Forest Oil Corp fka FSTO

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Sabine Oil & Gas and Forest Oil Complete All-Stock Business Combination

http://investors.sabineoil.com/phoenix.zhtml?c=92251&p=irol-newsArticle&ID=1999888

Sabine to own 73.5% of the combined company, as previously announced, with voting power capped at 49.9%

Revised transaction terms require no refinancing of Forest and Sabine outstanding bonds, reducing transaction costs and interest expense by more than $100 million over the next three years

The combined company will have in excess of $480 million of liquidity at closing

Complementary acreage positions create an upstream industry leader in East Texas

HOUSTON, TEXAS and DENVER, COLORADO – December 16, 2014 – Sabine Oil & Gas LLC (“Sabine”) and Forest Oil Corporation (“Forest”) announced that they have closed today the previously reported all-stock business combination on a revised basis.

The combined entity intends to change its name to Sabine Oil & Gas Corporation, and is expected to be one of the upstream industry’s largest operators and lease holders in East Texas, benefiting from management expertise, streamlined operations and economies of scale. The combination also results in core positions in the Eagle Ford, North Louisiana Haynesville and Granite Wash that provide optionality for development and monetization.

David Sambrooks, the combined company’s President and CEO, commented:

“Since we announced the combination in May 2014, market dynamics have changed considerably but the logic for combining these two complementary companies has not. Today’s closing will create a strong platform for growth and bring stability and upside opportunity to stockholders of the combined company. The combined asset portfolio creates one of the upstream industry’s largest East Texas players, while generating operating synergies, economies of scale and optimized capital allocation.”
Patrick McDonald, Forest’s President and CEO, commented:

“This combination, as revised, is clearly in the best interest of Forest and its shareholders, and we are very pleased to have completed it.”

Revised Transaction Terms

At closing, the owners of Sabine (the “Sabine Investor Entities”) contributed their interests in Sabine to Forest, in exchange for common stock and non-voting convertible preferred stock of Forest representing an aggregate 73.5% economic interest in the combined company. Existing Forest common shareholders retained their Forest shares, which now represent, in the aggregate, a 26.5% economic interest in the combined company. Under the revised terms, the Sabine Investor Entities’ will hold approximately 40% of the voting power of the combined company (with Forest’s existing shareholders retaining approximately 60% of the voting power). The preferred stock issued to the Sabine Investor Entities will not be convertible to the extent conversion would cause the combined voting power of the Sabine Investor Entities to exceed 49.9% of the outstanding voting power of the company. The combined entity will be headquartered in Houston, Texas.

Revised Transaction Financing

In connection with the combination, the existing Sabine and Forest revolving credit agreements will be refinanced with a new reserve-based lending credit agreement (the “RBL Revolver”) at the combined company level. The RBL Revolver will have a borrowing base of $1 billion at closing. In addition, the combined company expects to incur an additional $50 million of second lien term loans under its existing second lien term loan facility in connection with the closing. Under the revised transaction terms, no change of control will result under the indentures governing Forest’s and Sabine’s outstanding bonds or Sabine’s second lien term loan, all of which will remain outstanding after closing. The RBL Revolver, the second lien term loan facility and the outstanding Forest and Sabine bonds will reside at the surviving company in the combination. As a result of the revised transaction terms, the $850 million of bridge commitments previously obtained to finance the repurchase of the Forest bonds under the prior transaction terms are no longer necessary. The combined company will save at least $100 million in transaction costs and interest expenses over the next three years by leaving the Forest bonds outstanding.