Hexion drops after board member resigns; Bristow crashes on earnings, nixed deal

By James McCandless

San Antonio, Feb. 11 – The distressed space opened a new week on a downbeat tone with negative news across the spectrum.

Hexion Inc.’s notes saw a substantial drop after news broke that Scott Kleinman, co-president of the investment firm that owns the name, had resigned from its board of directors.

Elsewhere, Bristow Group Inc.’s issues crashed in after-hours trading following news of an earnings loss and the cancellation of its acquisition of Columbia Helicopters.

Showing more weakness in the space, sector peer PHI, Inc.’s paper was also negative.

Meanwhile, Range Resources Corp.’s notes were active but steady after reporting positive natural gas reserves for 2018.

Weaker oil futures were the backdrop for improvements in Rowan Cos. plc’s and Weatherford International plc’s issues while Ensco plc’s paper went negative.

In utilities, PG&E Corp.’s notes were better amid news that only half of its board of directors would remain following a May shareholders meeting.

Retailer L Brands, Inc.’s issues were mixed in anticipation of January sales figures.

Hexion drops

Hexion’s notes were falling in the Monday session, traders said.

The 6 5/8% notes due 2020 lost ¼ point to close at 83 bid. The 9% notes due 2020 fell 5 points to close at 35½ bid.

On Monday, news broke that Scott Kleinman, co-president of Apollo Management, had resigned from the Columbus, Ohio-based chemicals producer’s board of directors.

Apollo owns the company.

Hexion’s structure has been under pressure in recent months as second-lien holders became increasingly concerned that they would not be able to recoup value from $2.4 billion of bonds maturing in 2020.

The holders have started to organize, pushing the company to use certain assets as collateral and buying out first-lien holders.

“As much as there has been a real decline here, things could start to really unravel unless a deal is made to placate the second-lien holders,” a trader said.

Bristow crashes

After the market closed Bristow’s issues crashed on negative news, market sources said.

The 8¾% notes due 2023 dropped 10 points to 72½ bid in after-hours trading. The 6¼% notes due 2022 crashed 13½ points to 35 bid, also after market close.

While seeing little activity during Monday trading, the Houston-based offshore helicopter name’s structure came alive after it announced a loss for the third quarter and the termination of its proposed acquisition of Columbia Helicopters.

The company reported a loss of 57 cents per share, narrowly beating analyst estimates of a 59 cents per shares loss.

The now cancelled $560 million acquisition was announced in November, then was cast in doubt in January after the move was delayed amid doubts from stakeholder.

Late last Friday, Prospect News reported that Bristow was working to secure a bridge loan for $300 to $400 million to back the acquisition.

“A lot of these oil names are making hasty calls,” a trader said. “Bristow in particular seemed to go for this before building any kind of support for it. They’re now seeing the consequences of that.”

PHI moves down a point

Elsewhere in the helicopter space, PHI’s paper was also lower, traders said.

The 5¼% paper due 2019 took off 1 point to close at 69¾ bid.

The Lafayette, La.-based offshore transporter has also showcased the weakness in the helicopter space as it hurtles towards the March maturity date of its 2019 notes with few options remaining for refinancing.

Range Resources flat

Meanwhile, Range Resources’ notes were active but level, market sources said.

The 4 7/8% notes due 2025, while pushing as high as 90½ bid, closed level at 89½ bid, according to Trace data.

The Fort Worth-based natural gas producer’s notes were positive on Monday after it reported positive reserves for 2018.

It stated that it added 3.1 trillion cubic feet equivalent (CFE) of new natural gas reserves in the last year, bringing its total to 18.1 trillion CFE.

Oil names mixed

A negative day for oil futures led to mixed results for distressed tranches, traders said.

Houston-based contract driller Rowan’s issues gained.

The 4 7/8% notes due 2022 picked up 1¾ points to close at 89¾ bid.

On Friday, two proxy advisors recommended that its shareholders vote in favor of a proposed merger with London-based sector peer Ensco.

Conversely, Ensco’s notes were off.

The 7.2% notes due 2027 lost 1 point to close at 77½ bid. The 7¾% notes due 2026 shed 2½ points to close at 80¼ bid.

Baar, Switzerland-based oilfield services name Weatherford’s paper was better, though.

The 9 7/8% paper due 2023 added ¼ point to close at 71 bid.

West Texas Intermediate crude oil futures for March delivery fell 31 cents to close the session at $52.41 per barrel.

North Sea Brent crude oil futures for March delivery ended at $61.51 per barrel after dropping 59 cents.

PG&E better

In the utilities space, PG&E’s issues continued its positive streak, market sources said.

The 6.05% notes due 2034 added ½ point to close at 88½ bid.

The San Francisco-based bankrupt electric utility announced on Monday that only five members of its board of directors would remain in their positions following a May shareholders meeting.

Hedge fund BlueMountain Capital Management LLC, a large investor in the name, has been calling for the replacement of the entire board.

L Brands mixed

L Brands’ paper was mixed, traders said.

The 6¾% paper due 2036 lost ¾ point to close at 85 bid. The 5¼% paper due 2028 picked up ½ point to close at 88½ bid.

The Columbus, Ohio-based retailer’s paper was trading in anticipation of the company’s release of its January sales figures, which were released after the close on Monday.

Retailers have started the year under more scrutiny, as a handful of smaller retailers have filed for bankruptcy in recent weeks.

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