Filed by: NiSource Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Columbia Energy Group
Registration Statement File No: 333-33896
On April 24, 2000, NiSource distributed the "New Directions"
newsletter to its employees. The newsletter included news and
information on NiSource's merger with Columbia, as well as a question
and answer sheet for employees regarding the merger. The text of the
newsletter is set forth below.
Text of "New Directions" Employee Newsletter
April 24, 2000
April 24, 2000 Vol. 1 No. 1
NEW DIRECTIONS
NISOURCE LAUNCHES MERGER PUBLICATION
Welcome to the introductory issue of NEW DIRECTIONS, a
publication for NiSource employees that will disseminate news and
information about the NiSource/Columbia merger. NEW DIRECTIONS will
be published on the intranets of all NiSource companies on an as-
needed basis throughout the merger integration process. Columbia
Energy Group's employees will receive the same news and information
via POWERHOUSE, Columbia's employee publication.
If you have questions about the merger or ideas for NEW
DIRECTIONS, please send them to the e-mail address,
[email protected] or leave a message at 877-647-5990.
OF LEGENDS AND LEGALESE
What ARE those statements, anyway?
When NiSource and Columbia employees recently received a letter
from the companies' two chairmen, they may have wondered about the
attachment containing a pair of lengthy legal statements, also printed
on page 3 of NEW DIRECTIONS.
These statements -- referred to as legends -- must be included in
all merger-related information distributed publicly, including
material provided to employees. This is in accordance with federal
securities law.
Under U.S. Securities and Exchange Commission (SEC) rules,
companies cannot promote a transaction from the time they sign an
agreement until the mailing of a proxy statement. Realizing that the
rule actually prevented shareholders from receiving adequate
information about a transaction, the SEC amended its regulations Jan.
24 to permit more open communication.
While companies can still choose to operate under the previous,
more restrictive regulation, NiSource and Columbia have opted for more
open communication under the new rules. This option carries two
requirements: 1.) print a legend on each document urging readers to
also consult the official proxy statement/prospectus for further
information; and 2.) file each document with the SEC on the day it is
first communicated by the companies to make the information available
to all shareholders and potential investors.
The "forward-looking statements" legend alerts readers that
although the companies may make projections or state expectations
within a document, some factors--including many that are outside of
the companies' control--may cause the companies to fail to achieve
projected results and expectations. Readers are advised to keep those
risk factors in perspective when reviewing the document.
NISOURCE, COLUMBIA SET MEETINGS TO VOTE ON MERGER
NiSource Inc. and Columbia Energy Group announced today that they
have scheduled shareholder meetings to consider the merger of the two
companies.
NiSource will hold its annual meeting Thursday, June 1, 2000, at
10:00 am at the Capitol Theater in Columbus, Ohio. Columbia will hold
a special meeting of shareholders to vote on the merger on Friday,
June 2, at 2:00 pm at the PNC Bank Center in Wilmington, Del.
QUESTIONS AND ANSWERS RELATING TO THE NISOURCE COLUMBIA MERGER
This question-and-answer article addresses some of the questions
that employees have been asking following the announcement that
NiSource Inc. and Columbia Energy Group have agreed to merge.
1. WHERE WILL THE HEADQUARTERS FOR THE COMBINED COMPANY BE LOCATED?
The corporate offices will be in Merrillville, Indiana. However,
just as NiSource did with its acquisitions of Bay State Gas Company
and IWC Resources, the headquarters of Columbia's core operations will
remain in place.
2. WHY DO WE NEED TO FORM A NEW HOLDING COMPANY FOR THIS TRANSACTION
AND WHAT WILL IT BE CALLED?
One of the key benefits of forming a new holding company is that
NiSource can provide a tax benefit to Columbia shareholders who elect
to exchange their Columbia shares for the new holding company stock.
The new holding company will carry the NiSource name.
3. IS IT TYPICAL FOR A COMPANY THAT ANNOUNCES A MAJOR ACQUISITION TO
EXPERIENCE A DECLINE IN ITS STOCK PERFORMANCE?
Yes, investors need time to understand the value of the deal in
order to exhibit their confidence in the merger. Two other energy
companies recently saw similar reaction on Wall Street. Dominion
Resources' stock price fell after announcing the acquisition of CNG.
Key Span's stock dropped 31 percent after it announced the purchase of
Eastern Enterprises and Energy North.
4. WHAT ARE THE NEXT STEPS TOWARD COMPLETING THIS DEAL?
This merger requires shareholder approval as well as the approval
of various state and federal regulatory agencies. We expect this
process to be completed by the end of the year.
5. WILL THERE BE ANY ASSET SALES AS A RESULT OF THIS MERGER?
One key benefit of the merger is that there are no overlapping
assets. However, the companies have targeted more than $1 billion in
asset sales in order to strengthen the combined company's balance
sheet. The companies will consider selling those assets that don't
fit NiSource's long-term strategy.
6. WHAT WILL THE COMBINED COMPANY LOOK LIKE?
The new NiSource will be the largest natural gas company east of
the Rocky Mountains and the second-largest gas company in the United
States, based on customers.
* The combined company will have the second-largest volume of gas
sales in the nation, with 911 million cubic feet per day. Sempra
Energy, with a reported throughput of 962 million cubic feet per
day, has the largest volume of gas sales.
* The combined NiSource-Columbia organization will have assets that
stretch from the Gulf of Mexico, through the Midwest to the
Northeast.
* The company will have access to 30 percent of the U.S. population
and 40 percent of U.S. energy consumption.
* It will have 4.1 million gas, electricity, water, and propane
customers located primarily in nine states: Indiana, Kentucky,
Maine, Maryland, Massachusetts, New Hampshire, Ohio, Pennsylvania
and Virginia.
* The estimated enterprise value will be $13.7 billion (based on
the closing market price for NiSource on Feb. 25 plus the
transaction value of Columbia's shares and long-term debt)
7. HOW WILL THIS MERGER AFFECT THE STATUS OF UNION BARGAINING
AGREEMENTS?
NiSource will, of course, honor all union collective bargaining
agreements.
This newsletter contains 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 document. 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 the
document.
NiSource and the new holding company have filed a registration
statement, which contains a joint proxy statement/prospectus of
NiSource and Columbia, and other documents with the Securities and
Exchange Commission. Investors and security holders are urged to read
the joint proxy statement/prospectus and any other relevant documents
filed with the SEC because they contain important information.
Investors and security holders are able to receive the final joint
proxy statement/prospectus and other documents free of charge at the
SEC's web site, www.sec.gov, from NiSource at its web site,
www.nisource.com, or from Columbia at its web site,
www.columbiaenergygroup.com.
Information concerning the identity of the participants in the
solicitation of proxies by the NiSource Inc. and Columbia Energy Group
boards of directors and their direct or indirect interest, by security
holdings or otherwise, may be obtained from the Secretary of NiSource
Inc. or the Secretary of Columbia Energy Group at the respective
addresses listed above.
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New Directions is produced by NiSource Corporate Communications for
all NiSource employees. Questions may be directed to 219-647-6200.
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IN THE NEXT ISSUE OF NEW DIRECTIONS: AN OUTLINE OF THE TRANSITION
PROCESS
