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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR SECTION 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
SEMPRA ENERGY
(Name Of Subject Company (issuer) and Filing Person (offeror))
COMMON STOCK, WITHOUT PAR VALUE
(Title of Class of Securities)
816851109
(CUSIP Number of Class of Securities)
JOHN R. LIGHT, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
SEMPRA ENERGY
101 ASH STREET
SAN DIEGO, CALIFORNIA 92101-3017
(619) 696-2034
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Filing Person(s))
COPY TO:
BARRY M. CLARKSON, ESQ.
LATHAM & WATKINS
701 B STREET, SUITE 2100
SAN DIEGO, CALIFORNIA 92101-8197
(619) 236-1234
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$720,000,000 $144,000
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* For the purpose of calculating the filing fee only, this amount is based on the purchase of 36,000,000 shares
of common stock at the maximum tender offer price of $20.00 per share.
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[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which
the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the
form or schedule and the date of its filing.
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Amount Previously Paid: Not applicable. Filing party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
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[ ] Check box if filing relates solely to preliminary communications made before the commencement of a tender offer.
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Check the appropriate boxes below to designate any transactions to which the statement relates:
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[ ] third-party tender offer subject to Rule 14d-1 [ ] going private transaction subject to Rule 13e-3
[X] issuer tender offer subject to Rule 13e-4 [ ] amendment to Schedule 13D under Rule 13d-2
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Check the following box if the filing is a final amendment reporting the results
of the tender offer [ ]
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This Tender Offer Statement on Schedule TO relates to the offer by
Sempra Energy, a California corporation, to purchase shares of its common stock,
without par value. Sempra is offering to purchase up to 36,000,000 shares at a
price not in excess of $[_____] nor less than $[_____] per share, net to the
seller in cash, without interest, as specified by shareholders tendering their
shares. Sempra's offer is being made upon the terms and subject to the
conditions set forth in the Offer to Purchase dated January 26, 2000 and in the
related Letter of Transmittal, which, as amended or supplemented from time to
time, together constitute the offer. All shares tendered and purchased will
include the associated preferred stock purchase rights issued pursuant to a
Rights Agreement dated as of May 26, 1998 between Sempra and First Chicago Trust
Company of New York, as rights agent, and, unless the context otherwise
requires, all references to shares include the associated preferred stock
purchase rights. This Tender Offer Statement on Schedule TO is intended to
satisfy the reporting requirements of Section 13(e) of the Securities Exchange
Act of 1934, as amended.
The information in the Offer to Purchase and the related Letter of
Transmittal, copies of which are filed with this Schedule TO as Exhibits
(a)(1)(i) and (a)(1)(ii) hereto, respectively, is incorporated herein by
reference in answer to items 1 through 11 in this Tender Offer Statement on
Schedule TO.
ITEM 12. EXHIBITS.
(a)(1)(i) Offer to Purchase.
(a)(1)(ii) Letter of Transmittal.
(a)(1)(iii) Notice of Guaranteed Delivery.
(a)(1)(iv) Letter to shareholders from Richard D. Farman, Chairman
and Chief Executive Officer of Sempra, dated January
26, 2000.
(a)(1)(v) Letter to participants in the Sempra Energy and
Subsidiary Savings Plans from Richard D. Farman,
Chairman and Chief Executive Officer of Sempra, dated
January 26, 2000.
(a)(1)(vi) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(vii) Letter to Participants in the Sempra Energy and
Subsidiary Savings Plans.
(a)(2) Not applicable.
(a)(3) Not applicable.
(a)(4) Not applicable.
(a)(5)(i) Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(5)(ii) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(5)(iii) Summary Advertisement dated January 26, 2000.
(a)(5)(iv) Press Release dated January 26, 2000.
1
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(a)(5)(v) Teleconference Script.
(a)(5)(vi) Presentation Materials.
(a)(5)(vii) Pages 23 through 24 and Exhibit 13, inclusive, of
Sempra's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (incorporated by reference to
Sempra's Annual Report on Form 10-K filed with the
Commission on March 9, 1999).
(a)(5)(viii) Pages 1 through 7 and Exhibit 12.1, inclusive, of
Sempra's Quarterly Report on Form 10-Q for the period
ended September 30, 1999 (incorporated by reference to
Sempra's Quarterly Report on Form 10-Q filed with the
Commission on November 12, 1999).
(b) Not applicable.
(d) Not applicable.
(g) Not applicable.
(h) Not applicable.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: January 26, 2000 SEMPRA ENERGY
By: /s/ John R. Light
-------------------------------
Name: John R. Light
Title: Executive Vice President and
General Counsel
3
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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(a)(1)(i) Offer to Purchase.
(a)(1)(ii) Letter of Transmittal.
(a)(1)(iii) Notice of Guaranteed Delivery.
(a)(1)(iv) Letter to shareholders from Richard D. Farman, Chairman
and Chief Executive Officer of Sempra, dated January
26, 2000.
(a)(1)(v) Letter to participants in the Sempra Energy and
Subsidiary Savings Plans from Richard D. Farman,
Chairman and Chief Executive Officer of Sempra, dated
January 26, 2000.
(a)(1)(vi) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(vii) Letter to Participants in the Sempra Energy and
Subsidiary Savings Plans.
(a)(2) Not applicable.
(a)(3) Not applicable.
(a)(4) Not applicable.
(a)(5)(i) Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(5)(ii) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(5)(iii) Summary Advertisement dated January 26, 2000.
(a)(5)(iv) Press Release dated January 26, 2000.
(a)(5)(v) Teleconference Script.
(a)(5)(vi) Presentation Materials.
(a)(5)(vii) Pages 23 through 24 and Exhibit 13, inclusive, of
Sempra's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (incorporated by reference to
Sempra's Annual Report on Form 10-K filed with the
Commission on March 9, 1999).
(a)(5)(viii) Pages 1 through 7 and Exhibit 12.1, inclusive, of
Sempra's Quarterly Report on Form 10-Q for the period
ended September 30, 1999 (incorporated by reference to
Sempra's Quarterly Report on Form 10-Q filed with the
Commission on November 12, 1999).
(b) Not applicable.
(d) Not applicable.
(g) Not applicable.
(h) Not applicable.
<PAGE>
Offer to Purchase for Cash up to
36,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not in Excess of $20.00
nor Less Than $17.50 Per Share
The offer, proration period and withdrawal rights will expire at
5:00 p.m., New York City time, on Friday, February 25, 2000, unless
the offer is extended.
Sempra Energy, a California corporation, invites its shareholders to tender
up to 36,000,000 shares of its common stock, without par value, for purchase by
Sempra at a price not in excess of $20.00 nor less than $17.50 per share, net
to the seller in cash, without interest, as specified by shareholders tendering
their shares. Sempra will determine a single per share price that it will pay
for shares properly tendered, taking into account the number of shares tendered
and the prices specified by tendering shareholders. All shares acquired in the
offer will be acquired at the same purchase price. Sempra will select the
lowest purchase price that will allow it to buy 36,000,000 shares or, if a
lesser number of shares are properly tendered, all shares that are properly
tendered.
Sempra's offer is being made upon the terms and subject to the conditions
described in this Offer to Purchase and in the related Letter of Transmittal
which, as amended or supplemented from time to time, together constitute this
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to a Rights Agreement dated as of May 26,
1998 between Sempra and First Chicago Trust Company of New York, as rights
agent, and, unless the context otherwise requires, all references to shares
include the associated preferred stock purchase rights.
Only shares properly tendered at prices at or below the purchase price
selected by Sempra and not properly withdrawn will be purchased. However,
because of the "odd lot" priority, proration and conditional tender provisions
described in this Offer to Purchase, all of the shares tendered at or below the
purchase price will not be purchased if the offer is oversubscribed. Shares not
purchased in the offer will be returned as promptly as practicable following
the Expiration Date. See Section 3.
Sempra reserves the right, in its sole discretion, to purchase more than
36,000,000 shares pursuant to the offer.
This offer is not conditioned on any minimum number of shares being
tendered. However, this offer is subject to other conditions. See Section 7.
The shares are listed and traded on the New York Stock Exchange and the
Pacific Stock Exchange under the symbol "SRE." On January 25, 2000, the last
full trading day before the announcement of the offer, the last reported sale
price of the shares on the NYSE Composite Tape was $17.25. SHAREHOLDERS ARE
URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 8.
Neither Sempra nor Sempra's Board of Directors makes any recommendation to
you as to whether to tender or refrain from tendering your shares or as to the
purchase price at which you may choose to tender your shares. You must make
your own decision as to whether to tender your shares and, if so, how many
shares to tender and the price or prices at which you will tender them. In
doing so, you should consider our reasons for making this offer, including the
recently announced reduction in our quarterly dividend rate, our increased use
of financial leverage and our increased business emphasis on providing
unregulated integrated energy services. See Section 2. Our directors and
executive officers have advised us that they do not intend to tender any shares
in the offer.
If you wish to tender all or any part of the shares registered in your name,
you should follow the instructions described in Section 3 carefully, including
completing a Letter of Transmittal in accordance with the instructions and
delivering it, along with your share certificates and any other required items,
to First Chicago Trust Company of New York, the Depositary. If your shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee, you should contact the nominee if you desire to tender your
shares and request that the nominee tender them for you. Participants in the
Sempra Energy Direct Stock Purchase Plan or Sempra's savings plans who wish to
tender any of their shares held in these plans must follow the separate
instructions and procedures described in Section 3 of this Offer to Purchase.
Any shareholder who desires to tender shares and whose certificates for the
shares are not immediately available or cannot be delivered to the Depositary
or who cannot comply with the procedure for book-entry transfer or whose other
required documents cannot be delivered to the Depositary by the expiration of
the offer must tender the shares pursuant to the guaranteed delivery procedure
set forth in Section 3.
To properly tender shares, you must validly complete the Letter of
Transmittal, including the section relating to the price at which you are
tendering shares. If you wish to maximize the chance that your shares will be
purchased at the purchase price determined by Sempra, you should check the box
in the section on the Letter of Transmittal captioned "Shares Tendered at Price
Determined Pursuant to the Offer." Note that this election could result in your
shares being purchased at the minimum price of $17.50 per share.
You may request additional copies of this Offer to Purchase, the Letter of
Transmittal or the Notice of Guaranteed Delivery from the Information Agent at
its address and telephone numbers set forth on the back cover of this Offer to
Purchase.
We have not authorized any person to make any recommendation on our behalf
as to whether you should tender or refrain from tendering your shares in this
offer. You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information or to make any representation in connection with this offer other
than those contained in this Offer to Purchase or in the related Letter of
Transmittal. If anyone makes any recommendation or gives any information or
representation, you must not rely upon that recommendation, information or
authorization as having been authorized by Sempra Energy.
The Dealer Manager for this offer is:
Goldman, Sachs & Co.
January 26, 2000
<PAGE>
Summary Term Sheet
This summary highlights the most material information from this Offer to
Purchase. To understand the offer fully and for a more complete description of
the terms of the offer, you should read carefully this entire Offer to Purchase
and Letter of Transmittal. We have included page references parenthetically to
direct you to a more complete description of the topics in this summary.
What securities is Sempra offering to purchase? (Page 1)
. Sempra is offering to purchase 36,000,000 shares of its common stock,
including the associated preferred stock purchase rights, or any lesser
number of shares that shareholders properly tender in the offer. If more than
36,000,000 shares are tendered, all shares tendered at or below the purchase
price will be purchased on a pro rata basis, except for "odd lots" which will
be purchased on a priority basis.
How much will Sempra pay me for my shares and in what form of payment?
(Page 14)
Sempra is conducting the offer through a procedure commonly called a modified
"Dutch Auction."
. This procedure allows you to select the price within a specified price range
at which you are willing to sell your shares. The price range for this offer
is $17.50 to $20.00.
. Sempra will determine the lowest single per share price within the price
range that will allow it to purchase 36,000,000 shares, or if fewer shares
are tendered, all shares tendered.
. All shares purchased will be purchased at the same price, even if you have
selected a lower price, but no shares will be purchased above the purchase
price determined by Sempra.
. If you wish to maximize the chance that your shares will be purchased, you
should check the box in the section on the Letter of Transmittal indicating
that you will accept the purchase price determined by Sempra under the terms
of the offer. Note that this election could result in your shares being
purchased at the minimum price of $17.50 per share.
. Shareholders whose shares are purchased in the offer will be paid the
purchase price, net in cash, without interest, as soon as practicable after
the expiration of the offer period. Under no circumstances will Sempra pay
interest on the purchase price, including but not limited to, by reason of
any delay in making payment.
Does Sempra have the financial resources to pay me for my shares? (Page 19)
. Sempra intends to obtain substantially all of the approximately $734 million
of funds required to purchase the shares in this offer from the aggregate net
proceeds of underwritten public offerings of senior notes of Sempra and trust
preferred securities guaranteed by Sempra. These offerings are expected to be
conducted during the tender offer period.
. Sempra also has obtained a commitment from Goldman, Sachs & Co. to provide up
to $1 billion of committed, short-term financing as a back-up that can be
used if the long-term financings are not completed on terms acceptable to
Sempra by the expiration of the tender offer.
When does the tender offer expire? Can Sempra extend the offer, and if so, how
will I be notified? (Page 32)
. The offer expires Friday, February 25, 2000, at 5:00 p.m., New York City
time, unless it is extended by Sempra.
. Yes, Sempra may extend the offer at any time.
. Sempra cannot assure you that the offer will be extended or, if extended, for
how long.
. If the offer is extended, Sempra will make a public announcement of the
extension no later than 9:00 a.m. on the next business day following the
previously scheduled expiration of the offer period.
What is the purpose of the offer? Will Sempra's quarterly dividend be reduced?
(Page 5)
. As a complement to Sempra's business strategy, Sempra has developed financial
initiatives that are intended to increase Sempra's financial flexibility and
further position Sempra for the increasingly competitive utility and energy
services markets.
. Sempra plans to reduce the quarterly dividend payable on shares of its common
stock to $0.25 per share ($1.00 annualized rate) from its previous level of
$0.39 per share ($1.56 annualized rate) commencing with the dividend payable
in the second quarter of 2000. Reducing the dividend rate improves the
company's financial flexibility going forward. Additionally, it positions
Sempra's common stock for potential increased growth in market value by
retaining a proportionately higher level of earnings for reinvestment in the
business.
. Sempra intends to incur approximately $700 million in additional long-term
obligations in the form of senior notes of Sempra and trust preferred
securities guaranteed by Sempra to repurchase shares in this offer. This is
designed to increase the financial leverage employed by the company in its
capital structure.
. This offer allows shareholders an opportunity to exit all or part of their
investment in Sempra shares on potentially more favorable terms than would
otherwise be available. However, shareholders who choose not to tender their
shares may also benefit from these transactions. Non-tendering shareholders
will own a
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greater interest in a company with a potentially stronger earnings per share
growth rate.
What are the most significant conditions to the offer? (Page 15)
Sempra's obligation to accept for payment, purchase or pay for any shares
tendered depends upon a number of conditions, including:
. No significant decrease in the price of Sempra's common stock or in the price
of equity securities generally, or any adverse changes in the U.S. stock
markets or credit markets, shall have occurred during this offer, and Sempra
must have obtained approximately $700 million of long-term financing on terms
and conditions satisfactory to Sempra, in its sole judgment.
. No legal action shall have been threatened, pending or taken, that might
adversely affect the offer.
. No one shall have proposed, announced or made a tender or exchange offer
(other than this offer), merger, business combination or other similar
transaction involving Sempra.
. No material change in the business, condition (financial or otherwise),
assets, income, operations, prospects or stock ownership of Sempra shall have
occurred during this offer.
How do I tender my shares? (Page 8)
. If you decide to tender your shares, you must either:
. Deliver your shares by mail, physical delivery or book-entry transfer and
deliver a completed and signed Letter of Transmittal or an Agent's Message
to the Depositary before 5:00 p.m. on Friday, February 25, 2000; or
. If your share certificates are not immediately available for delivery to
the Depositary, comply with the guaranteed delivery procedure before 5:00
p.m. on Friday, February 25, 2000.
. Contact the Information Agent or your broker for assistance.
. Participants in Sempra savings plans who wish to tender any of their shares
held in those plans must instruct the plan trustee to tender their shares at
least three business days before the expiration of the offer by following the
separate instructions and procedures described in Section 3.
Until what time can I withdraw previously tendered shares? (Page 13)
. You may withdraw your tendered shares at any time before 5:00 p.m. on Friday,
February 25, 2000 and, unless already accepted for payment by Sempra, at any
time after 12:00 Midnight, New York City time, on Wednesday, March 22, 2000.
In what order will tendered shares be purchased? Will tendered shares be
prorated? (Page 3)
. First, Sempra will purchase shares from all holders of "odd lots" of less
than 100 shares (not including any shares held in the Sempra Energy Direct
Stock Purchase Plan or Sempra's savings plans) who properly tender all of
their shares at or below the selected purchase price; and
. Second, after purchasing all shares from the "odd lot holders," Sempra will
then purchase shares from all other shareholders who properly tender shares
at or below the selected purchase price, on a pro rata basis, subject to the
conditional tender provisions described in Section 6.
. Consequently, all of the shares that you tender in the offer may not be
purchased even if they are tendered at or below the purchase price.
What do Sempra and its Board of Directors think of the offer? (Page 1)
. Neither Sempra nor Sempra's Board of Directors makes any recommendation to
you as to whether to tender or refrain from tendering your shares or as to
the purchase price at which you may choose to tender your shares.
. You must decide whether to tender your shares and, if so, how many shares to
tender and the price or prices at which you will tender them.
. Our directors and executive officers have advised us that they do not intend
to tender any shares in the offer.
What is the recent market price of my shares? (Page 17)
. On January 25, 2000, the last full trading day before the announcement of the
offer, the last reported sale price of the shares on the NYSE Composite Tape
was $17.25.
. Shareholders are urged to obtain current market quotations for their shares.
Who do I contact if I have questions about the tender offer?
For additional information or assistance, you may contact:
. Information Agent:
D. F. King & Co., Inc.
77 Water Street
New York, NY 10005-4495
Banks and Brokers (212) 269-5550 (call collect)
All Others (800) 431-9645 (toll free)
(ii)
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TABLE OF CONTENTS
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SUMMARY TERM SHEET............................................................................. (i)
INTRODUCTION................................................................................... 1
THE OFFER...................................................................................... 3
1. Number of Shares; Proration............................................................ 3
2. Purpose of the Offer; Certain Effects of the Offer..................................... 5
3. Procedures for Tendering Shares........................................................ 8
4. Withdrawal Rights...................................................................... 13
5. Purchase of Shares and Payment of Purchase Price....................................... 14
6. Conditional Tender of Shares........................................................... 15
7. Certain Conditions of the Offer........................................................ 15
8. Price Range of Shares; Dividends....................................................... 17
9. Source and Amount of Funds............................................................. 19
10. Certain Information Concerning Sempra.................................................. 20
11. Interests of Directors and Officers; Transactions and Arrangements Concerning Shares... 29
12. Effects of the Offer on the Market for Shares; Registration Under the Exchange Act..... 29
13. Certain Legal Matters; Regulatory Approvals............................................ 30
14. Certain United States Federal Income Tax Consequences.................................. 30
15. Extension of the Offer; Termination; Amendment......................................... 32
16. Fees and Expenses...................................................................... 33
17. Miscellaneous.......................................................................... 34
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FORWARD LOOKING STATEMENTS
This Offer to Purchase, including the Summary, the Introduction, Section 2
and Section 10, contains statements that are not historical facts and
constitute projections, forecasts or forward-looking statements. When we use
words like "believes," "expects," "anticipates," "intends," "plans,"
"estimates," "may," "should" or similar expressions, or when we discuss our
strategy or plans, we are making projections, forecasts or forward-looking
statements. These statements are not guarantees of performance. They involve
risks, uncertainties and assumptions that could cause our future results and
shareholder value to differ materially from those expressed in these
statements. Many of the factors that will determine these results and value are
beyond our ability to control or predict. These statements are necessarily
based upon various assumptions involving judgments with respect to the future.
These risks and uncertainties include, among others:
. national, international, regional and local economic, competitive and
regulatory conditions and developments;
. capital market conditions, inflation rates and interest rates;
. energy markets, including the timing and extent of changes in commodity
prices;
. weather conditions;
. business, regulatory and legal decisions;
. the pace of deregulation of retail natural gas and electricity delivery;
. technological developments;
. the timing and success of business development efforts; and
. other uncertainties, all of which are difficult to predict and many of
which are beyond our control.
These risks and uncertainties are further discussed in more detail in Sempra's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
(iii)
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To the Holders of Common Stock of Sempra Energy:
INTRODUCTION
Offer
Sempra Energy, a California corporation, invites its shareholders to tender
shares of its common stock, without par value, for purchase by Sempra. Sempra
is offering to purchase up to 36,000,000 shares at a price not in excess of
$20.00 nor less than $17.50 per share, net to the seller in cash, without
interest, as specified by shareholders tendering their shares.
Sempra will determine a single per share price that it will pay for shares
properly tendered, taking into account the number of shares tendered and the
prices specified by tendering shareholders. All shares acquired in the offer
will be acquired at the same purchase price. Sempra will select the lowest
purchase price that will allow it to buy 36,000,000 shares or, if a lesser
number of shares are properly tendered, all shares that are properly tendered.
Sempra's offer is being made upon the terms and subject to the conditions
set forth in this Offer to Purchase and in the related Letter of Transmittal
which, as amended or supplemented from time to time, together constitute this
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to a Rights Agreement dated as of May 26,
1998 between Sempra and First Chicago Trust Company of New York, as rights
agent, and, unless the context otherwise requires, all references to shares
include the associated preferred stock purchase rights.
Only shares properly tendered at prices at or below the purchase price
selected by Sempra and not properly withdrawn will be purchased. However,
because of the "odd lot" priority, proration and conditional tender provisions
described in this Offer to Purchase, all of the shares tendered at or below the
purchase price will not be purchased if the offer is oversubscribed. Shares
tendered at prices in excess of the purchase price that is determined by Sempra
and shares not purchased because of proration or conditional tenders will be
returned as promptly as practicable following the Expiration Date. See Section
3.
Sempra reserves the right, in its sole discretion, to purchase more than
36,000,000 shares pursuant to the offer.
The offer is not conditioned on any minimum number of shares being tendered.
The offer is, however, subject to other conditions. See Section 7.
The Board of Directors of Sempra has authorized this offer. However, neither
Sempra nor Sempra's Board of Directors makes any recommendation to you as to
whether to tender or refrain from tendering your shares or as to the purchase
price at which you may choose to tender your shares. You must make your own
decision whether to tender your shares and, if so, how many shares to tender
and the price or prices at which you will tender them. In doing so, you should
consider our reasons for making this offer, including the recently announced
reduction in our quarterly dividend rate, our increased use of financial
leverage and our increased business emphasis on providing unregulated
integrated energy services. See Section 2. Our directors and executive officers
have advised us that they do not intend to tender any shares in the offer. See
Section 11.
If at the expiration of the offer more than 36,000,000 shares (or a greater
number of shares as Sempra may elect to purchase) are properly tendered at or
below the purchase price and not properly withdrawn, Sempra will buy shares
first from all Odd Lot Holders (as defined in Section 1) who properly tender
all their shares at or below the purchase price, and second, on a pro rata
basis from all other shareholders who properly tender shares at prices at or
below the purchase price. See Section 1.
1
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If you tender shares in the offer, your tender will include a tender of the
preferred stock purchase rights associated with your tendered shares. No
separate consideration will be paid for the rights. See Section 8.
The purchase price will be paid net to the tendering shareholder in cash,
without interest, for all shares purchased. Tendering shareholders who hold
shares registered in their own name and who tender their shares directly to the
Depositary will not be obligated to pay brokerage commissions, solicitation
fees or, subject to Instruction 7 of the Letter of Transmittal, stock transfer
taxes on the purchase of shares by Sempra in the offer. Shareholders holding
shares through brokers or banks are urged to consult the brokers or banks to
determine whether transaction costs may apply if shareholders tender shares
through the brokers or banks and not directly to the Depositary. However, any
tendering shareholder or other payee who fails to complete, sign and return to
the Depositary the Substitute Form W-9 that is included as part of the Letter
of Transmittal may be subject to required United States federal income tax
backup withholding of 31% of the gross proceeds payable to the tendering
shareholder or other payee pursuant to the offer. See Section 3.
Sempra will pay all fees and expenses incurred in connection with the offer
by Goldman, Sachs & Co., the Dealer Manager for this offer, First Chicago Trust
Company of New York, the Depositary for this offer and the administrator of the
Sempra Energy Direct Stock Purchase Plan, D. F. King & Co., Inc., the
Information Agent for this offer, and T. Rowe Price Trust Company, the trustee
of Sempra's savings plans. See Section 16.
Participants in the Sempra Energy Direct Stock Purchase Plan may instruct
the administrator of the plan to tender all or part of the shares of Sempra
common stock credited to the participant's account in the Direct Stock Purchase
Plan by following the instructions in the enclosed Letter of Transmittal and
returning it in accordance with those instructions. See Section 3.
Participants in the Sempra Energy Savings Plan, Sempra Energy Trading
Retirement Savings Plan, Southern California Gas Company Retirement Savings
Plan, San Diego Gas & Electric Company Savings Plan or the Sempra Energy
Services Savings Plan may instruct the trustee of those plans, T. Rowe Price
Trust Company, to tender some or all of the shares held for the participant's
account by following the instructions in the separate "Letter to Participants
in the Sempra Energy and Subsidiary Savings Plans" furnished separately and
returning it to the trustee's agent in accordance with those instructions. If
the trustee has not received a participant's instructions at least three
business days prior to the Expiration Date, the trustee will not tender any
shares held on behalf of the participant in the Plan. The plans require that
"employer matching funds" contributed to a participant's account by Sempra or
its subsidiaries and earnings on these funds must be invested in Sempra common
stock. Thus, the proceeds received by the trustee from any tender of shares
from a participant's account that were originally acquired with employer
matching funds or earnings on those funds will be reinvested under the terms of
the plans in Sempra common stock following the tender offer. Participants
should be aware that the proceeds will be reinvested in Sempra common stock
under the terms of the plans at the prevailing market price at the time of
reinvestment, which price may be higher or lower than the purchase price paid
by Sempra for shares in the tender offer. Proceeds received from any tender of
shares attributable to a participant's contributions and earnings thereon will
be initially invested under the terms of the plans for the participant in T.
Rowe Price Summit Cash Reserves, a money market fund, and subsequently may be
transferred by the participant to other investment funds as permitted by the
plan. See Section 3.
As of January 25, 2000, Sempra had 240,345,446 issued and outstanding
shares, and 8,647,907 shares reserved for issuance upon exercise of outstanding
stock options under Sempra's stock option plans. The 36,000,000 shares that
Sempra is offering to purchase pursuant to the offer represent approximately
15% of Sempra's shares outstanding on January 25, 2000. The shares are listed
and traded on the New York Stock Exchange and the Pacific Stock Exchange under
the symbol "SRE." On January 25, 2000, the last full trading day before the
announcement of the offer, the last reported sale price of the shares as
reported on the NYSE Composite Tape was $17.25. SHAREHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. See Section 8.
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THE OFFER
1. Number of Shares; Proration.
Upon the terms and subject to the conditions of the offer, Sempra will
purchase 36,000,000 shares, or the lesser number of shares that are properly
tendered and not properly withdrawn in accordance with Section 4 before the
Expiration Date, as defined below, at prices not in excess of $20.00 nor less
than $17.50 per share, net to the seller in cash, without interest.
The term "Expiration Date" means 5:00 p.m., New York City time, on Friday,
February 25, 2000. Sempra may, in its sole discretion, extend the period of
time during which the offer will remain open. In the event of an extension, the
term "Expiration Date" will refer to the latest time and date at which the
offer, as extended by Sempra, will expire. See Section 15 for a description of
Sempra's right to extend, delay, terminate or amend the offer.
In accordance with Instruction 5 of the Letter of Transmittal, shareholders
desiring to tender shares must either (1) specify that they are willing to sell
their shares to Sempra at the price determined in the offer, or (2) specify the
price, not in excess of $20.00 nor less than $17.50 per share, at which they
are willing to sell their shares to Sempra in the offer. As promptly as
practicable following the Expiration Date, Sempra will, upon the terms and
subject to the conditions of the offer, determine a single per share purchase
price that it will pay for shares properly tendered and not properly withdrawn
pursuant to the offer, taking into account the number of shares tendered and
the prices specified by tendering shareholders. All shares purchased in the
offer will be purchased at the same purchase price. Sempra will select the
lowest purchase price that will allow it to buy 36,000,000 shares, or the
lesser number of shares that are properly tendered at prices not in excess of
$20.00 nor less than $17.50 per share.
Only shares properly tendered at prices at or below the purchase price
determined by Sempra and not properly withdrawn will be purchased. However,
because of the "odd lot" priority, proration and conditional tender provisions,
all of the shares tendered at or below the purchase price will not be purchased
if the offer is oversubscribed. All shares tendered and not purchased pursuant
to the offer, including shares tendered at prices in excess of the purchase
price determined by Sempra and shares not purchased because of proration or
conditional tenders, will be returned to the tendering shareholders at Sempra's
expense as promptly as practicable following the Expiration Date.
Sempra reserves the right to purchase more than 36,000,000 shares pursuant
to the offer. In accordance with applicable regulations of the Securities and
Exchange Commission, Sempra may purchase pursuant to the offer an additional
amount of shares not to exceed 2% of the outstanding shares without amending or
extending the offer. See Section 15.
In the event of an over-subscription of the offer, shares tendered at or
below the purchase price before the Expiration Date will be subject to
proration, except for Odd Lots (as defined below). The proration period also
expires on the Expiration Date.
If Sempra (1) increases the price that may be paid for shares above $20.00
per share or decreases the price that may be paid for shares below $17.50 per
share, (2) materially increases the Dealer Manager fee, (3) increases the
number of shares that it may purchase in the offer by more than 2% of the
outstanding shares, or (4) decreases the number of shares that it may purchase
in the offer, then the offer must remain open for at least ten business days
following the date that notice of the increase or decrease is first published,
sent or given in the manner specified in Section 15.
The offer is not conditioned on any minimum number of shares being tendered.
The offer is, however, subject to other conditions. See Section 7.
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Priority of Purchases. If more than 36,000,000 shares (or a greater number
of shares as Sempra may elect to purchase) have been properly tendered at
prices at or below the selected purchase price and not properly withdrawn
before the Expiration Date, Sempra will purchase properly tendered shares on
the basis set forth below:
. First, Sempra will purchase all shares tendered by any Odd Lot Holder (as
defined below) who:
(1) tenders all shares owned beneficially or of record by the Odd Lot
Holder at a price at or below the selected purchase price (tenders
of less than all of the shares owned by the Odd Lot Holder will not
qualify for this preference); and
(2) completes the section entitled "Odd Lots" in the Letter of
Transmittal and, if applicable, in the Notice of Guaranteed
Delivery.
. Second, after the purchase of all of the shares properly tendered by Odd
Lot Holders, subject to the conditional tender provisions described in
Section 6, Sempra will purchase all other shares tendered at prices at or
below the purchase price, on a pro rata basis with appropriate
adjustments to avoid purchases of fractional shares, as described below.
Consequently, all of the shares that a shareholder tenders in the offer may
not be purchased even if they are tendered at prices at or below the purchase
price.
Odd Lots. The term "Odd Lots" means all shares tendered at prices at or
below the selected purchase price by any person (an "Odd Lot Holder") who owned
beneficially or of record an aggregate of fewer than 100 shares (not including
any shares held in the Sempra Energy Direct Stock Purchase Plan or in one of
Sempra's savings plans) and so certified in the appropriate place on the Letter
of Transmittal and, if applicable, on the Notice of Guaranteed Delivery. To
qualify for this preference, an Odd Lot Holder must tender all shares owned by
the Odd Lot Holder in accordance with the procedures described in Section 3.
