Monday, December 10, 2012

"GMX Resources Announces Execution of Supplemental Indenture and Closing of Private Placement" ($GMXR)

Press release out this morning:

GMX RESOURCES INC today announced that the Company entered into a supplemental indenture to the indenture (the "Indenture") governing Company's Senior Secured Notes due 2017 to authorize and permit the issuance of a new series of senior secured notes due 2017 under the Indenture (the "New Notes").

On December 7, 2012, following the execution of the Supplemental Indenture, the Company entered into purchase agreements with each of the committed holders who previously executed commitment agreements with the Company with respect to financing commitments by the Committed Holders. The Purchase Agreements effected the Company's private placements, with a closing on December 7, 2012, of (i) an aggregate of $30,000,000 aggregate principal amount of the New Notes for net proceeds (after original issue discount) of approximately $27.1 million, and (ii) an aggregate of 5,942,034 shares of Common Stock at a price of $0.48 per share, and an aggregate of 10,037,219 additional shares of Common Stock at a price of $0.01 per share, as partial consideration for the prior financing commitments of such purchasers. The Private Placements resulted in net cash proceeds to the Company on the closing date (before expenses and cash commitment fees previously paid after the commitments) of approximately $30.1 million. The cash proceeds from the Private Placements will be used to repay, redeem, repurchase or otherwise acquire or retire for value the Company's 5.00% Senior Convertible Notes due 2013 outstanding on the date of issuance of the New Notes at or prior to their stated maturity date.

The New Notes mature in December 2017. The New Notes accrue cash interest at 11.0% per annum (or, at the Company's option, 15.0% payment in kind in additional New Notes). The New Notes will rank pari passu in right of payment with the Existing Notes. The guarantees by each guarantor of the New Notes will rank pari passu in right of payment with the guarantee by such guarantor of the Existing Notes. The Company's obligations under the New Notes will be secured by liens on the same collateral securing the Existing Notes, which liens will rank pari passu with the liens securing Company's obligations under the Existing Notes. Additional terms of the New Notes will be included in a Form 8-K filed by the Company in connection with the transaction.
Can't wait to see the actual 8-K with details.

As I said before, the 15.979 million new shares of stock were essentially given away for free. How long until they hit the market? Why wouldn't the holders dump them and go higher up in the capital structure?

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