Uniti eyed amid mediation; Frontier Communications higher despite negative headlines

By James McCandless

San Antonio, Feb. 13 – In the back half of the week, the distressed debt space was squarely focused on the telecom and energy sectors.

Uniti Group Inc.’s notes varied in direction after a news release said that mediation between the company and Windstream Holdings, Inc. had not reached a resolution yet.

Sector peer CBL & Associates Properties, Inc.’s issues also saw a divergence.

Meanwhile, in the telecom space, Frontier Communications Corp.’s paper shifted higher despite negative headlines about its communications services.

Satellite operator Intelsat SA’s notes were under pressure.

Utilities name PG&E Corp.’s issues declined as it argues with a bankruptcy court judge over imposing safety measures.

Elsewhere, in oil and gas, Whiting Petroleum Corp.’s paper continued moving downward a day after reports indicated it is exploring refinancing options.

Gains for oil futures did not reach distressed tranches, as California Resources Corp.’s, Southwestern Energy Co.’s and Laredo Petroleum, Inc.’s notes dipped.

Uniti, CBL active

Uniti Group’s notes varied in direction in the Thursday session, traders said.

The 8¼% senior notes due 2023 shaved off ¼ point to close at 94½ bid. The 6% senior secured notes due 2023 added ¼ point to close at 98½ bid.

About $66 million of the notes combined changed hands by the close.

The Little Rock, Ark.-based telecom-focused real estate investment trust’s structure saw increased attention after Windstream, a telecom name also based in Little Rock, said that mediation to resolve litigation between the two companies was ongoing, Prospect News reported.

The talks to renegotiate server rents have yet to reach a resolution, Windstream said.

Under Windstream’s proposed terms, Uniti would be required to commit to fund up to $1.75 billion of growth capital improvements through December 2029, including $125 million in year one, $225 million per year in years two through five, $175 million per year in years six and seven and $125 million per year in years eight through 10.

Chattanooga, Tenn.-based sector peer CBL’s issues also saw a divergence.

The 5¼% senior notes due 2023 picked up ¾ point to close at 56¾ bid. The 4.6% senior notes due 2024 fell 1 point to close at 47 bid.

Frontier higher

Meanwhile, in the telecom space, Frontier’s paper shifted higher, market sources said.

The 10½% senior notes due 2022 rose ¾ point to close at 48¼ bid. The 11% senior notes due 2025 tacked on 1 point to close at 48½ bid.

Despite negative headlines, the Norwalk, Conn.-based wireline communications name’s paper saw positivity.

News reports indicated this week that the company has been sluggish to restore services in some areas, including 911 emergency calling.

The reports prompted lawmakers, namely Wisconsin senator Tammy Baldwin, to publicly question the company’s actions.

“It’s more in the background as far as the bonds go,” a trader said. “But it keeps it topical. They’re headed for bankruptcy anyway.”

The company indicated to creditors recently that it would seek bankruptcy protection in March.

Luxembourg-based satellite operator Intelsat’s notes were under pressure.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 dropped 2¾ points to close at 45½ bid. The 9½% senior notes due 2023 trailed by 2¼ points to close at 67 bid.

PG&E off

Utilities name PG&E’s issues were in decline as the day ended, traders said.

The 6.05% notes due 2034 slipped ¼ point to close at 115 bid.

Late Wednesday, the San Francisco-based bankrupt electric utility filed an argument in bankruptcy court against a judge intervening in its wildfire prevention operations.

Last month the judge in its case threatened to force the company to hire safety workers after PG&E reported that it was not in full compliance with the safety requirements of its probation.

The utility said that it would focus on current safety efforts, noting that a shortage of skilled workers led to its non-compliance.

Amid negotiations on its restructuring plan, California governor Gavin Newsom has said that the state is prepared to take over PG&E if its safety measures do not fall in line with regulations.

Whiting lower

Elsewhere, in oil and gas, Whiting Petroleum’s paper continued moving lower, market sources said.

The 6¼% senior notes due 2023 dived 4 points to close at 60½ bid. The 6 5/8% senior paper due 2026 cut off 2½ points to close at 51½ bid.

On Wednesday, the 6¼% notes dropped 4¼ points and the 6 5/8% notes lost 2 points.

The Denver-based independent oil and gas producer’s losses were triggered by reports that the company is in talks with potential financial advisers as it looks for ways to refinance a large short-term maturity wall.

The company is considering replacing unsecured debt with newly issued secured debt.

“This is what a lot of E&P’s are facing right now,” a trader said. “Those low oil prices have knocked down a lot of names this past year.”

Oil names drop

Gains for crude oil futures did not stretch as far as distressed energy tranches, a trader said.

West Texas Intermediate crude oil futures for March delivery improved by 25 cents to finish at $51.42 per barrel.

North Sea Brent crude oil futures for April delivery ended at $56.34 per barrel after a 55 cent gain.

Los Angeles-based producer California Resources’ notes were trailing.

The 6% senior notes due 2024 were pushed down 1¼ points to close at 23¼ bid. The 8% senior secured notes due 2022 gave back 1¼ points to close at 31 bid.

Spring, Tex.-based peer Southwestern Energy’s issues weakened.

The 6.2% senior notes due 2025 shed 1 point to close at 83¼ bid. The 7½% senior notes due 2026 lost ¾ point to close at 83½ bid.

Tulsa, Okla.-based producer Laredo Petroleum’s paper followed other names downward.

The 9½% senior paper due 2025 fell 2 points to close at 85 bid. The 10 1/8% senior notes due 2028 declined by 1 point to close at 85½ bid.

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