-----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, LM8atDnfQPu8opGrC9xvVn+0bz22iJrovfW4GECpmkGXAv7yzFJlTODVA/rEy+is VhitSMOb16Qn2xw37n1Cnw== 0000895813-00-000062.txt : 20000307 0000895813-00-000062.hdr.sgml : 20000307 ACCESSION NUMBER: 0000895813-00-000062 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000303 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA ENERGY GROUP CENTRAL INDEX KEY: 0000022099 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 131594808 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 SEC ACT: SEC FILE NUMBER: 001-01098 FILM NUMBER: 560225 BUSINESS ADDRESS: STREET 1: 13880 DULLES CORNER LANE STREET 2: SUITE 300 CITY: HENDERON STATE: VA ZIP: 20171-4600 BUSINESS PHONE: 7035616000 MAIL ADDRESS: STREET 1: 13880 DULLES CORNER LANE STREET 2: SUITE 300 CITY: HERNDON STATE: VA ZIP: 20171-4600 FORMER COMPANY: FORMER CONFORMED NAME: COLUMBIA GAS SYSTEM INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NISOURCE INC CENTRAL INDEX KEY: 0000823392 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 351719974 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: 801 E 86TH AVENUE CITY: MERRILLVILLE STATE: IN ZIP: 46410 BUSINESS PHONE: 2198535200 MAIL ADDRESS: STREET 1: 5265 HOHMAN AVENUE CITY: HAMMOND STATE: IN ZIP: 46320-1775 FORMER COMPANY: FORMER CONFORMED NAME: NIPSCO INDUSTRIES INC DATE OF NAME CHANGE: 19920703 425 1 Filed by: NiSource Inc. Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Columbia Energy Group Commission File No: 001-01098 On March 2, 2000, officers of NiSource made the following presentation in New York City to a group of analysts from various investment banks and institutions. TEXT OF ANALYST PRESENTATION [NISOURCE LOGO] [COLUMBIA ENERGY LOGO] CREATING VALUE IN THE ENERGY CORRIDOR March 2, 2000 These materials contain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, including statements about future business operations and financial performance. These statements involve risks and uncertainties inherent in business forecasts, and actual results could differ materially from those indicated in these statements. A number of these risks and uncertainties are discussed in NiSource s Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on November 12, 1999. 1 CAPITALIZING ON THE ENERGY CORRIDOR --------------------------------------------------------------------- [Graph - Corridor Highlights] * 40% of US energy consumption * 30% of US population * 127,000 MW of new gas fired generation * 24 Bcf/d of new interstate gas pipeline capacity [Graph - Regional map of the United States depicting states which NiSource serves] 2 THE PREMIER COMPETITOR --------------------------------------------------------------------- [Graph - Map depicting certain operations of various NiSource entities in the Energy Corridor] 3 BUILDING FOR TOMORROW --------------------------------------------------------------------- * Broad platform to maximize opportunities - 4.1 million electric, gas, water and propane customers - Gas distribution in 9 states - Pipeline operations in 16 states * Skills to procure, deliver and risk manage the commodity around the assets [CHART]

4 CREATING VALUE --------------------------------------------------------------------- . . .With Lower Risk and Higher Returns * Regulated Businesses - Positive regulatory relationships - Aggressive cost efficiencies - Pursue incentive opportunities * Related Diversification - Leverage existing asset base into knowledge based businesses with high returns - Integrating existing businesses into growth markets * Creating New Business Opportunities in Growth Markets - BTU arbitrage - Total energy management * Maintain strong financial profile: Solid investment grade ratings 5 THE RIGHT ASSETS MAKE ALL THE DIFFERENCE --------------------------------------------------------------------- 15% CAGR [Graph - Chart depicting projections of Net Income from 2001-2005 for Distributed Generation, Electric Optionality, Gas Optionality and Base Business] 6 A GREAT TRANSACTION --------------------------------------------------------------------- * "Columbia acquisition price is approximately 20% below the average for gas utility acquisitions announced in the last 12 months" -- A.G. Edwards & Sons - Weighted average economic value of $71.03 per share(1) * Asset sales - Minimize equity needs or reduce leverage - Identified over $1 BN of asset sales: Expect at least $923 MM in after tax proceeds - Likely that over $500 MM in asset sales will be completed by year-end 2000 - Sale program to be completed by June 30, 2001 * Dividend Policy - Committed to maintaining current profile - Dividend growth will continue to track net income growth -------------------- (1) Based on NiSource closing price on 2/25/2000 and assuming 70% / 30% cash/stock election. 7 THE TRANSACTION STRUCTURE --------------------------------------------------------------------- [Graph - Chart depicting transaction structure, target debt ratings, debt and preferred stock] 8 SOURCES AND USES ---------------------------------------------------------------------

