-----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, BNq2vEWHDSebkEnuT9VfmlP7LGyTZjlrwO6th7f/w63gxnVcgG/RrOoXAown7g61 22k4BMm3YDCJFRiyK6NoZA== 0000895813-00-000165.txt : 20000427 0000895813-00-000165.hdr.sgml : 20000427 ACCESSION NUMBER: 0000895813-00-000165 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000426 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: 425 SEC ACT: SEC FILE NUMBER: 001-01098 FILM NUMBER: 609458 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: 425 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 425 1 Filed by: NiSource Inc. Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: - Columbia Energy Group Registration Statement File No: 333-33896 On April 26, 2000, NiSource made the following analyst presentation. The information was also made available on NiSource's web site at www.nisource.com. TEXT OF ANALYST PRESENTATION April 26, 2000 [NISOURCE LOGO] [COLUMBIA ENERGY LOGO] CREATING VALUE IN THE ENERGY CORRIDOR April 26, 2000 These materials contain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, including state- ments about future business operations and financial performance. These statements involve risks and uncertainties inherent in business forecasts, and actual results could differ materially from those indicated in these statements. A number of these risks and uncer- tainties are discussed in NiSource/Columbia Form 10-Q Quarterly Report filed with the Securities and Exchange Commission. CAPITALIZING ON THE ENERGY CORRIDOR. . . ========================================================================== [Graph - Corridor Highlights] o 40% of US energy consumption o 30% of US population o 127,000 MW of new gas fired generation o 24 Bcf/d of new interstate gas pipeline capacity [Graph - Regional map of the United States depicting states which NiSource and Columbia serve in corridor, extending from New England through Illinois into Texas] THE PREMIER COMPETITOR. . . ========================================================================== [Graph - Map depicting certain operations of various NiSource and Columbia entities in the Energy Corridor] BUILDING FOR TOMORROW. . . ========================================================================== o Broad platform to maximize opportunities -- 4.1 million customers -- Gas distribution in 9 states -- Pipeline operations in 16 states o Skills to procure, deliver and risk manage the commodity around the assets [CHART] -------- ------------ ---------- Commodity Upstream Distribution Downstream -------- ------------ ---------- o 19,000 Miles of Pipeline o Regulated Utilities o Energy Related Products o 700 Bcf of Gas Storage o Customer Growth o Cogeneration o Marketing Services o Distributed Generation o Gas Optionality o Commodity Conversion o Electric Optionality CREATING VALUE. . . ========================================================================== . . .With Lower Risk and Higher Returns o Regulated Businesses -- Positive regulatory relationships -- Aggressive cost efficiencies -- Pursue incentive opportunities o Related Diversification -- Leverage existing asset base into knowledge based businesses with high returns -- Integrating existing businesses into growth markets o Creating New Business Opportunities in Growth Markets -- Asset Optionality -- Distributed Generation o Maintain strong financial profile: Solid investment grade ratings THE RIGHT ASSETS MAKE ALL THE DIFFERENCE. . . ========================================================================== 15% CAGR [Graph - Chart depicting projections of Net Income from 2001-2005 for Distributed Generation, Electric Optionality, Gas Optionality and Base Business] A GREAT TRANSACTION. . . ========================================================================== o Current estimates are for over subscription of equity offering to a maximum of 30% - reducing initial leverage o Asset sales -- Minimize equity needs or reduce leverage -- Identified over $1 BN of asset sales: Expect at least $923 MM in after tax proceeds -- Likely that over $500 MM in asset sales will be completed by year-end 2000 -- Sale program to be completed by June 30, 2001 o Dividend Policy -- Committed to maintaining current profile -- Dividend growth will continue to track net income growth THE TRANSACTION STRUCTURE. . . ========================================================================== [Graph - Chart depicting transaction structure target debt ratings, debt and preferred stock] REALIZABLE SYNERGIES. . . ========================================================================== [CHART] (Dollars in Millions) 2001 2002 2003 2004 2005 ---- ---- ---- ---- ---- DISTRIBUTION Revenue $1.5 $7.7 $11.5 $15.8 $18.1 Cost 15.3 19.1 22.6 27.8 29.5 TRANSMISSION Cost 8.7 13.9 15.3 17.3 17.8 CORPORATE 72.1 100.6 106.5 112.7 119.6 TOTAL SYNERGIES $97.6 $141.3 $155.9 $173.6 $185.0 ------------------------------------- Expect to realize incremental savings ------------------------------------- 6-9% OF COMBINED NON-FUEL O&M. . . ========================================================================== [ Graph - Bar Chart depicting pretax cost synergies and revenue enhancements from 2001 to 2004] 2001 2002 2003 2004 ---- ---- ---- ---- Cost savings % of Pro Forma 5.8% 8.1% 8.6% 9.4% Combined Non-Fuel O&M Cost savings % of Columbia 9.6% 13.2% 14.2% 15.6% Non-Fuel O&M MINIMIZING RISK. . . ========================================================================== o Stock Election -- Focused on