Alta Mesa notes crash after financial reporting news; Windstream issues gain as bankruptcy process starts

By James McCandless

San Antonio, Feb. 26 – The Tuesday session in the distressed space saw more focus on oil and telecom names.

Alta Mesa Resources, Inc.’s notes crashed after the company after announced preliminary Q4 results, including about $3.1 billion in write-downs.

Elsewhere in oil and gas, better oil futures led to positive movement for Sanchez Energy Corp.’s and PHI, Inc.’s issues while California Resources Corp.’s paper also improved.

In telecom, Windstream Holdings, Inc.’s notes recovered somewhat as the company worked through its first day of bankruptcy proceedings.

Telecom REIT Uniti Group Inc.’s issues also rose.

Drug-maker Mallinckrodt plc’s paper saw a boost after the company beat earnings expectations.

Sector peer Teva Pharmaceutical Industries Ltd.’s notes declined.

Vehicle rental name Hertz Global Holdings, Inc.’s issues were on the rise despite the company posting a Q4 loss.

Alta Mesa crashes

Energy name Alta Mesa’s notes crashed in the Tuesday session, traders said.

The 7 7/8% notes due 2024 saw a 16¾ point free fall to close at 30 bid.

On Tuesday, the Houston-based independent oil and gas producer disclosed that it is under investigation by a law firm for self-identified “ineffective internal control over financial reporting.”

It also expects to see $3.1 billion in non-cash impairment charges.

After the close on Monday, the company announced preliminary fourth-quarter results, showing net production of about 37,600 barrels of oil per day.

Although it reported that it had six active oil rigs at the end of 2019, that count was reduced to zero by the end of January.

The company faced market pressure and ratings downgrades following the departure of its chief executive, operating and financial officers in December and January.

“The last few months have been a disaster,” a trader said. “There should be a restructure coming soon.”

Energy names trend up

Elsewhere in the oil and gas space, distressed oil tranches mostly followed futures upward, market sources said.

Houston-based producer Sanchez Energy’s issues were better.

The 6 1/8% notes due 2023 added 1½ points to close at 17½ bid.

Lafayette, La.-based offshore transportation name PHI’s paper also improved.

The 5¼% paper due 2019 picked up 1 point to close at 66 bid.

Los Angeles-based sector peer California Resources’ notes went the opposite direction.

The 8% notes due 2022 traded down 1 point to close at 79 bid.

West Texas Intermediate crude oil futures for April delivery saw a slight 2 cent gain on Tuesday, closing at $55.50 per barrel.

North Sea Brent crude futures for April delivery ended at $65.21 per barrel after a 45 cent gain.

Windstream gains

Meanwhile, in telecom, Windstream’s issues gained, traders said.

The 9% notes due 2025 gained 6 points to close at 58 bid. The 10½% notes due 2024 jumped 5 points to close at 60 bid.

A day after the Little Rock, Ark.-based rural communications name filed for Chapter 11 bankruptcy, the company began court proceedings.

In bankruptcy court on Tuesday, it requested access to $1 billion in debtor-in-possession financing, Prospect News reported.

Also on Tuesday, Moody’s Investors Services downgraded the probability of default rating of subsidiary Windstream Services, LLC.

The company filed for bankruptcy two weeks following a court ruled that it was in default on its bonds after a 2015 spinoff.

“I suspect that the bonds will settle in at the levels they’re at right now after these volatile days,” a trader said.

Uniti rises

Closely related Uniti’s paper was also on the rise, market sources said.

The 8¼% paper due 2023 picked up 3¾ points to close at 86¼ bid. The 6% paper due 2023 gained 1¼ points to close at 93 bid.

The Little Rock, Ark.-based real estate investment trust was the segment that Windstream spun off in 2015, though Uniti was not party to the recent litigation.

The company continues to receive a majority of its revenue from Windstream.

Mallinckrodt better

Mallinckrodt’s notes were better in Tuesday activity, traders said.

The 4¾% notes due 2023 rose 3½ points to close at 81½ bid.

Early Tuesday, the Dublin-based drug maker issued a better-than-expected earnings report for the fourth quarter.

It showed a profit of $2.18 per share, beating analyst estimates of $1.98 per share.

The company also reported $834.9 million in revenues.

Petah Tikva, Israel-based sector peer Teva’s issues declined.

The 3.15% notes due 2026 lost ¾ point to close at 83½ bid. The 4.1% notes due 2046 shaved off ¼ point to close at 73¼ bid.

Hertz improves

Also reporting earnings, Hertz’ paper was also on the rise, market sources said.

The 5½% paper due 2024 improved by 2 points to close at 88 bid.

On Tuesday morning, the Estero, Fla.-based vehicle rental name gained despite reporting a loss for the fourth quarter.

It showed a 55 cents per share loss, outpacing analyst predictions of an 82 cents per share loss.

It also beat estimates for revenue, posting $2.29 billion.

© 2015 Prospect News.
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