-----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, Nxu6dvJJDATQFZvtH3EkDgORsBMWDurlsfXZDgM9FV88eJ9IE35E8rIEY6m+4Giu wDop/7v2Gl8ngMcLrkBxJA== 0000895813-99-000388.txt : 19991020 0000895813-99-000388.hdr.sgml : 19991020 ACCESSION NUMBER: 0000895813-99-000388 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19991019 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: 99730767 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. 28) 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. 28 (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 19, 1999, Parent issued (i) a press release regarding regulatory issues and (ii) the testimony of Parent before the Ohio House Public Utilities Committee delivered on October 19, 1999, which are included herein as Exhibits (a)(48) and (a)(49), 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 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 directors 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. (a)(47) Text of advertisement appearing in various newspapers beginning on October 19, 1999, issued by Parent on October 19, 1999. (a)(48) Press Release issued by Parent on October 19, 1999.* (a)(49) Testimony of Parent before the Ohio House Public Utilities Committee delivered on October 19, 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. 6 (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 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 19, 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(a)(47) Text of advertisement appearing in various newspapers beginning on October 19, 1999, issued by Parent on October 19, 1999. 11(a)(48) Press Release issued by Parent on October 19, 1999.* 11(a)(49) Testimony of Parent before the Ohio House Public Utilities Committee delivered on October 19, 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)(48) FOUR REGULATORY EXPERTS COMMENT ON NISOURCE'S PROPOSED TRANSACTION WITH COLUMBIA ENERGY MERRILLVILLE, IN, OCTOBER 19, 1999 NiSource Inc. (NYSE: NI) announced today that four former state regulatory commissioners retained by the board of directors to review the proposed NiSource / Columbia Energy transaction have each separately concluded that NiSource's six to nine month timeframe to complete the transaction is reasonable and that NiSource's financing plan creates no incremental regulatory risk. The former state regulators are: Andrew C. Barrett, who served on the Illinois Commerce Commission and the Federal Communications Commission; Charles J. Cicchetti, Ph.D., who served as the Chairman of the Wisconsin Public Service Commission; Bruce B. Ellsworth, former New Hampshire Public Utilities Commissioner and former President of the National Association of Regulatory Utility Commissioners; and Robert C. Yardley, Jr., former Chairman of the Massachusetts Department of Telecommunications and Energy. The regulators were asked to review publicly available information related to the proposed Columbia/ NiSource transaction and render their opinions from a regulatory perspective. TIMING OF REGULATORY APPROVALS. All four of the former state utility commissioners agreed that NiSource's six to nine month timeframe for completing the transaction is reasonable. Bruce Ellsworth said, "Based upon the apparent absence of any antitrust issues and the non-contiguous nature of the respective companies' service territories, I am confident, based upon my own experience, that the regulatory process could be completed, in a cooperative environment, within six to nine months." Andrew Barrett added, "Having participated in six or seven mergers of this size during my regulatory career, the 6-9 month timeframe that NiSource has proposed is reasonable. Based on recent precedents within the regulatory jurisdictions that need to undertake a review process, I am convinced that the process can be completed in an expedited manner." FINANCING OF THE TRANSACTION. The former state commissioners all agreed that given the fact that the rating agencies have stated that NiSource will maintain its investment grade credit rating, the financing plan for the proposed transaction creates no incremental regulatory risk. Robert Yardley said, "To date, these agencies have indicated that the merged entity will continue to merit a strong investment grade rating. This will ensure that the distribution subsidiaries have the access to capital at reasonable cost required to fulfill their public service obligations after the merger is complete. Regulators can take considerable comfort in the rigor of the review performed by the financial community, and by the rating agencies in particular, when addressing financial issues in the merger proceedings." Charles Cicchetti added, "Regulators will look to the projected end- game when evaluating the combined company's capital structure. Regulators would find that the pro forma balance sheet is consistent with other similar energy companies and approved mergers." CUSTOMER BENEFITS Mr. Cicchetti also discussed how the combination of NiSource and Columbia would create numerous benefits for customers. Mr. Cicchetti said, "This transaction combines two energy companies that complement each other in three ways. First, a major electric and gas utility (NiSource) will combine with an interstate natural gas pipeline and distribution utility to form a new company, stretching from Texas to Maine. This will extend converged energy services to the companies' respective, non-overlapping service territories and facilitate a new retail electric supplier in Columbia's service territories. "Second, this vast geographic region will have varying time, geography, weather and fuel dimensions. This will result in a more efficient natural gas and electric supply network that will enable the combined entity to sell physical commodities more competitively and arbitrage across the differences. In addition, this supply-side efficiency will encourage the combined company to offer financial services and various hedging contracts to large customers and, through aggregation, to smaller retail consumers over a region that represents over 30 percent of the U.S. population and 40 percent of the energy consumed in the nation. "Third, customer choice, efficiency, and new products and services will drive regulatory approval just as they drive the shareholder value strategy that makes this transaction so compelling," Mr. Cicchetti concluded. NiSource Inc. is a holding company with a market capitalization of approximately $3.6 billion whose primary business is the distribution of electricity, natural gas and water in the Midwest and Northeast United States. The company also markets utility services and customer-focused resource