Ferroglobe crashes on disappointing earnings; Digicel drops as exchange offers extended

By James McCandless

San Antonio, Nov. 27 – Distressed trading on Tuesday was largely negative as names tied to commodities continued to see losses.

Ferroglobe plc’s notes cratered after the company posted a drastic miss in its third-quarter earnings, facing uncertain market conditions.

Elsewhere in metals, AK Steel Holding Corp.’s issues moved lower as iron ore prices saw a similar fall.

Meanwhile, in telecom, Digicel Group Ltd.’s paper declined as the company extended the exchange offers for its 8¼% and 7 1/8% notes.

Sector peer Frontier Communications Corp.’s notes also trended negative.

In energy, Alta Mesa Resources, Inc.’s issues continued to slide after the company released a disappointing earnings report Monday.

Bristow Group Inc.’s paper declined as weakness in the offshore aviation space becomes a growing concern.

A mixed day in oil futures led to a downward day for California Resources Corp.’s and Sanchez Energy Corp.’s notes.

Diebold Nixdorf, Inc.’s issues sank as its equity hit new lows.

Ferroglobe crashes

Ferroglobe’s notes dropped significantly, traders said.

The 9 3/8% notes due 2022 fell 14 points to close at 89¾ bid.

On Tuesday, the London-based specialty metals producer released a dismal third-quarter earnings release, reporting earnings of 0 cents per share where analysts expected a 15 cents per share profit.

EBITDA was reported as $45 million, significantly lower than the previous quarter’s $130.9 million.

The company said that it would be cutting production in silicon metal and manganese-based alloys as materials costs jump.

Its equity lost 62% of its value after the news broke Tuesday.

“That was trading above par just yesterday,” a trader said. “It seems like this is another name getting crushed in the current trading climate.”

AK Steel down

Elsewhere in the sector, AK Steel’s issues were also lower.

The 7% notes due 2027 shed 1½ points to close at 85½ bid.

The West Chester, Ohio-based steel producer’s issues were lower as the market becomes wary of iron ore prices.

“Margins are going to tighten for steelmakers, especially in China,” a trader said.

Digicel lower

Meanwhile, Digicel’s paper traded down, market sources said.

The 8¼% paper due 2020 lost 1½ points to close at 65½ bid. The 7 1/8% paper due 2022 shaved off 8½ points to close at 56 bid.

The Kingston, Jamaica-based mobile phone network provider announced Tuesday that it would extend its exchange offers for any and all of its outstanding $2 billion 8¼% notes and any and all of its outstanding $1 billion 7 1/8% notes to Dec. 7, Prospect News reported.

The company is offering new notes issued by its subsidiaries in exchange for the two series of notes.

The offer was extended most recently from Nov. 16 after having been extended several times before that as the company negotiates with noteholders.

Meanwhile, Norwalk, Conn.-based wireline telecom name Frontier, a domestic peer, saw its notes active, but ending the day nearly level.

The 7 5/8% notes due 2024, while falling as low as 53¼ bid during intraday trading, ended the day level at 56¾ bid. The 10½% notes due 2022 shaved off ¼ point to close at 77¼ bid. The 11% notes due 2025 lost ½ point to close at 69½ bid.

Energy, oil fall

In energy, Alta Mesa’s issues continued to fall, traders said.

The 7 7/8% notes due 2024 fell 2½ points to close at 69½ bid.

On Monday, the 7 7/8% notes lost 2 points.

The Houston-based midstream energy services company’s issues have come under scrutiny after it reported a disappointing third quarter.

It reported a net income of $7.1 million for the quarter and EBITDA of $10.9 million.

Elsewhere in oil and gas, Bristow Group’s paper declined.

The 6¼% notes due 2022 dropped 3½ points to close at 55 bid.

The Houston-based offshore aviation name traded lower Tuesday as investors worry about the financial stability of the offshore aviation space following news Monday that competitor Waypoint Leasing had filed for bankruptcy.

“It’s highlighted now but it’s not localized to this part of the energy sector,” a trader said. “There’s negative sentiment all over energy trading.”

Drops in bellwether oil tranches coincided with a mixed day for oil futures.

Los Angeles-based independent oil and gas producer California Resources’ 8% notes due 2022 declined 1¾ points to close at 79½ bid.

Houston-based producer Sanchez Energy’s 6 1/8% notes due 2023 fell 2 points to close at 32 bid.

West Texas Intermediate crude oil futures saw a 46 cent gain to close the session at $52.02 per barrel. North Sea Brent crude futures lost 27 cents, ending the day at $60.21 per barrel.

Diebold off

Elsewhere, Diebold’s paper was weaker, market sources said.

The 8½% paper due 2024 lost 1¼ points to close at 62¾ bid.

The North Canton, Ohio-based connected commerce solutions name’s paper has been trading in the 60 context for the month, coming off of a year-to-date low of 54½ bid in August, according to Trace data.

“They’ve had a few really bad quarters, so they’re lucky to have some stability in the paper for a while,” a trader said. “But it can’t hold if the next one is just as bad.”

© 2015 Prospect News.
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