Revlon gains as lender dispute continues; American Airlines eyed amid service changes

By James McCandless

San Antonio, Aug. 21 – Distressed debt in the retail and travel sectors saw traction in the secondary market on Friday.

Revlon, Inc.’s notes gained as another lender of the company was sued by Citigroup to recover mistakenly distributed funds.

Sector peer L Brands, Inc.’s issues varied in direction in the wake of issuing its second-quarter earnings report.

In the travel space, American Airlines Group Inc.’s paper diverged after announcing several cuts to its flight schedule.

Air carrier United Airlines Holdings, Inc.’s notes saw mixed movements.

As oil futures ended the week drifting, Whiting Petroleum Corp.’s issues followed while Occidental Petroleum Corp.’s paper differed and Valaris plc’s notes rose.

Meanwhile, REIT CBL & Associates Properties, Inc.’s issues were under water while mall owner Washington Prime Group Inc.’s paper slipped.

Revlon gains

Revlon’s notes gained ground as the week finished, traders said.

The 5¾% senior notes due 2021 tacked on ¼ point to close at 21¾ bid. The 6¼% senior notes due 2024 rose 6¾ points to close at 16¾ bid.

Early Friday, news broke that Citibank has filed a third lawsuit against the New York-based cosmetics producer’s lenders to recoup hundreds of millions of dollars in funds.

The bank has said that it accidentally distributed $900 million to the company’s lenders in a clerical error.

On Wednesday, Citigroup won a court order freezing $127.3 million and $109.7 million that was distributed to HPS Investment Partners LLC and Symphony Asset Management LLC, respectively.

The day prior, $175 million sent to Brigade Capital Management was also frozen.

Lenders have filed a lawsuit against Revlon recently, claiming that intellectual property was improperly transferred to use as collateral.

L Brands varies

Sector peer L Brands’ issues varied in direction, market sources said.

The 6¾% senior notes due 2036 improved by 1¼ points to close at 99¾ bid. The 5¼% senior notes due 2028 were docked 1 point to close at 94 bid.

This week, the Columbus, Ohio-based department store chain surprised the market with a better-than-expected earnings report for the second quarter.

The company showed a per share profit of 25 cents, better than what analysts were predicting at a 34 cents per share loss.

Revenues came in at $2.32 billion.

The name’s Victoria’s Secret segment reported a 39% drop in sales while Bath & Body Works enjoyed an 87% increase in comparable-store sales.

Airlines active

Elsewhere, in the travel space, American Airlines’ paper diverged, traders said.

The 5% senior notes due 2022 lost 1½ points to close at 63½ bid. The 3¾% senior notes due 2025 reached up 2 points to close at 47½ bid.

On Thursday, the Fort Worth-based air traveler announced that it would suspend flights to 15 U.S. airports as a result of persistent low travel demand.

The suspensions take effect in October, effecting more than 700 flights.

Despite recent proposals for another round of federal aid to the sector coming out of the U.S. Senate and having the support of the president, legislation has stalled.

An original $25 billion in aid was passed earlier in the year.

The airline has warned of thousands of employee furloughs if federal aid is not passed.

Chicago-based carrier United Airlines’ notes saw mixed movements.

The 5% senior notes due 2024 chalked off 2 points to close at 87¼ bid. The 4¼% senior notes due 2022 held level to close at 91½ bid.

Oil in focus

As oil futures ended the week drifting, distressed energy names were pulled in different ways, market sources said.

West Texas Intermediate crude oil futures for October delivery dipped 48 cents to settle at $42.34 per barrel.

North Sea Brent crude oil futures for October delivery ended the week at $44.35 per barrel after a 55 cent decline.

Denver-based independent oil and gas producer Whiting Petroleum’s issues followed futures downward.

The 6¼% senior notes due 2023 shed 2 points to close at 20 bid. The 6 5/8% senior notes due 2026 shaved off ¼ point to close at 20 bid.

Houston-based E&P Occidental Petroleum’s paper saw took differing paths.

The 2.9% senior notes due 2024 gave up 2 points to close at 89¾ bid. The 2.7% senior notes due 2022 closed level at 98 bid.

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

The 5.2% senior notes due 2025 improved by 3¼ points to close at 9 bid. The 7¾% senior notes due 2026 shot up 3 points to close at 9½ bid.

CBL notes lower

Meanwhile, property owner CBL’s issues were under water, traders said.

The 5¼% senior notes due 2023 fell 1½ points to close at 35 bid. The 4.6% senior notes due 2024 shaved off ¼ point to close at 36½ bid.

This week, news broke that the Chattanooga, Tenn.-based real estate investment trust came to a restructuring agreement with noteholders representing more than 57% of the operating partnership’s 2023 notes, 2024 notes and the 5.95% senior notes due 2026.

The company plans to cut $1.4 billion of unsecured notes in exchange for the issuance of $500 million of new senior secured notes due June 2028, plus about $50 million of cash and 90% of the new common equity for unsecured holders.

Columbus, Ohio-based mall owner Washington Prime’s paper also slipped.

The 6.45% senior notes due 2024 gave back 1¾ points to close at 48¾ bid.

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