-----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, O7pKUNOu5Rr80hmvClhXG+OO9qHKO2ohn2t3qtOOxoRg8FL/VCs8yJDXMcJRmF6x Qht9qodoWHibchjehTHnuQ== 0000912057-99-002029.txt : 19991026 0000912057-99-002029.hdr.sgml : 19991026 ACCESSION NUMBER: 0000912057-99-002029 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19991025 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 14D9/A SEC ACT: SEC FILE NUMBER: 005-10049 FILM NUMBER: 99732953 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: 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 14D9/A 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 SC 14D9/A 1 SCHEDULE 14D9/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 50) COLUMBIA ENERGY GROUP (Name of Subject Company) COLUMBIA ENERGY GROUP (Name of Person(s) Filing Statement) COMMON STOCK, PAR VALUE $0.01 (Title of Class of Securities) 197648108 (CUSIP Number of Class of Securities) MICHAEL W. O'DONNELL SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER COLUMBIA ENERGY GROUP 13880 DULLES CORNER LANE HERNDON, VIRGINIA 20171 (703) 561-6000 (Name, address and telephone number of person authorized to receive notice and communications on behalf of the person(s) filing statement) COPY TO: NEIL T. ANDERSON, ESQ. SULLIVAN & CROMWELL 125 BROAD STREET NEW YORK, NEW YORK 10004 (212) 558-4000 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Amendment No. 50 amends and supplements the Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on July 6, 1999, and as subsequently amended July 6, 1999, July 9, 1999, July 12, 1999, July 15, 1999, July 16, 1999, July 20, 1999, July 22, 1999, July 30, 1999, August 3, 1999, August 4, 1999, August 5, 1999, August 6, 1999, August 9, 1999, August 11, 1999, August 12, 1999, August 13, 1999, August 16, 1999, August 17, 1999, August 19, 1999, August 31, 1999, September 2, 1999, September 3, 1999, September 7, 1999, September 9, 1999, September 10, 1999, September 13, 1999, September 14, 1999, September 15, 1999, September 16, 1999, September 17, 1999, September 20, 1999, September 21, 1999, September 22, 1999, September 23, 1999, September 24, 1999, September 27, 1999, September 28, 1999, September 29, 1999, September 30, 1999, October 1, 1999, October 4, 1999, October 5, 1999, October 6, 1999, October 7, 1999, October 12, 1999, October 13, 1999, October 14, 1999 and October 18, 1999 (as so amended, the "Schedule 14D-9"), by Columbia Energy Group, a Delaware corporation (the "Company"), relating to the tender offer by NiSource Inc., an Indiana corporation, to purchase for cash through its wholly-owned subsidiary, CEG Acquisition Corp., a Delaware corporation, all of the outstanding common shares, par value $0.01 per share, of the Company (the "Offer"). Capitalized terms used but not defined herein have the meaning ascribed to them in the Schedule 14D-9. ITEM 2. TENDER OFFER OF THE BIDDER. Item 2 is hereby supplemented and amended by adding the following paragraph: On October 17, 1999, Bidder publicly announced its intention to increase the price per Share to be paid pursuant to the Offer from $68.00 per Share to $74.00 per Share (the "Revised Offer Price"), net to the Seller in cash without interest thereon, upon the terms and subject to the conditions set forth in the Supplement to the Offer to Purchase, dated October 18, 1999 (the "Supplement") and in the revised Letter of Transmittal (together, the "Revised Offer"). Pursuant to the Supplement, the Revised Offer is scheduled to expire at 12:00 midnight, New York City time, on Friday, November 12, 1999, unless and until Bidder shall have further extended the period of time during which the Revised Offer is to remain open. ITEM 4. THE SOLICITATION OR RECOMMENDATION. Item 4 (a-b) is hereby supplemented and amended by adding the following paragraphs: (a) At a meeting of the Board held on October 22, 1999, the Board carefully considered the Company's business, financial condition and prospects, the terms and conditions of the Revised Offer, possible strategic alternatives to the Revised Offer and other matters, including presentations by its management and legal and financial advisors. At the October 22, 1999 meeting, the Board unanimously concluded, among other things, that the Revised Offer is inadequate and not in the best interests of the Company or its shareholders. ACCORDINGLY, THE BOARD STRONGLY RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS REJECT THE REVISED OFFER AND NOT TENDER THEIR SHARES PURSUANT TO THE REVISED OFFER. A copy of the letter to shareholders communicating the Board's recommendation and a form of press release announcing such recommendation are filed as Exhibits (a)(36) and (a)(37) hereto, respectively, and are incorporated herein by reference. (b) In reaching the conclusions referred to in Item 4(a), the Board took into account numerous factors, including but not limited to the following: (i) The Board's familiarity with the business, financial condition, prospects and current business strategy of the Company, the nature of the industries in which the Company operates and the Company's strong position in these industries. (ii) The written opinions to the Board of each of Morgan Stanley Dean Witter ("Morgan Stanley") and Salomon Smith Barney Inc. ("Salomon Smith Barney") to the effect