Odd Lots will be accepted for payment before any proration of the purchase of
other tendered shares. This preference is not available to partial tenders or
to beneficial or record holders of an aggregate of 100 or more shares, even if
these holders have separate accounts or certificates representing fewer than
100 shares, or with respect to any shares held in the Sempra Energy Direct
Stock Purchase Plan or in one of Sempra's savings plans. By tendering in the
offer, an Odd Lot Holder who holds shares in its name and tenders its shares
directly to the Depositary would not only avoid the payment of brokerage
commissions, but also would avoid any applicable odd lot discounts in a sale of
the holder's shares. Any Odd Lot Holder wishing to tender all of the
shareholder's shares pursuant to the offer should complete the section entitled
"Odd Lots" in the Letter of Transmittal and, if applicable, in the Notice of
Guaranteed Delivery.
Sempra also reserves the right, but will not be obligated, to purchase all
shares properly tendered by any shareholder who tenders any shares owned
beneficially or of record, at or below the selected purchase price and who, as
a result of proration, would then own beneficially or of record, an aggregate
of fewer than 100 shares. If Sempra exercises this right, it will increase the
number of shares that it is offering to purchase in the offer by the number of
shares purchased through the exercise of the right.
Proration. If proration of tendered shares is required, Sempra will
determine the proration factor as promptly as practicable following the
Expiration Date. Proration for each shareholder tendering shares, other than
Odd Lot Holders, will be based on the ratio of the number of shares tendered by
the shareholder to the total number of shares tendered by all shareholders,
other than Odd Lot Holders, at or below the selected purchase price. Because of
the difficulty in determining the number of shares properly tendered and not
properly withdrawn, and because of the Odd Lot procedure described above and
the conditional tender procedure described in Section 6, Sempra does not expect
that it will be able to announce the final proration factor or commence payment
for any shares purchased pursuant to the offer until approximately seven
business days after the Expiration Date. The preliminary results of any
proration will be announced by press release as promptly as practicable after
the Expiration Date. Shareholders may obtain preliminary proration information
from the Information Agent and also may be able to obtain the information from
their brokers.
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As described in Section 14, the number of shares that Sempra will purchase
from a shareholder pursuant to the offer may affect the United States federal
income tax consequences to the shareholder of the purchase and, therefore, may
be relevant to a shareholder's decision whether or not to tender shares. The
Letter of Transmittal affords each tendering shareholder the opportunity to
designate the order of priority in which shares tendered are to be purchased in
the event of proration.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of the shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on Sempra's
shareholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of shares.
2. Purpose of the Offer; Certain Effects of the Offer.
Diversified utility companies, including Sempra, have experienced and will
continue to experience a significant increase in the level of competition in
the utility and energy services markets over time. A steady move away from a
regulated monopoly energy supply structure toward a more competitive structure
has affected the utility industry for nearly two decades. During the past
decade, various state and federal regulatory changes have occurred and a
significant number of states have begun to implement legislative initiatives to
permit retail customers to choose their energy supply provider.
Sempra continues to refine its business strategies for the following
segments of the energy services industry: regulated delivery services,
international, wholesale trading, retail energy services, electric generation
and technology ventures.
Sempra plans to pursue the following initiatives to enhance its business
model and create sustainable earnings growth. Sempra's California utilities
plan to focus on their core distribution businesses, promoting competition in
retail markets and efficiency in the delivery services business. Sempra
International will continue to develop electric and gas distribution systems in
Nova Scotia, Mexico and portions of South America, while evaluating
opportunities to enhance its existing businesses with additional investments.
Sempra Energy Trading plans to continue to build and enhance its natural gas
and electric wholesale trading capability throughout North America and Europe.
In addition, Sempra and its non-utility subsidiaries will provide integrated
energy services to mass market retail and commercial and industrial customers
in domestic and international markets. To support its customer focused
activities, Sempra plans to continue to invest in electric generation assets,
either through development or acquisition. Sempra also has made investments and
is developing new businesses in the information systems and communications
fields. Sempra believes that all of these businesses will complement and
broaden its offerings to customers in retail markets. One of Sempra's
objectives is to generate one-third of its consolidated earnings from its
unregulated businesses by the end of 2003. Sempra cannot assure you that this
objective will be achieved.
Based upon this integrated approach to the energy marketplace, Sempra will
seek to achieve long-term returns on shareholder capital that exceed the
returns that have been historically available for state-regulated utility
businesses. At the same time, Sempra's business risks are expected to increase,
resulting in an increase in the potential volatility in revenue and income
streams.
As a complement to its business strategy, Sempra has developed financial
initiatives that are intended to increase Sempra's financial and operating
flexibility and to further position Sempra for the increasingly competitive
utility and energy services markets. Accordingly, Sempra announced on January
26, 2000 that it plans to reduce the quarterly dividend payable on shares of
its common stock, commencing with the dividend payable in the second quarter of
2000, to $0.25 per share ($1.00 annualized rate) from its previous level of
$0.39 per share ($1.56 annualized rate). Reducing the dividend rate improves
Sempra's financial flexibility going forward. It also positions Sempra's common
stock for potential increased growth in market value by retaining a
proportionately higher level of earnings for reinvestment in the business.
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Sempra also intends to repurchase up to 36,000,000 shares of its common
stock in this offer, representing approximately 15% of its outstanding common
stock as of January 25, 2000. Sempra intends to finance substantially all of
this stock repurchase by incurring approximately $700 million in additional
long-term obligations in the form of senior notes of Sempra and trust preferred
securities guaranteed by Sempra, through underwritten public offerings during
the tender offer period. It intends to finance the remaining approximately $34
million necessary to repurchase the shares with the issuance by Sempra Energy
Holdings of short-term commercial paper notes from its existing commercial
paper program, guaranteed by Sempra. These transactions are designed to
increase the financial leverage employed by Sempra in its capital structure.
Sempra expects to maintain a strong investment grade credit rating on its debt
and preferred securities and, following the announcement of this offer, rating
agencies have reaffirmed the ratings for Sempra's securities and those of its
utility subsidiaries. However, these ratings are subject to periodic review by
the rating agencies and may change from time to time.
This offer allows shareholders an opportunity to exit, subject to proration
in the offer, their investment in Sempra on potentially more favorable terms
than would otherwise be available. The offer provides shareholders who are
considering a sale of all or a portion of their shares with the opportunity to:
. sell a portion of their shares while retaining a continuing equity
interest in Sempra;
. determine the price or prices, not in excess of $20.00 nor less than
$17.50 per share, at which they are willing to sell their shares and,
subject to the terms and conditions of the offer (including proration)
and if shares are tendered by their registered owner directly to the
Depositary, to sell shares for cash without the usual transaction costs
associated with open market sales; or
. for Odd Lot Holders who hold shares in their names and tender their
shares directly to the Depositary and whose shares are purchased pursuant
to the offer, avoid the payment of brokerage commissions and any
applicable odd lot discounts payable on a sale of their shares in an NYSE
transaction.
Non-tendering shareholders will own a greater interest in a company with a
potentially stronger earnings per share growth rate. Upon successful completion
of the tender offer, Sempra's current goal to grow earnings per share by 5-6%
annually will increase to a goal of approximately 8-10% in annual compound
growth over the three year period from 2000 through 2002. Sempra cannot assure
you that this goal will be achieved. Shareholders who determine not to accept
the offer will realize a proportionate increase in their relative ownership
interest in Sempra, and thus in Sempra's future earnings and assets, subject to
Sempra's right to issue additional shares and other equity securities in the
future. Shareholders may be able to sell non-tendered shares in the future on
the NYSE or otherwise, at a net price higher than the purchase price in the
offer. Sempra can give no assurance, however, as to the price at which a
shareholder may be able to sell his or her shares in the future, which may be
higher or lower than the purchase price paid by Sempra in the offer.
In considering the offer, Sempra's Board of Directors took into account the
expected financial impact of the offer, including the company's increased long-
term obligations in the form of senior notes and trust preferred securities as
a result of the offer and the resulting increased interest and trust preferred
dividend expense. The Sempra Board believes that Sempra's financial condition
and outlook and current market conditions, including recent trading prices of
Sempra's common stock, make this an attractive time to repurchase a portion of
its outstanding shares. In the view of Sempra's Board, the offer is an
attractive use of Sempra's financial resources and will result in a more
appropriate capital structure for Sempra.
Accordingly, the offer is consistent with Sempra's long-term corporate goal
of increasing shareholder value. After the offer is completed, Sempra believes
that its anticipated cash flow from operations, access to credit facilities and
capital markets, and financial condition will, taken together, be adequate for
its needs for the foreseeable future. However, actual experience may differ
significantly from Sempra's expectations. Future events, such as regulatory
developments, adverse effects on operations, or levels of capital or other
expenditures, could have the effect of reducing Sempra's available cash or
might reduce or adversely affect the availability or cost of external financial
resources.
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Although it has no current plans to acquire additional shares other than
through the offer, Sempra may in the future purchase additional shares in the
open market, in private transactions, through tender offers or otherwise,
subject to the approval of the Board of Directors. Future purchases may be on
the same terms or on terms which are more or less favorable to shareholders
than the terms of the offer. However, Rule 13e-4 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), prohibits Sempra and its
affiliates from purchasing any shares, other than pursuant to the offer, until
at least ten business days after the Expiration Date. Any future purchases by
Sempra will depend on many factors, including:
. the market price of the shares;
. the results of this offer;
. Sempra's business and financial position; and
. general economic and market conditions.
Shares that Sempra acquires in the offer will be restored to the status of
authorized but unissued shares and will be available for Sempra to issue
without further shareholder action (except as required by applicable law or
stock exchange rules) for all purposes including, but not limited to, the
acquisition of other businesses, the raising of additional capital for use in
Sempra's business and the satisfaction of obligations under existing or future
employee benefit plans. Sempra has no current plans for the issuance of shares
repurchased pursuant to the offer.
Sempra has been informed that two members of its Board of Directors, Robert
H. Goldsmith and Ignacio E. Lozano, Jr., will retire from Sempra's Board of
Directors at Sempra's 2000 Annual Meeting of Shareholders. Sempra intends to
reduce the size of the Board of Directors to reflect these retirements.
In accordance with a previously announced succession plan, Richard D. Farman
will retire as Chief Executive Officer of Sempra on June 26, 2000 and as
Chairman of the Board on September 1, 2000. He will be succeeded in these
positions by Stephen L. Baum, who currently is Sempra's Vice Chairman,
President and Chief Operating Officer.
Except as disclosed in this Offer to Purchase, Sempra currently has no
plans, proposals or negotiations underway that relate to or would result in:
. any extraordinary transaction, such as a merger, reorganization or
liquidation, involving Sempra or any of its subsidiaries, which is
material to Sempra and its subsidiaries, taken as a whole;
. any purchase, sale or transfer of a material amount of assets of Sempra
or any of its subsidiaries, taken as a whole;
. any material change in the dividend rate or policy, or indebtedness or
capitalization of Sempra;
. any change in the present board of directors or management of Sempra,
including, but not limited to, any plans or proposals to change the
number or the term of directors or to fill any existing vacancies on the
board or to change any material term of the employment contract of any
executive officer;
. any other material change in Sempra's corporate structure or business;
. any class of equity securities of Sempra being delisted from a national
securities exchange;
. any class of equity securities of Sempra becoming eligible for
termination of registration under section 12(g)(4) of the Exchange Act;
. the suspension of Sempra's obligation to file reports under Section 15(d)
of the Exchange Act;
. the acquisition by any person of additional securities of Sempra, or the
disposition of securities of Sempra; or
. any changes in Sempra's charter, bylaws or other governing instruments or
other actions that could impede the acquisition of control of Sempra.
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The Board of Directors of Sempra has authorized the offer. However, neither
Sempra nor its Board of Directors makes any recommendation to shareholders as
to whether to tender or refrain from tendering their shares or as to the
purchase price at which shareholders should tender their shares, and neither
has authorized any person to make any recommendation. Shareholders are urged to
evaluate carefully all information in the offer, consult with their own
investment and tax advisors and make their own decision whether to tender and,
if so, how many shares to tender and the price or prices at which to tender
them. Sempra has been advised that none of its directors or executive officers
intends to tender any shares pursuant to the offer. See Section 11.
3. Procedures for Tendering Shares.
Proper Tender of shares. For shares to be tendered properly pursuant to the
offer:
(1) the certificates for the shares, or confirmation of receipt of the
shares pursuant to the procedure for book-entry transfer set forth
below, together with a properly completed and duly executed Letter of
Transmittal, or a manually signed facsimile of the Letter of
Transmittal, including any required signature guarantees, or an Agent's
Message (as defined below) in the case of a book-entry transfer, and
any other documents required by the Letter of Transmittal, must be
received before 5:00 p.m., New York City time, on the Expiration Date
by the Depositary at its address set forth on the back cover of this
Offer to Purchase; or
(2) the tendering shareholder must comply with the guaranteed delivery
procedure set forth below.
In accordance with Instruction 5 of the Letter of Transmittal, each
shareholder desiring to tender shares pursuant to the offer must either (1)
check the box in the section of the Letter of Transmittal captioned "Shares
Tendered at Price Determined Pursuant to the Offer" or (2) check one of the
boxes in the section of the Letter of Transmittal captioned "Price (in dollars)
per Share at Which Shares Are Being Tendered" indicating the price at which
shares are being tendered. A tender of shares will be proper if and only if,
one of these boxes is checked on the Letter of Transmittal.
If you wish to maximize the chance that your shares will be purchased, you
should check the box in the section on the Letter of Transmittal captioned
"Shares Tendered at Price Determined Pursuant to the Offer." Note that this
election could result in your shares being purchased at the minimum price of
$17.50 per share.
If you wish to indicate a specific price (in multiples of $0.125) at which
your shares are being tendered, you must check a box under the section
captioned "Price (in dollars) per Share at Which Shares Are Being Tendered."
Note that this election could result in no shares being purchased if you check
a box other than the box representing the lowest price. A shareholder who
wishes to tender shares at more than one price must complete separate letters
of transmittal for each price at which shares are being tendered. The same
shares cannot be tendered (unless previously properly withdrawn in accordance
with the terms of the offer) at more than one price.
In addition, Odd Lot Holders who tender all shares must complete the section
captioned "Odd Lots" in the Letter of Transmittal and, if applicable, in the
Notice of Guaranteed Delivery, to qualify for the preferential treatment
available to Odd Lot Holders as set forth in Section 1.
Shareholders who hold shares through brokers or banks are urged to consult
the brokers or banks to determine whether transaction costs may apply if
shareholders tender shares through the brokers or banks and not directly to the
Depositary.
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Participants in Sempra's savings plans who wish to tender some or all of the
shares attributed to their accounts must follow the instructions in the "Letter
to Participants in the Sempra Energy and Subsidiary Savings Plans" furnished
separately and return it to the plan trustee in accordance with those
instructions. The instructions must be received by the trustee's agent no later
than three business days prior to the Expiration Date, or no shares attributed
to the participant's account will be tendered.
Signature Guarantees and Method of Delivery. No signature guarantee is
required if:
(1) the Letter of Transmittal is signed by the registered holder of the
shares (which term, for purposes of this Section 3, will include any
participant in The Depository Trust Company (the "Book-Entry Transfer
Facility") whose name appears on a security position listing as the
owner of the shares) tendered and the holder has not completed either
the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" on the Letter of Transmittal; or
(2) shares are tendered for the account of a bank, broker, dealer, credit
union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank,
broker, dealer, credit union, savings association or other entity which
is an "eligible guarantor institution," as the term is defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended (each of
the foregoing constituting an "Eligible Institution"). See Instruction
1 of the Letter of Transmittal.
If a certificate for shares is registered in the name of a person other than
the person executing a Letter of Transmittal, or if payment is to be made, or
shares not purchased or tendered are to be issued, to a person other than the
registered holder, then the certificate must be endorsed or accompanied by an
appropriate stock power, in either case, signed exactly as the name of the
registered holder appears on the certificate, with the signature guaranteed by
an Eligible Institution.
In all cases, payment for shares tendered and accepted for payment pursuant
to the offer will be made only after timely receipt by the Depositary of
certificates for the shares (or a timely confirmation of the book-entry
transfer of the shares into the Depositary's account at the Book-Entry Transfer
Facility as described above), a properly completed and duly executed Letter of
Transmittal, or a manually signed facsimile of the Letter of Transmittal, and
any other documents required by the Letter of Transmittal.
The method of delivery of all documents, including certificates for shares,
the Letter of Transmittal and any other required documents, is at the election
and risk of the tendering shareholder. If delivery is by mail, then registered
mail with return receipt requested, properly insured, is recommended. In all
cases, sufficient time should be allowed to ensure timely delivery.
Book-Entry Delivery. The Depositary will establish an account with respect
to the shares for purposes of the offer at the Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the shares by causing the
Book-Entry Transfer Facility to transfer shares into the Depositary's account
in accordance with the Book-Entry Transfer Facility's procedures for transfer.
Although delivery of shares may be effected through a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, either (1) a
properly completed and duly executed Letter of Transmittal, or a manually
signed facsimile of the Letter of Transmittal, with any required signature
guarantees, or an Agent's Message, and any other required documents must be
transmitted to and received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase before the Expiration Date, or (2)
the guaranteed delivery procedure described below must be followed. Delivery of
the Letter of Transmittal and any other required documents to the Book-Entry
Transfer Facility does not constitute delivery to the Depositary.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgement from the participant in the Book-Entry
Transfer
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<PAGE>
Facility tendering shares that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that Sempra may enforce
such agreement against the participant.
United States Federal Income Tax Backup Withholding. Under the United States
federal income tax backup withholding rules, unless an exemption applies under
the applicable law and regulations, 31% of the gross proceeds payable to a
shareholder or other payee pursuant to the offer must be withheld and remitted
to the United States Internal Revenue Service ("IRS"), unless the shareholder
or other payee provides his or her taxpayer identification number (employer
identification number or social security number) to the Depositary (as payor)
and certifies under penalties of perjury that the number is correct. Therefore,
each tendering shareholder should complete and sign the Substitute Form W-9
included as part of the Letter of Transmittal so as to provide the information
and certification necessary to avoid backup withholding unless the shareholder
otherwise establishes to the satisfaction of the Depositary that the
shareholder is not subject to backup withholding. If the Depositary is not
provided with the correct taxpayer identification number, the United States
Holder (as defined in Section 14) may be subject to penalties imposed by the
IRS. If withholding results in an overpayment of taxes, a refund may be
obtained. Certain "exempt recipients" (including, among others, all
corporations and certain Non-United States Holders (as defined in Section 14))
are not subject to these backup withholding and information reporting
requirements. In order for a Non-United States Holder to qualify as an exempt
recipient, that shareholder must submit an IRS Form W-8 or a Substitute Form W-
8, signed under penalties of perjury, attesting to that shareholder's exempt
status. These statements can be obtained from the Depositary. See Instruction
14 of the Letter of Transmittal.
To prevent United States federal income tax backup withholding equal to 31%
of the gross payments made to shareholders for shares purchased pursuant to the
offer, each shareholder who does not otherwise establish an exemption from the
backup withholding must provide the Depositary with the shareholder's correct
taxpayer identification number and provide other information by completing the
Substitute Form W-9 included as part of the Letter of Transmittal.
Withholding For Non-United States Holders. Even if a Non-United States
Holder has provided the required certification to avoid backup withholding, the
Depositary will withhold United States federal income taxes equal to 30% of the
gross payments payable to a Non-United States Holder or his agent unless the
Depositary determines that a reduced rate of withholding is available pursuant
to a tax treaty or that an exemption from withholding is applicable because the
gross proceeds are effectively connected with the conduct of a trade or
business within the United States. To obtain a reduced rate of withholding
pursuant to a tax treaty, a Non-United States Holder must deliver to the
Depositary before the payment a properly completed and executed IRS Form 1001.
To obtain an exemption from withholding on the grounds that the gross proceeds
paid pursuant to the offer are effectively connected with the conduct of a
trade or business within the United States, a Non-United States Holder must
deliver to the Depositary a properly completed and executed IRS Form 4224. The
Depositary will determine a shareholder's status as a Non-United States Holder
and eligibility for a reduced rate of, or exemption from, withholding by
reference to any outstanding certificates or statements concerning eligibility
for a reduced rate of, or exemption from, withholding (e.g., IRS Form 1001 or
IRS Form 4224) unless facts and circumstances indicate that reliance is not
warranted. A Non-United States Holder may be eligible to obtain a refund of all
or a portion of any tax withheld if the Non-United States Holder meets those
tests described in Section 14 that would characterize the exchange as a sale
(as opposed to a dividend) or is otherwise able to establish that no tax or a
reduced amount of tax is due.
Non-United States Holders are urged to consult their tax advisors regarding
the application of United States federal income tax withholding, including
eligibility for a withholding tax reduction or exemption, and the refund
procedure.
Guaranteed Delivery. If a shareholder desires to tender shares pursuant to
the offer and the shareholder's share certificates are not immediately
available or cannot be delivered to the Depositary before the Expiration Date
(or the procedure for book-entry transfer cannot be completed on a timely
basis), or if time will not
10
<PAGE>
permit all required documents to reach the Depositary before the Expiration
Date, the shares still may be tendered, if all of the following conditions are
satisfied:
(1) the tender is made by or through an Eligible Institution;
(2) the Depositary receives by hand, mail, overnight courier, telegram or
facsimile transmission, on or before the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially
in the form Sempra has provided with this Offer to Purchase, including
(where required) a signature guarantee by an Eligible Institution in
the form set forth in the Notice of Guaranteed Delivery; and
(3) the certificates for all tendered shares, in proper form for transfer
(or confirmation of book-entry transfer of the shares into the
Depositary's account at the Book-Entry Transfer Facility), together
with a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile of the Letter of Transmittal, or an Agent's
Message in the case of a book-entry transfer, and any required
signature guarantees and other documents required by the Letter of
Transmittal, are received by the Depositary within three NYSE trading
days after the date of receipt by the Depositary of the Notice of
Guaranteed Delivery.
Return of Unpurchased Shares. If any tendered shares are not purchased, or
if less than all shares evidenced by a shareholder's certificates are tendered,
certificates for unpurchased shares will be returned as promptly as practicable
after the expiration or termination of the offer or, in the case of shares
tendered by book-entry transfer at the Book-Entry Transfer Facility, the shares
will be credited to the appropriate account maintained by the tendering
shareholder at the Book-Entry Transfer Facility, in each case without expense
to the shareholder.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of shares
to be accepted, the purchase price to be paid for shares to be accepted and the
validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of shares will be determined by Sempra, in its sole
discretion, and its determination will be final and binding on all parties.
Sempra reserves the absolute right to reject any or all tenders of any shares
that it determines are not in proper form or the acceptance for payment of or
payment for which may, in the opinion of Sempra's counsel, be unlawful. Sempra
also reserves the absolute right to waive any of the conditions of the offer or
any defect or irregularity in any tender with respect to any particular shares
or any particular shareholder, and Sempra's interpretation of the terms of the
offer will be final and binding on all parties. No tender of shares will be
deemed to have been properly made until all defects or irregularities have been
cured by the tendering shareholder or waived by Sempra. None of Sempra, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be obligated to give notice of any defects or irregularities in tenders, nor
will any of them incur any liability for failure to give any notice.
Sempra Energy Direct Stock Purchase Plan. Participants in the Sempra Energy
Direct Stock Purchase Plan will receive all documents furnished to shareholders
generally in connection with the offer. Participants in the Direct Stock
Purchase Plan may use the Letter of Transmittal to instruct First Chicago Trust
Company of New York, the administrator of the plan, to tender all or part of
the shares of Sempra common stock credited to the participant's account in the
Direct Stock Purchase Plan by completing the box entitled "Direct Stock
Purchase Plan Shares" and following the instructions in the enclosed Letter of
Transmittal and returning it in accordance with those instructions. Each
participant may direct that all, some or none of the shares credited to the
participant's account under the Direct Stock Purchase Plan be tendered and the
price at which such participant's shares are to be tendered. Any Direct Stock
Purchase Plan shares tendered but not purchased will be returned to the
participant's Direct Stock Purchase Plan account. Participants in the Direct
Stock Purchase Plan are urged to read the Letter of Transmittal and related
materials carefully.
Savings Plans. Participants in the Sempra Energy Savings Plan, Sempra Energy
Trading Retirement Savings Plan, Southern California Gas Company Retirement
Savings Plan, San Diego Gas & Electric Company
11
<PAGE>
Savings Plan or the Sempra Energy Services Savings Plan may instruct the
trustee of those plans, T. Rowe Price Trust Company, to tender some or all of
the shares attributed to a participant's account by following the instructions
in the separate "Letter to Participants in the Sempra Energy and Subsidiary
Savings Plans" furnished separately and returning it to the trustee's agent in
accordance with those instructions. All documents furnished to shareholders
generally in connection with the offer will be made available to participants
whose individual accounts are credited with shares. Participants in the various
savings plans cannot use the Letter of Transmittal to direct the tender of
shares, but must use the separate instruction letter sent to them.
Sempra's savings plans are prohibited from selling shares to Sempra for a
price that is less than the prevailing market price. Accordingly, if a
participant in the savings plans elects to tender shares at a price that is
lower than the prevailing market price of Sempra's common stock at the
expiration of the offer, the tender price elected by the participant will be
deemed to have been increased to the closest tender price that is not less than
the closing price on the New York Stock Exchange at the Expiration Date.
Delivery of a Letter of Transmittal by a participant does not constitute
proper tender of his or her retirement savings plan shares. Proper tender can
only be made by the trustee, who is the record owner of the shares. Please note
that the deadline for submitting instruction letters to the trustee's agent is
earlier than the Expiration Date. If the trustee has not received a
participant's instructions at least three business days prior to the Expiration
Date, the trustee will not tender any shares held on behalf of the participant
in the Plan.
Under the terms of the various savings plans, "employer matching funds"
contributed by Sempra or its subsidiaries and earnings on employer matching
funds must be invested in Sempra common stock. Thus, the proceeds received by
the trustee from shares of Sempra common stock tendered by participants will be
treated differently under the terms of the plan, depending upon whether the
tendered shares were originally purchased with contributions from the
participant or with earnings on participant contributions, or with employer
matching funds contributed by Sempra or its subsidiaries or earnings on
matching funds. The proceeds received by the trustee from any shares tendered
by a participant which were originally purchased with participant contributions
or earnings on participant contributions will be invested following the tender
offer initially in T. Rowe Price Summit Cash Reserves, a money market fund,
pending further investment direction from the tendering participant. On the
other hand, the proceeds received by the trustee from any shares tendered by a
participant which were originally purchased with employer matching funds or
earnings on matching funds will be reinvested under the terms of the plans in
shares of Sempra common stock following the tender offer. After any
successfully tendered shares are processed and the proceeds are credited to a
participant's savings plan account, participants may contact T. Rowe Price by
their normal manner of communication (e.g. participant service center, voice
response or on-line access(R)) to exchange any proceeds held in the T. Rowe
Price Summit Cash Reserves money market fund to any other investment option
available under the terms of the savings plans. Participants should be aware
that the proceeds reinvested under the terms of the plan in Sempra common stock
will be reinvested at the prevailing market price at the time of reinvestment,
which may be higher or lower than the purchase price paid by Sempra for shares
in the tender offer. Participants in the various Sempra savings plans are urged
to read the separate instruction letter and related materials carefully.
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<PAGE>
Tendering Shareholder's Representation and Warranty; Sempra's Acceptance
Constitutes an Agreement. A tender of shares pursuant to any of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the offer, as well as the tendering shareholder's
representation and warranty to Sempra that (1) the shareholder has a "net long
position," within the meaning of Rule 14e-4 promulgated by the SEC under the
Exchange Act, in the shares or equivalent securities at least equal to the
shares being tendered, and (2) the tender of shares complies with Rule 14e-4.
It is a violation of Rule 14e-4 for a person, directly or indirectly, to tender
shares for that person's own account unless, at the time of tender and at the
end of the proration period or period during which shares are accepted by lot
(including any extensions thereof), the person so tendering (1) has a net long
position equal to or greater than the amount of (a) shares tendered or (b)
other securities convertible into or exchangeable or exercisable for the shares
tendered and will acquire the shares for tender by conversion, exchange or
exercise and (2) will deliver or cause to be delivered the shares in accordance
with the terms of the offer. Rule 14e-4 provides a similar restriction
applicable to the tender or guarantee of a tender on behalf of another person.
Sempra's acceptance for payment of shares tendered pursuant to the offer will
constitute a binding agreement between the tendering shareholder and Sempra
upon the terms and conditions of the offer.
Lost or Destroyed Certificates. Shareholders whose certificates for part or
all of their shares have been lost, stolen, misplaced or destroyed may either
complete the box in the Letter of Transmittal entitled, "Affidavit of Lost or
Destroyed Certificate(s)," and pay the listed insurance premium or contact the
Depositary at (877) 773-6772 for instructions as to the documents which will be
required to be submitted together with the Letter of Transmittal in order to
receive stock certificate(s) representing the shares. Shareholders are
requested to contact the Depositary immediately in order to permit timely
processing of this documentation.
Certificates for shares, together with a properly completed Letter of
Transmittal and any other documents required by the Letter of Transmittal, must
be delivered to the Depositary and not to Sempra. Any documents delivered to
Sempra will not be forwarded to the Depositary and will not be deemed to be
properly tendered.
4. Withdrawal Rights.
Shares tendered pursuant to the offer may be withdrawn at any time before
the Expiration Date and, unless already accepted for payment by Sempra pursuant
to the offer, may also be withdrawn at any time after 12:00 Midnight, New York
City time, on Wednesday, March 22, 2000. Except as otherwise provided in this
Section 4, tenders of shares pursuant to the offer are irrevocable.
For a withdrawal to be effective, a notice of withdrawal must be in written,
telegraphic, telex or facsimile transmission form and must be received in a
timely manner by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase. Any notice of withdrawal must specify the name
of the tendering shareholder, the number of shares to be withdrawn and the name
of the registered holder of the shares. If the certificates for shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
before the release of the certificates, the tendering shareholder must also
submit the serial numbers shown on the particular certificates for shares to be
withdrawn and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution (except in the case of shares tendered for the
account of an Eligible Institution). If shares have been tendered pursuant to
the procedure for book-entry transfer described in Section 3, the notice of
withdrawal also must specify the name and the number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn shares and must
otherwise comply with the Book-Entry Transfer Facility's procedures. All
questions as to the form and validity, including the time of receipt, of any
notice of withdrawal will be determined by Sempra, in its sole discretion,
which determination will be final and binding on all parties. None of Sempra,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be obligated to give notice of any defects or irregularities in any notice
of withdrawal, nor will any of them incur liability for failure to give any
notice.
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<PAGE>
Participants in Sempra's savings plans who wish to withdraw their shares
must follow the instructions found in the separate "Letter to Participants in
the Sempra Energy and Subsidiary Savings Plans" sent to them separately.
Withdrawals may not be rescinded, and any shares properly withdrawn will be
deemed not properly tendered for purposes of the offer. However, withdrawn
shares may be re-tendered before the Expiration Date by again following one of
the procedures described in Section 3.
If Sempra extends the offer, is delayed in its purchase of shares or is
unable to purchase shares pursuant to the offer for any reason, then, without
prejudice to Sempra's rights under the offer, the Depositary may, subject to
applicable law, retain tendered shares on behalf of Sempra, and the shares may
not be withdrawn except to the extent tendering shareholders are entitled to
withdrawal rights as described in this Section 4.
