Moody's might upgrade Sabine, changes Forest outlook to stable

Moody's Investors Service said it placed Sabine Oil & Gas LLC's B3 corporate family rating, B3-PD probability of default rating, Caa1 second-lien term loan rating and Caa2 senior note rating under review for upgrade and affirmed its SGL-3 speculative grade liquidity rating.

In addition, the agency changed Forest Oil Corp.'s outlook to stable from negative and affirmed its B3 corporate family rating, B3-PD probability of default rating, Caa1 senior notes rating and SGL-3 speculative grade liquidity rating.

These rating actions were prompted by Sabine's announcement that it will acquire Forest in an all-stock combination of Sabine and Forest under a newly incorporated public holding company, Sabine Oil & Gas Corp. ("Newco"). Sabine will assume Forest's existing $800 million notes.

"The combination of Sabine and Forest joins two companies whose principal assets in East Texas and the Eagle Ford Shale are highly complementary, creating a company much larger in size and scale than the two companies are individually," Andrew Brooks, a Moody's vice president, said in an agency news release.

"Moreover, structured as an all-stock transaction, the transaction in aggregate is not leveraging and through anticipated production gains and efficiencies is expected to reduce the high debt leverage relative to production and cash flow which presently characterizes each of the companies individually."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.