that, as of October 22, 1999, the $74.00 per share consideration set forth in the Revised Offer was inadequate from a financial point of view to the Company's shareholders other than NiSource and its affiliates, and the analyses performed by Morgan Stanley and Salomon Smith Barney in connection with the delivery of their opinions. Such written opinions delivered to the Board are filed herewith as Exhibits (a)(38) and (a)(39). The Company's shareholders are urged to read such opinions in their entirety. Such opinions were expressed after review of various financial criteria used in assessing an offer, and were based on various assumptions and subject to various limitations, which were reviewed for the Board as part of the Board presentations by Morgan Stanley and Salomon Smith Barney. (iii) The significant conditions to which the Revised Offer is subject. Twelve conditions and many more sub-conditions must be satisfied or waived before Bidder is obligated to consummate the Revised Offer. Many of the conditions are at the sole discretion of Bidder or subject to external events not directly related to the Company, including the receipt of numerous federal, state and local public utility regulatory consents and approvals, the absence of threatened or instituted actions by any governmental authorities or other persons which might diminish benefits expected by Bidder, the lack of any changes in the general economic or financial market conditions in the United States or abroad that could have a material adverse effect on any of the Company's subsidiaries, and that no tender or exchange offer for some or all of the Shares shall have been publicly announced by a third party. (iv) The serious regulatory hurdles associated with the Revised Offer, including the likely negative reaction of numerous state and federal regulators to NiSource's need to borrow $6.5 billion to consummate the Offer, creating a highly leveraged debt-to-capital ratio of 86%. (v) The Board's decision to authorize the Company's management, with the assistance of the Company's financial advisors, Morgan Stanley and Salomon Smith Barney and legal advisors, to investigate and evaluate a number of strategic alternatives to generate value in excess of that which the Company's business plan or the Revised Offer can create. The foregoing discussion of the information and factors considered by the Board is not intended to be exhaustive but includes all material factors considered by the Board. In reaching its determination to reject the Revised Offer, the Board did not assign any relative or specific weights to the foregoing factors, and individual directors may have given differing weights to different factors. Throughout its deliberations, the Board received the advice of its legal and financial advisors. ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY. Item 7 (a-b) is hereby supplemented and amended by adding the following: The Board has instructed management, with the assistance of the Company's financial and legal advisors, to explore strategic alternatives to generate value in excess of that which the Company's business plan or the Revised Offer can create, including, without limitation (i) an extraordinary transaction, such as a merger or reorganization, involving the Company or any of its subsidiaries; or (ii) a sale or transfer of a material amount of assets by the Company or any of its subsidiaries. As a result, representatives of the Company will initiate discussions with one or more third parties that could relate to or result in one of the transactions mentioned above. The Board has determined that disclosure with respect to the parties to, and the possible terms of, any transactions or proposals of the type referred to in the preceding paragraphs might jeopardize any discussions or negotiations that the Company may conduct. Accordingly, the Board has adopted a resolution instructing management not to disclose the possible terms of any such transactions or proposals, or the parties thereto, unless and until a definitive agreement or any agreement in principle relating thereto has been reached or, upon the advice of counsel, as may otherwise be required by law. 2 There can be no assurance, however, that these activities will result in any transaction being recommended to the Board or that any transaction which may be recommended will be authorized or consummated. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. Item 9 is hereby supplemented and amended by adding the following: Exhibit (a)(36) -- Form of Letter to Shareholders, dated October 25, 1999. Exhibit (a)(37) -- Form of Press Release, dated October 24, 1999. Exhibit (a)(38) -- Opinion of Morgan Stanley Dean Witter, dated October 22, 1999. Exhibit (a)(39) -- Opinion of Salomon Smith Barney Inc., dated October 22, 1999.
3 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: October 25, 1999 COLUMBIA ENERGY GROUP By: /s/ MICHAEL W. O'DONNELL ----------------------------------------- Name: Michael W. O'Donnell Title: Senior Vice President and Chief Financial Officer
4 EXHIBIT LIST Exhibit (a)(36) -- Form of Letter to Shareholders, dated October 25, 1999. Exhibit (a)(37) -- Form of Press Release, dated October 24, 1999. Exhibit (a)(38) -- Opinion of Morgan Stanley Dean Witter, dated October 22, 1999. Exhibit (a)(39) -- Opinion of Salomon Smith Barney Inc., dated October 22, 1999.
