Filed On 7/18/97 ˇ SEC File 5-32547 ˇ Accession Number 950136-97-926
As Of Filer Filing On/For/As Docs:Pgs Issuer Agent
7/18/97 Calenergy Co Inc SC 14D1 11:84 NY State Electric & Gas Corp 950136
Calenergy Co Inc
Ce Electric (Ny)/INC
Tender-Offer Statement -- Third-Party Tender Offer ˇ Schedule 14D-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D1 Tender-Offer Statement -- Third-Party Tender Offer 8 34K
2: EX-99.(A)(1) Offer to Purchase 35 211K
3: EX-99.(A)(2) Letter of Transmittal 11 63K
4: EX-99.(A)(3) Notice of Guaranteed Delivery 2 16K
5: EX-99.(A)(4) Letter to Brokers 2 17K
6: EX-99.(A)(5) Letter to Clients 3 19K
7: EX-99.(A)(6) Guidelines 2 16K
8: EX-99.(A)(7) Summary Advertisement 5 27K
9: EX-99.(A)(8) Press Release 5 26K
10: EX-99.(A)(9) Press Release 2 11K
11: EX-99.(C) Engagement Letter 9 37K
OFFER TO PURCHASE FOR CASH
6,540,670 SHARES OF COMMON STOCK
OF
NEW YORK STATE ELECTRIC & GAS CORPORATION
AT
$24.50 NET PER SHARE
BY
CE ELECTRIC (NY), INC.
A WHOLLY OWNED SUBSIDIARY OF
CALENERGY COMPANY, INC.
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, AUGUST 14, 1997, UNLESS
THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER
OF SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY THE PURCHASER AND
ITS AFFILIATES, REPRESENTS AT LEAST 9.9% OF THE SHARES OUTSTANDING AND (2)
THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND
CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE.
THE OFFER IS NOT CONDITIONED UPON THE PURCHASER OBTAINING FINANCING.
----------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of his Shares should
either (1) complete and sign the enclosed Letter of Transmittal or a
facsimile thereof in accordance with the instructions in the Letter of
Transmittal, have his signature thereon guaranteed if required by Instruction
1 of the Letter of Transmittal and mail or deliver the Letter of Transmittal
or such facsimile with his certificates evidencing his Shares and any other
required documents to the Depositary, or follow the procedure for book-entry
transfer of Shares set forth in Section 4, or (2) request his broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
him. Shareholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if they desire to
tender their Shares so registered.
A shareholder who desires to accept the Offer and tender Shares and whose
certificates for such Shares are not immediately available, or who cannot
comply with the procedure for book-entry transfer on a timely basis, should
tender such Shares by following the procedures for guaranteed delivery set
forth in Section 4.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Managers at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Requests for
additional copies of this Offer to Purchase, the Letter of Transmittal and
other tender offer materials may be directed to the Information Agent or to
brokers, dealers, commercial banks or trust companies.
The Dealer Managers for the Offer are:
LEHMAN BROTHERS CREDIT SUISSE FIRST BOSTON
July 18, 1997
TABLE OF CONTENTS
ˇ Enlarge/Download Table
PAGE
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INTRODUCTION .......................................................................... 1
THE TENDER OFFER ...................................................................... 3
1. Terms of the Offer; Expiration Date; Proration...................................... 3
2. Acceptance for Payment and Payment for Shares ...................................... 4
3. Withdrawal Rights .................................................................. 5
4. Procedure for Tendering Shares ..................................................... 6
5. Certain Federal Income Tax Consequences ............................................ 8
6. Price Range of Shares; Dividends ................................................... 9
7. Effect of the Offer on the Market for the Shares and Exchange Act Registration .... 10
8. Certain Information Concerning the Company ......................................... 10
9. Certain Information Concerning the Purchaser and CalEnergy ......................... 11
10. Background of the Offer; Contacts with the Company ................................ 12
11. Purpose of the Offer .............................................................. 15
12. Certain Conditions of the Offer ................................................... 16
13. Source and Amount of Funds ........................................................ 19
14. Dividends and Distributions ....................................................... 19
15. Certain Legal Matters ............................................................. 19
16. Fees and Expenses ................................................................. 22
17. Miscellaneous ..................................................................... 23
SCHEDULE I --DIRECTORS AND OFFICERS OF THE PURCHASER AND CALENERGY
SCHEDULE II --SCHEDULE OF TRANSACTIONS IN SHARES DURING THE PAST 60 DAYS BY THE
PURCHASER, CALENERGY AND THEIR AFFILIATES
SCHEDULE III--CERTAIN ADDITIONAL INFORMATION ABOUT THE PURCHASER AND CALENERGY
TO ALL HOLDERS OF SHARES OF COMMON STOCK OF NEW YORK STATE ELECTRIC & GAS
CORPORATION:
INTRODUCTION
CE Electric (NY), Inc., a New York corporation (the "Purchaser") and a
wholly owned subsidiary of CalEnergy Company, Inc., a Delaware corporation
("CalEnergy"), hereby offers to purchase 6,540,670 shares ("Shares") of
common stock, par value $6.66 2/3 per share (the "Common Stock"), of New York
State Electric & Gas Corporation, a New York corporation (the "Company"), at
$24.50 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which together constitute the
"Offer"). Tendering holders will be entitled to retain the regular 35 cents
cash dividend payable in August 1997. See Section 14.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of
Lehman Brothers Inc. ("Lehman Brothers") and Credit Suisse First Boston
Corporation ("Credit Suisse First Boston", and together with Lehman Brothers,
the "Dealer Managers"), IBJ Schroder Bank & Trust Company (the "Depositary")
and MacKenzie Partners, Inc. (the "Information Agent") incurred in connection
with the Offer.
The $24.50 per Share consideration offered pursuant to the Offer
represents a premium of approximately 17.4% over the closing price of the
Common Stock on the New York Stock Exchange, Inc. (the "NYSE") on June 30,
1997, the day an affiliate of CalEnergy commenced purchases of Common Stock
in the open market. CalEnergy and its affiliates currently own approximately
0.35% of the outstanding Common Stock. The Offer is not subject to any
financing or regulatory approval condition, other than the expiration or
termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder.
As described more fully below, on July 10, 1997, David L. Sokol, the
Chairman and Chief Executive Officer of CalEnergy met with Wesley W. von
Schack, the Chairman, Chief Executive Officer and President of the Company to
discuss the possibility of a business combination between the Company and
CalEnergy. Subsequent to that meeting, Mr. von Schack called Mr. Sokol to
inform him that the Board of Directors of the Company, at a meeting on July
11, 1997, had determined that discussions of this opportunity were not a
priority and could not be conducted on the timely basis which Mr. Sokol had
outlined in their meeting. As a result of this decision by the Company's
Board of Directors, on July 15, 1997, CalEnergy and the Purchaser announced
their intention to commence the Offer, and on July 18, 1997 CalEnergy and the
Purchaser commenced the Offer. See Section 10.
The purpose of the Offer is to enable the Purchaser to acquire that number
of Shares which, together with the Shares currently beneficially owned by the
Purchaser and its affiliates, will represent 9.9% of the total number of
Shares outstanding. In order for the Purchaser to acquire more than 9.9% of
the outstanding Shares, the Purchaser will be required to obtain certain
regulatory approvals, including approvals from the Public Service Commission
of the State of New York and the Federal Energy Regulatory Commission. See
Section 15.
Following completion of the Offer, the Purchaser intends to seek
regulatory approvals permitting the acquisition and ownership of 100% of the
Common Stock and thereafter to acquire all of the outstanding Shares it does
not then own. See Section 15. In order to make such acquisition, the
Purchaser currently intends, following completion of the Offer, to offer (the
"Subsequent Offer") to acquire all of the Common Stock it does not then own.
The Subsequent Offer will be subject to a number of conditions to which
the Offer is not subject, including the receipt of all required regulatory
approvals, the availability of financing, the inapplicability of certain
takeover defenses and certain other conditions. As a result of the regulatory
approval requirement, the Purchaser believes that the Subsequent Offer will
not be capable of being consummated for a significant period of time after it
is commenced. See Section 15. The Purchaser expects that the
consideration to be paid in the Subsequent Offer will be higher than the
consideration to be paid in the Offer, but no assurance can be given that the
net present value of that consideration will be higher than the sum of the
consideration to be paid in the Offer plus the net present value of any
regular dividends that may be paid prior to the time the Subsequent Offer can
be completed. The consideration to be paid in the Subsequent Offer may be
cash, securities or a combination thereof.
CalEnergy and the Purchaser intend to continue their efforts to seek to
negotiate an acquisition agreement with the Company. No assurance can be
given, however, that any such negotiations will be entered into or
successfully completed, or as to the terms of any agreement that may be
reached. If the current Board of Directors of the Company continues to refuse
to negotiate with CalEnergy and the Purchaser, CalEnergy and the Purchaser
plan to take actions to remove and replace the current Board of Directors
either through a consent solicitation or through a proxy contest.
Lehman Brothers and Credit Suisse First Boston have delivered to CalEnergy
fully underwritten offers to provide the Purchaser with the full amount of
financing for the Subsequent Offer at a price up to $27.50 per Share.
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY,
AUGUST 14, 1997, UNLESS EXTENDED.
THE PURCHASER AND ITS AFFILIATES RESERVE THE RIGHT, FOLLOWING COMPLETION
OR TERMINATION OF THE OFFER AND EITHER PRIOR OR SUBSEQUENT TO OR IN LIEU OF
THE SUBSEQUENT OFFER, TO ACQUIRE SHARES THROUGH MARKET PURCHASES, PRIVATELY
NEGOTIATED TRANSACTIONS, A MERGER OR OTHER BUSINESS COMBINATION OR ANY
COMBINATION OF THE FOREGOING.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER
OF SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY THE PURCHASER AND
ITS AFFILIATES, REPRESENTS AT LEAST 9.9% OF THE SHARES OUTSTANDING (THE
"MINIMUM TENDER CONDITION") AND (2) THE EXPIRATION OR TERMINATION OF ALL
WAITING PERIODS IMPOSED BY THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT
OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT"). CERTAIN
OTHER CONDITIONS TO CONSUMMATION OF THE OFFER ARE DESCRIBED IN SECTION 12.
THE PURCHASER EXPRESSLY RESERVES THE RIGHT TO WAIVE ANY ONE OR MORE OF THE
CONDITIONS TO THE OFFER.
The Minimum Tender Condition. The Minimum Tender Condition requires that
there be validly tendered and not withdrawn prior to the expiration of the
Offer that number of Shares which, together with Shares beneficially owned by
the Purchaser and its affiliates, represents at least 9.9% of the Shares
outstanding. According to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1997 (the "March 10-Q"), as of April 30, 1997
there were 68,502,727 Shares outstanding. An affiliate of the Purchaser
beneficially owns 241,100 Shares, representing, based on information in the
March 10-Q, approximately 0.35% of the outstanding Shares. Based on the
foregoing and assuming no repurchases or issuances of Shares, the 6,540,670
Shares sought pursuant to the Offer, together with the 241,100 Shares held by
an affiliate of the Purchaser, will satisfy the Minimum Tender Condition. The
Shares beneficially owned by the Purchaser and CalEnergy were recently
acquired in open market purchases. See Schedule II.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended
or amended, the terms and conditions of any extension or amendment), the
Purchaser will accept for payment and pay for 6,540,670 Shares tendered on or
before the Expiration Date (as defined below) and not theretofore withdrawn
in accordance with Section 3. The term "Expiration Date" means 12:00
Midnight, New York City time, on Thursday, August 14, 1997, unless the
Purchaser, in its sole discretion, shall have extended the period of time for
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by the Purchaser,
shall expire. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or federal holiday and consists of the time period
from 12:01 A.M. through 12:00 Midnight, New York City time.
If any or all of the conditions set forth in Section 12 are not satisfied
prior to the Expiration Date, the Purchaser may elect to (i) extend the Offer
and retain all tendered Shares until the expiration of the Offer, as
extended, subject to the terms of the Offer (including any rights of
tendering shareholders to withdraw their Shares), (ii) terminate the Offer
and not accept for payment any Shares and return all tendered Shares to
tendering shareholders or (iii) waive any or all conditions and, subject to
complying with applicable rules and regulations of the Commission, accept for
payment all Shares validly tendered. The Purchaser reserves the right to
accept for payment and to pay for more than 6,540,670 Shares pursuant to the
Offer, although it has no present intention to do so.
Upon the terms and subject to the conditions of the Offer, if more than
6,540,670 Shares (or such greater number of Shares as the Purchaser elects to
accept for payment and pay for) shall be validly tendered and not withdrawn
prior to the Expiration Date, the Purchaser will, upon the terms and subject
to the conditions of the Offer, purchase 6,540,670 Shares (or such greater
number of Shares) on a pro rata basis (with adjustments to avoid purchases of
fractional Shares) based upon the number of Shares validly tendered and not
withdrawn prior to the Expiration Date. If fewer than 6,540,670 Shares are
validly tendered by the Expiration Date and not withdrawn, the Purchaser may
(i) terminate the Offer and return all tendered Shares to tendering
shareholders or (ii) extend the Offer and retain such Shares until the
expiration of the Offer as extended, subject to the terms of the Offer. The
Purchaser does not presently intend to waive the condition that at least
6,540,670 Shares be validly tendered and not withdrawn prior to the
Expiration Date. However, the Purchaser reserves the right to waive such
condition.
In the event that proration of tendered Shares is required, because of the
difficulty of determining the precise number of Shares properly tendered and
not withdrawn, the Purchaser may not be able to announce the final proration
factor until approximately six NYSE trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Shareholders may obtain
such preliminary information from the Information Agent and may be able to
obtain such information from their brokers. The Purchaser will not pay for
any Shares accepted for payment pursuant to the Offer until the final
proration factor is known.
