Hertz notes drop as company halts share offering; Intelsat up after DIP loan approved

By James McCandless

San Antonio, June 17 – The distressed debt market fixed its attention on travel and manufacturing newsmakers during the Wednesday session.

Hertz Global Holdings, Inc.’s notes dropped after halting its $500 million common stock sale on reports of Securities and Exchange Commission interest.

Satellite operator Intelsat SA’s issues picked up steam after receiving final court approval for $1 billion in debtor-in-possession financing.

Sector peer Frontier Communications Corp.’s paper varied in direction.

Meanwhile, manufacturer United States Steel Corp.’s notes moved lower as it forecasted a higher-than-expected loss for the second quarter.

Theater chain AMC Entertainment Holdings, Inc.’s issues rose as the company extended an exchange offer for four tranches.

In the oil and gas space, futures declined, followed by Occidental Petroleum Corp.’s and Whiting Petroleum Corp.’s paper while Chesapeake Energy Corp.’s notes diverged.

Elsewhere, utilities name PG&E Corp.’s issues tracked higher as the company prepares to exit bankruptcy.

Hertz declines

Hertz’s notes were seen dropping during the day, traders said.

The 6¼% senior notes due 2022 gave up 5½ points to close at 36½ bid. The 5½% senior notes due 2024 declined by 4¾ points to close at 38 bid.

During the Wednesday session, the Estero, Fla.-based car rental company announced that it would suspend its $500 million sale of additional common stock after the SEC expressed undisclosed concerns.

SEC chairman Jay Clayton said that the regulator had “comments” on the proposed offering and that it would not go forward until the comments were resolved.

“It’s an unprecedented move; so, of course the feds are going to get involved,” a trader said. “I wouldn’t be surprised if it was restricted in some way.”

In the process of seeking and getting the approval for the sale in bankruptcy court, Hertz repeatedly said that barring the full repayment of its creditors, the stock would likely become worthless upon its exit from Chapter 11.

Intelsat up

Telecom name Intelsat’s issues picked up steam, market sources said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 rose ¼ point to close at 7 bid. The 9½% senior notes due 2023 picked up ¾ point to close at 25¼ bid.

After the close on Tuesday, the Luxembourg-based satellite operator received final court approval to obtain $1 billion in DIP financing, Prospect News reported.

The approved amount includes an initial draw of $500 million.

Grouped with its cash on hand, the company said that the new liquidity would adequately fund its operations through its restructuring, specifically the cost of clearing from its C-band spectrum that will be up for auction in December.

Up to 80.58% of the DIP financing commitments will be available to pre-bankruptcy secured debt holders.

Norwalk, Conn.-based sector peer Frontier’s paper varied in direction.

The 10½% senior notes due 2022 held level at 36 bid. The 11% senior notes due 2025 tacked on ½ point to close at 35½ bid.

U.S. Steel lower

Meanwhile, manufacturer U.S. Steel’s notes moved lower, traders said.

The 6 7/8% senior notes due 2025 lost 2½ points to close at 75½ bid. The 6¼% senior notes due 2026 shaved off ¾ point to close at 73¼ bid.

Early Wednesday, the Pittsburgh-based steelmaker announced that it had revised its forecast for the second quarter, putting out wider-than-expected expectations.

The company expects to end Q2 with a loss per share of $3.06, worse off than what analyst estimated as a $1.73 per share loss.

In its reasoning, the company pinned the blame on weakness in the markets due to the coronavirus pandemic, saying that Q2 would probably be a floor as demand slowly rises.

Later in the day, U.S. Steel said it would offer 57.5 million in new common stock to boost liquidity.

AMC rises

In the entertainment space, AMC’s issues were rising, market sources said.

The 5 7/8% senior subordinated notes due 2026 improved by 2¼ points to close at 39½ bid. The 6 1/8% senior subordinated notes due 2027 shot up 2½ points to close at 39 bid.

Late Tuesday, the Leawood, Kan.-based theater chain announced that it had extended the early deadline and withdrawal deadline of its private exchange offers and related consent solicitations for four series of senior subordinated notes, Prospect News reported.

The deadlines were pushed to 11:59 p.m. ET on June 22.

The company is offering to issue up to $640 million of new 12% cash/PIK second-lien secured notes due 2026 in exchange for the existing subordinated notes.

Amid the pandemic, AMC has seen increased pressure as businesses geared toward gathering in close spaces see extended closures.

Oil trends downward

In the oil and gas space, futures declined along with distressed energy names, traders said.

West Texas Intermediate crude oil futures for July delivery shed 42 cents to settle at $37.96 per barrel.

North Sea Brent crude oil futures for August delivery ended the session at $40.71 per barrel after a 25 cent dip.

Houston-based independent oil and gas producer Occidental Petroleum’s paper slipped with futures.

The 2.9% senior notes due 2024 dropped ½ point to close at 89 bid. The 2.7% senior paper due 2022 chalked off ½ point to close at 93½ bid.

Denver-based producer Whiting Petroleum’s notes followed the trend.

The 6¼% senior notes due 2023 declined by ¼ point to close at 15¾ bid. The 6 5/8% senior notes due 2026 lost 1½ points to close at 16 bid.

Oklahoma City-based peer Chesapeake Energy’s issues diverged in direction.

The 7½% notes due 2026 shed 1 point to close at 4¼ bid. The 11½% notes due 2025 tacked on 1¾ points to close at 17¾ bid.

PG&E higher

Elsewhere, utilities name PG&E’s paper tracked higher, market sources said.

The 6.05% paper due 2034 improved by ¼ point to close at 120¾ bid.

As the San Francisco-based electric utility moves toward exiting Chapter 11 bankruptcy, the judge in its case said he would support its restructuring plan.

A final hearing to settle outstanding issues is set for Friday.

The company expects to exit the process by the end of the month, buoyed by billions of dollars in funds raised through public and private offerings.

© 2015 Prospect News.
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