Hexion mixed as term loan prepped; Legacy Reserves down on bankruptcy talk

By James McCandless

San Antonio, June 11 – The distressed market was again focused on names with news surrounding them on Tuesday.

Hexion, Inc.’s notes saw mixed results as the company talks a new $600 million seven-year term loan.

In energy, Legacy Reserves Inc.’s issues, already trading at low levels, sunk further after the company announced plans to file for bankruptcy.

Elsewhere in the sector, Covey Park Energy LLC’s paper continued to lose a day after news broke of a $2.2 billion buyout.

An unchanged day for oil futures was reflected in Denbury Resources Inc.’s notes as California Resources Corp.’s issues slipped.

In the pharma space, Teva Pharmaceutical Industries Ltd.’s and Mallinckrodt plc’s paper were higher as a sector peer filed for bankruptcy.

Meanwhile, in telecom, Frontier Communications Corp.’s paper was moving lower as West Corp.’s notes gained.

Hexion mixed

Hexion’s notes were mixed in Tuesday’s activity, traders said.

The 6 5/8% notes due 2020 picked up 1 point to close at 79¼ bid. The 9% notes due 2020 lost 3¼ points to close at 14¼ bid.

On Tuesday, the Columbus, Ohio-based chemicals producer talked a $600 million seven-year term loan at Libor plus 350 basis points to 375 bps with a 0% Libor floor and an original issue discount of 99, Prospect News reported.

Concurrently, it is also getting a $600 million equivalent euro seven-year term loan.

The two term loans come on the heels of a bankruptcy court approving the company’s entry into commitment and fee letters for a total of about $2 billion in new asset-based credit facility and term loan debt and senior unsecured notes.

“You have to move as quickly as bureaucracy allows,” a trader said. “When you’re in bankruptcy, you don’t want to waste any time.”

The company filed for Chapter 11 bankruptcy in April.

Legacy sinks

In energy, Legacy Reserves’ issues sunk during the day, market sources said.

The 6 5/8% notes due 2021 shed 3¼ points to close at 4½ bid. The 8% notes due 2020 declined by 3½ points to close at 5 bid.

The Midland, Texas-based independent oil and gas producer announced its intention to file for Chapter 11 bankruptcy imminently.

The company said that it has reached a restructuring agreement with its creditors.

The plan outlined by the name would see its capital structure deleveraged by $900 million.

“They’ve really been getting chopped up since the beginning of the year,” a trader said.

Covey Park loses

Elsewhere in the sector, Covey Park’s paper continued to lose, traders said.

The 7½% paper due 2025 shaved off ½ point to close at 79½ bid.

On Monday, the 7½% paper lost 8¾ points.

On Monday, news broke that the Dallas-based producer had accepted a buyout from Comstock Resources for $2.2 billion in cash and stock.

The move, according to Comstock, strengthens its position in the Haynesville Basin with production capabilities of about 1.1 billion cubic feet equivalent in 2,000 net drilling locations.

Oil flat

Oil futures were largely unchanged, as oil tranches trended flat to lower, market sources said.

Houston-based producer Denbury’s notes were active but finished flat.

The 6 3/8% notes due 2021, while moving below 79 bid during the day, closed level at 82 bid. The 5½% notes due 2022, while dipping to 58 bid during trading, ended flat at 62 bid.

Los Angeles-based sector peer California Resources’ issues slipped lower.

The 6% notes due 2024 dropped 4¾ points to close at 60 bid. the 8% notes due 2022 lost ¼ point to close at 71¾ bid.

West Texas Intermediate crude oil futures for July delivery saw a modest 1 cent rise to end the session at $53.27 per barrel.

North Sea Brent crude oil futures for August delivery remained unchanged at $62.29 per barrel.

Teva, Mallinckrodt higher

In the pharmaceutical sector, Teva’s paper was seen climbing, traders said.

The 3.15% paper due 2026 added 1¼ points to close at 81¼ bid. The 4.1% paper due 2046 shot up 2¾ points to close at 69½ bid.

The Petach Tikva-based generic drugmaker has seen increased scrutiny after settling a suit from the state of Oklahoma for $85 million on opioid-related allegations.

Staines-upon-Thames, England-based peer Mallinckrodt’s notes were also better.

The 5½% notes due 2025 rose 1 point to close at 65¾ bid. The 5¾% notes due 2022 tacked on ½ point to close at 83½ bid.

Both names were higher as Phoenix-based competitor Insys Therapeutics filed for bankruptcy under increasing pressure for its role in propagating opioids.

Frontier off, West gains

Meanwhile, in telecom, Frontier’s issues moved lower, market sources said.

The 10½% notes due 2022 declined by 2¼ points to close at 72 bid. The 11% notes due 2025 shed 1 point to close at 64 bid.

The company’s structure has been trending negative after a slate of board appointments included those experienced in the restructuring process.

Omaha-based network infrastructure name West’s paper saw gains.

The 8½% paper due 2025 shifted up 3¼ points to close at 84½ bid.

© 2015 Prospect News.
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