Each one in plain English, with the numbers worked through for a shareholder.
15 Feb 2008capital raising announcement● NeutralMajor
On February 11, 2008, GMX agreed to sell convertible notes, and on February 15 issued $125 million of 5.00% Convertible Senior Notes due February 1, 2013 after the buyers took up the over-allotment. The notes convert at about $32.50 per share (30.7692 shares per $1,000), are unsecured and rank behind the secured bank and Prudential debt, and GMX cannot redeem them early. Alongside, GMX lent 2,740,000 shares so far (2,140,000 sold publicly at $25.00) to a Jefferies affiliate to help note buyers hedge, with up to 3,846,150 shares lendable in total. GMX receives no proceeds from those share sales, only a $0.001 per share loan fee. The filing text is cut off, so use of the note proceeds is not shown.
This amendment to the January 31, 2008 filing fixes a typo: the expected gas price uplift from the PVR processing agreement is about $1.20/MMBtu, not $1.25. Nothing else changes, including the rights plan threshold increase from 20% to 29%.
1 Feb 2008security holder rights change▲ GoodMajor
On January 31, 2008, GMX signed a 10-year gas gathering and processing agreement with PVR East Texas Gas Processing covering all gas from wells jointly owned with PVOG, about 53% of current production. It expects this to raise its average gas price by about $1.25/MMBtu, with processing starting around March 1, 2008 and a $0.30/MMBtu fee rising $0.01 a year. The board also raised the rights plan trigger from 20% to 29% of common stock, which lets investors hold bigger stakes while keeping takeover protection.
On December 19, 2007, GMX amended its bank loan to add a temporary $30 million bridge increase in the borrowing base, from $90 million to $120 million, lasting until it completes additional financing or June 30, 2008. The bridge costs 2.25% more interest than regular borrowings and a higher unused-fee, and GMX paid $750,000 in upfront fees (2.5%). The higher-rate portion shrinks if the April 2008 redetermination raises the regular base.
On October 31, 2007, GMX signed a Second Amended and Restated Loan Agreement with Capital One and Union Bank, extending maturity to July 15, 2011 from July 8, 2008. The maximum it may borrow rises from $100 million to $125 million, the borrowing base from $62 million to $90 million, and the hedging cap from 75% to 80% of proved developed producing production.
On July 31, 2007, GMX signed a Note Purchase Agreement with Prudential for up to $100 million of senior subordinated secured notes, and sold an initial $30 million of 7.58% Series A notes due July 31, 2012. The proceeds are for general corporate purposes, including East Texas Cotton Valley drilling. The notes carry a second lien on all assets and covenants including a requirement that Kenworthy Jr. and Sr. remain CEO and CFO, or Prudential can require repurchase. GMX also amended its bank loan to allow the notes, and released Q2 2007 results (no figures given in the filing).
On February 1, 2007, GMX agreed with placement agent A.G. Edwards & Sons to sell up to 2,000,000 new common shares at $34.82 each to investors, under its Form S-3, expected to close February 7, 2007. The agent gets a 4.0% fee on gross proceeds. This is a new share issue that dilutes existing holders, at a price well above the $13.50 paid in July 2005. The filing does not state how the money will be used.
On January 31, 2007, GMX said management concluded that footnote disclosures about the pro forma cost of stock options for the 2005 quarterly periods were overstated and should not be relied on, because the full cost of option grants was shown rather than spread over vesting. It says reported revenues, expenses, net income, balance sheets and cash flows for 2005 are unchanged and has fixed the errors by amending its Q2 and Q3 2006 10-Qs. For example, the pro forma Q3 2005 net income moves from $1,022,991 to $1,932,785, against reported net income of $2,050,332.
On August 7, 2006, GMX amended its bank loan agreement with Capital One and Union Bank to raise the preferred stock it may issue from $45 million to $50 million. The preferred may be redeemable at GMX's option with Capital One's consent, and the maximum dividend rate can rise to 12% in certain circumstances. This builds on the June 2006 loan terms and widens GMX's room to raise preferred equity.
On June 7, 2006, GMX signed an Amended and Restated Loan Agreement with Capital One (as agent) and Union Bank of California, raising the borrowing base to $35 million with maximum availability of $100 million. The base falls by $1.5 million each quarter from June 30, 2006. Covenants are largely unchanged, but GMX may now issue up to $45 million of preferred stock or subordinated debt. This replaces the earlier Hibernia facility as the bank facility in the record (inference: the lenders are different).
