Endo rallies on latest opioid settlement; Mallinckrodt mixed; Envision notes soft

By Cristal Cody

Tupelo, Miss., Sept. 10 – Endo International plc’s bonds rallied over 3 points on Friday following the company’s late Thursday announcement that it settled an opioid-related lawsuit for $50 million.

Other distressed pharmaceutical issuers were active during the session.

Mallinckrodt LLC’s paper traded flat to about ½ point better.

Distressed health care paper was lower over the short holiday week, a source said.

Envision Healthcare Corp.’s 8¾% senior notes due 2026 (Ca/CCC-) ended the day ½ point down after losing 6 points on Wednesday and Thursday.

Bonds in the distressed energy space were mixed in light trading as equities closed lower and oil prices recovered.

Talen Energy Supply LLC’s notes softened about ½ point to 1 point on Friday after the paper traded up about 2½ points in the prior session.

Endo heads higher

Endo Finance LLC’s 6% senior notes due 2028 (Caa3/CCC+) climbed to as high as 69½ bid on Friday in heavy trading before finishing the session still stronger on the day at 67½ bid, a source said.

The notes traded at 64¼ bid on Thursday.

Endo said in a news release after the markets closed on Thursday that subsidiaries Endo Health Solutions Inc., Endo Pharmaceuticals Inc., Par Pharmaceutical, Inc. and Par Pharmaceutical Cos, Inc. settled three consolidated cases in New York’s Suffolk County Supreme Court for $50 million.

The company said it is also exploring other strategic alternatives that it may implement if a global settlement cannot be reached.

The New York settlement follows the Dublin-based pharmaceuticals maker’s announcement on July 22 that Endo Health and Endo Pharmaceuticals reached a $35 million opioid-related settlement in the Circuit Court for Sullivan County, Tenn.

That settlement followed the July 21 state and local governments settlement of up to $26 billion with Johnson & Johnson and distributors AmerisourceBergen Drug Corp., Cardinal Health Inc. and McKesson Corp. over the opioid epidemic.

New York attorney general Letitia James announced on Friday that the agreement does not release Endo from any claims by the New York Department of Financial Services or plaintiffs still suing the company within the state.

James filed the lawsuit in March 2019 against opioid manufacturers and affiliates that included Purdue Pharma, Janssen Pharmaceuticals, Mallinckrodt, Endo, Teva Pharmaceuticals USA, Inc. and Allergan Finance, LLC. The distributors named in the complaint were McKesson, Cardinal Health, Amerisource Bergen and Rochester Drug Cooperative Inc.

The cases against Mallinckrodt and Rochester Drug Cooperative are moving separately through U.S. Bankruptcy Court.

The trial against remaining defendants Teva Pharmaceuticals and Allergan Finance is underway in state court.

Mallinckrodt flat to higher

Mallinckrodt’s paper traded flat to about ½ point better during the session, a source said.

The 5½% notes due 2025 rose ½ point to head out at 67 bid.

A confirmation hearing for the bankrupt pharmaceuticals maker’s joint Chapter 11 plan of reorganization and disclosure statement is scheduled for Sept. 21-22.

The company, based in Dublin and St. Louis, filed for Chapter 11 bankruptcy on Oct. 12, 2021 in the U.S. Bankruptcy Court for the District of Delaware.

Envision notes down

Meanwhile, Envision Healthcare’s 8¾% senior notes due 2026 (Ca/CCC-) fell ½ point on Friday to 83½ bid, a source said.

The notes were under pressure in the back half of the week with the issue losing 1¼ points on Thursday and 4¾ points on Wednesday.

The health care company is based in Nashville.

Talen notes slip

Talen’s 6½% senior notes due 2025 (B3/CCC/B-) fell ½ point to 43 bid over the session, sending the notes out about 1½ points softer on the week, a source said.

The Woodlands, Tex., and Allentown, Pa.-based power company’s 10½% senior notes due 2026 (B3/CCC/B-) also traded down 1 point to 46 bid by the close. The issue was about 1 point softer on the week.

Distressed returns soften

Stocks remained weak on Friday, while measured volatility climbed more than 10% over the day.

The iShares iBoxx High Yield Corporate Bond ETF closed down 13 cents to $87.83.

The Chicago Board Options Exchange’s CBOE Volatility index climbed over 11% to 20.95.

Crude oil prices rallied over the session. West Texas Intermediate crude oil benchmark futures for October deliveries settled up $1.58 at $69.72 a barrel.

Distressed index returns were soft over the back half of the week.

The S&P U.S. High Yield Corporate Distressed Bond index total return was minus 0.12% on Thursday, compared to minus 0.12% on Wednesday and 0.08% on Tuesday.

Month-to-date total returns declined to 0.25% on Thursday versus 0.37% on Wednesday and 0.49% on Tuesday.

Distressed year-to-date total returns were 27.01% in the prior session, down from 27.16% on Wednesday and 27.31% on Tuesday.

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