Hertz notes eyed as lease settlement approved; Scientific Games rises after Q2 results

By James McCandless

San Antonio, July 24 – Closing out another week, the distressed debt space fixated on travel names and earnings results.

Hertz Global Holdings, Inc.’s notes saw varying movements as its bankruptcy judge approved a recent deal struck with its creditors.

Meanwhile, gaming name Scientific Games Corp.’s issues rose after releasing its earnings results for the second quarter.

Software provider Exela Technologies, Inc.’s paper declined a day after announcing the sale of its records storage arm.

In the airline space, American Airlines Group Inc.’s notes diverged in the wake of its Q2 earnings release.

Sector peer United Airlines Holdings, Inc.’s issues were also mixed.

Elsewhere, W&T Offshore, Inc.’s and Whiting Petroleum Corp.’s paper gained while Occidental Petroleum Corp.’s notes were mixed.

Theater chain AMC Entertainment Holdings Inc.’s issues drifted in the entertainment space.

Hertz varies

Hertz’s notes saw varying movements to cap the week in distressed activity, traders said.

The 6¼% senior notes due 2022 were docked 1¼ points to close at 35 bid. The 5½% senior notes due 2024 added ½ point to close at 37 bid.

On Friday, the Estero, Fla.-based vehicle rental provider received court approval of a temporary resolution of disputes related to its lease rejection motion under which the company has agreed to pay $650 million owed under a master lease agreement, Prospect News reported.

As part of the agreement, Hertz will dispose of about 182,000 leased vehicles and will pay regular rent on each car and a fee to cover depreciation.

The arrangement is expected to cut Hertz’s debt by about $6 billion.

Previously, the company had been in a dispute with creditors over how to handle its used car inventory.

Scientific Games rises

Meanwhile, gaming name Scientific Games’ issues were on the rise, market sources said.

The 7% senior notes due 2028 were lifted 1¼ points to close at 89½ bid. The 8 5/8% senior notes due 2025 tacked on ¼ point to close at 99¾ bid.

After the close on Thursday, the Las Vegas-based gambling company released its earnings report for the second quarter.

The company showed a loss per share of $2.15, worse than the analyst consensus estimate of a $1.89 per share loss.

Revenues surpassed analyst predictions at $539 million, representing a 36% decrease year over year.

Scientific Games’ digital business segment SciPlay reported the strongest revenue growth.

“With everything on the edge of shutting back down, I would expect similar results for the third quarter,” a trader said.

The company said that 85% of casinos have reopened, giving it optimism for end-of-year results.

Exela down

Software name Exela’s paper was in decline, traders said.

The 10% notes due 2023 shaved off ¾ point to close at 24¾ bid.

Toward the end of the day on Thursday, the Irving, Tex.-based business software provider announced that it has completed the divestment of its records storage division.

The unit sold for $12.3 million.

The sale raises the tally of the proceeds generated from its ongoing initiative to shed itself of non-core segments to between $150 million and $200 million.

In its most recent earnings report, released in June, the company reported revenues of $365.5 million.

Airlines mixed

In the airline space, American Airlines’ notes diverged, market sources said.

The 5% senior notes due 2022 picked up 1½ points to close at 60¼ bid. The 3¾% senior notes due 2025 slipped 2½ points to close at 47 bid.

Early Thursday, the Fort Worth-based air traveler posted its earnings results for the second quarter.

The company reported a loss per share of $7.82, which fell short of expectations, while revenues were better than expected at $1.62 billion.

Revenues at this point last year, however, came in at $11.96 billion.

The name’s cash burn rate has improved to $55 million per day.

Chicago-based sector peer United Airlines’ issues were also mixed.

The 5% senior notes due 2024 tacked on ¾ point to close at 84 bid. The 4¼% senior notes due 2022 gave up 1¾ points to close at 88½ bid.

Oil names firm

Elsewhere, while oil futures were firm, some distressed energy names gained, traders said.

West Texas Intermediate crude oil futures for September delivery rose 22 cents to cap the week at $41.29 per barrel.

North Sea Brent crude oil futures for September delivery finished at $43.34 per barrel after a 3 cent pickup.

Houston-based independent oil and gas producer W&T Offshore’s paper strengthened.

The 9¾% notes due 2023 gained 2 points to close at 66 bid.

Denver-based producer Whiting Petroleum’s notes joined the trend.

The 6 5/8% senior notes due 2026 improved by 1½ points to close at 20½ bid.

Houston-based E&P Occidental Petroleum’s issues were flat to slightly higher.

The 2.9% senior notes due 2024 held level to close at 93¾ bid. The 2.7% senior notes due 2022 garnered ¾ point to close at 97 bid.

AMC drifts

Movie theater name AMC’s paper drifted lower in the entertainment space, market sources said.

The 5¾% senior subordinated paper due 2025 lost 3¼ points to close at 25½ bid.

This week, the Leawood, Kan.-based theater chain announced that it had pushed back the target date for reopening its locations nationwide.

After previously saying that the reopenings would take place at the end of July, the company is now aiming for “mid-to-late August.”

Also this week, a group of lenders alleged that the name is in default after claiming it did not provide adequate information on a recent debt swapping measure.

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