solutions along a corridor stretching from Texas to Maine. Further information on the company's offer for Columbia may found on the Internet at www.yes2nisource.com and about the company at www.nisource.com. This release is neither an offer to purchase nor a solicitation of an offer to sell shares of common stock of Columbia Energy Group. Such a offer is made solely by the Offer to Purchase, dated June 25, 1999, as amended, and the related Letter of Transmittal. It is not being made to, and tenders will not be accepted from, holders of shares of Columbia common stock in any jurisdiction in which making or accepting such offer would not comply with law. In any jurisdiction where a licensed broker or dealer must make such offer, it shall be deemed made on behalf of NiSource Inc. by Credit Suisse First Boston Corporation or other registered brokers or dealers licensed in such jurisdiction. The offer may be extended beyond its November 12, 1999 expiration date. Any extension will be publicly announced no later than 9:00 a.m., New York City time, on the next business day. This release does not constitute a solicitation of proxies from Columbia energy Group's stockholders. Any such solicitation will be made only by separate proxy materials in compliance with Section 14(a) of the Securities Exchange Act. INVESTOR CONTACT: MEDIA CONTACT: NiSource Inc. NiSource Inc. Dennis Senchak Maria Hibbs (219) 647-6085 (219) 647-6201 Abernathy MacGregor Frank Joele Frank/Dan Katcher (212) 371-5999 ### EX-11 3 Exhibit 11(a)(49) NiSource Testimony before the Ohio House Public Utilities Committee October 19, 1999 Good afternoon. My name is Mark Maassel, vice president of regulatory and government policy at NiSource. Thank you for this opportunity to discuss House Bill 452 here today. As a senior officer at NiSource, I have first-hand experience in utility mergers and acquisitions and, in fact, led the successful NiSource merger with Bay State Gas/Northern Utilities which are located in Massachusetts, Maine and New Hampshire. That merger like others in industries across the country had its share of tensions and give and take, but eventually we came together and because of it we have reduced costs of gas to customers, provided increased opportunities for employees of all NiSource companies and made an investment in gas infrastructure to bring new gas into the Northeast. That's what our mergers are about, bringing greater benefits to the citizens and customers whom we serve, opportunities for employees and increased shareholder value while working closely with state and federal regulatory bodies. It's because we respect the role of lawmakers and regulators that I can say that we are NOT here to oppose Representative David Goodman's bill. In fact, we have always tried to communicate with state officials, legislators, customers and community leaders that we understand Ohio's interest in this transaction. Therefore we have supported the concepts in Representative Goodman's legislation. We realize that the testimony you have heard to date raises concerns about the perceived pain that comes from a contentious merger process. It is common in developing a merger of strong companies to have some contentious communications. Here, this contentious discussion is more public than in most mergers, but deals with issues common to all mergers. It also directs attention away from the central point, the merger of this Indiana-based company and this Virginia-based company, NiSource and Columbia Energy Group, which will bring vital benefits to the citizens and customers of Ohio. There is no question that today Columbia Energy Group of Herndon, Virginia is a very fine company with programs that deliver a vital, environmentally friendly product. But in this fast changing world, individual companies like NiSource and Columbia will find it more and more difficult to remain competitive. Combining efforts as we're suggesting in our merger, improves the ability to provide natural gas and other products at competitive prices thus benefiting customers. A merger of NiSource and Columbia will build Columbia's competitive edge in selling and delivering gas in the nation's marketplace. Let me tell you about NiSource. NiSource is a responsible corporate citizen, a good employer and dedicated to community involvement. In fact, NiSource supports our employee's involvement in communities and gives millions of dollars back to the community through charitable initiatives. We are pro-environment and the first utility company to attain ISO-14000 environmental quality certification for all our facilities. Let me touch on some of the details of our proposed merger with Columbia. First of all, Columbia Energy Group and NiSource assets and market areas are complementary, resulting in no overlaps within our combined system. Together, we create a powerful energy platform within a corridor stretching from the Gulf Coast, through the Midwest and into the Northeast. As the largest gas company east of the Rockies, NiSource will create new products and expanded gas capacity which will benefit customers. Our success in building our business has been predicated on employing the skills and experience of the management team and employee base present within the companies with which we have merged. Therefore, we are inviting five Columbia directors, including Rick Richard, to join an expanded NiSource Board and Mr. Richard to become vice-chairman of the Board. We also expect to retain the heads of all critical operating units and the headquarters for those units. Thus, Columbia Gas of Ohio will continue to be managed by people located here in Columbus. Of equal importance, consumers will benefit from the merger in a variety of ways. Columbia Energy Group has long sought to achieve "economic democratization", allowing customers to choose which company supplies them with natural gas. With this merger, Columbia's excellent "Choice" program will be maintained and reinforced. Much like Columbia, NiSource was the first to launch a "Choice" program in our home state of Indiana. NiSource is already bringing lower prices to Ohio consumers. We participate in Ohio's Choice program through our subsidiary, Energy USA, and we are proud to say that our price for gas was the lowest fixed price of any provider listed in the Public Utility Commission's "Apples to Apples" price comparison. In fact, our price was a full 10 percent lower than the listed price of gas to Columbia Gas of Ohio customers. In addition, the cost of gas for the customers of NiSource subsidiary Northern Indiana Public Service Company (NIPSCO), has consistently been lower than the cost of gas to Columbia Gas of Ohio customers.