retail shareholders (20% of Columbia shareholder base) -- Provides tax free exchange -- Significant dividend accretion -- Institutional interest exceeds initial expectations o Minimal Regulatory Risk -- Columbia management incentivized to proactively spearhead the transition process -- Dominion/CNG completed in 8-1/2 months -- Low rates, strong regulatory settlements, existing customer choice and open access programs minimize state regulatory pressures o Pro Forma Credit Profile - similar to Dominion/CNG -- Intend to proactively manage interest rate exposure -- Lower business risk profile -- Approximately 90% of EBIT from regulated businesses [NISOURCE LOGO] [COLUMBIA ENERGY GROUP LOGO] Oliver G. Richard III Chairman, President and CEO Columbia Energy Group Today's Focus ========================================================================== o Approvals required to close o Running the company in the interim APPROVAL TIMETABLE - Tracks NI/Bay State and D/CNG timetable
============================================================================================================================== - ------------------------------------------------------------------------------------------------------------------------------ Year 2000 March April May June July Aug. Sept. 4th Qtr. - ------------------------------------------------------------------------------------------------------------------------------ Shareholder Proxy Special Approval Filed Mtg 4/21 NI 6/1 CG 6/2 - ------------------------------------------------------------------------------------------------------------------------------ State Filings PA Filed VA Filed KY Filing All Proceedings 3/30 4/3 Approve ME Filed 4/10 NH Filed 4/12 - ------------------------------------------------------------------------------------------------------------------------------ FERC Filed 4/10 Approve - ------------------------------------------------------------------------------------------------------------------------------ Hart-Scott Filing Approve Rodino - ------------------------------------------------------------------------------------------------------------------------------ SEC 1935 Act Approve Filed 4/14 - ------------------------------------------------------------------------------------------------------------------------------
Approval Progress - On track for year-end close ============================================================================================================================== - ------------------------------------------------------------------------------------------------------------------------------ Year 2000 March April May June July Aug. Sept. 4th Qtr. - ------------------------------------------------------------------------------------------------------------------------------ Shareholder Proxy Special Approval Filed Mtg 4/21 NI 6/1 CG 6/2 - ------------------------------------------------------------------------------------------------------------------------------ State Filings PA Filed VA Filed KY Filing All Proceedings 3/30 4/3 Approve ME Filed 4/10 NH Filed 4/12 - ------------------------------------------------------------------------------------------------------------------------------ FERC Filed 4/10 Approve - ------------------------------------------------------------------------------------------------------------------------------ Hart-Scott Filing Approve Rodino - ------------------------------------------------------------------------------------------------------------------------------ SEC 1935 Act Approve Filed 4/14 - ------------------------------------------------------------------------------------------------------------------------------
Maintaining Our Focus - First Quarter 2000 Results ========================================================================== Period-to-period Improvement from Recurring Continuing Operations - -------------------------------------------------------------------------- Operating Income $31.4 million UP 12.5% Net Income $9.9 million UP 7.08% Earnings Per Share $0.16 UP 9.60% - -------------------------------------------------------------------------- Includes impact of weather that was 8% warmer than prior year Excludes one-time gain from 1999 producer settlement Columbia's Management Delivers Superior Value ========================================================================== [CHART SHOWING MOVEMENTS OF (A) COLUMBIA'S COMMON STOCK MARKET PRICES, (B) S&P 500 INDEX, AND (C) S&P NATURAL GAS INDEX OVER THE PERIOD FROM MARCH 1995 TO MARCH 2000] A Commitment To Continuing Value ================================================================================ [Graph depicting year-end closing price for 1995-2000] 5-yr. price appreciation = 148% Year-end closing price 12/95............. 29.25 12/96............. 42.42 12/97............. 52.38 12/98............. 57.75 12/99............. 63.25 12/00............. 72.60 [NISOURCE LOGO] [COLUMBIA ENERGY GROUP LOGO] Columbia Gas Transmission Corporation Columbia Gulf Transmission Company Operating Income Track Record Strong ========================================================================== One-time Normalized items Total ---------- ----- ----- ($ Millions) 1996..................... $243 1997..................... $281 1998..................... $307 $19 $326 1999..................... $314 $36 $350 Cost Reduction Targets Achievable ========================================================================== o Voluntary Incentive Retirement Program -- Almost 500 out of 2,300 (TCO) elected o 42% reduction in management staff o $30 million of cost savings by 2001 o Additional $3-10 million of savings from new work practices ROIC Moves to Top Quartile ========================================================================== Normalized 1996............... 