L Brands notes in focus amid joint venture news; LSC higher after purchase agreement

By James McCandless

San Antonio, Sept. 15 – The Tuesday session in the distressed debt market saw shifting ground in the retail space.

L Brands, Inc.’s notes varied after the company announced a joint venture that would see a British counterpart assume 51% control of Victoria’s Secret UK.

Sector peer Revlon, Inc.’s issues were carried higher in the aftermath of the name’s expiration of a private exchange offer.

Meanwhile, printer LSC Communications, Inc.’s paper was moved to better levels after news broke of a stock and asset purchase agreement.

Property owner Washington Prime Group, Inc.’s notes improved after the company reported a boost in rent collection.

Mall name CBL & Associates Properties, Inc.’s issues were also gaining as the day ended.

As oil futures recovered from some recent losses, Occidental Petroleum Corp.’s paper pushed upward while Antero Resources Corp.’s and Transocean Ltd.’s notes diverged.

Elsewhere, gambling name Scientific Games Corp.’s issues saw mixed results in the wake of news of a stake sale.

L Brands eyed

L Brands’ notes varied throughout the day’s activity, traders said.

The 5¼% senior notes due 2028 shaved off ¼ point to close at 96½ bid. The 6.75% senior notes due 2036 held level to close at 101 bid.

In the middle of Tuesday’s activity, the Columbus, Ohio-based retailer announced that it had entered into a joint venture with British counterpart Next plc over its Victoria’s Secret U.K. division.

Next has agreed to acquire a 51% majority stake in the segment, which is in administration.

By Spring 2021, store operations in the U.K. and Ireland, as well as corresponding online commerce, will be managed by the partnership.

The amount of the sale has not been disclosed.

“The company has been trying to turn Victoria’s Secret around for months,” a trader said. “Up until now, nobody’s been interested in buying.”

Earlier in the year, private equity firm Sycamore Partners backed out of a deal to purchase 55% of Victoria’s Secret for $525 million.

Revlon higher

Sector peer Revlon’s issues were carried higher, market sources said.

The 5¾% senior notes due 2021 gained 1¼ points to close at 33¼ bid. The 6¼% senior notes due 2024 jumped 3¾ points to close at 14¼ bid.

The New York-based cosmetics producer’s structure has seen heightened attention after announcing the expiration of subsidiary Revlon Consumer Products Corp.’s private exchange offer and consent solicitation for its 5¾% senior notes due 2021 for newly issued 5¾% senior notes due 2024.

In all, $19,836,000 of the existing notes, or 5.1% of the amount of notes outstanding, had been validly tendered as of 11:59 p.m. ET on Sept. 11.

The figures represent a failure to meet the 95% threshold; therefore, the tender has not been completed and the company has not accepted the existing notes tendered in the exchange offer.

“They wanted to push some maturities back, and now they’re running out of options,” a trader said.

LSC better

Meanwhile, printer LSC’s paper was moved to better levels, traders said.

The 8¾% notes due 2023 rose ¼ point to close at 15¼ bid.

On Tuesday, the Chicago-based printing services provider said that it has entered into a stock and asset purchase agreement with an affiliate of Atlas Holdings LLC that is supported by some of the its secured creditors, Prospect News reported.

Under the agreement, the Atlas affiliate will acquire substantially all of the name’s assets through a combination of cash and a credit bid of obligations under LSC’s secured term loan facility and senior secured notes at the direction of the creditor group.

Atlas will also acquire some of the company’s liabilities.

The deal is expected to close during fourth quarter of 2020.

Washington Prime improves

Property owner Washington Prime’s notes improved, market sources said.

The 6.45% senior notes due 2024 garnered ¾ point to close at 51½ bid.

In an investor presentation at a virtual conference on Tuesday, the Columbus, Ohio-based real estate investment trust reported that it has been able to collect about 48% of contractual rents for the second quarter.

The company also expects to collect 26% through deferred arrangements, bringing the expected total to 74%.

Additionally, Washington Prime said that it collected more than 80% of July and August rents.

During the initial onset of the coronavirus pandemic, Washington Prime closed all of its indoor mall properties.

Chattanooga, Tenn.-based mall name CBL’s issues were also seen gaining.

The 5¼% senior notes due 2023 inched up to 39½ bid. The 4.6% senior notes due 2024 grabbed ½ point to close at 39½ bid.

Oil futures up

While oil futures recovered from some recent losses, distressed energy tranches saw a divergence, traders said.

West Texas Intermediate crude oil futures for October delivery shot up $1.02 to finish at $38.28 per barrel.

North Sea Brent crude oil futures for November delivery ended at $40.53 per barrel after a 92 cent boost.

Houston-based independent oil and gas producer Occidental Petroleum’s paper pushed upward.

The 2.9% senior notes due 2024 picked up 2 points to close at 86 bid. The 2.7% senior notes due 2022 pushed up 2 points to close at 95½ bid.

Denver-based producer Antero Resources’ notes differed in direction.

The 5 1/8% senior notes due 2022 closed level at 85 bid. The 5% senior notes due 2025 tacked on ¼ point to close at 66¼ bid.

Steinhausen, Switzerland-based contract driller Transocean’s issues moved on separate paths.

The 7½% senior notes due 2031 slipped ½ point to close at 14 bid. The 6½% senior notes due 2020 rose 1¾ points to close at 85 bid.

Scientific Games mixed

Elsewhere, gaming name Scientific Games’ paper saw mixed results, market sources said.

The 7% senior notes due 2028 moved up ½ point to close at 100 bid. The 8¼% senior notes due 2026 closed level at 104 bid.

On Monday, news broke that a 34.9% stake in the Las Vegas-based gaming technology company would be purchased by a group of investors including Caledonia Investments.

As part of the deal, three additional seats will be added to the board of directors.

MacAndrews & Forbes sold the stake, which it announced its intention to do in January.

Moving forward, the company said that it would focus on digital gaming and sports betting.

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