I have for the past 10 years followed the drilling and initial production numbers almost daily on the NDIC web site. GMXR was the rising star that caught my attention and where I decided to invest. Unfortunately, I bought a boat-load of both Common and Preferred one month pre BK. After BK, I bought another 1,000 shares of GMXPQ(Preferred) at 80 cents and thinking about another 1,000 GMXPQ(Pref) at about 40 cents tomorrow. The following is my thinking, offered for your critical eye.
Suppose...... The note holding creditors offer GMXR an amount for ALL the assets of the company for an amount sufficient to cover, 1) the remaining debt owed, 2) plus the DIP financing, 3) plus some extra to cover the unsecured creditors, 4) plus 51M to "call" all the Preferred at $25........ then thereafter GMXR turns around and pays off all the 1),2),3),4) above, GMXR would essentially be debt free and could emerge from Ch-11. But what would emerge? Read on...
GMXR would still have Common shareholders, but with very little equity. These shareholders include ~87% who were the original note holding creditors. This 87% group would realize a significant loss on their investment, but would be more than compensated by the undervalued assets.
Going forward the value of the GMXR Common could appreciate if the company finds something to do with their employees such as service their old assets now belonging to the original note holders. With the SC13D disclosed possible change in control I can envision many variations. If the original note holders re-sell the assets to Big Oil, they may cut GMXR loose to do a Ch-7 or go back into business as a smaller company.
If Big Oil outbids in the auction, the original note holders with ~87% Common will do well (along with other holders) by the amount of additional equity GMXR gains. But again GMXR needs to find something to do.
Take a good look at (SARA )
GSO/BLACKSTONE is a major direct owner the managment is still intact the board is strengthen
the debt is controlled. the equity was preserved for the long term value of the assets of the company.
I see no reason why this would be any differnt for GMXR.
Gso BLKStne has a past working model to bring Gmxr out of CHap11 intact with gso having a 10% or greater
major holder of the company.
GSO/BLK knows the long term value of the E&P assests. and it seems in fact are building a specfic
investment for clients fund base upon expected long term asset value returns of E&P Holdings. This would be staggering.
go to yahoo look up SaRA and click on links to
key statical data
it is quite clear why we are in chap11 & with whom is strengthening to the equity. the common.
smart_bidder, Sounds very logical but..........................
Why are the Commons and Preferred trading so low, if this is such a sure thing. It would seem that once the word got out, especially to those closest to insiders, the PPS would start bidding up. To me, the Commons would be much more difficult to value, but the Preferred seem to be a no-brainer. My thinking on the Preferred, if GMXR emerges from CH11, there is still a SEC obligation to pay 9.25% dividend or Call each share at $25. Buying Preferred now at 50 cents would yield 462% interest per year, whereas a $25 call would yield a 4,900% one time gain. Too good to be true?? Possibly those in the know are purchasing very small lots to escape notice and keep price low??? Or.... the big OR, could Ch-11 lower the rate and/or call price on the Preferred as part of the BK, or even eliminate them???