J.C. Penney notes eyed after sale agreement; Transocean active as tender offer ends

By James McCandless

San Antonio, Sept. 10 – The distressed debt space entered the back half of the week reacting to shifting ground in retail and energy.

J.C. Penney Co., Inc.’s notes diverged in direction after the company came to an agreement to be sold to two mall owners.

Sector peer Nordstrom, Inc.’s issues also saw mixed activity.

Meanwhile, Transocean Ltd.’s paper varied after announcing the conclusion of an 11-series tender offer.

As oil futures were pushed downward, Occidental Petroleum Corp.’s, Antero Resources Corp.’s and SM Energy Co.’s notes moved on differing tracks.

In the travel space, American Airlines Group Inc.’s issues dipped after saying that it would seek more emergency funds from the Treasury Department.

Air carrier United Airlines Holdings, Inc.’s paper was also under water.

Elsewhere, cloud networking name GTT Communications, Inc.’s weakened.

J.C. Penney in focus

J.C. Penney’s notes diverged in direction on Thursday, traders said.

The 5 7/8% senior secured notes due 2023 dipped 7½ points to close at 30½ bid. The 7.4% senior notes due 2037 held level to close at ¾ bid.

Late Wednesday, the Plano, Tex.-based department store chain reached an agreement in principle to sell its retail and operating assets to Brookfield Property Group and Simon Property Group for $1.75 billion through a court-supervised sale process, Prospect News reported.

The company said it plans to seek approval of a disclosure statement and confirmation of a plan of reorganization in parallel with the sale process.

As part of that process, the retailer expects to execute a stalking horse asset purchase agreement, which could include the formation of a separate real estate investment trust and a property holding company.

J.C. Penney expects to complete the auction and emerge from the court-supervised process in advance of the 2020 holiday season.

“The timeline for this is relatively quick,” a trader said. “But I think Brookfield and Simon are both going to make it happen in time.”

Seattle-based sector peer Nordstrom’s issues also saw mixed activity.

The 5% senior notes due 2044 gave up ½ point to close at 69½ bid. The 4 3/8% senior notes due 2030 tacked on 1 point to close at 83 bid.

Transocean active

Meanwhile, in oil and gas, Transocean’s paper varied, market sources said.

The 7½% senior notes due 2031 closed level at 17 bid. The 6½% senior notes due 2020 rose 2½ points to close at 83¾ bid.

After the Wednesday close, the Steinhausen, Switzerland-based contract driller’s wholly owned subsidiary, Transocean Inc., announced final results of its offer to exchange 11 series of existing notes for 11½% senior guaranteed notes due 2027, Prospect News reported.

The offers expired at 5 p.m. ET on Sept. 9 with $1,514,164,000 of existing notes validly tendered.

Approximately $688 million of new 2027 senior guaranteed notes will be issued.

On Tuesday, the company extended the exchange offer after a court rejected attempts to block the offer.

Oil tranches eyed

As oil futures were pushed downward, distressed energy tranches differed, traders said.

West Texas Intermediate crude oil futures for October delivery slipped 75 cents to close at $37.30 per barrel.

North Sea Brent crude oil futures for November delivery capped the session at $40.06 per barrel after a 73 cent loss.

Houston-based independent oil and gas producer Occidental Petroleum’s notes moved on different tracks.

The 2.9% senior notes due 2024 shaved off ¼ point to close at 89¼ bid. The 2.7% senior notes due 2022 closed level at 97 bid.

Denver-based producer Antero Resources’ issues also took separate paths.

The 5 5/8% senior notes due 2023 were lifted ½ point to close at 78½ bid. The 5% senior notes due 2025 closed level at 66¾ bid.

SM Energy, another Denver-based E&P, saw its paper pull apart.

The 5 5/8% senior notes due 2025 shed ¾ point to close at 48¾ bid. The 6 1/8% senior notes due 2022 improved by 2 points to close at 80¼ bid.

Airlines dip

In the travel space, American Airlines’ notes dipped, market sources said.

The 5% senior notes due 2022 declined 1 point to close at 65 bid. The 11¾% senior notes due 2025 gave back ½ point to close at 97 bid.

During the Wednesday session, the Fort Worth-based airline said that it may seek more funds from the Treasury Department to boost its liquidity.

At a conference, chief financial officer Derek Kerr said the company could ask the federal government for more of the $25 billion in payroll protection aid that was distributed to the sector in March since some peers may not utilize their full portions.

The airline has previously warned that thousands of employees are at risk of furlough if the government does not pass a second round of aid by the time the first round expires in October.

Up to 40,000 jobs are at risk of furlough or layoff.

Chicago-based carrier United Airlines’ issues were also under water.

The 5% senior notes due 2024 declined by ½ point to close at 90½ bid. The 4¼% senior notes due 2022 fell 1½ points to close at 94 bid.

GTT weakens

Elsewhere, telecom name GTT’s paper weakened, traders said.

The 7 7/8% senior notes due 2024 lost ¼ point to close at 51 bid.

The McLean, Va.-based cloud networking services company’s paper backed off of recent gains that were sparked by Tuesday’s news of a potential asset sale worth $2 billion.

The company is in negotiations with Macquarie Group Ltd., 3i Group plc and AustralianSuper to offload its European fiber assets.

Last month, the name had garnered negative headlines after announcing a delay in the release of its second-quarter earnings report.

A filing with the Securities and Exchange Commission outlined issues in reporting telecom costs and internal control problems.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.