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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
SCHEDULE 14D-1/A
(Amendment No. 13)
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------
COLUMBIA ENERGY GROUP
(Name of Subject Company)
CEG ACQUISITION CORP.
NISOURCE INC.
(Bidders)
COMMON STOCK, $.01 PER SHARE
(Title of Class of Securities)
197648108
(CUSIP Number of Class of Securities)
Stephen P. Adik
Senior Executive Vice President,
Chief Financial Officer And Treasurer
NiSource Inc.
801 East 86th Avenue
Merrillville, Indiana 46410-6272
(219) 853-5200
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Bidder)
---------------------------------
Copies to:
Peter V. Fazio, Jr., Esq. Alan G. Schwartz, Esq.
Schiff Hardin & Waite Simpson Thacher & Bartlett
6600 Sears Tower 425 Lexington Avenue
Chicago, Illinois 60606 New York, New York 10017
Telephone: (312) 258-5500 Telephone: (212) 455-2000
====================================================================
This Amendment No. 13 (this "Amendment") amends and supplements
the Tender Offer Statement on Schedule 14D-1, as amended, originally
filed with the Securities and Exchange Commission on June 25, 1999
(the "Schedule 14D-1") by CEG Acquisition Corp., a Delaware
corporation (the "Offeror") and a wholly owned subsidiary of NiSource
Inc., an Indiana corporation ("Parent"). The Schedule 14D-1 and this
Amendment relate to a tender offer by the Offeror to purchase all of
the outstanding shares of common stock, par value $.01 per share (the
"Shares"), of Columbia Energy Group, a Delaware corporation (the
"Company"), at a purchase price of $68 per Share, net to the seller in
cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated June 25, 1999
(the "Offer to Purchase"), and in the related Letter of Transmittal
(which, as either may be amended or supplemented from time to time,
collectively constitute the "Offer"), copies of which are filed with
the Schedule 14D-1 as Exhibits (a)(1) and (a)(2), respectively.
Item 10. Additional Information.
On July 30, 1999, Parent issued i) the information available via
the Internet at http://www.yes2nisource.com and ii) a press release
regarding the release of information via the Internet at
http://www.yes2nisource.com, which are included herein as Exhibits
(a)(22) and (23), respectively, and incorporated herein by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase, dated June 25, 1999.*
(a)(2) Letter of Transmittal.*
(a)(3) Letter dated June 25, 1999, from Dealer Manager to
brokers, dealers, commercial banks, trust
companies and other nominees.*
(a)(4) Letter dated June 25, 1999, to be sent by brokers,
dealers, commercial banks, trust companies and
other nominees to their clients.*
(a)(5) Notice of Guaranteed Delivery.*
(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.*
(a)(7) Form of Summary Advertisement, dated June 25,
1999.*
(a)(8) Press Release issued by Parent on June 24, 1999.*
(a)(9) Form of letter dated June 28, 1999 from Gary L.
Neale, Chairman, President and Chief Executive
Officer of Parent, to investors of the Company.*
(a)(10) Press Release issued by Parent on June 28, 1999.*
(a)(11) "NiSource/Columbia StraightTalk" communication to
stockholders of the Company issued by Parent on
July 2, 1999.*
(a)(12) Form of letter dated July 2, 1999, from Gary L.
Neale, Chairman, President and Chief Executive
Officer of Parent, to directors of the Company.*
(a)(13) Press Release issued by Parent on July 6, 1999.*
(a)(14) Form of letter dated July 12, 1999, from Gary L.
Neale, Chairman, President and Chief Executive
Officer of Parent, to shareholders of Parent.*
(a)(15) "NiSource/Columbia StraightTalk" communication to
stockholders of the Company issued by Parent on
July 14, 1999.*
(a)(16) Press Release issued by Parent on July 14, 1999.*
(a)(17) Press Release issued by Parent on July 19, 1999.*
(a)(18) Press Release issued by Parent on July 20, 1999.*
(a)(19) Form of letter dated July 21, 1999, from Gary L.
Neale, Chairman, President and Chief Executive
Officer of Parent, to directors of the Company.*
(a)(20) Form of letter dated July 26, 1999, from Gary L.
Neale, Chairman, President and Chief Executive
Officer of Parent, to stockholders of the
Company.*
(a)(21) "NiSource/Columbia StraightTalk" communication to
stockholders of the Company issued by Parent on
July 26, 1999.*
(a)(22) Information published by Parent on July 30, 1999,
available via the Internet at
http://www.yes2nisource.com.
(a)(23) Press Release issued by Parent on July 30, 1999.
(b)(1) Commitment Letter dated June 23, 1999 to Parent
from Credit Suisse First Boston and Barclays Bank
PLC.*
(c) Not Applicable.
(d) Not Applicable.
(e) Not Applicable.
(f) Not Applicable.
(g)(1) Complaint in NiSource Inc. and CEG Acquisition
Corp. vs. Columbia Energy Group et al., Delaware
Chancery Court, New Castle County.*
(g)(2) Complaint in NiSource Inc. and CEG Acquisition
Corp. vs. Columbia Energy Group et al., United
States District Court, District of Delaware.*
(g)(3) First Amended Complaint in NiSource Inc. and CEG
Acquisition Corp. vs. Columbia Energy Group et
al., United States District Court, District of
Delaware.*
(g)(4) Complaint in NiSource Inc., NiSource Capital
Markets Inc. and CEG Acquisition Corp. vs.
Columbia Energy Group et al., Delaware Chancery
Court, New Castle County.*
---------------
*Previously filed.
SIGNATURE
After due inquiry and to the best of its knowledge and belief,
each of the undersigned certifies that the information set forth in
this statement is true, complete and correct.
CEG ACQUISITION CORP.
By: /s/ Gary L. Neale
------------------------
Name: Gary L. Neale
Title: President
NISOURCE INC.
By: /s/ Gary L. Neale
------------------------
Name: Gary L. Neale
Title: Chief Executive Officer
Date: July 30, 1999
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
11(a)(1) Offer to Purchase, dated June 25, 1999.*
11(a)(2) Letter of Transmittal.*
11(a)(3) Letter dated June 25, 1999, from Credit Suisse First
Boston Corporation to brokers, dealers, commercial
banks, trust companies and other nominees.*
11(a)(4) Letter dated June 25, 1999, to be sent by brokers,
dealers, commercial banks, trust companies and other
nominees to their clients.*
11(a)(5) Notice of Guaranteed Delivery.*
11(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.*
11(a)(7) Form of Summary Advertisement, dated June 25, 1999.*
11(a)(8) Press Release issued by Parent on June 24, 1999.*
11(a)(9) Form of letter dated June 28, 1999 from Gary L. Neale,
Chairman, President and Chief Executive Officer of
Parent, to investors of the Company.*
11(a)(10) Press Release issued by Parent on June 28, 1999.*
11(a)(11) "NiSource/Columbia StraightTalk" communication to
stockholders of the Company issued by Parent on July 2,
1999.*
11(a)(12) Form of letter dated July 2, 1999, from Gary L. Neale,
Chairman, President and Chief Executive Officer of
Parent, to directors of the Company.*
11(a)(13) Press Release issued by Parent on July 6, 1999.*
11(a)(14) Form of letter dated July 12, 1999, from Gary L. Neale,
Chairman, President and Chief Executive Officer of
Parent, to shareholders of Parent.*
11(a)(15) "NiSource/Columbia StraightTalk" communication to
stockholders of the Company issued by Parent on
July 14, 1999.*
11(a)(16) Press Release issued by Parent on July 14, 1999.*
11(a)(17) Press Release issued by Parent on July 19, 1999.*
11(a)(18) Press Release issued by Parent on July 20, 1999.*
11(a)(19) Form of letter dated July 21, 1999, from Gary L. Neale,
Chairman, President and Chief Executive Officer of
Parent, to directors of the Company.*
11(a)(20) Form of letter dated July 26, 1999, from Gary L. Neale,
Chairman, President and Chief Executive Officer of
Parent, to stockholders of the Company.*
11(a)(21) "NiSource/Columbia StraightTalk" communication to
stockholders of the Company issued by Parent on July
26, 1999.*
11(a)(22) Information published by Parent on July 30, 1999,
available via the Internet at http://www.yes2nisource.com.
11(a)(23) Press Release issued by Parent on July 30, 1999.
