-----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, FQDdpvM3TIW1HTMaq8f3YE15mZD0HwOG++4dpjTsn/4TfpuH3KYa+S6+O4vf9cnA X/mXkLpU9Kkhwr02kHhmnA== 0000895813-99-000293.txt : 19990705 0000895813-99-000293.hdr.sgml : 19990705 ACCESSION NUMBER: 0000895813-99-000293 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990702 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: SC 14D1/A SEC ACT: SEC FILE NUMBER: 005-10049 FILM NUMBER: 99659159 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: SC 14D1/A 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 SC 14D1/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------- SCHEDULE 14D-1/A (Amendment No. 2) TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------- COLUMBIA ENERGY GROUP (Name of Subject Company) CEG ACQUISITION CORP. NISOURCE INC. (Bidders) COMMON STOCK, $.01 PER SHARE (Title of Class of Securities) 197648108 (CUSIP Number of Class of Securities) Stephen P. Adik Senior Executive Vice President, Chief Financial Officer And Treasurer NiSource Inc. 801 East 86th Avenue Merrillville, Indiana 46410-6272 (219) 853-5200 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) ----------------------------- COPIES TO: Peter V. Fazio, Jr., Esq. Alan G. Schwartz, Esq. Schiff Hardin & Waite Simpson Thacher & Bartlett 6600 Sears Tower 425 Lexington Avenue Chicago, Illinois 60606 New York, New York 10017 Telephone: (312) 258-5500 Telephone: (212) 455-2000 ================================================= This Amendment No. 2 (this "Amendment") amends and supplements the Tender Offer Statement on Schedule 14D-1, as amended, originally filed with the Securities and Exchange Commission on June 25, 1999 (the "Schedule 14D-1") by CEG Acquisition Corp., a Delaware corporation (the "Offeror") and a wholly owned subsidiary of NiSource Inc., an Indiana corporation ("Parent"). The Schedule 14D-1 and this Amendment relate to a tender offer by the Offeror to purchase all of the outstanding shares of common stock, par value $.01 per share (the "Shares"), of Columbia Energy Group, a Delaware corporation (the "Company"), at a purchase price of $68 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated June 25, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as either may be amended or supplemented from time to time, collectively constitute the "Offer"), copies of which are filed with the Schedule 14D-1 as Exhibits (a)(1) and (a)(2), respectively. 2 Item 10. Additional Information. On July 2, 1999, Parent issued i) the "NiSource/Columbia StraightTalk" communication to stockholders of the Company, and ii) the form of letter from Gary L. Neale, Chairman, President and Chief Executive Oficer of Parent, to directors of the Company, which are included herein as Exhibits (a)(11) and (a)(12), respectively, and incorporated herein by reference. Item 11. Material to be Filed as Exhibits. (a)(1) Offer to Purchase, dated June 25, 1999.* (a)(2) Letter of Transmittal.* (a)(3) Letter dated June 25, 1999, from Dealer Manager to brokers, dealers, commercial banks, trust companies and other nominees.* (a)(4) Letter dated June 25, 1999, to be sent by brokers, dealers, commercial banks, trust companies and other nominees to their clients.* (a)(5) Notice of Guaranteed Delivery.* (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.* (a)(7) Form of Summary Advertisement, dated June 25, 1999.* (a)(8) Press Release issued by Parent on June 24, 1999.* (a)(9) Form of letter dated June 28, 1999 from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to investors of the Company.* (a)(10) Press Release issued by Parent on June 28, 1999.* (a)(11) "NiSource/Columbia StraightTalk" communication to stockholders of the Company issued by Parent on July 2, 1999. (a)(12) Form of letter dated July 2, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to directors fo the Company. (b)(1) Commitment Letter dated June 23, 1999 to Parent from Credit Suisse First Boston and Barclays Bank PLC.* (c) Not Applicable. (d) Not Applicable. (e) Not Applicable. (f) Not Applicable. 