-----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, Eq4iM3p40gTCDiyCBT5enwYGCgbzZwy+Wbh8YUBQaVnieXdWE/GK2wropzGQ/TUV nA69lcQnzpdaE2s4IqzBVQ== 0000071297-99-000003.txt : 19990128 0000071297-99-000003.hdr.sgml : 19990128 ACCESSION NUMBER: 0000071297-99-000003 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND ELECTRIC SYSTEM CENTRAL INDEX KEY: 0000071297 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 041663060 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: SEC FILE NUMBER: 070-09441 FILM NUMBER: 99514078 BUSINESS ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01582 BUSINESS PHONE: 5083669011 MAIL ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01582 U-1 1 File No. 70- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NEW ENGLAND ELECTRIC SYSTEM (Name of company filing this statement) 25 Research Drive Westborough, Massachusetts 01582 (Address of principal executive offices) NEW ENGLAND ELECTRIC SYSTEM (Name of top registered holding company parent of applicant) John G. Cochrane Kirk L. Ramsauer Treasurer Deputy General Counsel 25 Research Drive 25 Research Drive Westborough, Massachusetts 01582 Westborough, Massachusetts 01582 (Names and addresses of agents for service) New England Electric System (NEES), a Massachusetts business trust and a registered holding company under the Public Utility Holding Company Act of 1935, as amended (the Act), hereby files this Form U-1 Declaration (the Declaration) for the purpose of obtaining approval to amend its Agreement and Declaration of Trust (the Trust Agreement) and to solicit the proxies of the holders of common shares of NEES. Item 1. Description of Proposed Transaction - -------------------------------------------- NEES has entered into an Agreement and Plan of Merger, dated as of December 11, 1998 (the Merger Agreement) with The National Grid Group plc, a public limited company incorporated under the laws of England and Wales (National Grid) and Iosta LLC, a Massachusetts limited liability company which is directly and indirectly wholly owned by National Grid (Iosta). Iosta changed its name to NGG Holdings LLC (NGG Holdings) subsequent to the execution of the Merger Agreement. On the closing date, NGG Holdings would merge with and into NEES (the Merger). NEES would be the surviving entity and a wholly owned subsidiary of National Grid. On December 14, 1998, NEES and National Grid jointly issued a press release announcing the proposed merger and related information, a copy of which is attached as Exhibit B-2. This proposed merger will require Commission approval under the Act; a separate filing for such approval will be made during the first quarter of 1999. Pursuant to the terms of the Merger Agreement, NEES has agreed to convene a meeting of its shareholders for the purpose of obtaining required shareholder approvals related to the Merger. In addition, NEES will seek to obtain shareholder approval for an amendment to its Trust Agreement. The Amendment would allow (1) a Massachusetts limited liability company, like NGG Holdings, to be merged into NEES in accordance with Massachusetts General Laws, Chapters 156C and 182; and (2) shareholders not consenting to a merger with a limited liability company to be given the same appraisal rights as stockholders of a Massachusetts business corporation. The Amendment will be effected, if the required approvals listed below are obtained, regardless of whether the Merger is consummated. To be effected, the Merger and proposed Amendment must be approved by an affirmative vote of a majority of the outstanding shares. The NEES Board of Directors must also approve the proposed Amendment by a two-thirds vote. The Merger is subject to a number of conditions, including the approval of the Commission under the Act and other regulatory approvals. The Amendment is also subject to the approval of the Commission. The proposed new Article 59B to the Trust Agreement provides that a Massachusetts limited liability company, like NGG Holdings, could merge into NEES in accordance with Chapters 156C and 182 of the Massachusetts General Laws. Under Chapter 156C and amendments to Chapter 182, which were enacted in 1995, a Massachusetts limited liability company may merge with a Massachusetts business trust. The NEES Trust Agreement predated the Massachusetts statute on limited liability companies, and accordingly, the Trust Agreement did not give shareholders the ability to vote to merge with limited liability companies. The proposed Amendment would enable shareholders to vote on such mergers. After adoption of the proposed amendment, such a merger could be effected by vote of a majority of the shares outstanding and a two-thirds vote of the Board of Directors. This amendment to the Trust Agreement is necessary to effect a merger of NGG Holdings into NEES. The proposed new Article 59B of the Trust Agreement also provides that in any merger between NEES and a Massachusetts limited liability company, shareholders who vote against the merger, and follow the procedures set forth below, have the same appraisal rights as stockholders of a Massachusetts business corporation. Massachusetts General Laws, Chapter 156B, Sections 87- 98 provide that stockholders of a Massachusetts business corporation, if they give a specified written notice before a merger vote and also vote against the merger, can go through a procedure to have an independent valuation made of the shares and receive the amount of the valuation in exchange for their shares. Such an appraisal procedure is being offered in the vote on the Merger. This would be the only