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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
Amendment No. 1
(Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934)
MAGMA POWER COMPANY
(Name of Subject Company)
CE ACQUISITION COMPANY, INC.
CALIFORNIA ENERGY COMPANY, INC.
(Bidders)
Common Stock, par value $0.10 per Share
(Including the Associated Preferred Share Purchase Rights)
(Title of Class of Securities)
94-2213782
(CUSIP Number of Class of Securities)
Steven A. McArthur, Esq.
Senior Vice President, General Counsel and Secretary
CALIFORNIA ENERGY COMPANY, INC.
10831 Old Mill Road
Omaha, Nebraska 68194
(402) 330-8900
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
Copies to:
Peter J. Hanlon, Esq.
Michael A. Schwartz, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
(212) 821-8000
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California Energy Company, Inc., a Delaware corporation ("CECI"), and CE
Acquisition Company, Inc., a Delaware corporation and a wholly owned
subsidiary of CECI (the "Purchaser"), hereby amend and supplement their
Statement on Schedule 14D-1 ("Schedule 14D-1") filed with the Securities and
Exchange Commission (the "Commission") on October 6, 1994, with respect to the
Purchaser's offer to purchase 12,400,000 shares of Common Stock, par value
$0.10 per share (the "Shares"), of Magma Power Company, a Nevada corporation
(the "Company"), and, if applicable, associated Preferred Share Rights (the
"Rights"), upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated October 6, 1994 (the "Offer to Purchase") and the related
Letter of Transmittal.
Unless otherwise indicated herein, each capitalized term used but not
defined herein shall have the meaning assigned to such term in the Schedule
14D-1.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
The information set forth in Item 3(b) is hereby amended and supplemented
by the following:
On October 13, 1994, CECI issued a press release regarding the Company's
refusal to provide Mr. Ben Holt, a director of CECI and a record holder of
Shares for more than six months, with a stockholder list; a copy of such press
release is attached hereto as Exhibit (g)(1) and incorporated herein by
reference.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
The information set forth in Items 5(a), (c) and (e) are hereby amended
and supplemented by the following:
On October 13, 1994, CECI issued a press release announcing the filing of
a preliminary Request Solicitation Statement with the Commission; a copy of
such press release is attached hereto as Exhibit (g)(2) and incorporated
herein by reference.
Item 10. Additional Information.
The information set forth in Item 10(e) is hereby amended and
supplemented by the following:
Pending Litigation. On October 3, 1994, the Company filed a complaint
entitled Magma Power Company v. California Energy Company, Inc., Case No. CV-
N-94-00719-DWH,
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against CECI in the Second Judicial District Court of the State of Nevada
in and for the County of Washoe. The complaint seeks a declaratory judgment
that (i) the Company's Board properly discharged its fiduciary obligations in
adopting the Rights Agreement and an amendment to the Company's Bylaws and,
accordingly, such documents were valid and binding, and (ii) the Merger
Moratorium Statute is valid and not in violation of the Commerce Clause and
Supremacy Clause of the United States Constitution. CECI removed this action
to the United States District Court for the District of Nevada.
On October 17, 1994, CECI filed its answer and counterclaims in response
to the Company's complaint. The counterclaims name the Purchaser as an
additional counterclaim plaintiff and the Company's directors as counterclaim
defendants in addition to the Company. CECI's counterclaims seek primarily:
(i) a declaratory judgment that certain actions taken by the Company,
including the amendment to the Company's Bylaws precluding Company
stockholders from taking action by written consent, and implementation of its
"poison pill" Rights Agreement, are void and ultra vires, and constitute a
breach of fiduciary duty by the Company's Board; (ii) an injunction requiring
the Company's Board to rescind the amendment to the Company's Bylaws and
certain "golden parachute" severance agreements and indemnification
agreements; (iii) an injunction enjoining the operation of the "poison pill"
Rights Agreement and directing the Company's Board to redeem the Rights
provided for in that Agreement; (iv) a declaratory judgment that the Merger
Moratorium Statute is unconstitutional under the Supremacy Clause and the
Commerce Clause of the United States Constitution; (v) an injunction enjoining
the Company's Board from invoking the terms of the Merger Moratorium Statute
or otherwise obstructing the Offer; and (vi) an injunction requiring the
Company to correct all false and misleading statements in its Schedule 14D-9
and the amendments thereto. A copy of the press release issued by CECI
concerning its counterclaims is attached hereto as Exhibit (g)(3) and
incorporated herein by reference.
