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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. 20)
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. 20 amends and supplements the Solicitation/
Recommendation Statement on Schedule 14D-9 filed with the Securities and
Exchange Commission on July 6, 1999, and as subsequently amended July 6, 1999,
July 9, 1999, July 12, 1999, July 15, 1999, July 16, 1999, July 20, 1999, July
22, 1999, July 30, 1999, August 3, 1999, August 4, 1999, August 5, 1999, August
6, 1999, August 9, 1999, August 11, 1999, August 12, 1999, August 13, 1999,
August 16, 1999, August 17, 1999 and August 19, 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 8. ADDITIONAL INFORMATION TO BE FURNISHED.
On August 30, 1999 the Company's wholly-owned subsidiary, Columbia
Energy Services ("CES"), announced its intention to sell its wholesale and
trading operations based in Houston, Texas. The decision came following a
strategic review of CES's overall energy marketing businesses begun in February
1999.
A copy of the press release announcing CES's decision is attached
hereto as Exhibit (a)(19) and is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby supplemented and amended by adding the following:
Exhibit (a)(19) - Press Release of the Company, dated August 30, 1999.
Exhibit (a)(20) - Email Communication from Oliver G. Richard III to all
Company employees, dated as of August 30, 1999.
Exhibit (a)(21) - Email Communication from Brian Watt to employees of
Columbia Energy Services, Houston, Texas, dated as of
August 30, 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: August 31, 1999
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Exhibit List
Exhibit (a)(19) - Press Release of the Company, dated August 30, 1999.
Exhibit (a)(20) - Email Communication from Oliver G. Richard III to all Company
employees, dated as of August 30, 1999.
Exhibit (a)(21) - Email Communication from Brian Watt to employees of Columbia
Energy Services, Houston, Texas, dated as of August 30, 1999.
FOR IMMEDIATE RELEASE CONTACTS:
August 30, 1999 R.A. Rankin, Jr. (News Media)
703/561-6044
Melissa E. Bockelmann (Financial Community)
703/561-6011
COLUMBIA ENERGY GROUP UNIT TO SELL
WHOLESALE AND TRADING OPERATIONS
HERNDON, Va., Aug. 30, 1999 -- Columbia Energy Services (CES) today
announced that it has decided to sell its wholesale and trading operations,
based in Houston, Tex. The move came following a strategic review of CES's
overall energy marketing businesses begun in February 1999. Columbia Energy
Services is a wholly owned subsidiary of Columbia Energy Group.
"We have concluded that CES would do better to concentrate on becoming
a significant player in the retail end of the business, where Columbia's
existing geographic footprint gives us an advantage," said Brian Watt, president
and CEO of CES. "Columbia's principal operations are in the East, amidst a dozen
key states expected to provide the best retail opportunities as deregulation of
gas and electrical power markets proceeds. Therefore, we intend to concentrate
our resources on developing these opportunities. The recently announced
consolidation of our retail businesses in Herndon, Va. and refocusing of our
retail operations both are aimed at this objective.
"We have built and grown a wholesale gas and electric trading operation
in Houston," Watt said, "but with our strategic shift, CES will no longer pursue
a strategy aimed at being a top tier wholesale marketer."
During the first six months of 1999, the Houston operation sold a daily
average of five billion cubic feet of gas and a total of over 17 million
megawatt hours of electricity. The CES trading team has managed volumes for 65
pipelines and 77 local distribution companies, also trading power in six North
American Electric Reliability Council regions in the Eastern Interconnect. The
unit ranks among the top 15 for gas sales and has made the top 20 in electric
power sales, in terms of volume.
This action by CES will not require staff reductions in the Houston
unit, pending the sale of the business. The Houston operation has approximately
150 employees.
"We intend to sell the wholesale and trading operation as a going
concern and are not interested in `selling the book' and liquidating the
business," said Watt. "The new owner may see value with continuing to provide
certain resources to Columbia Energy Group businesses, and therefore Columbia
will entertain the possibility of contracting with the purchaser to provide
Columbia with these services," he added.
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A briefing package for potential buyers of the business will be
prepared. Companies with an interest in acquiring the business should contact
Dennis Pick, Columbia Energy Group Service Corporation, at 703/561-6797.
In accordance with generally accepted accounting principles, the CES
wholesale and trading operations will be reported as "discontinued operations"
on Columbia Energy Group's consolidated financial statements.
