<PAGE> 1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event Reported) August 30, 1994
---------------
THE COLUMBIA GAS SYSTEM, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-1098 13--1594808
- ---------------------------- ----------- -------------------
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
20 Montchanin Road, Wilmington, Delaware 19807
-----------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (302) 429-5000
--------------
<PAGE> 2
Item 5. Other Events
Information contained in a News Release dated
August 30, 1994, is incorporated herein by reference.
<PAGE> 3
SIGNATURE
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 hereunto duly authorized.
The Columbia Gas System, Inc
----------------------------
(Registrant)
By /s/ R. E. Lowe
---------------------------
R. E. Lowe
Vice President &
Controller
Date: August 30, 1994
<PAGE> 4
Contacts: Media - H. W. Chaddock (302) 429-5261
Analysts - T. L. Hughes (302) 429-5363
FOR IMMEDIATE RELEASE August 30, 1994
COLUMBIA GAS TERMS UNSOLICITED REORGANIZATION PROPOSAL
"UNACCEPTABLE AND FLAWED"
The Columbia Gas System, Inc. (NYSE:CG) confirmed today that
it had received a proposal for its own Chapter 11 reorganization from Dimeling,
Schreiber & Park, the Philadelphia leveraged buyout firm that the Bankruptcy
Court in Delaware found last March not financially qualified to become a
possible bidder for its subsidiary, Columbia Gas Transmission Corporation.
Columbia System Chairman and Chief Executive Officer John H.
Croom stated that he found the proposal totally unacceptable and fatally
flawed. "Columbia anticipates that the imminent results of the claims
estimation process and the intercompany claims proceedings will permit the
prompt reorganization of both companies without any fire sales to third parties
that would seriously dilute the equity of Columbia's shareholders," Croom said.
The substance of this unsolicited proposal, as elaborated on
by statements made by Dimeling to the press, was that a group of unnamed
investors would take control of Columbia by purchasing a minority common stock
position at a bargain price. In addition, all of Columbia's distribution
assets would be sold in a taxable transaction to electric utility interests at
a bargain price approximately equal to their book values. A portion of the
funds generated would be utilized to pay producer creditors of Columbia
Transmission, according to the Dimeling firm, "more than they are now seeking,"
regardless of the judicially allowable level of their creditor claims. It was
not disclosed whether any such producer creditors would be among the unnamed
equity investors. The proposal also incorrectly assumes that the Columbia
System will have excess cash of over $2 billion on the projected closing date,
and is further dependent on an as yet uncommitted $867 million of new long-term
debt financing. Moreover, the payment levels envisioned for Columbia's own
creditors are substantially in excess of the amounts that Columbia's Chapter 11
Equity Committee believes are legally justified, and it does not appear that
Columbia Transmission's customer
(more)
<PAGE> 5
2
creditors and other nonproducer creditors would be treated as generously as
producer creditors. Finally, many of the critical issues that arise under the
Public Utility Holding Company Act of 1935 and the required protracted and
undoubtedly contentious SEC proceedings are not addressed.
Croom stated that the financial premises of the proposal are
materially at variance with views which Salomon Brothers, Columbia's financial
adviser, has previously advanced, and, he believes, at variance with views
previously advanced by Smith Barney & Co., financial advisers to the Equity
Committee.
Croom said the proposal ignores the defenses that Columbia
Transmission has to the inflated claims filed by producers in proceedings on
which rulings are expected in mid-September and the parent company's defenses
to the multi-billion dollar suit brought by Columbia Gas Transmission's
Creditors' Committee challenging various intercompany transactions that is
scheduled to go to trial in Federal District Court September 12.
Croom said he did not think that Columbia's Board of Directors
or its shareholder and creditor constituencies would have any interest in
turning management and control of its reorganization over to the Dimeling firm.
The Columbia Gas System, Inc. and its principal pipeline
subsidiary have been operating under Chapter 11 of the Bankruptcy Code since
July 31, 1991.
# # #
