Forest Oil Corporation (FST) announced that it has priced its private offering to eligible purchasers of $500 million of 7.5% senior notes due 2020. The senior notes were priced at par.
This represents a $200 million increase from our initial proposed offering of $300 million in senior notes. The senior notes will be guaranteed by Forest Oil Permian Corporation, a subsidiary of Forest. The offering is expected to close on September 17, 2012, subject to customary closing conditions.
Forest intends to use a portion of the net proceeds from the offering of approximately $490.2 million to fund the proposed redemption of 50% of the aggregate principal amount of its outstanding 8.5% senior notes due 2014, and the balance to reduce borrowings under its bank credit facility. The principal amount outstanding of the 2014 Notes is $600 million.
Pending the proposed redemption of the 2014 notes, the portion of the net proceeds necessary to fund that redemption will be used to temporarily reduce borrowings under Forest’s bank credit facility or for general corporate purposes.