Akorn loan trades off after shareholders back away from proposal; Resorts World bonds weaken on parent restructuring; Valaris bonds edge up on Chapter 11 – Mid-Day Commentary

Akorn’s loan traded down this morning after Debtwire reported that an ad hoc group of equity holders has backed away from submitting a competing bankruptcy plan, based on the findings of its diligence.   

The group had pitched a proposal last month built around new money that would have been used to repay the prepetition term loans, as reported. 

However, the shareholders are now putting the brakes on that proposal, citing concerns related to FDA regulatory issues, the pipeline of products, quality of assets and a valuation analysis.

Akorn’s USD 862m term loan dropped to 91.167/93.833 context from 95.813/97.813 on 18 August, according to Markit. 

The debtor filed for bankruptcy on 21 May with its term loan lenders serving as the stalking horse bidder, with a USD 1.05bn credit bid, the assumption of certain liabilities and USD 35m in cash to fund a wind-down of the estate.  

Resorts World Las Vegas bonds traded off yesterday after sister company Genting Hong Kong announced last night (19 August) that it has suspended all payments on its USD 3.37bn debt stack, according to Debtwire Asia Pacific.  

Although the companies are entirely separate, they are both controlled by the Lim family, so investors are concerned that the Genting HK debt restructuring could affect the Resorts World business.  

The USD 1bn 4.625% senior unsecured notes due 2029 traded yesterday at 96.387 to yield 5.147%, compared to 99.9 to yield 4.638% on 18 August, according to MarketAxess. 

Valaris bonds edged up as the issuer finally filed Chapter 11 petitions, after it skipped interest payments that were due in July. Under an RSA, which has the support of 50% of noteholders, the company aims to equitize all of its funded debt and enter into USD 500m in exit financing. 

Valaris is the result of the merger of Ensco and Rowan Companies in 2019. The merger has been a lightning rod for controversy, with holders of notes issued by predecessor company Rowan filing a lawsuit in March against Valaris and certain company directors, taking aim at the April 2019 merger that created the company. The holders alleged that Valaris (then Ensco) looted Rowan for its own benefit through fraudulent transfers and with an intent to defraud Rowan’s creditors. 

Valaris’s USD 850m 3% senior unsecured notes due 2024 (Ensco Jersey Finance) traded up to 10 yesterday after the company filed from trades at 9.25 on 10 August. The notes drifted further upward to 10.125 today, according to MarketAxess. The USD 1bn 7.75% Ensco-issued senior unsecured notes due 2026 traded today at 6.25 from trades at 5.53 on 11 August, according to MarketAxess.  

Diamond Sports Group’s (DSG) debt traded down after parent Sinclair Broadcast Group announced that Diamond Sports Holdings (DSH) has redeemed 350,000 of its preferred units using cash dividends from DSG, an indirect subsidiary of DSH. 

The total redemption amount was USD 353.85m after including USD 3.85m in accrued and unpaid dividends. As of 2Q20 ended 30 June, DSG had around USD 436m in cash. 

Its USD 1.75bn 6.625% senior unsecured notes due 2027 traded down to 57 yesterday evening yielding 17.54%, down from 59.875 on 18 August while its USD 3bn 5.375% senior secured notes due 2026 slipped to 77 from 79.5 for the same period, according to MarketAxess.  

Apex Tool Group’s bonds traded higher yesterday after management hosted an earnings call detailing the company’s better-than-expected 2Q20 earnings, despite year-over-year revenue and EBITDA declines, as reported.  

The USD 325m 9% senior unsecured notes due 2023 traded 17 August at 86.25 after the earnings report, compared to trades at 80.25 on 10 August. The notes traded higher yesterday at 88 to yield 14.959%, according to MarketAxess.  

Management reinforced that results were not as bad as expected, with sales in the hand tools division already recovering in July.  

For the quarter, the company reported USD 257.1m of sales, down 23% from last year, while adjusted EBITDA declined 11% to USD 46.2m from USD 51.9m in 2Q19.  

Progrexion’s first lien loan strengthened over the last two days as the company prepaid a portion of its loan on the back of strong quarterly earnings.

Progrexion’s first lien TL due 2023 has steadied in the 74/79.33 context over the last two days, compared to 65/70 on 13 August and a 40/44 context on 5 May, according to Markit.

In May, the credit repair service provider received a USD 15.9m 1.5 lien senior secured term loan from its sponsor, which proceeds were used to pay down USD 12.5m of the first lien term loan and park cash on the balance sheet, according to a Moody’s report.  

The company also entered into an amendment that provided for a three-year maturity extension for the first and second lien loans, non-cash interest payments and a waiver of the first lien and second lien term loan financial covenants through 1Q21, with looser covenant measures through year-end 2021, the ratings agency noted in June. 

2020 Debtwire

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