iHeart gives up prior day’s gains; Murray Energy tops Peabody in coal activity; Stone down

By Colin Hanner

Chicago, Nov. 29 – Traders saw an increase in trading volume in distressed bonds on Tuesday, compared to the rather stagnant feeling since last week’s Thanksgiving holiday, and the focus shifted to several regularly traded distressed names.

iHeartMedia Inc., riding out news from Monday that the media company is seeking bondholders to agree to amendments on six sets of notes, saw a downturn from the previous day’s surge, losing most of its gains on the week.

Meanwhile, oil futures prices plummeted as the outlook of an Organization of Petroleum Exporting Countries’ accord looks to be weakening, heralded by a disconnect between several OPEC members.

In company-specific oil news, the top investor of Stone Energy Corp. said that the company’s restructuring agreement adversely affects the average shareholder interests, according to a Securities and Exchange Commission filing.

Stone’s distressed bonds dropped several points as a result.

In the coal space, several traders saw upticks in Murray Energy Corp.

Peabody Energy Corp. appeared to be a “bit sideways” and “not nearly as active [as Murray],” a trader said.

About-face on iHeart

Gains for iHeartMedia from Monday were nearly erased during Tuesday’s session, as news from Monday regarding an amendment seeking to exclude certain holders from the ability to consent, waive or amend terms of six notes seemed to kick in for traders.

“The headlines out last night spooked some people,” a trader said, but countered that the bond’s reaction to the news was “overblown.”

Nonetheless, several of iHeartMedia’s bonds were down, including the “weaker” 10% notes due 2018, which were down 4 points to 71½, according to one trader. Another trader had the notes going out with a 71-72 handle.

“Those gave back everything they got in the past day or so,” a trader said, referring to the 3- to 4-point increase the 10% notes saw on Monday’s trading.

The 9% notes due 2021 were down 1/8 point to 74½ on “a dozen trades,” a market source said, and rounding out downward movement for the media company were the 14% notes due 2021, which were down ½ point to 41.

News of the amendment comes on the heels of a legal ruling win last week over Gamco, which claimed that iHeart was channeling revenue from its Clear Channel Outdoor Holdings business back to iHeart.

OPEC decision awaited

Several oil and oil-related companies are waiting to see the definite news that will come out of Vienna on Wednesday, where OPEC members will decide whether to reach an accord to curb the oil supply glut.

Oil futures have been teetering on speculative news day-in, day-out for months, and that didn’t stop on Tuesday, as oil futures dropped on news that Saudi Arabia threatened it would leave the table for discussion and Iran expressing they would not agree to cuts.

A curb on oil output would likely boost the price of oil, whereas a failure to reach an accord could send oil prices tumbling.

West Texas Intermediate crude and Brent crude futures were down nearly 4% at market close on Tuesday.

“I think a lot of people are sitting to wait and see what happens out of [the OPEC decision],” a trader said. “I think that’s going to dictate some direction one way or another tomorrow.”

California Resources Corp.’s 8% notes due 2022 were down 1 point to 73¾, a trader said, while a market source said the same notes were down 1¼ points to 74¼.

Another trader said the notes were down 1 point to 74.

Linn Energy LLC’s 7¾% notes due 2021 were down ¾ point to 31½, a market source said.

Houston-based EP Energy Corp.’s 9 3/8% notes due 2020 were down 1¼ points to 79, and rounding out oil-related companies was CGG SA, which saw a 1/8-point decrease to 41½ in its 6½% notes due 2021, a trader said.

A market source said the notes were down 1 point to the same level.

Stone sees distrust

With a 9.92% ownership of Stone’s shares – the most out of any current shareholder – investor Thomas Satterfield “believes that the restructuring plan recently announced by [Stone Energy] disproportionately impairs the interests of the issuer’s common shareholders and unfairly advantages other stakeholders, especially the issuer’s board of directors and management,” according to a Schedule 13D filed on Nov. 29 with the SEC.

“[Thomas Satterfield] does not intend to support the proposed restructuring plan if [Stone Energy] files for bankruptcy and the plan is submitted without changes,” the filing said.

On Tuesday, the company’s 7½% notes due 2022 were down 2 points to 54½, a trader said, while another market source had the notes down 2½ points from Monday’s handle.

As previously reported by Prospect News, under the restructuring agreement, Stone Energy will file for voluntary relief under Chapter 11 of the U.S. Bankruptcy Code by Dec. 9 to implement the plan, according to a company announcement.

If the restructuring plan goes through, Stone said it expects to wipe out about $850 million principal of debt and to reduce its annual interest payment burden by about $46 million.

“The agreement with our noteholders will provide value to all of our stakeholders, improves our liquidity and better positions us to be profitable during a historically difficult time in our industry,” David Welch, the company’s chairman, president and chief executive officer, said in a news release after the restructuring agreement announcement. “Importantly, this agreement will allow all stakeholders to share in potential valuation growth if commodity prices improve.”

Peabody Energy saw several trades in its 6½% notes due 2020, and moved upward ¼-½ point to 59½, a market source said.

Murray on the upswing

Clairsville, Ohio-based Murray Energy was the most active named in the distressed arena, according to several traders, particularly in its 11¼% notes due 2021, which were up 7/8 point to 71 7/8 on “tons of trading,” a trader said. Another trader said the notes were trading a 72½-73 ZIP code.

A market source said the notes were up 2½ points to 73½.

A trader said he could not tell why the notes gained particular attention on Tuesday, citing the fact they are a private company.

Round up

Community Health Systems Inc.’s 6½% notes due 2022 were down 1 point to 69¾, a trader said, and the company’s 8% notes due 2019 were down 2 points in late trading to 80¾.

Atlanta-based Aces Health Inc.’s 8 3/8% notes due 2019 were up 1½ points.

In pharmaceuticals, Concordia International Corp.’s 9½% notes due 2022 were unchanged at 43¾, and Valeant Pharmaceuticals International Inc.’s 6 1/8% notes due 2025 were down ½ point to 77½.

Valeant’s 6½% notes due 2018 were down ¼ point to 96¼.

Communications satellite provider Intelsat SA’s Luxembourg-linked 8 1/8% notes due 2023 were down 1 point to 34½, a market source said, and the similarly linked 7¾% notes due 2021 were down ½ point to 34¾.

A market source said Caesars Entertainment Inc.’s 10% notes due 2018 were up ¼ point to 66½.

Tobacco merchant Alliance One International Inc.’s 9 7/8% notes due 2021 were up ½ point to 84, a market source said.

© 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.