PHI notes decline; Diebold gets interim CFO, notes gain; oil sector broadly higher

By James McCandless

San Antonio, Oct. 1 – The new week in distressed trading saw focus shift to energy names as oil futures rose to their highest levels in four years.

There was activity across the offshore oil services spectrum, namely in Bristow Group Inc., Ensco plc and Weatherford International plc.

The rise in oil futures led to a similar improvement in Sanchez Energy Corp.’s bellwether tranche.

Meanwhile, the talk of the market was PHI, Inc., which saw its notes decline as the company continues to extend a tender offer for its $500 million of 5¼% notes due 2019.

Elsewhere, Diebold Nixdorf, Inc.’s issues rose after the company announced the appointment of an interim chief financial officer. The company is working to regain its financial footing after a recent dismal earnings report.

Meanwhile, in the medical sector, Community Health Systems, Inc.’s paper was mixed. After the close, the company announced the completion of another hospital sale.

The retail space saw modest gains for J.C. Penney Co., Inc. and PetSmart Inc.

FirstEnergy Solutions Corp.’s 6.05% notes continued to rise on the back of the company’s bankruptcy plan being approved in court last week.

Energy services up front

PHI’s notes were seen declining on Monday, traders said.

The 5¼% notes due 2019 lost 2¾ points to close at 92¾.

“It had been trading on a 92 handle for most of the day,” a trader said.

The company is working on completing a cash tender offer for the $500 million outstanding of the 5¼% notes, announcing another extension on Friday after only receiving offers for $400 million.

The new deadline, previously set for Sept. 21, was extended to Oct. 5.

“Apparently there’s a sponsor at the $400 million level, but they just can’t get to the full $500 million,” another trader said. “It’s made them the topical name of the day.”

The Lafayette, La.-based company provides air transportation to oil and gas firms.

Other oil and gas service providers saw increased attention on Monday.

“The whole field saw a boost,” the trader said.

Houston-based air transportation name Bristow Group’s 6¼% notes due 2022 rose about ¼ point to close at 74 bid.

London-based drilling contractor Ensco’s 5¾% bonds due 2044 gained ¾ point to close at 75½ bid.

Switzerland-based Weatherford’s 8¼% notes due 2023 jumped up 1¼ points to close at 96 bid.

Another day of rising oil futures resulted in a similar rise in Houston-based oil and gas producer Sanchez Energy’s bellwether tranche.

The 6 1/8% paper due 2023 added ¾ point to close at 58 bid.

West Texas Intermediate crude oil futures ended the day up 16 cents, pushing past the $75 per barrel mark, the highest level since 2014. North Sea Brent crude oil rose as much as $2.25 during the day, entering $85 per barrel territory.

Diebold appoints CFO

Diebold’s issues were spotted rising, market sources said.

The 8½% notes due 2024 picked up 1 point to close at 73 bid.

On Monday morning, the company announced the appointment of Jeffrey Rutherford as interim chief financial officer as current CFO Chris Chapman prepares his exit.

The company’s notes entered distressed territory on Aug. 1 after issuing a dismal second-quarter earnings report, showing a 21 cents per share loss and a revenue drop of $1.11 billion.

A series of financial maneuvers, including securing a $650 million rescue loan, have set the notes on an upward path since hitting 54½ bid on Aug. 10.

Diebold is a North Canton, Ohio-based connected commerce solutions company.

Community Health mixed

Community Health’s paper ended mixed, traders said.

The 7 1/8% paper due 2020 lost ¼ point to close at 88¼ bid. The 6 7/8% notes due 2022 rose ¼ point to close at 56½ bid.

After the close on Monday, the company announced the completion of the sale of one of its Oklahoma hospitals to a subsidiary of Integris Health.

The Franklin, Tenn.-based hospital operator’s paper has seen mixed trading after last week’s news that a subsidiary would pay $260 million to the Department of Justice to settle a criminal probe.

Retail leaders gain

J.C. Penney’s issues were rising on Monday.

The 7.4% bonds due 2037 gained 1¾ points to close at 43 bid.

On Friday, news broke that chief financial officer Jeffrey Davis would be leaving the company after less than a year in the job.

The company is now operating without a permanent CFO or chief executive officer.

The Plano, Texas-based department store’s bonds have been on a negative trend since its most recent earnings report, which highlighted slipping revenues and a 38 cents per share loss.

Elsewhere in distressed retail, Phoenix-based pet supplies retailer PetSmart’s notes improved.

The 8 7/8% notes due 2025 added 1½ points to close at 74 bid.

FirstEnergy continues rise

FirstEnergy Solutions’ 6.05% notes due 2021 saw more gains to start the week’s trading, market sources said.

The 6.05% notes picked up 2½ points to close at 73½ bid at the close.

On Friday, the notes closed at around 71 3/8 bid after reaching as high as 73 in intraday trading.

Notes have been rising since last week, when the U.S. Bankruptcy Court for the Northern District of Ohio approved a bankruptcy deal between the company and its parent, FirstEnergy Corp.

“It seemed like a lighter day,” a trader said. “Most of the stuff that did trade ended up better.”

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