GMX RESOURCES INC.,
GMXR; an oil and gas exploration and production company with assets in
the Williston Basin, East Texas Basin and Denver Julesburg ("DJ") Basin
announced today that it has filed a voluntary petition for reorganization
under Chapter 11 in the U.S. Bankruptcy Court (the "Bankruptcy Court") for the
Western District of Oklahoma. In connection with this petition, GMXR is
pursuing an asset purchase agreement with holders of its Senior Secured Notes
due 2017 who own a majority of these secured notes (collectively referred to
below as the "Principal Senior Secured Noteholders") to acquire substantially
all of the Company's operating assets and undeveloped acreage. The Company's
joint venture, Endeavor Gathering LLC, in which the Company owns a 60%
membership interest, is not included in the filing.
Upon finalizing the contemplated asset purchase agreement with the Principal
Senior Secured Noteholders, the sale will then be subject to a public auction
and receipt of competing, and potentially higher and better offers, pursuant
to procedures to be approved by the Bankruptcy Court.
Over the past year, the Company implemented various strategic initiatives to
increase oil production, improve supply chain and production efficiencies, and
reduce costs to increase cash flow. While these operating initiatives resulted
in some success, natural gas commodity prices have remained low, and the
Company's oil and gas operations require ongoing additional capital
expenditures. To meet these financial requirements, the Company has actively
sought financing alternatives to solve its liquidity needs. The Company has
been unsuccessful in finding any viable funding solution to meet its long-term
liquidity needs. Based on discussions with the Company's various creditor
groups and advice from the Company advisors, the Company believes that the
rights and protections afforded under a court-supervised reorganization
process, including access to financing and a proposed sale of the Company
assets, will provide the Company the ability to meet its immediate financial
needs to preserve the value of assets and to provide for the greatest recovery
to its stakeholders.
The Company has obtained a commitment for debtor-in-possession (DIP) financing
from the Principal Senior Secured Noteholders, which will provide up to $50
million of additional financing to fund the Company's operating expenses. Upon
approval by the Bankruptcy Court, the new financing and cash generated from
the Company's ongoing operations will be used to support its business and the
Company's efforts to negotiate and implement a sale of its assets.
As is customary in cases such as this, the Company has filed various "first
day" motions with the Bankruptcy Court seeking authority from the Bankruptcy
Court that will enable it to continue business operations without
interruption. The requests include authority to honor royalty obligations, pay
salaries and provide benefits to employees, and pay ongoing undisputed
obligations to vendors and suppliers, and to approve the DIP financing.
The Company has notified the New York Stock Exchange (NYSE) of its Chapter 11
filing and as is customary, GMXR anticipates delisting procedures to begin
which the Company will not contest. Additional information regarding GMXR's
Chapter 11 proceedings can be found at http://dm.epiq11.com/GMX or by calling
877-854-0023 (within U.S.) or +1-503-597-7711 (outside U.S.)
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