Hertz notes gain on DIP financing news; GTT Communications improves on sale agreement

By James McCandless

San Antonio, Oct. 16 – Travel and telecom names saw continued attention in the distressed debt space to end the week.

Hertz Global Holdings, Inc.’s notes gained after news broke that the company received commitments for debtor-in-possession financing.

Meanwhile, GTT Communications, Inc.’s issues improved as it reached an agreement to sell its infrastructure unit.

Sector peer Frontier Communications Corp.’s paper declined.

Oil and gas driller Transocean Ltd.’s notes varied in direction amid a delisting notice and a ratings downgrade.

As oil futures ended the week lower, SM Energy Co.’s issues followed while Occidental Petroleum Corp.’s and Antero Resources Corp.’s paper diverged.

Elsewhere, United Airlines Holdings, Inc.’s and American Airlines Group, Inc.’s notes yielded mixed results as the industry waits for federal stimulus.

Hertz gains

Hertz’s notes gained to highlight the end of the week, traders said.

The 6¼% senior notes due 2022 grabbed 1¾ points to close at 44¼ bid. The 5½% senior notes due 2024 rose 1 point to close at 44¼ bid.

Before the markets opened on Friday, news broke that the Estero, Fla.-based car rental company secured commitments for $1.65 billion of DIP financing and has filed a motion for approval of the financing in bankruptcy court, Prospect News reported.

The company’s prepetition first-lien lenders are providing the financing, which is expected to be structured as a delayed-draw term loan debtor facility.

Under the terms of the deal, up to $1 billion can be used to provide equity for vehicle acquisitions in the United States and Canada while another $800 million can be used for working capital and general corporate purposes.

The deal is subject to the approval in bankruptcy court in a hearing scheduled for Oct. 29.

“Under normal conditions this deal would have happened months ago,” a trader said. “But there were a few complicated moving parts that injected some uncertainty.”

Hertz filed for bankruptcy in May after the coronavirus pandemic exacerbated its debt issues.

During the bankruptcy process so far, the company tried and rescinded an offer to sell up to $500 million in common stock to fund its efforts before turning to traditional bankruptcy financing.

GTT up, Frontier declines

Meanwhile, in the telecom space, GTT’s issues improved, market sources said.

The 7 7/8% senior notes due 2024 reached up ¾ point to close at 52¼ bid.

On Friday morning, the McLean, Va.-based cloud networking services provider announced that it had agreed to sell its infrastructure division to I Squared Capital for $2.15 billion.

The segment’s assets include Pan-European, North American, sub-sea and trans-Atlantic fiber network and data center infrastructure services.

In a statement, interim chief executive officer Ernie Ortega said that the sale will help the company focus on cloud networking.

GTT will receive $2.02 billion in cash up front and total deferred payments of up to $130 million.

The deal is expected to close in the first half of 2021.

Norwalk, Conn.-based wireline communicator Frontier’s paper declined.

The 10½% senior notes due 2022 were docked 1 point to close at 43¼ bid. The 11% senior paper due 2025 shaved off ½ point to close at 43¾ bid.

Transocean varies

Oil and gas name Transocean’s notes varied in direction, traders said.

The 7½% senior notes due 2031 declined ½ point to close at 14 bid. The 6½% senior notes due 2020 garnered 1¼ points to close at 95½ bid.

During Friday’s activity, the Steinhausen, Switzerland-based contract driller said that it had received a delisting notice from the New York Stock Exchange.

The company said that it would regain compliance with the exchange’s standards within six months.

Transocean plans to evaluate all of its options over that period of time and plans to submit its eventual solution to shareholders for approval.

On Thursday, Transocean was downgraded by S&P Global ratings.

As part of the downgrade, the company’s issuer credit rating was lowered to CC from CCC- and the ratings on five series of notes were also shaved.

Oil tranches diverge

As oil futures ended the week in a weaker position, distressed energy tranches saw differing movements, market sources said.

West Texas Intermediate crude oil futures for December delivery saw a 12 cent cut to finish at $40.88 per barrel.

North Sea Brent crude oil futures for December delivery capped the week at $42.93 per barrel after a 23 cent slide.

Denver-based independent oil and gas producer SM Energy’s issues followed the direction of futures.

The 5% senior notes due 2024 trailed by 2 points to close at 47 bid. The 6¾% senior notes due 2026 fell 1½ points to close at 42½ bid.

Houston-based producer Occidental Petroleum’s paper diverged.

The 2.9% senior notes due 2024 held level to close at 87½ bid. The 2.7% senior notes due 2022 tacked on ¼ point to close at 95¾ bid.

Antero Resources, another Denver-based E&P, saw its notes take opposing paths.

The 5 5/8% senior notes due 2023 improved by 1¾ points to close at 80¾ bid. The 5% senior notes due 2025 shed ½ point to close at 67½ bid.

Airlines trade mixed

Elsewhere, United Airlines’ issues saw mixed results, traders said.

The 5% senior notes due 2024 lost 1¼ points to close at 87¾ bid. The 4¼% senior notes due 2024 moved up ½ point to close at 93½ bid.

This week, the Chicago-based travel name’s structure was in focus due to a combination of its release of third-quarter earnings results and stalled negotiations over federal payroll aid for the industry.

On Wednesday, the company reported a loss per share of $8.16 and revenues of $2.49 billion, both underperforming analyst expectations.

This week, almost no progress was made in negotiations between Congress and the Trump administration over payroll aid for the airlines.

Airlines have been lobbying the government for a second round of $25 billion in order to reverse thousands of employee furloughs.

Fort Worth-based peer American Airlines’ paper was also pulled apart.

The 5% senior notes due 2022 closed level at 68½ bid. The 11¾% senior paper shaved off ¾ point to close at 98¼ bid.

© 2015 Prospect News.
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