11(b)(1) Commitment Letter dated June 23, 1999 to Parent from
Credit Suisse First Boston and Barclays Bank PLC.*
11(g)(1) Complaint in NiSource Inc. and CEG Acquisition Corp.
vs. Columbia Energy Group et al., Delaware Chancery
Court, New Castle County.*
11(g)(2) Complaint in NiSource Inc. and CEG Acquisition Corp.
vs. Columbia Energy Group et al., United States
District Court, District of Delaware.*
11(g)(3) First Amended Complaint in NiSource Inc. and CEG
Acquisition Corp. vs. Columbia Energy Group et al.,
United States District Court, District of Delaware.*
11(g)(4) Complaint in NiSource Inc., NiSource Capital Markets
Inc. and CEG Acquisition Corp. vs. Columbia Energy
Group et al., Delaware Chancery Court, New Castle
County.*
_________________
*Previously filed.
EXHIBIT 11(a)(22)
-----------------
[Information published by Parent on July 30, 1999, available via the
Internet at http://www.yes2nisource.com]
NISOURCE
Delivering life's essential resources
Get the latest news:
********************************************************************
Merrillville, Ind., July 20, 1999 - NiSource Inc. (NYSE: NI) today
announced that with regard to its tender offer of Columbia Energy
Group it has filed the necessary information under the Hart-Scott-
Rodino (HSR) Antitrust Improvements Act of 1976 with the Federal Trade
Commission and Department of Justice.
Gary Neale, NiSource Chairman, President and Chief Executive Officer
said "This sends a serious message to Columbia that we are confident
in our ability to secure the necessary regulatory approvals. We have
said throughout that we believe the regulatory approval process can be
completed within six to nine months if we work together. HSR
clearance is an important first step, and one that confirms our
commitment to move forward on all fronts of this transaction."
***********************************
For information about tendering your shares, call Innisfree M&A at
877-750-5837
************************************
NiSource is a holding company with a market capitalization of
approximately $3.6 billion whose primary business is the distribution
of electricity, natural gas and water in the Midwest and Northeast
United States. The company also markets utility services and customer
focused resource solutions along a corridor stretching from Texas to
Maine.
For more information on NiSource and its subsidiaries, visit
www.nisource.com.
******************************************************************
[NiSource logo and regional map of
the United States depicting states
which NiSource serves]
Say Yes To NiSource
FOR INFORMATION ABOUT TENDERING YOUR SHARES,
CALL INNISFREE M&A AT 877-750-5837.
WWW.NISOURCE.COM
The information appearing on this Web site is neither an offer to
purchase nor a solicitation of an offer to sell shares of common stock
of Columbia Energy Group. Such offer is made solely by the Offer to
Purchase, dated June 25, 1999, as amended, and the related Letter of
Transmittal. It is not being made to, and tenders will not be
accepted from, holders of shares of Columbia common stock in any
jurisdiction in which making or accepting such offer would not comply
with law. In any jurisdiction where a licensed broker or dealer must
make such offer, it shall be deemed made on behalf of NiSource Inc. by
Credit Suisse First Boston or other registered brokers or dealers
licensed in such jurisdiction. The offer may be extended beyond its
August 6, 1999 expiration date. Any extension will be publicly
announced no later than 9:00 a.m., New York City time, on the next
business day. This Web site does not constitute a solicitation of
proxies from Columbia Energy Group's stockholders. Any such
solicitation will be made only by separate proxy materials in
compliance with Section 14(a) of the Securities Exchange Act.
This Web site is covered by the TERMS AND CONDITIONS located at
NiSource's Web site at WWW.NISOURCE.COM.
[NiSource logo and regional map of
the United States depicting states
which NiSource serves]
ABOUT THE TENDER OFFER
WE ARE OFFERING $68 PER SHARE IN CASH FOR ALL SHARES OF COLUMBIA
ENERGY GROUP. WE ARE ASKING THAT COLUMBIA SHAREHOLDERS TENDER THEIR
SHARES IMMEDIATELY TO SEND A MESSAGE TO COLUMBIA'S MANAGEMENT AND
BOARD THAT "NEGOTIATIONS WITH NISOURCE IS IN THEIR STAKEHOLDERS' BEST
INTEREST."
* Offer of $68 cash per share represents a 30.7 percent
premium over Columbia's average closing share price for the
20 trading days prior to June 4, 1999 (the last trading day
before NiSource's June 7 announcement of its proposal).
* The financing for this transaction is firm and in place.
* We are willing and able to make a higher offer if Columbia
is willing to cooperate with us and negotiate a definitive
merger agreement.
* To tender their shares, investors should contact Innisfree
M&A at 877-750-5837.
WE BELIEVE OUR TENDER OFFER WILL BE SUCCESSFUL BECAUSE:
* Over 80 percent of Columbia stock is owned by institutions.
We believe our offer is a full and fair value, and we
believe that, as sophisticated investors, they will see it
the same way.
* There is no market overlap between the utility operations of
the two companies. Thus, regulatory risk is limited.
* We have met with the holders of over 50 percent of
Columbia's stock, and they want their company to negotiate
with us. We are confident that these same investors will
take the appropriate actions to ensure that Columbia's board
is fully aware of their position in this matter.
THE LAWSUITS ARE A PART OF OUR OVERALL STRATEGY TO COMPEL COLUMBIA TO
LISTEN TO THEIR SHAREHOLDERS.
* We believe that Columbia's board deprived their shareholders
of the right to fill the 13th board position. Columbia's
certificate of incorporation and by-laws mandate that
Columbia have 13 members on their board divided into three
classes with each serving three years.
* We intend to nominate an independent shareholder
representative, with no affiliation to NiSource, to fill the
final seat.
TO REITERATE, THIS COMBINATION IS IN THE BEST INTERESTS OF THE
SHAREHOLDERS OF BOTH COMPANIES.
* Our proposal is:
* an offer at a fair value.
* accretive in first 12 months without reliance on
operating synergies.
* strategically compelling.
* subject to little regulatory risk.
* ratings neutral.
* NiSource has consistently demonstrated its capabilities in
multiple sectors: electricity, gas and water.
* No strings attached to offer - customary conditions in a
merger agreement. NiSource would like to close a negotiated
transaction within six to nine months, assuming customary
regulatory approval process.
* Creates powerful "Super-Regional" energy company with a
unique portfolio.
* Deal will enhance future growth: NiSource-Columbia will be
a nimble player in the energy sector with an estimated 12
percent EPS growth per year.
FOR INFORMATION ABOUT TENDERING YOUR SHARES, CALL INNISFREE M&A AT
877-750-5837.
WWW.NISOURCE.COM
[NiSource logo and regional map of
the United States depicting states
which NiSource serves]
Frequently Asked Questions
WHO IS NISOURCE?
NiSource is a holding company with a market capitalization of
approximately $3.6 billion whose primary business is the distribution
of electricity, natural gas and water in the Midwest and Northeast
United States. The company also markets utility services and
customer-focused resource solutions along a corridor stretching from
Texas to Maine.
WHY IS NISOURCE PURSUING COLUMBIA ENERGY GROUP?
This acquisition is in line with NiSource's stated strategy of growing
a gas distribution corridor between Chicago and New England.
*It delivers on NiSource's well-defined strategy to create a
distribution value chain around its gas, electric and water
businesses.
*It brings new products and services to customers.
*The combination will make NiSource one of the largest natural gas
companies in the country.
*Its pipelines will connect the Texas Gulf to the Atlantic coast.
*NiSource will have the largest natural gas storage capacity in the
U.S.
WHAT IS THE OFFER THAT NISOURCE HAS MADE TO COLUMBIA ENERGY GROUP?
NiSource announced June 7, 1999 that it is offering to acquire
Columbia Energy Group for $5.7 billion, or $68 per share in cash. The
offer is not subject to any financing contingency. The price
represents a 30.7 percent premium over the average closing share price
for Columbia common stock for the 20 trading days ended Friday, June
4, 1999.
HAD NISOURCE PREVIOUSLY MADE A FORMAL OFFER TO COLUMBIA?
Yes. NiSource Chairman, President and Chief Executive Officer Gary L.
Neale said, "We're announcing this offer after a formal offer to the
Columbia Board of Directors was rejected, repeated requests for
discussion were ignored and Columbia's financial advisors informed us
on May 28 that the company was unwilling to talk with us. We believe
that all constituencies will find this offer to be so compelling that
Columbia's Board will no longer be able to ignore it."
HOW LONG WILL THIS ACQUISITION TAKE TO COMPLETE?
Pending approval from Columbia's shareholders and federal and state
regulators, we expect the acquisition to be completed within six to
nine months after execution of a merger agreement.
