Each one in plain English, with the numbers worked through for a shareholder.
3 Nov 2011capital raising announcement▼ BadMajor
On Nov 2, 2011 GMX signed support agreements with holders of about 50.1% of its 11.375% Senior Notes due 2019 to exchange them for new 11.0% senior secured notes due 2017. Holders can take $750 of new notes per $1,000 of old, or $971.4 if they also buy new notes for cash equal to 0.60 of the old notes tendered. The holders backstop $100M of new notes; if all holders tender and buy, GMX gets $120M cash and issues about $318M of new notes secured by substantially all assets. The backstop fee is $3.0M of new notes plus $7.0M of common stock (up to 4,242,425 shares). The proceeds are to retire the bank revolver and fund the capital program; the bank redetermination is postponed, GMX plans to monetize its natural gas hedges (about $16.6M value) in November, and is still pursuing a VPP sale on Cotton Valley assets. The 2012 capex plan is $131M, pending closing and board approval. The deal is not yet launched and terms are subject to final documentation. It replaces the unsecured 2019 notes with secured debt and is dilutive to shareholders via the stock issuance.
GMX filed a Form S-4 to register an exchange of its $200M 11.375% Senior Notes due 2019, issued Feb 9, 2011 without registration, for identical registered notes. This is the registration-rights exchange offer flagged in the February 2011 notes deal; the terms are substantially identical, GMX receives no cash, and it adds no new debt. It was filed one day before the Nov 2 support agreements described in the next filing, which propose to restructure these same notes.
GMX signed a Third Amendment to its Capital One-led bank loan on Aug 2, 2011: the required EBITDA-to-interest ratio drops to above 2.00 (from 2.50) for July 1-Dec 31, 2011, returning to 2.50 from Jan 1, 2012. While the ratio is below 2.50, borrowing margins rise 1.5% and the unused-facility fee rises 0.5% to 1.0% a year; GMX paid a fee of 1% of the borrowing base. The same filing furnished Q2 2011 results: record 6.5 Bcfe production (up 51% from Q2 2010), Haynesville/Bossier drilling temporarily suspended due to low gas prices, 2011 production guidance cut to 23.8-24.2 Bcfe, and remaining 2011 drilling capital focused on oil in the Bakken, Niobrara and East Texas. The covenant relief continues the thread on covenant headroom under the February 2011 loan; the amendment and release suggest (inference) that the original covenant was at risk.
4 May 2011capital raising announcement● NeutralMajor
On Apr 28, 2011 GMX closed the Arkoma Bakken/Long Properties/Reynolds deal, buying 87.5% of the sellers' working interest in about 7,613 undeveloped acres in McKenzie and Dunn Counties, North Dakota (6,661 net acres), and issued 3,542,091 shares to the sellers as partial payment. The sellers cannot sell the shares for six months and GMX agreed to register them for resale. This completes another of the pending Bakken acquisitions and adds to dilution; the filing does not state the cash paid.
On Mar 14, 2011 GMX signed a Second Amendment (effective Mar 1, 2011) to its Fifth Amended and Restated Loan Agreement. It extends the period for selling Series B preferred stock through its at-the-market program, raises the maximum liquidation preference of those sales to $62M, and lets GMX use the proceeds for general corporate and working capital purposes. Earlier the loan allowed Series B up to $150M liquidation preference in total; the filing does not say how the $62M relates to that.
2 Mar 2011capital raising announcement● NeutralMajor
On Feb 28, 2011 GMX closed the Retamco Bakken/Sanish-Three Forks acreage purchase in Montana and North Dakota, issuing 2,268,971 shares to Retamco (below the up-to 2,669,513 shares first announced; the filing does not explain why) and agreeing to register them for resale. Separately, underwriters exercised their over-allotment option for 1,098,518 more shares from the Feb offering, bringing about $4.9M of additional net proceeds, expected to close March 2, 2011. Both add to the share count. This completes the first of the Bakken/Niobrara acquisitions.
On Feb 9, 2011 GMX closed the $200M 11.375% senior notes due Feb 15, 2019, with net proceeds of about $187.1M, interest payable each Feb 15 and Aug 15 from Aug 15, 2011, and guarantees from two subsidiaries. The company says the stock and notes offerings have both completed and so satisfy the financing condition for its tender offer for up to $50M of the 5.00% 2013 convertibles, of which $122.75M is outstanding; the offer pays par plus accrued interest and expires Feb 28, 2011 unless extended. This resolves the open question of whether the offerings would close, though the filing does not state that the Fifth A&R loan conditions are met.
On Feb 4, 2011 GMX agreed with Morgan Stanley and Credit Suisse to sell 21,075,000 new common shares at $4.75 per share to the company, with an option for up to 3,161,250 more within 30 days. This is the equity half of the financing the new bank loan required (at least $75M), and it materially dilutes existing shareholders. Proceeds go to the same uses as the notes: the 2013 convertible tender offer, repaying the revolver, the cash part of about $68.3M of pending lease purchases, and drilling.