Columbia Energy Group, based in Herndon, Va., is one of the nation's
leading energy services companies, with assets of $7.2 billion. Its operating
companies engage in all phases of the natural gas business, including
exploration and production, transmission, storage and distribution, as well as
retail energy marketing, propane and petroleum product sales, and electric power
generation. 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, on a
consolidated, segment or subsidiary basis, 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 and propane,
and changes in general economic conditions.
Dear Columbia Colleagues:
Today Columbia Energy Services has announced that it has decided to sell its
wholesale and trading operations, based in Houston. This resulted from an
extensive strategic review of CES' overall marketing businesses that has been
underway since February 1999.
The current review has been led by Brian Watt, who has been President and CEO of
CES since the beginning of July and was closely involved in the assessment
initiated in February 1999.
This decision, coupled with the recent decision on CES' retail side to
consolidate its mass market and major account businesses into one retail
marketing operation based in Herndon, will better position CES for future
growth. It will focus CES on becoming a significant player in retail, taking
advantage of Columbia Energy Group's existing geographic footprint in an area
where deregulation of gas and electrical power markets is proceeding rapidly.
The wholesale and trading operations have grown rapidly from a small base--a
significant achievement in a short time. But the strategic review determined
that competitive pressures on wholesale margins and the commitment needed to
develop increasingly sophisticated risk management products favor increasing
consolidation in this segment to achieve the desired economies of scale needed
to be one of the industry leaders. This goal did not appear achievable by CES
given the increasing maturity of the business. Moreover, the strong competitive
nature of the top 10 wholesale and trading companies allows an
outsourcing/alliance strategy to meet the needs of the emerging retail
businesses.
I, along with Brian Watt and his team, believe CES can be a leading player in
the retail energy marketing business. Brian will direct the division's energies
and resources toward this goal. CES intends to sell the wholesale and trading
operation as a going concern, rather than selling the trading book and shutting
the operation down.
Columbia Energy Group's strong growth in recent years, and our continuing
commitment to maximize shareholder value over the long term, have been built on
making hard decisions and adapting to a changing industry environment. The CES
decision is one of those hard calls.
I believe it is the right call.
We appreciate the contribution made by all CES employees over a challenging
period. I know you will join me in giving them our encouragement and support as
the business undergoes this transition to prepare itself for future success.
To: CES Employees
From: Brian Watt Date: August 30, 1999
Re: CES Houston
As you all know, there has been a strategic review underway of Columbia Energy
Services operations since February 1999. I have been engaged closely in this
review, first as an outside advisor, and of course most directly since I joined
the company at the beginning of July.
It has become clear that Columbia Energy Group's geographic footprint in the
Eastern United States represents an advantage for our retail businesses, since
this part of the country will have a large share of the retail market
opportunities arising from the deregulation of energy. The recent decisions to
consolidate the retail operations in Herndon and refocus our marketing resources
on developing this region flowed directly from this assessment.
The second major part of this analysis covers our wholesale and trading business
in Houston. This business has grown rapidly from a small operation at the time
of the PennUnion merger to being one of the top 15 gas traders and top 20 power
traders, in terms of volume. While this is a significant achievement, it does
not put us among the industry leaders. Given the industry dynamics, we believe
we must be a leader in this business to be successful over the longer term.
On the other hand I am very confident that we will be a leading player in the
retail business. We have therefore decided to exit the wholesale and trading
business, and to focus our resources and our personal energies on carving out a
significant role for Columbia in the retail marketplace.
We have issued a press release today announcing that we will be selling the
Houston wholesale and trading operation. We intend to sell it as a going concern
rather than selling the trading book and shutting it down.
The decisions to sell CES Houston, and move Canonsburg and other branch
operations to Herndon have been difficult ones. I am fully aware of how
unsettling the restructuring has been to all of you. However, our challenges are
not unique--as you know, the whole industry is in a consolidating and
restructuring mode. We are doing what needs to be done. We will do everything we
can to help affected employees in this transition.
Columbia is a great company with wonderful people and assets. We will continue
to meet the external challenges of a rapidly changing business environment and
will succeed.
We appreciate your contribution, your hard work and the commitment you have made
to CES in difficult times. While it may be too soon to see the positive impacts
of the restructuring, I urge you to be patient, to focus on getting the job
done, and to take note of the good things that develop from the changes.