On October 17, 1994, the Company filed an amended complaint, which, in
addition to the relief requested in its original complaint, seeks (i)
declaratory and injunctive relief with respect to certain purportedly false
and misleading disclosures in the Schedule 14D-1 and the Offer to Purchase
therein; and (ii) declaratory and injunctive relief with respect to certain
allegedly false and misleading statements made in CECI's preliminary Request
Solicitation Statement filed with the Commission pursuant to Section 14(a) of
the Securities Exchange Act of 1934 on October 13, 1994.
On October 19, 1994, CECI and the Purchaser filed their answer to the
Company's amended complaint and their amended counterclaims which, in addition
to the relief requested in the original counterclaims, seeks an injunction
requiring the Company to correct additional false and misleading statements
reflected in an amendment to its Schedule 14D-9 and in other statements made
by the Company.
On September 20, 1994, William Steiner, a stockholder of the Company,
filed a class action complaint entitled William Steiner, et al. v. Paul M.
Pankratz, et al., Case No. 680986, against the Company and its directors in
the Superior Court of the State of California in and for the County of San
Diego, alleging, among other things, that the Company's stockholders have
been, and continue to be, deprived of the opportunity to fully
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realize the benefits of their investment in the Company as a result of the
directors' refusal to properly consider CECI's offer for the Company, which
actions are alleged to constitute unfair dealing and a breach of fiduciary
duty. As relief, the complaint seeks an order directing the Company's
directors to carry out their fiduciary duties to the Company's stockholders by
cooperating fully with CECI or any other entity making a bona fide offer for
the Company, as well as damages and costs.
On October 4, 1994, Charles Miller, a stockholder of the Company, filed a
class action complaint entitled Charles Miller, et al. v. Magma Power Company,
et al., Case No. CV94-06187, against the Company, its directors and The Dow
Chemical Company in the Second Judicial District Court of the State of Nevada
in and for the County of Washoe, alleging, among other things, that the
defendants' unwillingness to seriously consider CECI's proposal to acquire the
Company and its implementation of defensive measures constitute breaches of
the fiduciary duty owed to the Company's stockholders. As relief, the
complaint seeks a declaration that defendants have breached their fiduciary
duties, an order directing the defendants to fairly evaluate alternatives
designed to maximize value for the Company's stockholders, and an injunction
with respect to the implementation of the Company's "poison pill" or other
defensive measures, as well as damages and costs.
On October 14, 1994, Ben Holt, a stockholder of the Company, and a
director of CECI, filed a complaint entitled Ben Holt v. Magma Power Company,
Case No. CV94-06432, against the Company in the Second Judicial District Court
for the State of Nevada in and for the County of Washoe, alleging, among other
things, that the Company has infringed the plaintiff's right as a stockholder
by denying his demand for access to the Company's stockholder list, and
certain related material necessary to communicate with the Company's
stockholders. The plaintiff seeks an order directing the Company to comply
with the demand for the stockholder list and related information necessary to
communicate with stockholders. A expedited briefing schedule has been set by
the Court in this action.
Item 11. Material to Be Filed as Exhibits.
(g)(1) Text of Press Release, dated October 13, 1994, issued by
California Energy Company, Inc.
(g)(2) Text of Press Release, dated October 13, 1994, issued by
California Energy Company, Inc.
(g)(3) Text of Press Release, dated October 17, 1994, issued by
California Energy Company, Inc.
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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: October 20, 1994
CE ACQUISITION COMPANY, INC.
