Adient gains as company starts debt offerings; Dean Foods drops amid buyout speculation

By James McCandless

San Antonio, April 15 – Distressed debt trading was driven by fresh news to start a new week Monday.

Adient plc’s notes were higher as the company begins $1.5 billion in new debt financing and released preliminary second-quarter results.

Dairy producer Dean Foods Co.’s issues fell amid market speculation that a Canadian dairy name is considering buying the company.

In the energy space, Bristow Group Inc.’s paper fell before announcing a strategic alternatives review and warning that it would skip an imminent interest payment.

Negative oil futures spurred similar movements for Ensco Rowan plc’s, California Resources Corp.’s and Alta Mesa Resources, Inc.’s notes.

Utilities name PG&E Corp.’s notes improved.

Meanwhile, in telecom, Frontier Communications Corp.’s paper rose while Intelsat SA’s note declined.

Adient higher

Manufacturer Adient’s notes were gaining on Monday, traders said.

The 4 7/8% notes due 2026 added ¾ point to close at 80¼ bid.

On Monday, the Dublin-based car seat maker launched a $750 million five-year covenant-lite term loan B with price talk of Libor plus 450 basis points with a 0% Libor floor and an original issue discount of 99, Prospect News reported.

The company is also getting an asset-based revolving credit facility.

Additionally, the company launched a $750 million offering of senior secured notes due 2026.

The proceeds are expected to be used to refinance existing facilities.

On Monday, the company also released preliminary results for the second-quarter, saying that it expects revenues to come in at $4.1 billion, missing analyst estimates.

“I think you’ll see a positive cash flow,” a trader said. “That’s where any sort of turnaround is going to come from.”

The company’s paper has been on an upward trend, boosted last week by a string of analyst upgrades.

Dean Foods down

Elsewhere, Dean Foods’ issues were falling at the end of the session, market sources said.

The 6½% notes due 2023 dropped 1½ points to close at 60½ bid with about $21 million notes changing hands.

On Monday morning, the Dallas-based dairy products name’s notes saw heightened activity after market speculation of a buyout from Montreal-based sector peer Saputo surfaced.

“It’s all chatter right now,” a trader said. “But it got enough traction to make it one of the stories of the day.”

In February, the company announced fourth-quarter results marred by falling sales, a halt on its dividend, and a strategic alternatives review with the intention of finding a buyer.

It currently holds an $887 million debt load.

Bristow falls

In the oil and gas sector, Bristow’s paper fell, traders said.

The 6¼% paper due 2022 lost 1½ points to close at 16 bid.

After the close on Monday, the Houston-based offshore helicopter name announced that it would be conducting a strategic alternatives review.

The company concurrently said that it would not be making a $12.5 million interest payment on the 6¼% paper and would enter into a 30-day grace period.

“They’ll probably file when that time is up,” a trader said.

On Thursday, S&P Global Ratings issued downgrades to the name in reaction to its troubles with financial reporting and a potential need to obtain default waivers from lenders.

Oil loses

Distressed oil names followed crude oil futures downward, market sources said.

London-based contract driller Ensco Rowan’s notes were negative.

The 7¾% notes due 2026 slipped 1½ points to close at 86 bid. The 5.2% notes due 2025 declined by ¾ point to close at 79¾ bid.

Last Thursday, the merger between Ensco and sector peer Rowan was finalized.

Los Angeles-based independent oil and gas producer California Resources’ issues were also headed lower.

The 6% notes due 2024 fell 1¼ points to close at 69¾ bid. The 8% notes due 2022 lost 2¾ points to close at 82¼ bid.

Houston-based sector peer Alta Mesa’s paper followed the trend.

The 7 7/8% paper due 2024 shaved off ½ point to close at 37 bid.

West Texas Intermediate crude oil futures for May delivery declined by 49 cents, finishing the session at $63.40 per barrel.

North Sea Brent crude oil futures for June delivery finished at $71.18 per barrel after a 37-cent loss.

PG&E up

In utilities, PG&E’s notes were moving upward, traders said.

The 4% notes due 2046 added 1½ points to close at 82½ bid. The 3.3% notes due 2027 tacked on 1 point to close at 89½ bid.

The San Francisco-based bankrupt electric utility continues to experience positive movement after California governor Gavin Newsom announced a plan to set up an insurance fund for claimants of wildfire damages on Friday.

The company filed for bankruptcy early this year after being exposed to billions in liability charges in connection to 2017 and 2018 wildfires.

Frontier rises, Intelsat off

Meanwhile, in the telecom space, Frontier’s issues were rising, traders said.

The 11% notes due 2025 picked up ½ point to close at 65 bid. The 10½% notes due 2022 improved by 1 point to close at 73¾ bid.

The 11% notes saw $15 million of the bonds on the tape by the close.

Luxembourg-based satellite operator Intelsat’s paper took the opposite path.

Intelsat Jackson Holdings SA 5½% paper due 2023 lost ¼ point to close at 90¼ bid. Intelsat (Luxembourg) SA’s 8 1/8% paper due 2023 declined 1 point to close at 76 bid.

© 2015 Prospect News.
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