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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1/A
(Amendment No. 11)
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
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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)
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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
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This Amendment No. 11 (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.
2
Item 10. Additional Information.
On July 26, 1999, Parent issued (i) the form of letter from Gary
L. Neale, Chairman, President and Chief Executive Officer of Parent,
to stockholders of the Company, and (ii) the "NiSource/Columbia
StraightTalk" communication to stockholders of the Company, which is
included herein as Exhibits (a)(20) and (a)(21), 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.*
3
(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.
(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.*
_______________
*Previously filed.
4
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
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Name: Gary L. Neale
Title: President
NISOURCE INC.
By: /s/ Gary L. Neale
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Name: Gary L. Neale
Title: Chief Executive Officer
Date: July 26, 1999
EXHIBIT INDEX
Exhibit
Number Description
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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(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.*
_________________
*Previously filed.
EXHIBIT 11(a)(20)
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[Form of letter dated July 26, 1999 from Gary L. Neale, Chairman,
President and Chief Executive Officer of Parent, to shareholders of
the Company]
[Letterhead of Gary L. Neale, Chairman, President and Chief Executive
Officer of Parent]
July 26, 1999
Dear Columbia Energy Shareholder:
As you know, on June 25, 1999, NiSource offered to purchase your
shares of Columbia Energy for $68 per share in cash. Our offer
represents a premium of 35.3% over Columbia's average closing price
for the four weeks preceding our announcement, and more that 10% over
the highest price that Columbia's stock has ever traded. Even so,
NiSource has repeatedly stated that we are willing to increase our
offer, if only Columbia management would agree to talk.
Instead of meeting with us to consider our offer, Columbia has offered
only misleading statements designed to obscure the fact that our offer
maximizes value for all Columbia shareholders. At the same time,
Columbia's Board and management have been quick to reward themselves--
at your expense--with lucrative "golden-parachute" employment
agreements costing Columbia tens of millions.
Since we commenced our offer, I have spoken extensively to many of
Columbia's largest institutional shareholders. A significant number
of these holders have already tendered their shares. Indeed, the
holders of more than 50% of Columbia's outstanding shares have
expressed their desire to see a negotiated transaction. WE BELIEVE IT
IS TIME TO STOP THE RHETORIC AND FOR NISOURCE AND COLUMBIA TO SIT DOWN
TO NEGOTIATE A TRANSACTION FOR THE BENEFIT OF ALL COLUMBIA
SHAREHOLDERS.
I URGE YOU TO TENDER YOUR SHARES TODAY. REMEMBER, NISOURCE'S OFFER IS
CURRENTLY SET TO EXPIRE ON AUGUST 6, 1999. TENDERING NOW IS FULLY
REVERSIBLE, RISK-FREE AND COMMISSION-FREE. By doing so, you will join
other Columbia shareholders in sending a clear message that you
purchased your shares with the expectation of maximizing the value of
your investment. If you have any questions about how to tender your
shares, please call our Information Agent, Innisfree M&A Incorporated,
toll-free at 877-750-5837.
We are firmly committed to pursuing our offer, which we are convinced
is a win-win for the shareholders of both Columbia Energy and
NiSource, and for their employees, customers and the communities they
serve.
Thank you for your consideration and support.
Gary Neale
CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
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This letter 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,
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 letter 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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EXHIBIT 11(a)(21)
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NISOURCE/COLUMBIA
STRAIGHTTALK July 26, 1999
DEAR COLUMBIA SHAREHOLDER:
I'm sure many of you listened to Columbia Energy Group's second-
quarter earnings conference call last Thursday.
In response to the question, "Why won't you sit down with
NiSource to discuss their offer," Columbia management repeatedly
offered concerns about the equity portion of our refinancing. These
concerns, as the attached article elaborates, clearly misstate the
facts.
Another issue we'll examine is the "golden parachutes" Columbia
added to employment agreements. The idea of parachutes is not
terribly uncommon; however, the specifics of these are unusual.
We are still committed to completing this transaction, which is
compelling to both companies' shareholders. This week, we asked the
Department of Justice to begin its Hart-Scott-Rodino (HSR) review.
You'll find a report on our HSR filing in this issue.
In the final analysis, the issue facing you, the Columbia
shareholder, is straightforward. Twice we've put forward an offer
that has fully committed financing and gives you significant value --
but have been met with rejection. We've indicated our willingness to
raise our offer if we meet -- but encountered the mantra of "wrong
company, wrong time, wrong price." Your and our direct questions to
Columbia's management have been met with an unwillingness to discuss
the merits of our offer and business proposal.
Please tender your shares now to show that you want Columbia to
deal seriously with the offer on the table. We're asking you to send
a signal to Columbia's board and management that you want them to sit
down and negotiate.
Gary Neale
President, Chairman and Chief Executive Officer
NiSource Inc.