By:/s/ Steven A. McArthur
Steven A. McArthur
Senior Vice President, General
Counsel and Secretary
CALIFORNIA ENERGY COMPANY, INC.
By:/s/ Steven A. McArthur
Steven A. McArthur
Senior Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Exhibit Page
No. Description No.
(g)(1) Text of Press Release, dated October 13, 1994, issued by
California Energy Company, Inc.
(g)(2) Text of Press Release, dated October 13, 1994, issued by
California Energy Company, Inc.
(g)(3) Text of Press Release, dated October 17, 1994, issued by
California Energy Company, Inc.
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EXHIBIT (g)(1)
FOR IMMEDIATE RELEASE
David L. Sokol - Chairman and Chief Executive Officer (402) 330-8900
Mark H. Harnett - MacKenzie Partners, Inc. (212) 929-5877
MAGMA TO BE SUED TO OBTAIN RELEASE OF MAGMA STOCKHOLDER LIST
OMAHA, Neb., Oct. 13 /PRNewswire/ -- California Energy Company, Inc.
(NYSE: CE) ("CECI") announced today that Magma Power Company (Nasdaq: MGMA)
("Magma"), in an apparent effort to delay the ability of Magma shareholders to
call a special meeting, has denied the request of one of CECI's directors who
is a long-time Magma shareholder, for the Magma shareholder list. As
previously announced, CECI is soliciting requests to call a Special Meeting of
Magma's shareholders in order to provide Magma stockholders the opportunity to
consider and vote on CECI's Special Meeting proposals which, if approved,
would result in certain By-law amendments that would facilitate CECI's
proposal to acquire Magma and the election of four (4) CECI nominees to
Magma's Board, who would be committed to removing any impediments to
shareholders being able to freely choose whether to accept CECI's pending cash
tender offer for 12,400,000 shares at $35 net per share and approve the
proposed second step merger, thereby ensuring that the offer and proposed
merger get a full and fair hearing.
David L. Sokol, California Energy's Chairman and Chief Executive Officer,
stated: "Magma's denial of access to the list of shareholders is, at best, an
attempt to delay the inevitable, when Magma's Board and management will have
to account for their recent actions in front of their shareholders. Such
obstructionist tactics viewed in light of recent actions to implement "Golden
Parachutes" for 15 of the most highly compensated members of management simply
serve as further evidence of management's improper entrenchment motive in
recommending against CECI's acquisition proposal." Sokol added: "This sort
of irresponsible corporate behavior simply demonstrates the fact that Magma's
management is apparently unwilling to permit its actions to be judged by the
Company's
owners and will result in another wasteful lawsuit to the detriment of Magma's
shareholders."
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Page 2 - October 13
The Special Meeting Request Solicitation will be made only pursuant to
definitive solicitation documents, which will be filed with the Securities and
Exchange Commission and mailed to Magma stockholders. Gleacher & Co. Inc. is
acting as Financial Advisor to California Energy and Dealer Manager in
connection with the tender offer and request solicitation and MacKenzie
Partners, Inc. is acting as the Information Agent for the tender offer and
request solicitation.
California Energy Company is an international developer, owner and
operator of geothermal and other environmentally responsible power generation
facilities. Its six existing facilities currently produce in excess of 325 MW
of power with an additional 300 MW under construction.
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EXHIBIT (g) (2)
FOR IMMEDIATE RELEASE
David L. Sokol - Chairman, President and C.E.O. (402) 330-8900
Mark H. Harnett - MacKenzie Partners, Inc. (212) 929-5877
CALIFORNIA ENERGY TO SOLICIT CALL OF SPECIAL MEETING
OF MAGMA STOCKHOLDERS
OMAHA, NEBRASKA, October 13, 1994 - California Energy Company, Inc.
(NYSE, PSE and LSE: CE) ("CECI") announced today that in order to facilitate
consummation of its pending cash tender offer ("Offer") for 12,400,000 shares,
or approximately 51%, of the common stock of Magma Power Company (NASDAQ:MGMA)
("Magma") at a price of $35 net per share, CECI has filed materials with the
Securities and Exchange Commission ("SEC") to solicit written requests from
Magma shareholders to require Magma to call a Special Meeting of shareholders.
