GMX Resources Inc. said Monday it has suspended payment of quarterly dividends on its preferred stock “to preserve capital and improve liquidity.”
Monday's announcement affects the Oklahoma City energy company's 9.25 percent Series B cumulative preferred stock. The dividend is suspended until further notice, including the payout that was expected April 1.
Preferred stock dividends can be delayed, but they cannot be canceled.
A GMX Resources spokesman did not reply to requests for comment Monday.
The announcement comes a week after GMX said it missed an interest payment on its senior secured second-priority notes due 2018. The company said on March 4 that it had to make the payment within 30 days to avoid defaulting on the debt.
Tulsa money manager Jake Dollarhide said it appears GMX plans to pay the senior note interest with the money it was scheduled to use for the preferred dividend.
“This is a highly leveraged company,” said Dollarhide, CEO of Tulsa-based Longbow Asset Management Co. “There are assets there and a talented management team. It seems like they're doing the right things, but this is not a cash-rich company.”
In separate filings Monday, GMX disclosed that New York-based GSO Capital Partners and New Jersey-based Chatham Asset Management have bought stakes in the company.
GSO said it paid more than $1.2 million on Dec. 7 for a private placement of nearly 520,000 shares, or 7 percent of GMX stock. Chatham said it paid more than $1.4 million for more than 505,000 shares, or 6.8 percent of GMX.
Both investors stated that in light of GMX's “current liquidity and cash needs,” they have engaged in preliminary discussions with GMX and its directors “concerning any potential transactions that may be deemed to have the purpose or effect of changing or influencing control” of GMX.
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