Forest, Houston Exploration Set to Complete Merger
Forest Oil Corp. and The Houston Exploration Co. on Wednesday announced that based on the preliminary results of elections received prior to Tuesday's deadline for making a merger consideration election under Forest's merger agreement with Houston Exploration, the stock component is over-subscribed.
A total of approximately 28,559,499 shares of Houston Exploration common stock were outstanding on June 5, 2007, and entitled to participate in the merger. Of this amount, 2,129,055 shares elected to receive cash merger consideration, and 22,911,988 shares elected to receive shares of Forest common stock. In addition, elections covering 5,188,081 shares were made pursuant to the notice of guaranteed delivery procedure, of which 643,877 shares elected to receive cash and 4,544,204 shares elected to receive stock.
Based on the estimated number of shares of Houston Exploration common stock outstanding on June 5, 2007 and the preliminary election results, Forest expects to pay a total of approximately $750 million in cash to Houston Exploration stockholders and issue approximately 24 million shares of Forest common stock pursuant to the merger agreement.
As a result of the oversubscription, the elections will be subject to agreed upon proration procedures described in the merger agreement. Houston Exploration stockholders who elected to receive all of their merger consideration in shares of Forest common stock will receive a combination of cash consideration and stock consideration and stockholders who elected to receive all cash and all stockholders who failed to make a valid election will receive cash consideration of $60.0239 per share (assuming the merger closing occurs on June 6, 2007). However, the amount of the stock over subscription and the exact allocation of the stock merger consideration will not be known until final results of the election process are determined, at the end of the guaranteed delivery period described below.
With respect to the elections that were made pursuant to the notice of guaranteed delivery procedure, which elections may be duplicative and supersede the prior election, such procedure requires the delivery of the share certificates representing such shares of Houston Exploration common stock (or a confirmation evidencing the book-entry transfer of such shares) to the exchange agent by 5 p.m., New York City time, on June 8, 2007. If the exchange agent does not receive the required stock certificates or confirmation by this guaranteed delivery deadline with respect to any such election, the shares of Houston Exploration common stock subject to such election will be treated as shares that did not make a valid election.
After the final results of the merger consideration election process are determined following the expiration of the guaranteed delivery period, the actual merger consideration and the cash and stock allocation will be computed using the formula contained in the merger agreement. The formula will be based on, among other things, the actual number of shares of Houston Exploration common stock outstanding immediately prior to the completion of the transaction, the final results of the election process, and the closing price of shares of Forest common stock during a ten-day period preceding the completion of the merger. A more complete description of the merger consideration and the proration procedures is contained in the joint proxy statement/prospectus dated May 1, 2007, that was first mailed to Forest shareholders and Houston Exploration stockholders on or about May 4, 2007. Forest shareholders and Houston Exploration stockholders are urged to read the joint proxy statement/prospectus carefully and in its entirety. Copies of the joint proxy statement/prospectus may be obtained for free at the Securities and Exchange Commission's website at www.sec.gov.
Forest and Houston Exploration expect to complete the merger Wednesday. The proposed merger remains subject to the satisfaction of customary conditions to closing contained in the merger agreement.
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Company: The Houston Exploration Company more info
- Forest Reports Election Results for Houston Exploration Merger (Jun 14)
- Forest Oil Acquires Houston Exploration (Jun 07)
- Houston Exploration Announces Expiration of Tender Offer (Jun 06)