-----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, O1XFWQwmvdbUksm7BlMXJXfiwupZYu6ZfSVetuj+9hLujEV6wSdz8/r/v5Jthd2H y+MIch3nVdffjcC+zXbmrw== 0000895813-99-000378.txt : 19991020 0000895813-99-000378.hdr.sgml : 19991020 ACCESSION NUMBER: 0000895813-99-000378 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19991018 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: 99730247 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. 26) 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. 26 (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 an amended purchase price of $74 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"), as supplemented by the Supplement thereto, dated October 18, 1999, 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), (a)(38) and (a)(39), respectively. 2 Item 10. Additional Information. On October 18, 1999, Parent held a meeting with analysts to present additional information regarding the Offer and a summary of the presentation was available to the analysts, which is included herein as Exhibit (a)(46) 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 of the Company. (a)(13) Press Release issued by Parent on July 6, 1999. 3 (a)(14) Form of letter dated July 12, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to shareholders of Parent. (a)(15) "NiSource/Columbia StraightTalk" communication to stockholders of the Company issued by Parent on July 14, 1999. (a)(16) Press Release issued by Parent on July 14, 1999. (a)(17) Press Release issued by Parent on July 19, 1999. (a)(18) Press Release issued by Parent on July 20, 1999. (a)(19) Form of letter dated July 21, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to directors of the Company. (a)(20) Form of letter dated July 26, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to stockholders of the Company. (a)(21) "NiSource/Columbia StraightTalk" communication to stockholders of the Company issued by Parent on July 26, 1999. (a)(22) Information published by Parent on July 30, 1999, available via the Internet at http://www.yes2nisource.com. (a)(23) Press Release issued by Parent on July 30, 1999. (a)(24) Press Release issued by Parent on August 9, 1999. (a)(25) "NiSource/Columbia StraightTalk" communication to stockholders of the Company issued by Parent on August 13, 1999. (a)(26) Form of letter dated August 13, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to directors of the Company. (a)(27) Form of letter dated August 13, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to Oliver G. Richard III, Chairman, President and Chief Executive Officer of the Company. 4 (a)(28) Form of letter dated August 26, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to stockholders of the Company. (a)(29) Opinion/editorial articles by Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, submitted to various newspapers on September 9, 1999. (a)(30) Opinion/editorial articles by Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, submitted to various newspapers on September 10, 1999. (a)(31) Opinion/editorial article by Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, submitted to The Appalachian News-Express on September 13, 1999. (a)(32) Opinion/editorial article by Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, submitted to The Winchester Sun on September 14, 1999. (a)(33) Form of Letter dated September 23, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to officers, directors and managers of Parent. (a)(34) "Energy News - Oct. 1999" communication to customers of Northern Indiana Public Service Company first issued by Parent on October 1, 1999. (a)(35) Materials made available by Parent at a meeting among officials of Parent, officials of the Kentucky Public Service Commission and members of the public on October 5, 1999. (a)(36) Letter dated October 5, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to shareholders of the Company. (a)(37) Letter dated October 18, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to shareholders of the Company. (a)(38) Supplement to the Offer to Purchase, dated October 18, 1999. 5 (a)(39) Letter of Transmittal. (a)(40) Letter dated October 18, 1999, to be sent by brokers, dealers, commercial banks, trust companies and other nominees to their clients. (a)(42) Notice of Guaranteed Delivery. (a)(43) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(44) Press Release issued by Parent on October 17, 1999. (a)(45) Letter dated October 18, 1999, from Credit Suisse First Boston and Barclays Bank PLC, to the creditors of the Company. (a)(46) Materials made available by Parent to analysts at a meeting among officers and representatives of Parent and analysts on October 18, 1999.