Source Energy completes $130M note offering and amends credit facilities

On December 8, 2016, Source Energy Services Canada LP (“Source LP”) and Source Energy Services Canada Holdings Ltd. (“Source Holdings” and together with Source LP, “Source”) completed its offering of $130-million aggregate principal amount of senior secured first lien notes (the “Notes”). The Notes,  due December 15, 2021, bear interest at an annual rate of 10.5 per cent.

Click assign tab The Notes  were offered in all provinces of Canada and in the United States by BMO Nesbitt Burns Inc. and Raymond James Ltd. (collectively, the “Initial Purchasers”) by way of a private placement under applicable securities laws.

Concurrently with the offering, Source LP amended and restated its credit agreement with a syndicate of lenders — led by Bank of Montreal as agent (the “Agent”) — that provides for a $35-million operating facility and US$5-million standby letter of credit facility.

Source is an integrated supplier and distributor of Northern White frac sand used in multi-stage hydraulic fracturing in Western Canada and the United States with a leading market presence in key areas of the Western Canadian Sedimentary Basin (WCSB).

Source sells frac sand directly to exploration and production companies as well as indirectly through pressure pumpers by way of its strategically located terminal network, which allows Source to efficiently move Northern White frac sand from its Canadian National Railway origin mine and processing facilities in Wisconsin to the Montney, Duvernay, Deep Basin and other oil and natural gas plays in the WCSB.

Source was represented by
Stikeman Elliott LLP with a team comprised of Leland Corbett, Craig Story, Patrick McNally, Amy Nugent and Rhonda Ferguson (corporate & securities), Michael Yuzdepski and Catherine Grygar (real estate) and Julie D’Avignon and Kevin Guenther (tax). Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as US securities counsel to Source with a team comprised of Andrew Foley, Ronnie Ollo and Dave Marshall.

The Initial Purchasers were represented by
Blake, Cassels & Graydon LLP with a team comprised of Tim Andison, Olga Kary, Jennifer Marshall, Jacob Gofman, Joshua Whitford, Andrew Goldie and Salma Gilani (corporate & securities), Nick Tropak, James Desjardins and Rodney Perkins (banking), Jay Geers (real estate) and Brian Bailey and Casey Richardson-Scott (tax).

The Agent and lenders were represented by
Dentons Canada LLP with a team comprised of Colin Yeo, Radha Khosla, Danijel Augustinovic and Mike Tallim (banking), David LeGeyt and John Regush (insolvency) and Dentons US LLP, with a team comprised of Michelle Alves (capital markets and banking) and Oscar Pinkas (insolvency).