American Tire notes improve amid layoffs; Mattel issues improve, earnings released after market close

By James McCandless

San Antonio, July 24 – Trading in the distressed debt market remained fixed around newsworthy names on Wednesday as the market enters earnings season.

American Tire Distributors notes gained as the company announced a round of layoffs as part of its long-term growth strategy.

Mattel, Inc. notes traded up while the company released a disappointing earnings report and announced job cuts after the market close.

Windstream Holdings, Inc. notes were mixed as the company’s debt-default trial continued in court.

Intelsat SA notes were mixed. The Federal Communications Commission recently moved forward on a potential rule change that could bring new sources of revenue to satellite firms.

Frontier Communications Corp. issues were mixed. CFO Perley McBride recently announced his resignation.

Mallinckrodt plc paper improved in the medical space.

American Tire rises

Huntersville, N.C.-based tire distributor American Tire’s notes improved after reports surfaced that the company has announced a round of layoffs, mainly focused on 100 employees working at marketing subsidiary Tire Pros. The company says that the layoffs are part of its long-term growth strategy to better serve existing customers and free up resources to attract new customers. The company recently lost distribution deals with Bridgestone and Goodyear.

“I think this is good for them as they work something out with their sponsors,” a trader said. “It shows a certain flexibility.”

The 10¼% notes due 2022 picked up about 2½ points to close at 32½ bid.

Mattel up

El Segundo, Calif.-based toy producer Mattel issues saw gains, traders confirmed, in anticipation of what ended up being a dismal earnings report. Sales dipped 14% and its net loss increased to $240.9 million for Q2. The company also announced that it would be cutting 2,200 non-manufacturing jobs.

“There was some interesting movement today, but obviously the bonds are poised for declines tomorrow,” a trader said.

The 3.15% notes due 2023 rose about 1 point to close at around 88 bid. The 6.2% bonds due 2040 gained about ¾ point to close at around 86¼ bid.

Windstream mixed

Little Rock, Ark.-based network communications solutions name Windstream paper was mixed, market sources confirmed. The company is wrapped up in a trial against Aurelius Capital Management over whether it defaulted on its debt as a result of a spinoff of its real estate business and subsequent leaseback of assets in 2015.

The 7¾% paper due 2021 lost about 4 points to close at 71 bid. The 7½% paper due 2022 shaved off 3½ points to close at 63 bid. The 6 3/8% paper due 2023 added about 3 points to close at 59 bid.

On Tuesday, the 7¾% paper fell about 2½ points, the 7½% paper gained 2½ points and the 6 3/8% paper lost about 2¾ points.

Volume names trade

Luxembourg-based satellite communications company Intelsat notes were mixed. The FCC is considering a rule change that would allow mobile providers to access airwaves currently restricted to traditional broadcasters and managed by satellite firms, potentially opening up a new revenue stream for satellite firms.

The Intelsat (Luxembourg) SA 7¾% notes due 2021 lost about 3½ points to close at 94 bid. The 8 1/8% notes due 2023 picked up about ¼ point to close at around 84½ bid.

On Tuesday, the 7¾% notes rose about 3¼ points and the 8 1/8% notes gained about 1¾ points.

Norwalk, Conn.-based wireline communications name Frontier Communications issues were also mixed. CFO Perley McBride recently announced his departure from the company.

The 7 5/8% notes due 2024 traded up about ¼ point to close at around 67¾ bid. The 10½% notes due 2022 lost about ¼ point to close at around 89 bid. The 11% notes due 2025 improved about 3 points to close at around 81½ bid.

On Tuesday, the 7 5/8% notes fell about ¾ point, the 10½% notes gained ½ point and the 11% notes rose about 1½ points.

Britain-based drug maker Mallinckrodt saw its 4¾% paper due 2023 rise about ¼ point to close at around 83¼ bid.

On Tuesday, the 4¾% paper lost about ½ point.

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