Denbury Resources Inc. (NYSE: DNR) (“Denbury” or the “Company”)
today announced that it has entered into private exchange
agreements and has separately commenced exchange offers with
respect to certain of its subordinated notes and its second lien
notes due 2024.
Pursuant to the private exchange agreements,
certain institutional investors have agreed, subject to certain
conditions, to exchange approximately $44.8 million aggregate
principal amount of the Company’s 6⅜% Senior Subordinated Notes due
2021 (the “2021 Notes”), $93.1 million aggregate principal amount
of 5½% Senior Subordinated Notes due 2022 (the “2022 Notes” and,
together with the 2021 Notes, the “Old Subordinated Notes”), and
$96.3 million aggregate principal amount of 4⅝% Senior Subordinated
Notes due 2023 (the “2023 Notes”) for approximately $48.5 million
of cash, $36.6 million aggregate principal amount of new 7¾% Senior
Secured Second Lien Notes due 2024 (the “New Second Lien Notes”),
and $149.1 million aggregate principal amount of new 6⅜%
Convertible Senior Notes due 2024 (the “New Convertible Senior
Notes” and, together with the New Second Lien Notes, the “New
Notes”) (the “Subordinated Notes Private Exchanges”).
Additionally, the same institutional investors have agreed to
exchange $168.0 million aggregate principal amount of 7½% Senior
Secured Second Lien Notes due 2024 (the “Old Second Lien Notes”
and, together with the Old Subordinated Notes, the “Old Notes”) for
$168.0 million aggregate principal amount of New Second Lien Notes
(the “Second Lien Notes Private Exchanges” and, together with the
Subordinated Notes Private Exchanges, the “Private
Exchanges”). Closing of the Private Exchanges is conditioned
upon, among other things, the consummation of the Exchange Offers
described below.
In addition, the Company has also announced
today the commencement of exchange offers (the “Subordinated Notes
Exchange Offers”) to Eligible Holders (as defined below) of its 6⅜%
Senior Subordinated Notes due 2021 and 5½% Senior Subordinated
Notes due 2022 and a separate exchange offer (the “Second Lien
Notes Exchange Offer” and, together with the Subordinated Notes
Exchange Offers, the “Exchange Offers”) to holders of its 7½%
Senior Secured Second Lien Notes due 2024. 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 June 3, 2019.
For each $1,000 principal amount of Old Notes
validly tendered and not validly withdrawn pursuant to the Exchange
Offers prior to 5:00 p.m. New York City time, on June 14, 2019 (the
“Early Participation Time”), Eligible Holders will be eligible to
receive the applicable “Total Exchange Consideration,” which
includes the “Early Participation Premium,” as described in the
tables below. Old Notes tendered pursuant to the Exchange
Offers after the Early Participation Time will not be eligible to
receive the Early Participation Premium.
The following table sets forth the acceptance
priority level for each series of Old Subordinated Notes and the
applicable consideration offered for such series in the
Subordinated Notes Exchange Offers:
Subordinated Notes Exchange
Offers
Title of Old Subordinated Notes |
|
CUSIP / ISIN Numbers |
|
Principal Amount Outstanding(1) |
|
Acceptance Priority Level(2) |
|
Early Participation Premium |
|
Total Exchange Consideration(3)(4) |
6⅜% Senior
Subordinated Notes due 2021 |
|
247916AC3 / US247916AC30 |
|
$ |
203,545,000 |
|
1 |
|
$50.00 of cash |
|
$400.00 of cash |
|
|
|
|
|
and |
|
|
|
|
|
$350.00 principal amount of New Second Lien Notes |
|
|
|
|
|
and |
|
|
|
|
|
$250.00 principal amount of New Convertible Senior Notes |
5½% Senior
Subordinated Notes due 2022 |
|
247916AD1 / US247916AD13 |
|
$ |
314,662,000 |
|
2 |
|
$50.00 of cash |
|
$225.00 of cash |
|
|
|
|
|
and |
|
|
|
|
|
$225.00 principal amount of New Second Lien Notes |
|
|
|
|
|
and |
|
|
|
|
|
$550.00 principal amount of New Convertible Senior Notes |
- Before giving effect to the Subordinated Notes Private
Exchanges.
- All Old Subordinated Notes that are tendered for exchange in a
Subordinated Notes Exchange Offer on or before the Early
Participation Time will have priority over any Old Subordinated
Notes that are tendered for exchange after the Early Participation
Time.
- Includes the Early Participation Premium of $50.00 of
cash.
- In addition to the Total Exchange Consideration, the Company
will also pay in cash accrued and unpaid interest to, but not
including, the applicable Settlement Date.
The following table sets forth the consideration
per $1,000 principal amount of Old Second Lien Notes accepted in
the Second Lien Notes Exchange Offer:
Second Lien Notes Exchange
Offer
Title of Old Second Lien Notes |
|
CUSIP / ISIN Numbers |
|
Principal Amount Outstanding(1) |
|
Early Participation Premium |
|
Total Exchange Consideration(2)(3) |
7½% Senior Secured Second Lien
Notes due 2024 |
|
247916AL3, U2481AAH1 / US247916AL39, USU2481AAH15 |
|
$ |
450,000,000 |
|
$50.00 principal amount of New Second Lien Notes |
|
$1,000.00 principal amount of New Second Lien Notes |
- Before giving effect to the Second Lien Notes Private
Exchanges.
