Sabine Says Funding Backing Forest Deal Remains in PlaceShannon D. Harrington and Christine Idzelis
Bank commitments to fund Sabine Oil & Gas LLC’s proposed acquisition of Forest Oil Corp. remain in place after the sale of an $850 million loan to investors was postponed yesterday, Sabine said in a statement.
“The proposed combination of our companies is moving ahead,” Sabine Chief Executive Officer David Sambrooks said in the statement distributed by PR Newswire. “All parties remain fully committed to this transaction and will continue to take the necessary steps to ensure it is consummated to the benefit of all shareholders.”
The comments come a day after shares of Denver-based Forest dropped the most in almost four months, falling 18 percent to $2.01. Forest rose to $2.29 as of 9:31 a.m. in New York.
Last week, a group of banks led by Barclays Plc began marketing the financing to investors with an initial spread of 6.75 percentage points more than the London interbank offered rate, according to data compiled by Bloomberg. Libor, the variable lending benchmark for high-yield corporate loans, has a 1 percent minimum.
The sale of the loan to investors has been postponed, a person with knowledge of the deal said yesterday. The deferment doesn’t affect the financing commitment that was originally underwritten by Barclays and Wells Fargo & Co., Houston-based Sabine said today.
Proceeds from the loan will repay Forest Oil borrowings in connection with the merger.
Forest Oil’s $578 million of 7.25 percent bonds due in June 2019 rose to 99.5 cents on the dollar at 9:07 a.m. in New York, up from 96.625 cents yesterday, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds traded at par on June 13.