-----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, Ck4iZdCHuYaPLpm+4tG1ZH6B9rYrUyCPqSBgutRFWp2219FF+WNN2K969ziMQAPp Jkp4Dz3eNfQ2gXZaKy9V0w== 0000950152-97-000796.txt : 19970221 0000950152-97-000796.hdr.sgml : 19970221 ACCESSION NUMBER: 0000950152-97-000796 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970211 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OHIO EDISON CO CENTRAL INDEX KEY: 0000073960 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 340437786 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-02578 FILM NUMBER: 97525004 BUSINESS ADDRESS: STREET 1: 76 S MAIN ST CITY: AKRON STATE: OH ZIP: 44308 BUSINESS PHONE: 2163845100 DEFA14A 1 OHIO EDISON DEFINITIVE PROXY/ADDITIONAL MATERIALS 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SCHEDULE 14A (RULE 14a) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) [ ] Definitive Proxy Statement [x] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
OHIO EDISON COMPANY (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) XXXXXXXXXXXXXXXX (NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 FirstEnergy Merger Highlights for Registered Representatives 3 FirstEnergy Corp. [map of Ohio] Toledo Edison CEI Penn Power Ohio Edison 4 FirstEnergy o 11th largest investor-owned utility o 2.1 million customers o 13,200 square mile service area o Generating capacity of 11,681 MW o Annual revenues of $5 billion 5 Structure o Tax-free, stock-for-stock transaction o Exchange ratio: - OEC: 1 share of FirstEnergy for each share of OEC - CX: .525 shares of FirstEnergy for each share of CX o FirstEnergy shareholders to receive OE's dividend level 6 Financial and Strategic Benefits o Stronger enterprise with more resources to provide value to our investors and customers o Significant earnings and cash flow accretion o Natural opportunities for synergies - Minimum $1 billion over ten years - half labor o Control of major assets, less reliance on others o Accelerated debt reduction program - ($2.5 billion through 2000) 7 Synergies o Contiguous service territories, joint generation ownership interests offer natural opportunities for synergies o Anticipate elimination of 900 positions (8% of workforce) in addition to reductions previously announced o Significant achievement of synergies in early years is expected; transition teams have been formed 8 Merger Approval Milestones o PUCO approval of rate plan on January 30 o CX requires majority approval; OEC 2/3 approval o Special shareholder meetings on March 27 o Hope to close merger by end of 1997 9 Alignment of OEC Management and Shareholder Interests o Employees control about 11.6 million shares (8% of total) through Savings Plan o Nearly all employees are in an incentive compensation plan o Management employees have a significant portion (up to 50%) of their total compensation "at risk" based on the achievement of short- and long-term goals 10 Premium Valuation Comparison
Utility Transactions with Significant Premiums CX -------------------- ----- Premium 30.5% 42.9% Price-Earnings Multiple 15.4x 9.8x Cash Flow Multiple 6.4x 2.5x
11 OEC Common Stock Total Returns Periods Ending 12/31/96
1 Yr. 3 Yrs. 5 Yrs. --------------------- OEC 3.7% 7.5% 9.4% S & P Elec. Util. (0.2) 4.4 6.3
12 Summary o Natural opportunity to capture synergies o Significant accretion to earnings and cash flow o Strong cash flow supports rapid debt repayment o Stronger enterprise with more resources to provide value to our investors and customers 13 Questions & Answers 14 Shareholder Cash Flow
$ Millions 93 251 94 294 95 440 96 532
15
OEC vs S&P UTILITIES INDEX Stock Price Index - ----------------- Sept - Dec 1996 OEC S&P ------- ------- September 1996 13 100.00 100.00 19 94.578 99.166 25 95.181 99.627 October 1996 1 94.578 99.407 7 95.181 101.244 11 96.988 100.777 17 97.590 101.889 23 97.590 101.847 29 100.000 103.086 November 1996 4 100.602 104.282 8 103.614 106.098 14 103.614 105.946 20 107.229 106.145 26 110.241 105.773 December 1996 3 110.843 104.681 9 107.831 104.529 13 106.627 102.949 19 108.434 104.146 26 110.241 104.970 Jan - Feb 1997 - -------------- January 1997 8 111.446 104.881 14 109.639 106.313 20 109.639 106.418 24 111.446 105.848 30 112.651 105.007 February 1997 5 110.843 103.637
