GMX offers 9%/12% notes in swap for 5% and 4.5% convertibles

By Susanna Moon

Chicago, Aug. 9 - GMX Resources Inc. said it began an offer to issue new 9% senior secured second-priority notes due March 2018 in exchange for all $51,997,000 of its outstanding 5% convertible senior notes due 2013 and for some of its 4.5% convertible senior notes due 2015.

The company will issue a total of $60 million of new notes in the exchange offer, according to a press release.

Interest on the new notes is payable in kind through the second anniversary of the settlement date, with the number of shares based on a 10-day volume-weighted average price, discounted to yield the equivalent of a 12% interest rate.

GMX is offering to exchange up to $52 million of new notes and 288 common shares for each $1,000 principal amount of 5% convertibles. The company will accept all 5% notes tendered in the offer.

In the second part of the offer, the company will issue $700 principal amount of new notes for each $1,000 principal amount of 4.5% convertibles tendered, up to an amount equal to $60 million, less the total principal amount of 5% convertibles tendered in the offer.

Holders also will receive accrued interest through the settlement date.

If the total amount of 4.5% convertibles tendered exceeds the quotient of the notes payment limit divided by 0.7, then the total principal amount of those notes that the company may accept for purchase from each tendering holder will be equal to the product of (a) the payment limit, (b) a fraction, the numerator of which will be the aggregate principal amount of 4.5% notes tendered, and the denominator of which will be the aggregate principal amount of all the 4.5% notes tendered and (c) a fraction, the numerator of which is 1,000 and the denominator of which is 700, the release noted.

New notes will be issued only in minimum denominations of $1,000 and integral multiples of $1,000 after that.

The exchange offer will end at 11:59 p.m. ET on Sept. 6.

Global Bondholder Services Corp. (866 804-2200 or for banks and brokers only 212) 430-3774) is the information agent.

GMX is an Oklahoma City-based natural gas exploration and production company.

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