American Tire flat post-recapitalization agreement; Intelsat lower after subsidiary prices offering

By James McCandless

San Antonio, Sept. 6 – The distressed debt market spent another day focused on news-driven names on Thursday.

American Tire Distributors’ notes were flat but active. Reports of a recapitalization agreement late Tuesday spurred trading.

Intelsat SA’s issues fell. On Wednesday, a subsidiary priced a $2 billion offering of six-year senior notes.

Sanchez Energy Corp. paper declined, as traders remarked on its increased popularity in the distressed energy space.

Frontier Communications Corp.’s notes were mixed. The company recently reported disappointing second-quarter numbers.

Digicel Group Ltd.’s issues rose. The company announced a note exchange last Friday, leading to a ratings downgrade.

Mallinckrodt plc paper fell in the medical space.

American Tire level

Huntersville, N.C.-based tire distributor American Tire’s notes were level despite maintaining a high volume, traders said. On Tuesday, the company announced that it had reached an agreement with 70% of its creditors to convert their debt into a 95% stake of its restructured common equity. The agreement would slash the company’s debt by $1.1 billion. It is also seeking to extend the maturity of its revolving credit facilities and term loan.

On Wednesday, Moody’s Investors Service downgraded the company’s probability of default rating and senior subordinated notes rating. Standard & Poor’s lowered its long-term issuer credit rating and issue ratings on its senior subordinated notes.

The 10¼% notes due 2022 were level at around 29¼ bid.

On Wednesday, the 10¼% notes rose about ¼ point.

Intelsat down

Luxembourg-based satellite communications company Intelsat’s issues fell, market sources said. On Wednesday, subsidiary Intelsat Jackson Holdings SA priced an offering of $2.25 billion of six-year senior notes. The company has a concurrent plan to hold a tender offer for its 7¼% senior notes due 2020.

Recently, subsidiary Intelsat Connect Finance SA priced a $1.25 billion offering of senior notes due 2023.

The Intelsat Jackson 5½% notes due 2023 lost ½ point to close at 91¼ bid. The Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 shaved off about ½ point to close at 86½ bid.

On Wednesday, the 5½% notes rose about ½ point and the 8 1/8% notes added about ½ point.

Sanchez off

Houston-based independent oil and gas producer Sanchez Energy paper fell, traders said, noting that in recent months the name has become an increasingly popular distressed energy play. A recent second-quarter earnings report showed a 38 cents per share loss, missing analyst estimates of a 5 cents per share loss.

“Recognition on that name just keeps rising,” a trader said. “There was a bit of a flashpoint around their second-quarter report, and that level of trading has pretty much been sustained since. They have some structural problems that make it pretty appealing.”

The 6 1/8% notes due 2023 lost about 2½ points to close at 53½ bid.

On Wednesday, the 6 1/8% notes picked up about 1 point.

Volume names trade

Norwalk, Conn.-based wireline communications name Frontier Communications’ notes were mixed in distressed telecom trading.

In response to a negative second-quarter earnings report, Standard & Poor’s downgraded its issuer credit rating, senior unsecured debt rating and affirmed a negative outlook.

The 7 5/8% notes due 2024 gained about ¼ point to close at around 62½ bid. The 10½% notes due 2022 were level at 87 bid. The 11% notes due 2025 traded up about ¾ point to close at 76¼ bid.

On Wednesday, the 7 5/8% notes fell about ¾ point, the 10½% notes lost about ¾ point and the 11% notes traded down about ¾ point.

Bermuda-based mobile phone network provider Digicel’s issues improved. Last Friday, the company announced an exchange offer for any and all of its outstanding $2 billion 8¼% notes due 2020 and any and all of its outstanding $1 billion 7 1/8% notes due 2022 for new notes to be issued by its subsidiaries.

The move triggered corporate and issue-level ratings downgrades from Moody’s Investors Service and Fitch Ratings.

The 6% notes due 2021 jumped up 2¾ points to close at 91¾ bid. The 7 1/8% notes due 2022 rose 3½ points to close at 60 bid.

On Wednesday, the 6% notes lost ½ point and the 7 1/8% notes rose 1½ points.

Staines-upon-Thames, U.K.-based drug maker Mallinckrodt paper declined.

The 4¾% notes due 2023 fell about ¼ point to close at around 87¼ bid.

On Wednesday, the 4¾% notes rose about 1 point.

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