Intelsat jumps on note buyback; Community Health issues improve as subsidiary ends exchange offer

By James McCandless

San Antonio, June 11 – Traders reported a quiet start to the week in the distressed debt market on Monday, with spots of activity in news-driven names.

Intelsat SA notes gained after the company announced Monday that it would buy back its 7¾% notes due 2021 using proceeds from common stock and convertible offerings.

Community Health Systems, Inc. issues rose after a subsidiary wrapped up an exchange offer after reaching the 90% threshold for one series.

PetSmart, Inc. paper traded down. Last week, the company announced that it had hired debt advisers to help reduce its $8 billion debt.

Frontier Communications Corp. notes were mixed. The company recently held an auction for its Florida assets but failed to receive a satisfactory bid. Murray Energy Corp. issues were level. Last week, the company reached a debt restructuring agreement with creditors. Mallinckrodt plc paper fell.

Intelsat up

Luxembourg-based satellite communications company Intelsat notes saw multi-point gains, traders confirmed, after the company announced that it would buy back its Intelsat (Luxembourg) SA 7¾% senior notes due 2021. The company intends to purchase the notes using proceeds from an offering of $200 million of common shares and $300 million of convertible senior notes due 2025 (see related story elsewhere in this issue).

“Those notes have been a bellwether for the distressed market,” a trader said. “They were a real leader in trading today.”

The 7¾% notes due 2021 jumped up 8 points to close at 93½ bid. The 8 1/8% notes due 2023 rose about 3 points to close at 83½ bid.

On Friday, the 7¾% notes rose ¼ point and the 8 1/8% notes picked up about ¾ point.

Community Health rises

Franklin, Tenn.-based hospital operator Community Health Systems issues gained, market sources confirmed. On Monday, subsidiary CHS/Community Health Systems, Inc. announced the results of its exchange offers for three series of notes after reaching the 90% threshold needed for one series.

On May 1, the company began offering to exchange three series of notes on May 7 for up to a total $3,125,000,000 principal amount of new notes with extended maturities (see related story elsewhere in this issue).

Last Wednesday, the company amended the terms of the exchange offer, increasing the coupon on the 2023 notes to 11% for one year after issue, up 112.5 basis points from 9 7/8%.

The 7 1/8% notes due 2020 gained ¾ point to close at 86 bid. The 6 7/8% notes due 2022 rose about ¾ point to close at 55¼ bid.

On Friday, the 6 7/8% notes shaved off about ¼ point.

PetSmart off

Phoenix-based pet supplies retailer PetSmart paper was down, traders confirmed. Last week, the company became a favorite in trading as it announced that it had hired investment bank Houlihan Lockey, Inc. as restructuring advisers for its $8 billion in debt.

The company also moved 36.5% of its stake in its e-commerce site Chewy.com to its private equity owner, putting it partly out of reach of creditors.

The 5 7/8% paper due 2025 lost ¾ point to close at 74¾ bid. The 8 7/8% paper due 2025 fell about ¼ point to close at 58 bid.

On Friday, the 5 7/8% paper lost about ¼ point and the 8 7/8% paper rose about ½ point.

Volume names trade

Norwalk, Conn.-based wireline name Frontier Communications notes were mixed. The company is working to regain investor confidence following a failed auction for its Florida assets.

The 7 5/8% notes due 2024 shaved off about ½ point to close at around 69 bid. The 10½% notes due 2022 gained about ¾ point to close at around 91 bid. The 11% notes due 2025 rose about ½ point to close at 81¼ bid.

St. Clairsville, Ohio-based coal producer Murray Energy issues were level but active. Last Monday, the company reached an agreement with a portion of its noteholders and bank lenders on a debt restructure plan that will refinance its 11¼% senior secured notes due 2021 and its term loans.

The 11¼% notes due 2021 were level at 57¼ bid.

Britain-based drug maker Mallinckrodt’s 4¾% paper due 2023 traded down about ¼ point to close at 80¼ point.

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