If, as a result of repurchases of outstanding Shares by the Company or for
any other reason, the purchase by the Purchaser of 6,540,670 Shares pursuant
to the Offer would cause the Purchaser to own more than 9.9% of the number of
Shares then outstanding, the number of Shares to be purchased by the
Purchaser pursuant to the Offer will be reduced by an appropriate number of
Shares (to be determined by the Purchaser in its sole discretion) so that the
purchase of Shares by the Purchaser pursuant to the Offer will not cause the
Purchaser to own more than 9.9% of the number of Shares then outstanding.
The Purchaser expressly reserves the right, in its sole judgment, at any
time or from time to time, and regardless of whether any of the events set
forth in Section 12 shall have occurred or shall have been determined by the
Purchaser to have occurred, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment
for, any Shares, by giving oral or written notice of such extension to the
Depositary and (ii) to amend the Offer in any respect by giving oral or
written notice of such amendment to the Depositary. The rights reserved by
the Purchaser in this paragraph are in addition to the Purchaser's rights to
terminate the Offer pursuant to Section 12. Any such extension, amendment or
termination will be followed as promptly as practicable by public announce-
3
ment thereof, such announcement in the case of an extension to be issued not
later than 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date. The manner in which the Purchaser will
make such public announcement may, if appropriate, be limited to a release to
the Dow Jones News Service. The reservation by the Purchaser of the right to
delay acceptance for payment of or payment for any Shares is subject to the
provisions of applicable law, which require that the Purchaser pay the
consideration offered or return the Shares deposited by or on behalf of
shareholders promptly after termination or withdrawal of the Offer.
If the Purchaser decides to increase or decrease the consideration offered
in the Offer, or to increase or decrease the percentage of the outstanding
number of Shares being sought (other than an increase in the number of Shares
being sought that does not exceed 2% of the number of Shares outstanding),
and if at the time that notice of such increase or decrease is first
published, sent or given to holders of Shares in the manner specified above,
the Offer is scheduled to expire at any time earlier than the expiration of a
period ending on the tenth business day from, and including, the date that
such notice is first so published, sent or given, the Offer will be extended
until the expiration of such period of ten business days. If the Purchaser
waives any material condition to the Offer, or amends the Offer in any other
material respect, the Purchaser will extend the Offer and disseminate
additional tender offer materials to the extent required to comply with the
Commission's interpretation of Rules 14d-4(c) and 14d-6(d) under the Exchange
Act. The minimum period during which an offer must remain open following
material changes in the terms of the offer or information concerning the
offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances, including the relative
materiality of the change in terms or information.
A request is being made to the Company pursuant to Rule 14d-5 of the
Exchange Act for use of the Company's shareholder lists and security position
listings for the purpose of disseminating the Offer to holders of Shares.
This Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares, and will be furnished
to brokers, dealers, commercial banks, trust companies and similar persons
whose names, or the names of whose nominees, appear on the shareholder lists
or who are listed as participants in a clearing agency's security position
listing for subsequent transmittal to beneficial owners of Shares by the
Purchaser following receipt of such lists or listings from the Company, or by
the Company if it so elects.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
Purchaser will accept for payment, and will pay for, 6,540,670 Shares validly
tendered before the Expiration Date and not properly withdrawn in accordance
with Section 3 (including Shares validly tendered and not withdrawn during
any extension of the Offer, if the Offer is extended, subject to the terms
and conditions of such extension) as soon as practicable after the last to
occur of (i) the Expiration Date and (ii) the expiration or termination of
the waiting period under the HSR Act, in connection with the filings to be
made related to the Offer. In addition, the Purchaser expressly reserves the
right, in its sole discretion, to delay the acceptance for payment of or
payment for Shares in order to comply, in whole or in part, with any other
applicable law. Any such delays will be effected in compliance with Rule
14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to
pay for or return tendered Shares promptly after the termination or
withdrawal of the Offer).
The per Share consideration paid to any shareholder pursuant to the Offer
will be the highest per Share consideration paid to any other shareholder
pursuant to the Offer. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Shares (or timely confirmation (a
"Book-Entry Confirmation") of the book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company or Philadelphia
Depository Trust Company (collectively, the "Book-Entry Transfer
Facilities")), pursuant to the procedures set forth in Section 4, (ii) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees, or an Agent's Message (as
defined below) in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal.
4
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares, that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Purchaser may enforce such agreement against the participant.
Payment for Shares accepted for payment pursuant to the Offer may be
delayed in the event of proration due to the difficulty of determining the
number of Shares validly tendered and not withdrawn. See Section 1.
A Notification and Report Form with respect to the Offer was filed under
the HSR Act on July 17, 1997, and the waiting period with respect to the
Offer under the HSR Act will expire at 11:59 P.M., New York City time, on
August 1, 1997. Before such time, however, either the Federal Trade
Commission (the "FTC") or the Antitrust Division of the Department of Justice
(the "Antitrust Division") may extend the waiting period by requesting
additional information or material from the Purchaser. If such request is
made, the waiting period will expire at 11:59 P.M., New York City time, on
the tenth calendar day after the Purchaser has substantially complied with
such request. Thereafter, the waiting period may be extended only by court
order or with the Purchaser's consent. See Section 15.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn, if, as and when the Purchaser gives oral or written notice
to the Depositary of its acceptance for payment of the tenders of such
Shares. Payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which
will act as agent for the tendering shareholders for purposes of receiving
payment from the Purchaser and transmitting payment to tendering
shareholders.
UNDER NO CIRCUMSTANCES WILL THE PURCHASER PAY INTEREST ON THE PURCHASE
PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY DELAY IN
MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering shareholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering shareholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason or are not paid for because of an
invalid tender, or if certificates are submitted representing more Shares
than are tendered, certificates representing unpurchased or untendered Shares
will be returned, without expense to the tendering shareholder (or, in the
case of Shares tendered by book-entry transfer of such Shares into the
Depositary's account at a Book-Entry Transfer Facility as described in
Section 4, such Shares will be credited to an account maintained within such
Book-Entry Transfer Facility), as soon as practicable following the
expiration, termination or withdrawal of the Offer and determination of the
final results of proration.
As required by Commission rules, if the Purchaser were to vary the terms
of the Offer by increasing the consideration to be paid per Share, the
Purchaser will pay such increased consideration for all Shares purchased
pursuant to the Offer, whether or not such Shares have been tendered prior to
such increase in consideration.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more direct or indirect subsidiaries of
CalEnergy, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
the Purchaser of its obligations under the Offer and will in no way prejudice
the rights of tendering shareholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
3. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 3,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time before the Expiration Date
and, unless theretofore accepted for payment by the Purchaser as provided
herein, may also be withdrawn at any time after September 16, 1997.
5
If, for any reason whatsoever, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or if the Purchaser is unable to
accept for payment or pay for Shares tendered pursuant to the Offer, then,
without prejudice to the Purchaser's rights set forth herein, the Depositary
may, nevertheless, on behalf of the Purchaser and subject to Rule 14e-1(c)
under the Exchange Act, retain tendered Shares, and such Shares may not be
withdrawn except to the extent that the tendering shareholder is entitled to
and duly exercises withdrawal rights as described in this Section 3. Any such
delay will be accompanied by an extension of the Offer to the extent required
by law.
In order for a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase. Any notice of withdrawal must specify the name of the person
having tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and, if certificates for Shares have been tendered, the name of the
registered holder of Shares as set forth in the tendered certificate, if
different from that of the person who tendered such Shares. If certificates
for Shares ("Certificates") have been delivered or otherwise identified to
the Depositary, then, before the physical release of such Certificates, the
serial numbers shown on such Certificates must be submitted to the Depositary
and the signatures on the notice of withdrawal must be guaranteed by a firm
which is a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer Agent's
Medallion Program (collectively, "Eligible Institutions"), unless such Shares
have been tendered for the account of any Eligible Institution. If Shares
have been delivered pursuant to the procedures for book-entry delivery as set
forth in Section 4, any notice of withdrawal must also specify the name and
the number of the account at the appropriate Book-Entry Transfer Facility to
be credited with the withdrawn Shares and otherwise comply with such
Book-Entry Transfer Facility's procedures. Withdrawal of tenders of Shares
may not be rescinded, and any Shares properly withdrawn will be deemed not to
be validly tendered for purposes of the Offer. Withdrawn Shares may, however,
be retendered by repeating one of the procedures described in Section 4 at
any time before the Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of the
Purchaser, CalEnergy, the Dealer Managers, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or will incur any
liability for failure to give any such notification.
4. PROCEDURE FOR TENDERING SHARES. To tender Shares validly pursuant to
the Offer, a shareholder must cause a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or an Agent's Message in connection with a book-entry delivery of
Shares and any other required documents, to be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase
and must either cause certificates for tendered Shares to be received by the
Depositary at one of such addresses or cause such Shares to be delivered
pursuant to the procedures for book-entry delivery set forth below (and a
Book-Entry Confirmation to be received by the Depositary), in each case
before the Expiration Date, or (in lieu of the foregoing) such shareholder
must comply with the guaranteed delivery procedure set forth below.
The Depositary will establish accounts with respect to the Shares at the
Book-Entry Transfer Facilities for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that
is a participant in any of the Book-Entry Transfer Facilities' systems may
make book-entry delivery of the Shares by causing such Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with such Book-Entry Transfer Facility's procedure for such transfer.
However, although delivery of Shares may be effected through book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility, the
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in
connection with a book-entry delivery of Shares, and any other required
documents, must, in any case, be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase before the Expiration Date, or the tendering shareholder must
comply with the guaranteed delivery procedure described below.
6
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
Signatures on all Letters of Transmittal must be guaranteed by an Eligible
Institution, except in cases where Shares are tendered (i) by registered
holders of Shares (which term includes any participant in a Book-Entry
Transfer Facility whose name appears on a security position listing as the
owner of the Shares) who has not completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on
the Letter of Transmittal or (ii) for the account of an Eligible Institution.
See Instruction 1 of the Letter of Transmittal. If the Certificates are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made to a person other than the
registered owner of the Certificates surrendered, then the Certificates must
be endorsed or accompanied by duly executed stock powers, in either case
signed exactly as the name or names of the registered owner or owners appear
on the Certificates, with the signature(s) on the Certificates or stock
powers guaranteed as aforesaid. See Instruction 5 of the Letter of
Transmittal.
The method of delivery of Shares, the Letter of Transmittal and any other
required documents, including delivery through a Book-Entry Transfer
Facility, is at the option and risk of the tendering shareholder, and
delivery will be deemed made only when actually received by the Depositary.
If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. In all cases, sufficient time should be
allowed to ensure timely delivery.
Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of federal income tax, the Depositary will be
required to withhold, and will withhold, 31% of the gross proceeds otherwise
payable to a shareholder or other payee with respect to Shares purchased
pursuant to the Offer if the shareholder does not provide his taxpayer
identification number (social security number or employer identification
number) and certify that such number is correct. Each tendering shareholder
should complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal, so as to provide the
information and certification necessary to avoid backup withholding, unless
an applicable exemption exists and is proved in a manner satisfactory to the
Purchaser and the Depositary.
If a shareholder desires to tender Shares pursuant to the Offer and such
shareholder's Certificates are not immediately available or such shareholder
cannot deliver the Certificates and all other required documents to the
Depositary before the Expiration Date, such Shares may nevertheless be
tendered, provided that all of the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution; and
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Purchaser, is received by the
Depositary, as provided below, on or before the Expiration Date; and
(c) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantees (or, in the case of a book-entry transfer,
an Agent's Message) and all other documents required by the Letter of
Transmittal are received by the Depositary within three NYSE trading days
after the date of execution of such Notice of Guaranteed Delivery to the
Depositary.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) Certificates, or a Book-Entry Confirmation of such Shares,
(ii) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) (or, in the
7
case of a book-entry transfer, an Agent's Message) and (iii) any other
documents required by the Letter of Transmittal. Accordingly, payment might
not be made to all tendering shareholders at the same time, and will depend
upon when Certificates or Book-Entry Confirmations of such Shares are
received by the Depositary.
By executing a Letter of Transmittal as set forth above, the tendering
shareholder irrevocably appoints designees of the Purchaser, and each of
them, as his attorneys-in-fact and proxies, in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full
extent of such shareholder's rights with respect to the Shares tendered by
such shareholder and accepted for payment by the Purchaser and with respect
to any and all other Shares or other securities issued or issuable in respect
of such Shares on or after the date of this Offer to Purchase. All such
powers of attorney and proxies shall be considered irrevocable and coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, the Purchaser accepts such Shares for
payment. Upon such appointment, all prior proxies given by such shareholder
will be revoked, and no subsequent proxies may be given by such shareholder
(and if given, will not be deemed effective). The Purchaser's designees will
be empowered, among other things, to exercise all voting and other rights of
such shareholder as they in their sole discretion may deem proper at any
annual, special or adjourned meeting of the shareholders of the Company or
any consent in lieu of any such meeting or otherwise. The Purchaser reserves
the right to require that, in order for the Shares to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser must be able to exercise full voting and other rights
of a record and beneficial holder, including acting by written consent, with
respect thereto.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares will be
determined by the Purchaser, in its sole discretion, whose determination
shall be final and binding. The Purchaser reserves the absolute right to
reject any and all tenders determined by it not to be in proper form or the
acceptance for payment of which may, in the opinion of its counsel, be
unlawful. The Purchaser also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any
Shares of any particular shareholder whether or not similar defects or
irregularities are waived in the case of other shareholders. None of the
Purchaser, CalEnergy, the Depositary, the Dealer Managers, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in tenders or shall incur any liability for failure
to give any such notification. The Purchaser's interpretation of the terms
and conditions of the Offer (including the Letter of Transmittal and of the
instructions thereto) will be final and binding.
