Canadian Forest Oil Corp. Sub Nts Rtd 'B' by S&P.NEW YORK--(BUSINESS WIRE)--Sept. 22, 1997--Standard & Poor's CreditWire 9/22/97--Standard & Poor's today assigned its single-'B' rating to Canadian Forest Oil Ltd.'s proposed $125 million senior subordinated notes due 2007, guaranteed by Forest Oil Corp. (FOIL). Proceeds from the issue are expected to be applied primarily towards the cash tender offer for FOIL's outstanding $100 million aggregate principal amount of 11 1/4% senior subordinated notes due 2003. Over 80% of the notes have already been tendered. In addition, Standard & Poor's assigned its preliminary double-'B'-minus/single-'B' rating to FOIL's $250 million shelf registration. The ratings outlook for FOIL is revised to positive from stable. FOIL's ratings reflect the company's below average business position as a relatively small exploration and production (E&P) company somewhat offset by moderate debt usage and by a relatively low-risk operating strategy. FOIL focuses on acquisitions and enhancement of proved producing properties, and on exploration activities where the company is able to reduce risks by participating in ventures with other E&P companies. Properties are concentrated in the U.S. Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east , Western Canada
Western Canada, commonly referred to as the West , the U.S Rockies, and Oklahoma. The company's reserve base is relatively small -- about 80 million boe, 70% natural gas. Albeit small, FOIL reserves are reasonably diversified, affording a measure of protection from commodity price fluctuations. Since selling 40% of its stock in 1996 to Anschutz Corp. (unrated), FOIL has followed a moderate financial policy. Still, reserve and production growth -- while maintaining a moderate financial profile -- likely will pose a continuous challenge. Standard and Poor's Noun 1. Standard and Poor's - a broadly based stock market index Standard and Poor's Index expects cash flow protection measures to be adequate for the rating category with earnings before interest taxes depreciation and amortization Noun 1. Earnings Before Interest Taxes Depreciation and Amortization - income before interest and taxes and depreciation and amortization have been subtracted; an indicator of a company's profitability that is watched by investors (especially in leveraged buyouts) (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) coverage of interest averaging about 3.5 to 4.5 times and funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. to total debt of about 30% to 40%. Forest has significant financial flexibility for a company its size, as demonstrated by equity issuance In financial markets, an Equity Issuance is the sale of new equity or "stocks" by a firm to investors. Equity Issuance can involve a private sale, in which the transaction between investors and the firm takes place directly, or publicly, in which case the firm has to during recent years, and supported by a $150 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. OUTLOOK: Positive The investment by Anschutz and subsequent equity issues have restored the financial flexibility needed to carry on drilling programs, and as a result, FOIL has begun to improve its inventory of drilling opportunities. Standard & Poor's believes FOIL now has sufficient financial flexibility to increase its reserve base via a combination of improved drilling results and small property acquisitions. Gradual improvement in the company's cash flow protection and profitability measures commensurate with a higher rating from a bolstered drilling program are possible over the next few years, Standard & Poor's said. -- CreditWire CONTACT: Carlos Catoya, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , 212/208-8081 Copyright 1997, Standard & Poor's Rating Services For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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