Sabine Oil and Gas Corp fka SOGCQ

[TESLA777]

Not sure what to make of this guys, I can tell you that Forest sold off a bunch of assets last year (over 1 Billion USD) to pay off debt holders. this is still a huge company with major assets, but It looks like bond holders on the Forest Oil side are upset...this could cause a drop and a major buying op in the near future.....JMHO...

Some more assets may have to be sold this year, we'll have to see how this plays out....GLTA...

Forest Oil Bondholders Seek $584 Million in Sabine Deal Suit
11:28 AM EST
February 27, 2015

http://www.bloomberg.com/news/articles/2015-02-27/forest-oil-bondholders-seek-584-million-in-sabine-deal-lawsuit

were deprived of $584 million when First Reserve Corp. structured a merger to avoid redeeming their debt.

First Reserve acquired Forest, placing it under the management of one of its units, Sabine Oil & Gas Corp., while structuring the agreement to avoid triggering a provision that would have required the bond to be redeemed, the debt holders claimed in a lawsuit Friday in New York state court. The parties to the merger “conspired to conceal the purported work-around” to the change of control, according to bondholder trustee Wilmington Savings Fund Society FSB.

The indenture of the natural gas and oil producer’s $577.9 million of 7.25 percent senior bonds includes terms that the bonds will be repaid when the ownership of the company shifts from one party to another, which typically takes place in a merger.

First Reserve’s Sabine agreed in May to acquire Forest in an all-stock transaction. The merger between the two energy producers creates one of the biggest energy producers in East Texas, holding drilling rights on 207,000 net acres in the region and another 65,000 acres in the Eagle Ford area of West Texas.

Forest at first acknowledged the merger would trigger a “change of control,” but then concocted a deal structure that achieved the same objectives as the merger without triggering the change of control provision, the bondholders said.

Bonds Tumble

Sabine’s unsecured bonds tumbled as much as 62 percent in December, when the company said the merger was restructured to avoid giving bondholders the right to buy back the debt at a premium, The bonds traded at 32 cents to 43 cents, yielding more than 37 percent, Bloomberg analyst Spencer Cutter said in a Jan. 15 report.

“Forest’s bad-faith conduct, in so intentionally subverting the very purpose of the change of control provision and undercutting what Forest knew the provision specifically was designed to protect, violated the express terms of the indenture,” the debt holders said. “If ever there was a complete change of control, this is it.”

Mark Palmer, a spokesman for Forest Oil, declined to comment on the lawsuit. Sigmund S. Wissner-Gross, a lawyer for the bondholders trustee, also declined to comment.

The same conduct that constituted a breach of the 2019 indenture also constitutes a breach of the change of control provision of $222 million of outstanding 7.5 percent notes due in 2020, the bondholders claimed.
The bondholders are seeking declaration that the deal triggered the change of control provisions and damages for breach of contract.

First Reserve owns more than 99 percent of Houston-based Sabine, formed as a joint venture in 2006 with Nabors Industries Ltd., according to the closely held producer’s annual report. Nabors sold out in 2012.

The case is Wilmington Savings Fund Society FSB v. Forest Oil Corp., 650584-2015, Supreme Court of the State of New York (Manhattan).

To contact the reporters on this story: Christie Smythe in Brooklyn at [e-mail]; Jodi Xu Klein in New York at [e-mail]

To contact the editors responsible for this story: David E. Rovella at [e-mail] Joe Schneider, Charles Carter