Community Health mixed on earnings report; American Tire continues rise as reorganization begins

By James McCandless

San Antonio, July 26 – The distressed debt market saw an uptick in activity on Thursday as earnings season got underway.

Community Health Systems, Inc. notes ended mixed as the company released its Q2 earnings report after market close.

American Tire Distributors issues gained again a day after announcing a round of layoffs as part of its reorganization efforts.

Ensco plc paper improved after the company reported better than expected earnings as the market opened Thursday.

Intelsat SA notes were mixed again. The Federal Communications Commission is considering a rule change that could bring new sources of revenue to satellite firms.

Frontier Communications Corp. issues were also mixed. The company is preparing for the departure of CFO Perley McBride.

Elsewhere in the healthcare space, Mallinckrodt plc paper rose.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems notes were mixed, traders confirmed, as the company released its Q2 earnings report. The company posted a 1 cent loss per share, beating analyst expectations. The company also reported net operating revenues of about $3.5 billion.

Chairman and CEO Wayne Smith said that recent planned divestitures have made the company financially stronger and that more are planned to further the company’s financial objectives.

“They’re looking better after today,” a trader said. “I think a lot of people are wanting an entry point into the healthcare space, and this one may be where they start.”

The 7 1/8% notes due 2020 lost about 1 point to close at around 87¼ bid. The 6 7/8% notes due 2022 gained 1 point to close at 49½ bid.

American Tire improves

Huntersville, N.C.-based tire distributor American Tire issues gained again, market sources confirmed. On Wednesday, the company announced that it was laying off 100 employees in its marketing subsidiary Tire Pros. After the loss of two distribution deals with major tire companies, the company is shifting its focus to long-term growth strategies in order to better attract new business.

“I think if they can pull this off and eventually restructure, those bonds will start to look pretty attractive,” a trader said.

The 10¼% notes due 2022 jumped 4¼ points to close at 36 bid.

On Wednesday, the 10¼% notes rose about 2½ points.

Ensco up

London-based oil and gas drilling company Ensco paper rose, traders confirmed, after the company posted its Q2 earnings report Thursday morning. It reported a 30 cent loss per share, beating analyst estimates of a 33 cent loss per share. The company also reported $458.5 million in revenue against a $453 million estimate.

The 5¾% bonds due 2044 picked up about ¾ point to close at 72½ bid.

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes were mixed. The FCC is considering a rule change that would let mobile providers use airwaves currently restricted to traditional broadcasters and managed by satellite firms, potentially opening up a new revenue stream for satellite firms.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 shaved off about ¼ point to close at around 93¾ bid. The 8 1/8% notes due 2023 added about ¼ point to close at around 85¾ bid.

On Wednesday, the 7¾% notes lost about 3½ points and the 8 1/8% notes rose about ¼ point.

Norwalk, Conn.-based wireline communications name Frontier Communications issues ended mixed. CFO Perley McBride recently announced his resignation.

The 7 5/8% notes due 2024 fell about 1 point to close at around 66¾ bid. The 10½% notes due 2022 rose about 1½ points to close at around 90½ bid. The 11% notes due 2025 added about ¾ point to close at 82¼ point.

On Wednesday, the 7 5/8% notes traded up about ¼ point, the 10½% notes lost about ¼ point and the 11% notes rose about 3 points.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 add about ¼ point to close at around 83½ bid.

On Wednesday, the 4¾% paper rose about ¼ point.

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