- Includes the Early Participation Premium of $50.00 in principal
amount of New Second Lien Notes.
- In addition to the Total Exchange Consideration, the Company
will also pay in cash accrued and unpaid interest to, but not
including, the applicable Settlement Date.
The new notes issuable in the Exchange Offers
are comprised of 7¾% Senior Secured Second Lien Notes due February
15, 2024 and 6⅜% Convertible Senior Notes due December 31,
2024. The consideration for the exchange of 2021 Notes, 2022
Notes and Old Second Lien Notes pursuant to the Private Exchanges
is the same as the consideration being offered in the Exchange
Offers.
The maximum amount of consideration of each type
(the “Maximum Consideration Threshold”) that the Company will pay
or issue in the Subordinated Notes Exchange Offers is limited to
$71.5 million in cash, $71.3 million aggregate principal amount in
New Second Lien Notes and $98.9 million aggregate principal amount
in New Convertible Senior Notes. Accordingly, if the
Subordinated Notes Exchange Offers are oversubscribed prior to the
Early Participation Time, all 2021 Notes will be accepted before
any 2022 Notes are accepted, and all 2022 Notes will be accepted on
a pro rata basis until the applicable Maximum Consideration
Threshold is met. However, all Old Subordinated Notes
tendered before the Early Participation Time will be accepted
before any Old Subordinated Notes tendered after the Early
Participation Time are accepted. Based on the foregoing, 2021
Notes tendered before the Early Participation Time will not be
subject to proration.
Pursuant to both the Subordinated Notes Private
Exchanges and the Subordinated Notes Exchange Offers, the Company
will pay or issue up to an aggregate of (1) $120.0 million of cash,
(2) $107.9 million principal amount of New Second Lien Notes and
(3) $248.0 million principal amount of New Convertible Senior
Notes. Pursuant to the Private Exchanges and the Exchange
Offers, the Company will issue up to an aggregate of $557.9 million
principal amount of New Second Lien Notes. All New Second
Lien Notes, whether issued in the Private Exchanges or the Exchange
Offers, will have the same CUSIP, be part of the same series and be
fungible.
The New Second Lien Notes will be secured by the
same collateral as the Old Second Lien Notes. The New Second
Lien Notes will have the same maturity date as the Old Second Lien
Notes. However, the holders of the New Second Lien Notes may
require the Company to repurchase the New Second Lien Notes at a
price of par if any Old Second Lien Notes remain outstanding on
November 15, 2023.
The New Convertible Senior Notes will be
convertible into the Company’s common stock at any time, at the
option of each holder, at a rate of 370 shares of common stock per
$1,000 principal amount of New Convertible Senior Notes, resulting
in an effective issue price of $2.70 per share. In addition,
the New Convertible Senior Notes will automatically convert at that
same rate (subject to dividend, distribution or other customary
adjustments) if the volume-weighted average price of the Company’s
common stock is at or above $2.43 per share for ten out of fifteen
consecutive trading days. The maximum number of shares
subject to the New Convertible Senior Notes would be approximately
92 million.
All the New Notes will rank senior to all
existing and future subordinated indebtedness of the Company,
including any 2021 Notes, 2022 Notes or 2023 Notes that remain
outstanding after the consummation of the Exchange Offers.
Eligible Holders of Old Notes accepted for
exchange in the Exchange Offers will 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. Tenders may be validly withdrawn at any time
prior to 5:00 p.m. New York City time, on June 14, 2019, but not
thereafter unless required by law.
The consummation of the Exchange Offers is
conditioned upon the satisfaction or waiver of customary conditions
described in the Offering Memorandum and Letter of
Transmittal. In addition, the consummation of the Exchange
Offers is conditioned on a minimum of $300 million aggregate
principal amount of New Second Lien Notes and $200 million
aggregate principal amount of New Senior Convertible Notes being
issued in the aggregate in the Exchange Offers and pursuant to the
Private Exchanges.
The Company currently expects the initial
settlement date for the Exchange Offers to occur on or about June
19, 2019 (the “Initial Settlement Date”). The Exchange Offers
will expire at 11:59 p.m. New York City time, on June 28, 2019 (the
“Expiration Time”). The final settlement date, if necessary,
for the Exchange Offers is currently expected to occur on or about
July 2, 2019 (the “Final Settlement Date” and, together with the
Initial Settlement Date, the “Settlement Dates”).
The New Notes have not been and will not be
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 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
“Eligible Holders”). 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 www.dking.com/dnr or by contacting D.F. King & Co.,
Inc., the exchange agent and information agent in connection with
the Exchange Offers, by calling (800) 399-1581 (toll free) or (212)
269-5550 (banks and brokers) or by emailing denbury@dfking.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, 972.673.2000John Mayer,
Director of Investor Relations, 972.673.2383
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