Friday, February 13, 2015

Distressed Company Watch


  • Molycorp 3.25s 2016; million+ bonds traded at 15.5 yesterday; yield to maturity of over 200%!
  • Molycorp 10% (secured); million traded at 56.5 today; ytm 25%
  • Molycorp 6s 2017; fair amount traded today at ~15 cents; ytm over 100%
Interesting that the 3.25s and 6s trade at the same dollar price even though there's a difference in coupon. That implies people think that the company won't be paying unsecured coupons much longer. And note that the 6s are a current yield of 40%! Yet, the company has a $245 million market cap.

Walter Energy
  • The 9.875s of 2020 traded over a million today at around 16 cents; ytm over 70%. Note that's a 62% current yield!
  • The 8.5s of 2021 traded a million bonds a week ago for about 14 cents; ytm of 70%. Again, a 60% current yield.
    Those current yields are gigantic! Walter market cap is down to $75 million.

    Energy XXI Ltd.
    •  The 3s of 2018 traded 500k today at 33.25; ytm of 37%.
    The stock was up 10% today though and the market cap is $380 million. (Enterprise value is $4.26 billion.) Their slogan is "Acquire. Exploit. Deliver" and they are mostly offshore GOM.Their current investor presentation [pdf] is a lot better about their plans to get out of the low oil price jam than most companies': less capex and use cash flow to pay down debt; sell pipeline assets to pay down debt; sell non-core assets.

    Goodrich Petroleum
    • The 8.875s of 2019 traded a good amount today at around 41 cents; ytm of 38%. 
    That particular Goodrich bond is ~$275 million outstanding. At the current price, the debt has a market value of $110 million, which is about what the company plans to spend on capex this year. I would be surprised if their rate of return on capex would beat buying back these bonds. The company still has a market cap of $159 million.

    Alpha Natural Resources
    •  The 6s of 2019 traded multiple million at around 29; ytm of 44%. 
    Company has a $280 million market cap and $3 billion enterprise value.

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