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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER U.S. OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. 11
Empresa Nacional de Electricidad S.A.
(Name of Subject Company)
Duke Energy International, L.L.C.
Duke Energy Corporation
(Bidders)
Common Stock, no par value
(including that represented by
American Depositary Shares) 29244T101
(Title of Class of Securities) (CUSIP Number of Class of Securities)
Carol Graebner, Esq.
General Counsel
Duke Energy International, L.L.C.
5400 Westheimer Court
Houston, Texas 77056-5310
Telephone: (713) 627-6542
Facsimile: (713) 627-5219
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
----------------------------------
Copy to:
Frederick S. Green, Esq.
Ellen J. Odoner, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153-0119
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
(Continued on following pages)
(Page 1 of 59)
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NY2:\386201\01\89ZT01!.DOC\42615.0005
<PAGE>
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1 NAME OF REPORTING PERSONS: Duke Energy International, L.L.C.
- --------------------------------------------------------------------------------
S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSONS: 56-2051206
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: State of Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES N/A
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON OO
- --------------------------------------------------------------------------------
Page 2 of 59
<PAGE>
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1 NAME OF REPORTING PERSONS: Duke Energy Global Asset Development, Inc.
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S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSONS: 88-0366429
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: State of Navada
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES N/A
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON CO
- --------------------------------------------------------------------------------
Page 3 of 59
<PAGE>
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1 NAME OF REPORTING PERSONS: Duke Energy Services, Inc.
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S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSONS: 48-0650320
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: State of Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES N/A
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON CO
- --------------------------------------------------------------------------------
Page 4 of 59
<PAGE>
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1 NAME OF REPORTING PERSONS: PanEnergy Corp.
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S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSONS: 74-2150460
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: State of Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES N/A
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON CO
- --------------------------------------------------------------------------------
Page 5 of 59
<PAGE>
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1 NAME OF REPORTING PERSONS: Duke Capital Corporation
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S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSONS: 51-0282142
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: BK, WC,OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: State of Delaware
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES N/A
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON CO
- --------------------------------------------------------------------------------
Page 6 of 59
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS: Duke Energy Corporation
- -------------------------------------------------------------------------------
S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSONS: 56-0205520
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(e) OR 2(f) N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: State of North Carolina
- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES N/A
- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON CO
- --------------------------------------------------------------------------------
Page 7 of 59
<PAGE>
This Amendment No. 11 amends and supplements the Tender Offer Statement
on Schedule 14D-1 filed on February 25, 1999, as amended, by Duke Energy
International, L.L.C., a Delaware limited liability company (the "BIDDER") and a
wholly-owned, indirect subsidiary of Duke Energy Corporation, a North Carolina
corporation ("Duke"), with respect to the offer by Bidder to purchase for cash
up to 501,947,400 shares of Common Stock, no par value (the "SHARES"), of
Empresa Nacional de Electricidad S.A. (the "COMPANY"), a publicly traded stock
corporation (sociedad anonima abierta) incorporated under the laws of the
Republic of Chile, including Shares represented by American Depositary Shares,
each representing 30 Shares and evidenced by American Depositary Receipts.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
Exhibit (a)(34) Press release issued on March 26, 1999, alerting all
holders of Endesa's ADS using electronic voting for
bylaw amendment.
Exhibit (a)(35) English translation of press release issued on March 26,
1999.
Exhibit (a)(36) English translation of script for use by Chilean proxy
solicitors in Chile in answering frequently asked
questions.
Exhibit (a)(37) English translation of prospectus distributed by
Banchile Corredores de Bolsa to holders participating in
Chilean offer.
Page 8 of 59
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: March 29, 1999
DUKE ENERGY INTERNATIONAL, L.L.C.
By: /s/ BRUCE A. WILLIAMSON
--------------------------------------
Name: Bruce A. Williamson
Title: President and
Chief Executive Officer
DUKE ENERGY CORPORATION
DUKE ENERGY GLOBAL ASSET DEVELOPMENT, INC.
DUKE ENERGY SERVICES, INC.
PANENERGY CORP.
DUKE CAPITAL CORPORATION
By: /s/ BRUCE A. WILLIAMSON
--------------------------------------
Name: Bruce A. Williamson
Title: Authorized person
Page 9 of 59
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
Exhibit (a)(34) Press release issued on March 26, 1999, alerting all
holders of Endesa's ADS using electronic voting for
bylaw amendment.
Exhibit (a)(35) English translation of press release issued on March 26,
1999.
Exhibit (a)(36) English translation of script for use by Chilean proxy
solicitors in Chile in answering frequently asked
questions.
Exhibit (a)(37) English translation of prospectus distributed by
Banchile Corredores de Bolsa to holders participating in
Chilean offer.
Page 10 of 59
EXHIBIT (A)(34)
Page 11 of 59
<PAGE>
March 26, 1999 CONTACT: Bryant Kinney
Office: 704/382-2208
24-Hour: 704/382-8333
ALERT TO ALL ENDESA-CHILE ADS HOLDERS
USING ELECTRONIC VOTING FOR BYLAW AMENDMENT
CHARLOTTE - Duke Energy (NYSE: DUK) today alerted holders of Empresa Nacional de
Electricidad S.A. (Endesa-Chile) American Depositary Shares ("ADS") desiring to
vote "FOR" the Bylaw Amendment that they should not use the first voting option
under ADP's electronic voting systems (phone, Internet, proxy edge or RTA
system). In order to have their affirmative vote counted electronically, these
holders must use the second ADP option to vote "`FOR" the Bylaw Amendment.
When voting through electronic means, Endesa-Chile holders are provided with two
options: (1) to follow "Endesa-Chile board of directors' recommendation" or (2)
to vote according to individual instructions. Since the Endesa-Chile board has
not taken any position on the upcoming vote, a vote using the first option
effectively is a vote to abstain resulting in a vote AGAINST the Bylaw
Amendment. Duke Energy therefore urges all ADS holders to vote "FOR" the Bylaw
Amendment using the "individual instructions" option (currently option No. 2 for
telephone voting and the "proxy ballot" option for Internet voting).
Page 12 of 59
<PAGE>
2 -
All voters who have used the first option to vote must re-vote using option 2
(telephone) or the "proxy ballot" (Internet) in order to have their "FOR"
counted. Notwithstanding this technical problem, Duke Energy continues to
strongly urge ADS holders to vote "FOR" the Bylaw Amendment by electronic means
to help ensure that their vote will be counted by the 10 a.m. EST, April 6, 1999
deadline. ADS holders who are unable to vote by electronic means should contact
their broker or custodian bank and instruct them to vote "FOR" the bylaw
amendment on such holder's behalf. As a last resort, ADS holders should return
their voting instructions by overnight mail for delivery to their broker or bank
no later than 10 a.m. EST, April 6, 1999. ADS holders with questions on these
voting options should call Innisfree M & A Incorporated at (888) 750-5834.
Duke Energy (NYSE:DUK) is a global energy company with more than $26 billion in
assets. Headquartered in Charlotte, N.C., the company reaches into more than 50
countries, producing energy, transporting energy, marketing energy and providing
energy services. In the United States, Duke Energy companies provide electric
service to approximately two million customers in North Carolina and South
Carolina; operate interstate pipelines that deliver natural gas to various
regions of the country; and are leading marketers of electricity, natural gas
and natural gas liquids. Additional information about the company is available
on the Internet at: www.duke-energy.com.
###
Page 13 of 59
EXHIBIT (A)(35)
Page 14 of 59
<PAGE>
FORTUNE MAGAZINE AND FINANCIAL TIMES
HIGHLIGHT DUKE ENERGY
o The energy company is considered the most admired of its industry sector in
the United States, according to the ranking made by the American magazine,
and the most respected according to a poll carried out by the British
publication.
The prestigious publications Fortune, from the United States, and Financial
Times, from Great Britain, have pointed up Duke Energy's management in the
energy sector, both in the United States and around the world.
According to the survey of Financial Times, in which Chief Executive Officers of
53 countries were polled during 1998, Duke Energy led the world ranking as the
top utility.
In the March 1st, 1999 Fortune issue, dedicated to the companies that are most
admired by more than 10 thousand American executives and financial analysts,
Duke Energy was considered the best among the top 10 electric and gas companies
in: management quality, product quality, innovativeness, investment value,
financial soundness, talent, social responsibility and use of assets.
Duke Energy Corporation, through its subsidiary Duke Energy International (DEI),
has launched a tender offer for Empresa Nacional de Electricidad, S.A. (Endesa
Chile), subject to the condition that the shareholders increase the shares
concentration limit.
Bruce Williamson, president and Chief Executive Officer of DEI, has pointed out
that, if the tender offer for Endesa succeeds, the company will be transformed
into the vehicle through which DEI will channel its investments in South
America. To be able to access Endesa's control, the American company would
invest approximately US$ 2.100 millions in the shares's purchase.
Duke Energy is a global energy company, with assets of more than US$ 26.000
millions. It operates in 50 countries. It is a leader in the development,
ownership and operation of electric, natural gas and liquid gas companies. Duke
Energy's headquarters are based in Charlotte, North Carolina (USA).
Page 15 of 59
EXHIBIT (A)(36)
Page 16 of 59
<PAGE>
QUESTIONS AND ANSWERS FOR ENDESA SHAREHOLDERS
PUBLIC DOCUMENT
1. WHY IS IT CONVENIENT FOR ME TO APPROVE THE MODIFICATION OF THE BY-LAWS TO
INCREASE THE CONCENTRATION LIMIT FROM 26% TO 65%?
Because by modifying the threshold we create a real possibility that
there may exist an investor that can acquire at least 51% of the shares
and have a controlling interest in the company. This would make it more
likely that you could realize a "control premium" for your shares.
Increasing the concentration limit to 65% instead of just 51% is
important because it would leave a margin for additional investments by
a controlling shareholder, either by making additional direct
investments in the company or purchasing additional shares in the
market.
It is good for Endesa that there exist a qualified controller because
this would allow for the expansion and growth of Endesa during the
forthcoming years.
