<PAGE>
FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION NO. 333-16125
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED FEBRUARY 7, 1997
2,014,371 SHARES
[LOGO]
FOREST OIL CORPORATION
COMMON STOCK
----------------
FOREST OIL CORPORATION (THE "COMPANY" OR "FOREST") HAS CALLED FOR REDEMPTION
ON FEBRUARY 28, 1997 (THE "REDEMPTION DATE") ALL OF ITS OUTSTANDING $.75
CONVERTIBLE PREFERRED STOCK (THE "PREFERRED STOCK"), AT A REDEMPTION PRICE OF
$10.00, PLUS ACCUMULATED AND UNPAID DIVIDENDS TO AND INCLUDING THE REDEMPTION
DATE (FOR AN AGGREGATE OF $10.06 PER SHARE, THE "REDEMPTION PRICE"). FROM AND
AFTER THE REDEMPTION DATE, HOLDERS OF SHARES OF PREFERRED STOCK (THE "HOLDERS")
THAT ARE NOT CONVERTED AS HEREINAFTER DESCRIBED SHALL BE ENTITLED ONLY TO THE
REDEMPTION PRICE, AND NO FURTHER DIVIDENDS SHALL ACCRUE.
THIS PROSPECTUS COVERS THE ISSUANCE OF A MAXIMUM OF 2,014,371 SHARES OF
COMMON STOCK, PAR VALUE $.10 PER SHARE (THE "COMMON STOCK"), OF THE COMPANY
UNDER THE STANDBY ARRANGEMENTS DESCRIBED HEREIN UNDER "STANDBY ARRANGEMENT" AND
THE REOFFERING OF ANY COMMON STOCK ISSUED UPON CONVERSION OF THE OUTSTANDING
PREFERRED STOCK OF THE COMPANY INTO COMMON STOCK BY LEHMAN BROTHERS INC. (THE
"PURCHASER") OR PURSUANT TO SUCH STANDBY ARRANGEMENTS.
THE PREFERRED STOCK IS CONVERTIBLE INTO SHARES OF COMMON STOCK ON THE BASIS
OF 0.7 SHARES OF COMMON STOCK FOR EACH ONE SHARE OF PREFERRED STOCK UNTIL THE
CLOSE OF BUSINESS ON FEBRUARY 21, 1997 (THE "CONVERSION TERMINATION DATE"). CASH
WILL BE PAID FOR FRACTIONAL SHARES OF COMMON STOCK, AND NO PAYMENT OR ADJUSTMENT
WILL BE MADE ON ACCOUNT OF ANY DIVIDENDS ON THE SHARES OF COMMON STOCK ISSUED ON
SUCH CONVERSION. THE CONVERSION RIGHT EXPIRES AT THE CLOSE OF BUSINESS ON THE
CONVERSION TERMINATION DATE.
THE COMMON STOCK IS LISTED ON THE NASDAQ NATIONAL MARKET. ON FEBRUARY 6,
1997, THE LAST SALE PRICE OF THE COMPANY'S COMMON STOCK ON THE NASDAQ NATIONAL
MARKET WAS $16 7/8 PER SHARE.
THE COMPANY HAS MADE ARRANGEMENTS WITH THE PURCHASER PURSUANT TO WHICH THE
PURCHASER HAS AGREED, SUBJECT TO CERTAIN CONDITIONS, TO PURCHASE FROM THE
COMPANY A NUMBER OF AUTHORIZED BUT UNISSUED SHARES OF COMMON STOCK, EQUAL TO THE
TOTAL NUMBER OF SHARES OF COMMON STOCK THAT WOULD HAVE BEEN DELIVERED UPON
CONVERSION OF THOSE PREFERRED STOCK SHARES THAT ARE NOT DULY SURRENDERED FOR
CONVERSION PRIOR TO THE CLOSE OF BUSINESS ON THE CONVERSION TERMINATION DATE.
THE PURCHASER MAY ALSO PURCHASE PREFERRED STOCK IN THE OPEN MARKET OR OTHERWISE
PRIOR TO THE CONVERSION TERMINATION DATE AND HAS AGREED TO CONVERT ALL PREFERRED
STOCK SO PURCHASED INTO COMMON STOCK. SEE "STANDBY ARRANGEMENT" FOR A
DESCRIPTION OF THE PURCHASER'S COMPENSATION AND INDEMNIFICATION ARRANGEMENTS
WITH THE COMPANY.
PRIOR TO OR AFTER THE REDEMPTION DATE, THE PURCHASER MAY OFFER TO THE PUBLIC
SHARES OF COMMON STOCK AT PRICES SET BY THE PURCHASER FROM TIME TO TIME. IT IS
INTENDED THAT SUCH PRICES WILL NOT BE INCREASED MORE FREQUENTLY THAN ONCE IN ANY
CALENDAR DAY AND WILL NOT EXCEED THE GREATER OF THE LAST SALE OR CURRENT ASKED
PRICE OF THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET, PLUS APPLICABLE
DEALERS' COMMISSIONS. THUS, THE PURCHASER MAY REALIZE PROFITS OR INCUR LOSSES
INDEPENDENT OF THE COMPENSATION REFERRED TO UNDER "STANDBY ARRANGEMENT". SUCH
SHARES OF COMMON STOCK MAY BE OFFERED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE FROM TIME TO TIME BY THE PURCHASER. ANY
COMMON STOCK SO OFFERED BY THE PURCHASER WILL BE SUBJECT TO RECEIPT AND
ACCEPTANCE BY IT AND SUBJECT TO ITS RIGHTS TO REJECT ORDERS IN WHOLE OR IN PART.
SEE "STANDBY ARRANGEMENT". THIS PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN
OFFER TO SELL ANY SECURITIES OTHER THAN THE COMMON STOCK OFFERED BY THE
PURCHASER.
FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" COMMENCING
ON PAGE S-4 HEREOF.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
LEHMAN BROTHERS
FEBRUARY 7, 1997
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE PURCHASER MAY EFFECT TRANSACTIONS WHICH
STABILIZE OR MAINTAIN THE MARKET PRICES OF THE COMMON STOCK AND THE PREFERRED
STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET SYSTEM, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THE OFFERING, THE PURCHASER MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK OF THE COMPANY ON THE NASDAQ NATIONAL
MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934.
SEE "STANDBY ARRANGEMENT."
PROSPECTUS SUMMARY
THE COMPANY
Forest and its subsidiaries are engaged in the exploration, exploitation,
development, production, acquisition and marketing of natural gas and crude oil
in North America. The Company, which is the successor to a company formed in
1916, has extensive operating experience in most of the major exploration and
producing areas in and offshore the United States and in Canada. Forest's
principal reserves and producing properties are located in the Gulf of Mexico,
Texas, Oklahoma and Canada. The Company currently operates 45 offshore platforms
in the Gulf of Mexico. For the first nine months of 1996 production from the
offshore Gulf of Mexico and Canada each accounted for approximately 41% of the
Company's production on a Mcfe basis.
USE OF PROCEEDS
The net proceeds, if any, received by the Company from the sale of Common
Stock to the Purchaser pursuant to the standby arrangements described herein
will be used to pay the Redemption Price for the Preferred Stock not surrendered
for conversion. Any other amounts received by the Company pursuant to the
profit-sharing arrangement described in "Standby Arrangement" will be used for
general corporate purposes. The amount of the proceeds to be received by the
Company from the Purchaser is not determinable at this time, because neither the
number of shares, if any, that will be sold to the Purchaser nor the amount of
profit, if any, that the Purchaser will realize upon resale of such shares can
be determined at this time. The Company will not receive any cash proceeds from
the issuance of Common Stock upon the conversion of the Preferred Stock.
RECENT DEVELOPMENTS
REDEMPTION OF PREFERRED STOCK
The Company has called for redemption on February 28, 1997 all of its
outstanding Preferred Stock. Pursuant to the terms of the Company's Restated
Certificate of Incorporation relating to the Preferred Stock and as a result of
the call, Holders of Preferred Stock are entitled to receive from the Company
upon redemption the sum of $10.00, plus accumulated and unpaid dividends to and
including the Redemption Date (for an aggregate redemption price of $10.06 per
share). Holders of Preferred Stock may convert each share of Preferred Stock
into 0.7 shares of Common Stock prior to the close of business on February 21,
1997.
EXTINGUISHMENT OF NONRECOURSE SECURED LOAN DUE TO JEDI
On November 5, 1996, the Company exchanged 2,000,000 shares of Common Stock
plus approximately $13,500,000 in cash to extinguish approximately $43,000,000
of nonrecourse secured debt owed to Joint Energy Development Investments Limited
Partnership ("JEDI"), a Delaware limited partnership
S-2
<PAGE>
whose general partner is an affiliate of Enron Corp. In connection with this
transaction, The Anschutz Corporation ("Anschutz") acquired 1,628,888 shares of
Common Stock by exercising warrants for 388,888 shares of Common Stock at $10.50
per share and converting 620,000 shares of Forest's Second Series Preferred
Stock into 1,240,000 shares of Common Stock. The JEDI debt bore interest at the
rate of 12 1/2% per annum. The fair value of the stock issued, the cash payment
made, and the transaction costs incurred by the Company were less than the
carrying amount of the debt; accordingly, the Company recorded a gain of
approximately $2,166,000 on the extinguishment of the debt. Giving effect to
these transactions, Anschutz holds approximately 7,640,000 shares of Common
Stock and warrants to acquire an additional 3,500,000 shares of Common Stock.
JEDI holds approximately 3,680,000 shares of the Common Stock. See "Risk
Factors-- Ownership Position of Anschutz."
S-3
<PAGE>
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE COMMON STOCK SHOULD CAREFULLY CONSIDER;
TOGETHER WITH THE OTHER INFORMATION HEREIN, THE FOLLOWING FACTORS THAT AFFECT
THE COMPANY:
CONDITIONS IN OIL AND GAS INDUSTRY AFFECTING THE COMPANY
The Company's revenues, profitability and future rate of growth, if any, are
substantially dependent upon prevailing prices for oil and natural gas and the
ability of the Company to acquire proved reserves. Historically, the prices for
oil and natural gas have been quite volatile. The Company is impacted more by
natural gas prices than by oil prices, because the majority of its production is
natural gas. The Company has entered into volumetric production payments and
energy swap agreements with respect to a portion of its current production which
reduce the Company's exposure to commodity price risk. However, a significant
portion of the Company's oil and gas production is subject to spot market
prices, which have historically been volatile. The volatility of the spot market
for natural gas is due to factors beyond the Company's control, including
seasonality of demand. Prices are also affected by actions of state and local
agencies, the United States and foreign governments, and international cartels.
These external factors and the volatile nature of the energy markets make it
difficult to estimate future prices of oil and natural gas. Any substantial or
extended decline in the price of oil or natural gas would have a material
adverse effect on the Company's financial condition and results of operations.
The marketability of the Company's production depends in part upon the
availability, proximity and capacity of gas gathering systems, pipelines and
processing facilities. U.S. federal and state regulation and Canadian regulation
of oil and gas production and transportation, general economic conditions, and
changes in supply and demand all could adversely affect the Company's ability to
produce and market its oil and natural gas. If market factors were to change
dramatically, the financial impact on the Company could be substantial. The
availability of markets is beyond the control of the Company and thus represents
a significant risk.
UNCERTAINTY OF ESTIMATES OF OIL AND GAS RESERVES
Petroleum engineering is not an exact science. Estimates of commercially
recoverable oil and gas reserves and of the future net cash flows therefrom are
based upon a number of variable factors and assumptions, such as historical
production from the subject properties, comparison with other producing
properties, the assumed effects of regulation by governmental agencies and
assumptions concerning future oil and gas prices and future operating costs,
severance and excise taxes, abandonment costs, development costs and workover
and remedial costs, all of which may in fact vary considerably from actual
results. All such estimates are to some degree speculative, and various
classifications of reserves are only attempts to define the degree of
speculation involved. For these reasons, estimates of the commercially
recoverable reserves of oil and natural gas attributable to any particular
property or group of properties, the classification, cost and risk of recovering
such reserves and estimates of the future net cash flows expected therefrom,
prepared by different engineers or by the same engineers at different times, may
vary substantially. The Company therefore emphasizes that the actual production,
revenues, severance and excise taxes, development expenditures, workover and
remedial expenditures, abandonment expenditures and operating expenditures with
respect to its reserves will likely vary from such estimates, and such variances
may be material.
