SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 13, 1998
CALIFORNIA WATER SERVICE GROUP
(Exact name of registrant as specified in its charter)
California 1-13883 77-0448994
State of Incorporation Commission File No. IRS Employer ID Number
1720 North First Street, San Jose, CA 95112
Address, including Zip code, of registrant's principal executive office
(408) 367-8200
Registrant's telephone number, including area code
California Water Service Company
(Former name or former address, if changed since last report)
Item 5. Other Events
On November 15, 1998, Registrant issued a press release announcing that on
November 13, 1998 Registrant and its wholly-owned subsidiary, California Water
Service Company ("Company"), had entered into an agreement to merge with
Dominguez Services Corporation ("Dominguez"). As set forth in the press
release, Dominguez will merge with and into Company upon the agreed terms and
conditions, and each then issued and outstanding share of Dominguez common
stock will be converted into 1.18 shares of Registrant's common stock. The
consummation of the merger is conditioned upon the satisfaction of certain
conditions precedent, including approval by the California Public Utilities
Commission and other regulatory approvals, receipt of certain assurances that
the Merger will be accounted for as a pooling-of-interests and will qualify
as a tax free reorganization, and approval by Dominguez' shareholders.
Item 7. Financial Statements and Exhibits
Press release issued by the Registrant on November 15, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this current report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: November 19, 1998
California Water Service Group
By: /s/ Peter C. Nelson
Peter C. Nelson
President and Chief Executive Officer
EXHIBIT INDEX
Sequential
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EXHIBIT NUMBER
7. Press release issued by the Registrant on November 15, 1998. 5
A LOGO OF CALIFORNIA WATER SERVICE GROUP SHOWING A RISING SUN WAS PLACED
IN THE TOP LEFT CORNER OF THIS PRESS RELEASE.
A LOGO OF DOMINGUEZ SERVICES CORPORATION SHOWING A PICTURE OF A DROP OF
WATER WAS PLACED IN THE TOP RIGHT CORNER OF THIS PRESS RELEASE.
1720 NORTH FIRST STREET
SAN JOSE, CA 95112-4598
CONTACT: GERRY FEENEY (408) 367-8216 - ANALYSTS
JOHN TOOTLE (310) 834-2625 X322 - ANALYSTS
JIM GOOD (408) 367-8219 - MEDIA
NOVEMBER 15, 1998
98 GO 7
FOR IMMEDIATE RELEASE
CALIFORNIA WATER SERVICE GROUP AND DOMINGUEZ SERVICES
CORPORATION ANNOUNCE MERGER
At special meetings held on Friday, November 13, the Boards of Directors of
California Water Service Group (NYSE:CWT) and Dominguez Services Corporation
(Nasdaq:DOMZ) announced an agreement to merge. California Water Service Group
(Group) is the parent of the California Water Service Company and CWS Utility
Services, providing water utility services to over 1.5 million people in 58
California communities. Dominguez Services Corporation (Dominguez) is a water
utility holding company whose subsidiaries provide water service to 140,000
people in 20 communities throughout the state. The transaction is believed
to be the largest merger of investor-owned water utilities in the history of
California.
"We are pleased to announce this merger with one of the finest companies in the
investor-owned water industry," said Robert W. Foy, Chairman of the Board of
California Water Service Group. "This transaction, expected to be accretive
to Group shareholders within the first calendar year, will add value in a
number of ways, including: providing growth opportunities in new areas of
California; allowing the consolidation of the two companies' neighboring
systems in the Los Angeles region and thereby better positioning us to
compete in this key area; and permitting us to reap the administrative
benefits of a combined company. Shareholders will benefit further from the
added liquidity resulting from the larger share float of the combined
companies."
The transaction will be accounted for as a pooling of interests. It will be
structured as a tax-free exchange of 1,778,000 Group shares for all outstanding
shares of Dominguez, valued at approximately $47.6 million as of
November 13, 1998, an exchange ratio of 1:1.18 of Dominguez to Group shares.
Group will also assume Dominguez' outstanding net debt of approximately
$10.5 million, for a combined value of approximately $58 million.
