AMC notes weaken as lenders push for bankruptcy; American Airlines eyed in travel space

By James McCandless

San Antonio, Dec. 14 – As the week in the distressed debt space began, entertainment and travel names remained front and center.

AMC Entertainment Holdings, Inc.’s notes weakened amid reports that its lenders are pushing for a bankruptcy filing.

Sector peer Cinemark Holdings, Inc.’s issues varied.

Meanwhile, American Airlines Group Inc.’s paper diverged in direction amid news of the start of vaccine distribution in the United States.

Air carrier United Airlines Holdings, Inc.’s notes drifted downward.

On a day of sharper oil futures, Occidental Petroleum Corp.’s, Antero Resources Corp.’s and Callon Petroleum Co.’s issues yielded mixed results.

Propane distributor Ferrellgas Partners, LP’s paper drifted apart in the wake of news of an upcoming bankruptcy filing.

In the manufacturing space, United States Steel Corp.’s notes were under pressure.

AMC trades lower

AMC’s notes weakened as a new week got underway, traders said.

The 12% notes due 2026 shaved off ½ point to close at 24 bid. The 10½% notes due 2025 declined by 2 points to close at 69¼ bid.

Early Monday, reports indicated that the Leawood, Kan.-based movie theater chain is being urged by some of its lenders to file for Chapter 11 bankruptcy.

According to that reports, first-lien lenders are leading the charge on the effort while the company has said that second-lien holders are supporting its ongoing efforts to drum up capital.

Also on Monday, AMC and Plano, Tex.-based counterpart Cinemark both denied reports claiming that the two were considering a merger.

After both companies issued similar statements, their respective structures came under more pressure as the trading day went on.

“AMC is going to be stumbling for a while,” a trader said. “I think the best-case scenario is six months until we see a partial recovery.”

Compounding that pressure was AMC’s Friday announcement that it had received a commitment for $100 million in cash from Mudrick Capital Management in first-lien financing.

Mudrick will also convert $100 million of existing company debt into common stock, which will be issued to the public.

Sector peer Cinemark’s issues varied.

The 5 1/8% senior notes due 2022 held level to close at 96 bid. The 4 7/8% senior notes due 2023 rose ½ point to close at 93½ bid.

Airlines in focus

Meanwhile, American Airlines’ paper diverged in direction, market sources said.

The 5% senior notes due 2022 closed level at 87 bid. The 11¾% senior paper due 2025 was docked ¼ point to close at 114¼ bid.

The relative weakness in the Fort Worth-based commercial airline’s structure came despite headlines surrounding the beginnings of coronavirus vaccine distribution and administration in the United States over the weekend and into Monday.

Despite the positive news about vaccines in recent weeks, analysts have said that it could take the industry a year or more to recover from this year.

On Friday, a Deutsche Bank analyst downgraded the company’s common stock to hold from buy.

In a note, the analyst said that the sector airlines could be in for “the greatest demand recovery since World War II in 2021,” though posited that investors have already paid for two years of earnings growth.

An estimated $17 billion in federal stimulus for airlines remains stuck in negotiations.

Chicago-based carrier United Airlines’ notes drifted downward.

The 5% senior notes due 2024 dipped ¼ point to close at 99½ bid. The 4¼% senior notes due 2022 gave up ½ point to close at 100 bid.

Oil names mixed

As oil futures were sharper on Monday, distressed energy tranches yielded mixed results, traders said.

West Texas Intermediate crude oil futures for January delivery reached up 42 cents to finish at $46.99 per barrel.

North Sea Brent crude oil futures for February delivery ended at $50.29 per barrel after a 32 cent pickup.

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

The 2.9% senior notes due 2024 shed ¼ point to close at 95½ bid. The 2.7% senior notes due 2022 closed level at 100¾ bid.

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

The 5% senior notes due 2025 were lifted 3½ points to close at 90¼ bid. The 5 5/8% senior paper due 2023 trailed by ¼ point to close at 95¼ bid.

Houston-based E&P company Callon Petroleum’s notes were flat to higher.

The 6 1/8% senior notes due 2024 improved by 1 point to close at 55½ bid. The 6 3/8% senior notes due 2026 closed unchanged at 51¼ bid.

Ferrellgas drifts apart

Elsewhere, propane name Ferrellgas’ issues drifted apart, market sources said.

The 6¾% senior notes due 2023 added 2 points to close at 97 bid. The 10% notes due 2025 ended the session flat at 110½ bid.

Late last week, the Overland Park, Kan.-based propane distributor and subsidiary Ferrellgas Partners Finance Corp. announced plans to file pre-packaged Chapter 11 cases in the next several weeks to implement a restructuring plan.

The plan, which has the support of a majority of noteholders, would eliminate the debt of the company and the subsidiary, refinance roughly $1.5 billion of debt of Ferrellgas, LP and raise over $1 billion of new capital.

U.S. Steel lower

In the manufacturing space, U.S. Steel’s paper was under pressure, traders said.

The 6.65% senior notes due 2037 lost 1 point to close at 85¾ bid. The 6¼% senior notes due 2026 slipped ½ point to close at 92¼ bid.

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