Weatherford mixed on asset sale, delisting warning; Community Health lower on ACA judgment

By James McCandless

San Antonio, Dec. 17 – At the start of the new week in the distressed space, energy and healthcare names saw the most movement.

Weatherford International plc’s notes were mixed after the company announced that it had sold its surface data logging arm and received a warning of delisting from the New York Stock Exchange.

Elsewhere in energy, Aegean Marine Petroleum Network Inc.’s issues were rising on Saturday’s news that the company filed a reorganization plan.

Lower oil futures led to declines in California Resources Corp.’s and EP Energy Corp.’s paper while Diamond Offshore Drilling, Inc.’s notes improved.

Meanwhile, Community Health Systems, Inc.’s and Tenet Healthcare Corp.’s issues fell after a federal judge in Texas declared the Affordable Care Act unconstitutional.

Natural gas name Ferrellgas Partners LP’s paper declined on a ratings downgrade.

Xerox Corp.’s notes were also negative after ratings downgrades.

Weatherford mixed

Weatherford’s notes were mixed Monday, traders said.

The 8¼% notes due 2023 picked up ¾ points to close at 66 bid. The 9 7/8% notes due 2024 lost ½ point to close at 66 bid.

On Monday, the Baar, Switzerland-based oilfield services provider announced that it had sold its surface data logging business to Excellence Logging for $50 million in cash.

Last week, the company disclosed that it was in danger of being delisted from the NYSE after the average closing price of its shares had fallen below $1 over a 30-day trading period.

Earlier in December, the company completed the sale of 11 drilling rigs to ADES International for $92.5 million.

Aegean’s 4% notes up

Elsewhere, Aegean’s issues were rising.

The 4% notes due 2018 gained 5¾ points to close at 21½ bid.

The 4% notes are trading at record lows recently after trading in the 80’s context for most of the year, entering free fall to hit 10 bid in the last week of November, according to Trace data.

The Piraeus, Greece-based energy sector peer filed for bankruptcy in November and was subsequently investigated for alleged fraud. The company was approved for purchase by competitor Mercuria Energy Group Ltd. after Oaktree Capital Management and Hartree Partners showed brief interest.

Oaktree and Hartree entered into a restructuring agreement with the company on Dec. 13 but withdrew shortly after news broke that the company had lost $300 million in a misappropriation of funds.

“That’s a big one making waves today,” a trader said. “It’s going to be topical for a while as they sort that mess out.”

Oil names dip, Diamond gains

Another dip in oil prices led to a corresponding drop for Los Angeles-based independent producer California Resources’ paper.

The 6% paper due 2024 fell 3½ points to close at 68 bid. The 8% paper due 2022 dropped 2¾ points to close at 73½ bid.

Houston-based sector peer EP Energy’s 8% notes due 2025 shed 2 points to close at 45½ bid.

Diamond Offshore, a Houston-based contract driller, saw its issues gain.

The 7 7/8% notes due 2025 picked up 1 point to close at 89½ bid.

On Monday, West Texas Intermediate crude oil futures settled at $49.88 per barrel, closing below $50 for the first time since October 2017. North Sea Brent crude futures lost 67 cents to end at $59.61 per barrel.

Community Health, Tenet lower

Community Health’s paper moved lower, market sources said.

The 6¼% paper due 2023 lost 1¼ points to close at 92¼ bid. The 6 7/8% paper due 2022 shaved off ¼ point to close at 48¾ bid.

The Franklin, Tenn.-based hospital operator’s paper traded down after news broke over the weekend that a federal judge in Texas declared the individual mandate in the ACA unconstitutional, restarting debate on the constitutionality of the law itself.

“That took down a lot of the health care sector this morning,” a trader said. “That uncertainty is a potential sandbag for health care.”

Meanwhile, Dallas-based peer Tenet’s notes were also negative.

The 6¾% notes due 2023 lost 2 points to close at 95 bid. The 6 7/8% notes due 2031 fell 1¼ points to close at 86¼ bid.

Ferrellgas down

Ferrellgas’ issues were also trending downward, traders said.

The 8 5/8% notes due 2020 ended lower by 2½ points to close at 75½ bid. The 6¾% notes due 2023 lost 3 points to close at 82 bid.

On Monday, Moody’s Investors Service issued downgrades for the Overland Park, Kan.-based propane name’s corporate family rating, probability of default rating, senior unsecured notes rating and affirmed a negative outlook.

“They’re still stuck in this downward spiral,” a trader said. “There’s new talk that holders are organizing, specifically the unsecured holders.”

The company’s issues have been under pressure as more attention is paid to the company’s liquidity issues and executive turmoil, encapsulated in the suspension of quarterly cash distributions and the resignations of both its chief financial officer and chief operating officer, respectively.

Xerox negative

Xerox’s paper declined in the Monday session, market sources said.

The 3.8% paper due 2024 dropped 4½ points to close at 82¼ bid.

The Norwalk, Conn.-based print and digital document solutions name has experienced a pair of downgrades recently.

On Friday, Moody’s lowered the company’s senior unsecured debt ratings and affirmed a negative outlook.

On Monday, S&P Global Ratings downgraded its long-term issuer credit rating, short-term rating and debt issue-level ratings.

“For now, this just looks like a bump in the road,” a trader said. “But I think we’ll get a picture of that in the next earnings report.”

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