Intelsat up big ahead of earnings on reported merger talks with OneWeb; Valeant up marginally before results

By Colin Hanner

Chicago, Feb. 27 – Activity in the distressed market was all but normal during the last 30 minutes of trading on Monday, traders said, as news broke late about a merger in the making for one distressed company.

Reports of a merger in the communication satellite arena lifted bonds for Intelsat SA across the board, a day before the Luxembourg City-based company is set to announce its fourth quarter earnings.

U.K.-based Sky News broke the possibility of a merger between Intelsat and global communications company, OneWeb LLC, just after 3 p.m. ET.

Softbank Group Corp., a Japanese telecommunications and Internet company, is behind the merger, the report said, which would have a roughly $18 billion value if finalized.

Intelsat bond prices skyrocketed, spiking upwards of 20 points in one issue, a market source said.

“Intelsat was the mover of the day,” a trader said, adding most other companies’ movement paled in comparison.

Also set to announce quarterly figures on Tuesday is Valeant Pharmaceuticals International, Inc., though its most notable issue was up marginally on the day.

Elsewhere, Santa Clara, Calif.-based Avaya Inc., which “started to move higher on Friday’s session,” according to one trader, was up “a little bit higher” in one of its distressed issues.

Franklin, Tenn.-based hospital operator Community Health Systems, Inc., a notable throughout last week’s session, took a backseat to the action yet again on Monday, moving, if at all, up a fraction of a point, a trader said.

iHeartCommunications, Inc. was up slightly on the session, and two energy-focused companies had mixed movement on a session seemingly focused on a merger in the distressed arena.

Intelsat makes headlines

“Intelsat was the most notable today with all the headlines coming across,” a trader said Monday, referring to the reported merger that could prove to be quite beneficial for creditors.

Up for the better part of last week, Intelsat and its subsidiary-linked notes continued the progression after the reported merger broke during the session.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 were trading with a 76 handle at 3 p.m., a trader said, and just a half-hour later were up “10 points or so” to an 86 handle. The notes touched as high as 87 on the session.

The similarly linked 7¾% notes due 2021 were up 10 points to 54, a trader said, and the 7¼% notes due 2020 were up “5 and change” points to 92. They traded as high as 95, a market source said.

Intelsat Connect Finance SA’s 12½% notes due 2022 were up 6 points to 82, a market source said.

And, much to the disbelief of one sellside trader, Intelsat Luxembourg Holdings SA’s 8 1/8% notes due 2023 touched as high as 63, an 18½-point increase on the session.

According to the Sky News report, Intelsat could announce the terms of the merger on Tuesday when the company reports its financial results.

The deal might rest on the condition that “Intelsat's bondholders [accept] an offer at a slight premium to where the bonds were trading on Monday,” the report said.

Intelsat is also a minority shareholder in OneWeb.

According to a 2015 news release, OneWeb said it had “attracted investments” from Intelsat, among others, in a $500 million funding roundup to “further develop key technologies to enable affordable broadband for rural and underdeveloped locations.”

Valeant up, albeit marginally

Set to report its fourth quarter earnings on Tuesday morning just as the session gets underway, Valeant Pharmaceuticals was up just a touch on Monday ahead of the announcement, a trader said.

Its 6 1/8% notes due 2025 were up ¼ point to 81½, the trader said.

Valeant is set to announce its 2016 fourth quarter earnings and 2017 guidance at 8 a.m. on Tuesday on the company’s website.

Avaya better

Seeing an increase that mirrored its movement from Friday, technology company Avaya’s 7% notes due 2019 were up 3/8 point to 79½, a trader said.

“They started moving a bit on Friday, but they’re better off going out the door,” on Monday’s session, the trader said.

Low-action Community Health

For the past two sessions, Community Health’s most notable issue has been rather sluggish, a trader said, referring to the 6 7/8% notes due 2022, which he said were up “barely ¼ point” to 87¼ on Monday.

“There’s not a lot of action there,” the trader said.

One-off movers

A trader quoted iHeartCommunications’ 11¼% due 2021 down ¼ point to 83 on the session.

As its stock price ticked higher, exploration and production supplier Hornbeck Offshore Services Inc.’s 5 7/8% notes due 2020 were down 2 points to 66, a trader said.

And energy company FirstEnergy Corp.’s 6.8% notes due 2039 were unchanged at 35½, a trader said.

© 2015 Prospect News.
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