16 FIRSTENERGY The Right Choice for Ohio Edison Shareholders / X / Vote FOR the merger to CREATE a STRONGER, more COMPETITIVE company 17 /X/ Vote FOR: - - EARNINGS AND CASH FLOW GROWTH ANTICIPATED TO BEGIN IN THE FIRST YEAR OF THE MERGER -- AND A GREATER POTENTIAL FOR DIVIDEND GROWTH - - A NATURAL ALLIANCE OF ADJOINING SERVICE AREAS -- NEARLY DOUBLING CUSTOMERS, REVENUES AND CASH FLOW - - A LARGER, STRONGER COMPANY -- COMMITTED TO CUT DEBT BY 40 PERCENT THROUGH THE YEAR 2000 - - OHIO EDISON'S BEST STRATEGY FOR FUTURE SUCCESS NOTE: This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of FirstEnergy following the consummation of the merger. These forward-looking statements involve certain risks and uncertainties. For example, savings resulting from the merger are based on assumptions that Ohio Edison believes to be reasonable, but there can be no assurances that such assumptions will approximate actual experience, and actual results could differ materially from the presumptions included herein. Shareholders are urged to review pages 13 and 14 of Ohio Edison's proxy statement for greater detail on risks, uncertainties and underlying assumptions regarding the merger and to review the entire proxy and prospectus on the merger. You can find more information on the merger at Ohio Edison's site on the World Wide Web: http://www.ohioedison.com 1 18 Dear fellow SHAREHOLDER: Recently, you received a copy of a comprehensive document - our legally required filing with the Securities and Exchange Commission regarding our proposed merger with Centerior Energy under a new holding company called FIRSTENERGY. This supplement provides a brief review of the positive impact that we believe the merger will have on your investment. I'll begin by offering a simple explanation for the merger: We intend to create a larger, stronger, more competitive company that is FIRST in value to shareholders, FIRST in service to customers, and FIRST in opportunities for employees. And we believe that's good news for your investment. This booklet should give you a clearer picture of why your board of directors and management team strongly support the merger and urge that you vote FOR the merger on your proxy card. WE NEED YOUR SUPPORT. Approval of the merger requires a FOR vote from holders of at least two-thirds of Ohio Edison's common stock - and abstentions will have the effect of votes against the merger. By voting FOR the merger and returning your proxy card to us, you will help us create a company that is better positioned to compete and succeed in a rapidly changing utility industry - and one that we believe will add greater value to your investment. If you have questions regarding the merger after reviewing this material, please call us at 1-800-631-8945. We'll be glad to provide you with more information on why FirstEnergy merits your approval. Sincerely, /s/ Willard R. Holland Willard R. Holland Chairman and Chief Executive Officer Ohio Edison Company 2 19 /X/ Vote FOR: Earnings and cash flow GROWTH We are confident that joining the forces of Ohio Edison and Centerior Energy under FirstEnergy will create a stronger, more competitive utility that will INCREASE THE VALUE OF YOUR INVESTMENT. That's because FirstEnergy is a natural alliance - providing many opportunities to eliminate duplicative costs, maximize efficiencies, and increase management flexibility in a changing energy business. For these and other reasons, we anticipate earnings and cash flow growth beginning in the first year of the merger. Under the terms of our merger agreement, we expect to maintain your current annual dividend of $1.50 per share, and we have the flexibility to increase the dividend up to $1.60 per share prior to completion of the merger. After the merger is completed, FirstEnergy's Board of Directors will determine the new company's dividend level.
