Filed by: NiSource Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Columbia Energy Group
Commission File No: 001-01098
On March 31, 2000, NiSource Inc. announced, in its annual report
to shareholders, that its merger with Columbia Energy Group (NYSE:CG)
fulfills its vision to build a super-regional energy company
positioned to profit from the 60 percent growth rate projected for
U.S. natural gas consumption by 2020 using new technologies. The
following is a transcript of the joint press release issued on March
31, 2000:
PRESS RELEASE
MARCH 31, 2000
[NISOURCE LOGO]
FOR IMMEDIATE RELEASE
March 31, 2000
FOR ADDITIONAL INFORMATION
Investors: Dennis Senchak Rae Kozlowski Media: Sally Anderson
NiSource Inc. NiSource Inc. NiSource Inc.
219-647-6085 219-647-6083 219-647-6203
NiSource/Columbia Merger Creates Powerful Platform for Earnings Growth
Annual Report Cites Strategy Using New Technologies
MERRILLVILLE, Ind. (March 31, 2000)--NiSource Inc. (NYSE:NI) in
its annual report today told shareholders its merger with Columbia
Energy Group (NYSE:CG) fulfills its vision to build a super-regional
energy company positioned to profit from the 60 percent growth rate
projected for U.S. natural gas consumption by 2020 using new
technologies.
As the largest natural gas distributor east of the Rocky Mountains,
the combined company will have access to 30 percent of the U.S.
population consuming 40 percent of the nation's energy. The companies
announced a definitive merger agreement February 28 under which
NiSource will acquire all Columbia shares for approximately $6.0
billion and assume about $2.5 billion in Columbia long-term debt. The
new enterprise value would be approximately $13.7 billion.
"This transaction offers the opportunity to create significant
shareholder value with lower risk and higher returns," Gary L. Neale,
NiSource chairman, president and chief executive officer, wrote in his
letter to shareholders published in the 1999 NiSource Annual Report
distributed today. "Although we anticipate that integration costs and
other first-year expenses will reduce earnings by 10 to 15 cents per
share in 2001, the combination is expected to add to earnings in 2002
and beyond. NiSource also intends to maintain its current dividend
policy.
-more-
NISOURCE/COLUMBIA MERGE CREATES--2
"We expect the transaction to close by the end of 2000, following
approval by the shareholders of both companies and various regulatory
commissions," he continued.
Neale said NiSource business units that are supporting the
emerging technologies strategy by focusing on new forms of electric
generation systems powered by natural gas -- ranging from large
cogeneration systems for industrial users, to microturbines for
smaller businesses, to compact fuel cells for homes -- performed well
in 1999.
"We are developing energy products that will change the way
electricity is generated and delivered to the factory, to the office,
to the store and to the home," he explained. "We expect both the fuel
cell and micro-generation product lines to become key components of
the nation's future energy supply as economic, energy and
environmental policies converge to encourage investment in technology
that is cleaner and more efficient and not dependent on large-scale
transmission systems."
Acknowledging that NiSource's effort to acquire Columbia Energy
Group "began as a contested transaction," Neale said Columbia s Board
of Directors and senior management now fully support the combination
and are committed to helping achieve a rapid and seamless integration
of the two companies.
Neale said NiSource has obtained a commitment from Credit Suisse
First Boston and Barclays Bank Plc for a bank facility to finance the
cash portion of the Columbia purchase price. Anticipated asset sales
of more than $1 billion will minimize equity needs and reduce
leverage.
"As a result, we fully expect to maintain a strong financial
profile with solid investment-grade credit ratings," he added.
Citing a NiSource/Columbia value chain with upstream, commodity
distribution and downstream links, Neale said upstream opportunities
are expected enable the combined company to reduce risk and add value
through integrated capabilities in gas and electric supply, gas
transportation and storage, asset-based commodity trading and utility
services.
"The flexibility embedded in the utilization and operation of our
combined assets will allow us to create a virtually unlimited number
of high value energy packages," he explained. "With distribution
assets in nine states, pipeline operations in 16 states and the
largest storage capacity in the U.S., the NiSource/Columbia
combination provides the greatest optionality opportunities in the
industry."
-more-
NISOURCE/COLUMBIA MERGER CREATES--3
Columbia gas distribution companies in Ohio, Kentucky,
Pennsylvania, Maryland and Virginia link NiSource gas properties in
Indiana with those in Massachusetts, New Hampshire and Maine. The
combined company also will have 19,000 miles of gas pipelines, 700
billion cubic feet (bcf) of gas storage, 4,000 megawatts of power
generation and 965 bcf of proven natural gas reserves.
Turning to 1999 results as reported January 28, Neale said
NiSource earnings per share declined 19 per cent from $1.60 in 1998 to
$1.29 as a result of unseasonably warm winter and fall weather and
less-than-ideal timing in closing its acquisitions of Bay State Gas
Company and TPC Corporation. The NiSource stock price also was
negatively impacted by the battering of energy and utility stock
prices "as investors rushed to the dot-com startups."
"Compared to our ten-year track record of outperforming the
Standard & Poor's 500, our performance in 1999 was clearly below the
standard we set for ourselves and what you have come to expect," he
said.
NiSource also exited a number of non-core businesses and
facilities inconsistent with its strategic direction in 1999 and saw
adverse economic conditions negatively impact equity investments,
mostly in oil and gas development. These events reduced net income by
$21.7 million or 17 cents per share.
NiSource Inc. is a holding company with headquarters in
Merrillville, Ind., whose primary business is the distribution of
electricity, natural gas and water in the Midwest and Northeastern
United States. The company also markets utility services and customer-
focused resource solutions along a corridor from Texas to Maine. More
information about the company is available on the Internet at
www.nisource.com.
Columbia Energy Group, based in Herndon, Va., is one of the
nation's leading energy services companies, with assets of
approximately $7 billion. Its operating companies engage in virtually
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. More information about Columbia is available on the
Internet at www.columbiaenergygroup.com.
###
This press release 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
press release. 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 this press release. Readers are cautioned not to place
undue reliance on these forward-looking statements, which
speak only as of the date of this press release. 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 this press
release.
NiSource and the new holding company will be filing a
registration statement, which will contain a joint proxy
statement/prospectus of NiSource and Columbia Energy, 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 when they become available because they
will contain important information. Investors and security
holders will be able to 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 from Columbia Investor Relations at 13880 Dulles
Corner Lane, Herndon, Virginia 20171.
