Bankrupt Enviva paper jumps in distressed space; WW International softens; CommScope up

By Cristal Cody

Tupelo, Miss., March 13 – Distressed names across sectors traded on Wednesday with newly bankrupt Enviva Partners, LP’s bonds among the more active issues.

Enviva’s 6½% senior notes due 2026 (Caa2/CC/CC) shot up nearly 10 points on $9 million of bonds traded after the company reported it filed for Chapter 11 bankruptcy on Tuesday.

Enviva’s paper slid into the distressed space back in November when the 6½% notes plunged over 31 points after the company announced third-quarter losses, a shake-up in leadership and withdrew its guidance for the year.

WW International Inc.’s distressed 4½% senior secured notes due 2029 (B3/B) gave back over ¼ point on Wednesday in lighter trading following a strong uptick in secondary action the previous day.

WW’s bonds and stock have been under pressure in 2024 with the bonds down around 20 points year to date and the stock sliding to a new 52-week low on Wednesday.

Barclays Capital Inc. views “WW as a company facing a tough end market with increasing competition whilst in the early innings of a changeover to a digital health strategy,” analyst Stephanie Davis said in a note released Wednesday to Prospect News. “We are lowering our estimates.”

Law firm Bronstein, Gewirtz & Grossman, LLC announced on Monday that it is investigating possible federal securities law violations after WW’s stock plunged over 20% following the missed earnings report and announced exit of longtime board member Oprah Winfrey.

Overall, markets were mixed but mostly positive on Wednesday.

The S&P 500 index fell 0.19% after increasing 1.12% the previous day.

The iShares iBoxx High Yield Corporate Bond ETF rose 3 cents, or 0.04%, to $77.49.

The CBOE Volatility index was down 0.65% at 13.75.

CommScope Holding Co., Inc.’s paper rallied around 1½ points to 4½ points in some of the most active distressed issues in the wake of a downgrade from Moody’s Investors Service on continued fears of a distressed debt exchange.

CommScope’s 8¼% notes due 2027 (Ca/CCC-) rallied 4¼ points on $9 million of volume.

The global corporate default tally currently sits at 29, the highest year-to-date total since 2009, according to a S&P Global Ratings report on Wednesday.

The number of U.S. defaults year to date totals 17, while European corporate defaults total eight.

January saw 14 defaults, and 15 companies defaulted in February.

Enviva supply active

Enviva Partners’ 6½% senior notes due 2026 (Caa2/CC/CC) climbed to 41 bid on Tuesday in trading volume that hit $9 million, a source said.

The yield was 63.82%.

Enviva’s notes were last seen on Tuesday in thin trading at 31¼ bid.

The company announced on Tuesday that it filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court of the Eastern District of Virginia.

Enviva said it has entered into two restructuring support agreements with an ad hoc group representing a majority of holders of the 2026 notes, as well as its senior secured credit facility and bonds related to its Epes, Ala., plant under construction and with certain holders of bonds related to its now on-hold project near Bond, Miss.

In addition, the company secured a $500 million debtor-in-possession financing commitment from an ad hock group of holders.

Enviva expects to reduce its debt by $1 billion and complete the restructuring in the fourth quarter.

The Bethesda, Md.-based industrial wood pellets manufacturer’s paper slid into the distressed space back on Nov. 9 when the 6½% notes plunged over 31 points to 32½ bid on more than $60 million of bonds traded after Enviva posted third-quarter losses, a shake-up in leadership and withdrew its guidance for the year.

Enviva’s shares (NYSE: EVA) closed Wednesday down more than 35% to 39 cents.

The company said on Tuesday it expects the stock to continue to trade on the New York Stock Exchange during the restructuring process as long as minimum listing standards are met.

WW notes slip

WW International’s 4½% senior secured notes due 2029 (B3/B) fell more than ¼ point to head out Wednesday at just under 43 1/8 bid, a source reported.

Trading was light on $4 million of reported volume.

On Tuesday, the issue had climbed ½ point to 43½ bid on $12 million of secondary activity.

The notes opened 2024 with a 64 handle.

WW’s shares on Tuesday and Wednesday hit new 52-week lows.

WW International’s fiscal year 2024 revenue guidance announced Feb. 28 of $830 million to $860 million “meaningfully missed” Barclays/Street estimates of $909 million to $922 million, according to the Barclays note.

The company announced fiscal 2024 revenue guidance of $830 million to $860 million, while operating income is expected to be in the range of $100 million to $110 million.

“Near term, we see downside risk to consensus estimates on revenue headwinds stemming from both discounting actions and the exit of the consumer products business,” Davis said in the note.

In 2023, WW completed the $132 million cash and equity acquisition of telehealth platform Weekend Health, Inc., dba Sequence, but has faced competition for weight loss drug services so far in 2024.

Davis cut the price target on the company’s shares to $1.50 from $8 following the company’s earnings misses.

The New York-based WeightWatchers operator’s stock (Nasdaq: WW) fell around 7% to a new 52-week low of $2.66 on Tuesday but declined even further on Wednesday. Shares closed down 12% at $2.35, off a low of $2.15 earlier in the session.

CommScope paper higher

CommScope’s paper overall traded more than 4 points better during the session, a source said Wednesday.

CommScope, Inc.’s 7 1/8% senior notes due 2028 (Ca/CCC-) were changing hands 1¾ points higher at 41 bid on $6 million of supply.

CommScope’s 8¼% senior notes due 2027 (Ca/CCC-) rallied 4¼ points to 50¼ bid on $9 million of volume by the end of the session.

The less distressed CommScope Technologies LLC’s 6% senior notes due 2025 (Caa2/CCC+) were 1½ points better at 90¾ bid, also on $9 million of trading.

Moody’s said on Tuesday that it downgraded the company on increasing risk of a capital restructuring, including a distressed debt exchange.

The Hickory, N.C.-based network infrastructure manufacturer’s stock (Nasdaq: COMM) closed down 3.13% at $1.55.

Distressed index gains

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns improved to 0.38% on Tuesday versus 0.18% on Monday.

Month-to-date total returns rose to 1.55% from 1.17% at the week’s start.

Year-to-date total returns jumped to 4.21% on Tuesday from 3.82% on Monday.

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