GMX lowers minimum condition, extends exchange offer for convertibles

By Angela McDaniels

Tacoma, Wash., Sept. 11 - GMX Resources Inc. changed the minimum tender condition of its exchange offer and extended the expiration date to 5 p.m. ET on Sept. 17 from 5 p.m. ET on Sept. 10, according to a company news release.

As of 5 p.m. ET on Sept. 10, holders had tendered $24.9 million principal amount, or 48%, of GMX's 5% senior convertible notes due 2013 and $36.9 million principal amount, or 43%, of its 4.5% senior convertible notes due 2015.

Under the modified minimum tender condition, the company's obligation to accept 5% convertibles is conditioned on the receipt of tenders for at least $22 million - previously $30 million - principal amount of 5% convertibles.

GMX is offering new 9% senior secured second-priority notes due March 2018 and common stock in exchange for all $51,997,000 of its outstanding 5% convertibles and new notes in exchange for some of its 4.5% convertibles.

The company will issue no more than $60 million of new notes in the exchange offer, according to a previous news release.

Through the second anniversary of the settlement date, the company may pay interest on the new notes in common stock instead of cash. The number of shares is based on a 10-day volume-weighted average share price, discounted to yield the equivalent of a 12% interest rate.

GMX is offering to exchange $1,000 principal amount of new notes, subject to a maximum of $52 million in total, and 288 common shares for each $1,000 principal amount of 5% convertibles.

The company will issue $700 principal amount of new notes in exchange for each $1,000 principal amount of 4.5% convertibles tendered, subject to a maximum total principal amount of new notes equal to $60 million less the total principal amount of 5% convertibles tendered in the offer (the "4.5% convertibles consideration limit").

Holders also will receive accrued interest through the settlement date.

If the total amount of 4.5% convertibles tendered exceeds the quotient of the 4.5% convertibles consideration limit divided by 0.7, then the total principal amount of 4.5% convertibles that the company may accept for purchase from each tendering holder will be equal to the product of (a) the 4.5% convertibles payment limit times (b) the total principal amount of 4.5% convertibles tendered by the holder divided by the principal amount of all 4.5% convertibles tendered in the offer times (c) 1,000 divided by 700.

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

The exchange offer began Aug. 9. It was originally scheduled to expire at 11:59 p.m. ET on Sept. 6. The company later extended it to 5 p.m. ET on Sept. 10 to allow additional time for the SEC to complete the qualification of the indenture governing the new notes under the Trust Indenture Act.

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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