3 (g)(1) Complaint in NiSource Inc. and CEG Acquisition Corp. vs. Columbia Energy Group et al., Delaware Chancery Court, New Castle County.* (g)(2) Complaint in NiSource Inc. and CEG Acquisition Corp. vs. Columbia Energy Group et al., United States District Court, District of Delaware.* _______________ *Previously filed. 4 SIGNATURE After due inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. CEG ACQUISITION CORP. By: /s/ Gary L. Neale ---------------------------- Name: Gary L. Neale Title: President NISOURCE INC. By: /s/ Gary L. Neale ---------------------------- Name: Gary L. Neale Title: Chief Executive Officer Date: July 2, 1999 EXHIBIT INDEX Exhibit Number Description ------ ----------- 11(a)(1) Offer to Purchase, dated June 25, 1999.* 11(a)(2) Letter of Transmittal.* 11(a)(3) Letter dated June 25, 1999, from Credit Suisse First Boston Corporation to brokers, dealers, commercial banks, trust companies and other nominees.* 11(a)(4) Letter dated June 25, 1999, to be sent by brokers, dealers, commercial banks, trust companies and other nominees to their clients.* 11(a)(5) Notice of Guaranteed Delivery.* 11(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9*. 11(a)(7) Form of Summary Advertisement, dated June 25, 1999.* 11(a)(8) Press Release issued by Parent on June 24, 1999.* 11(a)(9) Form of letter dated June 28, 1999 from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to investors of the Company.* 11(a)(10) Press Release issued by Parent on June 28, 1999.* 11(a)(11) "NiSource/Columbia StraightTalk" communication to stockholders of the Company issued by Parent on July 2, 1999. 11(a)(12) Form of letter dated July 2, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to directors fo the Company. 11(b)(1) Commitment Letter dated June 23, 1999 to Parent from Credit Suisse First Boston and Barclays Bank PLC.* 11(g)(1) Complaint in NiSource Inc. and CEG Acquisition Corp. vs. Columbia Energy Group et al., Delaware Chancery Court, New Castle County.* 11(g)(2) Complaint in NiSource Inc. and CEG Acquisition Corp. vs. Columbia Energy Group et al., United States District Court, District of Delaware.* _________________ *Previously filed. EX-11 2 EXHIBIT 11(a)(11) ----------------- NISOURCE/COLUMBIA STRAIGHTTALK July 2, 1999 [Photo of Gary L. Neale] DEAR COLUMBIA SHAREHOLDER: We're delighted by the ongoing support we've received from Columbia shareholders since making our offer public. We believe it's useful to provide you with accurate and timely information to help you get the value you deserve. "StraightTalk" is our newsletter to you, the Columbia shareholder, about our offer. In this issue, we share information about the pricing and leverage involved in our proposal. You'll see comparables that indicate that our $68 per share cash offer is a good starting point from which to begin our negotiations. There is more money the question is whether we spend it pursuing this transaction or give it to shareholders. You'll also see statements from the rating agencies that document the investment grade rating of the combined company following completion of the transaction. The best way for you to encourage Columbia to sit down and negotiate is to tender your shares immediately. Tendering now is a no- cost, no-risk, fully reversible way to encourage Columbia board members to fulfill their fiduciary duties. I encourage you to communicate both with me and directly with Columbia directors and management your thoughts on our proposal. I can be reached at (219) 647-6005. Please help us to help you create shareholder value by tendering your shares now. Regards, Gary Neale Chairman, President and Chief Executive Officer NiSource Inc. 7 AGENCIES TO NISOURCE: CREDIT RATING REMAINS STRONG Three credit-rating agencies have affirmed NiSource's strong investment-grade rating following a combination with Columbia Energy Group. The numbers also show that the pro forma capital structure of the combined company will be well in line with the industry average. Certainly, Standard & Poor's has no trouble with NiSource's