Forest Oil shareholders to vote on stock issuance, stock incentive plan at special meeting

By Lisa Kerner

Charlotte, N.C. April 30 - Forest Oil Corp. shareholders, at a special meeting on June 5, will be asked to approve the issuance of additional shares of Forest Oil common stock for completion of the merger with the Houston Exploration Co.

Houston Exploration shareholders are scheduled to vote on the Jan. 7 merger agreement at their special meeting on April 30. Both companies' boards of directors have approved the merger plan.

Forest Oil shareholders will also be asked to adopt the company's 2007 stock incentive plan, according to an S-4 filing with the Securities and Exchange Commission. The board already adopted the plan. A total of 720,019 shares remained available for issuance under the Forest Oil 2001 stock incentive plan.

The latest stock incentive plan will provide additional incentives and reward opportunities to the company's employees and ensure that Forest Oil has a sufficient number of shares available to issue stock options to some Houston Exploration employees as provided in the merger agreement, the filing stated.

Under the agreement, Forest Oil will grant a stock option to each Houston Exploration employee who has remained continuously employed by Forest Oil and its subsidiaries from the effective time of the merger to the date of the grant. Forest Oil will also grant a stock option to employees who held, immediately prior to the effective time of the merger, an unexercised Houston Exploration stock option with an exercise price equal to or greater than $54.18 per share.

Forest Oil agreed to acquire 100% of the outstanding stock of Houston Exploration in a stock and cash transaction totaling about $1.5 billion plus the assumption of an estimated $100 million in net debt.

At the time the agreement was announced, Houston Exploration shareholders were slated to receive 0.84 of a share of Forest Oil common stock and $26.25 in cash for each share of Houston Exploration common stock for total consideration of roughly $52.47 per share.

Houston Exploration is an independent natural gas and crude oil producer based in Houston.

Denver-based Forest Oil is engaged in the acquisition, exploration, development and production of natural gas and liquids primarily in North America.

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