The current by-laws date back to the 1980s when Endesa was
privatized. Today, very few companies in Chile or abroad maintain such
a low concentration limit percentage, which turns large investors away
and therefore tends to depress the price per share of the stock.
2. WHY SHOULD I WANT TO APPROVE THE CONCENTRATION AMENDMENT IF I DO NOT INTEND
TO SELL MY SHARES?
Approving this modification does not mean that you have to sell. Your
approval merely opens a door so that investors such as DUKE ENERGY may
purchase shares from those stockholders who do wish to sell. If the
proposed increase in the concentration limit is approved, you will have
the choice of selling your shares at an attractive price to DUKE ENERGY
or another large investor or holding them.
3. WHY IS IT CONVENIENT TO SELL MY SHARES?
The purchase offer of DUKE ENERGY is $250 per share, 43% higher than
the average price per share for the period July 1998 through January
1999. The average price for your shares in the last six months of 1998
and in January of 1999 was $174 per share. On February 17, 1999, the
day prior to DUKE ENERGY's announcement of its purchase offer, the
closing share price was $211 per share.
Page 17 of 59
<PAGE>
4. COULD I GIVE MY CONSENT BY EXECUTING A PROXY LETTER IN FAVOR OF A CHILEAN
WHO IS INDEPENDENT FROM DUKE?
If you name a person in your proxy other than the three individuals
recommended by DUKE ENERGY, there may be no assurance that that person
will vote in favor of the amendment. Additionally, Chilean law
establishes that no shareholder or person related to it may vote in a
shareholders meeting shares exceeding the concentration limit.
Therefore, the proxies granted to persons related to Enersis probably
cannot be used to vote in favor of raising the concentration limit.
The three individuals recommended by DUKE ENERGY- Messrs. Bruce Andre
Williamson, Peter Joseph Wilt and Jaime Irarrazabal C.- are serious
professionals who will carry on your mandate to approve the amendment.
Mr. Jaime Irarrazabal C., is both a well-respected lawyer in Santiago
and a Chilean national.
5. WHAT IS THE DIVIDEND POLICY OF DUKE ENERGY?
DUKE ENERGY was formed by the merger of Duke Power and Pan
Energy in 1997. Duke Power had paid a dividend on its common
shares for 70 consecutive years prior to the merger. DUKE
ENERGY has continued this dividend payment tradition.
Following the consummation of the offer to purchase Endesa
Chile, DUKE ENERGY intends to support a dividend policy of
Endesa Chile that is consistent with the growth objectives of
that company. Endesa's growth will increase the likelihood of
greater dividends to all shareholders.
6. WHY IS DUKE ENERGY INTERNATIONAL THE RIGHT CONTROLLING PARTNER FOR ENDESA
CHILE?
- Duke Energy is a very successful and respected global company,
having been ranked by London's Financial Times in 1998 as the
world's most respected utility and by Fortune Magazine as America's
Most Admired electric and gas utility in 1999.
- With assets of US$26 billion (approximately six times the size of
Endesa Chile), Duke Energy is one of the top 10 energy companies in
the world, having great financial and technical strength.
- Duke Energy has expertise in power generation and global operations.
Page 18 of 59
<PAGE>
Duke Energy owns, operates or has an interest in hydroelectric and
thermal plants totaling approximately 30,000 MW of electric
generation capacity around the world and operates in 50 countries.
- Duke Energy International believes in Endesa, its managers and
employees.
- Duke Energy International is committed to employ Endesa and the
Santiago headquarters as its business platform for electric
generation investments and growth throughout South America.
7. IS THERE ANY ADVANTAGE TO HAVING ENDESA UNDER THE MAJORITY CONTROL OF A
FOREIGN COMPANY?
What is important is whether the controller can make the company grow
by providing the financial support and the crucial technical and
operational experience to make possible more profitable projects in the
highly competitive modern energy business. DUKE ENERGY is a global
energy company with strong technical and operational experience. It has
been in business for 100 years, having accumulated great experience and
financial and technical strength.
Chile needs foreign capital to grow. Even though the controlling
stockholder will be a foreign company, the corporate headquarters of
Endesa will remain in Santiago and will be the platform for Duke
Energy's electric generation investment in South America. Endesa's
growth will create new jobs for Chileans and bring additional foreign
investment to Chile.
8. WHAT IS THE POSITION OF THE BOARD OF DIRECTORS OF ENDESA REGARDING THE
BYLAWS AMENDMENT?
The Board of Directors of Endesa has not taken any position in regard
to the concentration amendment so far.
9. WILL THE SHARES THAT I DON'T SELL BE DEVALUATED?
Not necessarily, because by having only one controller coming in with
financial standing, experience in the electrical sector and creative
capacity, Endesa will be in the best position to grow and expand. Also,
because Duke has only offered to purchase 51% of Endesa, there should
be a liquid trading market for the remaining shares.
Page 19 of 59
<PAGE>
10. COULD THE WORKERS OF ENDESA BE HARMED BY THIS MODIFICATION?
No. This modification will have no impact on Endesa's employees. In
fact, with Duke Energy International's growth plans and financial
strength, workers of Endesa may have more opportunity in the future.
11. IS THERE ANY COST FOR SELLING MY SHARES, ANY COMMISSION?
If Duke is the purchaser of your shares, no costs or commissions will
be charged to you.
12. WHEN IS THE AUCTION, WHO DOES IT, HOW DOES IT WORK?
In order for an auction to take place, we first need to modify the
by-laws. Then, the auction date shall be scheduled. It is estimated
that this date will be between April 20 to April 30.
The administrator is BANCHILE CORREDORES DE BOLSA, who shall receive
the sale orders from Chilean stockholders and carry out the purchase of
the shares through the auction procedure in force at a Chilean stock
market.
Banchile appears at the stock market and offers the stock package
entrusted by the stockholders. Another person from Banchile offers to
purchase the package. If there are no other interested parties,
Banchile will make the purchase. If there are other interested parties,
DUKE must compete with the prices offered at that time.
13. HOW DOES THE PRORATION SYSTEM WORK?
DUKE shall purchase 3,680 million shares. In the event that the total
number of shares offered for sale during the auction is greater than
the one offered for purchase, the acquisition shall be prorated so that
all the stockholders have the same conditions, irrespective of the
number of shares held.
14. WOULDN'T SHAREHOLDERS MAKE MORE MONEY BY SELLING ALL OF THEIR SHARES AT
THE CURRENT STOCK MARKET VALUE THAN BY SELLING ONLY THEIR PRO RATA PORTION
TO DUKE FOR CH$250 PER SHARE?
Page 20 of 59
<PAGE>
The individual shareholders should each consider their particular
investment alternatives. DUKE ENERGY has structured the pro rata
purchase of the Endesa shares to be fair to all shareholders who would
like to sell, including the very small ones. DUKE ENERGY believes that
this pro rata structure will result in the greatest amount of liquidity
for the remaining Endesa Chile shareholders, who should be able to sell
their shares at will in the stock market after the DUKE ENERGY
purchase.
15. CONSIDERING THE CURRENT DROUGHT AND OTHER TEMPORARY CONDITIONS, SHOULD
SHAREHOLDERS OF ENDESA CHILE WAIT FOR A HIGHER OFFER FROM ANOTHER COMPANY?
While it is true that the average price per share for Endesa shares was higher
in 1997 than it is today, there are no guarantees that the price per share will
ever again reach those historical levels after the drought and other temporary
conditions are over. DUKE ENERGY, on the other hand, is guaranteeing what it
believes is a fair price. The $250-per-share price DUKE ENERGY is offering is
$39 higher than the $211-per-share price in effect the day prior to the public
announcement of DUKE ENERGY's offer last February and $76 higher than the
average price per share of $174 during the period of July 1998 through January
1999.
16. IF DUKE IS NOT A STOCKHOLDER, WHY CAN IT HAVE A REPRESENTATIVE AT THE
MEETING OF STOCKHOLDERS?
Any individual of legal age can be assigned the power to represent a
shareholder at the Shareholders Meeting. All it takes is your granting
to that individual the authority to represent you at the Meeting. We
request that you name one of the three individuals we have mentioned to
you because these individuals are committed to approve the bylaws
amendment and have no limitations to do so.
17. WHY SHOULD SHAREHOLDERS SELL THEIR SHARES IN ENDESA CHILE WHEN THEY KNOW
OF NO OTHER INVESTMENTS THAT PROVIDE A BETTER RETURN?
There are never any guarantees for safety and high returns in the stock
market. There are no guarantees that shareholders will be able to sell
their shares at a higher price than Ch$250 per share at any time in the
future nor that they will receive generous dividends. However, DUKE
ENERGY does guarantee that it will pay the shareholders Ch$250 per
share after the amendment is approved and all conditions to the DUKE
Page 21 of 59
<PAGE>
ENERGY offer are satisfied. DUKE ENERGY believes that this offer is
fair and attractive, being $39 higher than the $211-per-share price in
effect the day prior to the public announcement of DUKE ENERGY's offer
last February and 43% higher than the average price per share of $174
for the period July 1998 through January 1999.
18. WILL I LOSE MY DIVIDENDS IF I SELL NOW?
You will lose your dividends if you sell your shares, but the
$76-per-share margin between the average price of $174 per share during
the period from July 1998 through January 1999 and the price of $250
per share offered by DUKE ENERGY should greatly exceed the value of any
dividend that may be proposed by Endesa at the Meeting of Stockholders
of April 27.
19. WHY SHOULDN'T THE ENDESA SHAREHOLDERS WAIT TO ISSUE THEIR PROXIES UNTIL
AFTER THE ENERSIS SHAREHOLDERS MEETING ON MARCH 30?
The decision to be taken at the ENERSIS Shareholders Meeting is not a condition
of DUKE ENERGY's purchase offer. Therefore, DUKE ENERGY's offer to purchase a
controlling stake in Endesa Chile if the concentration limit is raised will
continue regardless of the outcome at the ENERSIS meeting.
Page 22 of 59
EXHIBIT (A)(37)
Page 23 of 59
<PAGE>
DUKE
ENERGY
INTERNATIONAL
OFFER TO PURCHASE IN AUCTION SHARES OF EMPRESA
NACIONAL DE ELECTRICIDAD S.A.