The valid tender of Shares pursuant to one of the procedures described
above will constitute the tendering shareholder's acceptance of the terms and
conditions of the Offer. The Purchaser's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between
the tendering shareholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following summary is a
general discussion of the material federal income tax consequences to
shareholders of the Company who tender their Shares pursuant to the Offer.
The discussion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), applicable Treasury regulations thereunder, administrative
procedures, rulings and decisions in effect on the date hereof, all of which
are subject to change (possibly with retroactive effect) by legislation,
administrative action or judicial decision. No ruling has or will be
requested from the Internal Revenue Service (the "Service") regarding the
anticipated tax consequences described herein. The discussion set forth below
does not discuss all aspects of federal income taxation that may be relevant
to a particular shareholder in light of his personal investment circumstances
or to certain types of shareholders subject to special treatment under the
federal income tax laws (for example, tax-exempt organizations, foreign
corporations and individuals who have received Shares as compensation or who
are not citizens or residents of the United States) and does not discuss any
aspect of state, local or foreign taxation. The discussion is limited to
those shareholders who hold the Shares as capital assets (generally, property
held for investment) within the meaning of Section 1221 of the Code.
SHAREHOLDERS SHOULD CONSULT THEIR INDIVIDUAL TAX ADVISORS CONCERNING THE
SPECIFIC TAX CONSEQUENCES OF THE OFFER, INCLUDING THE APPLICATION AND EFFECT
OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
8
Exchange of Shares for Cash. The exchange of Shares by tendering
shareholders will be a taxable event for federal income tax purposes, and may
also be a taxable transaction under applicable state, local and foreign tax
laws. A tendering shareholder will generally recognize gain or loss equal to
the difference between the amount of cash received by the shareholder
pursuant to the Offer and the aggregate tax basis in the Shares tendered by
the shareholder and purchased pursuant to the Offer. Gain or loss will be
calculated separately for each block of Shares tendered by the shareholder
and purchased pursuant to the Offer.
Gain or loss recognized by a tendering shareholder will be capital gain or
loss if the Shares are held as capital assets. Such capital gain or loss will
be classified as a long-term capital gain or loss to the extent that the
tendered Shares have a holding period of more than one year at the time of
their purchase pursuant to the Offer. Long-term capital gains recognized by a
tendering individual shareholder will be subject to tax at a maximum marginal
federal rate of 28%. Short-term capital gains recognized by a tendering
individual shareholder will be subject to tax at a maximum marginal federal
rate of 39.6%. Net capital gains recognized by a tendering corporate
shareholder will be subject to tax at a maximum marginal federal rate of 35%.
Backup Withholding. To prevent "backup withholding" of federal income tax
on payments of cash to a shareholder of the Company who exchanges Shares for
cash in the Offer, a shareholder of the Company must, unless an exception
applies under the applicable law and regulations, provide the payor of such
cash with such shareholder's correct taxpayer identification number ("TIN")
on a Substitute Form W-9 and certify under penalties of perjury that such
number is correct and that such shareholder is not subject to backup
withholding. A Substitute Form W-9 is included in the Letter of Transmittal.
If the correct TIN and certifications are not provided, a $50 penalty may be
imposed on a shareholder of the Company by the Service, and cash received by
such shareholder in exchange for Shares in the Offer may be subject to backup
withholding at the rate of 31%. Amounts paid as backup withholding do not
constitute an additional tax and would be allowable as a credit against the
shareholder's federal income tax liability.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are quoted on the NYSE.
The following table sets forth, for the periods indicated, the reported high
and low sales prices per Share, and the amount of cash dividends paid per
Share for each such period. The information for the fiscal years ended
December 31, 1994, December 31, 1995 and December 31, 1996 is derived from
the Company's Annual Reports on Form 10-K for the fiscal years ended December
31, 1995 and December 31, 1996. The information for subsequent periods is
derived from information reported in published financial sources.
ˇ Download Table
HIGH LOW DIVIDENDS
---- --- ---------
Fiscal Year Ended December 31, 1995:
First Quarter ........................ $21.75 $19.00 $.35
Second Quarter ....................... $24.00 $21.25 $.35
Third Quarter ........................ $26.75 $22.50 $.35
Fourth Quarter........................ $26.38 $24.75 $.35
Fiscal Year Ended December 31, 1996:
First Quarter ........................ $26.38 $21.88 $.35
Second Quarter ....................... $24.50 $22.00 $.35
Third Quarter ........................ $24.88 $21.13 $.35
Fourth Quarter........................ $22.63 $20.38 $.35
Fiscal Year Ending December 31, 1997:
First Quarter ........................ $24.50 $21.25 $.35
Second Quarter ....................... $22.50 $20.63 $.35
Third Quarter (through July 14, 1997) $21.63 $20.81 $.35*
------------
* Payable on August 15, 1997 to holders of record as of July 25, 1997
9
On July 14, 1997, the last full trading day prior to CalEnergy's issuance
of the press release announcing its intention to commence the Offer, the
reported closing sale price per Share on the NYSE was $21.38. The Offer
represents a 14.6% premium over the reported closing sale price per Share on
July 14, 1997.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES AND EXCHANGE ACT
REGISTRATION. Although the purchase of the Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and may
reduce the number of holders of Shares, the Purchaser does not believe that
the purchase of the Shares will significantly affect the liquidity and market
value of the remaining Shares held by persons other than the Purchaser and
its affiliates.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. According to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the
"1996 10-K"), the Company is a New York corporation with its principal
executive offices located at Dryden Road, P.O. Box 3287, Ithaca, New York
14852-3287. According to the 1996 10-K, the Company is primarily engaged in
generating, purchasing, transmitting and distributing electricity and
purchasing, transporting and distributing natural gas.
Set forth below is certain summary consolidated financial information with
respect to the Company derived from the information contained in the 1996
10-K and the March 10-Q. More comprehensive financial information is included
in reports and other documents filed with the Commission, and the following
summary is qualified in its entirety by reference to such reports and other
documents and all financial information (including any related notes)
contained therein. Such reports and other documents may be examined and
copies may be obtained in the manner set forth below.
NEW YORK STATE ELECTRIC & GAS CORPORATION
CONSOLIDATED SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ˇ Enlarge/Download Table
FISCAL YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------------------------- ---------------------
1994 1995 1996 1996 1997
------------ ------------ ------------ ---------- ----------
INCOME STATEMENT DATA:
Operating revenues ........... $1,898,855 $2,009,541 $2,059,371 $622,056 $588,137
Operating income ............. $ 438,575 $ 472,144 $ 457,543 $196,353 $167,527
Net income ................... $ 187,645 $ 196,690 $ 178,241 $ 98,676 $ 81,977
Earnings available for Common
Stock........................ $ 168,698 $ 177,969 $ 168,711 $ 96,343 $ 79,662
Earnings per share ........... $ 2.37 $ 2.49 $ 2.37 $ 1.35 $ 1.15
Average shares outstanding .. 71,254 71,503 71,127 71,503 69,353
ˇ Download Table
DECEMBER 31, MARCH 31,
------------------------- -------------------------
1995 1996 1996 1997
------------ ------------ ------------ ------------
BALANCE SHEET DATA:
Working capital (current assets
less current liabilities) .... $ 32,897 $ (68,661) $ (35,829) $ 18,308
Total assets ................... $5,114,331 $5,059,681 $5,142,147 $5,081,383
Total debt (including current
maturities) ................... $1,647,071 $1,693,602 $1,663,228 $1,578,703
Total preferred stock .......... $ 265,500 $ 159,440 $ 165,500 $ 159,440
Total Common Stock equity ..... $1,743,540 $1,769,982 $1,809,111 $1,818,348
Book value per share (based on
average shares outstanding) .. $ 24.38 $ 24.89 $ 25.30 $ 26.22
Although neither the Purchaser, CalEnergy, the Dealer Managers nor the
Information Agent have any knowledge that would indicate that any statements
contained herein based on such documents and records are untrue, none of the
Purchaser, CalEnergy, the Dealer Managers or the Information Agent
10
takes responsibility for the accuracy or completeness of the information
contained in such documents and records, or for any failure by the Company to
disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to the Purchaser,
CalEnergy, the Dealer Managers or the Information Agent.
The Company is subject to the informational filing requirements of the
Exchange Act and in accordance therewith is obliged to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted
to them, the principal holders of the Company's securities, any material
interests of such persons in transactions with the Company and other matters
is required to be disclosed in proxy statements distributed to the Company's
shareholders and filed with the Commission. Such reports, proxy statements
and other information may be inspected at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies may be obtained, by
mail, upon payment of the Commission's customary charges, by writing to its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
material may also be accessed electronically at the Commission's site on the
World Wide Web located at http://www.sec.gov. In addition, such material
should also be available for inspection at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005. Except as otherwise
noted in this Offer to Purchase, all of the information with respect to the
Company and its affiliates set forth in this Offer to Purchase has been
derived from publicly available information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND CALENERGY. CalEnergy,
together with its subsidiaries, is a United States-based global power company
which generates, distributes and supplies electricity to utilities,
government entities, retail customers and other customers located throughout
the world. CalEnergy, through its subsidiaries, is primarily engaged in the
development, ownership and operation of environmentally responsible
independent power production facilities worldwide utilizing geothermal
resources, natural gas and hydroelectric or other energy sources, such as oil
and coal. In addition, through its U.K. subsidiary, Northern Electric plc
("Northern"), a regional U.K. electric utility, CalEnergy is engaged in the
distribution and supply of electricity in an area in northeast England that
covers approximately 14,400 square kilometers with a population of
approximately 3.2 million people as well as the generation and supply of
electricity (together with other related business activities) in other
regions in England and Wales. CalEnergy believes that its experience in
operating a regional U.K. utility in the deregulated U.K. marketplace will
strengthen its ability to compete successfully in the United States, where
CalEnergy believes that the impending deregulation of the power markets will
reflect many aspects of the United Kingdom model for competitive generation,
transmission, distribution and supply of energy. For the year ended December
31, 1996 and the three months ended March 31, 1997, CalEnergy had total
revenues of $576.2 million and $566.0 million, respectively, and net income
of $92.5 million and $27.4 million, respectively. As of March 31, 1997,
CalEnergy had cash and short-term investments of $335.3 million (not
including restricted cash and joint venture cash and investments).
The principal executive offices of the Purchaser and CalEnergy are located
at 302 South 36th Street, Suite 400, Omaha, Nebraska 68131 and their
telephone number is (402) 341-4500. The Purchaser is a wholly owned
subsidiary of CalEnergy and has not conducted any business except in
connection with the Offer. The Purchaser was incorporated in 1997 under the
laws of the State of New York.
11
CALENERGY COMPANY, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ˇ Download Table
FISCAL YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------------------- --------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- --------- ----------
STATEMENT OF OPERATIONS DATA:
Total revenue ................. $185,854 $398,723 $576,195 $90,356 $565,976
Extraordinary item ............ $ (2,007) -- -- -- --
Net income .................... $ 36,827 $ 63,415 $ 92,461 $14,461 $ 27,448
Net income available to common
shareholders.................. $ 31,817 $ 62,335 $ 92,461 $14,461 $ 27,448
Net income per share--fully
diluted ...................... $ .88 $ 1.18 $ 1.50 $ .26 $ .41
Average number of shares
outstanding................... 35,721 49,971 57,870 54,114 65,647
ˇ Download Table
DECEMBER 31, MARCH 31,
------------------------- -------------------------
1995 1996 1996 1997
------------ ------------ ------------ ------------
BALANCE SHEET DATA:
Total assets .............. $2,654,038 $5,712,907 $2,721,400 $6,138,050
Total liabilities ......... $2,084,474 $4,263,803 $2,126,588 $4,685,776
Total shareholders'
equity.................... $ 543,532 $ 880,790 $ 569,228 $ 876,364
CalEnergy, through its subsidiaries, owns a general partnership interest
in and operates an environmentally advanced 240MW gas-fired generating plant
in Plattsburg, New York, which has a long-term power sales agreement with the
Company, and maintains an office in Plattsburg.
Schedule II hereto sets forth transactions in the Shares effected during
the past 60 days by the Purchaser and its affiliates. Except as set forth in
this Offer to Purchase and Schedule II hereto, none of the Purchaser,
CalEnergy or, to the best knowledge of the Purchaser, any of the persons
listed in Schedule I hereto, or any affiliate, associate or majority-owned
subsidiary of such persons, beneficially owns any equity security of the
Company, and none of the Purchaser, CalEnergy or, to the best knowledge of
the Purchaser, any of the other persons referred to above, or any of the
respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the Company
during the past 60 days.
