Valeant continues to notch asset-sale gains; Bristow jumps on corporate realignment; Rite Aid slide continues

By Paul Deckelman

New York, June 9 – Valeant Pharmaceuticals International Inc.’s bonds remained well-bid-for over a second straight session Friday on the news of an asset sale by the debt-laden Canadian drug manufacturer.

Also on the upside, Bristow Group Inc., a provider of helicopter transportation to the offshore energy industry, was sharply higher after it unveiled a corporate realignment plan that it said would cut costs, boost liquidity and ultimately help its capital structure.

Hornbeck Offshore Services Inc.’s bonds and shares were also better, though there was no firm news on the offshore energy services provider that might explain that jump.

Some recently embattled oil and gas names such as EP Energy Corp. were seen rebounding, as oil prices also turned upward after recent weakness.

But drugstore chain operator Rite Aid Corp.’s securities were headed in the opposite direction for a second day in a row following a report that indicated the Federal Trade Commission remains opposed to its planned merger with larger competitor Walgreen Boots Alliance.

Valeant continues climb

Valeant Pharmaceuticals International’s paper remained busy and well-bid for on Friday, traders said, extending the gains notched on Wednesday after the Laval, Que-based drugmaker announced that it had agreed to sell its iNova Pharmaceuticals business for $930 million to a company co-owned by Pacific Equity Partners and the Carlyle Group.

Proceeds from the asset sale, and other potential divestments, will go toward whittling down the company’s more than $28 billion of balance-sheet debt.

In Friday’s dealings, the company’s 6 1/8% notes due 2025 were seen about unchanged at 80 5/8 bid, the level to which they had risen on Thursday.

But volume was brisk, at more than $19 million.

Valeant’s 6 3/8% notes due 2020 rose by 1 1/16 points, to 95 ¾ bid, with over $12 million having traded.

Bristow flies on corporate revamp

A trader said that Bristow Group Inc.’s 6¼% notes due 2022 zoomed by more than 5 points on Friday to 68½ bid, with over $10 million traded.

The rise follows Thursday’s announcement by the Houston-based provider of helicopter services to the offshore energy drilling industry and airborne search and rescue services that it will realign its operations into two geographic divisions, one serving the Americas – the Gulf of Mexico, the Caribbean, Canada and Brazil – while its Europe hub will provide services to other parts of the world, including Africa, Asia, Australia, Norway, the U.K., Turkmenistan and the Middle East.

The company said that realigning operations this way will produce cost efficiencies, including reducing its corporate general and administrative expenses to approximately 12% of revenues, while also improving productivity.

It further said the new set-up will result in portfolio and fleet optimization, which, combined with cost recoveries from original equipment manufacturers whom it buys from, as well as reduced capital spending, should improve the company’s liquidity and reduce its debt.

Bristow also said that it expects revenue growth through contract wins in Bristow's primary hubs with a focus on delivering greater efficiencies to its core oil and gas clients. Bristow plans to bid on approximately 30 to 40 contracts this fiscal year, many of which are currently held by its competitors.

Bristow said in its statement announcing the changes that it “anticipates that in 12 to 24 months, the company will have higher quality revenue, which includes the $2.3 billion UK [search and rescue] contract, with improved cash flow and liquidity.”

Hornbeck heads higher

Another offshore energy oilfield services company – Covington, La.-based marine transportation company Hornbeck Offshore Services – was also seen solidly higher on Friday, although unlike in the case of Bristow, there was no fresh news out about the company to explain the rise.

A trader said that its 5% notes due 2021 moved up by nearly 2½ point on Friday, going home at just under 52 bid.

More than $12 million of those notes changed hands.

Hornbeck’s New York Stock Exchange-traded shares were up by 12 cents on the day, or 6.61%, ending at $1.92. Volume of 2.3 million shares was twice the norm.

Energy names rebounding

Traders said that some of the credits of oil and natural gas exploration and production companies traded up on Friday, after having been under pressure earlier in the week as oil prices declined.

A market sources said that Houston-based oil and gas operator EP Energy’s 8% notes due 2025 improved by 1½ points, to 80¾ bid, on volume of more than $10 million. Those same bonds had fallen by 2 points on Thursday.

Denver-based E&P company Whiting Petroleum Corp.’s 5¾% notes due 2021 firmed to 95½ bid, up ½ point on the day, on $11 million of turnover.

Los Angeles-based energy sector bellwether California Resources Corp.’s 8% notes due 2022 improved to 67¼ bid, 68¼ offered on Friday a market source said. He had seen those bonds at 66¾ bid, 67¾ offered on Thursday.

However, he noted that – unusually for CRC – it was not among the volume leaders on Friday.

Rite Aid retreat deepens

On the downside, Rite Aid Corp.’s 6 1/8% notes due 2023 were seen down a deuce in the day’s trading, at 93¼ bid.

More than $12 million of the notes changed hands.

Those bonds had also been off by more than 2 points, on about the same volume, in Thursday’s dealings, amid several days of negative news coverage on the prospects for Rite Aid’s pending $15 billion acquisition by larger sector peer Walgreen Boots Alliance.

The deal is now before federal anti-trust regulators amid speculation they could kill the transaction on anti-trust grounds.

On Friday, the Capital Forum reported that the Federal Trade Commission's staff was prepared to recommend that the agency file a lawsuit to stop the deal.

Rite Aid’s New York Stock Exchange-traded shares slid by 53 cents, or 15.01% on Friday, ending at $3.

Rite Aid and Walgreen first announced their proposed combination more than a year-and-a half ago, in October of 2015.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.