NIPSCO COLUMBIA ENERGY COMPARISON Gas Cost/Unit 1994 1995 1996 1997 1998 ------------- ---- ---- ---- ---- ---- NIPSCO $2.90 $2.65 $3.02 $3.16 $2.63 Columbia $3.92 $3.24 $3.82 $4.42 $3.72 Difference ($1.02) ($0.59) ($0.80) ($1.26) ($1.09)
As I noted above, we are committed to bringing lower cost gas to customers of all NiSource gas distribution companies. Thus, while gas costs at Bay State Gas were historically higher then those at NIPSCO, we have already reduced gas costs for Bay State customers. We have also made substantial investments in infrastructure to bring in new supplies of gas. We bring a similar philosophy to Columbia Energy Group. With regard to House Bill 452, NiSource fully supports the concept embodied by the legislation. We firmly believe that a "change in control" of a natural gas or any other utility operating in Ohio can be an appropriate subject for regulatory review. In fact, we stated in the tender document itself that NiSource would obtain all necessary approvals within Ohio (and in other jurisdictions) before buying the shares of Columbia Energy Group. We have reiterated this position in conversations and in letters since that time. In short, NiSource supports legislation which clarifies the PUCO's key role in any such transaction. We would like to highlight issues we see in House Bill 452. The mechanism currently contemplated by House Bill 452 may not provide all of the information necessary for the Commission to make a thorough review of an acquisition. For the PUCO to fully evaluate any proposed transaction and make a reasoned and objective review, the Commission must have all relevant facts before it. Therefore, NiSource is proposing several changes to the legislation currently before you. First, the filing with the PUCO should occur prior to an acquisition of a utility but after a tender offer has been made. Because utility mergers evolve like any other business transaction, the facts and information at the time of a tender offer may change as the transaction develops. A good example was the October 17 announcement by NiSource which increased the offer price, expanded the NiSource Board to add five current Columbia directors, invited Columbia Chairman Rick Richard to be vice-chairman at NiSource, and indicated that heads of all key operating units would be retained. The PUCO would be in a better position to review a transaction when it is clear there is going to be a transaction, when the terms of the merger have been established and there is full information from both parties. This is the procedure currently used by the PUCO in reviewing mergers. Second, PUCO must have the ability to gather information from all parties. Thus the parties to the proposed merger should be required to engage in an accelerated process so that all pertinent information can be made available to the Commission in conjunction with the filing required by the legislation. Again, such a change would put the PUCO in a better position to review a transaction, so that the Commission is not making its review in a vacuum. If both parties are required to produce information that would be necessary or useful to the PUCO, the Commission will be better able to evaluate whether the merger will truly promote public convenience and protect consumers. Finally, there are some concerns that House Bill 452, as drafted, may have an unconstitutional retroactive effect. I would strongly urge that the Ohio Legislature not take a step which may be unconstitutional. However, as I have previously stated, NiSource is prepared to discuss this transaction openly with all interested groups. Thus, if this language is removed, I will commit that NiSource will voluntarily submit to the PUCO review envisioned in House Bill 452. The changes I have outlined would protect the integrity of the process before the Commission giving Ohio a procedure that can be used, not just in the current NiSource-Columbia Energy situation, but in years to come for any other proposed natural gas utility mergers. To guarantee a procedure that truly protects Ohio consumers, it is vital that the Commission's review of any transaction be made upon ALL of the relevant facts and information. NiSource is happy to work with the Committee on amendments. As a final matter, I would like to directly respond to the comments made last week by Representative Goodman. NiSource strongly believes that a NiSource Columbia merger would be good for Ohio and therefore we welcome the opportunity to stand before the PUCO and testify to that effect or to meet with any appropriate interested parties. In fact, with or without this bill, when NiSource is successful in signing a merger agreement with Columbia Energy Group, it will appear before the PUCO prior to any change in control for the Commission's review of the acquisition. In closing, let me say once again that we support the concept outlined in House Bill 452, and we would support a full and appropriate review of our merger by the Public Utilities Commission at the moment in time that any other utility merger would be reviewed, when the parties have completed their delicate merger negotiations. We look forward to building a partnership with Ohio lawmakers, regulators and consumers as we enter the 21st century. Thank you for your time and attention. -----END PRIVACY-ENHANCED MESSAGE-----