Rite Aid up on third-quarter earnings beat; Superior Energy eyed amid ratings downgrade

By James McCandless

San Antonio, Dec. 19 – Activity in Thursday’s distressed debt session centered on newsmakers in the retail and energy sectors.

Rite Aid Corp.’s notes gained after the company released its third-quarter earnings report, outperforming expectations.

Sector peer Bed Bath & Beyond Inc.’s issues tracked lower.

Elsewhere, in oil and gas, Superior Energy Services, Inc.’s paper varied in direction amid a ratings downgrade.

Oil and gas producer Gulfport Energy Corp.’s notes improved as the company announced a divestiture of non-core assets.

Gaining oil futures were followed by Chesapeake Energy Corp.’s issues while Antero Resources Corp.’s paper dipped.

Meanwhile, in the telecom space, Intelsat SA’s notes saw a positive trend as questions over its role in a C-band spectrum auction persist.

Wireline name Frontier Communications Corp.’s issues were lifted.

Electric utility PG&E Corp.’s paper rose in the midst of continuing negotiations with state regulators over its restructuring.

Rite Aid gains

Rite Aid’s notes gained throughout the day, traders said.

The 6 1/8% senior notes due 2023 rose 3¾ points to close at 88 bid.

About $43 million of the notes traded by the end of the session.

On Thursday morning, the Camp Hill, Pa.-based drug store chain released a surprisingly positive third-quarter earnings report.

The company showed earnings of 54 cents per share, far better than the 3 cents per share profit that analysts had expected.

Revenues came in at $5.46 billion, also beating expectations.

“They’re in a unique spot, at least in the retail sector,” a trader said. “They’ve been working to reduce their debt, and the last few quarters have been promising.”

After a tumultuous year, the company appointed a new chief executive officer.

Union, N.J.-based sector peer Bed Bath & Beyond’s long-term issues tracked lower.

The 5.165% senior notes due 2044 declined by 1 point to close at 71 bid. The 4.915% senior notes due 2034 shaved off ¾ point to close at 76¼ bid.

Superior Energy eyed

Elsewhere, in oil and gas, Superior Energy’s paper varied, market sources said.

The 7 1/8% senior notes due 2021 fell ½ point to close at 86 bid. The 7¾% senior notes due 2024 picked up 1¼ points to close at 68 bid.

The Houston-based oilfield services provider received a ratings downgrade from S&P Global Ratings on Thursday.

The agency cut the issue-level ratings on its 2021 paper and affirmed a negative outlook.

The move comes a day after the company announced that it would divest its U.S. operations, moving them to a new entity made up of its assets and Forbes Energy Services.

After the deal closes in 2020, the company will retain a 49.9% stake in the class A common stock and 100% of class B non-voting stock.

It will also reduce its outstanding 2021 paper by $500 million.

Gulfport Energy up

Oil and gas producer Gulfport Energy’s notes were seen improving, traders said.

The 6 5/8% senior notes due 2023 garnered ½ point to close at 81 bid.

News broke during the Thursday session that the Oklahoma City-based independent oil and gas producer has reached an agreement to divest certain non-core water infrastructure assets.

The company has agreed to sell its 15-year agreements and infrastructure to Oklahoma water name Bison for $50 million in cash and a potential for $50 million in incentive payments over the next 15 years.

In a separate deal, Gulfport agreed to sell its interests in the Utica Shale for $29 million.

Oil futures rise

Gaining oil futures served as the backdrop to mixed movements in distressed energy names, market sources said.

West Texas Intermediate crude oil futures for January delivery rose 29 cents to finish the session at $61.22 per barrel.

North Sea Brent crude oil futures for February delivery settled at $66.54 per barrel after a 37 cent rise.

Oklahoma City-based oil and gas producer Chesapeake’s issues followed futures upward.

The 7% senior notes due 2024 picked up 2½ points to close at 60 bid.

Denver-based peer Antero Resources’ paper dipped.

The 5 5/8% senior paper due 2023 shed 2½ points to close at 80¾ bid. The 5% senior notes due 2025 declined by 3 points to close at 75½ bid.

Intelsat, Frontier positive

Meanwhile, telecom name Intelsat’s notes were positive, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 garnered 2¾ points to close at 58 bid. The 9½% senior notes due 2023 inched up ¼ point to close at 69 bid.

The Luxembourg-based satellite operator’s structure continued to be heavily traded, most recently buoyed by Wednesday’s news regarding efforts in Congress to outline the compensation that satellite names would receive in a C-band spectrum auction.

A bill that would split proceeds evenly between those companies and the Treasury lost support from lawmakers, missing the chance to be included in a year-end funding package.

The responsibility now falls on the Federal Communications Commission, which expects to hold the auction next year.

Norwalk, Conn.-based wireline name Frontier’s issues were lifted.

The 10½% senior notes due 2022 tacked on 1½ points to close at 48 bid. The 11% senior notes due 2025 gained 2 points to close at 48¼ bid.

PG&E rises

Utility PG&E’s paper rose by the end of the day, market sources said.

The 6.05% notes due 2034 added ½ point to close at 106 bid.

As the San Francisco-based bankrupt electric utility renegotiates its restructuring plan to satisfy state regulators, CEO Bill Johnson testified before the Senate on Thursday.

Johnson said that the company will continue its planned mass power outages for the foreseeable future until its infrastructure is upgraded.

He also deflected questions about its ability to continue in its current form once it exits bankruptcy.

On Wednesday, the company’s $13.5 billion settlement with wildfire victims and its $11 billion settlement with insurers was approved in bankruptcy court after the parties stripped a provision requiring California governor Gavin Newsom’s approval.

The utility’s restructuring plan still needs approval from state regulators appointed by Newsom.

© 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.