Toys ‘R’ Us active again on reports of possible U.S. asset liquidation; iHeart Media sees spike in activity

By James McCandless

San Antonio, March 12 – Traders reported a slow Monday in the distressed debt market, attributing much of the low activity to volatility in equity markets.

Notes in Toys “R” Us, Inc. were active again on more reports that the company could liquidate its U.S. assets this week.

iHeart Media, Inc. paper saw activity after revising its restructuring plan to its shareholders and senior creditors.

Frontier Communications Corp. started the week strong as usual. Its issues have been active on a string of recent news, including new issues priced last week and shifting focus towards debt service.

More activity in the telecom space was attributed to Intelsat SA. Mallinckrodt plc and Community Health Systems, Inc. continue to split volume in the healthcare sector. Cobalt International Energy, Inc. and Northern Oil and Gas, Inc. saw some of the most active days in the energy sector.

Toys ‘R’ Us active again

Wayne, N.J.-based bankrupt toy retailer Toys “R” Us began the week with its notes active again on reports confirming the possibility that the company could liquidate all U.S. assets. It has failed to find a buyer for those assets since its recent bankruptcy declaration and $3.1 billion loan to finance the intermediary period.

“Time is running out for anything positive to happen,” a trader said.

The 8¾% notes due 2021 rose about ¼ point to close at 11 bid. The 7 3/8% notes due 2018 dropped about 1½ points to close near 10½ bid.

iHeart reworks restructure terms

San Antonio-based outdoor communications company iHeart saw some activity Monday, traders confirmed, as it once again revised the proposed terms of its restructuring plan, slashing the value for shareholders while reducing the amount for priority guarantee noteholders and term lenders (see related story elsewhere in this issue).

“It’s a lot of moving the deck chairs on the Titanic here,” a trader said.

The 7¼% paper due 2027 traded down about 3 points to close just above 18 bid. The 2% paper due 2021 edged down slightly to close just under 14 bid. The 10 5/8% paper due 2023 remained level at 83 bid.

Frontier continues trading

The week started busily for Norwalk, Conn.-based wireline telecom name Frontier Communications, as market sources confirmed that it has been bolstered by recent new issues and the announcement that it would be rescinding its quarterly dividend to focus on debt flexibility.

The 7 5/8% issues due 2024 shaved off ¼ point to close at 60¾ bid. The 10½% issues due 2022 lost about 2½ points to close at 88 bid. The 11% issues due 2025 jumped up 1¾ points to close at 81¾ bid.

Volume favorites trade

Luxembourg-based satellite communications company Intelsat continued its run of activity, which received positive reinforcement since comments made about the future of the country’s 5G network spelled out potential benefits for satellite firms.

The Intelsat Jackson SA 5½% paper due 2023 traded down to finish close to 82½ bid. The 7¼% paper due 2020 rose about 1¾ points to close at near 96 bid.

Britain-based drug maker Mallinckrodt, which completed a recent $1.2 billion acquisition of Rockville, Md.-based medical applications name Sucampo Pharmaceuticals, saw its 4¾% notes due 2023 traded up slightly to end just above 79 bid.

Franklin, Tenn.-based hospital operator Community Health Systems saw more activity to begin the week. The company recently cautioned investors that it may close more hospitals by the end of the year.

The 7 1/8% issues due 2020 dropped more than 2 points to close below 81 bid. The 6 7/8% issues due 2022 held firm at about 60 bid.

Houston-based bankrupt oil exploration company Cobalt, which received approval for its third amended plan for reorganization last week, saw its 7¾% paper due 2023 rose ½ point to close at 80¼ bid.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas’ 8% issues due 2020 fell 1 point to close at 91 bid.

“This is the way Mondays have been lately,” a trader said. “Not enough people are letting their money go because they’re worried about volatility in equity markets, so let’s hope things continue on the trend of settling down.”

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