GMX RESOURCES INC., Endeavor Pipeline Inc. and Diamond Blue Drilling Co. Seek Protection Through Chapter 11 Bankruptcy Filings
April 01 2013 - 9:25AM
Pursuing Asset Purchase Agreement with Senior Secured
Noteholders
Company Secures Financing to Fund Operations During
Proceedings
GMX RESOURCES INC., (NYSE: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.)
The Company's financial advisors on the restructuring are
Jefferies LLC, and its legal advisors are Andrews Kurth LLP.
GMXR is an exploration and production
company. The company is currently developing its Bakken and
Three Forks oil shale resources located in the Williston Basin,
North Dakota. GMXR's large natural gas resources are located in the
East Texas Basin, primarily in the Haynesville/Bossier gas shale
and the Cotton Valley Sand Formation; where the majority of GMXR's
acreage is contiguous, with infrastructure in place and
substantially all held by production.
This press release includes certain statements that may be
deemed to be "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements,
other than statements of historical facts, included in this press
release that address activities, events or developments that GMXR
expects, believes or anticipates will or may occur in the future
are forward-looking statements. These statements include
management's expectations and desire to address GMXR's financial
challenges, preserve the value of assets and address important
issues in an orderly way. These statements are based on certain
assumptions and analysis made by GMXR in light of its experience
and perception of historical trends, current conditions, expected
future developments, and other factors it believes appropriate in
the circumstances, including the assumption that there will be no
material change in the operating environment for GMXR's
properties. Such statements are subject to a number of risks,
including but not limited to: (i) the ability of GMXR to obtain
Bankruptcy Court approval with respect to motions in the Chapter 11
case; (ii) the ability of GMXR to prosecute, develop and consummate
the contemplated sale of its assets; (iii) the effects of the
bankruptcy filing on GMXR and interests of various creditors,
equity holders and other stakeholders; (iv) the effects of the
bankruptcy filing on GMXR's liquidity or results of operations; (v)
Bankruptcy Court rulings in the Chapter 11 cases and the general
outcome of the cases; (vi) the length of time GMXR and its
subsidiaries will operate under the Chapter 11 cases, and the
length of time of its asset sale process; (vii) risks associated
with potential third-party motions in the Chapter 11 cases, which
may interfere with GMXR's ability to achieve its Chapter 11 goals;
(viii) GMXR's ability to execute its business or restructuring
plans; (ix) increased costs related to GMXR's bankruptcy filing and
other litigation; and (x) the ability of GMXR to maintain contracts
that are critical to its operation, including to obtain and
maintain normal terms with its vendors, customers, landlords and
service providers, and to retain key officers and
employees. In the event that the risks discussed above and
disclosed in GMXR's public filings cause results to differ
materially from those expressed in GMXR's forward-looking
statements, GMXR's business, financial condition, results of
operations or liquidity, and the interests of creditors, equity
holders and other constituents, could be materially adversely
affected. GMXR undertakes no obligation (and expressly
disclaims any such obligation) to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. For additional information concerning
factors that could cause actual results to materially differ from
those projected herein, please refer to GMXR's reports filed with
the Securities and Exchange Commission on Form 10-K and 10-Q.
CONTACT: Jennifer E. Mercer
Epiq Strategic Communications for GMX Resources
310-712-6215
jmercer@epiqsystems.com
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