Denbury Resources Inc. (NYSE:DNR) (“Denbury” or the “Company”)
today announced the commencement of private offers (the “Exchange
Offers”) to Eligible Holders (as defined below) of its outstanding
6⅜% Senior Subordinated Notes due 2021 (the “2021 Notes”), 5½%
Senior Subordinated Notes due 2022 (the “2022 Notes”), and 4⅝%
Senior Subordinated Notes due 2023 (the “2023 Notes” and, together
with the 2021 Notes and 2022 Notes, the “Old Notes”) to exchange
their Old Notes for up to approximately $182 million of new 9¼%
Senior Secured Second Lien Notes due March 31, 2022 (the “New
Second Lien Notes”) and up to approximately $147 million of new 5%
Convertible Senior Notes due December 15, 2023 (the “New
Convertible Senior Notes” and, together with the New Second Lien
Notes, the “New Notes”). The Exchange Offers are being made
upon the terms and subject to the conditions set forth in a
confidential offering memorandum (the “Offering Memorandum”) and
related letter of transmittal (the “Letter of Transmittal”), each
dated December 7, 2017.
The following table sets forth the acceptance
priority level for each series of Old Notes and the applicable
consideration offered for such series in the Exchange Offers for
the Old Notes:
Series of Old Notes |
|
CUSIP Number |
|
Principal Amount Outstanding(1) |
|
Acceptance Priority Level(2) |
|
Exchange Consideration(3)(4) |
|
Early Participation Premium |
|
Total Exchange Consideration(3)(5) |
6⅜% Senior
Subordinated Notes due 2021 |
|
247916AC3 |
|
$ |
215,144,000 |
|
1 |
|
$410.00 principal amount of New Second Lien Notes |
|
$50.00 principal amount of New Second Lien Notes |
|
$460.00 principal amount of New Second Lien Notes |
|
|
|
|
and |
|
|
and |
|
|
|
|
$340.00 principal amount of New Convertible Senior Notes |
|
|
$340.00 principal amount of New Convertible Senior Notes |
5½% Senior
Subordinated Notes due 2022 |
|
247916AD1 |
|
$ |
408,882,000 |
|
2 |
|
$382.50 principal amount of New Second Lien Notes |
|
$50.00 principal amount of New Second Lien Notes |
|
$432.50 principal amount of New Second Lien Notes |
|
|
|
|
and |
|
|
and |
|
|
|
|
$342.50 principal amount of New Convertible Senior Notes |
|
|
$342.50 principal amount of New Convertible Senior Notes |
4⅝% Senior
Subordinated Notes due 2023 |
|
24823UAH1 |
|
$ |
376,501,000 |
|
3 |
|
$360.00 principal amount of New Second Lien Notes |
|
$50.00 principal amount of New Second Lien Notes |
|
$410.00 principal amount of New Second Lien Notes |
|
|
|
|
and |
|
|
and |
|
|
|
|
$340.00 principal amount of New Convertible Senior Notes |
|
|
$340.00 principal amount of New Convertible Senior Notes |
- “Principal Amount Outstanding” above gives effect to the
exchange of approximately $364 million principal amount of 2022
Notes and approximately $246 million principal amount of 2023 Notes
by institutional investors on December 6, 2017 for approximately
$382 million principal amount of Private Exchange Second Lien Notes
(as defined below) and approximately $85 million of our new 3½%
Convertible Senior Notes due 2024, pursuant to negotiated exchange
agreements.
- All Old Notes that are tendered for exchange in an Exchange
Offer on or before the Early Participation Time (as defined below)
will have priority over Old Notes that are tendered for exchange
after the Early Participation Time, even if such Old Notes tendered
after the Early Participation Time have a higher Acceptance
Priority Level than Old Notes tendered on or before the Early
Participation Time.
- For each $1,000 principal amount of Old Notes.
- In addition to the Exchange Consideration or Total Exchange
Consideration, as applicable, the Company will also pay in cash
accrued and unpaid interest to, but not including, the Initial
Settlement Date or the Final Settlement Date on the Old Notes
tendered and accepted in the Exchange Offers as described in the
Offering Memorandum.
- Includes Early Participation Premium.
For each $1,000 principal amount of Old Notes
validly tendered and not validly withdrawn prior to 5:00 p.m., New
York City time, on December 20, 2017 (as it may be extended, the
“Early Participation Time”), Eligible Holders will be eligible to
receive the “Total Exchange Consideration” set forth in the table
above, which includes the “Early Participation Premium.” The
Company currently expects the initial Settlement Date to be on or
about December 22, 2017 (the “Initial Settlement Date”). For
each $1,000 in principal amount of Old Notes validly tendered after
the Early Participation Time, Eligible Holders will be eligible to
receive only the “Exchange Consideration” set forth in the table
above. The Exchange Offers will expire at 11:59 p.m., New
York City time, on January 5, 2018, unless extended or earlier
terminated by the Company (the “Expiration Time”). The Final
Settlement Date, if necessary, is currently expected to occur on or
about January 10, 2018 (the “Final Settlement Date” and together
with the Initial Settlement Date, the “Settlement Date”).
