Edge 5.75% convertible preferred holders to get Chaparral 5.75% convertible preferreds in merger

By Susanna Moon

Chicago, July 15 - Edge Petroleum Corp. said holders of its 5.75% cumulative convertible perpetual preferred stock will receive one share of Chaparral Energy, Inc.'s 5.75% series A cumulative convertible perpetual preferred stock per each Edge preferred.

The Chaparral convertible preferreds will have the same terms as the Edge preferreds, adjusted to reflect the merger and exchange ratio for Edge common stock.

Edge said it entered into a definitive merger agreement to be acquired by Chaparral in an all-stock deal. Through the merger, Chaparral will become a publicly traded company.

The merger agreement provides for Chaparral to list the preferreds on the New York Stock Exchange.

The boards of both companies have unanimously approved the merger agreement, according to a press release. The deal requires Edge stockholder approval. Chaparral's stockholders have approved the merger.

The deal is expected to close in the fourth quarter.

In the deal, Chaparral stockholders will own about 86% of the outstanding common stock of the combined company and Edge stockholders will own 14%. The combined company's stock is expected to trade under the symbol "CPR."

Edge stockholders will receive 0.2511 Chaparral common shares per Edge common share.

With the merger agreement, Magnetar Capital agreed to provide a $150 million series B convertible preferred investment. The preferreds will pay a 6.5% annual cash dividend or, at Chaparral's discretion, an 8% payable-in-kind dividend. The closing is contingent on the closing of the merger.

Chaparral also received a financing commitment for a credit facility, led by JPMorgan.

Chaparral's financial advisers for the merger are SunTrust Robinson Humphrey and RBS Greenwich Capital. Chaparral's lead placement agent for the series B convertible preferreds is SunTrust Robinson Humphrey along with co-placement agent J.P. Morgan Securities, Inc.

Edge's lead financial adviser for the merger is Merrill Lynch, Pierce, Fenner & Smith Inc. Houlihan Lokey also provided financial advisory services to Edge for the proposed merger.

Chaparral is an Oklahoma City-based oil and natural gas production and exploitation company.

Edge is a Houston energy company.

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