Tops Market files for Chapter 11 bankruptcy; FirstEnergy’s subsidiary notes active for a second day

By James McCandless

San Antonio, Feb. 21 – The low activity that has characterized recent trading in the distressed debt market received a small uptick Wednesday, traders said, as investors gain confidence in the stability of the overall market.

Notes in Tops Markets, LLC received some attention as the company announced that it had filed for Chapter 11 bankruptcy Wednesday morning.

FirstEnergy Corp.’s subsidiary issues remained in high volume for a second day of trading after announcing 2017 losses and several high-level management changes on Tuesday.

Mallinckrodt plc continued to dominate the healthcare space after recently announcing the acquisition of an American pharmaceutical company.

Rounding out the day’s volume were distressed telecom favorites Frontier Communications Corp., Intelsat SA, and Windstream Holdings Inc. Ensco plc issues continued to be heavily traded after Tuesday’s announcement of an impending dividend.

Tops bankrupt

Williamsville, N.Y.-based grocery chain Tops Market filed for Chapter 11 bankruptcy on Monday, reports confirmed. The company’s expressed goal is to eliminate “a substantial portion of debt,” and it is working cooperatively with noteholders (see related story elsewhere in this issue).

“The grocery space is going to be interesting to watch over the coming weeks,” a trader said. “Competition is getting tighter and tighter from stronger regional chains and national ones.”

The 8% notes due 2022 lost more than 2 points to close at around 55 bid.

FirstEnergy trades again

Subsidiaries of Akron, Ohio-based electric company FirstEnergy had issues active for a second day, according to a market source. The company announced shifts in top executive posts, including the appointment of six-year board member Donald Misheff as chairman of the board after the upcoming May retirement of current chairman George Smart. It also announced a total loss of $1.7 billion for 2017.

FirstEnergy Solutions Corp.’s 6.05% issues due 2021 rose again by 1¾ point to close at 36 bid. The 6.8% bonds due 2039 ticked up ¼ point to close at 34¼ bid.

Mallinckrodt active

Paper in Britain-based drug-maker Mallinckrodt extended its run of high volume on Wednesday, traders said. The company has been active in the distressed healthcare space since announcing recently that it had finished the acquisition of Rockville-Md.-based biopharmaceutical company Sucampo Pharmaceuticals for $1.2 billion.

“There is a bit of concern floating around that this deal does not do enough to address their leverage problem,” a trader said.

The 4¾% paper due 2023 fell about ¾ point to close above 78½ bid.

Telecom and oil trade

As investors slowly start to step back into the market as a whole, distressed telecom companies remain safe volume favorites. Norwalk, Conn.-based wireline telecom name Frontier Communications’ high activity continued as ever. The company recently announced positive changes to its credit agreements.

The 7 5/8% notes due 2024 fell over a point to close around 62¼ bid. The 10½% notes due 2022 dropped 2¼ points to close at 83¼ bid. The 11% notes due 2025 remained level at 77 bid.

Luxembourg-based satellite communications company Intelsat’s 5½% issues due 2023 fell about ¼ point to close below 79¼ bid. The Intelsat Jackson SA 7¼% issues due 2020 fell slightly by 1/8 point to close at about 88 7/8 bid.

Little Rock, Ark.-based communications solutions name Windstream saw its 6 3/8% paper due 2023 jump over 2 points to close at 55½ bid. The 7¾% paper due 2020 shaved off ¾ point to close at 72¼ bid.

Britain-based oil driller Ensco saw its notes active for another day, traders said. Reports confirmed Tuesday that the company will offer a $0.01 quarterly cash dividend for each Class A ordinary share, payable on March 16.

The 5¾% bonds due 2044 fell ¾ point to close at about 70 bid.

“There are still some people holding their money close and not really moving it,” a trader said. “We may have to wait until next week before we see the kind of activity we are used to seeing.”

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