Denbury Resources Inc. sweetened the terms of a proposed debt exchange after bondholders pushed back against the company’s original offer, designed to cut its debt load.
The oil producer is asking investors in its subordinated debt to swap some of their holdings for new unsecured bonds. It amended a covenant to now treat the exchanged notes as equal in standing to any junior-lien debt the company may incur in the future, according to a Tuesday statement from the Plano, Texas-based company.
Investors had been concerned that the deal would have required them to accept losses while giving them little in return. The new terms fix a flaw in the proposal, but several other loopholes remain, including no restrictions on adding new first-lien debt, according to Scott Josefsberg, an analyst at Covenant Review.
Denbury is attempting to rein in its $2.85 billion of debt by getting investors to lock in losses on their holdings by carrying out this exchange.
The oil producer, which had promised 65 cents on the dollar for investors willing to agree to the deal by Jan. 7, extended that deadline to Jan. 20. The company hasn’t said how many holders have tendered their securities so far.
Denbury produces crude by scavenging the bottoms of decades-old fields for reserves left behind by previous explorers. It uses carbon dioxide to force the stubborn remnants of oil out of the rocks.