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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): October 5, 1998
ALLEGHENY ENERGY, INC.
(Exact name of registrant as specified in its charter)
Maryland 1-267 13-5531602
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
10435 Downsville Pike
Hagerstown, MD 21740
(Address of principal executive offices)
Registrant's telephone number,
including area code: (301) 790-3400
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Item 5. Other Events.
On October 5, 1998, Allegheny Energy, Inc. received a letter from
DQE, Inc. purporting to terminate the Agreement and Plan of Merger between
the two companies as of that date. Incorporated herein by reference is
a press release issued on October 5, 1998, by Allegheny Energy, Inc.,
which describes legal action taken by Allegheny Energy, Inc. to enforce
its merger agreement with DQE, Inc. Attached as Exhibit 99.1 is a copy of
the press release.
Item 7 Exhibits
Ex. 99.1 Press release dated October 5, 1998
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.
Allegheny Energy, Inc.
Dated: October 7, 1998 By: /s/ Thomas K. Henderson
Name: Thomas K. Henderson
Title: Vice President
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EXHIBIT INDEX
Item No. 7 Exhibits
Ex. 99.1 Press release dated October 5, 1998
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Exhibit 99.1
ALLEGHENY ENERGY TAKES LEGAL ACTION
TO ENFORCE MERGER AGREEMENT
Hagerstown, Md., October 5, 1998 -- Allegheny Energy, Inc.
(NYSE: AYE) today took legal action in federal court to compel DQE, Inc.
(NYSE: DQE) to honor its obligation to proceed with the companies'
proposed merger.
Michael P. Morrell, Senior Vice President and Chief Financial
Officer of Allegheny Energy, said, "DQE"s purported basis for attempting
to terminate our merger agreement is meritless. Its action represents
nothing more than a disagreement over an overall business strategy for
the new company -- which is not a legitimate reason to terminate the merger.
"While we are profoundly disappointed by DQE's failure to honor its
contractual obligations, our position remains clear and consistent: The
merger is good for both companies' employees, shareholders, and the
communities we serve. It is a unique opportunity, and its value and
benefits cannot be replicated. We will continue to pursue the merger's
completion through all available options.
"In the meantime," added Morrell, "Allegheny Energy will move
forward as a robust, strong company, constantly seeking new opportunities
to strengthen
our business. We will continue our record of outstanding performance while
building our reputation and brand, particularly in Pennsylvania as the
Commonwealth implements customer choice for electricity."
Allegheny Energy today filed both a request for a temporary
restraining order and a formal complaint against DQE in the Unites States
District Court for the Western District of Pennsylvania. A brief summary
of the complaint can be found on the fact sheet provided with this news
release.
Headquartered near Hagerstown, Md., Allegheny Energy, an
investor-owned electric utility with operating subsidiaries doing business
as Allegheny Power, provides electric service to approximately 1.4
million customers in parts of five states. Under the merger agreement
signed in April 1997, the new Allegheny Energy would become the tenth
largest investor-owned utility in the nation based on total electric sales
and serve a population of more than 4.5 million, with 2 million customers
in a 30,000-square-mile service area in Pennsylvania, Maryland, Ohio,
Virginia, and West Virginia.
##
For a copy of the legal actions filed today, please access our web site at
www.alleghenypower.com.
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SYNOPSIS OF LAWSUIT FILED BY ALLEGHENY ENERGY, INC.
IN UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT
OF PENNSYLVANIA ON OCTOBER 5, 1998
ACTIONS REQUESTED BY ALLEGHENY ENERGY
- - The suit requests the Court to grant specific performance, requiring DQE
to abide by the terms of the merger agreement and to resume full
cooperation in seeking the remaining regulatory approvals for the merger.
- - The suit requests preliminary and permanent injunctions to prevent DQE
from taking any action which would impair the Court's ability to require
specific performance.
- - If specific performance is not awarded, the suit requests damages
(expected to amount to hundreds of millions of dollars) in an amount to
be determined at trial; attorneys' fees and costs of suit; and possible
other relief.
BREACH OF THE MERGER AGREEMENT
- - DQE seeks to renege on its obligations under the merger agreement
because a disagreement has developed between the two companies on future
strategy. Instead of leaving this disagreement to the board of directors of
the combined company to resolve, DQE seeks to withdraw from the agreement.
- - After July 28, in direct violation of the merger agreement, DQE urged the
Federal Energy Regulatory Commission, the Department of Justice, and the
Securities and Exchange Commission to suspend review of the merger and
later rejected the conditions to merger approval set by the Pennsylvania
Public Utility Commission and Federal Energy Regulation Commission even
though conditions are reasonable.
- - No event has occurred that gives DQE the right to unilaterally terminate
the merger agreement.
DISAGREEMENT OVER STRATEGY
- - DQE's dispute with Allegheny actually reflects a differing business view
about the wisdom of remaining in the generation business.
- - DQE not only contracted away its right to control that strategic question
when it entered into the merger agreement, but it endorsed staying in the
generation business as a reason to merge.
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- - DQE's position is based on a false premise: sale of generation capacity
does not eliminate or necessarily even reduce the adverse consequences of
the restructuring order. It merely changes the nature of the business
risks.
- - Allegheny's board has concluded that, in its business judgment,
generation has been and will, at least for now, continue to be a basic part
of the business. Its decision not to sell its generation at present
preserves the company and its businesses and supports one of the core
rationales for merging with DQE in the first place.
- - Allegheny has historically excelled in efficiently operating generation
assets, and there is every reason to believe its low-cost plants will be
attractive in a competitive environment. By maintaining its generation
assets, Allegheny is best positioned to leverage such assets into future
earnings as well as to participate in the ongoing consolidation in the
electric power market, either as an acquirer of other utilities and utility
assets or as an acquisition candidate.