BANCHILE
CORREDORES DE BOLSA
MARCH 1999
This report has been prepared on the basis of publicly available information,
and seeks to be of assistance for the evaluation and decision that each
shareholder may make individually and independently. Although reasonable efforts
have been made, Banchile Corredores de Bolsa S.A. does not assume any liability
whatsoever about any implicit or explicit recommendation herein made.
Page 24 of 59
<PAGE>
TABLE OF CONTENTS
I. INTRODUCTION
II. OFFER TO PURCHASE IN AUCTION SHARES OF EMPRESA NACIONAL DE ELECTRICIDAD
S.A.
III. INFORMATION CONCERNING THE PURCHASER AND DUKE
IV. INFORMATION CONCERNING ENDESA
V. PURPOSE OF THE OFFERS: PLANS FOR THE COMPANY
VI. EFFECT OF THE OFFERS ON THE MARKET FOR THE SHARES AND ADSs
VII. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
VIII. INSTRUCTIONS FOR SHAREHOLDERS WHO ACCEPT THE OFFER
EXHIBIT 1 INFORMATION REQUIRED ACCORDING TO THE TYPE OF SHAREHOLDER
EXHIBIT 2 FORM OF SELLING ORDER
Page 25 of 59
<PAGE>
I. INTRODUCTION
Duke Energy International, L.L.C. a Delaware limited liability company (the
"Purchaser") and a wholly-owned, indirect subsidiary of Duke Energy Corporation,
a North Carolina Corporation ("Duke") has the intention of acquiring control of
Empresa Nacional de Electricidad S.A., a publicly-traded stock corporation
incorporated under the laws of the Republic of Chile (the "Company" or
"Endesa-Chile"). In order to fulfill this purpose it has decided to make an
Offer in Chile (the "Chilean Offer") to acquire 3,680,947,436 shares, which will
be performed by a purchase in auction (the "Auction") that will take place in a
Stock Exchange in Chile (the "Stock Exchange").
Concurrent with the Chilean Offer a U.S. Offer is being made for up to
501,947,400 Shares. The total number of Shares (including Shares represented by
ADSs) that it is sought to acquire in the two Offers amounts to 4,182,894,836
Shares (51% of the Shares issued).
The price offered by Duke is 250 pesos per Share, net to the seller in cash, and
without interest thereon, and a price of 7,500 pesos per ADS.
The Estatutos of the Company (the "Bylaws") currently prohibit (a) any person
from owning, directly or indirectly through related parties more than 26% of the
voting capital stock of the Company and (b) any person from exercising, directly
or indirectly through related parties, the voting rights with respect to an
amount of shares that represent more than 26% of the voting capital stock of the
Company. Accordingly, the Offers are subject to the satisfaction of the Bylaw
Amendment Condition. In order for this condition to be satisfied, an
extraordinary meeting of the Company's shareholders (the "Bylaw Meeting") must
be called to consider amendments to Articles 5 bis and 32 bis of the Bylaws
(together the "Bylaw Amendments") to increase the percentage of Shares that a
single shareholder (or group of shareholders) may beneficially own, directly or
indirectly, in the Company and freely exercise voting rights with respect
thereto, from 26% to 65% of the outstanding voting Shares of the Company. For
these purposes the Board of Directors of the Company has called an Extraordinary
General Shareholders' Meeting to be held on April 8, 1999. Approval of the Bylaw
Amendments requires the affirmative vote of at least 75% of the outstanding
Shares (including Shares represented by ADSs).
Duke and the Purchaser urge all holders of Shares and ADSs to vote their Shares
and/or ADSs in favor of the Bylaw Amendments at the Bylaw Meeting, regardless of
whether such holders intend to tender their shares and/or ADSs in the Offers.
Should holders of at least 75% of the outstanding Shares approve the Bylaw
Amendments, Chilean law requires the publication and recording of the
shareholder approval before the Bylaw Amendments will be effective. The time
required to obtain the publication and recording of the shareholder approval is
uncertain. While there can be no assurance as to this timing, Duke's Chilean
counsel advises that these actions could be accomplished within 10 business
days.
Page 26 of 59
<PAGE>
The Chilean Auction will be scheduled to take place as soon as possible (and, in
any event, within 20 business days) after the effectiveness of the Bylaw
Amendments.
Tendering holders of Shares will not be obligated to pay any brokerage fees,
commissions or stock exchange transfer taxes on the sale of their Shares if the
purchase of Endesa shares by Duke is materialized in the Auction.
According to the Uniform Code Statistics Record filed by the Company with the
Superintendency of Securities and Insurance (S.V.S.), as of December 31, 1998,
there were 8,201,754,580 Shares outstanding including the number equivalent to
13.17% of all the Shares represented by ADSs. As of the date hereof, Duke does
not beneficially own any Shares or ADSs. If Shares and/or ADSs representing
4,182,894,836 Shares are validly tendered and accepted for payment pursuant to
the Offers, Duke would beneficially own in the aggregate approximately 51% of
the outstanding shares (Based on the number of Shares reported to be outstanding
as of December 31, 1998).
The purpose of the Chilean Offer and of the U.S. Offer is to acquire control of,
and a majority of the equity interest in, the Company. Duke intends, as soon as
practicable after the consummation of the Offers, to seek majority
representation on the Company's Board of Directors.
THE OFFERS SHALL NOT PROCEED UNLESS SHAREHOLDERS OF THE COMPANY APPROVE THE
BYLAW AMENDMENTS BY THE AFFIRMATIVE VOTE OF HOLDERS OF AT LEAST 75% OF THE
OUTSTANDING SHARES (INCLUDING SHARES REPRESENTED BY ADSs)
Page 27 of 59
<PAGE>
II. OFFER TO PURCHASE IN AUCTION SHARES OF EMPRESA NACIONAL DE ELECTRICIDAD S.A.
(Published in "El Mercurio de Santiago of February 25, 1999)
DUKE ENERGY INTERNATIONAL, L.L.C. ("Duke International") a limited liability
company incorporated under the laws of the State of Delaware United Sates of
America, engaged in investments, headquartered at 5400 Westheimer Court,
Houston, Texas, United States of America, and for these purpose at No. 970
Moneda St., 12th floor, Santiago, Chile, wholly owned subsidiary of DUKE ENERGY
CORPORATION ("Duke"), a company incorporated under the laws of the State of
North Carolina, United States of America, offers to purchase directly or through
a Chilean affiliate, (the "Affiliate") wholly controlled by Duke International
and especially incorporated therefor, 3,680,947,436 shares, with no par value
(the "Shares") representing 44.88% of the subscribed and paid capital stock of
EMPRESA NACIONAL DE ELECTRICIDAD S.A. ("Endesa") from all the Chilean
shareholders of Endesa, individuals or legal entities, by means of a purchase in
auction (the "Auction") that will take place in the Bolsa de Comercio de
Santiago Bolsa de Valores (the "Stock Exchange") in accordance with the rules
established in paragraph 2.3 of Section B, of the Auction System of the Manual
for Operations in Stock Exchange Shares1.
This notice is published pursuant to what is stated in the notice of Takeover of
Control of Endesa and affiliates and associated companies, published in the
newspaper "La Segunda" of February 18, 1999 and supplemented by notice published
on February 25, 1999 in the newspaper El Mercurio of Santiago.
CHARACTERISTICS OF THE OFFER.
1. Duke International invites all the Chilean shareholders of Endesa to tender
their Shares in the Auction so that Duke International or the Affiliate, may
purchase and acquire 3,680,947,436 subscribed and paid for Shares of Endesa that
are tendered, according to the terms of this notice, at the minimum price of $
250 per share. No interest or adjustments will accrue on this price. The price
of the purchase and sale will be paid under the stock exchange term called
"Normal Cash", that is to say, on the business day succeeding the date of the
Auction.
2. The purchase price of the Shares will be paid by nominative check issued to
the name of the seller to be delivered after the receipt for the money and the
release are signed.
- ----------------------
1 Duke is considering conducting the Auction on the Electronic Stock Exchange
instead of the Santiago Stock Exchange. If Duke decides to conduct the Auction
on the Electronic Stock Exchange it will announce and inform stockholders of
this fact at the time the date for the Auction is established.
Page 28 of 59
<PAGE>
3. The invitation to tender offers will start on March 4, 1999, and without
prejudice to what is stated in number 12 for the Stock Exchange Brokers, it will
expire at 12 midday of the fifth stock exchange business date prior to the
Auction date ("Period of the Offer"). The Auction will take place within ten
stock exchange business days counted from the date of publication of the notice
to which reference is made in No. 4 hereinbelow.
4. In order to carry out the Auction it is essential condition that an
Extraordinary General Meeting of Shareholders of Endesa takes place on or before
April 8, 1999, and legally approve the amendment to Article 5 Bis of its bylaws,
that presently establishes that "no person, directly or through other related
persons may concentrate more than 26% of the voting shares of the company", and
of Article 32 Bis of its bylaws, that presently establishes that
"notwithstanding what is provided in the preceding article, no shareholder may
exercise per se or representing other shareholders the right to vote for more
than 26% of the voting shares subscribed, being able to discount for this
purpose the excess over 26%", and that ends stating "nor shall any person
represent shareholders who in the aggregate own more than 26% of the shares
subscribed", with the object of replacing such limit of 26%" of maximum stock
participation by a new percentage of 65%, and likewise to take such
supplementary resolutions as may be necessary and sufficient to materialize such
bylaw amendment and that such Bylaw Amendments is properly legalized in a timely
manner and form. Once the above described condition is met, Duke International
shall publish, within the 10 stock exchange business days following the
legalization of the bylaw amendment, a prominent notice in the newspaper El
Mercurio of Santiago and in the Wall Street Journal of New York, United States
of America, respectively, giving information to this effect, and establishing
the date for the Auction.
