SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 14, 1999
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EASTERN ENTERPRISES
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(Exact name of registrant as specified in its charter)
Massachusetts 1-2297 04-1270730
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
9 Riverside Road, Weston, Massachusetts 02493
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 647-2300
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None
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(Former name or former address, if changed since last report)
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Item 1 through 4 and Items 6, 7(a) and (b), 8 and 9. Not Applicable.
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Item 5. Other Events
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On July 14, 1999, Eastern Enterprises, EE Acquisition Company, Inc.
and EnergyNorth, Inc. entered into an Agreement and Plan of Reorganization. A
press release relating to this matter is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
Item 7. Financial Statements and Exhibits
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(c) Exhibits
99.1 - Press Release.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EASTERN ENTERPRISES
Date: July 19, 1999 By:/s/ L. William Law, Jr.
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L. William Law, Jr.
Senior Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Exhibits
99.1 - Press Release
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Exhibit 99.1
EASTERN ENTERPRISES TO ACQUIRE ENERGYNORTH,
NEW HAMPSHIRE'S LARGEST NATURAL GAS DISTRIBUTOR
WESTON, Massachusetts and MANCHESTER, New Hampshire -- July 15, 1999 --
Eastern Enterprises (NYSE: EFU), New England's largest distributor of natural
gas, and EnergyNorth, Inc. (NYSE: EI) jointly announced today that they have
entered into a definitive agreement which provides for the merger of EnergyNorth
into a wholly-owned subsidiary of Eastern, intended to qualify as a tax-free
merger. Under the terms of the agreement, EnergyNorth's shareholders will
receive $47.00 per EnergyNorth share in Eastern common stock and cash. The
purchase price represents a 58% premium to EnergyNorth's closing price on July
14, 1999 and a multiple of 2.64x EnergyNorth's book value at March 31, 1999.
Based on EnergyNorth's shares outstanding as of March 31, 1999, the transaction
values EnergyNorth's equity at $156 million, and taking into account its
outstanding long-term debt, results in an enterprise value of $202 million.
EnergyNorth's shareholders can elect to receive cash, Eastern common
stock, or a combination of cash and stock (subject to pro-ration and the collar
mechanism described below). Under the agreement, 50.1% of the common stock of
EnergyNorth will be converted into Eastern common stock and 49.9% of EnergyNorth
shares will be converted into cash. The exchange ratio for the stock portion of
the consideration will be determined based upon the weighted average price of
Eastern common stock during a ten-day period prior to closing. Furthermore, if
Eastern's weighted average stock price per share for the period is either lower
than $36.00 or higher than $44.00, the portion of the purchase price payable in
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Eastern shares would be determined based upon a fixed exchange ratio calculated
at such prices. The transaction is intended to be tax-free to EnergyNorth
shareholders to the extent they receive Eastern common stock and these
shareholders will benefit from a 41% dividend increase based on Eastern's
current dividend rate and its closing price on July 14, 1999 of $40.00 per
share.
Eastern expects to issue about 2 million shares in this transaction,
based on Eastern's current stock price. Eastern expects to fund the cash portion
of the transaction, which is expected to be approximately $78 million, with
available cash and the issuance of debt securities.
J. Atwood Ives, Eastern chairman and chief executive officer,
commented, "The combination of EnergyNorth's businesses with Eastern's makes
great sense and is consistent with our objective of operating New England's
premier natural gas distribution business. Its regulated gas distribution
utility, EnergyNorth Natural Gas, serves 70,000 customers just north of
Eastern's Massachusetts-based gas distribution companies -- Boston Gas, Essex
Gas and, upon the completion of its pending merger, Colonial Gas. When the
Colonial Gas merger and this transaction are completed, Eastern will serve more
than 800,000 natural gas customers in New England and will be by far the largest
gas distribution company in the region. The increased size and scope of the
combined organization will enable us to provide enhanced, cost-effective
customer service and to capitalize on the above-average growth opportunities for
natural gas in New England.
"The addition of EnergyNorth's unregulated propane business adds access
to an additional 15,000 New Hampshire customers, as well as to another 10,000
customers in Vermont through its 49% ownership in VGS Propane, that state's
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largest propane distributor. The combination of ENI Mechanicals, Inc., which
includes Northern Peabody and Granite State Plumbing and Heating, with our HVAC
business, ServicEdge, will broaden our service offering, as well as leverage
management expertise over a substantially larger business base.
Mr. Ives concluded, "EnergyNorth is a well-managed growth company
operating in an economically dynamic region. We look forward to working with Bob
Giordano and his management team to continue to provide safe and reliable energy
services to customers in New Hampshire and to build future value for all of
Eastern's shareholders. We expect this transaction to be accretive to Eastern's
earnings after the first full year of combined operations."
Robert R. Giordano, EnergyNorth president and chief executive officer,
commented, "We are pleased to be joining Eastern's family of energy businesses.
