CALGARY, Feb. 29, 2016 /CNW/ - Sterling Resources Ltd. (TSX-V: SLG) ("Sterling" or the "Company" and together with its subsidiaries the "Group") announces an update on plans to redeem the US$225 million senior secured bond with current outstanding amount of US$180 million (ticker on Nordic ABM exchange: STRE01 PRO) (the "Bond"), issued by its UK subsidiary Sterling Resources (UK) Ltd. ("Sterling UK"), a potential recapitalization of the Group and the summoning of a meeting of holders of the Bond ("Bondholders") to be held on March 7, 2016.

Background

In accordance with the approval of the Bondholders at a Bondholder meeting held on November 6, 2015, various amendments and waivers were made to the terms and conditions governing the Bonds as previously announced (the "Third Amendment Agreement").  These included deferral of the October 30, 2015 Bond amortization instalment, suspension of payments to a blocked and charged account used for debt service purposes, and introduction of a set of refinancing milestones intended to achieve a redemption of the Bond as soon as practically possible and in any event on or before February 29, 2016 that would result in the repayment in cash in full of all of the obligations and liabilities owed to Bondholders (the "Bond Redemption").

The Group's efforts with respect to achieving a strategic transaction or refinancing that would result in a Bond Redemption have not been successful.  However, discussions are continuing between the Group, Nordic Trustee in its capacity as trustee for the Bond (the "Bond Trustee") and a group of large Bondholders holding in aggregate more than two-thirds (2/3) of the Bonds (the "Bondholder Committee") about a recapitalization of the Group (the "Recapitalization").  Over the past two months the Bond Trustee has granted various temporary waivers to Sterling UK and the Company in relation to certain additional undertakings, while these discussions continue.

Subject to completion of these discussions on a Recapitalization and negotiation of associated legal documentation, the Company expects to be able to announce details of the proposed Recapitalization in the next two weeks.  This would be accompanied by the summoning of a further Bondholder meeting in which Bondholders will be asked for their consent to the Recapitalization.

Amendments sought at the Bondholder meeting on March 7, 2016

As the current deadline for Bond Redemption on February 29, 2016 will not be met, and in order to give the parties time to complete the ongoing negotiations regarding the Recapitalization, at Sterling UK's request the Bond Trustee is summoning the Bondholder meeting on March 7, 2016 to seek Bondholders' approval of short extensions of certain deadlines and other amendments to the Third Amendment Agreement (the "Proposed Amendments").  These Proposed Amendments are, in summary form:

Full details of the Proposed Amendments are set out in the summons letter of today's date which is being filed on SEDAR (www.sedar.com) and being made available on the Company's website.  The summons letter is the definitive document in the event of any inconsistency with the summary set out above.  The Company has been informed that Bondholders holding more than two-thirds (2/3) of Bonds will vote in favour of the Proposed Amendments.

Sterling Resources Ltd. is a Canadian-listed international oil and gas company headquartered in Calgary, Alberta with assets in the United Kingdom, France and the Netherlands.  The shares are listed and posted for trading on the TSX Venture Exchange under the symbol "SLG".

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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Forward-Looking Statements

All statements included in this news release that address activities, events or developments that Sterling expects, believes or anticipates will or may occur in the future are forward-looking statements.  In particular, this news release contains forward-looking statements with respect to negotiation of the Recapitalization of the Group, the nature of and anticipated benefits to Sterling and the Bondholders of the Proposed Amendments; and the expected announcement in the next two weeks of details of the proposed Recapitalization and the summoning of a further Bondholder meeting.

These forward-looking statements involve numerous assumptions made by Sterling based on its experience, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.  In addition, these statements involve substantial known and unknown risks and uncertainties that contribute to the possibility that the forward looking statements will prove inaccurate, certain of which are beyond Sterling's control.  Readers should also carefully consider the matters discussed under the heading "Risk Factors" in the Company's Annual Information Form.

Undue reliance should not be placed on these forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur.  Sterling's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements.  These statements speak only as of the date of the news release. Sterling does not intend and does not assume any obligation to update these forward-looking statements except as required by law.

SOURCE Sterling Resources Ltd.