Denbury notes lose as company justifies merger; Mattel issues weaken at top of retail space

By James McCandless

San Antonio, Dec. 21 – At the end of the week, distressed trading was moderate as the end of 2018 approached.

Denbury Resources Corp.’s notes were losing after the company filed a document with the Securities and Exchange Commission outlining its reasoning for a merger with Penn Virginia.

Ultra Petroleum Corp.’s issues traded down as the company agrees to a swap of $780 million in notes.

As oil futures go south another day, California Resources Corp.’s bellwether paper was mixed while Whiting Petroleum Corp.’s notes declined.

Meanwhile, in retail, Mattel, Inc.’s issues were weaker as market scrutiny over holiday sales increases.

Sector peer L Brands, Inc.’s paper fell while Revlon Inc.’s notes finished mixed.

In the telecom space, Cincinnati Bell Inc.’s and Intelsat SA’s issues saw a decline.

Denbury down

Denbury’s notes were negative on Friday, traders said.

The 6 3/8% notes due 2021 lost 1 point to close at 73 bid. The 5½% notes due 2022 dropped 1¼% points to close at 70½ bid.

On Friday, the Plano, Texas-based independent oil and gas producer filed a document with the SEC outlining its rationale for its $1.7 billion proposed acquisition of sector peer Penn Virginia.

In the S-4 filing, the company outlined a litany of reasons for the merger, including the new entity’s diversity in production locations, an increased operating margin and additional capital investment opportunities.

As previously reported, not all creditors are enthused about the merger, with some doubting the merger will be completed.

“A lot of them still don’t like it,” a trader said. “It’s even harder to convince them now with oil prices moving the way they are.”

The company’s notes have been under pressure since the merger was announced, with the 5½% notes dropping from the 90s context in October to trading in the 70s in recent weeks.

Meanwhile, Houston-based producer Ultra Petroleum’s issues were trading lower after the company announced that it had agreed on Dec. 17 to exchange $780 million of wholly owned subsidiary Ultra Resources, Inc.’s notes for $545 million of new 9% cash/2% PIK senior secured second-lien notes due July 12, 2024, Prospect News reported.

The 6 7/8% notes due 2022 fell 3¼ points to close at 46 bid.

Another drop in oil futures saw mixed results in other oil names.

Los Angeles-based peer California Resources’ paper was mixed.

The 6% paper due 2024 dropped 2½ points to close at 62 bid. The 8% paper due 2022 picked up ½ point to close at 66¼ bid.

Denver-based producer Whiting Petroleum’s 6 5/8% notes due 2026 rose 1 point to close at 86 bid.

At the end of a dismal week, West Texas Intermediate crude oil futures traded lower again, closing Friday’s session at $45.59 for February delivery after a 29 cent drop.

North Sea Brent crude lost 53 cents to end at $53.82.

Mattel dips

Elsewhere, in retail, Mattel’s issues were moving lower, market sources said.

The 6¾% notes due 2025 lost 3¾ points to close at 88 bid, its first time trading below a 90 context all year, according to Trace data.

Distressed names in the retail space are under pressure to perform well during the holiday shopping season, with many eyes on the El Segundo, Calif.-based toy producer, a market source said.

“If Mattel doesn’t hit the high notes, then retail’s going to become even more frantic,” a trader said. “Individual stores should fare alright, but Mattel’s in a tough position with names like Amazon coming for their market share.”

Columbus, Ohio-based retailer L Brands’ paper was also dropping.

The 6 7/8% paper due 2035 fell 1¼ points to close at 83¾ bid.

New York City-based cosmetics producer Revlon’s notes were mixed.

The 5¾% notes due 2021, while trading as low as 73¼ bid during the Friday session, closed level at 75 bid, according to Trace data. The 6¼% notes due 2024 shaved off 3¼ points to close at 49¾ bid.

Cincinnati Bell lower

Cincinnati Bell’s issues were declining in a spike in telecom activity, traders said.

The 7% notes due 2024 gave up ½ point to close at 83 bid.

The Cincinnati-based diversified telecom services provider was at the top of telecom trading on Friday.

The company’s issues have been in decline throughout 2018 in a string of earnings misses.

On the international side, Luxembourg-based satellite operator Intelsat’s paper was also falling.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 crashed 11¼ points to close at 85¾ bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 lost 1½ points to close at 74 bid.

© 2015 Prospect News.
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