9 PRO FORMA FINANCIAL PROFILE: BASE BUSINESS

10 REALISABLE SYNERGIES ---------------------------------------------------------------------

11 6-9% OF COMBINED NON-FUEL O&M ---------------------------------------------------------------------- - [ Graph - Bar Chart depicting pretax cost synergies and revenue enhancements from 2001 to 2004] 2001 2002 2003 2004 ---- ---- ---- ---- Cost savings % of Pro Forma 5.8% 8.1% 8.6% 9.4% Combined Non-Fuel O&M Cost savings % of Columbia 9.6% 13.2% 14.2% 15.6% Non-Fuel O&M 12 MINIMIZING RISK ---------------------------------------------------------------------- - * Stock Election - Focused on retail shareholders (20% of Columbia shareholder base) - Provides tax free exchange - Significant dividend accretion - If less stock elected, increase level of asset sales: domestic businesses that are attractive and readily saleable * Minimal Regulatory Risk - Columbia management incentivized to proactively spearhead the transition process - Dominion/CNG completed in 8-1/2 months - Low rates, strong regulatory settlements, existing customer choice and open access programs minimize state regulatory pressures * Pro Forma Credit Profile similar to Dominion/CNG - Intend to proactively manage interest rate exposure - Lower business risk profile - Approximately 90% of EBIT from regulated businesses 13 SOLID INVESTMENT GRADE -------------------------------------------------------------------- Pro Forma Credit Statistics(1) 2001 2002 ---- NiSource EBITDA $911.0 $966.0 Columbia EBITDA 1,057 1,120 EBITDA/Interest 3.09x 3.39x Pre-Tax Int. Coverage 2.19x 2.42x Debt/Capital 69.4% 66.7% (1) Projections incorporate identified synergies.

14 COMPLETION IN 6-9 MONTHS ----------------------------------------------------------------------

Similar Process and Timing to NiSource / Bay State and Dominion / CNG APPENDIX A TRANSACTION TERMS ---------------------------------------------------------------------- * Columbia shareholders may elect to receive: - $70 in cash and $2.60 face value SAILS[SM] for up to 100% of outstanding Columbia shares - $74 in stock for up to 30% of outstanding Columbia shares * "Fixed value/fixed ratio" collar structure preserves upside price appreciation for NiSource shareholders while protecting against downside price movements - If NiSource stock price > $16.50, exchange ratio is $74 divided by NiSource stock price - If NiSource stock price < $16.50, exchange ratio is fixed at 4.4848 16 TRANSACTION TERMS ---------------------------------------------------------------------- * SAILS[SM] - $90 MM -- $100 MM issuance (fair value) depending on shareholder election - 0% dividend payments with 40% conversion premium - NiSource issues stock 4 years after closing calculated as follows: - If NiSource stock is less than or equal to $16.50, NiSource issues 0.16 shares - If NiSource stock is > $16.50 and < $23.10, NiSource issues shares equal to $2.60 divided by NiSource stock price - If NiSource stock is greater than or equal to $23.10, NiSource issues 0.11 shares This analyst presentation contains certain forward-looking statements within the meaning of the federal securities laws; these forward-looking statements are subject to various risks and uncertainties. The factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed herein 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 the 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The companies do not undertake any obligation to publicly release any revisions to these forward- looking statements to reflect events or circumstances after the date of this press release. NiSource and the new holding company will be filing a registration statement, which will contain a joint proxy statement/prospectus of NiSource and Columbia Energy, and other documents with the Securities and Exchange Commission. Investors and security holders are urged to read the joint proxy statement/prospectus and any other relevant documents filed with the SEC when they become available because they will contain important information. Investors and security holders will be able to receive the joint proxy statement/prospectus and other 17 documents free of charge at the SEC's web site, www.sec.gov, from NiSource Investor Relations at 801 East 86th Avenue, Merrillville, Indiana 46410 or from Columbia Investor Relations at 13880 Dulles Comer Lane, Herndon, Virginia 20171. -----END PRIVACY-ENHANCED MESSAGE-----