5 EX-99.1 2 EXHIBIT 99.1 [LOGO] October 25, 1999 Dear Shareholder: I am writing to inform you about two important developments related to your company's ongoing efforts to build value for our shareholders. The first is a determination by Columbia's Board of Directors that NiSource Inc.'s latest proposal is inadequate and not in the best interests of Columbia or its shareholders. The second development is a decision by the Board to authorize the company's management and its advisors to explore and evaluate a number of strategic alternatives to generate value in excess of that which Columbia's business plan or the NiSource proposal can create. The Board has taken this important step in recognition of the current business environment and many opportunities available in the rapidly evolving energy industry. As part of the review process authorized by the Board, we will initiate discussions with third parties regarding possible transactions, such as a merger, reorganization, or the disposition of a material amount of assets. While there can be no assurance that this process will result in a transaction or other action, we believe that engaging in this process will provide us the flexibility necessary to ensure that Columbia will continue to provide superior value for you, our shareholders, as well as for our customers, employees and the communities we serve. As you know, this is a time of tremendous change in the energy industry. For creative, forward-looking companies like Columbia, it is a time of promising opportunities, but also of challenges. YOUR BOARD AND MANAGEMENT ARE FIRMLY COMMITTED TO EXPLORING THOROUGHLY THE OPPORTUNITIES AVAILABLE TO US AND CONSIDERING ALL POSSIBLE STRATEGIC ALTERNATIVES FOR ENHANCING SHAREHOLDER VALUE. I believe the action taken by Columbia's Board will enable both Columbia and NiSource to move beyond the litigation and other counterproductive activities of the past four months, and to pursue initiatives that are in the best interests of all of our constituencies. As you may know, NiSource recently increased the terms and extended the deadline of its unsolicited tender offer for all of the outstanding shares of common stock of Columbia Energy Group. YOUR BOARD OF DIRECTORS HAS DETERMINED THAT NISOURCE'S REVISED OFFER OF $74 PER SHARE IN CASH IS INADEQUATE AND NOT IN THE BEST INTERESTS OF COLUMBIA'S SHAREHOLDERS. ACCORDINGLY, WE ONCE AGAIN RECOMMEND THAT YOU DO NOT TENDER YOUR SHARES TO NISOURCE. Your Board's determination that NiSource's latest unsolicited offer is inadequate is based, in part, on written opinions from Morgan Stanley Dean Witter and Salomon Smith Barney Inc. In addition to the financial inadequacy of the offer, the Board also continues to be concerned about the significant conditions and serious regulatory hurdles associated with the NiSource proposal. We encourage you to read carefully the attached documents, which are Columbia's amended Schedule 14D-9, including the discussion of the reasons for your Board's recommendation, the written opinions of the company's financial advisors, and a press release announcing the Columbia Board's actions. DO NOT TENDER YOUR SHARES TO NISOURCE OR ITS SUBSIDIARY, CEG ACQUISITION CORP. Please remember that CEG Acquisition Corp. has no relationship with Columbia Energy Group. NiSource created CEG Acquisition Corp. solely to try to achieve a hostile takeover of your company. PREVIOUSLY TENDERED SHARES CAN BE WITHDRAWN AT ANY TIME BEFORE THEY ARE ACCEPTED FOR PAYMENT. If you have any questions, including how to withdraw a tender, please contact our information agent, MacKenzie Partners, at 1-800-322-2885 toll-free or 212-929-5500 (call collect). Your Board of Directors and management will continue to act in the best interests of the company and all its shareholders. On Behalf of the Board of Directors Sincerely, /s/ Oliver G. Richard III OLIVER G. RICHARD III Chairman, President and Chief Executive Officer IF YOU HAVE ANY QUESTIONS PLEASE CONTACT: [LOGO] 156 Fifth Avenue New York, New York 10010 (212) 929-5500 (Call Collect) or CALL TOLL-FREE (800) 322-2885 EX-99.2 3 EXHIBIT 99.2 News Release [LOGO] --------------------------------------------- For Immediate Release CONTACTS: October 24, 1999 COLUMBIA ENERGY GROUP Thomas L. Hughes (Financial Community) 703/561-6001 R. A. Rankin, Jr. (News Media) 703/561-6044 KEKST AND COMPANY Michael Freitag (News Media) 212/521-4800 COLUMBIA ENERGY GROUP REJECTS INADEQUATE NISOURCE PROPOSAL; WILL EXPLORE STRATEGIC ALTERNATIVES TO ENHANCE VALUE HERNDON, Va., Oct. 24 -- Columbia Energy Group announced today that its board of directors has unanimously rejected the latest unsolicited offer from NiSource Inc. and authorized Columbia's management to explore strategic alternatives. The board determined that the revised cash tender offer by NiSource for all of Columbia's outstanding common stock for $74 per share is inadequate and not in the best interests of the company or its shareholders. Accordingly, the board strongly recommends that Columbia's shareholders not tender their shares to NiSource. The tender offer is currently scheduled to expire on Nov. 12, 1999. The Columbia board's determination that NiSource's