Washington Prime bonds jump; Diamond Sports declines; Peabody stronger; W&T notes gain

By Cristal Cody

Tupelo, Miss., June 14 – Washington Prime Group, LP’s bonds climbed in the distressed secondary market on Monday, a day after the real estate investment trust and affiliated debtors filed for voluntary Chapter 11 bankruptcy.

The company’s 6.45% notes due 2024 (C/D/C) went out Friday in the 64½ bid area and traded late Monday afternoon in the 73½ bid area, a source said.

Washington Prime Group Inc. announced on Monday that the company filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas on Sunday.

The company plans to restructure its corporate-level debt, either through a full equitization of its unsecured notes or an alternative value-maximizing transaction that would repay in full in cash all of its corporate debt.

The company said in a news release that it entered into a restructuring support agreement with creditors, led by investment firm SPVGlobal, that hold about 73% of the principal outstanding of its secured corporate debt and 67% of its outstanding unsecured notes.

Washington Prime also said in an 8-K filing with the Securities and Exchange Commission that it has secured a $100 million non-amortizing multiple draw super-priority senior secured debtor-in-possession term loan facility from the consenting creditors to support daily operations during the Chapter 11 process.

The restructuring support agreement provides for a deleveraging of the company’s balance sheet by nearly $950 million through the equitization of unsecured notes and a $190 million paydown of its revolving credit and term loan facilities.

The agreement also envisions a potential $325 million equity rights offering.

Washington Prime reported last week that it had received approval to extend a forbearance on a missed payment on the 6.45% notes to Monday after first entering into a forbearance agreement on the issue on March 16.

The company disclosed in February that its operating partnership withheld a $23.2 million interest payment on the 6.45% notes that was due Feb. 15.

The Columbus, Ohio-based shopping center REIT in May reported first-quarter net losses of $55.4 million, or $2.52 per share, compared to earnings of $3.4 million, or 16 cents per share, in the same period last year.

Washington Prime cautioned in the SEC filing that “trading in the company’s securities during the pendency of the Chapter 11 cases is highly speculative and poses substantial risks,” adding that prices may bear little to no relationship to the actual recovery by holders.

The company’s stock plunged 30.17% to $3.38 on an average volume of 4.92 million shares.

Diamond Sports softer

Diamond Sports Group LLC’s bonds continued to soften during the session after declining in heavy trading action on Friday, a source said.

Diamond Sports Group’s 5 3/8% senior secured notes due 2026 (B2/CCC+) traded about ¾ point weaker at the 73¼ bid area.

On Friday, the notes dropped more than 2¼ points to 74 bid on $8 million of secondary volume.

Also on Monday, Diamond Sports’ 6 5/8% senior notes due 2027 (Caa2/CCC-) fell about ¼ point to 57 bid after declining 3¾ points to 57¼ bid on $7 million of trading supply Friday.

The Chesapeake, Va.-based sports broadcast group’s bonds have been active on chatter of potential financing or refinancing transactions.

In February, parent Sinclair Broadcast Group, Inc. reported soft guidance for the company, along with an interest in liability management initiatives that could include a debt exchange or redemption.

Peabody heads higher

Elsewhere, Peabody Energy Corp.’s 6 3/8% notes due 2025 (Caa1/CCC) rallied further on Monday, going out up 5/8 point at 75 3/8 bid, a source said.

The notes headed out Friday up nearly 14 points on the week.

The issue finished May in the 57¾ bid range and traded at the 54 bid area at the start of the year.

In the prior week, S&P Global Ratings upgraded the St. Louis-based coal producer’s ratings to CCC from SD.

However, the ratings agency said the company’s outlook is negative, and it views Peabody’s recent trade of lower-priority common shares for its 6% senior notes due 2022 as a selective default.

W&T notes better

Oil prices were mixed as the week kicked off.

North Sea Brent crude oil futures for August deliveries rose 17 cents to settle at $72.86 a barrel.

West Texas intermediate crude oil benchmark futures for July deliveries fell 3 cents to settle at $70.88 a barrel, while August deliveries gained 3 cents to settle at $70.63 a barrel.

Elsewhere in the secondary market, Houston-based oil and gas producer W&T Offshore Inc.’s 9¾% senior secured notes due 2023 (Caa2/B) traded 1 point higher at 94 bid late afternoon, a source said.

The notes added about ¾ point on Friday and ended the week about 3¾ points higher.

Overall market tone was mixed ahead of the Federal Reserve’s start of its two-day monetary policy meeting on Tuesday.

The iShares iBoxx High Yield Corporate Bond ETF closed down 8 cents at $87.54.

The S&P U.S. High Yield Corporate Distressed Bond index ended Friday 0.01% softer. The index has month-to-date total returns of 2.53% and year-to-date total returns of 27.66%.

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