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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 19)
COLUMBIA ENERGY GROUP
(NAME OF SUBJECT COMPANY)
COLUMBIA ENERGY GROUP
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01
(TITLE OF CLASS OF SECURITIES)
197648108
(CUSIP NUMBER OF CLASS OF SECURITIES)
MICHAEL W. O'DONNELL
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
COLUMBIA ENERGY GROUP
13880 DULLES CORNER LANE
HERNDON, VIRGINIA 20171
(703) 561-6000
(NAME,ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF OF THE
PERSON(S) FILING STATEMENT)
COPY TO:
NEIL T. ANDERSON, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
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This Amendment No. 19 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission on July 6, 1999, and as subsequently amended
July 6, 1999, July 9, 1999, July 12, 1999, July 15, 1999, July 16, 1999, July
20, 1999, July 22, 1999, July 30, 1999, August 3, 1999, August 4, 1999, August
5, 1999, August 6, 1999, August 9, 1999, August 11, 1999, August 12, 1999,
August 13, 1999, August 16, 1999 and August 17, 1999 (as so amended, the
"Schedule 14D-9"), by Columbia Energy Group, a Delaware corporation (the
"Company"), relating to the tender offer by NiSource Inc., an Indiana
corporation, to purchase for cash through its wholly-owned subsidiary, CEG
Acquisition Corp., a Delaware corporation, all of the outstanding common shares,
par value $0.01 per share, of the Company (the "Offer"). Capitalized terms used
but not defined herein have the meaning ascribed to them in the Schedule 14D-9.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby supplemented and amended by adding the following:
Exhibit (a)(18) - Question and Answer Sheet for Company Employees and
Retirees.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
COLUMBIA ENERGY GROUP
By: /s/ Michael W. O'Donnell
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Name: Michael W. O'Donnell
Title: Senior Vice President and
Chief Financial Officer
Dated: August 19, 1999
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Exhibit List
Exhibit (a)(18) - Question and Answer Sheet for Company Employees and Retirees.
FOR COLUMBIA EMPLOYEES AND RETIREES
The following is some additional information we hope will answer questions you
may have regarding NiSource's unsolicited tender offer for Columbia Energy
Group.
STATUS OF NISOURCE'S TENDER OFFER
NISOURCE HAS STATED THAT AS OF AUGUST 6, MORE THAN 60 PERCENT OF
COLUMBIA SHAREHOLDERS HAD TENDERED THEIR STOCK TO NISOURCE. DOES THIS
MEAN THAT NISOURCE NOW CAN BUY A MAJORITY OF COLUMBIA STOCK AND TAKE
CONTROL OF OUR COMPANY?
No, NiSource cannot take control of Columbia any time soon, if ever.
The laws governing our industry prevent NiSource from purchasing more
than 4.9 percent of that stock unless - and until - it receives
permission from the Securities and Exchange Commission. The regulatory
approval process, both federal and state, could take 18 months, or even
longer. If any necessary regulatory approval is not attained, then
NiSource cannot buy the tendered shares.
NISOURCE HAS EXTENDED ITS TENDER OFFER UNTIL OCTOBER 15. WHAT DOES THIS
MEAN? WHAT WILL HAPPEN IF NISOURCE ANNOUNCES AN ADDITIONAL INCREASE IN
THE AMOUNT OF TENDERED SHARES BETWEEN NOW AND OCTOBER 15?
The extension of the tender offer has little significance, and neither
would any increase in the percentage of shares tendered. No matter how
many shares are tendered, NiSource must still go through a lengthy
regulatory approval process before it could buy the shares. We believe
NiSource does not expect to buy the tendered shares; rather, it is
using the tender process to try to pressure Columbia's Board and
management. The extension of the offer merely gives NiSource more time
to pursue this effort.
It is also quite possible that the number of tendered shares will
actually decrease by October 15, as shareholders who become frustrated
with NiSource's hostile tactics and lack of success withdraw their
tenders. In fact, we believe that as of August 17, a number of
shareholders have already withdrawn their tenders.
I'VE HEARD THAT NISOURCE CAN TAKE CONTROL OF THE COMPANY SIMPLY BY
OBTAINING TENDERS FOR AT LEAST 85 PERCENT OF COLUMBIA'S SHARES. IS THIS
TRUE?
No. No matter how many shares are tendered, NiSource must go through a
lengthy regulatory approval process before it can buy shares. This
process, which could take 18 months or longer, prevents NiSource from
taking control of Columbia any time soon, if ever.
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2
COLUMBIA'S RESPONSE TO NISOURCE
WHY WON'T COLUMBIA MEET WITH NISOURCE TO DISCUSS NISOURCE'S OFFER?
