-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U9Fb9GLTuR0a86N9+LsOTQwV2QmLfH3zCX60aFgEHtYkJ2V7hiOW/Fex1ybHgRSX 8K6dAi307fWgoj5A/XgpSA== 0001021408-99-001477.txt : 19990824 0001021408-99-001477.hdr.sgml : 19990824 ACCESSION NUMBER: 0001021408-99-001477 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990822 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990823 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAROLINA POWER & LIGHT CO CENTRAL INDEX KEY: 0000017797 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 560165465 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-03382 FILM NUMBER: 99697926 BUSINESS ADDRESS: STREET 1: 411 FAYETTEVILLE ST CITY: RALEIGH STATE: NC ZIP: 27601 BUSINESS PHONE: 9195466111 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): August 22, 1999 --------------- CAROLINA POWER & LIGHT COMPANY (Exact name of registrant as specified in charter) North Carolina 1-3382 54-0165465 -------------- ----------- ------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 411 Fayetteville Street Raleigh, North Carolina 27601-1748 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (919) 546-6111 -------------- None ----------------------------- (former name or former address if changed since last report) INFORMATION TO BE INCLUDED IN REPORT Item 5: Other Events. - ------ ------------ On August 22, 1999, Carolina Power & Light Company, a North Carolina corporation ("CP&L"), and Florida Progress Corporation, a Florida corporation ("FPC"), entered into an Agreement and Plan of Exchange (the "Agreement"), dated as of August 22, 1999, among CP&L, FPC and CP&L Holdings, Inc., a North Carolina corporation and wholly owned subsidiary of CP&L ("Holdco"). CP&L is in the process of creating a holding company structure with Holdco as the holding company. Under the terms of the Agreement, all the outstanding shares of common stock, no par value, of FPC ("FPC Common Stock") would be acquired by Holdco in a statutory share exchange (the "Exchange"). Each share of FPC Common Stock, at the election of the holder, will be exchanged for (i) $54.00 in cash (the "Cash Consideration") or (ii) the number of shares of common stock, no par value, of Holdco ("Holdco Common Stock") equal to the ratio determined by dividing $54.00 by the average of the closing sale price per share of Holdco Common Stock (the "Final Stock Price") as reported on the New York Stock Exchange composite tape for the twenty (20) consecutive trading days ending with the fifth trading day immediately preceding the closing date for the Exchange (the "Stock Consideration") or (iii) a combination of cash and Holdco Common Stock (the "Exchange Consideration"); provided, however, that shareholder elections shall be subject to allocation and proration to achieve a mix of the aggregate Exchange Consideration that is 65% Cash Consideration and 35% Stock Consideration. The number of shares of Holdco Common Stock that will be issued as Stock Consideration will vary if the Final Stock Price is within a range of $37.13 to $45.39, but not outside that range. Thus, the maximum number of shares of Holdco Common Stock into which one share of FPC Common Stock could be exchanged would be 1.4543 and the minimum would be 1.1897. The transaction has been approved by the Boards of Directors of FPC and CP&L. Consummation of the Exchange is subject to the satisfaction or waiver of certain closing conditions, including, among others, the approval of shareholders of FPC and the approval by the shareholders of Holdco of the issuance of Holdco Common Stock in the Exchange, the approval or regulatory review by the Federal Energy Regulatory Commission, the Securities and Exchange Commission (with respect to the Public Utility Holding Company Act of 1935, as amended), the Nuclear Regulatory Commission, the North Carolina Utilities Commission, the South Carolina Public Service Commission, and certain other federal and state regulatory bodies, the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions. In addition, FPC's obligation to consummate the Exchange is conditioned upon the Final Stock Price being not less than $30.00. Each of CP&L and FPC have agreed to certain undertakings and limitations regarding the conduct of their respective businesses prior to the closing of the transaction. The transaction is expected to be completed within 12 months. 