WHAT PLANS DOES NISOURCE HAVE FOR MERGING THE TWO COMPANIES?
Just as with previous acquisitions, NiSource expects there to be few
operational changes for Columbia. One clear advantage of this proposed
merger is that there is no overlap in service areas. NiSource and
Columbia are not direct competitors in any utility markets.
HISTORY HAS PROVEN THAT HOSTILE BIDS AREN'T SUCCESSFUL IN REGULATED
INDUSTRIES. WHY IS YOUR SITUATION ANY DIFFERENT?
Two reasons:
*Columbia is 82 percent institutionally held. We have spoken to
Columbia's largest shareholders, and they favor this offer, which is a
substantial premium to Columbia share price prior to our public
announcement on June 7.
*There is no market overlap between the utility operations of the two
companies. Thus, redundancies are very modest. For this reason and
others, we feel there is limited regulatory risk.
WHAT IS THE REASON FOR THE PROPOSED TENDER?
Despite our many attempts, Columbia's management has thus far been
unwilling to negotiate with us. We've received enough support from
Columbia's shareholders that we feel a tender offer for their shares
can be completed successfully.
We would also like to add that we have the ability to offer a higher
price. However, Columbia's management must sit down at the
negotiating table to obtain a higher price.
WHAT ARE THE TERMS OF THE TRANSACTION?
NiSource will offer to acquire all of the outstanding shares of common
stock of Columbia for $68 per share in cash.
WHEN DID THE OFFER COMMENCE?
June 25, 1999
WHAT WILL YOU DO IF SHAREHOLDERS DON'T TENDER?
We will review our options and make a decision at that time. However,
let me reiterate that we are committed to this transaction. We firmly
believe that this transaction is in the best interest of both
companies' shareholders. We're not going away.
IS THE PRICE OFFERED FAIR?
We believe this is a compelling offer to Columbia's shareholders that
represents a substantial premium over Columbia's current and
historical share price.
ARE YOU WILLING TO OFFER A HIGHER PRICE?
We have the financing in place to offer a higher price. However,
Columbia's management must sit down at the negotiating table to obtain
a higher price.
WHY A CASH TRANSACTION? WHY NOT STOCK?
We believe that our all-cash merger proposal, which reflects a
substantial premium over Columbia's current market value, represents a
full and fair price for Columbia stockholders. However, if the
Columbia Board and management believe that it would be in their
stockholders' best interest to receive NiSource stock in exchange for
these shares, we would be willing to consider a transaction that
contemplates offering a certain amount of NiSource stock. This would
mean, however, that we would need to negotiate a merger with Columbia,
something we have been prepared to do throughout this process.
DOES THIS TRANSACTION REQUIRE NISOURCE STOCKHOLDER APPROVAL?
No.
YOU COMMENCED LITIGATION AGAINST THE COLUMBIA BOARD JUNE 24. WHY?
Despite the fact that Columbia's board was aware that it had to elect
five directors at this year's annual meeting, they only filled four
seats, which is in violation of their own certificate of
incorporation. In view of the entrenched attitude Columbia's board has
shown to date, we filed a complaint to give shareholders the right to
choose the fifth director.
YOU COMMENCED FEDERAL LITIGATION AGAINST COLUMBIA JUNE 24. WHY?
This lawsuit seeks to prohibit Columbia from making false and
misleading statements about our tender offer.
WHY IS THIS DEAL IN THE BEST INTEREST OF NISOURCE'S SHAREHOLDERS?
*Stronger company - we project 12 percent EPS growth per year
*Strategically compelling - fits our long-stated goal of building a
gas corridor
*Transaction is accretive in the first year
WHY IS THIS DEAL IN THE BEST INTEREST OF COLUMBIA'S SHAREHOLDERS?
*Realize immediate value and significant premium over Columbia share
price
*Uncertainty of achieving the offer price on a stand-alone basis
*Stronger combined company
WHAT PROMISES ARE YOU PREPARED TO MAKE TO COLUMBIA SHAREHOLDERS?
EMPLOYEES? LOCAL COMMUNITIES?
*Columbia shareholders would receive a significant premium for their
shares.
*Overall, we anticipate that Columbia employees should see enhanced
career opportunities from being part of a larger organization.
*Together, we anticipate that NiSource and Columbia would continue to
be vital parts of their communities by providing jobs, economic
development assistance and civic and charitable support.
WHO ARE YOUR LARGEST SHAREHOLDERS? WHAT HAS BEEN THEIR REACTION?
They are Massachusetts Financial, Merrill Lynch, and Duff and Phelps.
We have spoke to all of our largest shareholders, and they firmly
support this transaction.
WHAT HAS BEEN THE REACTION OF COLUMBIA'S LARGEST SHAREHOLDERS? HAVE
YOU SPOKEN WITH THEM?
We've met with holders of more than 50 percent of their stock. They
are in favor of Columbia meeting with us to discuss our offer.
DOES COLUMBIA HAVE ANY TAKEOVER DEFENSES IN PLACE?
Columbia has many of the standard takeover defenses in place, such as
a staggered board.
DO THEY HAVE A POISON PILL?
No, and it is our hope that they will act responsibly and not take
actions which would further entrench Columbia management.
DO THEY HAVE A STAGGERED BOARD?
Yes.
DO COLUMBIA EXECUTIVES HAVE GOLDEN PARACHUTE AGREEMENTS?
Yes, that information is disclosed in their publicly filed documents,
and they were enhanced for the company's top three officers and
expanded to 27 others July 14.
ARE THERE ANY PENSION ISSUES INVOLVED?
No.
ARE YOU CONCERNED ABOUT A POSSIBLE INTERLOPER BREAKING UP THE
TRANSACTION?
We are not in a position to speculate. Again, we believe that our
offer represents an opportunity for the stockholders of both Columbia
and NiSource to realize significant value for their respective
investment.
IF A THIRD PARTY MAKES A COUNTEROFFER, HOW DO YOU THINK COLUMBIA WILL
REACT?
We are not in a position to speculate; however, we believe that we are
making a generous offer and that there are compelling strategic
reasons for a combination of our companies. We also believe that the
appropriate regulatory bodies will agree with us and that others will
recognize these factors as well.
IF COLUMBIA'S BOARD REJECTS YOUR INITIAL OFFER, OR A THIRD PARTY
ENTERS WITH A HIGHER BID, WOULD YOU BE WILLING TO INCREASE YOUR OFFER?
IF SO, BY HOW MUCH?
We will not speculate. We believe that our offer is full and fair and
our combination would make more sense to shareholders and regulators
than other potential combinations.
WHEN DO YOU EXPECT THE TRANSACTION TO CLOSE?
The company anticipates that the transaction will close within 6-9
months after execution of a merger agreement.
HOW WILL THIS IMPACT NISOURCE'S EARNINGS FOR THE QUARTER AND THE YEAR?
COLUMBIA'S?
The transaction is accretive in the first full year.
WHEN DO YOU ANTICIPATE FILING YOUR APPLICATION WITH THE FERC?
We will be filing promptly.
HOW WILL THE FERC REACT?
We expect the FERC to support the transaction as it promotes increased
competition and will lead to lower rates for customers.
WHAT OTHER REGULATORY APPROVALS DO YOU NEED? WHAT HAVE THE REGULATORS
SAID SO FAR?
The transaction requires approval of the state regulators in
Columbia's service area. Our conversations with these regulators have
been both constructive and encouraging.
WILL THERE BE A RATE HIKE?
No.
WHO WILL RUN THE COMPANY?
Gary Neale will become the CEO of the combined company. However, until
we sit down and talk with Columbia, it is premature to discuss the
balance of the combined company's senior management.
WHAT ABOUT COLUMBIA'S BOARD MEMBERS? WILL ANY OF THEM BE INVITED TO
JOIN NISOURCE'S BOARD?
Until we sit down and talk with Columbia, it is premature to discuss
the combined company's leadership. We would, however, like to approach
this as a true merger and retain the best of both companies.
HOW DO THE CULTURES OF THE TWO COMPANIES COMPARE? ARE THERE ANY
DIFFERENCES? IF SO CAN THIS BE AN IMPEDIMENT?
We are confident that we can combine the two companies operationally,
economically and culturally. We would not seek this combination if we
believed there were any significant impediments to a complete and
successful merger.
HOW DOES NISOURCE STAND ON ENVIRONMENTAL COMPLIANCE? HOW ABOUT
COLUMBIA?
We are proud of our reputation as an environmentally conscientious
company and, consistent with our history, we are committed to running
the Columbia operations in an environmentally responsible manner.