5. Purchase of Shares and Payment of Purchase Price.
As promptly as practicable following the Expiration Date, Sempra (1) will
determine a single per share purchase price it will pay for the shares properly
tendered and not properly withdrawn before the Expiration Date, taking into
account the number of shares tendered and the prices specified by tendering
shareholders, and (2) will accept for payment and pay for (and thereby
purchase) up to 36,000,000 shares properly tendered at prices at or below the
purchase price and not properly withdrawn before the Expiration Date. For
purposes of the offer, Sempra will be deemed to have accepted for payment (and
therefore purchased), subject to the "odd lot" priority, proration and
conditional tender provisions of this offer, shares that are properly tendered
at or below the selected purchase price and not properly withdrawn only when,
as and if it gives oral or written notice to the Depositary of its acceptance
of the shares for payment pursuant to the offer.
Sempra will accept for payment and pay the per share purchase price for all
of the shares accepted for payment pursuant to the offer as soon as practicable
after the Expiration Date. In all cases, payment for shares tendered and
accepted for payment pursuant to the offer will be made promptly, subject to
possible delay in the event of proration, but only after timely receipt by the
Depositary of certificates for shares, or of a timely Book-Entry Confirmation
of shares into the Depositary's account at the Book-Entry Transfer Facility,
and a properly completed and duly executed Letter of Transmittal, or manually
signed facsimile of the Letter of Transmittal, and any other required
documents.
Sempra will pay for shares purchased pursuant to the offer by depositing the
aggregate purchase price for the shares with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from
Sempra and transmitting payment to the tendering shareholders.
In the event of proration, Sempra will determine the proration factor and
pay for those tendered shares accepted for payment as soon as practicable after
the Expiration Date. However, Sempra does not expect to be able to announce the
final results of any proration and commence payment for shares purchased until
approximately seven business days after the Expiration Date. Certificates for
all shares tendered and not purchased, including all shares tendered at prices
in excess of the purchase price and shares not purchased due to proration or
conditional tenders, will be returned or, in the case of shares tendered by
book-entry transfer, will be credited to the account maintained with the Book-
Entry Transfer Facility by the participant who delivered the shares, to the
tendering shareholder at Sempra's expense as promptly as practicable after the
Expiration Date or termination of the offer without expense to the tendering
shareholders. Under no circumstances will Sempra pay interest on the purchase
price, including but not limited to, by reason of any delay in making payment.
In addition, if certain events occur, Sempra may not be obligated to purchase
shares pursuant to the offer. See Section 7.
Sempra will pay all stock transfer taxes, if any, payable on the transfer to
it of shares purchased pursuant to the offer. If, however, payment of the
purchase price is to be made to, or (in the circumstances permitted by the
offer) if unpurchased shares are to be registered in the name of, any person
other than the registered holder,
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<PAGE>
or if tendered certificates are registered in the name of any person other than
the person signing the Letter of Transmittal, the amount of all stock transfer
taxes, if any (whether imposed on the registered holder or the other person),
payable on account of the transfer to the person will be deducted from the
purchase price unless satisfactory evidence of the payment of the stock
transfer taxes, or exemption from payment of the stock transfer taxes, is
submitted. See Instruction 7 of the Letter of Transmittal.
Any tendering shareholder or other payee who fails to complete fully, sign
and return to the Depositary the Substitute Form W-9 included with the Letter
of Transmittal may be subject to required United States federal income tax
backup withholding of 31% of the gross proceeds paid to the shareholder or
other payee pursuant to the offer. See Section 3. Also see Section 3 regarding
United States federal income tax consequences for Non-United States
shareholders.
6. Conditional Tender of Shares.
Under certain circumstances and subject to the exceptions for Odd Lot
Holders described in Section 1, Sempra may prorate the number of shares
purchased pursuant to the offer. As discussed in Section 14, the number of
shares to be purchased from a particular shareholder may affect the tax
treatment of the purchase to the shareholder and the shareholder's decision
whether to tender. Accordingly, a shareholder may tender shares subject to the
condition that a specified minimum number of the shareholder's shares tendered
pursuant to a Letter of Transmittal or Notice of Guaranteed Delivery must be
purchased if any shares tendered are purchased. Any shareholder desiring to
make a conditional tender must so indicate in the box captioned "Conditional
Tender" in the Letter of Transmittal or, if applicable, the Notice of
Guaranteed Delivery. Each shareholder is urged to consult with his or her own
tax advisor.
Any tendering shareholder wishing to make a conditional tender must
calculate and appropriately indicate the minimum number of shares that must be
purchased if any are purchased. If the effect of accepting tenders on a pro
rata basis would be to reduce the number of shares to be purchased from any
shareholder (tendered pursuant to a Letter of Transmittal or Notice of
Guaranteed Delivery) below the minimum number specified, the tender will
automatically be regarded as withdrawn (except as provided in the next
paragraph). All shares tendered by a shareholder subject to a conditional
tender pursuant to the Letter of Transmittal or Notice of Guaranteed Delivery
and regarded as withdrawn as a result of proration will be returned as promptly
as practicable after the Expiration Date.
If conditional tenders would otherwise be regarded as withdrawn and would
cause the total number of shares to be purchased to fall below 36,000,000 then,
to the extent feasible, Sempra will select enough of the conditional tenders
that would otherwise have been withdrawn to permit Sempra to purchase
36,000,000 shares. In selecting among the conditional tenders, Sempra will
select by lot and will limit its purchase in each case to the designated
minimum of shares to be purchased.
7. Conditions of the Offer.
Notwithstanding any other provision of the offer, Sempra will not be
required to accept for payment, purchase or pay for any shares tendered, and
may terminate or amend the offer or may postpone the acceptance for payment of,
or the purchase of and the payment for shares tendered, subject to the rules
under the Exchange Act, if at any time on or after January 26, 2000 and before
the Expiration Date any of the following events have occurred (or have been
determined by Sempra to have occurred) that, in Sempra's sole judgment and
regardless of the circumstances giving rise to the event or events (including
any action or omission to act by Sempra), makes it inadvisable to proceed with
the offer or with acceptance for payment:
15
<PAGE>
. there has been threatened, instituted or pending any action, suit or
proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or by any other person,
domestic, foreign or supranational, before any court, authority, agency
or other tribunal that directly or indirectly:
(1) challenges or seeks to make illegal, or to delay or otherwise
directly or indirectly to restrain, prohibit or otherwise affect
the making of the offer, the acquisition of some or all of the
shares pursuant to the offer or otherwise relates in any manner to
the offer; or
(2) in Sempra's sole judgment, could materially and adversely affect
the business, condition (financial or otherwise), income,
operations or prospects of Sempra and its subsidiaries, taken as a
whole, or otherwise materially impair in any way the contemplated
future conduct of the business of Sempra or any of its subsidiaries
or materially impair the contemplated benefits of the offer to
Sempra;
. there has been any action threatened, pending or taken, including any
settlement, or any approval withheld, or any statute, rule, regulation,
judgment, order or injunction threatened, invoked, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the offer or Sempra or any of its subsidiaries, including
any settlement, by any court, government or governmental, regulatory or
administrative authority, agency or tribunal, domestic, foreign or
supranational, that, in Sempra's sole judgment, could directly or
indirectly:
(1) make the acceptance for payment of, or payment for, some or all of
the shares illegal or otherwise restrict or prohibit consummation
of the offer;
(2) delay or restrict the ability of Sempra, or render Sempra unable,
to accept for payment or pay for some or all of the shares;
(3) materially impair the contemplated benefits of the offer to Sempra;
or
(4) materially and adversely affect the business, condition (financial
or otherwise), income, operations or prospects of Sempra and its
subsidiaries, taken as a whole, or otherwise materially impair in
any way the contemplated future conduct of the business of Sempra
or any of its subsidiaries;
. there has occurred any of the following:
(1) any general suspension of trading in, or limitation on prices for,
securities on any United States national securities exchange or in
the over-the-counter market;
(2) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, whether or not
mandatory;
(3) the commencement of a war, armed hostilities or other international
or national calamity directly or indirectly involving the United
States;
(4) any limitation, whether or not mandatory, by any governmental,
regulatory or administrative agency or authority on, or any event
that, in Sempra's sole judgment, could materially affect, the
extension of credit by banks or other lending institutions in the
United States;
(5) any significant decrease in the market price of the shares or in
the market prices of equity securities generally in the United
States, any significant increase in the interest rate, distribution
rate or other significant change in the terms for debt or trust
preferred securities offerings in the United States, or Sempra
concludes in its sole judgment, that it is or will be unable prior
to the Expiration Date to obtain approximately $700 million of
long-term financing on terms and conditions satisfactory to Sempra,
or any changes in the general political, market, economic or
financial conditions in the United States or abroad that could
have, in the sole judgment of Sempra, a material adverse effect on
the business, condition (financial or otherwise), income,
operations or prospects of Sempra and its subsidiaries, taken as a
whole, or on the trading in the shares of Sempra common stock, or
on the proposed financing of the offer;
16
<PAGE>
(6) in the case of any of the foregoing existing at the time of the
commencement of the offer, a material acceleration or worsening
thereof; or
(7) any decline in the Dow Jones Industrial Average or the Standard and
Poor's 500 Composite Index by an amount in excess of 10% measured
from the close of business on January 25, 2000;
. a tender or exchange offer for any or all of the shares (other than this
offer), or any merger, acquisition proposal, business combination or
other similar transaction with or involving Sempra or any subsidiary, has
been proposed, announced or made by any person or has been publicly
disclosed;
. Sempra learns that:
(1) any entity, "group" (as that term is used in Section 13(d)(3) of
the Exchange Act) or person has acquired or proposes to acquire
beneficial ownership of more than 5% of the outstanding shares,
whether through the acquisition of stock, the formation of a group,
the grant of any option or right, or otherwise (other than as
disclosed in a Schedule 13D or Schedule 13G filed with the SEC on
or before January 25, 2000); or
(2) any entity, group or person who has filed a Schedule 13D or
Schedule 13G with the SEC on or before January 25, 2000 has
acquired or proposes to acquire, whether through the acquisition of
stock, the formation of a group, the grant of any option or right,
or otherwise, beneficial ownership of an additional 2% or more of
the outstanding shares;
. any person, entity or group has filed a Notification and Report Form
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, reflecting an intent to acquire Sempra or any of its shares of
common stock, or has made a public announcement reflecting an intent to
acquire Sempra or any of its subsidiaries or any of their respective
assets or securities other than in connection with a transaction
authorized by the Board of Directors of Sempra;
. any change or changes have occurred or are threatened in the business,
condition (financial or otherwise), assets, income, operations, prospects
or stock ownership of Sempra or its subsidiaries that, in Sempra's sole
judgment, is or may be material to Sempra or its subsidiaries; or
. Sempra determines that the consummation of the offer and the purchase of
the shares may cause its shares of Sempra common stock to be delisted
from the NYSE or to be eligible for deregistration under the Exchange
Act.
The conditions referred to above are for the sole benefit of Sempra and may
be asserted by Sempra regardless of the circumstances (including any action or
omission to act by Sempra) giving rise to any condition, and may be waived by
Sempra, in whole or in part, at any time and from time to time in its sole
discretion. Sempra's failure at any time to exercise any of the foregoing
rights will not be deemed a waiver of any right, and each such right will be
deemed an ongoing right that may be asserted at any time and from time to time.
In certain circumstances, if Sempra waives any of the conditions described
above, it may be required to extend the Expiration Date. Any determination by
Sempra concerning the events described above will be final and binding on all
parties.
8. Price Range of Shares; Dividends.
Sempra's common stock is listed for trading on the New York Stock Exchange
under the symbol "SRE." It began trading on June 29, 1998 following the
completion of the business combination of Pacific Enterprises and Enova
Corporation. The following table sets forth, for the fiscal quarters indicated,
the high and low sales prices per share as reported on the NYSE Composite Tape
and the cash dividends paid per share in each fiscal quarter:
17
<PAGE>
<TABLE>
<CAPTION>
High Low Dividends
------ ------ ---------
<S> <C> <C> <C>
1998
Third quarter.................................... 28.00 23.75 0.39
Fourth quarter................................... 29.31 24.56 0.39
1999
First quarter.................................... $26.00 $19.13 $0.39
Second quarter................................... 24.88 18.50 0.39
Third quarter.................................... 23.19 20.00 0.39
Fourth quarter................................... 21.33 17.13 0.39
2000
First quarter (through January 25, 2000)......... $18.50 $16.25 $0.39(a)
</TABLE>
- --------
(a) On January 26, 2000, Sempra announced that it plans to reduce its quarterly
common stock dividend to $0.25 per share ($1.00 annualized rate) from $0.39
per share ($1.56 annualized rate). Sempra expects the reduced dividend
payments will commence with the dividend payable in the second quarter of
2000.
On January 25, 2000, the last full trading day before the announcement of
the offer, the last reported sale price of the shares as reported on the NYSE
Composite Tape was $17.25. SEMPRA URGES SHAREHOLDERS TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
Rights Plan. On May 26, 1998, the Board of Directors of Sempra adopted a
Rights Agreement with First Chicago Trust Company of New York, as rights agent,
pursuant to which Sempra declared a dividend of one preferred stock purchase
right for each share of its common stock outstanding. One right attaches to
each share of Sempra common stock, and, when exercisable, each right will
entitle the registered holder to purchase from Sempra one one-hundredth of a
share of Series A Junior Participating Preferred Stock, without par value, at a
price of $80.00 per one one-hundredth of a preferred share, subject to
adjustment.
In general, the Rights become exercisable or transferable only upon the
occurrence of certain events relating to the acquisition by any person or group
of beneficial ownership of 15% or more of the aggregate voting power
represented by Sempra's outstanding securities or the commencement of a tender
offer to acquire such beneficial ownership. The rights will expire on May 31,
2008, subject to Sempra's right to extend the date, unless earlier redeemed or
exchanged by Sempra or terminated. The rights may be redeemed in whole, but not
in part, at a price of $.001 per right by the Board of Directors at any time
before the time a person crosses the beneficial ownership threshold.
The preferred stock purchase rights are not currently exercisable and trade
together with shares of Sempra common stock. Absent circumstances causing the
rights to become exercisable or separately tradable prior to the Expiration
Date, the tender of any shares pursuant to the offer will include the tender of
the associated rights. No separate consideration will be paid for the rights.
Upon the purchase of shares by Sempra pursuant to this offer, the sellers of
the shares purchased will no longer own the preferred stock purchase rights
associated with the purchased shares.
The foregoing description of the preferred stock purchase rights is
qualified in its entirety by reference to the Rights Agreement, a copy of which
has been filed as an exhibit to a Form 8-A filed by Sempra on June 5, 1998.
This exhibit may be obtained from the SEC in the manner provided in Section 10.
18
<PAGE>
9. Source and Amount of Funds.
Assuming Sempra purchases 36,000,000 shares pursuant to the offer at the
maximum specified purchase price of $20.00 per share, Sempra expects the
maximum aggregate cost, including all fees and expenses applicable to the
offer, will be approximately $734 million. Sempra intends to finance $700
million of this amount on a long-term basis primarily through a combination of
the underwritten public offerings of senior notes and trust preferred
securities. Any balance of up to $34 million will be funded by the issuance of
commercial paper.
Sempra intends to finance a portion of the aggregate purchase price for the
shares to be purchased in this offer from the net proceeds of the issuance and
sale in an underwritten public offering of approximately $500 million of senior
notes. The offer and sale of the senior notes will be made pursuant to Sempra's
existing effective shelf registration statement. The specific terms of the
senior notes will be described in a prospectus supplement to be filed with the
SEC.
The senior notes will be issued under an Indenture between Sempra and U.S.
Bank Trust National Association, as Trustee. The senior notes will mature on a
date from five years to ten years from their date of issue. The senior notes
will be senior unsecured obligations and will rank senior in right of payment
to all existing and future indebtedness of Sempra that is subordinated to the
senior unsecured notes and will rank pari passu in right of payment with all
other existing and future senior indebtedness of Sempra. The senior notes may
also be subject to redemption at Sempra's option prior to their stated maturity
date. It is expected that interest on the senior notes will be payable
semiannually, in arrears and at maturity. The senior notes will bear interest
at a rate to be determined prior to the issuance of the senior notes based on
the market rates for comparable securities of similar maturities at that time.
Sempra also intends to finance a portion of the aggregate purchase price for
the shares to be purchased in this offer from the net proceeds of the issuance
and sale of up to approximately $200 million of trust preferred securities by
Sempra Energy Capital Trust I, and guaranteed by Sempra in the manner and to
the extent described in a prospectus supplement applicable to the trust
preferred securities to be filed with the SEC. The offer and sale of the trust
preferred securities will be made pursuant to Sempra's existing effective shelf
registration statement. The specific terms of the trust preferred securities
will be described in the prospectus supplement to be filed with the SEC.
The trust preferred securities will be issued by Sempra Energy Capital Trust
I, a Delaware statutory business trust formed pursuant to a Declaration of
Trust which states the terms and conditions of the trust. All of the common
securities of the Trust will be owned by Sempra. The trust preferred securities
will represent undivided beneficial interests in the assets of the Trust. The
proceeds from the sale of the Trust's preferred securities will be used by the
Trust to purchase a series of subordinated debt securities of Sempra. Cash
payments received by the Trust on the subordinated debt securities will be
distributed to the holders of the preferred and common securities of the Trust
and will be the sole source of payment on the trust preferred securities.
Distributions on the trust preferred securities will accumulate if not
distributed currently. Sempra will guarantee the payment of distributions and
other amounts payable on the trust preferred securities, but only to the extent
that the Trust has funds available to make those payments. The trust preferred
securities will remain outstanding until they are redeemed by the Trust or
until the Trust distributes the subordinated debt of Sempra in exchange for the
trust preferred securities. The Trust may redeem the trust preferred securities
only with the
19
<PAGE>
proceeds from the repayment or acceleration of the subordinated debt of Sempra.
The subordinated debt of Sempra will have an initial stated maturity of 30
years. However, the stated maturity may be shortened to 15 years or, if certain
conditions are satisfied, extended to 50 years. The subordinated debt will also
be subject to redemption at Sempra's option prior to stated maturity.
Sempra intends to finance the balance of the aggregate purchase price for
the shares to be purchased in this offer from the net proceeds of the issuance
and sale by Sempra Energy Holdings of up to $34 million of unsecured short-term
commercial paper notes under its existing commercial paper program. The
commercial paper notes will be fixed rate and will have maturities of up to
one-year from the date of issuance. The commercial paper notes will also be
guaranteed by Sempra.
Sempra has obtained a commitment from Goldman, Sachs & Co. to provide up to
$1 billion of short-term committed financing that can be used as a back-up if
the proposed long-term financings are not completed by the expiration of the
offer period. While providing financial flexibility, the Goldman Sachs
commitment will not satisfy Sempra's long-term financing condition.
10. Certain Information Concerning Sempra.
General. Sempra Energy, based in San Diego, is a Fortune 500 energy services
holding company with 12,000 employees and annual revenues of $5.5 billion.
Through two regulated utility subsidiaries, Southern California Gas Company
and San Diego Gas & Electric Company, Sempra Energy serves over 21 million
consumers, the largest customer base of any gas, electric or combination gas
and electric utility in the United States. Natural gas service is provided
throughout Southern California and portions of Central California through over
5.5 million active meters. Electric service is provided throughout San Diego
County and portions of Orange County, both in Southern California, through over
1.2 million active meters.
Through other subsidiaries, Sempra Energy also provides other energy-related
products and services. These subsidiaries include Sempra Energy Solutions,
Sempra Energy Trading, Sempra Energy International and Sempra Energy Resources.
Sempra Energy is headquartered at 101 Ash Street, San Diego, California
92101-3017. Its telephone number is (619) 696-2034.
20
<PAGE>
Recently Announced Results of Operations for Fiscal 1999.
On January 26, 1999, Sempra reported unaudited earnings for the year ended
December 31, 1999 of $394 million, or $1.66 per diluted share, an increase of
34 percent from $294 million, or $1.24 per diluted share, for the year 1998.
Unaudited earnings in 1999, excluding nonrecurring items, rose to $408 million,
or $1.72 per diluted share, an increase of 7.7 percent, from $379 million, or
$1.60 per diluted share, in 1998.
Sempra reported unaudited fourth-quarter 1999 earnings of $105 million, or
$0.44 per diluted share, an increase of 24 percent from $85 million, or $0.36
per diluted share, for the fourth quarter of 1998 (or, excluding nonrecurring
items, an increase of 18 percent from $89 million, or $0.38 per diluted share
in 1998).
Sempra's revenues increased 8.8 percent to $5.5 billion for the full-year
ended December 31, 1999, compared to $5.0 billion in 1998.
The weighted average number of common shares outstanding (diluted) in 1999
increased to 237.6 million, compared to 237.1 million in 1998.
The following results from Sempra's business units are exclusive of non-
recurring costs:
Southern California Gas Company recorded net income of $201 million in 1999,
up from $193 million during the previous year, primarily due to increased sales
to commercial and industrial customers, lower operating costs and 1998
regulatory contract settlements. Net income for San Diego Gas & Electric in
1999 was $192 million, down from $220 million in 1998, primarily due to
reductions in its authorized rate of return and generation rate base, as well
as to increased interest expense, all related to California's electric industry
restructuring.
For the full-year 1999, non-utility and new-business operations, including
Sempra Energy Solutions, Sempra Energy Trading, Sempra Energy International,
Sempra Energy Resources, Sempra Energy Financial and the parent company,
recorded net income of $15 million, compared to a net loss of $34 million for
1998. The improvement in results for this group of companies was due primarily
to a $32 million net income increase by Sempra Energy Trading, a $14 million
rise in net income by Sempra Energy International and an additional $8 million
earnings contribution from Sempra Energy Financial. Sempra Energy Trading's
profits rose due to a 37 percent increase in physical natural gas trading
volumes and a successful entry into European markets. Sempra Energy
International's earnings growth was generated primarily by its South American
utilities, two of which--Chilquinta Energia and Luz del Sur--were acquired in
1999.
21
<PAGE>
Summary Historical Condensed Consolidated Financial Information. The
following table contains summary historical condensed consolidated financial
information of Sempra and its subsidiaries. The summary historical condensed
consolidated financial information for the years ended December 31, 1998 and
1997 and as of December 31, 1998 and 1997 has been derived from the audited
consolidated financial statements of Sempra. The summary historical condensed
consolidated financial information for the nine months ended September 30, 1999
and 1998 and as of September 30, 1999 and 1998 has been derived from the
unaudited consolidated financial statements of Sempra. In the opinion of
management, the interim condensed consolidated financial information reflects
all adjustments necessary for a fair presentation. These adjustments are only
of a normal recurring nature. The summary historical condensed consolidated
financial information should be read in conjunction with and is qualified in
its entirety by reference to the audited and unaudited consolidated financial
statements and the related notes thereto from which it has been derived. More
comprehensive financial information is included in the consolidated financial
statements and related notes contained in Sempra's Annual Report on Form 10-K
and Quarterly Reports on Form 10-Q, which it files with the SEC.
SEMPRA ENERGY AND SUBSIDIARIES
SUMMARY HISTORICAL CONDENSED CONSOLIDATED FINANCIAL INFORMATION
STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the years For the nine
ended December months ended
31, September 30,
--------------- ---------------
1998 1997 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue and other income....................... $ 5,525 $ 5,127 $ 3,962 $ 3,717
Expenses....................................... 4,874 4,170 3,348 3,230
Preferred dividends of subsidiaries............ 12 18 9 9
------- ------- ------- -------
Income before interest and income taxes........ 639 939 605 478
Interest....................................... 207 206 185 161
Income taxes................................... 138 301 131 108
------- ------- ------- -------
Net Income................................... $ 294 $ 432 $ 289 $ 209
======= ======= ======= =======
Average common shares outstanding (thousands):
Basic........................................ 236,423 236,662 237,192 236,253
Diluted...................................... 237,124 237,249 237,556 236,914
Earnings per common share:
Basic........................................ $ 1.24 $ 1.83 $ 1.22 $ 0.88
Diluted...................................... $ 1.24 $ 1.82 $ 1.22 $ 0.88
Dividends declared per common share............ $ 1.56 $ 1.27 $ 1.17 $ 1.17
Book value per common share (1)................ $ 12.29 $ 12.56 $ 12.20 $ 12.33
Common shares outstanding (thousands).......... 236,956 235,389 237,377 236,648
Ratio of earnings to fixed charges (2)......... 2.73 3.75 2.85 2.64
</TABLE>
(1) Book value per common share is calculated as total shareholders' equity
divided by the number of shares outstanding at the end of the period, which
excludes shares held by the Employee Stock Ownership Plan.
(2) The ratios of earnings to fixed charges is calculated by dividing the sum
of pre-tax income and fixed charges by fixed charges. Fixed charges include
all interest expense (before allowances for borrowed funds used during
construction), preferred dividends of subsidiaries, one-third of rent
expense (which approximates the interest component of such expense) and
amortization of debt issuance costs.
22
<PAGE>
SEMPRA ENERGY AND SUBSIDIARIES
SUMMARY HISTORICAL CONDENSED CONSOLIDATED FINANCIAL INFORMATION
BALANCE SHEET
(IN MILLIONS)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
Current assets....................................... $ 2,962 $ 2,458
Investments and other assets......................... 2,794 2,557
Property, plant and equipment........................ 5,383 5,441
------- -------
Total Assets....................................... $11,139 $10,456
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current liabilities.................................. $ 3,197 $ 2,466
Long-term debt....................................... 2,934 2,795
Deferred credits and other liabilities............... 1,909 2,078
------- -------
Total Liabilities.................................. 8,040 7,339
------- -------
Preferred stock of subsidiaries...................... 204 204
------- -------
SHAREHOLDERS' EQUITY
Common stock......................................... 1,885 1,883
Retained earnings.................................... 1,083 1,075
Other................................................ (73) (45)
------- -------
Total shareholders' equity......................... 2,895 2,913
------- -------
Total liabilities and shareholders' equity......... $11,139 $10,456
======= =======
</TABLE>
23
<PAGE>
Summary Unaudited Condensed Consolidated Pro Forma Financial Statements. The
following summary unaudited condensed consolidated pro forma financial
statements give effect to the purchase of shares of Sempra common stock
pursuant to this Offer to Purchase, including the related issuance of
indebtedness by Sempra and trust preferred securities by a Sempra business
trust and the reduction in the dividend on the common shares, based on certain
assumptions described below and in the related Notes below.
The Summary Unaudited Condensed Consolidated Pro Forma Balance Sheet as of
September 30, 1999 gives effect to the purchase of common stock pursuant to the
offer, including the related issuance of indebtedness by Sempra and trust
preferred securities by a Sempra business trust and the reduction in the
dividend on the common stock, as though such events occurred as of the date of
such balance sheet. The Summary Unaudited Condensed Consolidated Pro Forma
Statements of Income for the nine months ended September 30, 1999 and for the
year ended December 31, 1998 give effect to the purchase of common stock
pursuant to the offer, including the related issuance of indebtedness by Sempra
and trust preferred securities by a Sempra business trust and the reduction in
the dividend on the common stock, as though such events occurred on January 1,
1998.
The summary unaudited condensed consolidated pro forma financial statements
should be read in conjunction with the summary historical condensed
consolidated financial information included in this Offer to Purchase and the
historical consolidated financial information incorporated by reference herein.
The summary unaudited condensed consolidated pro forma financial statements are
subject to a number of uncertainties and assumptions and do not purport to be
indicative of the operating results that would actually have been obtained, or
operating results that may be obtained in the future, or the financial position
that would have resulted had the purchase of the common stock pursuant to this
Offer to Purchase, including the related issuance of indebtedness by Sempra and
trust preferred securities by a Sempra business trust and the reduction in the
dividend on the common stock, been completed at the dates indicated.
24
<PAGE>
SEMPRA ENERGY AND SUBSIDIARIES
SUMMARY UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets............................. $ 2,962 $ 2,962
Investments and other assets 2,794 $ 10 (1a) 2,804
Property, plant and equipment.............. 5,383 5,383
------- ----- -------
Total Assets............................. $11,139 $ 10 $11,149
======= ===== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current liabilities........................ $ 3,197 $ 34 (1b) $ 3,231
Total long-term debt....................... 2,934 500 (1c) 3,434
Total deferred credits and other
liabilities............................... 1,909 1,909
------- ----- -------
Total Liabilities........................ 8,040 534 8,574
------- ----- -------
Preferred stock of subsidiaries............ 204 204
------- -------
Mandatorily redeemable trust preferred
securities................................ 200 (1d) 200
----- -------
SHAREHOLDERS' EQUITY
Common stock............................... 1,885 (562)(2) 1,323
Retained earnings.......................... 1,083 (162)(2) 921
Other ..................................... (73) (73)
------- ----- -------
Total shareholders' equity............... 2,895 (724)(2) 2,171
------- ----- -------
Total liabilities and shareholders'
equity.................................. $11,139 $ 10 $11,149
======= ===== =======
</TABLE>
25
<PAGE>
SEMPRA ENERGY AND SUBSIDIARIES
SUMMARY UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENT OF INCOME
FOR NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
Revenue and other income.................. $ 3,962 $ 3,962
Expenses.................................. 3,348 3,348
Trust preferred distributions by
subsidiaries............................. $ 14 (3) 14
Preferred dividends by subsidiaries....... 9 9
------- -------- -------
Income before interest and income taxes... 605 (14) 591
Interest.................................. 185 32 (3) 217
Income taxes.............................. 131 (18)(4) 113
------- -------- -------
Net Income.............................. $ 289 $ (28) $ 261
======= ======== =======
Average common shares outstanding
(thousands):
Basic................................... 237,192 (36,000)(5) 201,192
Diluted................................. 237,556 (36,000)(5) 201,556
Earnings per common share:
Basic................................... $ 1.22 $ 1.30
Diluted................................. $ 1.22 $ 1.29
Dividends declared per common share....... $ 1.17 $ (0.42)(6) $ 0.75
Book value per common share............... $ 12.20 $ 10.78
Common shares outstanding (thousands)..... 237,377 (36,000)(5) 201,377
Ratio of earnings to fixed charges........ 2.85 2.37
</TABLE>
26
<PAGE>
SEMPRA ENERGY AND SUBSIDIARIES
SUMMARY UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENT OF INCOME
FOR YEAR ENDED DECEMBER 31, 1998
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
Revenue and other income................... $ 5,525 $ (500)(7) $ 5,025
Expenses................................... 4,874 (500)(7) 4,374
Trust preferred distributions by
subsidiaries.............................. 18 (3) 18
Preferred dividends by subsidiaries........ 12 12
------- ------- -------
Income before interest and income taxes.... 639 (18) 621
Interest................................... 207 43 (3) 250
Income taxes............................... 138 (24)(4) 114
------- ------- -------
Net Income............................... $ 294 $ (37) $ 257
======= ======= =======
Average common shares outstanding
(thousands):
Basic.................................... 236,423 (36,000)(5) 200,423
Diluted.................................. 237,124 (36,000)(5) 201,124
Earnings per common share:
Basic.................................... $ 1.24 $ 1.28
Diluted.................................. $ 1.24 $ 1.28
Dividends declared per common share........ $ 1.56 $ (0.56)(6) $ 1.00
Book value per common share................ $ 12.29 $ 10.89
Common shares outstanding.................. 236,956 (36,000)(5) 200,956
Ratio of earnings to fixed charges......... 2.73 2.19
</TABLE>
27
<PAGE>
NOTES TO SUMMARY UNAUDITED
CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(1) Represents the obligations incurred of $734 million from the issuance of
$500 million in senior notes (due in 10 years) at an assumed interest rate
of 8%, $200 million of trust preferred securities at an assumed
distribution rate of 9% and $34 million of commercial paper at an assumed
interest rate of 5.7%.
