MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services said it has
lowered its ratings on the senior unsecured notes due 2019 of Forest Oil Corp.
to 'B+' from 'BB-', and lowered the recovery rating to '5' from '4', indicating
the ratings agency's expectation for modest recovery in the event of a payment
default.
S&P said the action followed the exploration and production company's
announcement that it will add a proposed $250 million to the facility, bringing
the total to $1 billion.
Proceeds from the notes will be used primarily to repay $265 million in
existing notes that mature later this year. As of March 31, 2008, Denver-based
company had $1.8 billion in debt.
Meanwhile, the ratings agency had affirmed Forest's 'BB-' corporate credit
rating and raised its outlook to positive from stable.
The positive outlook reflected the company's improved capital efficiency
measures, better-than-average cost structure, and prospects for solid production
growth, as well as the recent increase in the ratings agency's natural gas and
crude oil pricing assumptions.
"As a result of the significant increase in Forest's borrowing capacity
under its senior secured revolving credit facility, there is less residual value
available for unsecured creditors in the event of a payment default," S&P added.
TFN.newsdesk@thomson.com
ami/aku
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