On January 16, 2006, GMX and Penn Virginia Oil & Gas amended their East Texas participation agreement (Amendment No. 6) so PVOG can use four rigs instead of two, with one shared with GMX for its 100%-owned Area III. The same filing says the bank raised the borrowing base on the Hibernia facility from $17 million to $24 million, dropping $1.5 million each quarter from March 31, 2006. GMX also issued a press release on 2005 year-end reserves and production; the filing gives no figures.
12 Dec 2005asset acquisition disposition● NeutralMajor
On December 8, 2005, GMX set up a new subsidiary, Diamond Blue Drilling Co., and bought McLachlan Drilling Rig No. 5, which it had had under contract since April 2005. It gave McLachlan a $5.1 million note at 7% secured by the rig, ending the one-year drilling contract. GMX plans to use the rig on its 100%-owned East Texas acreage and expects owning a rig to lower drilling and completion costs. Hibernia agreed an interim amendment to the credit facility allowing the subsidiary, the purchase and up to $12 million of investment in it.
The compensation committee approved discretionary cash bonuses of $50,000 each to CEO Ken Kenworthy, Jr. and CFO Ken Kenworthy, Sr., paid half in Q4 2005 and half in Q1 2006. GMX also reported Q3 2005 results: net income of $2,050,332 versus $353,582 a year earlier, on revenue of $4,375,657 versus $1,828,246. The release attributes this to 51% higher production and 55% higher prices, and reports continued East Texas joint development with Penn Virginia.
On July 29, 2005, GMX signed a three-year secured revolving credit facility with Hibernia National Bank, with an initial borrowing base of $17 million, maturing July 29, 2008. It is secured by its oil and gas properties and by Endeavor Pipeline, Inc. stock and gathering system. The filing says GMX paid off its existing credit facility with the July private placement proceeds. The new loan will not be funded until needed, and it bars dividends and stock buybacks and limits a change in control.
18 July 2005capital raising announcement▲ GoodMajor
On July 14, 2005, GMX agreed to sell 1,600,000 new common shares at $13.50 each to institutional investors in a private placement, raising $21,600,000 before expenses. The money is intended for drilling and development of its East Texas properties, and GMX agreed to register the shares for resale. Existing shareholders are diluted by the new shares.
What it means for a shareholder
1.6m new shares at $13.50 to raise about $21.6m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
18 May 2005security holder rights change● NeutralMajor
Shareholders approved a rights plan (poison pill) on May 17, 2005, with UMB Bank as rights agent. Each common share gets a right that becomes exercisable if a person or group acquires 20% or more of the stock, letting other holders buy shares at half price. The rights expire June 1, 2015. CEO Ken Kenworthy, Jr. and his wife (about 20% owners) are not treated as an acquirer unless they exceed 30%. The filing says the plan has anti-takeover effects and the board can redeem the rights for $0.01 each.
On April 6, 2005, GMX signed an agreement with McLachlan Drilling Co. for a drilling rig in its East Texas properties; the terms are only in an attached press release not reproduced here. The filing also notes a release with estimated first-quarter 2005 production, without figures.
On March 2, 2005, GMX and Penn Virginia Oil & Gas L.P. (successor to PVOG) amended their East Texas agreement again so PVOG can use two rigs and GMX can use the second rig for its own account in Phase III, one well for one well. No second rig had been found yet. The filing also notes a press release on 2004 fourth-quarter and full-year results, whose figures are not in the filing text.
GMX confirmed an amendment to its East Texas participation agreement with Penn Virginia Oil & Gas Corporation (PVOG), effective retroactively from May 11, 2004. It allows two-rig drilling, lets PVOG start Phase II early and move up to two carried-interest wells into Phase I, widens the Phase I area of mutual interest, extends the area of mutual interest provisions from two to four years, and lengthens the gas gathering agreement to the life of the wells with a lower fee. PVOG projected 16 to 18 wells in 2004.
GMX's audit committee dismissed its auditor KPMG and appointed Smith, Carney & Co., P.C. for 2004. The filing says KPMG's 2002 report carried a going-concern warning (debt covenant non-compliance and a significant working capital deficiency), and its 2003 report noted a change in accounting for asset retirement obligations. It states there were no disagreements with KPMG.
11 Oct 2002asset acquisition disposition● NeutralMajor
GMX sold its Kansas oil and gas properties in two deals in September 2002: to Vess Oil Corporation for $1,887,000 (Sept 16) and to Hartman Oil Co., Inc. for $1,731,000 (Sept 26), totalling $3,618,000 net of adjustments and commissions. The properties were about 12% of proved reserves (about 35% of oil reserves, 4% of gas reserves), and the proceeds were used to reduce bank debt.
