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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. 6)
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. 6 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 and July 16, 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. 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)(10) - Letter to Shareholders of the Company, dated July 20,
1999.
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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: July 20, 1999
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Exhibit List
Exhibit (a)(10) - Letter to Shareholders of the Company, dated July 20, 1999.
Exhibit (a)(10)
July 20, 1999
Dear Shareholder:
I am pleased to report that since I last wrote to you on July 6, there have
been a number of important developments in your company's ongoing program to
build value for our shareholders. These developments include Columbia's
announcement of its financial results for the 1999 second quarter and the
decision by your Board of Directors to increase by $400 million the
authorization for our ongoing open market share repurchase program.
WE BELIEVE THESE DEVELOPMENTS HELP DEMONSTRATE WHY YOUR BOARD AND
MANAGEMENT BELIEVE SO STRONGLY THAT THE VARIOUS UNSOLICITED TAKEOVER PROPOSALS
WE HAVE RECEIVED FROM NISOURCE INC. HAVE BEEN FOR THE WRONG PRICE, AT THE WRONG
TIME AND WITH THE WRONG COMPANY. Your Board has determined that the current $68
per share cash tender offer by CEG Acquisition Corp. -- a wholly owned
subisidary of NiSource Inc. that has no affiliation with our company -- is
inadequate and not in the best interests of Columbia or its shareholders.
Accordingly, we strongly recommend that you reject NiSource's hostile takeover
attempt and not tender your shares.
SECOND QUARTER REPORT
For the second quarter, Columbia Energy Group reported net income of $26.1
million, or 32 cents per share. This represents an increase of 18.5 percent over
the 27 cents per share we reported in the same quarter a year ago. It also marks
the fourth consecutive quarter where net income increased over the same period
in the prior year. Nine of the past 11 quarters have shown similar improvements.
Second quarter 1999 revenues totaled $1.7 billion, an increase of $373.4 million
over the 1998 period.
We are proud of the significant strides Columbia is making toward meeting
our ongoing strategic goals, particularly in the non-regulated side of our
business. In the second quarter, our progress included a potentially significant
discovery in our exploration and production operations; the successful
completion of two acquisitions and announcement of a third by Columbia Propane
that will substantially increase its service area and nearly triple the number
of customers it serves; and the start of construction on our new fiber network
for telecommunications along the Washington-to-New York pipeline right-of-way.
Another important development in the second quarter was the appointment of
Brian Watt as president and CEO of Columbia Energy Services, our marketing
operations. Brian is continuing a thorough strategic assessment of all facets of
these businesses, which are showing improvement but still are producing
unsatisfactory results. He has an excellent knowledge of these businesses and I
am confident he will provide the necessary direction on an immediate basis.
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SHARE REPURCHASE PROGRAM
On July 14, the Board of Directors authorized a $400 million increase in
Columbia's open market share repurchase program, bringing the total current
amount available under the program to $420 million. The Board authorized the
repurchases to take place through July 14, 2000. The company previously
repurchased $80 million of its common shares under a $100 million buyback
program authorized by the Board in February 1999.
THE BOARD HAS TAKEN THIS ACTION BECAUSE IT BELIEVES COLUMBIA'S TRUE VALUE
IS NOT FULLY REFLECTED IN ITS CURRENT STOCK PRICE, WHICH WAS IMPACTED IN 1999 BY
MUCH WARMER THAN USUAL WEATHER AND BY SIGNIFICANT INVESTMENTS AND COSTS IN THE
MARKETING SEGMENT, AND DOES NOT REFLECT COLUMBIA'S LONG-TERM BUSINESS PROSPECTS.
THE REPURCHASE PROGRAM DEMONSTRATES OUR CLEAR COMMITMENT TO ENHANCE SHAREHOLDER
VALUE IN THE NEAR- AND LONG-TERM AS WE CONTINUE TO IMPLEMENT OUR STRATEGIC
INITIATIVES TO TAKE ADVANTAGE OF OPPORTUNITIES IN A RAPIDLY EVOLVING ENERGY
INDUSTRY.