* (b)(1) Commitment Letter dated June 23, 1999 to Parent from Credit Suisse First Boston and Barclays Bank PLC. (b)(2) Amended and Restated Commitment Letter dated October 15, 1999 to Parent from Credit Suisse First Boston and Barclays Bank PLC. (c) Not Applicable. (d) Not Applicable. (e) Not Applicable. (f) Not Applicable. (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. (g)(3) First Amended Complaint in NiSource Inc. and CEG Acquisition Corp. vs. Columbia Energy Group et 6 al., United States District Court, District of Delaware. (g)(4) Complaint in NiSource Inc., NiSource Capital Markets Inc. and CEG Acquisition Corp. vs. Columbia Energy Group et al., Delaware Chancery Court, New Castle County. _______________ *Filed herewith. 7 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: October 18, 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 of the Company. 11(a)(13) Press Release issued by Parent on July 6, 1999. 11(a)(14) Form of letter dated July 12, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to shareholders of Parent. 11(a)(15) "NiSource/Columbia StraightTalk" communication to stockholders of the Company issued by Parent on July 14, 1999. 11(a)(16) Press Release issued by Parent on July 14, 1999. 11(a)(17) Press Release issued by Parent on July 19, 1999. 11(a)(18) Press Release issued by Parent on July 20, 1999. 11(a)(19) Form of letter dated July 21, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to directors of the Company. 11(a)(20) Form of letter dated July 26, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to stockholders of the Company. 11(a)(21) "NiSource/Columbia StraightTalk" communication to stockholders of the Company issued by Parent on July 26, 1999. 11(a)(22) Information published by Parent on July 30, 1999, available via the Internet at http://www.yes2nisource.com. 11(a)(23) Press Release issued by Parent on July 30, 1999. 11(a)(24) Press Release issued by Parent on August 9, 1999. 11(a)(25) "NiSource/Columbia StraightTalk" communication to stockholders of the Company issued by Parent on August 13, 1999. 11(a)(26) Form of letter dated August 13, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to directors of the Company. 11(a)(27) Form of letter dated August 13, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to Oliver G. Richard III, Chairman, President and Chief Executive Officer of the Company. 11(a)(28) Form of letter dated August 26, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to stockholders of the Company. 11(a)(29) Opinion/editorial articles by Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, submitted to various newspapers on September 9, 1999. 11(a)(30) Opinion/editorial articles by Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, submitted to various newspapers on September 10, 1999. 11(a)(31) Opinion/editorial article by Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, submitted to The Appalachian News-Express on September 13, 1999. 11(a)(32) Opinion/editorial article by Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, submitted to The Winchester Sun on September 14, 1999. 11(a)(33) Form of Letter dated September 23, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to officers, directors and managers of Parent. 11(a)(34) "Energy News - Oct. 1999" communication to customers of Northern Indiana Public Service Company first issued by Parent on October 1, 1999. 11(a)(35) Materials made available by Parent at a meeting among officials of Parent, officials of the Kentucky Public Service Commission and members of the public on October 5, 1999. 11(a)(36) Letter dated October 5, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to shareholders of the Company. 11(a)(37) Letter dated October 18, 1999, from Gary L. Neale, Chairman, President and Chief Executive Officer of Parent, to shareholders of the Company. 11(a)(38) Supplement to the Offer to Purchase, dated October 18, 1999. 11(a)(39) Letter of Transmittal. 11(a)(40) Letter dated October 18, 1999, to be sent by brokers, dealers, commercial banks, trust companies and other nominees to their clients. 11(a)(42) Notice of Guaranteed Delivery. 11(a)(43) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 11(a)(44) Press Release issued by Parent on October 17, 1999. 11(a)(45) Letter dated October 18, 1999, from Credit Suisse First Boston and Barclays Bank PLC, to the directors of the Company. 11(a)(46) Materials made available by Parent to analysts at a meeting among officers and representatives of Parent and analysts on October 18, 1999.* 11(b)(1) Commitment Letter dated June 23, 1999 to Parent from Credit Suisse First Boston and Barclays Bank PLC. 11(b)(2) Amended and Restated Commitment Letter dated October 15, 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. 11(g)(3) First Amended Complaint in NiSource Inc. and CEG Acquisition Corp. vs. Columbia Energy Group et al., United States District Court, District of Delaware. 