S&P downgrades Denbury

S&P said it lowered the corporate credit rating on Denbury Resources Inc. to CC from B, along with the rating on its senior subordinated notes to CC from CCC+.

The outlook is negative.

The downgrades follow news that Denbury entered into privately negotiated exchange agreements with existing holders of its senior subordinated notes to exchange this debt for a new issue of senior secured second-lien notes due 2021 and new common shares, S&P said.

The company is offering to exchange about $839 million principal amount of existing notes for about $483 of new notes and 33.6 million shares of common equity, the agency said.

The transaction is viewed as a distressed exchange because investors will receive less than what was promised on the original securities, S&P said.

Once the transaction has closed, the agency said it expects to lower the corporate credit rating to SD (selective default) and the issue-level rating on the senior subordinated notes to D.

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