Rite Aid notes eyed after earnings, guidance released; AMC lower in entertainment space

By James McCandless

San Antonio, Sept. 24 – Retail and entertainment names were the focus of the Thursday distressed debt session.

Rite Aid Corp.’s notes varied after the company released its second-quarter earnings report and guidance for the rest of the year.

Sector peer Nordstrom, Inc.’s issues spent the day in decline.

Theater chain AMC Entertainment Holdings, Inc.’s paper ended lower after the company filed plans to sell more common stock.

While there was a positive day for oil futures, Occidental Petroleum Corp.’s and Valaris plc’s notes diverged in direction while Antero Resources Corp.’s issues weakened.

Meanwhile, property owner Uniti Group Inc.’s paper drifted apart in the wake of a settlement taking effect between it and large customer Windstream Holdings Inc.

Mall name CBL & Associates Properties, Inc.’s notes saw mixed results.

Aircraft and railcar manufacturer Bombardier, Inc.’s issues were seen under pressure.

Rite Aid trades mixed

Rite Aid’s notes varied by the end of the day’s activity, traders said.

The 7½% senior notes due 2025 shaved off ½ point to close at 99 bid. The 8% notes due 2026 gained ½ point to close at 101 bid.

Before the market opened on Thursday, the Camp Hill, Pa.-based drug store chain reported better-than-expected earnings for the second quarter.

The company reported earnings per share of 25 cents, higher than what analysts were expecting at an 11 cents per share profit.

Revenues also outpaced predictions at $5.98 billion.

Despite this, the structure weakened due to the company’s guidance for the rest of the year.

“I think people were more focused on what’s coming,” a trader said. “The market was focused on what’s under the topline.”

As part of what it expects for the rest of 2020, Rite Aid projected a GAAP net loss of between $190 million and $140 million and an adjusted net income range from a profit of $0.09 per share to as low as a loss of $0.67 per share.

Seattle-based sector peer Nordstrom’s issues spent the day in decline.

The 5% senior notes due 2044 fell ½ point to close at 71 bid.

AMC lower

Theater chain AMC’s paper ended lower, market sources said.

The 10½% notes due 2026 dived 8 points to close at 75 bid. The 12% paper due 2026 lost 2½ points to close at 27 bid.

On Thursday morning, the Leawood, Kan.-based movie theater operator announced in a Securities and Exchange Commission filing that it would start an at-the-market offering for 15 million shares of its common stock.

The company entered an agreement to sell the shares through Citigroup and Goldman Sachs, saying it will use the shares for general corporate purposes.

Over the last month, AMC’s paper has seen heightened attention as the company executed a plan to reopen 70% of its locations that were shuttered at the onset of the coronavirus pandemic.

That attention culminated in negative trends as box office receipts over the last few weeks painted a picture of low demand for movie theaters.

Oil names diverge

While there was a positive day for oil futures, distressed energy names saw a divergence, traders said.

West Texas Intermediate crude oil futures for November delivery added 38 cents to cap the day at $40.31 per barrel.

North Sea Brent crude oil futures for November delivery ended the session at $41.94 per barrel after a 17 cent rise.

Houston-based producer Occidental Petroleum’s notes diverged in direction.

The 2.9% senior notes due 2024 held level to close at 83 bid. The 2.7% senior notes due 2022 shot up 2 points to close at 92¾ bid.

London-based contract driller Valaris’ issues were flat to higher.

The 5.2% senior notes due 2025 closed unchanged at 5 bid. The 7¾% senior notes due pushed up ½ point to close at 5½ bid.

Denver-based producer Antero Resources’ paper weakened.

The 5 1/8% senior notes due 2022 slipped 1¼ points to close at 82 bid. The 5 5/8% senior notes due 2023 shed ¼ point to close at 74¼ bid.

Uniti notes mixed

Meanwhile, property owner Uniti’s notes were seen drifting apart, market sources said.

The 8¼% senior notes due 2023 chalked off ¼ point to close at 98¾ bid. The 7 7/8% senior secured notes due 2025 closed flat at 105½ bid.

The Little Rock, Ark.-based telecom-focused real estate investment trust’s notes backed off of some of Wednesday’s gains, garnered after news broke that large customer Windstream had completed and exited the bankruptcy process.

The exit triggered the enactment of a settlement between the two entities that was reached in March.

As part of the pact, the company will invest up to $1.75 billion in growth capital improvements, consisting of long-term fiber and related assets in some Windstream ILEC and CLEC properties over the initial term of new leases.

Chattanooga, Tenn.-based mall operator CBL’s issues saw mixed results.

The 5¼% senior notes due 2023 were pushed down ¾ point to close at 37 bid. The 4.6% senior notes due 2026 added ½ point to close at 38¾ bid.

Bombardier lower

Air and rail builder Bombardier’s paper was under pressure, traders said.

The 7 7/8% senior notes due 2027 lost 1½ points to close at 72½ bid. The 7½% senior notes due 2025 slid 2¼ points to close at 74¼ bid.

Earlier in the week, the prospective buyer for the Montreal-based manufacturer’s aerostructures segment cast doubt on the deal and its ability to be closed in an SEC filing.

Spirit AeroSystems Holdings Inc. said that the agreement with automatically terminate if the company does not meet certain closing conditions by Oct. 31.

In order to close the $500 million deal, Bombardier must clear the agreement of legal barriers, provide receipt of third-party consents and ensure no major adverse changes to the business, including fuselage and wing factories.

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