Superior Energy notes in focus after bankruptcy; American Airlines eyed in travel space

By James McCandless

San Antonio, Dec. 7 – Kicking off the week in distressed debt trading, the attention turned to energy and travel names.

Superior Energy Services, Inc.’s notes varied in direction after the company filed for Chapter 11 bankruptcy on Monday.

While oil futures took a haircut, Occidental Petroleum Corp.’s and Antero Resources Corp.’s issues moved the same way while Laredo Petroleum, Inc.’s paper diverged.

In the travel space, American Airlines Group, Inc.’s notes moved in different directions amid headlines about a coronavirus vaccine.

Sector peer United Airlines Holdings, Inc.’s issues pushed higher.

Elsewhere, movie theater operator AMC Entertainment Holdings, Inc.’s paper dropped while Cinemark Holdings, Inc.’s notes were mixed.

Retailer L Brands, Inc.’s issues were seen drifting apart after a ratings shift.

Superior Energy varies

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

The 7¾% senior notes due 2024 grabbed 1 point to close at 31½ bid. The 7 1/8% senior notes due 2021 lost 1¼ points to close at 28¾ bid.

On Monday morning, the Houston-based oilfield services provider filed for Chapter 11 bankruptcy to implement a proposed pre-packaged plan of reorganization, Prospect News reported.

The company entered the Chapter 11 cases with the support of holders of about 85% of its $1.3 billion of senior unsecured notes.

Under the plan, the noteholders would receive 100% of the equity to be issued and outstanding by the reorganized company in exchange for erasing $1.3 billion of unsecured claims.

As a result, the plan would eliminate all of the company’s funded debt.

Upon the court’s approval, Superior Energy intends to obtain a $120 million debtor-in-possession letter-of-credit facility for its subsidiary SESI, LLC as borrower with certain of the lenders under SESI’s existing credit facility.

In response, S&P Global Ratings cut the company’s rating to D from CC and lowered all issue ratings to D.

Oil heads lower

With oil futures taking a haircut, distressed energy names largely moved the same way, market sources said.

West Texas Intermediate crude oil futures for January delivery shed 50 cents to end the day at $45.76 per barrel.

North Sea Brent crude oil futures for February delivery finished at $48.79 per barrel after a 46 cent slip.

Houston-based independent oil and gas producer Occidental Petroleum’s issues dipped.

The 2.9% senior notes due 2024 shaved off ½ point to close at 95 bid. The 2.7% senior notes due 2022 fell ¼ point to close at 99¾ bid.

Denver-based producer Antero Resources’ paper was also under pressure.

The 5 1/8% senior paper due 2022 was docked ¼ point to close at 96 bid. The 5% senior paper due 2025 lopped off 2¼ points to close at 83½ bid.

Tulsa, Okla.-based E&P company Laredo Petroleum’s notes diverged.

The 9½% senior notes due 2025 jumped up 10 points to close at 83 bid. The 10 1/8% senior notes due 2028 declined ½ point to close at 73¾ bid.

Airlines in focus

In the travel space, American Airlines’ issues moved in different directions, traders said.

The 5% senior notes due 2022 moved up ¼ point to close at 88 bid. The 11¾% senior notes due 2025 held level to close at 116¼ bid.

The Fort Worth-based commercial airline’s structure remained front and center amid headlines about a potential coronavirus vaccine.

Reports indicated on Monday that the Food and Drug Administration could authorize a prospective vaccine for use among the public by the end of the week.

“Despite this, I think it will be several months before the airlines recover in a meaningful way,” a trader said.

On Friday, the company announced as part of its forward guidance that it expects its Q4 average daily cash burn rate to be on the high end of a projected $25 million to $30 million.

Negotiations over stimulus for the industry have landed at $17 billion in the latest round of talks.

Chicago-based carrier United Airlines’ paper pushed higher.

The 5% senior notes due 2024 picked up ¼ point to close at 99¾ bid. The 4¼% senior paper due 2022 reached up ¾ point to close at 101 bid.

AMC drops

Elsewhere, movie theater operator AMC’s notes dropped, market sources said.

The 10½% senior notes due 2025 slipped 3½ points to close at 71 bid. The 12% notes due 2026 dived 9½ points to close at 22 bid.

Last week, the Leawood, Kan.-based movie theater chain’s notes were under pressure after a movie studio announced a major shift in its 2021 film release policy.

Warner Bros. announced on Thursday that for the coming year it would release films simultaneously in theaters and on the streaming platform HBO Max.

In response, AMC chief executive officer Adam Aron accused the studio of prioritizing profit increases over partnerships and that “we will do all in our power to ensure that Warner does not do so at our expense.”

On Thursday, AMC announced plans to raise $860 million by selling 200 million shares of common stock.

Plano, Tex.-based peer Cinemark’s issues were mixed.

The 5 1/8% senior notes due 2022 chalked off ¼ point to close at 96¼ bid. The 4 7/8% senior notes due 2023 gained ¾ point to close at 94¾ bid.

L Brands notes drift

Retailer L Brands’ paper was seen drifting apart to end the session, traders said.

The 6¾% senior notes due 2036 closed level at 111¾ bid. The 5¼% senior paper due 2028 lost ¾ point to close at 103¾ bid.

The Columbus, Ohio-based specialty retail name saw a ratings shift late last week.

Moody’s Investors Service switched the outlook on the company to positive from negative and affirmed the company’s ratings.

The agency said that the change reflects the outsized performance of its Bath & Body Works segment, improvements in the Victoria’s Secret unit and the expected continuation of debt reduction efforts.

© 2015 Prospect News.
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