latest unsolicited offer is inadequate is based, in part, on written opinions from Morgan Stanley Dean Witter and Salomon Smith Barney Inc. In addition to the financial inadequacy of the offer, the board continues to be concerned about the significant conditions and serious regulatory hurdles associated with the NiSource proposal. In recognition of the current business environment and many opportunities available in the rapidly evolving energy industry, the board has authorized management and its advisors to explore and evaluate a number of strategic alternatives to generate value in excess of that which the company's business plan or the NiSource proposal could create. As part of this process, Columbia will initiate discussions with third parties regarding possible transactions, including a merger, reorganization, or the disposition of a material amount of assets. The company noted there can be no assurance that these discussions will result in a transaction or any other action. Oliver G. Richard III, Columbia's chairman, president and chief executive officer, said: "This is a time of tremendous change in the energy services industry. For creative, forward-looking companies like Columbia, it is a time of promising opportunities, but also of challenges. Consequently, our board and management are firmly committed to exploring thoroughly the opportunities available to us and considering all possible alternatives for enhancing shareholder value." Richard today sent the following letter to Gary Neale, chairman, president and chief executive officer of NiSource Inc.: Dear Gary: This letter is in response to NiSource's tender offer for all of Columbia's outstanding shares at a revised cash price per share of $74 (the "Revised Offer"). Columbia's Board carefully considered the Revised Offer with the assistance of its financial and legal advisors. After careful deliberation, Columbia's Board has unanimously determined that the Revised Offer is inadequate and not in the best interests of Columbia or its shareholders. Accordingly, the Columbia Board is strongly recommending to Columbia shareholders that they not tender their shares into the Revised Offer. In making its determination, Columbia's Board took into account several factors. These factors include the written opinions of Morgan Stanley Dean Witter and Salomon Smith Barney Inc. that the Revised Offer was inadequate from a financial point of view to the company's shareholders and the significant conditions and serious regulatory hurdles associated with the Revised Offer. Notwithstanding this determination, the Board recognizes the rapid change taking place in the energy industry and the resulting need for a timely evaluation of all strategic alternatives available to Columbia. The Board has therefore determined that it is in the best interests of Columbia and its shareholders to authorize management -- with the advice and assistance of Columbia's financial and legal advisors -- to explore and evaluate a number of strategic alternatives to generate shareholder value greater than that which Columbia's business plan or the Revised Offer can create. As part of this process, we will initiate discussions with third parties -- including NiSource, if it is interested -- regarding possible transactions designed to significantly enhance value for our shareholders. We intend to consider a variety of strategic alternatives, including an extraordinary transaction, such as a merger, reorganization or the disposition by Columbia of a material amount of assets. Of course, there can be no assurance that this process will result in any such transaction. We continue to have serious questions about the strategic and financial merits of a combination of our two companies, as well as about NiSource's ability to satisfy the conditions of its financing commitments and successfully complete a transaction of the magnitude required. Nonetheless, be assured that we will attempt to accommodate NiSource's participation in this process. This is a time of tremendous change and exciting opportunities in the rapidly deregulating energy industry. I believe the action taken by Columbia's Board will enable both of our companies to move beyond the litigation and other disruptive and counterproductive activities of the past four months, and to pursue initiatives that are in the best interests of our shareholders, employees, customers and the communities we serve. Sincerely, Oliver G. Richard III Columbia Energy Group, based in Herndon, Va., is one of the nation's leading energy services companies, with assets of approximately $7 billion. Its operating companies engage in all phases of the natural gas business, including exploration and production, transmission, storage and distribution, as well as retail energy marketing, propane and petroleum product sales, and electric power generation. Information about Columbia Energy Group (NYSE:CG) is available on the Internet at WWW.COLUMBIAENERGYGROUP.COM. # # # 2 EX-99.3 4 EXHIBIT 99.3 MORGAN STANLEY DEAN WITTER October 22, 1999 Board of Directors Columbia Energy Group 13880 Dulles Corner Lane Herdon, VA 20171-4600 Members of the Board: We understand that on October 18, 1999, CEG Acquisition Corp. ("Subsidiary"), a wholly owned subsidiary of NiSource