FOR INFORMATION ABOUT TENDERING YOUR SHARES,
CALL INNISFREE M&A AT 877-750-5837.
WWW.NISOURCE.COM
[NiSource logo and regional map of
the United States depicting states
which NiSource serves]
RELATED PRESS RELEASES
JULY 1999
* NISOURCE SEEKS HART-SCOTT-RODINO CLEARANCE FOR COLUMBIA
ENERGY BID (7-20-99)
* NISOURCE ASKS COLUMBIA CEO TO CORRECT MISLEADING STATEMENTS
(7-19-99)
* NISOURCE/COLUMBIA STRAIGHTTALK (7-14-99)
* WASSERSTEIN PERELLA JOINS TEAM OF NISOURCE ADVISORS (7-14-
99)
* NISOURCE TO PURSUE ITS TENDER OFFER FOR COLUMBIA ENERGY (7-
6-99)
* NISOURCE/COLUMBIA STRAIGHTTALK (7-2-99)
JUNE 1999
* DELAWARE CHANCERY COURT ORDERS AN ACCELERATED SCHEDULE IN
NISOURCE LAWSUIT (6-28-99)
* NISOURCE TO COMMENCE TENDER OFFER FOR COLUMBIA ENERGY GROUP
(6-24-99)
* NISOURCE TO PURSUE TRANSACTION FOR COLUMBIA ENERGY GROUP (6-
10-99)
* SHAREHOLDERS WANT COLUMBIA TO NEGOTIATE WITH NISOURCE (6-9-
99)
* NISOURCE INC. OFFERS $68 PER SHARE FOR COLUMBIA ENERGY GROUP
(6-7-99)
FOR INFORMATION ABOUT TENDERING YOUR SHARES,
CALL INNISFREE M&A AT 877-750-5837.
WWW.NISOURCE.COM
[NiSource logo and regional map of
the United States depicting states
which NiSource serves]
NISOURCE-COLUMBIA COMPARISON
CREATES A SUPER REGIONAL POWERHOUSE
$ IN MILLIONS
NISOURCE COLUMBIA
--------------------------- -------------------------------
MARKET $3,571 MARKET $4,665
CAPITALIZATION: CAPITALIZATION:
ENTERPRISE VALUE:* $6,390 ENTERPRISE VALUE: $6,915<F1>
TOTAL ASSETS:* $6,370 TOTAL ASSETS: $7,200
1998 EBIT:* $ 480 1998 EBIT: $ 515
1998 NET INCOME:* $ 212 1998 NET INCOME: $ 259
CUSTOMERS (000'S) CUSTOMERS (000'S)
Electric 421
Gas 1,059 Gas 2,100
Water 254
Propane 300
* 1998 pro forma for Bay State Gas and TPC Corporation.
<F1> Includes National Propane acquisition debt.
Comparison as of June 7, 1999. Columbia numbers are taken from their
from their filings and public statements.
Download the ANALYST PRESENTATION regarding the Columbia offer.
[Text of Analyst Presentation]
NISOURCE
A CATALYST FOR COMPETITION
THE ACQUISITION OF COLUMBIA ENERGY GROUP
JUNE 1999
These materials contain forward-looking statements as defined in
Section 21E of the Securities Exchange Act of 1934, including
statements about future business operations and financial
performance. These statements involve risks and uncer-
tainties inherent in business forecasts, and actual
results could differ materially from those indicated
in these statements. A number of these risks and
uncertainties are discussed in NiSource's Form
10-Q Quarterly Report filed with the Securi-
ties and Exchange Commission on May 14, 1999.
NISOURCE
NISOURCE: A TRACK RECORD OF PERFORMANCE
----------------------------------------------------------------------
TOTAL RETURN NET INCOME
[Graph depicting performance [Graph depicting NiSource Net]
of NiSource stock compared to Income compared to NiSource EPS
S&P 500 Index for the period for the period 1990 to 1999.*]
June 1989 to June 1999.]
*Research estimates for 1999.
NISOURCE HAS CONSISTENTLY DELIVERED VALUE TO ITS SHAREHOLDERS
* * *
NISOURCE
A GREAT TRANSACTION FOR NI SHAREHOLDERS
----------------------------------------------------------------------
* Immediate cashflow and earnings accretion with little to no
synergies required
- Combined entity is poised to deliver 12+% annual EPS growth
- Revenue and cost synergies could result in higher growth
* Positions the combined company for profitable growth
- Opportunities to leverage capabilities across fuels,
geography, weather and time
- Maintains strong financial profile: credit ratings are
likely to be affirmed
* Creates a highly competitive energy company from Texas to Maine
- Columbia complements NiSource's gas corridor strategy
* Builds on management's proven track record of strategic accretive
acquisitions
* Fast track approval process: 6-9 months
- Customers will benefit from greater choice and increased
competition
ENERGY CORRIDOR STRATEGY --> ACCRETION --> EARNINGS GROWTH
* * *
NISOURCE
NISOURCE'S STRATEGY: BUILDING FOR TOMORROW
----------------------------------------------------------------------
* INCREASED PROFITABILITY FROM SOPHISTICATED ARBITRAGE ACROSS
FUELS, GEOGRAPHY, WEATHER AND TIME
- Procure, deliver, and risk-manage the commodity
- Fundamentally alter customer on-site consumption patterns
- Provide sophisticated billing and metering service for
multi-site businesses
* CONTINUE TO FOCUS ON ITS CORE STRENGTHS
- Gas, Electric and Water Distribution
- Gas Storage
- Distributed Generation
* USE PROVEN SKILLS TO MAXIMIZE SHAREHOLDER VALUE
- Quickly implement shared services
-- $25-30 million from purchasing synergies among Bay
State, IWC, and NIPSCO
-- No personnel layoffs
- Achieve above average returns from the regulated business
- Enhance base growth rate through non-regulated businesses
CONSISTENT FOCUS ON PROFITABILITY
* * *
NISOURCE
NI/CG ENERGY CORRIDOR
----------------------------------------------------------------------
Platform for Success [Regional map of the
United States depicting
* 4,100,000 customers states which NiSource
* 19,000 miles of gas pipelines serves]
* 700 Bcf of gas storage
* 4,000 MW power generation
* 800 Bcf proved natural gas reserves
30% OF U.S. POPULATION AND 40% OF U.S. ENERGY CONSUMPTION
* * *
NISOURCE
ARBITRAGE WITHIN THE CORRIDOR
----------------------------------------------------------------------
[Regional Map of the
United States depicting
states which NiSource serves]
Gas flows with the weather [arrow on map]
CAPITALIZE ON TIME AND WEATHER PATTERNS IN PEAK GAS USAGE PERIODS
* * *
NISOURCE
INCREMENTAL REVENUE POTENTIAL
----------------------------------------------------------------------
* Direct interconnect to move gas from Chicago to New England along
multiple peak points
* Use the combination of pipeline capacity and quick release gas
storage to arbitrage west to east weather patterns and east to
west time zones
- "Huff & Puff" theory
* Similar large industrial customer base provides multiple new
inside the fence cogen opportunities
- Build excess capacity to capitalize on marginal cost
differential
* Focus trading and marketing on existing asset and customer base
- Profitability is critical
- Capitalize on known reputation and existing cost
infrastructure
CREATE ELECTRIC AND GAS CONVERGENCE AT THE CUSTOMER LEVEL
* * *
NISOURCE
COMBINATION OF SIMILAR SIZED PEERS
----------------------------------------------------------------------
($ in Millions)
NiSource Columbia
------------------------------- -------------------------------
Market Capitalization: $3,571 Market Capitalization: $4,665
Enterprise Value:* $6,390 Enterprise Value: $6,915(1)
Total Assets:* $6,370 Total Assets: $7,200
1998 EBIT:* $480 1998 EBIT: $515
1998 Net Income:* $212 1998 Net Income: $259
Customers (000's) Customers (000's)
Electric: 421 Gas: 2,100
Gas: 1,059 Propane: 300
Water: 254
* 1998 pro forma for Bay State (1) Includes National Propane
Gas and TPC Corporation. acquisition debt
A SUPER REGIONAL POWERHOUSE
