Ensco, Rowan notes higher as merger consideration delayed; PG&E mixed amid volatile week

By James McCandless

San Antonio, Jan. 18 – The end of the week in the distressed debt space saw the market retain its focus on oil and other energy names.

Ensco plc and Rowan Cos. plc’s notes were both on the rise after the companies agreed to postpone finalizing a merger.

Elsewhere in the space, MEG Energy Corp.’s issues recovered slightly after entering freefall on Thursday in reaction to the cancellation of a takeover bid.

Meanwhile, Ultra Petroleum Corp.’s paper saw a boost after winning an appeals court opinion against a group of creditors.

Weatherford International plc’s notes were also up.

In utilities, PG&E Corp.’s issues were better, capping off a week of heavy trading.

In telecom, Digicel Group Ltd.’s paper trended upward.

Sector peer Frontier Communications Corp.’s notes were also gaining while Intelsat SA’s issues were mixed.

Ensco, Rowan up

Ensco’s notes rose on Friday, traders said.

The 7¾% notes due 2026 added ¾ point to close at 80¾ bid. The 4½% notes due 2024 gained 1 point to close at 73½ bid.

Rowan, Ensco’s prospective merger partner, also saw its issues moving higher.

The 4 7/8% notes due 2022 climbed ¾ point to close at 87¾ bid. The 7 3/8% notes due 2025 picked up 1 point to close at 86¼ bid.

After the close on Thursday, the contract drillers, based in London and Houston, respectively, announced that they would be pushing back meetings to consider the new terms of a proposed merger.

On Monday, Ensco proposed a new stock exchange ratio for the offering.

The new terms would mean that Rowan shareholders would receive 2.6 Ensco shares for each Rowan share, an increase from the original proposal of 2.215 Ensco shares.

“What happened with MEG makes this seem more dire than it is,” a trader said. “In this instance, it looks like there’s actually still hope left for this deal.”

MEG gains

MEG Energy’s paper saw a small recovery in the session, market sources said.

The 6 3/8% paper due 2023 shifted higher by ½ point to 87½ bid. The 7% paper due 2024 gained ¼ point to close at 87¾ bid.

On Thursday, the 6 3/8% paper tanked 13 points. The 7% notes lost 12½ points.

The Calgary, Alta.-based oil sands producer’s paper was in freefall in the Thursday session after Husky Energy announced that it let its $2 billion hostile takeover bid expire on Wednesday.

The deal gradually soured due to a loss of shareholder support and unfavorable market conditions.

In reaction to the news, Moody’s Investors Service said that the development was credit positive for Husky and would not impact any of MEG’s ratings.

Ultra Petroleum rises

Elsewhere in oil and gas, Ultra Petroleum’s notes saw a boost, traders said.

The 6 7/8% notes due 2022 shot up 8½ points to close at 44 bid. The 7 1/8% notes due 2025 added 1 point to close at 28 bid.

Late Thursday, the Houston-based independent oil and gas producer announced that it received a favorable opinion in make-whole litigation against its creditors over $400 million that creditors asserted was payable to them after the company exited bankruptcy in 2017.

Elsewhere, Baar, Switzerland-based sector peer Weatherford’s issues also rose.

The 9 7/8% notes due 2024 picked up ½ point to close at 64½ bid.

PG&E better

Away from oil and gas, PG&E’s paper ended better, market sources said.

The 6.05% paper due 2034 edged up ¼ point to close at 83¾ bid. The 3.3% paper due 2027 gained 1½ points to close at 78½ bid.

The past two weeks for the San Francisco-based electric utility have been marred by news that the company would file for Chapter 11 bankruptcy within the month.

The move comes after it was revealed that a string of California wildfires meant that the company could incur a large liabilities accounting charge.

On Thursday, large investor BlueMountain Capital Management complained to the board of directors that the company was solvent and that bankruptcy was not necessary.

Digicel higher

In telecom, Digicel’s notes were moving higher.

The 6% notes due 2021 gained ½ point to close at 93 bid.

The Kingston, Jamaica-based mobile phone network provider recently completed a $2 billion tender offer for two series of notes.

Norwalk, Conn.-based wireline communications name Frontier’s issues were also improving.

The 7 5/8% notes due 2024 rose 1½ points to close at 54½ bid. The 10½% notes due 2022 added 2 points to close at 74 bid. The 11% notes due 2025 gained 1½ points to close at 66 bid.

Elsewhere, Luxembourg-based satellite operator Intelsat’s paper was mixed.

Intelsat Jackson Holdings SA’s 5½% paper due 2023 gained ½ point to close at 91 bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 fell 2 points to close at 83¼ bid.

© 2015 Prospect News.
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