SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - October 28, 1996
FOREST OIL CORPORATION
(Exact name of registrant as specified in its charter)
New York 0-4597 25-0484900
(State or other juris- (Commission (IRS Employer
diction of incorporation) file number) Identification No.)
2200 Colorado State Bank Building, 1600 Broadway, Denver, CO 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 812-1400
Item 5. Other Events
For information concerning this item, please refer to
Exhibit 99.1 hereto, which is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits
(99.1) Forest Oil Corporation press release
announcing that Joint Energy Development Investments
Limited Partnership (JEDI), a Delaware limited
partnership whose general partner is an affiliate of
ENRON, has signed a letter of intent with Forest to
exchange two million shares of Forest's common stock for
a total consideration of $29.5 million.
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
FOREST OIL CORPORATION
(Registrant)
Dated: October 30, 1996 By: /s/ Daniel L. McNamara
Daniel L. McNamara
Secretary
FOR IMMEDIATE RELEASE
JEDI AND ANSCHUTZ TO INCREASE STAKE
IN FOREST OIL COMMON STOCK BY $45 MILLION
DENVER, COLORADO - October 29, 1996 - Forest Oil Corporation announced
today that Joint Energy Development Investments Limited Partnership (JEDI),
a Delaware limited partnership, whose general partner is an affiliate of
Enron, has signed a letter of intent with Forest to purchase two million
shares of Forest's common stock for total consideration of $29.5 million.
Among the conditions precedent to JEDI's purchase is the acquisition by The
Anschutz Corporation (Anschutz) of Forest's common stock by converting Forest
preferred stock and exercising certain warrants it currently holds for a total
consideration of $15.3 million. Completion of the transactions is subject to
JEDI and Forest entering into definitive agreements and satisfaction of certain
closing conditions. In addition, the parties can elect to not close the
transaction if the ten day average closing price per share of Forest stock is
less than $14.00 or more than $15.50.
JEDI would purchase two million shares of Forest Oil for $29.5 million or
$14.75 per share bringing its ownership to 3.68 million shares or 12.1% of
the outstanding shares of Forest. The newly purchased shares would be
non-transferable by JEDI, except in limited circumstances, until May 31, 1997.
Anschutz would convert 100% of the Second Series Convertible Preferred Stock
with a liquidation preference of $11.16 million into common stock and exercise
388,888, or 10%, of the outstanding warrants held by Anschutz for a total
exercise price of approximately $4.1 million. These transactions would bring
the total common stock held by Anschutz to 7.64 million shares or 25% of the
outstanding shares of Forest. As part of this transaction, the term of the
remaining 3.5 million warrants owned by Anschutz would be extended 12 months
to July 27, 1999.
The company would use the proceeds from the sale of equity and the warrant
exercise plus about $9.5 million in bank debt to extinguish approximately
$43 million of debt owed to JEDI currently bearing interest at 12-1/2%.
As a result of the transactions, Forest estimates primary shares outstanding
would be 30.5 million and fully diluted shares would be 36.7 million. Before
giving effect to the transaction, Forest estimates primary shares at
26.9 million and fully diluted shares at 34.7 million.
David H. Keyte, Chief Financial Officer commented, "As a result of these
transactions, Forest's leverage would be reduced to about 40% on a book basis
and 25% on a market cap basis, and cash flow and earnings would increase by
about $4.7 million per year."
"In January, when we completed our public offering, we told our investors
that our short-term leverage target was 40% of book capitalization. We have
now achieved that target with a two million share equity issuance at a 34%
premium to our public offering price. This transaction would add significant
financial flexibility to Forest and simplify its balance sheet considerably."
<TABLE>
The following table illustrates the pro forma effect, at June 30, 1996, of
these transactions on Forest's capitalization as well as the Anschutz exercise
of warrants and sale of Archean Energy stock previously announced in August.
<CAPTION> Capitalization
June 30, 1996
(In Thousands)
Pro Forma
Actual As
Adjusted
<S> <C> <C>
Bank debt $48,013 22,623
Production payment 13,122 13,122
obligation
Non-recourse secured 41,358 -
debt
Subordinated debentures 99,393 99,393
Deferred revenue 9,985 9,985
Minority interest 8,644 8,644
Shareholders' equity 178,537 238,307
Total capitalization $399,052 392,074
Fully diluted shares 35,000 37,000
outstanding
</TABLE>
Forest Oil Corporation is engaged in the acquisition, exploration,
development, production and marketing of natural gas and crude oil in
North America. Forest's principal reserves and producing properties are
located in the Gulf of Mexico, Texas, Oklahoma and Canada. Forest's common
and preferred stocks are traded on the Nasdaq National Market tier of The
Nasdaq Stock Market under the symbols FOIL and FOILO, respectively.
October 29, 1996
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