transaction. Writing on June 7, S&P noted that it "expects that the corporate credit ratings of NIPSCO (Northern Indiana Public Service Company) and affiliates will fall no more than one notch." S&P also said it "expects to raise the ratings of Columbia Energy at least one notch" in light of NIPSCO's strong credit rating. Moody's was also positive, confirming the debt ratings of NIPSCO and the commercial paper rating of NiSource Capital Markets. While putting the parent company's and long-term ratings of NiSource Capital Markets under review for possible downgrade, Moody's said that pro forma coverage ratios are typically lower for gas distribution companies than for predominantly electric companies. Moody's then noted that NiSource's pro forma coverage ratio would be "closer to the average" of other gas distribution companies rated Baal. And, in its release of June 7, Duff & Phelps Credit Rating Co. reaffirmed NiSource Capital Markets' and NIPSCO's credit ratings. In its press release commenting on the strategic rationale of NiSource's offer, S&P said that it "views the acquisition of Columbia Energy as a very significant step for NiSource, but consistent with the company's previously stated low-risk principal business strategy of commodity (gas, electric and water) distribution. "This distribution strategy has been reflected in the company's acquisition during the past two years of two small regulated utilities, Bay State Gas Co. and Indianapolis Water Co. This contrasts with the strategy of Columbia Energy, which is focusing increasingly on unregulated activities such as energy marketing and investments in merchant electric generating plants to spur growth," S&P said. NISOURCE OFFER STACKS UP TO 20 SIMILAR DEALS NiSource's $68 all-cash offer for Columbia Energy Group is 10.7 times and 15.8 times last twelve months EBITDA and EBIT, comparable to the mean of 9.5 times and 15 times paid in 20 comparable transactions completed since April 1996, including Dominion Resources' acquisition of Consolidated Natural Gas. Furthermore, NiSource's 35.3 percent premium to the average closing price for the four weeks preceding the announcement compares to a 39.5 percent average premium for the 20 comparable deals. 8 NiSource is proposing to pay 23.4 times last 12 months earnings and 2.7 times year-end book, compared to the mean of 24.2 times and 2.4 times for the comparable deals. "We believe our offer is fair compared to similar transactions, and it's worth noting that, looking at the multiples, Columbia's offer for Consolidated Natural Gas three months ago was similar," said Gary Neale, NiSource chairman, president and chief executive officer. "Of course, we're willing to pay more, but we don't want to bid against ourselves. We need to meet Columbia's team across the table and discuss how we can better our offer," Neale said. Details on the NiSource and comparable transactions are presented below
NiSource/Columbia Merger Transmission & Distribution Transactions - ---------------------------------------- (Dollars in millions, except price per share) Premiums Paid to Purchase Price Multiples of: Pre-Announcement Price Last Twelve Months Date Purchase --------------------- ------------------------------ Announced Acquiror Target Price 4wks 1wk 1day Earnings Book EBITDA EBIT _________________________________________________________________________________________________________________________________ Proposed NiSource Inc. Columbia Energy Group $7,940 35.3% 27.1% 22.0% 23.4x 2.7x 10.7x 15.8x _________________________________________________________________________________________________________________________________ 6/30/99 Energy East CTG Resources $544 52.2% 24.5% 15.1% 21.8x 2.6x 8.4x 12.4x 6/28/99 Wisconsin Energy WICOR $1,444 23.5% 29.2% 18.6% 24.6x 2.6x 9.9x 15.7x 6/15/99 Northeast Utilities Yankee Energy Systems $671 44.5% 40.6% 38.5% 28.5x 2.6x 10.5x 15.6x 5/10/99 Dominion Resources(1) Consolidated Natural Gas(1) $8,406 27.3% 29.2% 18.4% 22.6x 2.7x 10.3x 16.9x 4/26/99 ONEOK Southwest Gas $1,832 32.2% 21.5% 