Denbury to buy Encore for $3.2bn to create E&P giant.Byline: NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of : Denbury Resources has agreed to buy Encore Acquisition for $3.2 billion to create one of North America's largest oil production and exploration companies. Under the deal, Encore shareholders will get $50 per share, consisting of $15 in cash and $35 in Denbury common stock, the two companies said. Denbury also expects to sell off about $500 million in assets to pay down debt from its planned purchase of Encore The transaction, which represents a 35 per cent premium for Encore, is expected to close in the first quarter of next year. The companies value the total transaction at $4.5 billion. That number includes $1.3 billion in Encore's debt and about $400 million for a minority interest in Encore Energy Partners, Encore's chief financial officer Bob Reeves said in an email. Denbury plans to finance the deal with equity and debt, and has received a commitment letter from JPMorgan for a $1.6 billion bank revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility and $1.25 billion bridge financing Bridge Financing A method of financing, used by companies before their IPO, to obtain necessary cash for the maintenance of operations. Notes: These funds are usually supplied by the investment bank underwriting the new issue. . "We could see some weakness related to the premium Denbury paid to Encore shareholders and the equity requirement to fund the merger," RBC Capital Markets RBC Capital Markets is the corporate and investment banking division of Royal Bank of Canada ("RBC"). Broker dealers Depending on the jurisdiction, the division uses different broker dealer subsidiaries of RBC:
JPMorgan also advised Denbury. Barclays Capital advised Encore. "The combined companies have a unique blend of large oil fields with huge upside potential," said Encore chief executive Jonny Brumley in a statement. The combined company will continue to be known as Denbury Resources and will be headquartered in Plano, Texas. "We expect the new Denbury to have growth rates of 15 per cent over the next several years," RBC's Hanold said. Together, the companies will have over 500 million boe (barrels of oil equivalent) of additional potential barrels recoverable with CO2 tertiary operations. Copyright 2008 www.tradearabia.com Copyright 2009 Al Hilal Publishing & Marketing Group Provided by Syndigate.info an Albawaba.com company |
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