5. In the event Endesa's shareholders should accept to sell a number of shares
higher than the maximum amount that is offered to be purchased, Duke
International or the Affiliate will purchase shares on a pro rata basis from
those that each shareholder has decided to sell, until the total amount that
corresponds to the maximum shares tendered for purchase is completed. For this
purpose, the final number of shares that Duke International or the Affiliate,
shall acquire from each offering shareholder will be calculated multiplying the
number of shares offered for sale to Duke International by each shareholder by a
proration factor (Proration Factor) that will be obtained from dividing the
maximum number of shares offered to purchase by the quantity of shares offered
for sale according to the terms of this notice. The purchase will be made only
for the whole number of Shares resulting from the above described formula,
adjusting downwards if the fraction is under 0.50 or upwards if the fraction is
equal to or over 0.50. In the event that once the proration factor mentioned is
applied, the total number of shares to be purchased does not coincide with the
number of Shares allocated, the final figure will be adjusted adding or
subtracting the difference to the Shareholder that has offered the most shares
for sale. Duke International will communicate the Proration Factor that will be
applied on the same day of the Auction, at the latest at 1.00 p.m., through the
terminal system of the Stock Exchange, and subsequently by publication in the
newspaper "La Segunda" of the same day.
Page 29 of 59
<PAGE>
6. Duke International or the Affiliate will not acquire those shares that are
offered in terms and conditions that are different from those set forth in this
notice. In the case of shares that are not acquired by Duke International, or
the Affiliate, because the requirements and conditions established in this
notice of offer are not complied with or if the Auction is not performed as
provided for in this notice, no right, indemnification, payment or reimbursement
will generate in favor of the shareholders who have made offers for sale, nor
will this give rise to any obligation or liability against Duke, Duke
International, the Affiliate, Banchile Corredores de Bolsa S.A., their
respective attorneys-in-fact, advisers or representatives.
In the event the Auction is suspended by a judicial or administrative order,
Banchile Corredores de Bolsa S.A. will return the shares that were received for
such purpose, either from a stock broker or persons who have delivered them
directly in Banchile Corredores de Bolsa S.A., within the period of 7 business
days following the date of suspension of the Auction.
7. The shares offered for sale must be registered in the name of the selling
shareholders, fully paid to Endesa, free from encumbrances, prohibitions,
embargoes, lawsuits, precautionary measures, suspensive or resolutory conditions
and, in general, free from circumstance that could prevent their free assignment
or transfer. In addition, the shares that are not properly recorded in the name
of Banchile Corredores de Bolsa S.A. at 6.00 p.m. of the stock exchange business
day prior to the date of the Auction will not be considered in any way for the
purpose of the Auction, excluding the sellers mentioned in number 14
hereinbelow.
8. It is established that Duke International will act through Banchile
Corredores de Bolsa S.A. ("Banchile") for the purchase of the Shares. The
shareholders, however, may offer to sell their shares through any Stockbroker.
In turn, each broker will accumulate the orders of its clients to its own, and
will issue a selling order to Banchile for the aggregate of the corresponding
shares. It will be the responsibility of each stockbroker to check the existence
and accuracy of the documents to which reference is made in Nos. 10 and 11
below.
9. The Stockbrokers will receive selling orders until 12.00 hours of the fifth
stock exchange business day prior to the date of the Auction. Banchile will
register for the Auction all the selling orders that it has received from
different shareholders, either directly or through other Stock Exchange brokers,
provided the conditions and terms contained in this notice have been complied
with.
10. The individuals who hold shares and wish to offer their shares for sale
shall: (i) sign the selling order for all the shares that they offer to sell;
(ii) deliver to the Stock Exchange broker the certificate or certificates of the
Shares; (iii) exhibit their identification card and deliver a photocopy thereof
signed by the offeror, which will remain in the hands of the Stock Exchange
broker; (iv) if the individual is represented by a third party, copy of the
current power of representation with sufficient authorities, delivered or
attested to by a Notary Public must be exhibited and delivered to the Stock
Page 30 of 59
<PAGE>
Exchange Broker; (v) exhibit and deliver all those additional antecedents that
are required in order to evidence the authority and capacity of the offeror to
alienate the Shares; (vi) deliver properly signed, the corresponding share
transfer, where the shareholder will appear as seller and the Stock exchange
broker as buyer; and (vii) fill in the Client Record in accordance with the
regulations issued by Superintendencia de Valores y Seguros ("SVS").
11. Legal entities that hold shares and wish to offer their shares for sale
shall: (i) sign the selling order for all the shares that they offer to sell;
(ii) deliver to the Stock Exchange broker the certificate or certificates of the
Shares; (iii) exhibit the identification card of its legal representative and
deliver a photocopy thereof signed by the offeror, which will remain in the
hands of the Stock Exchange broker; (iv) exhibit and deliver to the Stock
Exchange broker copy of the legal background information of the respective legal
entity, and copy of the current power of representation with sufficient
authorities, delivered or attested to by a Notary Public; (v) exhibit and
deliver all those additional antecedents that are required in order to evidence
the authority and capacity of the offeror to alienate the shares; (vi) deliver,
properly signed, the corresponding share transfer, where the shareholder will
appear as seller and the Stock exchange broker as buyer; and (vii) fill in the
Client Record in accordance with the regulations issued by Superintendencia de
Valores y Seguros ("SVS").
12. The brokers must give their selling order to Banchile at the latest at 6.00
p.m. of the fifth stock exchange business day prior to the date of the Auction,
complying with the following requirements: (i) sign one single selling order for
all the shares they own and those that belong to third parties; (ii) deliver to
Banchile the certificate or certificates of all the shares contained in the
selling order; (iii) exhibit the identification card of the legal representative
and deliver a photocopy thereof, signed by the offeror, that will remain in the
possession of Banchile; (iv) exhibit and deliver to Banchile copy of the current
power of representation; and (v) deliver, properly signed, the corresponding
share transfer, where the broker will appear as seller and Banchile as buyer.
13. The selling order, that will state the terms of the offer must contain, at
least, the following special data: (i) that the minimum sale price is $ 250 per
share; (ii) that it is irrevocable from 6.00 p.m. of the second stock exchange
business days prior to the date of the Auction; (iii) that it accepts the
purchase system on the basis of Proration Factor; (iv) that it authorizes
Banchile to publish the notice to which the stock exchange rule refers; (v) that
it authorizes the broker to accumulate its selling order with other orders into
one or more divisible or indivisible lots; (vi) that it authorizes Banchile to
complete the antecedents of the transfer of shares pursuant to what is stated in
No. 15; (vii) that it accepts all the terms and conditions of the offer
contained in this notice; and (viii) that the shareholder is a Chilean person. A
copy of the form will be kept by the selling shareholder, to support the
commercial terms in which the selling order has been given,
14. Pension Funds, Mutual Funds and other institutional investors, that,
according to the law, must have the investments in their own name until their
sale, who should wish to participate in this offer of Shares, as regards the
sale of shares, shall be ruled by the standard procedures stipulated in the
current regulations.
Page 31 of 59
<PAGE>
15. In the event the shares that are offered for sale exceed the maximum amount
of shares that are offered to purchase and consequently the Proration Factor
must be applied, the excess of shares that will not be acquired will be properly
returned to the Stock Exchange broker or to those persons that have delivered
them directly to Banchile, within the 7 business days following the date of the
Auction.
16. The offer in Auction is conditioned to the reception of offers for sale in
Chile, that are in effect on the date of the Auction of a block of Shares
amounting to at least 3,680,947,436 shares representing 44.88% of the stock
capital of Endesa subscribed and paid for and the reception of offers of sale
through the "Tender Offer" in the United States of America of at least
501,947,400 shares, including those that are acquired in the form of ADSs,
representing 6.12% of the capital stock of Endesa at present subscribed and paid
for. Without prejudice to the above, the above described condition can be waived
by Duke International, at its sole discretion, including within its authorities
the possibility of considering or not the excess shares offered for sale in one
market to make up for the deficit of Shares offered for sale in another.
Furthermore, the Auction will not be held if in the exclusive judgment of Duke
International, any of the following events has occurred or it is expected to
occur.
(a) There shall have been instituted any action or proceeding by any authority
or court, domestic or foreign, seeking (i) to suspend, restrain or prohibit the
Auction or the Tender Offer or any of the terms and conditions thereof; (ii) to
restrict or prohibit the exercise by Duke International or any of its affiliates
of any of its rights with respect to any relevant business or assets of Endesa
or of its affiliates, or obligate Duke International or any of its affiliates or
Endesa or its affiliates to dispose of any relevant business or asset of Endesa
or of its affiliates; or (iii) impose any limitation on the ability of Duke
International or any of its affiliates to exercise its rights as a shareholder
of Endesa.
(b) There shall have occurred: (i) any relevant change or circumstances that
materially adversely affects the business, assets, financial condition or net
worth of Endesa or its affiliates or the value of the shares of Endesa; or (ii)
any suspension in trading of the Shares, and
(c) There shall have occurred any modification to the Bylaws of Endesa or its
affiliates, other than the Bylaw Amendment set forth in No. 4 of this notice of,
or there shall have been declared after February 18, 1999 any dividend;
The foregoing conditions are for the sole benefit of Duke International and may
be waived at its sole discretion.
Another condition to carry out the Auction is the approval under the terms of
Decree Law 600 of Duke International to make a capital contribution in dollars
of the United States of America, for the equivalent amount necessary to be able
to pay for all the Shares it has offered to purchase in Chile. As in the cases
Page 32 of 59
<PAGE>
mentioned above, this condition can only be fully or partially waived by Duke
International, at its exclusive discretion.
Finally, the absence of competitive offers will be a condition to carry out the
Auction. Without prejudice to the above, Duke International reserves the right,
if there are competitive offers to waive the aforementioned condition and
increase the price offered, all this at its exclusive discretion.
17. The Stock Exchange brokers must expedite the share transfers only after the
5th day prior to the Extraordinary General Shareholders' Meeting of ENDESA
mentioned in No. 4, so that the shareholders may exercise their voting right at
such meeting.
Banchile, in its capacity of Stock Exchange broker will request the
registration in Endesa of the transfers of the shares assigned to Duke
International or to its Affiliates in the auction on the stock exchange business
day succeeding the date of the auction, and against the payment of the price of
the shares.