2 Either party may terminate the Agreement under certain circumstances, including if the Exchange has not been consummated on or before December 31, 2000; provided that if certain conditions have not been satisfied on December 31, 2000 but all other conditions have been satisfied or waived then such date shall be June 30, 2001. In the event that FPC or CP&L terminate the Agreement in certain limited circumstances, FPC would be required to pay CP&L a termination fee of $150.0 million, plus CP&L's reasonable out-of-pocket expenses (not to exceed $25.0 million in the aggregate). The joint press release announcing execution of the Agreement and presentation materials used at analysts' meetings in connection with the announcement by CP&L and FPC of the Agreement are filed herewith as Exhibits 99.1 and 99.2, respectively, and are hereby incorporated herein by reference. The materials filed as exhibits hereto contain forward-looking statements within the meaning of the safe harbor provisions of the Securities Exchange Act of 1934 (the "Exchange Act"). The forward-looking statements are subject to various risks and uncertainties. Discussion of factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations may include factors that are beyond CP&L's ability to control or estimate precisely, such as estimates of future market conditions, the behavior of other market participants and the actions of Federal and state regulators. Other factors include, but are not limited to, actions in the financial markets, weather conditions, economic conditions in the service territory of CP&L and FPC, fluctuations in energy-related commodity prices, conversion activity, other marketing efforts and other uncertainties. Other risk factors are detailed from time to time in CP&L's reports under the Exchange Act and the Securities Act of 1933. Item 7: Financial Statements, Pro Forma Financial Information and Exhibits. - ------- ------------------------------------------------------------------ c) Exhibits -------- Number Exhibit ------ ------- 99.1 Joint Press Release of Carolina Power & Light Company and Florida Progress Corporation, dated August 23, 1999 99.2 Analyst Meeting Presentation Materials 3 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CAROLINA POWER & LIGHT COMPANY Date: August 23, 1999 By: /s/ Glenn E. Harder ----------------------------------- Glenn E. Harder Executive Vice President and Chief Financial Officer (Principal Financial Officer) 4 INDEX TO EXHIBITS Exhibit No. Description - ----------- ----------- 99.1 Joint Press Release of Carolina Power & Light Company and Florida Progress Corporation, dated August 23, 1999 99.2 Analyst Meeting Presentation Materials 5 EX-99.1 2 EXHIBIT 99.1 [CP&L logo] [Florida Progress Corporation logo] CAROLINA POWER & LIGHT AND FLORIDA PROGRESS AGREE TO $17 BILLION COMBINATION Creates Ninth-Largest Energy Utility Company Focused on High Growth Southeast Region Raleigh, NC and St. Petersburg, FL (August 23, 1999) - Carolina Power & Light Company ("CP&L") [NYSE: CPL] and Florida Progress Corporation [NYSE: FPC] today announced that their boards of directors have unanimously approved a definitive agreement to combine the two companies. Under the terms of the agreement, Florida Progress shareholders will receive $54.00 per Florida Progress common share in a combination of cash and a new CP&L holding company's common stock. The total value of the transaction is approximately $5.3 billion. Florida Progress shareholders will have the right to elect cash or stock subject to proration if the elections exceed 65 percent in cash or 35 percent in stock. The stock component of the consideration is subject to a collar if the average price of the new CP&L holding company's stock for the 20-day period ending five days prior to closing is greater than $45.39 or less than $37.13. Both the cash and stock components will be taxable to Florida Progress shareholders. The combined company will have a total enterprise value of approximately $17 billion ($8.0 billion in equity; $9.1 billion in net debt and preferred stock). The combination is expected to be accounted for as a purchase and is anticipated to be accretive in the first full year after closing. Thereafter, CP&L expects the combined company to have annual growth in earnings per share of 7 to 8 percent. This combination creates the nation's ninth-largest energy utility based on generating capacity of more than 18,500 megawatts. The combined company will have total revenues of $6.7 billion (based on 1998) and 2.5 million electricity customers in a 50,000-square-mile retail service area. The company will have a powerful presence in the Southeastern electric and natural gas markets, and will be dedicated to expanding the region's electric generation capacity and delivering reliable, competitively priced energy throughout its high-growth service area. Mr. William Cavanaugh, chairman, president and chief executive officer of CP&L, said, "The acquisition of Florida Progress represents a major step toward fulfilling our strategic plan of becoming a leading energy provider in the Southeast. Like the Carolinas, Florida is one of the highest-growth areas in the country. The predominantly residential base of Florida Power (Florida Progress' primary subsidiary) is an excellent complement to our mix of more commercial and industrial customers. The complementary growth in both CP&L and Florida Power territories and the wholesale market in the Southeast will enhance our plans to add more gas-fired generating capacity and will increase our siting options as well as