PetSmart notes strengthen as company offers loan amendment; Denbury notes traded mixed

By James McCandless

San Antonio, March 25 – Retailers and oil names were the main focus of distressed Monday trading.

PetSmart Inc.’s notes rose after the company offered more protections to senior lenders in a loan amendment.

Sector peer Neiman Marcus Group Inc.’s issues were trailing after reaching an agreement with a significant portion of its lenders on prolonging its debt maturities.

Denbury Resources Inc.’s paper was mixed in the wake of the company cancelling a merger following a lack of support from stakeholders.

Elsewhere, PHI Inc.’s notes dropped as the company’s common stock is delisted from the Nasdaq.

A mixed day for oil futures spurred declines in California Resources Corp., Halcon Resources Corp. and Weatherford International plc’s issues.

In telecom, Intelsat SA and Frontier Communications Corp.’s paper was negative.

PetSmart rises

In the retail space, PetSmart’s notes rose higher on Monday, traders said.

The 7 1/8% notes due 2023 added 2½ points to close at 71½ bid. The 5 7/8% notes due 2025 gained 1¾ points to close at 84 bid.

Early Monday, news broke that the Phoenix-based pet-supplies retailer has submitted a potential loan amendment to its senior creditors.

In exchange for dropping ongoing litigation, the company would limit its ability to tack on additional senior debt.

Creditors sued last year after the company transferred a large stake of e-commerce segment Chewy.com into private equity hands.

“I think a lot of the reason for the positivity today is that PetSmart finally proposed something,” a trader said. “They were pretty quiet for a long stretch.”

The amendment would require the consent of a majority of loan holders.

Neiman trails

Sector peer Neiman Marcus’ issues took a downward path, market sources said.

The 8% notes due 2021 shaved off 1 point to close at 54 bid. The 7 1/8% notes due 2028 lost 4¼ points to close at 70 bid.

The Dallas-based luxury retailer announced Monday that it has reached an agreement with 55% of term loan holders and 60% of unsecured note holders to extend the maturities on its debt by three years.

An exchange offer commencing in April would see bondholders of high interest notes due 2021 exchange those for a 10% equity stake in e-commerce arm MyTheresa.

Hedge fund Marble Ridge, which recently brought a fraudulent conveyance lawsuit against the name that was subsequently dismissed, said that the move short changes bondholders and increases interest expenses for the company.

“It didn’t trade as much as it could have,” a trader said. “I think people are sitting back and trying to see what the new picture looks like.”

Denbury mixed

Meanwhile, in oil and gas, Denbury’s paper closed the session mixed, traders said.

The 5½% paper due 2022 fell 8¼ points to close at 67½ bid. The 6 3/8% paper due 2021 gained 1 point to close at 78¾ bid.

The Houston-based independent oil and gas producer’s paper continues to trade after last week’s news that the company has cancelled its proposed $1.7 billion merger with Penn Virginia.

The merger, proposed in October, fell apart as the company could not garner the stakeholder support necessary for safe passage.

PHI drops

Elsewhere in the energy space, PHI’s notes dropped, market sources said.

The 5¼% notes due 2019 declined by ¾ point to close at 60¾ bid.

The Lafayette, La.-based bankrupt offshore transportation name’s common stock is scheduled to be delisted from the Nasdaq on March 26.

The company filed for Chapter 11 bankruptcy earlier this month after failing to address the $500 million outstanding of the 5¼% notes maturing.

Oil names fall

Amid mixed activity for oil futures, distressed oil tranches were uniformly negative, traders said.

Los Angeles-based independent producer California Resources’ issues declined.

The 6% notes due 2024 lost 7¾ points to close at 65¼ bid. The 8% notes due 2022 lost 2 points to close at 78½ bid.

Houston-based peer Halcon’s paper followed the negative trend.

The 6¾% paper due 2025 shaved off ¾ point to close at 59½ bid.

Baar, Switzerland-based oilfield-services provider Weatherford’s notes traded down.

The 8¼% notes due 2023 dipped ¼ point to close at 70¾ bid. The 9 7/8% notes due 2024 also lost ¼ point to close at 71½ bid.

Intelsat, Frontier negative

In telecom, Intelsat’s issues were pushed lower, market sources said.

Intelsat Jackson Holdings SA’s 5½% notes due 2023 lost ¾ point to close at 88½ bid. Intelsat (Luxembourg) SA’s 8 1/8% notes due 2023 shed 2¼ points to close at 68¾ bid.

Uncertainty surrounds the Luxembourg-based satellite operator on whether the U.S. government will want a share of potential revenues generated from use and management of the C-band spectrum.

Norwalk, Conn.-based wireline telecom name Frontier’s paper was also sliding.

The 11% paper due 2025 traded down ½ point to close at 64½ bid. The 10½ paper due 2022 fell ½ point to close at 73 bid.

© 2015 Prospect News.
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