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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
DQE, Inc.
(Name of Issuer)
Common Stock, no par value per share
(Title of Class of Securities)
23329J
(CUSIP Number)
Thomas K. Henderson
Allegheny Power System, Inc.
10435 Downsville Pike
Hagerstown, Maryland 21740
(301) 790-3400
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 5, 1997
(Date of Event which Requires Filing of this Statement)
If a filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 23329J 13D
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Allegheny Power System, Inc.; IRS Employer Identification
number: 13-5531602
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC, OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
State of Maryland
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7. SOLE VOTING POWER
NUMBER OF *
SHARES ----------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 0.0%
EACH ----------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON *
WITH ----------------------------------------
10. SHARED DISPOSITIVE POWER
0.0%
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
*
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[X]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
*
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14. TYPE OF REPORTING PERSON
CO
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* The shares of common stock, no par value (the "Common Stock") of DQE, Inc.
("DQE") covered by this report are purchasable by Allegheny Power System,
Inc. ("APS") upon exercise of an option granted to APS on April 5, 1997,
and described in Item 4 of this Schedule. Prior to the exercise of the
option, APS is not entitled to any rights as a shareholder of DQE as to
the shares covered by the option. The option may only be exercised upon
the happening of certain events referred to in Item 4, none of which has
occurred as of the date hereof. APS disclaims any beneficial ownership of
the shares of Common Stock which are purchasable by APS upon exercise of
the Option, because the Option is exercisable only in the circumstances
referred to in Item 4 below, none of which has occurred as of this date.
If the Option were exercised, APS would have the sole right to vote or to
dispose of the shares of Common Stock issued as a result of such exercise.
The number of shares indicated represents 19.9% of the total outstanding
shares of Common Stock as of February 21, 1997 (based on DQE's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996),
excluding shares issuable upon exercise of the option.
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Item 1 SECURITY AND ISSUER.
This statement relates to Common Stock of DQE, a Pennsylvania
corporation. DQE's principal executive offices are located at Cherrington
Corporate Center, Suite 100, 500 Cherrington Parkway, Coraopolis, Pennsylvania,
15108.
Item 2 IDENTITY AND BACKGROUND.
This statement is filed by APS, a Maryland corporation. APS is an
electric utility holding company which owns, directly or indirectly, various
regulated utility subsidiaries and non-regulated subsidiaries. APS' subsidiaries
are engaged principally in the generation, transmission, distribution and sale
of electric energy. APS' principal office is located at 10435 Downsville Pike,
Hagerstown, Maryland 21740.
(a)-(c); (f) the name, business address, present principal
occupation or employment and citizenship of each of the executive officers and
directors of APS are set forth in Schedule I hereto and are incorporated by
reference herein.
(d)-(e) Neither APS nor, to the best of APS' knowledge, any of APS'
directors or executive officers has during the last five years been convicted in
any criminal proceeding (excluding traffic violations or similar misdemeanors)
nor has APS or, to the best of APS' knowledge, any of its directors or executive
officers been a party to any civil proceeding of a judicial or administrative
body of competent jurisdiction resulting in a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3 SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Although a final determination has not been made, it is presently
anticipated that any purchases of shares of Common Stock as described in Item 4
would be made with funds obtained from APS' working capital and funds available
for investment.
Item 4 PURPOSE OF TRANSACTION.
Concurrently with the execution of the Agreement and Plan of Merger,
dated April 5, 1997, among APS, DQE and AYP Sub, Inc. (the "Merger Agreement"),
DQE and APS entered into a Stock Option Agreement, dated April 5, 1997, pursuant
to which DQE granted to APS an option (the "Option") to purchase, under the
circumstances specified therein, up to
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15,379,007 shares of Common Stock at a purchase price per share of $27.850 (the
"Purchase Price"). Based on the number of shares of Common Stock outstanding as
of February 21, 1997 (based on DQE's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996), the Option would be exercisable for 19.9% of the
outstanding shares of Common Stock. The Merger Agreement provides, among other
things, for the merger (the "Merger") of DQE with and into AYP Sub, Inc., as a
result of which DQE will become a wholly owned subsidiary of APS. Upon
consummation of the Merger, which is subject to the approval of DQE's and APS
stockholders, regulatory approvals, and the satisfaction or waiver of various
other terms and conditions, holders of Common Stock would receive 1.12 shares of
common stock, par value $1.25 per share, of APS for each share of Common Stock.
APS may exercise the Option, in whole or in part, if, but only if, a
Triggering Event (as defined below) shall have occurred prior to the occurrence
of an Exercise Termination Event (as defined below); provided that APS shall
have sent a written notice of such exercise within 180 days of the first such
Triggering Event.
