Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Bankruptcy newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (July 29, 2020, 11:24 AM EDT) -- Oil and gas company Denbury Resources said Wednesday it will seek Chapter 11 protection with an agreement with creditors in hand to slash $2.1 billion in debt, citing long-term debt and the pandemic's impact on energy demand.
Denbury Resources Inc. said it plans to file its petition in the Southern District of Texas by Thursday. The company has inked a restructuring support agreement with creditors holding all of its revolving credit facility loans, roughly two-thirds of its second-lien notes and over 70% of convertible notes, according to the announcement. The pre-packaged deal would eliminate $2.1 billion in bond debt, the announcement said.
Denbury is an oil and natural gas company with operations in the Gulf Coast and Rocky Mountain regions. Its strategy focuses on so-called CO2 enhanced oil recovery, which aims to reduce carbon dioxide emissions associated with oil production.
The combination of long-term debt and the pandemic-induced plunge in energy demand forced the company into Chapter 11, President and CEO Chris Kendall said in a statement.
"Recently our entire industry has been highly impacted by the global oil demand destruction caused by the COVID-19 pandemic, driving record low oil prices and rapid changes in energy market conditions," Kendall said.
The company worked to preserve cash by cutting spending and administrative costs, but it wasn't enough to stave off a restructuring, the statement said.
"It became apparent that a comprehensive financial restructuring would be necessary to address our legacy debt burden and create a clear path forward for the company," Kendall said.
Denbury said it expects to continue normal operations during the Chapter 11 process. Under the terms of the restructuring support agreement, Denbury's existing lenders will provide a revolving loan, which, alongside Denbury's cash flow, should sustain the business during the court proceedings, the announcement said.
Denbury said it will request a court hearing to confirm its plan on Sept. 3.
Denbury is represented by Joshua A. Sussberg, Christopher J. Marcus and Rebecca Blake Chaikin of Kirkland & Ellis LLP.
Evercore Inc. is acting as financial adviser and Alvarez & Marsal is serving as restructuring adviser.
J.P. Morgan is acting as administrative agent for certain of Denbury's credit facilities. The financial institution is represented by a Vinson & Elkins LLP team led by partners Erec Winandy and Bill Wallander and including partners Paul Heath and Tzvi Werzberger; senior associates Rafael Alvarado and Matt Pyeatt; counsel Farah Paliwala; and associates Alex Moosariparambil, Matt Struble and Trevor Spears.
--Editing by Alyssa Miller.
Update: This story has been updated with more details and with counsel information.
For a reprint of this article, please contact reprints@law360.com.