Your Board considers Columbia's stock a good long-term investment. For
shareholders interested in cash, the increase in the authorized amount of share
repurchases provides additional liquidity and some immediate value. And it will
enable shareholders with a long-term horizon to increase their proportionate
interest in Columbia's equity and therefore in the company's earnings and
assets.
A PROMISING OUTLOOK
We have worked hard over the past four years to build a Columbia that
promotes change and competition, and is well positioned to deliver outstanding
results for our shareholders, customers and employees in an energy industry that
is being transformed by deregulation. We have expanded and enhanced Columbia's
unique and valuable network of assets and businesses. We have built a talented
and effective management team. And we have developed a sound, forward-looking
strategy for both the regulated and non-regulated sides of our business.
We are pleased with our progress in the second quarter and, as the increase
in the share repurchase program demonstrates, we are well on our way to
delivering enhanced shareholder value in both the near- and long-term. We are on
track to produce a 15 percent increase in operating income in 1999 and achieve
our goal of average annual earnings per share increases of 10 to 12 percent by
the end of 2001.
AN INADEQUATE TENDER OFFER
As you know, on June 25, 1999, CEG Acquisition Corp., a wholly owned
subsidiary of NiSource Inc., began an unsolicited tender offer for all of the
outstanding shares of common stock of Columbia Energy Group for $68 per share in
cash. This tender offer is scheduled to terminate on August 6, 1999. PLEASE NOTE
THAT CEG ACQUISITION CORP. HAS NO RELATIONSHIP WITH COLUMBIA ENERGY GROUP
WHATSOEVER AND EXISTS SOLELY TO TRY TO ACHIEVE A HOSTILE TAKEOVER OF YOUR
COMPANY.
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Your Board's determination that the NiSource tender offer is inadequate
from a financial point of view is based, in part, on opinions from our financial
advisors, Morgan Stanley Dean Witter and Salomon Smith Barney. This view has
been echoed by many of the equity analysts covering our industry. Several of
these analysts have updated their earnings estimates and stock price projections
for Columbia Energy Group in recent weeks, indicating that they believe the
company's true value is significantly higher than its recent stock price or the
unsolicited $68 per share offer from NiSource.
In addition to the inadequacy of the NiSource proposal, it is important to
understand that NiSource has imposed significant conditions on its offer,
including numerous state and federal regulatory approvals that must be obtained
before the tender offer could be consummated. WE BELIEVE THERE IS SUBSTANTIAL
RISK THAT REGULATORS WILL NOT APPROVE THE PROPOSED TRANSACTION. WE BELIEVE THESE
REGULATORS WILL BE CONCERNED ABOUT NISOURCE'S NEED TO BORROW $5.7 BILLION TO
COMPLETE THE TRANSACTION, WHICH WOULD RESULT IN A HIGHLY LEVERAGED
DEBT-TO-CAPITAL RATIO OF 84 PERCENT UPON CONSUMMATION, AND BY NISOURCE'S STATED
PLANS TO REDUCE THAT DEBT BY ATTEMPTING TO RAISE $2.6 BILLION IN NEW EQUITY.
BECAUSE OF THESE AND OTHER REGULATORY HURDLES, IT IS HIGHLY UNLIKELY THAT
SHAREHOLDERS WHO TENDER THEIR SHARES WOULD RECEIVE ANY PAYMENT FROM NISOURCE IN
LESS THAN 18 MONTHS, IF AT ALL.
WE BELIEVE COLUMBIA'S VALUE RIGHTFULLY BELONGS TO YOU AND YOUR FELLOW
SHAREHOLDERS. DO NOT LET NISOURCE TAKE THAT VALUE FOR ITS SHAREHOLDERS.
We encourage you to read carefully Columbia's Schedule 14D-9, which was
mailed to you previously. We urge you to reject NiSource's unsolicited and
inadequate offer. DO NOT TENDER YOUR SHARES TO NISOURCE. If you have already
tendered your shares, you can withdraw your tender at any time before they are
accepted for payment.
Your Board of Directors and management will continue to act in the best
interests of the company and all its shareholders.
On Behalf of the Board of Directors
Sincerely,
/s/ OLIVER G. RICHARD III
OLIVER G. RICHARD III
Chairman, President and
Chief Executive Officer
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If you have any questions or would like another copy
of the company's 14D-9 please contact:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
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