<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 3, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
ENRON CORP.
(Exact name of Registrant as specified in its charter)
<TABLE>
<C> <C> <C>
OREGON
(State of other jurisdiction 5172 47-0255140
of incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification No.)
REX R. ROGERS
1400 SMITH STREET ENRON CORP.
HOUSTON, TX 77002-7369 1400 SMITH STREET
(713) 853-6161 HOUSTON, TX 77002-7369
(Address, including zip code, and telephone (713) 853-3069
number, including area code, of registrant's (Name, address, including zip code, and
principal executive offices) telephone number, including area code,
of agent for service)
</TABLE>
Copy to:
<TABLE>
<C> <C>
RONALD T. ASTIN WALTER J. SMITH
VINSON & ELKINS L.L.P. BAKER & BOTTS, L.L.P.
1001 FANNIN, SUITE 2300 910 LOUISIANA
HOUSTON, TEXAS 77002-6760 HOUSTON, TEXAS 77002-4995
(713) 758-3615 (713) 229-1614
</TABLE>
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable following the effectiveness of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED(1) AGGREGATE OFFERING PRICE(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock................................... $429,217,594 $130,066
============================================================================================================
</TABLE>
(1) This Registration Statement relates to the shares of the common stock of
Enron Corp. to be issued in exchange for the outstanding common shares of
Enron Global Power & Pipelines L.L.C. ("EPP") pursuant to the Merger
described in the Proxy Statement/Prospectus included herein.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f), based on the market value of the EPP common shares
to be canceled in the exchange using the average of the low and high sales
prices of EPP common shares as reported on the New York Stock Exchange
Composite Tape on August 27, 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
[ENRON LOGO]
ENRON GLOBAL POWER & PIPELINES L.L.C.
, 1997
Dear Enron Global Power & Pipelines Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders
(the "EPP Special Meeting") of Enron Global Power & Pipelines L.L.C. ("EPP"),
which will be held on , , 1997, at the Enron Building,
1400 Smith Street, Room 5C, Houston, Texas. The meeting will start at 10:00
a.m., local time.
At this important meeting, you will be asked to approve an Agreement and
Plan of Merger (the "Merger Agreement") providing for the merger (the "Merger")
of a wholly owned subsidiary of Enron Corp. ("Enron") with and into EPP. As a
result of this transaction, you will receive such number of shares of the common
stock, no par value, of Enron ("Enron Common Stock") as have a value of $35
(based upon the average of the closing prices, regular way, per share of Enron
Common Stock on the New York Stock Exchange during the 20 consecutive trading
days ending on the day prior to the closing date of the Merger).
THE OVERSIGHT COMMITTEE OF THE BOARD OF DIRECTORS, AFTER CAREFUL
CONSIDERATION, UNANIMOUSLY RECOMMENDED TO THE BOARD OF DIRECTORS THAT THE MERGER
AGREEMENT, AND THE MERGER CONTEMPLATED THEREBY, BE APPROVED BY THE SHAREHOLDERS
OF EPP. THE ENTIRE BOARD OF DIRECTORS ALSO CAREFULLY REVIEWED AND CONSIDERED THE
TERMS AND CONDITIONS OF THE MERGER AGREEMENT AND, AFTER RECEIPT OF THE OVERSIGHT
COMMITTEE'S RECOMMENDATION, CONCLUDED THAT THEY ARE IN THE BEST INTERESTS OF EPP
AND ITS SHAREHOLDERS. ACCORDINGLY, BY A UNANIMOUS VOTE OF THE DIRECTORS PRESENT,
YOUR BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY
RECOMMENDS A VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
Your vote is important no matter how many shares you hold. Even if you plan
to attend the EPP Special Meeting, we urge you to mark, sign and date the
enclosed proxy and return it promptly. You have the option to revoke it at any
time, or to vote your shares personally on request if you attend the EPP Special
Meeting. For the Merger Agreement to be approved under state law and EPP's
limited liability company agreement, it must have the support of the majority of
the votes entitled to be cast by the outstanding EPP common shares. Because
Enron owns approximately 52% of the outstanding EPP common shares and has
advised EPP that it intends to vote in favor of adoption of the Merger
Agreement, receipt of this vote is assured. However, pursuant to the Merger
Agreement, approval of the Merger also requires the support of a majority of the
votes of holders of common shares other than Enron and entities controlled by
Enron (the "Public Shareholders") present and voted at the EPP Special Meeting.
PLEASE RETURN YOUR SIGNED PROXY CARD. YOUR VOTE IS IMPORTANT NO MATTER HOW
MANY SHARES YOU OWN.
You are urged to review carefully the attached Proxy Statement/Prospectus,
which contains a detailed description of the Merger Agreement, the terms and
conditions thereof and the transactions contemplated thereby.
<PAGE> 3
Promptly after the Merger, a letter of transmittal will be mailed to each
holder of record of EPP common shares. PLEASE DO NOT SEND YOUR EPP COMMON SHARE
CERTIFICATES WITH THE ENCLOSED PROXY. THE LETTER OF TRANSMITTAL TO BE MAILED TO
YOU LATER WILL INCLUDE INSTRUCTIONS AS TO THE PROCEDURE TO BE USED IN SENDING IN
YOUR EPP COMMON SHARE CERTIFICATES.
If you have any questions or need further assistance, please call Norma A.
Tidrow, at (713) 646-7933.
Sincerely,
Rodney L. Gray
Chairman and Chief Executive Officer
<PAGE> 4
[ENRON LOGO]
ENRON GLOBAL POWER & PIPELINES L.L.C.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 1997
To the Shareholders of Enron Global Power & Pipelines:
A Special Meeting of Shareholders (the "EPP Special Meeting") of Enron
Global Power & Pipelines L.L.C., a Delaware limited liability company ("EPP"),
will be held on , , 1997 at 10:00 a.m. local time, at
the Enron Building, 1400 Smith Street, Room 5C, Houston, Texas for the following
purposes:
1. To consider and vote upon a proposal to approve an Agreement and Plan of
Merger by and among Enron Corp. ("Enron"), EPP, and Enron International
Merger L.L.C. ("Merger Sub"), a wholly owned subsidiary of Enron, dated
as of August 18, 1997 (the "Merger Agreement") providing for the merger
(the "Merger") of Merger Sub with and into EPP, as a result of which EPP
will be the surviving company and each EPP common share ("EPP Common
Share") issued and outstanding at the effective time of the Merger will
be converted into the right to receive such number of shares of the
common stock, no par value, of Enron ("Enron Common Stock") as have a
value of $35 (based upon the average of the closing prices, regular way,
per share of Enron Common Stock on the New York Stock Exchange during
the 20 consecutive trading days ending on the day prior to the closing
date of the Merger). Information concerning the Merger Agreement and the
transactions contemplated thereby is set forth in the accompanying Proxy
Statement/Prospectus and in the Merger Agreement, a copy of which is
included as Annex A thereto.
2. To transact such other business as may properly come before the EPP
Special Meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on ,
1997, as the record date (the "Record Date") for the determination of holders of
EPP Common Shares entitled to notice of, and to vote at, the EPP Special Meeting
or any adjournment(s) thereof. Only holders of record of EPP Common Shares at
the close of business on the Record Date are entitled to notice of, and to vote
at, the EPP Special Meeting. A complete list of such shareholders will be
available for inspection at the offices of EPP in Houston, Texas, during normal
business hours upon written demand by any EPP shareholder or the shareholder's
agent or attorney beginning two business days after the date of this notice and
continuing through the EPP Special Meeting. Any shareholder or shareholder's
agent or attorney may, upon written notice and subject to Section 18-305 of the
Delaware Limited Liability Company Act, copy the list of shareholders during
regular business hours during the inspection period at the shareholder's
expense. If you have shares registered in the name of a brokerage firm or
trustee and plan to attend the EPP Special Meeting, please obtain from the firm
or trustee a letter, account statement or other evidence of your beneficial
ownership of those shares to facilitate your admittance to the meeting.
Under applicable law, dissenters' rights do not apply to the holders of EPP
Common Shares in connection with the transactions contemplated by the Merger
Agreement.
<PAGE> 5
YOUR VOTE IS IMPORTANT. The affirmative vote of the holders of a majority
of each of (i) the outstanding EPP Common Shares and (ii) the EPP Common Shares
held by persons other than Enron and entities controlled by Enron present and
voted at the EPP Special Meeting is required for approval of the Merger
Agreement. Even if you plan to attend the EPP Special Meeting in person, please
sign and return the enclosed proxy to ensure that your shares will be
represented at the EPP Special Meeting if you are unable to attend. If you do
attend the EPP Special Meeting and wish to vote in person, you may withdraw your
proxy and vote in person.
By Order of the Board of Directors
K. Wade Cline
Vice President,
General Counsel and Secretary
Houston, Texas
, 1997
<PAGE> 6
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 3, 1997
[ENRON LOGO]
ENRON CORP.
ENRON GLOBAL POWER & PIPELINES L.L.C.
---------------------
PROXY STATEMENT/PROSPECTUS
This Proxy Statement/Prospectus relates to the Agreement and Plan of Merger
dated as of August 18, 1997 (the "Merger Agreement") among Enron Corp., an
Oregon corporation ("Enron"), Enron Global Power & Pipelines L.L.C., a Delaware
limited liability company ("EPP"), and Enron International Merger L.L.C., a
Delaware limited liability company and a wholly owned subsidiary of Enron
("Merger Sub"). Under the Merger Agreement, and subject to the terms and
conditions thereof, Merger Sub will merge with and into EPP, with EPP being the
surviving company (the "Merger").
In the Merger, each EPP common share ("EPP Common Share") issued and
outstanding at the effective time of the Merger (other than shares owned by
Merger Sub, Enron or any direct or indirect subsidiary of Enron, which will
remain outstanding and unchanged) will be converted into such number of shares
of common stock, no par value, of Enron ("Enron Common Stock") as have a value
of $35 (based on the average of the closing prices, regular way, per share of
Enron Common Stock on the New York Stock Exchange (the "NYSE") during the 20
consecutive trading days ending on the day prior to the closing date of the
Merger).
This Proxy Statement/Prospectus is being furnished to holders of EPP Common
Shares in connection with the solicitation of proxies by the Board of Directors
of EPP (the "EPP Board") for use at a special meeting of shareholders of EPP
(the "EPP Special Meeting") to be held on , 1997 to approve the
Merger Agreement. This Proxy Statement/Prospectus and the accompanying form of
proxy are first being mailed to shareholders of EPP on or about ,
1997.
This Proxy Statement/Prospectus also constitutes a prospectus of Enron with
respect to the shares of Enron Common Stock to be issued in the Merger in
exchange for EPP Common Shares outstanding, other than those owned by Merger
Sub, Enron or any subsidiary of Enron, at the effective time of the Merger.
On , 1997, the closing prices of Enron Common Stock and EPP
Common Shares, as reported on the NYSE, were $ and $ ,
respectively. On August 15, 1997, the last business day before the execution of
the Merger Agreement, the closing prices of Enron Common Stock and EPP Common
Shares, as reported on the NYSE, were $35 5/8 and $33 11/16, respectively. On
May 13, 1997, the day prior to the announcement of Enron's original proposal
regarding a merger involving EPP, the closing prices of Enron Common Stock and
EPP Common Shares, as reported on the NYSE, were $41 1/4 and $30 1/4,
respectively.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS , 1997
<PAGE> 7
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IN
CONNECTION WITH THE SOLICITATION OF PROXIES OR THE OFFERING OF SECURITIES MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY ENRON OR EPP. NEITHER THE DELIVERY OF
THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES OFFERED
HEREBY SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF ENRON OR EPP SINCE THE DATE HEREOF OR THAT THE
INFORMATION SET FORTH OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES, OR
THE SOLICITATION OF A PROXY, IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN OFFER OR PROXY
SOLICITATION.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE CERTAIN DOCUMENTS
CONCERNING ENRON AND EPP THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
ENRON AND EPP EACH UNDERTAKES TO PROVIDE COPIES OF SUCH DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE), WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER OF EPP
COMMON SHARES, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST, IN THE CASE OF ENRON, TO ENRON CORP., 1400 SMITH
STREET, HOUSTON, TEXAS 77002, ATTENTION: PEGGY B. MENCHACA, CORPORATE SECRETARY,
(713) 853-6161, AND IN THE CASE OF EPP, TO ENRON GLOBAL POWER & PIPELINES
L.L.C., 333 CLAY STREET, SUITE 1800, HOUSTON, TEXAS 77002, ATTENTION: K. WADE
CLINE, CORPORATE SECRETARY, (713) 646-7937. IN ORDER TO ENSURE DELIVERY OF
DOCUMENTS PRIOR TO THE SPECIAL MEETING, REQUESTS SHOULD BE RECEIVED BY
, 1997.
This Proxy Statement/Prospectus does not cover any resale of the securities
to be received by shareholders upon consummation of the Merger, and no person is
authorized to make any use of this Proxy Statement/Prospectus in connection with
any such resale.
AVAILABLE INFORMATION
Enron and EPP are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by Enron and EPP can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven World
Trade Center, Suite 1300, New York, New York 10048 and CitiCorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained by mail from the Public Reference Section of the
Commission at 450 West Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, reports, proxy statements and other information concerning
Enron or EPP may be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005, and such material and other information concerning Enron
can also be inspected at the Pacific Stock Exchange, Inc., 301 Pine Street, San
Francisco, California 94104 and the Chicago Stock Exchange, 440 South LaSalle
Street, Chicago, Illinois 60605, on which exchanges the Enron Common Stock is
listed. Certain of such reports, proxy statements and other information filed by
Enron or EPP are also available on the Internet at the Commission's World Wide
Web site at http://www.sec.gov.
Enron has filed with the Commission a Registration Statement on Form S-4
(together with all amendments, supplements and exhibits thereto, the
"Registration Statement") under the Securities Act of
2
<PAGE> 8
1933, as amended (the "Securities Act"), with respect to the Enron Common Stock
to be issued in the Merger. The information contained herein with respect to
Enron and its affiliates has been provided by Enron, and the information
contained herein with respect to EPP and its affiliates has been provided by
EPP. This Proxy Statement/Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement, copies of
which may be obtained from the Commission as set forth above. Any statements
contained herein concerning the provisions of any document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Effective July 1, 1997, Enron Corp., a Delaware corporation ("Old Enron"),
was reincorporated in Oregon by means of a merger with and into Enron Oregon
Corp., an Oregon corporation, which changed its name to Enron Corp. upon
consummation of the merger. Unless the context otherwise requires, as used
herein the term "Enron" refers to Enron Corp., an Oregon corporation, and to Old
Enron, its predecessor Delaware corporation.
The following documents filed by Enron with the Commission pursuant to the
Exchange Act are incorporated herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
and June 30, 1997;
(c) Current Report on Form 8-K dated July 15, 1997;
(d) Current Report on Form 8-K dated August 29, 1997; and
(e) The description of Enron Common Stock set forth in Enron's Registration
Statement on Form 8-B filed on July 2, 1997.
The following documents filed by Old Enron with the Commission pursuant to
the Exchange Act are incorporated herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1996;
(b) Current Report on Form 8-K dated March 17, 1997;
(c) Quarterly Report on Form 10-Q for the quarter ended March 31, 1997;
(d) Current Report on Form 8-K dated June 5, 1997; and
(e) Proxy Statement relating to the Enron Annual Meeting of Stockholders
held May 6, 1997.
The following documents filed by EPP with the Commission pursuant to the
Exchange Act are incorporated herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
and June 30, 1997;
(c) Current Reports on Form 8-K dated July 17, 1997 and August 22, 1997;
(d) Proxy Statement relating to the EPP Annual Meeting of Shareholders held
May 14, 1997; and
(e) The description of EPP Common Shares set forth in EPP's Registration
Statement on Form 8-A dated November 4, 1994.
All documents filed by Enron or EPP pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Proxy
Statement/Prospectus and prior to the date of the EPP Special Meeting shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Proxy Statement/Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement/Prospectus.
3
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION...................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE................................ 3
PROXY STATEMENT/PROSPECTUS INDEX OF DEFINED
TERMS.................................... 5
SUMMARY.................................... 6
The Companies............................ 6
The EPP Special Meeting.................. 6
General............................... 6
Quorum; Vote Required................. 6
Security Ownership of Enron and
Management.......................... 7
The Merger and the Merger Agreement...... 7
General............................... 7
Background............................ 7
Reasons for the Merger................ 7
Recommendations of the Board of
Directors........................... 7
Opinion of Financial Advisor to
Oversight Committee................. 8
Closing; Effective Time of the
Merger.............................. 8
Conditions to the Consummation of the
Merger.............................. 8
Termination of the Merger Agreement... 8
EPP Share Options..................... 9
Accounting Treatment.................. 9
No Appraisal Rights................... 9
Exchange of Stock Certificates........ 9
Interests of Certain Persons in the
Merger.............................. 9
Certain Federal Income Tax
Considerations...................... 9
Comparative Rights of Enron Stockholders
and EPP Shareholders.................. 9
Market Price Data........................ 10
Selected Historical Financial Information
of Enron.............................. 11
Selected Historical Financial Information
of EPP................................ 12
Summary Unaudited Pro Forma Combined
Financial Information................. 13
Comparative Per Share Data............... 14
Forward Looking Statements............... 14
THE COMPANIES.............................. 15
Enron.................................... 15
EPP...................................... 16
THE EPP SPECIAL MEETING.................... 16
The EPP Special Meeting.................. 16
THE MERGER................................. 19
General Description of the Merger........ 19
Background of the Merger................. 19
Reasons for the Merger; Recommendations
of the Board of Directors............. 25
Opinion of Financial Advisors to
Oversight Committee................... 26
Interests of Certain Persons in the
Merger................................ 29
Certain Federal Income Tax
Considerations........................ 29
Restrictions on Resales by EPP
Affiliates............................ 30
Accounting Treatment..................... 30
No Appraisal Rights...................... 30
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
THE MERGER AGREEMENT....................... 31
Closing; Effective Time of the Merger.... 31
Manner and Basis of Converting Shares.... 31
Conditions to the Merger................. 32
Representations and Warranties........... 33
Certain Covenants; Conduct of Business
Prior to the Effective Time........... 33
Stock Options and Incentive Plans........ 33
Certain Post-Merger Matters.............. 33
Amendment................................ 33
Termination of the Merger Agreement...... 34
Expenses and Termination Fees............ 34
MARKET PRICES AND DIVIDEND INFORMATION..... 35
UNAUDITED PRO FORMA FINANCIAL
INFORMATION.............................. 36
PRINCIPAL SHAREHOLDERS OF ENRON AND EPP.... 37
Enron.................................... 37
EPP...................................... 39
MANAGEMENT AND OTHER INFORMATION........... 40
Oversight Committee Compensation......... 40
COMPARATIVE RIGHTS OF ENRON STOCKHOLDERS
AND EPP SHAREHOLDERS..................... 40
Authorized Capital Stock................. 40
Boards of Directors...................... 40
Removal of Directors..................... 41
Special Meetings of Shareholders;
Shareholder Action Without Meeting.... 41
Shareholder Proposals and
Nominations........................... 41
Dissenters' Rights....................... 42
Shareholder Approval Not Required for
Certain Mergers....................... 42
Charter Amendments....................... 42
Dividends and Stock Repurchases.......... 43
Fair Price Charter Provisions............ 43
Business Combination Statutes............ 43
Control Share Statute.................... 44
Proper Factors for Consideration in
Evaluating Business Combinations...... 44
Form of Consideration for Capital
Stock................................. 44
Limitation of Director Liability......... 44
Indemnification.......................... 45
INDEPENDENT PUBLIC ACCOUNTANTS............. 45
LEGAL MATTERS.............................. 45
EXPERTS.................................... 45
SHAREHOLDER PROPOSALS...................... 46
Enron.................................... 46
EPP...................................... 46
ANNEXES:
A -- Agreement and Plan of Merger........ A-1
B -- Fairness Opinion.................... B-1
</TABLE>
4
<PAGE> 10
PROXY STATEMENT/PROSPECTUS INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Amended Merger Agreement.................................... 36
Closing..................................................... 8
Closing Date................................................ 8
Code........................................................ 29
Commission.................................................. 2
Converted Shares............................................ 31
Designated Development Projects............................. 19
DGCL........................................................ 44
DLJ......................................................... 19
Dillon Read................................................. 8
DLLCA....................................................... 6
ECT......................................................... 15
EES......................................................... 15
Effective Time.............................................. 8
Enron....................................................... 1
Enron Bylaws................................................ 9
Enron Charter............................................... 9
Enron Common Stock.......................................... 1
Enron Information........................................... 24
Enron International......................................... 7
Enron Options............................................... 9
EOG......................................................... 16
EPP......................................................... 1
EPP Board................................................... 1
EPP Certificate............................................. 31
EPP Common Share............................................ 1
EPP Company Agreement....................................... 6
EPP Options................................................. 9
EPP Special Meeting......................................... 1
Exchange Act................................................ 2
Exchange Ratio.............................................. 7
Fairness Opinion............................................ 8
FERC........................................................ 15
Florida Gas................................................. 15
Merger...................................................... 1
Merger Agreement............................................ 1
Merger Committee............................................ 22
Merger Sub.................................................. 1
Northern.................................................... 15
NYSE........................................................ 1
OBCA........................................................ 9
Old Enron................................................... 3
Oversight Committee......................................... 7
PGC......................................................... 6
PGC Merger.................................................. 36
PGE......................................................... 6
Public Shareholders......................................... 6
Purchase Right Agreement.................................... 19
Record Date................................................. 6
Registration Statement...................................... 2
Securities Act.............................................. 3
TGS......................................................... 19
Transwestern................................................ 15
</TABLE>
5
<PAGE> 11
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement/ Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained in or
incorporated by reference in this Proxy Statement/Prospectus, including the
Merger Agreement and other documents included as Annexes hereto. Shareholders
are urged to read carefully this Proxy Statement/Prospectus and the Annexes
hereto in their entirety.
THE COMPANIES
Enron is an integrated natural gas and electricity company with
headquarters in Houston, Texas. Essentially all of Enron's operations are
conducted through its subsidiaries and affiliates, which are principally engaged
in the gathering, transportation and wholesale marketing of natural gas to
markets throughout the United States and internationally through approximately
36,000 miles of natural gas pipelines; the exploration for and production of
natural gas and crude oil in the United States and internationally; the
production, purchase, transportation and worldwide marketing of natural gas
liquids and refined petroleum products; the independent (i.e., non-utility)
development, promotion, construction and operation of power plants, natural gas
liquids facilities and pipelines in the United States and internationally; and
the non-price regulated purchasing and marketing of energy related commitments.
The principal executive offices of Enron are located at 1400 Smith Street,
Houston, Texas 77002, and its telephone number at such offices is (713)
853-6161.
On July 1, 1997, Enron acquired Portland General Corporation ("PGC"), the
parent company of Portland General Electric Company ("PGE"), by means of a
merger of PGC with and into Enron. As a result of the merger, PGE is a
subsidiary of Enron. PGE is an electric utility engaged in the generation,
purchase, transmission, distribution and sale of electricity in the State of
Oregon. PGE also sells energy to wholesale customers throughout the western
United States.
EPP was formed in 1994 to own and manage Enron's operating power plant and
natural gas pipeline business conducted outside the United States, Canada and
Western Europe, and to expand such business through acquisitions. The principal
executive offices of EPP are located at 333 Clay Street, Suite 1800, Houston,
Texas 77002, and its telephone number at such offices is (713) 853-6220.
THE EPP SPECIAL MEETING
GENERAL
The EPP Special Meeting will be held on , , 1997 at
the Enron Building, 1400 Smith Street, Room 5C, Houston, Texas, commencing at
10:00 a.m. local time. The purpose of the EPP Special Meeting is to consider and
vote upon (i) a proposal to approve the Merger Agreement and (ii) such other
matters as may properly be brought before the EPP Special Meeting. Only holders
of record of EPP Common Shares at the close of business on , 1997
(the "Record Date") are entitled to notice of, and to vote at, the EPP Special
Meeting. On the Record Date, there were EPP Common Shares outstanding.
Each EPP Common Share will be entitled to one vote on each matter to be acted
upon at the EPP Special Meeting.
QUORUM; VOTE REQUIRED
The presence, in person or by proxy, at the EPP Special Meeting of the
holders of a majority of the EPP Common Shares outstanding and entitled to vote
is necessary to constitute a quorum at the meeting. Under the Delaware Limited
Liability Company Act (the "DLLCA") and the Amended and Restated Limited
Liability Company Agreement of EPP (the "EPP Company Agreement"), the
affirmative vote of the holders of a majority of the EPP Common Shares
outstanding and entitled to vote thereon at the EPP Special Meeting is required
to approve the Merger. In addition, pursuant to the terms of the Merger
Agreement, the vote of a majority of the EPP Common Shares held by persons other
than Enron and entities controlled by Enron (the "Public Shareholders") present
and voted at the EPP Special Meeting is required to approve the Merger
Agreement.
6
<PAGE> 12
SECURITY OWNERSHIP OF ENRON AND MANAGEMENT
As of the Record Date, Enron and its controlled subsidiaries owned
EPP Common Shares, or approximately 52% of the total EPP Common Shares
outstanding, and the directors and executive officers of EPP and their
affiliates owned approximately EPP Common Shares or less than 1% of
the outstanding EPP Common Shares entitled to vote at the EPP Special Meeting.
To approve the Merger Agreement, the affirmative vote of the holders of a
majority of the EPP Common Shares outstanding and entitled to vote thereon at
the EPP Special Meeting is required under the DLLCA and the EPP Company
Agreement. Because Enron has indicated to EPP that it will vote for approval of
the Merger Agreement, receipt of this vote is assured. In addition, pursuant to
the Merger Agreement, approval of a majority of the EPP Common Shares held by
Public Shareholders and present and voted at the EPP Special Meeting is required
to approve the Merger Agreement. Enron and each of the executive officers of EPP
has advised EPP that he or she plans to vote or to direct the vote of all such
EPP Common Shares entitled to vote thereon in favor of approval of the Merger
Agreement.
THE MERGER AND THE MERGER AGREEMENT
GENERAL
In the Merger, Merger Sub will merge with and into EPP, with EPP continuing
in existence as the surviving company. Each EPP Common Share issued and
outstanding at the effective time of the Merger (other than shares owned by
Merger Sub, Enron, or any direct or indirect subsidiary of Enron, which will
remain outstanding and unchanged) will be converted into such number of shares
of Enron Common Stock as have a value of $35 (based upon the average of the
closing prices, regular way, per share of the Enron Common Stock on the NYSE
during the 20 consecutive trading days ending on the day prior to the closing
date of the Merger) (the "Exchange Ratio"). See "The Merger Agreement -- Manner
and Basis of Converting Shares."
BACKGROUND
For a description of the background of the Merger, see "The
Merger -- Background of the Merger."