* * *
NISOURCE
The Offer
----------------------------------------------------------------------
* NiSource has proposed to acquire Columbia for $68 per share in
cash or $5.7 billion
* The offer is not contingent on financing; only customary merger
conditions
* Required regulatory approvals are expected in approximately 6-9
months
* Due to Columbia's unwillingness to discuss a negotiated
transaction, NiSource is making public its proposal
FULL AND FAIR VALUE TO COLUMBIA SHAREHOLDERS
* * *
NISOURCE
THIS IS A COMPELLING OFFER
----------------------------------------------------------------------
ONE YEAR STOCK PRICE PERFORMANCE
[Line Graph depicting performance of Columbia stock compared to S&P
500 Index for the period June 3, 1998 to June 4, 1990]
PERIOD PRIOR TO ANNOUNCEMENT
1 Day 1 Week 4 Weeks 3 Months
----- ------ ------- --------
Premium 22.0% 27.1% 35.3% 28.8%
OFFER EXCEEDS ALL TIME HIGH STOCK PRICE
* * *
NISOURCE
COMPARABLE TRANSACTION ANALYSIS
----------------------------------------------------------------------
(Dollars in Millions)
<TABLE>
<CAPTION>
Purchase Price Adjusted
as a Purchase
Premiums Paid to Multiple of: Price
Pre-announcement ------------ -------------
Prices LTM
------------------ ---------------------------
Date 4 1 1 Earn-
Announced Acquiror Target weeks week day ings Book EBITDA EBIT
--------- -------- ------ ----- ----- --- ---- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PROPOSED NISOURCE INC. COLUMBIA ENERGY GROUP 35.3% 27.1% 22.0% 23.4x 2.7x 10.7x 15.8x
5/10/99 Dominion Resources Consolidated Natural Gas 27.3% 29.2% 18.4% 22.6x 2.7x 10.3x 16.9x
4/26/99 ONEOK Southwest Gas 32.2% 21.5% 23.1% 19.1x 1.9x 7.5x 11.9x
4/23/99 Energy East Connecticut Energy 65.1% 50.0% 34.1% 23.0x 2.4x 11.1x 16.8x
3/15/99 El Paso Natural Gas Sonat Inc. 39.5% 41.9% 18.9% 32.8x 3.0x 9.2x 20.5x
2/22/99 Sempra Energy KN Energy 21.6% 28.6% 18.3% 31.3x 1.4x 11.6x 15.0x
12/14/98 National Grid Plc New England Electric System 26.8% 23.9% 25.0% 26.7x 2.0x 9.7x 13.1x
12/7/98 BEC Energy Commonwealth Energy System 16.1% 14.5% 16.6% 18.2x 2.1x 8.2x 12.9x
11/11/98 Carolina Power & Light North Carolina Natural
Gas Corp. 47.8% 41.1% 48.1% 20.9x 2.8x 10.1x 13.7x
10/19/98 Eastern Enterprises Colonial Gas 26.1% 29.9% 26.8% 21.0x 2.5x 10.3x 14.7x
12/22/97 Eastern Enterprises Essex County Gas 61.2% 55.5% 26.6% 21.2x 2.4x 9.5x 13.6x
12/18/97 NIPSCO Industries Bay State Gas 39.1% 32.0% 26.5% 22.5x 2.3x 10.3x 15.8x
12/12/96 ONEOK Western Resources Inc. NM NM NM 32.5x 1.2x 10.8x 18.4x
11/22/96 TECO Energy Lykes Energy NA NA NA 18.8x 2.8x 7.7x 11.4x
8/12/96 Houston Industries NorAm Energy 47.1% 43.8% 37.6% 25.3x 2.6x 8.2x 11.9x
7/22/96 Atmos Energy United Cities Gas 69.7% 64.3% 52.2% 24.8x 2.2x 8.6x 13.0x
4/15/96 Texas Utilities ENSERCH NM NM NM NM NM 6.8x 18.6x
MEAN 40.0% 36.6% 28.6% 24.0x 2.3x 9.4x 14.9x
* * *
</TABLE>
NISOURCE
COMPLETED IN 6 --9 MONTHS
----------------------------------------------------------------------
<TABLE>
<CAPTION>
Similar Process and Timing to NiSource/Bay State and Dominion/CNG
MONTHS
TO* TO+1 TO+2 TO+3 TO+4 TO+5 TO+6 TO+7 TO+8 TO+9
--- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Mail Proxy Shareholder
Approval Approval
FERC Filing Commission Approval
Review
Hart-Scott Filing Approval
Rodino
State Filings File: KY, OH,MD, Approval
PA, VA
SEC 1935 Act Filing Commission Approval
Review
</TABLE>
*Signing of Merger Agreement.
TIMING CAN BE COMPRESSED BY ACTIVE SHAREHOLDER SUPPORT
* * *
NISOURCE
ACQUISITION FINANCING PLAN
----------------------------------------------------------------------
STRUCTURE SOURCES & USES
--------- --------------
[Graphic depicting Acquisition INITIAL SOURCES $MM
Financing Plan] ---
364 Day Bank Facility $5,790
FINAL SOURCES
Debt Financing* $3,185
Equity and Equity
Linked Financing* 2,605
------
TOTAL FINAL SOURCES $5,790
======
USES
Purchase Price
($68.00/share) $5,690
Transaction Costs 100
------
Total Uses $5,790
======
* Within 12 months after
closing.
CREDIT RATINGS LIKELY TO BE AFFIRMED
* * *
NISOURCE
EPS PRO FORMA IMPACT
----------------------------------------------------------------------
($mm except per share data) 2000(1) 2001(1)
-------------------------------------------- ------- -------
IBES EST. NI NET INCOME 244.3 261.4
IBES EST. CG NET INCOME 152.7 386.4
NI Incremental Interest Expense (@6.75%) (121.1) (160.5)
Goodwill (net of consolidation adjustments) (30.2) (60.3)
PRO-FORMA NET INCOME 245.7 427.0
Avg. Fully Diluted Pro Forma Shares
Outstanding (mm)* 126.7 196.0
PRO-FORMA FULLY DILUTED EPS 1.94 2.18
NI STAND-ALONE FULLY DILUTED EPS 1.93 2.06
Accretion 0.01 0.12
Accretion % 0.5% 5.8%
(1)Assumes transaction close on June 30, 2000 and equity issuance at
end of Q1 2001
*Stock issued at $28.19 per share and assumes no stock buyback.
IMMEDIATELY ACCRETIVE
* * *
NISOURCE
HOW WE GOT HERE
----------------------------------------------------------------------
* On April 1, NiSource made a proposal to merge with Columbia in an all
cash transaction
- At Columbia's request NiSource withdrew its offer to allow
discussions to proceed on a friendly basis
- A meeting was scheduled between the companies for April 16
- Columbia cancelled the meeting on April 15 without explanation
* On April 16, NiSource sent a formal cash offer to Columbia
* Columbia rejected the NiSource offer on April 18 and launched its
unsolicited bid for Consolidated Natural Gas
* NiSource has subsequently attempted, without success, to engage Columbia
in merger discussions
* Because the combination is financially and strategically compelling,
NiSource believes it is obligated to inform Columbia's shareholders of
its proposal
IT'S TIME TO TALK
* * *
NISOURCE
SEND A MESSAGE TO THE BOARD TO NEGOTIATE
----------------------------------------------------------------------
SHAREHOLDERS
* Columbia has consistently underperformed its peer group and the market
* Since 1996, approximately $300 million has been invested in unregulated
businesses without results: $11.1mm Operating Loss in 1998
* Columbia lacks the skill and assets to capitalize on gas and electric
convergence
CUSTOMERS
* NiSource's cash offer assumes a rate freeze to all Columbia customers
* NiSource is an active proponent of competition and customer choice
EMPLOYEES
* NiSource's offer requires minimal synergies to be earnings accretive
HELP MAXIMIZE SHAREHOLDER VALUE
* * *
NISOURCE
CONCLUSIONS
----------------------------------------------------------------------
--> Compelling proposal for Columbia Shareholders, Customers and Employees
--> Transaction will be immediately earnings and cashflow accretive
--> Excellent strategic fit uniting two complementary platforms
--> Full Btu provider with direct access to 30% of the US population and 40%
of US energy consumption
--> Builds on NiSource's track record of disciplined accretive acquisitions
* * *
NISOURCE
www.nisource.com
FOR INFORMATION ABOUT TENDERING YOUR SHARES,
CALL INNISFREE M&A AT 877-750-5837.
