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GMX RESOURCES INC. Announces Entry Into Plan Support Agreement

Stocks in this article: GMXRQ

Under the plan of reorganization contemplated by the Plan Support Agreement, the current debtor-in-possession financing facility will be extended so that the Company may continue operating in Chapter 11 as it seeks confirmation of the proposed plan or reorganization. Further, in exchange for the secured portion of their claims in the approximate amount of $338 million, the holders of the Senior Secured Notes would receive 100% of the equity in the reorganized Company upon its emergence from bankruptcy and/or equity in an affiliate of the reorganized GMXR. Holders of the Company's Senior Secured Second-Priority Notes due 2018 shall be treated as general unsecured creditors. Under the proposed plan of reorganization, if the general unsecured creditors' class votes to accept the plan or reorganization, holders of allowed general unsecured claims would receive interests in a trust (the "Litigation Trust") funded with (i) $1.5 million in cash; and (ii) the Debtors' potential causes of action listed on Schedule A to the Restructuring Term Sheet. Further, if the class of holders of general unsecured claims vote to accept the plan or reorganization, the holders of Senior Secured Notes will waive recovery on their unsecured deficiency claim. If the class of holders of general unsecured claims does not vote to accept the plan of reorganization, the $1.5 million in cash will not be funded in the Litigation Trust and, the holders of Senior Secured Notes and debtor in possession lenders will participate in recovery from the Litigation Trust on account of their DIP loan claims, superpriority adequate protection claims and deficiency claim. Any equity interest in the Company, of any kind, existing prior to the consummation of the restructuring will be cancelled under the terms of the plan of reorganization.

The Consenting Senior Secured Noteholders may terminate the Plan Support Agreement under certain circumstances, including, but not limited to, if (i) the Debtors breach any of their undertakings, representations, warranties or covenants under the Plan Support Agreement which remains uncured, (ii) any ruling or order enjoining the consummation of a material portion of the plan, (iii) the Debtors lose the exclusive right to file and solicit acceptance of a chapter 11 plan, (iv) an examiner with expanded powers is appointed in the Debtors' cases, a chapter 11 trustee is appointed in the Debtors' cases, or the Debtors' cases shall have been converted into a chapter 7 case or cases, (v) the Debtors or the Creditors' Committee file any motion or pleading materially inconsistent with the Plan Support Agreement, which is not withdrawn, (vi) the Bankruptcy Court grants relief that is materially inconsistent with the Plan Support Agreement, (vii) the Bankruptcy Court grants relief terminating, annulling or modifying the automatic stay with regard to any material assets of the Debtors, (viii) the Debtors fail to file the plan of reorganization and disclosure statement with the Bankruptcy Court within 10 business days of the execution of the Plan Support Agreement, (ix) the disclosure statement is not approved within 50 days of the execution of the Plan Support Agreement, (x) if the plan of reorganization shall not have been approved within 95 days of the execution of the Plan Support Agreement or (xi) if all of the transactions contemplated by the Plan Support Agreement have not been consummated within 120 days of the execution of the Plan Support Agreement.

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