Monday, February 25, 2013

Vultures to Circle over GMX Resources?

GMX Resources announced this morning that it has retained investment bank Jefferies & Co. "to assist the Board and senior management in its ongoing exploration of a variety of financing alternatives, including a potential restructuring of the Company’s balance sheet in light of its current liquidity and cash needs."  I'm sure a sale of the company is on the table as well, although it would fetch a "distressed" price that would be unpalatable to shareholders and management.  Asset sales might be an option as well, but GMX ain't exactly Chesapeake in terms of its wide assortment of holdings.

In the past few weeks, GMX's share price has dropped 68% to around $2.25, keyed mostly by liquidity concerns and the problems the company has had lining up new financing.  GMX is one of those gas-centric independents trying to reinvent itself as an oil shale player, but it is late to the game and is paying the price.  A  balance sheet restructuring likely will hurt shareholders, but will it lead to a sale of the company's Haynesville/E. Texas assets?  Stay tuned...

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