Sunshine Oilsands extends forbearance agreement for 10% notes

By Susanna Moon

Chicago, Aug. 17 – Sunshine Oilsands Ltd. said it extended the previously announced noteholder forbearance until 2 p.m. ET on Aug. 22 from 2 p.m. ET on Aug. 15.

The agreement is with holders of its $200 million of 10% senior secured notes due Aug. 1, 2016.

Sunshine Oilsands said the additional time will allow it to finalize documentation for the refinancing of the notes.

The company previously announced on Aug. 1 that the holders provided the forbearance to allow more time for the company to finalize the terms of a refinancing that extends the maturity of the debt owed to noteholders to Aug. 1, 2017 and converts the notes into a term loan.

Interest will be 10% cash plus 2½% payment in kind.

Sunshine said it has been in discussions with noteholders for the principal terms of the term loan facility and they have reached an understanding on the main terms of the loan, which are expected to include the following:

• US$25 million paydown on the US$200 million principal debt on Feb. 1, 2017; and

• Payment of interest effective as of Aug. 1 and of the yield maintenance premium for the notes by Sept. 15.

The company said it expects to lift the restriction from raising debt capital that is junior to the term loan provided that it make no principal repayments on the debt until the term loan is repaid in cash. Also, the debt would be subordinated to the term loan, and the debt may only accrue PIK interest.

As announced Feb. 5, the company had planned to refinance its 10% notes, which were set to mature on Aug. 1, 2016, because the company decided to forgo completing the requirements needed to maintain the maturity date of Aug. 1, 2017.

As reported Aug. 4, 2014, the notes feature a springing maturity, which trims the tenor to two years from three years unless the company raises $50 million of equity by Feb. 1.

The issuer is a Calgary, Alta.-based developer of oil sands leases in the Athabasca oil sands region.

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