The changes to a merger agreement between Forest Oil Corp. and private equity-backed Sabine Oil & Gas LLC announced last week appear minor on their face—with the financial terms of the deal remaining untouched—but they are unusual in the way they significantly lower the threshold needed for shareholder approval, hinting at fears of a failed vote, experts say.
The companies flipped their deal from a merger to a contribution of assets transaction, which skirts a section of New York’s business code requiring a strict two-thirds vote for deal approval, according to an analysis of the changes. And on top of that, Forest implemented a new shareholder rights plan, or so-called poison pill, to ward off ill-meaning bond traders, a move that further suggests concern over an impending vote.
The changes are pure “corporate engineering,” experts say.
Here, Law360 takes a deeper look at the big changes to the buyout bid from First Reserve Corp. portfolio company Sabine and what they actually accomplish.