18. Concurrent with this offer to purchase shares Duke International is making
an offer in the United States of America to purchase Shares and ADSs of Endesa
beneficially owned by shareholders who are not Chileans, by means of a Tender
Offer in that country. The conditions and characteristics of such offer are
contained in the document called 14D-1, which has been filed with the Securities
and Exchange Commission of the United States of America. Copy of the prospectus
will be translated into Spanish and sent to the Superintendency of Securities
and Insurance, the Stock Exchange, and a copy of both documents will be
available to the shareholders in the offices of Banchile on or before March 4,
1999.
The price that Duke International will pay to the Chilean
shareholders will be the same as that which it will pay to the non-Chilean
shareholders.
19. In the event a change occurs in the number of shares of Endesa, as, for
example in the case of the exchange of shares or the subscription of new Shares
and in view of the fact that the offer for acquisition in Auction of Endesa
shares has been made on the basis of the number of shares in Endesa subscribed
and paid for on the date of such Offer, Duke International reserves the right
not to carry out the Auction or modify the Offer considering the number of
shares in Endesa subscribed and paid for that will enable it to obtain the
object pursued.
20. This Notice constitutes the offer to purchase in Auction shares of Endesa,
so that its terms prevail in the event of discrepancy with the terms of the
notice of take over of control mentioned at the beginning.
Further data and information may be requested in the office of Banchile, located
at 975 Agustinas, second floor, Santiago, or calling telephone 661-2200.
DUKE ENERGY INTERNATIONAL L.L.C.
Page 33 of 59
<PAGE>
III. INFORMATION WITH RESPECT TO THE PURCHASER AND DUKE
The Purchaser is a limited liability company organized under the laws
of the State of Delaware, U.S.A., develops, owns and operates energy projects
worldwide and has capabilities that include natural gas exploration, production,
processing, transportation and supply, and electric power generation, delivery
and marketing. In Latin America, the Purchaser currently has ownership interests
in approximately 1,750 MW of electric generating capacity in Argentina, Chile,
Ecuador and Peru. It also has interests in 125 miles of gas transmission and 245
miles of electric transmission, as well as exploration and production rights in
Blocks 85, 40 and 41 in Peru. The Purchaser is the international energy
subsidiary of Duke. All of the issued and outstanding capital stock of the
Purchaser is held directly by Duke Energy Global Asset Development, Inc. ("Duke
Global Asset"), an indirect wholly-owned subsidiary of Duke. The principal
executive offices of the Purchaser are located at 5400 Westheimer Court,
Houston, Texas 77056-5310, U.S.A. (Telephone: 713-627-5400).
DUKE GLOBAL ASSET. Duke Energy Global Asset is a Nevada corporation
with indirect ownership interests in more than 6,500 MW of generation capacity
worldwide, including projects under construction and under contract. Duke Global
Asset is wholly owned by Duke-Energy Services, Inc. ("DESI"). The principal
executive offices of Duke Global Asset are located at 400 South Tryon, Suite
1800, Charlotte, NC 28285, U.S.A. (Telephone: 704-382-2525).
DESI. DESI is a Delaware Corporation that is the holding company for a
variety of indirect subsidiaries of Duke that are engaged in energy businesses
that are not regulated in the United Sates. DESI is wholly owned by PanEnergy
Corp ("PanEnergy"). The principal executive offices of DESI are located at 400
Westheimer Court, Houston, Texas 77056-5310, U.S.A.
PANENERGY: PanEnergy is a Delaware corporation that is the direct owner
of DESI and of the subsidiaries that are engaged in the natural gas transmission
business of Duke in the United States. PanEnergy is wholly owned by Duke Capital
Corporation ("DUKE CAPITAL"). The principal executive offices of PanEnergy are
located at 5400 Westheimer Court, Houston, Texas 77056-5310, U.S.A. (Telephone:
713-627-5400).
DUKE CAPITAL. Duke Capital (formerly Church Street Capital Corporation)
is a Delaware corporation and a direct wholly-owned subsidiary of Duke. Duke
Capital provides financing and credit enhancement services for its subsidiaries.
The principal executive office of Duke Capital is located at 422 South Church
Street, Charlotte, North Carolina 28202, U.S.A. (Telephone 704-594-6200).
DUKE. Duke is a global energy company with more than U.S.$ 26 billion
in assets. Organized as a corporation under the laws of the State of North
Carolina, U.S.A. and headquartered in Charlotte, North Carolina. Duke, through
its affiliated companies, produces, transports and markets energy and provides
energy services in more than 50 countries worldwide. In the United States, Duke
provides electric service to approximately 2 million customers in North Carolina
Page 34 of 59
<PAGE>
and South Carolina, operates interstate pipelines that deliver natural gas to
various regions of the country and is a leading marketer of electricity natural
gas and natural gas liquids. In Latin America, Duke has significant investments,
through the Purchaser, in Chile, Argentina Peru and Ecuador. Duke's common
shares are listed on the NYSE where they trade under the symbol "DUK". The
principal executive offices of Duke are located at 422 south Church Street,
Charlotte, North Carolina 28202, 1904 U.S.A. (Telephone:
704-594-6200).
Duke is subject to the information and reporting requirements of the
U.S. Securities Exchange Act of 1934 and in accordance therewith is required to
file electronically via the U.S. Securities and Exchange Commission's ("SEC")
EDGAR System periodic reports, proxy statements and other information with the
SEC relating to its business (including the business conducted by the
Purchaser), financial condition and other matters. Certain information, as of
particular dates, concerning Duke's business, principal physical properties,
capital structure, material pending legal proceedings, operating results,
financial condition, directors and officers (including their remuneration and
stock options granted to them) the principal holders of Duke's securities, any
material interests of such persons in transactions with the principal holders of
Duke's securities, any material interests of such persons in transactions with
Duke's and certain other matters is required to be disclosed in proxy statements
and annual reports distributed to Duke's shareholders and filed with the SEC.
Such reports, proxy statements and other information may be obtained via the
SEC's website at http://www.sec.gov.
Duke recently publicly released its financial results for the year
ended December 31, 1998. Duke posted revenues of $17.6 billion, net income of
$1.25 billion and earnings before interest and taxes of $2.65 billion.
Set forth below is a summary of certain consolidated financial
information with respect to Duke and its subsidiaries for the fiscal years ended
December 31, 1995, 1996 and 1997, excerpted from financial statements presented
in Duke's 1997 Annual Report, and for the nine months ended September 1997 and
1998, excerpted from financial statements presented in Duke Quarterly Reports.
Page 35 of 59
<PAGE>
DUKE ENERGY CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
In millions
(except quantities per share) 1995 1996 1997 Nine Nine
months months
ended ended
30/9/97 30/9/98
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income
Operating Revenues $ 9,694.7 $ 12,302.4 $ 16,308.9 $ 11,719.2 $ 13,426.7
Operating Expenses 7,626.4 10,143.8 14,338.9 10,150.9 11,443.7
------------------------------------------------------------------
Operating Income 2,068.3 2,158.6 1,970.0 1,568.3 1,983.0
Other Income and Expenses 122.2 135.6 138.1 115.2 148.2
------------------------------------------------------------------
Earnings before Interest
and Taxes 2,190.5 2,294.2 2,108.1 1,683.5 2,131.2
Interest Expense 508.2 499.2 471.8 349.8 385.1
Minority Interest ------ 6.2 23.0 10.7 62.1
------------------------------------------------------------------
Earnings before Income
Taxes 1,682.3 1,788.8 1,613.3 1,323.0 1,684.0
Income Taxes 664.2 697.8 638.9 533.2 647.7
------------------------------------------------------------------
Income before
Extraordinary Item 1,018.1 1,091.0 974.4 789.8 1,036.3
Extraordinary Item ----- 16.7 ----- ----- (8.0)
------------------------------------------------------------------
Net Income 1,018.1 1,074,3 974.4 789.8 1,028.3
Dividends and Premiums on
Redemption of Preferred and
Preference Stock 48.9 44.2 72.8 33.2 16.5
------------------------------------------------------------------
Earnings for Common
Stockholders 969.2 1,030.1 901.6 756.6 1,011.8
=================================================================================================
Common Stock Data
Shares of Common Stock
Year-end 361.8 359.4 359.8
Averages 361.2 361.2 359.8 359.8 360.6
Basic Earnings per share
(before Extraordinary item) 2.68 2.90 2.51 2.10 2.83
Basic earnings per share 2.68 2.85 2.51 2.10 2.81
Dividends per Share 1.50 1.57 1.90 1.35 1.65
- -------------------------------------------------------------------------------------------------
Page 36 of 59
<PAGE>
Balance Sheet
Total Assets 20,867.9 22,366.2 24,028.8 23,776.0 26.183.9
Long-term debt 5,803.0 5,485.1 6,530.0 6,010.0 6,613.6
Preferred Stock with
Sinking Fund
Requirements 234.0 234.0 149.0 230.0 104.0
- -------------------------------------------------------------------------------------------------
</TABLE>
Page 37 of 59
<PAGE>
IV. INFORMATION CONCERNING ENDESA
ENDESA is the largest electricity generation and transmission company
in Chile and one of the largest companies in the country. The Company owns and
operates generation facilities in Chile with an aggregate installed capacity at
December 31, 1998, of 3,522 megawatts (or "MW"). At December 31, 1998 that
Company had approximately 45% of the total installed capacity of Chile.
The electricity produced as at December 31,1998 amounted to 12,188
gigawatts (or "Gwh") which accounted for approximately 37% of the energy
produced in Chile. 76% of the Endesa's installed capacity in Chile is
hydroelectric, with the remaining being thermal electric. The Company also owns
and operates a transmission system comprising most of the transmission lines and
substations connected to SIC in Chile and selectively participates in
infrastructure projects through its majority owned subsidiary Infraestructura
2000 S.A.
The Company also participates in the production and commercialization
of electric energy in Argentina, since 1992, in Peru, since 1995, in Colombia,
since December 1996 and, in Brazil since September 1997.Endesa administers in
other Latin American countries a total of 8,152 MW of installed capacity.
Page 38 of 59
<PAGE>
CONSOLIDATED INCOME STATEMENT IN MILLIONS OF PESOS OF DECEMBER 1998.
