Atwood climbs to par after Ensco takeover; GenOn, Bristow lower; Intelsat down ahead of exchange deadline

By Colin Hanner

Chicago, May 30 – Mergers and acquisitions typically reserved for Monday’s session were pushed to Tuesday following the extended Memorial Day holiday weekend.

The distressed debt arena saw London-based offshore drilling contractor Ensco plc acquire Houston-based Atwood Oceanics, Inc. for $839 million in an all-stock transaction, the companies said in a news release.

The sphere was dominated by Atwood bonds trading up, a market source said, adding the bonds traded what seemed like a “bajillion times.”

Atwood Oceanics’ notes quickly surged into double-digit gains after the announcement was made.

Ensco notes, on the other hand, were virtually unchanged.

From there, activity dozed off into a post-holiday lull, a market source said, with activity revolving around previous activity from Friday’s session.

Princeton, N.J. power generator, GenOn Energy Inc., which was lower on Friday following a downgrade from S&P Global Ratings, followed with a smaller loss on Tuesday.

Bristow Group Inc., which provides helicopter transport services mostly to the offshore energy drilling industry, was lower following a downgrade on Friday that stemmed from quarterly results.

Satellite telecommunications company Intelsat Jackson Holdings SA was lower by several points on Tuesday, a day prior to the end of its exchange offer for several notes.

And, in energy, oil futures fell modestly, as did Los Angeles-based California Resources Corp. In coal, Murray Energy Corp. nearly mirrored the same losses.

Atwood higher on merger

As oil prices continue to falter in light of the Organization of Petroleum Exporting Countries’ deal in November, and even more so from last week’s extension into March 2018, offshore drillers have been suffering in the bond and equity markets, attempting to move from offshore projects to shale drilling.

Bondholders of Atwood Oceanics were lifted from the sector’s pain on Tuesday when they merged with Ensco plc.

Atwood’s 6½% notes due 2020 were up 13 points in the par to par-and-a-half range, a market source said.

Atwood equity shareholders will receive a 33% premium for their stock as a part of the deal.

“We believe that the purchase price for these assets represents a compelling value to our shareholders, which is augmented further by expected synergies from the transaction,” said Ensco chief executive officer Carl Trowell.

Meanwhile, Ensco’s 4½% notes due 2024 were unchanged at 83¾, a market source said.

GenOn lower, again

Following a rating downgrade from S&P – which lowered its secured and unsecured debt to CCC and CCC- from CCC+ and CCC, respectively – was again lower on Tuesday.

Its 7 7/8% notes due 2017 were down 1 point to 74, while the 9 7/8% notes due 2020 were down 1 7/8 points to 71, a market source said.

“The negative outlook reflects our expectation of a near-term event of default, either via a distressed exchange or through a voluntary bankruptcy filing,” the ratings agency said on Friday.

Bristow bonds slow bleeding

The Dyce, U.K.-based helicopter transport company was down 1½ points in its 6¼% notes due 2022, which finished at 63½.

The company’s stock was down 56 cents, or 7.61%, to $6.80.

Guidance for the company’s upcoming quarters, made apparent in the widely-missed results that came out last week, were reason enough for SG Cowen to downgrade the company’s shares to market perform from outperform on Friday.

Intelsat loses

Intelsat Jackson Holdings SA’s 7½% notes due 2021 were down 2¼ points to 89, a market source said, while the 5½% notes due 2023 trailed with a 2-point loss to 82¾.

The 7¼% notes due 2020 were down 1½ points to 91½.

On Wednesday, Luxembourg-based Intelsat will end its exchange offer – one that has been pushed back several times – for a variety of notes.

The notes were last pushed back to May 31 from May 18.

Energy lower

As oil continued to go lower into Tuesday, some exploration and production companies followed, though liquidity was muted.

California Resources’ 8% notes due 2022 were down 3/8 point to 76¾.

Houston-based Denbury Resources Inc.’s 6 3/8% notes due 2021 were down ½ point to 77¼.

And Canadian oil sands producer MEG Energy Corp. was down 2 points to 88¼, a market source said.

St. Clairsville, Ohio-based private coal company Murray Energy saw a ¼-point decline in its 11¼% notes due 2021, which finished at 77.

Distressed wrap

A series of Valeant Pharmaceuticals International Inc.’s notes were mixed on the session, though did not drift too far from their start.

Its 7½% notes due 2022 were up ½ point to 90, a market source said, while its 5 5/8% notes due 2021 were up 3/8 point to 87.

On the other hand, the 5 7/8% notes due 2023 were down 1/8 point to 82.

Over the airwaves, Frontier Communications Corp.’s 7 1/8% notes due 2023 were up “almost 1 point” to 87, and iHeartCommunications, Inc.’s 9% notes due 2021 were down 1/8 point to 73 7/8.

Retailer Neiman Marcus Group Inc., which had been rumored last week to be part of possible merger talks with Related Cos., were down 1½ points in its 8% notes due 2021, which finished at 51½.

Paul Deckleman contributed to this review

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