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Sunshine Oilsands closes crucial $200-million debt offering

the company’s survival has been in question as it faced lawsuits seeking $94-million for unpaid bills.

Sunshine Oilsands

Sunshine Oilsands Ltd. has closed a crucial $200-million (U.S.) debt offering that it says will yield enough proceeds to pay off creditors and restart construction at its long-stalled northern Alberta energy project.

Sunshine, largely backed by Chinese institutional and retail investors, said the high-yield debt issue, along with $150-million of equity it has raised since the end of last year, will allow it to begin the four months of work it needs at its West Ells development before production at the initial 5,000-barrel-a-day phase can start.

Despite ownership by several major firms with combined assets exceeding $1-trillion, the company's survival has been in question as it faced lawsuits seeking $94-million for unpaid bills. The company had run out of cash a year ago, and it suspended work on the steam-assisted gravity drainage bitumen project, which was 80 per cent complete. It had invested $400-million.

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"This debt financing provides us with sufficient funds to complete facilities to support steam injection and production from our initial eight horizontal well pairs in the West Ells Project Area," interim chief executive officer David Sealock said in a statement released Friday. "The financing initiative also secured important support from North American institutions who understand the value of completing the first phase of our West Ells project."

After placement feeds and other expenses, Sunshine will realize $175.5-million, it said.

The secured notes are not cheap for the company, at a 10-per-cent interest rate. They were issued at $938.01 per $1,000 principal amount. They mature August, 2017.

Major shareholders, including China Life, China Investment Corp., Sinopec Century Bright Capital Investment Ltd. and Immediate Focus and others, own about 58 per cent of the company.

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About the Author
Mergers and Acquisitions Reporter

Jeffrey Jones is a veteran journalist specializing in mergers, acquisitions and private equity for The Globe and Mail’s Report on Business. Before joining The Globe and Mail in 2013, he was a senior reporter for Reuters, writing news, features and analysis on energy deals, pipelines, politics and general topics. More

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