Concordia International firms post-earnings; Hexion results weigh on debt; Petsmart gets a bounce

By Stephanie N. Rotondo

Seattle, Aug. 11 – As has been the case of late, fresh earnings were the main driver of distressed bonds on Friday.

Concordia International Corp. posted its results early in the day, reporting figures that were lower year over year. However, the company said it believed it had enough cash and cash flow to meet its needs for the next year.

In response, the company’s 9% notes due 2022 edged upward.

Hexion Inc. also reported ahead of the market’s open. A trader said the company’s debt “started trading early,” with the bonds losing ground in the wake of the results.

Meanwhile, recently topical names remained in play.

Petsmart Inc.’s bonds “had a little bounce back,” a trader said, following weakness tied to news of a management shakeup on Thursday.

The trader saw the 7 1/8% notes due 2023 ticking up almost a point to 86, while the 5 7/8% notes due 2025 inched up a quarter-point to 92˝.

The Phoenix-based pet product retailer announced on Wednesday that Michael Massey, its chief executive officer, was leaving the company after two years on the job.

There were also “lots of trades” in Valeant Pharmaceuticals International Inc.’s 6 1/8% notes due 2025, according to a trader.

The debt has been busy since reporting earnings earlier in the week.

The notes finished at 83˝, a gain of almost a point.

Frontier Communications Corp. was also on the active side, though without any fresh news to act as a catalyst.

A trader saw the benchmark 11% notes due 2025 rising a point to 87 5/8, as the 7 5/8% notes due 2024 firmed 1Ľ points to 79˝.

As for California Resources Corp.’s 8% second-lien notes due 2022, there was “limited trading” in the issue, a trader reported.

Still, the debt remained under pressure, losing half a point to close at 56.

Concordia rises

Concordia International’s 9% notes moved up in Friday trading on the back of the company’s earnings release.

A trader said the bonds bounced up to highs of 77, though they eventually settled in around 75.

That compared to levels around 74 previously.

For the second quarter, Concordia reported net loss from operations of $1.01 billion, or $19.78 a share. That compared to a loss of $570.38 million, or $11.18 per share, the year before.

Revenue for the quarter came to $160.78 million, versus the $231.71 million seen at the end of the second quarter of 2016.

As of June 30, cash and equivalents stood at $301.8 million, versus $397.9 million the year before.

Still, the Oakville, Ontario-based orphan drug developer asserted that the available liquidity combined with cash flow would meet its needs for the coming 12 months.

In addition to the earnings, Concordia also announced a variety of management changes, including the departure of Wayne Kreppner, president and chief operating officer.

Kreppner will exit his post on Aug. 31. The company does not intend to refill the role.

Hexion hesitates

Hexion’s 9% notes due 2020 were bogged down Friday as the market reacted to the company’s second-quarter results.

A trader deemed the debt down 3˝ points at 68.

For the quarter, the Columbus, Ohio-based specialty chemical manufacturer reported net loss of $34 million on sales of $912 million.

On the sales side, that was a decline of 4% year over year, though the decrease was due in large part to the impact of recent divestures. When accounting for the asset sales, sales improved 7%.

Segment EBITDA meantime fell 23% to $100 million. When adjusted for the divestures, the decline was 13%.

At the end of the quarter, Hexion had $323 million in liquidity, compared to its $3.7 billion in debt.

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