PHI notes improve on news of cash tender offer; Murray Energy issues gain despite ratings downgrade

By James McCandless

San Antonio, June 15 – The end of the week in the distressed debt market saw newsworthy names trading, with market sources reporting a drop-off in other activity after midday on Friday.

PHI, Inc. notes traded up after the company announced a cash tender offer for the $500 million in outstanding 5.25% senior notes due 2019.

Murray Energy Corp. issues gained despite the company’s ratings being downgraded. On Thursday, an agreement was reached with 95% of its lenders to partake in a planned debt restructuring.

PetSmart, Inc. paper was active but level as lenders try to protect their collateral from any potential asset transfer. During this week, the company shifted a portion of its e-commerce arm to private hands.

Intelsat SA notes were mixed. The company announced Monday that it would buy back its 7¾% notes due 2021. Frontier Communications Corp. issues were mixed on the heels of a failed auction for its Florida assets. Mallinckrodt plc paper declined.

PHI rises

Lafayette, La.-based offshore energy transportation name PHI notes gained, traders reported, after the company announced a cash tender offer to purchase any and all of its $500 million in outstanding 5¼% senior notes due 2019. The offer expires on July 17.

The company plans to purchase the notes using the net proceeds from a private placement of up to $500 million in five-year senior secured notes.

“They were the ones that got the most attention today,” a trader said.

The 5¼% notes due 2019 rose 2¾ points to close at 98½ bid.

Murray rises

St. Clairsville, Ohio-based coal producer Murray Energy issues improved, market sources confirmed, despite a ratings downgrade from Standard and Poor’s. The company received downgrades in its corporate credit rating, issue-level rating, recovery rating and assigned ratings to new term loans (see related story elsewhere in this issue).

Late Thursday, reports confirmed that the company had received commitments from lenders of 95% of its outstanding term loans to participate in its planned debt restructuring. The plan includes refinancing its 11¼% senior secured notes due 2021 and its term loans.

The 11¼% notes due 2021 gained about 1 point to close at around 61 bid.

PetSmart level

Phoenix-based pet supplies retailer PetSmart paper was active but level as reports confirmed that various lenders are gearing up to protect their collateral after the company shifted 36.5% of its stake in profitable e-commerce segment Chewy.com out of their hands and into private entities.

“There are a lot of moving parts to this,” a trader said. “People just want to make sure things are fair, but not everyone wants the same thing. It ranges from restructure to locking down Chewy to even bringing some of it back.”

In an attempt to calm creditors, the company said that it values the site at $4.45 billion.

The 5 7/8% paper due 2025 was level at about 77 bid. The 8 7/8% paper due 2025 was level at 62¾ bid.

On Thursday, the 5 7/8% paper rose about ½ point and the 8 7/8% paper picked up about 1 point.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes were mixed. On Monday, the company announced that it would buy back its Intelsat (Luxembourg) SA 7¾% senior notes due 2021.

The 7¾% notes due 2021 traded up 1 point to close at 91 bid. The 8 7/8% notes due 2023 were level at around 79 bid.

Norwalk, Conn.-based wireline name Frontier Communications issues were also mixed in the distressed telecom space. A recent auction failed to produce a satisfactory bid for its Florida assets.

The 7 5/8% notes due 2024 dropped 1 point to close at 74½ bid. The 10½% notes due 2022 lost about ¼ point to close at around 92¾ bid. The 11% notes due 2025 picked up about ½ point to close at around 84½ bid.

Britain-based drug maker Mallinckrodt’s 4¾% paper due 2023 shaved off about ¾ point to close at around 81¾ bid.

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