Peabody to exit Chapter 11, sees several-point gain; GenOn ‘mover of the day’; Avaya down; Caesars ticks up

By Colin Hanner

Chicago, Jan. 13 – Activity in the distressed arena saw no shortage of movers on the Friday before the extended Martin Luther King Jr. holiday weekend, including two companies that looked poised to exit bankruptcy in the coming months.

Peabody Energy Corp., which filed for Chapter 11 bankruptcy in April 2016 amid a flurry of other U.S. coal companies, announced late Thursday it had received an exit facility commitment letter from various banks, clearing the way for exiting bankruptcy in the second quarter this year.

Though volume was unsubstantial, distressed notes ticked several points higher on the day.

Per a media report, Caesars Entertainment Corp. cleared one of its last remaining obstacles before seeking to approve its reorganization plan next week.

One of its subsidiary notes traded up on the session.

GenOn Energy, Inc. also saw some substantial increases on Friday in at least three series of distressed securities, a trader said.

“GenOn looks like the mover of the day,” the trader said, adding that there must have been a catalyst driving the movement, though that did not appear to be the case.

Elsewhere, Avaya Inc. continued to move down, solidifying a downward trend for the distressed notes this week.

Valeant Pharmaceuticals International, Inc.’s notes were nearly unchanged on the day during a week in which the company completed two asset sales aimed at decreasing its $30 billion debt load.

Several other distressed names, including Denbury Resources Inc., which a trader called one of the more actively traded securities of the day, rounded out activity in distressed land.

Peabody up on bankruptcy exit

Late Thursday, Peabody Energy announced it had received an exit facility commitment letter from Goldman Sachs, JPMorgan Chase, Credit Suisse and others. The lenders agreed to provide a senior secured term loan facility of $1.5 billion to help the St. Louis-based coal company exit Chapter 11 bankruptcy, according to an 8-K filed with the Securities and Exchange Commission.

Macquarie Capital Funding LLC and Macquarie Capital Inc. also make up the group of lenders.

Peabody filed for Chapter 11 bankruptcy on April 13, 2016, and plans to exit in the second quarter this year.

Company stock was up 84 cents, or 20.44%, to $4.95.

The 6½% notes due 2020 were up 8 7/8 to a near-50 handle, a market source said.

Path cleared for Caesars

According to a Reuters report, Caesars Entertainment Corp.’s main operating unit came to terms with an objection that was preventing its reorganization plan, the last hurdle for the casino group to exit bankruptcy protection.

The U.S. Trustee Program, under the Department of Justice, objected to the reorganization plan but settled with the company on Friday.

In distressed land, a market source saw Harrah’s Operating Company, Inc.’s – part of Caesar’s Operating Inc. – 10% notes due 2018 up ½ point to 77.

Big uptick for GenOn

A trader said GenOn Energy had the biggest gains he had seen in any distressed notes on the day, though there were no apparent drivers of the across-the-board upticks.

The 7 7/8% notes due 2017 were up 4¾ points to 78, a trader said, adding that the 9 7/8% notes due 2020 followed with an “almost 4-point” gain to 74½.

The 9½% notes due 2018 were up 3½ points to 76. A market source saw the notes up 4 points to the same level.

NRG Energy Inc., which bought GenOn in late 2012, saw a bump in its stock price, which was up 22 cents, or 1.53%, to $14.60.

Avaya down, again

There seemed to be no reprieve this week for Avaya, Inc., a technology company that is weighing whether a Chapter 11 bankruptcy is in the future.

A trader said the 10½% notes due 2021 were down 3 5/8 points to 20¾.

Valeant cools to end week

The Lavel, Quebec-based Valeant Pharmaceuticals started the week with a series of asset sales, seeing a surge then a softening as the week progressed.

The softening came to a near-halt on Friday, as the 5 3/8% notes due 2020 remained unchanged, though active, with an 88 handle, a trader said.

Valeant’s 6 1/8% notes due 2025, some of the most active notes during mid-week trading, were up a ¼ point to 75¼.

A market source said Valeant’s 7½% notes due 2021 were down ½ point to 88.

Another pharmaceutical mover, Endo Pharmaceuticals plc, saw its 6½% notes due 2025 up 1 3/8 points to 88¾, a trader said.

And hospital operator Community Health Systems, Inc.’s 6 7/8% notes due 2022 were down ¾ point to 75.

Market movers

An “active” but unchanged security came out of Denbury Resources on Friday in its 5½% notes due 2022, which finished with an 88 handle, a trader said.

Intelsat Jackson Holdings SA’s 7¼% notes due 2019 were down ½ point to 83½, a market source said.

In exploration and production, California Resources Corp.’s 8% notes due 2022 were down ¼ point to 89¾, a market source said, while Memorial Production Partners LLC’s 7 5/8% notes due 2021 were down 2 points to 47¼.

iHeartCommunications, Inc.’s 14% notes due 2021 were up “almost 2 points” to 37.

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