Thursday, April 26, 2012

GMX Resources (GMXR) Does Another Stock for Debt Swap

The company announced this morning,

"as consideration for the surrender by the holders of $4,700,000 aggregate principal amount of the 2013 Convertible Notes, GMXR will issue to the holders an aggregate of 2,714,084 shares of GMXR common stock"
Good for the long bonds/short stock trade. This is a one-day, 3.9% increase in shares outstanding. Reduces unsecured debt by 3.2%, thereby helping recoveries for remaining unsecureds.

The shares were worth $3.75 million at today's price, so the tendering bondholders received roughly 80 cents on the dollar for their bonds. To get rid of the rest of the 2013 maturity, assuming that the stock price would not decline after more new issuance (which it probably would), would require issuing 32 million new shares at this rate, or a almost 50% increase in shares outstanding.

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