WWW.NISOURCE.COM
[NiSource logo and regional map
of the United States depicting
states which NiSource serves]
ABOUT NISOURCE
NiSource Inc. (NYSE: NI), formerly known as NIPSCO Industries Inc., a
Fortune 500 company based in Merrillville, Ind., has eight major
subsidiaries and nearly 7,500 dedicated employees and a market
capitalization of $3.6 billion. The NiSource family of companies serves
approximately 1.7 million customers in 23 states along a geographic
corridor that runs from the company's storage assets in Texas to one of
its pipelines in Maine. The region includes the Midwest, where 40% of
U.S. energy is consumed, and New England, a strategic geographic area for
growth.
Along this route, NiSource will explore opportunities for growth in
increased pipeline service, gas storage, customer acquisition in the gas,
electric and water distribution business, and strategic partnerships.
The company is committed to meeting customers' total energy needs by
focusing on opportunities for convergence in its core businesses and for
the continued emergence of a fourth business sector, nonregulated
solutions that deliver the benefits of these commodities.
FOR INFORMATION ABOUT TENDERING YOUR SHARES,
CALL INNISFREE M&A AT 877-750-5837.
WWW.NISOURCE.COM
[NiSource logo and regional map
of the United States depicting
states which NiSource serves]
MEDIA TOOLS
PHOTO OF GARY L. NEALE (4 MB zip file, unzip for EPS format)
NISOURCE{TM} LOGO* (EPS format)
VIDEO HIGHLIGHTS OF OUR ANNUAL SHAREHOLDERS MEETING, held on April 14,
1999 at the Century Center in South Bend, IN.
[Transcript of Video Highlights of Annual Shareholders Meeting]
Let me begin by congratulating you, our shareholders, for approving the
name change from NIPSCO Industries to NiSource. We went through an
extensive process in deciding to change the name of the Company and
then selecting the new name. This process included conducting focus groups
with shareholders, customers and members of the financial community, who
clearly agreed that we needed a name that better reflects the Company's
growth and new focus.
We believe that NiSource describes the new direction of your Company as a
multi-state supplier of energy and water resources and related services.
In other words, we are delivering life's essential resources to our
customers - and, in turn, delivering added value to you, our shareholders.
As stated in our Annual Report, NiSource will maximize our value to
shareholders by remaining focused on our core competencies of distributing
electricity, natural gas and water in the Midwest and Northeast United
States, and marketing utility services and customer-focused resource
solutions along the corridor pictured here, stretching from Texas to
Maine. I will elaborate on this focused growth strategy after reviewing
with you our financial highlights of 1998.
What does all this mean to you, our shareholders? Take a look at this
graph charting the growth of a $10,000 investment in our company versus
the Standard & Poor's 500 average. As you can see, your $10,000
investment in 1989 has grown by 21.6 percent per year to now be worth more
than $70,000, consistently outpacing the S&P 500. I think that's
significant, and I'm proud to be able to stand here today and show you
these outstanding returns.
We also continue to outperform another investment barometer, the Dow
Jones Utility Average. In 1998, our stock price closed at a record
30-7/16, which combined with our paid dividend of 96 cents, produced a
total return to shareholders of 28%.
I'm pleased to announce today that our earnings for the first quarter
of 1999 reached 62-cents per share, compared with 49-cents for the same
quarter of last year. Stronger operating results from our gas, electric
and water distribution businesses, driven by a return to more normal
weather patterns, and the inclusion of earnings from Bay State Gas,
contributed to the stronger earnings. Our competitive products and
services businesses also had improved performance.
In addition, you may have heard last week that you are now a shareholder
of a Fortune 500 company. In the April 26, 1999, edition of Fortune
magazine, you can see that our 22% yearly return to shareholders over
each of the last 10 years makes us No. 1 in total return to shareholders
among all 64 utilities in the Fortune 500.
The challenge, of course, is to continue to bring these outstanding
returns to you in a constantly evolving energy/utility world and a
volatile stock market. What's clear is that you as a shareholder view
us as primarily a distributor of natural gas, electricity and water.
This is our identity, and this must remain our primary focus. If we
stray from building value around our core expertise, we lose our existing
identity.
What we believe is emerging is an opportunity to build a distribution
value chain around our core gas, electric and water businesses. We
emphasize the word value here because this focus will bring useful
products and services to our customers as well as financial returns to
our shareholders. As you can see here, the basic commodity is linked to
commodity distribution and to commodity conversion. To build the NiSource
identity, we will focus on logical extensions of this distribution value
chain.
Upstream from the commodity distribution businesses - or, from your view,
to the left on the screen - are many opportunities to reduce risk through
such services as gas storage; risk management through asset-based commodity
trading; on-site industrial generation; and various utility services
including construction, underground facilities locating, and Shared
Services such as coordinated gas supply and purchasing.
Downstream from the commodity distribution business is the opportunity
to sell services and solutions based on our customers' energy and
service needs. This end of the value chain is more competitive and
therefore more risky, but it also can give us higher returns as we find
ways to bring the benefits of gas, electricity and water, not just the
commodities themselves, to our customers. Some of these opportunities
might include space heating and cooling; steam for industrial use; water
heater rentals and maintenance; back-up generation; distributed
generation that can increase service reliability without the need for
new transmission lines; and water purification or even in-ground
sprinkling systems.
As a result of these opportunities, our business profile continues to
change. We are a diverse company focusing on customers in four major
business sectors: gas, electric, water, and the upstream and downstream
products and services based on those commodities. Now, with the addition
of Bay State and increased gas trading volumes, we have nearly $1.7
billion in gas revenues, $1.4 billion in electric revenues, $84 million
in water and nearly $125 million in the competitive products and services
businesses. We expect during 1999 to grow the products and services piece
and to increase the commodity businesses through customer growth and
acquisitions.
I'd like to demonstrate how some significant events of 1998 and early 1999
build shareholder value along our distribution value chain.
Two months ago, we completed the acquisition of Bay State Gas Company,
making NiSource the 10th largest gas distribution company in the United
States. Bay State and its subsidiary, Northern Utilities, bring to the
NiSource family more than 300,000 customers in Massachusetts, New
Hampshire and Maine. If there are any former Bay State shareholders here
with us today, I welcome you to your first NiSource Annual Meeting.
Under the leadership of Jeff Yundt, who is now president and CEO of Bay
State, and Chairman Roger Young, whom you met earlier when he joined our
NiSource board, Bay State is focused on operational efficiency, excellent
customer service, and growth. Most importantly, Bay State gives us a
beachhead in the Northeast from which we intend to grow our gas distribution
business. This market offers significant opportunity, since barely half of
New England's homes and businesses heat with natural gas, compared with a 95
percent saturation rate here in the Midwest.
Indianapolis Water Company, our water distribution business, experienced
record growth in 1998, adding more than 7,000 new customers. This year IWC,
which is under the leadership of Jim Morris, also has taken over operation
of the Lawrence, Indiana, municipal water utility, adding another 10,000
customers.
This brings our total number of customers in central Indiana to nearly
264,000.
Northern Indiana Public Service Company - NIPSCO - continues to prepare
for a competitive energy marketplace by focusing on managing assets
efficiently. During 1998, employees reduced operating expenses by
another $27 million and managed to further bring down the costs of
fuel for our generating stations. Prudent fuel purchasing practices
have driven down our fuel costs by 41% over the last decade, which in
turn drives down the real cost of electricity to our customers by more
than 40%.
NIPSCO continues to invest in new technology to better serve customers, and
in 1998 installed a computer aided dispatch system. This system, which
provides computers in our service trucks, enables servicemen like the one
pictured here to communicate directly with Customer Service and Dispatch
personnel to improve response to customers' needs. In addition, NIPSCO
continues to make operational changes that allow us to provide superior
customer service efficiently. For example, many of you who live in north
central Indiana probably have heard recently that NIPSCO is consolidating
its Warsaw and Goshen operating areas. We find that we can better serve
customers through larger regional operations centers with higher
concentrations of employee and physical resources, rather than through
the historically smaller, scattered locations.
NIPSCO has, for many years, been a leader among utilities in environmental
stewardship. During 1998 NIPSCO took this leadership position a giant leap
further by becoming the first utility in North America to achieve ISO 14001
certification at all of its facilities. This is the international standard
for implementing an effective environmental management system, and it took
all of our operating employees working together to integrate the utility's
programs and facilities with environmental regulations and our overall
environmental policy.
Another benefit to the northern Indiana environment is a project at
NIPSCO's Schahfer Generating Station. The station has contracted with
Georgia Pacific Company to use all the gypsum output from our scrubber to
manufacture wallboard. Before, this gypsum was considered a waste product
and had to be landfilled on site at considerable expense. Now, the gypsum
is a revenue source.
