Thursday, August 1, 2019

Distressed Debt Watch - August 2019

  • Approach Resources (AREX, EDGAR) bond due June 2021 traded at 10 cents, ytm of 200%. Market capitalization at 27 cent share price of $25 million. Net debt of $400 million on about $2 million of EBITDA the most recent quarter. They are currently in a forbearance agreement with lenders (that's been extended a couple of times), negotiating a restructuring. The January 2020 $1 put options are 80 cents.
  • Frontier Communications (FTR, EDGAR) bond due April 2020 trading at 78 cents, ytm of 50%. Market capitalization at $1.32 share price of $139 million. Net debt of $17 billion on $1.5 billion of operating income. There are restructuring talks, with some creditors favoring a chapter 11. Shareholder equity is $1.5 billion, but that includes $6.4 billion of goodwill and $1.4 billion of other intangibles. The January 2021 $2 put options are about $1.20.
  • J.C. Penney (JCP, EDGAR) bond due November 2023 trading at 40 cents, ytm of 35%. Market capitalization at 75 cent share price is $238 million. Net debt of $5 billion on $68 million of EBIT last fiscal year. (And EBIT for mrq was negative $93 million.) Book value is $1 billion, but I would subtract $664 million of "other assets" like capitalized software and intangibles, and further the $392 million of capital expenditures in 2018 for things like "investments in our store environment and store facility improvement," leaving an adjusted equity value that may be negative. There is a $50 million debt maturity in 2019 and $110 million in 2020. The January 2021 $1 put options are about 50 cents.
  • Denbury Resources Inc. (DNR, EDGAR) bond due July 2023 trading at 40 for a 33% ytm. Market capitalization at $1 share price of $475 million. Net debt of $2.8 billion on $569 million of operating income. The January 2021 $1 put options are 45 cents.
  • GNC Holdings (GNC, EDGAR) bond due August 2020 trading at 90 for a 12% ytm.

2 comments:

CP said...

Another one is CRC.

Their second lien debt (8%) due Dec 2022 is trading at 65. About a 20% ytm. Their latest maturing unsecured 2024 debt is yielding 24%.

CP said...

The FTR 4/2020 bond has declined further - in the low 60s, ytm is around 100% now!