Filed by: New NiSource Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Columbia Energy Group
Registration Statement File No: 333-33896
On October 13, 2000, NiSource Inc. and Columbia Energy Group
began distributing a letter to Columbia shareholders, announcing that
the companies have scheduled November 1, 2000 as the Effective Time of
the merger between NiSource and Columbia Energy Group. On that basis,
the Election Deadline will be Monday, October 30, 2000, 5:00 p.m. New
York City time. The text of the joint letter is set forth below.
The bracketed statement appeared as a legend on the letter for
those shareholders who had been sent a previous letter dated October
10, which contained a misstatement.
TEXT OF JOINT LETTER TO COLUMBIA SHAREHOLDERS
OCTOBER 13, 2000
[NISOURCE LOGO] [COLUMBIA LOGO]
[THIS LETTER CORRECTS A MISSTATEMENT IN THE LAST PARAGRAPH ON THE
FIRST PAGE OF THE LETTER DATED OCTOBER 10, 2000 RELATING TO THE
MEASURING PERIOD FOR DETERMINING THE AVERAGE SHARE PRICE OF NISOURCE
COMMON STOCK AND UPDATES PRICE INFORMATION.]
October 12, 2000
Dear Columbia Shareholders:
We are pleased to announce that we have now scheduled November 1,
2000 as the Effective Time of the merger between NiSource Inc. and
Columbia Energy Group. ON THAT BASIS, THE ELECTION DEADLINE WILL BE
MONDAY, OCTOBER 30, 2000, 5:00 P.M., NEW YORK CITY TIME. If the dates
should have to change, we will announce the change in a press release,
on our websites at www.nisource.com and www.columbiaenergygroup.com
and in a filing with the SEC.
If you wish to receive New NiSource stock in the merger,
ChaseMellon Shareholder Services, L.L.C., the Exchange Agent, must
receive your instructions prior to the Election Deadline. If you are
a registered shareholder, you must send the Exchange Agent your
properly completed Stock Election Form together with either (a) your
Columbia stock certificate(s) or (b) a properly completed notice of
guaranteed delivery. If you hold your shares in "street-name," an
election must be made on your behalf by your bank or broker. You
should have received information about the stock election from your
bank or broker.
As we have previously informed you, you may elect to receive New
NiSource stock for all or a portion of your Columbia shares. If you
do not make a stock election prior to the Election Deadline, you will
receive cash and New NiSource SAILS for all of your Columbia shares.
The number of Columbia shares converted into New NiSource shares will
be prorated if Columbia shareholders elect stock for more than 30% of
the total outstanding Columbia shares. Additionally, stock elections
for at least 10% of Columbia's outstanding shares must be made;
otherwise all Columbia shareholders will receive cash and SAILS. WE
URGE YOU TO CONTACT YOUR FINANCIAL ADVISOR BEFORE DETERMINING WHETHER
OR NOT TO MAKE A STOCK ELECTION, SINCE THE VALUE OF THE CONSIDERATION
THAT YOU WILL RECEIVE MAY DIFFER SIGNIFICANTLY DEPENDING UPON YOUR
INDIVIDUAL FINANCIAL SITUATION.
==> If you elect New NiSource stock, you will receive for each share
of Columbia, subject to proration, a number of shares of New
NiSource common stock equal to $74.00 divided by the average
closing price of NiSource common stock during the 30 consecutive
trading days immediately preceding the second trading day prior
to completion of the merger, but not more that 4.4848 shares.
Since the Effective Time of the merger is expected to be November
1, 2000, the 30 day trading period would have begun on September
18. As of the date of this letter, 19 trading days have elapsed
and the average trading price per share of NiSource has been
$24.42. AS LONG AS THE 30-DAY AVERAGE CLOSING PRICE OF NISOURCE
SHARES FROM SEPTEMBER 18 TO OCTOBER 27 EXCEEDS $16.50, COLUMBIA
SHAREHOLDERS ELECTING STOCK WILL RECEIVE, ON THIS BASIS AND
SUBJECT TO PRORATION, NEW NISOURCE SHARES VALUED AT $74.00.
==> Columbia shareholders who do not receive New NiSource stock will
receive $70.00 cash and $2.60 stated amount of SAILS in exchange
for each of their Columbia shares. Trading of SAILS has
commenced in the over-the-counter market on a "when issued"
basis. On October 12, the bid price of SAILS in that limited
market was $1.88. ON THIS BASIS, THE VALUE ON OCTOBER 12 OF THE
COMBINATION OF CASH AND SAILS WAS $71.88.
Generally speaking, Columbia shareholders who receive only New
NiSource shares will not recognize a taxable gain or loss except for
cash received for fractional amounts. In most cases, an exchange for
cash and SAILS will be treated as a taxable event, and Columbia
shareholders who receive SAILS will also be required to include in
gross income their allocable share of the original issue discount that
accrues with respect to the debentures included in their SAILS, even
though they will receive no cash payment. YOU ARE URGED TO CONTACT
YOUR TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF RECEIVING
EITHER STOCK OR CASH AND SAILS. You should also refer to the
description of tax consequences beginning on page 87 of the Joint
Proxy Statement/Prospectus sent to Columbia shareholders on April 27,
2000.
If you have any questions regarding the stock election, or need
additional copies of the stock election materials, please call
Innisfree M&A Incorporated at 1-888-750-5833, or the Exchange Agent at
1-800-685-4258.
NISOURCE INC. COLUMBIA ENERGY GROUP
* * * * * *
This letter contains certain forward-looking statements
within the meaning of the federal securities laws; these
forward-looking statements are subject to various risks and
uncertainties. The factors that could cause actual results
to differ materially from the projections, forecasts,
estimates and expectations discussed herein may include
factors that are beyond the companies' ability to control or
estimate precisely, such as estimates of future market
conditions, the behavior of other market participants and
the actions of the Federal and State regulators. Other
factors include, but are not limited to, actions in the
financial markets, weather conditions, economic conditions
in the two companies' service territories, fluctuations in
energy-related commodity prices, conversion activity, other
marketing efforts and other uncertainties. Other risk
factors are detailed from time to time in the two companies'
SEC reports. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak
only as of the date of this letter. The companies do not
undertake any obligation to publicly release any revisions
to these forward-looking statements to reflect events or
circumstances after the date of these stories.
In addition to other documents filed with the Securities and
Exchange Commission by the two companies, NiSource and the
new holding company have filed a registration statement,
which contains a joint proxy statement/prospectus for
NiSource Inc. and Columbia Energy Group. The final joint
proxy statement/prospectus, dated April 24, 2000, is
available and has been distributed to the companies'
shareholders. Investors and security holders are urged to
read the joint proxy statement/prospectus and any other
relevant documents filed with the SEC when they become
available because they will contain important information.
Investors and security holders can receive the joint proxy
statement/prospectus and other documents free of charge at
the SEC's web site, www.sec.gov, from NiSource Investor
Relations at 801 East 86th Avenue, Merrillville, Indiana
46410 or at its web site, www.nisource.com, or from Columbia
Investor Relations at 13880 Dulles Corner Lane, Herndon,
Virginia 20171 or at its web site,
www.columbiaenergygroup.com.