<TABLE>
<S> <C>
1(a) Issuance costs (annual amortization of debt issue
costs-$565,000).................................................. $ 10
1(b) Issuance of 5.7% commercial paper............................ $ 34
1(c) Issuance of 10 year 8% senior notes.......................... $500
1(d) Issuance of 9% trust preferred securities.................... $200
</TABLE>
(2) Represents the reacquisition for cash of 36,000,000 shares of Sempra common
stock at the assumed purchase price of $20 per share, the maximum price in
this offer. There can be no assurance that Sempra will repurchase
36,000,000 shares or that the shares will be repurchased at a price of $20.
<TABLE>
<S> <C>
36,000,000 shares redeemed at $20 per share......................... $720
Represents assumed costs of offer .................................. 4
----
Total............................................................. $724
====
</TABLE>
The allocation to retained earnings and common stock of the cost for the
reacquisition of shares is based on first eliminating the existing retained
earnings per share and then allocating the remainder to common stock.
(3) Represents the pro forma additional interest expense on the senior notes
($41 million annually) and the commercial paper ($2 million annually) and
the distributions on the trust preferred securities ($18 million annually).
A 1/8 percent change in the applicable rates would impact interest and
distributions by $1 million.
(4) Represents the tax benefit of the pro forma additional interest and trust
preferred distributions expense calculated based on Sempra's statutory
income tax rate of 40%.
(5) Represents the pro forma reduction in weighted average common shares
outstanding and in common shares outstanding.
(6) Represents the pro forma annualized dividend reduction authorized by the
Sempra Board of Directors on January 25, 2000. The quarterly dividend rate
is assumed to decrease from $0.39 per share to $0.25 per share. The annual
dividend rate is assumed to decrease from $1.56 per share to $1.00 per
share.
(7) Represents the reclassification of PX/ISO power to conform to Sempra's
current presentation.
Additional Information. Sempra is subject to the informational filing
requirements of the Exchange Act, and, accordingly, is obligated to file
reports, statements and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning Sempra's directors and officers, their remuneration, options
granted to them, the principal holders of Sempra's securities and any material
interest of these persons in transactions with Sempra is required to be
disclosed in proxy statements distributed to Sempra's shareholders and filed
with the SEC. Sempra also has filed an Issuer Tender Offer Statement on
Schedule TO with the SEC which includes certain additional information relating
to the offer. These reports, statements and other information can be inspected
and copied at the public reference facilities maintained by the SEC at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549; and at its regional
offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of this
material may also be obtained by mail, upon payment of the SEC's customary
charges, from the Public Reference Section of the SEC at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a web
site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. These reports, statements and other information
concerning Sempra also can be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York, 10005, on which the shares are
listed.
28
<PAGE>
Incorporation by Reference
The rules of the SEC allow us to "incorporate by reference" information into
this document, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. This offer
incorporates by reference the financial statements and the notes related
thereto contained in the documents listed below that have been previously filed
with the SEC. These documents contain important information about Sempra
Energy.
<TABLE>
<CAPTION>
Sec Filings (File No. 1-14201) Period
------------------------------ --------------------------------
<S> <C>
Annual Report on Form 10-K.................. Year ended December 31, 1998
Quarterly Report on Form 10-Q............... Quarter ended September 30, 1999
</TABLE>
11. Interests of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares.
As of January 25, 2000, Sempra had 240,345,446 issued and outstanding shares
and 8,647,907 shares reserved for issuance upon exercise of all outstanding
stock options. The 36,000,000 shares that Sempra is offering to purchase
represent approximately 15% of the shares outstanding on January 25, 2000.
As of January 25, 2000, Sempra's directors and executive officers as a group
(28 persons) beneficially owned less than 1% of the outstanding shares on that
date. Each of Sempra's executive officers and directors has advised Sempra that
he or she does not intend to tender any shares pursuant to the offer. If Sempra
purchases 36,000,000 shares pursuant to the offer, and none of the executive
officers or directors tender shares pursuant to the offer, then after the
purchase of shares pursuant to the offer, Sempra's executive officers and
directors as a group would continue to beneficially own less than 1% of the
shares outstanding immediately after the offer.
Based on Sempra's records and on information provided to Sempra by its
directors, executive officers, affiliates and subsidiaries, neither Sempra nor
any of its affiliates or subsidiaries nor, to the best of Sempra's knowledge,
any of the directors or executive officers of Sempra or any of its
subsidiaries, nor any associates or subsidiaries of any of the foregoing, has
effected any transactions involving the shares during the 60 days prior to
January 26, 2000, other than purchases of shares through reinvestment of
dividends under the Sempra Energy Direct Stock Purchase Plan and purchases for
the accounts of executive officers under Sempra's savings plans. Sempra expects
that the Sempra Energy Direct Stock Purchase Plan and Sempra's savings plans
will, in accordance with the terms of the plans, elections in effect and
present patterns of contribution, continue to purchase shares prior to the
expiration of the offer.
Except as otherwise described in this Offer to Purchase, neither Sempra nor,
to the best of Sempra's knowledge, any of its affiliates, directors or
executive officers, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
offer or with respect to any securities of Sempra, including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of the securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or
the giving or withholding of proxies, consents or authorizations.
12. Effects of the Offer on the Market for Shares; Registration Under the
Exchange Act.
Sempra's purchase of shares pursuant to the offer will reduce the number of
shares that might otherwise trade publicly and is likely to reduce the number
of shareholders. Nonetheless, Sempra anticipates that there
29
<PAGE>
will be a sufficient number of shares outstanding and publicly traded following
consummation of the offer to ensure a continued trading market for the shares.
Based upon published guidelines of the NYSE and the Pacific Stock Exchange,
Sempra does not believe that its purchase of shares pursuant to the offer will
cause Sempra's remaining shares to be delisted from the NYSE or the PSE.
The shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using the shares as collateral. Sempra
believes that, following the purchase of shares pursuant to the offer, the
shares will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin regulations.
The shares are registered under the Exchange Act, which requires, among
other things, that Sempra furnish information to its shareholders and to the
SEC and comply with the SEC's proxy rules in connection with meetings of
Sempra's shareholders. Sempra believes that its purchase of shares pursuant to
the offer will not result in the shares becoming eligible for deregistration
under the Exchange Act.
13. Certain Legal Matters; Regulatory Approvals.
Sempra is not aware of any license or regulatory permit that appears to be
material to Sempra's business that might be adversely affected by Sempra's
acquisition of shares as contemplated in this offer or of any approval or other
action by any government or governmental, administrative or regulatory
authority or agency, domestic, foreign or supranational, that would be required
for Sempra's acquisition or ownership of shares as contemplated by this offer.
Should any approval or other action be required, Sempra presently contemplates
that it will seek that approval or other action. Sempra cannot predict whether
it will be required to delay the acceptance for payment of or payment for
shares tendered pursuant to the offer pending the outcome of any such matter.
There can be no assurance that any approval or other action, if needed, would
be obtained or would be obtained without substantial conditions or that the
failure to obtain the approval or other action might not result in adverse
consequences to Sempra's business. Sempra's obligations under the offer to
accept for payment and pay for shares are subject to conditions. See Section 7.
14. Certain United States Federal Income Tax Consequences.
The following summary describes the principal United States federal income
tax consequences to United States Holders (as defined below) of an exchange of
shares for cash pursuant to the offer. Those shareholders who do not
participate in the exchange should not incur any United States federal income
tax liability from the exchange. This summary is based upon the Internal
Revenue Code of 1986, as amended to the date of this offer (the "Code"),
existing and proposed United States Treasury Regulations promulgated under the
Code, published rulings, administrative pronouncements and judicial decisions,
changes to which could affect the tax consequences described in this offer
(possibly on a retroactive basis).
This summary addresses only shares held as capital assets. It does not
address all of the tax consequences that may be relevant to particular
shareholders because of their personal circumstances, or to other types of
shareholders (such as certain financial institutions, dealers or traders in
securities or commodities, insurance companies, "S" corporations, expatriates,
tax-exempt organizations, Non-United States Holders (as defined below), persons
who are subject to alternative minimum tax, or persons who hold shares as a
position in a "straddle" or as part of a "hedging" or "conversion" transaction
or that have a functional currency other than the United States dollar). This
summary may not be applicable with respect to shares acquired as compensation
(including shares acquired upon the exercise of stock options or which were or
are subject to forfeiture restrictions). This summary also does not address the
state, local or foreign tax consequences of participating in the offer.
30
<PAGE>
You should consult your tax advisor as to the particular consequences to you
of participation in this offer.
A "United States Holder" is a holder of shares that for United States
federal income tax purposes is:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in or under the laws of
the United States or any State or the District of Columbia;
. an estate the income of which is subject to United States federal income
taxation regardless of its source; or
. a trust (a) the administration over which a United States court can
exercise primary supervision and (b) all of the substantial decisions of
which one or more United States persons have the authority to control and
certain other trusts considered United States Holders for federal income
tax purposes.
A "Non-United States Holder" is a holder of shares other than a United
States Holder.
An exchange of shares for cash pursuant to the offer will be a taxable
event. A United States Holder participating in the exchange will be treated
either as having sold shares or as having received a dividend distribution from
Sempra. A United States Holder's exchange of shares for cash pursuant to the
offer will be treated as a dividend to the extent of Sempra's current or
accumulated earnings and profits as determined under federal income tax
principles, unless the exchange:
. results in a "complete termination" of the holder's stock interest in
Sempra under section 302(b)(3) of the Code;
. is a "substantially disproportionate" redemption with respect to the
holder under section 302(b)(2) of the Code; or
. is "not essentially equivalent to a dividend" with respect to the holder
under section 302(b)(1) of the Code.
In determining whether any of these tests have been met, a United States
Holder must take into account not only shares it actually owns, but also shares
it constructively owns within the meaning of section 318 of the Code.
A distribution to a shareholder is "not essentially equivalent to a
dividend" if it results in a "meaningful reduction" in the shareholder's stock
interest in Sempra. If, as a result of an exchange of shares for cash pursuant
to the offer, a United States Holder of shares whose relative stock interest in
Sempra is minimal and who exercises no control over corporate affairs suffers a
reduction in its proportionate interest in Sempra (including any ownership of
preferred stock and any shares constructively owned), that United States Holder
should generally be regarded as having suffered a meaningful reduction in its
interest in Sempra. Satisfaction of the "complete termination" and
"substantially disproportionate" exceptions is dependent upon compliance with
the respective objective tests set forth in section 302(b)(3) and section
302(b)(2) of the Code. A distribution to a shareholder will result in a
"complete termination" if either (1) all of the shares actually and
constructively owned by the shareholder are exchanged pursuant to the offer or
(2) all of the shares actually owned by the shareholder are exchanged pursuant
to the offer and the shareholder is eligible to waive, and effectively waives,
the attribution of shares constructively owned by the shareholder in accordance
with the procedures described in section 302(c)(2) of the Code. A distribution
to a shareholder will be "substantially disproportionate" if the percentage of
the outstanding shares actually and constructively owned by the shareholder
immediately following the exchange of shares pursuant to the offer (treating
shares exchanged pursuant to the offer as outstanding) is less than 80% of the
percentage of the outstanding shares actually and constructively owned by the
shareholder immediately before the exchange (treating shares exchanged pursuant
to the offer as outstanding).
If an exchange of shares for cash by a United States Holder pursuant to the
offer is not treated as a distribution taxable as a dividend, the holder will
recognize capital gain or loss equal to the difference between
31
<PAGE>
the amount of cash received and the holder's adjusted tax basis in the shares
and in the associated preferred stock purchase rights, if any, tendered to
Sempra, except to the extent that the amount of cash received includes
dividends that have been declared by the Board of Directors of Sempra before
the exchange. The gain or loss would be long-term capital gain or loss if the
holding period for the shares exceeded one year.
If the amount received by a United States Holder in the offer is treated as
a distribution that is taxable as a dividend (as opposed to consideration
received in a sale or exchange), the amount of the distribution will be the
amount of cash received by the holder. The amount will be treated as a
dividend, taxable as ordinary income to the United States Holder, to the extent
of Sempra's current or accumulated earnings and profits as determined under
Federal income tax principles. To the extent that the amount of the
distribution exceeds Sempra's current and accumulated earnings and profits, the
excess first will be treated as a return of capital that will reduce the
holder's tax basis in the shares exchanged in the offer. Any remaining amount
after the United States Holder's basis has been reduced to zero will be taxable
as capital gain. The United States Holder's adjusted tax basis in its shares
exchanged in the offer generally will be transferred to any of its remaining
stockholdings in Sempra, subject to, in the case of corporate shareholders,
reduction or possible gain recognition under section 1059 of the Code in an
amount equal to the non-taxed portion of the dividend. If the United States
Holder does not retain any actual stock ownership in Sempra (having a stock
interest only constructively), the holder may lose the benefit of the holder's
adjusted tax basis in its shares. A dividend received by a corporate United
States Holder may be (1) eligible for a dividends-received deduction (subject
to applicable exceptions and limitations) and (2) subject to the "extraordinary
dividend" provisions of section 1059 of the Code. Corporate shareholders should
consult their own tax advisors regarding (1) whether a dividends-received
deduction will be available to them, and (2) the possible application of
section 1059 to the ownership and disposition of their shares.
See Section 3 with respect to the application of United States federal
income tax withholding to payments made to Non-United States Holders and the
backup withholding tax requirements.
The trusts under the various savings plans maintained by Sempra and its
affiliates are exempt from federal income taxation. Accordingly, such trusts
will not be taxable upon the receipt of any cash proceeds pursuant to the
offer.
The tax discussion set forth above is included for general information only.
You are urged to consult your tax advisor to determine the particular tax
consequences to you of the offer, including the applicability and effect of
state, local and foreign tax laws.
15. Extension of the Offer; Termination; Amendment.
Sempra expressly reserves the right, in its sole discretion, at any time and
from time to time, and regardless of whether or not any of the events set forth
in Section 7 have occurred or are deemed by Sempra to have occurred, to extend
the period of time the offer is open and delay acceptance for payment of, and
payment for, any shares by giving oral or written notice of the extension to
the Depositary and making a public announcement of the extension. Sempra also
expressly reserves the right, in its sole discretion, to terminate the offer
and reject for payment and not pay for any shares not theretofore accepted for
payment or paid for or, subject to applicable law, to postpone payment for
shares upon the occurrence of any of the conditions specified in Section 7 by
giving oral or written notice of the termination or postponement to the
Depositary and making a public announcement of the termination or postponement.
Sempra's reservation of the right to delay payment for shares which it has
accepted for payment is limited by Rule 13e-4(f)(5) under the Exchange Act,
which requires that Sempra must pay the consideration offered or return the
shares tendered promptly after termination or withdrawal of a tender offer.
Subject to compliance with applicable law, Sempra further reserves the right,
in its sole discretion, and regardless of whether any of the events set forth
in Section 7 have occurred or are deemed by Sempra to have occurred, to amend
the offer in any respect (including, without limitation, by decreasing or
increasing the consideration offered in the offer to holders of shares or by
decreasing or increasing the number of shares being sought in the offer).
Amendments to the offer may be made at any time and from time to time by public
announcement of the amendment. In the case of an extension, the amendment
32
<PAGE>
must be issued no later than 9:00 a.m., New York City time, on the next
business day after the last previously scheduled or announced Expiration Date.
Any public announcement made pursuant to the offer will be disseminated
promptly to shareholders in a manner reasonably designed to inform shareholders
of the change. Without limiting the manner in which Sempra may choose to make a
public announcement, except as required by applicable law, Sempra will have no
obligation to publish, advertise or otherwise communicate any public
announcement other than by issuing a press release to the Dow Jones News
Service.
If Sempra materially changes the terms of the offer or the information
concerning the offer, or if it waives a material condition of the offer, Sempra
will extend the offer to the extent required by Rules 13e-4(d)(2) and 13e-
4(e)(2) promulgated under the Exchange Act. These rules provide that the
minimum period during which an offer must remain open following material
changes in the terms of the offer or information concerning the offer (other
than a change in price or a change in percentage of securities sought) will
depend on the facts and circumstances, including the relative materiality of
the terms or information. If:
(1) Sempra increases or decreases the price to be paid for shares,
materially increases the Dealer Manager fee or increases or decreases
the number of shares being sought in the offer and, in the event of an
increase in the number of shares being sought, the increase exceeds 2%
of the outstanding shares, and
(2) the offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and
including, the date that notice of an increase or decrease is first
published, sent or given in the manner specified in this Section 15,
then in each case the offer will be extended until the expiration of the period
of ten business days. For purposes of the offer, a "business day" means any day
other than a Saturday, Sunday or Federal holiday and consists of the time
period from 12:01 am through 12:00 Midnight, New York City time.
16. Fees and Expenses.
Sempra has retained Goldman, Sachs & Co. to act as its financial advisor, as
well as the Dealer Manager, in connection with the offer. Goldman Sachs will
receive, for its services as Dealer Manager, a fee of $0.05 per share tendered
and purchased in the offer. Sempra also has agreed to reimburse Goldman Sachs
for reasonable out-of-pocket expenses incurred in connection with the offer,
including reasonable fees and expenses of counsel, and to indemnify Goldman
Sachs against liabilities in connection with the offer, including liabilities
under the federal securities laws. Goldman Sachs will also act as the lead
manager of the proposed underwritten public offerings of senior notes and trust
preferred securities, the net proceeds of which will be used to finance the
purchase of shares pursuant to this offer, for which Goldman Sachs will receive
reasonable and customary compensation.
Sempra has retained D. F. King & Co., Inc., to act as Information Agent and
First Chicago Trust Company of New York to act as Depositary in connection with
the offer. The Information Agent may contact holders of shares by mail,
telephone, telegraph and personal interviews and may request brokers, dealers
and other nominee shareholders to forward materials relating to the offer to
beneficial owners. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their respective services, will be
reimbursed by Sempra for reasonable out-of-pocket expenses and will be
indemnified against certain liabilities in connection with the offer, including
liabilities under the federal securities laws.
First Chicago Trust Company of New York acts as the administrator of the
Sempra Energy Direct Stock Purchase Plan. First Chicago Trust Company of New
York will receive reasonable and customary compensation for its services as
plan administrator in connection with the offer and will be reimbursed for
certain out-of-pocket costs.
T. Rowe Price Trust Company acts as directed trustee of Sempra's savings
plans and will carry out the instructions of participants in the plans as more
fully described in Section 3. T. Rowe Price Trust Company will be reimbursed
for certain out-of-pocket costs in connection with the offer.
33
<PAGE>
Sempra will not pay any fees or commissions to brokers, dealers or other
persons (other than fees to the Dealer Manager and the Information Agent as
described above) for soliciting tenders of shares pursuant to the offer.
Shareholders holding shares through brokers or banks are urged to consult the
brokers or banks to determine whether transaction costs may apply if
shareholders tender shares through the brokers or banks and not directly to the
Depositary. Sempra will, however, upon request, reimburse brokers, dealers and
commercial banks for customary mailing and handling expenses incurred by them
in forwarding the offer and related materials to the beneficial owners of
shares held by them as a nominee or in a fiduciary capacity. No broker, dealer,
commercial bank or trust company has been authorized to act as the agent of
Sempra, the Dealer Manager, the Information Agent or the Depositary for
purposes of the offer. Sempra will pay or cause to be paid all stock transfer
taxes, if any, on its purchase of shares except as otherwise provided in
Instruction 7 in the Letter of Transmittal.
17. Miscellaneous.
Sempra is not aware of any jurisdiction where the making of the offer is not
in compliance with applicable law. If Sempra becomes aware of any jurisdiction
where the making of the offer or the acceptance of shares pursuant to the offer
is not in compliance with any valid applicable law, Sempra will make a good
faith effort to comply with the applicable law. If, after a good faith effort,
Sempra cannot comply with the applicable law, the offer will not be made to,
nor will tenders be accepted from or on behalf of, the holders of shares
residing in that jurisdiction. In any jurisdiction where the securities, blue
sky or other laws require the offer to be made by a licensed broker or dealer,
the offer will be deemed to be made on Sempra's behalf by the Dealer Manager or
one or more registered brokers or dealers licensed under the laws of the
jurisdiction.
Pursuant to Rule 13e-4 promulgated under the Exchange Act, Sempra has filed
with the SEC an Issuer Tender Offer Statement on Schedule TO, which contains
additional information relating to the offer. The Schedule TO, including the
exhibits and any amendments thereto, may be examined, and copies may be
obtained, at the same places and in the same manner set forth in Section 10
with respect to information concerning Sempra.
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information or make any representation on behalf of Sempra in connection with
this offer other than those contained in this Offer to Purchase or in the
related Letter of Transmittal. If given or made, you should not rely on that
information or representation as having been authorized by Sempra.
Sempra Energy
January 26, 2000
34
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for shares and any other
required documents should be sent or delivered by each shareholder or the
shareholder's broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below. To confirm delivery of
shares, shareholders are directed to contact the Depositary.
The Depositary for the offer is:
First Chicago Trust Company of New York
<TABLE>
<CAPTION>
By Mail: By Overnight Delivery: By Hand Delivery:
<S> <C> <C>
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Corporate Actions, Suite Corporate Actions, Suite c/o Securities Transfer and
4660 4660
P.O. Box 2569 525 Washington Blvd., 3rd Reporting Services Inc.
Floor Attn: Corporate Actions
Jersey City, NJ 07303-2569 Jersey City, NJ 07310 100 William Street, Galleria
New York, NY 10038
</TABLE>
Facsimile Transmission:
(201) 324-3402
or
(201) 324-3403
Confirm Receipt of Facsimile by Telephone:
(201) 222-4707
You may request additional copies of this offer, the Letter of Transmittal
or the Notice of Guaranteed Delivery and direct questions and requests for
assistance to the Information Agent at its address and telephone number set
forth below.
The Information Agent for the offer is:
D. F. King & Co., Inc.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 431-9645
The Dealer Manager for the offer is:
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
(212) 902-1000 (Call Collect)
<PAGE>
Letter of Transmittal
To Tender Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Sempra Energy
Pursuant to the Offer to Purchase
Dated January 26, 2000
- -------------------------------------------------------------------------------
The offer, proration period and withdrawal rights will expire at 5:00 p.m.,
New York City time, on Friday, February 25, 2000, unless the offer is extended.
- -------------------------------------------------------------------------------
The Depositary for the offer is:
First Chicago Trust Company of New York
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand Delivery:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Corporate Actions, Suite 4660 Corporate Actions, Suite 4660 c/o Securities Transfer and
P.O. Box 2569 525 Washington Blvd., 3rd Floor Reporting Services Inc.
Jersey City, NJ 07303-2569 Jersey City, NJ 07310 Attn: Corporate Actions
100 William Street, Galleria
New York, NY 10038
</TABLE>
This Letter of Transmittal, including the accompanying instructions, should
be read carefully before this Letter of Transmittal is completed.
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of Registered Holder(s) Description of Shares Tendered
(Please fill in, if blank, exactly as name(s) appear(s) (Attach Additional Signed)
on Share Certificate(s)) List if Necessary)
- -------------------------------------------------------------------------------------------------------
Total Number of
Share Shares Evidenced Number
Certificate by Share of Shares
Number(s)* Certificate(s) Tendered**
<S> <C> <C> <C>
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Total Shares
</TABLE>
- --------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which shares are
to be purchased in event of proration.*** Attach additional signed list if
necessary. See Instruction 9.
1st: 2nd: 3rd: 4th: 5th:
- --------------------------------------------------------------------------------
* DOES NOT need to be completed by shareholders tendering shares by book-
entry transfer.
** Unless otherwise indicated, it will be assumed that all shares
evidenced by each certificate delivered to the Depositary are being
tendered hereby. See Instruction 4.
*** If you do not designate an order, in the event less than all shares
tendered are purchased due to proration, shares will be selected for
purchase by the Depositary.
<PAGE>
Delivery of this Letter of Transmittal to an address other than as set forth
above will not constitute a valid delivery. Deliveries to Sempra will not be
forwarded to the Depositary and therefore will not constitute valid delivery.
Deliveries to the Book-Entry Transfer Facility will not constitute valid
delivery to the Depositary.
This Letter of Transmittal is to be completed only if (a) certificates
representing shares are to be forwarded herewith, or (b) unless an Agent's
Message (as defined in the Offer to Purchase) is utilized, a tender of shares
is to be made concurrently by book-entry transfer to the account maintained by
the Depositary at The Depositary Trust Company (the "Book-Entry Transfer
Facility") pursuant to Section 3 of the Offer to Purchase. Shareholders who
desire to tender shares pursuant to the offer, but whose share certificates are
not immediately available or who cannot deliver the certificates and all other
documents required by this Letter of Transmittal to the Depositary on or before
the Expiration Date (as defined in the Offer to Purchase), or who cannot comply
with the procedure for book-entry transfer on a timely basis, may nevertheless
tender their shares pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. See Instruction 2.
This Letter of Transmittal may NOT be used for shares held in the Sempra
Energy Savings Plan, Sempra Energy Trading Retirement Savings Plan, Southern
California Gas Company Retirement Savings Plan, San Diego Gas & Electric
Company Savings Plan or the Sempra Energy Services Savings Plan. See
Instruction 18. Participants in these plans must follow the instructions in the
"Letter to Participants in the Sempra Energy and Subsidiary Savings Plans" and
related materials sent to them separately. T. Rowe Price Trust Company, the
trustee for Sempra's savings plans, will submit one Letter of Transmittal for
each such plan on behalf of all of the tendering participants in each savings
plan.
If a participant in Sempra's savings plans owns shares apart from those
plans that he or she desires to tender, such holder must both submit this
Letter of Transmittal to tender the non-savings plan shares, and follow the
instructions described in the "Letter to Participants in the Sempra Energy and
Subsidiary Savings Plans" and related materials sent to them separately to
tender shares attributable to their savings plan account.
IF YOU ARE A PARTICIPANT IN THE SEMPRA ENERGY DIRECT STOCK PURCHASE PLAN,
THE NUMBER OF SHARES ON THE LABEL AFFIXED TO THIS LETTER OF TRANSMITTAL
INCLUDES SHARES HELD BY YOU IN THE SEMPRA ENERGY DIRECT STOCK PURCHASE PLAN, IF
ANY, AT JANUARY 21, 2000. ADDITIONAL SHARES MAY HAVE BEEN CREDITED AFTER THIS
DATE, INCLUDING SHARES PURCHASED WITH THE DIVIDEND PAID ON JANUARY 15, 2000. IN
ORDER TO TENDER ALL OR PART OF THE SHARES YOU HOLD IN THE SEMPRA ENERGY DIRECT
STOCK PURCHASE PLAN, YOU MUST CHECK ONE OF THE BOXES BELOW.
Sempra Energy Direct Stock Purchase Plan
(See Instruction 17)
This section is to be completed ONLY by participants in the Sempra Energy
Direct Stock Purchase Plan who wish to tender shares held in the plan.
<TABLE>
<C> <S>
[_] Check here to instruct the Depositary to tender on your behalf ALL of the
shares credited to your Sempra Energy Direct Stock Purchase Plan account
(including any shares purchased after January 21, 2000 and credited to
such account, which are not reflected on the Pre-Addressed Label).
[_] Check here to instruct the Depositary to tender on your behalf the
following number of shares credited to your Sempra Energy Direct Stock
Purchase Plan account: shares.
</TABLE>
2
<PAGE>
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF
NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES.
Shares Tendered at Price Determined by Shareholder
(See Instruction 5)
By checking ONE of the following boxes below INSTEAD OF THE BOX UNDER
"SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE OFFER," the undersigned
hereby tenders shares at the price checked. This action could result in none of
the shares being purchased if the purchase price determined by Sempra for the
shares is less than the price checked below. A shareholder who desires to
tender shares at more than one price must complete a separate Letter of
Transmittal for each price at which shares are tendered. The same shares cannot
be tendered at more than one price.
Price (In Dollars) per Share at Which Shares Are Being Tendered
<TABLE>
<S> <C> <C>
[_] $17.500 [_] $18.375 [_] $19.250
[_] $17.625 [_] $18.500 [_] $19.375
[_] $17.750 [_] $18.625 [_] $19.500
[_] $17.875 [_] $18.750 [_] $19.675
[_] $18.000 [_] $18.875 [_] $19.750
[_] $18.125 [_] $19.000 [_] $19.875
[_] $18.250 [_] $19.125 [_] $20.000
</TABLE>
Shares Tendered at Price Determined Pursuant to the Offer
(See Instruction 5)
<TABLE>
<C> <S>
[_] The undersigned wants to maximize the chance of having Sempra purchase all
of the shares the undersigned is tendering (subject to the possibility of
proration). Accordingly, by checking this ONE BOX INSTEAD OF ONE OF THE
PRICE BOXES ABOVE, the undersigned hereby tenders shares and is willing to
accept the purchase price determined by Sempra in accordance with the
terms of the offer. This action could result in receiving a price per
share of as low as 17.50.
</TABLE>
ODD LOTS
(See Instruction 8)
To be completed ONLY if shares are being tendered by or on behalf of a
person owning, beneficially or of record, an aggregate of fewer than 100 shares
(not including any shares held in the Sempra Energy Direct Stock Purchase Plan
or in one of Sempra's savings plans). The undersigned either (check one box):
<TABLE>
<C> <S>
[_] is the beneficial or record owner of an aggregate of fewer than 100
shares, all of which are being tendered; or
[_] is a broker, dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s), shares with respect to which
it is the record holder, and (b) believes, based upon representations made
to it by the beneficial owner(s), that each such person is the beneficial
owner of an aggregate of fewer than 100 shares and is tendering all of the
shares.
</TABLE>
In addition, the undersigned is tendering shares either (check one box):
<TABLE>
<C> <S>
[_] at the purchase price, as the same will be determined by Sempra in
accordance with the terms of the offer (persons checking this box need not
indicate the price per share above); or
[_] at the price per share indicated above under "Price (In Dollars) per Share
at Which Shares Are Being Tendered."
</TABLE>
3
<PAGE>
CONDITIONAL TENDER
(See Instruction 16)
A tendering shareholder may condition his or her tender of shares upon
Sempra purchasing a specified minimum number of the shares tendered, all as
described in the Offer to Purchase, particularly in Section 6. Unless at least
that minimum number of shares you indicate below is purchased by Sempra
pursuant to the terms of the offer, none of the shares tendered will be
purchased. It is the tendering shareholder's responsibility to calculate that
minimum number of shares that must be purchased if any are purchased, and each
shareholder is urged to consult his or her own tax advisor. Unless this box has
been checked and a minimum specified, the tender will be deemed unconditional.
<TABLE>
<C> <S>
[_] Minimum number of shares that must be purchased, if any are
purchased: _______________________________________ shares.
</TABLE>
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Sempra may terminate or amend the offer or may postpone
the acceptance for payment of, or the payment for, shares tendered or may
accept for payment fewer than all of the shares tendered. In any event, the
undersigned understands that certificate(s) for any shares not tendered or not
purchased will be returned to the undersigned at the address indicated above,
unless otherwise indicated under the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" below.
The undersigned understands that acceptance of shares by Sempra for payment
will constitute a binding agreement between the undersigned and Sempra upon the
terms and subject to the conditions of the offer.
The check for the aggregate net purchase price for the shares tendered and
purchased will be issued to the order of the undersigned and mailed to the
address indicated above, unless otherwise indicated under the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" below. The undersigned acknowledges that Sempra has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
shares from the name of its registered holder(s), or to order the registration
or transfer of any shares tendered by book-entry transfer, if Sempra does not
purchase any of the shares.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 6, 7 and (See Instructions 1, 6, 7 and
10.) 10.)
To be completed ONLY if certif- To be completed ONLY if
icate(s) for shares not tendered certificate(s) for shares not
or not purchased and/or any check tendered or not purchased and/or
for the purchase price are to be any check for the purchase price
issued in the name of someone are to be mailed or sent to
other than the undersigned, or if someone other than the
shares tendered hereby and deliv- undersigned, or to the
ered by book-entry transfer which undersigned at an address other
are not purchased are to be re- than that designated above.
turned by credit to an account at
the Book-Entry Transfer Facility
other than that designated above.