A Special Meeting will provide Magma stockholders the opportunity to consider
and vote on CECI's Special Meeting proposals which, if approved, would result
in certain By-law amendments that would facilitate CECI's proposal and the
election of four (4) CECI nominees to Magma's Board, who would be committed to
removing any impediments to shareholders being able to freely choose whether
to accept the Offer and approve the proposed merger, thereby ensuring that the
Offer and proposed merger get a full and fair hearing. As previously
announced, CECI's tender offer is to be followed by a second step merger in
implementing its September 19 proposal to acquire all Magma shares for a
combination of $25 in cash and $10 in market value of California Energy common
stock.
Today's announcement by CECI to commence a Special Meeting Request
Solicitation follows the decision by Magma's Board of Directors to recommend
that Magma shareholders not tender into CECI's $35 per share Offer because
remaining independent was more attractive to shareholders. In its SEC filing
recommending against CECI's Offer, Magma also disclosed that it had entered
into "Golden Parachute" severance agreements with 15 of the most highly
compensated members of Magma's management as well as indemnity agreements with
Board members in response to CECI's September 19 proposal. CECI intends to
take any appropriate action necessary to have any impediments to its Offer set
aside. David L. Sokol, California Energy's Chairman and Chief Executive
Officer, stated:
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"Magma's rejection of our offer, without any attempted
negotiation with us, demonstrates their disregard for Magma
shareholders. Rather than maximizing shareholder value, they
have implemented Golden Parachutes for the top 15 members of
management, entered into an excessive fee arrangement with
Goldman Sachs and initiated wasteful litigation. These actions
alone are estimated to cost Magma's shareholders between 0.75
and $1.00 per share. We believe that Magma's Board of
Directors have a fiduciary obligation to maximize shareholder
value, not the lifestyles of their friends and co-workers.
It is our understanding that the Magma Board Chairman,
President and Chief Financial Officer began a "road show"
presentation for investors yesterday directed at
misrepresenting and discrediting our offer, disparaging
California Energy, and offering extraordinary and unsustainable
projections for Magma's future. Much of the information which
Magma presented is inaccurate, misleading and in our view in
violation of the proxy solicitation rules established by the
Securities and Exchange Commission.
Magma's management, again yesterday, stated their hope to
investors that we would just go away. This will not happen
unless the shareholders reject our ultimate offer. It is our
belief that Magma's shareholders recognize the value of our
offer and will not allow the Magma management to prosper to
their detriment."
The Special Meeting Request Solicitation will be made only pursuant
to definitive solicitation documents, which will be filed with the Securities
and Exchange Commission and mailed to Magma stockholders. Gleacher & Co. Inc.
is acting as Financial Advisor to California Energy and Dealer Manager in
connection with the tender offer and Request Solicitation and MacKenzie
Partners, Inc. is acting as the Information Agent for the tender offer and
Request Solicitation.
California Energy Company is an international developer, owner and
operator of geothermal and other environmentally responsible power generation
facilities. Its six existing facilities currently produce in excess of 325 MW
of power with an additional 300 MW under construction.
# # #
<PAGE>1
EXHIBIT (g)(3)
FOR IMMEDIATE RELEASE
David L. Sokol - Chairman and Chief Executive Officer (402) 330-8900
Mark H. Harnett - MacKenzie Partners, Inc. (212) 929-5877
CALIFORNIA ENERGY SUES MAGMA'S
DIRECTORS FOR BREACH OF FIDUCIARY DUTY
OMAHA, NEBRASKA, October 17, 1994 - California Energy Company, Inc.
