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GMX Resources Inc. Message Board

  • hamradio73s hamradio73s Apr 19, 2013 3:52 PM Flag

    Step by step analysis

    Ok I've done this several times before on this board, but let me do it again starting from the top. And someone please correct me or add to this discussion.
    1) GSO/Bk/Chatham hold the Secured Notes
    2) GSO/Bk/Chatham hold 87+% common and thus influence the BK "Plan" and lacerative DIP.
    3) GSO/Bk/Chatham loans DIP money.
    4) GSO/Bk/Chatham purchase all the assets (for amount sufficient to cover DIP and Secured Notes).
    5) GMXR pays back to GSO/Bk/Chatham the DIP and Secured Notes.
    6) At this point GSO/Bk/Chatham recovers their Secured Note money and makes ~35% on the DIP loan, and owns VERY valuable assets.
    7) GMXR is now still a corporation, trading on the pink sheets, with no assets, and no work for their employees, with $51M preferred outstanding per terms of their SEC filed perspective, with unsecured creditors, and with lots of common mostly owned by GSO/Bk/Chatham . So her is where it starts to get confusing........ and I must deviate from the step by step because there are many forks in the road going forward. GSO/Bk/Chatham could see little value left in their common and liquidate/wind-down or Ch-7 the GMXR corporation, especially if they sell off the VERY valuable assets to others. GSO/Bk/Chatham however could possibly see more value in the assets if kept operational and want GMXR (now as a service company) to keep them running. Furthermore from an environmental and royalty owner liability perspective GSO/Bk/Chatham could not let all those active wells run uncontrolled and would need GMXR to keep things running with a possible slower sell off of assets later. Now enter the possibility of a higher bid at Public Auction, GMXR would still be incorporated and have no work for their employees. Here again I see GMXR needed to control the wells during any transition, but with GSO/Bk/Chatham now only being as a controlling shareholder. It's like having airplanes in the air while trying to sell them.

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    • Chapter 11 restructure.
      chapter 7 sell assets & orderly payoff debt.
      currently Gmxr has moved to complete step 3.

      step 4 states debtors only have a priority. not ownership. (Gmxr owns all assets and contiues operations
      as best interest of all stakeholders with consent from superpiority debt holder approved by the court.)
      so from this point forward only one of two events will occur-

      1.) A full supportive restructure of debt by note holders for the sole purpose of GMXR to re-emerge from chap 11.& to relist on NYSE exchange.

      2.)A realization that assets must be sold Gmxr moves to public auction Chapter 7 dismantles assets to orderly pay all debts, contracts & common holders.

      what i have no ideal of is how assets can be removed from GMXR without having to go thru public auction.
      which forces chapter 7 would it not?

      I understand that since gso/blkstone/chatham are lead debtors they have the ability to offer DIP.
      but that does not give them the assets it allows them to hold a $ amount for the ownership.
      If chap11 does not suceed in restructure to re-emerge then chapter 11 disolves & ch7 begins and the Public auction overseen by the court trys to ensure a fair market value has been acheived to close chapter 7.

      If i have this wrong please correct my misunderstanding this is my first bk with an equity.

      Sentiment: Hold