11(g)(4) Complaint in NiSource Inc., NiSource Capital Markets Inc. and CEG Acquisition Corp. vs. Columbia Energy Group et al., Delaware Chancery Court, New Castle County. _________________ *Filed herewith. EX-11 2 EXHIBIT 11(A)(46) ----------------- [MATERIALS MADE AVAILABLE BY PARENT TO ANALYSTS AT A MEETING AMONG OFFICERS AND REPRESENTATIVES OF PARENT AND ANALYSTS ON OCTOBER 18, 1999.] [NISOURCE Logo] [Columbia Energy Logo] Building the Premier Competitor within the Energy Corridor Right Company . . . . Right Price. . . . Right Time OCTOBER 1999 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 August 13, 1999. NISOURCE . . . A BUYING OPPORTUNITY --------------------------------------------------------------------- A growth story that is significantly undervalued [Chart - Relative Performance - bar graph comparing performance of NiSource against Philadelphia Electric Utility Index (1994-1998)] [Chart - Total Return graph comparing performance of NiSource common stock against S&P 500 (10/89-10/99)] NISOURCE/COLUMBIA . . . TAKING IT TO THE NEXT LEVEL --------------------------------------------------------------------- A super-regional powerhouse positioned for profitable growth Strategic Fit The critical mass, strategic location and the necessary skills to profitably compete in a deregulated energy market Unique Opportunity Largest natural gas company within the strategic Energy Corridor - no asset overlap in the combined system Value Creation Breakeven in 2001 and accretive thereafter - positioned for 12 - 15% annual EPS growth Shareholder Focus A strategic merger with endless opportunities THE PREMIER COMPETITOR IN THE ENERGY CORRIDOR ------------------------------------------------------------------- Columbia is the bridge between NiSource's distribution and storage assets [Graphic - Map of Energy Corridor] ARBITRAGE FUEL, WEATHER, GEOGRAPHY AND TIME --------------------------------------------------------------------- Corridor Highlights - 40% of US energy consumption - 30% of US population - 85,000 MW of new gas fired generation - 24 Bcf/d of new interstate gas pipeline capacity [Graphic - Map of Energy Corridor] FULL SERVICE SUPER-REGIONAL ENERGY DISTRIBUTOR --------------------------------------------------------------------- Delivering value added products and services across the energy chain - Platform to maximize opportunities from 4.1 million customers in 9 states - Skills to procure, deliver and risk manage the commodity Upstream------------------------------------------------Downstream Transportation - Storage - Distribution - Customer Service LARGEST NATURAL GAS COMPANY EAST OF THE ROCKIES --------------------------------------------------------------------- [NiSource Logo / Columbia Energy Logo] OPERATIONAL FINANCIAL (1) Eastern U.S. Ranking ------------ 3.1 Million Gas Customers 1st $13.6 Billion Total Assets 911 Bcf of Gas Sales 1st $5.8 Billion Revenue (2) 770 Bcf Gas Storage 1st $1.6 Billion EBITDA (2) 16,500 Miles Gas Pipeline 4th Solid Investment Grade Credit Rating (1) LTM Pro Forma. (2) Pro Forma for sale of marketing and trading A REVISED ALL CASH OFFER --------------------------------------------------------------------- - $74 per share in cash - No financing contingency: fully committed financing - 5 Columbia board members invited to join expanded board of directors - Rick Richard to become Vice Chairman - Retain heads and headquarters of all critical operating units FULL AND FAIR VALUE --------------------------------------------------------------------- (Dollars in Millions, Except Price Per Share)
ADJUSTED PURCHASE PRICE: PURCHASE PRICE --------------------------------- ADJUSTED PREMIUMS PAID TO AS A MULTIPLE OF LTM DATE PURCHASE PRE-ANNOUNCEMENT PRICES ---------------------------------- ANNOUNCED ACQUIROR TARGET PRICE 4 WEEKS 1 WEEK 1 DAY EARNINGS BOOK EBITDA EBIT - --------- -------- ------ -------- ------- ------ ----- -------- ---- ------ ---- PENDING NiSource(1) Columbia Energy $8,078 27.0% 22.7% 22.3% 24.1x 3.0x 10.5x 15.5x Group 10/5/1999 DTE Energy MCN Energy 4,791 57.2% 67.0% 61.1% 21.6x 2.8x 13.5x 18.5x 6/30/1999 Energy East CTG Resources 554 52.2% 24.5% 15.1% 21.8x 2.6x 8.4x 12.4x 6/28/1999 Wisconsin Energy WICOR 1,444 23.5% 29.2% 18.6% 24.6x 2.6x 9.9x 15.7x 6/15/1999 Northeast Utilities Yankee Energy Systems 671 44.5% 40.6% 38.5% 28.5x 2.6x 10.5x 15.6x 5/10/1999 Dominion Resources Consolidated Natural Gas 8,406 27.3% 29.2% 18.4% 22.6x 2.7x 10.3x 16.9x 4/19/1999 Columbia Energy Consolidated Group(2) Natural Gas 8,737 31.5% 34.9% 33.5% 23.8x 2.8x 10.7x 17.6x 4/23/1999 Energy East Connecticut Energy 608 65.1% 50.0% 34.1% 23.0x 2.4x 11.1x 16.8 3/15/1999 El Paso Natural Gas Sonat Inc. 5,874 39.5% 41.9% 18.9% 32.8x 3.0x 9.2x 20.5x 11/11/1998 Carolina Power & North Carolina Light Natural Gas Corp. 426 47.8% 41.1% 48.1% 20.9x 2.8x 10.1x 13.7x 10/19/1998 Eastern Enterprises Colonial Gas 476 26.1% 29.9% 26.8% 21.0x 2.5x 10.3x 14.7x 12/18/1997 NiSource, Inc. Bay State Gas 838 39.1% 32.0% 26.5% 22.5x 2.3x 10.3x 15.8x 11/22/1996 TECO Energy Lykes Energy 430 NA NA NA 18.8x 2.8x 7.7x 11.4x 7/22/1996 Atmos Energy United Cities Gas 518 69.7% 64.3% 52.2% 24.8x 2.2x 8.6x 13.0x Mean 43.6% 40.4% 32.7% 23.6x 2.6x 10.0x 15.6x ____________________ (1) Acquisition multiples & net debt are based on 6/30/99 results. (2) Failed hostile take-over attempt.