The term "Triggering Event" means the occurrence of any event that
could cause the Merger Agreement to become terminable under certain provisions
of the Merger Agreement which permit the Merger Agreement to be terminated
(x) by DQE, if, prior to the obtaining of the Company Requisite Vote
(as defined in the Merger Agreement), there exists a Superior Proposal (as
defined in the Merger Agreement) and the board of directors of DQE
determines that there is not a substantial probability that the Company
Requisite Vote will be obtained due to the existence of such Superior
Proposal, certain events and actions enumerated in Section 6.2(b) of
the Merger Agreement occur or do not occur or are taken or not taken, as
the case may be;
(y) by APS, if (i) the board of directors of DQE shall have
withdrawn or adversely modified its approval or recommendation of the
Merger Agreement or failed to reconfirm its recommendation of the Merger
Agreement after a written request by APS to do so, or (ii) DQE, or any of
the persons described in Section 6.2(a) of the Merger Agreement as
affiliates, representatives or agents of DQE shall have taken any of the
actions that would be proscribed by certain provisions of the Merger
Agreement, which restrict DQE's conduct with respect to Acquisition
Proposals; or
(z) by DQE or APS, if the Company Requisite Vote shall not have been
obtained at the duly held
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Stockholders Meeting (as defined in the Merger Agreement), including any
adjournments thereof.
The term "Exercise Termination Event" means any of the following
events:
(i) The Effective Time (as defined in the Merger Agreement);
(ii) The termination of the Merger Agreement in accordance with the
provisions thereof if such termination precedes the occurrence of a
Triggering Event; or
(iii) The first anniversary of the date of termination of the Merger
Agreement if such termination follows, or occurs at the same time as, the
occurrence of a Triggering Event or, if on such anniversary date the
Option cannot be exercised by reason of any applicable judgment, decree,
order, law or regulation, thirty business days after such impediment to
exercise shall have been removed or shall have become final and not
subject to appeal, but in no event under this clause (iii) later than
April 5, 1999.
Upon the occurrence of certain events set forth in the Option
Agreement, APS may, at its option, cause DQE to repurchase (the "Repurchase"),
in whole or in part, the Option and/or the shares of Common Stock issued upon
exercise thereof. In addition, the Option Agreement grants certain registration
rights ("Registration Rights") to APS with respect to the shares represented by
the Option. The terms of such Repurchase and Registration Rights are set forth
in the Option Agreement.
Following the Merger, DQE intends to cause the Common Stock to be
removed from listing on the New York Stock Exchange, the Philadelphia Stock
Exchange and the Chicago Stock Exchange.
Except as set forth in this Schedule, neither APS, nor to the
knowledge of APS, any of the persons listed on Schedule I hereto, has any
present plans or intentions which would result in or relate to any of the
actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
APS may determine at a future date to adopt plans or intentions
different from those set forth herein, to the extent permitted by the Merger
Agreement.
The Merger Agreement and the Option Agreement are included as
exhibits to this Schedule and are incorporated herein by reference. The
foregoing summary, as well as the
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other information contained in this report, is qualified in its entirety by
reference thereto.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
The number of shares of Common Stock covered by the Option is
15,379,007, constituting 19.9% of Common Stock based on the shares of Common
Stock issued and outstanding as of February 21, 1997 (based on DQE's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996).
APS disclaims any beneficial ownership of the shares of Common Stock
which are purchasable by APS upon exercise of the Option, because the Option is
exercisable only in the circumstances referred to in Item 4 above, none of which
has occurred as of this date. If the Option were exercised, APS would have the
sole right to vote or to dispose of the shares of Common Stock issued as a
result of such exercise.
Except as set forth in this Schedule, neither APS, nor, to the
knowledge of APS, any of the persons listed on Schedule I, beneficially owns any
shares of Common Stock.
Except as set forth in this Schedule, to the knowledge of APS, no
person other than APS has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, securities covered
by this Schedule.
Item 6. NOT APPLICABLE.
Item 7. EXHIBITS.
4(a) Agreement and Plan of Merger dated as of April 5, 1997 among the
Company, DQE and AYP Sub, Inc. (incorporated by reference to Exhibit
2(a) to Allegheny Power System, Inc.'s Current Report on Form 8-K dated
April 5, 1997).
4(b) Stock Option Agreement, dated as of April 5, 1997, between the Company
and DQE (incorporated by reference to Exhibit 2(b) to Allegheny Power
System, Inc.'s Current Report on Form 8-K dated April 5, 1997).
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SIGNATURE
After reasonable 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.
ALLEGHENY POWER SYSTEM, INC.
