Denbury completes tender for three Encore subordinated notes series

By Jennifer Chiou

New York, March 10 - Denbury Resources Inc. announced the completion of the cash tender offer for any and all of the following Encore Acquisition Co. senior subordinated notes:

• $150 million of 6¼% senior subordinated notes due 2014,

• $300 million of 6% senior subordinated notes due 2015; and

• $150 million of 7¼% senior subordinated notes due 2017.

The offer and consent solicitation ended at 10 a.m. ET on March 10, extended from 5 p.m. ET on March 9. They began on Feb. 9.

All in all, holders tendered $108,216,000, or 72%, of the 6¼% notes; $268,801,000, or 90%, of the 6% notes; and $123,515,000, or 82%, of the 7¼% notes, unchanged from the initial deadline. The company accepted all of the tendered notes.

As previously reported, Denbury agreed to acquire Encore in a cash-and-stock deal valued at $4.5 billion, including the assumption of debt and the value of the minority interest in Encore Energy Partners LP. The merger closed on Wednesday.

Denbury also received the needed consents to amend the note indentures to, among other things, eliminate most of the restrictive covenants, eliminate or modify certain events of default, and eliminate or modify related provisions. It has executed supplemental indentures.

For each $1,000 principal amount, the company will pay $1,012.50 for all notes, including a consent payment of $2.50.

The company will also pay accrued interest.

It will fund the offer with a portion of the net proceeds from Denbury's $1 billion of 8¼% senior subordinated notes due 2020 sold early last month.

According to a news release, Denbury will assume Encore's position as obligor on the remainder of all Encore senior subordinated notes and will, within 30 days after the merger, notify the holders of their right to resell those notes to Denbury at 101%.

If the principal amount of the Encore notes purchased in the tender and the subsequent rights of holders to sell the remaining notes to Denbury totals less than $600 million, Denbury said it will redeem that portion of its 8¼% notes in a principal amount equal to the difference between $600 million and the aggregate principal amount of Encore notes purchased. Those notes will be redeemed at par plus accrued interest.

Denbury was seeking consents from holders of a majority of the notes.

J.P. Morgan Securities Inc. was the dealer manager and solicitation agent (800 245-8812). MacKenzie Partners, Inc. was the information agent (call collect 212 929-5500 or 800 322-2885; or tenderoffer@mackenziepartners.com).

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

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