In addition, actual future net cash flows will be affected by factors such
as price, actual production, supply and demand for oil and natural gas,
curtailments or increases in consumption by natural gas purchasers, changes in
governmental regulations or taxation and the impact of inflation on costs. The
timing of actual future net revenue from proved reserves, and thus their actual
present value, can be affected by the timing of the incurrence of expenditures
in connection with development of oil and gas properties. The 10% discount
factor, which is required by the Securities and Exchange Commission to be
S-4
<PAGE>
used to calculate present value for reporting purposes, is not necessarily the
most appropriate discount factor based on interest rates in effect from time to
time and risks associated with the oil and gas industry. Discounted present
value, no matter what discount rate is used, is materially affected by
assumptions as to the amount and timing of future production, which may and
often do prove to be inaccurate. The present value of future net cash flows
referred to in this Prospectus Supplement should not be construed as the current
market value of the estimated oil and gas reserves attributable to the Company's
properties.
CEILING LIMITATION WRITEDOWNS
The Company reports its operations using the full cost method of accounting
for oil and gas properties. The Company capitalizes the cost to acquire, explore
for and develop oil and gas properties. Under full cost accounting rules, the
net capitalized costs of oil and gas properties may not exceed a "ceiling limit"
which is based upon the present value of estimated future net cash flows from
proved reserves, discounted at 10%, plus the lower of cost or fair market value
of unproved properties. If net capitalized costs of oil and gas properties
exceed the ceiling limit, the Company is subject to a ceiling limitation
writedown to the extent of such excess. A ceiling limitation writedown is a
charge to earnings which does not impact cash flow from operating activities.
However, such writedowns impact the amount of the Company's shareholders'
equity. The risk that the Company will be required to write down the carrying
value of its oil and gas properties increases when oil and gas prices are
depressed or volatile. In addition, writedowns may occur if the Company has
substantial downward revisions in its estimated proved reserves or if purchasers
or governmental action cause an abrogation of, or the Company voluntarily
cancels, long-term contracts for its natural gas. The Company had a writedown of
$58,000,000 in 1994. No assurance can be given that the Company will not
experience additional writedowns in the future.
CURRENCY RISK
A substantial portion of the Company's operations are located in Canada. The
expenses of such operations are payable in Canadian dollars and certain of the
revenues derived from natural gas and oil sales will be based upon U.S. dollar
prices. The results of such Canadian operations are therefore subject to the
risks of fluctuation in the relative values of Canadian and U.S. dollars.
GENERAL RISKS OF OIL AND GAS OPERATIONS
The nature of the oil and gas business involves a variety of risks,
including, but not limited to, the risks of operating hazards such as fires,
explosions, cratering, blow-outs, adverse weather conditions, pollution and
environmental risks, encountering formations with abnormal pressures, and, in
horizontal wellbores, the increased risk of mechanical failure and collapsed
holes, the occurrence of any of which could result in substantial losses to the
Company. The Company conducts a substantial portion of its operations offshore
in the Gulf of Mexico. Such operations are subject to certain risks including,
but not limited to, collision, sinking and grounding of rigs and vessels. These
risks could result in substantial losses to the Company due to personal injury,
severe damage or destruction of property and equipment, environmental clean-up
costs and the suspension of operations. The Company maintains insurance against
some, but not all, of these risks in amounts that management believes to be
reasonable in accordance with customary oil and gas industry practices. The
occurrence of a significant event, however, that is not fully insured could have
a material adverse effect on the Company's financial condition and results of
operations.
DRILLING RISKS
Drilling involves numerous risks, including the risk that no commercially
productive oil or gas reservoirs will be encountered. The cost of drilling and
completing wells is often unpredictable, and drilling operations may be
curtailed, delayed or canceled as a result of a variety of factors, including
unexpected drilling conditions, pressure or irregularities in formations,
equipment failures or accidents, weather conditions and shortages or delays in
delivery of equipment. There can be no assurance as to the success of
S-5
<PAGE>
the Company's future drilling activities. The Company's current inventory of 2-D
and 3-D seismic surveys will not necessarily increase the likelihood that the
Company will drill or complete commercially productive wells or that the volumes
of reserves, if any, would necessarily be greater than the Company would have
discovered without its current inventory of seismic surveys.
GAS MARKETING
The Company's operations include gas marketing in Canada as a result of the
acquisition of ATCOR Resources Ltd. ("ATCOR") in 1996. The Company's gas
marketing operations consist of the marketing of its own gas production, the
purchase and direct sale of third parties' natural gas, the handling of
transportation and operations of such third party gas and spot purchasing and
selling of natural gas. The profitability of such natural gas marketing
operations depend in large part on the ability of the Company to assess and
respond to changing market conditions, including credit risk, in negotiating
natural gas purchase and sale agreements. Profitability of such natural gas
marketing operations also depend in large part on the ability of the Company to
maximize the volume of third party natural gas which the Company purchases and
resells and on the ability of the Company to obtain a satisfactory margin
between the purchase price and the sales price for such volumes. The inability
of the Company to respond appropriately to changing market conditions in
connection with its gas marketing division could materially adversely affect the
Company's results of operations.
GAS PROCESSING
As a result of the ATCOR acquisition, the Company's operations also include
processing of natural gas to extract various natural gas liquids. The Company's
gas processing operations primarily consist of an interest in an ethane
extraction plant located in Edmonton, Canada. In order to obtain from natural
gas suppliers volumes of committed natural gas reserves to maintain natural gas
throughput at optimal levels, the plant must periodically contract to process
additional natural gas volumes provided from new or existing sources.
COMPETITION
The Company operates in a highly competitive environment. The Company
competes with major and independent oil and gas companies for the acquisition of
desirable oil and gas properties, as well as the equipment and labor required to
develop and operate such properties. The Company also competes with major and
independent oil and gas companies in the marketing and sale of oil and natural
gas to marketers and end-users. Many of these competitors have financial and
other resources substantially greater than those of the Company.
REPLACEMENT OF RESERVES
In general, the volume of production from oil and gas properties declines as
reserves are depleted. The decline rates depend on reservoir characteristics and
vary from the steep decline rates characteristic of Gulf of Mexico reservoirs,
where the Company has a significant portion of its production, to the relatively
slow decline rates characteristic of long-lived fields in other regions. Except
to the extent the Company acquires properties containing proved reserves or
conducts successful development and exploration activities, or both, the proved
reserves of the Company will decline as reserves are produced. The Company's
future natural gas and oil production is, therefore, highly dependent upon its
level of success in finding or acquiring additional reserves. The business of
exploring for, developing or acquiring reserves is capital intensive. To the
extent cash flow from operations is reduced and external sources of capital
become limited or unavailable, the Company's ability to make the necessary
capital investment to maintain or expand its asset base of oil and gas reserves
would be impaired. In addition, there can be no assurance that the Company's
future development, acquisition and exploration activities will result in
additional proved reserves or that the Company will be able to drill productive
wells at acceptable costs.
S-6
<PAGE>
ACQUISITION RISKS
The Company's recent growth has been primarily attributable to acquisitions
of producing properties. The Company expects to continue to evaluate and pursue
acquisition opportunities on terms management considers favorable to the
Company. The successful acquisition of producing properties requires an
assessment of recoverable reserves, future oil and gas prices, operating costs,
potential environmental and other liabilities and other factors beyond the
Company's control. Such assessments are necessarily inexact and their accuracy
inherently uncertain. In connection with such an assessment, the Company
performs a review of the subject properties that it believes to be generally
consistent with industry practices. Such a review, however, will not reveal all
existing or potential problems nor will it permit a buyer to become sufficiently
familiar with the properties to fully assess their deficiencies and
capabilities. Inspections may not always be performed on every platform or well,
and structural and environmental problems are not necessarily observable even
when an inspection is undertaken. The Company is generally not entitled to
contractual indemnification for preclosing liabilities, including environmental
liabilities, and generally acquires interests in the properties on an "as is"
basis with limited remedies for breaches of representations and warranties.
GOVERNMENT REGULATION, ENVIRONMENTAL RISKS AND TAXES
Various aspects of the Company's oil and natural gas operations are
regulated by administrative agencies under statutory provisions of the states
and provinces where such operations are conducted, by certain agencies of the
U.S. federal government for operations on U.S. federal leases and by the
Canadian government. In the past, the U.S. federal government has regulated the
prices at which oil and natural gas could be sold. While sales by producers of
natural gas, and all sales of crude oil, condensate and natural gas liquids can
currently be made at uncontrolled market prices, Congress could reenact price
controls in the future.
Extensive U.S., state and local laws and Canadian laws govern oil and gas
operations regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment. Numerous governmental
departments issue rules and regulations to implement and enforce such laws which
are often difficult and costly to comply with and which carry substantial
penalties for failure to comply. These laws, rules and regulations may restrict
the rate of oil and gas production below the rate that would otherwise exist.
The regulatory burden on the oil and gas industry increases its cost of doing
business and consequently affects its profitability. These laws, rules and
regulations affect the operations of the Company. Compliance with environmental
requirements generally could have a material adverse effect upon the capital
expenditures, earnings or competitive position of Forest. Although Forest's
experience has been to the contrary, there is no assurance that this will
continue to be the case.
OWNERSHIP POSITION OF ANSCHUTZ
Anschutz has a substantial ownership position in the Company and may
designate three of the Company's directors. Therefore, Anschutz has the ability
to exert substantial influence with respect to matters considered by the Board
of Directors. Based on the number of shares outstanding on January 31, 1997,
Anschutz owned approximately 24.9% of the outstanding Common Stock. Anschutz may
acquire additional shares up to a maximum 40% position, but its ability to
exceed such percentage is limited by a shareholders agreement with the Company
that expires in 2000. Under certain circumstances Anschutz could have a veto
power over proposed transactions between the Company and third parties such as a
merger, which requires the approval of the holders of two-thirds of the
outstanding Common Stock. It is unlikely that control of the Company could be
transferred to a third party without Anschutz's consent and agreement. It is
also unlikely that a third party would offer to pay a premium to acquire the
Company without the prior agreement of Anschutz, even if the Board of Directors
should choose to attempt to sell the Company in the future. Finally, the 40%
ownership limitation on Anschutz's ownership terminates in 2000 and earlier
under certain circumstances. In the absence of these limitations, based on the
number of
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shares outstanding on January 31, 1997, Anschutz may acquire up to an additional
approximately 11.4% of the Common Stock by exercising an option for 3,500,000
shares of Common Stock.
ANTI-TAKEOVER PROVISIONS
Certain provisions in the Company's Restated Certificate of Incorporation,
By-laws, its Shareholders' Rights Plan and executive severance agreements may
make it more difficult to effect a change in control of the Company and replace
incumbent management.
NO DIVIDENDS
The Company does not intend to pay cash dividends on its Common Stock in the
foreseeable future.
The Company currently intends to retain its cash for the continued growth of its
business, including development, exploration and acquisition activities. In
addition, the Company's bank credit facility and the Indenture executed in
connection with the Company's 11 1/4% Senior Subordinated Notes due 2003
currently restrict the ability of the Company to pay dividends.
S-8
<PAGE>
PRICE RANGE OF COMMON STOCK
The Company has one class of common equity securities outstanding, its
Common Stock, par value $.10 per share. On January 31, 1997, 30,543,104 shares
of Common Stock were held by approximately 1,700 holders of record.
The Common Stock is traded on the Nasdaq National Market. The high and low
intraday sales prices of the Common Stock for each quarterly period of the years
presented as reported by the Nasdaq National Market are listed in the chart
below. All of the following quotations have been adjusted to reflect the 5 to 1
reverse stock split of the Common Stock that occurred on January 8, 1996. There
were no dividends on Common Stock in 1994, 1995, 1996 or in the first quarter of
1997.
<TABLE>
<CAPTION>
HIGH LOW
--------- --------
<S> <C> <C>
1994
First Quarter........................... $23 3/4 $17 3/16
Second Quarter.......................... 23 3/4 16 7/8
Third Quarter........................... 22 1/2 15 15/16
Fourth Quarter.......................... 17 1/2 9 3/8
<CAPTION>
HIGH LOW
--------- --------
<S> <C> <C>
1995
First Quarter........................... $12 3/16 $ 6 7/8
Second Quarter.......................... 11 7/8 7 3/16
Third Quarter........................... 15 5/8 8 1/8
Fourth Quarter.......................... 16 9/16 10 5/8
<CAPTION>
HIGH LOW
--------- --------
<S> <C> <C>
1996
First Quarter........................... $16 1/2 $10 1/2
Second Quarter.......................... 13 5/8 11 1/4
Third Quarter........................... 14 3/4 12 1/2
Fourth Quarter.......................... 17 7/8 12 3/8
<CAPTION>
HIGH LOW
--------- --------
<S> <C> <C>
1997
First Quarter (through February 6,
1997)................................. $19 3/8 $16 1/4
</TABLE>
On February 6, 1997, the last reported sales price of the Common Stock as
quoted on the Nasdaq National Market was $16 7/8 per share.