Mail:[_] Check
[_] Share Certificate(s)
to:
Issue:[_] Check
[_] Share Certificate(s) to: Name: ____________________________
(Please Print)
Name: ____________________________ Address: _________________________
__________________________________
---------------------------------- (Include Zip Code)
(Please Print)
Address: _________________________
----------------------------------
(Include Zip Code)
----------------------------------
(Tax Identification or Social
Security Number)
(See Substitute Form W-9 on
reverse side)
[_]Credit shares delivered by
book-entry transfer and not
purchased to the account set
forth below:
Account Number: __________________
5
<PAGE>
[_] Check here if any certificate representing shares tendered hereby has been
lost, stolen, destroyed or mutilated and completely fill in the remainder
of this page.
AFFIDAVIT OF LOST OR DESTROYED CERTIFICATE(S)
THIS AFFIDAVIT CAN ONLY BE USED UNTIL MARCH 15, 2000. AFTER MARCH 15, 2000
PLEASE CALL FIRST CHICAGO TRUST COMPANY OF NEW YORK AT (877) 773-6772.
If you have lost certificates valued at $100,000 or more, or if these
certificates are part of an estate or trust, please call First Chicago Trust
Company of New York at (877) 773-6772 for additional instructions.
Complete this form only if you cannot locate some or all of your Sempra
Energy common stock certificate(s). Please print clearly.
Taxpayer ID: _____________________ Total Shares LOST: ______________
Name: ____________________________ ---------------------------------
Please Fill in
Certificate No(s). if Number of Shares
Known of Common Stock
---------------------------------
Address: _________________________
---------------------------------
City: ____________________________
---------------------------------
State: __________ Zip: ___________ ---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Attach separate schedule if
needed
---------------------------------
State of ________________________
County of _______________________
---------------------------------
SEE BELOW TERMS AND CONDITIONS
FOR SHAREOWNER LOST CERTIFICATE REPLACEMENTS UNDER $100,000
X Signed by Affiant (shareholder) on this (date)
(Deponent) (Indemnitore) (Heirs Individually)
Month/Day/Year
Replacement Insurance Premium Calculation for lost common stock certificates.
<TABLE>
<S> <C> <C> <C> <C>
X $0.35 =
--------------- --- --------------------------- --- -------------------
SHARES LOST INSURANCE PREMIUM PER SHARE TOTAL PREMIUM DUE
</TABLE>
Please make your check payable to General Insurance Company of America
and enclose it with this Letter of Transmittal.
TERMS AND CONDITIONS FOR SHAREHOLDER LOST CERTIFICATE REPLACEMENTS UNDER
$100,000
By signing this form above, I certify that I am the lawful owner of the
shares described on the front of this form, that these shares have not been
pledged or endorsed and that no other person, firm, corporation, agency or
government has asserted any right or title, claim equity or interest in this
(these) certificate(s). I have made a diligent search for the certificate(s),
and I have been unable to find it (them). I hereby agree (for myself, my
heirs, assigns and personal representatives), in consideration of the exchange
of the shares represented by certificate(s), to completely indemnify, protect
and hold harmless General Insurance Company of America, Sempra Energy, First
Chicago Trust Company of New York, and their respective affiliates
collectively, from and against any and all losses, costs and damages which
they may be subject to, or liable for, as a result of the action taken in
honoring the affidavit provided. I agree that this form is attached to and
made part of Blanket Bond Number 5679830 underwritten by General Insurance
Company of America to protect the foregoing, Sempra Energy and First Chicago
Trust Company of New York. I agree to surrender the certificate(s) for its
(their) cancellation if I find it (them) at any time.
6
<PAGE>
<TABLE>
<C> <S>
[_] Check here if tendered shares are being delivered by book-entry transfer
to an account maintained by the Depositary at the Book-Entry Transfer
Facility and complete the following:
</TABLE>
Name of Tendering Institution: ______________________________________________
Account No.: ________________________________________________________________
Transaction Code No.: _______________________________________________________
<TABLE>
<C> <S>
[_] Check here if shares are being tendered pursuant to a notice of guaranteed
delivery previously sent to the Depositary and complete the following:
</TABLE>
Name(s) of Registered Holder(s): ____________________________________________
Date of execution of Notice of Guaranteed Delivery: _________________________
Name of Institution that Guaranteed Delivery: _______________________________
Window Ticket Number (if any): ______________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
To First Chicago Trust Company of New York:
The undersigned hereby tenders to Sempra Energy, a California corporation,
the above-described shares of Sempra's common stock, without par value, at the
price per share indicated in this Letter of Transmittal, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated January 26, 2000, receipt of which is hereby
acknowledged, and in this Letter of Transmittal which, as amended or
supplemented from time to time, together constitute the offer. All shares
tendered and purchased will include the associated preferred stock purchase
rights issued pursuant to a Rights Agreement dated as of May 26, 1998 between
Sempra and First Chicago Trust Company of New York, as rights agent, and,
unless the context otherwise requires, all references to shares include the
associated preferred stock purchase rights.
Subject to, and effective upon, acceptance for payment of the shares
tendered in accordance with the terms and subject to the conditions of the
offer, including, if the offer is extended or amended, the terms and conditions
of the extension or amendment, the undersigned sells, assigns and transfers to,
or upon the order of, Sempra all right, title and interest in and to all shares
tendered and orders the registration of all shares if tendered by book-entry
transfer and irrevocably constitutes and appoints the Depositary as the true
and lawful agent and attorney-in-fact of the undersigned with respect to the
shares with full knowledge that the Depositary also acts as the agent of
Sempra, with full power of substitution (the power of attorney being deemed to
be an irrevocable power coupled with an interest), to:
(a) deliver certificate(s) representing the shares or transfer ownership
of the shares on the account books maintained by the Book-Entry Transfer
Facility, together, in either case, with all accompanying evidences of
transfer and authenticity, to or upon the order of Sempra upon receipt by
the Depositary, as the undersigned's agent, of the purchase price with
respect to the shares;
(b) present certificates for the shares for cancellation and transfer on
Sempra's books; and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of the shares, subject to the next paragraph, all in accordance
with the terms and subject to the conditions of the offer.
7
<PAGE>
The undersigned covenants, represents and warrants to Sempra that:
(1) the undersigned has full power and authority to tender, sell, assign
and transfer the shares tendered hereby and when and to the extent accepted
for payment, Sempra will acquire good, marketable and unencumbered title to
the tendered shares, free and clear of all security interests, liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer of the shares, and not subject
to any adverse claims;
(2) the undersigned understands that tenders of shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions will constitute the undersigned's acceptance of the
terms and conditions of the offer, including the undersigned's
representation and warranty that (i) the undersigned has a "net long
position," within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, in the shares or equivalent securities at
least equal to the shares being tendered, and (2) the tender of shares
complies with Rule 14e-4;
(3) the undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or Sempra to be necessary or
desirable to complete the sale, assignment and transfer of the shares
tendered; and
(4) the undersigned has read, understands and agrees to all of the terms
of the offer.
The undersigned understands that tenders of shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions will constitute a binding agreement between the undersigned and
Sempra upon the terms and subject to the conditions of the offer. The
undersigned acknowledges that under no circumstances will Sempra pay interest
on the purchase price, including without limitation, by reason of any delay in
making payment.
All authority conferred or agreed to be conferred will survive the death or
incapacity of the undersigned, and any obligation of the undersigned will be
binding on the heirs, personal representatives, executors, administrators,
successors, assigns, trustees in bankruptcy and legal representatives of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed,
if they are not already printed above, exactly as they appear on the
certificates representing shares tendered. The certificate numbers, the number
of shares represented by the certificates and the number of shares that the
undersigned wishes to tender, should be set forth in the appropriate boxes
above. The price at which the shares are being tendered should be indicated in
the box below.
The undersigned understands that Sempra will determine a single per share
price, not in excess of $20.00 nor less than $17.50, that it will pay for
shares properly tendered, taking into account the number of shares tendered and
the prices specified by tendering shareholders. All shares acquired in the
offer will be acquired at the same purchase price. Sempra will select the
lowest purchase price that will allow it to buy 36,000,000 shares or, if a
lesser number of shares are properly tendered, all shares that are properly
tendered. All shares properly tendered at prices at or below the purchase price
and not properly withdrawn will be purchased, subject to the conditions of the
offer and the "odd lot" priority, proration and conditional tender provisions
described in the Offer to Purchase. Shares tendered at prices in excess of the
purchase price that is determined by Sempra and shares not purchased because of
proration or conditional tenders will be returned.
8
<PAGE>
IMPORTANT
SHAREHOLDERS SIGN HERE
(Please Complete and Return the Attached Substitute Form W-9.)
(Must be signed by the registered holder(s) exactly as such holder(s) name(s)
appear(s) on certificate(s) for shares or on a security position listing or
by person(s) authorized to become the registered holder(s) thereof by
certificates and documents transmitted with this Letter of Transmittal. If
signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 6.)
Signature(s) of Owner(s): ____________________________________________________
Dated: , 2000
Name(s): _____________________________________________________________________
(Please Print)
Capacity (full title): _______________________________________________________
Address: _____________________________________________________________________
(Include Zip Code)
Daytime Area Code and Telephone Number: ______________________________________
Taxpayer Identification or
Social Security Number: ______________________________________________________
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 6)
Authorized Signature: ________________________________________________________
Name: ________________________________________________________________________
(Please Print)
Title: _______________________________________________________________________
Name of Firm: ________________________________________________________________
Address: _____________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number: ______________________________________________
Dated: , 2000
9
<PAGE>
PAYER: FIRST CHICAGO TRUST COMPANY OF NEW YORK
Part 1--Taxpayer
Identification Number-for ----------------------
all accounts, enter
taxpayer identification
number in the box at right
and certify by signing and
dating below.
SUBSTITUTE Social Security Number
Form W-9 OR
Department of
the Treasury ----------------------
Internal Employer Identification
Revenue Number TIN
Service
Note: If the account is in
more than one name, see the
chart in the enclosed
Guidelines to determine
which number to give the
payer.
--------------------------------------------------------
Part 2--For payees exempt from backup withholding,
please write "EXEMPT" here (see the enclosed
Guidelines):
Payer's Request --------------------------------------------------------
for Taxpayer Part 3--Certification--UNDER PENALTIES OF PERJURY, I
CERTIFY THAT (1) The number shown on this form is my
correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me), and (2) I
am not subject to backup withholding because: (a) I
am exempt from backup withholding, or (b) I have not
been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a
result of a failure to report all interest or
dividends or (c) the IRS has notified me that I am no
longer subject to backup withholding.
Identification
Number (TIN)
--------------------------------------------------------
Certification Instructions--You must cross out item
(2) above if you have been notified by the IRS that
you are currently subject to backup withholding
because of underreporting interest or dividends on
your tax return and you have not been notified by the
IRS that you are no longer subject to backup
withholding. (Also, see instructions in the enclosed
Guidelines.)
Signature _______________________ Date ________, 2000
NOTE: Failure to complete and return this form may result in backup withholding
of 31% of any payments made to you pursuant to the offer. Please review
the enclosed guidelines for certification of taxpayer identification
number on Substitute Form W-9 for additional details. You must complete
the following certificate if you are awaiting (or will soon apply for) a
taxpayer identification number.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and that I mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
(or I intend to mail or deliver an application in the near future). I
understand that, notwithstanding the information I provided in Part 3 of
the Substitute Form W-9 above (and the fact that I have completed this
Certificate of Awaiting Taxpayer Identification Number), if I do not
provide a taxpayer identification number to the Depositary within sixty
(60) days, the Depositary is required to withhold 31% of all cash payments
made to me thereafter until I provide a number.
Signature _________________________________________________ Date: , 2000
Name (Please Print) ________________________________________________________
Address (Please Print) _____________________________________________________
10
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer.
1. Guarantee of Signatures. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of the
shares (which term, for these purposes, includes any participant in the Book-
Entry Transfer Facility whose name appears on a security position listing as
the owner of the shares) tendered exactly as the name of the registered holder
appears on the certificate(s) for the shares tendered with this Letter of
Transmittal and payment and delivery are to be made directly to the owner
unless the owner has completed either the box entitled "Special Payment
Instructions" or "Special Delivery Instructions" above; or
(b) the shares are tendered for the account of a bank, broker, dealer,
credit union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank,
broker, dealer, credit union, savings association or other entity which is an
"eligible guarantor institution," as that term is defined in Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended (each of the
foregoing constituting an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 6.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed only if certificates
for shares are delivered with it to the Depositary (or the certificates will
be delivered pursuant to a Notice of Guaranteed Delivery previously sent to
the Depositary) or if a tender for shares is being made concurrently pursuant
to the procedure for tender by book-entry transfer set forth in Section 3 of
the Offer to Purchase. Certificates for all physically tendered shares or
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of shares tendered electronically, together in
each case with a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile of the Letter of Transmittal), or an Agent's
Message, and any other documents required by this Letter of Transmittal,
should be mailed or delivered to the Depositary at the appropriate address set
forth in this document and must be delivered to the Depositary on or before
the Expiration Date. Delivery of documents to the Book-Entry Transfer Facility
in accordance with the Book-Entry Transfer Facility's procedures does not
constitute delivery to the Depositary.
Shareholders whose certificates are not immediately available or who cannot
deliver certificates for their shares and all other required documents to the
Depositary before the Expiration Date, or whose shares cannot be delivered on
a timely basis pursuant to the procedures for book-entry transfer, must, in
any case, tender their shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery (or facsimile of the Notice of Guaranteed Delivery) and by otherwise
complying with the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. Pursuant to that procedure, certificates for all physically
tendered shares or book-entry confirmations, as the case may be, as well as
this properly completed and duly executed Letter of Transmittal (or manually
signed facsimile of this Letter of Transmittal), or an Agent's Message, and
all other documents required by this Letter of Transmittal, must be received
by the Depositary within three (3) New York Stock Exchange trading days after
receipt by the Depositary of the Notice of Guaranteed Delivery, all as
provided in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include
a signature guarantee by an Eligible Institution in the form set forth
therein. For shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
The method of delivery of all documents, including certificates for shares,
is at the option and risk of the tendering shareholder. If delivery is by
mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to assure
delivery.
11
<PAGE>
Except as specifically permitted by Section 6 of the Offer to Purchase,
Sempra will not accept any alternative, conditional or contingent tenders, nor
will it purchase any fractional shares, except as expressly provided in the
Offer to Purchase. All tendering shareholders, by execution of this Letter of
Transmittal (or a facsimile of this Letter of Transmittal), waive any right to
receive any notice of the acceptance of their tender.
3. Inadequate Space. If the space provided in the box entitled "Description
of Shares Tendered" above is inadequate, the certificate numbers and/or the
number of shares should be listed on a separate signed schedule and attached to
this Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to shareholders
who tender by book-entry transfer.) If fewer than all of the shares evidenced
by any certificate are to be tendered, fill in the number of shares that are to
be tendered in the column entitled "Number of Shares Tendered" in the box
entitled "Description of Shares Tendered" above. In that case, if any tendered
shares are purchased, a new certificate for the remainder of the shares
(including any shares not purchased) evidenced by the old certificate(s) will
be issued and sent to the registered holder(s), unless otherwise specified in
either the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" in this Letter of Transmittal, as soon as
practicable after the Expiration Date. Unless otherwise indicated, all shares
represented by the certificate(s) set forth above and delivered to the
Depositary will be deemed to have been tendered.
5. Indication of Price at Which Shares are Being Tendered. For shares to be
properly tendered, the shareholder MUST either (1) check the box next to the
section captioned "Shares Tendered at Price Determined Pursuant to the Offer"
in this Letter of Transmittal or (2) check one of the boxes in the section
captioned "Price (in dollars) per Share at Which Shares Are Being Tendered" in
this Letter of Transmittal indicating the price at which the shareholder is
tendering shares. Only one box may be checked. If more than one box is checked
or if no box is checked, there is no proper tender of shares. A shareholder
wishing to tender a portion(s) of the holder's shares at different prices must
complete a separate Letter of Transmittal for each price at which the holder
wishes to tender each portion of the holder's shares. The same shares cannot be
tendered (unless previously properly withdrawn as provided in Section 4 of the
Offer to Purchase) at more than one price.
6. Signatures on Letter Of Transmittal; Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the shares tendered, the signature(s) must correspond exactly with the name(s)
as written on the face of the certificate(s) without any change whatsoever.
(b) If the shares tendered are registered in the names of two or more joint
holders, each holder must sign this Letter of Transmittal.
(c) If any tendered shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimile) as there are different
registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered holder(s) of
the shares tendered, no endorsement(s) of certificate(s) representing the
shares or separate stock power(s) are required unless payment is to be made or
the certificate(s) for shares not tendered or not purchased are to be issued to
a person other than the registered holder(s). Signature(s) on the
certificate(s) must be guaranteed by an Eligible Institution. If this Letter of
Transmittal is signed by a person other than the registered holder(s) of the
certificate(s) listed, or if payment is to be made or certificate(s) for shares
not tendered or not purchased are to be issued to a person other than the
registered holder(s), the certificate(s) must be endorsed or accompanied by
appropriate stock power(s), in either case signed exactly as the name(s) of the
registered holder(s) appears on the certificate(s), and the signature(s) on the
certificate(s) or stock power(s) must be guaranteed by an Eligible Institution.
See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock power(s) is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or any other person acting in a fiduciary or
representative capacity, that person should so indicate when signing this
Letter of Transmittal and must submit proper evidence satisfactory to Sempra of
his or her authority to so act.
12
<PAGE>
7. Stock Transfer Taxes. Except as provided in this Instruction 7, no stock
transfer tax stamps or funds to cover tax stamps need accompany this Letter of
Transmittal. Sempra will pay any stock transfer taxes payable on the transfer
to it of shares purchased pursuant to the offer. If, however, either (a)
payment of the purchase price for shares tendered and accepted for purchase is
to be made to any person other than the registered holder(s); or (b) shares not
tendered or rejected for purchase are to be registered in the name(s) of any
person(s) other than the registered holder(s); or (c) certificate(s)
representing tendered shares are registered in the name(s) of any person(s)
other than the person(s) signing this Letter of Transmittal, then the
Depositary will deduct from the purchase price the amount of any stock transfer
taxes (whether imposed on the registered holder(s), other person(s) or
otherwise) payable on account of the transfer to that person, unless
satisfactory evidence of the payment of the taxes or any exemption therefrom is
submitted.
8. Odd Lots. As described in Section 1 of the Offer to Purchase, if Sempra
is to purchase fewer than all shares tendered before the Expiration Date and
not properly withdrawn, the shares purchased first will consist of all shares
properly tendered by any shareholder who owned, beneficially or of record, an
aggregate of fewer than 100 shares (not including any shares held in the Sempra
Energy Direct Stock Purchase Plan or in one of Sempra's savings plans), and who
tenders all of the holder's shares at or below the purchase price (an "Odd Lot
Holder"). This preference will not be available unless the section captioned
"Odd Lots" is completed.
9. Order of Purchase in Event of Proration. As described in Section 1 of the
Offer to Purchase, shareholders may designate the order in which their shares
are to be purchased in the event of proration. The order of purchase may have
an effect on the federal income tax treatment of the purchase price for the
shares purchased. See Sections 1 and 14 of the Offer to Purchase.
10. Special Payment and Delivery Instructions. If certificate(s) for shares
not tendered or not purchased and/or check(s) are to be issued in the name of a
person other than the signer of this Letter of Transmittal or if the
certificates and/or checks are to be sent to someone other than the person
signing this Letter of Transmittal or to the signer at a different address, the
box entitled "Special Payment Instructions" and/or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal should be completed as
applicable and signatures must be guaranteed as described in Instruction 1.
11. Irregularities. All questions as to the number of shares to be accepted,
the price to be paid for the shares and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of shares
will be determined by Sempra in its sole discretion, which determination will
be final and binding on all parties. Sempra reserves the absolute right to
reject any or all tenders of shares it determines not to be in proper form or
the acceptance of which or payment for which may, in the opinion of Sempra's
counsel, be unlawful. Sempra also reserves the absolute right to waive any of
the conditions of the offer or any defect or irregularity in any tender with
respect to any particular shares or any particular shareholder, and Sempra's
interpretation of the terms of the offer (including these Instructions) will be
final and binding on all parties. No tender of shares will be deemed to be
properly made until all defects and irregularities have been cured by the
tendering shareholder or waived by Sempra. Unless waived, any defects or
irregularities in connection with tenders must be cured within that time as
Sempra will determine. None of Sempra, the Dealer Manager (as defined in the
Offer to Purchase), the Depositary, the Information Agent (as defined in the
Offer to Purchase) or any other person is or will be obligated to give notice
of any defects or irregularities in tenders and none of them will incur any
liability for failure to give any notice of defect or irregularity.
12. Questions and Requests for Assistance and Additional Copies. You may
request additional copies of this Offer to Purchase, the Letter of Transmittal
or the Notice of Guaranteed Delivery from the Information Agent at its address
and telephone numbers set forth on the back cover of the Offer to Purchase.
13. Tax Identification Number and Backup Withholding. Federal income tax law
generally requires that a shareholder whose tendered shares are accepted for
purchase, or the shareholder's assignee (in either case, the "Payee"), provide
the Depositary with the Payee's correct Taxpayer Identification Number ("TIN"),
which, in the case of a Payee who is an individual, is the Payee's social
security number. If the Depositary is not provided with the correct TIN or an
adequate basis for an exemption, the Payee may be subject to penalties imposed
by the Internal Revenue Service and backup withholding in an amount equal to
31% of the gross proceeds received pursuant to the offer. If withholding
results in an overpayment of taxes, a refund may be obtained.
13
<PAGE>
To prevent backup withholding, each Payee must provide the Payee's correct
TIN by completing the Substitute Form W-9 set forth in this document,
certifying that the TIN provided is correct (or that the Payee is awaiting a
TIN) and that (i) the Payee is exempt from backup withholding, (ii) the Payee
has not been notified by the Internal Revenue Service that the Payee is subject
to backup withholding as a result of a failure to report all interest or
dividends, or (iii) the Internal Revenue Service has notified the Payee that
the Payee is no longer subject to backup withholding.
If the Payee lacks a TIN, the Payee should (i) consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 ("W-9 Guidelines") for instructions on applying for a TIN, (ii) write
"Applied For" in the space provided in Part 1 of the Substitute Form W-9, and
(iii) sign and date the Substitute Form W-9 and the Certificate of Awaiting
Taxpayer Identification Number set forth in this document. If the Payee does
not provide the Payee's TIN to the Depositary within sixty (60) days, backup
withholding will begin and continue until the Payee furnishes the Payee's TIN
to the Depositary. Note that writing "Applied For" on the Substitute Form W-9
means that the Payee has already applied for a TIN or that the Payee intends to
apply for one in the near future.
If shares are held in more than one name or are not in the name of the
actual owner, consult the W-9 Guidelines for information on which TIN to
report.
Exempt Payees (including, among others, all corporations and certain foreign
individuals) are not subject to backup withholding and reporting requirements.
To prevent possible erroneous backup withholding, an exempt Payee should write
"Exempt" in Part 2 of the Substitute Form W-9. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on the Substitute Form W-9 for
additional instructions. In order for a nonresident alien or foreign entity to
qualify as exempt, that person must submit a completed IRS Form W-8 Certificate
of Foreign Status or a Substitute Form W-8, signed under penalty of perjury
attesting to the exempt status. This form may be obtained from the Depositary.
14. Withholding For Non-United States Shareholders. Even if a Non-United
States Shareholder (as defined below) has provided the required certification
to avoid backup withholding, the Depositary will withhold United States federal
income taxes equal to 30% of the gross payments payable to a Non-United States
Shareholder or the holder's agent unless the Depositary determines that a
reduced rate of withholding is available pursuant to a tax treaty or that an
exemption from withholding is applicable because the gross proceeds are
effectively connected with the conduct of a trade or business within the United
States. For this purpose, a "Non-United States Shareholder" is any shareholder
that for United States federal income tax purposes is not (i) a citizen or
resident of the United States, (ii) a corporation or partnership created or
organized in or under the laws of the United States or any State or the
District of Columbia, (iii) an estate the income of which is subject to United
States federal income taxation regardless of the source of that income, or (iv)
a trust (a) the administration over which a United States court can exercise
primary supervision and (b) all of the substantial decisions of which one or
more United States persons have the authority to control. Notwithstanding the
foregoing, to the extent provided in United States Treasury Regulations,
certain trusts in existence on August 20, 1996, and treated as United States
persons before that date, that elect to continue to be treated as United States
persons also will not be Non-United States Shareholders. In order to obtain a
reduced rate of withholding pursuant to a tax treaty, a Non-United States
Shareholder must deliver to the Depositary before the payment a properly
completed and executed IRS Form 1001. In order to obtain an exemption from
withholding on the grounds that the gross proceeds paid pursuant to the offer
are effectively connected with the conduct of a trade or business within the
United States, a Non-United States Shareholder must deliver to the Depositary a
properly completed and executed IRS Form 4224. The Depositary will determine a
shareholder's status as a Non-United States Shareholder and eligibility for a
reduced rate of, or an exemption from, withholding by reference to outstanding
certificates or statements concerning eligibility for a reduced rate of, or
exemption from, withholding (e.g., IRS Form 1001 or IRS Form 4224) unless facts
and circumstances indicate that reliance is not warranted. A Non-United States
Shareholder may be eligible to obtain a refund of all or a portion of any tax
withheld if the Non-United States Shareholder meets those tests described in
Section 14 of the Offer to Purchase that would characterize the exchange as a
sale (as opposed to a dividend) or is otherwise able to establish that no tax
or a reduced amount of tax is due.
Non-United States Shareholders are urged to consult their own tax advisors
regarding the application of United States federal income tax withholding,
including eligibility for a withholding tax reduction or exemption, and the
refund procedure.
14
<PAGE>
15. Lost, Stolen, Destroyed or Mutilated Certificates. If any certificate(s)
representing shares has been lost, stolen, destroyed or mutilated, the
shareholder should do the following:
. Refer to the calculation on the "Affidavit of Lost or Destroyed
Certificate(s)" form for certificate replacements under $100,000.
. Write a check payable to GENERAL INSURANCE COMPANY OF AMERICA for the
amount of the replacement premium.
. Return the "Affidavit of Lost or Destroyed Certificate(s)," the
replacement premium check, a properly completed and executed copy of the
Letter of Transmittal and any certificate(s) you may have in your
possession to the Depositary.
16. Conditional Tenders. As described in Sections 1 and 6 of the Offer to
Purchase, shareholders may condition their tenders on all or a minimum number
of their tendered shares being purchased. If Sempra is to purchase less than
all of the shares tendered before the Expiration Date and not withdrawn, the
Depositary will perform a preliminary proration, and any shares tendered at or
below the purchase price pursuant to a conditional tender for which the
condition was not satisfied by the preliminary proration will be deemed
withdrawn, subject to reinstatement if such conditional tendered shares are
subsequently selected by random lot for purchase subject to Sections 1 and 6 of
the Offer to Purchase. Conditional tenders will be selected by lot only from
shareholders who tender all of their shares. All tendered shares will be deemed
unconditionally tendered unless the "Conditional Tender" box is completed. The
conditional tender alternative is made available so that a shareholder may
assure that the purchase of shares from the shareholder pursuant to the offer
will be treated as a sale of the shares by the shareholder, rather than the
payment of a dividend to the shareholder, for federal income tax purposes. Odd
Lot Shares, which will not be subject to proration, cannot be conditionally
tendered. It is the tendering shareholder's responsibility to calculate the
minimum number of shares that must be purchased from the shareholder in order
for the shareholder to qualify for sale (rather than dividend) treatment, and
each shareholder is urged to consult his or her own tax advisor.
In the event of proration, any shares tendered pursuant to a conditional
tender for which the minimum requirements are not satisfied may not be accepted
and thereby will be deemed withdrawn.
17. Sempra Energy Direct Stock Purchase Plan. If a shareholder desires to
tender shares credited to the shareholder's account under the Sempra Energy
Direct Stock Purchase Plan, the information under the caption "Sempra Energy
Direct Stock Purchase Plan" should be completed. A participant in the Sempra
Energy Direct Stock Purchase Plan may complete the information on only one
Letter of Transmittal submitted by the participant. If a participant submits
more than one Letter of Transmittal and completes the information on more than
one Letter of Transmittal, the participant will be deemed to have elected to
tender all shares credited to the shareholder's account under the Sempra Energy
Direct Stock Purchase Plan at the lowest price specified in the Letter of
Transmittal. If the shareholder is an Odd Lot Holder and desires to have all of
the shareholder's shares purchased, the box entitled "Odd Lots" must also be
completed. See Instruction 8.
18. Savings Plans. Participants in any of the Sempra Energy Savings Plan,
Sempra Energy Trading Retirement Savings Plan, Southern California Gas Company
Retirement Savings Plan, San Diego Gas & Electric Company Savings Plan or the
Sempra Energy Services Savings Plan may not use this Letter of Transmittal to
direct the tender of shares attributable to their individual accounts, but must
comply with the instructions found in the "Letter to Participants in the Sempra
Energy and Subsidiary Savings Plans" sent separately to them. Participants in
these savings plans are urged to carefully read the "Letter to Participants in
the Sempra Energy and Subsidiary Savings Plans" and related materials sent to
them.
This Letter of Transmittal, properly completed and duly executed, or
manually signed facsimile of this Letter of Transmittal, together with
certificates representing shares being tendered or confirmation of book-entry
transfer and all other required documents, or a notice of guaranteed delivery,
must be received before 5:00 p.m., New York City time, on the Expiration Date.
Shareholders are encouraged to return a completed Substitute Form W-9 with this
Letter of Transmittal.
15
<PAGE>
The Information Agent for the offer is:
D. F. King & Co., Inc.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 431-9645
The Dealer Manager for the offer is:
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
(212) 902-1000 (Call Collect)
<PAGE>
Sempra Energy
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the offer if certificates evidencing shares of common
stock, without par value, of Sempra Energy, a California corporation, are not
immediately available, or if the procedure for book-entry transfer described in
the Offer to Purchase dated January 26, 2000 and the related Letter of
Transmittal which, as amended or supplemented from time to time, together
constitute the offer, cannot be completed on a timely basis or time will not
permit all required documents, including a properly completed and duly executed
Letter of Transmittal or a manually signed facsimile of the Letter of
Transmittal, to reach the Depositary prior to the Expiration Date, as defined
in the Offer to Purchase.
This Notice of Guaranteed Delivery, properly completed and duly executed,
may be delivered by hand, mail or facsimile transmission to the Depositary. See
Section 3 of the Offer to Purchase.
The Depositary for the offer is:
First Chicago Trust Company of New York
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand Delivery:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Corporate Actions, Suite 4660 Corporate Actions, Suite 4660 c/o Securities Transfer and
P.O. Box 2569 525 Washington Blvd., 3rd Floor Reporting Services Inc.
Jersey City, NJ 07303-2569 Jersey City, NJ 07310 Attn: Corporate Actions
100 William Street, Galleria
New York, NY 10038
</TABLE>
Facsimile Transmission:
(201) 324-3402
or
(201) 324-3403
Confirm Receipt of Facsimile by Telephone:
(201) 222-4707
Delivery of this notice of guaranteed delivery to an address other than as
set forth above or transmission of instructions via facsimile transmission
other than as set forth above will not constitute a valid delivery. Deliveries
to Sempra will not be forwarded to the Depositary and therefore will not
constitute valid delivery. Deliveries to the Book-Entry Transfer Facility will
not constitute valid delivery to the Depositary.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on the Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Offer to Purchase)
under the instructions to the Letter of Transmittal, the signature guarantee
must appear in the applicable space provided in the signature box on the Letter
of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned tenders to Sempra at the price per share indicated in this
Notice of Guaranteed Delivery, upon the terms and subject to the conditions
described in the Offer to Purchase and the related Letter of Transmittal,
receipt of which is hereby acknowledged, the number of shares specified below
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. All shares tendered and purchased will include the
associated preferred stock purchase rights issued pursuant to a Rights
Agreement dated as of May 26, 1998 between Sempra and First Chicago Trust
Company of New York, as rights agent, and, unless the context otherwise
requires, all references to shares include the associated preferred stock
purchase rights.
