Southern Pacific Resource Corp. announced the pricing of its offering of senior secured second lien notes. The company will issue $260 million senior secured second lien notes at par, which will bear interest at a rate of 8.75% per annum and will mature five years from the date of issue.

The notes were offered in each of the Provinces of Canada and in the United States on a private placement basis through a syndicate of underwriters led by TD Securities Inc., RBC Securities Inc., Credit Suisse Securities (Canada) Inc. and BMO Nesbitt Burns Inc. The completion of the offering is anticipated to occur on January 25, 2013, and is subject to customary closing conditions. The company intends to use the net proceeds from the private placement, together with cash on hand, to retire its debt obligations under its existing $272.2 million second lien term loan facility. The new notes will have several distinct advantages to the company as compared to the existing second lien term loan facility including: a lower interest rate, the removal of potentially restrictive covenants, an ability to add additional second lien notes and the removal of a $30 million cap on the company's secured first lien revolving credit facility.

The company has negotiated a $75 million senior secured first lien revolving credit facility with a syndicate of financial institutions. The new revolving credit facility is anticipated to initially be undrawn and to close concurrently with completion of the notes. Unlike the existing term loan, the company will have the ability to increase this new revolving credit facility as the company expands.

Interest on the new revolving credit facility will vary based on similar terms to the existing revolving credit facility and is initially expected to bear interest at a rate of 4.25%, an improvement of 1.75% over the existing credit facility.