Exhibit K
Proposed Form of Notice
SECURITIES AND EXCHANGE COMMISSION
(RELEASE NO. 35- )
FILING UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
March 6, 2000
KeySpan Corporation ("KeySpan"), One MetroTech Center, Brooklyn, New
York 11201, a New York corporation and currently a public utility holding
company exempt from registration under the Act (except for Section 9(a)(2)
thereof) pursuant to Section 3(A)(1) of the Act and Rule 2 thereunder, ACJ
Acquisition LLC ("ACJ"), a direct wholly-owned subsidiary of KeySpan, and
Eastern Enterprises ("Eastern"), 9 Riverside Road, Weston, Massachusetts 02493,
a Massachusetts voluntary association and a public utility holding company
exempt from regulation under the Act (except for Section 9(a)(2) thereof)
pursuant to Section 3(a)(1) of the Act and Rule 2 thereunder, have jointly filed
an application-declaration under sections 9(a)(2) and 10 of the Act.
The application-declaration seeks approvals relating to the proposed
acquisition, pursuant to which Eastern will become a direct, wholly-owned
subsidiary of KeySpan (the "Transaction"). Specifically, KeySpan and ACJ request
authorization and approval of the Commission to acquire, by means of the
Transaction, all of the issued and outstanding common stock of Eastern and,
indirectly, all of the common stock of Eastern's utility companies. Following
completion of the Transaction, KeySpan will register as a holding company
pursuant to Section 5 of the Act. KeySpan also requests Commission approval for
the retention by KeySpan of the existing businesses, investments and non-utility
activities of KeySpan and Eastern under Section 11(b).
On January 5, 2000, Eastern filed an application/declaration with the
Commission ("Eastern/EnergyNorth Application") requesting authorization pursuant
to Sections 9(a)(2) and 10 of the Act to acquire all the issued and outstanding
common stock of EnergyNorth, Inc. ("EnergyNorth") (hereafter referred to as the
"ENI Transaction"). If the Commission approves the ENI Transaction, EnergyNorth
will become a direct subsidiary of Eastern, and, therefore, an indirect
subsidiary of KeySpan through consummation of the Transaction. In the
Eastern/EnergyNorth Application, Eastern and EnergyNorth have requested that the
Commission find that each will continue to be exempt holding companies under
Section 3(a)(1) of the Act. KeySpan requests that to the extent that the
Commission grants Eastern and EnergyNorth exemptions under Section 3(a)(1), the
Commission confirm that Eastern and EnergyNorth will continue to qualify for
exemptions under Section 3(a)(1) following the consummation of the Transaction
and KeySpan's registration as a holding company.
Likewise, KeySpan requests the Commission's confirmation that KeySpan
Energy Corporation ("KEC"), a direct, wholly-owned subsidiary of KeySpan, will
continue to be an exempt holding company under Section 3(a)(1) of the Act
following consummation of the Transaction. KEC is a holding company which
directly owns 100% of the outstanding voting securities of The Brooklyn Union
Gas Company d/b/a KeySpan
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Energy Delivery New York ("KeySpan New York"), a gas utility company which
operates gas distribution facilities, and sells gas at retail, within the state
of New York. KEC is currently an exempt holding company under Section 3(a)(1) of
the Act and Rule 2.
Pursuant to the Agreement and Plan of Merger dated November 4, 1999, as
modified by Amendment No.1 dated January 26, 2000 (the "Merger Agreement"),
KeySpan, through ACJ, will acquire all of the issued and outstanding common
stock of Eastern in an all-cash transaction. The Merger Agreement provides for
Eastern to be merged with and into ACJ with Eastern being the surviving entity.
Eastern will then become a wholly, owned direct subsidiary of KeySpan. Shares
held by Eastern, KeySpan, or any of KeySpan's wholly-owned subsidiaries will be
cancelled in the Transaction.
According to the Merger Agreement, Eastern shareholders will receive
$64.00 in cash, without interest, for each share of Eastern common stock, unless
the shareholder is entitled to and has perfected its dissenters' appraisal
rights. Eastern shareholders will receive an additional $0.006 per share
("Additional Amount") for each day the Transaction has not closed after the
later of (a) August 4, 2000 or (b) ninety days after the New Hampshire Public
Utilities Commission ("NHPUC") gives final regulatory approval to the
Eastern/EnergyNorth Transaction, though the aggregate Additional Amount will be
reduced by the aggregate amount of any per share increase in any dividend
actually paid that is attributable to any period in which the Additional Amount
accrues.