Number of shares to be tendered: shares.
Odd Lots
To be completed ONLY if shares are being tendered by or on behalf of a
person owning beneficially or of record an aggregate of fewer than 100 shares
(not including any shares held in the Sempra Energy Direct Stock Purchase Plan
or in one of Sempra's savings plans). The undersigned either (check one box):
<TABLE>
<C> <S>
[_] is the beneficial or record owner of an aggregate of fewer than 100
shares, all of which are being tendered; or
[_] is a broker, dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s) of shares with respect to
which it is the record holder, and (b) believes, based upon
representations made to it by the beneficial owner(s), that each person
was the beneficial or record owner of an aggregate of fewer than 100
shares and is tendering all of those shares.
</TABLE>
In addition, the undersigned is tendering shares either (check one box):
<TABLE>
<C> <S>
[_] at the purchase price, as the same will be determined by Sempra in
accordance with the terms of the offer (persons checking this box need not
indicate the price per share below); or
[_] at the price per share indicated below under "Price (In Dollars) per Share
at Which Shares Are Being Tendered."
</TABLE>
Conditional Tender
A tendering shareholder may condition his or her tender of shares upon
Sempra purchasing a specified minimum number of the shares tendered, all as
described in the Offer to Purchase, particularly in Section 6. Unless at least
the minimum number of shares you indicate below is purchased by Sempra pursuant
to the terms of the offer, none of the shares tendered by you will be
purchased. It is the tendering shareholder's responsibility to calculate the
minimum number of shares that must be purchased if any are purchased, and each
shareholder is urged to consult his or her own tax advisor. Unless this box has
been completed and a minimum specified, the tender will be deemed
unconditional.
<TABLE>
<C> <S>
[_] Minimum number of shares that must be purchased, if any are purchased:
shares.
</TABLE>
2
<PAGE>
Check Only One Box. If More Than One Box Is Checked or If
No Box Is Checked, There Is No Proper Tender of Shares.
Shares Tendered at Price Determined by Shareholder
(See Instruction 5 to the Letter of Transmittal)
By checking ONE of the following boxes below INSTEAD OF THE BOX UNDER
"SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE OFFER," the undersigned
hereby tenders shares at the price checked. This action could result in none of
the shares being purchased if the purchase price determined by Sempra for the
shares is less than the price checked below. A shareholder who desires to
tender shares at more than one price must complete a separate Letter of
Transmittal for each price at which shares are tendered. The same shares cannot
be tendered at more than one price.
Price (In Dollars) per Share at Which Shares Are Being Tendered
<TABLE>
<S> <C> <C>
[_] $17.500 [_] $18.375 [_] $19.250
[_] $17.625 [_] $18.500 [_] $19.375
[_] $17.750 [_] $18.625 [_] $19.500
[_] $17.875 [_] $18.750 [_] $19.625
[_] $18.000 [_] $18.875 [_] $19.750
[_] $18.125 [_] $19.000 [_] $19.875
[_] $18.250 [_] $19.125 [_] $20.000
</TABLE>
Shares Tendered at Price Determined Pursuant to the Offer
(See Instruction 5 to the Letter of Transmittal)
<TABLE>
<C> <S>
[_] The undersigned wants to maximize the chance of having Sempra purchase all
of the shares the undersigned is tendering (subject to the possibility of
proration). Accordingly, by checking THIS ONE BOX INSTEAD OF ONE OF THE
PRICE BOXES ABOVE, the undersigned hereby tenders shares and is willing to
accept the purchase price determined by Sempra in accordance with the
terms of the offer. This action could result in receiving a price per
share of as low as $17.50.
</TABLE>
Signature(s): __________________________________________________________________
Name(s) of Record Holder(s): ___________________________________________________
Please Type or Print
Certificate Nos.: ______________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
Zip Code
Daytime Area Code and Telephone No.: ___________________________________________
If shares will be delivered by book-entry transfer, provide the following
information:
Account Number: ________________________________________________________________
Date: , 2000
3
<PAGE>
Guarantee
(Not to be used for a signature guarantee.)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
that term is defined in Rule 17Ad-15 promulgated under the Securities Exchange
Act of 1934, as amended (each of the foregoing constituting an "Eligible
Institution"), guarantees the delivery to the Depositary of the shares
tendered, in proper form for transfer, or a confirmation that the shares
tendered have been delivered pursuant to the procedure for book-entry transfer
described in the Offer to Purchase into the Depositary's account at the Book-
Entry Transfer Facility, together with a properly completed and duly executed
Letter of Transmittal, or a manually signed facsimile of the Letter of
Transmittal, or an Agent's Message (as defined in the Offer to Purchase) in the
case of a book-entry transfer, and any other required documents, all within
three (3) New York Stock Exchange trading days of this date.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates representing shares to the Depositary within the time period set
forth herein. Failure to do so could result in a financial loss to the Eligible
Institution.
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
Zip Code
Area Code and Telephone No.: ___________________________________________________
Authorized Signature
Name: __________________________________________________________________________
Please Print
Title: _________________________________________________________________________
Date: , 2000
Note: Do not send share certificates with this form. Certificates for shares
should be sent with the Letter of Transmittal.
4
<PAGE>
SEMPRA ENERGY
January 26, 2000
To Our Shareholders:
We invite you to tender your shares of our common stock for purchase by
Sempra. We are offering to purchase up to 36,000,000 shares at a price not in
excess of $20.00 nor less than $17.50 per share, net to the seller in cash,
without interest, as specified by shareholders tendering their shares.
We will determine a single per share price that we will pay for shares
properly tendered, taking into account the number of shares tendered and the
prices specified by tendering shareholders. We will select the lowest purchase
price that will allow us to buy 36,000,000 shares or, if a lesser number of
shares are properly tendered, all shares that are properly tendered. All shares
acquired in the offer will be acquired at the same purchase price.
Our offer is being made upon the terms and subject to the conditions set
forth in the enclosed Offer to Purchase and related Letter of Transmittal. I
encourage you to read these materials carefully before making any decision with
respect to the offer. The offer will expire at 5:00 p.m., New York City time,
on Friday, February 25, 2000, unless we extend it.
Any shareholder whose shares are properly tendered directly to First Chicago
Trust Company of New York, the Depositary for the offer, and purchased in the
offer will not incur the usual transaction costs associated with open market
sales. If you who own fewer that 100 shares, the offer is an opportunity for
you to sell your shares without having to pay odd lot discounts.
If you want to maximize the chances that your shares will be purchased in
the offer, you should check the box in the section of the Letter of Transmittal
captioned "Shares Tendered at Price Determined Pursuant to the Offer." Note
that this election could result in your shares being purchased at the minimum
price of $17.50 per share.
Neither Sempra nor our Board of Directors makes any recommendation to you as
to whether to tender or refrain from tendering your shares or as to the
purchase price at which you may choose to tender your shares. You must make
your own decision as to whether to tender your shares and, if so, how many
shares to tender and the price or prices at which you will tender them. In
doing so, you should consider our reasons for making this offer, including the
recently announced reduction in our quarterly dividend rate, our increased use
of financial leverage and our increased business emphasis on providing
unregulated integrated energy services. Our directors and executive officers
have advised us that they do not intend to tender any shares in the offer.
If you do not wish to participate in this offer, you do not need to take any
action. If you do wish to tender your shares, the instructions on how to tender
shares are explained in detail in the enclosed materials.
If you have any questions regarding the offer or need assistance in
tendering your shares, please contact D. F. King & Co., Inc., the Information
Agent for the offer, at (800) 431-9645 (toll-free).
Sincerely,
SEMPRA LOGO
Richard D. Farman
Chairman and Chief Executive Officer
<PAGE>
QUESTIONS AND ANSWERS
ABOUT THE TENDER OFFER
FOR THE COMMON STOCK OF SEMPRA ENERGY
WHAT IS THIS OFFER TO PURCHASE?
. We are inviting you to tender shares of our common stock, without par value,
for purchase by Sempra at a price not in excess of $20.00 nor less than
$17.50 per share upon the terms and conditions described in the enclosed
Offer to Purchase and the related Letter of Transmittal.
WHAT WILL BE THE FINAL PURCHASE PRICE?
. We will determine the lowest single price per share that will allow us to
buy 36,000,000 shares properly tendered, taking into account the number of
shares tendered and the prices specified by tendering shareholders or, if a
lesser number of shares are properly tendered, all shares that are properly
tendered.
. All shares acquired in the offer will be acquired at the same purchase
price.
. If your shares are purchased in the offer, you will receive the purchase
price in cash for each of your shares that we purchase, without interest,
and will not incur the usual transaction costs associated with open market
sales.
WHY IS SEMPRA CONDUCTING THE TENDER OFFER AND REDUCING THE DIVIDEND?
. As a complement to our business strategy, we have developed financial
initiatives that are intended to increase our financial flexibility and
further position us for the increasingly competitive utility and energy
services markets.
. We plan to reduce the quarterly dividend payable on shares of our common
stock to $0.25 per share ($1.00 annualized rate) from its previous level of
$0.39 per share ($1.56 annualized rate) commencing with the dividend payable
in the second quarter of 2000. Reducing the dividend rate improves our
financial flexibility going forward. Additionally, it positions our common
stock for potential increased growth in market value by retaining a
proportionately higher level of earnings for reinvestment in the business.
. We intend to incur approximately $700 million in additional long-term
obligations in the form of senior notes and trust preferred securities
guaranteed by us to repurchase shares in this offer. This is designed to
increase the financial leverage employed by us in our capital structure.
. This offer allows you an opportunity to exit all or part of your investment
in our shares on potentially more favorable terms than would otherwise be
available. However, if you choose not to tender your shares, you may also
benefit from these transactions. Non-tendering shareholders will own a
greater interest in us with a potentially stronger earnings per share growth
rate.
HOW IS SEMPRA GOING TO REPAY THE OBLIGATIONS INCURRED TO FUND THE TENDER OFFER?
. We expect to repay the long-term obligations in the form of senior notes and
trust preferred securities incurred to finance our purchase of shares in the
offer through funds generated by our operations, increased cash flows
resulting from the dividend reduction or through refinancing the obligations
at a later date.
WHAT IS A MODIFIED "DUTCH AUCTION"?
. A modified "Dutch Auction" is a process through which we can offer to
purchase your shares of our common stock, you can decide whether or not you
want to tender, or sell, your shares, and if so, at what prices you would
like to tender, or sell, the shares within the price range we have
established.
WHAT ARE "ODD LOT HOLDERS"?
. ""Odd Lot Holders" are shareholders who own an aggregate of less than 100
shares, not including shares held in the Sempra Direct Stock Purchase Plan
or one of our savings plans.
. The sale of shares held by Odd Lot Holders will avoid any applicable odd lot
fees payable on sales of such odd lots on the securities exchanges.
<PAGE>
. If more than 36,000,000 shares, or any increased number of shares that we
elect to purchase, are properly tendered and not properly withdrawn in the
offer at prices at or below the purchase price, we will first purchase odd
lot shares and then the remaining shares on a pro rata basis.
. There will be no proration of shares tendered by any Odd Lot Holder.
AT WHAT PRICE MAY I TENDER MY SHARES?
. You may elect to tender your shares at the price determined according to the
offer or at a specified price, in increments of $0.125, starting at $17.50
per share up to and including $20.00 per share.
. You must indicate your election as to the number of shares you wish to
tender and price at which you want to tender those shares on the enclosed
Letter of Transmittal.
WHAT IF MY DESIGNATED PRICE IS ABOVE THE COMPANY'S PURCHASE PRICE?
. Shares that are tendered at a designated price that is above the purchase
price we determine in the offer will not be purchased and will be returned
to you.
WHAT IF MORE THAN 36,000,000 SHARES ARE TENDERED AT OR BELOW THE PURCHASE
PRICE?
. If more than 36,000,000 shares are properly tendered at or below the
purchase price, a pro rata share of each tender will be accepted for
purchase subject to priority for odd lots.
. Shares held by "Odd Lot Holders" who tender all of their shares at or below
the purchase price and who complete the appropriate section of the Letter of
Transmittal will be purchased before proration.
. You may tender shares subject to the condition that a specified minimum
number of your shares tendered must be purchased if any shares tendered are
purchased.
HOW DO I TENDER MY SHARES?
. If your shares are registered in you own name or held in an accounts in the
Sempra Energy Direct Stock Purchase Plan, you must complete and return the
enclosed Letter of Transmittal and follow the instructions contained
therein.
. If your shares are held through a brokerage firm or bank, you must instruct
your broker or bank to complete and return a Letter of Transmittal on your
behalf. The Letter of Transmittal cannot be used to tender shares held by a
nominee directly, even though one may have been delivered for informational
purposes.
. If you hold shares in one of our savings plans, you must instruct the
trustee of the plans, to tender the shares attributable to your savings plan
account.
WHAT FORM DO I NEED TO SIGN AND PROVIDE IF I CAN'T GET MY LETTER OF TRANSMITTAL
AND STOCK CERTIFICATES IN ON TIME?
. If you cannot deliver a completed Letter of Transmittal and other required
documents before the offer is scheduled to expire, you must have an Eligible
Institution complete and execute the Notice of Guaranteed Delivery instead.
CAN I TENDER MY SHARES AT DIFFERENT PRICES?
. Yes, you can elect to tender some shares at one price and other shares at a
second price.
. But the same shares cannot be tendered at different prices.
. If you wish to tender some shares at one price and other shares at a
different price, a separate Letter of Transmittal MUST be completed and
returned for each price.
CAN I WITHDRAW MY TENDER?
. Tendered shares may be withdrawn at any time until 5:00 P.M., New York City
time, on Friday, February 25, 2000, unless we extend the tender offer, or at
any time after 12:00 Midnight, New York City time, on Wednesday, March 22,
2000 if we have not by then accepted the tendered shares for payment.
. For a withdrawal to be effective, a written, telegraphic or facsimile
transmission form must be timely provided to First Chicago Trust Company of
New York, at its address set forth on the back of the Offer to Purchase.
CAN SEMPRA WITHDRAW THE TENDER OFFER?
. Under certain circumstances discussed in the Offer to Purchase, we may
withdraw the tender offer at any time before it expires.
<PAGE>
WHAT IF THE TERMS OF THE TENDER OFFER CHANGE?
. If we extend the Expiration Date of the tender offer or materially change
the terms of the tender offer, we will give notice of the change and, under
certain circumstances, must, in connection with that change, extend the
expiration date of the offer at least ten business days.
. During the extension, you will continue to be able to withdraw the tender of
your shares.
ARE THERE ANY BROKERAGE COMMISSIONS?
. There will be no brokerage commissions if shares tendered are registered in
a your name and tendered directly to the Depositary.
. If shares are held through brokers or banks, you should consult your broker
or bank to determine whether transaction costs apply to the tender of those
shares.
. No stock transfer tax will apply if payment is made to the registered holder
of the shares.
DO I HAVE TO SELL MY SHARES TO SEMPRA?
. No. No one is required to tender any shares.
. If you do not tender your shares, you will continue to own the same number
of shares without any adjustments.
. The percentage of the outstanding shares held by non-tendering shareholders
will increase since the number of outstanding shares will be reduced upon
completion of the tender offer.
IF I HAVE LOST OR MISPLACED MY SHARE CERTIFICATES, HOW DO I PARTICIPATE IN THE
OFFER?
. Contact First Chicago Trust Company of New York at (877) 773-6772
immediately for assistance.
WHAT IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
. Contact D.F. King & Co., the Information Agent for the tender offer, at
(800) 431-9645 with any questions about the terms and conditions of the
tender offer or how to tender your shares.
WHERE DO I OBTAIN ADDITIONAL COPIES OF THE LETTER OF TRANSMITTAL?
. Additional copies of the Letter of Transmittal and any of the other tender
offer documents can be obtained from the Information Agent.
<PAGE>
SEMPRA ENERGY
January 26, 2000
To The Participants In Our Saving Plans:
Sempra Energy invites you, as a holder of shares of our common stock through
your participation in one of Sempra's savings plans, to tender to us some or
all of the shares held in your savings plan account. We are offering to
purchase up to 36,000,000 shares at a price not in excess of $20.00 nor less
than $17.50 per share, net to the seller in cash, without interest, as
specified by shareholders tendering their shares.
We will determine a single per share price that we will pay for shares
properly tendered, taking into account the number of shares tendered and the
prices specified by tendering shareholders. We will select the lowest purchase
price that will allow us to buy 36,000,000 shares or, if a lesser number of
shares are properly tendered, all shares that are properly tendered. All shares
acquired in the offer will be acquired at the same purchase price.
Our offer is being made upon the terms and subject to the conditions set
forth in the Offer to Purchase and related Letter of Transmittal. The terms and
conditions of the offer are explained in detail in the enclosed Offer to
Purchase and the related Letter of Transmittal. I encourage you to read these
materials carefully before making any decision with respect to the offer.
The offer will expire at 5:00 p.m., New York City time, on Friday, February
25, 2000, unless we extend it, however, if you wish to properly tender some or
all of the shares held in your savings plan account, you must provide your
tender instructions to T. Rowe Price Trust Company, through its agent, no later
than three business days before the expiration of the offer.
Neither Sempra nor our Board of Directors makes any recommendation to you as
to whether to tender or refrain from tendering you shares or as to the purchase
price at which you may choose to tender your shares. You must make your own
decision as to whether to tender your shares and, if so, how many shares to
tender and the price or prices at which you will tender them. In doing so, you
should consider our reasons for making this offer, including the recently
announced reduction in our quarterly dividend rate, our increased use of
financial leverage and our increased business emphasis on providing unregulated
integrated energy services Our directors and executive officers have advised us
that they do not intend to tender any shares in the offer.
If you do not wish to participate in this offer, you do not need to take any
action. If you do wish to tender some or all of the shares held in your savings
plan account, the instructions on how to tender those shares are explained in
detail in the accompanying materials. You should read and follow the
instructions found the enclosed "Letter to Participants in Sempra Energy and
Subsidiary Savings Plans" carefully.
If you tender shares that were originally purchased with employer
contributions to your savings plan account, any proceeds will be reinvested in
shares of our common stock at a price that may by higher or lower than the
purchase price. If you tender shares that were originally purchased with your
contributions to your savings plan account, any proceeds will be initially
invested in the T. Rowe Price Summit Cash Reserves money market fund, pending
your further investment direction.
If you have any questions regarding the offer or need assistance in
tendering your shares, please contact D. F. King & Co., the Information Agent
for the offer, at (800) 431-9645 (toll-free).
Sincerely,
[SEMPRA ENERGY LOGO]
Richard D. Farman
Chairman and Chief Executive
Officer
<PAGE>
QUESTIONS AND ANSWERS
ABOUT THE TENDER OFFER
FOR THE COMMON STOCK OF SEMPRA ENERGY
WHAT IS THIS OFFER TO PURCHASE?
. We are inviting you to tender shares of our common stock, without par value,
for purchase by us at a price not in excess of $20.00 nor less than $17.50
per share, upon the terms and conditions described in the enclosed Offer to
Purchase and the related Letter of Transmittal.
WHAT ARE THE SEMPRA SAVINGS PLAN?
. Our Savings Plans include the Sempra Energy Saving Plan, the Sempra Energy
Trading Retirement Savings Plan, the Southern California Gas Company
Retirement Savings Plan, the San Diego Gas & Electric Company Savings Plan
and the Sempra Energy Services Savings Plan.
WHAT WILL BE THE FINAL
PURCHASE PRICE?
. We will determine the lowest single per share price that will allow us to buy
36,000,000 shares properly tendered, taking into account the number of shares
tendered and the prices specified by tendering shareholders or, if a lesser
number of shares are properly tendered, all shares properly tendered.
. All shares acquired in the offer will be acquired at the same purchase price.
. If your shares are purchased in the offer, you will receive the purchase
price in cash for each of your shares that we purchases, without interest,
and will not incur the usual transaction costs associated with open market
sales.
WHY IS SEMPRA CONDUCTING THE TENDER OFFER AND REDUCING
THE DIVIDEND?
.As a complement to our business strategy, we have developed financial
initiatives that are intended to increase our financial flexibility and
further position us for the increasingly competitive utility and energy
services markets.
.We plan to reduce the quarterly dividend payable on shares of our common stock
to $0.25 per share ($1.00 annualized rate) from its previous level of $0.39
per share ($1.56 annualized rate) commencing with the dividend payable in the
second quarter of 2000. Reducing the dividend rate improves our financial
flexibility going forward. Additionally, it positions our common stock for
potential increased growth in market value by retaining a proportionately
higher level of earnings for reinvestment in the business.
.We intend to incur approximately $700 million in additional long-term
obligations in the form of senior notes and trust preferred securities
guaranteed by us to repurchase shares in this offer. This is designed to
increase the financial leverage we employ in our capital structure.
.This offer allows you an opportunity to exit all or part of your investment in
our shares on potentially more favorable terms than would otherwise be
available. However, if you choose not to tender your shares, you may also
benefit from these transactions. Non-tendering shareholders will own a greater
interest in us with a potentially stronger earnings per share growth rate.
WHAT IS A MODIFIED "DUTCH AUCTION"?
. A modified "Dutch Auction" is a process through which we can offer to
purchase shares of our common stock, and the owners of those shares can
decide whether or not they want to tender, or sell, their shares, and if so,
at what prices they would like to tender, or sell, their shares within the
price range we have established.
AT WHAT PRICE MAY I TENDER
MY SHARES?
. You may elect to tender your shares at the price determined according to the
offer at a specified price, in increments of $0.125, starting at $17.50 per
share up to and including $20.00 per share.
. You must indicate your election as to the percentage of savings plan shares
you wish to tender and the price at which you want to tender those shares on
the enclosed Direction Form.
. Our savings plans are prohibited from selling shares to us for a price that
is less than the
<PAGE>
prevailing market price. Accordingly, if you elect to tender shares at a price
that is lower than the closing market price of our common stock on the New
York Stock Exchange at the expiration of the offer, the tender price you elect
will be deemed to have been increased to the closest tender price that is not
less than the closing price on the New York Stock Exchange at the expiration
of the offer.
HOW DO I TENDER THE SHARES ATTRIBUTABLE TO MY SEMPRA SAVINGS ACCOUNT?
. You may instruct the trustee, through its agent, to tender some or all of the
shares attributed to your savings plan account by following the instructions
in the "Letter to Participants in the Sempra Energy and Subsidiary Savings
Plans" furnished separately.
. The Direction Form provided separately must be completed and sent to the
trustee, through its agent, in the envelope provided with these documents.
. To have shares properly tendered in the offer, the trustee, through its
agent, must receive the Direction Form no later than 3 business days before
5:00 p.m. Friday, February 25, 2000, the expiration of the offer period.
WHAT IF MY DESIGNATED PRICE IS ABOVE THE COMPANY'S PURCHASE PRICE?
. Shares that are tendered at a designated price that is above the purchase
price determined by Sempra will not be purchased and will be returned to you.
WHAT IF MORE THAN 36,000,000 SHARES ARE TENDERED AT OR BELOW THE PURCHASE
PRICE?
. If more than 36,000,000 shares are properly tendered at or below the purchase
price, shares tendered at or below the purchase price may be subject to
proration, under which we will accept for purchase a pro rata share of each
tender.
CAN I TENDER PART OF MY STOCK
AT DIFFERENT PRICES?
. Yes, you can elect to tender some shares at one price and other shares at a
second price.
. The same shares cannot be tendered at different prices.
CAN SEMPRA WITHDRAW THE
TENDER OFFER?
. Under certain circumstances discussed in the Offer to Purchase, we may
withdraw the tender offer until 5:00 P.M., New York City time, on Friday,
February 25, 2000.
WHAT IF THE TERMS OF THE
TENDER OFFER CHANGE?
. If we extend the Expiration Date of the tender offer or materially change the
terms of the tender offer, we will give notice of the change and, under
certain circumstances, must, in connection with that change, extend the
expiration date of the offer at least ten (10) business days from such
notice.
. During the extension, you will continue to be able to withdraw the tender of
their shares.
DO I HAVE TO SELL MY STOCK
TO SEMPRA?
. No. No one is required to tender any stock.
. If you do not tender your shares, you will continue to own the same number of
shares without any adjustments.
. The percentage of the outstanding stock held by non-tendering shareholders
will increase since the number of outstanding shares will be reduced upon
completion of the tender offer.
HOW DO I WITHDRAW THE SHARES ATTRIBUTABLE TO MY SEMPRA SAVINGS ACCOUNT FROM THE
TENDER?
. Shares attributed to one of our savings accounts can be withdrawn from the
tender by notifying the trustee, through its agent, at any time before 3
business days prior to the Expiration Date, or at any time after 12:00
Midnight, New York City time, on Wednesday, March 22, 2000 if we have not
accepted the tendered shares for payment pursuant to the offer before that
date.
. For a withdrawal to be effective, a written and telegraphic transmission form
must be timely provided to the trustee, through its agent, Management
Information Services Corporation at its address at 61 Accord Park Drive,
Norwell, MA 02061.
<PAGE>
WHO IS THE TRUSTEE OF THE
SEMPRA SAVINGS PLANS?
. The trustee of our savings plans is T. Rowe Price Trust Company.
. T. Rowe Price Trust Company has engaged Management Information Services
Corporation to act as their agent in processing instructions from plan
participants and tendering a Letter of Transmittal on behalf of the savings
plans.
WHAT IF I HOLD SHARES OUTSIDE
THE SEMPRA SAVINGS PLANS?
. If you hold shares outside the our savings plans, you will receive, under
separate cover, tender offer materials which can be used to tender the shares
held outside our savings plans.
. Those tender offer materials MUST NOT be used to instruct T. Rowe Price
Associates, Inc. to tender shares attributable to one of our savings account.
HOW WILL THE PROCEEDS OF
THE TENDER OF MY SAVINGS PLAN
SHARES BE INVESTED?
. The investment of proceeds from the tender of shares attributable to a
savings account depends upon the source of the shares tendered.
. The proceeds received by the trustee from shares tendered which were
originally purchased with your contributions or earnings on your
contributions will be invested following the tender offer initially in T.
Rowe Price Summit Cash Reserves, a money market fund, pending your further
investment direction.
. The proceeds received by the trustee from shares tendered which were
originally purchased with our matching funds or earnings on our matching
funds will be reinvested by the trustee in shares of our common stock
following the tender offer.
. You should be aware that the proceeds reinvested by the trustee in our common
stock will be reinvested at the prevailing market price at the time of
reinvestment, which may be higher or lower than the purchase price paid by in
the tender offer.
. You may tender shares originally purchased with your contributions, shares
originally purchased with our matching contributions, or both.
HOW IS SEMPRA GOING TO REPAY
THE OBLIGATIONS INCURRED TO FUND THE TENDER OFFER?
. We expect to repay the long-term obligations in the form of senior notes and
trust preferred securities incurred to finance our purchase of shares
pursuant to the offer through funds generated by its operations, increased
cash flows resulting from the dividend reduction or through refinancing the
obligations at a later date.
CAN I TAKE ADVANTAGE OF THE
"ODD LOT" PRIORITY?
. No. Shares held in one of our savings plans are not eligible to avoid
proration by virtue of the "odd lot" priority.
CAN I MAKE A CONDITIONAL TENDER OF THE SHARES ATTRIBUTABLE TO MY SAVINGS PLAN
ACCOUNT?
. No. Shares held in one of our savings plans cannot be conditionally tendered.
WHAT IF I HAVE QUESTIONS ABOUT
THE TENDER OFFER?
. Contact D.F. King & Co., the Information Agent for the tender offer, at (800)
431-9645 with any questions about the terms and conditions of the tender
offer or how to tender your shares.
WHERE DO I OBTAIN ADDITIONAL COPIES OF THE LETTER TO PARTICIPANTS IN SEMPRA
SAVINGS PLANS?
. Additional copies of the Letter to Participants in Sempra Savings Plans and
any of the other tender offer documents can be obtained from the Information
Agent.
<PAGE>
Goldman, Sachs & Co.
85 Broad Street, New York, NY 10004
Sempra Energy
Offer to Purchase for Cash up to
36,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not in Excess of $20.00
nor Less Than $17.50 Per Share
The offer, proration period and withdrawal rights will expire at 5:00
p.m., New York City time, on Friday, February 25, 2000, unless the offer is
extended.
January 26, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Sempra Energy, a California corporation, has engaged us to act as Dealer
Manager in connection with its offer to purchase shares of its Common Stock,
without par value. Sempra is offering to purchase up to 36,000,000 shares at a
price not in excess of $20.00 nor less than $17.50 per share, net to the seller
in cash, without interest, as specified by shareholders tendering their shares.
Sempra will determine a single per share price that it will pay for shares
properly tendered, taking into account the number of shares tendered and the
prices specified by tendering shareholders. All shares acquired in the offer
will be acquired at the same purchase price. Sempra will select the lowest
purchase price that will allow it to buy 36,000,000 shares or, if a lesser
number of shares are properly tendered, all shares that are properly tendered.
Sempra's offer is being made upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal
which, as amended or supplemented from time to time, together constitute the
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to a Rights Agreement dated as of May 26,
1998 between Sempra and First Chicago Trust Company of New York, as rights
agent, and, unless the context otherwise requires, all references to shares
include the associated preferred stock purchase rights.
Only shares properly tendered at prices at or below the purchase price and
not properly withdrawn will be purchased. However, because of the "odd lot"
priority, proration and conditional tender provisions described in the Offer to
Purchase, all of the shares tendered at or below the purchase price will not be
purchased if the offer is oversubscribed. Shares tendered at prices in excess
of the purchase price that is determined by Sempra and shares not purchased
because of proration or conditional tenders will be returned as promptly as
practicable following the Expiration Date.
Sempra reserves the right, in its sole discretion, to purchase more than
36,000,000 shares pursuant to the offer.
The offer is not conditioned on any minimum number of shares being tendered.
However, the offer is subject to other conditions.
If at the expiration of the offer more than 36,000,000 shares, or any
greater number of shares as Sempra may elect to purchase, are properly tendered
at or below the purchase price and not properly withdrawn,
<PAGE>
Sempra will buy shares first from any person (an "Odd Lot Holder") who owned
beneficially or of record an aggregate of fewer than 100 shares (not including
any shares held in the Sempra Energy Direct Stock Purchase Plan or Sempra's
savings plans) and so certified in the appropriate place on the Letter of
Transmittal and, if applicable, on a notice of guaranteed delivery, who
properly tender all their shares at or below the purchase price, and then on a
pro rata basis from all other shareholders who properly tender shares at prices
at or below the purchase price, subject to the conditional tender provisions.
For your information and for forwarding to those of your clients for whom
you hold shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. The Offer to Purchase dated January 26, 2000;
2. The Letter of Transmittal for your use and for the information of your
clients, together with the accompanying Substitute Form W-9. Facsimile
copies of the Letter of Transmittal, with manual signatures, may be used
to tender shares;
3. A letter to the shareholders of Sempra dated January 26, 2000 from
Richard D. Farman, Chairman and Chief Executive Officer of Sempra;
4. The Notice of Guaranteed Delivery to be used to accept the offer and
tender shares pursuant to the offer if none of the procedures for
tendering shares described in the Offer to Purchase can be completed on
a timely basis;
5. A printed form of letter which you may send to your clients for whose
accounts you hold shares registered in your name or in the name of your
nominee, with an instruction form provided for obtaining the clients'
instructions with regard to the offer;
6. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9; and
7. A return envelope addressed to First Chicago Trust Company of New York,
as Depositary for the offer.
