Mariner Form S-4 Amendment
Forest also announced today that Mariner Energy, Inc. (Mariner) filed an amendment to its Registration Statement on Form S-4 with the Securities and Exchange Commission on December 22, 2005. The Registration Statement contains a preliminary form of proxy statement/prospectus-information statement relating to the proposed spin-off and merger of Forest's offshore Gulf of Mexico operations with Mariner.
As previously announced, under the terms of the transaction, Forest has contributed all of its offshore Gulf of Mexico operations, certain derivative liabilities and asset retirement obligations to a separate wholly owned subsidiary ("Spinco"), which will then merge with a wholly owned subsidiary of Mariner in a stock-for-stock transaction. As a result of the transaction, in addition to retaining all of their Forest Oil common stock, Forest's shareholders will receive approximately 0.8 shares of Mariner common stock for each Forest share owned as of the record date. Forest shareholders will receive approximately 58 percent of the common stock of Mariner on a diluted basis. Forest will not receive any shares of Mariner in connection with this transaction. Further to the transaction, Spinco will borrow from a third party and pay to Forest $200 million cash (subject to certain adjustments to reflect an economic effective date of July 1, 2005), which Forest will use to pay down debt. Mariner has applied to list its shares on the New York Stock Exchange. The transaction is expected to close in the first quarter of 2006.
Based on a current valuation of the Forest Gulf of Mexico operations and the current amount of distributions permitted by the covenants contained in the indentures governing Forest's outstanding bonds, Forest is not required to obtain consents of its bondholders for the spin-off and the merger.
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