Distressed bonds begin week with soft tone; Midstates interim CEO to resign; Vantage debt dips

By Stephanie N. Rotondo

Phoenix, March 9 – The distressed debt market ended softer Monday, even as the equity markets popped in celebration for the sixth anniversary of the bull market.

Midstates Petroleum Co. Inc.’s bonds followed the trend of the day – as did most of the energy space – as the company announced a director and chief executive officer succession plan.

Last week, the company delayed releasing its latest quarterly results.

Vantage Drilling Co. was also weaker, as investors mulled the company’s earnings from Friday.

The results came in line with analysts’ estimates.

In other commodities, Cliffs Natural Resources Inc. was drifting down, leading one trader to wonder if the company’s recently announced tender offer was hitting snags.

Midstates CEO to exit

Midstates Petroleum’s 10¾% notes due 2020 were “quite active,” a trader said, calling the issue off 2¾ points at 63 7/8.

Another trader deemed the issue as “fairly active.” He said the issue was trading “towards 61” by the end of the day, down from a 63 to 64 context.

In a press release published Monday, the Tulsa, Okla.-based oil and gas company said that Frederic (Jake) F. Brace was joining the board of directors and was being hired as an employee, effective immediately. Furthermore, Dr. Peter J. Hill, interim president and CEO, resigned from the board – effective immediately – and will be leaving his current position once the company releases its 10-K.

Once Hill exits his post, Brace will be appointed as interim president and CEO.

Last week, Midstates said it was delaying filing its fourth-quarter and year-end results, stating that more time was needed to compile the figures.

Vantage drifts down

A trader said Vantage Drilling’s 7 1/8% notes due 2023 fell a point to 59 in Monday trading.

On Friday, the Houston-based offshore drilling company reported quarterly earnings of 3 cents per share, coming in line with analysts’ estimates. Revenue was $215.9 million, compared to estimates of $219.25 million.

By comparison, earnings per share for the previous year was 9 cents. Revenue was 9.5% lower than the prior year.

Energy declines

As for the rest of the energy space, most names were ending with a softer tone.

For its part, oil prices ended the day mixed.

West Texas Intermediate crude rose 32 cents to $49.93 a barrel. But Brent crude oil dropped $1.14, or 1.91%, to $58.59.

Peabody Energy Corp.’s 6% notes due 2018 fell almost a point to 88½, according to a trader. Halcon Resources Corp.’s 9¾% notes due 2020 were meantime off over half a point to 73 1/8.

Also on the down side were EXCO Resources Inc.’s 7½% notes due 2018, which dipped over half a point to 74 3/8.

Both Samson Investments Co.’s 9¾% notes due 2020 and Swift Energy Co.’s 7 7/8% notes due 2022 weakened half a point, a trader said, to 31¼ and 51, respectively.

In SandRidge Energy Inc. paper, the 7½% notes due 2023 slipped to 65. The 8 1/8% notes due 2022 also closed at 65, down half a point.

The 7½% notes due 2021 finished a point lower at 66.

And, Breitburn Energy Partners LP’s 7 7/8% notes due 2022 closed off 1½ points to 75½.

Cliffs’ debt falters

A trader said he was wondering if Cliffs Natural Resources’ tender offer was “struggling,” as the bonds fell 3 to 4 points in Monday trading.

He said the 4 7/8% notes due 2021 closed in a 66 to 67 zip code, down from 69 to 70. The 4.8% notes due 2020 fell to 65 bid, 66 offered.

The Cleveland-based iron ore mining company announced a tender offer for up to $750 million of four series of notes on Feb. 27. On Thursday, the amount was increased to $1.25 billion.

In exchange for their holdings, bondholders will receive 7¾% senior secured notes due 2020.

In order of acceptance priority level, the notes covered by the offer are the company’s $754.14 million of 6¼% senior notes due 2040, $631.71 million of the 4 7/8% notes due 2021, $446.23 million of the 4.8% notes due 2020 and $393.75 million of the 5.9% senior notes due 2020.

The company also increased the maximum principal amount of 6¼% notes that will be accepted to $400 million from $325 million.

Cliffs is offering $780.00, $818.75, $821.25 and $860.00 principal amount of new notes in exchange for each $1,000 principal amount of 6¼% notes, 4 7/8% notes, 4.8% notes and 5.9% notes exchanged, respectively.

Each of the exchange amounts noted above includes an early tender premium of $50.00 for each $1,000 principal amount of notes tendered by 5 p.m. ET on Wednesday, the early tender date.

Holders also will receive cash for accrued interest to but excluding the settlement date.

The exchange offers will end at midnight ET on March 25.

© 2015 Prospect News.
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