23.1% 19.1x 1.9x 7.5x 11.9x 4/23/99 Connecticut Energy Energy East $608 65.1% 50.0% 34.1% 23.0x 2.4x 11.1x 16.8x 3/15/99 El Paso Natural Gas Sonat Inc. $5,874 39.5% 41.9% 18.9% 32.8x 3.0x 9.2x 20.5x 2/22/99 Sempra Energy(2) KN Energy(2) $5,674 21.6% 28.6% 18.3% 31.3x 1.4x 11.6x 15.0x 12/14/98 National Grid Pic New England Electric System $4,600 26.8% 23.9% 25.0% 26.7x 2.0x 9.7x 13.1x 12/7/98 BEC Energy Commonwealth Energy System $1,567 16.1% 14.5% 16.6% 18.2x 2.1x 8.2x 12.9x 11/11/98 Carolina Power & Light North Carolina Natural Gas Corp. $426 47.8% 41.1% 48.1% 20.9x 2.8x 10.1x 13.7x 10/19/98 Eastern Enterprises Colonial Gas $426 26.1% 29.9% 26.8% 21.0x 2.5x 10.3x 14.7x 12/22/97 Eastern Enterprises Essex County Gas $117 61.2% 55.5% 26.6% 21.2x 2.4x 9.5x 13.6x 12/18/97 NiSource Inc. Bay State Gas $838 39.1% 32.0% 26.5% 22.5x 2.3x 10.3x 15.8x 12/12/96 ONEOK Western Resources Inc. $661 NM NM NM 32.5x 1.2x 10.8x 18.4x 11/22/96 TECO Energy Lykes Energy $430 NA NA NA 18.8x 2.8x 7.7x 11.4x 8/12/96 Houston Industries NorAm Energy $3,842 47.1% 43.8% 37.6% 25.3x 2.6x 8.2x 11.9x 7/22/96 Atmos Energy United Cities Gas $518 69.7% 64.3% 52.2% 24.8x 2.2x 8.6x 13.0x 4/15/96 Texas Utilities ENSERCH $1,797 NM NM NM NM NM 6.8x 18.6x _________________________________________________________________________________________________________________________________ (1) Pending Mean 39.5% 35.6% 28.1% 24.2x 2.4x 9.5x 15.0x (2) Merger terminated on 6/21/99. Median 39.1% 32.0% 26.5% 23.0x 2.5x 9.8x 14.9x High 69.7% 64.3% 52.2% 32.8x 3.0x 11.6x 20.5x Low 16.1% 14.5% 15.1% 18.2x 1.2x 6.8x 11.4x
9 WHAT OTHERS ARE SAYING... "If the [Columbia] board [of directors] has no regard for its shareholders, why are they the board? The most important thing for me is that a Columbia/NiSource deal would be a powerhouse in the industry as a combined entity. This is a breakdown in what they're supposed to be doing as board members...[they] need to focus on their shareholders and their fiduciary responsibility to them, not on the needs of the board members." -- Maura Shaughnessy MFS Investment Management as quoted in GAS DAILY, June 14, 1999 "The bid they put in is a very respectable offer and certainly a great place to start a negotiation... [NiSource] has been very clear in their willingness to increase their bid." -- David Kiefer Prudential Utility Fund as quoted in THE WASHINGTON POST, June 25, 1999 "The idea that this is an LBO is ridiculous." -- Robert Rubin Bear Stearns & Co. as quoted by BLOOMBERG, June 23, 1999 "I think it's a great fit. It would clearly give NiSource the ability to enhance shareholder value over time." -- Michael Worms Gerard Klauer and Mattison Inc. as quoted in PETROLEUM FINANCE WEEK, June 14, 1999 This newsletter is neither an offer to purchase nor a solicitation of an offer to sell shares of common stock of Columbia Energy Group. Such offer is made solely by the Offer to Purchase, dated June 25, 1999, and the related Letter of Transmittal, and is not being made to, nor 10 will tenders be accepted from or on behalf of, holders of shares of common stock of Columbia Energy Group in any jurisdiction in which the making of such offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where securities, blue sky or other laws require such offer to be made by a licensed broker or dealer, such offer shall be deemed to be made on behalf of NiSource Inc. by Credit Suisse First Boston or one or more registered brokers or dealers licensed under the laws of such jurisdiction. The currently scheduled expiration date is August 6, 1999. The Tender Offer may be extended, and any extension will be publicly announced no later than 9:00 a.m., New York City time, on the next business day. This newsletter does not constitute a solicitation of proxies from Columbia Energy Group's stockholders. Any solicitation of proxies will be made only pursuant to separate proxy materials in compliance with the requirements of Section 14 (a) of the Securities Exchange Act of 1934, as amended. FOR MORE INFORMATION CALL DENNIS SENCHAK AT 219-647-6085 OR