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<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
The following table sets forth selected financial and operating data
regarding the Company as of and for each of the nine month periods ending
September 30, 1996 and 1995 and for each of the years in the five year period
ended December 31, 1995. This data should be read in conjunction with the
Consolidated Financial Statements of the Company included in the Company's
report on Form 10-K/A for the year ended December 31, 1995, the Consolidated Pro
Forma Financial Statements of the Company at September 30, 1996 and for the nine
months ended September 30, 1996 and the year ended December 31, 1995 and the
Financial Statements of ATCOR Resources Ltd. at December 31, 1995 and for each
of the years in the three year period ended December 31, 1995, included in the
Company's current report on Form 8-K/A dated January 28, 1997.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------------- -----------------------------------------------------
PRO FORMA PRO FORMA
1996(1) 1996 1995 1995(2) 1995 1994 1993 1992(3)
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA
Revenue:
Marketing and processing(4)........... $ 148,955 135,614 -- 139,444 -- -- -- --
Oil and gas sales and other........... 92,479 88,769 60,528 129,458 82,456 115,947 105,148 113,186
--------- --------- --------- --------- --------- --------- --------- ---------
Total revenue....................... 241,434 224,383 60,528 268,902 82,456 115,947 105,148 113,186
Expenses:
Marketing and processing(4)........... 141,797 129,115 -- 133,192 -- -- -- --
Oil and gas production................ 24,093 23,224 16,576 37,512 22,463 22,384 19,540 15,865
General and administrative............ 10,217 9,526 5,761 12,949 9,081 11,166 12,003 11,611
Interest.............................. 14,201 18,042 19,100 21,357 25,323 26,773 23,729 27,800
Depreciation and depletion............ 45,599 43,862 33,631 68,047 43,592 65,468 60,581 46,624
Provison for impairment of oil and gas
properties(4)....................... -- -- -- 21,326 -- 58,000 -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total expenses...................... 235,907 223,769 75,068 294,383 100,459 183,791 115,853 101,900
--------- --------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes,
minority interest, cumulative
effects of changes in accounting
principles and extraordinary item... 5,527 614 (14,540) (25,481) (18,003) (67,844) (10,705) 11,286
Income tax expense (benefit).......... 3,669 3,250 (7) (3,091) (7) 9 (1,350) 3,988
Minority interest in loss (earnings)
of subsidiary....................... 228 228 -- (7) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Income (loss) before cumulative
effects of changes in accounting
principles and extraordinary item... $ 2,086 (2,408) (14,533) $ (22,397) (17,996) (67,853) (9,355) 7,298
--------- ---------
--------- ---------
Cumulative effects of changes in
accounting principles for oil and
gas sales, postretirement benefits
and income taxes(6)................. -- -- -- (13,990) (1,123) --
Extraordinary item--extinguishment of
debt(6)............................. -- -- -- -- (10,735) --
--------- --------- --------- --------- --------- ---------
Net earnings (loss)................... $ (2,408) (14,533) (17,996) (81,843) (21,213) 7,298
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Weighted average number of common
shares outstanding.................. 31,471 23,698 6,611 28,119 7,360 5,619 4,399 2,755
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Net earnings (loss) attributable to
common stock........................ $ (4,027) (16,153) (20,156) (84,004) (23,463) 4,950
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Primary earnings (loss) per share(7):
Earnings (loss) before cumulative
effects of changes in accounting
principles and extraordinary
item.............................. $ .01 (.17) (2.44) (.87) (2.74) (12.46) (2.64) 1.80
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Net earnings (loss)................. $ (.17) (2.44) (2.74) (14.95) (5.34) 1.80
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
<CAPTION>
1991
---------
<S> <C>
STATEMENT OF OPERATIONS DATA
Revenue:
Marketing and processing(4)........... --
Oil and gas sales and other........... 69,897
---------
Total revenue....................... 69,897
Expenses:
Marketing and processing(4)........... --
Oil and gas production................ 12,548
General and administrative............ 14,076
Interest.............................. 23,306
Depreciation and depletion............ 38,229
Provison for impairment of oil and gas
properties(4)....................... 34,000
---------
Total expenses...................... 122,159
---------
Income (loss) before income taxes,
minority interest, cumulative
effects of changes in accounting
principles and extraordinary item... (52,262)
Income tax expense (benefit).......... (17,412)
Minority interest in loss (earnings)
of subsidiary....................... --
---------
Income (loss) before cumulative
effects of changes in accounting
principles and extraordinary item... (34,850)
Cumulative effects of changes in
accounting principles for oil and
gas sales, postretirement benefits
and income taxes(6)................. --
Extraordinary item--extinguishment of
debt(6)............................. 9,502
---------
Net earnings (loss)................... (25,348)
---------
---------
Weighted average number of common
shares outstanding.................. 2,499
---------
---------
Net earnings (loss) attributable to
common stock........................ (30,557)
---------
---------
Primary earnings (loss) per share(7):
Earnings (loss) before cumulative
effects of changes in accounting
principles and extraordinary
item.............................. (16.03)
---------
---------
Net earnings (loss)................. (12.23)
---------
---------
</TABLE>
S-10
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------------- -----------------------------------------------------
PRO FORMA PRO FORMA
1996(1) 1996 1995 1995(2) 1995 1994 1993 1992(3)
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER MCFE AMOUNTS)
BALANCE SHEET DATA (AT END OF
PERIOD)
Total assets....................... $ 532,894 533,166 304,743 544,235 321,043 324,832 426,755 378,532
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Long-term debt:
Bank credit facilities........... $ 45,028 36,165 19,800 45,624 40,237 33,000 25,000 --
Nonrecourse accrued loan(8)...... -- 42,446 47,149 -- 40,001 57,316 52,118 --
Production payment
obligation(9).................. 11,634 11,634 15,657 14,276 14,276 17,422 17,917 22,823
Senior secured notes............. -- -- -- -- -- -- -- 56,323
Subordinated debentures.......... 99,407 99,407 99,353 99,365 99,365 99,316 99,272 89,175
--------- --------- --------- --------- --------- --------- --------- ---------
Total long-term debt........... 156,069 189,652 181,959 159,265 193,879 207,054 194,307 168,321
Gas balancing liability............ 3,340 3,340 5,926 3,841 3,841 8,525 3,887 3,115
Other liabilities(10).............. 21,962 21,962 22,996 25,824 23,298 19,641 23,166 12,170
Deferred revenue(11)............... 8,569 8,569 18,501 15,137 15,137 35,908 67,228 67,066
Sharholders' equity................ 237,563 204,252 44,387 240,069 44,297 6,086 88,156 59,881
OPERATING DATA
Production(12):
Gas (MMcf)....................... 31,851 30,665 25,774 51,770 33,342 48,048 41,114 29,174
Oil (Mbbls)...................... 2,073 1,933 926 3,001 1,173 1,543 1,493 1,450
Average price received(12):
Gas (per Mcf).................... $ 1.78 1.78 1.75 1.64 1.90 1.90 1.88 1.70
Oil (per Bbl).................... 16.83 17.16 15.94 14.74 15.86 14.83 16.97 18.14
Production expense per Mcfe........ .54 .55 .53 .54 .56 .39 .39 .38
General and administrative expense
per Mcfe(13)..................... .23 .23 .18 .19 .22 .19 .24 .32
Capital expenditures:
Property acquisitons............. $ 20,445 391 26,807 9,762 144,916 88,772
Exploration...................... 18,541 8,082 12,739 15,693 5,433 2,297
Development...................... 24,205 11,801 13,198 17,089 20,472 15,558
--------- --------- --------- --------- --------- ---------
Total capital expenditures..... $ 63,191 20,274 52,744 42,544 170,821 106,627
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Proved reserves(12):
Gas (MMcf)....................... 330,166 238,128 246,996 273,382 194,655
Oil (Mbbls)...................... 20,788 10,541 7,532 8,198 7,560
Standardized measure of discounted
future net cash flows relating to
proved oil and gas
reserves(14)..................... $ 333,676 256,917 207,549 262,176 190,971
Total discounted future net cash
flows relating to proved oil and
gas reserves, including amounts
attributable to volumetric
production payments(14).......... $ 342,152 265,393 230,149 299,053 227,009
<CAPTION>
1991
---------
<S> <C>
BALANCE SHEET DATA (AT END OF
PERIOD)
Total assets....................... 296,189
---------
---------
Long-term debt:
Bank credit facilities........... --
Nonrecourse accrued loan(8)...... --
Production payment
obligation(9).................. --
Senior secured notes............. 59,262
Subordinated debentures.......... 90,387
---------
Total long-term debt........... 149,649
Gas balancing liability............ 2,947
Other liabilities(10).............. 10,341
Deferred revenue(11)............... 40,199
Sharholders' equity................ 54,840
OPERATING DATA
Production(12):
Gas (MMcf)....................... 23,877
Oil (Mbbls)...................... 847
Average price received(12):
Gas (per Mcf).................... 1.84
Oil (per Bbl).................... 25.31
Production expense per Mcfe........ .43
General and administrative expense
per Mcfe(13)..................... .33
Capital expenditures:
Property acquisitons............. 13,560
Exploration...................... 9,723
Development...................... 12,381
---------
Total capital expenditures..... 35,664
---------
---------
Proved reserves(12):
Gas (MMcf)....................... 193,471
Oil (Mbbls)...................... 5,315
Standardized measure of discounted
future net cash flows relating to
proved oil and gas
reserves(14)..................... 166,454
Total discounted future net cash
flows relating to proved oil and
gas reserves, including amounts
attributable to volumetric
production payments(14).......... 188,069
</TABLE>
- ------------------------------
(1) The pro forma statement of operations data, balance sheet data and
operating data include pro forma adjustments to give effect to (i) the
purchase of ATCOR Resources Ltd. ("ATCOR") as of January 1, 1996; (ii) the
extinguishment of the nonrecourse secured loan to JEDI and the issuance of
2,000,000 shares of Common Stock to JEDI in partial consideration therefore;
and (iii) the exercise of warrants to purchase 388,888 shares of Common
Stock and the conversion of the Second Series Preferred Stock by Anschutz.
(2) The pro forma statement of operations data, balance sheet data and
operating data include pro forma adjustments to (i) give effect to the sale
of Common Stock in the January 31, 1996 public offering and the use of the
proceeds together with borrowings under the Company's bank credit facility
to fund the acquisition of ATCOR, (ii) restate the historical financial
statements of ATCOR to conform to U.S. generally accepted accounting
principles, (iii) reflect the acquisition of ATCOR using the purchase
S-11
<PAGE>
method of accounting, (iv) reflect the sale of certain assets to ATCOR's
controlling shareholders and the use of the proceeds therefrom to repay
long-term debt of ATCOR, (v) give effect to the acquisition of the interest
in Saxon Petroleum, Inc. ("Saxon"), (vi) give effect to the issuance of
Common Stock to JEDI in exchange for debt and warrants to purchase Common
Stock, (vii) give effect to the extinguishment of the nonrecourse secured
loan to JEDI and the issuance of 2,000,000 shares of common stock to JEDI in
partial consideration therefore; and (viii) the exercise of warrants to
purchase 388,888 shares of common stock and the conversion of the Second
Series Preferred Stock by Anschutz.
(3) Statement of operations data and balance sheet data for the year ended
December 31, 1992 include the effects of the ONEOK settlement, which
increased total revenue by $37,541,000 and net earnings by $24,043,000 or
$8.73 per share. Operating data for the year ended December 31, 1992
excludes the effects of the ONEOK settlement.
(4) Represents amounts attributable to the gas marketing and processing
operations acquired from ATCOR.
(5) A provision for impairment of oil and gas properties of approximately
$21,326,000 recorded in the historical financial statements of ATCOR was
also included in the pro forma combined results of operations of Forest for
the year ended December 31, 1995 in accordance with rules of the Securities
and Exchange Commission for preparation of pro forma financial information.
