Denbury Resources merger to trigger put option for subordinated notes

By Angela McDaniels

Tacoma, Wash., Nov. 2 - Denbury Resources Inc.'s subordinated notes will become putable at 101% of par once it carries out its planned acquisition of Encore Acquisition Co.

The $4.5 billion stock-and-cash merger is expected to close in the first quarter of 2010.

Denbury has received a commitment letter for a new $1.6 billion bank revolving credit facility and a $1.25 billion bridge financing and may use some of the proceeds to retire and replace $825 million of the outstanding subordinated notes, according to a company news release.

Proceeds from the debt financing will also be used to pay the cash portion of the merger payment and to replace Encore's existing bank facility, which has about $180 million drawn and outstanding.

Denbury and Encore are oil and natural gas companies based in Plano, Texas, and Fort Worth, respectively.

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