Windstream drops on bankruptcy concerns; Halcon falls following CEO departure

By James McCandless

San Antonio, Feb. 22 – The distressed space placed the majority of its attention on turbulent news-driven names to end the week.

Windstream Holdings, Inc.’s notes dropped as analysts expect the company to file for bankruptcy within the next month.

Closely tied former subsidiary Uniti Group Inc.’s issues were also declining.

Meanwhile, in energy, Halcon Resources Corp.’s paper slid a day after the company announced the departure of its top executive.

Despite small gains in oil futures, California Resources Corp.’s and Ensco plc’s notes were mixed while Alta Mesa Resources, Inc.’s issues were negative.

Elsewhere, in the medical space, Community Health Systems, Inc.’s paper also trended downward.

Sector peer Teva Pharmaceutical Industries Ltd.’s notes ended mixed.

Delphi Technologies plc’s issues continued its rise after a positive earnings report.

Windstream drops

At the end of the week, Windstream’s notes dropped, traders said.

The 8 5/8% notes due 2025 lost 1 point to close at 86¼ bid. The 9% notes due 2025 shed ¼ point to close at 49¾ bid.

Citigroup analyst Michael Rollins issued a bearish analyst note on the Little Rock, Ark.-based rural communications name that drove equity down earlier in the week.

The analyst note follows last week’s court judgment against Windstream, which ruled that the company went into default on its bonds in 2015 and would have to pay out $300 million to plaintiff Aurelius Capital Management.

After the close on Thursday, S&P Global Ratings lowered the company’s issuer credit rating and the first-lien debt ratings of subsidiaries Windstream Services LLC and Windstream Holdings of the Midwest.

Moody’s Investors Service followed suit Friday, lowering the corporate family rating and probability of default rating for Windstream Services LLC.

“After PG&E fell out, I was starting to wonder how long it would take for something else to come along,” a trader said. “Looks like we found it.”

Little Rock, Ark.-based communications-focused real estate investment trust and former Windstream segment Uniti’s issues were also falling.

The 8¼% notes due 2023 fell ½ point to close at 75½ bid.

The company, heavily tied to Windstream for its revenue, received ratings downgrades from all three major ratings agencies.

Halcon falls

Meanwhile, in the energy space, Halcon’s paper dipped, market sources said.

The 6¾% paper due 2025 dropped 3 points to close at 74¾ bid.

In a press release issued after the close on Thursday, the Houston-based onshore oil and gas company announced that chairman, chief executive officer and president Floyd Wilson had resigned from the company effective immediately.

Its chief financial officer will also be leaving the company in the coming weeks.

In a response to the announcement, major shareholder Fir Tree Capital Management praised the move, calling for additional steps to protect shareholder value and move toward the sale of the company.

Oil names mixed

High volume tranches in the distressed energy space closed mixed, traders said.

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

The 6% notes due 2024 ended level at 69 bid. The 8% notes due 2022 took off 1½ points to close at 80½ bid.

London-based contract driller Ensco’s issues also closed Friday’s session mixed.

The 7¾% notes due 2026 shaved off ¼ point to close at 84½ bid. The 7.2% notes due 2027 gained ½ point to close at 82½ bid.

The company and its Houston-based peer Rowan recently won approval to merge from both groups of shareholders.

Houston-based producer Alta Mesa’s paper declined.

The 7 7/8% paper due 2024 fell ½ point to close at 56 bid.

On Friday, Moody’s lowered the company’s corporate family rating, probability of default rating, senior unsecured notes rating and speculative grade liquidity rating.

It also affirmed a negative outlook.

West Texas Intermediate crude oil futures for April delivery ended the week up 30 cents to $57.26 per barrel.

North Sea Brent crude futures closed the session at $67.12 per barrel following a modest 5 cents gain.

Community Health down

The medical space saw Community Health’s notes trade down, market sources said.

The 7 1/8% notes due 2020 trimmed off 1½ points to close at 89½ bid. The 6 7/8% notes due 2022 lost 2¼ points to close at 57½ bid.

The Franklin, Tenn.-based hospital operator released its fourth-quarter earnings report late Wednesday, showing moderately positive results.

It showed a 42 cents per share loss, beating analyst estimates of a 58 cents per share loss.

It also posted revenues of $3.45 billion.

Elsewhere in healthcare, Teva’s issues closed mixed.

The 3.15% notes due 2026 pushed down ¼ point to close at 82¼ bid. The 4.1% notes due 2046 added ¼ point to close at 72¼ bid.

Delphi gains

Delphi’s paper continued to rise, traders said.

The 5% paper due 2025 added ½ point to close at 87½ bid.

On Thursday, the 5% paper gained 1¾ points.

The London-based auto parts manufacturer released its fourth-quarter report on Thursday, highlighting positive results.

It reported a $1.06 per share profit, surpassing analyst predictions of an 89 cents per share profit.

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