Denbury Restructuring Support Agreement

Denbury Restructuring Support Agreement: What You Need to Know

Denbury Inc., an independent oil and gas company, recently filed for Chapter 11 bankruptcy under the United States Bankruptcy Code. As part of the restructuring process, Denbury has entered into a Restructuring Support Agreement with its creditors to facilitate a comprehensive financial recapitalization. This agreement will help the company emerge from bankruptcy as a stronger and more competitive company.

Here`s what you need to know about the Denbury Restructuring Support Agreement:

What is the Restructuring Support Agreement?

The Restructuring Support Agreement is a legally binding document that outlines the terms of the financial restructuring of Denbury. It was entered into by Denbury and its creditors, including certain holders of the company`s Senior Secured Second Lien Notes, Senior Unsecured Notes, and other unsecured claims. The agreement provides a roadmap for the company`s financial restructuring and governs the rights of Denbury and its creditors.

What are the terms of the Restructuring Support Agreement?

Under the terms of the agreement, Denbury will eliminate approximately $2.1 billion in debt and interest expenses, significantly reducing its overall debt load. The company will also receive $615 million in new capital, consisting of a fully-committed $450 million in new first-lien exit financing and up to $165 million in a new preferred equity investment.

Additionally, the agreement establishes a new $450 million first-lien revolving credit facility, providing the company with additional liquidity to support its operations. Denbury will use the proceeds from the new capital to repay existing creditors, fund its ongoing operations, and invest in growth opportunities.

What does this mean for Denbury`s operations?

The Restructuring Support Agreement will allow Denbury to emerge from bankruptcy with a significantly stronger balance sheet and more financial flexibility. The company will be better positioned to weather the current industry downturn and take advantage of growth opportunities when market conditions improve. Denbury`s core operations are expected to continue uninterrupted during the restructuring process, and the company`s customers, vendors, and other stakeholders will not be impacted.

What is the timeline for the restructuring process?

Denbury expects to file its plan of reorganization and disclosure statement with the bankruptcy court in the coming weeks, with the goal of emerging from Chapter 11 by the end of the first quarter of 2021. The company has received approval for its “first day motions,” which will allow it to continue to operate its business as usual during the restructuring process.

In conclusion, the Denbury Restructuring Support Agreement represents a significant step forward for the company, providing it with a path to a stronger, more sustainable financial future. While the restructuring process may cause some disruption in the short-term, Denbury`s long-term prospects are promising. As the company emerges from Chapter 11, it will be better equipped to navigate the current industry downturn and capitalize on future growth opportunities.

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