Forest Oil amends loan to loosen debt restrictions before breach

Forest Oil (FST +1%) reaches a deal with lenders to cut the borrowing capacity on a credit line by 25% to $300M in exchange for loosening restrictions the company had expected to breach after burning cash for 12 straight quarters.

The lenders agree to increase the amount of debt they allow FST to take on relative to its cash flow; the measure can now increase to as much as 5.75x the company’s EBITDA through Sept. 30, up from 5x.

FST had said in a regulatory filing in February that without amendments it had expected to breach the threshold as soon as this quarter.

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