Denbury Resources Inc. ( DNR) (“Denbury”) announced today that it
has closed its acquisition of Encore Acquisition Company (“Encore”),
entered into a new $1.6 billion 24-bank credit facility, and briefly
extended its tender offers for Encore senior subordinated notes. With
the merger, Denbury becomes one of the largest oil-focused independent
oil and natural gas companies in the United States. The combined company
will continue to be known as Denbury Resources Inc. (the “Company”) and
will be headquartered in Plano, Texas.
Merger
The merger closed this evening following approval by the stockholders of
both Denbury and Encore at meetings held this morning, and subsequent
completion of closing documentation. In the merger, Denbury issued
approximately 134.4 million shares of its common stock and paid
approximately $829.4 million in cash to Encore stockholders. The number
of Denbury shares issued to Encore public holders represents an exchange
ratio of 2.4048 Denbury shares and $15.00 in cash for each previously
outstanding share of Encore common stock, based on an overall 30% cash
and 70% stock pro ration of the overall consideration, subject to
different ratios for all-cash and all-stock elections made by Encore
stockholders. The Denbury shares issued to Encore stockholders will
represent approximately 33.9% of Denbury’s issued and outstanding common
stock after the merger, based upon Denbury shares outstanding at January
31, 2010.
Trading in Encore’s common stock on the New York Stock Exchange ( EAC) terminated after market close today, March 9th.
New Credit Facility
Denbury today entered into a new Credit Agreement with JPMorgan Chase
Bank, N.A., as administrative agent, and 23 other lenders that are
parties thereto. The Credit Agreement provides for an initial borrowing
base and aggregate lenders’ commitment of $1.6 billion. Denbury
anticipates that after draws under the facility to fund the Encore
merger, approximately $600 million to $700 million will remain available
under the credit facility. Denbury’s new bank credit facility is secured
by substantially all of its producing oil and natural gas properties.
Tender Offers
Denbury announced its intention to accept for purchase all of Encore’s
senior subordinated notes tendered by holders pursuant to cash tender
offers and related consent solicitations commenced on February 8, 2010
for $600 million aggregate principal amount of three series of
outstanding Encore senior subordinated notes. As of 5:00 p.m. Eastern
Time on March 9, 2010, tenders and consents had been received with
respect to (i) $108,216,000 aggregate principal amount, or 72%, of
Encore’s outstanding 6.25% Senior Subordinated Notes due 2014,
(ii) $268,801,000 aggregate principal amount, or 90%, of Encore’s
outstanding 6.0% Senior Subordinated Notes due 2015, and
(iii) $123,515,000 aggregate principal amount, or 82%, of Encore’s
outstanding 7.25% Senior Subordinated Notes due 2017. Denbury announced
that the original expiration of the cash tender offers and consent
solicitations set for 5:00 p.m., Eastern Time on March 9, 2010 for notes
of these series has been extended until 10:00 a.m., Eastern Time on
March 10, 2010. The purchase of tendered notes will be financed with a
portion of the net proceeds from Denbury’s $1.0 billion of 8¼% Senior
Subordinated Notes Due 2020 sold early last month. Denbury will assume
Encore’s position as obligor on the remainder of all Encore senior
subordinated notes which remain outstanding, and, in accordance with the
applicable indentures, will, within 30 days after consummation of the
merger, notify the holders thereof of their right to resell those notes
to Denbury at 101% of the face amount thereof.
If the principal amount of the Encore notes purchased pursuant to the
tender offers and the subsequent rights of holders to sell the remaining
notes to Denbury totals less than $600 million, Denbury will redeem that
portion of its 8¼% Senior Subordinated Notes Due 2020 in a principal
amount equal to the difference between $600 million and the aggregate
principal amount of Encore notes so purchased, at 100% of face value of
its 8¼% notes, plus interest accrued and unpaid to but not including the
date of redemption.
In the merger, J.P. Morgan Securities Inc. acted as exclusive financial
advisor to Denbury and Barclays Capital Inc. acted as exclusive
financial advisor to Encore. Baker & Hostetler LLP acted as counsel to
Denbury, and Baker Botts L.L.P. and Latham & Watkins LLP as counsel to
Encore.
Cautionary Note on Forward-Looking Statements
Certain statements in this release may constitute "forward-looking
statements" within the meaning of Federal securities laws. The events
and circumstances referred to in forward-looking statements are subject
to numerous risks and uncertainties that are detailed in Denbury's
filings with the Securities and Exchange Commission, including its most
recent reports on Forms 10-K and 8-K. Investors and securities holders
are urged to consider closely the disclosure in our Annual Report on
Form 10-K, available free of charge on our internet site ( www.denbury.com).
You can also obtain this form from the SEC on the SEC’s internet site ( www.sec.gov)
or by calling 1-800-SEC-0330. These risks and uncertainties are
incorporated by this reference as though fully set forth herein and
these events and circumstances may be influenced by factors that could
cause actual outcomes and results to be materially different from those
projected.
All written and oral forward-looking statements attributable to Denbury
or persons acting on its behalf are expressly qualified in their
entirety by such factors.
