Avaya up on DIP financing; Neiman Marcus recoups loss from Monday; E&P holds steady; pharma mixed

By Colin Hanner

Chicago, Jan. 24 – One distressed company continued its rebound on Tuesday following approval of debtor-in-possession financing the previous day, a trader said, and, for the most part, normal activity resumed on the session with no truly big movers.

Avaya, Inc. followed an upswing from Monday’s session with an increase in two sets of distressed securities off court approval that the company will be able to use $425 million of a proposed $725 million DIP financing facility on an interim basis.

“There were loads and loads of trades there,” a trader said.

Neiman Marcus Group, Inc. pared the previous session’s losses with gains that all but erased the declines, a market source said, a shimmer of rebounding for the traditional retailer that has been the subject of falling sessions in recent weeks.

In the exploration and production sector, California Resources Corp. saw “lots of trades” on a modest bump in its most popular distressed bonds.

Offshore driller Pacific Drilling reversed gains from Monday, and Noble Corp. showed slight gains on Tuesday following a contract with Saudi Aramco.

Community Health Systems, Inc. was active though unchanged, a trader said, Valeant Pharmaceuticals International, Inc. was down “a pinch,” and Concordia International Corp. was up, albeit slightly.

Though activity remains low, Peabody Energy Corp. continued to receive some shouts from the sidelines with an impending restructuring deal.

And trading in iHeartCommunications, Inc. and Intelsat Jackson Holdings SA – some of the distressed market’s most notables – were trading mixed on the day.

Avaya up on DIP loan

In response to news of approved DIP financing – which will go before a final hearing on Feb. 8 – Avaya’s distressed securities got another bump on Tuesday.

The Santa Clara, Calif.-based business collaboration and communications service’s 7% notes due 2019 were up “1 [point] and change” to 85 5/8, while the 9% notes due 2019 were up ¾ point to 85, a trader said.

Avaya obtained court approval to use $425 million of a proposed $725 million debtor-in-possession financing facility on an interim basis, according to an order filed Monday with the U.S. Bankruptcy Court for the Southern District of New York.

Avaya said this DIP financing, combined with its cash from operations, is expected to provide sufficient liquidity during the Chapter 11 cases to support its continuing business operations and minimize disruption.

Neiman rebounds

The past week for retailer Neiman Marcus has been a series of steep declines, but those halted and reversed course on Tuesday, with several of the notes seeing increases.

“All the losses were recouped today,” a trader said.

The 8% notes due 2021 rebounded to 64, a 4-point increase on the session, a trader said.

Neiman’s 8¾% notes due 2021 saw a similar gain, trading up 4 5/8 points to 60.

E&P continues gains

It was more of the same in the E&P sector on the session.

West Texas Intermediate crude flirted with a 1% gain before retreating and finishing at $53.18.

California Resources’ 8% notes due 2022 followed oil future’s movement and were active, a market source said, trading up ½ point to 88½.

Pacific Drilling reversed course in its 5 3/8% notes due 2020, which were down 2½ points to 46½.

Fellow driller Noble Corp. continued its modest gains in its 5¼% notes due 2022, which were up ½ point to 72, a trader said.

Pharma mixed, Community Health up

One of the pharmacy industry’s biggest companies came out with fourth quarter figures on Tuesday and were largely seen as missing the mark, several media outlets reported.

Johnson & Johnson’s pharmaceutical division sales were seen as the culprit of the less-than-hoped for results, and the high price of some medications, which have come under the scrutiny of President Donald Trump, was mentioned in the release.

The contagion of the unremarkable results may have spread to distressed pharmaceutical company Valeant Pharmaceuticals, which has come under federal scrutiny for price inflation of certain drugs.

A trader said the 6 1/8% notes due 2025 traded down 1/8 point to 75 3/8.

On the other hand, Concordia International’s 9½% notes due 2022 were up ½ point to 43¾, a market source said.

For up-in-the-air healthcare groups that are awaiting the policy measures brought down by Republican-controlled executive and legislative branches, Community Health Systems took a bit of a breather on the session.

A trader said the 6 7/8% notes due 2022 were unchanged, though active, with a 70 handle, and the 8% notes due 2019 were up ½ point to 78 on a half-dozen trades.

Community Health’s 5 1/8% notes due 2021 were up a ¼ point to 94½, a market source said.

Peabody down with robust talks

Though “still not very active,” a market source saw Peabody Energy Corp.’s 6½% notes due 2020 down ¾ point to 50½.

The flurry of activity on the sideline in Peabody’s restructuring talks continued, between debtors and another opposition that entered the mix.

“The current plan of reorganization ... is presently the only plan that provides a certain and timely exit from these Chapter 11 cases,” said Peabody in a filing with the U.S. Bankruptcy for Eastern District of Missouri on Tuesday.

Berenergy Corp. filed an objection to the plan, claiming that Peabody could lose $1 billion in revenue in connection with litigation between the two companies and that the plan does not spell out how the company might mitigate that loss, according to a filing with the U.S. Bankruptcy Court for the Eastern District of Missouri.

Notables mixed

iHeartCommunications, Inc.’s 9% notes due 2021 were “pretty much unchanged” at 76 3/8, a trader said.

A market source said the 10% notes due 2018 were up “a few more points” on the session to 78 on the heels of an increased participation rate in an exchange offer.

Intelsat Jackson Holdings SA’s 7¼% notes due 2020 were unchanged at 73¼, a trader said, while the 7¼% notes due 2019 were down ¼ point to 81¾, a market source said.

Caroline Salls contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.