Revlon notes eyed after warning to bondholders; AMC trades actively amid stock sale

By James McCandless

San Antonio, Oct. 20 – Distressed debt trading focused on retail and entertainment sector issuers on Tuesday.

Revlon, Inc.’s notes varied in direction after warning bondholders that repayment may be at risk if creditors do not participate in an exchange.

Sector peer PetSmart Inc.’s issues also diverged as the company prepared a $2.3 billion seven-year term loan.

Movie theater chain AMC Entertainment Holdings, Inc.’s paper was active yet unchanged again as the company announced a common stock sale.

Theater operator Cinemark Holdings, Inc.’s notes saw mixed movements.

Meanwhile, as oil futures improved, Occidental Petroleum Corp.’s and Antero Resources Corp.’s issues saw gains while Gulfport Energy Corp.’s paper dipped.

In the travel space, United Airlines Holdings, Inc.’s notes fell while American Airlines Group, Inc.’s issues picked up steam.

Revlon varies

Revlon’s notes varied in direction on Tuesday, traders said.

The 5¾% senior notes due 2021 declined by 2 points to close at 28 bid. The 6¼% senior notes due 2024 held level to close at 10 bid.

On Monday, the New York-based cosmetics producer warned bondholders in a letter that repayment of its notes is at risk.

In the letter, chief executive officer Debra Perelman said that if creditors do not participate in the exchange offer, “repayment of your notes will be at risk.”

The company wants to buy back $345 million of 5¾% bonds due next year at a discount.

Last week, Revlon extended the early tender deadline of the offer by subsidiary Revlon Consumer Products Corp. to exchange the 5¾% notes, Prospect News reported.

The tranches are to be exchanged for cash or a combination of cash and ABL FILO term loans and new BrandCo second-lien term loans.

The early tender deadline and withdrawal deadline was extended to 5 p.m. ET on Oct. 22 from 5 p.m. ET on Oct. 13.

PetSmart notes diverge

Sector peer PetSmart’s issues also diverged, market sources said.

The 8 7/8% senior notes due 2025 closed level at 104½ bid. The 5 7/8% senior notes due 2025 added ½ point to close at 103 bid.

After the close on Monday, the Phoenix-based pet supplies chain prepared to launch a $2.3 billion seven-year term loan B, Prospect News reported.

Price talk on the term loan B is Libor plus 400 basis points to 425 bps with a 0.75% Libor floor and an original issue discount of 99.

Following that, Moody’s Investors Service assigned the proposed offering a B1 rating, saying that the company’s operating performance has exceeded expectations.

The agency also applied a positive outlook.

AMC unchanged

Movie theater chain AMC’s paper was active yet rigid, traders said.

The 10½% notes due 2025, while pushing up to 61¾ bid during the day’s activity, closed unchanged at 61½ bid.

Early Tuesday, the Leawood, Kan.-based movie theater name announced that it would sell up to 15 million shares of its common stock.

The company also warned investors that if it does not raise sufficient capital or restructure by the end of the year it would be in danger of filing for bankruptcy.

According to an analyst note from MKM Partners, AMC has a burn rate of $100 million per month.

On Monday, AMC announced that it would reopen locations in New York state this week.

After receiving guidance from governor Andrew Cuomo, the company plans to bring the number of openings to 530.

Despite systematically reopening theaters that were initially shut by the coronavirus pandemic, demand has remained low.

Plano, Tex.-based operator Cinemark’s notes saw mixed movements.

The 5 1/8% senior notes due 2022 shaved off ¼ point to close at 87½ bid. The 4 7/8% senior notes due 2023 tacked on ¼ point to close at 84¼ bid.

Oil futures up

Meanwhile, as oil futures improved, distressed energy names largely trended the same way, market sources said.

West Texas Intermediate crude oil futures for December delivery shot up 64 cents to cap the day at $41.70 per barrel.

North Sea Brent crude oil futures for December delivery ended the session at $43.16 per barrel after a 54 cent pickup.

Houston-based independent oil and gas producer Occidental Petroleum’s issues followed futures upward.

The 2.9% senior notes due 2024 moved up 1¼ points to close at 88 bid. The 2.7% senior notes due 2022 tacked on ¼ point to close at 95¾ bid.

Denver-based producer Antero Resources’ paper also joined the trend.

The 5 1/8% senior notes due 2022 pushed up ¼ point to close at 90¾ bid. The 5% senior notes due 2025 picked up ¼ point to close at 69¼ bid.

Oklahoma City-based E&P company Gulfport Energy’s notes dipped.

The 6 5/8% senior notes due 2023 drifted down 1½ points to close at 59½ bid. The 6 3/8% senior notes due 2026 shed ¼ point to close at 58¼ bid.

Airlines active

In the travel space, United Airlines’ issues fell, traders said.

The 5% senior notes due 2024 declined 2 points to close at 86½ bid. The 4¼% senior notes due 2022 lost 1 point to close at 93 bid.

The industry, including the Chicago-based carrier, continues to see more attention as the federal government remains locked in negotiations over $25 billion in payroll aid.

The first round of $25 billion expired at the beginning of October, leading companies to issue thousands of furloughs to staff.

Fort Worth-based commercial airline American Airlines’ paper edged upward.

The 5% senior paper due 2022 garnered ¼ point to close at 69¼ bid. The 11¾% senior notes due 2025 added ½ point to close at 99¾ bid.

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