(NYSE, PSE and LSE: CE) ("CECI") announced today that it has sued the
Directors of Magma Power Company (NASDAQ: MGMA) ("Magma"), for, among other
things, breach of their fiduciary duties in failing to properly consider
CECI's proposal to acquire Magma and for taking obstructionist actions in
response to CECI's proposal, such as adopting special indemnity agreements for
themselves, "Golden Parachutes" for 15 Magma executives, a discriminatory
"poison pill" and by-law amendments which are intended to impede the right of
the majority of Magma's shareholders to freely consider CECI's offer and to
entrench current Magma management. In addition, CECI's suit notes that the
Board (which includes five (5) present or former Dow employees out of an 11
member Board) breached its duties by not disclosing to Magma's shareholders
Dow's conflict of interest in the transaction due to the fact that Dow cannot
obtain the same benefit from the tender offer price as other shareholders
because of recent Dow transactions that would invoke the SEC's 16(b) short-
swing profit disgorgement rule.
David L. Sokol, California Energy's Chairman and Chief Executive
Officer, stated:
"We find it astounding that Magma's Board has not even given serious
consideration to a proposal which would pay shareholders a $7.50 per
share premium over Magma's
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<PAGE>2
Page 2 - October 17
trading price prior to making the proposal. Moreover, the Board,
while stating our price to be "inadequate," has declined to engage
in a discussion about what price would constitute an adequate offer.
Although we have indicated that we are prepared to negotiate all
aspects of our offer, Magma has refused to engage in price
discussions, merely stating that it is somehow in the best interest
of shareholders to remain "independent." At the same time Magma's
Board has also taken actions to impede majority shareholder action
(such as adopting a poison pill and by-law amendments and refusing
access to a shareholder list) which indicate the Board's apparent
belief that shareholders shouldn't be permitted to make up their own
minds as to what is in their best economic interest and which only
serve to entrench current management.
It is also noteworthy that, while attempting to deny shareholders
the right to consider our offer, Magma's Board has taken steps to
provide for management's economic self-interest, such as approving
"Golden Parachute" severance agreements for the 15 most highly
compensated members of Magma's management. These and other
obstructionist actions are estimated to cost shareholders between
$0.75 and $1.00 per share. Such actions, viewed in the context of
Dow's conflict of interest, due to its inability to fully benefit
from the tender offer as a result of 16(b), paint a picture of
management entrenchment plain and simple."
Sokol added:
"It is curious to note that the five (5) Dow Board members
recommended against our $35 per share offer in light of Dow's
liquidation of a significant amount of
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Page 3 - October 17
its Magma holdings (3,635,000 shares) in 1993 at a net price of
$30.88 per share and Dow's recent sale in September 1994 of 857,143
Magma shares at $28.25. Assuming the 16(b) problems which prevent
Dow from fully benefitting from our offer were fully disclosed to
the independent Magma Board members, we do find it surprising that
Magma's Board could be advised that there was not a conflict that
would require the five (5) Dow members to abstain from voting on our
proposal."
As previously announced, CECI is soliciting requests to call a
Special Meeting of Magma's shareholders in order to provide Magma stockholders
the opportunity to consider and vote on CECI's Special Meeting proposals
which, if approved, would result in certain by-law amendments that would
facilitate CECI's proposal to acquire Magma and the election of four (4) CECI
nominees to Magma's Board, who would be committed to removing any impediments
to shareholders being able to freely choose whether to accept CECI's pending
cash tender offer for 12,400,000 shares at $35 net per share and to approve
the proposed second step merger, thereby ensuring that the offer and proposed
merger get a full and fair hearing. The Special Meeting Request Solicitation
will be made only pursuant to definitive solicitation documents, which will be
filed with the Securities and Exchange Commission and mailed to Magma
stockholders. Gleacher & Co. Inc. is acting as Financial Advisor to
California Energy and Dealer Manager in connection with the tender offer and
request solicitation and MacKenzie Partners, Inc. is acting as the Information
Agent for the tender offer and request solicitation.
California Energy Company is a leading international developer,
owner and operator of geothermal and other environmentally responsible power
generation facilities. Its six existing facilities currently produce in
excess of 325 MW with an additional 300 MW under construction.
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