Alpha Natural falls on bankruptcy prospects; weaker oil prices weigh on sector debt; CHC falls

By Stephanie N. Rotondo

Phoenix, July 17 – Commodities continued to be in focus in distressed debt trading on Thursday.

And while the markets were mostly stronger, most commodity-linked bonds did not fare as well.

For instance, Alpha Natural Resources Inc. bonds were coming in after it was reported late Wednesday that the coal producer was looking to line up bankruptcy financing.

A trader saw the 9¾% notes due 2018 falling over a point to 4¼, while the 6¼% notes due 2020 weakened a point to 6.

The Bristol, Va.-based company is reportedly in talks with loan holders and senior bondholders to line up $300 million to $400 million in debtor-in-possession financing. An official filing could come in early August, right around when certain convertible bonds come due.

The Alpha news – first reported by Wall Street Journal – came after sector peer Walter Energy Inc. filed for Chapter 11 protections on Wednesday. Patriot Coal Corp. sought bankruptcy in May.

News of the potential filing – and overall concerns about depressed coal prices and demand – also weighed on Peabody Energy Corp. debt.

A trader said the 6% notes due 2018 fell 3½ points to 33½. The 6½% notes due 2020 declined over 3 points to 25¼.

Oil bonds slip

In the oil and gas realm, bonds were drifting lower as West Texas Intermediate crude prices weakened.

The U.S. benchmark fell 44 cents to $50.97 following reports of yet another rise in U.S. crude and gasoline stockpiles.

Swift Energy Co.’s 7% notes due 2022 were topical Thursday, after the company said it was pulling a $640 million loan offering.

The company cited poor market conditions.

A trader pegged the issue at 32½, off a point.

Elsewhere in the sector, a trader saw California Resources Corp.’s 6% notes due 2024 falling nearly 2½ points to 81.

Also lower were Halcon Resources Corp.’s 8 7/8% notes due 2021, which ended off over 2 points at 58¼.

In Energy XXI paper, the 7½% notes due 2021 slipped a touch to 27½.

CHC weakens

A trader said CHC Helicopter Corp.’s 9 3/8% notes due 2021 traded for the first time in a month, declining over 15 points during that period.

The trader placed the issue at 55, down from 71½ previously.

The trader noted that it was “a small issue,” at just $135 million.

As for the 9¼% notes due 2020, those closed off “a point and change” at just north of 67.

On June 29, the company’s parent, CHC Group, reported earnings.

For the fiscal fourth quarter, the Vancouver, B.C.-based company saw revenue fall to $374 million from $453 million. The decline was attributed to currency translation as the dollar strengthened.

Net loss was $119 million, or $2.15 per share. That compared to a net loss of $26 million, of 29 cents per share, the year before.

On an adjusted basis, net loss was $32 million, or 55 cents per share, versus $14 million, or 17 cents per share, the previous year.

For the full fiscal year, revenue slid to $1.7 billion from $1.76 billion. Net loss widened to $795 million, or $11.17 per share, from $171 million, or $3.09 per share.

Adjusted net loss was $123 million, or $1.82 per share. By comparison, the adjusted loss was $97 million, or $1.24 per share, for the prior fiscal year.

For the quarter, the adjusted loss excluded special items, including a $77 million restructuring charge.

© 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.