remedy for any objecting shareholders should such a merger be consummated. The proposed language changes to Article 58 would conform Article 58 to Article 59B to allow for a certificate to be filed in the event of a merger pursuant to the new Article 59B. NEES proposes to hold its annual meeting on April 6, 1999. It is NEES' intention to mail definitive proxy materials to its shareholders at least 30 days prior to the meeting and to send all related proxy materials to print on February 26, 1999. In order for NEES to provide its shareholders with the proxy materials in a timely manner, NEES respectfully requests that the Commission grant it authority by February 19, 1999 to provide its shareholders with such proxy materials in their final form and solicit such proxies. Item 2. Fees, Commissions and Expenses - --------------------------------------- The estimated fees and expenses in connection with the proposed transaction include incidental services in connection with the transactions to be performed by New England Power Service Company (a wholly owned subsidiary of NEES) (the Service Company) at the actual cost thereof. The Service Company is an affiliated service company operating pursuant to Section 13 of the Act and the Commission's rules thereunder. The cost of such services is estimated to be approximately $50,000. The estimate of the approximate amount of fees and expenses payable to others in connection with the proposed solicitation is as follows: Counsel fees 50,000 Proxy solicitation firm 25,000 Printing expense 160,000 Miscellaneous and incidental expenses 25,000 ------ TOTAL $260,000 Item 3. Applicable Statutory Provisions - ---------------------------------------- Sections 6(a)(2) and 7 of the Act are applicable to the proposed amendments to Articles 58 and 59B of the Trust Agreement. Section 12(e) of the Act and Rules 62 and 65 are applicable to the solicitation of proxies. Item 4. Regulatory Approval - ---------------------------- No state regulatory authority and no federal regulatory authority, other than the Commission, have jurisdiction over the proposed solicitation. However, the Merger will require approvals from the Commission under the Act and other regulatory approvals. Item 5. Procedure - ------------------ It is requested that the Commission (i) take action with respect to this Declaration without a hearing, (ii) approve the proposed proxy solicitation in its notice of this filing not later than February 19, 1999, and (iii) enter an appropriate order approving the proposed amendments to the Trust Agreement. No recommended decision by a hearing officer or other responsible officer of the Commission is necessary or required in this matter. The Division of Investment Management of the Commission may assist in the preparation of the Commission's decision in this matter. There should be no thirty-day waiting period between the issuance and the effective date of any order issued by the Commission in this matter, and it is respectfully requested that any such order be made effective immediately upon the entry thereof. Item 6. Exhibits and Financial Statements - ------------------------------------------ (a) Exhibits A-1 NEES Agreement and Declaration of Trust dated January 2, 1926, as amended Incorporated by reference to Exhibit 3 to 1994 NEES Form 10-K, File No. 1-3446 A-2 Proposed Amendment to Agreement and Declaration of Trust B-1 Preliminary Proxy Statement Draft B-2 Press Release B-3 Agreement and Plan of Merger, dated as of December 11, 1998 Incorporated by reference to Exhibit 10(mm) to NEES Form 8-K dated December 11, 1998 *F Opinion of Counsel H Proposed Form of Notice * To be filed by amendment. ITEM 7. ENVIRONMENTAL EFFECTS - ------------------------------- The proposed solicitation does not involve major Federal action having a significant effect on the human environment. No Federal agency has prepared or is preparing an environmental impact statement with respect to the proposed solicitation. SIGNATURE --------- Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this Application/ Declaration on Form U-1 to be signed on its behalf, as indicated by the undersigned officer thereunto duly authorized. NEW ENGLAND ELECTRIC SYSTEM s/John G. Cochrane By John G. Cochrane, Treasurer Date: January 27, 1999 The name "New England Electric System" means the trustee or trustees for the time being (as trustee or trustees but not personally) under an agreement and declaration of trust dated January 2, 1926, as amended, which is hereby referred to, and a copy of which as amended has been filed with the Secretary of The Commonwealth of Massachusetts. Any agreement, obligation or liability made, entered into or incurred by or on behalf of New England Electric System binds only its trust estate, and no shareholder, director, trustee, officer or agent thereof assumes or shall be held to any liability therefor. EX-99 2 EXHIBIT INDEX EXHIBIT INDEX Exhibit No. Description Page - ----------- ------------ ------ A-1 NEES Agreement and Declaration of Incorporated by Trust reference A-2 Proposed Amendment to Agreement and Filed herewith Declaration of Trust B-1 Preliminary Proxy Statement/Draft Confidential treatment requested B-2 Press Release Filed herewith B-3 Agreement and Plan of Merger Incorporated by reference F Opinion of Counsel To be filed by Amendment H Proposed Notice Filed herewith EX-99 3 EXHIBIT A-2 Exhibit A-2 TEXT SHOWING CHANGES PROPOSED TO THE AGREEMENT AND DECLARATION OF TRUST - -Bracketed text to be deleted, underlined text to be added.