SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
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THE BROOKLYN UNION GAS COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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IF OTHER THAN THE REGISTRANT)
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A conversation
with
Brooklyn Union's
CEO, Bob Catell
[Pictures of Bob Catell]
About why you should vote for
the Brooklyn Union/LILCO combination.<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This document includes forward-looking statements within the
meaning of Section 21E of the Securities and Exchange Act of
1934. For those statements, Brooklyn Union claims the protec-
tion of the safe harbor for forward-looking statements con-
tained in the Private Securities Litigation Reform Act of 1995.
Shareholders of Brooklyn Union and shareholders of LILCO should
understand that the following important factors, in addition to
those discussed elsewhere in this document and in the documents
which are incorporated by reference herein, could affect the
future results of the Holding Company, Brooklyn Union and
LILCO, and could cause those results to differ materially from
those expressed in such forward-looking statements: materially
adverse changes in economic conditions in the markets served by
Brooklyn Union or LILCO and in the markets that will be served
by them; a significant delay in the expected closing of the
Combination and/or LIPA Transaction, or the failure of either
transaction to close; future regulatory actions and conditions
in Brooklyn Union's and LILCO's operating areas; and the timing
and extent of changes in commodity prices for crude oil, nat-
ural gas, electricity and interest rates.<PAGE>
[Picture of Bob Catell]
Dear Fellow Shareholders,
As you know I have always measured myself and Brooklyn Union's
success by our ability to create value for our shareholders,
and better service and value for our customers. We are focused
on the value of your investment over the long term and creating
a larger, stronger company with greater growth opportunities
and the capacity to pay higher dividends. In fact, we
anticipate that the initial annualized dividend of the new
holding company to be formed in connection with the Brooklyn
Union/LILCO combination will be $1.78 per share. This is an
increase of $.32 cents a share, or 22%, for Brooklyn Union
shareholders.
In this new competitive era, we must seek to broaden our asset
base, gain access to more customers and supply more than one
fuel or energy source. We have long realized that the most
natural, most opportune direction for our future growth was
eastward into Long Island. No other opportunity that we have
looked at offers the degree of growth potential that exists on
Long Island. Moreover, no other opportunity offers the
synergies achievable by being adjacent to our partner's
operations. I want to assure you that this combination with
LILCO provides the best strategic fit available at this time.
In addition to voting on the LILCO transaction, we are also
asking you to vote on the formation of the KeySpan holding
company as an interim step for Brooklyn Union prior to the
combination. The creation of this holding company will give us
the flexibility we need to continue to position us in the
rapidly changing energy marketplace.
Recently, you received a copy of our filing with the Securities
and Exchange Commission. This booklet should give you a clear
picture of why your board of directors and management team
strongly support the transaction and urge that you vote FOR the
combination and FOR the formation of KeySpan Energy
Corporation.
We need your support. Approval of the LILCO transaction
requires a FOR vote from holders of at least two thirds of
Brooklyn Union's common stock--and abstentions will have the
effect of votes against the LILCO transaction. The same holds
true for the vote on KeySpan. So, PLEASE take the time to fill
out the proxy card and register a vote FOR the LILCO transac-
tion and the KeySpan transaction. If you have any questions
regarding the LILCO transaction or KeySpan Energy Corporation,<PAGE>
please call our proxy solicitor, Georgeson & Company, Inc. at
(800) 223-2064, or send an e-mail to [email protected].
Sincerely,
/s/ Robert B. Catell
ROBERT B. CATELL
Chairman and Chief Executive Officer<PAGE>
Bob Catell responds to shareholder questions
WHAT AM I BEING ASKED TO VOTE ON?
We are asking you to vote on two things.
First, we need your vote to approve Brooklyn Union's combina-
tion with LILCO.
Second, we need your vote to approve the formation of the
KeySpan Energy Corporation. In the interim before the Brooklyn
Union/LILCO combination is completed, KeySpan will give us the
flexibility we need to grow our non-utility businesses and fur-
ther increase value for our shareholders.
WHY SHOULD I VOTE FOR THE BROOKLYN UNION/LILCO TRANSACTION?
This combination will create a larger, stronger company, better
positioned for success in the competitive energy marketplace.
Shareholders will benefit from increased revenues, earnings,
and dividends and the enhanced ability of the company to pro-
vide its broader customer base with competitive energy products
and services.
