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GMX Resources Inc. Message Board

  • pwang82 pwang82 Mar 4, 2013 8:36 AM Flag

    Not really defaulting

    "The Company had the option to pay this interest payment in cash, in shares of common stock of the Company or in a combination of cash and shares of common stock. If we paid this interest payment entirely in cash, the aggregate amount of cash would be approximately $2.1 million. If we paid this interest payment entirely in shares of common stock, the aggregate fair market value of the shares would be approximately $2.8 million. Under the terms of the 2018 Notes Indenture, the failure to pay the interest payment does not constitute an Event of Default (as defined therein) unless the failure is ongoing for 30 days."

    This payment (a mere $2+ million) can easily be dealt with by paying in stock, which will add to market cap.

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    • To the average retail investor this looks like a terrible press release, especially since they mentioned default. Here is the deal, this forces GMX Resources management to finally sell all the assets or announce a Joint venture. Read the other press releases they talk about H&P Flex Rig drilling still and they announced plans for other wells. Again, do what you need to, but I see this terrible press release as a good thing and think they have to sell out, sell assets, joint venture or get Blackstone to give them credit so they can pay off all indebtness and then pay blackstone interest, albeit a hig interest but doable after drilling som oily wells in the Niobrara.

    • Under the terms of the 2018 Notes Indenture, the failure to pay the interest payment does not constitute an Event of
      Default (as defined therein) unless the failure is ongoing for 30 days. However, under Section 5.01 of the First Supplemental
      Indenture (the “2015 Notes Indenture”) dated October 28, 2009, between the Company and The Bank of New YorkMellon Trust
      Company, N.A., as trustee, governing the Company’s 4.50% Senior Convertible Notes due 2015 (the “2015 Notes”), any failure to
      pay the principal or interest on any indebtedness in excess of $10million in the aggregate of the Company when due and payable (at
      its stated maturity, upon required repurchase, upon declaration or otherwise) constitutes an Event of Default under the 2015 Notes
      Indenture. Under Section 5.02 of the 2015 Notes Indenture, if an Event of Default occurs and is continuing, then the trustee or
      holders of not less than 25% of the aggregate principal amount of the outstanding 2015 Notes may (and the trustee upon request of
      such holders shall) declare the principal plus any accrued and unpaid interest on the 2015 Notes to be immediately due and payable.
      We currently have approximately $48.3million of 2015 Notes outstanding.