AMC notes spike amid takeover talk; Chesapeake Energy eyed on bankruptcy concerns

By James McCandless

San Antonio, May 11 – The distressed debt space started a new week with attention on newsmakers in the entertainment and energy sectors.

AMC Entertainment Holdings, Inc.’s notes spiked amid reports of potential takeover talks between the company and Amazon.

In the oil and gas space, Chesapeake Energy Corp.’s issues varied after going-concern worries sparked bankruptcy talk.

Sector peer Callon Petroleum Co.’s paper improved despite a negative earnings report and the suspension of well completions.

Occidental Petroleum Corp.’s notes followed futures lower while Whiting Petroleum Corp.’s issues diverged.

Cosmetics producer Revlon, Inc.’s issues were under pressure as a subsidiary completes an $880 million term loan.

Retailer L Brands, Inc.’s paper was also dipping.

Elsewhere, REIT Washington Prime Group Inc.’s notes continued to climb from Friday’s positive push.

Mall property name CBL & Associates Properties, Inc.’s issues were mixed.

AMC notes spike

Theater name AMC’s notes spiked at the beginning of the week, traders said.

The 5 7/8% senior subordinated notes due 2026 jumped up 7 points to close at 29 bid. The 10½% notes due 2025 improved by 5 points to close at 85 bid.

Early Monday, the Leawood, Kan.-based movie theater chain’s structure was sent higher on reports that the company is in talks for a potential buyout by Amazon.com Inc.

The company has had to shutter its theaters to comply with government mandates on slowing the spread of the coronavirus pandemic, grinding revenue to a halt.

As the day went on, other reports contradicted the first story as both companies withheld comment on the subject.

“I don’t know if it makes sense,” a trader said. “But if Amazon comes in with an offer that’s above the share price, it might interest holders.”

Last month, in an effort to better weather the pandemic, AMC priced a $500 million issue of 10½% five-year first-lien notes.

Chesapeake active

In the oil and gas space, Chesapeake Energy’s issues varied in direction, market sources said.

The 4 7/8% senior notes due 2022 tacked on ¼ point to close at 5 bid. The 11½% notes due 2025 shaved off ½ point to close at 5½ bid.

On Monday morning, the Oklahoma City-based independent oil and gas producer said in a Securities and Exchange Commission filing that “management has concluded that there is substantial doubt about the company's ability to continue as a going concern.”

The company also noted that it has hired strategic advisers and is considering filing for Chapter 11 bankruptcy.

“They need to restructure,” a trader said. “The sooner they do it the better. But for these E&P’s, it’s about how to navigate the market while energy prices are this low.”

The company also said that it recording $8.5 billion in impairments for the last quarter.

Callon up

Sector peer Callon’s paper ended the session improving, traders said.

The 6 1/8% senior notes due 2024 rose 6 points to close at 23 bid. The 6 3/8% senior notes due 2026 picked up 3 points to close at 19 bid.

The Houston-based oil and gas producer’s paper made gains despite the negativity spread throughout its first-quarter earnings report.

The company reported a profit of 12 cents per share, just above the 11 cents per share profit expected by analysts.

Revenues were pegged at $289.92 million, well below analyst estimates.

Concurrently, the company also announced that it has reduced activity, halting all fracking activities last month and keeping one drilling rig active.

Callon expects to spend no more than $325 million on fracking for the rest of the year.

Oil loses

As oil futures moved lower, distressed energy tranches trended the same way, market sources said.

West Texas Intermediate crude oil futures for June delivery slipped 60 cents to settle at $24.14 per barrel.

North Sea Brent crude oil futures for July delivery finished at $29.63 per barrel after a $1.34 drop.

Houston-based Occidental Petroleum’s notes followed futures lower.

The 2.9% senior notes due 2024 shed ¾ point to close at 76¼ bid. The 2.7% senior notes due 2022 were docked ½ point to close at 86½ bid.

Denver-based Whiting Petroleum’s issues diverged.

The 6¼% senior notes due 2023 lost 2½ points to close at 6½ bid. The 6 5/8% senior notes due 2026 added ¼ point to close at 8 bid.

Revlon, L Brands dip

Meanwhile, cosmetics name Revlon’s paper was under pressure, traders said.

The 5¾% senior notes due 2021 declined by 1 point to close at 52 bid. The 6¼% senior paper due 2024 fell 4¼ points to close at 15 bid.

During the Monday session, the New York-based cosmetics producer’s subsidiary, Revlon Consumer Products Corp., closed on its $880 million senior secured first-lien term loan due June 30, 2025, Prospect News reported.

Pricing on the term loan came in line with talk at Libor plus 1,050 basis points plus 2% PIK with a 1.5% Libor floor and a par issue price.

In the last week, the company was working to complete a $1.8 billion debt refinancing package despite the resistance from a group of creditors.

Columbus, Ohio-based retailer L Brands’ notes also dipped.

The 6¾% senior notes due 2036 declined by ¾ point to close at 65½ bid. The 5¼% senior notes due 2028 chalked off ¼ point to close at 65¼ bid.

Washington Prime climbs

Elsewhere, property name Washington Prime’s issues climbed, market sources said.

The 6.45% senior notes due 2024 improved by ¼ point to close at 58 bid.

The notes added 1¾ points on Friday.

On Friday, the positivity in the Columbus, Ohio-based retail-focused real estate investment trust’s notes came despite a first-quarter earnings report with a negative spin.

The company reported a lower-than-expected profit of 22 cents per share while revenues came in at $152.6 million.

As a result of business closures during the pandemic, the name also said that it only collected about 30% of contractual rent for April.

Chattanooga, Tenn.-based peer CBL’s paper was flat to lower.

The 5¼% senior notes due 2023 gave back ½ point to close at 31 bid. The 4.6% paper due 2024 held level at 26 bid.

© 2015 Prospect News.
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