Murray Energy trades up on debt restructuring agreement; Community Health mixed on extended deadline

By James McCandless

San Antonio, June 4 – Traders reported a typically muted Monday in the distressed debt market with spots of activity driven by recent news.

Murray Energy Corp. notes gained after the company announced that it has reached an agreement with a portion of its noteholders and lenders on debt restructuring.

Community Health Systems, Inc. issues were mixed as a subsidiary extended an early payout deadline for a note exchange again.

PetSmart, Inc. paper traded up for a third straight day, gaining back declines after the recent appointment of a new chief executive officer.

Intelsat SA notes gained. Recently, the company released a subpar Q1 report. Frontier Communications Corp. issues were mixed. The company recently presided over a failed auction for its Florida assets. Mallinckrodt plc paper was level.

Murray Energy gains

St. Clairsville, Ohio-based coal producer Murray Energy’s notes shot up, traders confirmed, as 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 (see related story elsewhere in this issue).

“This is the kind of shift that a lot of holders wanted to see and that’s reflected in the gains today,” a trader said.

The 11¼% notes due 2021 gained about 3 points to close at 51 bid.

Community Health mixed

Franklin, Tenn.-based hospital operator Community Health Systems issues were mixed, market sources confirmed, after subsidiary CHS/Community Health Systems, Inc. again extended an early payout deadline in an exchange offer for several notes (see related story elsewhere in this issue).

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.

Other parts of its plan to reduce its debt include corporate layoffs and refinancing.

The 7 1/8% notes due 2020 rose about 2½ points to close at around 85½ bid. The 6 7/8% notes due 2022 traded down about 1 point to close at 53 bid.

On Friday, the 7 1/8% notes rose about ¾ point.

PetSmart up

Phoenix-based pet supplies retailer PetSmart paper traded up for a third straight day, traders confirmed. The company announced the appointment of retail executive J.K. Symancyk as its new chief executive officer a few weeks ago.

Paper has been trending downward recently after Amazon.com, Inc. announced that it would be offering subscribers of its Prime service an in-house brand of dog food.

The 5 7/8% paper due 2025 gained about 2 points to close at 71½ bid. The 8 7/8% paper due 2025 jumped up about 4 ¾ points to close at 52¾ bid.

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

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 ¼ point to close at around 82 bid. The 8 1/8% notes due 2023 rose 2 points to close at 77¾ points.

Norwalk, Conn.-based wireline name Frontier Communications issues were mixed. The company is working to assuage investor concerns after a failed auction of its Florida assets, which did not produce bids that it considered satisfactory. The auction was part of its effort to reduce debt.

The 7 5/8% notes due 2024 gained about ½ point to close at around 68¾ bid. The 10½% notes due 2022 shaved off about ¾ point to close at around 89¼ bid. The 11% notes due 2025 lost about ½ point to close at 81 bid.

Britain based drug maker Mallinckrodt saw its 4¾% paper due 2023 stay level despite upward pressure at 81 bid.

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