The amendment expands the amount of junior lien debt the company may incur. It became effective upon execution, while other provisions will become effective simultaneously with the closing of a private offering of $400 million of the company’s new senior secured second lien notes due 2024.
The amendment, among other things, extends the maturity date of the credit facility by two years, to December 2021, and increases the amount of junior lien debt that the company may have outstanding by $450 million, to an aggregate total amount of $1.65 billion.
The size of the bank group has been streamlined to 14 banks and the aggregate commitment by the banks has been reduced from $1.05 billion to $615 million, which is more than offset by the $450 million increase in junior lien debt capacity. Combined with the existing junior lien debt capacity, Denbury has approximately $580 million of aggregate junior lien debt capacity under the amended facility.
Denbury will additionally be required to pay down its outstanding borrowings under the facility by not less than $350 million and maintain a consolidated total debt to consolidated EBITDAX ratio not to exceed 5.25 to 1.0 through December 31, 2020, and 4.5 to 1.0 thereafter through the facility’s maturity date.
Mark Allen, Denbury’s executive vice president and CFO, commented, “We are very pleased with the amendment and extension of our bank credit facility, and we believe these actions, combined with the closing of the private offering of new second lien notes announced and commenced today, will provide Denbury with essentially the same level of liquidity. We also feel very good about the right-sizing of our bank group, which now consists of 14 top-tier energy banks. We greatly appreciate the support we have received from these banks over the years, and we look forward to continuing our strong relationship with each of them.”
Denbury is an independent oil and natural gas company with operations focused on the Gulf Coast and Rocky Mountain regions.