GMX RESOURCES INC. Announces Entry Into Plan Support Agreement
October 03 2013 - 10:34AM
GMX RESOURCES INC., (OTC Markets:GMXRQ)
("GMXR" or the "Company") is an oil and gas
exploration and production Company with assets in the Williston
Basin, Denver Julesburg ("DJ") Basin and East Texas Basin.
As previously reported, on April 1, 2013, the Company filed a
voluntary petition (In re: GMX Resources Inc., Debtor, Case No.
13-11456) for reorganization under chapter 11 of title 11 of the
U.S. Code (the "Bankruptcy Code") in the Bankruptcy Court for the
Western District of Oklahoma (the "Bankruptcy Court"). Two of the
Company's subsidiaries, Diamond Blue Drilling Co. and Endeavor
Pipeline Inc. (collectively with the Company, the "Debtors"), also
filed related petitions with the Bankruptcy Court (Case Nos.
13-11457 and 13-11458, respectively). The Company's petition and
its subsidiaries' petitions are referred to herein collectively as
the "Bankruptcy Case."
Plan Support Agreement
The Company announces that, subject to approval by the
Bankruptcy Court, it has entered into a Plan Support Agreement (the
"Plan Support Agreement"), dated as of September 30, 2013, among
the Debtors, certain of the holders of the Company's Senior Secured
Notes Series A due 2017 and Senior Secured Notes Series B due 2017
(the "Senior Secured Notes") party thereto (the "Consenting Senior
Secured Noteholders"), and the Official Committee of Unsecured
Creditors (the "Creditors' Committee"). The Plan Support Agreement
requires the Consenting Holders to vote in favor of and support a
proposed plan of reorganization of the Company and its subsidiaries
consistent with the terms and conditions set forth in the term
sheet attached as an exhibit to the Plan Support Agreement. On
October 2, 2013, the Company filed a Motion to Approve the Plan
Support Agreement with the Bankruptcy Court seeking authority to
enter into the Plan Support Agreement. A hearing on such
motion is scheduled for October 29, 2013 at 9:30 a.m. before the
Bankruptcy Court.
Under the plan of reorganization contemplated by the Plan
Support Agreement, the current debtor-in-possession financing
facility will be extended so that the Company may continue
operating in Chapter 11 as it seeks confirmation of the proposed
plan or reorganization. Further, in exchange for the secured
portion of their claims in the approximate amount of $338 million,
the holders of the Senior Secured Notes would receive 100% of the
equity in the reorganized Company upon its emergence from
bankruptcy and/or equity in an affiliate of the reorganized
GMXR. Holders of the Company's Senior Secured Second-Priority
Notes due 2018 shall be treated as general unsecured
creditors. Under the proposed plan of reorganization, if the
general unsecured creditors' class votes to accept the plan or
reorganization, holders of allowed general unsecured claims would
receive interests in a trust (the "Litigation Trust") funded with
(i) $1.5 million in cash; and (ii) the Debtors' potential causes of
action listed on Schedule A to the Restructuring Term
Sheet. Further, if the class of holders of general unsecured
claims vote to accept the plan or reorganization, the holders of
Senior Secured Notes will waive recovery on their unsecured
deficiency claim. If the class of holders of general unsecured
claims does not vote to accept the plan of reorganization, the $1.5
million in cash will not be funded in the Litigation Trust and, the
holders of Senior Secured Notes and debtor in possession lenders
will participate in recovery from the Litigation Trust on account
of their DIP loan claims, superpriority adequate protection claims
and deficiency claim. Any equity interest in the Company, of
any kind, existing prior to the consummation of the restructuring
will be cancelled under the terms of the plan of
reorganization.
The Consenting Senior Secured Noteholders may terminate the Plan
Support Agreement under certain circumstances, including, but not
limited to, if (i) the Debtors breach any of their undertakings,
representations, warranties or covenants under the Plan Support
Agreement which remains uncured, (ii) any ruling or order enjoining
the consummation of a material portion of the plan, (iii) the
Debtors lose the exclusive right to file and solicit acceptance of
a chapter 11 plan, (iv) an examiner with expanded powers is
appointed in the Debtors' cases, a chapter 11 trustee is appointed
in the Debtors' cases, or the Debtors' cases shall have been
converted into a chapter 7 case or cases, (v) the Debtors or the
Creditors' Committee file any motion or pleading materially
inconsistent with the Plan Support Agreement, which is not
withdrawn, (vi) the Bankruptcy Court grants relief that is
materially inconsistent with the Plan Support Agreement, (vii) the
Bankruptcy Court grants relief terminating, annulling or modifying
the automatic stay with regard to any material assets of the
Debtors, (viii) the Debtors fail to file the plan of reorganization
and disclosure statement with the Bankruptcy Court within 10
business days of the execution of the Plan Support Agreement, (ix)
the disclosure statement is not approved within 50 days of the
execution of the Plan Support Agreement, (x) if the plan of
reorganization shall not have been approved within 95 days of the
execution of the Plan Support Agreement or (xi) if all of the
transactions contemplated by the Plan Support Agreement have not
been consummated within 120 days of the execution of the Plan
Support Agreement.
The plan of reorganization is subject to confirmation by the
Bankruptcy Court. The Company expects the Bankruptcy court to enter
a ruling on confirmation of the plan of reorganization prior to
January 15, 2014. Upon the effective date of the plan of
reorganization, reorganized GMXR will be a private company.
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 the proposed plan of reorganization
contemplated by the Plan Support Agreement or other motions in the
Chapter 11 case; (ii) the ability of GMXR to consummate the
proposed plan of reorganization contemplated by the Plan Support
Agreement; (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; (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: Lauren Stone
Investor Relations Coordinator
405.254.5887