WHO WILL MANAGE THE NEW COMPANY?
For one year after the combination I will serve as the Presi-
dent and Chief Operating Officer of our new company and Dr.
Catacosinos will be Chairman and Chief Executive Officer. Dur-
ing this transition, we will be leading the integration of the
two companies. After that, I will become the new company's
Chief Executive Officer and Dr. Catacosinos will remain as
Chairman.
WHAT HAPPENS TO MY DIVIDENDS?
[picture Your annual dividend per share will increase
of Bob from $1.46 per share to $1.78 per share, an
Catell] increase of 22%.
ARE THERE ANY TAX CONSEQUENCES TO SHAREHOLDERS
AS A RESULT OF THIS TRANSACTION?
The exchange of Brooklyn Union shares for shares
in the new holding company will be tax-free for
federal income tax purposes.<PAGE>
WHAT IS LIPA? WHAT DOES IT HAVE TO DO WITH THE
BROOKLYN UNION/LILCO COMBINATION?
[picture
of Bob
Catell]
The Long Island Power Authority (or LIPA) is
an agency of New York State created to, among
other things, reduce electric rates on Long
Island. The agency is authorized to acquire
all or any part of LILCO's securities or
assets in order to reduce electric rates paid by LILCO custom-
ers.
LILCO has entered into an agreement with LIPA under which LIPA
will acquire LILCO's electric transmission and distribution
system, its regulatory assets and its interest in the Nine Mile
Point 2 nuclear power plant. LIPA will also assume $4 billion
in debt and preferred stock. In exchange for this, Brooklyn
Union/LILCO will receive approximately $1.7 billion in net pro-
ceeds that can be used to further grow our new company.
Our agreement to combine with LILCO is not conditioned on the
sale to LIPA being approved or completed.
WHEN DO YOU EXPECT THE COMBINATION TO BE COMPLETED?
We are working to complete all aspects of the transaction as
quickly as possible. We currently expect the combination to be
completed in the second half of 1998.
MY SHARES ARE HELD IN MY BROKER'S NAME.
WILL MY BROKER VOTE MY SHARES FOR ME?
Your broker cannot vote your shares unless you provide written
instructions on how to vote. Without your instructions, your
shares held in what is called "street name" will not be voted,
which will have the same effect as voting against the combina-
tion. Therefore, we urge you to instruct your broker or bank
in writing to vote your shares FOR the combination and FOR the
KeySpan proposal.
WHAT DO I NEED TO DO NOW?
Just return your SIGNED, DATED, PROXY CARD today.
WHOM DO I CALL IF I HAVE FURTHER QUESTIONS?
If you have questions, please call our proxy solicitor,
Georgeson & Company, Inc. at (800) 223-2064. You can also send
us an e-mail at [email protected].<PAGE>
VOTE FOR: ACCELERATED DIVIDEND GROWTH
[picture Brooklyn Union shareholders will receive a
of Bob substantial increase in their dividend with this
Catell] combination. We are proud of our long tradition
-- over 21 consecutive years -- of delivering
annual dividend increases to our shareholders.
This transaction will increase your annual dividend from $1.46
per share to $1.78 per share, an increase of 22%.
GROWTH IN ANNUAL DIVIDENDS
[Chart showing growth in annual dividends per share from $0.57
in 1972 to $0.62 in 1978 to $1.00 in 1984 to $1.24 in 1990 to
$1.46 in 1997 to a projected $1.78 in 1998.]<PAGE>
VOTE FOR: THE PREMIER NORTHEAST ENERGY COMPANY
The Brooklyn Union/LILCO combination will have a service terri-
tory of over 1,400 square miles covering the Borough of Brook-
lyn, most of Queens and Staten Island and Nassau and Suffolk
counties of Long Island, offering customers a full energy port-
folio which should allow us to take advantage of the signifi-
cant upside potential of the convergence of gas and electric
companies within the energy industry.
[Map of New York City and Long Island, showing Brooklyn Union
Service Territory and LILCO Service Territory.]