Except as otherwise stated in this Offer to Purchase, (i) there have not
been any contacts, transactions or negotiations between the Purchaser,
CalEnergy or, to the best knowledge of the Purchaser, any of the persons
listed in Schedule I hereto, on the one hand, and the Company or any of its
directors, officers or affiliates, on the other hand, concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a
material amount of assets, or that are otherwise required to be disclosed
pursuant to the rules and regulations of the Commission, and (ii) none of the
Purchaser, CalEnergy or, to the best knowledge of the Purchaser, any of the
persons listed in Schedule I hereto has any contract, arrangement,
understanding or relationship with any person with respect to any securities
of the Company.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. On July 10, 1997,
David L. Sokol, the Chairman and Chief Executive Officer of CalEnergy met
with Wesley W. von Schack, the Chairman, Chief Executive Officer and
President of the Company to discuss the possibility of a business combination
between the Company and CalEnergy. At the meeting, Messrs. Sokol and von
Schack discussed their views on the electric and gas utility industry in the
State of New York and elsewhere and the present and future federal and New
York State regulatory environment. Mr. Sokol indicated that CalEnergy was
interested in acquiring the Company, and the two explored in general terms
the feasability of such a transaction, the possibility of a merger of equals
between the two companies and the benefits to the two companies and their
shareholders of a business combination. Although no offers to buy or sell
were made, Messrs. Sokol and von Schack discussed generally the consideration
that might be paid in a transaction, if such a transaction were to be
mutually agreeable. Mr. von Schack indicated in this conceptual discussion
12
that in his view up to a 25% premium for the Company's shares might be
appropriate in the context of a stock for stock merger of the Company and
CalEnergy. Mr. Sokol indicated that if CalEnergy were to acquire the Company
in a "friendly" transaction, and if certain assumptions regarding the
Company's business were confirmed (including the assumption that certain
pending regulatory matters could be resolved favorably), CalEnergy might
consider making a cash offer of up to $28 per share of Common Stock (and Mr.
Sokol further indicated that he believed any price near the top end of that
range would be fully priced). Mr. von Schack indicated to Mr. Sokol that the
Company's Board of Directors was scheduled to meet the next day, that he
would bring this discussion to the attention of the Board and that he would
advise Mr. Sokol as to the Board's reaction.
On July 12, 1997, Mr. von Schack called Mr. Sokol to inform him that the
Board of Directors of the Company, at a meeting on July 11, 1997, had
determined that discussions concerning a business combination with CalEnergy
were not a priority and could not be conducted on the timely basis which Mr.
Sokol had outlined in their meeting.
On July 15, 1997, Mr. Sokol delivered to Mr. von Schack and the Company's
Board the following letter and announced the same by press release:
July 15, 1997
BY HAND AND VIA FAX
Mr. Wesley W. von Schack
Chairman, President & Chief Executive Officer
New York State Electric & Gas Corporation
Binghamton, New York 13902-3607
Fax: 607-729-3318
Dear Wes:
I was disappointed to learn from you in our telephone call on Saturday,
July 12th of your Board's decision that pursuing discussions with us
concerning the advantages of a possible combination of New York State
Electric & Gas Corporation ("NYSEG") and CalEnergy Company, Inc.
("CalEnergy") was not a priority and could not be conducted on the
timely basis which I outlined to you in our meeting last week, on
Thursday, July 10th. I might add that your Board's reaction does not
appear to be consistent with the clear impression you gave me in our
meeting last Thursday to the effect that a sale of NYSEG in the price
range we conceptually discussed was an alternative that you would
seriously and promptly consider and that you agreed it was in the best
interests of your shareholders that you do so.
Accordingly, after considered review of the publicly available
information concerning NYSEG, the CalEnergy Board has concluded that the
potential strategic and financial benefits to our companies'
shareholders and other concerned constituencies are compelling and
should be pursued on an immediate and serious basis. Our strong
preference would be to work together with you and the NYSEG Board to
complete a negotiated transaction. However, in light of the confusing
messages we have received from you and your Board, CalEnergy is today
approaching your shareholders directly and announcing a cash tender
offer to acquire for $24.50 per share that number of shares of NYSEG
common stock which, together with the shares of NYSEG common stock which
CalEnergy presently owns, will represent 9.9% of the total number of
shares of NYSEG common stock outstanding. Holders tendering their shares
will also be entitled to retain the regular 35 cents dividend payable in
August. This tender offer is the first step in the intended acquisition
of 100% of NYSEG's common shares by CalEnergy.
As previously noted, we would much prefer to work together with you and
your Board to achieve a negotiated transaction. Accordingly, this letter
sets forth a specific proposal for consideration by you and your Board,
together with a brief reiteration of the merger rationale which I shared
with you at our meeting last week.
13
Our specific merger proposal is to commence negotiations immediately to
enter into a consensual merger in which each outstanding share of NYSEG
common stock would be exchanged for $27.50 in cash. This cash price
represents a premium of 31.74% above the NYSEG $20 7/8 per share NYSE
closing price on June 30, 1997 (the day immediately preceding the day on
which we first commenced our open market purchases of NYSEG Common
Stock). I would also note that the cash merger price which we propose
exceeds the up to 25% premium for NYSEG Common Stock which you
indicated, in our conceptual discussion during our meeting last
Thursday, might be appropriate in the context of a stock for stock
merger of NYSEG and CalEnergy.
As I informed you in our meeting last week, we have reviewed the
regulatory issues in detail and have fully underwritten financing offers
in an amount sufficient to complete the acquisition of 100% of NYSEG's
common stock at the price set forth above. The difference between our
proposed consensual merger price and our partial tender offer price
reflects the shorter time interval and increased certainty associated
with the purchase of 9.9% of NYSEG's common shares. The partial tender
offer requires no regulatory approvals other than expiration of the
expected 15-day Hart-Scott-Rodino waiting period, as compared to the
estimated nine to twelve months for the regulatory approvals required to
complete the acquisition of 100% of NYSEG's common stock.
While NYSEG clearly possesses many strengths, you have publicly
acknowledged that both New York's energy industry generally and NYSEG
specifically face a number of serious, complex and immediate challenges.
These include:
o The New York Public Service Commission's restructuring proceedings
with respect to, among other things, (i) the lowering of the rates
chargeable by NYSEG and other New York utilities, (ii) the potential
divestiture of generation assets and (iii) the introduction of broadened
competition;
o Litigation by NYSEG concerning the unimplemented rate increases
approved in NYSEG's last rate case (August 1995);
o NYSEG's potentially strandable above-market costs (which you have
publicly stated are more than twice the national average);
o NYSEG's flat revenues over the last two years; and
o The consistent underperformance of NYSEG's common stock since NYSEG
cut its dividend in October 1994.
CalEnergy welcomes the deregulation of the New York electric market and
views increased competition as positive and beneficial to ratepayers and
the larger New York community alike. We would expect to bring a helpful
competitive focus to NYSEG's transition to such an environment and in
meeting the competitive challenges which it faces.
CalEnergy, which has (according to analysts' consensus estimates)
expected 1997 revenues in excess of $2 billion, traces its roots to the
introduction of the competitive electric generation industry within the
United States and has expanded and thrived in the competitive
marketplace, both within the U.S. and internationally.
As I described to you, CalEnergy's U.K. utility subsidiary, Northern
Electric plc (which is engaged in the distribution and supply of
electricity to approximately 1.5 million customers, primarily in
Northeast England), brings us direct experience, systems and skills
acquired in the deregulated and competitive U.K. electric and gas
markets. We anticipate using these skills and working closely with the
New York Public Service Commission to provide rate reductions for all
NYSEG customers following the proposed merger, while maintaining the
safe and reliable service to which they are accustomed.
Consistent with CalEnergy's decentralized regional organization, we
would intend to maintain NYSEG as a separate operating business unit
with its existing corporate headquarters. We would also plan to
reincorporate CalEnergy in New York and grow NYSEG's business by
participating aggressively in the increasingly competitive New York
electric market. This would ultimately make a significant contri-
14
bution to the local region's long-term ability to retain jobs and
attract new jobs and businesses. CalEnergy is a high growth company
which has increased its number of employees tenfold over the past 5
years and provides worldwide opportunities in its numerous locations.
As I have previously detailed, we believe that our cash merger proposal,
which reflects a substantial premium over NYSEG's current market value,
represents a full and fair price for your shareholders. Moreover, our
proposal would permit your shareholders to realize this substantial cash
value notwithstanding the significant uncertainties facing NYSEG and its
business today. To the extent that you believe that your shareholders
would view favorably an option to receive CalEnergy shares or other
forms of consideration in lieu of the cash price we have proposed, we
would be willing to consider that in the context of a negotiated
transaction.
Although we have found it necessary to go directly to your shareholders
with our partial tender offer and advise them of our merger proposal, my
continuing preference is to pursue this opportunity on a consensual
basis with you and NYSEG's board. We are available to meet with you
immediately to discuss the terms of this proposal. However, if you
choose not to enter into discussions with us, we believe, and we hope
you will agree, that NYSEG's Board ought to permit NYSEG's shareholders
to freely decide for themselves on the merits of our offer rather than
taking any action which would hinder the shareholders' ability to
express their views.
I look forward to hearing from you soon.
Sincerely,
/s/David L. Sokol
David L. Sokol
Chairman & Chief Executive Officer
cc: Board of Directors of NYSEG
c/o Mr. Wesley W. von Schack
On July 15, 1997, CalEnergy and the Purchaser announced their intention to
commence the Offer, and on July 18, 1997, CalEnergy and the Purchaser
commenced the Offer.
11. PURPOSE OF THE OFFER.
General. The purpose of the Offer is to enable the Purchaser to acquire
the Shares, which together with the Shares currently beneficially owned by
the Purchaser, will represent 9.9% of the total number of Shares outstanding.
In order for the Purchaser to acquire more than 9.9% of the outstanding
Shares of the Company, the Purchaser will be required to obtain certain
regulatory approvals, including approvals from the PSC and the FERC. See
Section 15.
Following completion of the Offer, the Purchaser intends to seek
regulatory approvals permitting the acquisition and ownership of 100% of the
Common Stock and thereafter to acquire all of the outstanding Shares it does
not then own. See Section 15. In order to make such acquisition, the
Purchaser currently intends, following completion of the Offer, to make the
Subsequent Offer to acquire all of the Common Stock it does not then own.
The Subsequent Offer will be subject to a number of conditions to which
the Offer is not subject, including the receipt of all required regulatory
approvals, the availability of financing, the inapplicability of certain
takeover defenses and certain other conditions. As a result of the regulatory
approval requirement, the Purchaser believes that the Subsequent Offer will
not be capable of being consummated for a significant period of time after it
is commenced. See Section 15. The Purchaser expects that the consideration to
be paid in the Subsequent Offer will be higher than the consideration to be
paid in the Offer, but no assurance can be given that the net present value
of that consideration will be higher than the sum of the consideration to be
paid in the Offer plus the net present value of any regular dividends that
may be paid prior to the time the Subsequent Offer can be completed. The
consideration to be paid in the Subsequent Offer may be cash, securities or a
combination thereof. The Purchaser and its affiliates
15
reserve the right, following completion or termination of the Offer and
either prior or subsequent to or in lieu of the Subsequent Offer, to acquire
Shares through market purchases, privately negotiated transactions, a merger
or other business combination or any combination of the foregoing.
CalEnergy and the Purchaser intend to continue their efforts to seek to
negotiate an acquisition agreement with the Company. If the current Board of
Directors of the Company continues to refuse to negotiate with CalEnergy and
the Purchaser, CalEnergy and the Purchaser plan to take actions to remove and
replace the current Board of Directors either through a consent solicitation
or through a proxy contest.
Lehman Brothers and Credit Suisse First Boston have delivered to CalEnergy
fully underwritten offers to provide the Purchaser with the full amount of
financing for the Subsequent Offer at a price up to $27.50 per Share.
In the event that following consummation of the Offer the Purchaser does
not obtain the regulatory approvals permitting the acquisition and ownership
of 100% of the Common Stock, the Purchaser may seek to sell Shares owned by
it through market sales or privately negotiated transactions. A sale by the
Purchaser of a substantial portion of its Shares following consummation of
the Offer could adversely affect the market value of the Common Stock.
Except as indicated in this Offer to Purchase, the Purchaser has no
present plans or proposals which relate to or would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of assets,
involving the Company or any of its subsidiaries, or any material changes in
the Company's corporate structure or business or the composition of the
Company's Board or the Company's management or personnel.
12. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, and in addition to, and not in limitation of, the Purchaser's
rights to amend the Offer in any respect at any time in its sole discretion,
the Purchaser shall not be required to accept for payment or pay for, or may
delay the acceptance for payment of or payment for, tendered Shares (subject
to Rule 14e-1(c) under the Exchange Act), or may, in the sole discretion of
the Purchaser, terminate the Offer as to any Shares not then paid for if (i)
at or before the Expiration Date the Minimum Tender Condition shall not have
been satisfied or (ii) on or after the date of this Offer to Purchase, and at
or before the time of payment for any of such Shares, any of the following
events shall occur or shall be determined by CalEnergy or the Purchaser to
have occurred:
(a) there shall be threatened, instituted or pending any action or
proceeding by any government or governmental authority or agency, domestic
or foreign, or by any other person, domestic or foreign, before any court
or governmental authority or agency, domestic or foreign, (i) challenging
or seeking to make illegal, to delay or otherwise directly or indirectly
to restrain or prohibit the making of the Offer, the acceptance for
payment of or payment for some of or all the Shares by the Purchaser or
any other affiliates of CalEnergy, the consummation by the Purchaser or
any other affiliates of CalEnergy of a merger or other business
combination with the Company, seeking to obtain material damages or
otherwise directly or indirectly relating to the transactions contemplated
by the Offer or any such merger or business combination, (ii) seeking to
prohibit the ownership or operation by CalEnergy, the Purchaser or any
other affiliates of CalEnergy of all or any portion of the business or
assets of the Company and its subsidiaries or of the Purchaser, or to
compel CalEnergy, the Purchaser or any other affiliates of CalEnergy to
dispose of or hold separately all or any portion of the business or assets
of the Purchaser or the Company or any of its subsidiaries or seeking to
impose any limitation on the ability of CalEnergy, the Purchaser or any
other affiliates of CalEnergy to conduct their business or own such
assets, (iii) seeking to impose or confirm limitations on the ability of
CalEnergy, the Purchaser or any other affiliates of CalEnergy effectively
to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote any Shares acquired by any such person on
all matters properly presented to the Company's shareholders, (iv) seeking
to require divestiture by CalEnergy, the Purchaser or any other affiliates
of CalEnergy of any Shares, (v) otherwise directly or indirectly relating
to the Offer or which otherwise, in the sole judgment of the Purchaser,
might materially adversely affect CalEnergy, the Purchaser or any other
affiliates of
16
CalEnergy or the value of the Shares, or (vi) in the sole judgment of the
Purchaser, materially adversely affecting the business, properties,
assets, liabilities, capitalization, shareholders' equity, condition
(financial or other), operations, licenses or franchises, results of
operations or prospects of the Company or any of its subsidiaries, joint
ventures or partnerships; provided that the condition specified in this
paragraph (a) shall not be deemed to exist by reason of any court
proceeding pending on the date hereof and known to the Purchaser, unless
in the sole judgment of the Purchaser there is any adverse development in
any such proceeding after the date hereof, or before the date hereof if
not known to the Purchaser on the date hereof, which might, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (vi) above;
(b) there shall be any action taken, or any statute, rule, regulation,
interpretation, judgment, order or injunction proposed, enacted, enforced,
promulgated, amended, issued or deemed applicable (i) to the Purchaser,
CalEnergy or any affiliate of CalEnergy or (ii) to the Offer or any
business combination by the Purchaser or any affiliate of CalEnergy with
the Company, by any court, government or governmental, administrative or
regulatory authority or agency, domestic or foreign, other than the
routine application of the waiting period provisions of the HSR Act to the
Offer or to any business combination, which, in the sole judgment of the
Purchaser, might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (vi) of paragraph (a)
above;
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the
business, properties, assets, liabilities, capitalization, shareholders'
equity, condition (financial or other), operations, licenses, franchises,
permits, permit applications, results of operations or prospects of the
Company or any of its subsidiaries which, in the sole judgment of the
Purchaser, is or may be materially adverse, or the Purchaser shall have
become aware of any fact which, in the sole judgment of the Purchaser, has
or may have material adverse significance with respect to either the value
of the Company or any of its subsidiaries or the value of the Shares to
the Purchaser;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, or any material adverse change
in prices generally of shares on the NYSE or the Nasdaq Stock Market, (ii)
a declaration of a banking moratorium or any suspension of payments in
respect of banks by federal or state authorities in the United States,
(iii) any limitation (whether or not mandatory) by any governmental
authority or agency on, or other event which, in the sole judgment of the
Purchaser, might affect the extension of credit by banks or other lending
institutions, (iv) a commencement of a war, armed hostilities or other
national or international calamity directly or indirectly involving the
United States, (v) a material change in United States or any other
currency exchange rates or a suspension of, or limitation on, the markets
therefor, or (vi) in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or worsening
thereof;
(e) the Company or any of its subsidiaries, joint ventures or
partnerships or other affiliates shall have (i) split, combined or
otherwise changed, or authorized or proposed the split, combination or
other change of the Shares or its capitalization, (ii) acquired or
otherwise caused a reduction in the number of, or authorized or proposed
the acquisition or other reduction in the number of, any presently
outstanding Shares or other securities or other equity interests, (iii)
issued, distributed or sold, or authorized or proposed the issuance,
distribution or sale of, additional Shares, other than Shares issued or
sold upon the exercise or conversion (in accordance with the present terms
thereof) of employee stock options outstanding on the date of this Offer
to Purchase, shares of any other class of capital stock or other equity
interests, other voting securities, debt securities or any securities
convertible into, or rights, warrants or options, conditional or
otherwise, to acquire, any of the foregoing, (iv) declared, paid or
proposed to declare or pay any cash dividend or other distribution on any
shares of capital stock of the Company (other than regular cash dividends
in an amount not exceeding $.35 per quarter), (v) altered or proposed to
alter any material term of any outstanding security or material contract,
permit or license, (vi) incurred any debt otherwise than in the ordinary
course of business or any debt containing, in the sole judgment of the
Purchaser, burdensome
17
covenants or security provisions, (vii) authorized, recommended, proposed
or entered into an agreement with respect to any merger, consolidation,
recapitalization, liquidation, dissolution, business combination,
acquisition of assets, disposition of assets, release or relinquishment of
any material contractual or other right of the Company or any of its
subsidiaries or any comparable event not in the ordinary course of
business, (viii) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into,
any agreement or arrangement with any person or group that in the
Purchaser's sole opinion could adversely affect either the value of the
Company or any of its subsidiaries, joint ventures or partnerships or the
value of the Shares to the Purchaser, (ix) entered into any employment,
change in control, severance, executive compensation or similar agreement,
arrangement or plan with or for one or more of its employees, consultants
or directors, or entered into or amended, or made grants or awards
pursuant to, any agreements, arrangements or plans so as to provide for
increased benefits to one or more employees, consultants or directors, or
taken any action to fund, secure or accelerate the funding of compensation
or benefits provided for one or more employees, consultants or directors,
whether or not as a result of or in connection with the transactions
contemplated by the Offer, (x) except as may be required by law, taken any
action to terminate or amend any employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended) of the Company or any of its subsidiaries, or the Purchaser shall
have become aware of any such action which was not previously disclosed in
publicly available filings, or (xi) amended or authorized or proposed any
amendment to its certificate of incorporation or Bylaws or similar
organizational documents, or the Purchaser shall become aware that the
Company or any of its subsidiaries shall have proposed or adopted any such
amendment which shall not have been previously disclosed;
(f) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including the Company or
any of its subsidiaries or affiliates), or it shall have been publicly
disclosed or the Purchaser shall have otherwise learned that (i) any
person, entity (including the Company or any of its subsidiaries) or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall
have acquired or proposed to acquire beneficial ownership of more than 5%
of any class or series of capital stock of the Company (including the
Shares), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 5%
or any class or series of capital stock of the Company (including the
Shares) other than acquisitions for bona fide arbitrage purposes only and
except as disclosed in a Schedule 13D or 13G on file with the Commission
on the date of this Offer to Purchase, (ii) any such person, entity or
group which before the date of this Offer to Purchase had filed such a
Schedule with the Commission has acquired or proposes to acquire, through
the acquisition of stock, the formation of a group or otherwise,
beneficial ownership of 1% or more of any class or series of capital stock
of the Company (including the Shares), or shall have been granted any
right, option or warrant, conditional or otherwise, to acquire beneficial
ownership of 1% or more of any class or series of capital stock of the
Company (including the Shares), (iii) any person or group shall have
entered into a definitive agreement or an agreement in principle or made a
proposal with respect to a tender offer or exchange offer or a merger,
consolidation or other business combination with or involving the Company,
or (iv) any person shall have filed a Notification and Report Form under
the HSR Act or made a public announcement reflecting an intent to acquire
the Company or any assets or securities of the Company;
(g) the Purchaser shall have reached an agreement or understanding with
the Company providing for termination of the Offer, or the Purchaser or
any of its affiliates shall have entered into a definitive agreement or
announced an agreement in principle with the Company providing for a
merger or other business combination with the Company or the purchase of
stock or assets of the Company;
(h) the Purchaser shall become aware (i) that any material contractual
right of the Company or any of its subsidiaries or affiliates shall be
impaired or otherwise adversely affected or that any material amount of
indebtedness of the Company or any of its subsidiaries, joint ventures or
18
partnerships shall become accelerated or otherwise become due before its
stated due date, in either case with or without notice or the lapse of
time or both, as a result of the transactions contemplated by the Offer or
(ii) of any covenant, term or condition in any of the Company's or any of
its subsidiaries', joint ventures' or partnerships' instruments or
agreements that is or may be materially adverse to the value of the Shares
in the hands of the Purchaser (including, but not limited to, any event of
default that may ensue as a result of the consummation of the Offer or the
acquisition of control of the Company); or
(i) CalEnergy or the Purchaser shall not have obtained any waiver,
consent, extension, approval, action or non-action from any governmental
authority or agency which is necessary to consummate the Offer, including
without limitation, the expiration or termination of the waiting period
under the HSR Act;
which, in the sole judgment of the Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by the Purchaser or
any of its affiliates) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
or payment.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances giving rise to
such condition or may be waived by the Purchaser in whole or in part at any
time and from time to time in the sole discretion of the Purchaser. Any
determination by the Purchaser concerning any event described in this Section
12 shall be final and binding upon all parties.
13. SOURCE AND AMOUNT OF FUNDS. The Purchaser estimates that the total
amount of funds required to purchase the Shares in the Offer will be
approximately $160 million. The Purchaser will obtain such funds through a
capital contribution by CalEnergy from available cash on hand.
14. DIVIDENDS AND DISTRIBUTIONS. If, on or after the date of this Offer to
Purchase, the Company should split, combine or otherwise change the Shares or
its capitalization, or shall disclose that it has taken any such action,
then, subject to the provisions of Section 12, the Purchaser may, in its sole
judgment, make such adjustments as it deems appropriate to reflect such
split, combination or other change in the purchase price and the other terms
of the Offer (including, without limitation, the number and type of
securities offered to be purchased, the amounts payable therefor and the fees
payable hereunder).
If, on or after the date of this Offer to Purchase, the Company should
declare or pay any cash or stock dividend or other distribution on or issue
any rights with respect to the Shares, payable or distributable to
shareholders of record on a date before the transfer to the name of the
Purchaser or its nominee or transferee on the Company's stock transfer
records of the Shares accepted for payment pursuant to the Offer, then,
subject to the provisions of Section 12, (i) the purchase price per Share
payable by the Purchaser pursuant to the Offer will be reduced by the amount
of any such cash dividend (other than the regular quarterly cash dividend of
$.35 per Share payable on August 15, 1997 to holders of record as of the
close of business on July 25, 1997) or cash distribution and (ii) the whole
of any such non-cash dividend, distribution or right will be received and
held by the tendering shareholder for the account of the Purchaser and shall
be required to be promptly remitted and transferred by each tendering
shareholder to the Depositary for the account of the Purchaser, accompanied
by appropriate documentation of transfer. Pending such remittance, the
Purchaser will be entitled to all rights and privileges as owner of any such
non-cash dividend, distribution or right and may withhold the entire purchase
price or deduct from the purchase price the amount or value thereof, as
determined by the Purchaser in its sole discretion.
15. CERTAIN LEGAL MATTERS. Except as otherwise disclosed herein, on the
basis of an examination of publicly available filings with respect to the
Company, the Purchaser is not aware of any licenses or other regulatory
permits which appear to be material to the business of the Company and which
might be adversely affected by the acquisition of Shares by the Purchaser
pursuant to the Offer or of any approval or other action by any governmental,
administrative or regulatory agency or authority which would be required for
the acquisition or ownership of Shares by the Purchaser as contemplated
herein. Should any such approval or other action be required, it is currently
contemplated that such approval or action would
19
be sought. The Purchaser is unable to predict whether it may determine that
it is required to delay the acceptance for payment of Shares pursuant to the
Offer pending such approval or other action. There cannot be any assurance
that any such approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or such other
actions were not taken, any of which could cause the Purchaser to elect to
terminate the Offer pursuant to Section 12.
State Takeover Laws. A number of states (including New York) have adopted
laws and regulations containing restrictions that apply to offers to acquire
securities of corporations which are incorporated and/or have assets,
shareholders and/or conduct business therein. In 1982, the United States
Supreme Court in Edgar v. Mite Corp. invalidated on constitutional grounds
the Illinois Business Takeovers Statute which, as a matter of state
securities law, imposed procedural requirements of additional filings, a
waiting period and a fairness hearing on tender offers, on the ground that
the requirements imposed by the state takeover statute which made takeovers
of corporations meeting certain requirements more difficult, conflicted with
federal law. The reasoning in that decision is likely to apply to other state
takeover statutes that purport to impose similar requirements on the Offer.
In 1987, the United States Supreme Court in CTS Corp. v. Dynamics Corp. of
America held that the State of Indiana could, as a matter of corporate law
and, in particular, those aspects of corporate law concerning corporate
governance, constitutionally disqualify a potential acquiror from voting on
the affairs of a target corporation, without the prior approval of a majority
vote of those shareholders of the corporation who had no interest in the
acquisition and who were neither officers nor directors and employees of the
corporation, provided that such laws were applicable only to Indiana
corporations. Subsequently, certain United States District Courts have ruled
that state takeover statutes, even of the type upheld in CTS Corp., are
unconstitutional insofar as they apply to corporations incorporated outside
that state. In TLX Acquisition Corp. v. Telex Corp., a United States District
Court in Oklahoma ruled that Oklahoma takeover statutes were unconstitutional
insofar as they applied to corporations incorporated outside Oklahoma in that
they would subject such corporations to inconsistent regulations. Similarly
in Tyson Foods, Inc. v. McReynolds, a United States District Court in
Tennessee ruled that four Tennessee takeover statutes were unconstitutional
as they applied to corporations incorporated outside Tennessee. This decision
was affirmed by the United States Court of Appeals for the Sixth Circuit. The
reasoning of these cases may indicate that application of the takeover
statutes of states other than New York to the Offer could be
unconstitutional.
Various states, including New York, also have enacted business combination
statutes that regulate the circumstances under which a corporation may merge
or enter into other business combinations with an acquiror of certain
percentages of their outstanding stock. In Amanda Acquisition Corp. v.