- Article 58 58. In case these trusts shall be terminated or in the case of any merger approved pursuant to Section 59B or in the case any of the terms, powers and provisions herein contained shall be altered, amended, added to or rescinded pursuant to the provisions of Article 57, a certificate in any number of counterparts deemed desirable, setting forth such termination or merger, alteration, amendment, addition or rescission and that the Board of Directors and Shareholders have authorized the same in accordance with the provisions of [said] Article 57 or Article 59B, as applicable, shall be signed by two of the Directors and by the secretary or any assistant secretary, and shall be acknowledged by one of the Directors and one counterpart of said certificate shall be filed with the Trustee and other counterparts thereof shall be recorded or filed at the principal office of these trusts and in such places as may be required by law. Article 59B (new) 59B. Merger. Except as provided in Article 59A above, the Board of Directors by two-thirds vote may cause a domestic limited liability company to be merged into these trusts in accordance with Chapters 156C (Massachusetts Limited Liability Company Act) and 182 (Voluntary Associations and Certain Trusts) of the Massachusetts General Laws, if such merger has been authorized by vote, at a meeting duly called for the purpose upon at least twenty days' prior notice, of a majority of the shares outstanding and entitled to vote thereon at such meeting. Any such merger shall become effective only upon presentation to the Trustee, as required by Article 58, of the counterpart of the certificate referred to in Article 58, or at such later time as may be specified in the certificate. In respect to any such merger, the holders of all shares of the Company who dissent from such transaction within the time and in the manner provided in the Massachusetts statute applicable to business corporations, shall have substantially those rights they would have if these trusts were at the time a Massachusetts business corporation. Such rights shall be the Shareholders' exclusive remedy in respect of such holders' dissent from any such actions. EX-99 4 EXHIBIT B-2 Exhibit B-2 FOR RELEASE: Dec. 14, 1998 CONTACTS: NEES NATIONAL GRID Investors: Investors: Bob Seega, 508-389-2178 Jill Sherrett 011-44-171-620-9191 Media: Until 6:00 a.m.: Media: Susan Stevens, 617-236-5800 x2811 Margaret Stewart 011-44-171-620-9191 After 6:00 a.m.: Amy Tull, 508-389-3283 NEES AND NATIONAL GRID TO MERGE IN $3.2 BILLION TRANSACTION WESTBOROUGH, Mass., Dec. 14, 1998 The National Grid Group plc (LSE:NGG) and New England Electric System (NYSE:NES) announced today that they have signed a merger agreement under which National Grid will acquire all of the outstanding shares of NEES. Under the terms of the agreement, NEES shareholders will receive $53.75 in cash (subject to upward adjustment) for each NEES share held. The terms value the equity of NEES at approximately $3.2 billion and represent a premium of 25% above the closing price of NEES shares on Dec. 11, 1998. National Grid is the owner and operator of the England and Wales high- voltage transmission network, including interconnectors with Scotland and France. National Grid is the world's largest privately owned transmission company, and has almost a decade of experience running a transmission network in a competitive market. It is listed on the London Stock Exchange with a market capitalization of $12.4 billion. NEES will become the base of U.S. operations for National Grid, and will provide a regional platform for growth in transmission and distribution. "For NEES and our employees, this transaction not only keeps jobs in New England, it represents a tremendous opportunity for growth as the base of U.S. operations for a large and successful company. For our customers and the region, it is an opportunity to benefit from National Grid's proven track record of delivering high-quality, low-cost transmission service in the competitive UK market. National Grid's considerable experience should benefit customers here as the competitive electricity market develops in the northeast," said Rick Sergel, president and chief executive officer of NEES. "Most important, our customers will continue to receive the same great service from the same people in the yellow trucks, 24 hours a day; and they will continue to receive rates among the lowest in the region. The only difference is that we will have the resources of an international leader behind us," Sergel said. Commenting on the acquisition, David Jones, chief executive of National Grid, said: "NEES has a strong reputation for efficient service to customers, and has already played a prominent role in the regulatory developments in the region. The chemistry between the management teams is excellent, and by combining our expertise with that of NEES, I am confident that as a group we will be able to deliver on the exciting prospects in the northeast U.S. and continue to enhance value for National Grid shareholders." According to National Grid, the acquisition: - - represents a significant investment in an efficient, focused transmission and distribution business with a strong operational track record, which will benefit further from National Grid's core skills; - - enhances National Grid's earnings per share before the amortization of goodwill and significantly enhances National Grid's cash flow per share immediately following the acquisition; - - provides the right point of entry into the U.S. for National Grid, given New England's favorable economic climate and its advanced state of regulatory evolution