Your prompt action is requested. We urge you to contact your clients as
promptly as possible. Please note that the offer, proration period and
withdrawal rights will expire at 5:00 p.m., New York City time, on Friday,
February 25, 2000, unless the offer is extended.
In order to tender shares in the offer, a duly executed and properly
completed Letter of Transmittal, or a manually signed facsimile of the Letter
of Transmittal, including any required signature guarantees, or an Agent's
Message (as defined in the Offer to Purchase) in the case of a book-entry
transfer, and any other required documents should be sent to the Depositary
together with either certificate(s) representing tendered shares or timely
confirmation of their book-entry transfer, in accordance with the instructions
described in the Offer to Purchase and the related Letter of Transmittal.
Holders of shares whose certificate(s) for the shares are not immediately
available or who cannot deliver the certificate(s) and all other required
documents to the Depositary, or complete the procedures for book-entry
transfer, before the Expiration Date must tender their shares according to the
procedure for guaranteed delivery described in Section 3 of the Offer to
Purchase.
Neither Sempra nor any officer, director, shareholder, agent or other
representative of Sempra will pay any fees or commissions to any broker, dealer
or other person for soliciting tenders of shares pursuant to the offer (other
than fees paid to Goldman, Sachs & Co., as Dealer Manager, as described in the
Offer to Purchase). Sempra will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of
the enclosed materials to your clients whose shares are held by you as a
nominee or in a fiduciary capacity. Sempra will pay or cause to be paid any
stock transfer taxes applicable to its purchase of shares, except as otherwise
provided in the Letter of Transmittal.
2
<PAGE>
Requests for additional copies of the enclosed materials and any inquiries
you may have with respect to the offer should be addressed to D. F. King & Co.,
Inc., as Information Agent, 77 Water Street, New York, New York 10005-4495,
(212) 269-5550 (call collect) or (800) 431-9645 (toll free).
Very truly yours,
Goldman, Sachs & Co.
Nothing contained in this document or in the enclosed documents will make
you or any other person an agent of Sempra, the Dealer Manager, the Information
Agent or the Depositary or any affiliate of any of the foregoing, or authorize
you or any other person to use any document or make any statement on behalf of
any of them in connection with the offer other than the documents enclosed and
the statements contained in those documents.
3
<PAGE>
Sempra Energy
Offer to Purchase for Cash up to
36,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not in Excess of $20.00
nor Less Than $17.50 Per Share
The offer, proration period and withdrawal rights will expire at 5:00 P.M.,
New York City time, on Friday, February 25, 2000, unless the offer is
extended.
To the Participants in the
Sempra Energy and Subsidiary Savings Plans:
Enclosed for your consideration are the Offer to Purchase dated January 26,
2000 and the related Letter of Transmittal in connection with the offer by
Sempra Energy, a California corporation, to purchase shares of its common
stock, without par value. Sempra is offering to purchase up to 36,000,000
shares at a price not in excess of $20.00 nor less than $17.50 per share, net
to the seller in cash, without interest, as specified by shareholders tendering
their shares. As a participant in the Sempra Energy and Subsidiary Savings
Plans (the "Savings Plans"), you may tender shares that you hold in the Savings
Plans. If you wish to do so, you must direct the plan trustee to do so on your
behalf by following the instructions in this letter.
Sempra will determine a single per share price that it will pay for shares
properly tendered, taking into account the number of shares tendered and the
prices specified by tendering shareholders. Sempra will pay the same price for
all shares purchased in the offer. Sempra will select the lowest purchase price
that will allow it to buy 36,000,000 shares or, if a lesser number of shares
are properly tendered, all shares that are properly tendered. All shares
properly tendered at prices at or below the purchase price and not properly
withdrawn will be purchased, subject to the conditions of the offer and the
"odd lot" priority, proration and conditional tender provisions described in
the Offer to Purchase. Shares tendered at prices in excess of the purchase
price that is determined by Sempra and shares not purchased because of
proration or conditional tenders will be returned.
If you do not wish to direct the sale of any portion of the shares in your
Savings Plan account, you do not need to take any action.
If you would like to direct the sale of some or all of the shares held in
your Savings Plan account in response to this offer, detailed instructions on
how to tender those shares are included in the enclosed materials.
Sempra's offer is being made upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal
which, as amended or supplemented from time to time, together constitute the
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to a Rights Agreement dated as of May 26,
1998 between Sempra and First Chicago Trust Company of New York, as rights
agent, and, unless the context otherwise requires, all references to shares
include the associated preferred stock purchase rights.
Only shares properly tendered at prices at or below the purchase price and
not properly withdrawn will be purchased. Sempra will not purchase all of the
shares tendered at or below the purchase price if the offer is oversubscribed.
The number of shares Sempra actually acquires will be determined by taking into
consideration the "odd lot" priority, proration and conditional tender
provisions described in the Offer to Purchase. Shares tendered at prices in
excess of the purchase price and shares not purchased because of proration or
conditional tenders will be returned as promptly as practicable following the
expiration of the offer.
1
<PAGE>
Sempra reserves the right, in its sole discretion, to purchase more than
36,000,000 shares pursuant to the offer.
You must carefully follow the instructions below if you want to direct the
trustee to tender some or all of the shares in your Savings Plan account.
Failure to follow the instructions below properly may make you ineligible to
direct the trustee to tender the shares held in your Savings Plan account in
the offer. T. Rowe Price Trust Company, as trustee of the Savings Plans, is the
holder of record of the shares held in your Savings Plan account. Pursuant to
your instructions, T. Rowe Price Trust Company will, through its agent,
complete a Letter of Transmittal with respect to the shares held in your
Savings Plan account. A tender of the shares held in your Savings Plan account
can be made only by T. Rowe Price Trust Company, as the trustee of the Savings
Plans and the registered holder of the shares.
Under the terms of the Savings Plans, "employer matching funds" that Sempra
or its subsidiaries have contributed and earnings on employer matching funds
must be invested in Sempra Energy common stock. Thus, the proceeds received by
the trustee from shares of Sempra Energy common stock you tender will be
treated differently under the terms of the Savings Plans, depending upon
whether the tendered shares were originally purchased with your contributions
or with earnings on your contributions ("Employee Contribution Shares"), or
with employer matching funds contributed by Sempra or its subsidiaries or
earnings on those matching funds ("Employer Contribution Shares"). The proceeds
received by the trustee from any Employee Contribution Shares will be invested
following the tender offer initially in T. Rowe Price Summit Cash Reserves, a
money market fund, pending further investment direction from the tendering
participant. On the other hand, the proceeds received by the trustee from any
Employer Contribution Shares will be reinvested under the terms of the plan in
shares of Sempra common stock following the tender offer. After any
successfully tendered shares are processed and the proceeds are credited to
your Savings Plan account, you may contact T. Rowe Price by your normal manner
of communication (e.g. participant service center, voice response or on-line
access(R)) to exchange any proceeds held in the T. Rowe Price Summit Cash
Reserves money market fund to any other investment option available under the
terms of the Savings Plans. You should be aware that the proceeds of Employer
Contribution Shares will be reinvested under the terms of the plans in Sempra
common stock at the prevailing market price at the time of reinvestment, which
price may be higher or lower than the purchase price paid by Sempra for shares
in the tender offer.
Because the terms and conditions of the Letter of Transmittal will govern
the tender of the shares held in the Savings Plans, you should read the Letter
of Transmittal carefully. The Letter of Transmittal, however, is furnished to
you for your information only and cannot be used by you to tender shares that
are held in your Savings Plan account. You should also read the Offer to
Purchase carefully before making any decision regarding the Offer.
To instruct the trustee as to whether you want it to tender any or all of
the shares held in your Savings Plan account, you should complete the enclosed
Direction Form and return it to the trustee's agent in the enclosed envelope.
Please note the following:
1. Shares held in your Savings Plan accounts may be tendered at prices not
in excess of $20.00 nor less than $17.50 per share, as indicated in the
attached Instruction Form.
2. The offer is not conditioned on any minimum number of shares being
tendered. However, the offer is subject to other conditions described in
the Offer to Purchase.
3. If the trustee's agent has not received your instructions at least three
business days before the expiration of the offer, the trustee will not
tender any shares held on your behalf in the plan. The offer is
scheduled to expire at 5:00 p.m., New York City time, on Friday,
February 25, 2000, unless the offer is extended.
4. The offer, proration period and withdrawal rights will also expire at
5:00 P.M., New York City time, on Friday, February 25, 2000, unless the
offer is extended.
2
<PAGE>
5. The offer is for up to 36,000,000 shares, constituting approximately
15% of the shares outstanding as of January 25, 2000.
6. Sempra's Board of Directors has authorized the making of the offer.
However, neither Sempra nor Sempra's Board of Directors makes any
recommendation to you as to whether to tender or refrain from tendering
your shares or as to the purchase price at which you may choose to
tender your shares. You must make your own decision as to whether to
tender your shares and, if so, how many shares to tender and the price
or prices at which you will tender them.
7. Tendering shareholders will not be obligated to pay any brokerage fees
or commissions or solicitation fees to the Dealer Manager, Depositary,
Information Agent or Sempra or, except as described in the Letter of
Transmittal, stock transfer taxes on the transfer of shares pursuant to
the offer.
If you wish to direct the tender of any or all of the shares held in your
Savings Plan account, you should instruct the trustee, through its agent, of
your intentions in ample time to permit them to submit a tender on your behalf
before the expiration of the offer period.
If you want to withdraw a tender of shares held in your Savings Plan
account, you may direct the trustee to withdraw those shares so long as the
offer remains open or at any time after 12:00 Midnight, New York City time, on
Wednesday, March 22, 2000, if they have not already been accepted for payment.
Withdrawal instructions must be received by the trustee at least three business
days before the expiration of the offer. The offer is scheduled to expire at
5:00 p.m., New York City time, on Friday, February 25, 2000, unless the offer
is extended.
The offer is being made solely pursuant to the Offer to Purchase and the
related Letter of Transmittal and is being made to all record holders of shares
of common stock of Sempra. The offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of shares of common stock of Sempra
residing in any jurisdiction in which the making of the offer or acceptance
thereof would not be in compliance with the securities laws of that
jurisdiction.
The Savings Plans are prohibited from selling shares to Sempra for a price
that is less than the prevailing market price. Accordingly, if you elect to
tender shares at a price that is lower than the prevailing price of Sempra's
common stock on the New York Stock Exchange at the expiration of the offer, the
tender price you elect will be deemed to have been increased to the closest
tender price that is not less than that closing price.
In order to direct the trustee to tender shares held in your Savings Plan
account, you must complete, execute and return the enclosed Direction Form to
the trustee, through its agent, in ample time to permit the trustee to submit a
tender on your behalf before the expiration of the offer. If the trustee has
not received your instructions at least three business days before the
expiration of the offer, unless the offer is extended, the trustee will not
tender any shares held on your behalf in the plan. The offer is scheduled to
expire at 5:00 p.m., New York City time, on Friday, February 25, 2000, unless
the offer is extended.
Unless you direct the trustee, through its agent, on the enclosed Direction
Form to tender the shares held in your Savings Plan account, no shares will be
tendered.
3
<PAGE>
As more fully described in the Offer to Purchase, tenders will be deemed
irrevocable unless withdrawn by the dates specified therein. If you instruct
the trustee, through its agent, to tender the shares held in your Savings Plan
account, and you subsequently decide to change your instructions, you may do so
by submitting a written notice of change of instruction to the trustee, through
its agent. The notice of change of instruction will be effective only if it is
received by the trustee, through its agent, AT OR BEFORE THREE BUSINESS DAYS
BEFORE THE EXPIRATION OF THE OFFER. THE OFFER IS SCHEDULED TO EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 25, 2000. Upon receipt of a
timely notice of change of instruction to the trustee, through its agent,
previous instructions to tender the shares will be deemed canceled. If you
later wish to re-tender shares, you may call the trustee, through its agent,
and submit a new Instruction Form. If you have any questions about the offer or
any of the other matters discussed above, please call D. F. King & Co., Inc.,
the Information Agent, at (800) 431-9645.
4
<PAGE>
Sempra Energy
Offer to Purchase for Cash up to
36,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price not in Excess of $20.00
nor Less Than $17.50 Per Share
The offer, proration period and withdrawal rights will expire at 5:00
P.M., New York City time, on Friday, February 25, 2000, unless the offer
is extended.
January 26, 2000
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated January 26,
2000 and the related Letter of Transmittal in connection with the offer by
Sempra Energy, a California corporation, to purchase shares of its common
stock, without par value. Sempra is offering to purchase up to 36,000,000
shares at a price not in excess of $20.00 nor less than $17.50 per share, net
to the seller in cash, without interest, as specified by shareholders tendering
their shares.
Sempra will determine a single per share price that it will pay for shares
properly tendered, taking into account the number of shares tendered and the
prices specified by tendering shareholders. All shares acquired in the offer
will be acquired at the same purchase price. Sempra will select the lowest
purchase price that will allow it to buy 36,000,000 shares or, if a lesser
number of shares are properly tendered, all shares that are properly tendered.
Sempra's offer is being made upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal
which, as amended or supplemented from time to time, together constitute the
offer. All shares tendered and purchased will include the associated preferred
stock purchase rights issued pursuant to a Rights Agreement dated as of May 26,
1998 between Sempra and First Chicago Trust Company of New York, as rights
agent, and, unless the context otherwise requires, all references to shares
include the associated preferred stock purchase rights.
Only shares properly tendered at prices at or below the purchase price and
not properly withdrawn will be purchased. However, because of the "odd lot"
priority, proration and conditional tender provisions described in the Offer to
Purchase, all of the shares tendered at or below the purchase price will not be
purchased if the offer is oversubscribed. Shares tendered at prices in excess
of the purchase price that is determined by Sempra and shares not purchased
because of proration or conditional tenders will be returned as promptly as
practicable following the Expiration Date.
Sempra reserves the right, in its sole discretion, to purchase more than
36,000,000 shares pursuant to the offer.
If at the expiration of the offer more than 36,000,000 shares, or any
greater number of shares as Sempra may elect to purchase, are properly tendered
at or below the purchase price and not properly withdrawn before the Expiration
Date, Sempra will purchase shares first from any person (an "Odd Lot Holder")
who owned beneficially or of record an aggregate of fewer than 100 shares (not
including any shares held in the Sempra Energy Direct Stock Purchase Plan or in
one of Sempra's savings plans) and so certified in the appropriate place on the
Letter of Transmittal and, if applicable, on a notice of guaranteed delivery,
and properly tendered all those shares at or below the purchase price and then,
subject to the conditional tender provisions, on a pro rata basis from all
other shareholders who properly tender shares at prices at or below the
purchase price.
<PAGE>
A tender of your shares can be made only by us as the holder of record and
pursuant to your instructions. The Letter of Transmittal is furnished to you
for your information only and cannot be used by you to tender your shares held
by us for your account.
Accordingly, we request instructions as to whether you wish to tender any or
all of the shares held by us for your account, upon the terms and subject to
the conditions of the offer.
Please note the following:
1. Shares may be tendered at prices not in excess of $20.00 nor less than
$17.50 per share, as indicated in the attached Instruction Form, net to
the seller in cash, without interest.
2. The priority in which certificates will be purchased in the event of
proration may be designated.
3. The offer is not conditioned on any minimum number of shares being
tendered. However, the offer is subject to other conditions described in
the Offer to Purchase.
4. The offer, proration period and withdrawal rights will expire at 5:00
P.M., New York City time, on Friday, February 25, 2000, unless the offer
is extended.
5. The offer is for 36,000,000 shares, constituting approximately 15% of
the shares outstanding as of January 25, 2000.
6. Sempra's Board of Directors has authorized the making of the offer.
However, neither Sempra nor its Board of Directors makes any
recommendation to you as to whether to tender or refrain from tendering
your shares or as to the purchase price at which you may choose to
tender your shares. You must make the decision whether to tender your
shares and, if so, how many shares to tender and the price or prices at
which you will tender them.
7. Tendering shareholders who hold shares registered in their own name and
who tender their shares directly to the Depositary will not be obligated
to pay brokerage commissions, solicitation fees or, subject to
Instruction 7 of the Letter of Transmittal, stock transfer taxes on the
purchase of shares by Sempra in the offer.
Sempra will, upon the terms and subject to the conditions of the offer,
accept all your shares for purchase if:
. you owned beneficially or of record an aggregate of fewer than 100
shares (not including any shares held in the Sempra Energy Direct Stock
Purchase Plan or in one of Sempra's savings plans);
. you instruct us to tender on your behalf all your shares at or below the
purchase price before the Expiration Date; and
. you complete the section entitled "Odd Lots" in the attached Instruction
Form.
If you wish to tender portions of your shares at different prices, you must
complete a separate Instruction Form for each price at which you wish to tender
each portion of your shares. We must submit separate Letters of Transmittal on
your behalf for each price you will accept for each portion tendered.
If you wish to have us tender any or all of your shares, please instruct us
by completing, executing, detaching and returning the attached Instruction
Form. An envelope to return your Instruction Form to us is enclosed. If you
authorize us to tender your shares, all your shares will be tendered unless
otherwise indicated on the attached Instruction Form.
Please forward your Instruction Form to us as soon as possible to allow us
ample time to tender your shares on your behalf prior to the expiration of the
offer.
2
<PAGE>
As described in the Offer to Purchase, if more than 36,000,000 shares, or
any greater number of shares as Sempra may elect to purchase, have been
properly tendered at or below the purchase price and not properly withdrawn
before the Expiration Date, Sempra will purchase tendered shares on the basis
described below:
1. first, all shares tendered and not withdrawn before the Expiration Date
by any Odd Lot Holder who:
(a) tenders all shares owned beneficially or of record by the Odd Lot
Holder at a price at or below the purchase price (tenders of less
than all shares owned by the Odd Lot Holder will not qualify for
this preference); and
(b) completes the section captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed
Delivery; and
2. second, after purchase of all of the foregoing shares, subject to the
conditional tender provisions described in Section 6 of the Offer to
Purchase, all other shares properly tendered at prices at or below the
purchase price and not properly withdrawn before the Expiration Date, on
a pro rata basis (with appropriate adjustments to avoid purchases of
fractional shares) as described in the Offer to Purchase.
The offer is being made solely pursuant to the Offer to Purchase and the
related Letter of Transmittal and is being made to all record holders of shares
of common stock of Sempra. The offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of shares of common stock of Sempra
residing in any jurisdiction in which the making of the offer or acceptance
thereof would not be in compliance with the securities laws of that
jurisdiction.
3
<PAGE>
Instruction Form
Instructions For Tender of Shares of Sempra Energy
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated January 26, 2000 and the related Letter of Transmittal in
connection with the offer by Sempra Energy, a California corporation, to
purchase shares of its Common Stock, without par value. Sempra is offering to
purchase up to 36,000,000 shares at a price not in excess of $20.00 nor less
than $17.50 per share, net to the seller in cash, without interest, as
specified by shareholders tendering their shares. Sempra's offer is being made
upon the terms and subject to the conditions set forth in the Offer to Purchase
and in the related Letter of Transmittal which, as amended or supplemented from
time to time, together constitute the offer. All shares tendered and purchased
will include the associated preferred stock purchase rights issued pursuant to
a Rights Agreement dated as of May 26, 1998 between Sempra and First Chicago
Trust Company of New York, as rights agent, and, unless the context otherwise
requires, all references to shares include the associated preferred stock
purchase rights.
This will instruct you to tender to Sempra, on (our) (my) behalf, the number
of shares indicated below (or if no number is indicated below, all shares)
which are beneficially owned by (us) (me) and registered in your name, upon the
terms and subject to the conditions of offer.
Number of shares to be tendered: shares.*
ODD LOTS
<TABLE>
<C> <S>
[_] By checking this box, the undersigned represents that the undersigned
owns, beneficially or of record, an aggregate of fewer than 100 shares and
is tendering all of those shares.
</TABLE>
In addition, the undersigned is tendering shares either (check one box):
<TABLE>
<C> <S>
[_] at the purchase price, as it will be determined by Sempra in accordance
with the terms of the offer (persons checking this box need not indicate
the price per share below); or
[_] at the price per share indicated below under "Price (In Dollars) per Share
at Which Shares Are Being Tendered."
</TABLE>
CONDITIONAL TENDER
A tendering shareholder may condition his or her tender of shares upon
Sempra purchasing a specified minimum number of the shares tendered, all as
described in Section 6 of the Offer to Purchase. Unless at least the minimum
number of shares you indicate below is purchased by Sempra pursuant to the
terms of the offer, none of the shares tendered by you will be purchased. It is
the tendering shareholder's responsibility to calculate the minimum number of
shares that must be purchased if any are purchased, and each shareholder is
urged to consult his or her own tax advisor. Unless this box has been completed
and a minimum specified, the tender will be deemed unconditional.
<TABLE>
<C> <S>
[_] Minimum number of shares that must be purchased, if any are purchased:
shares.
</TABLE>
- --------
* Unless otherwise indicated, it will be assumed that all shares held by us for
your account are to be tendered.
4
<PAGE>
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF
NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES.
Shares Tendered at Price Determined by Shareholder
(See Instruction 5)
By checking ONE of the following boxes below INSTEAD OF THE BOX UNDER
"SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE OFFER," the undersigned
hereby tenders shares at the price checked. This action could result in none of
the shares being purchased if the purchase price determined by Sempra for the
shares is less than the price checked below. A shareholder who desires to
tender shares at more than one price must complete a separate Instruction Form
for each price at which shares are tendered. The same shares cannot be tendered
at more than one price.
Price (In Dollars) per Share at Which Shares Are Being Tendered
<TABLE>
<S> <C> <C>
[_] $17.500 [_] $18.375 [_] $19.250
[_] $17.625 [_] $18.500 [_] $19.375
[_] $17.750 [_] $18.625 [_] $19.500
[_] $17.875 [_] $18.750 [_] $19.625
[_] $18.000 [_] $18.875 [_] $19.750
[_] $18.125 [_] $19.000 [_] $19.875
[_] $18.250 [_] $19.125 [_] $20.000
</TABLE>
Shares Tendered at Price Determined Pursuant to the Offer
(See Instruction 5)
<TABLE>
<C> <S>
[_] The undersigned wants to maximize the chance of having Sempra purchase all
of the shares the undersigned is tendering (subject to the possibility of
proration). Accordingly, by checking THIS ONE BOX INSTEAD OF ONE OF THE
PRICE BOXES ABOVE, the undersigned hereby tenders shares and is willing to
accept the purchase price determined by Sempra in accordance with the
terms of the offer. This action could result in receiving a price per
share of as low as $17.50.
</TABLE>
The method of delivery of this document is at the option and risk of the
tendering shareholder. If delivery is by mail, registered mail with return
receipt requested, properly insured, is recommended. In all cases, sufficient
time should be allowed to assure delivery.
SIGN HERE:
Signature(s): __________________________________________________________________
Print Name(s): _________________________________________________________________
Address(es): ___________________________________________________________________
Area Code and Telephone Number: ________________________________________________
Taxpayer Identification or Social Security Number: _____________________________
Date:______________, 2000
5
<PAGE>
EXHIBIT 99(a)(7)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
Social security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------- ------------------------------------------------------------
Give the Give the EMPLOYER
For this type of account: SOCIAL SECURITY For this type of account: IDENTIFICATION
number of: number of:
- -------------------------------------------------- ------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 9. A valid trust, estate, The legal entity
2. Two or more individuals The actual owner or pension trust (Do not furnish
(joint account) of the account the
or, if combined identification
funds, any one number of the
of other personal
individuals(1) representative
3. Husband and wife (joint The actual owner or trustee
account) of the account unless the legal
or, if joint entity itself is
funds, either not designated
person(1) in the account
4. Custodian account of a The minor(2) title)(5)
minor (Uniform Gift to 10. Corporate account The organization
Minors Act) 11. Religious, charitable, The corporation
5. Adult and minor (joint The adult or, if or educational
account) the minor is the organization account
only 12. Partnership account The partnership
contributor, the 13. Association, club or The organization
minor(1) other tax-exempt
6. Account in the name of The ward, minor, organization
guardian or committee or incompetent 14. A broker or registered The broker or
for a designated ward, person(3) nominee nominee
minor, or incompetent 15. Account with the The public
person Department of entity
7.a. The usual revocable The grantor- Agriculture in the
savings trust account trustee(1) name of a public
(grantor is also entity (such as a
trustee) State or local
b. So-called trust account The actual government, school
that is not a legal or owner(1) district, or prison)
valid trust under State that receives
law agricultural program
8. Sole proprietorship The owner(4) payments
account
- -------------------------------------------------- --------------------------------- --------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note:If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number ("TIN") or you don't know
your number, obtain Form SS-5, Application for a Social Security Number Card,
or Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number. As soon as you receive your TIN, complete another W-9,
include your TIN, sign and date the form, and send it to the Depositary.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments
including the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust. A common trust fund operated by a bank un-
der section 584(a) of the Code.
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount renewed is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852) of the Code.
. Payments described in section 6049(b)(5) of the Code to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451 of the Code.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9 EN-
CLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE SUBSTI-
TUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER IDENTIFICA-
TION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE FORM
AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
Privacy Act Notice
Section 6109 requires most recipients of dividends, interest, or other
payments to give taxpayer identification numbers to payers who must report the
payments to IRS. The IRS uses the numbers for identification purposes and to
help verify the accuracy of your tax return. Payers must be given the numbers
whether or not recipients are required to file a tax return. Payers must
generally withhold 31% of taxable interest, dividends, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding. If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell shares. The offer is made solely by the Offer to Purchase dated
January 26, 2000 and the related Letter of Transmittal, and any amendments or
supplements to the Offer to Purchase or Letter of Transmittal, which are being
mailed to all holders of shares. Sempra is not aware of any jurisdiction where
the making of the offer is not in compliance with applicable law. If Sempra
becomes aware of any jurisdiction where the making of the offer or the
acceptance of shares in the offer is not in compliance with applicable law,
Sempra will make a good faith effort to comply with the applicable law. If,
after a good faith effort, Sempra cannot comply, the offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of shares in
that jurisdiction. In any jurisdiction where the securities, blue sky or other
laws require the offer to be made by a licensed broker or dealer, the offer
will be deemed to be made on behalf of Sempra by Goldman, Sachs & Co., the
Dealer Manager of this offer, or one or more registered brokers or dealers
licensed under the laws of that jurisdiction.
Notice Of Offer To Purchase For Cash
By
Sempra Energy
up to 36,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price
not in Excess of $20.00 Nor
Less Than $17.50 Per Share in Cash
Sempra Energy, a California corporation, invites its shareholders to tender
shares of its common stock, for purchase by Sempra. Sempra is offering to
purchase up to 36,000,000 shares at a price not in excess of $20.00 nor less
than $17.50 per share, net to the seller in cash, without interest, as
specified by shareholders tendering their shares.
Sempra will determine a single per share price that it will pay for all
shares that it purchases in the offer, taking into account the number of shares
tendered and the prices specified by tendering shareholders. Sempra will select
the lowest purchase price that will allow it to purchase 36,000,000 shares or,
if a lesser number of shares are properly tendered, all shares that are
properly tendered. Only shares properly tendered at prices at or below the
purchase price and not properly withdrawn will be purchased. However, because
of the "odd lot" priority, proration and conditional tender provisions
described in the Offer to Purchase, all of the shares tendered at or below the
purchase price will not be purchased if the offer is oversubscribed. Under no
circumstances will Sempra pay interest on the purchase price, including but not
limited to, by reason of any delay in making payment.
Sempra's offer is being made upon the terms and subject to the conditions
described in the Offer to Purchase dated January 26, 2000 and in the related
Letter of Transmittal which, as amended or supplemented from time to time,
together constitute the offer. All shares tendered and purchased will include
the associated preferred stock purchase rights issued pursuant to a Rights
Agreement dated as of May 26, 1998 between Sempra and First Chicago Trust
Company of New York, as rights agent, and, unless the context otherwise
requires, all references to shares include the associated preferred stock
purchase rights.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
Sempra reserves the right, in its sole discretion, to purchase more than
36,000,000 shares pursuant to the offer.
<PAGE>
The offer is not conditioned on any minimum number of shares being tendered.
However, the offer is subject to other conditions described in the Offer to
Purchase.
Sempra's Board of Directors has authorized the offer. However, neither
Sempra nor Sempra's Board of Directors makes any recommendation to shareholders
as to whether to tender or refrain from tendering shares or as to the purchase
price at which shareholders may choose to tender their shares. Shareholders
must make their own decision as to whether to tender their shares and, if so,
how many shares to tender and the price or prices at which they will tender
them. In doing so, shareholders should consider Sempra's reasons for making the
offer, including the recently announced reduction in Sempra's quarterly
dividend level, Sempra's increased use of financial leverage and Sempra's
increased business emphasis on providing unregulated integrated energy
services. Sempra's directors and executive officers have advised Sempra that
they do not intend to tender any shares in the offer.
The term "Expiration Date" means 5:00 p.m., New York City time, on Friday,
February 25, 2000. Sempra may, in its sole discretion, extend the period of
time during which the offer will remain open. In the event of an extension, the
term "Expiration Date" will mean the latest time and date at which the offer,
as extended by Sempra, will expire. For purposes of the offer, Sempra will be
deemed to have accepted for payment, and therefore purchased, subject to the
"odd lot" priority, proration and conditional tender provisions of the offer,
shares properly tendered at or below the selected purchase price and not
properly withdrawn only when, as and if Sempra gives oral or written notice to
First Chicago Trust Company of New York, the Depositary for the offer, of its
acceptance of the shares for payment pursuant to the offer. Payment for shares
tendered and accepted for payment pursuant to the offer will be made only after
timely receipt by the Depositary of certificates for the shares, or a timely
confirmation of a book-entry transfer of the shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase), a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile of the Letter of Transmittal, or an Agent's Message
(as defined in the Offer to Purchase) in the case of a book-entry transfer, and
any other documents required by the Letter of Transmittal.
If at the expiration of the offer more than 36,000,000 shares, or a greater
number of shares as Sempra may elect to purchase, are properly tendered at
prices at or below the purchase price and not properly withdrawn, Sempra will
purchase properly tendered shares on the following basis:
(a) first, Sempra will purchase all shares tendered by any Odd Lot Holder
(as defined in the Offer to Purchase) who:
(1) tenders all shares owned beneficially or of record by the Odd Lot
Holder at a price at or below the purchase price (tenders of less
than all of the shares owned by the Odd Lot Holder will not qualify
for this preference); and
(2) completes the sections entitled "Odd Lots" in the Letter of
Transmittal and, if applicable, in the Notice of Guaranteed
Delivery; and
(b) second, after the purchase of all of the shares properly tendered by
Odd Lot Holders, subject to the conditional tender provisions described
in Section 6 of the Offer to Purchase, Sempra will purchase all other
shares properly tendered at prices at or below the purchase price, on a
pro rata basis, with appropriate adjustments to avoid purchases of
fractional shares.
Sempra expressly reserves the right, in its sole discretion, at any time and
from time to time, and regardless of whether or not any of the events described
in Section 7 of the Offer to Purchase have occurred or are deemed by Sempra to
have occurred, to extend the period of time during which the offer is open and
delay acceptance for payment of, and payment for, any shares by giving oral or
written notice of the extension to the Depositary and making a public
announcement of the extension. During any extension, all shares previously
tendered and not properly withdrawn will remain subject to the offer and to the
rights of a tendering shareholder to withdraw the shareholder's shares.