Inc. ("Bidder"), amended and supplemented its tender offer to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Common Stock"), of Columbia Energy Group ("Target" or the "Company"), other than shares of Common Stock owned by the Bidder and its affiliates, at a price of $74.00 per share net to the seller in cash upon the terms and subject to the conditions set forth in the Offer to Purchase, dated June 25, 1999, as amended as of October 18, 1999 (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Bidder Offer"). The terms of the Bidder Offer are more fully set forth in the Schedule 14D-1, as amended and supplemented as of October 18, 1999 (the "Schedule 14D-1") filed by Subsidiary and Bidder with the Securities and Exchange Commission on June 25, 1999. You have asked for our opinion as to whether the Bidder Offer is adequate from a financial point of view to the holders of Common Stock other than Bidder and its affiliates. For purposes of the opinion set forth herein, we have: (i) reviewed certain publicly available financial statements and other information of the Company; (ii) reviewed certain internal financial statements and other financial and operating date concerning the Company prepared by the management of the Company; (iii) analyzed certain financial projections prepared by the management of the Company; (iv) discussed the past and current operations and financial condition and the prospects of the Company with senior executives of the Company; (v) reviewed the reported prices and trading activity for the Common Stock; (vi) compared the financial performance of the Company and the prices and trading activity of the Common Stock with that of certain other comparable publicly-traded companies and their securities; (vii) reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions; (viii)reviewed the Offer to Purchase, the Schedule 14D-1 and certain related documents; (ix) reviewed a report from the Ryder Scott Company dated January 27, 1999, regarding the reserves, future production and income attributable to certain leasehold and royalty interests of Columbia Natural Resources Corporation (the "Ryder Scott Report"); and (x) performed such other analyses and considered such other factors as we have deemed appropriate. MORGAN STANLEY DEAN WITTER We have assumed and relied upon without independent verification the accuracy and completeness of the information reviewed by us for the purposed of this opinion. With respect to the financial projections, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the future financial performance of the Company. We have not made any independent valuation or appraisal of the assets or liabilities of the Company nor have we been furnished with any such appraisals; however, we have reviewed the Ryder Scott Report and have relied without independnt verification upon such report for purposes of this opinion. Our opinion is necessarily based on economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. We have acted as financial advisor to the Board of Directors of the Company in connection with an analysis of the Offer to Purchase and the Bidder Offer, and will receive a fee for our services. It is understood that this letter is for the information of the Board of Directors of the Company and may not be used for any other purpose without prior written consent, except that this opinion may be included in its entirety in any filing made by the Company in respect of the Bidder Offer with the Securities and Exchange Commission. This opinion is not intended to be and shall not constitute a recommendation to any holder of Common Stock as to whether to tender shares of Common Stock pursuant to the Bidder Offer. Based on the foregoing, we are of the opinion on the date hereof that the Bidder Offer is inadequate from a financial point of view to the holders of Common Stock other than Bidder and its affiliates. Very truly yours, MORGAN STANLEY & CO. INCORPORATED By: ----------------------------------------- Daniel B. More MANAGING DIRECTOR
EX-99.4 5 EXHIBIT 99.4 [LOGO] October 22, 1999 Board of Directors Columbia Energy Group 13880 Dulles Corner Lane Herndon, VA Ladies and Gentlemen: You have requested our opinion as to the adequacy, from a financial point of view, to the holders of common stock, par value $0.01 per share ("Company Common Stock"), of Columbia Energy Group (the "Company") of the tender offer of CEG Acquisition Corp. ("Subsidiary"), a wholly owned subsidiary of NiSource Inc. ("NI"), to purchase all of the issued and outstanding shares of Company Common Stock, other than shares of Company Common Stock owned by NI and its affiliates, for $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, as amended and supplemented as of October 18, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which together with the Offer to Purchase constitutes the "Offer"). The terms of the Offer are more fully set forth in the Schedule 14D-1, as amended and supplemented as of October 18, 1999 (the "Schedule 14D-1"), filed by Subsidiary and NI with the Securities and Exchange Commission on June 25, 1999. In connection with rendering our opinion, we have reviewed and analyzed, among other things, the following; (i) certain publicly available information concerning the Company; (ii) certain internal