Universal Foods Corp., the United States Court of Appeals for the Seventh
Circuit held that the state of Wisconsin could, as a matter of state law,
prohibit for a period of three years, a Wisconsin corporation from entering
into certain business combinations, including a merger, with a holder of 10%
or more of the outstanding stock of the corporation, unless the corporation's
Board of Directors had approved the transaction prior to the time the
acquiror purchased its 10% interest in the corporation. Certiorari to the
United States Supreme Court was denied.
The Company and certain of its subsidiaries conduct business in a number
of states throughout the United States, some of which have enacted takeover
statutes. The Purchaser does not know whether any or all of these statutes
will by their terms apply to the Offer. To the extent that state takeover
statutes and regulations purport to apply to the Offer, and contain
provisions that impose requirements that conflict with the United States
Constitution or conflict with the federal securities laws applicable to the
Offer, the Purchaser believes that such statutes and regulations are
unconstitutional and/or preempted by federal law. Should the Company, any
government agency or official or any other person seek to apply any such
statute to the Offer, the Purchaser will take such action as then appears
desirable and may contest the validity of such statutes and the application
of such statutes to the Offer in appropriate judicial or administrative
proceedings. If it is asserted that one or more state takeover laws is
applicable to the Offer and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the
20
Purchaser may be required to file certain information with, or receive
approvals from, the relevant state authorities, and, if enjoined, the
Purchaser may be unable to purchase Shares tendered pursuant to the Offer or
may be delayed in consummating the Offer. In the circumstances described
above, the Purchaser may not be obliged to purchase any Shares tendered. See
Section 12. Without conceding the constitutionality or applicability of
Article 16 of the New York Business Corporation Law or otherwise prejudicing
its rights to challenge the constitutionality or applicability of such
Article, CalEnergy and the Purchaser have filed a registration statement
pursuant to such Article with the New York Attorney General and have included
in Schedule III to this Offer to Purchase certain additional information
concerning CalEnergy and the Purchaser in compliance with such Article.
Antitrust. Under the HSR Act, certain acquisition transactions may not be
consummated unless certain information has been furnished to the FTC and the
Antitrust Division and certain waiting period requirements have been
satisfied. The Offer is subject to these requirements. See Section 2.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, purchases cannot be made until the expiration of a
15-day waiting period after July 17, 1997, the date on which certain required
information and documentary material was furnished by the Purchaser to the
FTC and the Antitrust Division with respect to the Offer, unless both the FTC
and the Antitrust Division terminate the waiting period with respect thereto.
If, within such 15-day waiting period, either the FTC or the Antitrust
Division requests additional information or documentary material relevant to
the Offer, the waiting period will be extended for an additional period of
ten days following the date of substantial compliance with such requests.
Accordingly, the required waiting period will expire at 11:59 P.M., New York
City time, on August 1, 1997, unless a request for additional information or
documentary material is received before then. Thereafter, the waiting period
could be extended only by court order or with the Purchaser's consent. The
Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirement imposed by the HSR Act has
been satisfied.
The Antitrust Division, the FTC and state authorities frequently
scrutinize the legality under the antitrust laws of transactions such as the
acquisition of Shares pursuant to the Offer. At any time before or after the
consummation of any of such transactions, the Antitrust Division, the FTC or
state authorities could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin
the purchase of Shares pursuant to the Offer or otherwise, or seeking the
divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of the Company. Private parties may also seek to take
action under the antitrust laws. The Purchaser believes that the acquisition
of Shares pursuant to the Offer will not violate the antitrust laws. However,
there can not be any assurance that a challenge to the Offer on antitrust
grounds will not be made, or if such a challenge is made, what the result
will be. See Section 12 for certain conditions of the Offer, including
conditions with respect to injunctions and certain governmental actions.
Subsequent Regulatory Approvals in Connection with Future Share
Acquisitions or Merger.
Following completion of the Offer, the Purchaser intends to seek
regulatory approvals permitting the acquisition and ownership of 100% of the
Common Stock and, after receiving such approvals, to acquire all of the
outstanding Shares it does not then own. See Section 11. The regulatory
approvals that would be needed in order to permit the Purchaser to acquire
all of the outstanding Shares are described below.
State Regulatory Approvals. Approval of the Public Service Commission of
New York ("PSC") will be required for the acquisition of the remaining
outstanding shares of the Common Stock. The PSC considers whether the
acquisition would be in the public interest, taking into account such factors
as the impact of the merger on consumers, on rates, and on quality of
service. The PSC also would have to approve any issuance of securities of the
Company made in connection with the Purchaser's acquisition. The PSC approval
process typically takes from six to twelve months, depending upon the issues
involved. The Purchaser does not believe approval from any other state
commissions are also required. However, if required, the Purchaser believes
any such approvals should be obtainable in the same time frame as the PSC
approval.
Federal Power Act. The Federal Energy Regulatory Commission ("FERC") has
determined that its approval is required under Section 203 of the Federal
Power Act (the "FPA") before any person can
21
acquire a controlling interest in a public utility. Therefore FERC's approval
will be required before the Purchaser can acquire the remaining outstanding
shares of the Common Stock of the Company. Under Section 203 of the FPA, FERC
must approve a proposed disposition of facilities if it finds that the
disposition will be consistent with the public interest. The FERC approval
process is expected to take anywhere from six to twelve months, depending
upon the complexity of the issues involved.
Atomic Energy Act. The Company has an 18% ownership interest in the Nine
Mile Nuclear Generating Unit # 2 ("Nine Mile Unit # 2"). The remaining
ownership interests are held by Niagara Mohawk Power Corp., which is the
operator, and by Long Island Lighting Company, Rochester Gas & Electric Corp.
and Central Hudson Gas & Electric Corp. As an owner, the Company holds a
possession-only license issued by the Nuclear Regulatory Commission ("NRC")
under the Atomic Energy Act for Nine Mile Unit # 2. The purchase of the
remaining outstanding shares of the Common Stock of the Company will be
considered an indirect change of control of the license, and will require the
prior approval of the NRC. The Purchaser believes such approval should be
obtainable in the same time frame as the FERC approval.
Others. Based on an examination of publicly available information with
respect to the Company, the Purchaser is not aware of any other regulatory
approval that would be required prior to the acquisition of the remaining
outstanding shares of the Common Stock. However, there may be a requirement
to obtain approvals of the transfer of licenses, franchises or other permits;
such approvals should be granted in the ordinary course of business. The
Purchaser presently intends to take such actions with respect to any
additional approvals that may be needed as will enable it to acquire the
remaining outstanding shares of the Common Stock subsequent to the completion
of the Offer. In addition, certain partial dispositions may be required in
order to maintain the qualifying facility status (under the Public Utility
Regulatory Policies Act of 1978) of certain of CalEnergy's independent
generating facilities following its acquisition of more than 9.9% of the
Company.
16. FEES AND EXPENSES. Lehman Brothers and Credit Suisse First Boston are
acting as financial advisors (the "Financial Advisors") to the Purchaser and
CalEnergy in connection with the transactions described in this Offer to
Purchase and as Dealer Managers for the Offer. CalEnergy has agreed to pay
the Financial Advisors an aggregate financial advisory fee of $8.5 million,
of which (i) $250,000 became payable upon the filing of a Notification and
Report Form under the HSR Act with respect to the Offer, (ii) $750,000 is
payable upon the earlier to occur of (x) the execution of a merger or similar
agreement providing for the acquisition of a majority of the Common Stock or
assets of the Company by CalEnergy and (y) the delivery by Lehman Brothers or
Credit Suisse First Boston of an opinion as to the fairness to CalEnergy,
from a financial point of view, of the consideration to be paid by CalEnergy
in an acquisition of the Company, and (iii) $7,500,000 is payable upon
consummation by CalEnergy of an acquisition of a majority of the Common Stock
or assets of the Company. CalEnergy has also agreed to reimburse the
Financial Advisors for their reasonable expenses and has granted customary
indemnity to each Financial Advisor. The Financial Advisors are not receiving
any additional compensation for acting as Dealer Managers in the Offer.
MacKenzie Partners, Inc. has been retained by the Purchaser to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, facsimile, telegraph and
personal interviews and may request brokers, dealers and other nominee
shareholders to forward materials relating to the Offer to beneficial owners
of Shares. The Information Agent will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities
and expenses in connection therewith, including certain liabilities under the
federal securities laws.
In addition, IBJ Schroder Bank & Trust Company has been retained as the
Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed
for certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the federal securities laws.
22
Neither CalEnergy nor the Purchaser will pay any fees or commissions to
any broker or dealer or other person (other than the Dealer Managers and
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
the Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
17. MISCELLANEOUS. The Offer is being made to all holders of Shares. The
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to a state statute.
If the Purchaser becomes aware of any state where the making of the Offer is
so prohibited, the Purchaser will make a good faith effort to comply with any
such statute or seek to have such statute declared inapplicable to the Offer.
If, after such good faith effort, the Purchaser cannot comply with any
applicable statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of the Purchaser by the Dealer Managers or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
The Purchaser has filed with the Commission a Statement on Schedule 14D-1,
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer, and may file amendments thereto. Such
Statement and any amendments thereto, including exhibits, may be examined and
copies may be obtained from the principal office of the Commission in
Washington, D.C. in the manner set forth in Section 8 of this Offer to
Purchase.
No person has been authorized to give any information or make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
CE Electric (NY), Inc.
July 18, 1997
23
SCHEDULE I
DIRECTORS AND OFFICERS
OF THE PURCHASER AND CALENERGY
The following information sets forth the name, business address and
present principal occupation and five-year employment history of each of the
directors, executive officers and other officers of the Purchaser and
CalEnergy. Each of the directors, executive officers and other officers is a
citizen of the United States unless otherwise noted. Unless otherwise
indicated, the business address of each of the directors, executive officers
and other officers of the Purchaser and CalEnergy named below is 302 South
36th Street, Suite 400, Omaha, Nebraska 68131.
DIRECTORS AND OFFICERS OF CALENERGY
ˇ Enlarge/Download Table
NAME AGE POSITION
---- --- --------
Executive Officers
------------------
David L. Sokol ........ 40 Chairman of the Board of Directors and Chief Executive
Officer
Gregory E. Abel ....... 34 President and Chief Operating Officer, CalEnergy Europe and
Chief Accounting Officer, CalEnergy
Edward F. Bazemore ... 60 Vice President, Human Resources
Craig M. Hammett ...... 36 Vice President and Chief Financial Officer
Thomas R. Mason ....... 53 President and Chief Operating Officer, CalEnergy Americas
Steven A. McArthur ... 39 Senior Vice President, General Counsel and Secretary
Donald M. O'Shei, Jr. 37 President and Chief Operating Officer, CalEnergy Asia
Robert S. Silberman .. 39 Senior Vice President, Marketing, Implementation and
Strategic Planning
Other Officers
--------------
Douglas I. Anderson .. 39 Assistant General Counsel and Assistant Secretary, CalEnergy
and General Counsel, CalEnergy Americas
J. Douglas Divine .... 40 Vice President, Strategic Planning
Vincent R. Fesmire ... 56 Vice President, Construction and Engineering
Adrian M. Foley, III . 50 Vice President, Marketing
Patrick J. Goodman ... 30 Controller
Brian K. Hankel ....... 34 Treasurer
Frederick L. Manuel .. 38 Vice President, Indonesia
James D. Stallmeyer .. 39 Assistant General Counsel, CalEnergy and General Counsel,
CalEnergy Asia and Vice President/General Manager,
Philippines
Jonathan M. Weisgall . 47 Vice President, Legislative and Regulatory Affairs
Directors
---------
David L. Sokol ........ 40 Director
Edgar D. Aronson ...... 62 Director
Judith E. Ayres ....... 53 Director
James Q. Crowe ........ 47 Director
Richard K. Davidson .. 55 Director
David Dewhurst ........ 53 Director
Richard R. Jaros ...... 45 Director
David R. Morris ....... 62 Director
Bernard W. Reznicek .. 60 Director
Walter Scott, Jr. .... 65 Director
John R. Shiner ........ 53 Director
Neville G. Trotter ... 65 Director
David E. Wit .......... 35 Director
S-1
Set forth below is certain information with respect to each of the
foregoing officers and directors:
EXECUTIVE OFFICERS
DAVID L. SOKOL, Chairman of the Board and Chief Executive Officer. Mr.
Sokol has been CEO since April 19, 1993 and served as President of CalEnergy
from April 19, 1993 until January 21, 1995. He has been Chairman of the Board
of Directors since May 1994. Mr. Sokol has been a director of CalEnergy since
March 1991. Formerly, Mr. Sokol was Chairman, President and Chief Executive
Officer of CalEnergy from February 1991 until January 1992. Mr. Sokol was the
President and Chief Operating Officer of, and a director of, JWP, Inc., from
January 27, 1992 to October 1, 1992. From November 1990 until February 1991,
Mr. Sokol was the President and Chief Executive Officer of Kiewit Energy
Company, the largest shareholder of CalEnergy and a wholly owned subsidiary
of PKS.
GREGORY E. ABEL, President and Chief Operating Officer, CalEnergy Europe
and Chief Accounting Officer, CalEnergy. Mr. Abel joined CalEnergy in 1992.
Mr. Abel is a Chartered Accountant and from 1984 to 1992 he was employed by
Price Waterhouse. As a Manager in the San Francisco office of Price
Waterhouse, he was responsible for clients in the energy industry.
EDWARD F. BAZEMORE, Vice President, Human Resources, Mr. Bazemore joined
CalEnergy in July 1991. From 1989 to 1991, he was Vice President, Human
Resources, at Ogden Projects, Inc. in New Jersey. Prior to that, Mr. Bazemore
was Director of Human Resources for Ricoh Corporation, also in New Jersey.
Previously, he was Director of Industrial Relations for Scripto, Inc. in
Atlanta, Georgia.