13.9% 1997............... 17.4% 1998............... 17.2% 1999............... 17.5% Platform for Growth ========================================================================== [MARKET EXPANSION LOGO] [VOLUNTEER PIPELINE LOGO] [MILLENNIUM PIPELINE LOGO] [COLUMBIA GULF MAINLINE '99 LOGO] [SUNSTAR PIPELINE LOGO] MILLENNIUM PIPELINE LOGO ================================================================================ o Project sponsors: Columbia (47.5%) TCPL (21%) Westcoast (21%) and MCN (10.5%) [MAP OF MILLENNIUM PIPELINE] o 700 Mmcf/d, low-cost expandability o 422 miles from Lake Erie o $650 million investment Millennium Advantages ========================================================================== o Problematic Independence certificate o Vector moves Millennium pricing point to Dawn creating pricing advantage o Only 7 percent of Millennium right-of-way is green field o 300 Mmcf/d interconnect with 1200 MW Bowline facility Realistic Combined Cycle Power Generation Growth of 1.2 Bcf/d ========================================================================== [MAP SHOWING MILLENNIUM PIPELINE, TIOGA STORAGE, BOWLINE, COLUMBIA STORAGE FIELDS, AND NUMBER, CAPACITY AND VOLUME OF DEVELOPERS] Power Market Growth for Columbia Gulf, Volunteer ========================================================================== [MAP SHOWING EGAN STORAGE, COLUMBIA GULF, PROPOSED VOLUNTEER PIPELINE ROUTE AND MIDWESTERN GAS] Supply Driven Growth in Gulf ========================================================================== SunStar o Deepwater/Liquids play [MAP SHOWING TARGET SUPPLY AREA IN GULF OF MEXICO AND COLUMBIA GULF o Partnership with PIPELINE] major producer o Phased project -- up to 600 Mdth/d o Timeframe: late 2001/early 2002 Growth in OH Valley/Storage Play Creates Synergies with NiSource ========================================================================== [MAP SHOWING NISOURCE GAS DISTRIBUTION SERVICE TERRITORY, PEAKING PLANTS, CROSSROADS, COLUMBIA GAS TRANSMISSION, COLUMBIA STORAGE FIELDS AND TIOGA STORAGE] Transmission Segment Outlook ========================================================================== o Strategically located assets o Aggressive cost efficiencies o Strong demand for products/services o Creating new business opportunities in growth markets Platform for NEW Growth ========================================================================== [GRAPHIC OMITTED] COLUMBIA TRANSCOM Leveraging Existing Asset Base Into Knowledge-Based Business With High Returns ========================================================================== o Columbia's pipeline footprint connects key population and business centers --Access to 23 million people --29% of nation's telecom traffic o Customer interest high o 1,830-mile Mid-Atlantic network [MAP SHOWING COLUMBIA'S PIPELINE NETWORK] Status of DC to NYC Build ========================================================================== o 70+% of fibers under contract o Only 1 of 4 conduits used o In-service scheduled for June 30, 2000 o Unregulated operating income of $8 million by 2001 o Up-front payments from customers return capital by 6/2001 Transcom Summary ================================================================================ o Leveraging strategically located ROW o Business fits NiSource strategy to leverage existing asset base into knowledge-based businesses with high returns o Unregulated earnings platform o Capex returned quickly o Significant growth potential [NISOURCE LOGO] [COLUMBIA ENERGY GROUP LOGO] Columbia Energy Group Gas Distribution Companies Columbia Distribution ========================================================================== o 32,000 miles of pipeline o 2.1 million customers o 525 Bcf of deliveries [MAP SHOWING COLUMBIA DISTRIBUTION COVERAGE] Summary Results ========================================================================== Mid 90s 1999 2000E ------- ---- ----- O&M Expense $ 445 $ 410 $ 370* Capital Expendituress $ 152 $ 145 $ 136 Employees 5,000 3,900 3,200 Gas supply revenue $ 0 $ 71 $ 71 Cash Flow $ (25) $ 60 $ 75 ROIC 12.5% 17.5% 17.5% Note: Dollar amounts in millions. *Excludes one-time charges Distribution Objectives ========================================================================== Financial Operational --------- ----------- o 6 - 8 % Operating Income growth o CHOICE/revenue growth o Top Quartile returns o 95% customer satisfaction o Significant cash flow generation o Positive external relationships Operating Income ========================================================================== [GRAPH SHOWING OPERATING INCOME IN 1997, 1998 AND 1999, AND PROJECTED ANNUAL GROWTH IN 2000 AND 2001] Gas Management Revenues ========================================================================== [GRAPH SHOWING GAS MANAGEMENT REVENUES IN 1995, 1996, 1997, 1998, 1999 AND PROJECTED GROWTH IN 2000-2004] Key Initiatives ========================================================================== o Centralization of support activities o Leveraged procurement o Commitment to Excellence: -- Strategic use of technology -- Virtual workforce structure -- Consolidation of field operations Impact of Initiatives ========================================================================== December 1999 December 2000 ------------- ------------- Employee Count.................... 