Seeking Alpha

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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