Community Health enlists Lazard for debt help; iHeart Media activity up after loan forbearance extension

By James McCandless

San Antonio, March 13 – Tuesday trading in the distressed debt market was described as comparatively weak by traders, with few names experiencing significant movement.

Community Health Systems, Inc. notes were active on reports that the company is enlisting Lazard to assist with its growing debt problems.

A day after revising its restructuring plan, iHeart Media, Inc. issues traded as it extended by a day a forbearance agreement over its failure to pay interest on some notes.

Toys “R” Us, Inc. is said to be working on a plan to liquidate its U.S. assets after failing to find a buyer amid reports that it has forgone payments to its vendors.

Frontier Communications Corp. and Intelsat SA continue to jockey for the position of most traded in the distressed telecom space. Mallinckrodt plc contributed more volume in distressed healthcare. A mixed day for oil futures spurred activity in Ensco plcand Northern Oil and Gas, Inc.

Community Health seeks debt help

Franklin, Tenn.-based hospital operator Community Health Systems saw a bevy of activity as traders confirmed reports that it has hired asset management firm Lazard to help with existing debt. This comes at the heels of the company signaling to shareholders that it may close or sell more hospitals in the coming year.

“They are going to have to do something,” a trader said. “They have a ton of debt. They don’t seem to be digging themselves out of the hole anytime soon. I don’t know how soon they can start selling things off, but they’ll find out with Lazard.”

The 7 1/8% notes due 2020 fell about 1 point to close at 79 bid. The 6 7/8% notes due 2022 fell 1¼ points to close at 58¾ bid.

iHeart Media gets extension

San Antonio-based outdoor communications company iHeart received an extension on its loan forbearance for default on its 14% notes by one day Tuesday (see related story elsewhere in this issue). On Monday, the company revised the proposed terms of its restructuring plan.

The company’s 2% notes due 2021 traded up slightly to close at 14 bid. The 10 5/8% issues due 2023 jumped about 7 points to close just above 90 bid.

Toys “R” Us plans to liquidate

Confirming what seemed inevitable since last week, reports came that Wayne, N.J.-based bankrupt toy retailer Toys “R” Us plans to liquidate its U.S. assets after failing to find a buyer. Other reports surfaced claiming that the company has missed payments to vendors.

The 8¾% paper due 2021 dropped about 5½ points to close near 5½ bid. The 7 3/8% paper due 2018 edged up closer to about 10¾ bid.

Volume favorites active

Norwalk, Conn.-based wireline telecom name Frontier Communications continues to see high volume trading, precipitated by new issues and the announcement that it would be halting its quarterly dividend to focus on debt repayment.

The 7 5/8% notes due 2024 traded down to close at about 60½ bid. The 10½% notes due 2022 dropped ½ point to close at 87½ bid. The 11% notes due 2025 traded up ¼ point to close at 82 bid.

Luxembourg-based satellite communications company Intelsat took up much of the distressed telecom space once again, trending positively since comments about the future of the U.S. 5G network and its potential benefit to satellite names were made recently.

The Intelsat Jackson SA 5½% issues due 2023 traded down slightly to close at 82½ bid. The 7¼% issues due 2020 handed back Monday’s gain of about 1¾ points to close at 94¼ bid.

Britain-based drug maker Mallinckrodt added to the volume in the distressed healthcare sector, remaining a favorites since completing a $1.2 billion acquisition that helps it expand into the U.S. market.

The 4¾% paper due 2023 traded up about 2¼ points to close at around 81¼ bid.

Oil futures saw a mixed day, leading to activity in distressed energy names.

Britain-based oil driller Ensco saw its 5¾% bonds due 2044 rise slightly to close near 67¾ bid.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas’ 8% issues due 2020 added 1¼ points to close at 92¼ bid.

“We were pretty much weaker on the day,” a trader said. “Not a lot changed hands.”

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