VISIT NISOURCE AT WWW.NISOURCE.COM FOR INFORMATION ABOUT TENDERING SHARES, CALL INNISFREE M&A AT 877-750- 5833 11 EX-11 3 EXHIBIT 11(a)(12) ----------------- [Form of letter dated July 2, 1999 from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to directors of the Company] [Letterhead of Gary L. Neale, Chairman, President and Chief Executive Officer of Parent] July 2, 1999 Dear : I am taking this opportunity to write to you today because I think it is important for me to communicate directly with you regarding a combination of our two companies. First, let me state that we believe a friendly merger, which benefits both companies' shareholders, is still possible. A great deal of time and analysis has been spent on this proposed merger, and we strongly believe that the two companies, together, can grow faster and more profitably than either can separately. We share many common strategies for growth with Columbia's management team and would welcome them in the new company. In fact, we need them to ensure the common strategic plan is carried out. I have visited personally with shareholders who own more than 50% of Columbia's stock, and they have expressed strong support for the two companies negotiating a merger agreement. In fact, your top 330 shareholders, who represent approximately 80% of your outstanding shares, also own approximately 38% of NiSource. Holders of a majority of your stock view this potential merger as a powerful combination that creates one of the strongest regional energy companies in the nation. I know you have seen a great deal of analysis from your investment bankers on value. Enclosed is a comparative listing of mergers in this industry in the past three years. This information is also included in the attached communication we are sending regularly to Columbia shareholders. The numbers are clear $68 a share compares favorably with the similar transactions over the last three years. We arrived at the $68 price using similar multipliers that Columbia used in your CNG offer. Having said that, we will still offer a higher price to your shareholders if we can sit down and negotiate a definitive merger agreement. 11 A combination of our two companies will benefit all of Columbia's stakeholders. We intend to pay full value to Columbia shareholders. Our credit ratings for the combined company will be strong investment grade. We will strongly support all communities currently served by Columbia. We have committed to no layoffs in Columbia's operating companies, and there is room in this new company for many of the officers who currently run Columbia business units. We look forward to working with you and the entire board to create this exciting, new regional energy company. Sincerely, This letter is neither an offer to purchase nor a solicitation of an offer to sell shares of common stock of Columbia Energy Group. Such offer is made solely by the Offer to Purchase, dated June 25, 1999, and the related Letter of Transmittal, and is not being made to, nor will tenders be accepted from or on behalf of, holders of shares of common stock of Columbia Energy Group in any jurisdiction in which the making of such offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdictions where securities, blue sky or other laws require such offer to be made by a licensed broker or dealer, such offer shall be deemed to be made on behalf of NiSource Inc. by Credit Suisse First Boston or one or more registered brokers or dealers licensed under the laws of such jurisdiction. The currently scheduled expiration date is August 6, 1999. The Tender Offer may be extended, and any extension will be publicly announced no later than 9:00 a.m., New York City time, on the next business day. This letter does not constitute a solicitation of proxies from Columbia Energy Group's stockholders. Any solicitation of proxies will be made only pursuant to separate proxy materials in compliance with the requirements of Section 14 (a) of the Securities Exchange Act of 1934, as amended. 12 -----END PRIVACY-ENHANCED MESSAGE-----