Current Report — Form 8-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 8-K Wisconsin Energy Corporation 9 34K
2: EX-2.1 Agreement and Plan of Merger 84 331K
3: EX-2.2 Wec Stock Option Agreement 18 79K
4: EX-2.3 Nsp Stock Option Agreement 18 78K
5: EX-2.4 Committees of the Board of Directors of Primergy 1 6K
6: EX-2.5 Form of Employment Agreement of James J. Howard 30 66K
7: EX-2.6 Form of Employment Agreement of Richard A. Abdoo 27 63K
8: EX-2.7 Amended and Restated Articles of Northern Power 37 124K
Wis Corp
9: EX-99.1 Wec Press Release 5 22K
EX-99.1 — Wec Press Release
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EXHIBIT (99)-1
FOR IMMEDIATE RELEASE
May 1, 1995
WISCONSIN ENERGY, NORTHERN STATES POWER
ANNOUNCE STRATEGIC BUSINESS COMBINATION
Milwaukee, Wis. and Minneapolis, Minn. -- Wisconsin Energy Corporation (NYSE:
WEC) of Milwaukee, and Northern States Power Company (NYSE: NSP) of
Minneapolis, two of the nation's leading utility companies, today announced
that they have signed a definitive agreement to engage in a strategic business
combination.
The merger-of-equals transaction, which was unanimously approved by both
companies' boards of directors, will join two companies whose current combined
market capitalization is approximately $6.0 billion, and will create the tenth
largest investor-owned (electric/gas) utility company in the United States
based on current market capitalization. For the year ended Dec. 31, 1994, the
combined revenues of Wisconsin Energy and Northern States Power were $4.2
billion, with total assets of more than
$10.0 billion.
The management teams of both companies believe the transaction will create a
combined enterprise well-positioned for an increasingly competitive energy
industry environment. It is designed to achieve continued competitive energy
rates over the long term for the companies' respective customers and to
enhance value for the shareholders of both companies.
A preliminary estimate indicates that the merger will result in net savings of
approximately $2.0 billion over 10 years. The synergies created by the merger
will allow the companies to implement a reduction in electric retail rates
followed by a rate freeze for retail electric customers through the year 2000.
The transaction will result in a registered public utility holding company
known as Primergy Corporation (Primergy), which will become the parent of both
NSP and the current operating subsidiaries of WEC. Primergy will serve 2.3
million electric customers and 750,000 natural gas customers, and its service
territory will include portions of Minnesota, Wisconsin, North Dakota, South
Dakota and Michigan. The business of Primergy will consist of utility
operations and various non-utility enterprises, including independent power
projects.
At the effective time of the transaction, holders of Northern States Power
(NSP) common stock will own 1.626 shares of stock of Primergy for each share
of NSP stock they own, and Wisconsin Energy (WEC) shareholders will own one
share of Primergy common stock for each share of Wisconsin Energy common stock
they own.
As of April 20, 1995, Wisconsin Energy had 109.4 million shares outstanding,
and Northern States Power had 67.3 million shares outstanding. Based on the
number of outstanding common shares, 50% of the common equity of Primergy
would be held by existing Northern States Power Company shareholders and 50%
by existing Wisconsin Energy Corporation common shareholders. The holders of
preferred stock of Northern States
Power will receive preferred stock in a successor corporation with identical
terms. The preferred stock of Wisconsin Electric Power Company will remain
outstanding after the transaction. As a condition of closing, the parties
must receive an Internal Revenue Service ruling that the exchange of stock
qualifies as a tax-free transaction, and obtain appropriate accounting
assurances that the transaction will be accounted for as a pooling of
interests.
It is anticipated that Primergy will adopt NSP's dividend payment level
adjusted for the exchange ratio. NSP currently pays $2.64 per share annually,
and WEC's annual dividend rate is currently $1.47 per share. Based on the
exchange ratio and NSP's current dividend rate, the pro forma dividend rate
for Primergy would be $1.62 per share. Both companies have historically
increased their dividends consistently, and anticipate that such policies will
continue, both before and after the merger, subject to earnings performance
and regulatory constraints.
Richard A. Abdoo, chairman, president and chief executive officer of Wisconsin
Energy Corporation, said: "This merger gets us in front of the changing energy
marketplace. We are initiating a thoughtful combination of resources and
talents to manage successfully in the much more demanding times ahead. Our
common goal is to be a premier investor-owned energy company -- in meeting
customer needs, having competitive rates and creating shareholder value."
James J. Howard, chairman, president and chief executive officer of NSP, said:
"This transaction is the best and most financially conservative way to ensure
continued competitive rates over the long term for the customers of both
companies. By doing that, we will help our communities attract new business,
add jobs and strengthen the economy in our combined service territory. That,
in turn, will position the combined company to build long-term value for all
its shareholders -- many of whom also are customers."
Following completion of the merger, Howard, 59, will serve as chairman and
chief executive officer of Primergy. Abdoo, 51, will become vice chairman,
president and chief operating officer of Primergy. Abdoo will become chief
executive officer of Primergy in May 1998. Howard will continue as chairman
of the new company until his expected normal retirement date in July 2000, at
which time Abdoo will become chairman.