NiSource has made three previous unsolicited offers to our Board. Each
time, our Board determined that the NiSource offer was inadequate and
not in the best interest of Columbia or its shareholders. We believe
strongly that a merger of our companies is not compelling and that
Columbia's shareholders will be better served through our ongoing
efforts to build value under our strategic plan. Accordingly, we do not
believe there is any basis for discussion, let alone negotiation.
NISOURCE CLAIMS COLUMBIA IS IGNORING THE WILL OF A MAJORITY OF ITS
SHAREHOLDERS. IS THIS TRUE?
We disagree with NiSource's self-serving interpretation of the results
of the tender offer. These results do not demonstrate support for
NiSource or its inadequate, highly conditional offer. They merely
indicate shareholders would like to see Columbia's true value and
long-term business potential more fully reflected in its stock price.
The Board and management of Columbia agree and are hard at work
implementing the strategic objectives to help build shareholder value
in both the near and long term.
SINCE COLUMBIA IS LARGER AND HAS MORE RESOURCES AT ITS DISPOSAL, WHY
DOESN'T IT TURN AROUND AND ACQUIRE NISOURCE?
As we have stated, we don't think a combination of the two companies
makes sense, regardless of who the buyer is.
IS COLUMBIA TALKING TO ANY "WHITE KNIGHTS"? IS IT REALISTIC TO THINK
THAT COLUMBIA CAN SURVIVE AS AN INDEPENDENT COMPANY IN A RAPIDLY
CONSOLIDATING INDUSTRY?
Columbia is not currently in discussions with any potential merger
partners. Based on the strength of our assets and operating plan, we
have confidence in our ability to continue to compete on a stand-alone
basis. As we have said for some time, Columbia management and the Board
continue to examine all the available options open to the company.
There are many promising opportunities in the rapidly changing industry
and we will take actions that are in the best interest of our
shareholders, employees, customers and the communities we serve.
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A HIGHER OFFER
THERE SEEMS TO BE GENERAL CONSENSUS THAT COLUMBIA'S STOCK IS WORTH MORE
THAN $68 PER SHARE IN CASH. WHY HASN'T NISOURCE RAISED ITS OFFER?
That is really a question for NiSource. However, we have serious doubts
about NiSource's ability to successfully finance its current proposal,
let alone a higher all-cash offer. To raise its cash offer, NiSource
would need to borrow even more billions of dollars, placing the company
in deeper debt. It also would need to undertake the largest stock
offering ever in the energy utility industry. This would likely raise
significant issues with regulators, rating agencies, lenders and
NiSource's own shareholders -- who already must be concerned about
NiSource's declining stock price.
IF NISOURCE RAISES ITS OFFER, WOULD COLUMBIA THEN ENTER INTO
NEGOTIATIONS?
Like the Board of any publicly traded company, Columbia's Board of
Directors would carefully consider any serious and realistic proposal
that would significantly enhance shareholder value. However, we have
serious doubts about NiSource's ability to make a higher all-cash
offer.
SPECULATION ON NISOURCE'S ACTIONS
SOME REPORTS HAVE INDICATED THAT NISOURCE PLANS TO BEGIN PURCHASING
COLUMBIA STOCK ON THE OPEN MARKET. HOW DOES THIS DIFFER FROM THE TENDER
OFFER AND THE PURCHASE OF TENDERED SHARES?
We do not believe that NiSource can purchase shares on the open market
with a tender offer pending. In order to do this, NiSource would have
to withdraw its current tender offer. In any case, NiSource could not
purchase more than 4.9 percent of Columbia stock without regulatory
clearance, which we estimate could take 18 months or longer.
SOME PRESS ACCOUNTS HAVE SAID NISOURCE COULD PROPOSE A SLATE OF
DIRECTORS TO BE ELECTED AT NEXT SPRING'S ANNUAL MEETING THAT WOULD GIVE
IT CONTROL OF THE BOARD. IS THAT TRUE?
Under the bylaws of Columbia Energy Group, shareholders elect one-third
of the directors at the annual meeting each year. Therefore, even if
NiSource were able to elect all of its own candidates at next year's
annual meeting, it would "control" only one-third of the directors, not
a majority.
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4
I HAVE READ PRESS REPORTS ABOUT POSSIBLE SALES OF ASSETS BY NISOURCE TO
FINANCE ITS PURCHASE OF COLUMBIA. WHAT WOULD THIS MEAN?