[Graphic of Map]
NISOURCE FILES FOR HART-SCOTT-RODINO CLEARANCE
Moving to secure regulatory approval for its bid to acquire
Columbia Energy Group, NiSource filed the necessary information last
week to seek Hart-Scott-Rodino (HSR) clearance from the Federal Trade
Commission and Department of Justice.
NiSource has told investors that it believes it can obtain the
necessary regulatory approvals within six to nine months if Columbia
cooperates. This filing shows that NiSource is confident in its
ability to secure these approvals and signals its commitment to move
ahead with the transaction.
NiSource believes it will receive HSR clearance because NiSource
and Columbia are in non-competing service areas, the transaction does
not depend on operating synergies and both companies provide service
on an unbundled basis.
COLUMBIA BOARD APPROVES
UNUSUAL GOLDEN PARACHUTES
One day before Columbia's second-quarter earnings conference
call, Columbia's Board amended "golden parachutes" for three key
executives. The amendments provide the opportunity for them to leave
Columbia with generous severance packages PRIOR to the closing of a
change-of-control transaction.
Employment agreements are designed to encourage executives to
remain in place to ensure that a merger is completed and there is a
smooth transition of power. These agreements, however, reward the
three Columbia executives even if they leave before the integration is
complete. Benefits experts have advised NiSource that these provisions
are virtually unprecedented.
Columbia's CEO and two other key executives may voluntarily
terminate their employment and receive their full severance packages
as early as 90 days after Columbia shareholders approve a transaction
or the Columbia Board recommends a tender offer from an outside
company. The closing of any change-of-control transaction involving
Columbia would typically take several months after the 90-day notice
period. For a regulated company to allow key executives to leave the
company without leadership could jeopardize any transaction, including
a friendly one supported by the board and shareholders.
At the same time, Columbia's Board also approved new parachutes
for 27 other executives. While fulfilling its legal obligation by
filing with the Securities and Exchange Commission on July 14,
Columbia's management neglected to disclose the matter on last
Thursday's call.
In a letter to Columbia management, NiSource requested that
Columbia provide the necessary information to enable shareholders to
calculate the true cost of these parachutes. NiSource estimates that
the amount would reach into the tens of millions of dollars.
INVESTORS ASK "WHY NOT MEET NISOURCE?"
Columbia shareholders challenged management's refusal to
negotiate with NiSource during Columbia's second-quarter earnings
conference call on July 15.
In the question-and-answer session following the discussion of
the second quarter results, shareholders repeatedly urged the company
to "sit down at the table with NiSource." Management's response that
NiSource was going after "the wrong company, at the wrong price, at
the wrong time," was criticized as not addressing the issue.
Questioning CEO Rick Richard, Dreman Value Management's Nelson
Woodard was quoted in Bloomberg: "I don't know what portion of the
company you own... but we are concerned about getting maximum value
out of our assets."
Jonathan Zang of Fidelity asked, "I'm just a little curious
insofar as NiSource is actually on the record as having said they will
increase their offer if you're willing to meet with them," he said.
"What is the reason that you're not going to meet with them just to
see how much higher they would raise their offer?"
COLUMBIA'S "FINANCING CONCERNS" MISLEAD INVESTORS
Columbia Energy's July 15 second-quarter earnings conference call
featured management referring to a "huge equity takeout" required to
complete NiSource's $68 cash tender offer.
The trouble is, there is no equity offering required to effect
the cash tender offer for Columbia shareholders.
"The proposed financing plan is typical for an all-cash
transaction, including Texas Utilities' purchase of The Energy Group
and AT&T's recent purchase of Media One," said Jamie Welch of Credit
Suisse First Boston.
"It does not create significant incremental regulatory risk,
particularly since rating agencies have come out fully in support."
NiSource has committed financing in place from Credit Suisse
First Boston and Barclays Bank PLC to pay Columbia shareholders.
Shareholders will be paid in full at the time of closing, subject only
to a merger agreement and usual regulatory approvals.
Following the completion of the merger and Columbia shareholders'
receipt of cash, NiSource intends to refinance its acquisition debt.
As noted in the July 1 issue of "STRAIGHT TALK," all three major
credit-rating agencies have affirmed NiSource's strong investment-
grade rating following its combination with Columbia Energy Group.
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FOR MORE INFORMATION
CALL DENNIS SENCHAK AT
219-647-6085 OR
VISIT NISOURCE
AT WWW.NISOURCE.COM
OR
OUR NEW WEB SITE DEVOTED ENTIRELY TO
NISOURCE EFFORTS TO ACQUIRE COLUMBIA AT
WWW.YES2NISOURCE.COM
(AVAILABLE THE WEEK OF 7-26)
FOR INFORMATION ABOUT TENDERING SHARES,
CALL INNISFREE M&A AT 877-750-5837
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This newsletter 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, 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 newsletter 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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