Valeant Pharmaceuticals up big on two separate asset sales; Avaya continues fall; Neiman Marcus up

By Colin Hanner

Chicago, Jan. 10 – A series of asset sales for one of the distressed market’s most notable names stole the bulk of attention on Tuesday, as activity raged throughout the morning session and lasted until the closing bell.

Valeant Pharmaceuticals International, Inc. announced two separate asset sales late Monday and early Tuesday that totaled $2.1 billion, a dent in the company’s $30 billion debt load.

“There was tons of trades in all the bonds” for Valeant, a trader said.

Though it had been trending lower in previous sessions, Avaya Inc. saw increases in several of its distressed securities on the session, traders said. The news comes on the heels of the company calling for new terms of debtor-in-possession financing, according to a trader.

Retailer Neiman Marcus Group, Inc. saw an uptick in activity, a market source said, and seemed to reel in from previous sessions that felt the effects of retailers announcing disappointing holiday earnings.

Bonanza Creek Energy, Inc. pared some gains from the last few momentous sessions, mirroring the about-face its equity made on the session.

Several other one-off names in the exploration and production sector traded up as oil futures declined for the second-consecutive session.

Valeant asset sale causes surge

Late Monday, Valeant announced it had sold all its outstanding equity interests in Dendreon Pharmaceuticals, Inc. to Sanpower Group Co., Ltd. for $819.9 million, according to a press release.

Valeant will use proceeds from the sale of Dendreon to permanently repay term loan debt under its senior secured credit facility.

“With this sale, we are better aligning our product portfolio with Valeant's new operating strategy by exiting the urological oncology business, which is one of our non-core assets,” said Valeant’s chief executive officer Joseph C. Papa in the press release.

The deal is slated to be completed in the first half of 2017.

Less than a day later on Tuesday, the Quebec-based pharmaceutical company followed up with an announcement of another asset sale to sell its CeraVe, AcneFree and AMBI skincare brands to L'Oréal for $1.3 billion in cash, according to a press release.

The proceeds of the sale, which is set to conclude in the first quarter of 2017, will go toward permanently repaying the term loan debt under its senior credit facility.

Traders said all of the pharmaceutical company’s distressed notes were higher during Tuesday’s trading, several by multiple-point spreads.

The 7% notes due 2020 were up 4 points to 72¾, followed by the 6 3/8% notes due 2020, which were up 3¼ points to 91¼.

Following that were the 7½% notes due 2021, up 3½ points to 90½, a trader said. A market source quoted the notes up 3 points to the same level.

Rounding out Valeant were its 6 1/8% notes due 2025, which were up 2 points to 78, a market source said.

“It goes on and on,” a trader said, referring to the list of increases coming from the company on the day.

The deals also come a day after Takeda Pharmaceutical Co. – seen previously as a potential bidder for Valeant’s Salix Pharmaceuticals – bought Ariad Pharmaceuticals for $5.2 billion, further enhancing the question of whether or not the Japanese pharmaceutical company will continue to pursue Salix, as it had been rumored to do for roughly $10 billion.

Other healthcare

Pharmaceutical company Endo Finance Co. (Endo Pharmaceuticals plc) saw a modest 1/8-point gain in its 6½% notes due 2025, which were up to 85½, a market source said.

Hospital operator Community Health Systems, Inc.’s 6 7/8% notes due 2022 were up 1 point to 77, a trader said, and the 5 1/8% notes due 2021 were unchanged at 95.

Avaya changes tune

Though trending lower in previous sessions – possibly due to a potential Chapter 11 filing in the not-too-distant future – Avaya Inc.’s distressed notes changed direction on Tuesday, a trader said.

The 7% notes due 2019 were “very active” and traded up ½ point to 82½.

Mirroring the gain were the company’s 7% notes due 2019, which finished with an 82½ handle, a trader said.

On Monday, a trader told Prospect News that the notes had been trending lower once news was released about the company calling for new terms of debtor-in-possession financing.

Neiman springs back

The luxury retailer seems to have reeled in from several brick-and-mortar retailers announcing disappointing holiday sales last week.

Among them, Macy’s Inc., Sears Holdings Corp. and L Brands Inc. all announced cuts of some sort to their brands.

On Tuesday, Neiman Marcus Group saw gains across the board in its distressed notes, including the 8% notes due 2021, which were up 1½ points to 68½, a trader said.

The 8¾% notes due 2021 were up 1 point to 65½.

Bonanza does about-face

The energy and exploration production company, which surged for several consecutive sessions on its Chapter 11 filing last week, swung the other way on Tuesday, a market source said, possibly a result of profit-taking for activities that became very active the past few sessions.

The 5¾% notes due 2023 were down 1 point to 87¾, a market source said.

Bonanza’s 6¾% notes due 2021 mirrored the same losses and settled with an 87 handle.

E&P mixed

As oil futures declined for the second-straight day, a few E&P companies saw mixed movement.

Pacific Drilling Co.’s 5 3/8% notes due 2020 were up 1¾ points to 38¼, a trader said.

And Denbury Resources’ 6 3/8% notes due 2021 were down 1¼ points to 93, a market source said.

Distressed miscellany

iHeartCommunications, Inc.’s 9% notes due 2021 were down 3/8 point to 75¼, and its 14% notes due 2021 were down ½ point to 35¼, a trader said.

Claire’s Stores Inc.’s 9% notes due 2019 were down ¼ point to 52½.

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