Had the provision for impairment recorded in the historical financial
statements of ATCOR been excluded from the pro forma combined results of
operations of Forest, the pro forma loss before cumulative effects of
changes in accounting principles and extraordinary item and the pro forma
loss per share before cumulative effects of changes in accounting principles
and extraordinary item would have been $10,454,000 and $.45, respectively.
(6) The Company changed its method of accounting for oil and gas sales from the
sales method to the entitlements method effective January 1, 1994. The
Company adopted the provisions of Statements of Financial Accounting
Standards No. 106 and No. 109 effective January 1, 1993. These statements
required the Company to accrue the expected cost of postretirement benefits
and to adopt the liability method of accounting for income taxes,
respectively. In 1993, the Company realized a loss on extinguishment of debt
of $10,735,000 as a result of the redemption of its outstanding Senior
Secured Notes and long-term subordinated debentures. In 1991, the Company
realized an extraordinary gain on the extinguishment of debt of $9,502,000,
net of income taxes of $4,895,000, in connection with a recapitalization of
its debt and equity securities.
(7) Fully diluted earnings (loss) per share was the same as primary earnings
(loss) per share in all periods except the year ended December 31, 1992. In
1992, fully diluted earnings per share was $1.45.
(8) Represents the nonrecourse secured loan payable to JEDI entered into in
connection with the acquisition of properties in 1993. This debt was
extinguished on November 6, 1996 as described under "Recent Developments".
(9) Represents a dollar-denominated production payment obligation sold in 1992.
The dollar denominated production payment obligation had an original
principal amount of $37,550,000 and was recorded as a liability of
$28,805,000 after a discount to reflect a market rate of interest of 15.5%
per annum.
(10) Includes liabilities for employee benefit plans and other long-term
liabilities.
(11) Represents amounts received from the sale of volumetric production
payments.
(12) Includes amounts attributable to required deliveries under volumetric
production payments.
(13) Excludes non-recurring general and administrative charges of $4,535,000 in
1991.
(14) Amounts are presented net of related income taxes.
S-12
<PAGE>
CAPITALIZATION
The following table sets forth (i) the actual capitalization of the Company
as of September 30, 1996 (ii) the pro forma capitalization of the Company at
September 30, 1996, after giving effect to the exercise by Anschutz of warrants
to purchase 388,888 shares of Common Stock, the conversion by Anschutz of the
Second Series Preferred Stock into 1,240,000 shares of Common Stock, the
extinguishment of the nonrecourse secured loan payable to JEDI, including the
issuance to JEDI of 2,000,000 shares of Common Stock and (iii) the pro forma as
adjusted capitalization of the Company at September 30, 1996, after giving
effect to the pro forma transactions and the assumed conversion of all of the
Company's outstanding $.75 Convertible Preferred Stock into 2,014,371 shares of
Common Stock. See "Recent Developments".
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
----------- ----------- -----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Long-term debt:
Bank debt............................................................... $ 36,165 45,028 45,028
Nonrecourse secured loan(1)............................................. 42,446 -- --
Production payment obligation(2)........................................ 11,634 11,634 11,634
11 1/4% Subordinated Debentures......................................... 99,407 99,407 99,407
----------- ----------- -----------
Total long-term debt.................................................... 189,652 156,069 156,069
Shareholders' equity:
$.75 Convertible Preferred Stock, 2,877,673 shares issued and
outstanding, 2,877,673 shares pro forma and none pro forma as
adjusted.............................................................. 15,827 15,827 --
Second Series Preferred Stock, 620,000 shares issued and outstanding,
none pro forma and none pro forma as adjusted......................... 8,518 -- --
Common Stock, par value $.10 per share, 26,864,019 shares issued and
outstanding, 30,492,907 shares pro forma and 32,507,278 shares pro
forma as adjusted(3)(4)............................................... 2,686 3,049 3,250
Capital surplus......................................................... 397,117 436,417 452,043
Accumulated deficit..................................................... (219,906) (217,740) (217,740)
Foreign currency translation............................................ 10 10 10
----------- ----------- -----------
Total shareholders' equity............................................ 204,252 237,563 237,563
----------- ----------- -----------
Total capitalization...................................................... $ 393,904 393,632 393,632
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ------------------------
(1) Represents the nonrecourse secured loan payable to JEDI entered into in
connection with the acquisition of properties in 1993. This debt was
extinguished on November 6, 1996 as described under "Recent Developments".
(2) Represents a dollar-denominated production payment obligation sold in 1992.
The dollar denominated production payment obligation had an original
principal amount of $37,550,000 and was recorded as a liability of
$28,805,000 after a discount to reflect a market rate of interest of 15.5%.
(3) The historical amount is based on the number of shares of Common Stock
outstanding at September 30, 1996. The historical, pro forma and pro forma
as adjusted shares do not include a total of 676,600 shares reserved for
issuance upon exercise of outstanding stock options.
(4) The historical, pro forma, and pro forma as adjusted shares do not include
3,888,888, 3,500,000 and 3,500,000 shares, respectively, reserved for
issuance upon the exercise of warrants held by Anschutz.
S-13
<PAGE>
STANDBY ARRANGEMENT
Under a Standby Purchase Agreement (the "Standby Agreement") with the
Company, the Purchaser has agreed, subject to certain conditions, to purchase
from the Company, at $14.37 per share (the "Purchase Price"), the number of
shares of Common Stock (the "Purchased Shares") necessary to provide the Company
with proceeds which the Company will use to pay the aggregate Redemption Price
of Preferred Stock required to be redeemed by the Company on and after the
Redemption Date. The Purchaser may also acquire Preferred Stock (the "Acquired
Preferred Stock") in the open market or otherwise prior to the close of business
on the Conversion Termination Date and has agreed to convert all Preferred Stock
so acquired by it into shares of Common Stock.
As compensation to the Purchaser for its commitment under the Standby
Agreement, the Company will pay to the Purchaser (i) a standby fee of $200,000
(the "Standby Fee") and (ii) an amount per share (the "Take-up Fee") equal to
the greater of the following fees per Purchased Share (excluding Common Stock
acquired by the Purchaser upon conversion of Acquired Preferred Stock) if the
number of shares purchased is less than or equal to 100,719 shares, $0.14 per
share; if the number of shares purchased is greater than 100,719 but less than
or equal to 201,437 shares, $.29 per share; if the number of shares purchased is
greater than 201,437 shares but less than or equal to 503,593 shares, $0.57 per
share; and if the number of shares purchased is greater than 503,593 shares,
$0.75 per share. Thus, only the Standby Fee would be received by the Purchaser
if all the currently outstanding shares of Preferred Stock are converted by the
holders prior to the expiration of convertibility on the Conversion Termination
Date, and the maximum compensation to the Purchaser would be $1,710,778 if all
of the currently outstanding shares of Preferred Stock are redeemed. In
addition, the Company has agreed to reimburse the Purchaser for its
out-of-pocket expenses, including legal fees and expenses, not to exceed $75,000
in the aggregate.
Any profits realized by the Purchaser upon resale of the Purchased Shares
will be shared equally by the Company and the Purchaser, except that the first
$200,000 of any such profits realized will be paid solely to the Company.
Prior to and after the Redemption Date, the Purchaser may offer to the
public, shares of Common Stock, including shares of Common Stock acquired
through conversion of Preferred Stock purchased by the Purchaser as described
above, at prices set from time to time by the Purchaser. It is intended that
such prices will not be increased more frequently than once in any day and will
not exceed the greater of the last sale or current asked price of the Common
Stock on the Nasdaq National Market, plus applicable dealers' commissions. The
Purchaser may realize profits or incur losses as a result of such transactions.
Such shares of Common Stock may be offered on the Nasdaq National Market or
otherwise from time to time by the Purchaser, subject to prior sale. Any Common
Stock so offered by the Purchaser will be subject to receipt and acceptance by
it and subject to its right to reject orders in whole or in part.
The Company, its directors, executive officers and Anschutz have agreed
that, if the number of Purchased Shares is greater than 201,437, for 60 days
after the date of this Prospectus they will not, without the prior written
consent of the Purchaser, issue, sell, offer to sell, or otherwise dispose of
any shares of Common Stock (or securities convertible into or exercisable for
shares of Common Stock), other than the shares offered hereby, certain stock
options, shares issuable upon exercise, exchange or conversion of securities
outstanding on the date of this Prospectus, shares issued in connection with any
acquisition transaction and shares sold upon the exercise of management stock
options up to 100,000 shares in the aggregate.
The Company has agreed to indemnify the Purchaser against certain
liabilities, including liabilities under the Securities Act.
In connection with the offering, the Purchaser may engage in passive market
making transactions in the Common Stock on the Nasdaq National Market in
accordance with Rule 10b-6A under the Securities Exchange Act of 1934, during
the two business day period before commencement of offers or sales of the
S-14
<PAGE>
Common Stock offered hereby. Passive market making transactions must comply with
certain volume and price limitations and be identified as such. In general, a
passive market maker may display its bid at a price not in excess of the highest
independent bid for the security, and if all independent bids are lowered below
the passive market maker's bid, then such bid must be lowered when certain
purchase limits are exceeded.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for the
Company by Vinson & Elkins L.L.P., Houston, Texas, and certain legal matters
will be passed upon for the Purchaser by Cahill Gordon & Reindel, a partnership
including a professional corporation, New York, New York.
S-15
<PAGE>
PROSPECTUS
FOREST OIL CORPORATION
E
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
------------------
Forest Oil Corporation ("Forest" or the "Company") may from time to time
offer (i) its unsecured senior debt securities (the "Senior Debt Securities"),
(ii) its unsecured subordinated debt securities (the "Subordinated Debt
Securities" and, together with the Senior Debt Securities, the "Debt
Securities"), which may be convertible into shares of common stock, par value
$.10 per share, of the Company (the "Common Stock"), (iii) shares of its
preferred stock, par value $.01 per share (the "Preferred Stock"), which may be
convertible into shares of Common Stock or exchangeable for Debt Securities and
(iv) shares of its Common Stock. The Preferred Stock and the Common Stock are
collectively referred to as the "Equity Securities," and the Debt Securities and
the Equity Securities are collectively referred to as the "Securities." The
Securities offered pursuant to this Prospectus may be offered separately or
together in one or more series up to an aggregate public offering price of
$250,000,000 (or the equivalent thereof in foreign currency or currency units)
at individual prices and on terms to be determined at the time of the offering
and set forth in one or more supplements to this Prospectus (each, a "Prospectus
Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and,
among other things, will include, where applicable, (i) in the case of Debt
Securities, the specific designation, aggregate principal amount offered,
ranking, rate or rates of interest or the provisions for determining such rate
or rates and the time of payment thereof, maturity, currency of payment, terms
relating to redemption (whether mandatory, at the option of the Company or the
holder), terms for sinking fund payments, terms for conversion into Common
Stock, additional covenants and the initial public offering price, (ii) in the
case of shares of Preferred Stock, the number of shares, specific title and
stated value, any dividend, liquidation, redemption, conversion, exchange,
voting and other rights and restrictions and the initial public offering price
and (iii) in the case of shares of Common Stock, the number of shares of Common
Stock and the terms of the offering and sale thereof.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain U.S. Federal income taxes, accounting and other
considerations relating to, and any listing on a securities exchange of, the
Securities covered by such Prospectus Supplement.
The Securities may be sold directly by the Company, through agents
designated by the Company from time to time or through underwriters or dealers
designated by the Company from time to time. If any agents of the Company or any
dealers or underwriters are involved in the sale of the Securities in respect of
which this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable agent's commission, dealer's purchase price or
underwriter's discount will be as set forth in or may be calculated from the
applicable Prospectus Supplement. The net proceeds to the Company from such sale
will be the purchase price of such Securities less such commission in the case
of an agent, the purchase price of such Securities in the case of a dealer or
the public offering price of such Securities less such discount in the case of
an underwriter and less, in each case, other attributable issuance expenses. See
"Plan of Distribution" for indemnification arrangements for agents, dealers, and
underwriters.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is February 7, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the regional offices of the Commission
located at the following addresses: Seven World Trade Center, 13th Floor, New
York, New York 10048 and Northwest Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, upon the payment of fees prescribed by the Commission. In addition,
the Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission at http://www.sec.gov. Similar information concerning the
Company can also be inspected at the offices of the Nasdaq National Market, at
1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 (together with all amendments, exhibits and
schedules thereto, the "Registration Statement"), of which this Prospectus is a
part, which Forest has filed with the Commission under the Securities Act of
1933, as amended (the "Securities Act"). Statements contained herein concerning
the provisions of any contract or other document are necessarily summaries of
such contracts or documents filed with the Commission. Copies of the
Registration Statement are on file at the offices of the Commission and may be
obtained, upon payment of fees prescribed by the Commission, or may be examined
without charge at the public reference facilities of the Commission described
above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the
following documents, which have been filed with the Commission pursuant to the
Exchange Act (File No. 0-4597):
(a) The Company's Annual Report on Form 10-K/A for the year ended
December 31, 1995 (the "1995 Annual Report");
(b) The Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31 and June 30, 1996 and the Company's Quarterly Report
on Form 10-Q/A for the quarterly period ended September 30, 1996; and
(c) The Company's Current Reports on Form 8-K dated April 15, August 7
and October 30, 1996 and on Form 8-K/A dated January 28, 1997.
