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 2, 2000, NiSource distributed a "New Direction"
newsletter to employees of NiSource and Columbia. The newsletter
included news and information on NiSource's merger with Columbia. The
text of the newsletter is set forth below.
TEXT OF "NEW DIRECTION" EMPLOYEE NEWSLETTER
OCTOBER 2, 2000
October 2, 2000 Vol. 1 No. 15
NEW DIRECTION
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* INSIDE THIS ISSUE *
* *
* Commitment to communities an important strategy to NiSource . . Pg. 2 *
* Questions and answers about employee transition . . . . . . . . Pg. 3 *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
STAFFING PROCESSES MOVING FORWARD
Over the past few weeks, much progress has been made toward staffing
the new NiSource. And additional work remains to be done. Neverthe-
less, Project Compass remains on target to meet the goal that on or
before Nov. 1 all employees will know their status, job, boss and role
in achieving company strategy.
"While the timeline may seem aggressive, we are employing a systema-
tic, comprehensive approach to ensure quality control," explained Mark
Wyckoff, president of New Energy Company and leader of Project
Compass. "The Employee Transition Team and human resources leaders are
doing an excellent job of coordinating efforts to make certain the
process meets the new organization's human resource needs."
That coordination includes sorting through all the Employee Data and
Interest, and Employee Assessment forms that were submitted as well as
other information about employees, facilitating staffing decisions
with business leaders, and verifying the accuracy of the information
in the databases.
Wyckoff acknowledged that this is a time of uncertainty. "That's to be
expected. Although stress levels are high, it is important that we get
this right. We are working overtime to bring closure as quickly as
possible," stated Wyckoff.
"At this point, we are still in the process of finalizing structures
and staffing the organizations," added Steve Smith, president of
Business Services and co-leader of Project Compass. "Before we can let
people know if they will have a role in the new NiSource, we must go
through a quality-assurance review and ensure that the organizations
are consistent with the opportunities identified during phase two of
Project Compass."
ENVIRONMENTAL STEWARDSHIP: A KEY PRINCIPLE OF THE NEW NISOURCE
The combination of NiSource and Columbia will bring together two
companies whose business practices have long incorporated environ-
mental responsibility. Both companies have ventured beyond "regulatory
compliance" to protect the environment in the communities they serve.
"The goal of our environmental program is to support sustainable
business successes," said Art Smith, vice president and environmental
counsel for the new NiSource. "We will help the corporate enterprise
be more sustainable as a business in the future by decreasing our
environmental impacts at the lowest possible cost and finding smarter,
more efficient ways to manage our environmental, health and safety
efforts.
"We also aim to inject awareness of the environmental impacts of
products and services so business managers throughout the company can
consider those impacts when making business decisions," Smith con-
tinued. "This should give us a competitive advantage and enhanced
environmental reputation in a deregulated energy marketplace."
While integrating the environmental, health and safety activities of
NiSource and Columbia, Smith and his team have focused on:
* continuing and enhancing the strong relationship between
environmental, health and safety and the business operations
units, which has been a cornerstone of Columbia's organization;
* managing environmental issues for the combined company
efficiently;
* prioritizing a safe workplace for our employees; and
* continuing and enhancing the proactive approach to environmental
stewardship that has earned NiSource accolades as an
environmental leader.
"This is a culture that has given NiSource advantages in terms of our
relationships with regulators and environmental stakeholder groups,"
Smith said.
NiSource views protection of the environment and safety as key aspects
of every employee's job. The company's proactive environmental
management program has for several years focused on sustainability,
restorative measures and the wise use of resources. That focus will
continue in the new NiSource, Smith said.
"What this means for employees is that they should feel good about
their employer as being part of the solution to a better quality of
life for them and their families," Smith said. "Employees also benefit
from being part of a successful enterprise."
ENVIRONMENTAL HIGHLIGHTS
Highlights of NiSource's and Columbia's commitments to the environment
include:
* Achieving registration to the rigorous ISO 14001 standard. Main-
tained by the International Standards Organization, the standard
allows companies to effectively integrate all of their operating
programs and facilities with environmental regulations and
policy. Northern Indiana Public Service Company (NIPSCO) was the
first utility in North America to meet this standard, and since
then three other NiSource companies have achieved this goal.
Columbia Natural Resources was one of the first U.S. exploration
and production companies to earn this designation. Other Columbia
and NiSource companies will work toward ISO 14001 certification
over the next few years.
* Columbia, NIPSCO and Bay State Gas are active participants in the
U.S. Environmental Protection Agency's Natural Gas Star program
for pollution prevention.
* Numerous awards for environmental stewardship. NiSource received
the North American Waterfowl Management Plan's National Great
Blue Heron Award and most recently, NiSource subsidiary Primary
Energy Inc. received a Governor's Award for Excellence in
Pollution Prevention for its Cokenergy power plant at Ispat
Inland in East Chicago, Ind.
