Like many others in the oil and gas patch, the Plano, Texas, company has been decimated by the drop in oil and gas prices during the coronavirus pandemic.
The company has agreed with creditors holding all of its revolving-credit-facility loans, about 67.2% of second lien notes and about 70.8% of convertible notes on a plan that will erase its $2.1 billion of bond debt.
Denbury expects to file its bankruptcy petition in U.S. Bankruptcy Court for the Southern District of Texas by Thursday.
It plans to continue normal operations throughout the bankruptcy process. Its lenders will provide a debtor-in-possession revolving loan that will roll into an exit facility with up to $615 million available.
Denbury will continue to evaluate the operating environment and adjust as necessary to the impact of covid-19, OPEC+ actions and other factors that affect its business, the company said in a statement.
In light of the pandemic, “we have taken multiple proactive steps at Denbury to preserve liquidity, including by reducing our capital spending and general and administrative costs and optimizing operations,” Denbury Chief Executive Chris Kendall said in a statement.
“However, even after taking these steps, 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.”
Denbury said it would ask the court's permission "to pay suppliers in full under normal terms for goods and services provided on or after the filing date. Under terms of the prepackaged plan, which is subject to court approval, general unsecured prepetition claims will also be paid in full in the ordinary course."
The bankruptcy should “position Denbury for a strong future,” the CEO said.