REASONS FOR THE MERGER
Enron and EPP believe that the combined company and its shareholders can
benefit from the Merger because the proposed Merger:
- provides EPP's shareholders with the opportunity to participate in all of
Enron's international activities across a broader spectrum of
geographical regions;
- affords EPP's shareholders the opportunity to participate in Enron's
worldwide infrastructure development and merchant activities;
- integrates EPP's manpower, skills and expertise with those available in
Enron's other international business unit ("Enron International");
- permits the shareholders of both Enron and EPP to benefit from
administrative cost reductions arising from the integration of EPP into
Enron; and
- simplifies the financial reporting structure of Enron.
As more fully described in "The Merger -- Reasons for the Merger;
Recommendations of the Board of Directors," Enron and EPP also believe that the
Merger will benefit their respective customers and employees.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The Oversight Committee of the EPP Board, a committee of three independent
directors created in connection with the formation of EPP to deal with
transactions between Enron and EPP (the "Oversight
7
<PAGE> 13
Committee") and the full EPP Board each has determined that the transactions
contemplated by the Merger Agreement are fair to, and in the best interests of,
EPP and its shareholders. The Oversight Committee recommended to the EPP Board
that the EPP Board (i) approve and adopt the Merger Agreement and (ii) recommend
that the holders of EPP Common Shares vote FOR approval of the Merger Agreement
at the EPP Special Meeting. After such recommendation, the EPP Board approved
and adopted the Merger Agreement by the unanimous vote of all directors present
and recommends that the Public Shareholders vote for approval of the Merger
Agreement at the EPP Special Meeting. See "The Merger -- Background of the
Merger" and "-- Reasons for the Merger; Recommendations of the Board of
Directors." In considering the recommendation of the EPP Board with respect to
the Merger Agreement, EPP shareholders should be aware that certain officers and
directors of EPP have certain interests respecting the Merger, apart from their
interests as shareholders of EPP. See "The Merger -- Interests of Certain
Persons in the Merger."
OPINION OF FINANCIAL ADVISOR TO OVERSIGHT COMMITTEE
Dillon, Read & Co. Inc., now named SBC Warburg Dillon Read Inc. ("Dillon
Read"), has delivered to the Oversight Committee its written opinion (the
"Fairness Opinion") as of August 18, 1997, that as of such dates and based upon
the factors and assumptions described in such opinion, the consideration to be
offered to the Public Shareholders of EPP pursuant to the Merger Agreement is
fair to the Public Shareholders from a financial point of view. For information
regarding the opinion of Dillon Read, including the assumptions made, matters
considered and limits of such opinion, see "The Merger -- Opinion of Financial
Advisors" and the full text of the opinion dated the date hereof, which is
included as Annex B hereto.
CLOSING; EFFECTIVE TIME OF THE MERGER
The closing of the transactions contemplated by the Merger Agreement (the
"Closing") and the effectiveness of the Merger will occur as soon as practicable
after satisfaction of the various conditions to the Merger (the date of such
closing being referred to herein as the "Closing Date"). The Merger will become
effective upon the filing of required merger documents with the Office of the
Secretary of State of Delaware or at such time as may be agreed by the parties
and specified in such filings. The time at which the Merger becomes effective is
referred to herein as the "Effective Time."
CONDITIONS TO THE CONSUMMATION OF THE MERGER
The respective obligations of Enron and EPP to consummate the Merger are
subject to the satisfaction of certain conditions, including approval of the
Merger Agreement by a majority of the shareholders of EPP (which vote is
assured) and by a majority of the Public Shareholders present and voted at the
EPP Special Meeting and the absence of judgments or injunctions prohibiting the
Merger.
In addition, the obligation of Enron to consummate the Merger is subject to
the satisfaction of certain conditions, including the performance by EPP of its
obligations under the Merger Agreement and the representations and warranties of
EPP being true at the Closing Date (in each case subject to certain materiality
exceptions) and the absence of a decline in stock market prices evidenced by a
drop in the Dow Jones Industrial Average below 6,000. See "The Merger
Agreement -- Conditions to the Merger."
The obligation of EPP to consummate the Merger is subject to the
satisfaction of certain conditions, including the performance by Enron of its
obligations under the Merger Agreement and the representations and warranties of
Enron and Merger Sub being true at the Closing Date (in each case subject to
certain materiality exceptions). See "The Merger Agreement -- Conditions to the
Merger."
TERMINATION OF THE MERGER AGREEMENT
Under specified circumstances, the Merger Agreement may be terminated by
either Enron or EPP prior to the Closing Date, before or after approval of the
Merger Agreement by the shareholders of EPP. See "The Merger
Agreement -- Termination of the Merger Agreement."
8
<PAGE> 14
EPP SHARE OPTIONS
Pursuant to the Merger Agreement, all outstanding options to purchase EPP
Common Shares held by employees or directors of EPP ("EPP Options") will be
exchanged for options to purchase shares of Enron Common Stock ("Enron
Options"). EPP has agreed to use its best efforts to take all action necessary
to provide for the exchange of the outstanding EPP Options. Subject to the
consummation of the Merger and at the Effective Time, all then outstanding EPP
Options shall be canceled in exchange for the number of Enron Options calculated
by multiplying (x) the number of shares covered by EPP Options by (y) the
Exchange Ratio. The exercise price per share of the Enron Options shall be
calculated by dividing (i) the exercise price per share of the EPP Options by
(ii) the Exchange Ratio. The Enron Options will maintain the same vesting
provisions (other than vesting provisions related to the financial performance
of EPP, changes to which will be determined by the Compensation Committee of the
Board of Directors of Enron) and exercise term as, and shall otherwise have
terms substantially similar to, the EPP Options. However, upon consummation of
the Merger, the Enron Options held as a result of the Merger by officers,
directors and employees of EPP who are terminated on the date of the Effective
Time will become 100% vested. All outstanding options to purchase EPP Common
Shares held by Enron shall be canceled upon consummation of the Merger.
ACCOUNTING TREATMENT
The Merger will be accounted for as a "purchase" of EPP for financial
reporting purposes. See "The Merger -- Accounting Treatment."
NO APPRAISAL RIGHTS
No holder of EPP Common Shares will be entitled to any dissenters' or
appraisal rights in connection with the transactions contemplated by the Merger
Agreement.
EXCHANGE OF STOCK CERTIFICATES
Promptly after consummation of the Merger, a letter of transmittal will be
sent to each holder of record of EPP Common Shares immediately before the
Effective Time for use in exchanging certificates formerly representing EPP
Common Shares for certificates representing shares of Enron Common Stock. A
holder of EPP Common Shares should not surrender certificates for EPP Common
Shares until receipt of the letter of transmittal from Enron. See "The Merger
Agreement -- Manner and Basis of Converting Shares."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the EPP Board have personal interests with respect to
the Merger separate from their interests as holders of EPP Common Shares. Upon
consummation of the Merger, Enron Options held as a result of the Merger by
officers, directors and employees of EPP who are terminated on the date of the
Effective Time (which is expected to consist of the members of the Oversight
Committee) will become 100% vested.
See "The Merger -- Interests of Certain Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The Merger will be treated as an exchange of EPP Common Shares for Enron
Common Stock in a fully taxable transaction. See "The Merger -- Certain Federal
Income Tax Considerations."
COMPARATIVE RIGHTS OF ENRON STOCKHOLDERS AND EPP SHAREHOLDERS
Enron. Rights of stockholders of Enron are currently governed by the Oregon
Business Corporation Act ("OBCA"), the Restated Articles of Incorporation of
Enron (the "Enron Charter") and Enron's Bylaws (the "Enron Bylaws").
9
<PAGE> 15
EPP. Rights of shareholders of EPP are currently governed by the DLLCA and
the EPP Company Agreement. Upon consummation of the Merger, EPP shareholders
will become stockholders of Enron and their rights as stockholders of Enron will
be governed by the Enron Charter and the Enron Bylaws. There will be a number of
differences between the rights of EPP shareholders and the rights of Enron
shareholders. See "Comparative Rights of Enron Stockholders and EPP
Shareholders."
MARKET PRICE DATA
Enron Common Stock is traded on the NYSE and on the Chicago, Pacific,
London and Frankfurt exchanges under the symbol "ENE" and the EPP Common Shares
are traded on the NYSE under the symbol "EPP." The following table sets forth
the closing sales prices per share of Enron Common Stock and EPP Common Shares
as reported on the NYSE on August 15, 1997, the last business day prior to
announcement by the parties of the Merger Agreement, and on , 1997,
the last trading day for which prices were available prior to the date of this
Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
MARKET PRICE PER SHARE
-------------------------------
EPP ENRON
DATE COMMON SHARES COMMON STOCK
---- ------------- ------------
<S> <C> <C>
August 15, 1997............................................. $33 11/16 $35 5/8
, 1997........................................... $ $
</TABLE>
10
<PAGE> 16
SELECTED HISTORICAL FINANCIAL INFORMATION OF ENRON
The financial information set forth below has been derived from the audited
and unaudited consolidated financial statements of Enron. The information should
be read in connection with, and is qualified in its entirety by reference to,
Enron's financial statements and notes thereto incorporated by reference herein.
See "Incorporation of Certain Documents by Reference." The interim data reflect
all adjustments that, in the opinion of the management of Enron, are necessary
to present fairly such information for the interim periods. The results of
operations for the six-month periods are not necessarily indicative of the
results expected for a full year or any other interim period.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------- ------ ------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues........................................... $6,415 $7,985 $8,984 $9,189 $13,289 $6,015 $8,595
Costs and expenses
Cost of gas, electricity and other products
sold........................................... 4,222 5,567 6,517 6,733 10,478 4,652 8,018
Operating expenses............................... 1,037 1,146 1,124 1,218 1,421 578 581
Oil and gas exploration expenses................. 59 76 84 79 89 38 46
Depreciation, depletion and amortization......... 376 458 441 432 474 230 249
Taxes, other than income taxes................... 101 108 102 109 137 69 69
------ ------ ------ ------ ------- ------ ------
5,795 7,355 8,268 8,571 12,599 5,567 8,963
------ ------ ------ ------ ------- ------ ------
Operating income (loss)............................ 620 630 716 618 690 448 (368)
Other income and deductions
Equity in earnings of unconsolidated
subsidiaries................................... 56 73 112 86 215 71 81
Other income, net................................ 91 95 116 461 333 161 168
------ ------ ------ ------ ------- ------ ------
Income (loss) before interest, minority interests
and income taxes................................. 767 798 944 1,165 1,238 680 (119)
Interest and related charges, net.................. 330 300 273 284 274 134 149
Dividends on company-obligated preferred securities
of subsidiaries.................................. -- 2 20 32 34 16 31
Minority interests................................. 18 28 31 44 75 38 36
Income tax expense (benefit)....................... 90 135 167 285 271 162 (137)
------ ------ ------ ------ ------- ------ ------
Income (loss) before extraordinary items........... 329 333 453 520 584 330 (198)
Extraordinary items................................ (23)(1) -- -- -- -- -- --
------ ------ ------ ------ ------- ------ ------
Net income (loss).................................. 306 333(2) 453 520 584 330 (198)
Preferred stock dividends.......................... 22 17 15 16 16 8 8
------ ------ ------ ------ ------- ------ ------
Earnings (loss) on common stock.................... $ 284 $ 316 $ 438 $ 504 $ 568 $ 322 $ (206)
====== ====== ====== ====== ======= ====== ======
Primary earnings (loss) per common share........... $ 1.29 $ 1.32 $ 1.80 2.07 $ 2.31 $ 1.31 $(0.83)
====== ====== ====== ====== ======= ====== ======
Fully diluted earnings (loss) per common share..... $ 1.21 $ 1.25 $ 1.70 $ 1.94 $ 2.16 $ 1.22 $(0.83)
====== ====== ====== ====== ======= ====== ======
Cash dividends per common share.................... $ 0.66 $ 0.71 $ 0.76 $ 0.81 $ 0.86 $ 0.43 $ 0.45
====== ====== ====== ====== ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------- JUNE 30,
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- -----------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets........................................... $10,312 $11,504 $11,966 $13,239 $16,137 $16,085
Long-term debt (including amounts reclassified from
short-term debt)..................................... 2,459 2,661 2,805 3,065 3,349 4,537
Company-obligated preferred securities of
subsidiaries......................................... -- 214 377 377 592 964
Minority interests..................................... 179 196 290 549 755 770
Shareholders' equity................................... 2,518 2,623 2,880 3,165 3,723 3,431
Book value per common share............................ 9.61 10.01 10.94 12.01 13.81 12.70
</TABLE>
- ---------------
(1) Relates to an early extinguishment of debt.
(2) Includes a primarily non-cash charge of $54 million to adjust for the
increase in the corporate federal income tax rate from 34% to 35%.
11
<PAGE> 17
SELECTED HISTORICAL FINANCIAL INFORMATION OF EPP
The financial information set forth below has been derived from the audited
and unaudited consolidated financial statements of EPP. The information should
be read in connection with, and is qualified in its entirety by reference to,
EPP's financial statements and notes thereto incorporated by reference herein.
The interim data reflect all adjustments that, in the opinion of the management
of EPP, are necessary to present fairly such information for the interim
periods. The results of operations for the six-month periods are not necessarily
indicative of the results expected for a full year or any other interim period.
<TABLE>
<CAPTION>
PREDECESSOR PERIODS
ENDED SIX MONTHS
--------------------- PERIOD PRO FORMA YEAR ENDED ENDED
ENDED YEAR ENDED DECEMBER 31, JUNE 30,
DEC. 31, NOV. 21, DEC. 31, DEC. 31, ----------------- -----------------
1993 1994 1994 1994(1) 1995 1996 1996 1997
-------- ---------- --------- ---------- ------- ------- ------- -------
(YEAR) (325 DAYS) (40 DAYS) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Technical Assistance Fees............ $ 7,438 $ 8,075 $ 599 $ 8,674 $10,033 $11,258 $ 5,308 $ 5,850
Equity in Earnings of
Unconsolidated Subsidiaries
Pipeline Operations................ 20,721 21,259 1,706 22,965 22,154 29,767 16,529 14,825
Power Operations................... 4,218 6,968 1,209 8,177 11,274 16,348 7,657 8,427
------- ------- ------ ------- ------- ------- ------- -------
Equity in Earnings and Technical
Assistance Fees.................... 32,377 36,302 3,514 39,816 43,461 57,373 29,494 29,102
General and Administrative
Expenses........................... (3,486) (4,289) (397) (6,382) (6,036) (5,707) (2,911) (3,279)
Taxes Other than Income.............. (503) (448) (41) (489) (600) (672) (293) (306)
Interest Expense..................... -- -- -- -- (96) (1,834) (1) (1,343)
Other Income, Net.................... (128) 1,058 93 1,151 1,869 1,370 (880) 4,023
------- ------- ------ ------- ------- ------- ------- -------
Income Before Income Taxes........... 28,260 32,623 3,169 34,096 38,598 50,530 25,409 28,197
Income Taxes......................... 2,281 3,444 358 3,802 3,571 4,535 2,313 (2,810)
------- ------- ------ ------- ------- ------- ------- -------
Net Income........................... $25,979 $29,179 $2,811 $30,294 $35,027 $45,995 $23,096 $31,007
======= ======= ====== ======= ======= ======= ======= =======
Net Income per Common Share.......... $ 0.13 $ 1.45 $ 1.68 $ 1.90 $ 0.96 $ 1.22
====== ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------------------------------- -----------
1993 1994 1995 1996 1997
------------- -------- -------- -------- -----------
(PREDECESSOR) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Investments in and Advances to Unconsolidated
Subsidiaries.............................................. $203,494 $152,112 $159,621 $298,530 $284,943
Total Assets................................................ 230,217 163,100 187,713 343,843 373,323
Shareholders' Equity........................................ 223,070 158,968 177,352 265,444 332,050
</TABLE>
- ---------------
(1) Reflects adjustments for increased general and administrative expenses
resulting from increased costs associated with a publicly owned company.
12
<PAGE> 18
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma selected combined financial information
presents the combined financial data of Enron and EPP for the year ended
December 31, 1996, and as of and for the six months ended June 30, 1997. The
unaudited pro forma financial information includes the pro forma effects of
Enron's acquisition of PGC on July 1, 1997. The unaudited pro forma combined
income statement data give effect to the Merger as if it had occurred on January
1, 1996, and the unaudited pro forma combined balance sheet data give effect to
the Merger as if it had occurred on June 30, 1997. Enron will account for the
Merger as a purchase. The unaudited pro forma selected combined financial data
have been derived from the unaudited pro forma combined financial statements
described herein and should be read in conjunction with those statements, the
related notes thereto and with the separate historical financial statements of
Enron and EPP and the pro forma effects of the PGC acquisition included in
Enron's Form 8-K dated August 29, 1997, all of which have been incorporated
herein by reference. See "Incorporation of Certain Documents by Reference." The
pro forma data are not necessarily indicative of the actual or future results of
operations or financial condition that would have been reported had the Merger
occurred on the dates assumed.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
1996 JUNE 30, 1997
------------- --------------
(UNAUDITED; IN MILLIONS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................................... $14,401 $ 9,272
Costs and expenses
Cost of gas, electricity and other products............... 10,795 8,303
Operating expenses........................................ 1,674 696
Oil and gas exploration expenses.......................... 89 46
Depreciation, depletion and amortization.................. 661 344
Taxes, other than income taxes............................ 189 98
------- -------
13,408 9,487
------- -------
Operating income (loss)..................................... 993 (215)
Other income and deductions, net............................ 530 256
------- -------
Income (loss) before interest, minority interests and income
taxes..................................................... 1,523 41
Interest and related charges, net........................... 360 191
Dividends on company-obligated preferred securities of
subsidiaries.............................................. 37 32
Minority interests.......................................... 57 21
Income tax expense (benefit)................................ 374 (76)
------- -------
Net income (loss)........................................... 695 (127)
Preferred stock dividends................................... 16 8
------- -------
Earnings (loss) on common stock............................. $ 679 $ (135)
======= =======
Earnings (loss) per share of common stock
Primary................................................... $ 2.20 $ (0.52)
======= =======
Fully diluted............................................. $ 2.08 $ (0.52)
======= =======
Cash dividends per share of common stock(1)................. $ 0.86 $ 0.45
======= =======
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
<S> <C> <C>
BALANCE SHEET DATA:
Total assets................................................ $21,049
Short-term debt............................................. 125
Long-term debt due within one year.......................... 96
Long-term debt (including amounts reclassified from
short-term debt).......................................... 5,434
Company-obligated preferred securities of subsidiaries...... 995
Minority interests.......................................... 645
Shareholders' equity........................................ 5,731
Book value per common share................................. $ 17.24
</TABLE>
- ---------------
(1) Pro forma cash dividends per common share reflect quarterly cash dividends
of Enron of $0.2125 per share ($0.85 per share annually), which were
increased to $0.225 per share ($0.90 per share annually) beginning in the
fourth quarter of 1996.
13
<PAGE> 19
COMPARATIVE PER SHARE DATA
The following table sets forth for the Enron Common Stock and EPP Common
Shares selected historical per share data and the corresponding unaudited pro
forma per share amounts for the periods indicated, giving effect to the Merger.
The data presented are based upon the consolidated financial statements and
related notes of each of Enron and EPP incorporated by reference into this Proxy
Statement/Prospectus and the unaudited pro forma combined balance sheet and
income statements, including the notes thereto, appearing elsewhere herein. This
information should be read in conjunction with, and is qualified in its entirety
by, the historical and unaudited pro forma combined financial statements and
related notes thereto. The assumptions used in the preparation of this table
appear under "Unaudited Pro Forma Financial Information." The comparative per
share data are not necessarily indicative of the results of the future
operations of the combined organization or the actual results that would have
occurred if the Merger had been consummated at the beginning of the periods
indicated.
<TABLE>
<CAPTION>
ENRON/EPP
ENRON EPP PRO FORMA
HISTORICAL HISTORICAL COMBINED
---------- ---------- ---------
<S> <C> <C> <C>
Book value per common share:
December 31, 1996......................................... $13.81 $10.88 $ --
June 30, 1997............................................. 12.70 12.76 17.24
Cash dividends per common share:
Year ended December 31, 1996.............................. 0.86 0.91 0.86(1)
Six months ended June 30, 1997............................ 0.45 0.50 0.45(1)
Earnings (loss) per common share:
Primary:
Year ended December 31, 1996........................... 2.31 1.90 2.20
Six months ended June 30, 1997......................... (0.83) 1.22 (0.52)
Fully diluted:
Year ended December 31, 1996........................... 2.16 1.90 2.08
Six months ended June 30, 1997......................... (0.83) 1.22 (0.52)
</TABLE>
- ---------------
(1) Pro forma cash dividends per common share reflect quarterly cash dividends
of Enron of $0.2125 per share ($0.85 per share annually), which were
increased to $0.225 per share ($0.90 per share annually) beginning in the
fourth quarter of 1996.
FORWARD LOOKING STATEMENTS
This Proxy Statement/Prospectus includes forward looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. All statements other than statements of historical facts included or
incorporated by reference in this Proxy Statement/Prospectus, including, without
limitation, statements regarding EPP's, Enron's or the surviving company's
future financial position, business strategy, budgets, reserve estimates,
projected costs and plans and objectives of management for future operations,
are forward looking statements. Although Enron and EPP believe their
expectations reflected in such forward looking statements are based on
reasonable assumptions, no assurance can be given that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from the expectations reflected in the forward looking
statements herein include political developments in foreign countries, the pace
of deregulation of retail natural gas and electricity markets in the United
States, the timing and extent of changes in commodity prices for crude oil,
natural gas, electricity and interest rates, the extent of success in acquiring
oil and gas properties and in discovering, developing and producing reserves,
the timing and success of efforts to develop international power, pipeline and
other infrastructure projects, conditions of the capital markets and equity
markets and the ability of Enron and EPP to achieve the goals described in "The
Merger -- Reasons for the Merger; Recommendation of the Board of Directors"
during the periods covered by the forward looking statements. All subsequent
written or oral forward looking statements attributable to EPP or Enron, or
persons acting on their behalf, are expressly qualified in their entirety by the
foregoing cautionary statements.
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THE COMPANIES
ENRON
Enron is an integrated natural gas and electricity company with
headquarters in Houston, Texas. Essentially all of Enron's operations are
conducted through its subsidiaries and affiliates, which are principally engaged
in the gathering, transportation and wholesale marketing of natural gas to
markets throughout the United States and internationally through approximately
36,000 miles of natural gas pipelines; the exploration for and production of
natural gas and crude oil in the United States and internationally; the
production, purchase, transportation and worldwide marketing of natural gas
liquids and refined petroleum products; the independent (i.e., non-utility)
development, promotion, construction and operation of power plants, natural gas
liquids facilities and pipelines in the United States and internationally; and
the non-price regulated purchasing and marketing of energy related commitments.
On July 1, 1997, Enron acquired PGC, the parent company of PGE, by means of
a merger of PGC with and into Enron. As a result of the merger, PGE is a
subsidiary of Enron. PGE is an electric utility engaged in the generation,
purchase, transmission, distribution and sale of electricity in the State of
Oregon. PGE also sells energy to wholesale customers throughout the western
United States.
Transportation and Operation. Enron's operations include the interstate and
intrastate transmission of natural gas, and construction, management and
operation of natural gas and natural gas liquids pipelines, liquids plants,
clean fuel plants and power facilities. Enron and its subsidiaries operate
domestic interstate pipelines extending from Texas to the Canadian border and
across the southern United States from Florida to California. Included in
Enron's domestic interstate natural gas pipeline operations are Northern Natural
Gas Company ("Northern"), Transwestern Pipeline Company ("Transwestern") and
Florida Gas Transmission Company ("Florida Gas") (indirectly 50% owned by
Enron), and all such pipelines are subject to the regulatory jurisdiction of the
Federal Energy Regulatory Commission ("FERC"). Each pipeline serves customers in
a specific geographical area: Northern, the upper Midwest; Florida Gas, the
State of Florida; and Transwestern, principally the California market and
pipeline interconnects on the east end of Transwestern's system. In addition,
Enron holds a 13% interest in Northern Border Partners, L.P., which owns a 70%
interest in the Northern Border Pipeline system. An Enron subsidiary operates
the Northern Border Pipeline system, which transports gas from western Canada to
delivery points in the midwestern United States.
Domestic Gas and Power Services. Through its wholly owned subsidiary, Enron
Capital & Trade Resources Corp., and its affiliated companies ("ECT"), Enron
purchases natural gas, natural gas liquids, electricity and other energy
products through a variety of contractual arrangements, including both
short-term and long-term contracts, the arrangement of production payment and
other financing transactions, and other contractual arrangements. ECT markets
these energy products to local distribution companies, electric utilities,
cogenerators, and both commercial and industrial end-users. ECT also provides
price risk management services in connection with natural gas, natural gas
liquids and power transactions through both physical delivery and financial
arrangements.
ECT offers a broad range of non-price regulated natural gas merchant
services by tailoring a variety of supply and marketing options to its
customers' specific needs. ECT's strategy is to provide predictable pricing,
reliable delivery and low cost capital to its customers. ECT provides these
services through a variety of instruments, including forward contracts, swap
agreements and other contractual commitments.
Retail Energy Services. Enron recently established Enron Energy Services
("EES") to pursue the significant growth opportunities in anticipation of a
fully competitive retail natural gas and electricity market. As states begin to
deregulate their natural gas and electricity markets, and as these markets
continue to converge, EES's goal is to provide end-users with a broad range of
energy choices at more competitive prices. EES has participated in selected
natural gas and electric retail marketing pilot programs, including a state-wide
electricity pilot in New Hampshire, where individual customers are free to
select the power provider of their choice. EES will continue to participate in
such programs.
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International Operations and Development. Enron's international activities
principally involve the independent (i.e., non-utility) development,
acquisition, financing, promotion and operation of natural gas and power
projects in emerging markets, and the marketing of natural gas liquids and other
liquid fuels. Development projects are focused on power plants, gas processing
and terminalling facilities, and gas pipelines, while marketing activities
center on fuels used by or transported through such facilities. Enron's
international activities include management of direct and indirect ownership
interests in and operation of power plants in England, Germany, Guatemala, the
Dominican Republic, the Philippines and China; pipeline systems in Argentina and
Colombia; retail gas and propane sales in the Caribbean basin; processing of
natural gas liquids at Teesside, England; and marketing of natural gas liquids
and other liquid fuels worldwide. Enron is also involved in power, pipeline and
liquefied natural gas projects in varying stages of development in Argentina,
China, Egypt, India, Puerto Rico, Italy, Turkey, Qatar, Vietnam, Bolivia,
Brazil, Indonesia, Poland and elsewhere.
Exploration and Production. Substantially all of Enron's natural gas and
crude oil exploration and production operations are conducted by its subsidiary,
Enron Oil & Gas Company ("EOG"). EOG is engaged in the exploration for, and
development, production and marketing of, natural gas and crude oil primarily in
major producing basins in the United States, as well as in Canada, Trinidad,
India and, to a lesser extent, in selected other international areas. At
December 31, 1996, EOG had estimated net proved natural gas reserves of 3,675
billion cubic feet, including 1,180 billion cubic feet of proved undeveloped
methane reserves in the Big Piney, Wyoming deep Paleozoic formations, and
estimated net proved crude oil, condensate and natural gas liquids reserves of
55 million barrels, and at such date, approximately 74% of EOG's reserves (on a
natural gas equivalent basis) were located in the United States, 9% in Canada,
10% in Trinidad and 7% in India. Enron owns approximately 53% of the common
stock of EOG.