DEC. 97 DEC. 98
OPERATING INCOME 668,813 811,612
Operating Expenses -424,362 -482,562
Gross Income 244,442 329,049
Adm and Sales Expenses -27,520 -37,892
OPERATING INCOME 216,922 291,157
Financial Income 17,625 26,515
Financial Expenses -116,488 -163,288
Profit Investments in Related Companies 13,897 300
Losses Investments in Related Companies 0 0
Other Non operating Income 13,314 13,088
Other Non Operating Expenses- -21,532 -19,978
Amort Negative Goodwill -4,035 -5,576
Price Level Restatement 27,259 -23,612
NON OPERATING INCOME -69,960 -172,551
INCOME BEFORE TAXES 146,962 118,606
Income Taxes -24,172 -26,200
Consolidated Profit 122,790 92,407
Minority Interest -21,761 -75,437
Net Profit 101,029 16,970
Amort Goodwill 21,417 28,207
NET PROFIT OF THE FINANCIAL PERIOD 122,446 45,177
The information of the Consolidated Income Statement has been obtained from the
FECU (Ficha Estadistica Codificada Uniforme) at December 31, 1998.
Page 39 of 59
<PAGE>
CONSOLIDATED GENERAL BALANCE SHEET IN MILLIONS OF PESOS OF DECEMBER 1998
DEC. 97 DEC. 98
ASSETS 4,475,004 5,249,856
CURRENT ASSETS 291,348 405,996
Cash+ Time Deposits.+ Negot. Securities 97,274 162,819
Debtors for sales 90,379 84,135
Accounts Receivable 4,018 4,104
Accounts Receivable Related Companies 45,267 85,236
Sundry Debtors 10,709 12,928
Stocks 18,493 17,138
Other Current Assets 25,207 39,364
FIXED ASSETS 3,762,583 4,451,854
Land 34,009 36,324
Construc. and Infrastructure work 1,960,766 3,014,849
Machinery and Equipment 3,021,256 2,243,964
Other Fixed Assets 25,620 216,150
Higher Value Reappraisal 160,593 386,288
Accumulated Depreciation -1,439,750 -1,445,722
OTHER LONG TERM ASSETS 421,072 392,007
Accounts Receivable Related Companies 0 20,192
Other Assets 137,218 159,113
Investment in Related Companies 249,462 198,094
Investment in Other Companies 1,745 1,745
Lower Value of Investments 101,254 101,946
Higher Value of Investments -106,791 -154,898
Long Term Debtors 26,460 54,370
Intangibles 11,724 11,725
Amortization 0 -280
The information of the Consolidated General Balance Sheet has been obtained from
the FECU (Ficha Estadistica Codificada Uniforme) at December 31, 1998.
Page 40 of 59
<PAGE>
CONSOLIDATED GENERAL BALANCE SHEET IN MILLIONS OF PESOS OF DECEMBER 1998
DEC. 97 DEC. 98
LIABILITIES 4,475,005 5,249,856
CURRENT LIABILITIES 197,475 381,381
Short term Debts with Banks 17,941 34,354
Long term Debts with Banks S/T Portion 40,701 166,926
Debts with the public (bonds) 33,853 41,562
LT debts due within one year 2,414 8,909
Accounts Payable 54,807 55,236
Dividends Payable 9,299 30
Documents Payable 0 0
Sundry Creditors 4,317 42,779
Documents Payable Related Companies 4,488 2,924
Other Current Liabilities 29,655 28,661
LONG TERM LIABILITIES 2,015,785 2,334,004
Debts with banks 1,441,735 1,374,902
Debts with the public (bonds) 519,672 701,803
Documents Payable 27,387 170,638
Sundry Creditors 6,798 64,275
Documents Payable Related Companies 0 0
Provisions 16,696 17,485
Other Liabilities 3,497 4,902
MINORITY INTEREST 976,201 1,241,123
Shareholders' Equity 1,285,542 1,293,348
Equity Capital + Reserves 1,137,055 1,132,741
Retained Profits Previous Fiscal periods 96,615 115,430
Profit of the Financial Period 122,446 45,177
Interim Dividends -70,574 0
The information of the Consolidated General Balance Sheet has been obtained from
the FECU (Ficha Estadistica Codificada Uniforme) at December 31, 1998.
Page 41 of 59
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PRICE RANGE OF SHARES
The shares are listed and traded in Bolsa de Comercio de Santiago, Bolsa
Electronica de Chile ("Electronic Exchange") and the Bolsa de Corredores de
Valparaiso (the "Valparaiso Stock Exchange"), (collectively, the "Chilean Stock
Exchanges"). The following table sets forth, for the periods indicated, the high
and low closing prices of the shares on the Santiago Stock Exchange.
Per Share(1)
------------
High Low
$ $
- -
1998
January 257.50 225.00
February 269.50 233.00
March 286.00 267.00
April 288.00 244.00
May 257.50 230.00
June 241.25 211.00
July 235.00 214.00
August 219.00 141.00
High Low
$ $
1998 September 155.00 124.00
October 160.00 123.00
November 175.00 156.00
December 180.00 142.00
1999
January 206.00 143.00
February 222.00 188.00
First Quarter (up to March 03) 215.00 208.00
(1) According to the information provided by Stock Exchange of Santiago
On February 17, 1999 the last full day of trading on the Santiago Stock
Exchange, prior to the announcement of the Offers, the reported closing sales
price of the Shares on the Santiago Stock Exchange was Ch$211.00 per share.
The ADSs are listed and traded on the NYSE under the symbol "EOC". Each ADS
represents 30 Shares. The following table sets forth, for the periods indicated,
the quarterly high and low closing prices of the ADSs on the NYSE in U. S.
Dollars.
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<PAGE>
By ADS (1)
Maximum Minimum
US$ US$
1996
First Quarter 23 18 7/8
Second Quarter 211/2 183/4
Third Quarter 22 1/8 19
Fourth Quarter 19 7/8 15 1/8
1997
First Quarter 193/4 15 3/8
Second Quarter 23 7/8 18 1/8
Third Quarter 241/2 21 3/16
Fourth Quarter 211/4 16 13/16
1998
First Quarter 19 5/8 14 3/8
Second Quarter 191/2 14 1/6
Third Quarter 15 3/8 7 7/8
Fourth Quarter 12 7 7/8
1999
First Quarter (until February 24) 13 5/16 9
(1) According to the information provided by NYSE
Page 43 of 59
<PAGE>
DIVIDENDS.
The table below sets forth the amount in Chilean pesos of the profit per Share
and the dividends paid with respect to each one of the years indicated.
Years ended Dividends Profit
December 31 Per Share Per share
$ Dec. 98 $ Dec. 98
- ---------------------------------------------------------------------------
1995 33.18 21.85
1996 13.14 19.09
1997 17.33 14.93
1998 4.80 5.51
Page 44 of 59
<PAGE>
V. PURPOSE OF THE OFFERS: PLANS FOR THE COMPANY.
The purpose of the Offers is to enable Duke to acquire control of, and
a majority of the equity interest in the Company. Upon termination of the
Offers, Duke would beneficially own 4,182,894,836 Shares (assuming that the
Offers are fully subscribed) representing approximately 51% of the outstanding
Shares.
Duke intends, as soon as practicable after consummation of the Offers,
to seek majority representation on the Company's Board of Directors. Duke
believes, however, that the Company's institutional and other minority
shareholders should also be represented on the Board of Directors, consistent
with their level of ownership.
Duke considers Latin America to be one of the largest and most dynamic
energy markets in the world, and views the Company as a potential platform to
establish Duke as a leading participant in those markets. If the Offers are
completed, Duke intends that the Company become Dukes power generation
investment vehicle for growth and expansion in Latin America. Duke believes
that, together, the Company and Duke would become the first truly regional power
generation and energy trading and marketing force in Latin America with
opportunities for future growth through the combination of the Company's assets
and management team with Duke's financial resource and experience.
Following the consummation of the Offers, Duke intends to support a
dividend policy and capitalization of the Company that is consistent with the
growth objectives of the Company.
Except as otherwise discussed in this Offer to Purchase, neither Duke
nor the Purchaser has any present plans or proposals that would result in any
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, or sale or transfer of a material amount of assets of the Company
or any of its subsidiaries or any other material change to the Company's
capitalization, dividend policy, capital structure, corporate structure or
business.
Page 45 of 59
<PAGE>
VI. EFFECT OF THE OFFERS ON THE MARKET FOR THE SHARES AND ADSs.
According to Chilean law, the SVS may cancel the registration of any
security of the Company in the Securities Registry in the following cases: (i)
if quotations or transactions have been suspended for more than 120 days and the
causes for such suspension have not been cured, and (ii) in certain serious
cases, such as, (a) if registration was obtained with false information; (b) if
the Company delivered false information to the Stock Exchange or brokers; (c) in
the case of a market offer, if the issuer divulged false notices or
advertisements; and (d) if the security does not comply with the requirements
for its registration.
Effects on Market for Shares. The purchase of Shares pursuant to the
Offers will reduce substantially the number of Shares that might otherwise trade
publicly and may reduce the number of holders of Shares. In view of the number
and value of the Shares that would remain outstanding after completion of the
Offer, Duke believes that there will continue to be a liquid market for the
Shares. While a reduction in publicly traded Shares could adversely affect
liquidity and market value, the Purchaser cannot predict, with any certainty,
whether this reduction would have an adverse or beneficial effect on the market
price for, or marketability of, the Shares.
The Shares are traded on the Santiago Stock Exchange, the Valparaiso
Stock Exchange and the Electronic Exchange. Duke and the Purchaser recognize
that the existence of a liquid trading market for the Shares in Chile is
important to holders of Shares. Consequently, the current strategy of Duke and
the Purchaser is to cause the Company to maintain the listing of those Shares on
these stock exchanges. In view of this strategy and the fact that the laws of
Chile do not provide a mechanism for the forced delisting of the securities once
trading has commenced, the Purchaser and Duke do not expect that the Offers will
have any adverse impact on the listing of the Shares on any stock exchange in
Chile.
Effects on Market for ADSs. The purchase of ADSs pursuant to the U.S.
