AMC distressed notes rally; GEO continues slide; Endo weakens; Mallinckrodt mixed

By Cristal Cody

Tupelo, Miss., May 26 – AMC Entertainment Holdings, Inc.’s bonds rallied on Wednesday along with its stock in heavy trading action.

AMC’s 5¾% senior subordinated notes due 2025 (Ca/C) gained 1 point to 74 bid after trading up 2 points in the prior session.

The company’s 12% second-lien senior secured notes due 2026 (Ca/C) jumped 2½ points to 95½ bid by the close, a source said.

The 12% notes are 4¼ points higher week to date.

AMC’s stock closed up more than 19% on the day.

The Leawood, Kan.-based movie theater owner raised approximately $428 million in a registered offering of 43 million shares of class A common stock earlier in May.

AMC reported in January that it had raised or signed commitment letters to receive $917 million of new equity and debt capital. The company also issued $100 million of guaranteed first-lien secured notes due 2026 on Jan. 15.

GEO bonds drop

GEO Group Inc.’s bonds continued to decline on Wednesday in heavy distressed secondary trading following S&P Global Ratings’ downgrade of the private prison operator in the prior session.

GEO’s 5 1/8% senior notes due 2023 (B2/CCC) were quoted 3 points weaker at 86½ bid following a 2 point drop on Tuesday, a source said.

GEO’s 5 7/8% senior notes due 2024 (B2/CCC) traded about 2 points lower at the 72 bid range on Wednesday. The issue declined more than 2½ points on Tuesday.

The company’s 6% senior notes due 2025 (B2/CCC) headed out at 60 7/8 bid. The notes fell more than 3 points on Tuesday to the 61¼ bid area.

S&P dropped the company’s bond ratings by two notches and levied a negative outlook on Tuesday.

In January, president Joe Biden instructed the U.S. Department of Justice to not renew contracts with privately operated prison operators.

The Boca Raton, Fla.-based real estate investment trust that specializes in secure and processing facilities and electronic monitoring is no longer managing several facilities where the contracts have expired and will no longer manage other facilities when those contracts expire.

S&P said on Tuesday that GEO has borrowed substantially all of its remaining revolving credit facility availability and is building large cash balances in a strategy that typically precedes a debt exchange.

The company has recently retained Lazard Financial Advisory and Skadden, Arps, Slate, Meagher & Flom LLP to assess various alternatives for its capital structure.

Endo declines

Looking at the distressed pharmaceuticals space, Endo Finance LLC’s 6% senior notes due 2028 (Caa2/CCC+) sank 3¾ points to 66¼ bid in heavy trading action on Wednesday, a source said.

The notes traded at 72¾ bid the same day a week ago.

Endo’s notes have declined from trading at the 77 bid range at the start of the month.

Parent Dublin-based pharmaceuticals maker Endo International plc reported weaker first-quarter earnings and revenue earlier in May.

Mallinckrodt eyed

Bankrupt pharmaceuticals maker Mallinckrodt plc’s bonds were mixed on Wednesday after a court hearing on the company’s Chapter 11 bankruptcy plan of reorganization was rescheduled, a market source said.

The company’s 4¾% notes due 2023 were mostly unchanged on the day at the 21½ bid area but have softened from 23 bid on Monday.

The 5½% notes due 2025 were quoted at 62¾ bid in strong secondary activity on Wednesday. The issue was up ¾ point from where the notes last traded in early May.

Mallinckrodt filed its Chapter 11 plan of reorganization and disclosure statement in the U.S. Bankruptcy Court for the District of Delaware on April 20.

A hearing on approval of the disclosure statement that was scheduled for Wednesday was postponed to June 8, according to a court notice.

Mallinckrodt, which has principal offices in Dublin and St. Louis, filed for Chapter 11 bankruptcy on Oct. 12, 2020.

GTT bonds stronger

In other distressed secondary trading on Wednesday, GTT Communications, Inc.’s 7 7/8% senior notes due 2024 (/C/) improved to 8 bid in strong trading activity, a source said.

On Tuesday, the notes climbed 1 7/8 points to 6 7/8 bid.

The notes traded at the 18 bid range in mid-April and the 40 bid area at the start of the year.

The McLean, Va.-based telecommunications and internet services provider reported May 17 in an 8-K filing with the Securities and Exchange Commission that it received an extension of the deadline under its term loan and revolving credit agreements and the forbearance agreement on the 7 7/8% notes to June 3.

Transocean softens

Overall market tone was positive over the day.

The iShares iBoxx High Yield Corporate Bond ETF finished 3 cents higher at $87.25.

Oil prices settled slightly higher.

North Sea Brent crude oil futures for July deliveries rose 22 cents to settle at $68.87 a barrel.

West Texas intermediate crude oil benchmark futures for July deliveries settled up 14 cents to $66.21 a barrel.

In secondary trading, offshore driller Transocean Inc.’s 7½% senior notes due 2026 (Ca) were down about 1 point in the 78 bid range, a source said.

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