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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. 2)
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. 2 amends and supplements the Solicitation/
Recommendation Statement on Schedule 14D-9 filed with the Securities and
Exchange Commission on July 6, 1999 and amended on July 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. 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)(6) -- Slides made available to attendees at the
July 9, 1999 meeting of the Interstate Natural
Gas Association of America
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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/ Patricia A. Hammick
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Name: Patricia A. Hammick
Title: Senior Vice President, Strategy and
Communications, Columbia Energy
Group Service Corporation
Dated: July 9, 1999
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Exhibit List
Exhibit (a)(6) -- Slides made available to attendees at the
July 9, 1999 meeting of the Interstate Natural
Gas Association of America
Exhibit (a)(6)
The following slides were made available by Columbia Energy Group to attendees
at the July 9, 1999 Interstate Natural Gas Association of America (INGAA)
meeting.
Slide 1: Text stating the following
P
Response to Current Acquisition Offer
Slide 2: Text stating the following -
NiSource Offer Does not Deliver
On July 1, Columbia's Board voted to reject the NiSource Offer:
o Inadequate offer price for Columbia shareholders
o Business combination not compelling
o Estimated timing-to-close suspect
o Capital structure introduced considerable regulatory risk
Columbia is confident that sticking to its strategic plan is the right course to
deliver shareholder value
Slide 3: Titled "NiSource Offer is Inadequate"
Graphic illustrating an upward trend in the Columbia stock trading range based
on trading multiples of a 14.5x Forward price/earnings ratio and a 17.5x Forward
price/earnings ratio for the time period 1999 through 2002 and Columbia I/B/E/S
EPS Estimates as follows: 1999 - $3.60; 2000 - $4.17; 2001 - $4.64 and 2002 -
$5.17 ["Trading Range"]. The two parallel upward sloping linear lines depicting
the Trading Range begin in 1999 at approximately $60/share and $72/share,
respectively, for the 14.5x and 17.5x multiples and end in 2002 at approximately
$82/share and $100/share.
The $68/share NiSource offer is shown with a horizontal dashed line extending
over the 1999-2002 time period ["NI Offer Price"] and intersecting a vertical
line representing NiSource's estimated closing date of approximately mid-2000
["NI Estimated Closing Date"]. The point of intersection between the NI Offer
Price and the NI Estimated Closing Date falls just below the Trading Range.
Text below graphic: "Columbia's strategic plan will deliver significantly
greater shareholder value than NiSource's offer"
Text reflected as a footnote: "Note: (1) Multiples of one year forward earnings
estimates. Trading multiples represent future trading prices and do not include
any merger premiums."
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Slide 4: Titled "Evidence of Competition"
Two column charts illustrating the data and headings as follows:
Chart 1 - Percentage of Customers with Choice -
NIPSCO Gas = 25%
Columbia Ohio = 100%
Chart 2 - Percentage of Customers Electing Choice -
NIPSCO Gas = 2%
Columbia Ohio = 32%
Text below charts:
o Future success depends on learning how to compete
o Columbia has earned the business of over 500,000 nonregulated retail customers
Slide 5: Titled "Examples of Competitive Advantage"
Two column charts illustrating the data and headings as follows:
Chart 1 - NiSource's Variable Cost of Generation
$/Mwh
Northern Indiana Public Service Co. 16.84
Duquesne Light Co. 15.65
Detroit Edison Co. 14.45
PSI Energy, Inc. 14.45
Cleveland Electric Illuminating Co. 14.19
Ohio Power Co. 13.93
Consumers Energy Co. 13.92
Cincinnati Gas & Electric Co. 13.72
Ohio Edison 13.40
Dayton Power & Light Co. 13.05
Louisville Gas & Electric Co. 11.83
Indianapolis Power & Light Co. 11.54
Text below chart:
o Low demand growth
o High cost generation
o High wheeling tariffs
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Chart 2 - Columbia's North East Transportation Cost
$/Dth
CNG Upstream (CNG) 0.85
TETCO Zone M3 (Duke) 0.85
Tennessee Zone 5 (El Paso) 0.80
TCO/CGT (Columbia) 0.43
Transco Zone 5 (Williams) 0.42
o Low cost route from Gulf
o Serving higher growth NE/SE gas markets
Slide 6: Titled "Regulatory and Financing Risk"
Two pie charts illustrating the data and headings as follows:
Chart 1 - Capital Structure at Closing
Debt 84%
Preferred 4%
Equity 12%
Chart 2 - Capital Structure Contingent on $2.6B Equity Offering Represents 75.8%
of current NiSource market cap
Debt 62%
Preferred 4%
Equity 12%
New Equity 22%
Slide 7: Titled "Columbia's Management Delivers Superior Value"
Line chart illustrating stock price appreciation for the period May 1995 to May
1999 for Columbia, NiSource and the S&P 500 and specifying the following ending
values as of May 1999:
Columbia 173%
S&P 500 150%
NiSource 71%
The source of the data, noted in a footnote, is Bloomberg.
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Slide 8: Titled "Columbia's Historic and Projected Growth"
Two column charts illustrating the data and headings as follows:
Chart 1 - Historic Annual Earnings Growth '96-'98
CG 8.2%
NI 5.4%
Chart 2 - 5-Year Projected I/B/E/S Annual Earnings Growth
CG 11.2%
NI 7.6%
Text below charts: "Columbia delivers greater growth to its shareholders than
NiSource"