Additional information concerning Enron and its subsidiaries is included in
the Enron documents filed with the Commission and incorporated herein by
reference. See "Incorporation of Certain Documents by Reference."
EPP
EPP was formed in November 1994 by Enron to acquire, own and manage Enron's
operating power plant and natural gas pipeline business conducted outside the
United States, Canada and Western Europe, and to expand such business through
acquisitions. EPP's assets consist of interests in a 6,604 kilometer (4,104
mile) natural gas pipeline system in Argentina, a 575 kilometer (357 mile)
natural gas pipeline in Colombia, two power plants in the Philippines (with 226
megawatts of aggregate net generating capacity), a power plant in Guatemala
(with 110 megawatts of net generating capacity) and a 185 megawatt oil-fired,
barge mounted power plant in the Dominican Republic. Enron owns approximately
52% of the EPP Common Shares.
THE EPP SPECIAL MEETING
THE EPP SPECIAL MEETING
Purpose of the EPP Special Meeting. The purpose of the EPP Special Meeting
is to consider and vote upon (i) a proposal to approve the Merger Agreement and
(ii) such other matters as may properly be brought before the EPP Special
Meeting. The EPP Board is not aware, as of the date of mailing of this Proxy
Statement/Prospectus, of any other matters that may properly come before the EPP
Special Meeting. If any such other matters properly come before the EPP Special
Meeting, or any adjournment thereof, it is the intention of the persons named in
the EPP proxy to vote such proxies in accordance with their best judgment on
such matters.
THE OVERSIGHT COMMITTEE OF THE EPP BOARD, AFTER CAREFUL CONSIDERATION,
UNANIMOUSLY RECOMMENDED TO THE EPP BOARD THAT THE MERGER AGREEMENT, AND THE
MERGER CONTEMPLATED THEREBY, BE APPROVED BY THE SHAREHOLDERS OF EPP. THE ENTIRE
EPP BOARD ALSO CAREFULLY REVIEWED AND CONSIDERED THE TERMS AND CONDITIONS OF THE
MERGER AGREEMENT AND, AFTER
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RECEIPT OF THE OVERSIGHT COMMITTEE'S RECOMMENDATION, CONCLUDED THAT
THEY ARE IN THE BEST INTERESTS OF EPP AND ITS SHAREHOLDERS. ACCORDINGLY, BY A
UNANIMOUS VOTE OF THE DIRECTORS PRESENT, THE EPP BOARD HAS APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.
Date, Place and Time; Record Date. The EPP Special Meeting is scheduled to
be held on , , 1997, at 10:00 a.m., local time, at the
Enron Building, 1400 Smith Street, Room 5C, Houston, Texas. Holders of record of
EPP Common Shares at the close of business on , 1997, the Record
Date, will be entitled to notice of and to vote at the EPP Special Meeting. As
of the Record Date, EPP Common Shares were issued and outstanding.
A complete list of shareholders entitled to notice of the EPP Special
Meeting will be available for inspection at the offices of EPP in Houston,
Texas, during normal business hours upon written demand by any EPP shareholder
or such shareholder's agent or attorney beginning two business days after the
date of EPP's notice of meeting for the EPP Special Meeting and continuing
through the EPP Special Meeting. Any shareholder or such shareholder's agent or
attorney may, upon written demand and, subject to Section 18-305 of the DLLCA,
inspect and copy the shareholder list during regular business hours during the
inspection period at such shareholder's expense.
The EPP Special Meeting may be adjourned to another date and/or place for
proper purposes (including, without limitation, for the purpose of soliciting
additional proxies).
Voting Rights. Each shareholder of record on the Record Date is entitled to
one vote for each EPP Common Share held on each matter submitted to a vote at
the EPP Special Meeting. A majority of the outstanding EPP Common Shares
entitled to vote on a matter, represented in person or by proxy, constitutes a
quorum for consideration of such matter at the EPP Special Meeting. If a quorum
is present, under the DLLCA and the EPP Company Agreement, the affirmative vote
of the holders of at least a majority of the outstanding EPP Common Shares is
necessary to approve the Merger Agreement. Enron beneficially owns approximately
52% of the outstanding EPP Common Shares and has advised EPP that it will vote
for approval of the Merger Agreement. Accordingly, receipt of the approvals
required by the DLLCA and the EPP Company Agreement is assured and the EPP
Common Shares held by the Public Shareholders present and voting at the EPP
Special Meeting will be necessary to approve the Merger Agreement.
Proxies. Any holder of EPP Common Shares may vote such shareholder's shares
either in person or by duly authorized proxy. The giving of a proxy by an EPP
shareholder will not affect such shareholder's right to vote such shares if the
shareholder attends the EPP Special Meeting and desires to vote in person. Prior
to the voting of an EPP proxy, such proxy may be revoked by the shareholder by
delivering written notice of revocation to the Secretary of EPP, by executing a
subsequently dated proxy or by voting in person at the EPP Special Meeting. All
shares represented by effective proxies on the enclosed form of EPP proxy
received by EPP will be voted at the EPP Special Meeting in accordance with the
terms of such proxies. If no instructions are given, the EPP proxies will be
voted FOR the approval of the Merger Agreement.
EPP will bear the cost of the solicitation of proxies for the EPP Special
Meeting, except that EPP and Enron will share equally expenses incurred in
connection with the printing and filing of this Proxy Statement/ Prospectus.
Certain officers, directors, employees and agents of EPP may solicit EPP proxies
by correspondence, telephone, telegraph, telecopy or other electronic means, or
in person, but without extra compensation. EPP will pay to banks, brokers,
nominees and other fiduciaries their reasonable charges and expenses incurred in
forwarding the proxy soliciting material to their principals.
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Voting Procedures for Participants in Employee Benefit Plans. The enclosed
proxy includes power to vote the number of shares of EPP Common Shares
registered in a holder's name, according to the books of EPP's transfer agent.
EPP will mail this Proxy Statement/Prospectus and a proxy to all persons
who, according to the books of EPP's Transfer Agent beneficially own EPP Common
Shares.
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THE MERGER
GENERAL DESCRIPTION OF THE MERGER
The Merger Agreement provides that, at the Effective Time, Merger Sub will
merge with and into EPP, with EPP continuing in existence as the surviving
corporation. Each EPP Common Share issued and outstanding at the Effective Time
(other than shares owned by Merger Sub, Enron or any direct or indirect
subsidiary of Enron, which will remain outstanding and unchanged) will be
converted into such number of shares of Enron Common Stock as have a value of
$35 (based upon the average of the closing prices, regular way, per share of
Enron Common Stock on the NYSE for the 20 consecutive trading days ending on the
day prior to the closing date of the Merger).
BACKGROUND OF THE MERGER
In November 1994, EPP was formed by Enron to own and manage all of Enron's
operating power plant and natural gas pipeline business conducted outside the
United States, Canada and Western Europe. Enron formed EPP and offered EPP
Common Shares to the public in part to enable public investors to better
evaluate and participate directly in the growth of Enron's operating power plant
and natural gas pipeline activities in emerging markets without exposure to the
development and construction risks associated with international power plants
and natural gas pipeline projects. To facilitate that goal and in light of
Enron's ongoing majority ownership interest in EPP, Enron and EPP executed a
Purchase Right Agreement (as amended, the "Purchase Right Agreement") which
requires Enron to offer EPP ownership interests in qualifying power and natural
gas pipeline projects developed or acquired by Enron outside the United States,
Canada and Western Europe at prices determined by Enron in good faith to be
commercially reasonable and, in the case of the Designated Development Projects
(as hereinafter defined), meeting specified pricing parameters set forth in the
Purchase Right Agreement. If EPP does not purchase the ownership interest, Enron
may only sell the ownership interest to a third party if the price is at least
105% of the price at which the interest was offered to EPP.
The Purchase Right Agreement and the EPP Company Agreement collectively
establish a procedure for review and approval by the Oversight Committee, with
the assistance and advice of independent counsel and financial advisors, of the
projects offered by Enron to EPP and the terms of purchase whereby EPP
determines whether to accept the project on terms offered by Enron. EPP may not
accept Enron's offer unless the Oversight Committee receives a fairness opinion
from an independent internationally recognized financial advisor. Two projects
(the Centragas pipeline project in Colombia and the Puerto Plata power plant in
the Dominican Republic) were sold in 1996 by Enron to EPP pursuant to the
Purchase Right Agreement. In addition, EPP acquired an increased interest in
Transportada de Gas del Sur S.A. ("TGS"), EPP's Argentine pipeline investment,
in 1996 using proceeds of financing provided by Enron and subject to Oversight
Committee approval.
Unanticipated delays have been experienced in the development and
construction of several of the projects designated by Enron at the time of EPP's
formation (or by later amendment of the Purchase Right Agreement) for eventual
transfer to EPP (the "Designated Development Projects"), notably the planned
power plant, fuel facilities and related ancillary facilities in Dabhol, India
and the planned power plants in Hainan Province and People's Republic of China.
Furthermore, the oversight process established by the Purchase Right Agreement
has proven to be more expensive and complex than was contemplated when EPP was
formed.
During 1996, Enron began to evaluate the possibility of restructuring its
international operations, and in the fall of 1996 Enron engaged Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") to review that possibility. DLJ
evaluated and discussed a number of possible transactions, some of which would
have involved a combination of EPP's business with other Enron international
operations. Although a decision was made not to pursue any of such transactions,
DLJ continued to have discussions from time to time with Enron regarding Enron's
international operations. In early 1997, Enron decided that it should consider
the possibility of a merger of EPP with Enron or one of its subsidiaries. At
that time, Enron did not advise the Oversight Committee or management of EPP of
its consideration of such a possible merger.
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On February 20, 1997, George S. Slocum, one of the three members of the
Oversight Committee, sent a memorandum to the members of the EPP Board
suggesting that a review of possible strategic policy changes and/or new
initiatives might be appropriate for EPP because the EPP Common Shares appeared
to be undervalued compared to stock market indices and most of its peer
companies. The possible strategies suggested by Mr. Slocum included (i) the
vigorous pursuit of third party project acquisitions, (ii) the purchase by EPP
of Enron's 35% interest in Promigas S.A., E.S.P. (which was not subject to the
Purchase Right Agreement), (iii) amendment of the Purchase Right Agreement to
include projects in the early construction phase or after completion of project
financing, and (iv) the pursuit of an acquisition strategy with companies having
more certain or better timed project starting dates, economies of scale or
greater sovereign risk diversification.
On March 6, a meeting was held at the offices of Enron at which Edmund P.
Segner III, Executive Vice President and Chief of Staff of Enron, informed the
senior officers of EPP in attendance, including Mr. Rodney L. Gray, Chairman and
Chief Executive Officer of EPP, that Enron had decided to study the possibility
of a merger involving EPP. After the officers of EPP left the meeting,
representatives of DLJ discussed with Mr. Segner, Mr. Joseph W. Sutton,
President and Chief Operating Officer of Enron International (a business unit of
Enron formed at the end of 1996) and Tod A. Lindholm, Vice President for
Corporate Financial Planning and Analysis of Enron, various valuation issues and
strategies with regard to the potential merger. On March 5, 1997, the day before
the possibility of a merger was first discussed with EPP management, the closing
price of EPP Common Shares was $28 3/8. Following the meeting, Enron began an
evaluation study of EPP, and retained DLJ to act as its financial advisor in
connection with a possible merger. An engagement letter between Enron and DLJ
was executed dated May 14, 1997.
On April 3 and April 13, the possibility of the merger was discussed at a
meeting of the Executive Committee of the Board of Directors of Enron, and at a
meeting of the full Board of Directors of Enron, respectively. At the meetings,
the persons present were briefed on the progress of the evaluation of a
potential merger with EPP and, at the Enron Board of Directors meeting, there
was an informal discussion of the range of possible values of EPP and the use of
Enron Common Stock as the consideration to be utilized in the proposed merger.
Following a discussion, the Enron Board of Directors concluded that management
should proceed with discussions regarding a possible merger with the Oversight
Committee subject to approval by the Enron Board of Directors of any definitive
agreement evolving out of the negotiations.
On April 18, Mr. Segner placed a call to Mr. Thomas C. Theobald, Chairman
of the Oversight Committee, to discuss the possibility of a merger between Enron
and EPP. On the same day Mr. Robert S. Baird of Vinson & Elkins L.L.P., legal
counsel to Enron, called Mr. Walter J. Smith of Baker & Botts L.L.P., legal
counsel to the Oversight Committee, to advise him of the possibility of merger
discussions.
The following day, Mr. Segner and Mr. Theobald spoke by telephone. During
the conversation Mr. Segner said that, partly in response to Mr. Slocum's
memorandum of February 20, 1997, suggesting a review of possible changes to the
EPP business strategy, Enron had been considering strategic alternatives for
EPP. Mr. Segner advised that Enron had concluded that it desired to enter into
preliminary discussions regarding a possible acquisition of the outstanding
public interest in EPP by Enron, which Enron believed would be in the best
interests of the shareholders of Enron and EPP. Mr. Segner advised Mr. Theobald
that Enron had hired DLJ as its financial advisor and that DLJ would be prepared
to make a presentation at the EPP Board meeting scheduled for May 14. Mr. Segner
suggested that the Oversight Committee consider retaining a financial advisor to
prepare it for the eventuality of a possible Enron merger proposal. The
following day, Mr. Theobald called Mr. Segner and advised him that the Oversight
Committee would meet to discuss the matters raised in Mr. Segner's telephone
call.
On April 24, Mr. Segner sent a letter to Mr. Theobald to confirm their
prior telephone conversation concerning Enron's interest in discussing
preliminarily a possible merger with EPP. Mr. Segner indicated that together
with its financial advisor, Enron had contemplated an analysis of EPP that
indicated little or no premium to current market price would be justified in
such a transaction, and that Enron would like to share its analysis with the
Oversight Committee at the meeting scheduled for May 14. Also on April 24, the
Oversight Committee met to discuss the possible merger discussions and consult
with its legal counsel concerning its responsibilities relating to such matter.
After a detailed discussion of the appropriate manner in
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which to proceed, the Oversight Committee determined that it would evaluate and
respond to any proposal Enron determined to make; that it would not determine an
acceptable price range prior to receiving a proposal from Enron; and that due to
the related expense, it would not hire a financial advisor unless Enron either
made a merger proposal or undertook to reimburse the expense in the event no
proposal was forthcoming. The Oversight Committee also expressed concern that
Enron had not yet named an additional Designated Development Project as required
under the amendment to the Purchase Right Agreement and that EPP did not have a
chief financial officer or any senior officers who did not also hold significant
positions with other Enron entities. The Oversight Committee then instructed its
legal counsel to advise Enron's legal counsel of its concerns and the
determinations it had made.
During the period following the April 24 meeting, the Oversight Committee
interviewed potential financial advisors.
On May 14, the Oversight Committee met in Houston. At the meeting, the
Oversight Committee heard a presentation by Mr. Kenneth L. Lay, Chairman and
Chief Executive Officer of Enron, regarding the possibility of discussions
relating to a possible merger between EPP and a wholly owned subsidiary of
Enron. Mr. Lay stated that due to the changes in the world market for energy
projects which had resulted in decreased returns on investment for pipeline and
power projects, the decrease in the expected rate of return on EPP's projects,
the reorganization of Enron International activities, and, in Enron's view, the
potential greater return which would be received by EPP's shareholders if their
EPP shares were exchanged for Enron stock, Enron was prepared to begin
discussions with the Oversight Committee regarding the possible acquisition by
Enron of the outstanding publicly traded shares of EPP through a merger. Mr. Lay
concluded by stating that DLJ had a presentation to make to the Oversight
Committee.
Mr. Theobald responded that while the Oversight Committee would listen to
the presentation, he thought it was premature for the presentation to cover
pricing issues, because the Oversight Committee had not yet retained a financial
advisor.
Mr. Lay stated that it was not Enron's intent to present either a proposal
or a price at that meeting, but that he wished DLJ to make a presentation to the
Oversight Committee as to Enron's reasons for believing a merger would be
beneficial to EPP's shareholders. Mr. Slocum asked Mr. Lay if Enron had
considered expanding EPP's operations to include development or merging the
international operations of Enron into EPP rather than merging EPP into Enron.
Mr. Lay responded that these alternatives had been considered but that Enron had
concluded that EPP's shareholders would receive greater value through
participation in the full range of Enron's activities after a merger of EPP into
the Enron organization.
After a discussion of these issues, DLJ made a presentation to the
Oversight Committee. DLJ noted that EPP had underperformed relevant market
indices due to the delays experienced in the development of projects to be
acquired by EPP (and the related postponement of earnings from such projects in
EPP's financial results) and because of the performance of the Argentine
pipeline, which is EPP's largest asset. DLJ noted that EPP was not perceived by
the market as an international power and pipeline company and did not trade
based on the considerations applicable to companies that have international
power and pipeline development and construction risks, but only on the basis of
price-earnings multiples. DLJ also stated that the international power and
pipeline market had become extremely competitive and that it would be difficult
for EPP to buy projects from third parties and from Enron (other than Designated
Development Projects) on a competitive basis without diluting EPP's earnings.
DLJ concluded that it was Enron's view that preliminary merger discussions would
be beneficial to both parties, and Mr. Lay advised the Oversight Committee that
Enron was seeking to do what was best for both its shareholders and those of
EPP.
Following the conclusion of the Oversight Committee meeting, Mr. Lay and
other members of Enron management met and discussed the possibility of a merger.
During the meeting, they were advised that the market price of EPP Common Shares
had been rising rapidly during the day. Mr. Lay then advised the Oversight
Committee that Enron might make a merger proposal later that day. EPP Common
Shares closed at $32 3/8 on the NYSE that day, up $2 1/8 from the closing price
of $30 1/4 on May 13. Late on the afternoon of May 14, a letter signed by Mr.
Segner was sent to Mr. Gray and the Oversight Committee setting forth a proposal
to acquire the outstanding public interest in EPP for $32 per share in Enron
Common Stock. After receipt of Mr. Segner's letter, Enron and EPP issued a press
release regarding the merger proposal.
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On May 28, an engagement letter between the Oversight Committee and Dillon
Read was executed and on June 2, Dillon Read and legal counsel to the Oversight
Committee commenced their due diligence with regard to the proposed merger.
During May, June and July, due diligence proceeded and legal counsel to Enron
and the Oversight Committee undertook preliminary negotiations with regard to a
definitive merger agreement. During this period, Dillon Read retained SBC
Warburg Inc. to assist Dillon Read in its evaluation of EPP's international
properties.
On June 24, Mr. Slocum met with Dillon Read to receive a progress report on
their work to date and recommended that the full Oversight Committee meet to
receive such report. On June 30, the Oversight Committee held a telephone
meeting to receive reports from its legal and financial advisors on the status
of their review of EPP's operations and prospects.
On July 21, the Oversight Committee met in New York with its legal counsel
and Dillon Read to receive preliminary reports on the results of the due
diligence and the legal and financial aspects of Enron's offer. Dillon Read
representatives presented to the Oversight Committee their analysis of the
proposed transaction. This analysis included a review of the proposed
transaction, including its proposed form, consideration, relative valuation,
conditions to closing and tax treatment. Dillon Read presented an overview of
EPP, focusing on its relative stock price performance, current shareholder
composition and research analysts' reaction to Enron's proposal. Dillon Read
reviewed its preliminary valuation analysis of EPP, including EPP's current
projects and technical fees, the Designated Development Projects and other
projects currently planned that would be required to be offered to EPP under the
Purchase Right Agreement. Dillon Read discussed EPP's future earnings potential,
including earnings to be generated through the addition of the India and
Marmara, Turkey power plants in 1999. Dillon Read also presented its analysis of
the pro forma impact of the proposed transaction on Enron's earnings under a
variety of scenarios. Dillon Read presented an overview of Enron to the
Oversight Committee, focusing on its relative stock price performance, current
shareholder composition and research analyst comments. Dillon Read also
presented materials which summarized premiums paid in precedent transactions
(both cash and stock consideration), as well as materials on public market
trading valuations of multinational power and pipeline companies. After
discussion and consideration of Dillon Read's presentation, the Oversight
Committee concluded unanimously that Enron's proposal of $32 in Enron Common
Stock was below the range that the Oversight Committee considered fair to the
Public Shareholders. The Oversight Committee also discussed legal issues arising
from the draft of the Merger Agreement, including whether the affirmative vote
of a majority of EPP's shareholders other than Enron and its affiliates should
be required to approve the transaction. The Oversight Committee unanimously
concluded that such a voting condition would be desirable and instructed its
legal counsel to include it in comments to the draft Merger Agreement. Later
that day, Mr. Theobald informed Mr. Segner by telephone of the conclusions
reached in the Oversight Committee's meeting.
During the period between July 22 and August 7, legal counsel to Enron and
to the Oversight Committee exchanged comments on the draft of the Merger
Agreement and representatives of DLJ and Dillon Read had several meetings and
conversations regarding their respective valuations of EPP in an attempt to
clarify differences in their valuations. During this period, Dillon Read and DLJ
also exchanged written presentations supporting their respective valuations. On
August 8, the Oversight Committee held a telephone meeting to receive reports
from its legal and financial advisors on the status of their discussions with
Enron's advisors. Subsequent to such meeting, further conversations took place
between Dillon Read and DLJ concerning their respective valuations.
On August 11, the Board of Directors of Enron met and approved the possible
acquisition of EPP for a price of up to $35 per share in Enron Common Stock,
cash or any combination thereof and appointed a committee (the "Merger
Committee") of two directors, Mr. Lay and Jeffrey K. Skilling, who is also
President and Chief Operating Officer of Enron, to negotiate and approve the
final terms of the Merger Agreement and the Merger contemplated thereby.
On August 13, the Oversight Committee held its regularly scheduled meeting
at Enron's office at noon, Houston time. At the Oversight Committee's request,
Dillon Read reported on the status of its discussions with DLJ and commented on
the likelihood that alternative transactions, such as a sale of EPP as an entity
or
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a sale of the publicly held shares to a third party, could not be consummated.
Following these discussions, Mr. Segner, Mr. Sutton and Mr. Gray and
representatives of DLJ and Enron's legal counsel were invited to join the
Oversight Committee meeting. DLJ presented an analysis supporting its evaluation
of EPP and raised several issues where it disputed Dillon Read's valuations of
EPP and its assets. A lengthy discussion among the Oversight Committee and
representatives of Enron and their respective advisors followed. No resolution
was reached on the valuation issues between the Oversight Committee and Enron as
a result of these discussions, but Mr. Segner and Mr. Theobald concurred that
the financial advisors had performed a thorough analysis, that the issues had
been fully discussed and that no further financial analysis was necessary.
Following this discussion, all persons other than the Oversight Committee,
its legal counsel and the representatives of Dillon Read left the meeting, which
recessed at approximately 2:45 p.m. Approximately one hour later, Mr. Lay asked
the Oversight Committee to meet with him, Mr. Segner and Mr. Sutton. During that
meeting, Mr. Lay made a proposal to acquire the outstanding public equity
interest in EPP for $34 in Enron Common Stock per share. The Oversight Committee
indicated it would consider the proposal, but was not favorably disposed toward
such a price. Thereafter, the Oversight Committee discussed the matter with its
legal counsel and Dillon Read and after discussion, unanimously agreed that the
$34 proposal was unacceptable. Thereafter the meeting adjourned. After the
meeting adjourned, representatives of Dillon Read spoke with representatives of
DLJ regarding the Oversight Committee's reaction to the $34 per share proposal
made by Enron at the earlier meeting.
On August 14, Mr. Lay called Mr. Theobald to discuss the matter. During the
telephone call, Mr. Theobald rejected on behalf of the Oversight Committee
Enron's $34 per share proposal. During the call, Mr. Lay increased Enron's
proposal to $35 per share, conditioned on an immediate cessation of EPP
distributions, including the distribution for the second quarter of 1997. Mr.
Theobald subsequently consulted with the other members of the Oversight
Committee and called Mr. Lay on August 15, to reject Enron's latest proposal. In
that telephone call, Mr. Lay made a proposal of $35 per share without any
cessation of distributions, and Mr. Theobald told Mr. Lay he would present the
$35 proposal to the Oversight Committee. Mr. Theobald also raised the subject of
requiring that the merger transaction be approved by a majority of the Public
Shareholders of EPP present and voted at the meeting to approve the Merger, and
Mr. Lay responded that he favored such a provision.
Between the meetings on August 13 and August 18, legal counsel for the
Oversight Committee and Enron completed negotiations on all remaining issues on
the Merger Agreement.
On August 18, the Oversight Committee met to consider Enron's proposal of
$35 per share in Enron Common Stock for each outstanding EPP Common Share. Mr.
Theobald initially reviewed the events that had occurred since the conclusion of
the Oversight Committee's meeting on August 13. Legal counsel to the Oversight
Committee then reviewed the provisions of the proposed Merger Agreement and
answered questions concerning the Merger Agreement. Mr. Theobald then asked Mr.
Powell to present Dillon Read's financial analysis of the revised proposal, and
Mr. Powell summarized Dillon Read's conclusions, including its discounted cash
flow analysis, the premiums paid in certain similar merger transactions and a
dividend discount analysis. At the conclusion of the presentation, Mr. Powell
stated that Dillon Read was of the opinion that the consideration to be received
by the Public Shareholders pursuant to the Merger Agreement was fair to such
shareholders from a financial point of view and that a written opinion to that
effect would be delivered that day. Upon conclusion of the presentation, the
Oversight Committee unanimously authorized and approved the Merger Agreement and
recommended that the EPP Board recommend to the shareholders that they vote in
favor of the Merger at a special meeting of the shareholders of EPP to be called
for that purpose.
In reaching its determination to approve and adopt the Merger, the
Oversight Committee considered numerous factors (but did not consider it
practicable to assign relative weights to such factors) in evaluating the Merger
and the proposed Merger Agreement, including but not limited to:
1. The financial condition, results of operations, cash flows, assets,
liabilities, business and prospects of EPP.
2. The terms of the Purchase Right Agreement, as amended.
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3. Information provided by Enron regarding Designated Development Projects
and Future Projects (each as defined in the Purchase Right Agreement)
under development by Enron and its subsidiaries other than EPP.
4. Publicly available information regarding Enron and certain other
information provided by Enron regarding its future plans and projections
of its future earnings (collectively, the "Enron Information").
5. Presentations by Dillon Read that involved various financial and
comparative analyses of EPP and Enron and the opinion of Dillon Read
that the consideration to be received in the Merger is fair, from a
financial point of view, to the Public Shareholders. In considering such
opinion, the Oversight Committee also took note of Dillon Read's
reputation and qualifications.
6. The factors and analyses included in the Dillon Read presentations to
the Oversight Committee.
