HONG KONG, CHINA and CALGARY, ALBERTA–(Marketwired – Aug. 1, 2016) – (a corporation incorporated under the Business Corporations Act of the Province of Alberta, Canada with limited liability) (HKEX: 2012)
By Order of the Board of Sunshine Oilsands Ltd.
Sun Kwok Ping, |
Executive Chairman |
Hong Kong, August 1, 2016 |
Calgary, July 31, 2016 |
As at the date of this announcement, the Board consists of Mr. Kwok Ping Sun, Mr. Hong Luo, Dr. Qi Jiang and Mr. Qiping Men as executive directors; Mr. Michael John Hibberd, Mr. Jianzhong Chen and Ms. Xijuan Jiang as non-executive directors; and Mr. Raymond Shengti Fong, Mr. Gerald Franklin Stevenson, Ms. Joanne Yan and Mr. Yi He as independent non-executive directors.
* For identification purposes only
The Board of Directors (the “Board“) of Sunshine Oilsands Ltd. (the “Corporation” or “Sunshine“) (HKEX:2012) is pleased to announce the following:
SUNSHINE OBTAINS FORBEARANCE FROM NOTEHOLDERS TO NEGOTIATE DEFINITIVE AGREEMENT FOR A TERM LOAN
Reference is made to the announcements of the Corporation dated August 5, 2014 (Hong Kong Time), August 8, 2014 (Hong Kong Time) and February 5, 2016 (Hong Kong Time) in relation to, among other things, the offering of US$ 200 million principal amount of senior secured notes (the “Notes“).
The Corporation has entered into a forbearance agreement (the “Forbearance Agreement“) with all of the holders (the “Noteholders“) of the Notes maturing on August 1, 2016. Pursuant to the Forbearance Agreement, each of the Noteholders has agreed not to enforce its rights in respect of the Notes prior to 2:00 p.m. New York time on August 8, 2016, subject to certain restrictions, in order to provide the Corporation and the Noteholders with additional time to finalize definitive documentation effecting, among other things, entering into a term loan facility that extends the maturity date of the indebtedness owed to the Noteholders to August 1, 2017.
Sunshine has been in discussions with the Noteholders in connection with the principal terms of the term loan facility and all parties have reached a general understanding on the anticipated main terms of the term loan facility. These terms are expected to include the following: (a) extending the maturity date of the indebtedness pursuant to the Notes to August 1, 2017; (b) converting the Notes into a term loan facility; (c) paying down US$25.0 million of the principal amount of the US$200 million principal indebtedness on February 1, 2017; (d) an interest rate of 10% cash plus 2.5% payment-in-kind (“PIK“) through to the new maturity date; (e) making an interest payment effective as of August 1, 2016 and a payment of the yield maintenance premium for the Notes by September 15, 2016; (f) interest payments under the term loan will be payable on February 1, 2017 and August 1, 2017; (g) covenants relating to minimum liquidity to be held by the Corporation for specified periods until the new maturity date; (h) board of director observation rights for certain significant Noteholders; (i) term loan agreement style reporting obligations; (j) use of proceeds restrictions for the proceeds of any asset sales completed by the Corporation prior to the new maturity date; and (k) budget approval rights; and (l) satisfaction with the Corporation’s vendor payment arrangements and amounts.
It is also anticipated that Corporation will no longer be restricted from raising debt capital that is junior to the term loan provided that: (a) no principal repayments may be made on such indebtedness until the principal amount of the term loan is fully repaid in cash; (b) any such indebtedness is subordinated in right of payment to the term loan pursuant to a subordination agreement; and (c) any such indebtedness may only accrue PIK interest.
The Board believes the above described terms are in the best interests of the Corporation and its shareholders as a whole as the new term loan facility will provide the Corporation with additional time to repay or refinance the outstanding indebtedness owed to the Noteholders under the Notes.
The Corporation will provide further updates to the negotiation and completion of the term loan facility as necessary.
ABOUT SUNSHINE OILSANDS LTD.
The Corporation is a Calgary based public corporation listed on the Hong Kong Stock Exchange since March 1, 2012. The Corporation is focused on the development of its significant holdings of oil sands leases in the Athabasca oil sands region. The Corporation owns interests in approximately one million acres of oil sands and petroleum and natural gas leases in the Athabasca region. The Corporation is currently focused on executing milestone undertakings in the West Ells project area. West Ells has an initial production target rate of 5,000 barrels per day.