Covenant Review Comments on Denbury Resources' Extension of Exchange Offer Amidst Bondholder Opposition to Deal Terms

Jan 08, 2016, 13:42 ET from Covenant Review

NEW YORK, Jan. 8, 2016 /PRNewswire/ -- Denbury Resources Inc. ("Denbury" or the "Company") today announced that it has extended the early participation deadline of its previously announced bond exchange offer (the "Offer") in which it is attempting to exchange a portion of its outstanding 6⅜% Senior Subordinated Notes due 2021, 5½% Senior Subordinated Notes due 2022, and 4⅝% Senior Subordinated Notes due 2023 (collectively, the "Subordinated Notes") for up to $650 million of newly issued 7½% Senior Notes due May 15, 2022 (the "New Senior Notes").  Under the original terms of the Offer, bondholders would receive $650 in principal amount of New Senior Notes for each $1,000 principal amount of Subordinated Notes tendered, subject to proration, if they tendered prior to 5pm, New York City time, on January 7, 2016 (the "Early Participation Deadline").  Denbury has extended the Early Participation Deadline by 13 days to January 20, 2016. 

The extension comes amidst significant bondholder opposition to the proposed terms of the covenants for the New Senior Notes and buys Denbury more time to attempt to convince bondholders to accept the Offer.  Independent credit research firm Covenant Review published reports explaining how the proposed terms of the New Senior Notes had critical legal loopholes.  In particular, the proposed terms would allow Denbury to launch new offers in the future to exchange all of its remaining Subordinated Notes for new secured bonds that would effectively subordinate the New Senior Notes.  Under the proposed terms, Denbury could offer collateral to holders of the remaining Subordinated Notes that will not secure the New Senior Notes, allowing bondholders that do not participate in the Offer to hold out for a sweetened deal that allows them to leapfrog bondholders who take the Offer and exchange for New Senior Notes now. In other words, bondholders might take a haircut on their holdings now, only to again wind up with bonds trading below par and at risk of being further down the line if Denbury might go into bankruptcy.

Covenant Review's Denbury analyst Scott Josefsberg explains, "I have spoken with many Denbury bondholders who tell me that Denbury is not getting much support for the offer and that they are very unhappy with the proposed legal terms of the exchange.  They want and should get a better deal."

Institutional investors can obtain further analysis on the exchange offer from Covenant Review.  Covenant Review is relied upon by fixed income professionals worldwide as The Authority on Bond and Loan Covenants.  Customers use Covenant Review's services as risk management tools, sources of investment ideas, benchmarking tools to compare deal structures, and investment process and workflow management solutions. 

For additional information on Covenant Review, see  This press release has been prepared by Covenant Review, without any participation by or affiliation with Denbury.

SOURCE Covenant Review