By Angela McDaniels
Tacoma, Wash., May 11 – Denbury Resources Inc. issued $531.2 million principal amount of new 9% senior secured second-lien notes due May 15, 2021 and 36.9 million shares in exchange for $922.5 million principal amount of outstanding senior subordinated notes on May 10, according to an 8-K filing with the Securities and Exchange Commission.
The company exchanged the new notes and shares for $126.6 million principal amount of its outstanding 6 3/8% senior subordinated notes due 2021, $351.6 million principal amount of outstanding 5˝% senior subordinated notes due 2022 and $444.2 million principal amount of outstanding 4 5/8% senior subordinated notes due 2023.
The exchanges were made under privately negotiated exchange agreements with the holders of the old notes.
On May 4, the company said it planned to issue $482.9 million of the new 9% notes and about 33.6 million shares in exchange for $839.4 million of its outstanding senior subordinated notes, including about $123.4 million of the 6 3/8% notes, about $301.7 million of the 5˝% notes and about $414.3 million of the 4 5/8% notes.
New note terms
At any time prior to Dec. 15, 2018, the new notes are callable at par plus a premium equal to the greater of 1% and the excess, if any, of (a) the present value of the redemption price of the notes on Dec. 15, 2018 plus all required interest payments due through Dec. 15, 2018, computed using a discount rate equal to the Treasury rate plus 50 basis points, over (b) the then-outstanding principal amount.
Beginning Dec. 15, 2018, the company may redeem the notes at 109% of par, declining to 104.5% of par on Dec. 15, 2019 and to par on Dec. 15, 2020. Before Dec. 15, 2018, there is an equity clawback for up to 35% of the notes at 109% of par.
In the case of a change of control, the company must offer to purchase all of the new notes at a price equal to 101% of par.
The new notes are senior in right of payment to old notes that remain outstanding.
The new notes are guaranteed by subsidiaries of the company representing substantially all of the company’s assets, operations and income and are secured by second-priority liens on substantially all of the assets that secure the company’s senior secured bank credit facility.
Under the terms of an intercreditor agreement, the liens on the collateral that secure the new notes and the guarantees are contractually subordinated to liens that secure the company’s senior secured bank credit facility and certain other priority lien debt.
Subject to compliance with the covenant regarding debt, the company may issue more new notes from time to time under the indenture.
Denbury is an oil and natural gas company based in Plano, Texas.
| Issuer: | Denbury Resources Inc.
|
| Issue: | Senior secured second-lien notes
|
| Amount: | $531.2 million
|
| Maturity: | May 15, 2021
|
| Coupon: | 9%
|
| Price: | Par
|
| Yield: | 9%
|
| Call option: | Make-whole call prior to Dec. 15, 2018; redeemable at 109 beginning Dec. 15, 2018, declining to 104.5 on Dec. 15, 2019 and to par on Dec. 15, 2020
|
| Equity clawback: | For up to 35% of notes at 109 before Dec. 15, 2018
|
| Put option: | A 101 if a change of control occurs
|
| Settlement date: | May 10
|
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