Hertz notes eyed as company preps stock sale; Pyxus rises after bankruptcy filing

By James McCandless

San Antonio, June 15 – Throughout the Monday session, the newsmakers of the previous week remained in the spotlight in the distressed debt market.

Hertz Global Holdings, Inc.’s notes varied in direction as the company said it would move forward with a plan to sell $500 million more common stock.

Meanwhile, Pyxus International, Inc.’s issues rose after filing for Chapter 11 bankruptcy on Monday.

In the air travel space, United Airlines Holdings, Inc.’s paper diverged after accepting $5 billion in federal loans.

Sector peer American Airlines Group Inc.’s notes also saw mixed movements.

Oil and gas name Valaris plc’s issues were under pressure after announcing that it was skipping an interest payment.

As futures opened the week with a boost, Occidental Petroleum Corp.’s and Whiting Petroleum Corp.’s paper followed as Antero Resources Corp.’s notes weakened.

Elsewhere, in retail, Party City Holdco Inc.’s issues finished with differing results in the wake of its Q1 earnings report.

Hertz notes eyed

Hertz’s notes varied in direction during the Monday session, traders said.

The 6% senior notes due 2028 dropped 5 points to close at 43½ bid. The 7 1/8% senior notes due 2026 picked up 2¼ points to close at 43¾ bid.

The two tranches combined saw about $34 million trading.

Early Monday, the Estero, Fla.-based car rental company announced in a Securities and Exchange Commission filing that it was moving forward with its plan to sell up to $500 million in additional common stock.

The company’s bankruptcy judge granted it permission to issue up to $1 billion on Friday.

Hertz is offering the common stock despite telling the judge on Friday that the stock may ultimately be worthless, reiterating the warning in the filing.

“This is crazy,” a trader said. “Nothing like this has ever happened. The only way that any of these people get their money back is if the creditors are all paid back in full. That doesn’t seem likely. The company says that’s probably not going to happen.”

The company said that meeting those conditions would require a “significant and rapid and currently unanticipated improvement” in business conditions.

Pyxus rises

Meanwhile, tobacco name Pyxus’ issues were seen rising, market sources said.

The 9 7/8% notes due 2021 tacked on 4½ points to close at 13½ bid. The 8½% notes due 2021 improved by 3 points to close at 93 bid.

Before the market opened on Monday, the Morrisville, N.C.-based tobacco products producer announced that it and its Alliance One International, LLC, Alliance One North America, LLC, Alliance One Specialty Products, LLC and GSP Properties, LLC subsidiaries made a pre-packaged Chapter 11 bankruptcy filing, Prospect News reported.

The company entered into a restructuring support agreement with holders of more than 92% in principal amount of its first-lien notes and more than 67% in principal amount of its second-lien notes.

Debtor-in-possession financing in the amount of $206.7 million has been secured.

The company hopes to slash its debt by about $400 million.

Airlines eyed

In the air travel space, United Airlines’ paper diverged, traders said.

The 5% senior notes due 2024 shaved off ¼ point to close at 83 bid. The 4¼% senior paper due 2022 garnered ½ point to close at 87½ bid.

News broke on Monday that the Chicago-based airline is raising $5 billion to help weather the coronavirus pandemic, with a majority through emergency economic funding through the federal government.

The company plans to borrow $4.5 billion, backed by its frequent flier program as collateral.

Separately, the company expects to receive about $1 billion in proceeds from a planned common stock sale of 28 million shares.

“The loyalty programs as collateral makes sense,” a trader said. “It would look really bad if airlines started selling planes.”

Fort Worth-based sector peer American Airlines’ notes also saw mixed movements.

The 5% senior notes due 2022 held level at 66 bid. The 3¾% senior notes due 2025 rose 4¼ points to close at 60 bid.

Valaris down

Oil and gas name Valaris’ issues were under pressure, market sources said.

The 5.2% senior notes due 2025 lost 2 points to close at 7 bid. The 7¾% senior notes due 2026 dropped 6¼ points to close at 6¾ bid.

On Monday morning, the London-based contract driller announced that it had elected to skip a $13.5 million interest payment on its 7 3/8% senior notes due 2025.

The nonpayment triggered a 30-day forbearance period, during which it will hold talks with bondholders as it works to grapple with its $6.5 billion debt load.

As of June 12, the company said that it had about $208 million in cash.

Oil futures boosted

As energy futures opened the week with a boost, distressed energy names joined the trend, traders said.

West Texas Intermediate crude oil futures for July delivery gained 86 cents to close the day at $37.12 per barrel.

North Sea Brent crude oil futures for August delivery finished at $39.72 per barrel after a 99 cent bump.

Houston-based independent oil and gas producer Occidental Petroleum’s paper followed futures upward.

The 2.9% senior notes due 2024 pushed up 2 points to close at 85½ bid. The 2.7% senior paper due 2022 grabbed 2¼ points to close at 93¼ bid.

Denver-based producer Whiting Petroleum’s notes also tracked higher.

The 6¼% senior notes due 2023 picked up 1¼ points to close at 18 bid. The 6 5/8% senior notes due 2026 gained ½ point to close at 16½ bid.

Antero Resources, another Denver-based producer, saw its issues slide under pressure.

The 5 5/8% senior notes due 2023 slipped ½ point to close at 63 bid.

Party City active

Elsewhere, in the retail sector, Party City’s paper differed in direction, market sources said.

The 6 1/8% senior notes due 2023 closed level at 20 bid. The 6 5/8% senior paper due 2026 gained 1¾ points to close at 20 bid.

On Friday, the Elmsford, N.Y.-based party supplies name released its earnings report for the first quarter.

The company reported a loss per share of 28 cents and revenues of $414 million, both falling short of analyst expectations.

Like many others in the retail space, the company has seen increased pressure as the pandemic forced it to temporarily shutter retail locations.

Last month, a transaction support agreement was struck to exchange senior notes and reduce its balance sheet by about $450 million.

© 2015 Prospect News.
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