Breitburn rises on EIG investment; Peabody tender done, bonds mixed; Murray Energy gains

By Stephanie N. Rotondo

Phoenix, March 30 – The distressed debt market was again zeroing in on the energy arena Monday.

The marketplace ended with a firmer feel, even as oil prices drifted lower. The commodity was again under pressure as a deadline for talks on Iran’s nuclear program was fast approaching.

West Texas Intermediate crude drifted down 35 cents to $48.52 per barrel for May delivery. Brent crude dipped 19 cents to $56.22.

In addition to the oil price decline, several energy companies had news of their own Monday, resulting in a move one way or another.

Breitburn Energy Partners LP, for instance, got a sizable boost as the company announced a $1 billion investment from a group led by EIG Global Partners.

In the coal space, Peabody Energy Corp.’s debt was mixed after the company issued its final tender results.

And, sector peer Murray Energy Corp. saw its bonds trending higher after the company announced it had increased the amount to be paid in its own tender offer.

Murray first announced the tender on Thursday.

Breitburn up on investment

Breitburn Energy Partners’ bonds were boosted Monday on news the company was getting a $1 billion investment from a group led by EIG Global Partners.

A trader said the 8 5/8% notes due 2020 put on over 3 points to close at 73¼. The 7 7/8% notes due 2022 earned a like amount, ending at 73½.

The company’s preferred units were also higher, as the 8.25% series A cumulative redeemable preferred units rose 11 cents to close at $20.68.

Under the terms of the investment agreement, the investor group will buy $650 million of 9¼% senior secured notes due May 2020, as well as $350 million of convertible preferred units.

Proceeds will be used to reduce credit facility borrowings.

Breitburn is an oil and gas company based in Los Angeles.

Peabody wraps tender

Peabody released the final results of its cash tender offer for its 7 3/8% senior notes due 2016 on Monday.

All told, the company tendered $566.88 million of notes, or 87% of the $650 million outstanding bonds.

The total included $1.23 million of the debt tendered after the early deadline.

The offer expired March 27. The remaining outstanding notes will be redeemed April 15.

Though the offer seemed to go fairly well, a trader saw the St. Louis-based coal producer’s debt ending mixed on the day.

The 6½% notes due 2020, he said, were up half a point at 65¾. But the 6¼% notes due 2021 fell nearly 2 points to 63.

As for the $1 billion of 10% second-lien notes due 2022 – a deal that came at 97.566 to yield 10½% on March 5 – those closed down almost a point at 90.

Murray raises tender payment

Fellow coal producer Murray Energy is in the midst of its own tender offer, which was announced on Thursday.

On Monday, the St. Clairsville, Ohio-based company said it was increasing the amount of cash it would give to holders of its 8 5/8% senior secured notes due 2021 and 9½% notes due 2020.

On the news, the 9½% notes were seen jumping 4 points to 112½.

Murray will pay $1,109.70 for each $1,000 of 8 5/8% notes validly tendered and $1,178.70 for each $1,000 of the 9½% notes.

Those prices are up from $1,100.00 and $1,150.00, respectively.

The amount also includes a $50 early tender payment for notes tendered by 5 p.m. ET on April 8.

Murray noted in a prepared statement that “a large majority” of bondholders had agreed to participate in the tender at the amended terms.

The offer expires at 11:59 p.m. ET on April 22.

Energy mixed

Among other energy names, it was a fairly mixed day.

A trader said Transocean Ltd. was trading busily. He said the 7½% notes due 2031 were “fairly active” at 76½, which was down a touch. The 2½% notes due 2017 meantime saw “pretty good volume” and ended steady at 92.

The 6.8% notes due 2038 rose 1¼ points to 72½, the trader said.

W&T Offshore Inc.’s 8½% notes due 2019 closed off a quarter-point at 61¾.

Holding steady were Key Energy Services Inc.’s 6¾% notes due 2021, which finished at 64¾, according to a market source.

Resolute Energy Corp. managed to improve with the market, as the 8½% notes due 2020 earned “almost 2 points,” closing at 43.

Rounding out the sector, Seventy-Seven Energy Inc.’s 6 5/8% notes due 2019 declined 2½ points to 75¾.

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