after the company announced an exchange of a portion of its 8% senior notes due 2020 for stock.

Intelsat SA paper fell. On Monday, the company announced a buyback for its 7¾% notes due 2021, using proceeds from common stock and convertible offerings.

Frontier Communications Corp. notes were up. A recent auction for its Florida assets failed to produce a substantive bid. Community Choice Financial Inc. issues traded up. On Monday, the company reached a debt restructuring agreement with its largest noteholder. Mallinckrodt plc paper declined.

PetSmart gains

Phoenix-based pet supplies retailer PetSmart notes rose, traders confirmed, as the company estimates the value of e-commerce segment Chewy.com at $4.45 billion in a bid to assuage creditor concerns after it transferred 36.5% of its stake in a private equity firm and an unrestricted subsidiary.

“The valuation is more than expected,” a trader said. “And some of the bondholders are happy, by the looks of how the notes traded.”

Last week, the company hired investment bank Houlihan Lokey, Inc. as restructuring advisers for its $8 billion in debt.

The 5 7/8% notes due 2025 gained about 1½ points to close at 76½ bid. The 8 7/8% notes due 2025 rose about 3½ points to close at 62 bid.

On Tuesday, 5 7/8% notes edged up ¼ point and the 8 7/8% notes rose about ¼ point.

Northern Oil loses

Minnetonka, Minn.-based independent oil and gas company Northern Oil and Gas issues declined, market sources confirmed. On Tuesday, the company announced it had exchanged of $20.95 million of its 8% senior notes due 2020 for stock in order to reduce debt. The exchanges were carried out in two separately negotiated agreements with institutional holders.

“Those have been off from that high,” a trader said.

The 8% notes due 2020 lost about ½ point to close at around 97½ bid.

On Tuesday, the 8% notes gained about 1½ points.

Intelsat falls

Luxembourg-based satellite communications company Intelsat paper fell, traders confirmed. On Monday, the company announced a buyback for its Intelsat (Luxembourg) SA 7¾% senior notes due 2021. The company intends to purchase the notes using proceeds from an offering of $200 million of common shares and $300 million of convertible senior notes due 2025.

The 7¾% paper due 2021 shaved off 1¾ points to close at 90½ bid. The 8 1/8% paper due 2023 lost 5 points to close at around 78 bid.

On Tuesday, the 7¾% paper declined 2¾ points and the 8 1/8% paper lost about ½ point.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications notes gained. The company recently held a failed auction for its Florida assets.

The 7 5/8% notes due 2024 jumped up 5½ points to close at 75 bid. The 10½% notes due 2022 rose about ¾ point to close at around 92¾ bid. The 11% notes due 2025 gained about 1 point to close at 84 bid.

Dublin, Ohio-based financial services company Community Choice issues improved. On Tuesday, the company reached a debt restructuring agreement with largest holder of its existing notes.

The 10¾% notes due 2019 rose 2¼ points to close at 78¼ bid.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 fall about 2½ points to close at 81¼ bid.

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