The total common on March 11 was 7.7M, on April 1 it became 31.3M. The dilution was 31.3/7.7 = 4, thus the pps dropped from $2.4 avg to $0.6 at April 1 open.
There must have been threats from external raiders in March, they had their eyes on the $400M+ assets market values. It would took them 5M shares x $2.4 = $12M to raid GMXR's assets. Thus a poison pill (23.5M commons) was issued (there were 160M ready-to-issue shelved commons) to the existing major common holders. I.E. GSO/Blackstone had 64% = 5M, Chantham had 19% = 1.4M, GMXR insiders and retailers had 0.8M shares on March 11.
The add'l 23.5M new shares could have been issued to GSO/SR 2017 holders & Chamtham as the purchase price of the assets, in exchange of revolving $50M (each pop) DIP loans payable on Oct 1. Now GMXR has NO assets for the external raiders to bite, instead, the internal "raiders" bought out the company's assets for amount $X. It was a two-birds by one-stone hit.
The best part of it is the $X purchase price in the form of 31.3M commons will be owed to the GMXR owners (the common holders, i.e. GSO/Chantham & insiders.) until the court approved year end auctions is done. GSO/others are both buyers and owners, while they also hold $324M secured 2017 notes and the DIP loans. The proceeds from the auctions will pay GSO/others (GMXR old owners) $X for the purchase (divi by 31.3M shares), then pay their debts of $324M + DIP. Thus $X is the minimun profit GSO/others are guaranteed in this pre-pack Chapt-11 deal. After these payments, i.e. $X, $324M secured debts & DIP, the other non-secured debts will be paid.
This is why a swarm of non-secured debt holders are organizing and send in their cases in court. Because they may get screwed if the auctions only brought in $X + $324M + DIP.
By the time the 2013 plan was completed, Bakken/3-Fork alone would worth $700M, plus other assets, the year end auction could bring in more than $700M. Then all deb
Joe your post was difficult to understand. On March 11 GSO/others already held 87% of the common and thus the controlling vote. I don't understand the "raid" being possible either way, pre or post the 4:1 dilution. Why were the additional shares given to GCO/others...... other than to dilute the value of small shareholders?
Ham, Yes. On March 11 GSO/Chamtham together had 87% of commons, total 7.7M shares. But there were 160M already approved to issue shelved commons which can be issued by the GMXR board anytime. At that time neither GSO nor Chamtham had any member on the board. An external raider could arrange a perivate offering with GMXR board and take over the veluable assets, say 10M commons in March.
That was why Chamtham and GSO both filed Form13D to increase their commons by more than 23M shares, at the March avg price, to BUY the assets from GMXR. The purchase price of $X will be paid to the GMXR assets owners of March, i.e. common holders GSO/CHamtham, GMXR board & retailers. This was then revealed in April 1 Chpt-11 filing, stopped all interest/divi payments and provided a DIP life line for operation.
After the GMXR board signed the asset purchase agreement, court approved the plan, continue the 2013 plan to turn more leases from potential to proven. At the end of year when the assets values rosen to $800M and more, then execute the auctions or emerge from Chpt-11.
In the case of GMXR emerge from Chpt-11, GSO/Chamtham's 31M shares of commons will worth more than $10 each, while their 2017 notes and DIP loans can collect hefty interests. They can appoint their men on the board and keep the old staff to operate the valuable assets. It's win-win for them.
In the case of auctions, if it brings in $700M, first pay the March GMXR owners (GSO/Chamtham, retailers & old GMXR insiders) the purchase price $X, then pay DIP, then pay 2017 secured notes, then use the leftover to pay non-secured debts, i.e. vendor bills, 2015, 2018, 2019 & pref. Again it's a win-win for GSO/Chamtham. On the April 1 filing it claimed the assets value at $281M (Dec 2012 basis), so I suspect the purchase price $X = $281M.
This pre-packed Chpt-11 is very unique and all for GSO/Chamtham & old GMXR insiders. That is why the swarm of non-secured debt holders are organizing and filing law