MEG Energy crashes on canceled takeover; PG&E issues rise as bankruptcy saga presses on

By James McCandless

San Antonio, Jan. 17 – The distressed debt market saw more focus on oil and electric utility names in the Thursday session.

MEG Energy Corp.’s notes crashed after prospective buyer Husky Energy canceled its hostile bid for the company.

Elsewhere in energy, a slight drop in oil futures was the backdrop for improvements in Sanchez Energy Corp.’s and Hi-Crush Partners LP’s issues while Ultra Petroleum Corp.’s paper ended mixed.

Bristow Group Inc.’s notes were lower.

PG&E Corp.’s issues were higher as some of the market’s pressure loosened.

In the retail space, Neiman Marcus Group, Inc.’s, L Brands, Inc.’s and Revlon, Inc.’s paper closed the day mixed.

MEG tanks

MEG Energy’s notes crashed Thursday, traders said.

The 6 3/8% notes due 2023 dropped 13 points to close at 87 bid. The 7% notes due 2024 lost 12½ points to close at 87½ bid.

The Calgary, Alta.-based oil sands producer’s notes were in free fall on Thursday after news broke that prospective buyer Husky Energy withdrew its hostile bid.

The company had previously made a $2 billion bid for the name in September.

In a press release, Husky said that it did not win the support of a requisite number of shareholders by the time the offer expired on Wednesday.

Another factor cited by both companies was the Alberta government’s implementation of crude oil production cuts to curb a glut in the market.

“The reaction to this looks a little overblown,” a trader said. “But maybe someone’s trying to get a better deal out of it.”

Oil names trend up

Despite modest drops in crude oil prices, distressed oil names trended positive, market sources said.

Houston-based independent oil and gas producer Sanchez Energy’s issues rose.

The 6 1/8% notes due 2023 added ¼ point to close at 22¼ bid.

Houston-based sector peer Hi-Crush’s paper also ended the day better.

The 9½% paper due 2026 gained 1¾ points to close at 79 bid.

Ultra Petroleum, another Houston-based producer, saw its notes close the session mixed.

The 6 7/8% notes due 2022 shaved off ¾ point to close at 35½ bid. The 7 1/8% notes due 2025 added 2 points to close at 27 bid.

West Texas Intermediate crude oil futures for February delivery lost 24 cents in Thursday activity, closing at $52.07 per barrel.

Likewise, North Sea Brent crude futures ended the session at $61.18 per barrel after falling 14 cents.

Bristow off

Elsewhere in energy, Bristow Group’s issues were lower, traders said.

The 6¼% notes due 2022 fell ¼ point to close at 47¼ bid.

The Houston-based offshore aviation provider has come under pressure after delaying its expected $560 million merger with sector peer Columbia Helicopters.

“There’s a bit of anticipation for watchers of this sector right now,” a trader said. “But we’re not sure when updates are coming.”

PG&E gains

Electric utilities name PG&E’s paper saw a boost, market sources said.

The 6.05% paper due 2034, seen as the benchmark for the structure, rose 1½ points to close at 83½ bid. The 3½% paper due 2025 added ¾ point to close at 78½ bid.

After days of the market trading in reaction to the San Francisco-based electric utility announcing that it would file for Chapter 11 bankruptcy in the near future, a large investor told its board of directors that it thinks the move is unnecessary.

BlueMountain Capital Management asserted on Thursday that the company’s position as a solvent entity did not warrant bankruptcy.

“It’s a weird complaint,” a trader said. “They’re basically arguing that because they’re not there yet they shouldn’t say they’re going to.”

Retail mixed

In a sector increasingly under pressure, retail names were mixed, traders said.

Garnering much of the attention was Dallas-based luxury retailer Neiman Marcus.

The 8% notes due 2021 fell 3 points to close at 37 bid. The 7 1/8% notes due 2028 rose 1¾ points to close at 68¾ bid.

The company is currently embroiled in a legal fight with creditors over last year’s private equity transfer of e-commerce segment MyTheresa.

Columbus, Ohio-based sector peer L Brands’ issues traded in opposite directions.

The 6¾% notes due 2036 added ¾ point to close at 86 bid. The 5¼% notes due 2028 shaved off ¼ point to close at 87¾ bid.

New York City-based cosmetics producer Revlon’s 5¾% paper due 2021 trended lower by ¾ point to close at 83¾ bid. The 6¼% paper due 2024 gained 1¼ points to close at 60½ bid.

© 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.