PG&E lower amid victim payout dispute; Bristow notes up as bankruptcy exit expected

By James McCandless

San Antonio, Oct. 7 – The distressed debt space started a new week with muted activity with utilities and energy names in the fray.

PG&E Corp.’s notes moved lower as a group representing wildfire victims argued in court that payouts needed were more than the company’s $8.4 billion cap.

In energy, offshore transporter Bristow Group Inc.’s issues improved after announcing that it had received court approval to exit bankruptcy.

As oil futures were under pressure, Chesapeake Energy Corp.’s paper was negative as Valaris plc’s and McDermott International, Inc.’s notes rose.

Elsewhere, Exela Technologies, Inc.’s issues declined, giving back some of its gains after announcing a contract worth hundreds of millions of dollars.

The pharma space saw Teva Pharmaceutical Industries Ltd.’s and Endo International plc’s paper dipped.

Manufacturer United States Steel Corp.’s notes diverged.

PG&E lower

PG&E’s notes were seen moving lower on Monday, traders said.

The 6.05% notes due 2034 dropped 1¾ points to close at 109¼ bid.

On Monday, a lawyer representing wildfire victims in the San Francisco-based electric utility’s bankruptcy case said that the cost of a settlement to the victims is $13.5 billion.

The number is at odds with what is outlined in the company’s proposed restructuring plan, which caps victim payouts at $8.4 billion.

Last Friday, the company said in court that it had $34.35 billion in debt financing commitments to back its restructuring plan.

According to the company, the terms of the commitments are better than what a competing plan is proposing.

Later in the month, a judge will rule on whether the company will continue to maintain exclusive control of its restructuring process.

Bristow improves

In the energy space, Bristow’s notes improved, market sources said.

The 6¼% senior notes due 2022 picked up 1¼ points to close at 6½ bid.

The Houston-based offshore transportation name announced on Monday that its amended plan for reorganization was approved in bankruptcy court last week.

Solus Alternative Asset Management LP, South Dakota Investment Council, Empyrean Capital Partners, LP, Bain Capital Credit and Oak Hill Advisors are expected to own more than 50% of the new equity collectively, with the remaining equity held by other secured creditors and unsecured noteholders, Prospect News reported.

The company will receive $535 in new capital from a rights offering and debtor-in-possession financing.

Bristow expects to exit Chapter 11 on Oct. 31.

Oil under pressure

A day of modest losses for oil futures was met with non-cohesive movements in distressed energy names, traders said.

West Texas Intermediate crude oil futures for November delivery slid 6 cents to settle the session at $52.75.

North Sea Brent crude oil futures for December delivery capped the day at $58.35 after a 2 cent drop.

Oklahoma City-based independent oil and gas producer Chesapeake Energy’s paper also took a negative turn.

The 8% senior notes due 2025 fell 4¼ points to close at 67¼ bid. The 8% senior paper due 2027 slipped 2¼ points to close at 66 bid.

London-based contract driller Valaris’ notes were on the rise.

The 5.2% senior notes due 2025 jumped up 5¾ points to close at 53¼ bid. The 7¾% senior notes due 2026 inched up ¼ point to close at 52¾ bid.

Houston-based oil and gas engineering name McDermott’s issues also climbed.

The 10 5/8% senior notes due 2024 gained 1½ points to close at 19 bid.

Exela declines

Elsewhere, Exela’s paper saw a decline on Monday, market sources said.

The 10% senior secured paper due 2023 dipped 1¾ points to close at 53½ bid.

The Irving, Tex.-based business software company announced on Friday that it had been awarded a five-year contract with the Department of Veterans Affairs that could be worth as much as $900 million.

A bid was jointly submitted with General Dynamics to improve processing veteran benefits claims.

Teva, Endo dip

In the pharma space, Teva’s notes were lower, traders said.

The 2.2% senior notes due 2021 lost ½ point to close at 92½ bid. The 3.15% senior notes due 2026 shaved off ¼ point to close at 70½ bid.

As the high-profile bankruptcy case of industry peer Purdue Pharma continues to make headlines, Petach Tikva, Israel-based generic drug producer and others continue to see pressure from the market.

Several drug makers are considering Purdue’s blanket settlement as a model to settle the thousands of outstanding lawsuits over the opioid-epidemic.

Dublin-based pharmaceuticals maker Endo’s issues also fell.

The 6% senior notes due 2023 declined by ¼ point to close at 61 bid. The 6% senior notes due 2025 moved down ½ point to close at 58½ bid.

U.S. Steel notes active

Manufacturer U.S. Steel’s paper diverged, market sources said.

The 6¾% senior paper due 2025 dropped 1½ points to close at 88¼ bid. The 6¼% senior notes due 2026 added ½ point to close at 82 bid.

The Pittsburgh-based steelmaker saw increased attention last week after announcing that it was purchasing a 49.9% stake in competitor Big River Steel for $700 million.

The company has the option to purchase the rest of Big River Steel over the next four years.

© 2015 Prospect News.
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