So if interest payment was due on March 4th does that mean that the 30 day timeline is April 4th. If so i'm guessing we should get some news here, either this week or next. Any insight anyone...
One important caveat that I did not notice in the prospectus until i reread it: "Special Redemption upon Change of Ownership or Control: Following a “Change of Ownership or Control” of us by a person or entity other than by a “Qualifying Public Company,” we (or the acquiring entity) will be required to redeem the Series B Preferred Stock".
The next paragraph says: A Change of Ownership or Control of us by a Qualifying Public Company will not require a mandatory redemption of the Series B Preferred Stock, but such Qualifying Public Company will have the right for a period of 90 days after a Change of Ownership or Control to redeem the Series B Preferred Stock pursuant to the special redemption provisions listed above."
It appears that if a "Qualifying Public Company" takes a controlling interest, that company does not have to redeem the preferred shares. This would give GMX more leeway in striking a deal since a potential acquirer does not have to spend the $45 million to redeem the preferreds.
Even if someone were to acquire more shares, it wouldn't necessarily trigger a change of control. They would likely insist on having a seat on the board if their interest were large enough but a proxy vote would still have to take place before there could be a change of control. Someone could buy a large number of shares and leave the current management in place, which would also leave redemption of the preferred off the table.
The problem now is they can not file their financial reports until they raise funds one way or another because no accountant can sign off on the reports as being for a viable concern. There has to be money to continue operations for a respectable amount of time, or an accountant can not sign off as if it is a viable (ongoing, workable) concern. They would not be talking with note holders about lower interest rates, but possibly about changes in terms other than interest, such as controls over sales of assets or timelines, or conditions for late or missed payments.
I'm sorry don but you misread my post. I said that if a Qualifying Public Company (which I believe Blackstone is) takes a controlling interest, that company does NOT have to redeem the preferreds. Preferreds only have to be redeemed under a change of ownership or control by a person or group, but not a Qualifying Public Company. See page S-23 of the prospectus. In fact, the opposite of what you said is true: this provision could actually be a significant factor in GMX avoiding declaring BK.
Good post by Butterfly which illustrates why a pre-pack or conventional bankruptcy is likely. If Blackstone were to take much more equity in propping up the company, they would trigger a change of control and the company would be required to redeem the preferred. That provision doesn't apply in a pre-pack as the contract gets voided.
Ok, thanks for the clarification goblue. But the issue of redemption of the preferreds might be moot if a "Qualifying Public Company" takes a controlling interest in the company.
It's $79M to redeem the preferreds, not $45M. See below from most recent 10Q:
9.25% Series B Cumulative Preferred Stock, 6,000,000 shares authorized, 3,176,734 shares issued and outstanding as of September 30, 2012 and December 31, 2011 (aggregate liquidation preference $79,418 as of September 30, 2012 and December 31, 2011)
Yes something needs to happen and soon. My odds are pre-pack bankruptcy - 40%, conventional bankruptcy - 40%, they pay the interest in stock and delay things- 10%, some kind of deal to sell assets - 7% some kind of deal to sell debt and heavily dilute the common - 2%, buyout for whole company - 1%
Chances are very high that shareholders won't like the end result here IMO.
Yahoo won't let me post replies directly, but to slater - No I'm not short. I would have loved to short the preferred at 14, but unfortunately wasn't able to borrow the shares. Just following the company as a former bondholder and former long.
I do also feel a need to reply to posts from folks like slater who thinks the company is negotiating for lower interest rates. The 2015 notes have a 4.5% coupon. The 2018 notes can be paid in stock (no cash). The 2017 notes can be paid in kind by issueing more 2017 notes instead of cash. Those terms are already about as friendly as you can get for a cash strapped company like GMXR,
The problem is that there is no money for drilling. They need more cash and to do that some of the preferred, common and junior debt probably has to go away.
Oh, one other thing, the preferred has the potential of bouncing back to a much higher price than the common in the event the difficulties are worked out and if the company is bought out, then the preferred shareholders have to paid the par value plus the back interest. The common shareholders will get whatever the buyer feels the stock is worth and nothing more.
Don't be so fast to push for an immediate bankruptcy. There are still avenues open for renegotiating the debt or finding an angel to help out with the immediate cash flow difficulties the company is experiencing. The assets under the company's control are worth a lot more than the debt owed when extracted and nobody is going to just let that gas and oil sit untapped under the ground. Natural gas and oil are rising in price lately, so that can only help the negotiations. I'm rating this one a hold but I have to break it down as to common and preferred. I like the preferred better in this price range than the common because it is a bit more secure than the common in the worst case scenario and it pays interest so I put a buy on that but not a strong buy. I put a sell, but not a strong sell, on the common because of the risk of being completely wiped out in bankruptcy being greater than the preferred combined with the fact that the common generates no cash from holding it like the preferred.
Where do you come up with stuff shorty, no one here believes in your propaganda. They are simply getting a better deal on rates and Jefferies will help them with liquidity to get drilling back in order, now whether that is a asset sale or what it is still on going so you do not know $hit.Now go play in traffic.
I'm leaning against the pre-pak because I don't think the Kennies have what it takes to protect their personal interests in one. Pre-pak is more a tool for the original owners to come out with more to show for it.
just a few more days and the truth of our investment will be unfolded for all to see.
I very much have enjoyed this thread as there are very many smart & diligent post on such a single thread. what a great gathering of knowledge. ithank all for such insightful posts.
Sentiment: Strong Buy
They could be working both a deal with debt holders and an asset sale. But as far as an asset sale, they are not dealing from a position of strength. With the debt holders there is the hope of huge returns in the distant future or them getting stubborn and demanding a little right now.