The merger is subject to review by various state and federal agencies,
including the U.S. Securities and Exchange Commission and the California
Public Utilities Commission. Final regulatory approval is expected in late
1999. Dominguez shareholders must also approve the transaction, which is
expected to occur at a special meeting in the first quarter of 1999.
"Merging our two firms, one-California Water Service Group-the largest
investor-owned water utility in California and west of the Mississippi, and
the other-Dominguez Services Corporation-one of the oldest water companies in
the Golden State, with an active presence in the state's burgeoning water
rights market, makes good business sense," said Peter C. Nelson, President
and CEO of California Water Service Group. "The post-merger firm will be
well-positioned to play an active role in the growth and consolidation taking
place in the water industry. In combining our adjacent operations, we will
pool our human resources and achieve economies of scale that will not only
benefit our shareholders and customers, but also make us a more attractive
and viable partner to public and private water providers," he said.
Brian J. Brady, President and CEO of Dominguez said: "I am confident that this
merger will benefit shareholders, customers, and employees alike. California
Water Service Group is committed to welcoming Dominguez employees and the
expertise and experience they will bring to the company. Working together,
we will focus on producing superior results for our shareholders while
providing excellent water service to our customers."
The post-merger firm will solidify its position as the largest investor-owned
water utility in California and west of the Mississippi. It will serve
almost 80 California communities through 450,000 service connections,
consistently post annual revenues well in excess of $200 million, and, based
on current share prices, have a market capitalization of $350 million.
Dominguez Service Corporation owns and operates Dominguez Water Company,
formed in 1911 to irrigate the farmlands of one of the first Spanish land
grants in California, as well as the Antelope Valley Water Company in northern
Los Angeles County and Kern River Valley Water Company near Lake Isabella in
Kern County. By year-end, Dominguez will complete acquisition of the Redwood
Valley Water Company, located in northern California. Dominguez also has a
water rights trading operation and a 20 percent equity investment in Chemical
Services Company of San Jose, a supplier of on-site chlorine generation
equipment.
Formed in 1926, California Water Service Group is the largest investor-owned
water utility in California and fourth largest in the nation.
Additional information about the two companies may be found on the attached
fact sheet or on their Web sites, located at www.dominguezh2o.com and
www.calwater.com.
This press release contains a number of forward looking statements, all of
which are based upon current expectations. Actual results may differ
materially.
Attachment (Fact Sheet)
CALIFORNIA WATER SERVICE GROUP
DOMINGUEZ SERVICES CORPORATION
MERGER
FACTS-AT-A-GLANCE
(DATA AS OF 11/13/98 UNLESS OTHERWISE INDICATED)
ITEM CALIFORNIA WATER DOMINGUEZ SERVICES
SERVICE GROUP CORPORATION
Principal Subsidiary California Water Service Dominguez Water
Company Company
Year Formed 1926 1911
Total Customers Served 410,000 38,000
Number of Employees 650 73
Communities Served 58 20
Gross Revenue
(12 months as of 9/30/98) $185 million $26 million
EPS (12 months as
of 9/30/98) $1.41 $1.04
Dividends Per Share, 1998 $1.07 $0.92
Dividend Yield 4.0% 3.5%
Net Utility Plant
(9/30/98) $471 million $39 million
Average ROE, since 1987 12.2% 13.3%
Market-to-Book Ratio 2.0x 2.4x
Price-to-Earnings Ratio 19.0x 25.5x
Stock Trading Range
Since 1994 $14 - $33.75 $10 - 24
Average Daily Trading
Volume YTD 1998 13,550 1,591
Number of Shareholders 11,000 960
Exchange and Trading
Symbol NYSE:CWT NASDAQ:DOMZ
Type of Transaction Tax free
reorganization/merger;
pooling of Interests
Purchase Price $47.6 million equity
purchase, $10.5 million
in assumed debt.
Total $58.0 million
Purchase Method Tax-free exchange of
common equity
Estimated Exchange Ratio 1.18:1, CWT:DOMZ
Benefit to DOMZ
Shareholder with
1,000 shares @ 6/30/98 Market Value: $30,000 Market Value:$17,750
Annual Dividend: $1,338 Annual Dividend: $920
