Southern Pacific greenshoe lifts 6% convertibles to C$172.5 million

By Susanna Moon

Chicago, Jan. 7 - Southern Pacific Resource Corp. said it closed C$172.5 million of 6% convertible subordinated debentures after underwriters exercised the C$22.5 million greenshoe.

The company priced an upsized C$150 million of the convertibles on Dec. 10 at par on a bought-deal basis with an initial conversion premium of 36%. The issue was originally C$125 million in size.

The debentures were bought and will be sold publicly in all the provinces of Canada except Quebec by a syndicate co-led by BMO Capital Markets, RBC Capital Markets and Credit Suisse Securities (Canada), Inc. and including TD Securities Inc. and Raymond James Ltd.

A portion of the issue will also be available to U.S. investors under Rule 144A.

The debentures will be convertibles at a price of C$2.15 per share.

The convertibles will be non-callable for 3.5 years and then provisionally callable subject to a 130% price hurdle to conversion. There is standard takeover and dividend protection.

Proceeds will be used to fund development of Southern Pacific's bitumen treatment and steam generation McKay project and for general corporate purposes.

The convertibles deal was subject to normal regulatory approvals and the closing of a second-lien term loan of up to $275 million and a first-lien revolving loan facility intended to replace a current credit facility.

The company completed the $275 million senior secured second-lien term loan facility on Jan. 7.

Southern Pacific is a mineral exploration company based in Calgary, Alta.

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