All reports and any definitive proxy or information statements filed by the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Prospectus and prior to the termination of the offering of the
Securities offered hereby shall be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein, or contained in this Prospectus, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Any person, including any beneficial owner, receiving a copy of this
Prospectus may obtain without charge, upon request, a copy of any of the
documents incorporated by reference herein, except for the exhibits to such
documents (unless such exhibits are specifically incorporated by reference in
such
2
<PAGE>
documents). Such requests should be directed to Daniel L. McNamara, Corporate
Counsel and Secretary, Forest Oil Corporation, 1600 Broadway, Suite 2200,
Denver, Colorado 80202 (telephone: (303) 812-1400).
THE COMPANY
Forest and its subsidiaries are engaged in the acquisition, exploration,
development, production and marketing of natural gas and crude oil in North
America. The Company was incorporated in New York in 1924, the successor to a
company formed in 1916, and has been a publicly held company since 1969. The
Company is active in several of the major exploration and producing areas in and
offshore the United States and in Canada. Forest's principal reserves and
producing properties are located in the Gulf of Mexico, Texas, Oklahoma and
Canada. The Company operates from production offices located in Lafayette,
Louisiana and Denver, Colorado. In January 1996, the Company established an
administrative and production office in Calgary, Alberta, Canada. Forest's
corporate headquarters are located in Denver, Colorado. The Company's principal
offices are located at 1600 Broadway, Suite 2200, Denver, Colorado 80202
(telephone: (303) 812-1400).
USE OF PROCEEDS
Except as otherwise provided in an applicable Prospectus Supplement, the net
proceeds from the sale of the Securities will be used for the acquisition of oil
and gas properties, capital expenditures, the repayment of subordinated
debentures or other debt, or repayments of borrowings under revolving credit
agreements or for other general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
A description of the Company's ratio of earnings to fixed charges or
earnings to combined fixed charges and preferred stock dividends, as applicable,
on a consolidated basis, will appear in an applicable Prospectus Supplement.
DESCRIPTION OF DEBT SECURITIES
Debt Securities may be issued from time to time under one or more
indentures, each dated as of a date on or prior to the issuance of the Debt
Securities to which it relates. Senior Debt Securities and Subordinated Debt
Securities may be issued pursuant to separate indentures (respectively, a
"Senior Indenture" and a "Subordinated Indenture"), in each case between the
Company and a trustee (a "Trustee"), which may be the same Trustee, and in the
form that has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part, subject to such amendments or supplements as may be
adopted from time to time. The Senior Indenture and the Subordinated Indenture,
as amended or supplemented from time to time, are sometimes referred to
individually as an "Indenture" and collectively as the "Indentures." Each
Indenture will be subject to and governed by the Trust Indenture Act of 1939, as
amended (the "TIA"). The statements made hereunder relating to the Debt
Securities and the Indentures are summaries of the anticipated provisions
thereof, do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all of the provisions of the applicable
Indenture, including the definitions therein of certain terms and those terms
made part of such Indenture by reference to the TIA, as in effect on the date of
such Indenture, and to such Debt Securities. Certain capitalized terms used
below and not defined have the respective meanings assigned to them in the
applicable Indenture.
TERMS
The Debt Securities will be unsecured obligations of the Company. The
Indebtedness represented by (i) Senior Debt Securities will rank PARI PASSU in
right of payment with all other unsecured and unsubordinated Indebtedness of the
Company and (ii) Subordinated Debt Securities will be subordinated
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in right of payment to the prior payment in full of all Senior Indebtedness (as
defined below) of the Company. See "--Ranking of Debt Securities." The
particular terms of the Debt Securities offered by a Prospectus Supplement will
be described in such Prospectus Supplement, along with any applicable
modifications of or additions to the general terms of the Debt Securities as
described herein and in the applicable Indenture and any applicable U.S. Federal
income tax considerations. Accordingly, for a description of the terms of any
Series of Debt Securities, reference must be made to both the Prospectus
Supplement relating thereto and the description of the Debt Securities set forth
in this Prospectus.
Each Indenture will provide for the issuance by the Company from time to
time of its Debt Securities in one or more Series. The aggregate principal
amount of Debt Securities which may be issued under each Indenture will be
unlimited and each Indenture will set forth the specific terms of any Series of
Debt Securities or provide that such terms shall be set forth in, or determined
pursuant to, an Authorizing Resolution and/or a supplemental indenture, if any,
relating to such Series.
The specific terms of each Series of Debt Securities will be set forth in
the applicable Prospectus Supplement relating thereto, including the following,
as applicable:
1. the title of such Debt Securities and whether such Debt Securities
are Senior Debt Securities or Subordinated Debt Securities;
2. the aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
3. the price (expressed as a percentage of the principal amount
thereof) at which such Debt Securities will be issued and, if other than the
principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity thereof, or, if
applicable, the portion of the principal amount of such Debt Securities that
is convertible into Common Stock or the method by which any such portion
shall be determined;
4. if convertible into Common Stock, the terms on which such Debt
Securities are convertible, including the initial conversion price, the
conversion period, any events requiring an adjustment of the applicable
conversion price and any requirements relating to the reservation of such
shares of Common Stock for purposes of conversion;
5. the date or dates, or the method for determining such date or dates,
on which the principal of such Debt Securities will be payable and, if
applicable, the terms on which such maturity may be extended;
6. the rate or rates (which may be fixed or floating), or the method by
which such rate or rates shall be determined, at which such Debt Securities
will bear interest, if any;
7. the date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the dates on which any such
interest will be payable, the record dates for such interest payment dates,
or the method by which such dates shall be determined, the persons to whom
such interest shall be payable, and the basis upon which interest shall be
calculated if other than that of a 360-day year of twelve 30 day months;
8. the place or places where the principal of and interest, if any, on
such Debt Securities will be payable, where such Debt Securities may be
surrendered for registration of transfer or exchange and where notices or
demands to or upon the Company in respect of such Debt Securities and the
applicable Indenture may be served;
9. the period or periods, if any, within which, the price or prices at
which and the other terms and conditions upon which such Debt Securities
may, pursuant to any optional or mandatory redemption provisions, be
redeemed, as a whole or in part, at the option of the Company;
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10. the obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any Sinking Fund (as defined in the
applicable Indenture) or analogous provision or at the option of a holder
thereof, and the period or periods within which, the price or prices at
which and the other terms and conditions upon which such Debt Securities
will be redeemed, repaid or purchased, as a whole or in part, pursuant to
such obligations;
11. if other than U.S. dollars, the currency or currencies in which the
principal of and interest, if any, on such Debt Securities are denominated
and payable, which may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies, and the terms and
conditions relating thereto;
12. whether the amount of payments of principal of or interest, if any,
on such Debt Securities may be determined with reference to an index,
formula or other method (which index, formula or method may, but need not
be, based on the yield on or trading price of other securities, including
United States Treasury securities, or on a currency, currencies, currency
unit or units, or composite currency or currencies) and the manner in which
such amounts shall be determined;
13. whether the principal of or interest, if any, on the Debt Securities
of the Series are to be payable, at the election of the Company or a holder
thereof, in a currency or currencies, currency unit or units or composite
currency or currencies other than that in which such Debt Securities are
denominated or stated to be payable and the period or periods within which,
and the terms and conditions upon which, such election may be made;
14. provisions, if any, granting special rights to the holders of Debt
Securities of the Series upon the occurrence of such events as may be
specified;
15. any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to Debt Securities of the
Series, whether or not such Events of Default (as defined below) or
covenants are consistent with the Events of Default or covenants described
herein;
16. whether Debt Securities of the Series are to be issuable initially
in temporary global form and whether any Debt Securities of the Series are
to be issuable in permanent global form and, if so, whether beneficial
owners of interests in any such security in permanent global form may
exchange such interests for Debt Securities of such Series and of like tenor
of any authorized form and denomination and the circumstances under which
any such exchanges may occur, if other than in the manner provided in the
applicable Indenture, and, if Debt Securities of the Series are to be
issuable as a Global Security (as defined below), the identity of the
depository for such Series;
17. the applicability, if any, of the defeasance and covenant defeasance
provisions of the applicable Indenture to the Debt Securities of the Series;
and
18. any other terms of the Series (which terms shall not be inconsistent
with the provisions of the Indenture under which the Debt Securities are
issued).
If so provided in the applicable Prospectus Supplement, the Debt Securities
may be issued at a discount below their principal amount and provide for less
than the entire principal amount thereof to be payable upon declaration of
acceleration of the maturity thereof ("Original Issue Discount Securities"). In
such cases, all material U.S. Federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities will be
described in the applicable Prospectus Supplement.
Except as may be set forth in the applicable Prospectus Supplement, the Debt
Securities will not contain any provisions that would limit the ability of the
Company to incur Indebtedness or that would afford holders of Debt Securities
protection in the event of a highly leveraged transaction involving the Company
or in the event of a change of control. Reference is made to the applicable
Prospectus Supplement for information with respect to any deletions from,
modifications of or additions to the Events
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of Default or covenants of the Company that are described below, including any
addition of a covenant or other provision providing event risk or similar
protection.
DENOMINATION, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of each Series will be issued only in registered form, without
coupons, in denominations of $1,000 and integral multiples thereof, or in such
other currencies or denominations as may be set forth in the applicable
Indenture or specified in, or pursuant to, an Authorizing Resolution and/or
supplemental indenture, if any, relating to such Series of Debt Securities.
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of and interest, if any, on any Series of Debt Securities will be
payable at the corporate trust office of the applicable Trustee, the address of
which will be stated in the applicable Prospectus Supplement; PROVIDED THAT, at
the option of the Company, payment of interest may be made by check mailed to
the address of the person entitled thereto as it appears in the applicable
register for such Debt Securities.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any Series will be exchangeable for any
authorized denomination of other Debt Securities of the same Series and of a
like aggregate principal amount and tenor upon surrender of such Debt Securities
at the corporate trust office of the applicable Trustee or at the office of any
registrar designated by the Company for such purpose. In addition, subject to
certain limitations imposed upon Debt Securities issued in book-entry form, the
Debt Securities of any Series may be surrendered for registration of transfer or
exchange thereof at the corporate trust office of the applicable Trustee or at
the office of any registrar designated by the Company for such purpose. No
service charge will be made for any registration of transfer or exchange, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with certain transfers and exchanges.
The Company may act as registrar and may change any registrar without notice.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company shall not consolidate with or merge with or into any other
corporation or transfer all or substantially all of its property and assets as
an entirety to any person, unless (i) either the Company shall be the continuing
person, or the person (if other than the Company) formed by such consolidation
or into which the Company is merged or to which all or substantially all of the
properties and assets of the Company as an entirety are transferred is a
corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia which expressly assumes all of the
obligations of the Company under each Series of Debt Securities and the
Indenture with respect to each such Series and (ii) immediately before and
immediately after giving effect to such transaction, no Event of Default and no
event which, after notice or passage of time or both, would become an Event of
Default shall have occurred and be continuing. Notwithstanding the foregoing,
any Subsidiary may consolidate with, merge with or into or transfer all or part
of its properties and assets to the Company or any other Subsidiary or
Subsidiaries.