CRAIG HAMMETT, Vice President and Chief Financial Officer. Mr. Hammett
joined CalEnergy in 1996. Prior to joining CalEnergy, Mr. Hammett served as
Director of Project Finance for Entergy Power group, as Director, Project
Finance and M&A for CSW Energy and as a corporate loan officer for various
financial institutions.
THOMAS R. MASON, President and Chief Operating Officer, CalEnergy
Americas. Mr. Mason joined CalEnergy in March 1991. From October 1989 to
March 1991, Mr. Mason was Vice President and General Manager of Kiewit Energy
Company. Prior to that, Mr. Mason was Director of Marketing for Energy
Factors, Inc. (now Sithe Energies U.S.A., Inc.), a non-utility developer of
power facilities. Prior to that Mr. Mason was a worldwide Market Manager of
power generation for Caterpillar's Solar Gas Turbines, a gas turbine
manufacturer.
STEVEN A. McARTHUR, Senior Vice President, General Counsel and Secretary.
Mr. McArthur joined CalEnergy in February 1991. From 1988 to 1991 he was an
attorney in the Corporate Finance Group at Shearman & Sterling in San
Francisco. From 1984 to 1988 he was an attorney in the Corporate Finance
Group at Winthrop, Stimson, Putnam & Roberts in New York.
DONALD M. O'SHEI, JR., President and Chief Operating Officer, CalEnergy
Asia. Mr. O'Shei joined CalEnergy in August 1992. Prior to 1997, he served as
General Manager -- Indonesia and Vice President of CE International
Investments, Ltd. for the Company. From 1991 to 1992, he was employed by
Proven Alternatives Capital Corporation as a Financial Analyst. Prior to
1991, Mr. O'Shei served in the U.S. Army in the Special Forces, Airborne and
Pathfinder Units.
ROBERT S. SILBERMAN, Senior Vice President, Marketing, implementation and
Strategic Planning. Mr. Silberman joined CalEnergy in 1995. Prior to that,
Mr. Silberman served as Executive Assistant to the Chairman and Chief
Executive Officer of International Paper Company, as Director of Project
Finance and Implementation for the Ogden Corporation and as a Project Manager
in Business Development for Allied-Signal, Inc. He has also served as the
Assistant Secretary of the Army for the United States Department of Defense.
OTHER OFFICERS
DOUGLAS L. ANDERSON, Assistant General Counsel and Assistant Secretary,
CalEnergy and General Counsel, CalEnergy Americas. Mr. Anderson joined
CalEnergy in February 1993. From 1990 to 1993, Mr. Anderson was a business
attorney with Fraser, Stryker, Vaughn, Meusey, Olson, Boyer & Bloch, P.C.
S-2
in Omaha. From 1987 through 1989, Mr. Anderson was a principal in the firm
Anderson & Anderson. Prior to that, from 1985 to 1987, he was an attorney
with Foster, Swift, Collins & Coey, P.C. in Lansing, Michigan.
J. DOUGLAS DIVINE, Vice President, Strategic Planning. Mr. Divine joined
CalEnergy in September 1996. Prior to that, he was Director of Planning and
Regulatory Affairs with Falcon Seaboard Resources Inc. from 1990 to 1996.
From 1987 to 1990, he was Senior Manager of Management Consulting Services
with Price Waterhouse; from 1984 to 1986 Mr. Divine was Director of
Operations Review Divisions and Executive Assistant to Commissioner of the
Public Utility Commission of Texas; and from 1983 to 1984, he was Coordinator
of Revenue and Economic Analysis for the Governor's Office, State of Texas.
VINCENT R. FESMIRE, Vice President, Construction and Engineering. Mr.
Fesmire joined CalEnergy in October 1993. Since joining CalEnergy, Mr.
Fesmire's responsibilities have shifted from project development and
implementation to construction in parallel with the status of CalEnergy's
projects. Prior to joining CalEnergy, Mr. Fesmire was employed for 19 year
with Stone & Webster, an engineering firm, serving in various management
level capacities with an expertise in geothermal design engineering.
ADRIAN M. FOLEY, III, Vice President, Marketing. Mr. Foley joined the
Company in January 1994 as Project Development Manager and continued in that
capacity until January 1997 when he was promoted to Vice President,
Marketing. Prior to joining CalEnergy, Mr. Foley was Regional Manager,
Business Development with Ogden Projects, Inc. from 1989 to 1993 and
Executive Vice President with Rescom Development Company from 1980 to 1989.
PATRICK J. GOODMAN, Controller, Mr. Goodman joined CalEnergy in June 1995,
and served as Manager of Consolidation Accounting until September 1996 when
he was promoted to Controller. Prior to joining CalEnergy, Goodman was an
accountant at Coopers & Lybrand.
BRIAN K. HANKEL, Treasurer, Mr. Handel joined CalEnergy in February 1992
as Treasury Analyst and served in that position to December 1995. Mr. Hankel
was appointed to Assistant Treasurer in January 1996 and was appointed
Treasurer in January 1997. Prior to joining CalEnergy, Mr. Hankel was an
Analyst at FirsTier Bank of Lincoln from 1987 to 1992 and Senior Credit
Analyst at FirsTier from 1987 to 1988.
FREDERICK MANUEL, Vice President, Indonesia. Mr. Manuel joined CalEnergy
in 1991. Prior to that, he was employed by Chevron Corporation with
responsibilities including land and offshore drilling, reservoir and
production engineering, project management and technical research.
JAMES D. STALLMEYER, Assistant General Counsel, CalEnergy and General
Counsel, CalEnergy Asia and Vice President/General Manager, Philippines. Mr.
Stallmeyer joined CalEnergy in 1993. Mr. Stallmeyer practiced in the public
finance and banking areas at Chapman and Cutler in Chicago from 1984 to 1987
and in the corporate finance department from 1989 to 1993. Prior to that, Mr.
Stallmeyer was an attorney in the public finance department of the Chicago
office of Skadden, Arps, Slate, Meaher & Flom in 1987 and 1988 and was a
legal writing instructor at the University of Illinois College of Law in 1988
and 1989.
JONATHAN WEISGALL, Vice President, Legislative and Regulatory Affairs. Mr.
Weisgall joined CalEnergy in May 1995. Prior to that, Mr. Weisgall was an
attorney in private practice with extensive energy and regulatory experience
and is currently Adjunct Professor of Energy Law at Georgetown University Law
Center.
DIRECTORS
DAVID L. SOKOL, Director. (See above biographical reference in Executive
Officers.)
EDGAR D. ARONSON, Director. Mr. Aronson has been a director of CalEnergy
since April 1983. Mr. Aronson founded EDACO Inc., a private venture capital
company in 1981, and has been President of EDACO since that time. Prior to
that, Mr. Aronson was Chairman of Dillon, Read International from 1979 to
1981 and a General Partner in charge of the International Department at
Salomon Brothers Inc from 1973 to 1979.
S-3
JUDITH E. AYRES, Director. Ms. Ayres has been a director of CalEnergy
since July 1990. Since 1990, Ms. Ayres has been Principal of The
Environmental Group, an environmental consulting firm in San Francisco,
California. From 1988 to 1989, Ms. Ayres was a Vice President of William D.
Ruckelshaus Associates, an environmental consulting firm. From 1983 to 1988,
Ms. Ayres was the Regional Administrator of Region 9 (Arizona, California,
Hawaii, Nevada, and the Western Pacific Islands) of the United States
Environmental Protection Agency.
JAMES Q. CROWE, Director. Mr. Crowe has been a director of CalEnergy since
March 1991. Mr. Crowe is Chairman of the Board of WorldCom, Inc. Prior to
assuming his current position Mr. Crowe was Chairman and Chief Executive
Officer of MFS Communications Company, Inc. In 1991, Mr. Crowe was President
of Kiewit Industrial Company, a subsidiary of PKS. Before joining Kiewit
Industrial Company in 1986, Mr. Crowe was Group Vice President, Power Group
at Morrison-Knudsen Corporation. In 1994, Mr. Crowe became a director of PKS.
Mr. Crowe is also a director of C-TEC Corporation, a publicly-traded company
in which PKS holds a majority ownership interest.
RICHARD K. DAVIDSON, Director. Mr. Davidson has been a director of
CalEnergy since March 1993. As of January 1, 1997, Mr. Davidson became
Chairman and CEO of Union Pacific Corporation. Prior to that, Mr. Davidson,
President of Union Pacific Corporation and a director of that corporation
since May 1994, was Chairman of Union Pacific Railroad since September 1991.
Mr. Davidson became part of Union Pacific Railroad when it merged with the
Missouri Pacific and the Western Pacific Railroads in 1982. He was promoted
to Vice President-Operations in 1986, Executive Vice President-Operations in
1989, until his appointment as President and Chief Executive Officer on
August 7, 1991; seven weeks later Mr. Davidson was named Chairman and Chief
Executive Officer.
DAVID DEWHURST, Director. Mr. Dewhurst has been a Director since August
1996. Mr. Dewhurst was the founder, Chairman and Chief Executive Officer of
Falcon Seaboard Resources, Inc. for many years and is presently Chairman and
Chief Executive Officer of Falcon Seaboard Holdings, L.P. Mr. Dewhurst was a
Foreign Service Reserve Officer in the U.S. Department of State, in 1971-1973
and served in the U.S. Air Force from 1968-70. Mr. Dewhurst currently serves
on the National Board of Directors of Citizens for a Sound Economy.
RICHARD R. JAROS, Director. Mr. Jaros has been a director of CalEnergy
since March 1991. Mr. Jaros served as President and Chief Operating Officer
of CalEnergy from January 8, 1992 to April 19, 1993 and as Chairman of the
Board from April 19, 1993 to May 1994. Mr. Jaros is currently Executive Vice
President, Chief Financial Officer and a director of PKS. From 1990 until
January 8, 1992, Mr. Jaros served as a Vice President of PKS. Mr. Jaros
serves as a director of WorldCom, Inc. and C-TEC Corporation, a publicly
traded company in which PKS holds a majority ownership interest.
DAVID R. MORRIS, Director. Mr. Morris was appointed a director of
CalEnergy in February 1997. Mr. Morris was Chairman of Northern Electric plc
from 1989 to January 1997. In 1980 he joined Delta plc becoming Managing
Director of the Switchgear and Accessories Division in 1981 and a Board
Director in 1984. Prior to that, Mr. Morris was Managing Director of Wildt
Mellor Bromley Ltd., a subsidiary of Sears Holdings, plc, from 1975 to 1980.
From 1958 to 1975 Mr. Morris was associated with English Electric Aircraft
Ltd., which merged with GEC, in production and development management. Mr.
Morris is a director of Delta Group plc.
BERNARD W. REZNICEK, Director. Mr. Reznicek has been a director of
CalEnergy since May 1995. Mr. Reznicek became National Director--Utility
Marketing for Central States Indemnity Co. of Omaha on January 2, 1997. Prior
to that, he was Dean, College of Business Administration at Creighton
University from 1994 to 1996. Prior to that, Mr. Reznicek was the Chairman,
President and Chief Executive Officer of Boston Edison Company from 1987 to
1994 and was the President and Chief Executive Officer of the Omaha Public
Power District from 1981 to 1987. Mr. Reznicek serves on the Board of
Directors of Stone & Webster, Incorporated since (1995), State Street Boston
Corporation (1991), Boston Edison Company (1987) and Guarantee Life
Companies, Inc. (1986).
WALTER SCOTT, JR., Director. Mr. Scott has been a director of CalEnergy
since June 1991. Mr. Scott was the Chairman and Chief Executive Officer of
CalEnergy from January 8, 1992 until April 19,
S-4
1993. Mr. Scott is Chairman and President of PKS, a position he has held
since 1979. Mr. Scott is a director of Berkshire Hathaway, Inc., Burlington
Resources, Inc., ConAgra, Inc., Valmont Industries, Inc., WorldCom, Inc.,
First Bank Systems and C-TEC Corporation, a publicly traded company in which
PKS holds a majority ownership interest.
JOHN R. SHINER, Director. Mr. Shiner has been a director of CalEnergy
since May 1995. He joined the law firm of Morrison & Foerster in 1993, where
he is a partner resident in the Los Angeles office. Prior to that time, he
was a partner in the law firm of Baker & McKenzie. Mr. Shiner has practiced
law in Los Angeles since 1968, specializing in litigation and consultation
with the senior management and board of directors of closely held and public
corporations.
NEVILLE G. TROTTER, Director. Since 1974, Mr. Trotter has been a Member of
Parliament in the U.K. House of Commons representing the Tynemouth area. In
Parliament, Mr. Trotter served as a member of the Select Committees of the
House relating to Defense, Trade & Industry and Transport. Prior to that, Mr.
Trotter, a Chartered Accountant, was a Senior Partner in the Grant Thornton
accounting firm in the U.K. and formerly served as a member of the Newcastle
City Council and was Chairman of the City Finance and Transport Committees.
DAVID E. WIT, Director. Mr. Wit has been a director of CalEnergy since
April 1987. He is Co-Chief Executive Officer of Logicat, Inc., a software
development/publishing firm. Prior to working at Logicat, Inc., Mr. Wit
worked at E.M. Warburg Pincus & Company, where he analyzed seed-stage
financing and technology investments.
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
The names of each director of the Purchaser are set forth below. The other
required information with respect to each such person is set forth under
"Directors and Officers of CalEnergy" above.
ˇ Download Table
NAME AGE
DAVID L. SOKOL ......................................................... 40
STEVEN A. MCARTHUR ..................................................... 39
All current executive officers of CalEnergy hold the same offices (to the
extent applicable) at the Purchaser. See "Directors and Executive Officers of
CalEnergy" above.