information, primarily financial in nature, including projections, concerning the business and operations of the Company, furnished to us by the Company for purposes of our analysis; (iii) certain publicly available information concerning the trading of, and the trading market for, Company Common Stock; (iv) certain publicly available information concerning NI; (v) certain publicly available information with respect to certain other companies that we believe to be comparable to the Company and the trading markets for certain of such other companies' securities; (vi) the Offer to Purchase and the Schedule 14D-1; and (vii) a report from the Ryder Scott Company dated January 27, 1999 regarding the reserves, future production and income and certain leasehold and royalty interests of Columbia Natural Resources Corporation (the "Ryder Scott Report"); and (viii) certain publicly available information concerning the nature and terms of [LOGO] Columbia Energy Group October 22, 1999 Page 2 certain other transactions that we consider relevant to our inquiry. We further have considered such other information, financial studies, analyses, investigations and financial, economic and market criteria that we deemed relevant. We also have met with certain officers and employees of the Company to discuss the forgoing as well as other matters that we believe relevant to our inquiry. In our review and analysis and in arriving at our opinion, we have assumed and relied upon the accuracy and completeness of all of the financial and other information provided to us or publicly available and have neither attempted independently to verify nor assumed any responsibility for verifying any of such information and have further relied upon the assurances of management of the Company that they are not aware of any facts that would make any of such information inaccurate or misleading. We have not conducted a physical inspection of any of the properties or facilities of the Company, nor have we made or obtained or assumed any responsibility for making or obtaining any independent evaluations or appraisals of any of such properties or facilities, nor have we been furnished with any such valuations or appraisals; however, we have reviewed the Ryder Scott Report and have relied without independent verification upon such report for purposes of this opinion. With respect to financial projections, we have been advised by the management of the Company and have assumed that they were reasonably prepared and reflect the best currently available estimates and judgment of the management of the Company as to the future financial performance of the Company and we express no view with respect to such projections or the assumptions on which they were based. In conducting our analysis and arriving at our opinion as expressed herein, we have considered such financial and other factors as we have deemed appropriate under the circumstances including, among others, the following: (i) the historical and current financial position and results of operations of the Company; (ii) the business prospects of the Company; (iii) the historical and current market for company Common Stock and for the equity securities of certain other companies that we believe to be comparable to the Company; and (iv) the nature and terms of certain other merger transactions that we believe to be relevant. We have also taken into account our assessment of general economic, market and financial conditions as well as our experience in connection with similar transactions and securities valuation generally. Our opinion necessarily is based upon conditions as they exist and can be evaluated on the date hereof, and we assume no responsibility to update or revise our opinion based upon circumstances or events occurring after the date hereof. Our [LOGO] Columbia Energy Group October 22, 1999 Page 3 opinion is, in any event, limited to the adequacy, from a financial point of view, of the Offer to the holders of Company Common Stock. Our opinion is not intended to be and shall not constitute a recommendation to any holder of Company Common Stock as to whether to tender shares of Company Common Stock pursuant to the Offer. We have acted as financial advisor to the Company in connection with the Offer and will receive a fee for such services. In addition, in the ordinary course of business, we and our affiliates may actively trade the securities of the Company and NI for our own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities. We and our affiliates (including Citigroup Inc.) may have other business relationships with the Company or NI. This opinion is intended solely for the benefit and use of the Company (including the management and directors of the Company) in considering the transaction to which it relates and may not be used for any other purpose or reproduced, disseminated, quoted or referred to at any time, in any manner or for any purpose, without the prior written consent of Salomon Smith Barney. Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Offer is inadequate, from a financial point of view, to the holders of Company Common Stock, other than NI and its affiliates. Very truly yours, /s/ Salomon Smith Barney Inc. Salomon Smith Barney Inc. -----END PRIVACY-ENHANCED MESSAGE-----