RANKING OF DEBT SECURITIES
SENIOR DEBT SECURITIES
The Senior Debt Securities will constitute unsecured senior obligations of
the Company and will rank PARI PASSU in right of payment with all other Senior
Indebtedness (as defined below) of the Company. However, the Senior Debt
Securities will be effectively subordinated in right of payment to all secured
Indebtedness of the Company to the extent of the value of the assets securing
such Indebtedness and will be effectively subordinated to all indebtedness of
the Company's Subsidiaries and all mandatory redemption preferred stock of the
Company's Subsidiaries. Except as otherwise set forth in the applicable Senior
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Indenture or specified in an Authorizing Resolution and/or supplemental
indenture, if any, relating to a Series of Senior Debt Securities to be issued,
there will be no limitations in any Senior Indenture on the amount of additional
Indebtedness which may rank PARI PASSU with the Senior Debt Securities or on the
amount of Indebtedness, secured or otherwise, which may be incurred or preferred
stock which may be issued by any of the Company's Subsidiaries.
SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities will constitute unsecured obligations of
the Company. Unless otherwise provided in the applicable Prospectus Supplement,
the payment of principal of, interest on and all other amounts owing in respect
of the Subordinated Debt Securities will be subordinated in right of payment to
the prior payment in full in cash of principal of, interest on and all other
amounts owing in respect of all Senior Indebtedness of the Company. Upon any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any total or partial
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors or marshaling of assets of the Company or in a bankruptcy,
reorganization, insolvency, receivership or other similar proceeding relating to
the Company or its property, whether voluntary or involuntary, all principal of,
interest on and all other amounts due or to become due upon all Senior
Indebtedness shall first be paid in full in cash, or such payment duly provided
for to the satisfaction of the holders of Senior Indebtedness, before any
payment or distribution of any kind or character is made on account of any
principal of, interest on or other amounts owing in respect of the Subordinated
Debt Securities, or for the acquisition of any of the Subordinated Debt
Securities for cash, property or otherwise. If any default occurs and is
continuing in the payment when due, whether at maturity, upon any redemption, by
declaration or otherwise, of any principal of, interest on, unpaid drawings for
letters of credit issued in respect of, or regularly accruing fees with respect
to, any Senior Indebtedness (a "Payment Default"), no payment of any kind or
character shall be made by or on behalf of the Company or any other person on
its or their behalf with respect to any principal of, interest on or other
amounts owing in respect of the Subordinated Debt Securities or to acquire any
of the Subordinated Debt Securities for cash, property or otherwise.
Upon the happening of any default or event of default (other than a Payment
Default) (including any event which with the giving of notice or the lapse of
time or both would become an event of default and including any default or event
of default which would result upon any payment with respect to the Subordinated
Debt Securities) with respect to any Senior Indebtedness of the Company, as such
default or event of default is defined therein or in the instrument or agreement
or other document under which it is outstanding, then upon written notice
thereof given to the Company and the Trustee by a holder or holders of any
Senior Indebtedness of the Company or their Representative (as defined in the
applicable Indenture) ("Payment Notice"), no payment shall be made by or on
behalf of the Company, with respect to the principal of, premium, if any, or
interest on the Subordinated Debt Securities, during the period (the "Payment
Blockage Period") commencing on the date of such receipt of such Payment Notice
and ending on the earlier of (x) the date, if any, on which such default is
cured or waived or ceases to exist or the Senior Indebtedness to which such
default relates is discharged and (y) the 120th day after the date of receipt of
such Payment Notice. The Company may resume payments on the Subordinated Debt
Securities after such Payment Blockage Period. Not more than one Payment Notice
may be given in any consecutive 360-day period with respect to any Senior
Indebtedness, irrespective of the number of defaults with respect to Senior
Indebtedness during such period, and the giving of a Payment Notice will not
prevent the payment of an installment of principal of or interest on the
Subordinated Debt Securities for more than 120 days, except that the
commencement of a Payment Blockage Period by any holders of or the trustee for
Senior Indebtedness other than Indebtedness under the Company's revolving loan
and letter of credit facility with The Chase Manhattan Bank, N.A. and a group of
other lenders (the "Bank Credit Facility"), (the "Initial Payment Blockage
Period") will not prevent the commencement of a subsequent Payment Blockage
Period (the "Subsequent Payment Blockage Period") by the Agent under the Bank
Credit Facility, PROVIDED, HOWEVER, that in no event may the Subsequent Payment
Blockage Period end later than
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the 179th day after the date of receipt of the Payment Notice with respect to
the Initial Payment Blockage Period. Notwithstanding the foregoing, (a) no event
of default that existed or was continuing on the date of any Payment Notice
shall be made the basis for the giving of a subsequent Payment Notice unless all
such events of default shall have been cured or waived for a period of at least
90 consecutive days after such date, and (b) if the Company or the Trustee
receives any Payment Notice, a similar notice relating to or arising out of the
same default or facts giving rise to such default (whether or not such default
is on the same issue of Senior Indebtedness of the Company), unless cured or
waived for a period of at least 90 consecutive days, shall not be effective for
purposes of this paragraph.
The Subordinated Indentures will not restrict the amount of Senior
Indebtedness or other Indebtedness of the Company or any Subsidiary. As a result
of the foregoing provisions, in the event of the Company's insolvency, holders
of the Subordinated Debt Securities may recover ratably less than general
creditors of the Company.
"Senior Indebtedness" will be defined in each Subordinated Indenture as
Indebtedness of the Company, whether outstanding on the date of issue of any
Subordinated Debt Securities or thereafter created, incurred, assumed or
guaranteed by the Company, other than the following: (i) any Indebtedness as to
which, by the terms of the instrument creating or evidencing such Indebtedness,
it is expressly provided that such Indebtedness is subordinated in right of
payment to all Indebtedness of the Company not expressly subordinated to such
Indebtedness, (ii) any Indebtedness which, by its terms, expressly refers to the
Subordinated Debt Securities and states that such Indebtedness shall not be
senior, shall be PARI PASSU or shall be subordinated in right of payment to the
Subordinated Debt Securities and (iii) the Subordinated Debt Securities of the
same or another Series.
DISCHARGE
Unless otherwise provided in the applicable Prospectus Supplement, the
Company generally may terminate its obligations under any Series of Debt
Securities and the Indenture with respect to such Series, at any time, (a) by
delivering all outstanding Debt Securities of such Series to the applicable
Trustee for cancellation and paying all sums payable by it under such Debt
Securities and the Indenture with respect to such Series or (b) after giving
notice to the Trustee of its intention to defease all of the Debt Securities of
such Series, by irrevocably depositing with the Trustee or a paying agent (other
than the Company or a Subsidiary) (i) in the case of any Debt Securities of any
Series denominated in U.S. dollars, cash or U.S. Government Obligations
sufficient to pay all principal of and interest on such Debt Securities and (ii)
in the case of any Debt Securities of any Series denominated in any currency
other than U.S. dollars, an amount of the Required Currency sufficient to pay
all principal of and interest on such Debt Securities; PROVIDED that if such
irrevocable deposit pursuant to (b) above is made on or prior to one year from
the Stated Maturity for payment of principal of such Series of Debt Securities,
the Company shall have delivered to the Trustee either an opinion of counsel
with no material qualifications or a favorable ruling of the Internal Revenue
Service, in either case to the effect that holders of such Debt Securities (i)
will not recognize income, gain or loss for U.S. Federal income tax purposes as
a result of such deposit (and the defeasance contemplated in connection
therewith) and (ii) will be subject to U.S. Federal income tax on the same
amounts and in the same manner and at the same time as would have been the case
if such deposit and defeasance had not occurred.
MODIFICATION AND WAIVER
Modification and amendment of an Indenture will be permitted to be made by
the Company and the Trustee with the consent of the holders of not less than a
majority in principal amount of the outstanding Debt Securities of all Series
affected thereby (voting as a single class); PROVIDED that such modification or
amendment may not, without the consent of each holder of the Debt Securities
affected thereby, (i) change the Stated Maturity of the principal of or any
installment of interest with respect to the Debt Securities; (ii) reduce the
principal amount of, or the rate of interest on, the Debt Securities; (iii)
change the currency
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of payment of principal of or interest on the Debt Securities; (iv) impair the
right to institute suit for the enforcement of any payment on or with respect to
the Debt Securities; (v) reduce the above-stated percentage of holders of the
Debt Securities of any Series necessary to modify or amend the Indenture
relating to such Series; (vi) modify the foregoing requirements or reduce the
percentage of outstanding Debt Securities necessary to waive any covenant or
past default; (vii) in the case of any Subordinated Indenture, modify the
subordination provisions thereof in a manner adverse to the holders of
Subordinated Debt Securities of any Series then outstanding; or (viii) in the
case of any convertible Debt Securities, adversely affect the right to convert
the Debt Securities into Common Stock in accordance with the provisions of the
applicable Indenture. Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of all Series affected thereby (voting as a
single class) may waive certain past defaults and may waive compliance by the
Company with any provision of the Indenture relating to such Debt Securities
(subject to the immediately preceding sentence); PROVIDED that, (i) without the
consent of each holder of Debt Securities affected thereby, no waiver may be
made of a default in the payment of the principal of or interest on any Debt
Security and (ii) only the holders of a majority in principal amount of Debt
Securities of a particular Series may waive compliance with a provision of the
Indenture relating to such Series or the Debt Securities of such Series having
applicability solely to such Series.
EVENTS OF DEFAULT AND NOTICE THEREOF
Unless otherwise provided in the applicable Prospectus Supplement, each
Indenture will provide that the following events are "Events of Default" with
respect to any Series of Debt Securities issued thereunder (i) failure of the
Company to pay interest on any Debt Securities of such Series within 30 days of
when due or principal of any Debt Securities of such Series when due (including
any Sinking Fund installment); (ii) failure to perform any other agreement
contained in the Debt Securities of such Series or the Indenture relating to
such Series (other than an agreement relating solely to another Series of Debt
Securities) for 60 days after notice; (iii) certain events of bankruptcy,
insolvency or reorganization with respect to the Company. Additional or
different Events of Default, if any, applicable to the Series of Debt Securities
in respect of which this Prospectus is being delivered will be specified in the
applicable Prospectus Supplement.
Each Indenture will provide that the Trustee under such Indenture shall,
within 75 days after the occurrence of any default (the term "default" to
include the events specified above without grace or notice) with respect to any
Series of Debt Securities actually known to it, give to the holders of such Debt
Securities notice of such default; PROVIDED that, except in the case of a
default in the payment of principal of or interest on any of the Debt Securities
of such Series or in the payment of any Sinking Fund installment, the Trustee
for such Series shall be protected in withholding such notice if it in good
faith determines that the withholding of such notice is in the interest of the
holders of such Debt Securities. Each Indenture will require the Company to
certify to the Trustee under such Indenture quarterly as to whether any default
exists.
In case an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) with respect to any Series of Debt
Securities shall occur and be continuing, the Trustee for such Series or the
holders of at least 25% in aggregate principal amount of the Debt Securities of
such Series then outstanding, by notice in writing to the Company (and to the
Trustee for such Series if given by the holders of the Debt Securities of such
Series), will be entitled to declare all unpaid principal of and accrued
interest on such Debt Securities then outstanding to be due and payable
immediately. In case an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization shall occur, all unpaid principal of
and accrued interest on all Debt Securities of such Series then outstanding
shall be due and payable immediately without any declaration or other act on the
part of the Trustee for such Series or the holders of any Debt Securities of
such Series. Such acceleration may be annulled and past defaults (except, unless
theretofore cured, a default in payment of principal of or interest on the Debt
Securities of such Series) may be waived by the holders of a majority in
principal amount of the Debt Securities of such Series then outstanding upon the
conditions provided in the applicable Indenture.
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Each Indenture will provide that no holder of the Debt Securities of any
Series issued thereunder may pursue any remedy under such Indenture unless the
Trustee for such Series shall have failed to act after, among other things
notice of an Event of Default and request by holders of at least 25% in
principal amount of the Debt Securities of such Series of which the Event of
Default has occurred and the offer to the Trustee for such Series of indemnity
satisfactory to it; PROVIDED, HOWEVER, that such provision does not affect the
right to sue for enforcement of any overdue payment on such Debt Securities.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities of any
Series will be convertible into Common Stock will be set forth in the Prospectus
Supplement relating thereto. Such terms will include the Conversion price (or
manner of calculation thereof), the conversion period, provisions as to whether
conversion will be at the option of the holders of such Series of Debt
Securities or at the option of the Company, the events requiring an adjustment
of the conversion price and provisions affecting conversion in the event of the
redemption of such Series of Debt Securities.