Together, EnergyNorth and Eastern will be a strong competitor in the emerging
energy markets. This merger is consistent with our vision for growth, and it
accelerates our plans to become a diversified energy company. This transaction
will benefit our customers, who will have the benefit of a larger, more
efficient service organization; our shareholders, who will receive both a
premium, based on current market prices, and the opportunity to participate in
the future growth of the natural gas distribution business; and our employees,
who can benefit from being part of a larger company."
The combination of Eastern and EnergyNorth has been approved by both
companies' boards and will be accounted for as a stock purchase transaction. The
transaction is expected to close within approximately nine months, subject to
satisfactory regulatory approvals, including those from the Securities and
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Exchange Commission, the New Hampshire Public Utilities Commission and the
approval of EnergyNorth shareholders. One member of EnergyNorth's board will be
invited to join Eastern's Board of Trustees upon completion of the merger.
After the merger is completed, EnergyNorth Natural Gas will operate as
a wholly-owned subsidiary of Eastern and as a sister company of Boston Gas,
Essex Gas, and Colonial Gas, upon completion of that pending merger.
EnergyNorth's profitable, unregulated energy businesses, EnergyNorth Propane,
Inc. and ENI Mechanicals, Inc., will operate as separate subsidiaries within the
Eastern family and will benefit from Eastern's additional financial resources.
EnergyNorth, Inc. is an energy services holding company headquartered
in Manchester, New Hampshire. Its subsidiaries distribute natural gas and
propane to approximately 95,000 customers throughout New Hampshire and Vermont,
as well as providing mechanical contracting and HVAC services for commercial,
industrial and institutional customers in northern New England. For the twelve
months ended March 31, 1999, EnergyNorth earned $5.7 million, or $1.73 per
share, on operating revenues of $116.5 million.
Eastern Enterprises owns and operates Boston Gas Company, Essex Gas
Company, Midland Enterprises Inc. and ServicEdge Partners, Inc. Together, Boston
Gas and Essex Gas are New England's largest distributor of natural gas,
currently serving 580,000 residential, commercial and industrial customers in
Boston and 90 other eastern and central Massachusetts communities. Midland
Enterprises, headquartered in Cincinnati, Ohio, is the leading carrier of coal
and a major carrier of other dry bulk cargoes on the nation's inland waterways,
with a fleet of 2,399 barges and 87 towboats. ServicEdge is the largest
unregulated provider of residential HVAC equipment installation and service to
customers in Massachusetts.
On October 19, 1998, Eastern announced an agreement to acquire Colonial
Gas Company (NYSE: CLG). Colonial Gas serves over 155,000 customers in 24
communities northwest of Boston (which are contiguous to towns served by Boston
Gas and Essex Gas) as well as on Cape Cod. The transaction, with an equity value
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of approximately $332 million, is subject to receipt of satisfactory regulatory
approvals. The merger, which will be paid for with $150 million in cash and the
balance in Eastern common stock, will be accounted for as a purchase transaction
and is expected to close in the third quarter of 1999.
Eastern Enterprises: This release and other company reports and
statements issued or made from time to time contain certain "forward-looking
statements" concerning projected future financial performance, expected plans or
future operations. Eastern cautions that actual results and developments may
differ materially from such projections or expectations.
Investors should be aware of important factors that could cause actual
results to differ materially from the forward-looking projections or
expectations. These factors include, but are not limited to: o the effect of
this merger and other strategic initiatives on earnings and cash flow, o
Eastern's ability successfully to integrate its new gas distribution operations,
o temperatures above or below normal in eastern Massachusetts, o changes in
market conditions for barge transportation, o adverse weather and operating
conditions on the inland waterways, o uncertainties regarding the ultimate
profitability of ServicEdge, o the timetable and cost for completion of
Eastern's year 2000 plans, o the impact of third parties' year 2000 issues, o
changes in economic conditions, including interest rates and the value of the
dollar versus other currencies, o regulatory and court decisions, and o
developments with respect to Eastern's previously-disclosed environmental
liabilities.
Most of these factors are difficult to accurately predict and are
generally beyond the control of the Company. EnergyNorth: This release
contains forward-looking statements. The company cautions that, while
it believes such statements
to be reasonable and makes them in good faith, they almost always vary from
actual results, and the differences between assumed facts or basis and actual
results can be material, depending upon the circumstances. Investors should be
aware of important factors that could have a material impact on future results.
Factors include, but are not limited to, the impact of weather on the company's
revenues and profitability, and the unpredictability of future weather
conditions; the general regulatory environment; customers' preferences;
unforeseen competition; and other uncertainties; all of which are difficult to
predict, and many of which are beyond the control of the company.
Eastern Enterprises' press releases are available via fax by calling,
toll-free, 1-800-311-4607 or on the Internet at http://www.efu.com.
Information regarding EnergyNorth can be found on the Internet at
http://www.energynorth.com
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