FirstEnergy Solutions notes mixed on retail power business sale; Murray Energy notes improve

By James McCandless

San Antonio, July 10 – Traders saw catalysts driving trading in individual names on Tuesday as the overall market saw activity slowly climb.

FirstEnergy Solutions Corp. notes were mixed as the company enters a definitive agreement to sell its retail power business to Exelon Corp.

Murray Energy Corp. issues gained. The company recently announced that it had completed its debt restructuring process.

PetSmart, Inc. paper was mixed. The market is waiting for developments in a recent dispute between the company and its creditors.

Frontier Communications Corp. notes were mixed. Chief financial officer Perley McBride has announced his resignation.

Intelsat SA issues were mixed. The company has announced a buyback program for its 7¾% notes due 2021.

American Tire Distributors paper rose. Bridgestone recently ended its commercial tire distribution deal with the company.

FirstEnergy mixed

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw notes end mixed as reports confirmed that it has agreed to sell its retail power business to Constellation, a subsidiary of Chicago-based utilities holding name Exelon for $140 million. The sale is subject to approval in bankruptcy court.

“Those notes have come back into focus today,” a trader said.

The 6.05% notes due 2021 lost about 1¾ points to close at around 49 bid. The 6.8% bonds due 2039 declined about 1 point to close at 49 bid. The 6.85% bonds due 2034 were level at 48¾ bid.

Murray energy rises

St. Clairsville, Ohio-based coal producer Murray Energy issues improved, traders confirmed. The company announced last week that it had completed its debt restructuring. It has exchanged 71% of its 11¼% senior secured notes due 2021 and 97% of its term loans.

The company issued $495.4 million of new notes and also entered into an amended and restated asset-based lending credit agreement that includes a $135 million revolver and a $90 million last-out term loan, both due in 2021.

The company is awaiting a decision from the Department on Energy on whether it will provide assistance to at-risk coal and nuclear power plants.

The 11¼% notes due 2021 jumped up 3½ points to close at 66 bid.

PetSmart mixed

Phoenix-based pet supplies retailer PetSmart paper was mixed, market sources confirmed. The company recently filed a lawsuit against Citigroup for allegedly breaching contract as a loan agent by not cooperating with a recent equity transfer of 36.5% of e-commerce segment Chewy.com. The company and its creditors are at odds over the transfer with both sides hiring advisers and legal representation.

“I think Citi could see what was going on and didn’t want to be involved anymore,” a trader said. “But that question of whether they were obligated to cooperate while scaling back involvement is the issue.”

The 5 7/8% paper due 2025 rose about ¼ point to close at around 78½ bid. The 8 7/8% paper due 2025 fell 1 point to close at 67¾ bid.

On Monday, the 5 7/8% paper gained about ¼ point and the 8 7/8% paper rose 2¼ points.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications notes were mixed again. The company recently announced the resignation of CFO Perley McBride.

The 7 5/8% notes due 2024 shaved off ¼ point to close at 68½ bid. The 10½% notes due 2022 were level at around 90¼ bid. The 11% notes due 2025 were level at 80 bid.

On Monday, the 7 5/8% notes lost about ¼ point, the 10½% notes gained about 1¼ points and the 11% notes rose about 1¾ points.

Luxembourg-based satellite communications company Intelsat, another distressed telecom name, saw issues mixed. Recently, the company began a buyback program for its Intelsat (Luxembourg) SA 7¾% senior notes due 2021.

The 7¾% notes due 2021 rose about ¼ point to close at around 94 bid. The 8 1/8% notes due 2023 lost about ½ point to close at 81½ bid.

On Monday, the 7¾% notes rose about ¾ point and the 8 1/8% notes gained about 1 point.

Huntersville, N.C.-based tire distributor American Tire notes gained. Last Thursday, Bridgestone announced that it would stop its passenger tire distribution deal with the company.

The 10¼% notes due 2022 rose about ¼ point to close at around 25¾ bid.

On Monday, the 10¼% notes were level.

“I think as we head into summer we’re going to see more catalytic activity as opposed to broad-based activity,” a trader said. “I see a big spike coming as we head into the next earnings season.”

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