* The NiSource Environmental Challenge Fund, an employee-driven,
non-profit corporation that enables employees to contribute to
environmental programs while offering organizations a funding
source for restoration activities. Since its inception, the
program has funded 67 environmental enhancement projects totaling
nearly $175,000.
COMMITMENT TO COMMUNITIES AN IMPORTANT STRATEGY FOR THE NEW NISOURCE
Charitable giving plays an important role in being a good corporate
citizen at both NiSource and Columbia. Combined, the companies
currently donate more than $7.7 million annually in support of
programs that make a significant and positive impact on the
communities they serve.
That commitment will remain after the merger is completed. In fact,
the commitment is so strong that during the regulatory approval
process NiSource clearly communicated that it will maintain charitable
contributions and support for civic efforts for the next five years.
"We will continue to invest our resources in activities that benefit
the health and well being of our customers and the communities we
serve," said Maria Hibbs, vice president of corporate communications.
"To date, some unique partnerships have been established, and we plan
to build on that foundation."
According to Hibbs, there are similarities in the types of activities
both companies currently support. Both NiSource and Columbia provide
grants to support education, the arts, community development, the
environment, and health and human services including the United Way.
The goal for the future is to work with the various subsidiaries to
establish common strategies and guidelines for giving.
NiSource's practice has been to designate a minimum of 1 percent of
pre-tax profits for charitable giving. Those funds are provided to
qualifying non-profit organizations that meet established guidelines.
Those guidelines include clearly defining the need and how the
requested grant will impact the community, having measurable goals and
objectives and having 501(c)(3) tax-exempt status.
"Moving forward, our goal will be to leverage our community efforts to
further the initiatives and strategies of the business units," Hibbs
concluded. "An integrated, strategic approach to corporate contribu-
tions can play a significant role in adding value to the NiSource and
local brands."
QUESTIONS AND ANSWERS ABOUT EMPLOYEE TRANSITION
Employees continue to ask questions related to the staffing processes
and employee transition. Project Compass remains committed to
answering questions in a timely manner. We are answering a few recent
questions below.
If you have questions, please e-mail them to newdirection@
nisource.com, or call Project Compass toll-free at (877) 236-2242.
IF I AM NOT OFFERED A POSITION IN THE NEW NISOURCE AND AM ELIGIBLE FOR
VOLUNTARY EARLY RETIREMENT PROGRAM (VERP) BENEFITS, CAN I RECEIVE
BENEFITS UNDER MY INVOLUNTARY SEVERANCE PLAN AS WELL AS THE VERP?
For current NiSource employees:
* You may be paid both involuntary severance and unreduced
retirement benefits only if you are already eligible for an
unreduced retirement benefit as of the your termination date.
This would only be possible for NiSource employees who are at
least 60 years old and have at least 25 years of credited service
as of the date of notification.
* If you are not already eligible for an unreduced retirement
benefit as of the date you are notified of your involuntary
severance, and you meet the criteria for participation in the
VERP, you must choose either the unreduced retirement benefit or
benefits under the involuntary severance plan, based upon your
individual calculations and financial goals.
* If you are eligible for a reduced retirement benefit now (that
is, you are at least 55 years old and have at least 10 years of
credited service), but you do not meet the "rule of 85," you can
receive involuntary severance benefits and a reduced retirement
benefit.
For current Columbia employees:
* If you are involuntarily separated, you are eligible for benefits
under the severance program. If you subsequently become eligible
for and elect to take the VERP, you will not be eligible for
severance benefits.
WHY ARE THE VERP OPPORTUNITIES DIFFERENT FOR CURRENT NISOURCE
EMPLOYEES AND CURRENT COLUMBIA EMPLOYEES?
The decision to offer different plans for specific employment units
was driven by the individual needs for those businesses.
IF AN EMPLOYEE RECEIVES NOTICE THAT HE OR SHE WILL NOT HAVE A POSITION
IN THE NEW NISOURCE, IS THE EMPLOYEE ELIGIBLE FOR ANY SEVERANCE
BENEFITS IF HE OR SHE LEAVES PRIOR TO THE DATE SEVERANCE BECOMES
EFFECTIVE?
An employee will be eligible for severance benefits if he or she stays
until the date he or she is released.
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* MANAGEMENT ANNOUNCEMENTS MADE VIA INTRANET *
* *
* Organization charts naming leaders of various functions in Business *
* Services, the Merchant Company and other business units have been *
* updated on the Project Compass intranet site under "meet the new *
* NiSource." Check back for additional leadership announcements. *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
The following is included to conform with federal regulations:
This publication 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 publication. 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.
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* QUESTIONS, COMMENTS? *
* *
* New Direction is published by Project Compass for all NiSource *
* and Columbia employees. We welcome your comments and questions. *
* Give us a call at 877-236-2242 or e-mail us at *
* [email protected]. *
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