Uniti notes eyed after earnings report; SM Energy diverges amid early tender results

By James McCandless

San Antonio, May 13 – As the week in the distressed debt market reached the midpoint, earnings and energy took up much of the attention.

Uniti Group Inc.’s notes varied in direction after the release of its Q1 earnings report and a settlement approval.

Sector peer Washington Prime Group Inc.’s issues improved.

Meanwhile, in oil and gas, SM Energy Co.’s paper diverged after the company announced the early results of a tender offer.

A drop in oil futures were mirrored by Whiting Petroleum Corp.’s and Chesapeake Energy Corp.’s notes while Occidental Petroleum Corp.’s issues saw mixed results.

In the retail space, Revlon, Inc.’s paper moved in different directions after the company received a ratings downgrade.

Drug store chain Rite Aid Corp.’s notes were under pressure.

Elsewhere, Hertz Global Holdings, Inc.’s issues were sent to lower levels.

Uniti notes flat to higher

Uniti’s notes varied in direction by the end of the session, traders said.

The 7 7/8% senior secured notes due 2025 held level at 100 bid. The 8¼% senior notes due 2023 gained 1 point to close at 91¾ bid.

After the Monday close, the Little Rock, Ark.-based telecom-focused real estate investment trust released its first-quarter earnings report.

The company showed a profit of 45 cents per share, edging out the 42 cents per share profit that was expected by analysts.

Revenues also came in above predictions at $266.16 million.

On Wednesday, Windstream Holdings, Inc. and the Uniti received court approval of a settlement that resolves claims and causes of action that have been or may be filed against Uniti by Windstream, Prospect News reported.

The two parties agreed to settle all litigation in March.

Columbus, Ohio-based sector peer Washington Prime’s issues improved.

The 6.45% senior notes due 2024 gained 1¾ points to close at 1¾ bid.

SM Energy diverges

Meanwhile, in the oil and gas space, SM Energy’s paper diverged, market sources said.

The 5 5/8% senior paper due 2025 closed level at 32¼ bid. The 6¾% senior paper due 2026 lost 2 points to close at 26 bid.

During the Wednesday session, the Denver-based independent oil and gas producer announced the early results and extension of the early tender time of its exchange offers and consent solicitations, Prospect News reported.

As of 5 p.m. ET on May 12, about $243.5 million of old notes had been tendered in the exchange offers.

Tenders may no longer be withdrawn. and extended the early tender deadline to midnight on May 27.

At the same time, the company is soliciting consents for some proposed amendments to each indenture governing the old notes to eliminate substantially all of the restrictive covenants and some of the default provisions contained therein.

Oil drops

A drop in oil futures was mirrored by distressed energy tranches, traders said.

Despite a decline in U.S. crude oil inventories, energy futures weakened as the Federal Reserve warned of a prolonged recovery from the coronavirus pandemic.

West Texas Intermediate crude oil futures for June delivery moved down 49 cents to finish at $25.29 per barrel.

North Sea Brent crude oil futures for July delivery ended the session at $29.19 per barrel after a 79 cent slip.

Denver-based producer Whiting Petroleum’s notes followed futures to lower levels.

The 6¼% senior notes due 2023 shaved off ¾ point to close at 7 bid. The 6 5/8% senior notes due 2026 chalked off 1¾ points to close at 7 bid.

Oklahoma City-based peer Chesapeake Energy’s issues followed the trend.

The 4 7/8% senior notes due 2022 shed ¾ point to close at 4¼ bid. The 11½% notes due 2025 lost ½ point to close at 4½ bid.

Houston-based producer Occidental Petroleum’s paper saw mixed results.

The 2.9% senior notes due 2024 closed level at 76½ bid. The 2.7% senior notes due 2022 dropped 2¾ points to close at 85¼ bid.

“The comments from the Fed really dragged everything down,” a trader said.

Revlon in focus

In the retail space, Revlon’s notes moved in different directions, market sources said.

The 5¾% senior notes due 2021 lopped off 1½ points to close at 52½ bid. The 6¼% senior notes due 2024 improved by 2 points to close at 18½ bid.

After the close on Tuesday, the New York-based cosmetics producer received a ratings cut from S&P Global Ratings.

The agency slashed the company’s overall rating to SD from CC and lowered the rating on its 2016 term loan to D from CC.

The move was in reaction to Revlon’s completion of the refinancing of its 2016 term loan, which S&P considers a distressed exchange.

Revlon completed its refinancing efforts on Monday despite some creditor opposition.

Camp Hill, Pa.-based drug store chain Rite Aid’s issues were under pressure.

The 6 1/8% senior notes due 2023 were pushed down 1 point to close at 90¼ bid.

Hertz lower

Elsewhere, vehicle rental name Hertz’s paper was sent to lower levels, traders said.

The 6¼% senior notes due 2022 slipped 2¾ points to close at 16¼ bid. The 5½% senior paper due 2024 lost 1¼ points to close at 14¼ bid.

The Estero, Fla.-based vehicle rental company said in a Securities and Exchange Commission filing on Wednesday that there is significant doubt that it will be able to remain a going concern through the year.

The company said that it may not have sufficient liquidity to meet lender obligations.

Its first-quarter earnings showed a $1.78 loss per share and revenues at $1.92 billion, both below expectations.

© 2015 Prospect News.
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