June 16 (Bloomberg) -- Forest Oil Corp. dropped the most in almost four months after an $850 million loan backing its acquisition by Sabine Oil & Gas was postponed.
Forest Oil shares dropped 18 percent to $2.01 in New York, the biggest decline since Feb. 26. The financing being led by Barclays Plc may be marketed to investors at a later date, according to a person with knowledge of the transaction, who asked not to be identified, citing a lack of authorization to speak publicly.
Proceeds of the unsecured debt were to repay Forest Oil borrowings in connection with the purchase.
The companies said last month that First Reserve Corp.’s Houston-based Sabine Oil agreed to buy Denver-based Forest Oil in an all-stock transaction, without giving a value for the deal. Sabine holders will own 73.5 percent of the combined company, leaving Forest Oil shareholders with 26.5 percent, according to a May 6 statement.
Shane M. Bayless, Sabine’s chief financial officer, and Larry Busnardo, a spokesman for Forest, didn’t immediately return a phone calls seeking comment on the postponement.
Barclays began marketing the financing to investors last week with an initial spread of 6.75 percentage points more than the London interbank offered rate, according to data compiled by Bloomberg. Libor, the lending benchmark, has a 1 percent minimum.
Forest Oil’s $578 milion of 7.25 percent bonds due in June 2019 fell to 96.625 cents on the dollar at 4:55 p.m. in New York, from par on June 13, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
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