Denbury Resources Enters into Restructuring Support Agreement for Pre-packaged Plan to Strengthen Its Balance Sheet and Reduc...
July 29 2020 - 08:00AM
Denbury Resources Inc. (NYSE: DNR) (“Denbury” or the “Company”)
today announced that it has entered into a Restructuring Support
Agreement (the “RSA”) with funded debtholders holding 100% of
revolving credit facility loans, approximately 67.2% of second lien
notes and approximately 70.8% of convertible notes for a
“pre-packaged” plan that will eliminate the Company’s $2.1 billion
of bond debt.
To implement the balance sheet restructuring
contemplated by the RSA, the Company is soliciting approval of the
“pre-packaged” plan and expects to file voluntary petitions for
reorganization under Chapter 11 of the Bankruptcy Code in the U.S.
Bankruptcy Court for the Southern District of Texas (the "Court")
on or before July 30, 2020.
Denbury expects to continue normal operations
throughout the Court-supervised process. Pursuant to their
commitment letter, the Company’s existing lenders will provide a
debtor-in-possession (“DIP”) revolving loan that will “roll” into
an exit facility with up to $615 million in availability. Following
Court approval, the Company expects this financing, together with
cash flow from operations, to support the business during the
Court-supervised process. Denbury will continue to evaluate the
operating environment and make adjustments, as necessary, to adapt
to the impact of COVID-19, OPEC+ actions and other factors
affecting its business.
Chris Kendall, Denbury’s President and CEO,
commented, “Denbury has developed a distinctive strategy focused on
CO2 enhanced oil recovery (EOR), reinforced by a portfolio of high
quality, low decline assets. Recently our entire industry has been
highly impacted by the global oil demand destruction caused by the
COVID-19 pandemic, driving record low oil prices and rapid changes
in energy market conditions. In response to this extraordinarily
difficult business environment, we have taken multiple proactive
steps at Denbury to preserve liquidity, including by reducing our
capital spending and general and administrative costs and
optimizing operations. This is in addition to many similar actions
taken by the Company over the last several years as we navigated
significant oil price volatility and made consistent progress in
reducing leverage. However, even after taking these steps, it
became apparent that a comprehensive financial restructuring would
be necessary to address our legacy debt burden and create a clear
path forward for the Company.
“The difficult decision to undertake this
financial restructuring process follows a comprehensive review of
alternatives, and we believe it is an important and necessary step
that will best position our company for long-term success. As we
undertake the process, we are pleased to have the support of our
lenders and bondholder groups, which will enable us to complete the
financial restructuring on an expedited basis. Our dedicated team
continues to perform at a high level, remaining highly focused on
safe, responsible and efficient operations, and we are committed to
working with our service providers and vendors in the same manner
as we have in the past.
“We are confident that this process will
significantly reduce our debt, strengthen our balance sheet and
position Denbury for a strong future. Looking forward, I believe
that Denbury’s unique CO2 EOR focused strategy will continue to
differentiate us from the industry, providing an advantageous
solution that significantly reduces the CO2 emissions associated
with the production of oil, underpinning our target of reaching
full carbon neutrality in this decade.”
The Company intends to seek Court approval to
pay suppliers in full under normal terms for goods and services
provided on or after the filing date. Under terms of the
“pre-packaged” plan, which is subject to Court approval, general
unsecured pre-petition claims will also be paid in full in the
ordinary course.
Additional information is available at
www.denburyrestructuring.com or by calling Denbury’s
Restructuring Hotline at 855-917-3570 (toll-free in the U.S.) or
503-520-4467 (for calls originating outside the U.S.). Information
related to the solicitation process is available on a separate
website administered by Denbury’s claims agent, Epiq, at
https://dm.epiq11.com/Denbury.
Kirkland & Ellis LLP is acting as legal counsel to Denbury,
Evercore Inc. is acting as financial advisor and Alvarez &
Marsal is serving as restructuring advisor.
ABOUT DENBURY RESOURCES
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 carbon dioxide
enhanced oil recovery (CO2 EOR) operations. For more information
about Denbury, please visit www.denbury.com.
This press release contains forward-looking
statements that involve a number of risks and uncertainties,
including those detailed in the Company’s filings with the
Securities and Exchange Commission, including Denbury’s most recent
Form 10-Q and its 2019 Form 10-K. These risks and uncertainties are
incorporated by this reference as though fully set forth herein.
The forward-looking statements contained herein are based on
financial, market, geological and operating assumptions that
management believes are reasonable based on currently available
information; however, management’s assumptions and the Company’s
future performance are subject to a wide range of business risks,
and subject to the Company’s ability to confirm and consummate a
plan of reorganization under Chapter 11 or an alternative
restructuring transaction, the risks attendant to the bankruptcy
process, the adequacy and restrictions of a DIP facility such as
that contemplated by our lenders’ commitment letter, and the impact
of all of these factors upon our ability to capitalize on the
reorganization process and emerge as an entity equipped to operate
as a going concern on a long-term basis. There is no assurance that
the goals and projections herein can or will be met. Actual results
may vary materially. 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.
INVESTOR CONTACT:
John Mayer
Denbury Resources Inc., Director of Investor Relations
972.673.2383
MEDIA CONTACT:
Andrew Siegel / Michael Freitag / Andrew Squire
Joele Frank, Wilkinson Brimmer Katcher
212.355.4449
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