Toys ‘R’ Us to shutter all U.S. stores; iHeart gets another one-day forbearance extension

By James McCandless

San Antonio, March 14 – Distressed debt market activity remained muted Wednesday, traders said, while various pockets remained in high volume over recent news.

After failing to find a buyer for its U.S. business, Toys “R” Us, Inc. made an after-market announcement that it would be closing all of its stores.

iHeart Media, Inc. issues were trading once again after obtaining yet another one-day extension of its forbearance agreement for failure to pay interest on some notes.

Community Health Systems, Inc. paper took up much of the volume in the healthcare sector as it receives a ratings downgrade, coming after Tuesday’s reports that it had enlisted asset management firm Lazard to assist with its debt problems.

Frontier Communications Corp. and Intelsat SA remained at the top of the distressed telecom space. Mallinckrodt plc added to the volume in distressed healthcare. California Resources Corp. and Northern Oil and Gas, Inc. made up much of the energy sector’s volume.

Toys to shut all U.S. stores

After reports earlier in the day confirmed that it would be closing all of its U.K. locations with no buyer, after-market reports confirmed Thursday that Wayne, N.J.-based bankrupt toy retailer Toys “R” Us would also close its 800 U.S. locations for the same reason.

“There was some hope earlier that there would be a buyer for their Canadian business, and that that buyer could possibly take the U.S. assets, as well,” a trader said.

The 8¾% notes due 2021 rose about 3¾ points to close above 9 bid. The 7 3/8% notes due 2018 gained about 1½ points to close at around 12 bid.

iHeart gets another day

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

“The fact that they got another day tells me that they may be able to get out of the mess they’re in,” a trader said. “There could be a buyer in the works, otherwise they would not be this confident.”

The 6 7/8% issues due 2018 cratered 7½ points to close at 19 bid. The 9% issues due 2021 shaved off 1¼ points to close at 81¾ bid.

Community Health active

Franklin, Tenn.-based hospital operator Community Health Systems paper continued its activity Wednesday, a market source confirmed. Standard & Poor’s lowered its corporate credit rating and affirmed a negative outlook (see related story elsewhere in this issue). On Tuesday, the company enlisted asset management firm Lazard to help with its debt service.

The 7 1/8% paper due 2020 jumped up 3 points to close at 82 bid. The 6 7/8% paper due 2022 rose by about 1¼ points to close just above 60 bid.

Volume names trade

Norwalk, Conn.-based wireline telecom name Frontier Communications saw more heavy volume on the day. The company recently priced new issues and ended its quarterly dividend to focus on debt repayment.

The 7 5/8% notes due 2024 edged up slightly to close at 60¾ bid. The 10½% notes due 2022 remained level at 87½ bid. The 11% notes due 2025 fell ½ point to close at 81½ bid.

Elsewhere in telecom, Luxembourg-based satellite communications company Intelsat continues to be heavily traded.

The Intelsat Jackson SA 5½% issues due 2023 lost ½ point to close at 82 bid. The 7¼% issues due 2020 fell ¼ point to close at 94 bid.

Britain-based drug maker Mallinckrodt has also been popular in the distressed healthcare space since completing the $1.2 billion acquisition of Rockville, Md.-based medical applications name Sucampo Pharmaceuticals.

The 4¾% paper due 2023 gained about ¼ point to close near 81½ bid.

In energy, Los Angeles-based oil and gas producer California Resources saw its 6% notes due 2024 lose about 2¼ points to close at just under 61¼ bid.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas’ 8% issues due 2020 fell ¼ point to close at 92 bid.

“There wasn’t a lot of movement today,” a trader said. “We’ll just have to watch the equity markets and hope for the best.”

© 2015 Prospect News.
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