Petsmart giving back post-earnings gains; Fresh Market, Claire’s firm; Global A&T up on restructuring

By Stephanie N. Rotondo

Seattle, Sept. 11 – As has been the case of late, distressed debt investors were focusing their attention on the embattled retail sector on Monday.

Petsmart Inc. was particularly active, traders reported.

“It’s been one of the more active names since they released earnings” on Sept. 6, a trader said.

Given that the company is private, those earnings were not available to the public. However, the Phoenix-based pet products chain’s debt pushed higher in the wake of the results.

But those gains have slowly been ebbing and Monday’s session brought more weakness in the name.

A trader said the 7 1/8% notes due 2023 – “the more active one of all” of the company’s debt structure – were in an 80 to 81 context at Monday’s close.

“So they’ve given back a little bit,” the trader added, noting that the paper had hit highs in an 83 to 84 range post-earnings.

Another trader called the 7 1/8% notes off 1¾ points for the day, placing the paper at 80¼. As for the 8 7/8% notes due 2025, they were down over half a point at 81¾.

Other distressed retail names, however, were inching upward.

Fresh Market Inc.’s 9¾% notes due 2023 were deemed 1½ points better at 71½.

In Claire’s Stores Inc.’s bonds, the 6 1/8% notes due 2020 finished the session a quarter-point higher at 50¼, according to a trader. The 9% notes due 2019 were up half a point at 55½.

Away from retail, Global A&T Electronics Ltd.’s debt was notable as the company announced a restructuring agreement with some holders of its 10% notes due 2019.

The bonds improved as much as 8 points.

In the telecommunications area, Frontier Communications Corp.’s benchmark 11% notes due 2025 slipped half a point to 83, which one trader remarked was “all-time lows” for the issue.

“That’s been an underperformer,” he said, adding that the debt was “not that active” in Monday dealings.

Global A&T to restructure

Global A&T Electronics’ bonds were being eyed on Monday after the company announced a restructuring agreement with noteholders and equity holders.

The company has two debt issues, both of which are 10% notes due 2019. However, one tranche was issued in February 2013 and another came in November 2013.

Of the two, the February issuance was the largest. A trader said that one – the “bigger issue,” he said – closed around 81, which was “about where they’ve been.” He pegged the other tranche in a 39 to 40 zip code.

A second trader placed the initial issue at 81 3/8, though he wasn’t sure how that compared to previous trades.

“They don’t trade much,” he noted.

The additional issue was up 8 points at 39, the trader reported.

The Cayman Islands-based semiconductor assembly and testing company said on Monday that it had reached a deal with about 44% of bondholders holding the February 2013 issue and about 83% of bondholders of the November issue.

The company’s existing equity sponsors also signed on.

Under the terms of the agreement, holders of the initial issue will receive about $540 million of new 7¾% five-year first-lien senior secured notes. The additional issue holders will get $110 million of the notes, plus 30% of the equity in the reorganized company.

Equity sponsors are expected to make a significant equity contribution to the company.

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