Offer will reduce the quantity of ADSs that might otherwise trade publicly and
could reduce the number of holders of ADSs. In view of the number and value of
the ADSs that would remain outstanding after completion of this Offer, Duke
believes that there will continue to be a liquid market for the ADSs. While a
reduction in the number of ADSs publicly traded could adversely affect liquidity
and market value, the Purchasers cannot predict, with any certainty, whether
this reduction will have an adverse or beneficial effect on the market price
for, or marketability of, the ADSs.
The ADSs are listed on the NYSE. Duke and the Purchaser recognize that
the existence of a liquid trading market for the ADSs is important to holders of
ADSs. Consequently, the current strategy of Duke and the Purchaser is to cause
the Company to maintain this listing. The NYSE does not currently have a formal
policy with respect to the delisting of ADSs. Accordingly, while Duke expects to
maintain the NYSE listing for the Shares, the Purchaser and Duke cannot
guarantee the continued listing of the ADSs in NYSE
Page 46 of 59
<PAGE>
If the liquidity and market value of the Shares and of the ADSs are
materially and adversely affected by the Offers, Duke will analyze and take
whatever steps it deems convenient and appropriate to address this effect,
The ADSs are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect among other things, of allowing brokers to extend credit on
the collateral of such securities. Depending upon factors such as market value
of the publicly held ADSs., the ADSs might no longer constitute "margin
securities" for the purposes of the Federal Reserve Board's margin regulations
and, therefore, could no longer be used as collateral for loans made by brokers.
Registration of Shares under the Exchange Act. The Shares are currently
registered under the Exchange Act. Such registration may be terminated upon
application of the Company to the Commission if the ADSs are not listed on a
national securities exchange and there are fewer than 300 record holders of the
Shares of ADSs resident in the United States. Termination of the registration of
the shares under the Exchange Act would substantially reduce the information
required to be furnished by the company to holders of ADSs and to the Commission
and would make certain of the provisions of the Exchange Act such as the
requirements of Rule 13e3 under the Exchange Act with respect to "going private"
transactions, no longer applicable to the ADSs. Furthermore "affiliates" of the
Company and persons holding "restricted securities" of the company may be
deprived of the ability to dispose of such securities pursuant to Rule 144
promulgated under the Securities Act. If registration of the Shares under the
Exchange Act were terminated, the ADSs would no longer be "margin securities" or
eligible for listing or NASDAQ reporting.
Page 47 of 59
<PAGE>
VII. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
CHILEAN CORPORATE LAW
Should Duke acquire control of approximately 51% of the total number of
outstanding Shares, Duke would be able, with the concurrence of holders of
relatively few Shares not owned by Duke, to make certain fundamental changes to
the Company. More particularly, Chilean companies law provides that a vote of
the holders of at least 2/3 of the outstanding shares would be required to take
any of the following actions: (i) transformation, spin-off or merger of the
Company; (ii) amendment to the term of duration of the Company or its early
termination; (iii) change of the domicile of the Company; (iv) decrease in
capital of the Company; (v) approval and valuation of capital contributions made
in property other than cash; (vi) amendment to those matters to be decided at a
meeting of shareholders; (vii) reduction of the number of members of the Board
of Directors of the Company and limits on the powers of the Board of Directors;
(viii) sale of all of the assets and debts or sale of all of the assets of the
Company; (ix) the manner of distributing surplus of the Company; and (x) the
curing of technical defects in the constitutive documents of the Company or any
amendment thereto.
Chilean company law provides for statutory withdrawal rights for
minority shareholders where holders of at least two thirds of the total shares
outstanding make certain of the fundamental changes set forth above. Following
the adoption of a resolution relating to a fundamental change by a majority of
at least two thirds of the total shares outstanding a company is required to
publish a notice of the passing of such resolution. Dissident shareholders have
thirty days to notify the company of their dissent. The Board of Directors of
the company has an additional thirty days to call another meeting of the
shareholders to consider the revocation of the resolution that triggered the
withdrawal right. If the Board of Directors does not call a second meeting of
the shareholders or the resolution is not revoked at such meeting, all
dissenting shareholders that previously notified the Company have the right to
compel the company to purchase their shares in the company. Such purchases are
made within thirty days of the second shareholders meeting or the date of the
decision of the Board of Directors not to call such meeting, at a price
determined from the weighted average trading price on stock exchanges in Chile
during the preceding two months.
Under Article 54 of the Chilean Securities Market Law, any person or group of
persons intending to take control of publicly traded Chilean company must
announce such intent to the public by publishing in a national newspaper a
notice of intention to acquire control that contains the information prescribed
by such Article 54 and duly notifying the SVS and the stock exchanges in Chile
on which such company's securities are traded. In accordance with Article 54, a
notice of intention to acquire control was published by Duke on February 18,
1999 in La Segunda, a national newspaper and reprinted on February 19, 1999 in
El Mercurio, also a national newspaper, and the SVS and Chilean Stock Exchanges
were duly notified on February 18, 1999. Following the announcement by Duke of
its intention to conduct the Offers, the SVS requested that Duke and the
Purchaser supplement the information provided in the Article 54 notice and Duke
and the Purchaser have complied with this request.
Page 48 of 59
<PAGE>
In accordance with article 12 of the Securities Market Law, Duke must
report the results of the Offers to the SVS and the Santiago Stock Exchange, the
Valparaiso Stock Exchange and the Electronic Exchange within five days of the
Expiration Date. In addition, the Company must give notice of the acquisition of
a majority of the ownership interests of the Company within five days after the
first day of the month following the month in which the purchases under the
Offers are made. Duke intends to take, or cause to be taken, all steps necessary
to comply with Article 12 of the Chilean Securities Market Law.
ANTITRUST AND REGULATORY LAWS.
There are no requirements under Chilean law that the Chilean Antitrust
Authority (the "CAA") be notified of the Offers. The CAA does, however, have
broad authority to investigate any intended transaction that the CAA determines
is likely to cause an adverse effect on, or lessen, competition. Although it is
not anticipated that the CAA will investigate the Offers, no assurance can be
given that the CAA will not determine that the Offers are anticompetitive and
subject to the scrutiny of the CAA.
OTHERS. Based upon the Purchaser's examination of publicly available
information concerning the Company, it appears that the Company and its
subsidiaries own property and conduct business in a number of foreign countries
in addition to those described above. In connection with the acquisition of
Shares and/or ADSs pursuant to the Offers, the laws of certain of those foreign
countries may require the filing of information with, or the obtaining of the
approval of, governmental authorities therein. After commencement of the Offers,
Duke will seek further information regarding the applicability of any such laws
and currently intends to take such action as they may require, but no assurance
can be given that such approvals will be obtained. If any action is taken prior
to completion of the U.S. Offer by any such government or governmental
authority, the Purchaser may not be obligated to accept for payment or pay for
any offered Shares.
Page 49 of 59
<PAGE>
VIII. INSTRUCTIONS FOR SHAREHOLDERS WHO ACCEPT THE OFFER.
With the purpose of participating in the Offer for Acquisition in Auction of
Shares of Endesa, made by Duke Energy International, L.L.C., the shareholders
who wish to tender their shares for sale, must concur to the office of Banchile
Corredores de Bolsa S.A. or the office of their habitual Broker and follow the
instructions given below:
1. Concur as soon as possible, with which you will obtain a better service, and
will avoid any obstacle that it may be impossible to cure due to the strict time
periods of the Offer. In addition, you must bear in mind that you are entitled
to revoke your order until 6.00 p.m. of the second stock exchange business day
prior to the date of the Auction.
2. As in the case of any normal stock exchange transaction Banchile will request
the necessary documents in order that the shares that you instruct it to sell
are listed in your name in the Custody of Banchile.
Specifically, you must present the following background information.
NATURAL PERSONS:
Exhibit identification card.
If you act represented by a third party, a certified copy of the current power
of attorney with sufficient authorities granted by public deed before a Notary
Public must be exhibited. No photocopies will be accepted.
For women, and in accordance with their condition, documents specified in
attached Exhibit will be requested.
Only in the case of First Issue shares, Certificate given by Endesa
evidencing the number of First Issue shares and their date of acquisition.
Share certificates, unless Banchile releases you of this requirement.
LEGAL ENTITIES:
Exhibit identification card of the legal representative(s)
Exhibit the Taxpayer Card of the Company
Copy of the current power of attorney of representation with sufficient
authorities delivered or attested to by a Notary Public. Copy of legal
background information about the respective legal entity, including the
information specified in the attached Exhibit. For those companies with legal
background duly informed and approved by the Shareholders Registry of ENDESA, it
will not be necessary to provide the documentation specified above. Share
certificates unless Banchile releases you from this obligation.
3. Banchile, at the time of your concurrence, will ask you to complete and sign
the following documents.
Selling Order:
Page 50 of 59
<PAGE>
Identifies the selling shareholder, the amount of shares that it is offering to
sell, the Date and Time of the offer and other information about the Offer. THIS
DOCUMENT MUST BE SIGNED BEFORE BANCHILE BY THE SHAREHOLDER, a copy remaining in
its possession. In the event the shareholder offers to sell ordinary shares and
First Issue Shares, it must sign a Selling Order for each type of share.
Client Record
Document required by SVS regulations, that is filled in and signed by you in the
same act.
SHARE TRANSFER
This document must indicate: The number of shares to be transferred, the number
of certificates attached and the additional background about your identification
as a seller.
In the event you offer to sell ordinary and First Issue Shares, you must fill in
a transfer for each case, each associated with the respective Selling Order.
4. It is an essential and indispensable condition that the shares that you offer
for sale must be free from encumbrances, prohibitions, embargoes and in general
any circumstance that prevents their free assignment or transfer. In the event
your Shares are affected by any of these impediments, you must solve them
previously to be able to participate in the offer.
5. If you decide to revoke the Selling Order, you must personally give notice to
the Broker to whom you gave the respective Order, and for this purpose, you must
fill in the form of Revocation of Order, which must be signed with the same
formalities as those required for the Orders for Sale. Revocation of orders
shall only be received until 6.00 p.m. of the second stock exchange business day
prior to the auction.
