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MarketScreener Homepage  >  Equities  >  OTC Bulletin Board - Other OTC  >  Denbury Resources Inc.    DNRCQ

DENBURY RESOURCES INC.

(DNRCQ)
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Denbury Resources Files for Bankruptcy, Handing Control to Creditors

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07/31/2020 | 03:13pm EDT

By Becky Yerak

Denbury Resources Inc. plans to hand ownership over to creditors as part of a bankruptcy strategy that would eliminate $2.1 billion in bond debt.

The oil-and-gas company filed for chapter 11 protection Thursday in U.S. Bankruptcy Court in Houston. The proposed restructuring includes giving second-lien bondholders and convertible noteholders nearly all of the equity in the reorganized business. Denbury had warned this week that a bankruptcy filing was likely.

Under the plan, GoldenTree Asset Management LP would get a seat on the company's new board of directors. The board also would include two directors selected by Fidelity Management & Research Co., as well as others picked by a second-lien creditor committee.

The Plano, Texas-based company, the latest in a series of energy businesses to file for bankruptcy, said it suffered a one-two punch earlier this year due to the coronavirus pandemic and the disagreement between Russia and the Organization of the Petroleum Exporting Countries. Oil prices plunged.

Although crude prices have recovered somewhat, they continue to hover in the low-$40s, Denbury Chief Executive Christian Kendall said in a declaration filed in bankruptcy court.

Denbury's production and development activities are in the Gulf Coast and Rocky Mountains regions.

The company entered bankruptcy with a restructuring agreement backed by all lenders under a revolving credit facility and by creditors holding 67% of its second-lien bonds and 73% of its convertible notes.

Under the plan, the second-lien bondholders would recoup an estimated 62 cents on the dollar of what they are owed, while convertible noteholders would recover 27 cents on the dollar.

Vendors would be paid in full for goods and services provided on or after the bankruptcy filing.

By converting all $2.1 billion of its bond debt into equity, Denbury will be freeing itself from most of its liabilities.

Equity is typically wiped out in bankruptcies but in the Denbury case, shareholders could receive warrants exercisable for an ownership stake of as much as 2.5%, records show.

Lenders are providing a bankruptcy loan and exit financing of up to $615 million.

Denbury is represented in the bankruptcy by law firms Kirkland & Ellis LLP and Jackson Walker LLP. Evercore Group LLC will be its financial adviser. Alvarez & Marsal North America LLC is its restructuring adviser. KPMG LLP and PricewaterhouseCoopers LLP are its tax advisers.

The chapter 11 filings of Denbury and affiliated businesses have been consolidated under case number 20-33801. The matter has been assigned to Judge David Jones.

Write to Becky Yerak at becky.yerak@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
DENBURY RESOURCES INC. -2.56% 0.039 Delayed Quote.-97.23%
EVERCORE INC. -0.10% 64.75 Delayed Quote.-13.39%
LONDON BRENT OIL 1.48% 45.16 Delayed Quote.-31.89%
PENTAIR PLC 0.54% 45.05 Delayed Quote.-2.22%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) 0.82% 73.61228 Delayed Quote.18.50%
WTI 1.99% 42.325 Delayed Quote.-31.52%
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Financials (USD)
Sales 2020 - - -
Net income 2020 - - -
Net Debt 2020 2 207 M - -
P/E ratio 2020 -
Yield 2020 -
Capitalization 19,4 M 19,4 M -
EV / Sales 2020 -
EV / Sales 2021 -
Nbr of Employees 718
Free-Float 98,7%
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Consensus
 
Mean consensus SELL
Number of Analysts 1
Average target price 0,00 $
Last Close Price 0,04 $
Spread / Highest target -100%
Spread / Average Target -100%
Spread / Lowest Target -100%
EPS Revisions
Managers
NameTitle
Christian S. Kendall President, Chief Executive Officer & Director
John Patrick Dielwart Chairman
David Sheppard Senior Vice President-Operations
Mark C. Allen Chief Financial Officer, Treasurer & Executive VP
Steve A. McLaurin Chief Information Officer & Vice President
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