After the merger, Wisconsin Energy Company (the new name for the consolidated
operations of Wisconsin Energy's existing utility subsidiaries, Wisconsin
Electric Power Company and Wisconsin Natural Gas Company) and Northern States
Power Company will continue to operate under those names as the principal
subsidiaries of Primergy Corp. Following the merger, NSP-Wisconsin will merge
into Wisconsin Energy Company. The headquarters of the two utilities will
remain in their current locations, Wisconsin Energy's in Milwaukee and NSP's
in Minneapolis. The headquarters of Primergy, which will be incorporated in
the state of Wisconsin, will be in Minneapolis. The board of directors of
Primergy will be composed of six current directors of WEC and six current
directors of NSP.
"We intend to be a winner in the new market ahead," Abdoo stated, "and that
means first and foremost a clear focus on customers. Knowing what our
customers want, and meeting those needs quickly, efficiently and with quality
is what this merger of two great companies is all about."
"The benefits of this strategic combination for shareholders are expected to
be substantial," Howard said. "Value will be obtained from the strengthening
and improved cost-efficiency of our combined product lines. The professional,
productive attitudes of both employee groups will combine to enhance solid
traditions of quality customer service."
According to Howard and Abdoo, an additional benefit of the merger is that it
will leverage the complementary environmental expertise and leadership of both
companies. The combined entity will utilize the most efficient, least-
polluting generation sources available to provide customers with reliable
electricity systemwide.
Both NSP and WEC recognize that the divestiture of their existing gas
operations and certain non-utility operations is a possibility under the new
registered holding company structure, but will seek approval from the
Securities and Exchange Commission to maintain such businesses. If
divestiture is ultimately required, the SEC has historically allowed companies
sufficient time to accomplish divestitures in a manner that protects
shareholder values.
The merger is subject to approval by the shareholders of both companies and
various regulatory agencies including the Securities and Exchange Commission;
the Federal Energy Regulatory Commission; state regulators in Minnesota,
Wisconsin and in certain other states where the companies conduct business;
and the Nuclear Regulatory Commission. The merger also is subject to the
termination or expiration of the applicable waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act. The preliminary proxy materials are
expected to be filed with the Securities and Exchange Commission in the near
future. While the timing of the regulatory process cannot be predicted with
certainty, the parties currently expect completion of the transaction in the
fourth quarter of 1996.
# # #
Wisconsin Energy Corporation
----------------------------
Wisconsin Energy (WEC), headquartered in Milwaukee, is a holding company with
seven wholly owned subsidiaries and approximately 5,000 employees. The
utility subsidiaries are Wisconsin Electric Power Company (WEPCO) and
Wisconsin Natural Gas Company (WNG).
WEPCO serves about 945,000 electric customers in three non-contiguous areas
which include southeastern Wisconsin (including the Milwaukee area), eastern
Wisconsin (including Appleton), and northeastern Wisconsin and the Upper
Peninsula of Michigan. WEPCO also sells steam utility service in downtown
Milwaukee to both space heating and manufacturing customers.
WEC's electric energy mix is 64% coal, 27% nuclear, 7% purchased power and 2%
other. The Point Beach nuclear units 1 and 2 provide 19% of company-owned
generating capability.
WNG services about 350,000 gas customers in southeastern Wisconsin, the Fox
Valley, and in the Prairie du Chien area. In 1994, WNG acquired Wisconsin
Southern Gas Company, Inc. If regulatory approvals are obtained, WNG will
merge with WEPCO December 31, 1995.
WEC's non-regulated subsidiaries -- Wispark Corp., Witech Corp., Wisvest
Corp., Badger Service Co., and Wisconsin Michigan Investment Corp. -- are
devoted primarily to stimulating economic growth in the utilities' service
territories and to capitalizing on diversified investment opportunities for
shareholders.
Northern States Power Company
-----------------------------
Northern States Power Company (NSP), headquartered in Minneapolis, serves
customers in Minnesota, Wisconsin, North Dakota, South Dakota and Michigan.
NSP generates, transmits and distributes electricity to about 1.4 million
customers and distributes natural gas to approximately 400,000 customers. The
company employs approximately 7,000 people.
NSP-Minnesota operates in Minnesota, North Dakota and South Dakota. NSP-
Wisconsin is a wholly owned subsidiary operating in Wisconsin and the Upper
Peninsula of Michigan.
NSP's electric energy mix is 48% coal, 28% nuclear, 20% purchased power and 4%
hydro and renewables. NSP's Prairie Island and Monticello nuclear plants
provide 22% of company-owned generating capability.
NRG Energy, Inc., with headquarters in Minneapolis, is a wholly owned
subsidiary operating non-regulated energy business activities.
Cenergy, Inc., a wholly owned subsidiary of NSP, markets natural gas and
energy related services throughout the United States. In December 1994, the
Federal Energy Regulatory Commission granted the company a license to also
market electricity.
Viking Gas Transmission Company, also a wholly owned subsidiary, owns and
operates a 500-mile natural gas pipeline serving the Upper Midwest. The
pipeline provides transportation services and has direct access to four major
interstate and international pipelines linked to the majority of natural gas
supplies in North America.
CONTACTS
--------
For Northern States Power Company For Wisconsin Energy Corporation
Investor inquiries: Investor inquiries:
Jim McIntyre Cal Baker
612/330-7712 414/221-2126
Jackie Currier Jeff West
612/330-6020 414/221-2590
Dick Kolkmann
612/330-6622
Media inquiries: Media inquiries:
John Bousquet Rick James
612/337-2167 414/221-4444 (Mon., 5/1)
414/221-3818 (Tues., 5/2
and following)
Dates Referenced Herein and Documents Incorporated by Reference
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