THE TRUSTEE
The Trustee for each Series of Debt Securities will be identified in the
applicable Prospectus Supplement. Each Indenture will contain certain
limitations on a right of a Trustee thereunder, as a creditor of the Company, to
obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise. Each Trustee
will be permitted to engage in other transactions; PROVIDED, HOWEVER, that if it
acquires any conflicting interest, it must eliminate such conflict or resign.
The holders of a majority in principal amount of all outstanding Debt
Securities of a Series (or if more than one Series is affected thereby, of all
Series so affected, voting as a single class) will have the right to direct the
time, method and place of conducting any proceeding for exercising any remedy or
power available to the Trustee for such Series or all such Series so affected.
In case an Event of Default shall occur (and shall not be cured) under any
Indenture relating to a Series of Debt Securities and is known to the Trustee
for such Series, such Trustee shall exercise such of the rights and powers
vested in it by such Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs. Subject to such provisions, no Trustee will be
under any obligation to exercise any of its rights or powers under the
applicable Indenture at the request of any of the holders of Debt Securities
unless they shall have offered to such Trustee security and indemnity
satisfactory to it.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by the laws of the
State of New York.
GLOBAL SECURITIES; BOOK-ENTRY SYSTEM
The Debt Securities of any Series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depository (the "Depository") identified in
the Prospectus Supplement relating to such Series. Global Securities, if any,
issued in the United States are expected to be deposited with The Depository
Trust Company ("DTC"), as Depository. Global Securities will be issued in fully
registered form and may be issued in either temporary or permanent form. Unless
and until it is exchanged in whole or in part for the individual Debt Securities
represented thereby, a Global Security may not be transferred except as a whole
by the Depository for such Global Security to a nominee of such Depository or by
a nominee of such Depository to such Depository or another nominee of such
Depository or by such Depository or any nominee of such Depository to a
successor Depository or any nominee of such successor.
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The specific terms of the depository arrangement with respect to any Series
of Debt Securities will be described in the Prospectus Supplement relating to
such Series. The Company expects that unless otherwise indicated in the
applicable Prospectus Supplement, the following provisions will apply to
depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depository ("Participants"). Such accounts will be designated
by the underwriters, dealers or agents with respect to such Debt Securities or
by the Company if such Debt Securities are offered directly by the Company.
Ownership of beneficial interests in such Global Security will be limited to
Participants or persons that may hold interests through Participants.
The Company expects that, pursuant to procedures established by DTC,
ownership of beneficial interests in any Global Security with respect to which
DTC is the Depository will be shown on, and the transfer of that ownership will
be effected only through, records maintained by DTC or its nominee (with respect
to beneficial interests of Participants) and records of Participants (with
respect to beneficial interests of persons who hold through Participants).
Neither the Company nor the Trustee will have any responsibility or liability
for any aspect of the records of DTC or for maintaining, supervising or
reviewing any records of DTC or any of its Participants relating to beneficial
ownership interests in the Debt Securities. The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and laws may impair the ability to own, pledge or
transfer beneficial interest in a Global Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as described below or in the applicable Prospectus
Supplement, owners of beneficial interest in a Global Security will not be
entitled to have any of the individual Debt Securities represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of any such Debt Securities in definitive form and
will not be considered the owners or holders thereof under the applicable
Indenture. Beneficial owners of Debt Securities evidenced by a Global Security
will not be considered the owners or holders thereof under the applicable
Indenture for any purpose, including with respect to the giving of any
direction, instructions or approvals to the Trustee thereunder. Accordingly,
each person owning a beneficial interest in a Global Security with respect to
which DTC is the Depository must rely on the procedures of DTC and, if such
person is not a Participant, on the procedures of the Participant through which
such person owns its interests, to exercise any rights of a holder under the
applicable Indenture. The Company understands that, under existing industry
practice, if it requests any action of holders or if an owner of a beneficial
interest in a Global Security desires to give or take any action which a holder
is entitled to give or take under the applicable Indenture, DTC would authorize
the Participants holding the relevant beneficial interest to give or take such
action, and such Participants would authorize beneficial owners through such
Participants to give or take such actions or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal of, and any interest on, individual Debt Securities
represented by a Global Security registered in the name of a Depository or its
nominee will be made to or at the direction of the Depository or its nominee, as
the case may be, as the registered owner of the Global Security under the
applicable Indenture. Under the terms of the applicable Indenture, the Company
and the Trustee may treat the persons in whose name Debt Securities, including a
Global Security, are registered as the owners thereof for the purpose of
receiving such payments. Consequently, neither the Company nor the Trustee has
or will have any responsibility or liability for the payment of such amounts to
beneficial owners of Debt Securities (including principal and interest). The
Company believes, however, that it is currently the policy of DTC to immediately
credit the accounts of relevant Participants with such payments, in amounts
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<PAGE>
proportionate to their respective holdings of beneficial interests in the
relevant Global Security as shown on the records of DTC or its nominee. The
Company also expects that payments by Participants to owners of beneficial
interests in such Global Security held through such Participants will be
governed by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
street name, and will be the responsibility of such Participants. Redemption
notices with respect to any Debt Securities represented by a Global Security
will be sent to the Depository or its nominee. If less than all of the Debt
Securities of any series are to be redeemed, the Company expects the Depository
to determine the amount of the interest of each Participant in such Debt
Securities to be redeemed to be determined by lot. None of the Company, the
Trustee, any Paying Agent or the Registrar for such Debt Securities will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Security for such Debt Securities or for maintaining any records with respect
thereto.
Neither the Company nor the Trustee will be liable for any delay by the
holders of a Global Security or the Depository in identifying the beneficial
owners of Debt Securities and the Company and the Trustee may conclusively rely
on, and will be protected in relying on, instructions from the holder of a
Global Security or the Depository for all purposes. The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
If a Depository for any Debt Securities is at any time unwilling, unable or
ineligible to continue as depository and a successor depository is not appointed
by the Company within 90 days, the Company will issue individual Debt Securities
in exchange for the Global Security representing such Debt Securities. In
addition, the Company may at any time and in its sole discretion, subject to any
limitations described in the Prospectus Supplement relating to such Debt
Securities, determine not to have any of such Debt Securities represented by one
or more Global Securities and in such event will issue individual Debt
Securities in exchange for the Global Security or Securities representing such
Debt Securities. Individual Debt Securities so issued will be issued in
denominations of $1,000 and integral multiples thereof.
DESCRIPTION OF EQUITY SECURITIES
GENERAL
The Restated Certificate of Incorporation of the Company (the "Certificate
of Incorporation") provides that the aggregate number of shares of all classes
of stock that the Company has authority to issue is 210,000,000 shares,
consisting of 200,000,000 shares of Common Stock, par value $.10 per share and
10,000,000 shares of preferred stock, par value $.01 per share.
As of December 31, 1996, the issued and outstanding Common Stock and
Preferred Stock of the Company was as follows:
<TABLE>
<CAPTION>
CLASS OF STOCK SHARES
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<S> <C>
Common Stock.......................................................... 30,541,105
$.75 Convertible Preferred Stock...................................... 2,877,673
</TABLE>
All issued and outstanding shares are fully paid and non-assessable.
The Company has warrants outstanding to purchase 3,500,000 shares of Common
Stock at a price of $10.50 per share (the "A Warrants"). The A Warrants expire
on July 27, 1999.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the common shareholders of the Company. In
addition, such holders are entitled to receive ratably such dividends, if any,
as may be declared from time to time by the Board of Directors out of funds
legally
12
<PAGE>
available therefor, subject to the payment of preferential dividends with
respect to (i) the $.75 Convertible Preferred Stock as set forth below and (ii)
any other preferred stock of the Company that from time to time may be
outstanding. The Company does not presently intend to pay dividends on the
Common Stock for the foreseeable future.
In the event of dissolution, liquidation or winding-up of the Company, the
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of all liabilities of the Company and subject to the prior
distribution rights of the holders (i) the $.75 Convertible Preferred Stock and
(ii) any other preferred stock of the Company that preemptive or other rights to
acquire or subscribe for additional, unissued or treasury shares. All
outstanding shares of Common Stock are, and when issued, the shares of Common
Stock offered hereby will be, fully paid and nonassessable.
The transfer agent and registrar for the Common Stock is Chemical Mellon
Shareholder Services.
PREFERRED STOCK
The Company has one class of preferred stock outstanding, the $.75
Convertible Preferred Stock.
$.75 CONVERTIBLE PREFERRED STOCK
Each share of $.75 Convertible Preferred Stock is convertible into .7 shares
of Common Stock, subject to adjustment upon certain events. Holders of shares of
$.75 Convertible Preferred Stock are entitled to cumulative preferential cash
dividends at the annual rate of $.75 per share prior to the payment of any
dividends (except for dividends paid in shares of Common Stock) or other
distributions on (or certain repurchases of) Common Stock and on liquidation,
dissolution or winding up of the Company to preferential payment of $10 per
share plus accumulated and unpaid dividends before any distribution is made with
respect to Common Stock. Dividends on the $.75 Convertible Preferred Stock may
be paid in cash or, at the Company's election, in shares of Common Stock or in a
combination of cash and Common Stock. Common Stock is valued for dividend
payment purposes at between 75% and 90%, based upon trading volume, of the
average last reported sales price of the Common Stock for the 10 consecutive
trading days ending on the tenth calendar day prior to the date for determining
record holders entitled to the dividend payment.
Whenever dividends on the $.75 Convertible Preferred Stock have not been
paid, the amount of the deficiency, plus an amount equal to the accumulated
dividend for the then current quarterly dividend period, must be fully paid, or
declared and set apart for payment, before any dividend may be declared and paid
or set apart for payment upon the Common Stock, except for dividends paid in
shares of Common Stock.
Whenever $.75 Convertible Preferred Stock dividends are in arrears in an
amount equivalent to six full quarterly dividends, the holders of the $.75
Convertible Preferred Stock, voting separately as a class and with one vote per
share, will have the right to elect two directors. If two consecutive dividend
payments are in arrears, the holder of each share of $.75 Convertible Preferred
Stock will be entitled to a penalty conversion right enabling such holder to
convert each share, plus accumulated dividends, into a share of Common Stock
during a two-day period of 30 days after the second dividend payment date at a
conversion price of 75% of the average of the last reported sales prices of the
Common Stock during the period from such second dividend payment date to five
trading days prior to the conversion date. The $.75 Convertible Preferred Stock
is redeemable, in whole or in part, at the option of the Company, at a
redemption price of $10.00 per share, including accumulated and unpaid
dividends.
TERMS
The following description of the Preferred Stock summarizes certain general
terms and provisions of each series of Preferred Stock to which any Prospectus
Supplement may relate. Certain other terms of a
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<PAGE>
particular series of Preferred Stock will be summarized in the Prospectus
Supplement relating to such series. The summaries of the terms of the Preferred
Stock below and in any Prospectus Supplement do not, and will not, purport to be
complete and are subject to, and qualified in their entirety by reference to,
the Company's Restated Certificate of Incorporation and the certificate of
amendment establishing a series of Preferred Stock (each, a "Certificate of
Amendment"), each of which will be filed with the Commission at or prior to the
time of the sale of such series of Preferred Stock.
The Board of Directors is authorized to provide for issuance of the
Preferred Stock of the Company from time to time, in one or more series, and to
fix the dividend rate, conversion or exchange rights, voting rights, terms of
redemption, redemption price or prices, liquidation preferences and
qualifications, limitations and restrictions thereof with respect to each
series.
An applicable Prospectus Supplement will set forth or describe other
specific terms regarding each series of Preferred Stock offered thereby,
including:
1. the number of shares of such Preferred Stock offered, the liquidation
preference per share and the initial offering price of such Preferred Stock;
2. the dividend rate, period and/or payment date, or method of calculation
thereof, applicable to such Preferred Stock;
3. the date from which dividends on such Preferred Stock shall accumulate,
if applicable;
4. the provision for a sinking fund, if any, for such Preferred Stock;
5. the provision for redemption, if applicable, of such Preferred Stock;
6. any listing of such Preferred Stock on any securities exchange;
7. the terms and conditions, if applicable, upon which such Preferred Stock
will be convertible into Common Stock or exchangeable for Debt Securities,
including the conversion price or exchange rate, as the case may be (or the
manner of calculation thereof);
8. a discussion of U.S. Federal tax considerations applicable to such
Preferred Stock;
9. the relative ranking and preference of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of the
affairs of the Company;
10. any limitations on issuance of any series of Preferred Stock ranking
senior to or on a parity with such series of Preferred Stock as to dividend
rights and rights upon liquidation, dissolution or winding up of the affairs of
the Company;
11. the voting powers, if any, of such Preferred Stock, in addition to those
set forth below; and
12. any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
DIVIDENDS
The holders of the Preferred Stock of each series shall be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of the funds of the Company legally available therefor, cash dividends at the
annual rate and on such dates as shall be set forth in the Prospectus Supplement
relating to such series. Each such dividend shall be paid to the holders of
record of shares of such series on such record date as shall be fixed by the
Board of Directors of the Company.
