================================================================================
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. 13)
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
================================================================================
<PAGE>
This Amendment No. 13 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 and
August 6, 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 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
Item 6 is hereby supplemented and amended by adding the following:
On August 6, 1999, pursuant to its previously announced repurchase
program, the Company purchased 22,000 Shares on the open market at a weighted
average price per share of $60.000.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 is hereby supplemented and amended by adding the following:
Between July 6, 1999 and August 6, 1999, approximately 126,465 Shares
were issued by the Company to cover exercises of stock options by participants
in the Company's stock option plans.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby supplemented and amended by adding the following:
Exhibit (a)(16) - Press Release, dated August 9, 1999.
<PAGE>
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
-------------------------------
Name: Michael W. O'Donnell
Title: Senior Vice President
and Chief Financial
Officer
Dated: August 9, 1999
<PAGE>
Exhibit Index
Exhibit (a)(16) - Press Release, dated August 9, 1999.
For Immediate Release CONTACTS:
August 9, 1999 Columbia Energy Group
---------------------
Thomas L. Hughes (Financial Community)
703/561-6001
R. A. Rankin, Jr. (News Media)
703/561-6044
Kekst and Company
-----------------
Michael Freitag (News Media)
212/521-4800
COLUMBIA ENERGY GROUP AGAIN URGES SHAREHOLDERS
TO REJECT INADEQUATE TENDER OFFER FROM NISOURCE INC.
REAFFIRMS COMMITMENT TO BUILD SHAREHOLDER VALUE
HERNDON, Va., August 9 -- Columbia Energy Group today once again urged
its shareholders to reject NiSource Inc.'s hostile takeover attempt. Columbia's
Board of Directors has determined that NiSource's unsolicited $68 per share cash
tender offer, which has been extended until October 15, 1999, is inadequate and
not in the best interest of Columbia or its shareholders.
Oliver G. Richard III, Columbia's chairman, president and chief
executive officer, today sent the following letter to Gary Neale, chairman,
president and chief executive officer of NiSource Inc.:
Dear Gary:
We understand that NiSource's unsolicited tender offer for Columbia's
common stock, which had been scheduled to expire on August 6, has now been
extended until October 15, 1999. Frankly, we believe shareholders of both of our
companies should question why you are continuing this costly and disruptive
effort when it is evident NiSource cannot buy the tendered shares for at least
12 to 18 months, if ever. Indeed, NiSource itself has described its tender offer
as little more than a "fully reversible, risk-free and commission-free"
shareholder referendum.
We know our shareholders believe our stock price should be higher than
where it is currently trading. Columbia's Board and management agree strongly
that the company's true value and long-term business potential are not yet fully
reflected in its stock price, which has been impacted this year by much warmer
than usual weather and significant investment and costs in the marketing
segment. We are committed to building shareholder value in both the near and
long term, and are hard at work in implementing the strategic initiatives that
will help us achieve this objective. We have expanded and enhanced Columbia's
unique and valuable network of assets and businesses, built a talented and
effective management team, and developed a sound, forward-looking strategy for
both the regulated and non-regulated sides of our business. As a result of these
efforts, Columbia recently announced its fourth consecutive quarter of
year-over-year earnings improvement.
We also know that many of the shareholders who tendered their stock do
not believe $68 per share is adequate consideration for their investment in
Columbia. This view has been echoed by equity analysts covering our industry, as
well as by Columbia's Board of Directors, which has twice determined that
NiSource's unsolicited cash offer of $68 per share is inadequate from a
financial point of view and not in the best interest of Columbia or its
shareholders.
<PAGE>
We also have raised serious concerns about whether NiSource's financing
will be approved by regulators, the potential impact of a merger on employees
and customers, and the strategic merits of a combination of our two vastly
different companies. NiSource repeatedly has tried to shrug off these concerns,
saying they are "irrelevant" to its all-cash offer. However, we believe
NiSource's highly conditional proposed transaction is a matter of tremendous
concern for the shareholders, employees, regulators and customers of both
companies.
WHY SHOULDN'T SHAREHOLDERS OF BOTH COMPANIES -- AND REGULATORS -- BE
CONCERNED THAT NISOURCE'S HIGHLY LEVERAGED TRANSACTION COULD TOPPLE LIKE
A HOUSE OF CARDS?
To acquire Columbia for $68 per share -- a price Columbia's Board and
many shareholders believe is inadequate -- NiSource would need to borrow
$5.7 billion. Incurring this debt would result in a highly leveraged
debt-to-capital ratio of 84 percent upon consummation of the
transaction. NiSource also has said it would try to reduce that massive
debt load by attempting to raise $2.6 billion in new equity, which would
be the largest such offering ever in the energy utility industry. We
believe state and federal regulators would be extremely uncomfortable
about approving such a risky transaction.