the markets for our product. With our recent acquisition of North Carolina Natural Gas Corp., this combination with Florida Progress will enhance our competitive position in the generation, power marketing and delivery of energy services in the best area of the country to be in the energy business." -more- -2- "Florida Progress employees, like our own, bring considerable expertise and experience to the larger company," Mr. Cavanaugh said. "The expanded diversity of employee talents and skills will position us for leadership in the evolving energy services industry. We will build on that talent and on both companies' tradition of community service and delivering superior performance for customers and shareholders." Mr. Richard Korpan, chairman, president and chief executive officer of Florida Progress, said, "This transaction provides shareholders with a premium that recognizes the value inherent in our Florida franchise and our diversified operations. The combination creates a larger, stronger company well-positioned to leverage our joint capabilities for the benefit of our customers, while delivering real - and increasing - value to our shareholders. Our two companies are a great strategic fit, sharing complementary visions of how to provide our markets with reliable energy and excellent service. Indeed, the combined company will grow its generation, allowing it to meet future energy needs throughout the Southeast. "Looking to that future, Florida Progress employees will help create an organization poised for continued growth. As a leading Southeast regional service provider, the company will continue to play an important role throughout Florida. Furthermore, CP&L's commitment to a continued presence in our service area ensures that we enter our second 100 years with even greater ability to serve the energy needs of our customers. As part of that commitment, CP&L will continue the active community support that has been a hallmark of Florida Progress' corporate citizenship for a century," Mr. Korpan added. This announcement is the latest and most significant development in CP&L's regional energy strategy, which continues to build momentum in 1999. This summer, CP&L added 325 MW of electric generation part of a planned 7,000 MW of generation additions over the next decade to meet growing retail needs and increase sales in the competitive wholesale market. CP&L also acquired North Carolina Natural Gas Corp. in July and is developing natural gas pipeline expansion plans to fuel CP&L's planned power plants. The combined company's non-utility businesses represent a strong platform to supplement utility earnings growth. CP&L's non-utility subsidiaries primarily include Interpath Communications, Inc., a network-based applications service provider that operates a 2,000 fiber optic route mile network and Strategic Resource Solutions Corp. (SRS) a technology-based energy services company. Florida Progress' primary non-utility subsidiary is Electric Fuels Corporation (EFC), which consists of three business segments: coal mining and coal procurement, marine transportation and rail services. In addition, Florida Progress owns a 1,100 fiber optic route mile network through its Progress Telecommunications subsidiary. Non-utility revenues will represent approximately 15 percent of the revenues of the combined company. -more- -3- The companies expect annual synergies in excess of $100 million pre-tax, which will partially offset annual goodwill expense of $83 million and will help enable the transaction to be accretive in the first full year after closing. These synergies result primarily from the elimination of duplicate corporate and administrative programs and operating efficiencies including integration of the Crystal River nuclear site with CP&L's three existing nuclear sites. Revenue enhancements are also possible from generation expansion and wholesale marketing opportunities. After the integration is completed, it is anticipated that the company will have a combined workforce of approximately 16,000 employees, reflecting a reduction of about 7 percent. The company will use a combination of attrition and moderation in hiring to reduce the need for employee separations. All union contracts will be honored. CP&L expects the new holding company to continue CP&L's current dividend policy which has resulted in dividend increases for 16 of the last 17 years. CP&L currently pays an annual dividend of $2.00 per share. It is anticipated that Florida Progress shareholders who elect stock will receive the CP&L dividend in effect at the time of the close of the transaction. William Cavanaugh will be chairman, president and chief executive officer of the combined company. Richard Korpan will retire as chairman, president and chief executive officer of Florida Progress at the close of the transaction and join CP&L's board of directors. The board will have 14 members, 10 of whom will be designated by CP&L and four of whom will be designated