This combination is good for customers, New York City and Long
Island. The combined company will:
Have approximately 2 million customers;
Spur increased regional business growth;
Achieve more than $1 billion in savings over 10
years, which will reduce customer rates;
Combine Brooklyn Union and LILCO's high standard of
customer service;
Continue the commitment to Brooklyn Union/LILCO com-
munities
[Picture
of Bob
Catell]<PAGE>
HERE'S WHAT THE BROOKLYN UNION/LILCO HOLDING COMPANY WILL LOOK
LIKE WITHOUT THE LIPA TRANSACTION
BU/LILCO HOLDING COMPANY
------------------------
|
---------------------------------------------
| | |
----|---- ---|--- -------------------------|-----------------------------
BROOKLYN BU LILCO LILCO LILCO LILCO
UNION GAS ENERGY GAS ELECTRIC REGULATORY ELECTRIC
DISTRIBUTION RELATED DISTRIBUTION GENERATION AND OTHER TRANSMISSION
GROUP ASSETS & DISTRIBUTION
The Brooklyn Union/LILCO combination will be well positioned for
competition.
The current Brooklyn Union and LILCO utilities will be operated as
separate subsidiaries of the new holding company.
UNDER THE TERMS OF THE BROOKLYN UNION/LILCO AGREEMENT:
Brooklyn Union shareholders will receive one share of
Brooklyn Union/LILCO for each Brooklyn Union share they own;
LILCO shareholders will receive .803 of a share of Brooklyn
Union/LILCO for every share of LILCO they own;
The dividend on each Brooklyn Union/LILCO share will be
$1.78
[Picture
of Bob
Catell]<PAGE>
HERE'S WHAT THE BROOKLYN UNION/LILCO
HOLDING COMPANY WILL LOOK LIKE WITH THE
LIPA TRANSACTION [Picture
of Bob
Catell]
BU/LILCO HOLDING COMPANY LIPA
------------------------ ----
| |
-------------------------------- |
| | | |
----|---- ---|--- ---------|--------- ------------|---------------
BROOKLYN BU LILCO LILCO LILCO LILCO
UNION GAS ENERGY GAS ELECTRIC REGULATORY ELECTRIC
DISTRIBUTION RELATED DISTRIBUTION GENERATION AND OTHER TRANSMISSION
GROUP ASSETS & DISTRIBUTION
LILCO's agreement with the Long Island Power Authority (LIPA)
would enhance the original Brooklyn Union/LILCO transaction.
UNDER LILCO'S AGREEMENT WITH LIPA:
LIPA will acquire LILCO's interest in the Nine Mile
Point 2 nuclear plant;
LIPA will acquire LILCO's regulatory assets;
LIPA will acquire LILCO's electric transmission/dis-
tribution system;
Brooklyn Union/LILCO will manage this system under an
8-year agreement with LIPA;
LIPA will assume $3.6 billion in debt, and approxi-
mately $340 million of preferred stock;
Brooklyn Union/LILCO will receive net cash proceeds
of approximately $1.7 billion;
Brooklyn Union shareholders will receive one share of
Brooklyn Union/LILCO for each Brooklyn Union share
they own; LILCO shareholders will receive .880 of a
share of Brooklyn Union/LILCO for each LILCO share
they own;
The dividend on each Brooklyn Union/LILCO share will
be $1.78
Our combination with LILCO is not conditioned on approval or
consummation of the agreement with LIPA.<PAGE>
[Picture In Voting FOR The Brooklyn Union/LILCO
of Bob Combination, You Are Voting FOR:
Catell]
a 22% increase in the annual dividend from
$1.46 per share to $1.78 per share, to
become payable quarterly in the first year
after the combination;
a natural alliance of adjoining service
territories with nearly two million custom-
ers and $1 billion in synergies realized
over 10 years;
a broader base for future earnings growth
from increased customers and a wider range
of products and services;
a larger, more diverse, stronger company,
positioned to be a formidable competitor in
the energy industry in the Northeastern
United States;
the implementation of Brooklyn Union's
vision of becoming the Northeast's premier
energy company.<PAGE>
PLEASE SIGN AND MAIL YOUR PROXY TODAY
Your Board of Directors and management team urge you to vote
FOR the combination with LILCO and FOR the formation of KeySpan
Energy Corporation on the enclosed proxy card.
Remember, not returning your proxy card, or abstaining, has the
same effect as voting against the combination and the formation
of KeySpan Energy Corporation.
Please call our proxy solicitor,
Georgeson & Company, Inc. at (800) 223-2064
if you have any questions about the combination
or the formation of KeySpan Energy Corporation.
You can also send an e-mail to [email protected]
Brooklyn
Union [logo]
http://www.bug.com
One MetroTech Center, Brooklyn, NY 11201-3850