We believe NiSource is trying to find buyers for some of our most
valuable assets to help finance its attempted 1980's-style leveraged
buyout. This type of activity may increase regulatory concerns. We also
think it would be wholly inappropriate for NiSource's shareholders to
benefit from the value you have worked so hard to build in these
assets. This value rightfully belongs to our shareholders.
SUPPORTING COLUMBIA
I KNOW THE TENDER OFFER IS STILL PENDING; HOW CAN I SHOW MY SUPPORT FOR
COLUMBIA?
If you do not wish to tender your shares, taking no action is in itself
a show of support for Columbia. Not tendering your shares demonstrates
your opposition to NiSource's hostile takeover attempt.
If you already tendered shares to NiSource, you may still show your
support for Columbia by withdrawing the tender. It is important to
understand that all shareholders can withdraw their tenders at any time
prior to the expiration of the offer. To find out how to withdraw
previously tendered shares, contact MacKenzie Partners collect at (212)
929-5500, or toll-free at (800) 322-2885 .
IF I DON'T TENDER NOW - AND NISOURCE IS ULTIMATELY SUCCESSFUL IN
PURCHASING A LARGE MAJORITY OF COLUMBIA SHARES - WHAT WILL HAPPEN TO
ME?
NiSource has stated in its SEC filings that in the event that it is
successful in purchasing Columbia shares in the tender offer (an event
we feel is highly unlikely), it intends to pay non-tendering Columbia
shareholders the same amount in cash that it would pay to tendering
Columbia shareholders in a subsequent business combination.
THRIFT PLANS
I STILL DON'T UNDERSTAND WHAT YOU MEAN BY "FREEZING" THE THRIFT PLAN.
PLEASE EXPLAIN.
The freeze applies to the Columbia Stock Fund - not your entire Thrift
Plan account. During a freeze, all distributions, loans, withdrawals
and exchanges out of balances in the Columbia Stock Fund will be
prohibited. The freeze will begin approximately one week prior to the
expiration of the tender offer. The purpose of the freeze is to allow
Fidelity Management Trust Company, as Trustee, time to count the
Trustee Direction Forms, accurately tabulate the number of Columbia
shares tendered and tender the shares to NiSource prior to the
expiration date of the offer.
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5
During the freeze period, you will be able to purchase units in the
Columbia Stock Fund. These purchases may be in the form of your
contributions, Columbia's matching contributions, loan repayments and
exchanges.
NISOURCE'S TACTICS AND PERFORMANCE RECORD
WHY IS NISOURCE PURSUING ITS ATTEMPTED TAKEOVER SO AGGRESSIVELY WHEN A
HOSTILE TAKEOVER HAS NEVER BEEN COMPLETED SUCCESSFULLY IN THE UTILITY
INDUSTRY?
It is understandable that NiSource should want Columbia's unique and
well-positioned assets, dedicated and talented team, proven strategy
and earnings power - all of which would help address NiSource's
vulnerabilities in a rapidly changing and consolidating energy
industry. But we see little, if any, true synergy between NiSource's
principal operations in Indiana and Columbia's assets and businesses.
As we have said before, we believe NiSource's various proposals have
been for the wrong price, at the wrong time, and with the wrong
company.
IS IT TRUE THAT NISOURCE HAS A POOR RECORD ON CUSTOMER SERVICE AND
CONSUMER CHOICE?
A recent survey published by the highly regarded J.D Power and
Associates and Navigant Consulting reported that NiSource's principal
subsidiary in Indiana was ranked "below average" for customer
satisfaction among Midwest electric utilities. According to an annual
survey conducted by the Indiana Utility Regulatory Commission, NiSource
also has the most expensive residential electric rates in the state of
Indiana. In addition, NiSource has done little to demonstrate that it
is ready to face a more competitive future by providing choice to its
customers. By contrast, Columbia -- as you know -- has been a leader in
this area. All these factors contribute to our belief that a
combination of our companies would not be in the best interest of
Columbia's shareholders, employees, customers and the communities we
serve.
THE WALL STREET JOURNAL SAID BOTH COMPANIES ARE FACING A "PROLONGED
STALEMATE." IF THIS IS TRUE, WHAT WILL MAKE NISOURCE GO AWAY?
We believe NiSource eventually will understand that continuing its
expensive, disruptive and unwanted takeover attempt is not in the best
interest of either company. In fact, considering that NiSource's stock
price has declined by more than 13 percent* since the start of its
hostile takeover attempt, we would not be surprised if NiSource's
shareholders are already pressuring the company to fold its tent and
move on to more productive activities. In the meantime, we at Columbia
remain committed to fostering the growth and development of our
businesses to maximize value for our customers, employees, and
shareholders.
*From June 4 to August 17, 1999
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