Bombardier notes gain as term loan arranged; AMC drifts as lenders claim default

By James McCandless

San Antonio, July 22 – In the midpoint of the week, the distressed debt space saw a positive trend across several sectors.

Bombardier Inc.’s notes were seen gaining after news broke of the company securing a three-year senior secured term loan.

Meanwhile, theater chain AMC Entertainment Holdings Inc.’s issues drifted lower as its lenders claim that the company is in default.

In the airline space, United Airlines Holdings, Inc.’s paper was carried higher as the market reacted to its second-quarter earnings release.

Sector peer American Airlines Group Inc.’s notes varied in direction.

While oil futures weakened, Chesapeake Energy Corp.’s issues slipped while Occidental Petroleum Corp.’s and Whiting Petroleum Corp.’s paper saw positivity.

Car rental company Hertz Global Holdings, Inc.’s notes were under pressure a day after announcing a deal to quash a lender dispute.

Elsewhere, in the REIT space, CBL & Associates Properties, Inc.’s issues diverged.

Bombardier gains

Bombardier’s notes were seen gaining by the session’s conclusion, traders said.

The 7½% senior notes due 2025 rose 2½ points to close at 75½ bid. The 6% senior notes due 2022 jumped up 4 points to close at 88 bid.

About $51 million of the notes were on the tape.

Early Wednesday morning, the Montreal-based air and rail manufacturer announced that it has secured up to C$1 billion through a commitment for a three-year senior secured term loan, Prospect News reported.

The funds for the term loan are from funds and accounts managed by HPS Investment Partners, LLC.

The facility is expected to be in place in Q3 2020.

Proceeds will go to bolstering its capital.

Concurrently, the company reported cash usage that was $500 million better than previously expected.

“For them, it’s trying to find the quickest way to return to normal,” a trader said. “Maintaining their liquidity is the priority.”

AMC lower

Meanwhile, entertainment name AMC’s issues drifted lower, market sources said.

The 5 7/8% senior subordinated notes due 2026 gave up 1 point to close at 26¼ bid. The 5¾% senior subordinated notes due 2025 lost 3¼ points to close at 25½ bid.

Reports indicated on Wednesday that a group of the Leawood, Kan.-based movie theater chain’s lenders have alleged that the company is in default.

A group that represents the majority of a $2 billion term loan sent AMC a notice of default for failing to provide information on a planned debt swap, which they say violates the terms of its credit agreement.

AMC has provided the group with additional details, though the creditors do not view the supplement as sufficient.

Last week, the company raised $300 million from private equity firm Silver Lake as part of a debt cutting deal.

Airlines active

In the airline space, United Airlines’ paper was carried higher, traders said.

The 5% senior notes due 2024 tacked on 2 points to close at 84½ bid. The 4¼% senior paper due 2022 rose ½ point to close at 88 bid.

At the end of the Tuesday session, the Chicago-based carrier released its earnings report for the second quarter.

The company showed a loss per share of $9.31, worse than what analysts predicted at $9.02 per share.

Revenues were better than expected at $1.48 billion.

The airline also reported that it was burning cash at a rate of $40 million per day with expectations of $25 million per day in the third quarter.

United has said that it has sent out about 36,000 potential furlough notices to its U.S. workers.

Fort Worth-based sector peer American Airlines’ notes varied in direction.

The 5% senior notes due 2022 held level at 57¾ bid. The 3¾% senior notes due 2025 grabbed ¾ point to close at 50 bid.

Oil futures little changed

While oil futures weakened slightly, distressed energy tranches were generally seen rising, market sources said.

West Texas Intermediate crude oil futures for September delivery shaved off 2 cents to close at $41.90 per barrel.

North Sea Brent crude oil futures for September delivery finished at $44.29 per barrel after a 3 cent loss.

Oklahoma City-based independent oil and gas producer Chesapeake Energy’s issues also slipped.

The 7% senior notes due 2024 chalked off ¾ point to close at 4½ bid.

Houston-based producer Occidental Petroleum’s paper saw positivity, going against the trend.

The 2.9% senior notes due 2024 gained 1 point to close at 93½ bid. The 2.7% senior notes due 2022 rose 1 point to close at 96½ bid.

Denver-based E&P Whiting Petroleum’s notes were also under water.

The 6¼% senior notes due 2023 improved by ¾ point to close at 20½ bid. The 6 5/8% senior notes due 2026 garnered ½ point to close at 20¼ bid.

Hertz under

Car rental company Hertz’s issues spent the day under water, traders said.

The 6¼% senior notes due 2022 shed 1½ points to close at 37 bid. The 5½% senior notes due 2024 lost 2¼ points to close at 37¼ bid.

On Tuesday, the Estero, Fla.-based vehicle rental service announced that it has agreed to pay $650 million owed under a master lease agreement as part of a temporary resolution of disputes with creditors related to its lease rejection motion.

The company had been embroiled in a dispute with creditors over the handling of its fleet of nearly 500,000 car leases.

Hertz must now pay regular rent on each car and a fee to cover depreciation.

CBL diverges

Elsewhere, property owner CBL’s paper diverged, market sources said.

The 5¼% senior notes due 2023 shed ¾ point to close at 26½ bid. The 4.6% senior paper due 2024 rose ¼ point to close at 26¼ bid.

Late last week, reports indicated that the Chattanooga, Tenn.-based real estate investment trust is preparing for a Chapter 11 bankruptcy filing.

In ongoing talks with creditors, CBL hopes to come to a pre-packaged arraignment for its restructuring process.

© 2015 Prospect News.
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