June 28th 2020
Currently tracking 237 credits from 145 companies.
If you wish to view the Distressed Watchlist within Google Sheets, please request access to it and I will shortly grant you access to it.
Leaders for the Week
Laggards for the Week
American Airlines (AAL) issued $2.5B of new secured debt at a discount to yield 12% this week. The remaining unsecured notes were weaker again. AAL 5.00 ’22 fell 14pts to 57 while AAL 3.75 ’25 fell 12pts to 46.50, both back near their all-time lows.
Viking Cruises (VIKH 5.875 ’21) traded lower by 10pts to 60 yielding 15.2% as cruise line related equity and credit were weaker.
Fresh Markets (TFM 9.75 ’23) bonds traded up 8.50pts to 84.50 on the back of earnings and now yielding 16.8%.
Retail names like Macys (M) and Staples (SPLS) were weaker this week as Covid cases continue to rise. Macys (M 3.625 ’24) were down 7pts to 72 while Staples (SPLS 7.50 ’26) were down 6.50pts to 80.
W&T Offshore (WTI) continues to trade higher as its disclosed it purchased a total of 72.6M of its senior second lien notes at a discount. Since the beginning of April, the company average cost on bond buyback was ~34. On Friday, those bonds closed at 69 yielding 23.7%.
CEC Entertainment filed for bankruptcy this week. Its Chuck E. Cheese entertainment centers remain seriously impacted by Covid. CEC 8.00 ’22 notes ended the week unchanged at 12.
2020 Mid-Year Bankruptcy Recap
As we reach the halfway point of the year, I thought it would interesting to compile a list of businesses that have filed for bankruptcy this year.
Nearly all the companies listed below filed with over $100M in assets and liabilities. Here is the month by month recap, starting from the most recent.
‣ Chesapeake Energy (CHK) finalized its Restructuring Support Agreement (RSA) with lenders and filed to restructure its business and address its massive debt load. More details about the RSA will come on Monday. Article Link
‣ GNC Holdings, Inc. (GNC) entered bankruptcy with plans to close 800-1200 stores and possibly sell itself. Article Link
‣ During May, we saw a lot retail bankruptcies. Department stores like Neiman Marcus, Stage Stores, and J.C. Penny as well as speciality retail names like John Varvators and JCrew (Chinos).
‣ PQ New York, an owner and operator of bakeries and dining services such as Le Pain Quotidien filed for bankruptcy protection in May. They recently agreed to sell the business. Article Link
‣ Hertz (HTZ) filed for bankruptcy causing its top shareholder, Carl Ichan to sell his ~40% stake for a $2B+ loss. speculators and retail investors took the stock as high as $5.50 before closing at $1.50 on Friday. Which was still 100% higher than where Icahn sold.
‣ Frontier Communications (FTR) entered into bankruptcy as it looked to reduce its borrowings by more than $10 billion.. Article Link
‣ Whiting Petroleum Corporation (WLL) filed in April with the consent of the majority of lenders, while also giving current stockholders a small recovery when it plans to emerge in August. Article Link
‣ Pier 1 Imports (PIR) struggled going into 2020 as it look to close half its stores. It ended up filing in February, unable to find any interested buyers to keep the brand alive and ultimately started a liquidation process.
‣ Helios and Matheson Analytics (HMNY) the owner of MoviePass filed for bankruptcy protection in January due to heavy losses from its subscription-based movie business.
2020 has been a year marked by uncertainty. It has seen a worldwide pandemic, the collapse of oil prices (crude front month futures temporarily traded in negative territory at one point) and what many are labeling “Retail Mania” as risk assets have soared after March’s sell-off.
But added volatility pushed many distressed companies further to the brink of bankruptcy.