Earnings on Common Stock (Millions) - ----------------------------------- Ohio Edison Centerior FirstEnergy - ----------- --------- ----------- $295 $220 $542*
Cash Flow from Operations (Millions) - ------------------------------------ Ohio Edison Centerior FirstEnergy - ----------- --------- ----------- $753 $611 $1,364+ Unless otherwise indicated, statistics included in this booklet are for the year ended December 31, 1995. * Derived from the unaudited, pro forma financial information found on page 50 of our proxy statement. + Derived from Ohio Edison and Centerior statements of cash flow incorporated by reference in our proxy statement.
3 20 /X/ Vote FOR: Considerable SAVINGS Key benefits from merging Ohio Edison and Centerior will lead to savings that are far greater than we could achieve on our own. For example: - - SAVINGS OF $1 BILLION OVER TEN YEARS will result from new efficiencies throughout our shared operations - - Our aggressive goal to REDUCE DEBT BY AT LEAST $2.5 BILLION through the year 2000 will improve earnings by LOWERING THE COMPANIES' COMBINED INTEREST COSTS NEARLY $240 MILLION ANNUALLY BY 2001
kWh Sales (Billions) - -------------------- Ohio Edison Centerior FirstEnergy - ----------- --------- ----------- $33 31 64
Revenues (Millions) - ------------------- Ohio Edison Centerior FirstEnergy - ----------- --------- ----------- $2,466 $2,516 $4,965*
4 21 /X/ Vote FOR: A LARGER, STRONGER utility Based on total electric sales, FirstEnergy will become the nation's 11th largest investor-owned electric system - a larger, stronger utility with more opportunities to increase revenue and ultimately provide dividend growth for shareholders. Here's FirstEnergy at a glance: - - STRONG ELECTRIC SALES - 64 billion kilowatt-hours annually - - ATTRACTIVE PROSPECTS FOR FUTURE GROWTH - 2.1 million customers throughout a 13,200-square- mile service area that is one of the nation's leaders in promoting economic development - - GREATER FINANCIAL RESOURCES -$5 billion in annual revenues and more than $18 billion in assets - - RELIABLE POWER SUPPLIES - 11,681 megawatts of generating capability - - A NATURAL ALLIANCE THAT MAKES SENSE - bringing together the companies' adjoining service areas - - STRATEGIC LOCATION - within a 500-mile radius of one-half of the U.S. population - - STRONGER TRANSMISSION NETWORK - 6,500 miles of transmission lines, and 57 interconnections with 8 electric systems - - BETTER OPPORTUNITIES FOR OFF-SYSTEM ELECTRIC SALES - including growing markets in Canada and the eastern U.S. - - SOLID SUPPORT FOR LOCAL COMMUNITIES - and a commitment to build on these strong ties in the years ahead 5 22 [Graphic depicting map with locations of Toledo Edison, Ohio Edison, CEI, Penn Power highlighted] 6 23 A GOOD VALUE For Shareholders The merger represents an excellent opportunity for Ohio Edison shareholders. Here are a few of the reasons why: /X/ FAIR EXCHANGE RATIO: - - Ohio Edison shareholders will receive one share of FirstEnergy common stock for each share of Ohio Edison common stock they currently own - - Centerior shareholders will receive 0.525 of a share of FirstEnergy common stock for each share of Centerior stock they own - - As a result, Ohio Edison shareholders will own approximately two-thirds of the new company /X/ TAX-FREE: - - We expect exchange of shares to be tax-free for federal income tax purposes /X/ OHIO EDISON LEADERSHIP: - - Board of Directors of FirstEnergy will be designated by Ohio Edison's Board - - Willard R. Holland will become chairman, president and CEO of FirstEnergy - - FirstEnergy's headquarters will be located at Ohio Edison's general office in Akron, Ohio /X/ MOTIVATED MANAGEMENT TEAM: - - Ohio Edison's management team is motivated to improve shareholder value - with up to 50 percent of management's total incentive compensation