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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report May 2, 1996 (Date of Earliest Event Reported April 22, 1996)
EL PASO NATURAL GAS COMPANY
(Exact Name of Registrant as Specified in the Charter)
Incorporated in the State of Delaware
(State or Other Jurisdiction of Incorporation)
1-2700 74-0608280
(Commission File Number No.) (I.R.S. Employer Identification)
One Paul Kayser Center
100 North Stanton Street, El Paso, Texas 79901
(Address of Principal Executive Offices) (Zip Code)
(915) 541-2600
Registrant's Telephone Number, Including Area Code
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Item 5. Other Events
On April 22, 1996, El Paso Natural Gas Company (the "Company"),
now doing business as El Paso Energy Corporation, and
Cornerstone Natural Gas, Inc. ("Cornerstone") entered into a
definitive merger agreement which provides for the acquisition by the
Company of all of the outstanding shares of Cornerstone common stock
and the merger of Cornerstone with a subsidiary of El Paso Field
Services Company, a subsidiary of the Company. Pursuant to the
agreement, a cash tender offer of $6.00 per share for all outstanding
shares of Cornerstone common stock will be made. The tender offer is
conditioned upon, among other things, the acquisition of at least a
majority of the shares of Cornerstone common stock on a fully diluted
basis and the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act. The agreement provides
that shares of Cornerstone common stock not purchased in the tender
offer will be acquired in the subsequent merger at the same price as
that paid in the tender offer. The agreement also provides for
specified fees and expenses to be paid to the Company under certain
circumstances.
The holders of over 50 percent of the fully diluted outstanding shares
have granted to the Company options to purchase all shares of
Cornerstone common stock and Cornerstone stock options and warrants
held by them. The merger is expected to close in the second quarter of
1996. A copy of the press release further describing the transaction is
attached hereto as Exhibit 99 and is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits
Exhibits.
99. Press release dated April 22, 1996.
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SIGNATURES
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 thereunto duly authorized.
El Paso Natural Gas Company
(Registrant)
By /s/ JEFFREY I. BEASON
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Jeffrey I. Beason
Vice President, Controller and
Chief Accounting Officer
Date: May 2, 1996
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EXHIBIT INDEX
Exhibit No. Description
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99 Press release dated April 22, 1996
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El Paso Energy Press Release 4/22/96
EL PASO ENERGY CORPORATION TO ACQUIRE
CORNERSTONE NATURAL GAS, INC.
El Paso, Houston, and Dallas, Texas, April 22, 1996 - El Paso Energy Corporation
(NYSE:EPG) and Cornerstone Natural Gas, Inc. (AMEX:CGA) jointly announced today
the execution of a definitive merger agreement which provides for the
acquisition by EPG of all of the outstanding shares of Cornerstone common stock
and the merger of Cornerstone with a subsidiary of El Paso Field Services
Company (EPFS), the gathering and processing aim of EPG. The net value of the
transaction is approximately $115 million.
Pursuant to the agreement, a subsidiary of EPG will commence a cash tender
offer for all outstanding shares of common stock of Cornerstone at $6.00 per
share in cash within five business days. Rodman & Renshaw, Inc. will act as
Dealer Manager for the offer.
The tender offer will be conditioned upon, among other things, the
acquisition of at least a majority of the outstanding shares of common stock
of Cornerstone on a fully diluted basis (taking into account shares subject to
an option agreement in favor of EPG) and the expiration of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act. The agreement provides
that shares of Cornerstone common stock not purchased in the tender offer will
be acquired in the subsequent merger at the same price as that paid in the
tender offer.
In connection with execution of the merger agreement, the holders of over
50% of the fully diluted outstanding shares of Cornerstone common stock have
granted to EPG options to purchase all shares of Cornerstone common stock and
Cornerstone stock options and warrants held by them. The merger agreement also
provides for specified fees and expenses to be paid to EPG under certain
circumstances.
The merger is expected to close in the second quarter of 1996. Following
the close, Cornerstone will become a subsidiary of EPFS. Cornerstone's
operations are comprised of approximately 700 miles of gathering and
transportation systems and 7 natural gas processing and treating facilities
principally located in East Texas and Louisiana. Additionally, the Company
markets natural gas and gas liquids through its headquarters in Dallas, Texas
and regional marketing located in Pittsburgh,
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Pennsylvania and Shreveport, Louisiana. Cornerstone's systems and plants
currently gather, process and treat approximately 250 MMcf/d, with third party
marketing of another 100 MMcf/d.
"The acquisition of Cornerstone represents a significant addition to El
Paso Field Services as we continue our strategy of expanding El Paso's
non-regulated business activities into key geographic regions," said William A.
Wise, Chairman, President and Chief Executive Officer of El Paso Energy
Corporation. "Coupled with last year's acquisition of Eastex Energy and
Premier Gas and the formation of El Paso's Merchant Services Group, Cornerstone
represents an opportunity to enhance our presence in supply basins where
drilling activity has escalated due to higher energy prices, benefit from a
broader scale of operations in gathering, processing and marketing, and compete
for new business opportunities in these areas."
El Paso Energy Corporation, through El Paso Natural Gas Company, owns
and operates one of the nation's largest mainline transmission systmes serving
the sourthwestern region of the United States with first quarter 1996
throughput of over 3.5 Bcf/d. El Paso Field Services owns and operates over
7,000 miles of gathering systems connected to more than 10,000 wells in the San
Juan, Anadarko and Permian basins with first quarter 1996 gathering and
treating volumes of 1.5 Bcf/d. The El Paso Merchant Services Group is a
nationwide provider of natural gas and power marketing services with first
quarter 1996 sales volumes of 3.8 Bcf/d.
Cornerstone is engaged in natural gas pipeline and processing
operations in Texas and Louisiana which include the purchasing, gathering,
treating, transporation and marketing of natural gas and the recovery and
marketing of natural gas and the recovery and marketing of natural gas liquids.
EPG will host a conference call to discuss this merger on April 22nd at
2:00 p.m. EDT (1:00 P.M., CDT, 12:00 P.M. MDT). If you would like to
participate in the conference call, contact SNET at 1-800-841-9385 at least 15
minutes before the call begins.
Contacts: El Paso Energy Corporation
Ms. Norma Dunn (915) 541-5443
Vice President, Investor & Public Relations
Cornerstone Natural Gas, Inc.
Mr. Robert Cavnar (214) 691-5536
Chief Financial Officer
