iHeartMedia debt rises as more advisers hired; Breitburn, SandRidge enter bankruptcy; oil names gain

By Stephanie N. Rotondo

Seattle, May 16 – The distressed debt market was again seeing big pockets of activity on Monday, as fresh news pushed around credit-specific names.

iHeartMedia Inc. experienced “significant action,” a trader said, as it was reported that the multimedia company was bringing on advisers to deal with its hefty debt burden. One option being bandied about was a debt repurchase, which gave a couple of the company’s outstanding issues a boost.

Meanwhile, SandRidge Energy Inc. and Breitburn Energy Partners LP both announced bankruptcy filings on Monday. In the wake of the news, both companies saw the debt rising, though Breitburn’s preferred units ended weaker.

Oil-linked names in general were having a decent day, as crude oil prices ticked up nearly 3.5% to $47.82 a barrel. The gains were attributed in part to ongoing production outages in Nigeria and Canada, as well as other locations.

Also sparking the upward move was a new report from Goldman Sachs that said the outages, along with pared production levels in the U.S., could result in a supply deficit.

A trader said Whiting Petroleum Corp.’s 5% notes due 2019 added 2½ points to close at 86½, while the 7¾% notes due 2021 improved “almost 4 points” to 81 3/8.

In Chesapeake Energy Corp. paper, a trader said the 8% second-lien notes due 2022 had “pretty good volume,” pushing up 1½ points to 69.

Another trader said California Resources Corp.’s 8% second-lien notes due 2022 “had a big day,” trading at least 24 times in size and adding 1½ points to end at 61¼.

iHeart hires more advisers

iHeartMedia is reportedly looking at its options to restructure its debt, as Reuters reported that the company had brought on restructuring adviser Millstein & Co.

The news outlet reported in March that the company had signed on investment bank Moelis & Co. as a financial adviser.

On the news, a trader said the 14% notes due 2021 “traded a ton,” rising 7½ points to 37½. The 10% notes due 2018 increased by 5½ points to 48½, he said.

The 9% notes due 2021 ticked up just over a point to 74½, as the 9% notes due 2019 inched up almost a point to 79½.

One option on the table is a debt repurchase, which could help the San Antonio-based company decrease its $21 billion debt load.

The hiring of the additional adviser comes as iHeart and its senior creditors battle in court over the company’s transfer of assets to a new unit, Broader Media LLC. For their part, creditors are claiming that the move constituted a default.

On Monday, iHeart said it was in talks with certain creditors to amend a credit agreement, as well as its priority guaranteed notes.

Breitburn, SandRidge file

As the new week began, another round of oil-related bankruptcies were seen hitting the tape.

Breitburn Energy said late Sunday that it had filed for Chapter 11 protections, after a month of “constructive discussions” with second-lien noteholders and bank lenders.

The Los Angeles-based master limited partnership also said it had lined up a $75 million debtor-in possession facility.

SandRidge Energy meantime filed on Monday, as it looks to implement a prepackaged reorganization plan that over two-thirds of creditors have agreed to.

The news pushed both names higher in trading.

In Breitburn, a trader said the 8 5/8% notes due 2020 gained “almost 2 points,” closing at 9¾. The 7 7/8% notes due 2022 were a point better at 9¼, he said.

However, the 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) did not fare as well, falling 54 cents, or 57.45%, to 40 cents per $25-par unit.

As for SandRidge, a trader said the 8¾% notes due 2020 were “quite active,” trading up “about 7 points” to 42 1/8.

Another trader said the 8¾% notes were up 6½ points in a 41¼ to 42 context.

At another shop, the 7½% notes due 2021 were seen at 7 bid, up half a point.

With the latest filings, Fitch Ratings placed the total trailing 12-month energy sector default rate to 14%, up from 13% at the beginning of last week.

The agency believes more filings will follow and, as such, has projected a 20% default rate for the sector by the end of the year.

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