By Jennifer Chiou
New York, Nov. 3 - GMX Resources, Inc. entered into separately negotiated support agreements on Nov. 2 with holders making up roughly 50.1% of its 11 3/8% senior notes due 2019, according to an 8-K filing with the Securities and Exchange Commission.
The agreed-upon private exchange offer is conditioned on consents from holders of a majority of the notes.
Under the agreements, those holders have said that they would, among other things, complete the following:
• Tender their notes in exchange for either (a) $750 of new 11% senior secured notes due December 2017 or (b) $971.4 of the new notes per $1,000 principal amount of existing notes if the holder also agrees to purchase new notes in a private placement equal to 0.6 multiplied by the principal amount of tendered existing notes;
• Purchase their pro rata amount of the new notes, and if holders do not elect to purchase at least $100 million of the notes in connection with the exchange offer, they will allow GMX, under a backstop agreement, to put for cash purchase an amount of additional notes to make up at least $100 million; and
• Consent to certain proposed amendments to the indenture governing the existing notes.
The filing stated that if holders of 100% of the existing notes tender their securities in the exchange offer and elect to purchase new notes, it would result in $120 million of cash proceeds and the issue of roughly $318 million of new notes.
At GMX's option, it may pay interest on the notes 9% in cash and 4% in kind.
As consideration for the backstop agreement, the company said that upon completion of the transactions, it will issue $3 million of the new notes and $7 million of its stock, up to 4.2 million shares.
Oklahoma City-based GMX is a small-cap natural gas exploration and production company.
New note terms
| Issuer: | GMX Resources, Inc.
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| Issue: | Senior secured notes
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| Amount: | At least $100 million and up to $318 million
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| Maturity: | December 2017
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| Coupon: | 11%, or 9% in cash and 4% in kind at company's option
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