Boston, MA 06/17/2014 (wallstreetpr) – Shareholders of Forest Oil Corporation (NYSE:FST) can now relax. It has just been confirmed that all is well for the company concerning the planned tie-up with Sabine Oil.
In a statement today, Sabine CEO David Sambrooks termed as incorrect the earlier reports that made rounds yesterday about stalling acquisition of Forest Oil. Today’s announcement appears to be intended to undo the damage that the earlier reports had on Forest Oil. It emerged yesterday that the efforts to raise $850 million through debt sale that involved Barclays as a financier had been pulled. However, the reports have been confirmed as untrue.
Shares of Forest Oil are up nearly 16 percent in the current session. The shares have dropped almost 36 percent this year.
Plan on course
Forest Oil Corporation (NYSE:FST) is preparing to merge into Sabine, and several financial have stepped forward in the deal where the past weeks have seen the financial marketing the $850 million borrowing to their investors.
According to Sabine CEO Sambrooks, all parties are committed to seeing the deal to its successful completion. He noted that the deal is in the best interest of all shareholders.
The combination of Forest Oil and Sabine will lead to the creation of a big player in the Texas shale formation.
Ownership of the combined company
The deal is an all-stock transaction whose completion will see Sabine shareholders taking over a stake of 73.5 percent of the combined company while shareholders of Forest Oil Corporation (NYSE:FST) will contend with 26.5 percent stake in the new company.
The value of the deal has not been provided.
Who needs the deal?
Although the deal is expected to result in a win-win situation for all the participants, the recent performance of Forest Oil Corporation (NYSE:FST) appears to suggest that the company will do better if the deal is successful. The company not only saw its revenue drop almost 45 percent on a year-over-year basis, but it also failed to meet the consensus expectation in the most recent quarter.
