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Filed by Florida Progress Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Florida Progress Corporation
Commission File No. 001-08349
On March 6, 2000, Carolina Power & Light Company and Florida Progress
Corporation issued the following press release:
CAROLINA POWER & LIGHT AND FLORIDA PROGRESS SHAREHOLDERS TO BENEFIT FROM NEW
SYNTHETIC FUEL PLANTS
CP&L AND FLORIDA PROGRESS BOARDS OF DIRECTORS UNANIMOUSLY APPROVE AMENDMENT TO
SHARE EXCHANGE AGREEMENT
RALEIGH, N.C. and ST. PETERSBURG, Fla., March 6 -- Carolina Power and Light
Company ("CP&L") [NYSE: CPL] and Florida Progress Corporation [NYSE: FPC]
announced today that, in connection with Florida Progress' purchase of four
synthetic fuel plants, their boards of directors have unanimously approved an
amendment to the August 22, 1999 share exchange agreement. The amendment
provides Florida Progress shareholders with the potential for additional
compensation if the future operations of the four plants purchased in October
1999 by Electric Fuels Corporation, a subsidiary of Florida Progress, produce
certain economic results. The amendment is further described in a publicly
available amended preliminary joint proxy statement filed today with the
Securities & Exchange Commission.
The amendment provides for the issuance of one Contingent Value Obligation (CVO)
for each share of Florida Progress stock, in addition to the initial purchase
price of $54.00 per share (in the form of a combination of cash and CP&L
Energy's -- the new name of CP&L's holding company previously known as CP&L
Holdings -- common stock). The CVOs will be issued along with the cash and CP&L
Energy's stock at the time of the share exchange. The holders of the CVOs will
be entitled to payments in the event that the four synthetic fuel plants achieve
certain economic performance levels during the years 2001 through 2007.
Electric Fuels entered the synthetic fuels business as a natural extension of
its coal business in mid-1998 through the purchase of majority interests in
three synthetic fuel plants. These plants combine a petroleum-based substance
with coal fines to produce the synthetic fuel. This fuel qualifies for
alternative fuel tax credits in accordance with section 29 of the U.S.
Internal Revenue Code.
"This is a great opportunity for CP&L, Florida Progress and the shareholders of
both companies," said William Cavanaugh, chairman, president and chief executive
officer of CP&L.
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"This investment has the potential to generate significant value for
shareholders, while at the same time keeping the original terms of our agreement
intact. Florida Progress has a proven track record of producing favorable
results from its current synthetic fuel plants. All of us at CP&L look forward
to completing our merger with Florida Progress this fall so that we may realize
the benefits of that track record and the significant value this investment
creates for all of our shareholders. This investment is but one of the many
exciting opportunities before us."
Richard Korpan, chairman, president and chief executive officer of Florida
Progress, said, "Electric Fuel's expansion of its coal operations through
synthetic fuel has been very successful. We are building on that success through
the purchase of four new plants. The issuance of the CVOs enables Florida
Progress shareholders to potentially benefit from these new investments. We are
very pleased that we were able to achieve that goal while keeping the essential
terms of our merger agreement intact."
Florida Progress estimates that annual sales from the four new plants could
range between 2.2 and 2.5 million tons each. Under such operating conditions,
the four plants could produce on average $140 million of net after-tax cash flow
annually from 2001 through 2007. Under the CVO arrangement, the first $80
million of net after-tax cash flow in each year will be retained by CP&L and any
excess will be shared equally between CP&L and the CVO holders. The estimated
amount payable to CVO holders will be held by The Chase Manhattan Bank pending
the finalization of CP&L's corporate income tax return each year.
Due to the length of time needed to finalize each tax year, the payments to CVO
holders, if any, are not expected to begin any earlier than 2007. Amounts
deposited with The Chase Manhattan Bank will be invested in U.S. Treasury
securities until paid out.
Florida Progress is a FORTUNE 500 diversified electric utility holding company
based in St. Petersburg, Florida. Its principal subsidiary is Florida Power, the
state's second largest electric utility serving 1.4 million customers in central
and northern Florida. Diversified operations include coal mining, synthetic fuel
production, rail services, and marine and energy operations.
Carolina Power & Light (CP&L), headquartered in Raleigh, North Carolina,
provides energy to one of the fastest growing regions in the country. Its 30,000
square mile service area reaches about half of North Carolina and about
one-fourth of South Carolina. CP&L is engaged in the generation, transmission,
distribution and sale of electricity to 1.2 million customers. CP&L also
provides natural gas though a wholly owned subsidiary to 178,000 customers.
CP&L's diversified operations include Interpath, a network-based application
service provider and Strategic Resources Solutions, an integrated facility- and
energy-management solutions company. Additional information on CP&L can be found
at http://www.cplc.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: This news release contains forward-looking statements including estimated
production and sales of synthetic fuel, the average amount of annual net cash
flow expected from synthetic fuel sales, the expected date by which payments to
CVO holders may begin, and the estimated payments to CVO holders. These
statements involve risks and uncertainties that could cause actual results or
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outcomes to differ materially from expectations. Key factors that could have a
direct bearing on the company's ability to meet these projections include market
acceptance of synthetic fuel, competition from competing products, impacts of
environmental regulations on potential buyers, income tax issues related to
synthetic fuel tax credits and other factors.
In connection with the share exchange between CP&L Energy and Florida
Progress, Carolina Power & Light and Florida Progress have filed with the
Securities and Exchange Commission (the "SEC") a preliminary joint proxy
statement/prospectus. CP&L will file a Registration Statement on Form S-4 and
Florida Progress will file a definitive proxy statement each of which will
contain the definitive joint proxy statement/prospectus of CP&L Energy and
Florida Progress in addition to other relevant documents concerning the share
exchange with the SEC. WE URGE INVESTORS TO READ THE DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE
SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors will be able to
obtain the documents free of charge at the SEC's web site,
http://www.sec.gov. In addition, documents filed by Carolina Power & Light
and CP&L Energy with the SEC can be obtained by contacting Carolina Power &
Light and CP&L Energy at the following address and telephone number:
Shareholder Relations, 411 Fayetteville Street, Raleigh, North Carolina
27601, telephone: (800) 662-7232. Documents filed with the SEC by Florida
Progress can be obtained by contacting Florida Progress at the following
address and telephone number: Investor Services, P.O. Box 14042 (BT11B), St.
Petersburg, Florida 33733, telephone: (800) 937-2640. READ THE DEFINITIVE
JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A DECISION
CONCERNING THE SHARE EXCHANGE.
CP&L Energy, its officers, directors, employees and agents may be
soliciting proxies from CP&L Energy shareholders in connection with the share
exchange. Information concerning the participants in the solicitation is set
forth in the preliminary joint proxy statement/prospectus filed by Carolina
Power & Light with the SEC on March 6, 2000.
Florida Progress, its officers, directors, employees and agents may be
soliciting proxies from Florida Progress shareholders in connection with the
share exchange. Information concerning the participants in the solicitation is
set forth in the preliminary joint proxy statement/prospectus filed by Florida
Progress with the SEC on March 6, 2000.
