AMC notes decline as industry sees closures; American Airlines eyed amid aid talks

By James McCandless

San Antonio, Oct. 5 – Kicking off a new week in the distressed debt market, entertainment and transportation names were front and center.

AMC Entertainment Holdings, Inc.’s notes took a dive as an industry peer announced the closure of its U.S. theater locations.

Meanwhile, in transportation, American Airlines Group, Inc.’s issues varied in direction as the government negotiates a second round of payroll aid.

Sector peer United Airlines Holdings, Inc.’s paper also diverged.

On a positive day for oil futures, Occidental Petroleum Corp.’s and Antero Resources Corp.’s notes moved the same way while Superior Energy Services’ issues ended on mixed ground.

Wireline telecom name Frontier Communications Corp.’s paper drifted apart in the wake of the company’s sale of new seven-year notes.

Cloud networker GTT Communications, Inc.’s notes declined.

Elsewhere, car rental name Hertz Global Holdings, Inc.’s issues were mixed in secondary trading.

AMC dives

AMC’s notes took a dive to kick off the week, traders said.

The 10½% notes due 2025 declined by 9¾ points to close at 67¼ bid. The 12% notes due 2026 lost 11¼ points to close at 17¾ bid.

The Leawood, Kan.-based movie theater operator’s structure was under pressure after industry peer Cineworld announced that it would temporarily close its 536 Regal theater locations.

The move was predicated by the delay of No Time To Die, the latest movie in the James Bond franchise.

The delay leaves no other major studio release on the calendar for the rest of the year.

Also, 128 locations in the U.K. have been slated for closure.

“People are staying out of the theaters,” a trader said.

Late last week, the company received a ratings downgrade from S&P Global Ratings.

The agency cut the company’s issuer rating and removed all of its ratings from CreditWatch with negative implications.

S&P said that it expects the company’s liquidity to deteriorate over the next six months without an outsized increase in domestic theater attendance.

Airlines in focus

Meanwhile, in the travel sector, American Airlines’ issues varied in direction, market sources said.

The 5% senior notes due 2022 held level to close at 71 bid. The 11¾% senior notes due 2025 tacked on 2¾ points to close at 99¾ bid.

During the Monday session, the Fort Worth-based airline’s structure remained in focus as the federal government tries to negotiate a second round of stimulus for the industry.

When the first round of $25 billion in payroll protection expired last week, the company said it would furlough thousands of workers until new legislation is passed.

In response to the furloughs, the U.S. House speaker, representative Nancy Pelosi, D-Calif., said that the new funds would be approved quickly and urged airlines to halt and reverse any furloughs.

A spokesperson for the airline said that the furloughs would be walked back only if the stimulus bill was approved.

Chicago-based sector peer United Airlines’ paper also diverged.

The 5% senior notes due 2024 shaved off ¾ point to close at 87½ bid. The 4¼% senior notes due 2022 shot up 1¼ points to close at 94¾ bid.

Oil positive

On a positive day for oil futures, distressed energy tranches mostly moved similarly, traders said.

West Texas Intermediate crude oil futures for November delivery jumped up $2.17 to end the session at $39.22 per barrel.

North Sea Brent crude oil futures for December delivery capped the day at $41.29 per barrel after a $2.02 pickup.

Houston-based independent oil and gas producer Occidental Petroleum’s notes took the same route.

The 2.9% senior notes due 2024 improved by 2 points to close at 85½ bid. The 2.7% senior notes due 2022 rose 1¾ points to close at 95½ bid.

Denver-based producer Antero Resources’ issues joined the trend.

The 5 1/8% senior notes due 2022 garnered 2¼ points to close at 84 bid. The 5% senior notes due 2025 inched up ¼ point to close at 62¾ bid.

Houston-based oilfield services name Superior Energy’s paper ended on mixed ground.

The 7 1/8% senior notes due 2021 chalked off ¾ point to close at 29¼ bid. The 7¾% senior notes due 2024 gained 3¼ points to close at 30¾ bid.

Frontier notes drift

Telecom name Frontier’s notes drifted apart by Monday’s end, market sources said.

The 10½% senior notes due 2022 closed level at 42½ bid. The 11% senior notes due 2025 dropped 4¼ points to close at 38¼ bid.

At the end of last week, the Norwalk, Conn.-based wireline communications company sold a $1.15 billion issue of seven-year first-lien senior secured notes at 5 7/8%.

The offering was shopped throughout the week.

With the proceeds, combined with a $500 million term loan and cash available from its proposed $625 million exit revolving facility, the company plans to fund its bankruptcy process by paying off its pre-petition first-lien notes.

The name also reduced pricing on its $500 million seven-year DIP-to-exit term loan B to Libor plus 475 basis points from Libor plus 500 bps.

McLean, Va.-based cloud networking services provider GTT’s issues declined.

The 7 7/8% senior notes due 2024 gave up ½ point to close at 52 bid.

Hertz differs

Elsewhere, car rental name Hertz’s paper traded mixed, traders said.

The 6¼% senior notes due 2022 rose 2¼ points to close at 45¼ bid. The 5½% senior paper due 2024 was docked ½ point to close at 44 bid.

The Estero, Fla.-based vehicle rental company’s paper continues to see heightened levels of activity as it works its way through the bankruptcy process.

Last week, the company announced the resignation of its chief financial officer after only two months on the job.

Eric Esper would be leaving the position to pursue a new opportunity, while Hertz elevated finance executive Kenny Cheung into the role.

Esper will remain on as the chief accounting officer until November.

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