Community Health up on asset sale; California Resources drops; Neiman Marcus lower

By Colin Hanner

Chicago, Feb. 17 – The distressed debt market was quiet on Friday, traders said, as the long Presidents Day weekend set in early for some, though an asset sale for one distressed hospital corporation and the quarterly results of an oil and natural gas producer stole a majority of the action on the session.

Franklin, Tenn.-based Community Health Systems, Inc. was up marginally after the hospital operator announced it will divest eight hospitals in three states to pay down the company’s debt load.

Moving in the opposite direction were California Resources Corp.’s most popular distressed notes, which were down because of the company’s fourth-quarter results.

A market source said there were a lot of trades with those bonds, and activity was sparse for the rest of the market from there on out.

Retailer Neiman Marcus Group, Inc. was down a round number off a dozen trades, a market source said, parring the gains the company saw on Thursday’s session.

J.C. Penney Co., Inc. followed with a similar loss, a market source said.

Semiconductor test and assembly service company Global A&T Electronics Ltd. was one of the distressed market’s biggest losers on the day, a trader said. There were no apparent reasons for the movement.

Several exploration and production companies moved in both directions, albeit slightly; private coal company Murray Energy Corp. was down more than a point in its distressed issues after three sessions of upticks, and iHeartCommunications, Inc. traded tight on an otherwise low-activity session.

Asset sale causes upsurge

After Thursday’s session, Community Health announced the sale of eight hospitals – three each in both Florida and Ohio and two in Pennsylvania – whose sale proceeds will go toward paying down the company’s debt, according to a news release.

Though the price of the deal had yet to be approved, the transaction is expected to close in the second quarter of 2017.

In the distressed arena, a trader said the 6 7/8% notes due 2022 were up ½ point to 76. As of Wednesday’s session, the notes had been trading with a 75 handle.

And the 5 1/8% notes due 2021 were up ¼ point to 94¾, a market source said.

California Resources lower

It was disappointing fourth-quarter results, and not the daily fluctuation of crude prices, that affected California Resources’ distressed notes on Friday.

Among the results, the company announced a net loss of $77 million, though the company said that a sixth bank amendment would allow joint ventures. Immediately, California Resources announced a joint venture with Benefit Street Partners LLC for up to $250 million to invest in the company’s properties, media reports said.

In an investor conference call, Todd Stevens, president and chief executive officer of California Resources, said the company “proactively” reduced the company’s debt load by $900 million during 2016 and offered an outlook for how the company hopes to deleverage.

“As our debt has continued to trade higher, the opportunity to capture discounts in our debt is limited,” Stevens said. “Therefore, we are focused on deleveraging through EBITDA growth.”

Retailers fall

For the second-consecutive session, Neiman Marcus faltered in its 8% notes due 2021, though activity was rather low, a trader said.

The notes traded “a dozen times,” according to the trader, and were down 1 point to 56½.

Mirroring the 1-point decline were J.C. Penney’s 7.4% notes due 2037, which were down 1 point to 82¼.

Global A&T loses big

On just a few trades, Global A&T Electronics was one of the day’s biggest decliners just days after announcing fourth-quarter results.

The 10% notes due 2019 were down 7 points to 65½, a trader said.

Energy trades mixed

Though several oil and natural gas producers and drillers traded on the day, movement was tight and moved in both direction, a market source said.

Offshore driller Noble Corp.’s 5¼% notes due 2043 were down ½ point to 72½, a trader said.

Offshore support vessel service GulfMark Offshore, Inc.’s 6 3/8% notes due 2022 were up ¼ point to 65.

And oil and natural gas producer Denbury Resources’ 5½% notes due 2022 were down ¼ point to 80¾, a market source said.

In the electricity arena, First Energy Solutions Corp.’s 6.05% notes due 2021 were up 1/8 point to 38 1/8, a trader said, while GenOn Energy, Inc.’s 9½% notes due 2018 were down 1 point to 76¾.

Distressed roundup

Breaking the three-session upward movement, Murray Energy’s 11¼% notes due 2021 were down 1¾ points to 82, a trader said.

iHeartCommunications’ 9% notes due 2021 were down 1/8 point to 77 1/8.

Hydrocarbon product producer Calumet Specialty Products Partners, LP’s 7 5/8% notes due 2022 were unchanged at 86½.

A pair of pharmaceutical companies saw mixed movement on the day, led by Endo Pharmaceuticals plc’s 6% notes due 2025, which were up ½ point to 87½.

And Valeant Pharmaceuticals International, Inc.’s 6 7/8% notes due 2025 were down 1/8 point to 78 1/8, a trader said.

© 2015 Prospect News.
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