based on the performance of your stock 7 24 /X/ Vote for: Improved PERFORMANCE Our service area adjoins Centerior's, and the two companies share ownership of several major power plants. The merger will build on these strong ties to achieve a number of significant benefits, including: - - Accelerated debt reduction - - Reduced operating expenses - - Enhanced cash flow - - Improved service for customers at lower prices over the long term - - Better control and operation of our combined generation and transmission facilities - - Elimination of duplicative activities - - More purchasing power, especially for our largest expense - fuel - - Lower capital requirements - - More opportunities for sales of energy-related products and services
Generating Capability (Megawatts) - --------------------------------- Ohio Edison Centerior FirstEnergy - ----------- --------- ----------- 5,757 5,924 11,681 Customers (Thousands) - ----------- Ohio Edison Centerior FirstEnergy - ----------- --------- ----------- 1,096 1,040 2,136
8 25 /X/ Questions and ANSWERS about the merger Q WHAT AM I BEING ASKED TO VOTE ON? A You are being asked to approve the merger of Ohio Edison and Centerior under a new company named FirstEnergy Corp. Q WHY SHOULD I VOTE FOR THE MERGER? A Our merger means that you will have a stake in one of the nation's largest electric utility systems under a new holding company, FirstEnergy. You will own a larger company with more resources to meet the challenges of a changing electric utility industry. We believe that the alliance will enhance the long-term value of your investment in ways that otherwise would not be possible. Our two companies have adjoining service areas, and we already share ownership in many of our major generating plants. Together, we believe we can increase revenues and cash flow, eliminate duplicative costs, maximize efficiencies, reduce debt and capital expenditures, and increase management flexibility. Q WHAT IS THE POSITION OF OHIO EDISON'S BOARD OF DIRECTORS? A Your Board of Directors has unanimously approved the plan to merge and recommends that you also vote in favor of the merger. Q WHAT HAPPENS TO MY FUTURE DIVIDENDS? A After the merger, we expect the initial annual dividend of FirstEnergy to be the same as Ohio Edison's annual dividend rate at that time, although the actual dividend will be determined by the Board of FirstEnergy. 9 26 Q WHAT ARE THE FEDERAL TAX CONSEQUENCES TO SHAREHOLDERS? A We expect that your exchange of shares will be tax-free for federal income tax purposes, except for taxes on cash received by dissenting shareholders. Q WHAT DO I NEED TO DO NOW? A Just mail your signed, dated proxy card in the enclosed envelope as soon as possible. That way, your shares will be represented at the special shareholder meeting on March 27, 1997. Q MY SHARES ARE HELD IN MY BROKER'S NAME. WILL MY BROKER VOTE MY SHARES FOR ME? A Your broker will vote your shares only if you provide written instructions on how to vote. Absent such instructions, your shares held in what is called "street name" will not be voted. A failure to vote will have the effect of a vote against the merger. Therefore, WE URGE YOU TO INSTRUCT YOUR BROKER IN WRITING TO VOTE YOUR SHARES FOR THE MERGER. Q WHAT WILL HAPPEN IF I DON'T VOTE? A If you do not vote, it is in effect a vote against the merger. Abstentions also are considered votes against the merger. To approve the merger, we must receive the affirmative votes of holders of more than two-thirds of the outstanding shares of Ohio Edison common stock, SO YOUR VOTE IS VERY IMPORTANT. Q WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED? A We are trying to complete the merger as quickly as possible. In addition to shareholder approvals, we must also obtain a number of regulatory approvals. We hope to complete the merger by the end of 1997. 