6. The payment of the Shares sold (all or part of them if they are allocated to
a pro rata basis) of the Selling Orders given to Banchile, will be made 48 stock
exchange business hours following the date of the Auction, by nominative check
made out in your name, and after you have signed the receipt for the money and
release. The place and date of payment will be duly announced by a notice in the
press. Those shareholders with information of their bank accounts registered in
ENDESA, will be able to request to have the aforementioned check deposited in
it.
In this same time period the other Brokers will be paid by Banchile for the
shares sold corresponding to the Selling Orders expedited through them who are
responsible for payment to their clients. You must ask your Broker about the
definite form, place and date of payment.
7. If there is an allocation on a pro rata basis, Banchile will return to its
clients and to the Brokers the surplus unsold shares within the 7 business days
following the date of the Auction.
Page 51 of 59
<PAGE>
8. Banchile will keep you and the public in general informed with respect to the
process and particularly the special places for attention to the public, the
date of the Auction and the pro ration factor.
9. You can obtain further information and details directly in the office of
Banchile Corredores de Bolsa S.A., look up our Internet page www.banchile.cl or
our Telephone No. 800-202820, especially qualified for these purposes.
Page 52 of 59
<PAGE>
EXHIBIT 1
INFORMATION REQUIRED ACCORDING TO THE TYPE OF SHAREHOLDER
WOMAN
- - In case of a married woman, a recently issued Marriage Certificate or an
authorized copy of the Marriage Booklet must be attached. (These documents
evidence whether she is married with or without separation of property)
- - In case of being separated of property the woman can freely sell her
shares.
- - In case of not being separated of property either the sales documents must
be executed by her husband, or her husband must grant the respective power
of attorney before Notary Public.
- - In case of being single, she must subscribe a affidavit signed before a
Notary Public about her Civil status, according to the form that will be
provided.
- - In case the shares were acquired under her Reserved Networth pursuant to
article 150 of the Chilean Civil Code, a statement with that purposes must
be subscribed, which will be understood as part of the shares transfer,
and the information evidencing the existence of such networth on the date
of purchase of the shares must be attached (at least two public or private
documents such as labor contracts, payroll, and fees invoices).
- --------------------------------------------------------------------------------
MINORS
Page 53 of 59
<PAGE>
LEGITIMATE CHILD
The legitimate child must be represented by his/her father (mother in
default*) which must be evidence by attaching a notarized copy of the respective
Marriage Booklet or in case of default, by both a birth and a marriage
certificates.
* The father is understood to be in default when is dead or in case a
judicial decision grants power of administration of child`s networth the mother,
then either a dead certificate of the father or a note in the Marriage Booklet
evidencing his death, or the corresponding judicial decision.
ILEGITIMATE CHILD
Legal information evidencing the appointment of the respective guardian
or administrator of the child. (Judicial decision and the guardian`s appointment
deed).
- --------------------------------------------------------------------------------
REPRESENTATIVES OF NATURAL PERSONS
Original public deed of general or special power of attorney must be
attached (this power must not be of more than six months old. If older a
certificate of validity issued by the respective Notary Public or Judicial File
is required).
In case a woman is represented, the information background requested to
women must be attached.
- --------------------------------------------------------------------------------
Page 54 of 59
<PAGE>
LEGAL ENTITIES
1.- CORPORATIONS
A) Copy of the Deed of Incorporation
B) A current copy, not older than 30 days, of the Company's registration
of the Commercial Registry, with its marginal annotations.
C) Publication of the excerpt of the constitution in the Official Gazette.
D) Public deed of power of attorney of the representative of the Company
with its corresponding registration in the Commerce Registry, if any.
E) Documentation A to C related to amendments of the Company`s By-Laws.
F) Original Taxpayer Card of the Company
2.- LIMITED LIABILITY COMPANIES
A) Copy of the Deed of Incorporation
B) A current copy, not older than 30 days, of the Company's registration
of the Commercial Registry, with its marginal annotations.
C) Publication of the excerpt of the constitution in the Official Gazette.
D) Public deed of power of attorney of the representative of the Company
with its corresponding registration in the Commerce Registry, if any.
E) Documentation A to C related to amendments of the Company`s By-Laws.
F) Original Taxpayer Card of the Company
3.- COLLECTIVE COMPANIES
A) Copy of the Deed of Incorporation.
B) A current copy, not older than 30 days, of the Company's registration
of the Commercial Registry, with its marginal annotations.
C) Public deed of power of attorney of the representative of the Company
with its corresponding registration in the Commerce Registry, if any.
D) Documentation A and B related to amendments of the Company`s By-Laws.
E) Original Taxpayer Card of the Company.
4.- NON PROFITS ORGANIZATIONS AND FOUNDATIONS
- By-Laws
Page 55 of 59
<PAGE>
- Existence authorization
- Power of attorney of the legal representative.
- Original Taxpayer Card.
NOTE: Powers of attorney of the representatives of the legal entities, must not
be older than six months. If they are older certificate of validity issued by
the respective Notary Public or Judicial File is required
- --------------------------------------------------------------------------------
SHAREHOLDERS COMMUNITY
1. If the shareholder is a community form by one or more natural persons
or legal entities, each one of its members must subscribe the sales
documents, or at least grant a power of attorney by public deed in
recent date.
2. If there are legal entities in the community, the documentation
mentioned for them must be attached.
- --------------------------------------------------------------------------------
HEREDITARY SUCCESSION AS SHAREHOLDER
1. Copy of the registration of the judicial order of effective possession.
2. Copy of the will and its registration, if any.
3. Inventory of the assets of the dead person, including the shares
under the sale.
4. Documentation evidencing the inheritance tax payment or its exemption.
Page 56 of 59
<PAGE>
5. In the case of any of the successors assigned his/her rights in the
succession, all documents regarding the assignment of succession rights
must be attached.
6. In case any of the successors is a married woman with separation of
property, she must provide evidence of such separation of property;
otherwise her husband must sign the sale documentation.
- --------------------------------------------------------------------------------
SHARES WITH USUFRUCT
Both the usufructuary and the owner must subscribe the sale documents.
Page 57 of 59
<PAGE>
EXHIBIT 2
Order No:______________
Date:__________________
Time: _________________
SELLING ORDER ENDESA AUCTION.
SHAREHOLDER: __________________________
ADDRESS: ______________________________
ISSUER: ENDESA QUANTITY OF SHARES_______ MINIMUM PRICE: $250
TERMS OF PAYMENT: NORMAL CASH ORDER NOT SUBJECT TO COMMISSION.
I expressly authorize ________(the Broker) to execute this Order in the Auction
of Shares (the Auction) that Banchile Corredores de Bolsa S.A. (Banchile) will
hold on a stock exchange in Chile, as part of the Offer for the Acquisition in
Auction of ENDESA Shares (the Offer) made by DUKE Energy International, L.L.C.
(Duke International) and subject to the conditions set forth in such Offer. In
view of the characteristics of the Offer, the Broker will not be obliged to
abide by the regulatory sequence in its execution or distribution.
I state that the shares offered for sale, are registered in my name in ENDESA,
fully paid, free from encumbrances, prohibitions, embargoes, lawsuits,
precautionary measures, suspensive or resolutory conditions and, in general,
from any circumstance that could prevent their free assignment or transfer.
I accept that this Selling Order is irrevocable from 6.00 p.m. of the second
stock exchange business day prior to the date of the Auction.
I hereby name the Broker as my representative, so that by virtue of the transfer
signed on this date, it may register in its name the shares that are identified
in this Selling Order, with the object of facilitating the performance of this
order. This procedure is done in order to facilitate the fulfillment of the
Regulations of the Bolsa de Comercio de Santiago and does not purport the
intention of acquiring for itself the shares that I have ordered to be sold. In
any event, I expressly instruct the Broker so that the transfer will not be
expedited before the fifth day prior to the Extraordinary General Shareholders'
Meeting of Endesa, that must be held on April 8, 1999.
I authorize the Broker to accumulate this Selling Order with other orders in one
or more divisible or indivisible lots.
I authorize the Broker so that in the event the aggregate shares offered to be
sold in the Auction exceed the quantity of shares offered to be purchased
therein the Proration factor defined in the Offer be applied.
I expressly authorize the Broker so that in the event a Proration Factor is
applied in the sale of the Shares in the Auction, the unsold surplus be returned
to me within the seven business days following the date of the Auction, and such
Page 58 of 59
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shares shall remain in the custody of Endesa in my name. For these purposes, I
expressly authorize the Broker to represent me.
I expressly accept that those shares that for any reason or motive are not
properly listed in the name of Banchile at 6.00 p.m. on the stock exchange
business day prior to the auction, shall not be included in it.
I accept that the performance of this Selling Order is subject to the conditions
indicated by DUKE International in the notice of Offer published in the
newspaper El Mercurio, on February 25, 1999 and its eventual modifications, and
consequently, this order is conditioned to the fact that the Auction is
effected.
I authorize Banchile to publish the notice for the Auction, stipulated in the
stock exchange regulations.
I state that I am a Chilean person.
I authorize the Broker to carry out this Selling Order through Banchile
Corredores de Bolsa, in the same terms contained in this document, for which
purpose I authorize it to sign the corresponding Selling Order and that the
Shares that I have ordered to be sold be listed in the name of Banchile
Corredores de Bolsa in the Shareholders' Registry of ENDESA.
I state that I know and accept the terms contained in the Offer and by virtue
thereof, I sign this Selling Order. I particularly know and accept that Duke
International or the Chilean Affiliate of Duke Energy Corporation (the
Affiliate) that may be organized will not acquire the shares offered in terms
and conditions other than those mentioned in its offer and that in the event
that the shares are not acquired by that company or because the Auction is not
effected, no right, indemnification, payment or reimbursement whatsoever will be
generated in favor of those who have made offers for sale, nor will it give rise
to any obligation or liability on the part of Duke International, the Affiliate,
Banchile Corredores de Bolsa S.A, their respective attorneys-in-fact, advisers
or representatives.
I authorize the Broker and Banchile to complete, as the case may be, all the
antecedents of the transfer of Shares that may be necessary, all this according
to what is stated in this Selling Order
- ----------------------------- ---------------------
BY STOCK EXCHANGE BROKER SHAREHOLDER
Page 59 of 59