by Florida Progress. The combined company will be headquartered in Raleigh with Florida Power headquarters in St. Petersburg. The transaction is conditioned, among other things, upon the approvals of shareholders of both companies, Federal Energy Regulatory Commission, the Securities and Exchange Commission (SEC), Nuclear Regulatory Commission and the completion of state regulatory procedures. While there is no formal state approval for this transaction in Florida, the companies will continue their practice of constructively working with state regulators regarding their ongoing jurisdiction over Florida Power. CP&L is in the process of creating a holding company and anticipates registering as a utility holding company with the SEC under the Public Utility Holding Company Act (PUHCA) of 1935 prior to the transaction closing. It is anticipated that regulatory procedures could be completed within 12 months. Upon closing of the transaction, the new holding company will issue the common stock consideration to the former Florida Progress shareholders. CP&L and Florida Power will continue as principal subsidiaries of the holding company. Merrill Lynch & Co. acted as financial advisor and provided a fairness opinion to CP&L. Salomon Smith Barney acted as financial advisor and provided a fairness opinion to Florida Progress. -more- -4- Florida Progress is a Fortune 500 diversified utility holding company with assets of $6.3 billion. Its principal subsidiary is Florida Power, one of the nation's leading electric utilities committed to serving its 1.3 million customers in Florida with competitively priced energy, excellent reliability, and outstanding customer service. Diversified operations include rail services, marine operations and coal mining. Headquartered in Raleigh, CP&L provides electricity and energy services to 1.2 million customers in the Carolinas and provides natural gas distribution and service, through a wholly owned subsidiary, to about 178,000 customers in eastern and southern North Carolina. This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Securities Exchange Act of 1934. The forward- looking statements are subject to various risks and uncertainties. Discussion of factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations may include factors that are beyond the companies' ability to control or estimate precisely, such as estimates of future market conditions, the behavior of other market participants and the actions of Federal and state regulators. Other factors include, but are not limited to, actions in the financial markets, weather conditions, economic conditions in the two companies' service territories, fluctuations in energy-related commodity prices, conversion activity, other marketing efforts and other uncertainties. Other risk factors are detailed from time to time in the two companies' SEC reports. # # # Contacts for CP&L: Contacts for Florida Progress: Media: Media: Mike Hughes Cheryl Krauss Phone: (919) 546-6189 Phone: (727) 820-5282 Investors: Investors: Bob Drennan Greg Beuris Phone: (919) 546-7474 Phone: (727) 820-5734 EX-99.2 3 EXHIBIT 99.2 ************************************ * A Powerful Southeastern Presence * ************************************ [CP&L Logo] [Florida Progress Corporation Logo] Today's Presenters - -------------------------------------------------------------------------------- William Cavanaugh III - -------------------------------------------------------------------------------- Chairman, President and Chief Executive Officer Carolina Power & Light Company Richard Korpan - -------------------------------------------------------------------------------- Chairman, President and Chief Executive Officer Florida Progress Corporation Glenn E. Harder - -------------------------------------------------------------------------------- Executive Vice President and Chief Financial Officer Carolina Power & Light Company [CP&L Logo] [Florida Progress Corporation Logo] Safe Harbor Language - -------------------------------------------------------------------------------- . This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the Securities Exchange Act of 1934; these forward-looking statements are subject to various risks and uncertainties. . Discussion of factors that could cause actual results to differ materially from management projections, forecasts, estimates and expectations may include factors that are beyond the companies' ability to control or estimate precisely, such as estimates of future market conditions, the behavior of other market participants and the actions of Federal and state regulators. . Other factors include, but are not limited to, actions in the financial markets, weather conditions, economic conditions in the two companies' service territories, fluctuations in energy-related commodity prices, conversion activity, other marketing efforts and other uncertainties. . Other risk factors are detailed from time to time in the two companies' SEC