Claire’s, Quorum Health trade higher after fourth-quarter earnings; iHeart ‘better,’ but not much volume

By Colin Hanner

Chicago, April 13 – It was an overall quiet session in the distressed market on a shortened day, ahead of a long Easter weekend, traders said, with new issues continuing to trade, though Quorum Health Corp. and Claire’s Stores, Inc. were higher after announcing fourth quarter results.

Better, but with not much volume behind them, were iHeartCommunications, Inc.’s notes, trading marginally better after the company amended and extended its private exchange offers for five series of priority guarantee notes and senior notes due 2021 in connection with a proposed debt restructuring.

California Resources Corp. was down a round number, a trader said, as crude oil futures remained about unchanged.

And Dublin, Ireland-based pharmaceutical company Endo International plc was up, after pricing senior secured notes.

As for the general sentiment surrounding the quietness this week, a trader said it could be shifting perspective of the market and the lull of a short week, rather than the start of any general trend.

“[There is] not a fundamental change in risk appetite,” the trader said. “Do I think a combination of vacation and uncertainty with the market, given geopolitical risks, that are giving some people hesitation, sitting on their hands until they get a better sense of how it plays out? I do think it could be the case. I don’t think people are de-risking necessarily, but could be reassessing what they think of the market, so they’re not necessarily buying stuff, and they’re not necessarily selling stuff.”

Quorum higher

In line with year-end and fourth quarter results, Quorum’s 11 5/8% notes due 2022 were up 3 points to 89¼, traders said.

For the year, the company generated $2.1 billion in net operating revenue, near in-line with the previous year’s net operating revenue.

Claire’s gets a bump

On the session, Claire’s 9% notes due 2019 were up 3 points to 43, traders said.

The Hoffman Estates, Ill.-based retailer of fashion accessories and jewelry plans to make enhancing its liquidity a priority, as management stated in the third quarter, and has refinanced and retired some of its debt in order to progress this endeavor.

“In order to help create enhanced liquidity, we replaced our HSBC $50 million revolving credit facility with a $50 million secured term loan that will mature in January 2019,” chief executive officer Ron Marshall said on the company’s fourth quarter earnings conference call on Thursday.

“We have retired the remaining $25.8 million in principal of the 10½[%] senior subordinated notes that would have matured June 1, 2017.”

The company’s global cash balance was $55.8 million at the end of the fourth quarter and it had $64.1 million of borrowing capacity available under its credit facilities.

Adjusted EBITDA in the fiscal 2016 fourth quarter was $76.9 million compared to $80.6 million last year.

iHeart up

After announcing it would amend and extend the private exchange offer for five series of its notes due to low turnout, a trader said there was a general uptick in iHeart notes, though volume was lacking.

The 9% notes due 2019 were up ½ point to 85½, and the 9% notes due 2021 were up ½ point to 77.

As announced March 15, the company is offering to swap out its $1,999,815,000 of 9% priority guarantee notes due 2019 and $1.75 billion of 9% priority guarantee notes due 2021, among others.

The offer will now continue until April 28, twice-extended from an original April 14 deadline.

E&P down

As crude oil futures were nearly unchanged on the day, distressed exploration and production companies were down on the day.

California Resources’ 8% notes due 2022 were down 1 point to 80½.

And offshore drilling contractor Ensco plc’s 4½% notes due 2024 were down ¼ point to 84¾.

The Energy Information Agency also announced that U.S. crude inputs saw 268,000 more barrels per day last week compared to the previous week’s average.

Distressed roundoff

After Endo International priced $300 million of 5 7/8% notes on Wednesday – intended to repay outstanding loans and existing credit facilities – its 6% notes due 2023 were up ¾ point to 87¾.

Aside from Claire’s Stores, other brick-and-mortar retailers were down on the session.

Guitar Center, Inc.’s 6½% notes due 2019 were down ¾ point to 83 5/8.

And J.C. Penney Co. Inc.’s 6 3/8% notes due 2036 were down 5/8 point to 75 5/8.

Susanna Moon and Devika Patel contributed to this review

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