The New Notes will be senior to all existing and
future subordinated indebtedness that the Company may incur,
including any Old Notes that remain outstanding after the
consummation of the Exchange Offers. The New Second Lien
Notes will be issued as “additional notes” under the indenture
pursuant to which the Company previously issued approximately $382
million aggregate principal amount of new 9¼% Senior Secured Second
Lien Notes due 2022 (the “Private Exchange Second Lien Notes”). The
$182 million principal amount of New Second Lien Notes being
offered in the exchange offers represents the maximum principal
amount of second lien debt that the Company currently has capacity
to issue in exchange for, or to purchase, Old Notes under the
applicable terms of the indentures governing its existing 9% and
9¼% second lien notes. The Company currently expects the New
Second Lien Notes to be issued in a “qualified reopening,” and, if
so, the New Second Lien Notes will be fungible with, and trade
under the same CUSIP as, the Private Exchange Second Lien
Notes. The New Convertible Senior Notes are convertible into
the Company’s common stock at any time, at the option of the
noteholders, at a rate of 281.69 shares of common stock per $1,000
principal amount of New Convertible Senior Notes, provided that the
New Convertible Senior Notes will automatically convert at that
same rate if the Company’s stock price is at or above $3.55 per
share based on a volume-weighted average price for ten out of
fifteen consecutive trading days, subject to dividend, distribution
or other customary adjustments. The New Convertible Senior Notes
will be convertible into a maximum of approximately 41 million
shares depending on the amount of New Convertible Senior Notes
issued.
In addition to the applicable exchange
consideration, Eligible Holders of Old Notes accepted for exchange
in the Exchange Offers will also receive accrued and unpaid
interest on such Old Notes in cash from the applicable last
interest payment date to, but not including, the applicable
Settlement Date as described in the Offering Memorandum.
All Old Notes validly tendered and not validly
withdrawn will be accepted in accordance with their “Acceptance
Priority Level” set forth in the table above, with 1 being the
highest Acceptance Priority Level and 3 being the lowest Acceptance
Priority Level. Accordingly, all Old Notes with an Acceptance
Priority Level 1 will be accepted before any Old Notes with an
Acceptance Priority Level 2 or an Acceptance Priority Level 3, and
all Old Notes with an Acceptance Priority Level 2 will be accepted
before any Old Notes with an Acceptance Priority Level 3, until the
applicable maximum amount of New Notes has been reached. If the
remaining portion of the New Notes is adequate to exchange some but
not all of the aggregate principal amount of Old Notes tendered
within the next lower Acceptance Priority Level, Old Notes tendered
for exchange in that next lower Acceptance Priority Level will be
accepted on a pro rata basis, based on the aggregate principal
amount of Old Notes tendered with respect to that next lower
Acceptance Priority Level, and no Old Notes with a lower Acceptance
Priority Level will be accepted for exchange.
Notwithstanding the foregoing, all Old Notes
that are tendered for exchange in the Exchange Offers at or before
the Early Participation Time will have priority over Old Notes that
are tendered for exchange after the Early Participation Time, even
if such Old Notes tendered after the Early Participation Time have
a higher Acceptance Priority Level than Old Notes tendered at or
before the Early Participation Time.
The consummation of the Exchange Offers is
subject to, and conditioned upon, the satisfaction or waiver of
conditions set out in the Offering Memorandum and Letter of
Transmittal, subject to the Company’s right to amend or terminate
any of the Exchange Offers prior to the Expiration Time. The
consummation of the Exchange Offers is not contingent on any
minimum exchange condition. Tenders may be validly withdrawn
at any time on or prior to 5:00 p.m., New York City time, on
December 20, 2017, but not thereafter unless that date is extended
by the Company or required by law.
The New Notes have not been registered under the
U.S. Securities Act of 1933, as amended (the “Securities Act”), or
under any state securities laws and the New Notes will be issued
pursuant to an exemption therefrom, and may not be offered or sold
within the United States, or to or for the account or benefit of
any U.S. Person, absent registration or an applicable exemption
from registration requirements.
Documents relating to the Exchange Offers will
be distributed only to “Eligible Holders” of Old Notes who complete
and return an eligibility form confirming that they are either a
“qualified institutional buyer” under Rule 144A or not a “U.S.
person” under Regulation S as defined under applicable securities
laws. The complete terms and conditions of the Exchange
Offers, as well as the terms of the New Notes, are described in the
Offering Memorandum and Letter of Transmittal.
In order to receive a copy of the Offering
Memorandum, Eligible Holders must complete and submit an
eligibility form. The eligibility form may be obtained by
visiting https://web1.debtdomain.com/public/denbury/ or
by contacting Ipreo LLC, the exchange agent and information agent
in connection with the Exchange Offers, by calling (888) 593-9546
(toll free) or (212) 849-3880 (banks and brokers) or by emailing
exchangeoffer@ipreo.com.
This press release does not constitute an offer
to sell or a solicitation of any offer to buy any securities, nor
shall there be any sale of any securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. This press release is being issued pursuant to Rule
135c under the Securities Act.
This press release contains forward-looking
statements that involve risks and uncertainties that are based on
assumptions that management believes are reasonable based on
currently available information. There is no assurance that these
assumptions will prove to be correct. In addition, any
forward-looking statements represent the Company’s estimates only
as of today and should not be relied upon as representing its
estimates as of any future date. Denbury assumes no obligation to
update its forward-looking statements.
Denbury is an independent oil and natural gas
company with operations focused in two key operating areas: the
Gulf Coast and Rocky Mountain regions. The Company’s goal is
to increase the value of its properties through a combination of
exploitation, drilling and proven engineering extraction practices,
with the most significant emphasis relating to CO2 enhanced oil
recovery operations.
DENBURY CONTACTS:
Mark C. Allen, Executive Vice President and Chief Financial Officer, 972.673.2000
John Mayer, Investor Relations, 972.673.2383
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