7. Recent and historical market prices for the EPP Common Shares, including
the fact that the market value of Enron Common Stock to be received by
the Public Shareholders would represent a premium over (a) both book
value and the market price of EPP Common Shares before Enron publicly
announced the initial version of the merger proposal and (b) the current
market price of EPP Common Shares.
8. The terms and provisions of the Merger Agreement, including the fact
that the Merger Agreement provides that the mutual conditions to the
obligation of the parties to consummate the Merger include (a) that the
Merger be approved by the affirmative vote of a majority of the EPP
Common Shares held by Public Shareholders and voted at the EPP Special
Meeting to be held to vote upon the Merger and (b) that neither the
Fairness Opinion nor the recommendation of the Merger by the Oversight
Committee to the EPP Board have been withdrawn or adversely modified
before the closing date.
9. The fact that Enron currently beneficially owns approximately 52% of the
outstanding EPP Common Shares.
10. The prospects that EPP will be able to acquire additional projects
(other than the remaining Designated Development Projects) on
competitive terms, and the statements that Enron has made to the
Oversight Committee that Enron would not be willing to combine its
project development business with EPP's business in any manner other
than through the Merger.
11. The lack of any alternative purchaser for the EPP Common Shares held by
the Public Shareholders. The Oversight Committee noted Dillon Read's
comments on the unlikely possibility that a third party would be
interested in acquiring EPP.
12. The potential consequences to EPP and the Public Shareholders if the
Merger Agreement is not approved.
At 2 p.m. on August 18, the full EPP Board received the recommendation of
the Oversight Committee that the Merger be approved, including the reasons
therefore described above. The EPP Board considered the factors described under
"Approval of the Board of Directors" below, and after receipt of the report, by
unanimous vote of directors present (Ms. Rebecca Mark being absent), the EPP
Board approved the execution and delivery of the Merger Agreement and
recommended to the Public Shareholders that the Merger Agreement and the Merger
contemplated thereby be approved and adopted. Effective the same day, the Merger
Committee approved the execution and delivery, of the Merger Agreement on behalf
of Enron. Following the adjournment of the EPP Board meeting, the Merger
Agreement was executed and delivered by EPP and Enron.
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REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARD OF DIRECTORS
Enron and EPP believe that the combined company and its shareholders can
benefit from the Merger because the proposed Merger:
- provides EPP's shareholders with the opportunity to participate in all of
Enron's international activities across a broader spectrum of
geographical regions;
- affords EPP's shareholders the opportunity to participate in Enron's
worldwide infrastructure development and merchant activities;
- integrates EPP's manpower, skills and expertise with those in the Enron
International organization;
- permits the shareholders of both Enron and EPP to benefit from
administrative cost reductions arising from the integration of EPP into
Enron; and
- simplifies the financial reporting structure of Enron.
Recommendation of the Oversight Committee to the EPP Board. As described
above, the Oversight Committee engaged in a full investigation of the proposed
Merger with the assistance of independent counsel and independent financial
advisors. After such evaluation, the Oversight Committee recommended to the full
EPP Board that the EPP Board (i) approve and adopt the Merger Agreement and (ii)
recommend to EPP's shareholders that they approve the Merger Agreement.
Recommendation of the EPP Board. After reviewing the Oversight Committee's
findings and its own evaluation, the EPP Board believes that the terms of the
Merger are fair to, and in the best interests of, EPP and its shareholders,
including the Public Shareholders. Accordingly, the EPP Board, by a unanimous
vote of those present, has adopted the Merger Agreement and unanimously
recommends its approval by EPP's shareholders. The EPP Board believes that the
Merger represents a significant strategic opportunity for EPP and should offer
EPP and its shareholders better prospects for the future than would be available
to EPP as a stand-alone entity.
In reaching its decision to approve the Merger Agreement, the EPP Board
considered, among others, the following factors (but did not consider it
practicable to assign relative weights to such factors): (i) the fact that the
holders of the EPP Common Shares were receiving a 25% premium over Enron's
original proposal of $32 per EPP Common Share; (ii) the current and historical
market prices of the Enron Common Stock and EPP Common Shares (as set forth
under "Market Prices and Dividend Information"); (iii) pricing trends in the
market for international power and pipeline projects; (iv) information
concerning the financial performance, condition, business operations and
prospects of EPP and Enron; (v) the effects of the Merger on EPP's existing
shareholders, including the opportunity to share in the anticipated benefits of
ownership of the combined enterprise; (vi) the terms of the contractual
agreements between Enron and EPP; (vii) information provided by Enron regarding
projects under development by Enron and its subsidiaries other than EPP; (viii)
publicly available information regarding Enron and certain other information
provided by Enron regarding its future plans and projections of its future
earnings; (ix) the written opinion of Dillon Read that the Merger is fair, from
a financial point of view, to the EPP shareholders (other than Enron or any of
its subsidiaries); (x) the fact that the market value of Enron Common Stock to
be received by the EPP shareholders would represent a premium over both book
value and the market price of EPP Common Shares before Enron publicly announced
the initial version of the proposed Merger and a premium over the current market
price of EPP Common Shares; and (xi) the terms and provisions of the Merger
Agreement.
THE EPP BOARD, BY A UNANIMOUS VOTE OF THE DIRECTORS PRESENT, HAS ADOPTED
THE MERGER AGREEMENT, BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO EPP'S
SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF EPP VOTE FOR
APPROVAL OF THE MERGER AGREEMENT.
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OPINION OF FINANCIAL ADVISORS TO OVERSIGHT COMMITTEE
On August 18, 1997, the Oversight Committee received Dillon Read's written
opinion that, as of the date of the opinion, the consideration to be received by
the holders (other than Enron and its controlled subsidiaries) of EPP Common
Shares pursuant to the Merger Agreement is fair from a financial point of view.
The full text of Dillon Read's opinion dated August 18, 1997, which describes
the assumptions made, matters considered and limits on the review undertaken, is
attached hereto as Annex A to this Proxy Statement/Prospectus and is
incorporated herein by reference. Dillon Read's opinions do not constitute a
recommendation to any holder of EPP Common Shares as to how such holder should
vote at the EPP Special Meeting. Holders of EPP Common Shares are urged to read
the opinion in its entirety.
In arriving at its opinion, Dillon Read has, among other things: (i)
reviewed certain business and historical financial information relating to EPP
and Enron, (ii) reviewed certain financial forecasts and other data provided to
it by EPP and Enron relating to the business and prospects of EPP and Enron,
(iii) conducted discussions with members of the senior managements of EPP and
Enron with respect to the business and prospects of EPP and Enron, (iv) reviewed
publicly available financial and stock market data with respect to certain other
companies in lines of business Dillon Read believed to be generally comparable
to those of EPP and Enron, (v) reviewed and evaluated the present value of
projected future cash flows from EPP and its subsidiaries, (vi) reviewed the
historical market prices and trading volumes of the EPP Common Shares and the
common stock of Enron, (vii) compared the proposed financial terms of the Merger
with the financial terms of certain other transactions which Dillon Read
believed to be generally comparable to the Merger, (viii) considered the pro
forma effect of the Merger on Enron's earnings and cash flow, (ix) reviewed the
Merger Agreement, and (x) conducted such other financial studies, analyses and
investigations, and considered such other information, as Dillon Read deemed
necessary or appropriate.
In connection with its review, Dillon Read did not independently verify any
of the foregoing information and with the consent of EPP relied on its being
complete and accurate in all material respects. In addition, Dillon Read did not
make any independent evaluation or appraisal of any of the assets or liabilities
(contingent or otherwise) of EPP or Enron or any of their respective
subsidiaries, nor was it furnished with any such evaluation or appraisal. With
respect to the financial forecasts referred to above, Dillon Read, at the
direction of EPP, assumed that they had been reasonably prepared on bases
reflecting the best currently available estimates and judgments of EPP's and
Enron's management as to the future financial performance of EPP or Enron, as
applicable. Further, the opinion of Dillon Read was based on economic, monetary
and market conditions existing on the date hereof.
The consideration was determined through arm's-length negotiations between
EPP and Enron. EPP did not place any limitations upon Dillon Read regarding the
procedures to be followed or factors to be considered in rendering its opinion.
Dillon Read has not been requested to nor has it solicited offers for EPP from
third parties.
In connection with rendering its opinion, Dillon Read considered a variety
of valuation methods which are summarized below. While the following summary
describes the material analyses, it does not purport to be a complete
description of the analyses considered by Dillon Read in this regard.
Discounted Cash Flow Analysis. Dillon Read performed a discounted cash flow
valuation based upon projections furnished by the managements of EPP and Enron.
With respect to projections for EPP and Enron, Dillon Read assumed that such
projections were reasonably prepared upon bases reflecting the best available
estimates and judgments of the managements of EPP and Enron, respectively.
Utilizing these projections, Dillon Read discounted to a present value, under
varying assumed discount rates, the cash flows from all projects currently owned
by EPP as well as all projects which Enron had an obligation to offer to EPP at
favorable market rates under the Purchase Right Agreement. The analysis was
divided into five sections: the value of EPP's indirect interest in TGS, cash on
EPP's balance sheet, projects currently owned by EPP, Designated Development
Projects and all future projects covered under the Purchase Right Agreement
which Enron has an obligation to offer to EPP.
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With respect to TGS, Dillon Read valued EPP's indirect stake in TGS based
on the average closing price of TGS common stock over the 60 trading days prior
to August 18, 1997. Dillon Read also valued the cash on EPP's balance sheet as
of June 30, 1997, at its book value.
With respect to projects currently owned by EPP, Dillon Read developed a
discounted cash flow analysis for each of the following projects: Subic Power
Corp., Batangas Power Corp., Puerto Quetzal Power Corp., Smith/Enron
Cogeneration Limited Partnership, Centragas, the technical assistance fees
associated with TGS, the administrative fees associated with Subic Power Corp.
and Batangas Power Corp., and the guarantee fee from the Smith/Enron
Cogeneration Limited Partnership. Based on the respective duration of each
project, EPP's ownership interest, the appropriate range of discount rates, and
any other project specific issues, this analysis indicated a value to EPP
shareholders of $10.75 - $11.81 per share.
With regard to Designated Development Projects, Dillon Read developed a
discounted cash flow analysis for each of the following projects: India-Dabhol
Phase I, Turkey-Marmara, Poland-Nowa Sarzyna, India-Dabhol Phase II and
China-Hainan Meinan. Because Enron was obligated to offer these projects at
terms which generated a minimum internal rate of return to EPP of 14%, Dillon
Read valued the projects based on the difference in the present value of cash
flows at a 14% discount rate versus the appropriate discount rate for the
respective project. Based on the duration of each project, EPP's projected
ownership interest, the appropriate range of discount rates, and any other
project specific issues, this analysis indicated a value to EPP shareholders of
$4.12 - $7.12 per share.
The Purchase Right Agreement also obligates Enron to offer future projects,
subject to certain restrictions related to geography, fuel type and size, among
other things, to EPP at commercially reasonable terms. In the event that an
agreement could not be reached between EPP and Enron regarding a future project
covered under the Purchase Right Agreement, Enron was prohibited from selling
its interest in the project to a third party for less than 105% of the final
offer rejected by EPP.
With regard to currently identified future projects which fall under the
Purchase Right Agreement, Dillon Read developed a discounted cash flow analysis
for each of the following projects: a power plant to be built in Pakistan, a
pipeline to be constructed from Bolivia to Brazil, a power plant in Croatia, a
pipeline in Mozambique, a power plant in East Java and a power project in Mato
Grosso, Brazil. Based on the terms set forth in the Purchase Right Agreement,
Dillon Read calculated the value of these projects at 5% of the aggregate
present value of the respective cash flows from each project. Based on each
project's duration, EPP's ownership interest, the appropriate range of discount
rates and any other project specific issues, Dillon Read's analysis indicated a
value to EPP shareholders of $0.71 - $0.86 per share.
With regard to additional future projects not specifically identified which
would fall under the Purchase Right Agreement, Dillon Read based its analysis on
public statements made by Enron and EPP concerning the future backlog of
development projects at Enron which could eventually be sold to EPP. Using
Enron's estimates for its current holdings and projects under construction, and
based on estimated capital cost, capital structure, EPP's ownership interest and
estimated Enron holding period return, a discount to market of 5% for EPP and an
appropriate range of discount rates, Dillon Read's analysis indicated a value to
EPP shareholders of $1.26 - $2.49 per share.
In total these analyses indicated a value to EPP shareholders of $33.07 -
$38.53 per share. Dillon Read believes that this analysis supports Dillon Read's
view that the consideration received by the Public Shareholders of EPP Common
Shares is fair from a financial point of view.
Precedent Transactions Analysis. Using publicly available information,
Dillon Read compared the final premiums paid to unaffected stock price (one
month before first public announcement) in previous "minority squeeze-out"
transactions, defined as the acquisition of a minority interest greater than 20%
resulting in total ownership after the transaction of 95% or greater. For
comparison purposes, all comparable transactions from January 1, 1984, to
January 28, 1997, with a total value in excess of $100 million, were included.
The premium paid to unaffected stock price in cash transactions ranged from
- -8.4% to 104.2%, with a mean of 38.6% and a median of 31.1%. For comparable
transactions with stock consideration, the premium paid ranged from -19.8% to
67.6% with a mean of 27.2% and a median of 25.8%. Holders of EPP Common
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Shares, other than Enron and its controlled subsidiaries, will receive a 24.3%
premium over their unaffected closing stock price of $28.13, as of April 11,
1997, in the proposed transaction with Enron.
Dividend Discount Analysis. Dillon Read performed a dividend discount
analysis based on projections furnished by the managements of Enron and EPP.
Dillon Read reviewed EPP's forward (next year) price-to-earnings multiple since
its initial public offering in 1994. Based on this review Dillon Read determined
that EPP, on average, has traded at 12.4x forward net income. Based on EPP's
estimate for earnings per share of $3.40 in 1999 from its Operating and
Strategic Plan and the 12.4x price-to-earnings multiple, Dillon Read estimated a
per share price for EPP in mid-1998 of $42.16. Assuming unchanged dividends per
share of $1.00 in the interim year and an EPP equity discount rate of 11% - 14%,
Dillon Read's analysis indicated a value to EPP shareholders of $37.86 - $38.88
per share. EPP management advised Dillon Read, however, that EPP's 1999 earnings
per share could be as much as 10% lower than originally forecast.
The preparation of a fairness opinion involves various determinations as to
the most appropriate and relevant methods of financial analysis and the
application of these methods to particular circumstances, and, therefore, the
opinion and analysis are not readily susceptible to summary description.
Accordingly, not withstanding the separate factors and analyses summarized
above, Dillon Read believes that its analysis must be considered as a whole and
that selecting portions of its analysis and other factors it considered, without
considering all factors and analyses, could create a misleading view of the
evaluation process underlying its opinions. Dillon Read did not assign any
particular weight to any analysis or factor it considered but, rather made
qualitative judgments based on its experience in rendering such opinion and on
economic, monetary and market conditions then present as to the significance and
relevance of each analysis and factor. In its analyses, Dillon Read assumed
relatively stable industry performance, regulatory environments and general
business and economic conditions, all of which are beyond EPP's control. Any
estimates contained in Dillon Read's analyses do not necessarily indicate actual
value, which may be significantly more or less favorable than stated therein.
Estimates of the financial value of companies do not purport to be appraisals or
necessarily reflect the prices at which companies actually may be sold. In
rendering its opinion, Dillon Read expressed no view as to the range of values
at which the Enron Common Stock may trade following the consummation of the
transaction discussed herein, nor does Dillon Read make any recommendations to a
holder of EPP Common Share with respect to how such holder should vote on the
transaction discussed herein or to the advisability of disposing of or treating
such Enron Common Stock following the transaction discussed herein.
Dillon Read is an internationally recognized investment banking firm which,
as part of its investment banking business, regularly is engaged in evaluating
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive bids, secondary distributions of listed
and unlisted securities, private placements and valuations for estate, corporate
and other purposes. The Oversight Committee selected Dillon Read on the basis of
the firm's expertise and reputation.
Pursuant to the engagement letter between EPP and Dillon Read, EPP has paid
Dillon Read the following amounts:
(a) $500,000 upon the execution of its engagement letter;
(b) $1,250,000 at such time as Dillon Read informed the Oversight Committee
that Dillon Read was prepared to deliver the Fairness Opinion; and
(c) Upon the closing of the Merger, in the event that the purchase price
per share, calculated the day before Closing, exceeds $33.42, an amount
equal to the product of (i) 2.5%, (ii) the number of EPP Common Shares
outstanding and not owned directly or indirectly by Enron and (iii) the
difference between the purchase price per share, determined using the
closing price of Enron Common Shares on the last trading day before
Closing, and $33.42.
Dillon Read and SBC Warburg Inc. or their respective affiliates have
provided financial services to Enron, its subsidiaries or affiliates in the
past, for which they have received customary compensation and expense
reimbursement, and may do so again in the future.
On September 2, 1997, Dillon, Read & Co. Inc. became a wholly owned
subsidiary of Swiss Bank Corporation, merged with SBC Warburg, Inc. and changed
its name to SBC Warburg Dillion Read Inc.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the EPP Board with respect to the
Merger, shareholders should be aware that certain members of the EPP Board have
certain interests in the Merger that are in addition to the interests of
shareholders of EPP generally and that could potentially represent conflicts of
interest. Upon consummation of the Merger, Enron Options held as a result of the
Merger by officers, directors and employees of EPP who are terminated on the
date of the Effective Time (which is expected to consist of the members of the
Oversight Committee) will become 100% vested. The full EPP Board was aware of
these interests and considered them, among other things, in adopting the Merger.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the material federal income tax
consequences relevant to the exchange of EPP Common Shares for Enron Common
Stock pursuant to the Merger, and reflects the opinion of Vinson & Elkins
L.L.P., counsel to Enron, to the extent it relates to matters of law and legal
conclusions. This discussion is based upon the Code (as hereinafter defined),
Treasury regulations, Internal Revenue Service rulings and judicial decisions
now in effect, all of which are subject to change by legislative, judicial or
administrative action. This discussion does not purport to be a complete
analysis of all the potential federal income tax effects of the Merger, does not
address the federal income tax consequences to certain holders to whom special
rules apply (such as banks, insurance companies, tax-exempt organizations,
regulated investment companies, dealers in securities, and persons that hold EPP
Common Shares as part of a straddle, hedge, synthetic security, conversion
transaction or other integrated investment), and does not address state and
local taxes, foreign taxes or estate and gift tax considerations. This
discussion is directed to investors that hold their EPP Common Shares and will
hold Enron Common Stock received in the Merger as "capital assets" within the
meaning of section 1221 of the Internal Revenue Code of 1986 (the "Code"). EACH
HOLDER OF EPP COMMON SHARES IS URGED TO CONSULT HIS OWN TAX ADVISOR CONCERNING
THE TAX CONSEQUENCES TO HIM OF THE EXCHANGE OF EPP COMMON SHARES PURSUANT TO THE
MERGER AND OF THE OWNERSHIP AND DISPOSITION OF ENRON COMMON STOCK.
Characterization of the Merger
The formation of Merger Sub and its merger with and into EPP will be
disregarded for federal income tax purposes. Instead, the Merger will be treated
as a purchase by Enron of the EPP Common Shares acquired in the Merger in
exchange for shares of Enron Common Stock and cash in lieu of fractional share
interests therein, with the consequences to the holders of EPP Common Shares
described below.
Taxation of Holders (other than Foreign Holders) of EPP Common Shares
Each holder of EPP Common Shares will be treated as having sold his EPP
Common Shares to Enron in exchange for shares of Enron Common Stock (and cash in
lieu of fractional share interests therein) in a fully taxable transaction in
which gain or loss is realized and recognized. The amount of gain or loss will
be equal to the difference between the holder's aggregate basis for his EPP
Common Shares and the aggregate fair market value of the shares of Enron Common
Stock (plus the amount of any cash received in lieu of fractional share
interests therein) received in exchange therefor. Such gain or loss generally
will be treated as capital gain or loss; however, in the case of a holder that
acquired his EPP Common Shares in 1997, such gain will be treated as ordinary
income to the extent of the amount deductible by that holder in 1997 as his
share of the amortization of goodwill and other intangibles of EPP. In the case
of an individual or other noncorporate taxpayer, any capital gain recognized on
such exchange will be taxable at a maximum 20% rate if the holder's holding
period for his EPP Common Shares is more than 18 months, or at a maximum 28%
rate if the holder's holding period is more than one year but not more than 18
months. Because the aggregate EPP Common Shares held by a holder are treated as
a single interest in EPP for federal tax purposes, it is unclear how to
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measure a holder's holding period for that interest where his EPP Common Shares
have been acquired in separate transactions at separate times.
Certain provisions of the Code treat proceeds from the sale of an interest
in an entity classified as a partnership for federal tax purposes (such as EPP)
as ordinary income, rather than capital gain, to the extent such proceeds are
attributable to the unrealized receivables of the partnership. For this purpose,
unrealized receivables include certain earnings and profits of controlled
foreign corporations to the extent of the unrealized gain in the stock of such
corporations held by the partnership. Although these provisions (sections 751
and 1248 of the Code) technically could apply to holders of EPP Common Shares,
EPP has determined (based in part on the valuations of EPP conducted in
connection with the Merger) that for all holders of EPP Common Shares (other
than holders that acquired their EPP Common Shares in private placements) the
amount of such unrealized receivables should be zero.
Foreign Holders
Generally, a Foreign Holder (as hereinafter defined) of EPP Common Shares
will not be subject to United States federal income tax on any gain recognized
upon the exchange of EPP Common Shares for Enron Common Stock (and cash in lieu
of fractional share interests therein) pursuant to the Merger unless (i) such
gain is effectively connected with the conduct of a trade or business within the
United States by such Foreign Holder or (ii) such Foreign Holder is an
individual who has been present in the United States for at least 183 days
during the taxable year of the Merger and either (a) such individual's "tax
home" for federal income tax purposes is in the United States or (b) the gain is
attributable to an office or other fixed place of business maintained in the
United States by such individual. A "Foreign Holder" is any person other than
(i) an individual who is a citizen or resident of the United States, (ii) a
corporation or partnership created or organized in the United States or under
the laws of the United States or of any State thereof, (iii) an estate the
income of which is includible in gross income for United States federal income
tax purposes regardless of its source, or (iv) a trust subject to the primary
supervision of a court within the United States and to the control of one or
more United States persons.
RESTRICTIONS ON RESALES BY EPP AFFILIATES
The securities to be received by EPP shareholders in connection with the
Merger have been registered under the Securities Act and, except as set forth in
this paragraph, may be traded without restriction. The securities to be issued
in connection with the Merger and received by persons who are "affiliates" (as
that term is defined in Rule 144 under the Securities Act) of EPP prior to the
Merger may be resold by them only in transactions permitted by the resale
provisions of Rule 145 under the Securities Act (or, in the case of such persons
who become affiliates of Enron, Rule 144 under the Securities Act) or as
otherwise permitted under the Securities Act.
ACCOUNTING TREATMENT
The Merger will be accounted for as a purchase for financial reporting
purposes. Under the purchase method of accounting, the assets and liabilities of
EPP will be recorded at their fair values at the Effective Time, with the
difference between such fair value and the value of the consideration paid in
the Merger allocated to EPP's investment in unconsolidated subsidiaries and to
goodwill.
NO APPRAISAL RIGHTS
Under the DLLCA, no holder of EPP Common Shares will be entitled to any
dissenters' or appraisal rights in connection with the transactions contemplated
by the Merger Agreement.
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THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement
and is qualified in its entirety by reference to the Merger Agreement. A copy of
the Merger Agreement is attached as Annex A to this Proxy Statement/Prospectus
and is incorporated herein by reference.
CLOSING; EFFECTIVE TIME OF THE MERGER
The Closing of the transactions contemplated by the Merger Agreement will
occur on the business day immediately following the date on which the last of
the conditions to the Merger is satisfied or is capable of being satisfied, or
at such other time and date as EPP and Enron agree.
The Merger will become effective upon the filing of articles of merger with
the Office of the Secretary of State of Delaware or at such later time as may be
mutually agreed to by the parties and specified in such articles of merger (the
"Effective Time").
MANNER AND BASIS OF CONVERTING SHARES
Conversion of EPP Common Shares Pursuant to the Merger. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
of shares of EPP or capital stock of Enron, each EPP Common Share issued and
outstanding immediately prior to the Effective Time (other than EPP Common
Shares owned by Merger Sub, Enron or any direct or indirect subsidiary of Enron,
which will remain outstanding and unchanged) will be converted into such number
of shares of Enron Common Stock as have a value of $35 (based upon the average
of the closing prices, regular way, per share of Enron Common Stock on the NYSE
during the 20 consecutive trading days ending on the day prior to the closing
date of the Merger) (the "Exchange Ratio").
Exchange of EPP Certificates. Promptly after consummation of the Merger,
Enron will designate an exchange agent acceptable to EPP to distribute shares of
Enron Common Stock exchanged for EPP Common Shares in the Merger. The Exchange
Agent will send a letter of transmittal to each holder of record of EPP Common
Shares immediately before the Effective Time for use in exchanging certificates
formerly representing EPP Common Shares (an "EPP Certificate") that were
converted ("Converted Shares") into Enron Common Stock for certificates
representing shares of Enron Common Stock. EPP Certificates should not be
surrendered by the holders of EPP Common Shares until they have received the
letter of transmittal from the Exchange Agent. Upon delivery of an EPP
Certificate to the Exchange Agent for exchange, together with a duly executed
letter of transmittal and such other documents as the Exchange Agent shall
require, the holder of such EPP Certificate will be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Enron Common Stock and the amount of cash in lieu of fractional share interests
(if any) which such holder has the right to receive pursuant to the Merger
Agreement. In the event of a transfer of ownership of Converted Shares which is
not registered in the transfer records of EPP, a certificate representing the
proper number of shares of Enron Common Stock may be issued to a transferee if
the EPP Certificate representing such Converted Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence satisfactory to the Exchange Agent that any
applicable stock transfer taxes have been paid. Until delivered and exchanged
for Enron Common Stock as provided in the Merger Agreement, each EPP Certificate
will be deemed at any time after the Effective Time to represent only the right
to receive upon such delivery the certificate representing shares of Enron
Common Stock and cash in lieu of any fractional shares (and any distributions
described below). Unless and until the certificate or certificates representing
Converted Shares have been surrendered for exchange to the Exchange Agent, no
dividends or other distributions payable to holders of Enron Common Stock as of
a record date at or after the Effective Time will be paid to any holder of a
certificate representing such unexchanged Converted Shares. Subject to the
effect of unclaimed property, escheat and other applicable laws, following
delivery of any such certificate, there will be paid to the record holder (or
transferee) of the certificates representing whole shares of Enron Common Stock
issued in exchange therefor, without interest, (i) the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Enron Common Stock, and (ii) at the
appropriate payment date, the amount of
31
<PAGE> 37
dividends or other distributions with a record date at or after the Effective
Time but prior to delivery and a payment date subsequent to delivery payable
with respect to such whole shares of Enron Common Stock, as the case may be.
