Each one in plain English, with the numbers worked through for a shareholder.
22 Mar 2019business combination● NeutralMajor
Denbury and Penn Virginia mutually terminated their 28 Oct 2018 merger agreement on 21 March 2019 and released each other from claims. Denbury's CEO cited difficult market conditions since announcement and opposition from some Penn Virginia shareholders making the required super-majority approval unlikely. The 17 April Denbury stockholder meeting will not happen and neither side owes the other a payment, so the share dilution tied to the deal (up to 191.8m shares) and the authorised share increase will not occur. Management said it expects well over $100 million of free cash flow in 2019 at current oil prices (a forward-looking statement).
Denbury and Penn Virginia announced that Penn Virginia record holders must make their choice of merger consideration (cash, shares, or the mixed option) by 5:00 p.m. Eastern on 16 April 2019. This is a procedural step in the pending Penn Virginia deal and adds no new terms. (Superseded days later by the termination of the deal.)
Denbury set a special stockholder meeting for 17 April 2019 (record date 19 Feb 2019) to vote on issuing shares to Penn Virginia holders and on raising authorised shares from 600,000,000 to 984,000,000. The definitive joint proxy was filed and mailing began on or about 4 March 2019, following the S-4 becoming effective on 4 Feb 2019. This resolves the earlier open question of meeting dates; the vote was still pending at this point.
SailingStone Capital Partners LLC, SailingStone Holdings LLC, MacKenzie B. Davis, Kenneth L. Settles Jr reported no remaining DENBURY INC shareholding in its periodic institutional filing.
Denbury filed Amendment No. 1 to its S-4 for the Penn Virginia merger. The deal terms are unchanged ($25.86 cash plus 12.4 shares, $79.80 cash, or 18.3454 shares per Penn Virginia share; cash prorated to $400 million), and the registered maximum remains 191,784,216 shares. Meeting dates are still blank, so shareholder votes have not yet been scheduled in this filing. The visible text shows only an updated fee calculation using a Penn Virginia price of $54.25 (fee $101,694 versus $104,177 originally paid); the rest of the amendment was truncated.
The U.S. Federal Trade Commission granted early termination of the antitrust (Hart-Scott-Rodino) waiting period for the Penn Virginia acquisition on 27 Dec 2018, clearing one of the merger conditions. Denbury now expects completion in the first quarter of 2019, still subject to both companies' shareholder approvals and other customary conditions.
Denbury filed the S-4 registration statement for the Penn Virginia merger, registering up to 191,784,216 new Denbury shares, based on 15,466,469 Penn Virginia shares at the 12.4 exchange ratio. Terms match the 28 Oct deal: $25.86 cash plus 12.4 shares, or $79.80 cash, or 18.3454 shares per Penn Virginia share, with total cash prorated to $400 million. Meeting dates are blank; Denbury holders will vote on the share issuance and an increase in authorised shares, and both boards unanimously recommend the deal. For Denbury shareholders, this puts a ceiling on dilution at that share count.
Denbury posted an updated investor presentation titled "Transformational Combination of Denbury & Penn Virginia" for investor meetings on 13-15 Nov 2018. The 8-K text itself adds no new deal terms; it restates the 28 Oct 2018 merger agreement and that an S-4/joint proxy will be filed and shareholder votes are required.
Denbury posted an investor presentation for its third quarter 2018 call, which also updated investors on the Penn Virginia merger agreed on 28 Oct 2018. The filing text itself contains no new deal terms beyond restating that Denbury and Penn Virginia will file an S-4/joint proxy and that shareholder votes are required; the presentation's mentions of Eagle Ford enhanced oil recovery potential are described only as forward-looking.
On 28 Oct 2018 Denbury agreed to acquire Penn Virginia Corporation by merger. Each Penn Virginia share can be exchanged for $25.86 cash plus 12.4 Denbury shares, or $79.80 cash, or 18.3454 Denbury shares, with total cash capped at $400 million via proration. Closing needs approval from both companies' shareholders (including Denbury holders approving the share issuance and an increase in authorised shares), antitrust clearance and an effective S-4, and the deal can be ended if it has not closed by 30 April 2019; a $45 million break fee applies in specified cases for either side. Two Penn Virginia directors would join Denbury's board. For Denbury shareholders this means new share issuance (dilution) and a new asset base, a new thread beyond the debt refinancing.
Denbury closed the second lien notes offering on 21 Aug 2018, issuing $450 million of 7½% Senior Secured Second Lien Notes due Feb 2024 (upsized from the $400 million launched on 14 Aug). The press release says the proceeds repaid all outstanding bank credit facility borrowings and covered fees, with the remainder for general corporate purposes. The new notes rank equally with the existing 2021 and 2022 second lien notes, sit behind the bank facility, and restrict dividends and buybacks. This completes the refinancing launched on 14 Aug and so triggers the amended bank terms (inference: the filing says those take effect on receipt of proceeds).
Denbury amended its bank credit agreement (Sixth Amendment, 13 Aug 2018) to raise the cap on junior-lien debt from $1.2 billion to $1.65 billion, with $1.07 billion currently outstanding, and launched a $400 million offering of new second lien notes due 2024. Once the offering closes, the bank facility's maturity moves to December 2021 (earlier, Feb-Aug 2021, if the 2021 second lien or 6⅜% subordinated notes are not repaid or refinanced), at least $350 million of bank borrowings must be repaid, the borrowing base falls from $1.05 billion to $615 million, and a new total debt/EBITDAX limit of 5.25x applies through 2020 (4.5x after). The company says proceeds will repay substantially all bank borrowings ($410 million at 31 July 2018). This continues the debt reshuffling since the Dec 2017/Jan 2018 exchanges.
