Forest Oil to use existing loan to help fund Wiser Oil acquisition

By Sara Rosenberg

New York, May 24 - Forest Oil Corp. officials said in a conference call Monday that the company plans to draw on its existing credit facility to help finance the acquisition of The Wiser Oil Co. for about $330 million, including assumed debt of about $160 million.

The company also plans to use proceeds from the sale of 4.5 million shares of common stock and cash on hand to help fund the acquisition. Assuming a public offering price of $24.02 per share, which was the closing price of the company's common stock on May 21, it is expected that the net proceeds from this offering will be about $103.4 million after deducting underwriting discounts and commissions and estimated offering expenses, according to a form 424B3 filed with the Securities and Exchange Commission.

Pending completion of the Wiser acquisition, proceeds from the equity offering will be used to temporarily reduce borrowings under the credit facilities, the filing added.

As of May 21 Forest Oil had about $273 million outstanding under its credit facilities at an average interest rate of 2.25% and had used the credit facilities for letters of credit in the amount of $5.8 million. The credit facilities mature in October 2005.

The company has a $500 million U.S. credit facility and a $100 million Canadian credit facility, both led by JPMorgan. The borrowing base was set at $480 million in March, with $460 million allocated to the U.S. credit facility and $20 million allocated to the Canadian credit facility.

Based on discussions with banks, Forest Oil believes that its borrowing base will remain intact in connection with the acquisition, company officials said in the call.

Under the acquisition terms, a subsidiary of Forest will commence a tender offer to purchase all of the outstanding shares of Wiser at a price of $10.60 per share in cash. The boards of directors of both Forest and Wiser have unanimously approved the transaction. A vote of Wiser's stockholders will be required only if less than 90% of Wiser's shares are tendered into the Forest offer.

If the company is unable to complete the Wiser acquisition it will use proceeds from the equity offering to reduce debt and for other general corporate purposes.

Forest Oil is a Denver oil and gas company.

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