If dividends are not paid in full or declared in full and a sum set apart
for the payment thereof upon the Preferred Stock of a series and any other
Preferred Stock ranking on a parity as to dividends with the Preferred Stock of
such series, all dividends declared upon shares of Preferred Stock of such
series and any other Preferred Stock ranking on a parity as to dividends shall
be declared PRO RATA so that in all cases the amount of dividends declared per
share on the Preferred Stock of such series and any other Preferred
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<PAGE>
Stock ranking on a parity as to dividends shall be in the same proportion as the
amount of dividends that would be paid on all shares of Preferred Stock of such
series and such other parity Preferred Stock if all such dividends (including
dividends accrued or in arrears) were paid in full. Except as provided in the
preceding sentence, unless full cumulative dividends on the Preferred Stock of a
series have been paid or declared in full and a sum set aside for the payment
thereof, no dividends shall be declared or paid or set aside for payment or
other distribution made upon the Company's Common Stock or any other class or
series of capital stock of the Company ranking junior to or on a parity with the
Preferred Stock of the applicable series as to dividends or liquidation rights,
nor shall any Common Stock or any other class or series of capital stock of the
Company ranking junior to or on a parity with the Preferred Stock of such series
as to dividends or liquidation rights be redeemed, purchased or otherwise
acquired for any consideration (or any payment made to or available for a
sinking fund for the redemption of any shares of such stock) by the Company or
any subsidiary of the Company (except by conversion into or exchange for stock
of the Company ranking junior, to the Preferred Stock of the applicable series
as to dividends and liquidation rights). Unless otherwise stated in the
applicable Prospectus Supplement, no interest, or sum of money in lieu of
interest, will be payable in respect of any dividend payment or payments on
Preferred Stock of any series which may be in arrears.
VOTING RIGHTS
The holders of the Preferred Stock shall not, except as required by law or
as set forth in the applicable Prospectus Supplement, have any right or power to
vote on any question or in any proceeding or to be represented at, or to receive
notice of, any meeting of stockholders. On any matters on which the holders of
the Preferred Stock shall be entitled to vote, they shall be entitled to one
vote for each share held.
The approval of the holders of at least a majority of the then outstanding
shares of Preferred Stock of a series will be required to amend the applicable
Certificate of Amendment to adversely change the preferences, special rights or
powers of the Preferred Stock of such series or to authorize, create or increase
the authorized amount of any class or series of capital stock of the Company
ranking prior to the Preferred Stock of such series either as to dividend or
liquidation rights; PROVIDED that the creation or issuance of any class or
series of capital stock of the Company not ranking prior to the Preferred Stock
of a series as to dividend or liquidation rights shall not require the consent
of the holders of the Preferred Stock of such series.
RANKING
The Preferred Stock to which any Prospectus Supplement may relate will rank
PARI PASSU with the outstanding shares of $.75 Convertible Preferred Stock with
respect to dividend rights and liquidation preference. The Preferred Stock also
will rank prior to the Company's Common Stock. Without the requisite vote of
holders of the Preferred Stock, as described above under "Voting Rights," no
class or series of capital stock can be created ranking senior to the Preferred
Stock as to dividend rights or liquidation preference.
LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding up of the Company,
the holders of shares of the Preferred Stock of each series are entitled to
receive out of assets of the Company available for distribution to stockholders,
before any distribution of assets is made to holders of Common Stock or any
other class or series of capital stock of the Company (including any Preferred
Stock) which is junior as to liquidation rights to the Preferred Stock of such
series. Liquidating distributions in the amount set forth in the applicable
Prospectus Supplement, plus dividends accumulated but unpaid to the date of such
distribution. If, upon any liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Preferred Stock of such series
and any other Preferred Stock of the Company ranking as to any such distribution
on a parity with the Preferred Stock of such series are not paid in full, the
holders of
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<PAGE>
the Preferred Stock of such series and of such other Preferred Stock of the
Company will share ratably in any such distribution of assets in proportion to
the full respective preferential amounts to which they are entitled. After
payment of the full amount of the liquidating distribution to which they are
entitled, the holders of shares of the Preferred Stock will not be entitled to
any further participation in any distribution of assets by the Company. Neither
a consolidation or merger of the Company with another corporation nor a sale or
transfer of all or part of the Company's assets for cash or securities shall be
considered a liquidation, dissolution or winding up of the Company.
REDEMPTION PROVISIONS
The Preferred Stock of each series will have such optional or mandatory
redemption terms, if any, as shall be set forth in the applicable Prospectus
Supplement.
CONVERSION AND EXCHANGE RIGHTS
The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into Common Stock or exchangeable into Debt Securities will be
set forth in the applicable Prospectus Supplement relating to such series of
Preferred Stock. Such terms will include (i) in the case such series of
Preferred Stock is convertible into Common Stock, (A) the number of shares of
Common Stock into which shares of such series of Preferred Stock are
convertible, (B) the conversion price (or manner of calculation thereof), (C)
the conversion period, (D) provisions as to whether conversion will be at the
option of the holders of such series of Preferred Stock or at the option of the
Company, (E) the events requiring an adjustment of the conversion price and (F)
provisions affecting conversion in the event of the redemption of such series of
Preferred Stock and (ii) in the case such series of Preferred Stock is
exchangeable into Debt Securities, (A) the principal amount of Debt Securities
into which shares of such series of Preferred Stock are exchangeable, (B) the
exchange period and (C) provisions as to whether exchange will be at the option
of the holders of such series of Preferred Stock or at the option of the
Company.
MISCELLANEOUS
The Preferred Stock will have no preemptive rights. All of the Preferred
Stock, upon payment in full therefor, will be fully paid and nonassessable.
ANTI-TAKEOVER PROVISIONS
Certain provisions in the Company's Restated Certificate of Incorporation
and By-laws, the Company's shareholders' rights plan, executive severance
agreements and the ownership position of Anschutz may have the effect of
encouraging persons considering unsolicited tender offers or other unilateral
takeover proposals to negotiate with the Board of Directors rather than pursue
non-negotiated takeover attempts.
CLASSIFIED BOARD OF DIRECTORS.
The Company's By-laws provide that the Board of Directors is divided into
four classes as nearly equal in number as possible, with each class having not
less than three members, whose four year terms of office expire at different
times in annual succession. A staggered board makes it more difficult for
shareholders to change the majority of the directors and instead promotes a
continuity of existing management.
BLANK CHECK PREFERRED STOCK.
The Company's Restated Certificate of Incorporation authorizes the issuance
of blank check preferred stock. The Board of Directors can set the voting
rights, redemption rights, conversion rights and other rights relating to such
preferred stock and could issue such stock in either private or public
16
<PAGE>
transactions. In some circumstances, the blank check preferred stock could be
issued and have the effect of preventing a merger, tender offer or other
takeover attempt which the Board of Directors opposes.
SHAREHOLDERS' RIGHTS PLAN.
In October 1993, the Board of Directors adopted a shareholders' rights plan
(the "Plan") and entered into the Rights Agreement. The Company issued a
dividend of a preferred stock purchase right (the "Rights") on each outstanding
share of Common Stock of the Company, which, after the Rights become
exercisable, entitles the holder to purchase 1/100th of a share of a newly
issued series of the Company's preferred stock at a purchase price of $30 per
1/100th of a preferred share, subject to adjustment. The Rights expire on
October 29, 2003 unless extended or redeemed earlier. The Rights will become
exercisable (unless previously redeemed or the expiration date of the rights has
occurred) following a public announcement that a person or group (an "Acquiring
Person") has acquired 20% or more of the Common Stock or has commenced (or
announced an intention to make) a tender offer or exchange offer for 20% or more
of the Common Stock. In certain circumstances each holder of Rights (other than
an Acquiring Person) would have the right to receive, upon exercise (i) shares
of Common Stock having a value significantly in excess of the exercise price of
the Rights, or (ii) shares of Common Stock of an acquiring company having a
value significantly in excess of the exercise price of the Rights.
PLAN OF DISTRIBUTION
The Company may sell Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to a limited number of institutional
purchasers or to a single purchaser, or (iii) through agents. Any such dealer or
agent, in addition to any underwriter, may be deemed to be an underwriter within
the meaning of the Securities Act. The terms of the offering of the Securities
with respect to which this Prospectus is being delivered will be set forth in
the applicable Prospectus Supplement, including the name or names of any
underwriters, dealers or agents, the purchase price of such Securities and the
proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, the public offering price and any
discounts or concessions which may be allowed or reallowed or paid to dealers
and any securities exchanges on which the Securities may be listed.
If underwriters are used in the sale of Securities, such Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or more
underwriters acting alone. Unless otherwise set forth in the applicable
Prospectus Supplement, the obligations of the underwriters to purchase the
Securities described in the applicable Prospectus Supplement will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all such Securities if any are so purchased by them. Any public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
The Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agents involved in the offer or
sale of the Securities in respect of which this Prospectus is being delivered,
and any commissions payable by the Company to such agents, will be set forth in
the applicable Prospectus Supplement. Unless otherwise indicated in the
applicable Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If dealers are utilized in the sale of any Securities, the Company will sell
the Securities to the dealers, as principals. Any dealer may resell the
Securities to the public at varying prices to be determined by the dealer at the
time of resale. The name of any dealer and the terms of the transaction will be
set forth in the Prospectus Supplement with respect to the Securities being
offered.
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<PAGE>
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase the Securities to which this Prospectus and the
applicable Prospectus Supplement relates from the Company at the public offering
price set forth in the applicable Prospectus Supplement, plus, if applicable,
accrued interest, pursuant to delayed delivery contracts providing for payment
and delivery on a specified date in the future. Such contracts will be subject
only to those conditions set forth in the applicable Prospectus Supplement, and
the applicable Prospectus Supplement will set forth the commission payable for
solicitation of such contracts.
Underwriters will not be obligated to make a market in any Securities. The
Company cannot predict the activity of trading in, or liquidity of, any
Securities.
Agents, dealers and underwriters may be entitled, under agreements entered
into with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
by the Company to payments they may be required to make in respect thereof.
Agents, dealers and underwriters may be customers of, engage in transactions
with, or perform services for, the Company in the ordinary course of business.
LEGAL MATTERS
Certain legal matters in connection with the Securities offered hereby will
be passed upon for the Company by Vinson & Elkins L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of the Company which appear in the
December 31, 1995 Annual Report on Form 10-K/A of the Company have been
incorporated by reference herein in reliance upon the report dated February 20,
1996 of KPMG Peat Marwick LLP, independent certified accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG Peat Marwick LLP refers to a change
in the method of accounting for oil and gas sales from the sales method to the
entitlements method effective January 1, 1994 and to changes in the method of
accounting for post retirement benefits other than pensions and income taxes in
1993.
The consolidated financial statements of ATCOR Resources, Ltd., included in
the Current Report on Form 8-K/A of Forest Oil Corporation, dated January 28,
1997 have been incorporated by reference herein in reliance upon the report
dated February 1, 1996 of Price Waterhouse, independent auditors, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing. Price Waterhouse is a Canadian partnership, resident in
Canada.
18
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NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OF THE PURCHASER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES IN ANY STATE TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
STATE. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR
ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary.................... S-2
Risk Factors.......................... S-4
Price Range of Common Stock........... S-9
Selected Financial and Operating
Data................................ S-10
Capitalization........................ S-13
Standby Arrangement................... S-14
Legal Matters......................... S-15
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 3
Ratio of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges
and Preferred Stock Dividends....... 3
Description of Debt Securities........ 3
Description of Equity Securities...... 12
Plan of Distribution.................. 17
Legal Matters......................... 18
Experts............................... 18
</TABLE>
[LOGO]
2,014,731 SHARES
FOREST OIL CORPORATION
COMMON STOCK
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PROSPECTUS SUPPLEMENT
February 7, 1997
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LEHMAN BROTHERS
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