/s/ Thomas K. Henderson
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By: Thomas K. Henderson
Vice President, Legal
Date: April 15, 1997
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SCHEDULE I
The following table sets forth the name, business address and present
principal occupation or employment of each director and executive officer of
APS. Unless otherwise specified each person listed below is a citizen of the
United States and has his or her principal business address at the office of
APS, Allegheny Power System, Inc., 10435 Downsville Pike, Hagerstown, Maryland
21740.
Name and Business Address Present Principal Occupation or Employment
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William L. Bennett Chairman, HealthPlan Services Corporation, a
leading managed health care services company.
Formerly, Chairman and Chief Executive Officer of
Noel Group, Inc., Director of Belding Heminway
Company, Inc., Noel Group, Inc., and Sylvan, Inc.
Wendell F. Holland Vice President, American Water Works Service
Company, Inc. Formerly, Of Counsel, Law Firm of
Reed, Smith, Shaw & McClay, Partner, Law Firm of
LeBoeuf, Lamb, Greene & MacRae, and Commissioner
of the Pennsylvania Public Utility Commission.
Phillip E. Lint Retired. Formerly partner, Price Waterhouse.
Frank A. Metz, Jr. Retired. Formerly Senior Vice President, Finance
and Planning, and Director of International
Business Machines Corporation, a manufacturer and
distributor of information systems equipment and
services. Director of Monsanto Company and Norrell
Corporation.
Alan J. Noia Chairman of the Board (effective May 8, 1997),
President and Chief Executive Officer of APS.
Chairman of the Board, President and Chief
Executive Officer of Allegheny Power Service
Corporation. Chairman and Chief Executive
Officer of APS's other principal subsidiaries.
Formerly, President and Chief Operating Officer
of APS, and President of The Potomac Electric
Company.
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Steven H. Rice Bank and real estate consultant and
attorney-at-law, Director and Vice Chairman of the
Board of Stamford Federal Savings Bank. Formerly,
President and Director of The Seamen's Bank for
Savings and Director of Royal Group, Inc.
Gunnar E. Sarsten Chairman and Chief Executive Officer of MK
International. Formerly, President and Chief
Operating Officer of Morrison Knudsen Corporation,
President and Chief Executive Officer of United
Engineers & Constructors International, Inc. (now
Raytheon Engineers & Constructors, Inc.), and
Deputy Chairman of the Third District Federal
Reserve Bank in Philadelphia.
Peter L. Shea Managing Member of Temblor Petroleum Company
L.L.C., a privately owned oil and gas exploration
and production company and Individual General
Partner of Panther Partners, L.P., a closed- end
non-diversified management company. Formerly,
Managing Director of Hydrocarbon Energy, Inc.
Klaus Bergman Chairman of the Board of APS and Director of APS's
principal subsidiaries. Prior to June 1, 1996,
Chairman of the Board and Chief Executive Officer
of APS, Allegheny Power Service Corporation, and
of APS's principal subsidiaries.
Eleanor Baum Dean of The Albert Nerken School of Engineering of
The Cooper Union for the Advancement of Science
and Art. Director of Avnet, Inc. and United States
Trust Company. Commissioner of the Engineering
Manpower Commission, and a fellow of the Institute
of Electrical and Electronic Engineers. Member of
the Board of Governors of the New York Academy of
Sciences, Past President, American Society of
Engineering Education, and President,
Accreditation Board for Engineering and
Technology.
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Edward H. Malone Retired. Formerly, Vice President of General
Electric Company and Chairman, General Electric
Investment Corporation. Director of Fidelity Group
of Mutual Funds, General Re Corporation, and
Mattel, Inc.
Peter J. Skrgic Senior Vice President of APS and Allegheny Power
Service Corporation. Vice President and Director
of APS's other principal subsidiaries.
Jay S. Pifer Senior Vice President of APS and Allegheny Power
Service Corporation. President and Director of
APS's other principal subsidiaries.
Richard J. Gagliardi Vice President of APS and Allegheny Power Service
Corporation and of certain of APS's other
subsidiaries.
Kenneth M. Jones Vice President and Controller of APS. Vice
President of Allegheny Power Service
Corporation and of certain of APS's other
subsidiaries.
Michael P. Morrell Senior Vice President and Chief Financial Officer
of APS. Senior Vice President of Allegheny Power
Service Corporation. Director and Vice President
of APS's other principal subsidiaries.
Nancy L. Campbell Vice President and Treasurer of APS and Allegheny
Power Service Corporation. Treasurer of APS's
other principal subsidiaries.
Thomas K. Henderson Vice President of APS and Allegheny Power Service
Corporation and of certain of APS's other
principal subsidiaries.
Victoria V. Schaff Vice President of APS and Allegheny Power Service
Corporation.
Eileen M. Beck Secretary of APS, Allegheny Power Service
Corporation and APS's other principal
subsidiaries.
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