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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): October 5,
1998
WEST PENN POWER COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 1-255-2 13-5480882
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
800 Cabin Hill Drive
Greensburg, PA 15601
(Address of principal executive offices)
Registrant's telephone number,
including area code: (724) 837--3000
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Item 5. Other Events.
On October 5, 1998, Allegheny Energy, Inc., parent
company of West Penn Power Company, received a letter
from DQE, Inc. purporting to terminate the Agreement
and Plan of Merger between Allegheny Energy, Inc. and
DQE, Inc. as of that date. Incorporated herein by
reference is a press release issued on October 5, 1998,
by Allegheny Energy, Inc., which describes legal action
taken by Allegheny Energy, Inc. to enforce its merger
agreement with DQE, Inc. Attached as Exhibit 99.1 is a
copy of the press release.
Item 7 Exhibits
Ex. 99.1 Press release dated October 5, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned thereunto duly
authorized.
West Penn Power Company
Dated: October 8, 1998 By: /s/ Thomas K. Henderson
Name: Thomas K. Henderson
Title: Vice President
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EXHIBIT INDEX
Item No. 7 Exhibits
Ex. 99.1 Press release dated October 5, 1998
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Exhibit 99.1
ALLEGHENY ENERGY TAKES LEGAL ACTION
TO ENFORCE MERGER AGREEMENT
Hagerstown, Md., October 5, 1998 -- Allegheny Energy, Inc.
(NYSE: AYE) today took legal action in federal court to compel
DQE, Inc. (NYSE: DQE) to honor its obligation to proceed with the
companies' proposed merger.
Michael P. Morrell, Senior Vice President and Chief
Financial Officer of Allegheny Energy, said, "DQE's purported
basis for attempting to terminate our merger agreement is
meritless. Its action represents nothing more than a
disagreement over an overall business strategy for the new
company -- which is not a legitimate reason to terminate the
merger.
"While we are profoundly disappointed by DQE's failure to
honor its contractual obligations, our position remains clear and
consistent: The merger is good for both companies' employees,
shareholders, and the communities we serve. It is a unique
opportunity, and its value and benefits cannot be replicated. We
will continue to pursue the merger's completion through all
available options.
"In the meantime," added Morrell, "Allegheny Energy will
move forward as a robust, strong company, constantly seeking new
opportunities to strengthen our business. We will continue our
record of outstanding performance while building our reputation
and brand, particularly in Pennsylvania as the Commonwealth
implements customer choice for electricity."
Allegheny Energy today filed both a request for a temporary
restraining order and a formal complaint against DQE in the
Unites States District Court for the Western District of
Pennsylvania. A brief summary of the complaint can be found on
the fact sheet provided with this news release.
Headquartered near Hagerstown, Md., Allegheny Energy, an
investor-owned electric utility with operating subsidiaries doing
business as Allegheny Power, provides electric service to
approximately 1.4 million customers in parts of five states.
Under the merger agreement signed in April 1997, the new
Allegheny Energy would become the tenth largest investor-owned
utility in the nation based on total electric sales and serve a
population of more than 4.5 million, with 2 million customers in
a 30,000-square-mile service area in Pennsylvania, Maryland,
Ohio, Virginia, and West Virginia.
##
For a copy of the legal actions filed today, please access our
web site at www.alleghenypower.com.
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SYNOPSIS OF LAWSUIT FILED BY ALLEGHENY ENERGY, INC.
IN UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT
OF PENNSYLVANIA ON OCTOBER 5, 1998
ACTIONS REQUESTED BY ALLEGHENY ENERGY
- - The suit requests the Court to grant specific performance,
requiring DQE to abide by the terms of the merger agreement and
to resume full cooperation in seeking the remaining regulatory
approvals for the merger.
- - The suit requests preliminary and permanent injunctions to
prevent DQE from taking any action which would impair the Court's
ability to require specific performance.
- - If specific performance is not awarded, the suit requests
damages (expected to amount to hundreds of millions of dollars)
in an amount to be determined at trial; attorneys' fees and costs
of suit; and possible other relief.
BREACH OF THE MERGER AGREEMENT
- - DQE seeks to renege on its obligations under the merger
agreement because a disagreement has developed between the two
companies on future strategy. Instead of leaving this
disagreement to the board of directors of the combined company to
resolve, DQE seeks to withdraw from the agreement.
- - After July 28, in direct violation of the merger agreement,
DQE urged the Federal Energy Regulatory Commission, the
Department of Justice, and the Securities and Exchange Commission
to suspend review of the merger and later rejected the conditions
to merger approval set by the Pennsylvania Public Utility
Commission and Federal Energy Regulation Commission even though
conditions are reasonable.
- - No event has occurred that gives DQE the right to
unilaterally terminate the merger agreement.
DISAGREEMENT OVER STRATEGY
- - DQE's dispute with Allegheny actually reflects a differing
business view about the wisdom of remaining in the generation
business.
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- - DQE not only contracted away its right to control that
strategic question when it entered into the merger agreement, but
it endorsed staying in the generation business as a reason to
merge.
- - DQE's position is based on a false premise: sale of
generation capacity does not eliminate or necessarily even reduce
the adverse consequences of the restructuring order. It merely
changes the nature of the business risks.
- - Allegheny's board has concluded that, in its business
judgment, generation has been and will, at least for now,
continue to be a basic part of the business. Its decision not to
sell its generation at present preserves the company and its
businesses and supports one of the core rationales for merging
with DQE in the first place.
- - Allegheny has historically excelled in efficiently operating
generation assets, and there is every reason to believe its low-
cost plants will be attractive in a competitive environment. By
maintaining its generation assets, Allegheny is best positioned
to leverage such assets into future earnings as well as to
participate in the ongoing consolidation in the electric power
market, either as an acquirer of other utilities and utility
assets or as an acquisition candidate.