Exela notes drop on first-quarter earnings; CBL eyed after entering forbearance deal

By James McCandless

San Antonio, July 1 – As the holiday-shortened week neared its end, the distressed debt space was fixed on the tech and REIT spaces.

Exela Technologies, Inc.’s notes dropped after releasing its first-quarter earnings and rescinding its guidance for the rest of the year.

Meanwhile, REIT CBL & Associates Properties, Inc.’s issues varied after announcing a forbearance agreement with creditors.

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

In the airline space, United Airlines Holdings, Inc.’s notes diverged as the company says it will increase flights in August.

Air traveler American Airlines Group Inc.’s issues weakened.

Elsewhere, car renter Hertz Global Holdings, Inc.’s paper also saw mixed results as the name and its creditors argue over its fleet of vehicles.

Oil and gas producer Denbury Resources Inc.’s notes also differed in direction after saying it would skip an interest payment on a convertible security.

As oil futures were firm, Occidental Petroleum Corp.’s and Whiting Petroleum Corp.’s issues drifted onto different tracks.

Exela drops

Exela’s notes dropped during the Wednesday session, traders said.

The 10% notes due 2023 moved down 3¼ points to close at 21½ bid.

About $12 million of the notes traded by the end of the afternoon.

After the close on Tuesday, the Irving, Tex.-based business software solutions company released its first-quarter earnings results.

The name reported a loss of 8 cents per share, wider than what analysts expected at a 5 cents per share loss.

Revenues were also under target at $365.5 million.

During an earnings call, chief financial officer Shrikant Sortur said that the company expects to be cash flow positive by the end of the year.

“I can see them closing out the year either neutral or cash flow positive,” a trader said.

CBL notes mixed

Meanwhile, property owner CBL’s issues varied, market sources said.

The 5¼% senior notes due 2023 tacked on ¼ point to close at 29 bid. The 4.6% senior notes due 2024 declined 1¼ points to close at 27¾ bid.

Early Wednesday morning, the Chattanooga, Tenn.-based real estate investment trust announced that it had entered a forbearance agreement on its credit agreements and with holders of more than 50% of its operating partnership's 2023 notes.

The $11.8 million interest payment was originally skipped on June 1, triggering a 30-day grace period.

Both agreements are set to expire on July 15.

Talks with creditors are ongoing.

In March, CBL said that it would close indoor properties to comply with government mandates about slowing the spread of the coronavirus.

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

The 6.45% senior notes due 2024 rose ¼ point to close at 56¾ bid.

Airlines in focus

In the airline space, United Airlines’ notes were seen diverging by the end of the day, traders said.

The 5% senior notes due 2024 dipped 2¼ points to close at 82¼ bid. The 4¼% senior notes due 2022 rose 2¼ points to close at 87½ bid.

The Chicago-based airline’s structure was active amid news that the company plans to add about 25,000 domestic flights in August.

The development comes despite a spike in coronavirus cases around the country that has forced states to roll back reopening measures.

Executives said on Wednesday that the airline is prepared to alter its plans if deemed necessary.

Fort Worth-based peer American Airlines, which plans to fill its planes to capacity in July, saw its issues weaken.

The 3¾% senior notes due 2025 shaved off ¼ point to close at 48 bid.

Hertz notes mixed

Elsewhere, car renter Hertz’s paper also saw mixed results, market sources said.

The 6¼% senior paper due 2022 held level at 31½ bid. The 5½% senior notes due 2024 edged up ½ point to close at 32 bid.

During the Wednesday session, reports indicated that the Estero, Fla.-based car rental company is in a dispute with its creditors over how to handle about 494,000 cars in its fleet.

The company has asked its bankruptcy court judge to allow it to convert its master lease to individual leases in order to reject the terms on about 144,000 cars.

The potential savings from the move is estimated at about $80 million per month.

Creditors are arguing for the name to keep making payments on all of the vehicles while selling them on the open market.

“Hertz wants to exit the process with a fleet to remain in business,” a trader said. “What are they if all of their cars are gone?”

Denbury eyed

Oil and gas name Denbury’s notes differed in direction, traders said.

The 9% notes due 2021 gained ½ point to close at 40½ bid. The 4 5/8% senior subordinated notes due 2023 closed level at 3½ bid.

The Plano, Tex.-based independent oil and gas producer was another to announce on Wednesday that it had elected to forego an interest payment.

The company said that it would skip an $8 million interest payment on its 6.375% convertible senior notes due 2024.

Triggering a 30-day forbearance period, the company said it would evaluate strategic alternatives.

Concurrently, Denbury decided to draw $200 million under its credit agreement as a “precautionary measure.”

After the move, Moody’s Investors Service said it had cut Denbury’s probability of default rating, corporate family rating and issue-level ratings.

Oil futures firm

As oil futures were firm through the day, distressed energy tranches drifted apart, market sources said.

West Texas Intermediate crude oil futures for August delivery shifted up 55 cents to end at $39.82 per barrel.

North Sea Brent crude oil futures for September delivery ended at $42.03 per barrel after a 76 cent jump.

Houston-based producer Occidental Petroleum’s issues moved along different tracks.

The 2.9% senior notes due 2024 improved by ¾ point to close at 86½ bid. The 2.7% senior notes due 2022 fell ¼ point to close at 93 bid.

Denver-based peer Whiting Petroleum’s paper was also non-cohesive.

The 6¼% senior notes due 2023 shot up 3¼ points to close at 21¼ bid. The 6 5/8% senior paper due 2026 slipped 2 points to close at 18 bid.

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