In a noteworthy capital markets transaction, law firm BakerHostetler has advised CO2 enhanced oil recovery leader Denbury Resources in a $1.2 billion debt offering. The 10 ½ -year, senior subordinated notes were priced to yield 4.625 – according to the underwriters, that represents the lowest yield on record for a non-investment grade subordinated notes offering. The sale is expected to close on February 5.
Denbury announced that the proceeds are being used to fund repurchases of two series of outstanding senior notes due in 2016, carrying interest rates of 9.5% and 9.75%. Remaining proceeds will go toward repayment of current borrowings on its bank credit facility and then for general corporate purposes. Denbury increased the size of the offering by $200 million due to investor demand.
Joint book running managers for the offering were BofA Merrill Lynch, J.P. Morgan, Credit Suisse, Wells Fargo Securities, Credit Agricole Securities, and RBC Capital Markets. The underwriter group was advised by law firm Simpson Thacher.
BakerHostetler securities partner Donald Brodsky led the deal team advising Denbury. “Investor demand is white hot right now for high-yield in the energy sector and we are thrilled about these fabulous offering results for our client Denbury and loved helping this deal come together. Denbury has a unique strategy that is focused on CO2 enhanced oil recovery in two key oil regions of the country, the Rocky Mountains and Gulf Coast. This is just a terrific transaction for our capital markets group.”
Mr. Brodsky has represented Denbury Resources for nearly 18 years on corporate and securities matters – including its 2010 acquisition of Encore Acquisition Company, a transaction valued at approximately $4.5 billion.
In addition to Mr. Brodsky, the BakerHostetler team included Houstonians Judy Gechman, Morgan Hotzel, Gary Alletag and Brittany Sakowitz, Cleveland securities lawyers Robert Weible, John Harrington and Pete Van Euwen, and tax partner Michelle Hervey and New York corporate partner Larry Markowitz.