KeySpan is a diversified public utility holding company which owns
three public utility companies: Keyspan New York, KeySpan Gas East Corporation
d/b/a KeySpan Energy Delivery Long Island ("KeySpan Long Island") and KeySpan
Generation, LLC ("KeySpan Generation"). Together, KeySpan New York and KeySpan
Long Island distribute natural gas to approximately 1.6 million retail
customers. KeySpan Generation sells electricity and capacity at wholesale to one
customer, the Long Island Power Authority (which is a state agency that resells
the energy at retail).
KeySpan has sixteen (17) direct non-utility subsidiaries which, either
directly or indirectly, engage in energy related business. The non-utility
subsidiaries are as follows: KeySpan Energy Corporation; KeySpan Operating
Services LLC; KeySpan Exploration and Production, LLC; KeySpan Corporate
Services LLC; KeySpan Utility Services LLC; KeySpan Electric Services LLC;
KeySpan Energy Trading Services LLC; Marquez Development Corporation; Island
Energy Services Company, Inc.; LILCO Energy Systems Inc.; KeySpan-Ravenswood
Inc.; KeySpan-Ravenswood Services Corp.; KeySpan Energy Supply LLC; KeySpan
Services, Inc.; Honeoye Storage Corporation; KeySpan Technologies Inc.; and
KeySpan MHK, Inc. In addition, KeySpan's gas utility subsidiary, Keyspan New
York, owns all or part interests in three (3) subsidiaries that are engaged in
non-utility businesses.
For the year ended December 31, 1999, KeySpan reported operating
revenues of $3.0 billion of which $1.8 billion (or approximately 59%) were
derived from regulated sales of gas and gas transportation, and $861.6 million
(or approximately 29%) were derived from electric operations. In the year ended
December 31, 1999, KeySpan had an operating income of $482.2 million and net
income of $258.6 million. At December 31, 1999, KeySpan had consolidated assets
of $6.7 billion, including net property and
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equipment of $4.2 billion. At December 31, 1999, KeySpan had issued and
outstanding 133.9 million shares of common stock, par value $0.01 per share.
KeySpan's common stock is publicly traded on the New York Stock Exchange and the
Pacific Stock Exchange.
Eastern conducts all of its business activities through its operating
subsidiaries. Eastern currently owns all of the outstanding common stock of
three gas utility companies operating exclusively within Massachusetts: Boston
Gas Company, Colonial Gas Company and Essex Gas Company (collectively referred
to herein as the "Massachusetts Utilities"). Together, the Massachusetts
Utilities serve approximately 735,000 retail gas customers. Eastern has four (4)
wholly-owned, material non-utility subsidiaries: Midland Enterprises, Inc.,
Transgas Inc., AMR Data Corporation and ServicEdge Partners, Inc. The principal
non-utility activities of Eastern's subsidiaries are water barging activities,
including the hauling of fuel and other cargo; transporting by truck LNG and
propane; providing meters and meter reading services to municipal utilities;
and, providing heating, ventilation and air conditioning services.
For the year ended December 31, 1999, Eastern reported gross revenues
of $978,702,000, of which $690,809,000 (or approximately 70.6%) were derived
from regulated sales of gas and gas transportation, operating earnings of
$113,439,000, and earnings before extraordinary items of $55,093,000. At
December 31, 1999, Eastern had consolidated assets of $2,019,757,000, including
net property and equipment of $953,502,000. At April 27, 2000, Eastern had
issued and outstanding 27,146,678 shares of common stock, par value $1.00 per
share. Eastern's shares are listed for trading on the New York, Boston and
Pacific Stock Exchanges; however, they will be delisted and cease to be publicly
traded after consummation of the Transaction.
If the Eastern/EnergyNorth Transaction is consummated, EnergyNorth will
be a direct, wholly-owned subsidiary of Eastern. EnergyNorth, a New Hampshire
corporation, owns all of the issued and outstanding common stock of one gas
utility company: EnergyNorth Natural Gas, Inc ("ENGI"). ENGI distributes natural
gas to approximately 72,000 residential, commercial and industrial customers in
27 cities and towns located in southern and central New Hampshire, including
Nashua, Manchester, Concord and Laconia.
EnergyNorth's material non-utility subsidiaries are principally engaged
in installing and servicing commercial heating, ventilation and air conditioning
equipment and distributing propane.
For the fiscal year ended September 30, 1999, EnergyNorth reported
consolidated operating revenues of $119,172,000, of which $76,617,000 (or 64%)
represented regulated gas sales and transportation, operating income of
$9,621,000, and net income of $4,537,000. At September 30, 1999, EnergyNorth had
$168,325,000 in total assets, including net utility plant of $113,730,000. As of
December 17, 1999, EnergyNorth had issued and outstanding 3,322,903 shares of
common stock, par value $1.00 per share. Its shares are listed and traded on the
New York Stock Exchange, however, they will be delisted and cease to be publicly
traded upon the consummation of the Eastern/EnergyNorth Transaction.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
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