S-5
SCHEDULE II
SCHEDULE OF TRANSACTIONS IN SHARES
DURING THE PAST 60 DAYS
BY THE PURCHASER, CALENERGY AND THEIR AFFILIATES
ˇ Download Table
TRANSACTION SHARES PRICE PER
DATE ACQUIRED* SHARE**
-------------- ----------- -----------
July 1, 1997 . 16,000 $20.88
July 1, 1997 . 18,500 $21.00
July 7, 1997 . 700 $21.19
July 7, 1997 . 7,600 $21.25
July 7, 1997 . 2,000 $21.38
July 7, 1997 . 25,600 $21.44
July 7, 1997 . 25,000 $21.50
July 8, 1997 . 23,600 $21.56
July 8, 1997 . 3,900 $21.50
July 9, 1997 . 8,000 $21.50
July 9, 1997 . 45,000 $21.56
July 10, 1997 48,400 $21.56
July 11, 1997 2,000 $21.58
July 11, 1997 14,800 $21.63
-------
Total ......... 241,100
------------
* All transactions set forth in the table above were effected through a
registered broker on the NYSE.
** All prices are exclusive of commissions.
S-6
SCHEDULE III
CERTAIN ADDITIONAL INFORMATION ABOUT THE PURCHASER AND CALENERGY
INFORMATION ABOUT THE PURCHASER
The Purchaser was incorporated under the laws of the State of New York on
July 11, 1997. The Purchaser has not conducted any business or other
activities of any kind since its incorporation other than in connection with
the Offer.
Authorized capital stock of the Purchaser consists of 1,000 shares of
common stock, par value $0.01 ("Purchaser Common Stock"). At July 18, 1997,
there were 1,000 shares of Purchaser Common Stock outstanding. The Purchaser
does not have any long-term debt.
The Purchaser has no labor or employment related claims or disputes, and
is not involved in any pending legal or administrative proceedings.
INFORMATION ABOUT CALENERGY
CalEnergy was incorporated under the laws of the State of Delaware in
1971. It has an office in upstate New York and, through its subsidiaries,
operates an environmentally advanced, 240 MW gas-fired generating plant in
Plattsburgh, which generates power sufficient to supply 100,000 homes.
The following is a description of the authorized capital and long-term
debt of CalEnergy, the potential impact on New York residents of CalEnergy's
plans and proposals, existing pension plans, profit-sharing plans and savings
plans, educational opportunities or relocation adjustments provided to its
employees, pending litigation and labor or employment related claims or
disputes, and community activities, charitable, cultural, educational or
civic contributions:
1. AUTHORIZED CAPITAL
Authorized capital stock of CalEnergy consists of 180,000,000 shares of
common stock, par value $.0675 per share ("CalEnergy Common Stock"), and
2,000,000 shares of preferred stock, no par value ("CalEnergy Preferred
Stock"). At March 31, 1997, there were 63,529,955 shares of CalEnergy Common
Stock outstanding. No shares of CalEnergy Preferred Stock are issued and
outstanding. CalEnergy currently does not pay dividends on the CalEnergy
Common Stock but reinvests earnings into its operations.
2. LONG-TERM DEBT*
CalEnergy's long-term debt comprised the following at March 31, 1997:
ˇ Download Table
Senior discount notes ................... $529,640
Senior notes ............................ 224,164
Limited recourse senior secured notes** 200,000
Revolving credit facility ............... 0
--------
$953,804
========
------------
* Excludes non-recourse debt of subsidiaries.
** The "Recourse Amount" (as defined in the applicable indenture) with
respect to CalEnergy was $0 at March 31, 1997.
(i) Senior Discount Notes. In March 1994, CalEnergy issued $400,000,000 of
10 1/4% Senior Discount Notes which accrete to an aggregate principal amount
of $529,640,000 at maturity in 2004. The original issue discount (the
difference between $400,000,000 and $529,640,000) was amortized from issue
date through January 15, 1997. Interest on the Senior Discount Notes is
payable semiannually on January 15 and July 15 of each year. The Senior
Discount Notes are redeemable at any time on or after January 15, 1999
initially at a redemption price of 105.125% declining to 100% on January 15,
2002 plus accrued interest to the date of redemption. The Senior Discount
Notes are unsecured senior obligations of CalEnergy.
S-7
(ii) Senior Notes. On September 20, 1996 CalEnergy completed a private
sale to institutional investors of $225,000,000 aggregate principal amount of
9 1/2% Senior Notes due 2006. Interest on the Senior Notes is payable
semiannually on March 15 and September 15 of each year. The Senior Notes are
redeemable at any time on or after September 15, 2001 initially at a
redemption price of 104.75% declining to 100% on September 15, 2004 plus
accrued interest to the date of redemption. The Senior Notes are unsecured
senior obligations of CalEnergy.
(iii) Limited Recourse Senior Secured Notes. On July 21, 1995 the Company
issued $200,000,000 of 9 7/8% Limited Recourse Senior Secured Notes due 2003
(the "Notes"). Interest on the Notes is payable on June 30 and December 30 of
each year, commencing December 1995. The Recourse Amount to CalEnergy under
this Indenture was $0 at March 31, 1997.
(iv) Revolving Credit Facility. On July 8, 1996 CalEnergy obtained a
$100,000,000 three year revolving credit facility. The facility is unsecured
and is available to fund general operating capital requirements and finance
future business opportunities. There is currently no debt outstanding under
this facility.
The annual repayments of CalEnergy's debt for the years beginning January
1, 1997 are as follows:
ˇ Download Table
SENIOR DISCOUNT NOTES SENIOR NOTES LIMITED RECOURSE NOTES*
--------------------- -------------- -----------------------
1997--2001 .... $ 0 $ 0 $ 0
Thereafter .... 529,640 225,000 200,000
-------- -------- --------
$529,640 $225,000 $200,000
======== ======== ========
------------
* The "Recourse Amount" (as defined in the applicable indenture) with
respect to CalEnergy was $0 at March 31, 1997.
3. POTENTIAL IMPACT ON THE NEW YORK RESIDENTS OF CALENERGY'S PLANS AND
PROPOSALS
CalEnergy believes that its proposed business combination would yield many
benefits for the Company's customers and employees and the State of New York.
CalEnergy welcomes the various initiatives of the Governor's office, the New
York legislature and the New York Public Service Commission to introduce full
competition to New York's energy market. CalEnergy fully expects that it will
be able to work closely with the New York Public Service Commission to
implement rate reductions for all the Company's customers, while providing
them with the same safe and reliable energy service to which they are
accustomed. Lower rates would give the Company an advantage in meeting the
competitive challenges of the deregulating energy market while contributing
to New York's economic vitality and ability to attract and retain jobs.
CalEnergy intends to reincorporate CalEnergy in New York and maintain the
Company as a distinct operating unit with its existing corporate headquarters
and grow the Company's business by participating aggressively in the
increasingly competitive New York electric market. CalEnergy is a growth
company that has increased its number of employees tenfold in the last five
years.
4. PENSION PLANS, PROFIT-SHARING PLANS AND OTHER MATTERS
CalEnergy maintains a full range of employee health and benefit and
insurance plans and provides a matching 401(k) retirement savings plan for
all employees, as well as employee bonus plans, employee stock purchase and
employee stock option plans.
(i) CalEnergy Company, Inc. 401(k) Savings Plan. This plan permits
employees to defer up to 15 percent of their compensation (as defined in the
plan) annually on a pre-tax basis, subject to legally imposed limitations.
CalEnergy also automatically makes matching contributions to the plan, in the
amount determined by CalEnergy, to be allocated based on the amounts of the
employees' contributions. The employees are always vested in 100 percent of
their contributions and CalEnergy's matching contributions. The investment
options under the plan consist of mutual funds and a CalEnergy stock fund.
S-8
(ii) CalEnergy Company, Inc. Employee Stock Option Plan. CalEnergy
maintains the Employee Stock Option Plan, which provides for grants of
incentive and nonqualified stock options to directors, employees, consultants
and independent contractors of CalEnergy. The exercise price of an incentive
stock option granted under the plan generally must be not less than the fair
market value of CalEnergy Common Stock at the date of grant; the exercise
price of a nonqualified option is determined by the committee administering
the plan and cannot be less than 85% of the fair market value at the time of
grant. CalEnergy has reserved 3,739,165 shares of CalEnergy Common Stock for
issuance under the Plan.
(iii) CalEnergy Company, Inc. Employee Stock Purchase Plan. This plan
permits participating employees to purchase CalEnergy Common Stock at a price
below its market value and to pay for the purchases through payroll
deductions. The purchase price is set at a discount of 15% from the lower of
the market value of CalEnergy Common Stock on the last trading day before a
six-month participation period starts or on the last trading day in the
participation period. The aggregate fair market value of the shares of
CalEnergy Common Stock that may be purchased under the plan by any
participant in any calendar year may not exceed $25,000.
(iv) Insurance. CalEnergy provides term life and other accidental death
and disability insurance coverage to its employees at no cost.
5. PENDING LEGAL PROCEEDINGS
CalEnergy is not a party to any material pending legal proceedings.
6. LABOR AND EMPLOYEE RELATIONS
As of March 31, 1997, CalEnergy and its subsidiaries had approximately
4,500 employees. CalEnergy's labor and employment relations with its
employees are excellent. There have been no violations by CalEnergy of the
Federal National Labor Relations Act, Occupational Safety and Health Act of
1970, Fair Labor Standards Act or Employee Retirement and Income Security
Act, as amended, finally adjudicated or settled within five years of the
commencement of the Offer.
7. EDUCATIONAL OPPORTUNITIES
CalEnergy provides special job training programs and, in certain
circumstances, educational assistance to eligible employees who pursue
programs of study that are related to the employees' field of work.
8. RELOCATION ADJUSTMENTS
CalEnergy reimburses job applicants, new employees and current employees
for certain travel and relocation expenses.
9. CHARITABLE AND CIVIC ACTIVITIES
Consistent with CalEnergy's commitment to responsible community
involvement, CalEnergy supports the arts and a variety of charitable
foundations, particularly in communities in which CalEnergy operates
facilities or has offices. Additionally, CalEnergy is active in community
safety programs, environmental activities and educational organizations by
making contributions and matching gifts to certain accredited institutions of
higher education, college associations and other educational organizations.
S-9
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Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each shareholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of
its addresses set forth below:
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
Telephone Number:
(212) 858-2103
ˇ Enlarge/Download Table
BY MAIL: BY FACSIMILE: BY HAND OR OVERNIGHT DELIVERY
P.O. Box 84
Bowling Green Station One State Street
New York, New York 10274-0084 (212) 858-2611 New York, New York 10004
Attn: Reorganization Operations Attn: Reorganization Operations Attn: Reorganization Operations
Department Department Department
Confirm Facsimile by Telephone: (212) 858-2103
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Managers at their respective addresses and telephone
numbers set forth below. Requests for additional copies of this Offer to
Purchase, the Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or to brokers, dealers, commercial banks or
trust companies.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Managers for the Offer are:
LEHMAN BROTHERS CREDIT SUISSE FIRST BOSTON
3 World Financial Center Eleven Madison Avenue
New York, New York 10285 New York, New York 10010
Call collect at: (212) 526-1941 Call: (888) 285-7693
Dates Referenced Herein and Documents Incorporated By Reference
| Referenced-On Page |
|---|
| This SC 14D1 Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 1/8/92 | | 29 |
| | 1/27/92 | | 27 |
| | 10/1/92 | | 27 |
| | 4/19/93 | | 27 | | 29 |
| | 12/31/94 | | 11 | | | | | 10-K |
| | 1/21/95 | | 27 |
| | 7/21/95 | | 33 |
| | 12/31/95 | | 11 | | | | | 10-K405, 11-K |
| | 7/8/96 | | 33 |
| | 9/20/96 | | 33 |
| | 12/31/96 | | 11 | | 13 | | | 10-K, 10-K/A, 10-K405, 11-K |
| | 1/1/97 | | 29 | | 33 |
| | 1/2/97 | | 29 |
| | 1/15/97 | | 32 |
| | 3/31/97 | | 4 | | 34 | | | 10-Q |
| | 4/30/97 | | 4 | | | | | 10-K/A |
| | 6/30/97 | | 3 | | 16 | | | 10-Q, 11-K, S-8 |
| | 7/1/97 | | 31 | | | | | 11-K, S-3 |
| | 7/7/97 | | 31 | | | | | 8-K |
| | 7/8/97 | | 31 |
| | 7/9/97 | | 31 |
| | 7/10/97 | | 3 | | 14 |
| | 7/11/97 | | 3 | | 32 |
| | 7/12/97 | | 15 |
| | 7/14/97 | | 11 | | 12 |
| | 7/15/97 | | 3 | | 17 | | | 8-K |
| | 7/17/97 | | 7 | | 23 |
| Filed On / Filed As Of | | 7/18/97 | | 1 | | 32 | | | 8-K |
| | 7/25/97 | | 11 | | 21 | | | 424B3, SC 14D1/A |
| | 8/1/97 | | 7 | | 23 | | | SC 14D1/A, SC 14D9/A |
| | 8/14/97 | | 1 | | 5 | | | 10-Q, SC 14D1/A, SC 14D9/A |
| | 8/15/97 | | 11 | | 21 | | | SC 14D1/A |
| | 9/16/97 | | 7 | | | | | 8-K |
| | 12/31/97 | | 11 | | | | | 10-K, 10-K405, 11-K |
| | 1/15/99 | | 32 | | | | | 15-12B |
| | 9/15/1 | | 33 |
| | 1/15/2 | | 32 | | | | | 8-K |
| | 9/15/4 | | 33 |
| |
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