iHeart steals action with ruling, moving notes both ways; Peabody down on operating loss; Valeant mixed

By Colin Hanner

Chicago, Dec. 21 – Though trading remains relatively muted on the week, Wednesday brought several cases of company-specific news to the forefront in the distressed arena, swaying movement in both directions.

iHeartCommunications, Inc. caught both sides of that after a decision from the International Swaps & Derivatives Association ruled that a recently skipped repayment was a failure to pay credit event.

The New York City-based media company also announced the private offering of priority guaranteed notes for outstanding notes, which were down after the news.

“I guess it was all iHeart today,” a trader said.

Movement was on the whole for the company on Wednesday.

The same could not be said for Peabody Energy Corp., which was down after it was announced late Tuesday that the St. Louis-based coal company posted an operating loss for the month of November.

It was down several points.

Valeant Pharmaceuticals International Inc. continued building on the momentum of the week and trading continued to be mixed.

Several idiosyncratic names filled the gaps on a pre-holiday week that is experiencing a lull in activity and volume, including Stone Energy Corp. and Teck Resources Ltd.

iHeart mixed on ruling, offer

iHeartCommunications saw a flurry of headlines affect its distressed notes on Wednesday in a week generally characterized as quiet.

A ruling by the America Credit Derivatives Determinations Committee of the International Swaps and Derivatives Association deemed that a failure to pay credit event occurred in respect to iHeartCommunications, a press release said.

The decision was in regards to iHeart’s decision to skip a repayment on Dec. 15 for $57.1 million of its 5½% senior notes.

Movement in its distressed securities was mixed in reaction to the news.

The 14% notes due 2021 were up ½ point to 39¾, a trader said, and the 9% notes due 2021 were down 3/8 point to 73 3/8.

A market source said the 9% notes due 2019 were up 5/8 point to 80¾.

iHeartCommunications also began a private offering of 11¼% priority guaranteed notes due 2021 in exchange for its $347,028,000 of outstanding 10% senior notes due 2018.

The said 10% notes were down 1 point to 74 on the session, a trader said.

Fitch Ratings announced that the exchange offer would provide holders of the 10% notes an improved position in the capital structure, though Fitch’s deemed iHeart’s capital structure is “unsustainable.”

Peabody down on operating loss

After trekking downward for the past few sessions – perhaps due to spot prices in coal or momentum with the notes, a trader offered – Peabody’s distressed securities continued the decline on Wednesday following a late announcement on Tuesday.

Peabody Energy Corp. posted a $94.7 million operating loss for November on $504.4 million in total revenue, according to its monthly operating report filed Tuesday with the Securities and Exchange Commission.

Those figures compared to $6.1 million of operating income reported for October on $390.8 million in total revenue.

The November operating loss included a $180 million asset impairment.

The net loss for November was $160 million, widening from a $20.3 million October net loss.

The company had $1,262,700,000 in cash and cash equivalents as of Nov. 30, up from $1,177,200,000 at the end of October.

A market source said the 6½% notes due 2020 were down 2 points to 67, and the 10% notes due 2022 were unchanged at 92¾.

Valeant on the up

After two sessions of general downward movement, things started to look up for Valeant Pharmaceuticals on Wednesday as three of its distressed notes were up, albeit marginally.

Though there appears to be no significant drivers of the up-and-down movement, chatter surrounding the company continues to persist.

A trader said the 5½% notes due 2023 were down 3/8 point to 74 1/8.

There was upward movement in the 5 3/8% notes due 2020, which were up ½ point to 84 on “a dozen trades,” a market source said.

Trailing just behind were Valeant’s 6 1/8% notes due 2025, which were up 3/8 point to 74 1/8.

In health

Hospital operator Community Health Systems Inc.’s 6 7/8% notes due 2022 were up 3/8 point to a 69 handle, a trader said.

Tenet Healthcare Corp.’s 6¾% notes due 2023 were unchanged at 87 7/8.

And Malvern, Pa.-based Endo International plc’s 6½% notes due 2025 were up 3/8 point to 84½, a market source said.

Retail roundup

Neiman Marcus Group, Inc.’s 8% notes due 2021 were down ½ point to 75, a trader said.

J. Crew Group, which in recent weeks has been the subject of restructuring in the face of $2 billion in debt, saw a ¼-point increase in its 7¾% notes due 2019, which finished with a 42 handle.

A mixed bag

Stone Energy’s 7½% notes due 2022 were up 1¾ points to 59¼, a market source said.

The company filed for Chapter 11 bankruptcy protection last Wednesday.

Canadian metals and mining company Teck Resources saw no action in its 5.4% notes due 2043, which stayed with an 88 handle.

Caesars Entertainment Group’s 10% notes due 2018 were down ¼ point to 68¼, a trader said.

Caroline Salls and Angela McDaniels contributed to this review

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