10 27 PLEASE mark, sign and mail your proxy TODAY Vote FOR /X/ YOUR BOARD OF DIRECTORS AND MANAGEMENT TEAM URGE YOU TO VOTE FOR THE MERGER ON THE ENCLOSED PROXY CARD. REMEMBER, NOT RETURNING YOUR PROXY CARD, OR ABSTAINING, HAS THE EFFECT OF A VOTE AGAINST THE MERGER. Questions? CALL 1-800-631-8945 TO REACH A REPRESENTATIVE OF INVESTOR SERVICES OR GEORGESON & COMPANY, INC., WHICH IS ASSISTING US WITH THE PROXY SOLICITATION. [OHIO EDISON LOGO] The Energy Makers 76 South Main Street o Akron, Ohio 44308 28 FIRSTENERGY MERGER SUMMARY On September 16, 1996, Ohio Edison and Centerior Energy announced an agreement to merge under a new holding company called FirstEnergy Corp. Both investors and customers will benefit from the merger, which will create the nation's 11th largest electric utility based on total electric sales - with $5 billion in revenues and 2.1 million customers in northern and central Ohio and western Pennsylvania. As a larger, stronger company, FirstEnergy will be better positioned to compete under any future industry structure. BENEFITS OF MERGER - - Earnings and cash flow growth expected to start in the first year of merger. - - Increased size to better compete. - - Savings of $1 billion over ten years. - - Increased control of generating plant assets to maximize operating efficiency. - - Lower capital costs. - - Natural alliance of contiguous service areas to enhance customer service and prospects for off-system sales and future growth. - - Operating companies to reduce their exposure to nuclear investments and regulatory assets by an additional $4.3 billion by 2006. APPROVALS - - Merger requires two-thirds approval of Ohio Edison common shareholders and majority approval of Centerior shareholders. - - Merger will be reviewed by a number of regulatory agencies. The Public Utilities Commission of Ohio has already approved a key element of the merger - FirstEnergy's rate plan fo customers of Centerior. EXCHANGE RATIO/TIMING - - Upon completion of merger, OEC shareholders will receive one share of FirstEnergy for each share of OEC common stock, and CX shareholders will receive a .525 share of FirstEnergy for each share of CX common stock. - - We expect FirstEnergy's common dividend rate to be equivalent to OEC's current dividend rate. - - We expect the exchange to be tax-free for federal income tax purposes. [Map of Ohio PA Regions] Toledo Edison Ohio Edison CEI PennPower OHIO PA - - Special meeting of shareholders is scheduled for March 27, 1997. - - We expect the merger to be completed by the end of 1997. STOCK PRICE PERFORMANCE This chart highlights Ohio Edison's common stock price performance since the merger announcement. - OEC - S&P Utilities Price at 9/13/96 = 100 OEC S/P SEPTEMBER 1996 SEPTEMBER 13 100 100 20 93.373 99.659 27 94.578 99.386 OCTOBER 1996 OCTOBER 4 95.181 101.013 11 96.988 100.777 18 96.988 102.068 25 98.795 102.057 NOVEMBER 1996 NOVEMBER 1 100.000 104.198 8 103.614 106.098 15 104.217 106.056 22 109.639 105.998 29 110.843 105.411 DECEMBER 1996 DECEMBER 6 107.229 103.931 13 106.627 102.949 20 108.434 104.949 27 110.241 105.678 JANUARY 1997 JANUARY 3 110.241 103.831 10 110.241 105.678 17 110.241 106.770 24 111.446 105.848 30 112.651 105.007 COMMON STOCK HIGHLIGHTS MARKET STATISTICS AT DECEMBER 31, 1996
OE CX High/Low Price During 4th Quarter $23.25/$19.375 $10.75/$9.13 Earnings Per Share $2.10 $.82 Annualized Dividend Yield 6.6% 7.4% Annualized Dividend Per Share $1.50 $.80 Price/Earnings Ratio (12 months) 10.8 13.1 Payout Ratio (12 months) 71% 98% Book Value Per Share $17.35 $13.40
- -------------------------------------------------------------------------------- CONTACT Greg LaFlame o Manager, Investor Relations Ohio Edison Company - 76 South Main St. - Akron, OH 44308 - (330) 384-5500 -----END PRIVACY-ENHANCED MESSAGE-----