In the event the Exchange Ratio results in fractional shares, no
certificates or scrip representing fractional shares of Enron Common Stock will
be issued in exchange for Converted Shares, but in lieu thereof, each holder of
a certificate representing Converted Shares will, upon surrender thereof, be
entitled to receive a cash payment as set forth in the Merger Agreement.
CONDITIONS TO THE MERGER
Condition to Each Party's Obligation to Effect the Merger. The respective
obligations of each party to effect the Merger will be subject to the
satisfaction prior to the Closing Date of certain conditions, including the
following, except to the extent such condition is waived by the parties in
writing: (a) the required approval of the shareholders of EPP shall have been
obtained at the EPP Special Meeting; (b) no temporary restraining order or
preliminary or permanent injunction or other judgment, decree, ruling or order
by any court of competent jurisdiction preventing consummation of the Merger
shall have been issued and be continuing in effect, and the Merger and the other
transactions contemplated by the Merger Agreement shall not have been prohibited
under any applicable federal or state law or regulation; (c) the Registration
Statement shall have been declared effective and no stop order suspending the
effectiveness of the Registration Statement under the Securities Act shall have
been issued and remain in effect; (d) Enron and EPP shall have obtained all
material permits and approvals of securities or blue sky commissions or other
governmental bodies that reasonably may be deemed necessary so that the
consummation of the Merger will be in compliance with applicable laws, the
failure to comply with which would have a material adverse effect on the
business, financial condition or results of operations of Enron, EPP and their
subsidiaries, taken as a whole; (e) the shares of Enron Common Stock issuable in
the Merger and the shares of Enron Common Stock issuable upon exercise of any
Enron Options shall have been approved for listing on the NYSE upon official
notice of issuance; (f) all statutory or private approvals of the transactions
contemplated by the Merger Agreement, the granting of which are necessary for
the consummation of the Merger and the non-receipt of which would have a
material adverse effect on the business, financial condition or results of
operations of Enron, EPP and their subsidiaries, taken as a whole, after
consummation of the Merger, shall have been obtained at or prior to the
Effective Time; (g) Dillon Read shall have delivered to the Oversight Committee
a Fairness Opinion, and such Fairness Opinion shall not have been withdrawn or
adversely modified; and (h) the recommendation of the Oversight Committee made
to the EPP Board shall not have been withdrawn or adversely modified.
Conditions to the Obligations of Enron to Effect the Merger. The obligation
of Enron to effect the Merger will be further subject to the satisfaction, on or
prior to the Closing Date, of certain conditions, including the following,
except as may be waived by Enron in writing: (a) EPP shall have performed in all
material respects its agreements and covenants contained in or contemplated by
the Merger Agreement required to be performed by it at or prior to the Effective
Time (subject to certain materiality exceptions); (b) with certain exceptions,
the representations and warranties of EPP set forth in the Merger Agreement
shall be true and correct as of the date of the Merger Agreement and as of the
Closing Date (subject to certain materiality exceptions); (c) since the date of
the Merger Agreement, no material adverse change in the financial condition,
results of operations, or business of EPP and its subsidiaries, taken as a
whole, shall have occurred, and EPP and its subsidiaries shall not have suffered
any damage, destruction or loss materially adversely affecting the properties or
business of EPP and its subsidiaries, taken as a whole; and (d) since the date
of the Merger Agreement, the Dow Jones Industrial Average shall not have closed
below 6,000 for a period of more than seven days in any ten consecutive trading
day period.
Conditions to the Obligation of EPP to Effect the Merger. The obligation of
EPP to effect the Merger will be further subject to the satisfaction, on or
prior to the Closing Date, of certain conditions, including the following,
except as may be waived by EPP in writing: (a) Enron shall have performed in all
material respects its agreements and covenants contained in or contemplated by
the Merger Agreement required to be performed by it at or prior to the Effective
Time (subject to certain materiality exceptions); (b) with certain
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<PAGE> 38
exceptions, the representations and warranties of Enron set forth in the Merger
Agreement shall be true and correct as of the date of the Merger Agreement and
as of the Closing Date (subject to certain materiality exceptions); (c) since
the date of the Merger Agreement, no material adverse change in the financial
condition, results of operations, or business of Enron and its subsidiaries,
taken as a whole, shall have occurred, and Enron and its subsidiaries shall not
have suffered any damage, destruction or loss materially adversely affecting the
properties or business of Enron and its subsidiaries, taken as a whole; and (d)
EPP shall have received from counsel to Enron an opinion dated the Closing Date
covering the matters set forth in Exhibit A to the Merger Agreement.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of
Enron and Merger Sub relating to, among other things, (i) organization and
similar corporate matters, (ii) authorization, execution, delivery and
enforceability of the Merger Agreement and related matters, and the absence of
conflicts, violations and defaults under its charter and bylaws and certain
other agreements and documents, (iii) documents and reports filed by it with the
Commission and the accuracy of the information contained therein, (iv) conduct
of business in the ordinary course and absence of certain changes and events,
(v) capitalization, (vi) brokers and finders, (vii) interim operations of Merger
Sub, and (viii) certain other matters. The Merger Agreement also contains a
representation and warranty of EPP relating to brokers and finders. The
representations and warranties expire at the Effective Time.
CERTAIN COVENANTS; CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME
Prior to the Effective Time, Enron has agreed that the business of Enron
and its subsidiaries shall be conducted only in, and Enron and its subsidiaries
shall not take any action except in, the ordinary course of business.
STOCK OPTIONS AND INCENTIVE PLANS
Pursuant to the Merger Agreement, all outstanding EPP Options will be
exchanged for Enron Options. EPP has agreed to use its best efforts to take all
action necessary to provide for the exchange of the outstanding EPP Options.
Subject to the consummation of the Merger and effective at the Effective Time,
all then outstanding EPP Options shall be canceled in exchange for the number of
Enron Options calculated by multiplying (x) the number of shares covered by EPP
Options by (y) the Exchange Ratio. The exercise price per share of the Enron
Options shall be calculated by dividing (i) the exercise price per share of the
EPP Options by (ii) the Exchange Ratio. The Enron Options will maintain the same
vesting provisions (other than vesting provisions dependent upon the financial
performance of EPP, which shall be revised as determined by the Compensation
Committee of the Board of Directors of Enron) and exercise term as, and shall
otherwise have terms substantially similar to, the EPP Options; however,upon
consummation of the Merger, the Enron Options held as a result of the Merger by
officers, directors and employees of EPP who are terminated on the date of the
Effective Time (which is expected to consist of the members of the Oversight
Committee) will become 100% vested. All outstanding options to purchase EPP
Common Shares held by Enron shall be canceled upon consummation of the Merger.
CERTAIN POST-MERGER MATTERS
Once the Merger is consummated, Merger Sub will cease to exist as a
company, and EPP will be the surviving company. Pursuant to the Merger
Agreement, the limited liability company agreement of EPP, as in effect
immediately prior to the Effective Time, will be the limited liability company
agreement of the surviving company and thereafter shall continue to be its
company agreement until amended as provided therein and pursuant to Delaware
Law.
AMENDMENT
The Merger Agreement may be amended by the parties pursuant to action of
the respective Boards of Directors of each of Enron and EPP, at any time before
or after approval of the Merger Agreement by the shareholders of EPP and prior
to the Effective Time, but after such approval, no such amendment may be
33
<PAGE> 39
made without such approval. The Merger Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties thereto. Any (i)
amendment, termination or waiver of any condition of the Merger Agreement by
EPP, (ii) extension of the time for performance of the obligations of Enron or
Merger Sub under the Merger Agreement or (iii) other action to be taken by the
EPP Board in connection with the Merger Agreement, requires the approval of a
majority of the members of the Oversight Committee. After the Merger Agreement
has been approved and adopted by the holders of EPP Common Shares, the Merger
Agreement may be amended only as may be permitted by applicable provisions of
Delaware Law.
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval thereof by the shareholders of EPP, in
the following circumstances: (a) by the mutual consent of Enron and EPP; (b)
subject to certain limitations, by Enron or EPP, if the Merger has not been
effected on or before December 31, 1997 (which date may be extended by written
notice of either Enron or EPP to a date not later than March 31, 1998, if the
Merger shall not have been consummated as a direct result of Enron or EPP having
failed by December 31, 1997, to receive all required regulatory approvals or
consents with respect to the Merger); (c) by Enron or EPP if a final,
unappealable order of a judicial or administrative authority of competent
jurisdiction to restrain, enjoin or otherwise prevent a consummation of the
Merger Agreement or the transactions contemplated in connection therewith shall
have been entered; (d) by Enron upon a breach of any covenant or agreement on
the part of EPP set forth in the Merger Agreement, such that the covenants and
conditions to be complied with and performed by EPP shall not have been duly
complied with and performed in all material respects by March 31, 1998 (provided
that in any case, a willful breach shall be deemed to cause such conditions to
be incapable of being satisfied); (e) by EPP upon a breach of any
representation, warranty, covenant or agreement on the part of Enron or Merger
Sub set forth in the Merger Agreement, such that the breach shall not have been
cured by March 31, 1998 (provided that in any case, a willful breach shall be
deemed to cause such conditions to be incapable of being satisfied); (f) by
Enron if since the date of the Merger Agreement there has been a material
adverse change in the results of operations, financial condition or business of
EPP and its subsidiaries, taken as a whole; (g) by Enron if since the date of
the Merger Agreement the Dow Jones Industrial Average shall have closed below
6,000 for a period of more than seven days in any ten consecutive trading day
period; (h) by Enron if there has been a material breach of any covenant set
forth in the Merger Agreement by EPP which breach has not been cured within 30
days following receipt by EPP of notice of such breach; (i) by EPP if since the
date of the Merger Agreement there has been a material adverse change in the
results of operations, financial condition or business of Enron and its
subsidiaries, taken as a whole; and (j) by EPP if there has been a material
breach of any representation or warranty or covenant set forth in the Merger
Agreement by Enron which breach has not been cured within 30 days following
receipt of Enron of notice of such breach.
EXPENSES AND TERMINATION FEES
Except for the termination fees described below, the Merger Agreement
provides that all costs and expenses incurred in connection with the Merger
Agreement and the transactions contemplated thereby will be paid by the party
incurring such expenses, except that (i) expenses incurred in connection with
the printing and mailing of this Proxy Statement/Prospectus will be shared
equally by Enron and EPP and (ii) all fees and expenses payable to Dillon Read
and all legal fees and expenses incurred by the Oversight Committee shall be
paid by Enron.
In the event of termination of the Merger Agreement by either Enron or EPP
pursuant to the provisions described above, generally there will be no liability
on the part of either Enron or EPP or their respective officers or directors
under the Merger Agreement except for any liability for breach of the covenants,
agreements, representations or warranties set forth in the Merger Agreement. The
Merger Agreement provides that the breaching party will pay the costs and
expenses of the other parties in connection with the transactions contemplated
by the Merger Agreement.
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<PAGE> 40
MARKET PRICES AND DIVIDEND INFORMATION
Enron Common Stock is traded on the NYSE and the Pacific, Chicago, London
and Frankfurt exchanges under the symbols "ENE" and the EPP Common Shares are
traded on the NYSE under the symbol "EPP." The following table sets forth, for
the periods indicated, the range of high and low per share sales prices for
Enron Common Stock and EPP Common Shares as reported on the NYSE, as well as
information concerning quarterly dividends declared on such shares.
<TABLE>
<CAPTION>
ENRON COMMON STOCK EPP COMMON STOCK
------------------------ ------------------------
DIVIDENDS DIVIDENDS
PER PER
HIGH LOW SHARE HIGH LOW SHARE
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1995
First Quarter............................... $34 $28 $0.20 $241/4 $20 0.205
Second Quarter.............................. 367/8 321/2 0.20 27 225/8 0.205
Third Quarter............................... 363/8 315/8 0.20 24 21 0.205
Fourth Quarter.............................. 393/8 33 0.2125 253/8 227/8 0.205
Year ended December 31, 1996
First Quarter............................... $40 $345/8 $0.2125 $27 $233/4 0.22
Second Quarter.............................. 423/8 363/8 0.2125 27 233/8 0.22
Third Quarter............................... 43 391/8 0.2125 253/8 231/4 0.22
Fourth Quarter.............................. 471/2 401/4 0.225 29 24 0.25
Year ended December 31, 1997
First Quarter............................... $451/8 $377/8 $0.225 $301/2 $261/2 0.25
Second Quarter.............................. 421/2 355/8 0.225 343/8 273/8 0.25
Third Quarter (through , 1997)......... 0.225 0.25
</TABLE>
On August 15, 1997, the last trading day prior to the joint announcement by
Enron and EPP that they had executed the Merger Agreement, the closing per share
sales prices of Enron Common Stock and EPP Common Shares, as reported on the
NYSE Composite Tape, were $35 5/8 and $33 11/16, respectively.
Enron has paid quarterly cash dividends on the Enron Common Stock for more
than 50 consecutive years. Enron intends to continue its policy of paying
regular quarterly cash dividends on its common stock, although future dividend
payments on the Enron Common Stock will depend on Enron's results of operations,
cash flow, anticipated capital requirements and such other factors as the Board
of Directors of Enron deems relevant. Enron is prohibited from paying dividends
on the Enron Common Stock in the event of default of certain guaranteed
obligations under the terms of the Enron Capital LLC 8% Cumulative Guaranteed
Monthly Income Preferred Shares and Enron Capital Resources, L.P. 9% Cumulative
Preferred Securities, Series A. Enron does not believe such provisions will
materially restrict the ability of Enron to pay dividends in the future.
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<PAGE> 41
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following describes the effect of the Merger on Enron's unaudited pro
forma balance sheet as of June 30, 1997, and its unaudited pro forma income
statements for the six months ended June 30, 1997, and the year ended December
31, 1996, based on the historical consolidated financial statements of Enron and
EPP under the assumptions and adjustments described below.
On July 1, 1997, Enron acquired PGC by merger pursuant to the Amended and
Restated Agreement and Plan of Merger by and among Enron, PGC and Enron Oregon
Corp. (the "Amended Merger Agreement"). Pursuant to the Amended Merger
Agreement, on July 1, 1997, PGC merged with and into Enron, with Enron
continuing in existence as the surviving corporation (the "PGC Merger"). Each
share of PGC common stock issued and outstanding was converted into 0.9825
shares of Enron Common Stock (approximately 50.5 million shares of Enron Common
Stock). The following unaudited pro forma financial information includes the pro
forma effects of the PGC Merger. A description of the pro forma effects of the
PGC Merger on Enron's balance sheet as of June 30, 1997, and its income
statements for the six months ended June 30, 1997, and for the year ended
December 31, 1996, is included in Enron's Form 8-K dated August 29, 1997,
incorporated by reference in this proxy statement/prospectus.
The effects of the Merger on Enron's unaudited pro forma balance sheet
assume the Merger was consummated on June 30, 1997. The effects of the Merger on
Enron's unaudited pro forma income statements assume that the Merger was
consummated on January 1, 1996. Enron will account for the transaction as a
purchase for financial reporting purposes.
Since EPP is a consolidated subsidiary of Enron, the primary effects of the
Merger on Enron's unaudited pro forma balance sheet at June 30, 1997, would be
to eliminate minority interest of $125 million, to allocate excess purchase cost
of $160 million to EPP's investment in unconsolidated subsidiaries and $214
million to goodwill (including $6 million for Enron's transaction costs related
to the Merger), to increase deferred income tax liabilities by $56 million for
the tax effect of the basis difference between the fair value of EPP's
investments and EPP's corresponding historical net book value and to increase
Enron's stockholders' equity $437 million related to the issuance of 12 million
shares of Enron Common Stock, without par value, for the EPP Common Shares
outstanding as of June 30, 1997. The exchange ratio of 0.94 shares of Enron
Common Stock for each EPP Common Share was based upon the average of the closing
prices of Enron Common Stock on the NYSE during the 20 consecutive trading days
ending August 22, 1997.
The primary effects of the Merger on Enron's unaudited pro forma income
statements for the year ended December 31, 1996, and the six months ended June
30, 1997, would be an increase in depreciation, depletion and amortization of $5
million and $3 million, respectively, related to the amortization of goodwill, a
decrease in other income of $20 million and $15 million, respectively, related
to lower equity earnings as a result of the amortization of excess purchase
price allocated to EPP's investments and the elimination of gains on sales of
EPP Common Shares by Enron, the elimination of minority interest expense of $18
million and $15 million, respectively and a decrease in income tax expense of $7
million and $5 million, respectively. Excess purchase cost allocated to EPP's
investment in unconsolidated subsidiaries is amortized over the estimated
remaining life of each EPP investment. The excess purchase cost allocated to
goodwill is amortized over the weighted average estimated remaining life of all
of EPP's investments. As a result, Enron's pro forma earnings (loss) on common
stock and earnings (loss) per share for the year ended December 31, 1996, and
the six months ended June 30, 1997, would be as follows (amounts in millions,
except per share amounts):
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
1996 JUNE 30, 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
Earnings (Loss) on Common Stock.................. $ 679 $ (135)
Earnings (Loss) Per Share of Common Stock
Primary........................................ 2.20 (0.52)
Diluted........................................ 2.08 (0.52)
Average Number of Common Shares Used in
Primary Computation............................ 308 258
</TABLE>
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<PAGE> 42
The adjustments to the unaudited pro forma income statements do not give
effect to any nonrecurring costs directly associated with the Merger that might
be incurred within the next 12 months. The pro forma financial data also do not
give effect to any potential cost savings and synergies that could result from
the Merger.
The above description of the effects of the Merger on Enron's unaudited pro
forma financial statements should be read in conjunction with the historical
consolidated financial statements and related notes thereto of Enron and EPP and
the pro forma effects of the PGC Merger included in Enron's Form 8-K dated
August 29, 1997, all of which have been incorporated by reference. See
"Incorporation of Certain Documents by Reference." The description of the
effects of the Merger on Enron's financial statements have been prepared based
upon assumptions deemed appropriate by management of Enron and EPP. This
description of the effects of the Merger on Enron's financial statements has
been prepared for informational purposes only and is not necessarily indicative
of the actual or future results of operations or financial condition that would
have been achieved had the Merger occurred at the dates assumed.
PRINCIPAL SHAREHOLDERS OF ENRON AND EPP
ENRON
As of July 31, 1997, Enron knows of no one who beneficially owns in excess
of 5% of a class of the Enron voting stock except as set forth in the table
below:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-------------------------------------------
SOLE VOTING
SOLE SHARED AND LIMITED
TITLE OF VOTING AND VOTING AND OR NO PERCENT
NAME AND ADDRESS CLASS INVESTMENT INVESTMENT INVESTMENT OF
OF BENEFICIAL OWNER OF STOCK POWER POWER POWER OTHER CLASS
------------------- ----------- ---------- ---------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Belfer.................. Common 5,351,563(1)(13) 464,898(2) 12,845(12)(14) -- 1.92
767 Fifth Avenue Convertible
New York, NY 10153 Preferred 296,273(3) 6,352(4) -- -- 22.61
Mr. & Mrs. Lawrence Ruben......... Common 4,800,813(5) 1,013,449(6) -- -- 1.91
600 Madison Avenue Convertible
New York, NY 10022 Preferred 289,387(7) 16,275(8) -- -- 22.84
Jack Saltz........................ Common 1,459,648(9) 817,103(10) -- -- *
767 Fifth Avenue Convertible
New York, NY 10153 Preferred 73,041 58,900(11) -- -- 9.86
Enron Savings Plan................ Common -- -- -- 8,232,767(15) 2.74
1400 Smith Street Convertible
Houston, TX 77002 Preferred -- -- -- 70,000(15) 5.23
</TABLE>
- ---------------
* Less than 1 percent
(1) Includes 15,726 shares held by trusts of which Mr. Belfer is trustee, in
all of which shares Mr. Belfer disclaims beneficial ownership. Also
includes 4,044,719 shares that would be acquired upon the conversion of the
Enron Convertible Preferred Stock shown in the table as being beneficially
owned by Mr. Belfer with sole voting and investment power.
(2) Includes 372,000 shares held by a trust of which Mr. Belfer's wife is
co-trustee and 6,180 shares held by Mr. Belfer's wife. Also includes 86,718
shares that would be issued upon the conversion of the Enron Convertible
Preferred Stock shown in the table as being beneficially owned by Mr.
Belfer with shared voting and investment power.
(3) Includes 61,870 shares held by trusts of which Mr. Belfer is trustee, in
all of which shares Mr. Belfer disclaims beneficial ownership.
(4) Includes 5,300 shares held by a trust of which Mr. Belfer's wife is
co-trustee, 625 shares held by Mr. Belfer's wife and 427 shares held by
trusts of which Mr. Belfer is a trustee, in all of which shares Mr. Belfer
disclaims beneficial ownership.
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<PAGE> 43
(5) Includes 9,513 shares held as trustee or co-trustees for their children and
61,200 shares held by Mrs. Ruben as trustee for a charitable trust. Also
includes 3,950,711 shares that would be acquired upon the conversion of the
Enron Convertible Preferred Stock.
(6) Includes 120,696 shares held by Mrs. Ruben as co-trustee for her children;
226,787 shares held by Mr. Ruben as co-trustee for his children; 332,280
shares held by Mr. Ruben as co-trustee for his nieces and nephews; 35,000
shares held by the Selma and Lawrence Ruben Foundation and 76,500 shares
held by the Selma Ruben Foundation in which shares Mr. and Mrs. Ruben have
no pecuniary interest. Also includes 222,186 shares that would be issued
upon the conversion of the Enron Convertible Preferred Stock.
(7) Includes 960 shares held as co-trustee for their children, 53,330 shares
held by Mrs. Ruben as trustee for her children and 3,600 shares held by
Mrs. Ruben as trustee for a charitable trust.
(8) Includes 5,224 shares held by Mrs. Ruben as co-trustee for her children and
11,051 shares held by Mr. Ruben as co-trustee for his nieces and nephews,
in which shares Mr. Ruben has no pecuniary interest.
(9) Includes 997,156 shares that would be issued upon the conversion of the
Enron Convertible Preferred Stock.
(10) Includes 804,103 shares that would be issued upon the conversion of the
Enron Convertible Preferred Stock.
(11) Held by Mr. Saltz's wife as trustee for their children.
(12) Includes restricted shares of Enron Common Stock held under Enron's 1991
Stock Plan. Participants in the plan have sole voting power and no
investment power for restricted shares awarded under the plan until such
shares vest in accordance with plan provisions. After vesting, the
participant has sole investment and voting powers.
(13) 21,344 shares of Enron Common Stock are subject to stock options
exercisable within 60 days after July 31, 1997, which number is included in
the number of shares shown as beneficially owned as of such date.
(14) Includes shares held under Enron's Savings Plan. Participants in the
Savings Plan have sole voting power and limited investment power with
respect to shares in the Plan.
(15) Pursuant to the terms of Enron's Savings Plan, shares allocated to employee
accounts are voted by the respective employees. If the trustee receives no
voting directions from the respective employees, then all such shares are
to be voted by the trustee in the same proportion as the allocated shares
that are voted by employees. Includes 955,640 shares that would be acquired
upon the conversion of the Enron Convertible Preferred Stock.
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<PAGE> 44
EPP
As of July 31, 1997, EPP does not know of any person or entity that would
be deemed to own beneficially more than 5% of the EPP Common Shares except as
set forth in the table below:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL
OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP PERCENT OF CLASS
- -------------------------------------------- -------------- ----------------- ----------------
<S> <C> <C> <C>
Enron Corp.(1).............................. Common Shares 13,535,332 52.02%
1400 Smith Street
Houston, TX 77002
Genesis Asset Managers Limited.............. Common Shares 1,505,000 5.78%
Bermuda House
St. Julian's Avenue
St. Peter Port
Guernsey, Channel Islands
</TABLE>
- ---------------
(1) Represents shares owned of record by Enron Corp.'s direct or indirect wholly
owned subsidiaries, Enron Holding Company L.L.C., Enron Development Corp.,
Enron Equity Corp. and Enron International Holdings Corp., which
subsidiaries share voting and investment power with Enron Corp.
39
<PAGE> 45
MANAGEMENT AND OTHER INFORMATION
Certain information relating to the management, executive compensation,
voting securities, certain relationships and related transactions and other
related matters pertaining to Enron and EPP is set forth in or incorporated by
reference in their respective Annual Reports on Form 10-K for the year ended
December 31, 1996. Such Annual Reports are incorporated in this Proxy
Statement/Prospectus. See "Incorporation of Certain Documents by Reference."
OVERSIGHT COMMITTEE COMPENSATION
From time to time, EPP has paid supplemental compensation to members of the
Oversight Committee for undertaking additional work beyond the Oversight
Committee's ordinary duties. In connection with the evaluation of the proposed
Merger, each member of the Oversight Committee was paid $50,000 by EPP on July
8, 1997. Enron has agreed to reimburse EPP for the amount of such payments.
COMPARATIVE RIGHTS OF ENRON STOCKHOLDERS AND EPP SHAREHOLDERS
Rights of stockholders of Enron are currently governed by the OBCA, the
Enron Charter and the Enron Bylaws. Rights of shareholders of EPP are currently
governed by the DLLCA and the EPP Company Agreement. Upon consummation of the
Merger, EPP shareholders will become stockholders of Enron and their rights as
stockholders of Enron will be governed by the Enron Charter, the Enron Bylaws
and the OBCA. There are a number of differences between the rights of Enron and
EPP stockholders. The following is a brief summary of certain differences
between the rights of Enron shareholders and the rights of EPP shareholders, and
is qualified in its entirety by reference to the relevant provisions of the
OBCA, the DLLCA, the Enron Charter and Enron Bylaws, and the EPP Company
Agreement.
AUTHORIZED CAPITAL STOCK
Enron. The authorized capital stock of Enron consists of 600,000,000 shares
of Enron Common Stock, no par value, and 16,500,000 shares of Preferred Stock,
no par value. Based on the number of shares of Enron Common Stock and of EPP
Common Shares outstanding on the Record Date, there will be an aggregate
of shares of Enron Common Stock outstanding after the Merger. With respect
to the Preferred Stock, the Board of Directors of Enron is authorized, without
stockholder approval (subject to any class voting rights of any existing holders
of preferred stock), to designate series of each such class and to determine the
relative rights, preferences and limitations of such series. As of the date
hereof, there have been designated an aggregate of 1,370,000 shares of Enron
Cumulative Second Preferred Convertible Stock (of which shares were
issued and outstanding as of the Record Date) and 35.568509 shares of Enron
9.142% Perpetual Second Preferred Stock (of which 35.568509 shares are issued
and outstanding), each of which is a series of Second Preferred Stock.
EPP. EPP is authorized to issue up to 200,000,000 Common Shares.
BOARDS OF DIRECTORS
Enron. The Board of Directors of Enron currently consists of 17 members,
with the number of directors constituting the Board of Directors to be
determined from time to time by a majority of the Board, except that no decrease
in the number of directors passed by the Board of Directors may shorten the term
of any incumbent director. The Enron Board is not divided into classes,
although, under the OBCA, the Board of Directors would be empowered to establish
a classified board of directors without shareholder approval by amending the
Enron Bylaws. Cumulative voting in the election of directors is not permitted.