55% DEBT / 45% EQUITY FINANCING PLAN --------------------------------------------------------------------- Maintain strong investment grade credit profile
Structure Sources & Uses [NiSource Logo] $3,434 - Debt $MM % $2,809 Equity ----- --- $74/ 100% INITIAL SOURCES Share Common Stock [Columbia Energy Logo] $2,125 Debt 364 Day Bank Acquisition Facility $6,243 Assumed FINAL SOURCES (1) Debt Financing $3,434 55% Common Equity/Asset Sales 2,809 45% ------ ---- TOTAL FINAL SOURCES 6,243 100% ----- ---- USES Purchase Price ($74,00/Share) $6,143 Transaction Costs 100 ----- TOTAL USES $6,243 ------ (1) Within 12-24 months after closing.
MODEST SYNERGIES ASSUMED --------------------------------------------------------------------- Only 6-8% of Combined Non-Fuel O&M [Chart - comparing Non-Fuel O&M in 2001 to Non-Fuel o%M in 2002] BREAKEVEN IN 2001 AND ACCRETIVE BY 2002 ---------------------------------------------------------------------
(Dollars in Millions, Except per Share Data) -------------------------------------------------------------------- (Dollars in Millions, Except per Share Data 2001 2002 -------- ------- NiSource Stand-alone Net Income (1) 261.4 279.7 Columbia Stand-alone Net Income (1) 387.7 431.5 NiSource Incremental After-Tax Interest Expense (2) (@7.25%) 191.9 159.3 Acquisition Goodwill (3) 95.2 95.2 Assumed Annual Synergies to Shareholders (After-Tax (2) 62.7 85.8 ------- -------- Pro Forma Net Income 424.7 542.4 Average Fully Diluted Shares Outstanding (MM) (4) ------- -------- Pro Forma Fully Diluted EPS 206.2 232.7 NiSource Stand Alone Fully Diluted EPS $2.06 $2.33 Accretion ($) $2.06 $2.21 Accretion (%) $0.00 $0.12 0.0% 5.6% (1) Based upon IBES mean consensus estimates and IBES 5 yr growth rates of 11.3% for Columbia and 7.0% for NiSource (2) Tax rate of 36% (3) Assume $2.4 billion for Columbia book value at year end 2000. (4) Assume common equality is issued at 3/31/01 at $26.50 per share which is the 1999 YTD stock price average.
A BALANCED REFINANCING APPROACH --------------------------------------------------------------------- Selectively refinance during 2001 and 2002 - Raise approximately $2.8 billion from equity, equity-linked securities and asset-sales - Greater liquidity and above average growth will appeal to investors - Timing dependent on NI stock price and market conditions - Minimize overhang on NiSource stock - The rating agencies are supportive of the timetable and approach SIGNIFICANT INVESTOR DEMAND FOR NEW EQUITY -------------------------------------------------------------------- Target Columbia shareholders: Similar investment profile with broader opportunities - Energy/Utility investments will be reduced by the $17 billion cash portion of M&A transactions announced in 1999 - New equity opportunities are significantly less than M&A announcements - Columbia transaction results in cashing out an additional $6.1 billion - 90% from the institutional sector - Top 25 Columbia shareholders own 56% of Columbia (tender value equal to $3.4 billion) but only 18% of NiSource (market value equal to $500 MM) - Cash proceeds to top 25 Columbia shareholders far exceeds NISource's required equity needs of $2.8 billion THE RIGHT PATH TO SHAREHOLDER VALUE --------------------------------------------------------------------- Right Company - The combined company will be the largest natural gas company east of the Rockies - Full BTU provider with direct access to 40% of US energy consumption and 30% of the US population Right Price - Full and fair value relative to comparable transactions - breakeven to earnings in 2001 and accretive in 2002 Right Time - Industry is undergoing rapid change - Now is the time to make a move - Fast track approval process should allow completion in 6-9 months Right Value - Anticipated earnings growth of 12-15% makes the combined company a market leader [NISOURCE Logo] [Columbia Energy Logo] WE WILL DELIVER! -----END PRIVACY-ENHANCED MESSAGE-----