Northern Oil notes down on asset acquisition; American Tire rebounds after weakness

By James McCandless

San Antonio, April 26 – The distressed debt market was relatively quiet, traders reported, despite earnings statements slated for this week.

Northern Oil and Gas, Inc.’s notes declined as the company announced that it had entered an agreement to purchase assets and acreage in the Williston Basin in North Dakota.

American Tire Distributor’s notes bounced back some after a two-day free fall after Goodyear severed ties with the company.

FirstEnergy Solutions’ paper was mixed after announcing Wednesday that the company has notified the government of its intention to deactivate three at-risk plants.

Intelsat SA’s notes were down. Recently a subsidiary was chosen to be part of a government project. Frontier Communications Corp.’s note issues were up as it searches for buyers for certain assets. Community Health Systems, Inc.’s paper was mixed in the health care space.

Northern Oil off

Minnetonka, Minn.-based independent oil and gas producer Northern Oil and Gas’ notes were down as reports confirmed that it had entered into an agreement with Salt Creek Oil and Gas, LLC to purchase assets and acreage in the Williston Basin in North Dakota.

The deal will be paid for with $40 million in cash and 6 million shares of common stock. Interim president Brandon Elliot said in a news release that the acquisition is part of its long-term acquisition strategy.

“This acquisition solidifies our position as the natural consolidator of non-operating working interests in the Williston Basin,” Elliot said. “It brings with it outstanding future drilling locations and current production, without additional general and administrative costs, demonstrating the scalability of our business model.”

The 8% notes due 2020 fell about 1¼ points to close at around 93¼ bid.

American Tire trades up

Huntersville, N.C.-based tire distributor American Tire saw gains, according to a market source, after two days of losses spurred on by Tuesday’s news that Goodyear had ended its distribution agreement with the company after entering into a joint distribution venture with Bridgestone late last week.

The 10¼% notes due 2022 jumped up 11 points to close at 53½ bid.

The 10¼% notes lost 6½ points on Wednesday and 39¼ points on Tuesday.

FirstEnergy Solutions mixed

FirstEnergy Solutions, a subsidiary of Akron, Ohio-based electricity producer FirstEnergy Corp., saw paper mixed, traders confirmed, after the company filed a deactivation notice Wednesday with the U.S. Nuclear Regulatory Commission, signaling that if the government does not provide assistance it will permanently close two Ohio plants and one Pennsylvania power plants.

The 6.05% paper due 2021 lost about ¼ point to close at around 46 bid. The 6.8% bonds due 2039 gained about 3½ points to close at 48½ bid. The 6.85% bonds due 2034 traded up 1 point to close at 47½ bid.

On Wednesday, the 6.05% paper gained 1½ points, the 6.8% bonds edged up about ¼ point, and the 6.85% rose by 1½ points.

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes traded down. A subsidiary of the company was recently chosen to participate in a satellite payload project for the Federal Aviation Administration.

The Intelsat Jackson SA 5½% notes due 2023 shaved off ¼ point to close at 84¼ bid. The 7¼% notes due 2020 lost about ½ point to close at around 97½ bid.

Norwalk, Conn.-based wireline telecom name Frontier Communications’ issues traded up as the company continues seeking a buyer for certain assets.

The 7 5/8% notes due 2024 rose about 1 point to close at 65½ bid. The 10½% notes due 2022 gained about ½ point to close at around 88 bid. The 11% notes due 2025 traded up ¾ point to close at 77¼ bid.

Franklin, Tenn.-based hospital operator Community Health Systems’ paper was mixed in the health care space as the company completes asset sales and layoffs as part of a plan to reduce its debt.

The 7 1/8% paper due 2020 lost about ½ point to close at around 79½ bid. The 6 7/8% paper due 2022 rose about 3 points to close at around 58 points.

“Today was quiet, which was a little surprising,” a trader said. “But then again, not a lot in our market is going to move significantly unless a name in a certain industry posts outlier numbers and that sends the whole industry one way or another. That doesn’t look likely to happen this week.”

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