Starting a new thread due to yahoo restrictions. Wist is making some rather long winded arguments about Blackstone's supposedly sinister reasons for buying equity in support of their debt position. Sorry Wist, but you are overlooking the more simpler and obvious explanations.
Blackstone doesn't want GMXR to go bankrupt Wist- contrary to your conspiracy theories. In fact the Blackstone equity investment reduced the chance of a GMXR bankruptcy. Pull up the chart in FINRA of the 2017 secured notes. They were trading near 82 in August and are now trading at 98. This price increase is not because the 2017 note holders want a bankruptcy and think they'd profit from it. This increase is because the Blackstone equity investment and other developments made a bankruptcy less likely. No sane investor wants a messy, expensive, unpredictable and lengthy bankruptcy process. That's why the debt is up.
Folks, just trying to inject a little bit of reality here as I'm getting tired of reading all these ridiculous conspiracy theory posts from Wist and it's about time someone posted a decent rebuttal.
Panick: I did not paint Blackstone's action as a conspiracy. What I have suggested is normal procedure on Wall Street and Kenny has been beholden to Wall Street for years. When the first round of Blackstone's debt was floated, GMXR paid off lower interest denominated debt to secure higher interest debt (brilliant). Blackstone's action on their loan may have staved off BK related to the 2013 notes but did not (IMO) reduce BK risk. You might want to look at the GMXR 2015 notes that are trading at 44.250 for a yield of 46% (thanks for the FINRA site). You should look up the word conspiracy in the dictionary and also explain to me why the discount on the 2015s is massive if bankruptcy is not a risk. Additionally, Blackstone essentially got stock for almost nothing. If you count the free restricted shares they blend out to a dollar cost under $.18/share. Essentially they gain an approximate 20% common holding for $2.8 million. That is a deal no one would pass up but in Blackstone's case it prevents an opposing party as a white knight. The loan terms for the "pari-pasu" was egregious. The discount was enough to pay for the all the new common they were gifted. Net net...GMXR gave up 20% of the company to get a #$%$ loan at an extremely high interest rate. If they were more solvent and had better management, that loan and give-aways would have never taken place. Hey, who knows...GMXR may be around five years from now, but IMO it is a flip of the coin whether they will have the same common share ownership.
Good discussion. Most of my GMXR stake is in the 2015 and 2018 notes. The 2015 notes have a wide bid / ask spread, but if you look at the graph in FINRA you'll see that in fact they have traded higher over the past few months. Since July the bid price has moved up from the low 30's to the low 40"s. I bought more 2015 notes after the Blackstone deal was announced and I view it as being favorable for the 2015 notes. Yes, the yield on the 2015 notes is still very high but not as high as it was before. Trading in the 2015's supports my argument that GMXR's bankruptcy risk is still high - but has dropped.
Your argument that preventing a possible default on the 2013's did not reduce bankruptcy risk is just nonsense. Yes there is still a major risk of failure. GMXR still needs to do another deal sometime in 2013 to raise more cash and to deliver on their drilling program. The Blackstone deal at least bought them another 9 months to try and execute on their drilling plan, get a rebound in nat gas prices or sell an asset.
Blackstone debt went up in price as a result of their actions That's the simplest explanation. Your convoluted explanation that Blackstone is trying to position themselves for a GMXR bankruptcy does fit a conspiracy theory. PLan "A: for Blackstone is that the company does well and they make money on the stock and debt. Plan "B" for them is that they force a sale of the company. Plan "C" is that GMXR goes bankrupt and they lose their equity investment, but salvage most of their debt investment. Yes, they have a plan "C" and I don't deny that. However, plan "C" is not plan "A" as you've been suggesting.
I do a newsletter focused on distressed debt and preferred stock issues and an covering the GMXR 2015 notes as a speculative pick. Added it as a pick right after the Blackstone deal in fact. Newsletter includes excel IRR models of many distressed issues. If anyone wants to preview a free copy, email me at my yahoo ID which is mrpanick.
Panick why Blacksone won't raise the stock price for better r/s? No news from GMXR on the well result with should have been out in mid Dec. This would be time 5 days left to r/s get good average price in .70-.80 JMHO
I don't think Blackstone controls the stock price or is that worried about the short term stock price. They are probably looking at the lease valuations net of debt. Here's a little math to backup my point. SInce August the 2017 notes are up from around 82 to 98. If memory serves me, Blackstone owns in the ballpark of 200 mil+ par value of the notes. By getting involved with the equity and the debt swap, they increased their debt market value by about 32 mil. Plus they also have a profit on the equity due to their low cost basis there.
No conspiracy theories are needed to explain Blackstone's involvement. Just look at the positive impact that their activism has had on the market price of the debt that they own.