Valeant rises after refinancing, new term B loan news; Community Health up; Neiman, Intelsat down

By Colin Hanner

Chicago, March 6 – The distressed market took a breather following the weekend, traders said, as last week’s headlines affecting distressed companies’ movement seemed to dissolve and much of the focus in the high-yield space went more toward new issues.

“There were a bunch of new issues last week,” a trader said. “Those are still trading, and there are still a lot of eyeballs on new issues.”

Though not trading wildly one way or the other – as Intelsat SA and Neiman Marcus Group, Inc. did last week – Valeant Pharmaceuticals International, Inc. saw some heightened activity following an announcement that it will refinance its credit agreement, borrow new term B loans under the agreement and issue new debt securities.

Bonds were up across the board for the Candian pharmaceutical company.

In the hospital sector, Community Health Systems, Inc. was up incrementally following Friday’s tender offer announcement for its 5 1/8% notes due 2018.

Geoscience company CGG SA did an about-face on Monday, trading down several points following its fourth quarter results.

Intelsat followed last week’s active streak with a quieter tone, traders said, as did Neiman Marcus Group, which saw one trade that brought it down again following Reuters having reported Friday that it plans to bring in outside help to “explore ways to bolster its balance sheet as it seeks relief from $4.9 billion in debt.”

Two issues of Claire’s Stores, Inc. traded mixed, Frontier Communications Corp. inched closer to distressed territory following last week’s earnings announcement and several energy names traded mostly down.

Valeant up refinancing, loan

After announcing it completed its sale of several skincare brands on Friday to L’Oreal for $1.3 billion, Valeant Pharmaceuticals followed with more news on Monday morning.

Valeant will launch a fungible $3.06 billion incremental series F-3 term loan B due April 1, 2022 talked at Libor plus 475 basis points with a 0.75% Libor floor and an original issue discount of 99.75 on new money, according to a market source.

The spread and the floor on the incremental loan matches pricing on the existing series F term loan B.

Barclays and Goldman Sachs Bank USA are the bookrunners on the deal.

With the refinancing, the company is looking to amend its credit agreement to provide for additional covenant cushion and improve financial flexibility, the source continued. A news release said the amendment would remove the maintenance covenants from the term B loan, revise maintenance covenants under the revolving credit facility, modify certain other provisions, as well as repay a portion of the company’s 6¾% notes due 2018.

Distressed notes sprung at the news.

The 5 7/8% notes due 2023 were up 7/8 point to 79¾, a trader said, adding they were “very active,” while the trader saw the 6 1/8% notes due 2025 mirror the gain to finish at 78¾.

However, another trader said the 6 1/8% notes due 2025 were instead down 1 to 1½ points and finished in a 78 to 79 zip code.

The 6 3/8% notes due 2020 were up ¾ point to 93 7/8.

And Valeant’s 7½% notes due 2021 were up 1½ points on heavy volume, a trader said, and finished with a 93¾ handle.

Community Health down

Following news on Friday of a hospital divestment in Alabama – valued at $25 million – as well as a tender offer for the company’s 5 1/8% notes due 2018, one of the company’s issues was down on the session, a trader said.

The 6 7/8% notes due 2022 were down 5/8 point to 87 7/8.

CGG’s about-face

CGG’s movement on Monday was more fitting given the stark outlook given by its chief executive officer, Jean-Georges Malcor, on Friday following the company’s fourth quarter results.

“In this environment and given delays in market recovery, we do not expect our performance to generate sufficient cash flow to service our current level of debt over the years to come,” Malcor said in a news release.

The French geoscience company’s 6½% notes due 2021 were down 2½ points to 47½, a trader said.

Neiman down, Claire’s mixed

Neiman Marcus “continues to be the distressed name in the retail space,” a trader said Monday.

The company’s 8¾% notes due 2021 were down 1 3/8 points to 52 5/8 on one trade, a trader said.

According to a Reuters report on Friday, Neiman Marcus hired Lazard Ltd. to restructure the company’s debt, though sources said there was no “immediate risk” of bankruptcy.

Amidst fears in the slowly-diminishing brick-and-mortar landscape, Claire’s Stores saw two kinds of movement on Monday.

The tween retailer’s 6 1/8% notes due 2020 were down 1½ points to 42, a trader said.

Seeing a similar move in the opposite direction were the company’s 9% notes due 2019, which were up 1½ points to 45½.

Distressed wrap-up

Up for the better part of last week after a merger with OneWeb LLC, Intelsat Jackson Holdings SA were especially quiet on Monday, particularly the 5½% notes due 2023, which were down 5/8 point to 84 5/8, a trader said.

Frontier Communications Corp.’s 11% notes due 2025 were down 1½ points to 96¼, a trader said.

“Those have continued deteriorating since earnings” on Feb. 27, a trader said.

Spanish-language media company LBI Media, Inc.’s 13½% notes due 2020 were down ½ point to 60.

Oil and gas developer and producer EV Energy Partners, LP’s 8% notes due 2019 were down “almost 1 point” to 79 3/8, a market source said.

And FirstEnergy Corp. saw a mixed bag of movement, led by the 6.05% notes due 2021, which were up ½ point to 37.

The 6.85% notes due 2034 were down ¾ point to 32¼, and its 6.80% notes due 2039 were down 1 to 35, a trader said.

Sara Rosenberg contributed to this review

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