S&P cuts GMX Resources

Standard & Poor's said it lowered the ratings on GMX Resources Inc. to CC from CCC+.

The ratings were removed from CreditWatch negative, where they were placed in November.

The outlook is developing.

The downgrade reflects the potential for a selective default on GMX's existing 11 3/8% senior unsecured notes due 2019 due to certain aspects of GMX's exchange offer that would constitute a distressed exchange, S&P said.

Part of the exchange offer allows noteholders to exchange $1,000 principle of existing notes for $750 principle of new secured notes, the agency said.

Before the company's launch of its exchange offer, S&P said it was skeptical about the company's ability to meet its debt service obligations in 2012.

If no noteholders elect to exchange existing notes for $750 of new notes, the agency said it would re-evaluate the credit quality of GMX in light of its new capital structure and additional liquidity provided by the exchange offer.

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