Southern Pacific Resource Corp.

Southern Pacific Resource Corp.

December 24, 2010 09:00 ET

Southern Pacific Announces Filing of Final Prospectus for Funding for STP-McKay Thermal Project

CALGARY, ALBERTA--(Marketwire - Dec. 24, 2010) - 


Southern Pacific Resource Corp. ("Southern Pacific" or the "Company") (TSX:STP) is pleased to announce that it has filed a final prospectus dated December 23, 2010 in connection with the qualification of $150 million principal amount of 6.0% convertible unsecured subordinated debentures (the "Debentures") plus an over-allotment of a further $22.5 million (the "Offering"). The syndicate for the Debentures is being co-led by BMO Capital Markets, RBC Capital Markets, Credit Suisse Securities (Canada), Inc. and TD Securities Inc. and includes Raymond James Ltd.

In connection with the filing of the final prospectus, the US$275 million senior secured second lien term loan facility (the "Second Lien Term Loan Facility") to be offered by the Company has been allocated and certain details of such facility have been disclosed in the final prospectus. The Second Lien Term Loan Facility is being led by Credit Suisse Securities (USA), LLC and RBC Capital Markets as joint lead arrangers and joint bookrunners, with BMO Capital Markets and TD Securities Inc. also acting as joint bookrunners.

The net proceeds from the Second Lien Term Loan Facility and the Offering are expected to complete the financing requirements of the Company for the full construction of the STP-McKay Thermal Project.

In conjunction with the completion of the Second Lien Term Loan Facility, the Company also expects to enter into a first lien senior secured revolving facility (the "First Lien Revolving Loan Facility") of up to $30 million. Certain details of such facility have been disclosed in the final prospectus.

The Debentures have a face value of $1,000 per debenture, a coupon of 6.0%, a maturity date of June 30, 2016, and will be convertible into Common Shares at the option of the holder at a conversion price of $2.15 per Common Share. The Debentures will pay interest semi-annually in arrears on June 30 and December 31 of each year, commencing on June 30, 2011. The Debentures will be redeemable in certain circumstances after June 30, 2014.

The Debentures will be issued pursuant to the final prospectus filed in all provinces, except Quebec and by way of private placement in the United States to Qualified Institutional Buyers pursuant to Rule 144A or in such other manner as to not require registration under the United States Securities Act of 1933, as amended (the "US Securities Act"). 

The Offering is subject to certain conditions precedent, including approval of the Toronto Stock Exchange and prior or concurrent closing of the Second Lien Term Loan Facility and the First Lien Revolving Loan Facility, each as defined and described above. Closing of the Debentures, the Second Lien Term Loan Facility and the First Lien Revolving Loan Facility are all expected to occur on or about January 5, 2011.

About Southern Pacific

Southern Pacific Resource Corp. is engaged in the exploration, development and production of in-situ thermal heavy oil and bitumen production in the Athabasca oil sands of Alberta and in Senlac, Saskatchewan. Southern Pacific trades on the TSX under the symbol "STP."

This press release does not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdictions. These securities have not been registered under the US Securities Act or any state securities law, and they may not be sold in the United States unless an exemption from registration is available. This press release does not constitute an offer to sell or a solicitation of an offer to buy securities in the United States.

Readers' Advisory

Safe Harbour

Forward-Looking Information

This news release contains certain "forward-looking information" within the meaning of applicable securities law including, but not limited to: the proposed financing plan for Southern Pacific which contemplates the completion of the Offering, the Second Lien Term Loan Facility and the First Lien Revolving Loan Facility, and the proposed use of proceeds in connection therewith. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management with respect to results of operations, production, future commodity prices and exchange rates, future capital and other expenditures, business prospects and future economic and market conditions as at the date the statements are made. Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include, but are not limited to the inherent risks involved in the exploration and development of conventional oil and gas properties and of oil sands properties, difficulties or delays in securing required regulatory approvals and in the construction, commissioning and start-up operations, the uncertainties involved in interpreting drilling results and other geological data, fluctuating commodity prices, the possibility of unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed for construction of STP-McKay in the future and risks and uncertainties associated with the impact of general economic conditions and other factors including unforeseen delays.

As an oil sands enterprise in the early stage of development with heavy crude and conventional production, Southern Pacific faces risks including those associated with exploration, development, start-up, approvals and the continuing ability to access sufficient capital from external sources as required. There can be no assurance that the Company will be able to complete its debt financing plan on terms and conditions satisfactory to Southern Pacific or at all. Industry related risks could include, but are not limited to, operational risks in exploration, development and production, delays or changes in plans and the timing of capital expenditures, risks associated to the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. For a description of the risks and uncertainties facing Southern Pacific and its business and affairs, readers should refer to Southern Pacific's most recent Annual Information Form. Southern Pacific undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, unless required by law. Due to the risks and uncertainties associated with forward-looking information, the reader is cautioned not to place undue reliance on this forward-looking information.

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