SM Energy notes eyed as exchange amended; Tupperware Brands dips amid tender offer

By James McCandless

San Antonio, June 1 – The distressed debt market started the week with a focus on energy and retail names.

SM Energy Co.’s notes varied in direction after the company announced amendments to its exchange offers for five series of notes.

As oil futures saw mixed movements, Occidental Petroleum Corp.’s issues mirrored that movement while Gulfport Energy Corp.’s paper fell and Superior Energy Services, Inc.’s notes gained.

Meanwhile, multi-level marketer Tupperware Brands Corp.’s issues dipped by the close amid a cash tender offer.

In the retail space, Party City Holdco Inc.’s paper diverged in the wake of reaching a transaction support agreement with creditors.

Sector peer Revlon, Inc.’s notes were under pressure.

Utilities name PG&E Corp.’s issues were pushed higher after state regulators approved the company’s reorganization plan last week.

Elsewhere, United Airlines Holdings, Inc.’s paper improved as the company prepares for cost cutting measures.

SM Energy active

SM Energy’s notes varied in direction to kick off the week’s activity, traders said.

The 5 5/8% senior notes due 2025 gained 1½ points to close at 52½ bid. The 6 5/8% senior notes due 2027 shed 1 point to close at 50¼ bid.

On Monday morning, the Houston-based independent oil and gas producer said it amended its previously announced exchange offers after reaching an agreement with some holders of the existing notes, Prospect News reported.

The company is now offering to exchange five series of existing notes for newly issued 10% senior secured notes due 2025.

Also, the company reached an agreement with some holders of the old notes to privately issue $213.5 million of new 10% notes due 2025 in exchange for $316.4 million of old notes.

“Seems like they’re sweetening the pot to get the exchange done,” a trader said.

The expiration on the offer was extended to 11:59 p.m. ET on June 12.

Oil futures mixed

As oil futures saw mixed movements, distressed energy tranches saw similar non-cohesion, market sources said.

West Texas Intermediate crude oil futures for July delivery shaved off 5 cents to settle at $35.44 per barrel.

North Sea Brent crude oil futures for August delivery moved up 48 cents to end the day at $38.32 per barrel.

Houston-based producer Occidental Petroleum’s issues mirrored futures’ movements.

The 2.9% senior notes due 2024 rose ½ point to close at 80½ bid. The 2.7% senior notes due 2022 slipped ¾ point to close at 91½ bid.

Oklahoma City-based peer Gulfport Energy’s paper fell.

The 6% senior notes due 2024 shaved off ¾ point to close at 58 bid. The 6 3/8% senior paper due 2025 were pushed down ¼ point to close at 50¼ bid.

Houston-based oilfield services provider Superior Energy’s notes gained ground.

The 7 1/8% senior notes due 2021 shot up 7½ points to close at 37 bid. The 7¾% senior notes due 2024 gained 3 points to close at 35 bid.

Tupperware lower

Meanwhile, housewares name Tupperware’s issues dipped, traders said.

The 4¾% senior notes due 2021 gave back 2¾ points to close at 40¾ bid.

Last week, the Orlando, Fla.-based multi-level marketer announced an offer to purchase for cash up to $175 million of its $600 million outstanding of the 2021 notes.

Holders will be eligible to receive $450 for each $1,000 principal amount of notes they tender and that are accepted for purchase.

The move triggered ratings cuts from S&P Global Ratings and Moody’s Investors Service.

Moody’s slashed the company’s corporate family rating, probability of default rating and senior unsecured notes rating.

Both agencies said that they view the offer as a distressed exchange.

Party City diverges

In the retail space, Party City’s paper diverged, market sources said.

The 6 1/8% senior notes due 2023 closed level at 16½ bid. The 6 5/8% senior notes due 2026 improved by ¼ point to close at 16 bid.

On Friday, the Elmsford, N.Y.-based party supplies retailer said that it had reached a transaction support agreement with holders of more than 52% of the two series of notes.

The measure is supposed to lead to a debt reduction of $450 million while raising $100 million in new capital.

The company expects to kick off an exchange offer for the 2023 and 2026 issues in June, for which holders would receive shares of common stock, $100 million of 10% second-lien senior secured notes due 2026 and $185 million of first-lien variable-rate senior secured notes due 2025.

New York-based cosmetics producer Revlon’s notes were under pressure.

The 5¾% senior notes due 2021 chalked off 1 point to close at 64½ bid. The 6¼% senior notes due 2024 were docked 1 point to close at 16 bid.

PG&E higher

Utilities name PG&E’s issues were pushed higher by the end of the day, traders said.

The 6.05% notes due 2034 gained ½ point to close at 114¾ bid.

Near the end of last week, the California Public Utilities Commission approved the San Francisco-based bankrupt electric utility and Pacific Gas and Electric Co.’s plan of reorganization.

As part of the agreement, the company agreed to several measures to improve PG&E’s governance process, operational structure and safety.

The utility can also issue new debt as it exits bankruptcy.

By the end of June, PG&E plans to complete the bankruptcy process.

United Airlines up

Elsewhere, United Airlines’ paper improved, market sources said.

The 5% senior paper due 2024 tacked on ½ point to close at 72¼ bid. The 4¼% senior notes due 2022 rose ½ point to close at 81 bid.

The Chicago-based airline’s structure has seen heightened activity as the company prepares to implement cost cutting measures.

Chief executive officer Scott Kirby told employees last week that demand for flights could be reduced by 30% to 70% in the short term and to prepare for cuts to labor costs.

As part of the announcement, Kirby said that chief operating officer Greg Hart would step away from the role to focus on how to streamline the company’s balance sheet.

© 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.