Edge Petroleum closes sale; unsecured creditor distribution unlikely

By Caroline Salls

Pittsburgh, Dec. 31 - Edge Petroleum Corp. closed the sale of substantially all of its assets to Mariner Energy, Inc., according to an 8-K filed Thursday with the Securities and Exchange Commission.

Edge said the sale proceeds will be used to substantially reduce the debt under its fourth amended and restated credit agreement with Union Bank, NA.

The company said it currently believes that the $226.5 million outstanding on the credit agreement will be in excess of the proceeds available for distribution from the Mariner transaction.

As a result, it is unlikely that any material amount of proceeds will be available for distribution to Edge's unsecured creditors.

In the unlikely event that unsecured creditors would receive any distribution, Edge said the holders of its 5.75% series A cumulative convertible perpetual preferred stock would most likely receive no distribution.

According to the filing, the holders of the company's common stock will not be entitled to any recovery even under the most optimistic of circumstances.

Under the sale transaction, Edge's outstanding common and preferred stock has been cancelled.

In addition, Edge received court approval of an employee incentive plan.

Under the incentive plan, employees who continue to be employed by Edge on the plan of reorganization effective date will be entitled to receive an incentive bonus for assisting in the successful closing of the sale.

If an employee is not employed by the company on the effective date, Edge may, after consultation with the U.S. Trustee for the Southern District of Texas and Union Bank, reallocate that employee's funds among the remaining employees.

The bank has consented to the use of up to $1.8 million to fund the incentive plan, according to the 8-K.

Edge, a Houston-based oil and natural gas company, filed for bankruptcy on Oct. 1 in the U.S. Bankruptcy Court for the Southern District of Texas. Its Chapter 11 case number is 09-20644.

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