On Feb 4, 2011 GMX agreed to sell $200M of 11.375% senior unsecured notes due 2019 to initial purchasers (Credit Suisse and Morgan Stanley) at 93.583% of face in the agreement text, while the press release says 96.833%; the filing gives both figures without reconciling them. Proceeds, with a concurrent stock offering, are to fund an offer to buy up to $50M of the 2013 convertibles, repay the bank revolver, pay the cash part of about $68.3M of pending lease acquisitions, and fund drilling and general purposes. This is the senior notes step the new bank loan required, and it adds high-cost debt maturing in 2019.
This amendment to the Feb 2 filing adds a First Amendment dated Feb 3, 2011 to the Fifth Amended and Restated Loan Agreement. The agreement still takes effect only if GMX completes at least $75M of common stock and $175M of senior unsecured notes by Feb 28, 2011, with at least $50M placed in a restricted account to retire 2013 convertibles (to no more than $75M principal within 45 days of effectiveness). It repeats the $100M commitment, $60M initial borrowing base and Jan 1, 2013 maturity, and adds a requirement that no advances be outstanding under the prior loan agreement. This continues the open financing thread; the filing does not say what the Feb 3 amendment changed beyond this.
On Feb 2, 2011 GMX signed a Fifth Amended and Restated Loan Agreement with Capital One and its bank group, turning the January commitment letter into a signed deal. It takes effect only if GMX raises at least $75M of common stock and $175M of senior unsecured notes by Feb 28, 2011, and puts at least $50M of proceeds in a restricted account to retire 2013 convertible notes so that no more than $75M remains within 45 days. It provides a $100M commitment with a $60M initial borrowing base, matures Jan 1, 2013 (extended to Dec 31, 2013 if the 2013 convertibles are gone), and caps senior secured debt at 2.50x EBITDA. The agreement lapses if the conditions are not met by Feb 28, 2011, so the outcome of the equity and notes offerings is an open thread.
28 Jan 2011capital raising announcement● NeutralMajor
On Jan 24, 2011 GMX agreed to buy undeveloped Bakken acreage in McKenzie and Dunn Counties, North Dakota for about $31.3M (one-third cash, two-thirds stock, with the share price collared between $5.50 and $6.50), and signed a letter of intent for a further Williams County deal of about $7.3M on the same terms. The press release says it now has four purchase agreements and one letter of intent covering about 67,724 net acres across the Bakken and the Niobrara (Wyoming), and says it plans to raise capital to fund development. It also has a commitment letter with Capital One for a new credit agreement with a $60M initial borrowing base and January 1, 2013 maturity, conditional on debt and equity financings. This expands the Bakken thread into a broader shift toward oil acreage and implies significant new share issuance.
20 Jan 2011capital raising announcement● NeutralMajor
On Jan 13, 2011 GMX agreed to buy undeveloped Bakken/Sanish-Three Forks acreage in Montana and North Dakota from Retamco Operating, paying up to 2,669,513 new shares plus about $1.8M cash, with closing due by Feb 28, 2011. This is a first step outside the East Texas Haynesville/Bossier and Cotton Valley focus, and the share issuance would dilute existing holders. The release also reports Haynesville/Bossier proved reserves of 234.1 Bcfe at year-end 2010 (up from 25.9 Bcfe) and says the company is exploring joint ventures on its undeveloped East Texas acreage and options on its 60% Endeavor Gathering stake to address liquidity needs.
27 Dec 2010capital raising announcement● NeutralMajor
On Dec 21, 2010 GMX amended its July 2010 bank loan agreement: the $130M borrowing base stays until the next redetermination, a new limit caps senior secured debt at 2.50x EBITDA, and the total net debt/EBITDA limit is eased to 4.75x (Dec 2010-Feb 2011), 4.60x (Mar-Aug 2011) and 4.40x (Sep-Oct 2011), returning to 4.00x from Nov 2011. It also exchanged $2.25M of its 2013 convertible notes for 380,250 new common shares plus cash for accrued interest, and the press release says 2011 capital spending is cut to $110M with one rig drilling. The covenant relief continues the July 2010 loan thread but adds a new secured-debt limit; the note exchange slightly dilutes shareholders.
On July 8, 2010 GMX signed a Fourth Amended and Restated Loan Agreement with its bank group, extending the maturity from July 15, 2011 to August 1, 2012, with an automatic extension to July 8, 2013 in certain circumstances. The maximum debt-to-EBITDA ratio is relaxed to 4.50 for June to December 2010 and 4.25 for January to June 2011, returning to 4.00 from July 2011, and the debt definition now counts only the debt portion of the convertible notes. U.S. Bank and Credit Suisse join as lenders, and Union Bank and Fortis leave. The borrowing base stays at $130 million.
GMX said on March 10, 2010 that its 2008 annual and first three 2009 quarterly financial statements can no longer be relied on, because impairment charges and deferred taxes were calculated wrongly and diluted loss per share was misstated. Restated 2008 net loss is $124.6 million, versus $81.7 million originally reported. The 2008 fourth-quarter impairment rises by $41.0 million, and the first-quarter 2009 impairment falls by $42.2 million. The company says the non-cash charges do not change its PV-10 values. It also reported a 2009 net loss to shareholders of $185.3 million. The restatement will appear in the 2009 10-K.
