GMX Resources Inc. says it will not contest any delisting procedures initiated by the New York Stock Exchange on the heels of the company’s bankruptcy filing. The oil and gas producer filed for Chapter 11bankruptcy on April 1, citing low natural gas prices as the cause of its continuing financial difficulties. The bankruptcy petition includes the company’s Diamond Blue Drilling and Endeavor Pipeline units. Endeavor Gathering LLC, a company in which GMX has a 60 percent ownership interest, was not included in the filing.
GMX had pursued a number of strategies to right its financial ship, including efforts to increase the company’s production of oil, improve the efficiency of its operations and supply chain and reduce expenses. However, with the continued low price of natural gas and the need to spend more on its oil and gas businesses, the company’s financial pressures have mounted. Additionally, it has been unable to find any long-term financing solutions.
As part of its bankruptcy reorganization, GMX says it plans to sell the company’s operating assets and undeveloped real estate holdings to senior note holders. In exchange, the company will receive $50 million in debt financing, which will be used to cover operating expenses.
The company’s shares have traded from a low of $1.80 to a high of $21.84 on the New York Stock Exchange during the last year. On March 29, 2013, the last trading day before the bankruptcy filing, GMX closed at $2.19.
When a company is struggling with debt due to unexpected expenses and depressed sales, Chapter 11 bankruptcy can help the company stay viable by providing more options for raising cash. A business owner considering whether to file for bankruptcy would benefit by first consulting with a qualified bankruptcy attorney, who could help weigh the pros and cons.
Source: The Miami Herald, “GMX files for Chapter 11 bankruptcy protection,” April 1, 2013by