3,900 3,200 O&M Expense....................... $ 410M $ 370M Raising the Bar... ========================================================================== [GRAPH SHOWING CAPITAL PER CUSTOMER IN 1999, 2000, 2001 AND 2002] Raising the Bar... ========================================================================== [GRAPH SHOWING O&M PER CUSTOMER IN 1999, 2000, 2001 AND 2002] Raising the Bar... ========================================================================== [GRAPH SHOWING ROIC IN 1999, 2000, 2001 AND 2002] OPTIONALITY - NISOURCE ========================================================================== o OPTIONALITY DEFINED -- Value Derived From Ownership/Control of an Asset by Having the Right to Employ That Asset in Advantageous Market Environments. o WHAT IS THE VALUE TO NISOURCE? -- Asset Ownership/Control * Legacy Obligations -- Market Approach * Enterprise Opportunities OPTIONALITY - NISOURCE ========================================================================== o ASSESS -- Capability of Asset -- Type of Asset -- Adaptability o VALUE -- Market/Demand -- Cost Basis -- Timing o DECISIONS -- Trade, Market, Buy, Sell, Hold OPTIONALITY - NISOURCE Locational Edges ========================================================================== o Move Natural Gas From Chicago Market to the East o 700 Bcf of Midwest Market Storage o Monetize the Volatility of Regional Electric Markets OPTIONALITY - NISOURCE Locational Edges ========================================================================== [GRAPH - Depicting northeastern quarter of the United States including different markets served] OPTIONALITY - NISOURCE ========================================================================== [GRAPH depicting different options uses available to market area storage] OPTIONALITY ========================================================================== [BAR GRAPH of Primary Energy Inc. MW generation and income after taxes for years 1996 to 2003] NATURAL GAS - FUELING THE FUTURE ========================================================================== [PHOTOGRAPH - of Natural Gas Microturbine on roof of Walgreens store] Natural Gas Microturbine Combined Heat and Power [PHOTOGRAPH - of man in laboratory working with a fuel cell] Fuel Cell CREATING VALUE. . . ========================================================================== . . . With Lower Risks and Higher Returns o Regulated Businesses -- Positive regulatory relationships -- Aggressive cost efficiencies -- Pursue incentive opportunities o Related Diversification -- Leverage existing asset base into knowledge based businesses with high returns -- Integrating existing businesses into growth markets o Creating New Business Opportunities in Growth Markets -- Asset Optionality -- Distributed Generation o Maintain strong financial profile: Solid investment grade ratings THE PREMIER COMPETITOR. . . ========================================================================== [Graph - Map depicting certain operations of various NiSource and Columbia entities in the Energy Corridor] [NISOURCE LOGO] [COLUMBIA ENERGY LOGO] CREATING VALUE IN THE ENERGY CORRIDOR April 26, 2000 These materials contain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, including statements about future business operations and financial performance. These statements involve risks and uncertainties inherent in business forecasts, and actual results could differ materially from those indicated in these statements. A number of these risks and uncertainties are discussed in NiSource/Columbia Form 10-Q Quarterly Report filed with the Securities and Exchange Commission. These materials contain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, including statements about future business operations and financial performance. These statements involve risks and uncertainties inherent in business forecasts, and actual results could differ materially from those indicated in these statements. A number of these risks and uncertainties are discussed in NiSource's and Columbia Energy Group's respective Form 10-Q Quarterly Reports filed with the Securities and Exchange Commission. SEC INFORMATION --------------- NiSource and the new holding company formed in connection with the Columbia merger have filed a registration statement, which contains a joint proxy statement/prospectus of NiSource and Columbia and other documents, with the Securities and Exchange Commission. Investors and security holders are urged to read the joint proxy statement/prospectus and any other relevant documents filed with the SEC because they contain important information. Investors and security holders may receive the joint proxy statement/prospectus and other documents free of charge at the SEC's web site, www.sec.gov, from NiSource at its web site, www.nisource.com, or from Columbia at its web site, www.columbiaenergygroup.com. Information concerning the identity of the participants in the solicitation of proxies by the NiSource Inc. and Columbia Energy Group boards of directors and their direct or indirect interests, by security holdings or otherwise, may be obtained from the Secretary of NiSource Inc., or the Secretary of Columbia Energy Group, as the case may be, at the web addresses listed above. -----END PRIVACY-ENHANCED MESSAGE-----