Superior Energy notes active after earnings miss; PG&E mixed amid creditor dispute

By James McCandless

San Antonio, July 24 – Energy and utilities names were the focus of the distressed space on Wednesday.

Superior Energy Services, Inc.’s notes were mixed after the company reported a higher quarterly loss than expected.

As oil futures moved lower, Ensco Rowan plc and Chaparral Energy, Inc.’s issues followed suit while California Resources Corp.’s paper rose.

In utilities, PG&E Corp.’s notes moved in opposite directions after another dispute arose over who is allowed to submit restructuring plans for the company.

Retailer Bed Bath & Beyond Inc.’s issues were active a day after it announced a round of executive layoffs.

Drug makers Mallinckrodt plc and Teva Pharmaceutical Industries Ltd.’s paper also finished mixed.

LSC Communications, Inc.’s notes continued to sink a day after announcing the termination of a merger.

Superior Energy eyed

Oil name Superior Energy’s 7 1/8% senior notes due 2021 lost 2½ points to close at 67½ bid. The 7¾% notes due 2024 added 1¾ points to close at 57¼ bid.

After the close on Tuesday, the Houston-based oilfield services provider issued its second-quarter earnings report.

The company showed a loss of 29 cents per share, a wider loss than the 23 cents per share loss expected by analysts.

It also posted weak revenues of $436.32 million.

“After Weatherford filed, these oilfield names have seen more interest from distressed guys,” a trader said.

In response, Moody’s Investors Service downgraded the company’s corporate family rating, probability of default rating and senior unsecured ratings.

The agency also changed the outlook to negative, citing weak cash flow generation prospects in a tightening sector and an increased risk of refinancing.

Oil slips

Oil tranches trended lower as oil futures took a negative turn, market sources said.

London-based contract driller Ensco Rowan’s issues were declining.

The 5.2% senior notes due 2025 shaved off 2¾ points to close at 69½ bid. The 7¾% notes due 2026 fell ¾ point to close at 72¾ bid.

Houston-based independent oil and gas producer Chaparral Energy’s paper followed the negative trend.

The 8¾% senior paper due 2023 declined by 1 point to close at 58 bid.

On the other side of the spectrum, Los Angeles-based sector peer California Resources’ notes were seen gaining.

The 6% senior notes due 2024 added ½ point to close at 53 bid. The 8% notes due 2022 picked up ¾ point to close at 68½ bid.

Concerns about lower U.S. crude inventories and expected weaker demand in the short term drove futures lower.

West Texas Intermediate crude oil futures for September delivery dipped 89 cents to settle at $55.88 per barrel.

North Sea Brent crude oil futures for September delivery finished the day at $63.18 per barrel after a 65 cent drop.

PG&E mixed

In the utilities space, PG&E saw stronger movement in its 2034 benchmark notes, traders said.

The 3¾% senior notes due 2042 gave back ¾ point to close at 91½ bid. However, the benchmark 6.05% notes due 2034 gained 3¼ points to close at 115½ bid.

On Wednesday, a judge in bankruptcy court ruled that the San Francisco-based bankrupt electric utility could retain sole control over its bankruptcy process for at least another two weeks.

The move comes after California governor Gavin Newsom intervened to argue that more time is needed to come up with restructuring proposals to counter one being pushed by a group of creditors.

The company has until Aug. 9 to develop a process for evaluating reorganization plans.

The bondholder group expressed concerns that the delay would prevent the company from exiting bankruptcy in time to access the newly established $21 billion wildfire insurance fund.

The group submitted its restructuring proposal for consideration in June.

Bed Bath active

Elsewhere, in retail, Bed Bath & Beyond’s paper also closed mixed, market sources said.

The 5.165% senior paper due 2044 dipped ½ point to close at 67 bid. The 4.915% paper due 2034 held level at 72¼ bid.

The Union, N.J.-based retailer announced on Tuesday that it would lay off 7% of its corporate staff, eliminating the position of chief operating officer.

The company has taken several measures to increase profitability and force a turnaround in recent months under pressure from activist investors.

Long-time chief executive officer Steven Temares resigned in May.

Moody’s revised its outlook on the company to negative.

Mallinckrodt, Teva mixed

Drug maker Mallinckrodt’s notes also saw a mixed day, traders said.

The 5½% senior notes due 2025 lost ¼ point to close at 56¾ bid. The 5¾% notes due 2022 gained ½ point to close at 74½ bid.

The Staines-Upon-Thames, U.K.-based drug manufacturer has been feeling constant pressure from negative headlines over the sector’s legal ramifications from its alleged propagation of the opioid epidemic.

Petach Tikva, Israel-based generic producer Teva’s issues were also active.

The 6.15% senior notes due 2036 lopped off 1¾ points to close at 80¾ bid. The 4.1% notes due 2046 picked up 1 point to close at 65 bid.

LSC sinks

LSC’s paper continued to sink on Wednesday, market sources said.

The 8¾% senior secured paper due 2023 dropped 9 points to close at 74¾ bid.

On Tuesday, the 8¾% paper crashed 11½ points.

The Chicago-based business printing services provider’s notes took a dive on Tuesday after news broke that its proposed $1.4 billion merger with sector peer Quad/Graphics was mutually terminated.

The move came after the Department of Justice filed an anti-trust lawsuit to block the move in June.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.