reports. . The press release also contains further discussion of factors affecting the companies. [CP&L Logo] [Florida Progress Corporation Logo] ****************************** * Overview * ****************************** Key Transaction Terms - -------------------------------------------------------------------------------- Offer Price: $54 per Florida Progress share Premium to FPC: 30%, based upon 20-day average closing price ending 8/20/99 Total Transaction Value: $8.0 billion, including the assumption of $2.7 billion of Florida Progress net debt and preferred Consideration: 65% Cash, 35% Common Stock of CP&L Holdings (subject to proration and collar) Governance: 14 Board members --10 from CP&L --4 from Florida Progress [CP&L Logo] [Florida Progress Corporation Logo] Two High-Quality Energy Companies - -------------------------------------------------------------------------------- Dollars in Millions
CP&L Florida Progress ------- ---------------- Market Value $ 6,000 $ 4,400 Enterprise Value $ 9,120 $ 7,130 Total Assets $ 8,863 $ 6,302 1998 Revenues $ 3,130 $ 3,620 1998 EBIT $ 898 $ 600 1998 Net Income $ 399 $ 282 Generation Capacity (MWs) 10,288 8,232 Customers (000's) 1,400 1,300
[CP&L Logo] [Florida Progress Corporation Logo] Combination Creates One of the Largest Energy Companies - --------------------------------------------------------------------------------
CP&L U.S. New U.S. Standalone Ranking Company Ranking ------------ ------- ------------ ------- Equity Market Value $ 6 Billion 18 $ 8 Billion 13 Total Assets $ 9 Billion 24 $ 15 Billion 14 Generation Capacity (MWs) 10,228 MW 17 18,520 MW 9 Customers 1.4 Million 25 2.7 Million 16
[CP&L Logo] [Florida Progress Corporation Logo] Combined - A Super Regional Powerhouse - -------------------------------------------------------------------------------- Highlights - ---------- . $6.7 billion total revenues . $15.2 billion total assets [Map of Southeastern United States with CP&L and Florida Progress Corporation market areas highlighted county-by-county] . 18,520 MWs power generation . 2.7 million customers . 7-8% EPS growth [CP&L Logo] [Florida Progress Corporation Logo] A Strategically Sound Transaction - -------------------------------------------------------------------------------- . Two strong companies . High-growth region . Significant scale . Greater access to competitive markets . Constructive regulatory environments [CP&L Logo] [Florida Progress Corporation Logo] Financial Benefits - -------------------------------------------------------------------------------- . Accretive -- Annual synergies of $100-$175 million . Platform for growth -- Earnings growth of 7-8% -- Improved cash flow . Secure dividend . Favorable risk/return opportunity [CP&L Logo] [Florida Progress Corporation Logo] Strengthing the Foundation for Growth - -------------------------------------------------------------------------------- . Superior financial performance -- Top-line revenue growth -- Focused cost management . Core strengths -- Generation assets and wholesale marketing -- Distribution of electricity and natural gas . Regulatory transition for shareholders . Enhance profitability through non-regulated business -- Domestic investments -- Focused diversification [CP&L Logo] [Florida Progress Corporation Logo] Continued Focus on Maximizing Shareholder Value - -------------------------------------------------------------------------------- [Bar Chart showing Total Return (%) over 3-Year, 5-Year and 10-Year periods for CP&L, Florida Progress and S&P Electrics as indicated in the following table] 3-Year 5-Year 10-Year ------- ------- -------- Carolina P&L 16.5% 15.4% 16.2% Florida Progress 16.0% 13.3% 14.2% S&P Electrics 13.2% 10.6% 13.4% [CP&L Logo] [Florida Progress Corporation Logo] ************************************* * A Powerful Southeastern Presence * ************************************* [CP&L Logo] [Florida Progress Corporation Logo] ************************************* * A Profile of the * * New Company * ************************************* Favorable Customer Mix - -------------------------------------------------------------------------------- Revenues by Customer Class [Pie Charts showing revenues by Customer Class as indicated in the following table] Carolina Power & Light Florida Progress New Company ----------------------- ----------------- ----------- Residential 33% 54% 42% Commercial 21% 23% 22% Industrial 23% 8% 16% Wholesale/Other 23% 15% 20% Source: 1998 10-Ks and Annual Reports [CP&L Logo] [Florida Progress Corporation Logo] Balanced Generation Portfolio - -------------------------------------------------------------------------------- Instralled Capacity [Pie Charts showing Installed Capacity as indicated in the following table] Carolina Power & Light Florida Progress New Company ----------------------- ----------------- ------------ Total 10,228 MWs 8,232 MWs 18,520 MWs Nuclear 31% 9% 21% Coal 52% 28% 41% Gas/Oil 15% 63% 37% Hydro 2% 0% 1% Source: 