GMX dismissed its auditor Smith, Carney & Co. and appointed Grant Thornton LLP on Nov 30, 2009. The filing says Smith Carney's 2007 and 2008 reports were clean and there were no disagreements. GMX also told NASDAQ it will move its stock listing to the NYSE, with trading expected around Dec 16, 2009 under the same symbol GMXR.
5 Nov 2009asset acquisition disposition● NeutralMajor
The Kinder Morgan deal announced Oct 16 closed effective Nov 1, 2009: GMX moved its gas gathering assets into Endeavor Gathering LLC and sold 40% to Kinder Morgan Endeavor for $36 million, keeping 60%. Kinder Morgan receives 80% of cash distributions until it recovers its purchase price plus any other capital it contributes. GMX dedicated its Harrison and Panola County production to the system and owes shortfall payments if minimum volumes are not met. The press release says the deal provides liquidity to add a rig.
On Oct 22-28, 2009 GMX sold 6,950,000 common shares at $15.00 (net about $98.8M) and $86.25M of 4.50% convertible senior notes due May 1, 2015 (net about $82.6M, conversion price about $18.75, including the exercised over-allotment). The filing says Capital One received part of the proceeds through repayment of the bank revolver. The Prudential repayment condition from the Oct 17-18 amendments is a likely use of proceeds (inference; the visible text does not show it). This adds new shares and new debt, following the May 2009 offering. The share loan to the Jefferies affiliate now stands at 3,140,000 shares.
GMX signed a Fifth Amendment with its bank lenders (effective Oct 17, 2009) allowing the Kinder Morgan gathering deal and a new offering of unsecured convertible notes due 2015, removing the minimum net worth covenant that had needed repeated waivers, and waiving a debt-to-EBITDA default for Aug 31 and Sept 30, 2009. The borrowing base falls from $175 million to $140 million when the gathering deal closes. A separate Prudential amendment lets the new notes be sold only if the proceeds fully repay Prudential's notes.
On October 16, 2009 GMX agreed to sell a 40% stake in a new gas gathering company, Endeavor Gathering LLC, to Kinder Morgan Endeavor LLC for $36 million, keeping 60%. This follows the May 2009 statement that it was exploring a partner for its Endeavor Pipeline group. Kinder Morgan gets 80% of cash distributions until it recovers its investment, then 40%. GMX also committed to activate a second drilling rig and keep at least two rigs drilling in Harrison and Panola Counties for three years. Closing, expected in early November 2009, needs secured lender consents and lien releases.
On May 13, 2009 GMX agreed to sell 5,000,000 new shares at $12.00 each, with net proceeds of about $56.8 million, and underwriters have an option for up to 750,000 more. Banks that lend under its revolving credit facility, or their affiliates, are underwriters and will receive a substantial portion of the proceeds through repayment of borrowings. The price compares with $70.50 in the July 2008 offering, so existing holders are diluted at a much lower price. The filing also updates the Jefferies share loans: 2,140,000 shares sold in February 2008, plus 600,000, 500,000 and 200,000 at-the-market shares loaned in February, March and June 2008.
On May 6, 2009 Prudential again amended the note agreement and waived a technical default at March 31, 2009 that came from another oil and gas write-down, with no amendment fee. It also amended the agreement so any fair-value election on debt is ignored in the covenant tests. The attached press release reports a Q1 2009 net loss of $124.4 million (versus net income of $6.2 million a year earlier) and says a new bank borrowing base decision is expected later in May and that the company is exploring a partner for its Endeavor Pipeline group. This repeats the December 2008 covenant problem.
GMX amended its bank loan agreement so the non-cash effects of oil and gas write-downs are left out of the minimum net worth test. Prudential made similar changes and waived a technical default at December 31, 2008 caused by the write-down. The same filing reports a 2008 net loss of $81.7 million, versus 2007 net income of $16.9 million, including a $151.6 million impairment charge on oil and gas properties. Production rose 48% to 12.9 Bcfe, and the company began Haynesville/Bossier horizontal drilling in August 2008 and moved away from Cotton Valley Sand drilling in December 2008.
On July 17, 2008 GMX agreed to sell 2,000,000 new common shares at $70.50 each through underwriters led by Jefferies, with net proceeds of about $133.7 million. A portion will repay borrowings under the revolving bank facility. The filing also gives the February 2008 share-lending update: 2,140,000 shares were loaned and sold at the fixed-price offering, plus 1,300,000 more sold in at-the-market offerings, out of up to 3,846,150 lendable. This adds to the share count.
On June 12, 2008 GMX signed a Third Amended and Restated Loan Agreement with Capital One and Union Bank of California, raising the maximum it can borrow from $125 million to $250 million and the borrowing base from $90 million to $140 million. BNP Paribas, Fortis Capital Corp and Compass Bank were added as lenders, and the LIBOR margin rose by 0.25 percentage points in both tiers. Prudential, holder of the $30 million Series A notes, also agreed to raise the bank debt the company can incur from $125 million to $185 million.