WHY SHOULDN'T SHAREHOLDERS AND EMPLOYEES BE CONCERNED ABOUT NISOURCE'S
ABILITY TO MEET ITS AGGRESSIVE EARNINGS PROJECTIONS FOR A COMBINED
ENTERPRISE?
At $68 per share, NiSource claims an acquisition of Columbia would be
accretive, adding a few cents of earnings per share in the first year
and more in subsequent years. Our analysis finds otherwise. We believe
the transaction would be dilutive in the first year and subsequent
years. NiSource's stock price has declined 16 percent since December 31,
1998 and more than 9.3 percent since it first disclosed its unsolicited
offer of $68 per share on June 7, 1999. This decline further exacerbates
our concerns about NiSource's ability to complete a massive equity
offering, which at NiSource's current stock price would require the
issuance of more than 100 million shares.
WHY SHOULDN'T EMPLOYEES OF BOTH COMPANIES -- AND REGULATORS -- BE
CONCERNED ABOUT POSSIBLE LAYOFFS AND ASSET SALES?
NiSource claims it has no plans to raise rates or cut staff in
Columbia's operating units, yet has hinted about seeking certain
"synergies." How does NiSource expect to achieve these synergies and
meet its massive debt obligations without raising rates and/or cutting
essential staff in Indiana, Virginia, Ohio, Pennsylvania and other
states? Likewise, we have heard reports that, to try to reduce the
massive debt it would incur, NiSource is considering sales of assets at
both companies. What would happen to the employees of these units?
WHY SHOULDN'T CUSTOMERS OF BOTH COMPANIES -- AND REGULATORS -- BE
CONCERNED ABOUT NISOURCE'S RECORD ON CUSTOMER SERVICE AND CONSUMER
CHOICE?
A recent survey published by J.D. Power & Associates and Navigant
Consulting reported that NiSource's principal subsidiary in Indiana was
ranked "below average" for customer satisfaction among Midwest electric
utilities. Even more importantly, NiSource has done little to
demonstrate that it is ready to face a more competitive future by
providing choice to its customers. Columbia, by contrast, has been a
leader in this area. We have brought our Energy Economic Democracy
program to 86 percent of Columbia's local distribution customers, with
more than half a million customers enrolled in four states and more on
the way. Earlier this month, Columbia Gas of Pennsylvania became the
first company to file a restructuring plan under that state's new
deregulation law.
<PAGE>
In short, I can understand why you might want Columbia's unique and
well-positioned assets, dedicated and talented team, proven strategy and
earnings power to help address NiSource's vulnerabilities in a rapidly changing
and consolidating energy industry. But your highly leveraged offer has no
compelling strategic logic.
Since June, NiSource has launched an unsolicited tender offer for
Columbia's outstanding common stock; filed three separate lawsuits against
Columbia and certain of its officers and directors; engaged in an aggressive
public relations campaign notable for its hype and misleading statements, and --
though you refuse to disclose how much of your shareholders' money you are
spending -- evidently poured millions of dollars into investment banking,
credit, legal, tender solicitation, public relations and advertising fees. Yet
NiSource still insists it wants to negotiate a "friendly" transaction.
Quite simply, the tender offer and related hostilities haven't changed
our belief that NiSource's various merger proposals have been for the wrong
price, at the wrong time and with the wrong company. We will continue to urge
shareholders to reject NiSource's hostile takeover attempt and bring an end to
this needless waste of corporate resources at a time when there are so many
promising opportunities in the rapidly changing energy market.
Sincerely,
Oliver G. Richard III
Columbia Energy Group, based in Herndon, Va., is one of the nation's
leading energy services companies, with 1998 revenues of nearly $6.6 billion and
assets of about $7 billion. Its operating companies engage in all phases of the
natural gas business, including exploration and production, transmission,
storage and distribution, as well as commodities marketing, energy management,
propane sales and electric power generation, sales and trading. Information
about Columbia Energy Group (NYSE:CG) is available on the Internet at
www.columbiaenergygroup.com.
This press release contains "forward-looking statements" within the
meaning of the Federal securities laws, including statements concerning
Columbia's plans, objectives and expected performance. There can be no assurance
that actual results will not differ materially due to various factors, many of
which are beyond the control of Columbia, including, but not limited to,
competition, the regulatory approval process, weather, supply and demand for
natural gas, electricity, propane and petroleum and changes in general economic
conditions. The safe harbor provisions of the Private Securities Litigation
Reform Act with respect to forward-looking statements are not available to
statements made in connection with a tender offer.
# # #
