FirstEnergy announces changes, 2017 losses; Armstrong Energy completes sale as plan takes effect

By James McCandless

San Antonio, Feb. 20 – Traders reported a dearth of activity on Tuesday, as many seemed reluctant to reenter the distressed debt space after the long holiday.

Notes in FirstEnergy Corp. subsidiaries received some heightened attention late in the afternoon after announcing senior management changes, including a new chairman of the board, and total losses for 2017.

Armstrong Energy, Inc. issues cratered after reports confirmed that its third bankruptcy plan had taken effect Tuesday. It also completed the sale of its Kentucky holdings to Murray Energy Corp.

Paper in Bon-Ton Stores, Inc. was active again as the bankrupt company announced large discounts at the stores that it expects to close this year and appointments to its unsecured creditors committee.

Distressed telecom companies Frontier Communications Corp. and Intelsat SA shored up what little volume there was by remaining actively traded. Mallinckrodt plc and Ensco plc rounded out the day’s volume.

FirstEnergy news drives notes

Notes of Akron, Ohio-based electric company FirstEnergy’s subsidiarys picked up steam late in the day, according to a market source, after the company announced changes in senior management. Along with the nine changes to its executive team, it also said that it would appoint six-year board member Donald Misheff as chairman of the board when current chairman George Smart retires in May. In a release, Smart praised the company’s leadership team for their ability to navigate a challenging business environment.

“In addition, I believe Don will provide strong, thoughtful leadership to the board as the company continues this important transition into a fully regulated utility,” Smart said.

The company also announced $1.7 billion in losses for 2017.

FirstEnergy Solutions Corp.’s 6.05% notes due 2021 traded up almost 1 point to close at 34¼ bid. The FirstEnergy Solutions 6.8% bonds due 2039 remained level at 34 bid. The Ohio Edison Co. 6 7/8% bonds due 2034, while active, also remained level at 35½ bid.

Armstrong plan takes effect

St. Louis, Mo-based coal producer Armstrong Energy, Inc. issues plummeted as the company’s third Chapter 11 amended plan of reorganization, confirmed on Feb. 2, took effect Tuesday. It was also announced that the company had completed the sale of 51% ownership interest in its Kentucky holdings to Murray Kentucky Energy, Inc., a subsidiary of St. Clairsville, Ohio-based coal name Murray Energy Corp (see related story elsewhere in this issue).

The 11¾% issues due 2019 fell almost 11½ points to close at about 18 1/8 bid.

Bon-Ton activity continues

Going on two weeks after filing for bankruptcy, York, Pa.-based department store chain Bon-Ton Stores continued last week’s activity, to the surprise of some traders. The company has begun discounting merchandise in the 42 stores it expects to close and has appointed its official seven-member committee of unsecured creditors.

“It is some unusual activity for a name like this,” a trader said.

The 8% paper due 2021 remained at last week’s closing bid of 18½.

Volume names trade

As the markets remained sluggish after the long weekend, a trader said that distressed telecom favorites continued to take up space. Norwalk, Conn.-based wireline telecom Frontier Communications continues its high activity spurred by the recent news that it had attained positive changes to its credit agreements.

The 7 5/8% notes due 2024 traded up almost 1 point to close just under 63½ bid. The 10½% notes due 2022 dropped 1½ point to close at 85½ bid. The 11% notes due 2025 shot up ¾ point to close at 77 bid.

Luxembourg-based satellite communications company Intelsat’s 5½% issues due 2023 fell off 1¼ point to close near 79½ bid. The Intelsat Jackson SA 7 ¼% issues due 2020 shaved off ¼ point to close at 89 bid.

Britain-based pharmaceutical name Mallinckrodt’s recent $1.2 billion acquisition of Rockville, Md.-based biopharmaceutical name Sucampo Pharmaceuticals have made its paper a popular trade. The 4¾% notes due 2023 fell about ½ point to close under 79½ bid.

Britain-based oil driller Ensco’s notes traded up after reports confirmed that the company will offer a $0.01 quarterly cash dividend for each Class A ordinary share, payable on March 16.

Its 5¾% bond due 2044 rose ½ point to close at 70¾ bid.

“After a long weekend, I am not surprised that there was not much going on today,” a trader said. “The whole market experienced that. My guess is that things should pick up in the next few days.”

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