Opportunities exist throughout NiSource to implement these types of
proactive efforts to benefit the environment, and our Board has solidified
our commitment to environmental initiatives by creating the position of
Environmental Officer and Counsel. Art Smith assumes this new, critical
officer position. Art was an attorney for the U.S. Environmental Protection
Agency before joining our Company eight years ago to lead our environmental
affairs group. I'm pleased to announce that Art and his team recently added
another award to the list of our environmental accolades: the North American
Waterfowl Management Plan's National Great Blue Heron Award, which
recognizes that our Company is setting the standard for corporate
environmental responsibility. We are the first utility to ever receive
this award for our land donations, contributions to local environmental
projects, redevelopment of brownfields and efforts to reduce emissions.
Through all of our management initiatives, we strive to improve service to
customers and enhance shareholder value while benefiting the environment.
Let me now turn to the upstream opportunities in the energy and utility
industry.
Our Crossroads Pipeline Company is well-positioned to meet the growing
demand for natural gas in the Northeast by supplying gas from the Midwest.
Crossroads recently completed a successful Open Season showing firm demand
for its planned western extension, which will expand the options to shippers
moving gas through the Chicago market hub.
Crossroads also plans an eastward expansion to connect with the CNG
Transmission system, which feeds the New England market. Together with Bay
State, NiSource owns more than 19 percent of the Portland Natural Gas
Transmission System, or PNGTS, which earlier this year began moving Canadian
gas into the Northeastern United States. Here, you see some of the
construction of this pipeline last year in New Hampshire.
This is the first of the Canada-to-New England pipelines to come on-line and
offers us a new source of inexpensive Canadian gas for expansion in the
Northeast market.
On April 1 we completed the acquisition of TPC Corporation, a major natural
gas marketer, gas portfolio manager, and a leading developer of salt dome
natural gas storage. Through this purchase, NiSource now owns 78 percent of
Market Hub Partners, the largest independent owner and operator of salt
cavern storage in North America.
Just to give you an idea of the depth of these salt caverns, here is a
comparison of the size of MHP's state-of-the-art natural gas storage
facilities with the height of the World Trade Center in New York. MHP's
facilities are strategically located at market hubs near the convergence of
major natural gas pipelines in Texas and Louisiana, and the partnership
this year will begin building another cavern in Pennsylvania.
Under the leadership of NiSource Senior Vice President Jim Abcouwer, TPC's
gas marketing strength and MHP's assets will provide NiSource the basis for
significant increase in upstream revenue opportunities in the coming years.
Our utility services businesses offer another exciting avenue for growth.
Miller Pipeline Corporation installs gas and water distribution pipelines
for utilities throughout the Midwest. SM&P Utility Resources is one of the
largest underground facilities locating companies in the country.
Both of these businesses are profitable, rapidly growing, and show the
potential for double-digit growth in meeting the needs of a changing
industry requiring more cost-effective operational alternatives.
Our subsidiary Primary Energy continues to meet the needs of large
industrial customers who also are seeking more cost-effective operational
alternatives. Primary Energy, led by Joe Turner, completed its largest
project to date in 1998 - the Cokenergy plant at Ispat Inland's Indiana
Harbor Works in East Chicago. This 94-megawatt turbine uses waste heat from
Ispat Inland's environmentally friendly coke facility to provide steam and
electricity for steelmaking.
Primary Energy's next project will be a 50-megawatt cogeneration plant at
LTV Steel's Indiana Harbor Works in East Chicago. This project will include
a significant upgrade to LTV's steam capacity and operating control systems,
making the steelmaker more efficient and globally competitive. Primary
Energy also will build a major cogeneration and steam facility at the BP
Amoco facility in Whiting, Indiana, and it is actively working on several
potential major industrial projects in the Midwest.
Now let's take a look at several significant developments on the downstream
end of the value chain.
One opportunity recently announced is the expansion of NIPSCO's customer
choice program, which began right here in South Bend less than two years
ago. As of this month, all 660,000 NIPSCO natural gas customers in northern
Indiana have the opportunity to choose their natural gas supplier. NIPSCO
will continue to deliver the gas to customers' homes and businesses and
provide customer service. The NIPSCO Choice program offers customers the
opportunity for choice on the gas supply portion of their bill.
We're the first utility in Indiana to offer customers this choice. The
alternative regulatory plan that allows for choice also enables NIPSCO to
offer customers many new programs and services related to gas supply. For
example, the Price Protection Service is available to customers who want
price certainty in their utility bills.
These new competitive programs help customers understand the value of all
of the services we offer because they can now compare NIPSCO to the
competition.
The acquisition of Bay State by NiSource brought with it the strong energy
marketing brand, EnergyUSA. We have now restructured many of our competitive
businesses under the EnergyUSA umbrella, including natural gas marketing and
trading, retail commodity sales and product development, commercial energy
solutions and other utility services. Jim Abcouwer also leads this area of
our business. EnergyUSA already is significantly reducing energy costs for
many large commercial and industrial customers, including Reebok
International. When Reebok wanted to reduce dollars spent on heating and
give employees at two Northeast distribution facilities a more comfortable
environment in which to work, the footwear maker turned to EnergyUSA for
complete analysis and service solutions.
EnergyUSA offers significant opportunities for providing new energy- and
utility-related products and services to our customers throughout the
geographic corridor we serve.
A budding growth market in the energy industry is the opportunity to meet
the energy needs of residential, commercial and small industrial customers
by developing relatively small electric generation facilities at or near
the customer's location. This approach is called distributed generation.
In this picture you see a microturbine NiSource currently is installing
at a northern Indiana site of a national retailer. You can see how small
this turbine is compared with the Primary Energy turbine I showed you
earlier, yet the cogeneration principle is the same. This microturbine
will give the customer efficient electricity and will be integrated with
environmentally friendly heat recovery equipment that will provide the
customer hot water which will be used for both heating and cooling services.
NiSource also is investigating other distributed generation technologies,
such as fuel cells for homes and businesses. We truly believe it's an
opportune time to develop this new energy supply market.
You can keep up with our growth by viewing our new NiSource Web site. This
site debuts today and echoes the theme of our 1998 Annual Report, opening
doors to new opportunities. You can check the latest stock price, get news
about NiSource and link directly to our subsidiaries' Web sites.
We're also now conducting business via the Internet, participating in the
growing customer service dubbed electronic commerce. Business customers and
marketers can manage their energy portfolios on-line. By the end of this
year, you will be able to pay your utility bill or purchase products and
services using the Web site.
I hope my discussion has given you a clear picture of this distribution
value chain along which we will operate and its importance to enhancing
shareholder value. We believe this value chain minimizes risk and gives
the greatest opportunity to capture additional value in the energy and
utility markets. We have the discipline to stay focused on this growth
strategy in the geographic corridor I have defined.
One method of insuring success of this focus is the operational integration
of administrative services through a Shared Services initiative that began
early this year at NiSource.
Shared Services organizations have been successfully implemented at many
other Fortune 500 companies including Kraft Foods, Allied Signal, Johnson
and Johnson and Duke Energy, just to name a few.
Functions that will be redesigned into this Shared Services group, serving
all NiSource subsidiaries, include procurement, auditing, human resources,
finance and accounting, bill printing, environmental affairs, corporate
communications and legal services.
We expect to have the concept fully implemented by the end of next year. In
addition, we are finding opportunities for operational integration. As an
example, we recently combined Bay State's gas supply operations into the
NiSource Corporate Gas Supply department. This combination will allow us to
better capitalize on opportunities for savings in the gas marketplace.
I cannot conclude my discussion with you this year without addressing the
well-publicized Y2K computer issue. I must emphasize that NiSource and all
its subsidiaries, including NIPSCO, do not anticipate any interruption of
service due to the Year 2000 date change. We have been addressing the
potential Y2K problem since 1996, and have a well-coordinated and
well-documented effort among all NiSource and subsidiary functions to
remediate and test any systems that could have been affected by the Y2K bug.
Within the last week, NIPSCO participated in a test of electric utility
systems all over North America and an internal drill of our ability to
maintain critical utility operations following possible Y2K scenarios. In
June the utility will participate in another North America-wide exercise,
and by October, all NiSource systems will be test-proven Y2K compliant.
In closing, I'd like to restate our vision - as the doors of opportunity in
the energy/utility world open, we will:
* remain focused on the efficient, reliable distribution of electricity,
natural gas and water in the Midwest and Northeast; and
* we will capitalize on upstream and downstream opportunities to market
utility services and customer-focused solutions based on those commodity
resources in a corridor stretching from Texas to Maine.