EPP. The EPP Board may consist of not less than six nor more than 12
persons and currently consists of seven members, with the number of directors
constituting the EPP Board to be determined from time to time by resolution of
the EPP Board, except that no decrease in the number of directors passed by the
EPP Board may shorten the term of any incumbent director and no increase during
any twelve-month period passed by
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the EPP Board may cause more than two additional directors to be elected to fill
the vacancies created by such increase. The EPP Board is not divided into
staggered classes, and cumulative voting in the election of directors is not
permitted. The EPP Board is required to appoint the Oversight Committee, which
must consist solely of persons who are not officers, directors, employees or
consultants of Enron or EPP or related by blood or marriage (closer than first
cousin) to any officer of EPP or any officer or director of Enron Holding
L.L.C., a subsidiary of Enron.
REMOVAL OF DIRECTORS
Enron. The Enron Bylaws provide that any director or the entire Board of
Directors may be removed, with or without cause, by the holders of a majority of
the shares entitled to vote at an election of directors (except that any
director elected by a particular class or series of stock may be removed only by
such class).
EPP. The EPP Company Agreement provides that any director other than a
member of the Oversight Committee may be removed, with or without cause, by the
written consent or other approval of a majority of the EPP Board other than
directors qualified to serve on the Oversight Committee. A member of the
Oversight Committee may be removed as a director only (i) with cause by a
majority of the EPP Board, or (ii) with or without cause by a majority interest
(other than Enron affiliates) obtained at a meeting of shareholders held for
such purpose of which a quorum is present, in person or by proxy.
SPECIAL MEETINGS OF SHAREHOLDERS; SHAREHOLDER ACTION WITHOUT MEETING
Enron. The Enron Bylaws provide that special meetings of stockholders may
be called by the Chairman of the Board, President, any Vice Chairman of the
Board or by a majority of the Board or Executive Committee thereof. As required
by the OBCA, the holders of at least 10% of all votes entitled to be cast on any
issue proposed to be considered at the meeting will also be entitled to call a
special shareholders' meeting. Under the OBCA, Enron shareholders are entitled
to act by written consent only if such consent is unanimous
EPP. The EPP Company Agreement provides that special meetings of
shareholders may be called by the EPP Board or by shareholders owning a majority
of the voting power of the company's securities of the class or classes for
which a meeting is proposed. The EPP Company Agreement also provides that any
action that may be taken at a meeting of shareholders may be taken without a
meeting if an approval in writing setting forth such action is signed by
shareholders holding not less than the minimum percentage of the company's
securities that would be necessary to authorize or take such action at a meeting
at which all the shareholders entitled to vote on such matter were present and
voted.
SHAREHOLDER PROPOSALS AND NOMINATIONS
Enron. The Enron Bylaws provide that for business to be properly brought
before an annual meeting of stockholders by a stockholder, the stockholder must
have given timely notice in writing of the business to be brought before the
meeting to the Secretary of Enron. To be timely, a stockholder's notice must be
delivered to or mailed and received at Enron's principal executive offices not
less than 120 days prior to the anniversary date of the proxy statement for the
previous year's annual meeting of the stockholders. The stockholder's notice to
the Secretary must set forth certain specified information as to each matter the
stockholder proposes to bring before the annual meeting. With respect to
director nominations, the Enron Bylaws provide that persons nominated by a
stockholder and not by or at the direction of the Board of Directors, shall be
eligible for election as a director only if such nomination is delivered to or
mailed and received at Enron's principal executive offices, (i) with respect to
an election to be held at an annual meeting of stockholders of Enron, not less
than 120 days prior to the anniversary date of the proxy statement for the
previous year's annual meeting of stockholders, and (ii) with respect to an
election to be held at a special meeting of stockholders of Enron for the
election of directors, not later than the close of business on the 10th day
following the date on which notice of the date of the meeting was mailed or
public disclosure of the date of the meeting was made, whichever first occurs.
Such stockholder's notice must set forth certain specified information with
respect to the nominee and the nominating stockholder.
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EPP. The EPP Company Agreement has no provision for shareholder proposals.
With respect to director nominations, the EPP Company Agreement provides that
nominations may be made by any shareholder, but any such shareholder nominations
must be in writing and delivered to the Secretary of EPP not less than 90 or
more than 120 days prior to the meeting of the shareholders at which an election
of directors is to be held, and any slate of shareholder nominees must include
at least two persons who are qualified to serve on the Oversight Committee.
DISSENTERS' RIGHTS
Enron. Under the OBCA, a shareholder is entitled to dissent from, and
obtain payment of the fair value of the shareholder's shares in the event of
(only to the extent the shareholder is entitled to vote thereon) a merger, stock
exchange, sale or exchange of all or substantially all of the property of the
corporation other than in the usual and regular course of business (with certain
exceptions), or certain specified charter amendments. Under the OBCA, unless the
articles of incorporation provide otherwise (which the Enron charter does not),
dissenters' rights do not apply to the holders of stocks of any class or series
if the stocks of the class or series were registered on a national securities
exchange or quoted on the Nasdaq National Market on the record date for the
meeting of shareholders at which the corporate action giving rise to dissenters'
rights is to be approved.
EPP. The EPP Company Agreement does not provide for any appraisal rights
for dissenting shareholders.
SHAREHOLDER APPROVAL NOT REQUIRED FOR CERTAIN MERGERS
Enron. Under the OBCA, action by shareholders of a surviving corporation on
a plan of merger is not required if (i) the articles of incorporation of the
survivor will not differ from its articles before the merger (with certain
limited exceptions), (ii) each shareholder of the survivor will hold the same
number of shares with identical preferences and other rights as existed before
the merger, (iii) the number of voting shares outstanding after the merger, plus
the number of voting shares issuable as a result of conversions or the exercise
of warrants issued pursuant to the merger, will not exceed by more than 20% the
total number of voting shares of the survivor outstanding before the merger, and
(iv) the number of participating shares (shares entitling their holders to
participate without limitations in distributions) outstanding after the merger,
plus the number of participating shares issued upon conversion or exercise of
securities or rights issued pursuant to the merger, will not exceed by more than
20% the total number of participating shares outstanding before the merger.
EPP. The EPP Company Agreement provides that mergers shall be submitted to
a vote of the shareholders, whether at a meeting or by written consent, after
approval by the EPP Board.
CHARTER AMENDMENTS
Enron. Under the OBCA, an amendment to the Enron Charter generally may be
approved if the votes cast by a voting group entitled to vote favoring the
amendment exceed the votes cast by the voting group opposing the action (except
that a charter amendment that would result in a voting group having dissenters'
rights requires the affirmative vote of a majority of the shares of such voting
group). The OBCA requires a separate class vote on a charter amendment if the
amendment would increase or decrease the aggregate number of authorized shares
of such class, increase or decrease the par value of the shares of such class,
or alter or change the powers, preferences or special rights of shares of such
class so as to affect them adversely. In addition, the Oregon statute requires,
among other things, a class vote if the charter is amended to create a new class
of shares having rights or preferences prior to or on a parity with the shares
of the class or to increase the rights or preferences of another authorized
class so that such other class becomes prior to or on a parity with the shares
of a class. The OBCA provides that directors may make certain amendments to the
articles of incorporation without shareholder approval, including making certain
changes to the corporation's name or extending the duration of the corporation.
EPP. Amendments to the EPP Company Agreement may be proposed only by or
with the consent of the EPP Board. In order to adopt a proposed amendment, the
EPP Board is required to seek written approval of
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the shareholders required to approve such amendment or call a meeting of
shareholders to consider and vote upon the proposed amendment, except in certain
limited circumstances. Proposed amendments must be approved by shareholders
holding outstanding EPP securities possessing a majority of the voting power of
all outstanding EPP securities entitled to vote with respect to such matter.
DIVIDENDS AND STOCK REPURCHASES
Enron. The OBCA provides that, subject to any restrictions contained in the
articles of incorporation, a corporation may make a distribution to its
shareholders unless, after giving effect to the distribution (which is defined
to include a repurchase of shares), (i) the corporation would not be able to pay
its debts as they become due in the usual course of business or (ii) the
corporation's total assets would be less than the sum of its total liabilities
plus the amount that would be needed, if the corporation were to be dissolved,
to satisfy the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those receiving the distribution. The board
of directors may base a decision that a distribution is not prohibited on (a)
financial statements prepared on the basis of accounting practices that are
reasonable in the circumstances, (b) a fair valuation, or (c) any other method
that is reasonable in the circumstances.
EPP. Shareholders of EPP are entitled to receive such dividends as may be
declared from time to time by the EPP Board. The EPP Board may also cause EPP to
redeem, repurchase or otherwise acquire EPP Common Shares and may require
holders to sell EPP Common Shares to EPP under specified conditions if at any
time not more than 10% of the EPP Common Shares are held by persons other than
Enron and its affiliates.
FAIR PRICE CHARTER PROVISIONS
Enron. The Enron Charter contains a "fair price" provision which generally
requires that certain mergers, business combinations and similar transactions
with a "Related Person" (generally the beneficial owner of at least 10% of
Enron's voting stock) be approved by the holders of at least 80% of Enron's
voting stock, unless (i) the transaction is approved by at least 80% of the
"Continuing Directors" (as defined) of Enron, who constitute a majority of the
entire board, (ii) the transaction occurs more than five years after the last
acquisition of Enron voting stock by the related person or (iii) certain "fair
price" and procedural requirements are satisfied.
EPP. The EPP Company Agreement does not contain any "fair price"
provisions.
BUSINESS COMBINATION STATUTES
Enron. Enron is subject to the provisions of the OBCA, which provides that
any person who acquires 15% or more of a corporation's voting stock (thereby
becoming an "interested shareholder") may not engage in certain "business
combinations" with the corporation for a period of three years following the
date the person became an interested shareholder, unless (i) the board of
directors has approved, prior to that acquisition date, either the business
combination or the transaction that resulted in the person becoming an
interested shareholder, (ii) upon consummation of the transaction that resulted
in the person becoming an interested shareholder, that person owns at least 85%
of the corporation's voting stock outstanding at the time the transaction is
commenced (excluding shares owned by persons who are both directors and officers
and shares owned by employee stock plans in which participants do not have the
right to determine whether shares will be tendered in a tender or exchange
offer), or (iii) the business combination is approved by the board of directors
and authorized by the affirmative vote of at least 66% of the outstanding voting
stock not owned by the interested shareholder.
EPP. The DLLCA does not contain any provisions regarding business
combinations of interested shareholders.
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CONTROL SHARE STATUTE
Enron. As is permitted by the OBCA, the Enron Charter contains a provision
"opting out" of the application of the Oregon Control Share Act, so Enron is not
subject to the provisions of such Act.
EPP. Under the DLLCA, EPP is not subject to a "control share" statute.
PROPER FACTORS FOR CONSIDERATION IN EVALUATING BUSINESS COMBINATIONS
Enron. The OBCA provides that, when evaluating a tender offer, merger,
consolidation or sale of assets, the directors may, in determining what they
believe to be in the best interests of the corporation, give consideration to
the social, legal and economic effects on employees, customers and suppliers of
the corporation and on the communities and geographical areas in which the
corporation operates, the economy of the state and nation, the long-term as well
as short-term interests of the corporation and its shareholders, including the
possibility that these interests may be best served by the continued
independence of the corporation, and other relevant factors.
EPP. The DLLCA does not contain a statutory provision outlining proper
factors for consideration in evaluating a business combination or transaction.
FORM OF CONSIDERATION FOR CAPITAL STOCK
Enron. Under the OBCA, shares may be issued for a consideration consisting
of any tangible or intangible property or benefit to the corporation, including
cash, promissory notes, services performed, contracts for services to be
performed or other securities of the corporation.
EPP. Under the DLLCA and the EPP Company Agreement, EPP Common Shares may
be issued for such consideration as is determined to be appropriate by the EPP
Board.
LIMITATION OF DIRECTOR LIABILITY
Enron. The Enron Charter contains a provision, permitted by the OBCA, that
eliminates the personal liability of a director to the corporation or its
stockholders for monetary damages for conduct as a director, except for
liability of a director (i) for breach of the duty of loyalty, (ii) for actions
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for the payment of improper dividends or
redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit.
EPP. The EPP Company Agreement provides that, except as otherwise
specifically provided therein, the duties and obligations of officers, directors
and affiliates of EPP to EPP and its shareholders will be the same as the duties
owed by officers, directors and affiliates of a corporation organized under the
Delaware General Corporation Law (the "DGCL") to such corporation and its
stockholders. Other provisions of the EPP Company Agreement contain language
that modifies these fiduciary duties and exculpatory language that limits the
liability of officers, directors and affiliates to EPP and the holders of Common
Shares. Such provisions are intended to permit Enron to deal with EPP, and to
permit the officers and directors of EPP to perform their duties to EPP, without
undue uncertainty regarding the standards by which they will be judged or undue
risk of liability. The EPP Company Agreement provides, among other things, that:
(i) an officer, director or affiliate of EPP will not be liable for errors in
judgment or for any act or omission if such person acted in good faith; (ii) it
will not constitute a breach of fiduciary or other duty for the officers or
directors of EPP (including the Oversight Committee) to resolve conflicts of
interest, as long as the resolution of such conflict is fair to EPP; (iii) it
will not constitute a breach of fiduciary or other duty for an officer or
director of EPP to engage attorneys, accountants, engineers and other advisors
on behalf of EPP, its Board of Directors or any committee thereof, even though
such persons may also be retained from time to time by Enron, and such persons
may be engaged with respect to any matter in which the interests of EPP and
Enron may differ, or may be engaged by both EPP and Enron with respect to a
matter, as long as such officer or director reasonably believes that any
conflict between EPP and Enron with respect to such matter is not material.
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INDEMNIFICATION
Enron. The Enron Charter contains provisions under which Enron will
indemnify, to the fullest extent permitted by law, persons who are made a party
to an action or proceeding by virtue of the fact that the person is or was a
director, officer, or, in certain circumstances, an employee or agent, of Enron
or another corporation at Enron's request. The OBCA generally permits such
indemnification to the extent that the person acted in good faith and in a
manner which he reasonably believed to be in the best interest of or not opposed
to the corporation or, with respect to criminal matters, if the individual had
no reasonable cause to believe his or her conduct was unlawful.
EPP. The EPP Company Agreement provides that EPP will indemnify the members
of the EPP Board and the officers of EPP from liabilities arising in the course
of such persons' service to EPP, provided that the indemnitee acted in good
faith. Such liabilities include all losses, claims, damages, expenses
(including, without limitation, legal fees and expenses), judgments, fines,
penalties, interests, settlements and other amounts, provided that with respect
to any criminal proceeding, the indemnitee had no reasonable cause to believe
its conduct was unlawful. EPP carries directors' and officers' liability
insurance for potential liability under such indemnification. The holders of EPP
Common Shares will not be personally liable for such indemnification.
Additionally, EPP and each of its officers and directors have entered into
indemnification agreements with terms substantially similar to those provided by
the EPP Company Agreement.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Arthur Andersen LLP will be present at the EPP Special
Meeting to respond to appropriate questions of shareholders and to make a
statement if they so desire.
LEGAL MATTERS
The validity of the securities to be issued in the Merger has been passed
upon for Enron by James V. Derrick, Jr., Senior Vice President and General
Counsel of Enron.
EXPERTS
The consolidated financial statements included in Enron's Current Report on
Form 8-K dated March 17, 1997 and consolidated financial statements and schedule
included in Enron's Annual Report on Form 10-K for the year ended December 31,
1996, incorporated by reference herein and in the Registration Statement, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing.
The letter report of DeGolyer and MacNaughton, independent petroleum
consultants, included as an exhibit to Enron's Annual Report on Form 10-K for
the year ended December 31, 1996, and the estimates from the reports of that
firm appearing in such Annual Report, are incorporated by reference herein on
the authority of said firm as experts in petroleum engineering and in giving
such reports.
The consolidated financial statements of EPP, included in EPP's Annual
Report on Form 10-K for the year ended December 31, 1996, incorporated by
reference herein and in the Registration Statement, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Compania de Inversiones de Energia
S.A., included in EPP's Annual Report on Form 10-K for the year ended December
31, 1996, incorporated by reference herein and in the Registration Statement,
have been audited by Pistrelli, Diaz y Asociados, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing.
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SHAREHOLDER PROPOSALS
ENRON
Pursuant to various rules promulgated by the Commission and provisions of
the Enron Bylaws, any proposals of holders of Enron voting stock intended to be
presented to the Annual Meeting of Shareholders of Enron to be held in 1998 must
be received by Enron, addressed to Peggy B. Menchaca, Vice President and
Secretary, 1400 Smith Street, Houston, Texas 77002, no later than November 24,
1997, to be included in the Enron proxy statement and form of proxy relating to
that meeting. Pursuant to the Enron Bylaws and the rules of the Commission, a
shareholder proposal or nomination must contain certain information specified in
the Enron Bylaws.
EPP
If for any reason the Merger is not completed and there is an Annual
Meeting of Shareholders of EPP in 1998, then any proposals of holders of EPP
Common Shares intended to be presented to such 1998 Annual Meeting of
Shareholders of EPP must be received by EPP, addressed to K. Wade Cline, Vice
President, General Counsel and Secretary, 333 Clay Street, Suite 1800, Houston,
Texas 77002, no later than November 28, 1997, to be included in the EPP proxy
statement and form of proxy relating to that meeting.
A shareholder's notice to the Secretary shall set forth as to each matter
the shareholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting,
(ii) the name and address of the shareholder proposing such business and (iii)
the acquisition date, the class and number of Common Shares that are owned
beneficially by the shareholder. A shareholder must also comply with all other
applicable requirements of the Exchange Act and the rules and regulations
thereunder. No business will be conducted at the annual meeting of shareholders
except in accordance with the procedures outlined above.
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ANNEX A
AGREEMENT AND PLAN OF MERGER
AMONG
ENRON CORP.,
ENRON INTERNATIONAL MERGER L.L.C.
AND
ENRON GLOBAL POWER & PIPELINES L.L.C.
AUGUST 18, 1997
<PAGE> 53
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<S> <C> <C>
1.1 The Merger.................................................. A-1
1.2 Closing Date................................................ A-1
1.3 Consummation of the Merger.................................. A-1
1.4 Effects of the Merger....................................... A-1
1.5 Company Agreement........................................... A-2
1.6 Directors and Officers...................................... A-2
1.7 Conversion of Securities.................................... A-2
1.8 Exchange of Certificates; Fractional Shares................. A-2
1.9 Taking of Necessary Action; Further Action.................. A-3
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Enron and Merger Sub...... A-3
2.2 Representations and Warranties of EPP....................... A-5
ARTICLE III
COVENANTS OF EPP PRIOR TO THE EFFECTIVE TIME
3.1 Proxy and Information Statement............................. A-6
3.2 Meeting or Consent of Holders of Common Shares of EPP....... A-6
ARTICLE IV
COVENANTS OF ENRON PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Enron Pending the Merger............. A-6
4.2 Registration Statement...................................... A-6
4.3 Stock Exchange Listing...................................... A-6
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Filings; Consents; Reasonable Efforts....................... A-7
5.2 Expenses.................................................... A-7
5.3 Post-Effective Time Mailing................................. A-7
5.4 EPP Stock Options........................................... A-7
5.5 Indemnification............................................. A-7
ARTICLE VI
CONDITIONS
6.1 Conditions of Obligation to Each Party to Effect the
Merger...................................................... A-9
6.2 Additional Conditions to Obligations of Enron............... A-9
6.3 Additional Conditions to Obligations of EPP................. A-10
ARTICLE VII
MISCELLANEOUS
7.1 Termination................................................. A-10
7.2 Effect of Termination....................................... A-11
</TABLE>
A-i
<PAGE> 54
7.3 Amendment................................................... A-11
7.4 Waiver...................................................... A-11
7.5 Nonsurvival of Representations, Warranties and Agreements... A-12
7.6 Public Statements........................................... A-12
7.7 Assignment.................................................. A-12
7.9 Notices..................................................... A-12
7.9 Governing Law............................................... A-12
7.10 Severability................................................ A-12
7.11 Counterparts................................................ A-12
7.12 Headings.................................................... A-12
7.13 Entire Agreement............................................ A-12
7.14 Parties in Interest......................................... A-12
7.15 Oversight Committee......................................... A-13
EXHIBIT A -- OPINION OF COUNSEL TO ENRON.......................... A-14
LIST OF DEFINED TERMS
Agreement......................................................... A-1
Enron............................................................. A-1
Merger Sub........................................................ A-1
EPP............................................................... A-1
Merger............................................................ A-1
Common Share...................................................... A-1
Enron Common Stock................................................ A-1
Delaware Law...................................................... A-1
Surviving Company................................................. A-1
Closing........................................................... A-1
Closing Date...................................................... A-1
Effective Time.................................................... A-1
Company Agreement................................................. A-2
Exchange Ratio.................................................... A-2
Enron Material Effect............................................. A-3
Commission........................................................ A-4
Securities Act.................................................... A-4
Exchange Act...................................................... A-4
Enron Commission Filings.......................................... A-4
Enron Subsidiaries................................................ A-4
DLJ............................................................... A-5
Financial Advisor................................................. A-5
Registration Statement............................................ A-6
Proxy Statement................................................... A-6
Proxy/Registration Statement...................................... A-6
Oversight Committee............................................... A-7
EPP Options....................................................... A-7
Enron Options..................................................... A-7
Indemnitees....................................................... A-7
Indemnification Agreements........................................ A-7
Public Shareholders............................................... A-9
Fairness Opinion.................................................. A-9
A-ii
<PAGE> 55
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of the 18th day of August, 1997
(the "Agreement"), is among Enron Corp., an Oregon corporation ("Enron"), Enron
International Merger L.L.C., a newly-formed Delaware limited liability company
and a wholly-owned subsidiary of Enron ("Merger Sub"), and Enron Global Power &
Pipelines L.L.C., a Delaware limited liability company ("EPP").
RECITALS:
The Board of Directors of EPP has determined that a business combination to
be effected by means of a merger of Merger Sub with and into EPP (the "Merger")
is in the best interests of EPP and its shareholders and has approved and
adopted this Agreement and recommended approval and adoption of this Agreement
by the shareholders of EPP.
The Board of Directors of Enron has determined that the business
combination to be effected by means of the Merger is in the best interests of
Enron and its shareholders and has approved and adopted this Agreement.
Upon the terms and subject to the conditions of this Agreement, Merger Sub
will merge with and into EPP and EPP will be the Surviving Company, and pursuant
thereto, each issued and outstanding common share of EPP ("Common Share") not
owned directly or indirectly by Enron will be converted into the right to
receive shares of common stock, no par value, of Enron ("Enron Common Stock").
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to and in accordance with the terms and conditions
of this Agreement and in accordance with Section 18-209 of the Delaware Limited
Liability Company Act and all other applicable provisions of the laws of the
State of Delaware ("Delaware Law"), at the Effective Time (as defined in Section
1.3) Merger Sub shall be merged with and into EPP. As a result of the Merger,
the separate corporate existence of Merger Sub shall cease and EPP shall
continue as the surviving company (sometimes referred to herein as the
"Surviving Company"), and all the properties (real, personal and mixed), rights,
privileges, powers and franchises of EPP and Merger Sub shall vest in the
Surviving Company, without any transfer or assignment having occurred, and all
debts, liabilities and duties of EPP and Merger Sub shall attach to the
Surviving Company, all in accordance with Delaware Law.
1.2 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Enron, 1400 Smith
Street, Houston, Texas 77002, as soon as practicable after the satisfaction or
waiver of the conditions set forth in Article VI or at such other time and place
and on such other date as Enron, Merger Sub and EPP shall agree; provided, that
the closing conditions set forth in Article VI shall have been satisfied or
waived at or prior to such time. The date on which the Closing occurs is herein
referred to as the "Closing Date."
1.3 Consummation of the Merger. As soon as practicable on the Closing
Date, the parties hereto will cause the Merger to be consummated by filing with
the Secretary of State of Delaware a certificate of merger in such form as
required by, and executed in accordance with, the relevant provisions of
Delaware Law. The "Effective Time" of the Merger as that term is used in this
Agreement shall mean such time as the certificate of merger is duly filed with
the Secretary of State of Delaware or at such later time (not to exceed 90 days
from the date the certificate is filed) as is specified in the certificate of
merger pursuant to the agreement of Enron, Merger Sub and EPP.
1.4 Effects of the Merger. The Merger shall have the effects set forth in
the applicable provisions of Delaware Law.
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1.5 Company Agreement. The Amended and Restated Limited Liability Company
Agreement of EPP (the "Company Agreement"), as in effect immediately prior to
the Effective Time, shall be the limited liability company agreement of the
Surviving Company and thereafter shall continue to be its limited liability
company agreement until amended as provided therein and pursuant to Delaware
Law.
1.6 Directors and Officers. The directors of Merger Sub immediately prior
to the Effective Time shall be the directors of the Surviving Company at and
after the Effective Time, each to hold office in accordance with the Company
Agreement of the Surviving Company, and the officers of Merger Sub immediately
prior to the Effective Time shall be the officers of the Surviving Company at
and after the Effective Time, in each case until their respective successors are
duly elected or appointed and qualified.
1.7 Conversion of Securities. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Enron, EPP, Merger Sub or their shareholders:
(a) Each EPP Common Share issued and outstanding immediately prior to
the Effective Time, other than any EPP Common Share which remains
outstanding and unchanged pursuant to Section 1.7(b), shall be converted
into the right to receive a number of shares of Enron Common Stock
calculated by dividing (x) $35.00 by (y) the Average Daily Price of the
Enron Common Stock, with the result rounded down to the nearest ten
thousandth (the "Exchange Ratio"). As used herein, the "Average Daily Price
of the Enron Common Stock" means the average of the closing prices, regular
way, per share of the Enron Common Stock as reported on the New York Stock
Exchange Composite Tape during the 20 consecutive trading days ending on
the day prior to the Closing Date; provided, however, that no fractional
shares of Enron Common Stock shall be issued, and, in lieu thereof, a cash
payment shall be made in accordance with Section 1.8(d) hereof.
(b) Each Common Share owned by Merger Sub, Enron or any direct or
indirect wholly-owned subsidiary of Enron immediately prior to the
Effective Time shall remain outstanding and unchanged and no payment shall
be made with respect thereto.
(c) Each common share of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into one Common Share of
EPP.
