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Published on 11/18/2019 in the Prospect News Distressed Debt Daily.

Intelsat dives after comments by FCC chairman; PG&E notes down as financing sought

By James McCandless

San Antonio, Nov. 18 – The distressed debt market opened a new week with shifting tides in the telecom and utilities spaces.

Intelsat SA’s notes dived after the chairman of the Federal Communications Commission endorsed a public auction plan for C-band spectrum.

Sector peer Frontier Communications Corp.’s issues moved in different directions.

Meanwhile, in utilities, PG&E Corp.’s paper traded down as it seeks to fill a financing gap and warns of a new round of power cuts.

Coworking name WeWork Cos. Inc.’s notes were pushed lower amid headlines that it preparing to lay off thousands of workers.

In the automotive space, Tenneco Inc.’s issues saw negativity after announcing the departure of a top executive.

Print services provider LSC Communications, Inc.’s paper shot up from recent lows brought on by its third-quarter report.

Falling oil futures were followed by Valaris plc’s, Whiting Petroleum Corp.’s and McDermott International, Inc.’s notes.

Intelsat dives

Intelsat’s notes took a dive through the Monday session, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 dropped 9 points to close at 61¾ bid. The 9½% senior notes due 2023 fell 9 points to close at 72½ bid.

The two tranches combined to see about $194 million trading.

Early Monday, FCC commissioner Ajit Pai announced that the agency plans to proceed with a public auction for C-band spectrum, or 5G, early next year.

The move would be contrary to the outcome desired by the Luxembourg-based satellite operator, which has been pushing for a private auction as part of the three-company C-Band Alliance.

Last Friday, the group proposed paying a portion of the proceeds from the auction to the U.S. Treasury.

The company stated that it would work with the agency to come to an amicable solution.

“If its public, they lose a lot of the proceeds that they would use to pay down some of its debt,” a trader said. “It puts them in a weaker position if they lose out on that.”

Norwalk, Conn.-based wireline telecom Frontier’s issues moved in different directions.

The 10½% senior notes due 2022 lost ½ point to close at 43½ bid. The 11% senior notes due 2025 gained 1 point to close at 44 bid.

PG&E down

Meanwhile, utilities name PG&E’s paper traded down, market sources said.

The 6.05% senior paper due 2034 fell 1 point to close at 101½ bid.

The San Francisco-based bankrupt electric utility is reportedly in the midst of renegotiating amounts that investors would commit to its restructuring plan since raising the amount it would pay out in settlements to wildfire victims.

In a filing, the company disclosed that it had $7.4 billion in commitments with a $4.6 billion gap to fill by Dec. 6.

Last week, the company upped its total amount it would pay out to victims from $8.4 billion to $13.5 billion as it seeks to reach a compromise with bondholders over its reorganization.

California governor Gavin Newsom has threatened a state takeover of the entity if the two opposing sides are unable to reach a compromise.

WeWork lower

Embattled startup WeWork’s notes were pushed lower, traders said.

The 7 7/8% senior notes due 2025 declined by 1½ points to close at 71 bid.

News broke on Monday that the New York-based coworking company is planning to lay off at least 4,000 workers this week.

The move is part of the company’s cost-cutting initiatives after halting an initial public offering and losing a large portion of its valuation.

In the aftermath, chief executive officer Adam Neumann resigned and large investor SoftBank provided $8 billion in rescue financing.

Tenneco negative

In the automotive space, Tenneco’s issues saw negativity, market sources said.

The 5% senior notes due 2026 shaved off ¼ point to close at 82¾ bid.

The Lake Forest, Ill.-based auto parts maker announced on Monday that executive vice president of finance Ron Hundzinski would leave the company.

The company has begun a search for a replacement.

LSC notes improve

Elsewhere, printing name LSC’s paper pushed higher, traders said.

The 8¾% senior secured notes due 2023 shot up 11¾ points to close at 51¼ bid.

The Chicago-based printing services name’s structure bounced back from recent lows brought about by a disappointing third-quarter earnings report.

The company reported a 6 cent loss per share and underwhelmed with $834 million in revenue.

“It was weirdly low today before trading back up to the 50’s,” a trader said.

Oil names fall

Falling oil futures were mirrored by distressed energy names, market sources said.

West Texas Intermediate crude oil futures for December delivery lost 67 cents to settle the day at $57.05 per barrel.

North Sea Brent crude oil futures for January delivery finished at $62.44 per barrel after an 86 cent dip.

London-based contract driller Valaris’ notes followed futures lower.

The 5.2% senior notes due 2025 dropped 2 points to close at 47¾ bid. The 7¾% senior notes due 2026 shaved off ½ point to close at 47½ bid.

Denver-based independent oil and gas producer Whiting Petroleum’s issues followed the sector trend.

The 6¼% senior notes due 2023 lopped off 1½ points to close at 73 bid. The 6 5/8% senior notes due 2026 fell 1¼ points to close at 62 bid.

Houston-based oil and gas engineering name McDermott’s paper were under pressure.

The 10 5/8% senior notes due 2024 declined by ¼ point to close at 6½ bid.


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