Bed Bath & Beyond mixed on layoff news; LSC notes tank after merger cancelled

By James McCandless

San Antonio, July 23 – While retail and oil names made news on Tuesday, pharmaceutical names made up much of the trading in the distressed debt space.

Bed Bath & Beyond Inc.’s notes were mixed after the company announced that it would make cuts to its corporate staff.

Sector peer J.C. Penney Co., Inc.’s issues were seen improving.

Meanwhile, LSC Communications, Inc.’s paper tanked after news broke that a potential merger with Quad/Graphics, Inc. would not happen.

In the pharma space, Mallinckrodt plc’s notes continued to drop under the pressure of negative headlines while Teva Pharmaceutical Industries Ltd.’s issues saw a reprieve.

Elsewhere, Halcon Resources Corp.’s paper rose despite its delisting from the New York Stock Exchange.

Despite another gain for oil futures, California Resources Corp., Weatherford International plc and Alta Mesa Resources, Inc.’s notes traded negative.

Bed Bath mixed

In retail, Bed Bath & Beyond’s notes saw a mixed day, traders said.

The 5.165% senior notes due 2044 picked up 1 point to close at 67½ bid. The 4.915% notes due 2034 lost 1 point to close at 72¼ bid.

On Tuesday, the Union, N.J.-based retail chain announced that it would be cutting 7% of its corporate staff.

Included in the cuts is the elimination of the chief operating officer position.

The cuts are expected to save the company $18.9 million for the rest of the fiscal year.

The company has been taking several measures to force a turnaround in its business and increase profits at the behest of an activist investor group.

In May, chief executive officer Steven Temares resigned under pressure.

“They’re cutting from the top instead of the bottom,” a trader said. “It leads to the question of how long it might take until they decide to close stores.”

Plano, Tex.-based sector peer J.C. Penney’s issues were seen improving.

The 6¾% senior notes due 2028 added ½ point to close at 86 bid. The 3.15% notes due 2026 rose 1¼ points to close at 75¼ bid.

LSC tanks

Meanwhile, LSC Communications’ paper tanked, market sources said.

The 8¾% senior secured paper due 2023 crashed 11½ points to close at 83¾ bid.

News broke on Tuesday that a merger between Chicago-based business printing services name and peer Quad/Graphics had been terminated.

Quad/Graphics made a $1.4 billion all-cash offer for the company in October 2018.

In June, the Department of Justice sued to block the merger, citing anti-trust concerns.

The two companies said that the merger was cancelled due to the time and money it would take to fight the suit.

Mallinckrodt drops, Teva up

Pharmaceutical name Mallinckrodt’s notes saw weakness, traders said.

The 4¾% senior notes due 2023 fell 1¾ points to close at 62¼ bid. The 5¾% notes due 2022 shaved off ½ point to close at 74 bid.

The Staines-Upon-Thames, U.K.-based drug manufacturer, along with its sector, has been continually under pressure as it grapples with negative headlines related to the opioid crisis.

Last week, news broke that e-mails showed that the company’s executives had displayed an indifference to the ongoing crisis.

The company and others face mounting legal challenges to its handling of opioid medication.

Petach Tikva, Israel-based generic drug maker Teva’s notes gained.

The 6¾% senior notes due 2028 rose ½ point to close at 86 bid. The 3.15% notes due 2026 added 1¼ points to close at 75¼ bid.

Halcon rises

Elsewhere, in oil and gas, Halcon’s paper was on the rise, market sources said.

On Tuesday, the Houston-based independent oil and gas producer received notice from the New York Stock Exchange that its common stock would be delisted.

Trading on the stock was suspended on Monday as it sunk to 16 cents.

The NYSE cited “abnormally low” trading levels for the delisting.

Oil names lower

As oil futures continued to gain, distressed energy names saw their bonds decline, traders said.

Los Angeles-based oil and gas producer California Resources’ notes were negative.

The 6% senior notes due 2024 dipped ½ point to close at 52½ bid. The 8% notes due 2022 lost 1¼ points to close at 67¾ bid.

Baar, Switzerland-based bankrupt oilfield services provider Weatherford’s issues also slipped.

The 8¼% senior notes due 2023 declined by ¾ point to close at 48 bid. The 9 7/8% notes due 2024 also lost ¾ point to close at 48 bid.

Houston-based producer Alta Mesa’s paper followed the sector’s trend.

The 7 7/8% senior paper due 2024 fell 1 point to close at 34 bid.

West Texas Intermediate crude oil futures for September delivery added 55 cents to settle at $56.77 per barrel.

North Sea Brent crude oil futures for September delivery finished the day at $63.83 per barrel after a 57 cent gain.

© 2015 Prospect News.
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