PHI notes tank after company cancels tender offer; energy mixed on rebound; Sears sinks

By James McCandless

San Antonio, Oct. 12 – At the end of a short week in the distressed debt space, trading skewed negative despite a rebound in the equity markets.

After a seventh extension, PHI, Inc.’s notes tanked after the company announced that it would be terminating its cash tender offer for 5¼% notes due 2019.

Elsewhere in the energy space, FerrellGas Partners, LP’s issues ended mixed a day after the company announced the completion of two acquisitions.

A rebound in oil futures ended with mixed results for Sanchez Energy Corp., Denbury Resources Inc. and California Resources Corp. tranches

In retail, Sears Holdings Corp.’s notes ended the week falling again as the company tries to extend its operations through the holidays. Competitor J.C. Penney Co., Inc.’s paper also declined.

After a ratings affirmation, telecom name Wind Tre SpA’s notes gained.

Meanwhile, in the medical space, Community Health Systems, Inc.’s notes were mixed after the company announced a divestiture late Thursday. Mallinckrodt plc’s paper improved.

PHI terminates offer

PHI’s notes dived at the Friday close, traders said.

The 5¼% notes due 2019 lost 8½ points to close at 83½ bid.

Toward the close, the Lafayette, La.-based offshore air services company announced that it would be terminating a cash tender offer after failing to get substantial funding for the tender offer for the $500 million outstanding 5¼% notes.

The offer had previously been extended several times, most recently to 5 p.m. ET on Oct. 12, Prospect News reported.

The company also hired Houlihan Lokey as financial advisers to explore other options.

“They replaced one game of wait-and-see with another,” a trader said.

Energy mixed

FerrellGas’ issues ended the day mixed, market sources said.

The 6½% notes due 2021 added ¾ point to close at 89½ bid. The 6¾% notes due 2022 shaved off ¼ point.

The company announced on Thursday that it had acquired longtime suppliers Salathe Gas Co. and North Star Exchange Inc. in a deal with undisclosed terms.

The buzz surrounding the potential acquisitions sent the Overland Park, Kan.-based propane supplier’s notes upward, market sources said.

A rebound in oil futures didn’t translate to gains across the board for bellwether oil tranches.

Houston-based independent oil and gas producer Sanchez Energy’s 6 1/8% paper due 2023 rose ½ point to close at 56½ bid.

Plano, Texas-based producer Denbury saw its 5½% notes due 2022 lose ½ point to close at 92 bid.

Los Angeles-based peer California Resources’ notes rose.

The 8% notes due 2022 jumped up 3¾ points to end at 97½ bid.

At the close Friday, West Texas Intermediate crude oil futures added 37 cents to cap the week at $71.34 per barrel. North Sea Brent crude oil futures rose 17 cents to $80.43 per barrel.

Sears pushes lower

In the retail space, Sears’ notes continued to slide after a dismal week, traders said.

The 7% bonds due 2032 lost about 3 points to close at 42 bid. The 6½% notes due 2028 dropped ½ point to close at 42½ bid.

On Thursday, the 7% bonds lost 3 points and the 6½% notes shed 5 points.

After news earlier in the week that the Hoffman Estates, Ill.-based retailer is preparing for bankruptcy, bonds have been precipitous in their decline.

On Friday, more news broke that the company is working to secure a loan that would keep the company in operation through the winter holidays.

“I suppose that they want to remain a going concern,” a trader said. “That’s despite a strong faction that wants to liquidate right now.”

Sector peer J.C. Penney’s 8 5/8% notes due 2025 lost about ¼ point to close at around 66¼ bid.

Wind Tre improves

Elsewhere, Wind Tre’s paper gained, market sources said.

The 5% paper due 2026 picked up ½ point to close at 86¼ bid.

The Milan, Italy-based fixed and mobile telecom services provider’s paper began to rise Friday morning after receiving a ratings affirmation. S&P Global Ratings affirmed the long-term issuer credit rating of the company and its wholly owned subsidiary Wind Acquisition Finance, affirming a stable outlook.

On Wednesday, Fitch Ratings upgraded the long-term issuer default rating and also affirmed a stable outlook.

Both moves were in response to CK Hutchinson Holdings Ltd. becoming the company’s sole owner after purchasing an additional 50% stake in June.

Community Health mixed

Community Health’s notes were seen closing mixed, traders said.

The 7 1/8% notes due 2020 lost ½ point to close at 86½ bid. The 6 7/8% notes due 2022 rose ¾ point to close at 55¼ bid.

In a continuance of its debt reduction strategy, the Franklin, Tenn.-based hospital operator announced late Thursday that it had entered into a definitive agreement to sell its two-hospital Mary Black Health System and related businesses to South Carolina-based Spartanburg Regional Healthcare System.

Elsewhere in the medical space, Staines-upon-Thames, U.K.-based drug maker Mallinckrodt’s 4¾% notes due 2023 added ¾ point to close at 83 bid.

© 2015 Prospect News.
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