J. Crew notes spike on restructuring buzz; Peabody ticks higher after equity holder filing; Syniverse up

By Colin Hanner

Chicago, Dec. 9 – Friday’s session capped off a week of teetering distressed energy bonds, mixed movement in the healthcare space and a continuing rally in the coal space, though much of the focus was shifted toward a reported restructuring in the retail sector.

J. Crew Group Inc. is in talks to file for a debt restructuring agreement with its creditors to cut its $2 billion debt, according to a report from Reuters. Its distressed notes made double-digit increases after the news was released.

Continuing to inch higher was Peabody Energy Corp., which pushed higher on Friday after a motion was filed seeking a committee of equity holders in the coal company’s bankruptcy case.

“There’s more strategy coming out with a plan. Equity guys are looking to form an equity committee, arguing the value would be good for us, as well as equities,” a market source said.

Oil continued to trek upward a day before non-members are set to meet with the Organization of Petroleum Exporting Countries to discuss supply cuts.

Though distressed oil bonds traded on Friday, many remained unchanged, like California Resources Corp. and Denbury Resources, Inc.

Intelsat SA, riding a wave of increases throughout the week on the back of an exchange deal reached on Monday, cooled heading into the weekend, though traded throughout the session.

Seeing similar movement to J. Crew was telecommunications company Syniverse Holdings Inc., which also saw double-digit upticks off the news of a private exchange offer.

Possible J. Crew restructuring

Joining the league of retailers struggling in a market dominated by Internet-savvy shoppers is J. Crew, which is reportedly looking into negotiating with its creditors to work with its growing $2 billion debt, a Reuters report said Friday.

An unnamed source quoted in the story said that the retailer is looking for avenues to take advantage of its low-priced debt.

The 7¾% notes due 2019 – trading in the mid-30s before Friday – were trading around “43-44,” a trader said, off the heels of the debt restructuring news.

A market source said the notes went out the door with a 43¼ handle.

Peabody goes higher

Late Thursday, the Mangrove Partners Master Fund, Ltd., which has a 5.2% stake in Peabody, filed a motion in the United States Bankruptcy Court for the Eastern District of Missouri seeking an official committee of equity security holders in the Chapter 11 case for Peabody.

“[I]n light of the substantial rebound of the coal industry since the filing of the Chapter 11 cases, holders of the shares will see meaningful recoveries in connection with a reorganization of the debtors if metallurgical and thermal coal prices stabilize at or around $145 per ton and $77 per ton or higher respectively – prices that are well below both historical averages and current prices,” the filing said.

In the filing, Mangrove Partners goes on to say that when Peabody filed for bankruptcy protection, it did so because of “reduced demand and significantly lower coal prices,” which Mangrove claims has rebounded since the filing.

A market source said that several of Peabody’s notes traded on this news, saying that the news helps “us” – holders of the company’s bonds – as well as equity owners.

The 6½% notes due 2020 were up 2½ points to 74¾, and the 10% notes of 2022 were up to 96, a 1¾-point gain for Thursday’s levels.

Oil up, bonds mostly unchanged

Oil rose for the second straight day, bookending a week-and-a-half of unparalleled gains due to the OPEC supply cut accord last Wednesday.

Western Texas Intermediate crude was up 64 cents, or 1.26%, to $51.48, while Brent crude was up 51 cents, or 0.95%, to $54.40.

On Saturday, non-OPEC members will meet to discuss a supply cut, a measure that is seen as vital by some for oil prices to stabilize in the not-too-distant future.

CGG SA’s 6½% notes due 2021 were up 1¾ points to 45¼, a market source said.

Denbury Resources’ 4 5/8% notes due 2023 were unchanged at 81¼, though the notes saw plenty of volume.

In a similar boat were California Resources’ 8% notes due 2022, which remained at 89.

Linn Energy, LLC was up ¼ point in its 6½% notes due 2021, a market source said.

Intelsat dormant

Rolling over similar trends from Thursday was Intelsat SA, which spent the first half of the week in gaining territory.

“Intelsat, which has been active and topical all week, was trading, but there was not much price movement,” a trader said.

The Luxembourg-linked 7½% notes due 2021 were mostly unchanged on Friday, trading on heavy volume, but hovering around the same 35 handle in which they entered the session.

The Jackson-linked 7¼% notes due 2019 were unchanged at 83¼.

Syniverse sees sparks

A trader said his focus on Friday was on Syniverse Holdings, which announced the launch of a private exchange offer for its outstanding notes.

Those notes – 9 1/8% notes due 2019 – were up 12¼ points to 86¼, a trader said, adding they traded with a “fair amount of volume.”

“It was an exchange deal the market likes,” the trader said.

Noteholders may exchange up to $364 million of its $475 million of the outstanding 9 1/8% notes.

In exchange, Syniverse Foreign Holdings Corp., an indirect wholly owned subsidiary of the company, is offering to issue new 9 1/8% senior notes due 2022 for each $1,000 principal amount of notes tendered by 5 p.m. ET on Dec. 21, the early participation date.

The early exchange value contains a premium of $50 principal amount per $1,000 of notes.

Holders who tender their notes for exchange after the early deadline will receive $950 principal amount of the new notes due 2022.

Market round up

Gymboree Corp.’s 9 1/8% notes due 2018 were down ¼ point on one trade, a market source said, finishing the session with a 45 7/8 handle. On Thursday, the company announced its first quarter results, and the same notes traded down 3½ points late in the day from their Wednesday levels.

iHeartCommunications’ 14% notes due 2021 were up almost ½ point on an out-the-door 38½.

-Susanna Moon contributed to this review

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