Tenders of shares may be withdrawn at any time before the Expiration Date
and, unless previously accepted for payment by Sempra pursuant to the offer,
may also be withdrawn at any time after 12:00 Midnight, New York City time, on
Thursday, March 23, 2000. For the withdrawal to be effective, a
<PAGE>
written, telegraphic or facsimile transmission notice of withdrawal must be
received in a timely manner by the Depositary at one of its addresses described
on the back cover of the Offer to Purchase. Any notice of withdrawal must
specify the name of the tendering shareholder, the number of shares to be
withdrawn and the name of the registered holder of the shares. If the
certificates for shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, before the release of the certificates, the
serial numbers shown on the certificates must be submitted to the Depositary
and the signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution (as defined in the Offer to Purchase), unless the shares
have been tendered for the account of an Eligible Institution. If shares have
been tendered pursuant to the procedure for book-entry transfer described in
the Offer to Purchase, any notice of withdrawal also must specify the name and
the number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn shares and must otherwise comply with the Book-Entry
Transfer Facility's procedures. All questions as to the form and validity,
including the time of receipt, of any notice of withdrawal will be determined
by Sempra, in its sole discretion, which determination will be final and
binding on all parties. None of Sempra, the Depositary, the Information Agent,
the Dealer Manager or any other person will be under any duty to give notice of
any defects or irregularities in any tender or notice of withdrawal, nor will
any of them incur liability for failure to give any notice.
The information required to be disclosed by Rule 13e-4(d)(1) promulgated
under the Securities Exchange Act of 1934, as amended, is contained in the
Offer to Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal are being mailed
to record holders of shares whose names appear on Sempra's shareholder list and
will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
shareholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information. Shareholders should read them carefully before making
any decision regarding the offer.
Shareholders may request additional copies of the Offer to Purchase, the
Letter of Transmittal or the Notice of Guaranteed Delivery from the Information
Agent at its address and telephone number below.
The Information Agent for the offer is:
D. F. KING & CO., INC.
77 Water Street
New York, NY 10005-4495
Banks and Brokers Call Collect (212) 269-5550
All Others Call Toll Free (800) 431-9645
The Dealer Manager for the offer is:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, NY 10004
Call Collect: (212) 902-1000
January 26, 2000
<PAGE>
EXHIBIT 99(a)(5)(iv)
FOR IMMEDIATE RELEASE
- ---------------------
Media Contacts: Chuck Burgess/Ian Campbell Doug Kline/Michael Clark
Abernathy MacGregor Group Sempra Energy
212-371-5999 877-866-2066
Analyst Contact: Clem Teng
Sempra Energy
877-736-7727
SEMPRA ENERGY ANNOUNCES INCREASED 1999 EARNINGS,
SELF-TENDER OFFER, DIVIDEND REDUCTION
FINANCIAL INITIATIVES TO ENHANCE FINANCIAL FLEXIBILITY, EPS GROWTH RATE
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SAN DIEGO, Jan. 26, 2000 - Sempra Energy (NYSE: SRE) today simultaneously
reported increased 1999 earnings and announced a tender offer and dividend
reduction designed to further accelerate earnings growth and enhance the
company's competitive position.
Sempra Energy reported unaudited 1999 earnings of $394 million, or $1.66
per diluted share, up 34 percent from $294 million, or $1.24 per diluted share,
for the year 1998. Unaudited earnings, excluding nonrecurring items, in 1999
rose to $408 million, or $1.72 per diluted share, up nearly 8 percent, from $379
million, or $1.60 per diluted share, in 1998.
Sempra Energy has commenced a "Dutch Auction" self-tender offer to purchase
up to 36 million shares, or approximately 15 percent, of outstanding common
shares at a premium to the closing price of Sempra Energy's common stock on
Tuesday, Jan. 25, 2000. The company intends to finance substantially all of the
repurchase by issuing a combination of senior notes and trust preferred
securities.
Sempra Energy also plans to reduce the quarterly dividend payable on
shares of its common stock to $0.25 per share ($1.00 annualized rate) from its
previous level of $0.39 per share ($1.56 annualized rate).
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SEMPRA ENERGY ANNOUNCES 1999 EARNINGS / PAGE 2
"These financial initiatives give us increased financial flexibility to
invest in our growing domestic and international businesses, bring our dividend
payout ratio in line with our industry peers and help us achieve our goal of
increasing our compound average growth rate in earnings per share to 8 percent
to 10 percent over the next three years," said Richard D. Farman, chairman and
chief executive officer of Sempra Energy. "These initiatives are consistent
with our strategies and our objective of being a focused, flexible and
competitive energy services company.
"Today's actions return capital to shareholders while maintaining a solid
balance sheet, excellent cash flow and strong investment-grade credit ratings,"
Farman added.
"We've successfully delivered on our primary performance objectives since
Sempra Energy's creation 18 months ago," said Stephen L. Baum, vice chairman,
chief operating officer and president of Sempra Energy. "We exceeded our
earnings goal in 1999 and achieved profitability in our unregulated businesses
one year ahead of target. We're on track to meet our objective to generate one-
third of our earnings from these units by the end of 2003. We're particularly
pleased with the progress of our energy trading and our international
businesses. We've also produced returns from our California regulated utility
operations that exceed their authorized rates of return on equity.
"Going forward, we will intensify development of our growth businesses,
including retail energy services, international utilities, trading and
technology ventures," Baum said. "At the same time, we'll continue to enhance
the competitive position and returns from our regulated delivery services in
California and to add generation capacity in selected markets to support our
retail businesses."
DIVIDEND REDUCTION
The company plans to reduce the quarterly dividend payable on shares of its
common stock to $0.25 per share ($1.00 annualized rate) from its previous $0.39
per share ($1.56 annualized rate) commencing with the dividend payable in the
second quarter of 2000. Reducing the dividend rate improves the company's
financial flexibility, increases cash flow available for investment in higher-
growth businesses, and brings the company's dividend payout ratio in line with
industry peers. This move positions Sempra Energy's common stock for increased
growth in earnings per share and market value.
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SEMPRA ENERGY ANNOUNCES 1999 EARNINGS / PAGE 3
1999 Earnings
Sempra Energy reported unaudited fourth-quarter 1999 earnings of $105
million, or $0.44 per diluted share, up 24 percent from $85 million, or $0.36
per diluted share, for the fourth quarter of 1998 (or, excluding nonrecurring
items, up 18 percent from $89 million, or $0.38 per diluted share, in 1998).
Revenues for Sempra Energy increased 8.8 percent to $5.5 billion in the
full-year 1999, compared to $5.0 billion in 1998.
The weighted average number of common shares outstanding (diluted) in 1999
increased to 237.6 million, versus 237.1 million in 1998.
The following results from Sempra Energy's business units are exclusive of
non-recurring costs:
Southern California Gas Company recorded net income of $201 million in
1999, up from $193 million during the previous year, primarily due to increased
sales to commercial and industrial customers, lower operating costs and 1998
regulatory contract settlements. Net income for San Diego Gas & Electric in 1999
was $192 million, down from $220 million in 1998, primarily due to reductions in
its authorized rate of return and generation rate base, as well as to increased
interest expense, all related to California's electric industry restructuring.
For the full-year 1999, non-utility and new-business operations, including
Sempra Energy Solutions, Sempra Energy Trading, Sempra Energy International,
Sempra Energy Resources, Sempra Energy Financial and the parent company,
recorded net income of $15 million, compared to a net loss of $34 million last
year. The improvement in results for this group of companies was due primarily
to a $32 million net income increase by Sempra Energy Trading, a $14 million
rise in net income by Sempra Energy International and an additional $8 million
earnings contribution from Sempra Energy Financial. Sempra Energy Trading's
profits rose due to a 37-percent increase in physical natural gas trading
volumes and a successful entry into European markets. Sempra Energy
International's earnings growth was generated primarily by its South American
utilities, two of which - Chilquinta Energia and Luz del Sur - were acquired in
1999.
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SEMPRA ENERGY ANNOUNCES 1999 EARNINGS / PAGE 4
STOCK REPURCHASE PLAN
Sempra Energy plans to repurchase up to 36 million shares of its common
stock at a single, per-share price within a price range of $17.50 to $20.00 per
share. Under the company's Dutch Auction tender offer, shareholders will have
the opportunity to tender all -- or a portion of -- their shares at a price
within this specified price range. The closing price of Sempra Energy's common
stock on Tuesday, Jan. 25, 2000, was $17.25 per share. Based on the number of
shares tendered and the prices specified by the tendering shareholders, the
company will determine the single, per-share price within the range that will
allow it to buy 36 million shares (or the lesser number of shares that are
properly tendered at a price within the range). Shareholders whose shares are
purchased in the offer will be paid the set purchase price net in cash, without
interest, after expiration of the offer period.
Neither Sempra Energy nor its board of directors makes any recommendation
to shareholders as to whether to tender or refrain from tendering their shares.
Shareholders must decide how many shares they will tender, if any, and the price
within the stated range at which they will offer their shares for purchase.
The tender offer will expire Feb. 25, 2000, at 5 p.m., EST, unless the
company elects to extend the offer. The offer is subject to various conditions,
including the company's obtaining long-term financing on satisfactory terms and
conditions.
Shareholders shortly will receive more detailed information about the
repurchase plan through the tender offer mailing. The dealer manager for the
offer is Goldman, Sachs & Co. The information agent is D.F. King & Co., Inc.
Copies of the Offer to Purchase and related materials, dated Jan. 26, 2000, will
be mailed to all shareholders. The terms of the offer and procedures for
tendering are explained in detail in these materials. Shareholders are urged to
carefully read these materials prior to making any decision with respect to the
offer. Additional information or assistance may be obtained from the
information agent by calling (800) 431-9645 (toll free) or (212) 269-5550 (call
collect).
Sempra Energy, based in San Diego, is a Fortune 500 energy services holding
company with 12,000 employees and annual revenues of $5.5 billion. Through its
seven principal subsidiaries - Southern California Gas Company, San Diego Gas &
Electric, Sempra Energy Solutions, Sempra Energy Trading, Sempra Energy
International, Sempra Energy Resources and Sempra Energy Financial - Sempra
Energy serves 9 million customers in the United States, Europe, Canada, Mexico,
and South America.
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SEMPRA ENERGY ANNOUNCES 1999 EARNINGS / PAGE 5
This press release contains statements that are not historical fact and
constitute "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934,as amended (the "Exchange Act"). It has not
been judicially determined that the safe harbor provided by Section 21E of the
Exchange Act applies to forward-looking statements in a press release by an
issuer regarding the issuer's business which also contains information relating
to a tender offer. Some sentences may receive the benefit of the safe harbor,
while others may not. When we use words like "believes," "expects,"
"anticipates," "intends," "plans," "estimates," "may," "should" or similar
expressions, or when we discuss our strategy or plans, we are making forward-
looking statements. Forward-looking statements are not guarantees of
performance. They involve risks, uncertainties and assumptions that could cause
the Company's future results to differ materially from those expressed in these
forward-looking statements. Many of the factors that will determine these
results are beyond the Company's ability to control or predict. These statements
are necessarily based upon various assumptions involving judgments with respect
to the future. These risks and uncertainties, include, among others: national,
international, regional and local economic, competitive and regulatory
conditions and developments; capital market conditions, inflation rates and
interest rates; energy markets, including the timing and extent of changes in
commodity prices; weather conditions; business, regulatory and legal decisions;
the pace of deregulation of retail natural gas and electricity delivery;
technological developments; the timing and success of business development
efforts; and other uncertainties, all of which are difficult to predict and many
of which are beyond the Company's control. These risks and uncertainties are
further discussed in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998.
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SEMPRA ENERGY -- ANALYST TELECONFERENCE
WEDNESDAY, JANUARY 26, 2000
9:00 AM EST
OPERATOR:
Good morning everyone, and welcome to the Sempra Energy analyst conference
call. With us today are Mr. Richard Farman, chairman and chief executive officer
of Sempra, Mr. Steve Baum, vice chairman, president and chief operating officer,
Mr. Neal Schmale, executive vice president and chief financial officer, Mr.
Frank Ault, vice president and controller, and Mr. Clem Teng, director of
investor relations. After the opening remarks, we will be taking questions. To
ask a question, please [INSTRUCTIONS].
The prepared remarks will be recorded and are copyrighted material.
Therefore, please note that they can not be recorded, transcribed, or
rebroadcast without Sempra Energy's permission. Your participation implies
consent to our recording this call. If you do not agree to these terms, simply
drop off the line. Now I would like to turn the call over to Mr. Clem Teng.
Please go ahead, sir.
CLEM TENG:
Good morning, everyone. Thank you for joining us today.
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Before we begin, I want to remind you that this call may contain statements
that are not historical fact and constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions that could cause our future results to
differ materially from those expressed in the forward-looking statements. These
risks, uncertainties and assumptions are described at the bottom of today's
press release and are further discussed in the company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, filed with the SEC.
Now, I'd like to introduce my colleagues who are with me on the call this
morning. First Dick Farman, our chairman and CEO will lay out the strategic
rationale and significance of today's announcement, and then Steve Baum,
Sempra's vice chairman, president and COO, will discuss the financial
initiatives in more detail. Frank Ault, our vice president and controller, will
be talking about our earnings later in the call.
I'll turn over the call to Dick.
RICHARD FARMAN:
Thanks, Clem.
First, I want to underscore how pleased we are today to report increased
fourth quarter and annual earnings. Second, as you see from the press release
issued today, we will purchase up to 36 million or about 15 percent
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of Sempra Energy outstanding shares through a "Dutch Auction" self-tender,
and third, we will reduce our annual dividend to $1.00 from $1.56. We intend to
finance the tender with a combination of senior notes and trust preferred
securities.
Before we discuss the details of each of these announcements, let me
outline the broader significance of the two financial initiatives.
These two financial steps will help Sempra Energy generate stronger growth
and returns for investors and advance the company's evolution into a more
focused, flexible, competitive energy services company.
The dividend reduction and stock repurchase plan will help Sempra Energy
generate stronger growth and returns for investors and advance the company's
evolution into a more focused, flexible, competitive energy services company.
These initiatives will help us achieve our new goal of increasing our EPS
growth rate to a 3-year average compound annual rate of 8 percent to 10 percent.
They provide us with increased financial flexibility to invest in our growing
business lines, to become a leader in increasingly customer-driven multi-
regional energy marketplace. They also bring our dividend payout ratio in line
with our current business mix, our long-term business strategy, and our industry
peers. Finally, they support our commitment to sustain a strong balance sheet
with strong investment-grade credit ratings - and to continue to enhance the
efficiency and focus of our core utility operations.
As we told you eighteen months ago when we outlined the strategies for our
new company, we've been focusing on key opportunities for growth
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in these principal business lines: in faster growing international markets, in
energy trading and in the retail energy markets. We have also begun to take
promising steps in the development of our capabilities in the emerging
technology services arena. Since Sempra Energy's formation, we've delivered what
we said we would:
o We exceeded our EPS growth objective of 5 to 6 percent in 1999;
o We achieved profitability for our new unregulated business lines one
year ahead of schedule;
o We've achieved growth in those new business lines that puts us on
track to generate one-third of our consolidated earnings from these
units by the end of 2003;
o We've maintained strong investment-grade credit ratings; and
o We've generated returns from our core utility operations that exceed
our authorized return on equity.
Having developed a growing presence in emerging, unregulated markets,
today's financial initiatives should accelerate our evolution into a stronger
growth company.
Now, Steve is going to describe the self-tender offer and the dividend
reduction in a bit more detail. He'll also give you a more detailed update on
the prospects we see for our primary areas of focus.
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STEVE BAUM:
Thanks, Dick. As Dick has explained, both moves are intended to generate
stronger growth and returns for investors. Let's look at how the share buy-back
plan will work.
We plan to repurchase up to 36 million shares or up to 15 percent of our
common stock at a single, per-share price within a price range of $17.50 to
$20.00 per share through a Dutch Auction. Under the Dutch Auction tender offer,
shareholders will have the opportunity to tender all -- or a portion of -- their
shares at a price within this specified price range. Yesterday's closing price
was $17 1/4 per share.
This offer will expire Feb. 25, 2000 at 5 p.m., EST, unless we choose to
extend the offer. The press release and the offer documents describe this in
great detail. We're happy to answer any questions you may have at the end of the
call. Let me turn now to the dividend reduction.
The second financial initiative is a reduction in our annual dividend from
$1.56 per share to $1.00 per share. This dividend is consistent with our mix of
delivery and growth businesses, improves our financial flexibility, and aligns
our payout with our peers.
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What's the result? These initiatives, after returning capital to
shareholders, free up financial resources for investment in our growth
businesses or repayment of debt. This in turn positions Sempra for potential
increased growth in earnings per share, and we expect, enhanced performance from
our common stock. In addition, we're pleased that Duff & Phelps, Moody's, and S
& P each has confirmed our `A' credit ratings.
Let's look at the elements of our strategy that these initiatives allow us
to accelerate.
In our traditional core business with a customer base of six million -- San
Diego Gas & Electric and Southern California Gas -- our goal is to sustain both
utilities' tradition for excellence, to improve efficiencies and to realize the
benefits of those efficiencies in returns that exceed our authorized ROE. We
will also promote competitive markets in California and elsewhere.
We're very excited about the opportunities presented by the relatively high
rates of growth in our international utilities' customer growth and energy
demand. We already have built an international customer base that is more than 2
million strong and growing. Our international business was boosted in the past
year through the acquisition of Chilquinta Energia in Chile and Luz del Sur in
Peru. In the fourth quarter, we won the bid for developing a $700 million gas
distribution system in Nova Scotia - a major project that has an excellent
regulatory framework.
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Our trading business is going well in a rapidly expanding market in North
America and Europe. In Europe, we have successfully opened offices in London,
Oslo and Dusseldorf and have become one of the largest traders of Brent crude in
Europe.
We're pleased with the growth of our trading business, and the $19 million
in earnings recorded this year. We plan to continue our disciplined approach to
the growth of this business. Further, we're confident this company's expertise
will be an integral factor in the success of our retail businesses.
Our Energy America subsidiary serves some 400,000 customers and is
targeting a large national market. Today, 23 states have either deregulated or
will soon deregulate, opening important new markets for this business, which we
believe can be profitably grown at a very strong pace. We will also seek to add
new customers through e-commerce connections.
In the Commercial and Industrial retail sector, we see excellent
opportunities. We are well underway in complementing our existing business with
skills to capture a major segment of this large, emerging market. With some
prominent commercial customers, including Lockheed Martin and Union Bank of
California already signed up, we intend to aggressively pursue clients for both
outsourced energy solutions and as a consultant on enhanced control over their
use of energy resources.
Sempra plans on a selective basis to develop a further presence in
generation primarily to provide the power plants certain customers require.
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It's an arena we know well: consider our recently completed El Dorado generation
facility in Nevada, and plans for an additional California facility near
Bakersfield, which are well underway.
Finally, let me mention our technology ventures. We have formed Sempra
Communications to develop fiber networks and to explore other communications
opportunities. We're in the early stages of the development of technology
applications for energy services. For example, Soliance Networks is designed to
capture a growing share of the information systems market for customer care.
In addition to discussing our announcement this morning, we are also
pleased to report strong earnings for the quarter and the year.
I'd like to turn the call over to Frank Ault who will provide a summary of
our results.
FRANK AULT:
Thank you, Steve, and good morning to everyone.
As Dick reported earlier, Sempra Energy's 1999 earnings exceeded our annual
earnings per share growth objective of 5 percent to 6 percent.
Excluding business-combination costs, Sempra Energy's earnings per diluted
share were $1.72 in 1999, or 7.5 percent higher than the $1.60 per diluted share
for 1998.
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As shown on slide 1, Sempra reported unaudited 1999 consolidated net income
of $394 million, $1.66 per diluted share of common stock, for 1999. This
compares to consolidated net income of $294 million, or $1.24 per diluted share
in 1998.
Slide 2 shows results by lines of business:
o SoCalGas reported net income of $201 million, or 85 cents per share for
1999, versus $193 million, or 81 cents in 1998.
o SoCalGas' income increased from last year primarily due to increased
sales to commercial and industrial customers, lower operating costs and
1998 non-recurring costs associated with contract settlements.
o San Diego Gas & Electric reported net income of $192 million, or 81 cents
per share for 1999, down from $220 million, or 93 cents per share in
1998.
o SDG&E results were impacted primarily by reductions in its generation
rate base as well as the utility's authorized return on equity and higher
interest costs all resulting from California's electric industry
restructuring.
o Sempra Energy's parent and non-utility operations include Sempra Energy
International, Sempra Energy Solutions, Sempra Energy Trading, Sempra
Energy Resources, and Sempra Energy Financial
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o Collectively, these business lines contributed $15 million, or 6 cents
per share to earnings for 1999 compared to a $34 million loss or 14 cents
per share in 1998.
o The improvement in results for this group of companies was due primarily
to:
o A $32 million net income improvement by Sempra Energy Trading;
o A $14 million increase in net income by Sempra Energy International;
and
o An $8 million improvement in earnings contribution from Sempra Energy
Financial.
Sempra Energy Trading reported earnings of $19 million, or 8 cents per
share in 1999 compared to a net loss of $13 million, or 5 cents per share for
1998. Increased volumes and the new European operations provided the significant
increase in earnings.
Sempra Energy Trading's profit improvement benefited from a 37-percent rise
in physical natural gas trading volumes to 5.8 billion cubic feet per day
(bcf/d) from 4.2 bcf/d in 1998.
Sempra Energy International reported earnings of $10 million, or 4 cents
per share compared to a loss of $4 million, or 2 cents per share in 1998. The
earnings improvement was generated primarily by its South American utilities
which Steve discussed earlier.
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Our operations in Argentina remained profitable, benefiting from colder
weather and lower operating costs.
Our four projects in Mexico -- Mexicali, Chihuahua, LaLaguna-Durango, and
the pipeline to the Rosarito power plant -- continue to be collectively
profitable.
Sempra Energy Financial, our affordable housing subsidiary, contributed $28
million, or 12 cents per share in 1999, compared to $20 million, or 8 cents per
share in 1998.
The rest of the unregulated businesses - several of which are still in the
start-up phase - incurred losses resulting from their start-up operations.
I'd like to return the discussion to Dick Farman, who will wrap up.
DICK FARMAN:
Thanks, Frank. Let me summarize the significance of today's announcement
before taking your questions.
Today's initiatives are about growth, flexibility, and delivering value to
shareholders. They enhance the flexibility of our financial resources in ways
that complement our strategic focus. They help us maintain a solid balance sheet
and strong investment grade credit ratings. They help us accelerate EPS growth
and the evolution of our strategy. They also return capital to shareholders.
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As Steve said, we accomplished much over the past 18 months, meeting or
exceeding our financial and operating objectives. But we recognize it's not
enough. We have more work to do, and we look forward to discussing our progress
as the year 2000 unfolds. I believe the long-term result of these steps -- and
those to come -- will be superior performance, differentiation from our peers
and enhanced total value for all our shareholders.
We would now be happy to answer any questions you may have.
[END]
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Sempra Energy
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Safe Harbor Statement
This teleconference script presentation contains statements that are not
historical fact and constitute "foward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). It has not been judicially determined that the safe harbor provided by
Section 21E of the Exchange Act applies to forward-looking statements in a
presentation by an issuer regarding the issuer's business which also contains
information relating to a tender offer. Some sentences may receive the benefit
of the safe harbor, while others may not. When we use words like "believes,"
"expects," "anticipates, "intends," "plans," estimates," "may," "should" or
similar expressions, or when we discuss our strategy or plans, we are making
forward-looking statements. Foward-looking statements are not guarantees of
performance. They involve risks, uncertainties and assumptions that could cause
the Company's future results to differ materially from those expressed in these
forward-looking statements. Many of the factors that will determine these
results are beyond the Company's ability to control or predict. These statements
are necessarily based upon various assumptions involving judgments with respect
to the future. These risks and uncertainties, include among others: national,
international, regional and local economic, competitive and regulatory
conditions and developments; capital market conditions, inflation rates and
interest rates; energy markets, including the timing and extent of changes in
commodity prices; weather conditions; business, regulatory and legal decisions;
the pace of deregulation of retail natural gas and electricity delivery;
technological developments; the timing and success of business development
efforts; and other uncertainties, all of which are difficult to predict and many
of which are beyond the Company's control. These risks and uncertainties are
further discussed in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998.
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EXHIBIT B
Sempra Energy
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Reported Earnings Per Share (diluted)
Fourth Quarter Full Year
1999 1998 1999 1998
$0.45 $0.36 $1.66 $1.24
Reported Net Income ($millions)
1999 1998 1999 1998
$105 $85 $394 $294
EPS by Line of Business
Fourth Quarter Full Year
1999 1998 1999 1998
SoCal Gas $0.25 $0.18 $0.85 $0.81
SDG&E 0.14 0.21 0.81 0.93
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Total Utilities 0.39 0.39 1.66 1.74
Sempra Energy Trading 0.04 (0.01) 0.08 (0.05)
Sempra Energy International 0.02 0.00 0.04 (0.02)
Sempra Energy Financial 0.03 0.02 0.12 0.08
Other Non-Utility and Parent (0.04) (0.02) (0.18) (0.15)
----------------- -----------------
Normalized EPS 0.44 0.38 1.72 1.60
----------------- -----------------
Business Combination Costs 0.00 (0.02) (0.06) (0.36)
----------------- -----------------
Reported EPS (diluted) $0.44 $0.36 $1.66 $1.24
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[LOGO] Sempra Energy
<PAGE>
[LOGO] Sempra Energy(SM)
Dick Farman
Chairman and CEO
Steve Baum
Vice Chairman, President and COO
January 26, 2000
<PAGE>
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Sempra Energy
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Safe Harbor Statement
This teleconference script contains statements that are not historical fact and
constitute "foward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). It has not
been judicially determined that the safe harbor provided by Section 21E of the
Exchange Act applies to forward-looking statements in a presentation by an
issuer regarding the issuer's business which also contains information relating
to a tender offer. Some sentences may receive the benefit of the safe harbor,
while others may not. When we use words like "believes," "expects,"
"anticipates, "intends," "plans," estimates," "may," "should" or similar
expressions, or when we discuss our strategy or plans, we are making
forward-looking statements. Foward-looking statements are not guarantees of
performance. They involve risks, uncertainties and assumptions that could cause
the Company's future results to differ materially from those expressed in these
forward-looking statements. Many of the factors that will determine these
results are beyond the Company's ability to control or predict. These statements
are necessarily based upon various assumptions involving judgments with respect
to the future. These risks and uncertainties, include among others: national,
international, regional and local economic, competitive and regulatory
conditions and developments; capital market conditions, inflation rates and
interest rates; energy markets, including the timing and extent of changes in
commodity prices; weather conditions; business, regulatory and legal decisions;
the pace of deregulation of retail natural gas and electricity delivery;
technological developments; the timing and success of business development
efforts; and other uncertainties, all of which are difficult to predict and many
of which are beyond the Company's control. These risks and uncertainties are
further discussed in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998.
<PAGE>
Sempra Energy
Summary of Today's Transaction
. Repurchase of up to 15% of shares outstanding in a Dutch Auction Tender at
a premium to yesterday's close
. The tender will be financed with a combination of senior debt and trust
preferred securities
. Reduction of annual dividend rate from $1.56/share to $1.00/share, or 36%
<PAGE>
Sempra Energy
Summary of Today's Transaction
. Transaction offers return of capital to shareholders
. 'A' credit rating confirmed
. Dividend reduction provides additional financial flexibility and brings
payout ratio in line with peers
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Sempra Energy
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Current Financial Objectives
<TABLE>
<CAPTION>
Objectives Status (Pre-transaction)
---------- ------------------------
<S> <C> <C>
. Grow earnings per share by
5%-6% per year (right arrow) Achieved in 1999
. New business lines collectively
profitable during 2000 (right arrow) Achieved one year early
during 1999
. 1/3 of consolidated earnings from
unregulated lines of business by (right arrow) On target to achieve
the end of 2003
. Maintain strong credit ratings (right arrow) A (S&P, D&P)
A2 (Moody's)
</TABLE>
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Sempra Energy
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Enhanced Strategic and
Financial Objectives
. Focus strategies to create stronger growth and returns
. Accelerated our evolution into a more flexible, competitive energy services
company
. Provide financial flexibility to invest in higher growth energy businesses
. Provide dividend payout consistent with mix of delivery and growth businesses
and with peers
<PAGE>
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Sempra Energy
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Enhanced Strategic and
Financial Objectives
. Grow earnings per share an average of 8%-10% over the next three years
. Provide one-third of consolidated earnings from unregulated businesses by the
end of 20003
. Maximize use of our current strong balance sheet while maintaining strong
investment grade credit ratings
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Sempra Energy
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Business Descriptions
and Strategies
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Sempra Energy
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Sempra's Businesses
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Retail Trading
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Delivery [LOGO] Sempra Energy/SM/ International
Services
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Technology Generation
Ventures
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Sempra Energy
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Delivery Services
. Continue California utilities as the foundation
. Focus on superior delivery services
. Aggressively pursue cost reduction initiatives
. Promote competitive markets in California and elsewhere
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Sempra Energy
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International
. Integrate energy service offerings in Mexico
. Build on delivery businesses in South America
. Develop gas distribution in Nova Scotia
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Sempra Energy
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Energy Trading
. Continue to build our energy trading and marketing capabilities throughout
North America and Europe
. Continue disciplined approach
. Integrate trading and marketing skills into other core strategies
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Sempra Energy
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Retail
. Integrate and expand existing commercial and industrial products and
services
. Build on Energy America business and brand for the mass market
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Sempra Energy
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Generation
. Build or acquire generation to support retail business
. Focus in select regions
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Sempra Energy
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Technology Ventures
. Develop technology-based ventures to enhance our retail strategy
o Soliance Networks
o Convergence of communications and energy businesses - Sempra
Communications
o Web technology
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Sempra Energy
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Summary
. Up to 15% of common shares repurchased
. Dividend payout aligned with strategy and consistent with peers
. A new earnings per share growth rate objective of 8%-10%
. Strong cash flow generation
. Focus on increasing shareholder value
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[LOGO] Sempra Energy/SM/
<PAGE>
EXHIBIT D
SEMPRA ENERGY
EARNINGS PER SHARE (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31 December 31
1999 1998 Change 1999 1998 Change
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Utility Operations
SoCalGas $ 0.25 $ 0.18 $ 0.07 $ 0.85 $ 0.81 $ 0.04
SDG&E 0.14 0.21 (0.07) 0.81 0.93 (0.12)
Parent & Non-Utility Operations 0.05 (0.01) 0.06 0.06 (0.14) 0.20
------- ------- ------- ------- ------- -------
Earnings Per Share
Before Business-Combination Costs 0.44 0.38 0.06 1.72 1.60 0.12
Business-Combination Costs - (0.02) 0.02 (0.06) (0.36) 0.30
------- ------- ------- ------- ------- -------
Reported Earnings Per Share, (Diluted) $ 0.44 $ 0.36 $ 0.08 $ 1.66 $ 1.24 $ 0.42
======= ======= ======= ======= ======= =======
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</TABLE>
FINANCIAL HIGHLIGHTS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31 December 31
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Capital Expenditures (in millions)
SoCalGas $ 40 $ 51 $ 146 $ 135
SDG&E $ 80 $ 67 $ 245 $ 227
Weighted Average Rate Base (in millions)
SoCalGas - - $ 2,466 $ 2,604
SDG&E - - $ 2,333 $ 2,623
Authorized Return on Rate Base
SoCalGas - - 9.49% 9.49%
SDG&E - - 9.05% 9.35%
Authorized Return on Common Equity
SoCalGas - - 11.60% 11.60%
SDG&E - - 11.10% 11.60%
Achieved Return on Common Equity (annualized)*
SoCalGas - - 15.21% 14.14%
SDG&E - - 15.70% 17.51%
*Excluding business-combination costs
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</TABLE>
