PetSmart notes gain as company spins off part of online business; Community Health dips after extension

By James McCandless

San Antonio, June 5 – Traders reported a quiet day in the distressed debt market on Tuesday with few catalysts driving activity.

PetSmart, Inc. notes gained again as the company transfers a third of its stake in online segment to its private equity owner.

Community Health Systems, Inc. issues were down a day after a subsidiary extended an early payout deadline for a note exchange once again.

Murray Energy Corp. paper rose again a day after the company announced an agreement has been reached with a portion of its noteholders and lenders on debt restructuring.

Intelsat SA notes gained. The company recently released a disappointing Q1 report. Frontier Communications Corp. traded up. A recent failed auction for the company’s Florida assets has impeded the company’s efforts to reduce debt. Bristow Group Inc. paper declined.

PetSmart up

Phoenix-based pet supplies retailer PetSmart notes gained again, traders confirmed, as the company moves 36.5% of its stake in e-commerce segment Chewy.com to its private equity owner BC Partners and an unrestricted subsidiary. The site has been a source of revenue growth since the company acquired it last year for $3.35 billion.

Recently, the company announced the appointment of retail executive J.K. Symancyk as its new chief executive officer.

“That’s a large amount of that segment that can’t be used in collateral,” a trader said. “Word is that that’s a contentious point with some debt holders.”

The 5 7/8% notes due 2025 jumped up about 2¼ points to close at around 73¾ bid. The 8 7/8% notes due 2025 rose about 2¼ points to close at around 55 bid.

On Monday, the 5 7/8% notes gained about 2 points and the 8 7/8% notes rose about 4¾ points.

Community Health falls

Franklin, Tenn.-based hospital operator Community Health Systems issues traded down, market sources confirmed, a day after subsidiary CHS/Community Health Systems, Inc. again extended an early payout deadline in an exchange offer for several notes.

On Friday, the company announced the sale of five hospitals to three companies as part of its divestiture plan. Three Tennessee assets were sold to West Tennessee Healthcare, another Tennessee asset was sold to Rennova Health, Inc. and one Louisiana asset was sold to subsidiaries of Allegiance Health Management.

The 7 1/8% notes due 2020 lost about ¼ point to close at around 85¼ bid. The 6 7/8% notes due 2022 shaved off 2 points to close at 51 bid.

On Monday, the 7 1/8% notes gained about 2½ points and the 6 7/8% notes lost about 1 point.

Murray Energy gains

St. Clairsville, Ohio-based coal producer Murray Energy paper rose again, traders confirmed. On Monday, the company reached an agreement with a portion of its noteholders and bank lenders on a debt restructuring plan that will refinance its 11¼% senior secured notes due 2021 and its term loans.

Holders of 71% of the 11¼% notes and 61% of the term loans have entered into a transaction support agreement with the company to participate in the refinancing.

The 11¼% notes due 2021 rose about 1 point to close at 48¼ bid.

On Monday, the 11¼% notes gained about 3 points.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes gained. A recent Q1 report showed a 56 cents per share loss, missing analyst estimates of 41 cents per share.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 gained about 1 point to close at 83 bid. The 8 1/8% notes due 2023 jumped up about 3¾ points to close at around 81½ bid.

Norwalk, Conn.-based wireline name Frontier Communications issues were up. A recent failed auction for the company’s Florida assets has cast a pale over investor confidence.

The 7 5/8% notes due 2024 were up about ¾ point to close at around 69½ bid. The 10½% note s due 2022 gained about 1½ points to close at 90¾ bid. The 11% notes due 2025 traded up about 1¾ points to close at around 82¾ bid.

Houston-based offshore energy aviation services name Bristow Group saw its 6¼% paper fall about ½ point to close at around 77 bid.

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