We have a new name, but our mission remains to continually enhance service to
our customers and increase value to our shareholders.
I appreciate the opportunity to be with you today and am especially pleased
to be able to share with you the results of our recent performance and our
vision of your Company's future.
If there are no further questions, I now declare this meeting adjourned.
BENEFITS OF THE ACQUISITION
NiSource Inc. (NYSE: NI) is a holding company whose primary business is
the distribution of electricity, natural gas and water in the Midwest
and Northeast United States. The Company also markets utility services
and customer-focused resource solutions along a corridor stretching from
Texas to Maine.
The merger of NiSource and Columbia Energy Group will create a
super-regional energy company serving 4 million energy and water
distribution customers in nine states. Because there is no market
overlap between the utility operations of the two companies, the
combined company will have direct access to a growing natural gas
market, which represents 30 percent of the U.S. population and 40
percent of U.S. energy consumption.
NiSource's offer price of $68 per share represents a 30.7 percent
premium over the average closing share price for Columbia common stock
for the 20 trading days ended June 4, 1999. NiSource has delivered the
top total return to shareholders among Fortune 500 utilities over the
last 10 years, while Columbia has underperformed the market during the
same period.
NiSource and Columbia will remain focused on delivering value and
outstanding service to customers. Both companies have been leaders in
bringing competition and customer choice to natural gas customers and,
as a unified organization, NiSource will continue to be an active
proponent of customer choice in all its markets. The new combined
company will be poised to deliver upwards of 12 percent annual earnings
per share growth.
Furthermore, NiSource believes minimal synergies will be required for
the merger to be accretive in the first year. Both NiSource and Columbia
employees will play key roles in the success of the combined
organization. Employees will build on their track record of operational
excellence to drive profitability.
NISOURCE HIGHLIGHTS (FOR THE THREE MONTHS ENDED MARCH 31, 1999)
Total Assets: $6.2 billion
Operating Revenues: $891 million
Net Income: $77 million
Earnings Per Share: $0.62
Dividends Per Share: $0.255
Number of Employees: 7,500
RECENT ACQUISITION HISTORY
Kokomo Gas & Fuel Company, Kokomo, Ind.
Kokomo Gas provides natural gas distribution service to
approximately 33,800 customers in east central Indiana. Acquisition
was completed in February 1992. Price: $47.9 million.
Northern Indiana Fuel & Light Company (NIFL), Auburn, Ind.
NIFL provides natural gas distribution service to approximately
34,380 customers in the northeast corner of Indiana. Acquisition
was completed in March 1993. Price: $30.2 million.
IWC RESOURCES CORP. (IWCR), INDIANAPOLIS, IND.
IWCR's water utilities serve 264,000 customers in the Indianapolis
area. IWCR also brought to the NiSource family of companies one of
the country's major pipeline construction companies, Miller
Pipeline Corporation, and the largest underground utility locating
and marking service business in the United States, SM&P Utility
Resources. Acquisition was completed in March 1997. Price: $290
million.
BAY STATE GAS COMPANY, WESTBOROUGH, MASS.
Bay State provides natural gas distribution service to more than
305,000 customers in Massachusetts, New Hampshire and Maine. The
purchase gives NiSource a beachhead in the rapidly expanding New
England gas market. Acquisition was completed in February 1999.
Price: $780 million.
TPC CORPORATION, HOUSTON, TEXAS
TPC is a major natural gas marketer, utility gas asset portfolio
manager and a leading developer of salt cavern gas storage. The
acquisition included TPC's 66 percent interest in Market Hub
Partners, L.P. (MHP), giving NiSource 78 percent ownership of the
largest independent owner and operator of salt cavern natural gas
storage in North America. Acquisition was completed in April 1999.
Price: $150 million.
BIOGRAPHICAL INFORMATION
Chairman Gary L. Neale
Gary L. Neale joined NiSource in August 1989 as President and Chief
Operating Officer and was promoted to Chairman, President and Chief
Executive Officer in March 1993. Mr. Neale brings an extensive
history in the energy industry to NiSource. He was Chairman,
President and Chief Executive Officer of Planmetrics, Inc., an
energy industry management consulting firm, for 17 years. Mr. Neale
also held management positions at Wells Fargo Bank and Kaiser
Industries.
Mr. Neale will serve as the next chairman of the American Gas
Association, and he is Chairman of the North American Reliability
Council. His other industry affiliations include serving on the
boards of directors of the Edison Electric Institute and the
Association of Edison Illuminating Companies, and he has been
appointed by the governor of Indiana to the Economic Development
Council, the Energy Policy Forum and the Clean Air Advisory
Committee. In addition, Mr. Neale serves on several corporate and
civic boards and has published articles in Business Week, Public
Utilities Fortnightly and the Harvard Business Review. He earned
his B.A. and M.B.A. degrees from the University of Washington.
FOR INFORMATION ABOUT TENDERING YOUR SHARES,
CALL INNISFREE M&A AT 877-750-5837.
WWW.NISOURCE.COM
*NOTE: Logo provided for news reporting purposes only and subject to
withdrawal at any time upon ntoice from Nisource. Commercial and other uses
prohibited without the written consent of NiSource.
[NiSource logo and regional map
of the United States depicting
states which NiSource serves]
CONTACT US
GENERAL QUESTIONS:
[email protected]
FOR INFORMATION ABOUT TENDERING YOUR SHARES:
call Innisfree M&A at 877-750-5837.
WWW.NISOURCE.COM
EXHIBIT 11(a)(23)
-----------------
FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION, CONTACT:
INVESTORS: Dennis Senchak Rae Kozlowski Wendy Wilson
NiSource Inc. NiSource Inc. Hill & Knowlton
219-647-6085 219-647-6083 312-255-3033
MEDIA: Maria Hibbs Larry Larsen
NiSource Inc. Hill & Knowlton
219-647-6201 312-255-3084
NISOURCE LAUNCHES "YES TO NISOURCE" WEB SITE
Investors And Media Can Access Information On
Columbia Tender Offer At www.yes2nisource.com
Merrillville, Ind., July 30, 1999 NiSource Inc. (NYSE: NI)
today launched a web site located on the Internet at
http://www.yes2nisource.com. The purpose of this site is to provide
timely and accurate information on its tender offer for Columbia
Energy Group.
Information on the site includes:
- "Compare NI-CG" a digest of pertinent financial
information with a link to NiSource's presentation to
analysts about the offer.
- "About the tender offer" a description of and reasons for
the tender offer.
- "FAQ's" the answers to frequently asked questions on the
combination of the two companies.
- "Press releases" and "media tools" access to every press
release NiSource has issued on the transaction; a NiSource
fact sheet; picture of President, Chairman and CEO Gary
Neale; the NiSource logo and video highlights of the
company's 1999 Annual Meeting of Shareholders.
"We want investors to have the information they need to make an
informed judgment on this transaction," Neale said. "We are confident
that, armed with this knowledge, they will support our position that
it's time for Columbia to sit down to negotiate our offer."
The company's general web site, http://www.nisource.com, contains
detailed information on NiSource, its subsidiaries, community
involvement, economic development, environmental initiatives,
employment and other topics.
NiSource Inc. is a holding company with a market capitalization
of approximately $3.6 billion whose primary business is the
distribution of electricity, natural gas and water in the Midwest and
Northeast United States. The company also markets utility services
and customer-focused resource solutions along a corridor stretching
from Texas to Maine. Further information on the company may be
accessed on the Internet at www.yes2nisource.com or www.nisource.com.
----------------------------------------------------------------------
This release is neither an offer to purchase nor a solicitation
of an offer to sell shares of common stock of Columbia Energy Group.
Such offer is made solely by the Offer to Purchase, dated June 25,
1999, as amended, and the related Letter of Transmittal. It is not
being made to, and tenders will not be accepted from, holders of
shares of Columbia common stock in any jurisdiction in which making or
accepting such offer would not comply with law. In any jurisdiction
where a licensed broker or dealer must make such offer, it shall be
deemed made on behalf of NiSource Inc. by Credit Suisse First Boston
or other registered brokers or dealers licensed in such jurisdiction.
The offer may be extended beyond its August 6, 1999 expiration date.
Any extension will be publicly announced no later than 9:00 a.m., New
York City time, on the next business day. This release does not
constitute a solicitation of proxies from Columbia Energy Group's
stockholders. Any such solicitation will be made only by separate
proxy materials in compliance with Section 14(a) of the Securities
Exchange Act.
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