1998 10-Ks and Annual Reports [CP&L Logo] [Florida Progress Corporation Logo] A Strong Commitment to Nuclear Excellence - -------------------------------------------------------------------------------- 1998 License Facility Megawatts Capacity Factor Expiration -------- --------- --------------- ---------- Robinson #2 683 92% 2010 Harris 860 89% 2026 Brunswick #1 820 89% 2016 Brunswick #2 811 98% 2014 Crystal River 835 90% 2016 Recent Highlights - ----------------- . Carolina Power & Light's nuclear plants set a combined generation record for the fifth consecutive year; during that time, O&M costs have been lowered by one-third . Carolina Power & Light's plants have consistently been rated among the industry leaders in terms of plant safety . Crystal River nuclear unit has produced more than 100% of its rated capacity since its restart in February 1998 [CP&L Logo] [Florida Progress Corporation Logo] Attractive Non-Regulated Businesses - -------------------------------------------------------------------------------- [Logos of Progress Rail Services, Memco Barge Lines, Inc., Strategic Resource Solutions, Interpath Communications Inc., Progress Telecommunications Corporation and Electric Fuels Corporation] [CP&L Logo] [Florida Progress Corporation Logo] ************************************* * Financial Terms * * and Benefits * ************************************* Key Transaction Terms - ------------------------------------------------------------------------------- Offer Price: $54 per Florida Progress share Premium to FPC: 30%, based upon 20-day average closing price ending 8/20/99 Total Transaction Value: $8.0 billion, including the assumption of $2.7 billion of Florida Progress net debt and preferred Consideration: 65% Cash, 35% Common Stock of CP&L Holdings Taxable to Florida Progress Shareholders Collar: Fixed Value at CP&L prices of $37.13 to $45.39 per share Accounting Treatment: Purchase Timing: Expected to close within 12 months Regulatory Approvals: SEC, FERC, NRC NC and SC state approvals required to form holding company [CP&L Logo] [Florida Progress Corporation Logo] Regulatory Approvals/Filings - ---------------------------------------------------------------------------- Two Steps Holding Company Formation Merger Approval * SEC * CP&L and * FERC FPC Shareholders * NRC * SEC * NCUC * FERC * SCPSC * NRC * Dept. of Justice * NCUC/SCPSC/FPSC, as required Early 2000 Within 12 Months [CP&L Logo] [Florida Progress Corporation Logo] Commitment to Credit Quality - ------------------------------------------------------------------------------ . Establish a holding company with a funding subsidiary . Access debt capital markets for acquisition financing -- Expected holding company debt rating of BBB+ . Maintain current Carolina Power & Light and Florida Power utility ratings . Reduce leverage over time to strengthen holding company ratings -- Utilize hybrid preferred securities [Graph showing projected FFO/Total Interest Expense from 2001 to 2004] [Graph showing projected Debt/Capitalization from 2001 to 2004] [CP&L Logo] [Florida Progress Corporation Logo] $100 - $175 Million of Annual Synergies - -------------------------------------------------------------------------------- [Pie Chart showing Annual Synergies and represented in the following table] Description Percent ----------- ------- Shared Services 44% Energy Supply 20% Revenue Synergies 14% Energy Delivery 14% Retail 8% [CP&L Logo] [Florida Progress Corporation Logo] Pro Forma Earnings Impact Scenario - -------------------------------------------------------------------------------- Dollars in Millions, Except per Share Data
2001 2002 ---- ---- CP&L Standalone Estimated Net Income (1) $523 $547 FPC Standalone Net Income (1) 338 355 CP&L Incremental After-Tax Interest Expense (@7.50%) (160) (158) Goodwill (83) (83) Assumed Annual Synergies to Shareholders (Net of Tax) (2) 60 70 -- -- Pro Forma Net Income $678 $731 ---- ---- Average Fully Diluted Pro Forma Shares Outst. (mm) 199 199 Pro Forma Fully Diluted EPS $3.41 $3.67 CP&L Standalone Fully Diluted EPS $3.40 $3.56 Accretion ($) $0.01 $0.11 Accretion (%) -- 3.1%
(1) Based on Merrill Lynch Research and assumes EPS growth rates of 4.8% for CP&L and 5.5% for FPC. (2) Assumes the recognition of a full year of synergies. [CP&L Logo] [Florida Progress Corporation Logo] ****************************** * Conclusions * ****************************** A Compelling Combination - -------------------------------------------------------------------------------- . Achieves goal of becoming a super regional utility . Asset-based regionally focused strategy . Conservative synergies lead to accretion in first full year . Outstanding platform to deliver accelerated earnings growth [CP&L Logo] [Florida Progress Corporation Logo] ************************************* * A Powerful Southeastern Presence * ************************************* [CP&L Logo] [Florida Progress Corporation Logo] -----END PRIVACY-ENHANCED MESSAGE-----