Forest Oil terminates floating interest rate swap Dec. 27

Petroleum News Alaska Staff

Forest Oil Corp. said Dec. 30 that it terminated a floating interest rate swap Dec. 27 and will receive cash proceeds of $15.9 million.

The swap that was terminated was an effective hedge of the fixed interest rate on Forest's 7.75 percent senior notes due 2014. As a result of the transaction, Forest said, there will be a reduction of interest expense of approximately $14.9 million recognized over the remaining term of the notes.

The company said that from the date of issuance to Dec. 27, the effective rate on the senior notes was reduced to approximately 3.5 percent as a result of the original swap. From Dec. 28 to maturity, the effective rate on the notes will be reduced to approximately 6.87 percent as a result of the termination of the swap.

Forest said it estimates it will have approximately 86 percent of its long-term debt subject to fixed interest rates at Dec. 31, following the termination of the interest rate swap.