toward performance-based regulation; - - brings National Grid a high-quality management team with proven distribution expertise and a shared view of the industry's future development in the northeast U.S.; and - - provides an excellent regional platform for growth in transmission and distribution. Rick Sergel will continue as president and chief executive officer of NEES and will join the National Grid Board as an executive director, together with one of NEES's outside directors. Alfred D. Houston, NEES chairman, will step down upon the closing of the merger, and will serve as a consultant for two years. A NEES advisory board will be established for two years. Upon completion of the acquisition, NEES will become a wholly owned subsidiary of National Grid. NEES and its subsidiary names will remain the same. Headquarters for U.S. operations will remain in Massachusetts, and the strong links forged by NEES with its local communities in Massachusetts, Rhode Island and New Hampshire will be maintained, according to National Grid. The acquisition is subject to a number of regulatory and other approvals and consents, including approvals by the U.S. Securities and Exchange Commission, Federal Energy Regulatory Commission, and Nuclear Regulatory Commission, support from the states in which NEES operates, and Hart-Scott- Rodino approval. The acquisition also requires approval by shareholders of both companies, and is expected to be completed by early 2000. NEES shareholders will receive a cash payment of $53.75 for each share held when the merger is completed. The cash payment will be subject to an increase if the completion of the merger does not take place on or before the date following six months after approval of the merger by NEES shareholders. The amount of any such adjustment will be determined using a daily accrual rate of $0.0033 until closing, up to a maximum increase of $0.60 per share. Merrill Lynch & Co. served as financial advisor and delivered a fairness opinion to NEES. Rothschild and Dresdner Kleinwort Benson are jointly advising National Grid. Dresdner Kleinwort Benson Securities and HSBC Securities are brokers to National Grid. More information on the merger agreement and both companies is available on the NEES web site at www.nees.com, and the National Grid web site at www.ngc.co.uk. NEES is a public utility holding company headquartered in Westborough, Mass. Its subsidiaries Massachusetts Electric Company, Narragansett Electric Company, Granite State Electric Company, and Nantucket Electric Company serve approximately 1.3 million customers in Massachusetts, Rhode Island and New Hampshire. Unregulated subsidiaries include AllEnergy, an energy marketing company, and NEESCom, a telecommunications company. This document contains statements that may be considered forward looking under the securities laws. Actual results may differ materially. For a list of factors that could influence results, please refer to NEES's Form 10-Q for the period ended Sept. 30, 1998. The transaction is also subject to contingencies as discussed herein. EX-99 5 EXHIBIT H Exhibit H - Proposed Notice New England Electric System (NEES), 25 Research Drive, Westborough, Massachusetts 01582, a registered holding company, has filed an Application/Declaration pursuant to Sections 6(a)(2), 7, and 12(e) of the Public Utility Holding Company Act of 1935 (Act), and Rules 62 and 65 under the Act. NEES has entered into an Agreement and Plan of Merger, dated as of December 11, 1998 (the Merger Agreement), with The National Grid Group, plc, a public limited company incorporated under the laws of England and Wales (National Grid) and Iosta LLC, a Massachusetts limited liability company which is directly and indirectly wholly owned by National Grid (Iosta). Iosta changed its name to NGG Holdings LLC (NGG Holdings) subsequent to the date of the Merger Agreement. NEES would be the surviving entity and become a wholly owned subsidiary of National Grid. Under the Merger Agreement, among other things, NEES agreed to hold a meeting of its shareholders to obtain the shareholder approvals required to effect the Merger. NEES proposes to solicit proxies from its common shareholders to approve various matters in connection with the Merger at the annual NEES shareholders meeting, scheduled in early April 1999. The NEES shareholders will also be asked to consider and approve an amendment (Amendment) to NEES' Agreement and Declaration of Trust (the Trust Agreement), to provide for the merger of a Massachusetts limited liability company with and into NEES and to provide appraisal rights to shareholders. The proposed Amendment will be effected if approved by an affirmative vote of a majority of the outstanding shares. The NEES Board of Directors must then approve the Amendment by a two-thirds vote. The proposed Amendment will be effected if so approved, regardless of whether the merger is consummated. Accordingly, NEES requests that an order authorizing the solicitation of proxies to be issued as soon as practicable under Rule 62(d). At a later date, NEES and National Grid plan to file an application- declaration with this Commission requesting authority to consummate the merger. It appears to the Commission that NEES' declaration regarding the proposed solicitation of proxies should be permitted to become effective immediately. IT IS ORDERED, under Rule 62 under the Act, that the declaration regarding the solicitation of proxies can become effective immediately, subject to the terms and conditions contained in Rule 24 under the Act. -----END PRIVACY-ENHANCED MESSAGE-----