1.8 Exchange of Certificates; Fractional Shares.
(a) As soon as practicable after the Effective Time, each holder of a
certificate that prior thereto represented Common Shares and who is
entitled to receive Enron Common Stock upon consummation of the Merger
shall be entitled, upon surrender thereof to Enron or its transfer agent,
to receive in exchange therefor, as applicable, a certificate or
certificates representing the number of whole shares of Enron Common Stock
into which the EPP Common Share so surrendered shall have been converted as
aforesaid, in such denominations and registered in such names as such
holder may request. Each holder of EPP Common Shares who would otherwise be
entitled to a fraction of a share of Enron Common Stock shall, upon
surrender of the certificates representing such shares held by such holder
to Enron or its transfer agent, be paid an amount in cash in accordance
with the provisions of Section 1.8(d). Until so surrendered and exchanged,
each certificate that prior to the Effective Time represented Common Shares
shall represent solely the right to receive Enron Common Stock and cash in
lieu of fractional shares, if any. Unless and until any such certificates
shall be so surrendered and exchanged, no dividends or other distributions
payable to the holders of Enron Common Stock of record as of any time on or
after the Effective Time shall be paid to the holders of such certificates
that prior to the Effective Time represented Common Shares; provided,
however, that, upon any such surrender and exchange of such certificates,
there shall be paid to the record holders of the certificates issued and
exchanged therefor the amount, without interest thereon, of dividends and
other distributions, if any, that theretofore were declared and became
payable to holders of record of Enron Common Stock at or after the
Effective Time with respect to the number of whole shares of Enron Common
Stock issued to such holder.
(b) All shares of Enron Common Stock issued upon the surrender for
exchange of certificates that prior to the Effective Time represented
Common Shares in accordance with the terms hereof (including
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any cash paid pursuant to Section 1.8(d)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Common Shares.
If, after the Effective Time, certificates which prior to the Effective
Time represented Common Shares are presented to the Surviving Company for
any reason, they shall be canceled and exchanged as provided in this
Article I.
(c) If any certificate for shares of Enron Common Stock is to be
issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall have paid to Enron or its transfer agent any transfer or
other taxes required by reason of the issuance of a certificate for shares
of Enron Common Stock in any name other than that of the registered holder
of the certificate surrendered, or established to the satisfaction of Enron
or its transfer agent that such tax has been paid or is not payable.
(d) No fraction of a share of Enron Common Stock shall be issued, but
in lieu thereof each holder of EPP Common Shares who would otherwise be
entitled to a fraction of a share of Enron Common Stock shall, upon
surrender of the certificate formerly representing EPP Common Shares held
by such holder to Enron or its transfer agent, be paid an amount in cash
equal to the value of such fraction of a share based upon the Average Daily
Price of the Enron Common Stock. No interest shall be paid on such amount.
All EPP Common Shares held by a record holder shall be aggregated for
purposes of computing the number of shares of Enron Common Stock to be
issued pursuant to this Article I and cash in lieu of fractional shares
payable hereunder.
(e) None of Enron, Merger Sub or EPP or their transfer agents shall be
liable to a holder of the Common Shares for any amount properly paid to a
public official pursuant to applicable property, escheat or similar laws.
1.9 Taking of Necessary Action; Further Action. The parties hereto shall
take all such reasonable and lawful action as may be necessary or appropriate in
order to effectuate the Merger as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Company with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of EPP or Merger Sub, such parties shall direct their respective
officers, directors and managers to take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Enron and Merger Sub. Enron and
Merger Sub hereby jointly and severally represent and warrant to EPP that:
(a) Authorization and Validity of Agreement. Enron and Merger Sub are
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which they are chartered or organized and have all
requisite corporate or limited liability company power and authority, and
have been duly authorized by all necessary regulatory approvals and orders
to own, lease and operate their respective assets and properties and to
carry on their respective businesses as now being conducted other than such
regulatory approvals and orders the failure to obtain which would not, when
taken together with all other such failures, have a material adverse effect
on the financial condition, results of operation or business of Enron and
its consolidated subsidiaries, taken as a whole (an "Enron Material
Effect"), and are duly qualified and in good standing to do business in
each jurisdiction in which the nature of their respective business or the
ownership or leasing of their respective assets and properties makes such
qualification necessary, other than in such jurisdictions where the failure
to be so qualified and in good standing would not have an Enron Material
Effect. Enron and Merger Sub have all requisite corporate or limited
liability company power and authority to enter into this Agreement and to
perform their obligations hereunder. The execution and delivery by Enron
and Merger Sub of this Agreement and the consummation by each of them of
the transactions contemplated hereby have been duly authorized by all
necessary corporate or limited liability company action. This Agreement has
been duly executed and delivered by Enron and
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Merger Sub and is the valid and binding obligation of Enron and Merger Sub,
enforceable against Enron and Merger Sub in accordance with its terms.
(b) No Approvals or Notices Required; No Conflict with Instruments to
which Enron or Merger Sub is a Party. Neither the execution and delivery of
this Agreement nor the performance by Enron or Merger Sub of its
obligations hereunder, nor the consummation of the transactions
contemplated hereby by Enron and Merger Sub, will (i) conflict with the
charter or bylaws of Enron or the Limited Liability Company Agreement of
Merger Sub; (ii) assuming satisfaction of the requirements set forth in
clause (iii) below, violate any provision of law applicable to Enron or
Merger Sub; (iii) except for (A) requirements of federal or state
securities laws, (B) requirements of notice filings in such foreign
jurisdictions as may be applicable, and (C) the filing of a certificate of
merger by Merger Sub in accordance with Delaware Law, require any consent
or approval of, or filing with or notice to, any public body or authority,
domestic or foreign, under any provision of law applicable to Enron or
Merger Sub; or (iv) require any consent, approval or notice under, or
violate, breach, be in conflict with or constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default)
under, or permit the termination of any provision of, or result in the
creation or imposition of any lien upon any properties, assets or business
of Enron or Merger Sub under, any note, bond, indenture, mortgage, deed of
trust, lease, franchise, permit, authorization, license, contract,
instrument or other agreement or commitment or any order, judgment or
decree to which Enron or Merger Sub is a party or by which Enron or Merger
Sub or any of its or their assets or properties is bound or encumbered,
except (A) those that have already been given, obtained or filed, and (B)
those that, in the aggregate, would not have an Enron Material Effect.
(c) Commission Filings; Financial Statements. Enron and Merger Sub
have filed all reports, registration statements and other filings, together
with any amendments required to be made with respect thereto, required by
the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). All
reports, registration statements and other documents (including all notes,
exhibits and schedules thereto and documents incorporated by reference
therein) filed by Enron with the Commission since January 1, 1992, through
the date of this Agreement, together with any amendments thereto, are
sometimes collectively referred to as the "Enron Commission Filings." Enron
has heretofore delivered to EPP copies of the Enron Commission Filings. As
of the respective dates of their filing with the Commission, the Enron
Commission Filings complied in all material respects with, and any reports,
registration statements and other documents (including all notes, exhibits
and schedules thereto and documents incorporated by reference therein)
filed by Enron with the Commission after the date hereof will comply in all
material respects with, applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations of the Commission thereunder,
and did not contain (or, in the case of documents filed by Enron with the
Commission after the date hereof, will not contain) any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Each of the consolidated financial statements (including any related
notes or schedules) included in the Enron Commission Filings was prepared,
and the consolidated financial statements (including any related notes or
schedules) to be included in any reports, registration statements and other
documents filed by Enron with the Commission after the date hereof will be
prepared, in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be noted therein or in the
notes or schedules thereto) and complied in all material respects with all
applicable rules and regulations of the Commission. Such consolidated
financial statements fairly present (or, in the case of the consolidated
financial statements included in filings by Enron with the Commission after
the date hereof, will fairly present) the consolidated financial position
of Enron and its consolidated subsidiaries (the "Enron Subsidiaries") as of
the dates thereof and the results of operations, cash flows and changes in
shareholders' equity for the periods then ended (subject, in the case of
the unaudited interim financial statements, to normal year-end audit
adjustments on a basis comparable with past periods).
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(d) Conduct of Business in the Ordinary Course; Absence of Certain
Changes and Events. Since December 31, 1996, except as contemplated by this
Agreement or as disclosed in the Enron Commission Filings, Enron and the
Enron Subsidiaries have conducted their business only in the ordinary and
usual course, and there has not been any material adverse change in the
financial condition, results of operations or business of Enron and the
Enron Subsidiaries, taken as a whole, or any condition, event or
development that reasonably may be expected to result in any such material
adverse change.
(e) Capitalization. The authorized capital stock of Enron and the
number of shares of each class or series of capital stock outstanding are
as set forth in the Enron Commission Filings, other than issuances of Enron
Common Stock in the ordinary course of business in an aggregate immaterial
amount since the most recent Enron Commission Filing containing information
regarding capitalization. All of the issued and outstanding shares of the
capital stock of Enron are validly issued, fully paid and nonassessable and
free of preemptive rights. Except as disclosed in the Enron Commission
Filings or grants of options and commitments in the ordinary course of
business covering in the aggregate an immaterial amount of shares of Enron
Common Stock since the date of the most recent Enron Commission Filing
containing information regarding options and commitments in respect of
capital stock, as of the date hereof there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating Enron to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock or other voting securities of Enron
or obligating Enron to grant, extend or enter into any such arrangement or
commitment.
(f) Brokers and Finders. Except for the fees and expenses payable to
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), which fees are
reflected in its agreement with Enron (a copy of which has been delivered
to EPP), Enron has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of
Enron to pay any finder's fees, brokerage or agent commissions or other
like payment in connection with the transactions contemplated hereby.
Except for the fees and expenses paid or payable to DLJ, there are no
claims for payment by Enron of any investment banking fees, finder's fees,
brokerage or agent commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
(g) Interim Operations of Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
2.2 Representations and Warranties of EPP. EPP hereby represents and
warrants to Enron and Merger Sub that:
(a) Brokers and Finders. Except for the fees and expenses payable to
Dillon, Read & Co. Inc. (the "Financial Advisor"), which fees are reflected
in its agreement with EPP (a copy of which has been delivered to Enron),
EPP has not entered into any contract, arrangement or understanding with
any person or firm which may result in the obligation of EPP to pay any
finder's fees, brokerage or agent commissions or other like payment in
connection with the transactions contemplated hereby. Except for the fees
and expenses paid or payable to the Financial Advisor, there are no claims
for payment by EPP of any investment banking fees, finder's fees, brokerage
or agent commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
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ARTICLE III
COVENANTS OF EPP PRIOR TO THE EFFECTIVE TIME
3.1 Proxy and Information Statement. Promptly after the date of this
Agreement, EPP shall cooperate with Enron in preparing for filing by Enron with
the Commission under the Securities Act a Registration Statement on Form S-4
(the "Registration Statement"), and shall cooperate with Enron in preparing and
shall file under the Exchange Act a proxy or information statement with respect
to the consent solicitation or meeting of holders of Common Shares of EPP
referred to in Section 3.2 (the "Proxy Statement," and together with the
Registration Statement, the "Proxy/Registration Statement"). Subject to the
fiduciary duty of the Board of Directors of EPP under Delaware Law, the Proxy
Statement shall contain the recommendation of the Board of Directors of EPP that
the shareholders of EPP vote or consent to approve and adopt this Agreement. EPP
will advise Enron promptly in writing if prior to the Effective Time it shall
obtain knowledge of any facts that would make it necessary to amend or
supplement the Proxy Statement (or the Registration Statement of which the Proxy
Statement is a part) in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or to comply with
applicable law.
3.2 Meeting or Consent of Holders of Common Shares of EPP. Subject to the
fiduciary duty of the Board of Directors of EPP under Delaware Law, EPP shall
promptly take all action reasonably necessary in accordance with Delaware Law
and the EPP Company Agreement to solicit from the holders of its Common Shares
consents to this Agreement and the Merger or to call a meeting of holders of its
Common Shares to consider and vote upon the adoption and approval of this
Agreement and the Merger.
ARTICLE IV
COVENANTS OF ENRON PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Enron Pending the Merger. Enron covenants and
agrees that, from the date of this Agreement until the Effective Time, unless
EPP shall otherwise agree in writing or as otherwise expressly contemplated by
this Agreement, the business of Enron and the Enron Subsidiaries shall be
conducted only in, and Enron and the Enron Subsidiaries shall not take any
action except in, the ordinary course of business.
4.2 Registration Statement. Promptly after the date of this Agreement,
Enron will file the Registration Statement with the Commission under the
Securities Act with respect to the offering, sale and delivery of the shares of
Enron Common Stock to be issued pursuant to the Merger; and Enron will use its
reasonable efforts to cause such Registration Statement to become effective as
soon as practicable after filing. Enron agrees that the Registration Statement
will comply as to form in all material respects with the requirements of the
Securities Act and the Exchange Act and the respective rules and regulations
adopted thereunder, and will not contain any untrue statement of any material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements made therein not misleading. Enron will advise
EPP in writing if prior to the Effective Time it shall obtain knowledge of any
fact that would, in its opinion, make it necessary to amend or supplement the
Registration Statement in order to make the statements therein not misleading or
to comply with applicable law.
4.3 Stock Exchange Listing. Enron shall use all reasonable efforts to
cause the shares of Enron Common Stock to be issued in the Merger or upon
exercise of the Enron Options granted pursuant to Section 5.4 to be approved for
listing on the New York Stock Exchange, subject to official notice of issuance,
prior to the Closing Date.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Filings; Consents; Reasonable Efforts. Subject to the terms and
conditions of this Agreement, EPP and Enron shall (i) make all necessary filings
with respect to the Merger and this Agreement under the Securities Act, the
Exchange Act and applicable blue sky or similar securities laws and shall use
all reasonable efforts to obtain required approvals and clearances with respect
thereto; (ii) obtain all consents, waivers, approvals, authorizations and orders
required in connection with the authorization, execution and delivery of this
Agreement and the consummation of the Merger; and (iii) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement.
5.2 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense, except
that (i) expenses incurred in connection with printing and mailing the
Registration Statement and the Proxy Statement shall be shared equally by Enron
and EPP, and (ii) all fees and expenses payable to the Financial Advisor and all
legal fees and expenses incurred by the Oversight Committee of the Board of
Directors of EPP (the "Oversight Committee") shall be paid by Enron; provided,
however, that if this Agreement shall have been terminated pursuant to Section
7.1 as a result of the willful breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement, such breaching
party shall pay the costs and expenses of the other parties in connection with
the transactions contemplated by this Agreement.
5.3 Post-Effective Time Mailing. As soon as practicable following the
Effective Time, Enron will cause to be mailed to each holder of certificates
that represented EPP Common Shares immediately prior to the Effective Time, at
such holder's address as it appears on EPP's share transfer records, a letter of
transmittal and other information advising such holder of the consummation of
the Merger along with information and instructions to enable such holder to
effect the exchange of share certificates as contemplated by Article I of this
Agreement.
5.4 EPP Stock Options. EPP covenants and agrees to use its best efforts to
take all action necessary to provide for the exchange of the outstanding options
to purchase shares of Enron Common Stock held by employees or directors of EPP
("EPP Options") as described in this Section 5.4. Subject to the consummation of
the Merger and effective at the Effective Time, all then outstanding EPP Options
shall be canceled in exchange for the number of options to purchase shares of
Enron Common Stock (the "Enron Options") calculated by multiplying (x) the
number of shares covered by EPP Options by (y) the Exchange Ratio. The exercise
price per share of the Enron Options shall be calculated by dividing (i) the
exercise price per share of the EPP Options by (ii) the Exchange Ratio. The
Enron Options will maintain the same vesting provisions (other than vesting
provisions dependent upon the financial performance of EPP, which shall be
revised as determined by the Compensation Committee of the Board of Directors of
Enron) and exercise term as, and shall otherwise have terms substantially
similar to, the EPP Options; provided, however, that upon consummation of the
Merger the Enron Options held as a result of the Merger by officers, directors
and employees of EPP who are involuntarily terminated by Enron or one of its
subsidiaries on the date of the Effective Time will become 100% vested. All
outstanding options to purchase Common Shares of EPP held by Enron shall be
canceled upon consummation of the Merger. Enron covenants and agrees to issue
the Enron Options, to reserve and make available for issuance upon exercise of
the Enron Options all shares of Enron Common Stock covered thereby and to amend
its Registration Statement on Form S-8, if required, or file a new registration
statement to cover the additional shares of Enron Common Stock subject to Enron
Options, if required.
5.5 Indemnification.
(a) Existing Indemnities. Enron agrees that all rights to
indemnification now existing or hereafter arising in favor of "Indemnitees"
(such term to have the same meaning herein as defined in the Company
Agreement) as provided in the Company Agreement as in effect on the date
hereof or pursuant to other
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agreements (including the Indemnification Agreements between EPP and
certain current and former officers and directors of EPP (the
"Indemnification Agreements")) in effect on the date hereof shall survive
the Merger and shall continue in full force and effect for a period of not
less than six years from the Effective Time, provided that, if any claim is
asserted or made within such six-year period, all rights to indemnification
in respect of any such claim shall continue until final disposition of any
and all such claims. Consistent with the foregoing, for a period of at
least six years from the Effective Time, the limited liability company
agreement of the Surviving Company shall contain the provisions with
respect to indemnification set forth in the Company Agreement, which
provisions shall not be amended, repealed or otherwise modified during such
six-year period in any manner that would adversely affect the rights
thereunder of individuals who, immediately prior to the Effective Time,
were Indemnitees.
(b) Enron Indemnity. To the fullest extent permitted by applicable
law, Enron will, for a period of six years from and after the Effective
Time, indemnify and hold harmless each Indemnitee with respect to all acts
and omissions occurring before the Effective Time that are based on or
arise out of the Indemnitee's service to EPP in his capacity as such,
including all acts or omissions in connection with this Agreement and the
Merger, to the extent provided by whichever of the following is most
favorable to the Indemnitee: (i) any Indemnification Agreement or any other
indemnification policy, practice, contract or other arrangement that EPP
has with its directors at the date of this Agreement (copies of which have
previously been furnished to Enron), (ii) indemnification provisions in
Enron's then-existing certificate of incorporation or bylaws and (iii) any
other then-existing indemnification policy, practice, contract or other
arrangement that Enron has with its directors.
(c) Insurance. From and after the date hereof and for six years from
the Effective Time, Enron or the Surviving Company, as the case may be,
shall maintain (and Enron shall cause the Surviving Company to maintain, if
not maintained by Enron) continuously in effect directors' and officers'
liability insurance covering those persons who are currently covered by
Enron's directors' and officers' liability insurance policy applicable to
officers and directors of EPP for actions taken or omissions occurring at
or prior to the Effective Time on terms that in the aggregate are not less
favorable to such persons than the terms of such current insurance
coverage; provided that Enron or the Surviving Company may substitute
therefor policies of at least the same coverage containing terms that are
no less advantageous with respect to matters occurring at or prior to the
Effective Time to the extent such liability insurance can be maintained
annually at a cost to Enron or the Surviving Company not greater than 200
percent of the current annual premiums for the policies currently
maintained by Enron for its directors' and officers' liability insurance
applicable to the officers and directors of EPP; provided further, that if
such insurance cannot be so maintained or obtained at such cost, Enron or
the Surviving Company shall maintain or obtain a policy providing the best
coverage available, as determined by the Board of Directors of Enron, for a
premium not exceeding 200 percent of the current annual premiums of Enron
for its directors' and officers' liability insurance applicable to the
officers and directors of EPP. In addition, the Surviving Company shall
reasonably compensate (and Enron shall cause the Surviving Company to
reasonably compensate) any current or former director or officer of EPP for
his time required to be spent when not a full-time employee of Enron or any
subsidiary entity controlled by Enron, as the case may be, in connection
with any third-party litigation or other proceeding arising out of this
Agreement or the transactions contemplated hereby.
(d) Benefit of Provisions. The provisions of this Section 5.5 are
expressly for the benefit of the current and former directors and officers
of EPP, shall be enforceable by each of them, and shall survive the
consummation of the Merger. If the Surviving Company or any of its
successors or assigns (i) consolidates with or merges into any other person
and shall not be the continuing or surviving entity of such consolidation
or merger, or (ii) transfers all of substantially all of its properties and
assets to any person, then, and in each such case, proper provision shall
be made so that the successors and assigns of the Surviving Company assume
the obligations of the Surviving Company set forth in this Section 5.5.
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ARTICLE VI
CONDITIONS
6.1 Conditions of Obligation to Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement shall have been approved and adopted by (i) the
requisite vote or consent of the shareholders of EPP, as may be required by
law and by the rules of the New York Stock Exchange and (ii) the vote of
the holders of a majority of the Common Shares held by shareholders other
than Enron or any subsidiary entity controlled by Enron (the "Public
Shareholders") and voted at a special meeting of shareholders called to
vote on the Merger;
(b) No order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal the
consummation of the Merger;
(c) The Registration Statement shall be effective on the Closing Date,
and all post-effective amendments filed shall have been declared effective
or shall have been withdrawn; and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that
purpose shall have been initiated or, to the knowledge of the parties,
threatened by the Commission;
(d) Enron and EPP shall obtain any and all material permits, approvals
and consents of securities or blue sky commissions of any jurisdiction, and
of any other governmental body or agency, that reasonably may be deemed
necessary so that the consummation of the Merger and the transactions
contemplated thereby will be in compliance with applicable laws, the
failure to comply with which would have a material adverse effect on the
business, financial condition or results of operations of Enron, the
Surviving Company and their subsidiaries, taken as a whole after
consummation of the Merger;
(e) The shares of Enron Common Stock issuable upon consummation of the
Merger and the shares of Enron Common Stock issuable upon exercise of any
Enron Options shall have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance;
(f) All approvals of private persons or entities, (i) the granting of
which is necessary for the consummation of the Merger or the transactions
contemplated in connection therewith and (ii) the non-receipt of which
would have a material adverse effect on the business, financial condition
or results of operations of Enron, the Surviving Company and their
subsidiaries, taken as a whole after the consummation of the Merger, shall
have been obtained;
(g) the Financial Advisor shall have delivered to the Oversight
Committee a written opinion to the effect that the consideration to be paid
to the Public Shareholders in connection with the Merger is fair to the
Public Shareholders from a financial point of view (the "Fairness
Opinion"), and such opinion shall not have been withdrawn or adversely
modified; and
(h) the recommendation of the Oversight Committee made to the Board of
Directors of EPP shall not have been withdrawn or adversely modified.
6.2 Additional Conditions to Obligations of Enron. The obligation of Enron
to effect the Merger is, at the option of Enron, also subject to the fulfillment
at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of EPP contained in Section 2.2
shall be accurate in all material respects as of the date of this Agreement
and as of the Closing Date as though such representations and warranties
had been made at and as of that time; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by EPP on or
before the Closing Date shall have been duly complied with and performed in
all material respects; and a certificate to the foregoing effect dated the
Closing Date and signed by the Chairman of the Board or President of EPP
shall have been delivered to Enron;
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(b) Since the date of this Agreement, no material adverse change in
the financial condition, results of operations or business of EPP and its
subsidiaries, taken as a whole, shall have occurred, and EPP and its
subsidiaries shall not have suffered any damage, destruction or loss
materially adversely affecting the properties or business of EPP and its
subsidiaries, taken as a whole, and Enron shall have received a certificate
signed by the Chairman of the Board or President of EPP dated the Closing
Date to such effect; and
(c) Since the date of the Agreement, the Dow Jones Industrial Average
shall not have closed below 6000 for a period of more than seven days in
any ten consecutive trading day period.
6.3 Additional Conditions to Obligations of EPP. The obligation of EPP to
effect the Merger is, at the option of EPP, also subject to the fulfillment at
or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Enron and Merger Sub
contained in Section 2.1 shall be accurate in all material respects as of
the date of this Agreement and as of the Closing Date as though such
representations and warranties had been made at and as of that time; all
the terms, covenants and conditions of this Agreement to be complied with
and performed by Enron on or before the Closing Date shall have been duly
complied with and performed in all material respects; and a certificate to
the foregoing effect dated the Closing Date and signed by the Chairman of
the Board, President or Executive Vice President and Chief of Staff or any
Senior Vice President of Enron shall have been delivered to EPP;
(b) Since the date of this Agreement, no material adverse change in
the results of operations, financial condition or business of Enron and the
Enron Subsidiaries, taken as a whole, shall have occurred, and Enron and
the Enron Subsidiaries shall not have suffered any damage, destruction or
loss materially adversely affecting the properties or business of Enron and
the Enron Subsidiaries, taken as a whole, and EPP shall have received a
certificate signed by the Chairman of the Board, President or Executive
Vice President and Chief of Staff or any Senior Vice President of Enron
dated the Closing Date to such effect; and
(c) EPP shall have received from counsel to Enron an opinion dated the
Closing Date covering the matters set forth in Exhibit A.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated and the Merger and the
other transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether prior to or after approval by the holders of Common
Shares of EPP:
(a) by mutual consent of Enron and EPP;
(b) by either Enron or EPP if the Merger has not been effected on or
before December 31, 1997, provided, however, that this Agreement may be
extended by written notice of either Enron or EPP to a date not later than
March 31, 1998, if the Merger shall not have been consummated as a direct
result of Enron or EPP having failed by December 31, 1997 to receive all
required regulatory approvals or consents with respect to the Merger;
(c) by Enron upon a breach of any covenant or agreement on the part of
EPP set forth in this Agreement, such that the conditions set forth in
Section 6.2(a) of this Agreement would be incapable of being satisfied by
March 31, 1998; provided that in any case, a willful breach shall be deemed
to cause such conditions to be incapable of being satisfied for purposes of
this Section 7.1(c);
(d) by EPP upon a breach of any representation, warranty, covenant or
agreement on the part of Enron or Merger Sub set forth in this Agreement,
or if any representation or warranty of Enron or Merger Sub shall have
become untrue, in either case such that the conditions set forth in Section
6.3(a) of this Agreement would be incapable of being satisfied by March 31,
1998; provided that in any case, a willful
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breach shall be deemed to cause such conditions to be incapable of being
satisfied for purposes of this Section 7.1(d);
(e) by either Enron or EPP if a final, unappealable order of a
judicial or administrative authority of competent jurisdiction to restrain,
enjoin or otherwise prevent a consummation of this Agreement or the
transactions contemplated in connection herewith shall have been entered;
(f) by Enron if (i) since the date of this Agreement there has been a
material adverse change in the results of operations, financial condition
or business of EPP and its subsidiaries, taken as a whole, (ii) since the
date of the Agreement, the Dow Jones Industrial Average shall have closed
below 6000 for a period of more than seven days in any ten consecutive
trading day period or (iii) there has been a material breach of any
covenant set forth in this Agreement by EPP which breach has not been cured
within 30 days following receipt by EPP of notice of such breach;
(g) by EPP if (i) since the date of this Agreement there has been a
material adverse change in the results of operations, financial condition
or business of Enron and the Enron Subsidiaries, taken as a whole, or (ii)
there has been a material breach of any representation or warranty or
covenant set forth in this Agreement by Enron which breach has not been
cured within 30 days following receipt by Enron of notice of such breach.
The right of any party hereto to terminate this Agreement pursuant to this
Section 7.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement. Unless such termination shall be waived by Enron, Merger Sub and EPP,
this Agreement shall be terminated and the Merger and the other transactions
contemplated herein shall be terminated if either the Fairness Opinion or the
recommendation of the Oversight Committee previously made to the EPP Board of
Directors to approve this Agreement shall have been withdrawn or adversely
modified.
7.2 Effect of Termination.
(a) Except as provided in Section 5.2 of this Agreement, in the event
of any termination of this Agreement pursuant to Section 7.1, this
Agreement shall be forthwith become void, there shall be no liability on
the part of Enron, any Enron Subsidiaries or EPP to the other party and all
rights and obligations of each party hereto shall cease, except that
nothing herein shall relieve any party of any liability for (i) any breach
of such party's covenants or agreements contained in this Agreement, or
(ii) any willful breach of such party's representations or warranties
contained in this Agreement.
7.3 Amendment. This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after approval of the
Merger by the shareholders of EPP, no amendment, which under applicable law may
not be made without the approval of the shareholders of EPP, may be made without
such approval. This Agreement may not be amended except by a written instrument
signed by the parties hereto, provided that after this Agreement has been
approved and adopted by the holders of Common Shares of EPP, this Agreement may
be amended only as may be permitted by applicable provisions of Delaware Law.
7.4 Waiver. At any time prior to the Effective Time, any party hereto may
(i) extend the time for the performance of any of the obligations or other acts
of the other party hereto, (ii) waive any inaccuracies in the representations
and warranties of the other party contained herein or in any document delivered
pursuant hereto and (iii) waive compliance by the other party with any of the
agreements or conditions contained herein. The waiver by any party hereto of any
condition or of a breach of another provision of this Agreement shall not
operate or be construed as a waiver of any other condition or subsequent breach.
The waiver by any party hereto of any of the conditions precedent to its
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement other than with respect to the condition so waived. Any
provision of this Agreement may be waived at any time by the party that is, or
whose shareholders are, entitled to the benefits thereof. Any extension or
waiver shall be valid only if set forth in writing in an instrument signed by
the party or parties to be bound thereby.
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7.5 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants or agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the terms of Article I, Article V and this Article VII.
7.6 Public Statements. EPP and Enron agree to consult with each other
prior to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or applicable stock exchange policy.
7.7 Assignment. This Agreement shall inure to the benefit of and will be
binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns. Except as set forth in this Agreement, this
Agreement shall not be assignable by the parties hereto.
7.9 Notices. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i) delivered
in person or by courier, (ii) sent by telecopy or facsimile transmission, answer
back requested, or (iii) mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
if to EPP: Enron Global Power & Pipelines L.L.C.
333 Clay Street, Suite 1800
Houston, Texas 77002
Attention: Chairman of the Board and Chairman
of the Oversight Committee
if to Enron: Enron Corp.
1400 Smith Street
Houston, Texas 77002-7369
Attention: Executive Vice President and Chief of Staff
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 7.9. Such notices shall be
effective, (i) if delivered in person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when the
answer back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
7.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive law of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
7.10 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provision, covenants and restrictions
of this Agreement shall continue in full force and effect and shall in no way be
affected, impaired or invalidated.
7.11 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.
7.12 Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.
7.13 Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all other prior agreements and understandings, both oral and written,
among the parties or any of them, with respect to the subject matter hereof.
7.14 Parties in Interest. This Agreement shall be binding upon and shall
inure solely to the benefit of each party hereto and, except as set forth in
Sections 5.4 and 5.5, nothing in this Agreement, express or implied, is intended
to confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
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7.15 Oversight Committee. Any (i) amendment, termination or waiver of any
condition of his Agreement by EPP, (ii) extension of the time for performance of
the obligations of Enron or Merger Sub hereunder or (iii) other action to be
taken by EPP's Board of Directors in connection with this Agreement, shall
require the approval of a majority of the members of the Oversight Committee.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
ENRON CORP.
By: /s/ EDMUND P. SEGNER, III
------------------------------------
Name: Edmund P. Segner, III
----------------------------------
Title: Executive Vice President and
Chief of Staff
-----------------------------------
ENRON GLOBAL POWER & PIPELINES L.L.C.
By: /s/ RODNEY L. GRAY
------------------------------------
Name: Rodney L. Gray
----------------------------------
Title: Chairman and Chief Executive
Officer
-----------------------------------
ENRON INTERNATIONAL MERGER L.L.C.
By: /s/ RODNEY L. GRAY
------------------------------------
Name: Rodney L. Gray
----------------------------------
Title: Executive Vice President
-----------------------------------
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<PAGE> 68
EXHIBIT A -- OPINION OF COUNSEL TO ENRON
(i) Enron is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Oregon and has all requisite corporate
power and authority to enter into this Agreement and perform its obligations
hereunder and to carry on its business as now being conducted as described in
the Registration Statement; Merger Sub is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Delaware and has all requisite limited liability company power and authority to
enter into this Agreement and perform its obligations hereunder and to carry on
its business as now being conducted as described in the Registration Statement;
and EPP is a limited liability company duly formed, validly existing and in good
standing under the laws of the State of Delaware and has all requisite limited
liability company power and authority to enter into this Agreement and perform
its obligations hereunder and to carry on its business as now being conducted as
described in the Registration Statement.
(ii) the Agreement constitutes the legal valid and binding obligation of
each of Enron, Merger Sub and EPP, enforceable against each such party in
accordance with its terms, except (i) as such enforceability may be limited by
applicable laws affecting the enforcement of creditors' rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and (ii) no opinion is
expressed regarding the enforceability of provisions of the Agreement providing
for indemnification by Enron of any person for violations of federal and state
securities laws.
(iii) The certificate of merger prepared for filing with the Secretary of
State of Delaware complies in all material respects with the requirements of
Delaware Law, and upon filing of such certificate with the Secretary of State of
Delaware, the Merger will become effective in accordance with the applicable
provisions of Delaware Law.
(iv) The affirmative vote or consent of (i) the holders of a majority of
the outstanding Common Shares of EPP and (ii) a majority of the Common Shares
held by the Public Shareholders and voted at a special meeting of shareholders
called to vote on the Merger is the only vote or consent of the holders of any
class or series of shares of EPP necessary to approve the Agreement and the
Merger; the consent of the sole shareholder of Merger Sub is the only vote or
consent of the holders of any class or series of the shares of Merger Sub
necessary to approve the Agreement and the Merger; and no vote or consent of the
holders of any class or series of capital stock of Enron is necessary to approve
the Agreement and the Merger.
(v) All necessary corporate or limited liability company action on the part
of Enron, Merger Sub and EPP to approve the Agreement and the Merger, and on the
part of Enron for the issuance of shares of Enron Common Stock to be delivered
in connection with the Merger and the Enron Options, has been validly taken.
(vi) The Registration Statement has become effective under the Securities
Act and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for such purpose have been initiated or are pending or threatened by the
Commission under the Securities Act.
(vii) The shares of Enron Common Stock to be delivered in connection with
the Merger and in connection with the Enron Options are duly authorized and
reserved for issuance and, when issued in accordance with the terms and
conditions of the Agreement or such Enron Options, will be validly issued, fully
paid and nonassessable.
(viii) None of Enron, Merger Sub or EPP is an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(ix) Enron is a holding company exempt from regulation under the Public
Utility Holding Company Act of 1935 (other than Section 9(a)(2) thereof)
pursuant to Section 3(a)(1) thereof and Rule 2 thereunder.
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ANNEX B
DILLON, READ & CO. INC.
<TABLE>
<S> <C>
2001 Ross Avenue
Suite 3950
Dallas, Texas 75201
214-969-4000
</TABLE>
August 18, 1997
Oversight Committee of the Board of Directors
Enron Global Power & Pipelines L.L.C.
1400 Smith Street
Houston, Texas 77002
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view, to the holders (other than Enron Corp. ("Enron") and its controlled
subsidiaries) of common shares, no par value ("EPP Common Shares") of Enron
Global Power & Pipelines L.L.C. ("EPP"), of the consideration to be received by
such holders (the "Public Shareholders") pursuant to the Agreement and Plan of
Merger (the "Agreement"), dated as of August 18, 1997, by and among Enron, Enron
International Merger L.L.C., a newly-formed Delaware limited liability company
and an indirect wholly-owned subsidiary of Enron ("Merger Sub"), and EPP,
pursuant to which Merger Sub shall be merged with and into EPP (the
"Transaction"), subject to, among other things, the approval of the holders of a
majority of the EPP Common Shares held by Public Shareholders and voted at
special meeting to be called to vote on the Transaction.
In the event the Transaction is consummated, each issued and outstanding
EPP Common Share, other than EPP Common Shares to remain outstanding pursuant
the Agreement, shall be converted into the right to receive a number of shares
of Enron common stock, no par value, calculated using the Exchange Ratio as
defined in the Agreement.
In arriving at our opinion, we have, among other things: (i) reviewed
certain business and historical financial information relating to EPP and Enron,
(ii) reviewed certain financial forecasts and other data provided to us by EPP
and Enron relating to the business and prospects of EPP and Enron, (iii)
conducted discussions with members of the senior managements of EPP and Enron
with respect to the business and prospects of EPP and Enron, (iv) reviewed
publicly available financial and stock market data with respect to certain other
companies in lines of business we believe to be generally comparable to those of
EPP and Enron, (v) reviewed and evaluated the present value of projected future
cash flows from EPP and its subsidiaries, (vi) reviewed the historical market
prices and trading volumes of the EPP Common Shares and the common stock of
Enron, (vii) compared the proposed financial terms of the Transaction with the
financial terms of certain other transactions which we believe to be generally
comparable to the Transaction, (viii) considered the pro forma effect of the
Transaction on Enron's earnings and cash flow, (ix) reviewed the Agreement, and
(x) conducted such other financial studies, analyses and investigations, and
considered such other information, as we deemed necessary or appropriate.
In connection with our review, we have not independently verified any of
the foregoing information and have, with your consent, relied on its being
complete and accurate in all material respects. In addition, we have not made
any independent evaluation or appraisal of any of the assets or liabilities
(contingent or otherwise) of EPP or Enron or any of their respective
subsidiaries, nor have we been furnished with any such evaluation or
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<PAGE> 70
appraisal. With respect to the financial forecasts referred to above, we have,
at your direction, assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of EPP's and
Enron's management as to the future financial performance of EPP or Enron, as
applicable. Further, our opinion is based on economic, monetary and market
conditions existing on the date hereof.
Dillon, Read & Co. Inc. has acted as financial advisor to the Oversight
Committee of the Board of Directors of EPP in connection with the Transaction,
for which we will receive a fee.
In rendering this opinion, we express no view as to the range of values at
which Enron common stock may trade following consummation of the Transaction,
and we are not making any recommendation to the Public Shareholders as to
whether to vote in favor of the transaction or with respect to the advisability
of disposing of or retaining such Enron common stock following the Transaction.
Based upon and subject to the foregoing, we are of the opinion, as of the
date hereof, that the consideration to be received under the Agreement is fair,
from a financial point of view, to the Public Shareholders.
Very truly yours,
DILLON, READ & CO. INC.
By: /s/ KENNETH S. CREWS
------------------------------------------
Kenneth S. Crews
Managing Director
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<PAGE> 71
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Enron Charter contains provisions under which Enron will indemnify, to
the fullest extent permitted by law, persons who are made a party to an action
or proceeding by virtue of the fact that the individual is or was a director,
officer, or, in certain circumstances, an employee or agent, of Enron or another
corporation at Enron's request. The OBCA generally permits such indemnification
to the extent that the individual acted in good faith and in a manner which he
reasonably believed to be in the best interest of or not opposed to the
corporation or, with respect to criminal matters, if the individual had no
reasonable cause to believe his or her conduct was unlawful. In addition, the
Enron Charter contains a provision that eliminates the personal liability of a
director to the corporation or its shareholders for monetary damages for conduct
as a director, except for liability of a director (i) for breach of the duty of
loyalty, (ii) for actions or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for the payment of
improper dividends or redemptions, or (iv) for any transaction from which the
director derived an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS
-------------- -----------------------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of August 18, 1997
among Enron, Enron International Merger L.L.C. and EPP
(included as Annex A to the Proxy Statement/Prospectus
included herein)
3.1 -- Amended and Restated Articles of Incorporation of Enron
Corp. (incorporated by reference to Exhibit 3.1 to Enron
Corp.'s Registration Statement on Form S-4, File No.
333-13791)
3.2 -- Articles of Merger of Enron Oregon Corp., an Oregon
Corporation, and Enron Corp., a Delaware Corporation
(incorporated by reference to Exhibit 3.02 to Enron
Corp.'s Post-Effective Amendment No. 1 to Registration
Statement on Form S-3, File No. 33-60417)
3.3 -- Articles of Merger of Enron Corp., an Oregon Corporation,
and Portland General Corporation, an Oregon Corporation
(incorporated by reference to Exhibit 3.03 to Enron
Corp.'s Post-Effective Amendment No. 1 to Registration
Statement on Form S-3, File No. 33-60417)
3.4 -- Form of Series Designation for the Enron Convertible
Preferred Stock (incorporated by reference to Annex F to
the Proxy Statement/Prospectus included in Enron's
Registration Statement on Form S-4, File No. 333-13791).
3.5 -- Form of Series Designation for the Enron 9.142% Preferred
Stock (incorporated by reference to Annex G to the Proxy
Statement/Prospectus included in Enron's Registration
Statement on Form S-4, File No. 333-13791).
3.6 -- Bylaws of Enron Corp. (incorporated by reference to
Exhibit 3.04 to Enron Corp.'s Post-Effective Amendment
No. 1 to Registration Statement on Form S-3, File No.
33-60417)
3.7 -- Certificate of Formation of EPP (incorporated by
reference to Exhibit 3.1 to EPP's Registration Statement
on Form S-1, File No. 33-85246)
3.8 -- Amended and Restated Limited Liability Company Agreement
of EPP (incorporated by reference to Exhibit 3.2 to EPP's
Annual Report on Form 10-K for the year ended December
31, 1994)
5.1* -- Opinion of James V. Derrick, Jr.
23.4 -- Consent of Arthur Andersen LLP (Enron)
23.5 -- Consent of Arthur Andersen LLP (EPP)
23.6 -- Consent of Pistrelli, Diaz y Asociados (Compania de
Inversiones de Energia S.A.)
23.7 -- Consent of DeGolyer and MacNaughton
24.1 -- Power of attorney of certain directors and officers of
Enron
99.1 -- Form of Proxy Card
99.2* -- Consent of SBC Warburg Dillon Read Inc.
</TABLE>
- ---------------
* To be filed by amendment
Financial Statement Schedules:
Not Applicable
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<PAGE> 72
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
Registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof;
(5) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request;
(6) That, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form;
(7) That every prospectus (i) that is filed pursuant to paragraph (6)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Securities Act of 1933 and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part
of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; and
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<PAGE> 73
(8) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 20 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE> 74
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Enron Corp. has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, the State of
Texas on August 29, 1997.
ENRON CORP.
By: /s/ RICHARD A. CAUSEY
----------------------------------
Richard A. Causey
Senior Vice President and
Chief Accounting and Information
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ KENNETH L. LAY Chairman of the Board, Chief August 29, 1997
- ----------------------------------------------------- Executive Officer and
Kenneth L. Lay Director (Principal Executive
Officer)
/s/ RICHARD A. CAUSEY Senior Vice President and Chief August 29, 1997
- ----------------------------------------------------- Accounting and Information
Richard A. Causey Officer (Principal Accounting
Officer)
/s/ ANDREW S. FASTOW Senior Vice President, Finance August 29, 1997
- ----------------------------------------------------- (Principal Financial Officer)
Andrew S. Fastow
/s/ ROBERT A. BELFER* Director August 29, 1997
- -----------------------------------------------------
Robert A. Belfer
/s/ NORMAN P. BLAKE, JR.* Director August 29, 1997
- -----------------------------------------------------
Norman P. Blake, Jr.
/s/ RONNIE C. CHAN* Director August 29, 1997
- -----------------------------------------------------
Ronnie C. Chan
/s/ JOHN H. DUNCAN* Director August 29, 1997
- -----------------------------------------------------
John H. Duncan
/s/ JOE H. FOY* Director August 29, 1997
- -----------------------------------------------------
Joe H. Foy
/s/ WENDY L. GRAMM* Director August 29, 1997
- -----------------------------------------------------
Wendy L. Gramm
/s/ KEN L. HARRISON* Director August 29, 1997
- -----------------------------------------------------
Ken L. Harrison
</TABLE>
II-4
<PAGE> 75
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT K. JAEDICKE* Director August 29, 1997
- -----------------------------------------------------
Robert K. Jaedicke
/s/ CHARLES A. LEMAISTRE* Director August 29, 1997
- -----------------------------------------------------
Charles A. LeMaistre
/s/ JEROME J. MEYER* Director August 29, 1997
- -----------------------------------------------------
Jerome J. Meyer
/s/ JEFFREY K. SKILLING* Director and Chief Operating August 29, 1997
- ----------------------------------------------------- Officer
Jeffrey K. Skilling
/s/ JOHN A. URQUHART* Director August 29, 1997
- -----------------------------------------------------
John A. Urquhart
/s/ JOHN WAKEHAM* Director August 29, 1997
- -----------------------------------------------------
John Wakeham
/s/ CHARLS E. WALKER* Director August 29, 1997
- -----------------------------------------------------
Charls E. Walker
/s/ BRUCE G. WILLISON* Director August 29, 1997
- -----------------------------------------------------
Bruce G. Willison
/s/ HERBERT S. WINOKUR, JR.* Director August 29, 1997
- -----------------------------------------------------
Herbert S. Winokur, Jr.
*By: /s/ PEGGY B. MENCHACA
------------------------------------------------
Peggy B. Menchaca
(Attorney-in-fact for persons indicated)
</TABLE>
II-5
<PAGE> 76
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS
-------------- -----------------------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of August 18, 1997
among Enron, Enron International Merger L.L.C. and EPP
(included as Annex A to the Proxy Statement/Prospectus
included herein)
3.1 -- Amended and Restated Articles of Incorporation of Enron
Corp. (incorporated by reference to Exhibit 3.1 to Enron
Corp.'s Registration Statement on Form S-4, File No.
333-13791)
3.2 -- Articles of Merger of Enron Oregon Corp., an Oregon
Corporation, and Enron Corp., a Delaware Corporation
(incorporated by reference to Exhibit 3.02 to Enron
Corp.'s Post-Effective Amendment No. 1 to Registration
Statement on Form S-3, File No. 33-60417)
3.3 -- Articles of Merger of Enron Corp., an Oregon Corporation,
and Portland General Corporation, an Oregon Corporation
(incorporated by reference to Exhibit 3.03 to Enron
Corp.'s Post-Effective Amendment No. 1 to Registration
Statement on Form S-3, File No. 33-60417)
3.4 -- Form of Series Designation for the Enron Convertible
Preferred Stock (incorporated by reference to Annex F to
the Proxy Statement/Prospectus included in Enron's
Registration Statement on Form S-4, File No. 333-13791).
3.5 -- Form of Series Designation for the Enron 9.142% Preferred
Stock (incorporated by reference to Annex G to the Proxy
Statement/Prospectus included in Enron's Registration
Statement on Form S-4, File No. 333-13791).
3.6 -- Bylaws of Enron Corp. (incorporated by reference to
Exhibit 3.04 to Enron Corp.'s Post-Effective Amendment
No. 1 to Registration Statement on Form S-3, File No.
33-60417)
3.7 -- Certificate of Formation of EPP (incorporated by
reference to Exhibit 3.1 to EPP's Registration Statement
on Form S-1, File No. 33-85246)
3.8 -- Amended and Restated Limited Liability Company Agreement
of EPP (incorporated by reference to Exhibit 3.2 to EPP's
Annual Report on Form 10-K for the year ended December
31, 1994)
5.1* -- Opinion of James V. Derrick, Jr.
23.4 -- Consent of Arthur Andersen LLP (Enron)
23.5 -- Consent of Arthur Andersen LLP (EPP)
23.6 -- Consent of Pistrelli, Diaz y Asociados (Compania de
Inversiones de Energia S.A.)
23.7 -- Consent of DeGolyer and MacNaughton
24.1 -- Power of attorney of certain directors and officers of
Enron
99.1 -- Form of Proxy Card
99.2* -- Consent of SBC Warburg Dillon Read Inc.
</TABLE>
- ---------------
* To be filed by amendment
Financial Statement Schedules:
Not Applicable
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our reports dated February 17,
1997 included in Enron Corp.'s Form 8-K dated March 17, 1997 and Form 10-K for
the year ended December 31, 1996 and to all references to our Firm included in
this Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
August 28, 1997
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated March 13, 1997,
on the consolidated financial statements of Enron Global Power & Pipelines
L.L.C., included in Enron Global Power & Pipelines L.L.C.'s Form 10-K, for the
year ended December 31, 1996 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Houston, Texas
August 28, 1997
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 12,
1997, on the consolidated financial statements of Compania de Inversiones de
Energia S.A., included in Enron Global Power & Pipelines L.L.C.'s Form 10-K, for
the year ended December 31, 1996 and to all references to our Firm included in
this registration statement.
Pistrelli, Diaz y Asociados
Enrique C. Grotz
Partner
Buenos Aires, Argentina
August 28, 1997
<PAGE> 1
Exhibit 23.7
DeGolyer and MacNaughton
One Energy Square
Dallas, Texas 75206
August 29, 1997
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Gentlemen:
In connection with the Registration Statement on Form S-4 (the Registration
Statement), to be filed with the Securities and Exchange Commission on or about
August 29, 1997, by Enron Corp., DeGolyer and MacNaughton hereby consents to the
incorporation in said Registration Statement of the references to our firm and
to the opinions delivered to Enron Oil & Gas Company (the Company) regarding our
comparison of estimates prepared by us with those furnished to us by the Company
of the proved oil, condensate, natural gas liquids, and natural gas reserves of
certain selected properties owned by the Company. The opinions are contained in
our letter reports dated January 13, 1995, January 22, 1996, and January 17,
1997, for estimates, as of January 1, 1995, December 31, 1995, and December 31,
1996, respectively. The opinions are referred to in the section "Oil and Gas
Exploration and Production Properties and Reserves - Reserve Information" in
Enron Corp.'s Annual Report on Form 10-K for the year ended December 31, 1996,
and in Note 19 to the Enron Corp. consolidated financial statements included in
Enron Corp.'s Form 10-K for the year ended December 31, 1996. DeGolyer and
MacNaughton also consents to the incorporation by reference in the Registration
Statement of its letter report, dated January 17, 1997, addressed to the
Company, which is included as Exhibit 23.03 to Enron Corp.'s Annual Report on
Form 10-K for the year ended December 31, 1996. DeGolyer and MacNaughton also
consent to the references to us in the section "Experts" in the Prospectus that
is a part of the Registration Statement.
Very truly yours,
/s/ DeGOLYER and MacNAUGHTON
<PAGE> 1
EXHIBIT 24.1
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ ROBERT A. BELFER
-----------------------------
Robert A. Belfer
Director
<PAGE> 2
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ NORMAN P. BLAKE, JR.
-----------------------------
Norman P. Blake, Jr.
Director
<PAGE> 3
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ RONNIE C. CHAN
-----------------------------
Ronnie C. Chan
Director
<PAGE> 4
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ JOHN H. DUNCAN
-----------------------------
John H. Duncan
Director
<PAGE> 5
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ JOE H. FOY
-----------------------------
Joe H. Foy
Director
<PAGE> 6
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, her true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on her behalf, and in her name and in her
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this
29th day of August, 1997.
/s/ WENDY L. GRAMM
-----------------------------
Wendy L. Gramm
Director
<PAGE> 7
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ KEN L. HARRISON
-----------------------------
Ken L. Harrison
Director
<PAGE> 8
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ ROBERT K. JAEDICKE
-----------------------------
Robert K. Jaedicke
Director
<PAGE> 9
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ CHARLES A. LEMAISTRE
-----------------------------
Charles A. LeMaistre
Director
<PAGE> 10
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ JEROME J. MEYER
-----------------------------
Jerome J. Meyer
Director
<PAGE> 11
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ JEFFREY K. SKILLING
-----------------------------
Jeffrey K. Skilling
Director and Chief Operating
Officer
<PAGE> 12
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ JOHN A. URQUHART
-----------------------------
John A. Urquhart
Director
<PAGE> 13
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ John Wakeham
-----------------------------
John Wakeham
Director
<PAGE> 14
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ CHARLS E. WALKER
-----------------------------
Charls E. Walker
Director
<PAGE> 15
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ BRUCE G. WILLISON
-----------------------------
Bruce G. Willison
Director
<PAGE> 16
LIMITED POWER OF ATTORNEY
ENRON CORP.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of Enron Corp., an Oregon corporation, does hereby make, constitute and
appoint KENNETH L. LAY, RICHARD A. CAUSEY, ANDREW S. FASTOW and PEGGY B.
MENCHACA, and each of them acting individually, his true and lawful attorney
with power to act without the other and with full power of substitution, to
execute, deliver and file, for and on his behalf, and in his name and in his
capacity or capacities as aforesaid, a Registration Statement on Form S-4 for
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and any other documents in support thereof or supplemental
thereto, with respect to Common Stock of Enron Corp., necessary or appropriate
to be registered in connection with the merger of Enron Global Power & Pipelines
L.L.C. with Enron Corp. (or any wholly-owned subsidiary of Enron Corp.) and any
and all amendments thereto, hereby granting to said attorneys and each of them
full power and authority to do and perform each and every act and thing
whatsoever as said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
29th day of August, 1997.
/s/ HERBERT S. WINOKUR, JR.
-----------------------------
Herbert S. Winokur, Jr.
Director
<PAGE> 1
EXHIBIT 99.1
[Enron logo]
ENRON GLOBAL POWER & PIPELINES L.L.C.
P Proxy Solicited on Behalf of the Board of Directors of
Enron Global Power & Pipelines L.L.C. for Special Meeting on _______, 1997
R
The Undersigned hereby appoints Rodney L. Gray, K. Wade Cline and Kurt
O S. Huneke, or any of them, and any substitute or substitutes, to be the
attorneys and proxies of the undersigned at the Special Meeting of
X Shareholders of Enron Global Power & Pipelines L.L.C. ("EPP") to be held at
10:00 a.m. Houston time on ______________ 1997, in Room 5C of the Enron
Y Building, 1400 Smith Street, Houston, Texas, or at any adjournment thereof,
and to vote at such meeting the shares of EPP the undersigned held of record
on the books of EPP on the record date for the meeting.
(change of address/comments)
_____________________________________
_____________________________________
_____________________________________
_____________________________________
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card)
You are encouraged to specify your choice by marking the appropriate box,
SEE REVERSE SIDE, but you need not mark any box if you wish to vote in
accordance with the Board of Directors' recommendation. The proxies cannot
vote your shares unless you sign and return this card.
The signer hereby revokes all proxies theretofore given by the signor to
vote at said meeting or any adjournment(s) or postponement(s) thereof.
-------------
SEE REVERSE
SIDE
-------------
<PAGE> 2
PLEASE MARK YOUR |
[X] VOTE AS IN THIS | 4835
EXAMPLE. |________
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
1. Approval of the Agreement and Plan of Merger
among Enron Corp., Enron International Merger L.L.C.
and Enron Global Power & Pipelines L.L.C. dated
August 18, 1997.
All as more particularly described in
the Proxy Statement relating to such
meeting, receipt of which is hereby
acknowledged.
SIGNATURES(S)______________________________________DATE__________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE
