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<PAGE>
SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This presentation contains forward-looking statements within the meaning of
the "safe harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements with respect to revenues, earnings, performance,
strategies, prospects and other aspects of the businesses of FirstEnergy
Corp. and GPU, Inc. are based on current expectations that are subject to
risks and uncertainties. A number of factors could cause actual results or
outcomes to differ materially from those indicated by such forward-looking
statements. These factors include, but are not limited to, risks and
uncertainties set forth in FirstEnergy's and GPU's filings with the SEC,
including risks and uncertainties relating to: failure to obtain expected
synergies from the merger, delays in obtaining or adverse conditions
contained in any required regulatory approvals, changes in laws or
regulations, economic or weather conditions affecting future sales and
margins, changes in markets for energy services, changing energy market
prices, availability and pricing of fuel and other energy commodities,
legislative and regulatory changes (including revised environmental and
safety requirements), availability and cost of capital and other similar
factors. Readers are referred to FirstEnergy's and GPU's most recent
reports filed with the Securities and Exchange Commission.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, FirstEnergy Corp. and GPU, Inc.
will file a joint proxy statement/prospectus with the Securities and
Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE
JOINT PROXY STATEMENT / PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may
obtain a free copy of the joint proxy statement / prospectus (when
available) and other documents filed by FirstEnergy and GPU with the
Commission at the Commission's Web site at http://www.sec.gov. Free copies
of the joint proxy statement / prospectus, once available, and each
company's other filings with the Commission may also be obtained from the
respective companies. Free copies of FirstEnergy's filings may be obtained
by directing a request to FirstEnergy Corp., Investor Services, 76 S. Main
St., Akron, Ohio 44308-1890, Telephone: 1-800-736-3402. Free copies of GPU
filings may be obtained by directing a request to GPU, Inc., 300 Madison
Ave., Morristown, NJ 07962-1911, Telephone: 1-973-401-8204.
FirstEnergy, its directors, certain executive officers, and certain other
employees (Thomas M. Welsh, manager of Communications, and Kurt E. Turosky,
manager of Investor Relations) may be deemed under the rules of the
Commission to be "participants in the solicitation" of proxies from the
security holders of FirstEnergy in favor of the merger. FirstEnergy's
directors, and executive officers beneficially own, in the aggregate, less
than 1% of the outstanding shares of FirstEnergy common stock. Security
holders of FirstEnergy may obtain additional information regarding the
interests of the "participants in the solicitation" by reading the joint
proxy statement/prospectus relating to the merger when it becomes
available.
GPU, its directors (Theodore H. Black, Fred D. Hafer (Chairman; CEO and
President), Thomas B. Hagen, Robert Pokelwaldt, John M. Pietruski,
Catherine A. Rein, Bryan S. Townsend, Carlisle A.H. Trost, Kenneth L. Wolfe
and Patricia K. Woolf), certain executive officers (Ira H. Jolles (Senior
Vice President and General Counsel), Bruce L. Levy (Senior Vice President
and CFO) and Carole B. Snyder (Executive Vice President Corporate Affairs))
and certain other employees (Jeff Dennard (Director of Corporate
Communications), Joanne Barbieri (Manager of Investor Relations) and Ned
Raynolds (Manager of Financial Communications)) may be deemed under rules
of the commission to be "participants in the solicitation" of proxies from
the security holders of GPU in favor of the merger. GPU's directors, and
executive officers beneficially own, in the aggregate, less than 1% of the
outstanding shares of GPU common stock. Security holders of GPU may obtain
additional information regarding the interests of "participants in the
solicitation" by reading the joint proxy statement/prospectus relating to
the merger when it becomes available.
<PAGE>
FIRSTENERGY AND GPU
ANALYST MEETING & TELECONFERENCE CALL
August 9, 2000
8:30 a.m. EDT
CHAIRPERSON: Peter Burg, Chairman and CEO of FirstEnergy
OP = Operator PB = Peter Burg FH = Fred Hafer
RM = Richard Marsh BL = Bruce Levy SP = Unidentified Speaker
[tape blank for a couple of minutes]
PB: ... FirstEnergy, and we welcome all of you here today. We're delighted
and excited really to be here to present to you the combination of
FirstEnergy and GPU.
We think this combination will provide a larger, stronger, more
competitive company that really will be out to enhance shareholder value.
We have a number of representatives from our companies in the audience. I
say that now so they stay alert in case we call on them later on during the
question and answer session.
At the podium, we have Fred Hafer, Chairman, President, and CEO of
GPU, our new partner, and our two CFOs, Rich Marsh, from FirstEnergy, Bruce
Levy, from GPU. So we'll hear from some of them later.
First of all, as I said, we are committed to grow shareholder value.
We expect this transaction to be accretive to earnings and cash flow, we
think we'll have enhanced our revenue opportunities, and we'll talk about
these later. But we think there are substantial cost reduction
opportunities. We think we'll be able to accelerate our earnings growth
potential going forward to a higher level. As we said in the press release,
we expect to maintain a FirstEnergy dividend at $1.50 per share.
This transaction provides us with several strategic benefits. It
provides scope and scale for us to expand into the 13 state region that
we've targeted for growth within our strategy. We will now have the sixth
largest customer base in the country. We have broadened capabilities for
unregulated products and services. It provides an opportunity, we think, to
help support GPU's power needs and in turn provide a market for some of our
capacity.
We will now have a significant presence in three states, allowing us
to reach a much broader customer base to exploit our consistent retail
strategy. We will have about 2 million customers in Ohio, roughly half of
our total, about 1 million in both the states of Pennsylvania and New
Jersey.
This chart really depicts our targeted 13 state region and shows some
key statistics I think that demonstrates the critical mass that we have. It
will provide our sales force the ability to leverage the many customer
relationships that both companies have to provide further market
opportunities.
The next two slides really deal with the issue of size. This one deals
with customer size. We will have the sixth largest U.S. electric customer
system. Size here really deals, I think, with the critical mass. This
affects some things maybe you don't even think about from time to time.
Back office costs, marketing, sales, advertising, and all of the other
so-called overheads that we all gripe about from time to time, in addition
to the obvious factor of really just giving us more places, more homes to
sell our products and services. Keeping in mind, though, as my wife always
reminds me, bigger is not always better. We still know that while size is
important, we have to act locally. We know that and we intend to do that.
Our market capitalization, which we also think is strategic, will
approach the Top Ten in the industry and it's shown here roughly coming in
at about 11th in size.
Our combination, we think, should help with some of GPU's provider of
last resort issues in their obligation in that area via some of our
capacity. We have experience in that area as well because we're doing it
now for our subsidiary, Pennsylvania Power Company. We will continue to
seek, as is GPU, a regulatory solution to the experience of this summer
when some of the customers over there came back from their alternate
suppliers.
This, we think, is a very important chart and we're going to spend a
little time on it. A very strategic element of this transaction relates to
the optimization of our generation portfolio. As alluded to earlier, our
fossil fleet's utilization, we think, can be enhanced in supporting GPU's
supply needs. This chart attempts to depict that.
Now I'll just start in the upper left hand corner there where it says,
"Increased Customer Load." We will now have market entree to some 2 million
plus customers. This could increase our load. In turn, moving to the right,
this will increase the utilization of our base load units during off-peak
periods and during peak shoulder periods. In turn, this will result in much
better performance for our facilities, less cycling of units, less wear and
tear on these units. That, in turn, will lead to lower overall O&M costs,
and the circle can continue. Again, it's a very nice circle, if you will.
It also leads to opportunities for margins that we would not otherwise
have. So I think that's very important to focus on that element.
I had a question yesterday that said, "You know, really, why couldn't
FirstEnergy have done that anyhow? Just sell the power into that
marketplace?" Well first of all, there's probably another middleman or two
that gets involved in the process. I don't think it changes the prices for
the customers, but there are other parties who take a margin, and this is a
margin business.
In addition, we've been trying to get into that marketplace. It hasn't
happened. It just has not happened. People are not penetrating that market.
We will now have direct access to those customers in a real way, in the
real market, and we will have knowledge of those customers. That may be
even more important with respect to our overall strategy. So we can support
a portion of GPU's load and as a supplier, not as a trader. That maybe is
the difference in terms of what we're doing versus what some other people
are doing.
Another point I want to make with respect to this chart deals with
operating efficiencies. At least for FirstEnergy in the last few years,
with the higher availability of our baseload nuclear facilities, they've
been running very, very well, our capacity factor for our fossil units has
dropped off. Recently, to lower than 60% on an annual basis. We believe we
could substantially increase that capacity factor without additional
incremental costs, other than fuel.
For every one percentage point increase in our fossil capacity factor,
we reduce the cost coming out of those units by 1%. That is significant. If
we had more off-peak demand, we think we could get that capacity factor up
to as high as 75% without really any major additional incremental costs. We
could now well have a customer base to get to that level.
Finally, some of you over the past little while here have expressed
concern. I guess we express concern ourselves about losing customers in
Ohio. Many of you know that now that legislation is passed in Ohio, there's
a mandate in fact that all the companies in Ohio lose 20% of their
customers. So in this case, that translates for us to about 2,500 megawatts
of capacity, if you look at it in very simple terms.
As you know, we've agreed to sell 1,100 megawatts of that capacity in
our transition plan, which has now been approved, to power marketers. So
that leaves some 1,400 megawatts of capacity that will be available for us
to sell in Ohio or elsewhere or here to some of GPU's customers. So we
think that coming together with GPU will provide really another real avenue
for that capacity when it gets freed up.
So we spent quite a bit of time on this page, but hopefully you get
the point and we've been clear on that.
We will also be able, we think, to utilize some of the new peaking
capacity that we have on the drawing boards, and it's going to be installed
over the next few years. Our two systems together do not necessarily peak
in a coincident fashion all the time. So we'll be able to leverage that
diversity of these new facilities that we're putting in place.
We also foresee more capacity becoming available from the OVEC
facility when the Enrichment plant in Ohio shuts down over the next few
years. Those megawatts are shown on this page. Of course our Pepco
contract, some 450 megawatts that we sell to Pepco in Washington, will be
expiring over the next several years. So that will be available as well for
new customers.
So the megawatts shown here, as well as the optimization shown on the
prior page, we think are strategic for us in this transaction. They are not
included in the estimated synergies that Rich will talk about later on.
Again, more customers will allow us to accelerate our retail strategy,
offering a bundled array - bundle is the key word - bundled array of
energy-related products and services. That is we will leverage the customer
relationships that we and GPU have to sell more of what we offer.
The increase in customer base will also provide opportunities for our
HVAC and infrastructure businesses. This is a real synergistic business
prospect that we have bringing these two companies together. Together it
will be really the fourth largest HVAC and infrastructure business in the
country with revenues approaching $1 billion. This capability of expanded
services into these kinds of marketplaces, particularly commercial and
industrial customers, really will differentiate, we think, FirstEnergy from
the marketplace.
Both of our companies have also been forming strategic alliances where
they make sense and can benefit our market reach and penetration. Several
of these are shown here. Of course we're very excited about GPU's telecom
operations. We're involved in that as well. Of course we're also both
members of America's Fiber Optic Network, which you've hopefully heard a
lot about.
This is a map of that system. Together our new company will have a
significant stake in this partnership - in excess of 30% ownership - and
we'll have contributed over 50,000 fiber miles to that partnership by the
end of this year.
We're also both capitalizing on opportunities as a strategic investor
in energy-related new technology ventures. I won't go into the details of
these here, but each of these investments really is leading edge and we
think they hold great promise, both for our businesses and really for
investments in general.
Pantellos, for example, the e-commerce association of the top
utilities across the country, we're both in that together now. Powerspan,
an investment in technology that we think will revolutionize coal burning.
You may poo-poo that, but we believe that sincerely. This is a New
Hampshire based company that you're going to be hearing a lot about. I
think we're the major investor in that company.
So really in summary, if I can leave you with a few thoughts, we think
this merger really creates a compelling story. It's shareholder friendly,
it's expected to be accretive, we see accelerated earnings growth potential
for us, strong cash flow. We think we will be the premier supplier of
energy and related services in the 13 state region, help reduce GPU's
supply risk. It'll help expand our capacity utilization, as I said before.
It'll broaden our unregulated market opportunities. It really does
accelerate our retail strategy - no question about it. We will leverage
those kinds of relationships over a customer base that is double the size
that each has right now. I think we have the team to make it work.
We'll come back later to give you a few more points, but now I want to
call on Fred Hafer, our partner here, just to go over a few of the details
related to the transaction, give you his perspective. Fred.
FRED HAFER
Thank you very much, Pete, and good morning everyone. I guess it goes
without saying that I am extremely excited about the prospects of this
combination and really extremely proud of what I believe both organizations
have been able to do for all of their stakeholders, including most
importantly, our investors - the shareholders of our two companies.
I'm proud of it particularly because I've been, for a long time, an
outspoken proponent of the consolidation of this industry. I think it's
obvious and it goes without saying that it has to happen. I've been
somewhat chagrined by the fact that I think there are still a significant
number of my peers who have yet to recognize that or at least yet to accept
it.
But I'm also proud because this was a transaction that GPU entered
into, not because we didn't have any other options, but because of the
options that we had, this clearly came out as the best - as the superior
choice. So I'm delighted to be here and to be able to team up with Pete and
his team and to look to the future of what is going to be, I believe, one
of this country's greatest energy companies.
This is, as the somewhat perhaps overused phrase goes, a win-win
situation. Maybe it's a win-win-win-win situation when you look at the
stakeholders - for everyone involved. As I said, it was made not because we
didn't have any options, but because this is such a superior option, at
least from the GPU perspective.
Obviously we looked at this, first and foremost, with our shareholders
in mind and I believe that the price we got, the terms of this transaction,
clearly did a good job for our shareholders. I believe I can stand up
before them at the shareholders meeting with some pride and hope that they
will indeed agree with me.
What I have heard in the early feedback is that the shareholders, in
fact, are appreciative of this transaction. I think the market reaction to
it has kind of validated the equity of the deal on both sides.
We are a company that has historically been very sensitive to and
aware of and concerned about the welfare and the future of our employees.
We have been very much involved and will continue to be involved in the
communities in which we live and operate. We have been focused on customers
for as long as I've been with this GPU system. We will continue to maintain
that focus.
We have the benefit of being a Pennsylvania corporation, and under
Pennsylvania business law we are indeed allowed to take all of those
stakeholders into account when we enter into a business transaction such as
this. But what has made this transaction really special for our company and
for me personally is we found a partner who has the same kind of values and
the same kind of philosophy and the same kind of strategy.
While they focus on the benefit of their owners, the people that they
work for, their shareholders, there's a deep and abiding concern for the
employees, for the customers, for the communities in which we operate. So
it just feels good as you try to put these two organizations together and
look forward to the future.
The management of the new organization will initially, and for the
next couple of years, be made up with me serving as Chairman of the
combined company and with Pete as Vice Chairman and CEO. I have agreed and
have been planning, in fact, to retire when I reach age 62. At that time,
Pete will take over as Chairman of the organization.
The initial Board will be comprised of 16 Directors, 10 of whom are
currently serving on the FirstEnergy Board, and six of whom are currently
on the GPU Board. They will make up the new Board of 16 going forward.
The integration activity, which will be the most important job that
many of us have in front of us for the next many months and indeed the one
that employees will be most concerned about, will be a Steering Committee
chaired appropriately, as it should be, by Pete, Vice Chaired by me with
three other Senior Management members, one of whom will come from GPU and
two from FirstEnergy. That group will oversee and conduct the integration
studies, will form task force and various committees under them to
recommend and help develop and implement the organizational structure as we
go forward and try to put these two great work forces together.
So I am proud of this transaction. I am proud of the fact that I
believe I can stand up before all of our stakeholders, our investors, our
employees, our communities, our regulatory commissions, and say that we
have done something that is good for both companies and for all
stakeholders. I'm excited about the future prospects, and I'm particularly
delighted to be associated with and affiliated with Pete Burg and his
really great management staff.
At this time, I think I'd like to turn over the podium to Rich Marsh,
CFO of FirstEnergy.
RICHARD MARSH
Good morning everybody. We're delighted you could take the time to be
with us this morning. We are very happy and excited to tell you about this
story, so we appreciate you being here.
I'd like to start off by giving you just a brief summary of some of
the key transaction terms. This is a traditional fixed price structure with
a 10% price collar. Price equals consideration of $36.50. The midpoint of
the collar was our closing stock price on Friday, August 4th, which was 26
15/16. I have shown here the collar range, which is $24.24 to $29.63. This
is 50% cash, 50% stock, subject to pro-ration. Total consideration for the
deal is about $4.5 billion. This will be accounted for as purchase
accounting.
Total goodwill based on book values that existed at this point in time
is estimated to be about $1.1 billion. Our anticipation is that that amount
would be amortized over 40 years or about $28 million from that point in
time.
There is a possibility that some assets under purchase accounting
could be written down to their current market value at the time of closing.
That will depend on how many assets particularly that GPU may divest
themselves of in the meantime. So we don't have a definitive estimate.
However, obviously there is an offset to that. While goodwill would go up
if that happens, depreciation expense for those items would go down because
their book values would be reduced, so it would not really have an impact
on the overall transaction going forward net income.
A couple of other key transaction terms. There are no walkaways
associated with changes to FirstEnergy stock price. Also, the termination
fee in this transaction is $145 million. That is a one-way fee that would
apply if GPU were to take a bid that they felt was superior to ours.
I want to talk for a minute about cost savings opportunities. I think
this transaction is a little bit different maybe than many that you've
heard about in that it doesn't really rely or depend on synergies in order
to become accretive. Even prior to the capture of synergies, this
transaction would be slightly accretive. It shows sort of the underlying
economic strength of the transaction. Nonetheless, we do think there are
some very significant cost savings and synergy opportunities for us.
We have not yet completed a detailed full-blown synergies study,
however, we have completed our screening process. It gives us confidence
that these synergy opportunities exist. We did this using the model that
we've used in other transactions in the past, and we feel pretty
comfortable with the results. We believe that synergies will be at least in
line with other utility combinations and we are estimating about 5% of
non-generation O&M, roughly in the range of about $150 million per year
annual synergies. We think that's very realistic and achievable.
We think, unlike our merger with Centerior, there will not be
significant or very large costs to achieve. When we did the merger in 1997,
we were all preparing for the Y2K problem. We had a number of systems
costs, about $90 million of costs to achieve in terms of upgrading systems
and putting in the Oracle system that we have now. We don't believe we'll
have that same level of cost to achieve here. Most of those will probably
be related to personnel costs, severance costs, which under purchase
accounting really becomes part of goodwill and doesn't have a going forward
impact on earnings per share.
The number I've shown here, the $150 million, is O&M reduction.
Obviously we believe there will be significant capital opportunities as
well, although we've not yet quantified that. As far as sharing these
synergies, obviously that's a process where nobody can get the definitive
answer at the outset. Obviously there is the possibility for sharing.
I know various people use various conventions for modeling purposes -
50% and so forth. We have assumed some level of sharing and certainly I
think that sort of level for your modeling purposes is probably a
reasonable model to use.
One of the great things about this transaction is that it allows us to
move our earnings growth rate from the 5% level that both companies have
had to a higher plane - get it to a 7% to 8% annual growth rate. Certainly
this is something that our investors and our owners have been demanding of
us. This transaction does allow it to become a reality.
What I've tried to show here is the depiction of the drivers of that
earnings growth. We've broken it in for illustration purposes into three
buckets. The first bar on the far left hand side of the line, "Regulated
Utilities." The middle part is the "Unregulated Retail" segment, which
includes electric sales, which beginning January 1, 2001, in Ohio will
become unregulated - gas and our facilities services group. The third bar
is our "Unregulated Businesses - All Other", which includes things like
telecom, unregulated international businesses of GPU, and so forth.
The way you should sort of look at this depiction is this is sort of
the weighted contribution that these business lines will make to that 7% to
8% earnings growth target for the overall corporation. You can see the
largest driver by far is the middle box, our "Unregulated Retail."
This is the growth motor that we've been working on under our retail
strategy that will push our earnings growth forward. This includes things
like expanded retail opportunities. Through this transaction, as Pete
mentioned, we obviously gain a much larger customer base that'll allow us
to apply this retail strategy, sell products and services to more customers
that we might've before. We have a different relationship with those GPU
customers now than we will have had before.
It also includes some of the generation efficiencies and cost savings
that we'll be able to garner from this transaction. And it includes some
pretty significant and aggressive assumptions for market penetration for
our unregulated business units in terms of moving in and gathering more
customers outside of our franchise territory, and also starting to move the
margins forward on some of the products and services that we provide.
So overall we think this is an achievable scenario, and certainly one
that we've been very anxious to achieve. This transaction does give us the
ability to move the earnings growth rate up to 7% to 8% annual range.
One thing I wanted to mention, we certainly got a lot of questions
about this over the last day. It's the whole issue of GPU's international
holdings. I think we've been fairly explicit in the past in saying that
international was not part of our strategy. We were focused on the 13 state
region that Pete showed in the map. And our strategic focus has not
changed. We will remain focused regionally. Obviously we will have some
international exposure and we will have to deal with that.
In that regard, let me say we do support GPU's announced program to
divest certain of their international assets based on economic conditions.
We think that makes a lot of sense as they go forward over the next year or
so. I think all of that rationalization will take place prior to the merger
closing.
However, it probably will not be economic to sell all their
international assets. I think the most notable one is the Midlands
Distribution Company in the United Kingdom. That holding does contribute
significantly to earnings of GPU, roughly over $1.00 per year of earnings.
So it's a very significant part of their earnings profile and probably
would not make sense to sell that in the near-term. So my expectation is
that that asset will be coming over to FirstEnergy, along with some other
assets potentially.
A number of those holdings are either in the market now or anticipated
to be in the market now. Maybe so before the merger closes, and that would
include the Gas Net Distribution, a gas distribution company in Australia,
GPU International, which is a portfolio of IPP exempt wholesale generator
projects, and GPU Power as well. So depending on how the market goes, those
transactions may be consummated before the merger is closed.
We've talked a lot about increasing shareholder value, but I also want
to make the point that we do retain a very strong commitment to credit
quality as well. I think many of you are aware of the progress we've made
over the last particularly five years in terms of improving our credit
quality and credit profile. That remains very important to us.
On a standalone basis... and I know we have some of our friends from
the rating agencies here. I don't want to put any words in their mouth. But
I think we're in a position to be upgraded, finally, now that we have
closure on the stranded cost recovery issue and the transition plan in
Ohio. I think that would be a reflection of the progress we've made in
paying down debt over the years.
Our merger partner, GPU, is somewhat more heavily leveraged than us.
Right now they're carrying in the mid-60% kind of leverage. However,
because of the nature of their business, they do have A-type ratings from
the rating agencies. There's a significant difference in the S&P business
position between the two companies. GPU has a business position of three,
while FirstEnergy has a business position eight. Obviously the combined
company, we would hope, would move up somewhere into that mid-range. That
would have a very positive effect on our credit rating going forward.
We will be putting out about $2 billion, just a little bit over $2
billion, in terms of acquisition debt. How we structure that is going to be
a tactical decision based on market conditions, but obviously will involve
some sort of mix of public and bank debt more than likely.
Leverage of the combined company on day one will be somewhere in the
66% range. However, our plan is to rapidly reduce that over the first three
years of the transaction. Our expectation is that that would be paid down
to something closer to 58% - mid-50% - range by the end of year three. That
would imply about $1.8 billion of debt reductions over that period of time,
averaging about $600 million every year.
On day one, we would have a funds from operation to interest coverage
ratio greater than 2.8, and we would expect that to grow probably over to
the 3.2 range by the end of year three. So very rapid improvement in the
overall credit profile of the combined company.
The approval process is obviously going to be very critical in this
transaction, as it is in all transactions. We know and understand how
critical it is to get this process behind us. Obviously many of the
write-ups I read yesterday expressed concern, as they do with every
transaction, that this could take some period of time, whatever it is, and
"block the company up." I don't necessarily agree with that sentiment, but
I do understand how important it is to get this done quickly.
We've set an aggressive goal for ourselves. We think we can get this
closed within 12 months, by the middle of next year or late summer. We
think that's doable. We don't see anything unusual or problematic about
this transaction. It does require the typical kind of approval to obviously
shareholders. We don't believe actually approval is required in Ohio. I
have put it on the list, however. Pennsylvania and New Jersey requirements
and then both SEC and so forth, all the other typical ones.
I don't think it's going to present any unusual situations. GPU
obviously does not have generation. That eliminates a lot of the market
power concerns and so forth.
We have had some brief informal discussions in the few hours since the
deal was announced yesterday morning with some of the regulators and the
politicians and so forth. I think the feedback has been positive, which
confirms what we're thinking. So we set an aggressive target for ourselves
and we're confident that we'll be able to achieve that.
I think this is a timely transaction in the life of FirstEnergy, if
you will. I've tried to summarize some of the accomplishments we've made
over the last five years. You look at FirstEnergy in the middle of 2000 and
you look at FirstEnergy in 1995, it really looks like two different
companies.
We have a vastly improved financial profile. We have strong operating
cashflow. We've reduced our leverage from 63% to less than 60%, and we'll
have that down to the mid-50% before too long. We've reduced the payout
ratio. We've accelerated over $1 billion of potentially stranded assets. We
have a positive ratings outlook. Now, with closure, with the transition
plan, we have the opportunity to fully recover the stranded assets that we
filed in our case. So a much changed and a much improved company
financially from where we were just a few short years ago.
We've given you lots of great reasons, lots of great words today why
we're excited about this transaction, and why we think it makes a lot of
sense. But at the end of the day, none of those things will happen by
themselves. What's going to make this happen is the management team behind
the transaction. It all comes down to our ability to make the benefits
real.
What I've tried to lay out for you here is a little bit of our track
record in terms of mergers, and particularly the Centerior merger of 1997.
On the left hand side of this chart, I've tried to depict a few of the
major promises that we made and then our results in delivering the goods.
We talked about when we announced the Centerior merger, synergy
capture of $1 billion over 10 years - $100 million annually. So far we've
already captured over $700 million of synergies in the first three years of
the transaction. Those are now at a $350 million annual run rate. So we've
been able to more than triple the promise that we made to the investment
community three years ago.
We've made tremendous progress in maximizing the value of our
generation portfolio. I especially like to point to the nuclear units. Some
of you remember the Perry nuclear plant, not too many years ago, was really
considered one of the least desirable units in the country. That unit along
with our Davis-Besse nuclear facility is now performing at truly
world-class levels, and is one of the best nuclear plants internationally.
We are making that same progress with the Beaver Valley unit that we
acquired from Duquesne at the end of last year. I think we have truly
maximized the portfolio that we have in place. As Pete mentioned to date,
we now have an opportunity to raise those efficiencies to a whole new level
going forward.
As I mentioned before, we said debt reduction was important to us when
we merged with Centerior, and we've delivered in terms of $1.5 billion of
debt that we've paid off since 1997. As far as the regulatory process goes,
I wanted to spend just a minute and talk about the promises we made in
conjunction with that transaction.
I remember very well one of the first questions that we got when we
announced the merger with Centerior was, "What's going to happen to the
Ohio Edison rate plan that we had just put in place, just a year or so
before?" That plan allowed us to freeze rates, it allowed us to pay down
stranded assets, and it allowed us to improve our fundamental business
position. The concern was that the regulators, in order to approve the
Centerior transaction, were going to open up that rate plan, take out the
benefits we had, and throw it back to shareholders.
I think virtually every analyst wrote that that was at least a
distinct possibility, if not a probability. In fact, that did not happen.
We were able to preserve that value for our shareowners.
We were also able to put in place the FirstEnergy rate plan, which was
really a similar plan for Centerior. We got that implemented just several
short months after the transaction closed. As everybody is aware now, we do
have a transition plan, which has been approved by the Commission. That was
a stipulated agreement with all the parties in the case, which provides an
opportunity for full stranded cost recovery and allows for an orderly and
efficient transition to competition in Ohio. That's another item I think
very few people in the investment community really expected to happen.
So I think we have a great track record in terms of making promises
come real and making transaction benefits actually develop for our
shareowners. We told you a lot of things today, but I think the one thing I
hope you take away from this is that we do have the ability to make this
work and we do have the commitment to make this work - absolutely.
Okay. I appreciate your time this morning. I'd like to turn the podium
back to Pete right now. Certainly we want to make sure that we have all
your questions answered. If after this, if people have follow-up questions,
we'll be around for awhile or certainly get hold of Kurt Turosky, our
Investor Relations Manager and we'll make sure we address all your
questions. So thank you very much.
PB: Thank you, Rich. Again hopefully you can see that we really truly are
excited about this transaction. As each day goes by, as each conversation
that we have goes by, it becomes more so. I say that from the heart,
honestly. I really believe that.
Again to summarize, we think it is a compelling story. We think we
will be the premier supplier in the area that we're focusing on. We think
we can help produce and deliver some more generation into the Pennsylvania
and New Jersey markets. We think it broadens our market opportunities. We
think we do have the team to put it in place.
That's really our story. We would now, as Rich said, open it up to
questions. We can try to answer the questions from here or we have some of
our experts also in the audience. So we'll try to do that.
QUESTIONS AND ANSWERS
SP: Alright, Pete, I was wondering...
PB: Boy, he was quick on that microphone over there. Yes, sir.
SP: After all the contracts are falling off in the customer switching,
how much generation or how many megawatts will you be short during peak
demand in 2002? And is this a bet on power prices going down? It seems like
it's a change from your generation strategy to I guess now you guys are
going to be short in the market. I was wondering if you could elaborate a
little bit on that and perhaps the change in strategy that at least it
appears to be.
The second question I have is with respect to that. I don't mean
to keep on going back to this, but this generation synergy situation,
in terms of enhancement of your generation, it would seem to me that
GPU is currently paying lower prices off-peak in the wholesale power
market than by buying power from you or having your generation plants
kick-up to supply that. I'm just wondering how that works in the
efficiencies. So it's two questions.
PB: Yeah, on the... My mind goes fast, so let me try... I remembered the
second question already, so let me jump to it and maybe our friends
from GPU can jump in there as well.
It's my understanding that, in many ways, GPU goes into the
marketplace for periods of time, Bruce, from my understanding. They
don't get to necessarily just pick and choose. So they may have to
enter into a contract for, you know, 16 hours a day, five days a week,
six days a week. It doesn't give them an awful lot of opportunity to
do some of the kinds of things that you're talking about, number one.
Number two, we believe that with a larger portfolio, with a
larger customer base, we'll be able to manage that supply situation in
a much more efficient way than maybe GPU on their own or even
ourselves on our own are able to do at this point in time. So it's a
different dynamic in terms of what we're talking about.
In terms of prices and so forth, I mean all we're really talking
about here in many ways is the margin, the middleman that sometimes
gets in the way. Whether it's a power marketer, another generator, and
so forth, but I think that's the kind of situation that we're talking
about with respect to maximizing some of the revenue enhancements that
we would have.
With respect to your other question on the supply side in the
year 2002, again we're just beginning to look at that ourselves, if
you will. But I don't see any change in strategy. I mean we've always
been... Not always, but... Ohio Edison before, then Centerior, and
FirstEnergy, I mean we've been managing a supply, not necessarily all
the assets available to provide that supply being in-house. So it's
not really totally different on that score.
But before I go on, Bruce, we talked about this last night. Maybe
you had an item or two to add to that.
BL: Yeah, I think there's several dynamics and it's very hard to even
after spending several hours last night to put in a summary format.
But really there's a benefit that we'll get from the interplay between
the PJM power pool and the ECAR power pool.
Right now, while GPU can shop for off-peak energy, and it is pretty
cheap, it's not free and it's not necessarily lower than the cost we
get from FirstEnergy. But we can't shop in ECAR right now because we
can only shop from the source and PJM. So we'll be able to shop from
ECAR more easily because we'll establish transmission rights, and
we'll be able to buy... It's really the flexibility to buy from the
lowest source and to the extent, even if it's at the marginal cost of
FirstEnergy's units, would be what cleared in PJM, it allows them to
get the benefits of more availability and less cycling that Pete
talked about.
SP: [inaudible]...is that it?
BL: No, not prohibited. It's when we buy spot, right now, which is
typically what we do off-peak. The only spot we have available is PJM.
With this we would obviously set up some sort of trading arrangement
with our affiliates so we'd be able to buy from ECAR as well.
SP: Do you need a merger to do that? Can't you just do it yourselves?
You'd need a merger to actually be able to buy from ECAR? You
couldn't just set up the transmission rights...
[overtalking]
BL: Well, from GPU's point of view, before a merger we'd get no benefits
from doing that. I think the benefits of us buying off-peak from
FirstEnergy will accrue to FirstEnergy, not to GPU.
SP: Okay. This'll be my last point here, but how much are you going to be
short, I guess, totally from the total company in 2002? What is the
total number of megawatts that you guys expect to be short in 2002?
PB: I don't really have that number in hand. I know we've looked at 2001.
We're satisfied that everything is in hand in 2001, from what I can
gather. We're beginning the process, Paul, to figure out how to best
handle that situation.
From GPU's standpoint on a standalone basis, I don't know if you
have that number or not at hand, Bruce.
BL: Well, we buy on annual basis about 5,000 megawatts, which is what we
are short net of the contracts we have from the nuclear plants we
sold. Some of that's already purchased for 2002, so it's hard to say
an exact number.
PB: Before we go onto the next question, just one more thing I just want
to say again. When you're able to manage a supply situation for 4-4.5
million customers, and you have a significant amount of generation
available already, there's a different dynamic, there's a greater
optimization available to you than if you're half that size and
probably even more dynamic if you don't have any generation available.
So there's a lot of things that you can do when you know the customer
base, you know what the other side needs, that helps you optimize your
own operations. You can do things that you may not be able to do in a
standard, contractual arrangement with someone else who's driving the
terms.
Okay, another question. Yes, Mark.
M_: Would it be correct... just to continue on this line a little more...
to say that GPU's the full service customers really are indifferent to
the price that GPU pays for the power, since they're paying a tariff
rate anyway, and that under the merger what you'd like to do is to
optimize both corporations instead of GPU costs? If that's correct,
how much and how long would it take after the merger to switch to
using FirstEnergy as a supplier rather than whoever else you're using
now?
PB: Well again, I think the answer to that question is yes. The answer to
that question is yes. It deals with the opportunities for margin
contribution that I tried to show in the middle of that graph.
Now really the total scenario here will depend upon the contracts
and when they expire. As we get into looking at our new peakers
that are coming on and some of our other facilities, again this is all
part of the transition team that we're going to get into.
I might add to that, Mark, however, I think this transition team
will be a little different than our prior one. We will have a
transition team I think associated with processes and we'll really
have another segment dealing with strategic issues, that go right at
the heart of the matter that you're talking about. That'll be a very
important part of this transition mechanism. Yes.
SP: More questions on the generation optimization. You talked about your
fossil units in the low 60s on capacity factor now and every
percent...
[End of side 1]
[Beginning of side 2]
SP: ... 1% improvement in capacity factor and how long you would
anticipate getting from where you are now to 75% that you think is
possible?
PB: Well I think it's, you know... I'd say it's premature to speculate on
how fast we can get there. We have to look at the facilities, the
profile, the contracts, etc. What I was trying to say before is
roughly in our fossil line-up today, for every one percentage point
increase in the capacity factor, as I said, we can reduce the fossil
generation costs by about $0.15 per megawatt hour or roughly 1%. So we
think we can get 60% to 75% with no real expanded capital
requirements. Really the main cost involved will be the fuel costs,
and that's not included in what I was talking about really.
So you're talking about the... I'm sorry, that is included in
what I was talking about. So if you take away the fuel, you'll
probably take away the tax element, and that's really the differential
that you're talking about when you go through the calculation. Yes.
SP: [inaudible]...that you can share with us at this point?
PB: Are there any details of the merger financing that we can share
with you? I think Rich tried to allude to that in his
presentation. No real details available at this point other than
we will be opportunistic. We'll look to probably some permanent
debt possibly or an intermediate term debt and some bank debt.
T_: FirstEnergy would be the borrower...[coughing]...the money to complete
the transaction.
RM: That's our expectation, Ted, yes.
T_: Okay. Thank you.
PB: Who's got the microphone next here? Carl?
C_: Relative to the generation situation, one of your slides says you will
continue to pursue regulatory solutions. FirstEnergy has been
particularly outstanding, I think, over the years in pursuing
regulatory solutions that work, and I wonder if you could describe a
little bit what you're looking to do in Pennsylvania where GPU has had
this problem?
PB: Well, you know, I would put it another way. GPU's already taken the
lead. GPU really knows Pennsylvania as well as we do, if not better. I
think they have had some discussions. Other companies in the state are
in some similar situations. I don't know that it's totally unique to
GPU. So I think we'll try to work together on that. Fred, you want to
add anything to that item?
FH: Yeah, I guess, GPU points with some pride to our success in the
regulatory arena, too. I think some of our past settlements have been
very good. The situation in Pennsylvania that we find ourselves in is
having to continue to be the provider of last resort with no
generation of our own and no mechanism to recover any excess cost that
we have to pay in what is still an immature and unpredictable market.
So that's the bad news and that's the regulatory solution we're
working for.
The good news, from my perspective, is that all of the
stakeholders in this process, be they consumer advocate or
representatives of the large customers or those types of people, have
been meeting and discussing it. I think there is universal agreement
among those stakeholders that the process as it has turned out wasn't
what people envisioned. In fact, GPU's decision to split up initially
was applauded by those same groups.
So we've come up with a situation, which is untenable for us and
really unpredicted and unintended for all the stockholders. That gives
me some reason for confidence about our ability to get to a regulatory
solution.
Now having said that, I've also been involved in this business
for a long time. A big piece of it, a big piece of my career was in
the regulatory solution area. I know that there is always a price to
be paid for any solution. So what we're faced with today is a group
that all agrees on what the outcome should be and we're down to
negotiating the price. I'm pretty optimistic that we'll be able to get
that solution, but obviously not in time for the summer of 2000.
PB: Do we have a question on the phone that someone was calling in,
Operator?
OP: The question is from Dan Ford of ABN. Sir, please proceed.
DF: Yes, my question has been asked. Thank you.
PB: Okay, go ahead.
SP: A question back to the generation, and Fred had mentioned that the
cost... Even if they just used... Even if GPU just used your
percentages marginal cost as the price for using the fossil, that you
would still get the benefits of cycling and the reduced maintenance,
etc. Have you thought about how you're going to weigh the use of
FirstEnergy's capacity? For example, selling year-round or off-peak to
GPU at marginal costs, as an example, let's say, versus other
opportunities at higher prices elsewhere that would preclude off-peak
sales that might require more cycling. How do you weigh those?
PB: Well, I mean obviously you have to take all of those factors into
consideration, and we will do that. We'll look at the economic
trade-offs and consider what's the best for the bottom line going
forward. I mean it's really... Those kinds of calculations will be
hopefully relatively simple because we just look at the trade-offs, if
I understand the question. Okay, yes.
SP: It was mentioned before that with the acquisition of a lot of
customers without any generation, at least any significant amount of
generation, you will now be in a net short position generation at
least a lot of the time. Does this change your thinking about building
or acquiring future generation?
PB: No, I mean I think we have... First of all, for a good part of the
country, we continue to still be in a long base load capacity
situation. So base load capacity is available. We obviously have
talked about the availability of more than 1,000 megawatts of capacity
that we will be bringing on over the next few years. So those plans
are already in place and underway, but they're not all built yet. Some
facilities are in service.
We also look forward to all of the announced megawatts from other
generators that have been put into the marketplace, and I'm sure some
of those will come to pass. So at this five minutes in time, we have
no specific plans whatsoever for additions, beyond the plans that I've
already articulated. But we'll obviously look at that as we go
forward.
As we have the customers, you know, it's a different profile.
It's a different mindset. If you have the customers in place and you
want to build something or obtain a supply as opposed to just building
it and then trying to find the customers. Our strategy is the former
and has been consistently, not the latter. Okay, do we have another
question on the phone, Operator?
OP: Your question is from Virge Trotter of Manning Napier. Please proceed
with your question.
VT: Hello. I have two questions. First is the reason for the large premium
on the GPU shares. Were there other bidders? Just a little background
on that. The second, the earnings next year, and have you changed your
guidance. Thank you.
PB: I didn't hear the caller. Was that the Star magazine or who was that
that called in there? I didn't quite hear that. No, as far as I know
we haven't changed our earnings outlook for next year, at this point
in time. You know, I don't know that we necessarily were focused... We
weren't focused at all on premium here in this transaction. Fred may
have been. I won't say that we were.
I would put it another way. In order to bring these two companies
together, you know, both sides have to be willing to come together.
Sometimes you have to pay some price for that. I would tell you,
however, when if you do look at the premium, the premium is right in
line with precedent transactions that have taken place over the last
few years. The multiple, in terms of earnings for the forward-looking
year and year two, are at the lowest levels, I think, of any
transaction that's taken place in the last couple of years. The market
to book ratio is the lowest of any transactions that have taken place
over the last few years. I think EBITDA multiple is right at or close
to the lowest of any of the transactions that have taken place over
the last few years.
So I think it was a fair premium, a fair exchange of issues, and
I also think we have a very favorable transaction. Maybe most
importantly, is what we have going forward. We haven't saddled
ourselves, we don't think, and we have great prospects for the new
company going forward.
Okay, how about one more question and then we'll be around later
as well. Yes, Barry.
B_: Could you explain how you get the synergies from your respective
contracting and construction businesses? Because the way I understand
it that GPU's construction business, MYR, is more of a national
business and your HVAC business is more of a regional business. So
could you explain how you get the synergies?
PB: Yeah, again we want to emphasize to all of you, because I know you've
asked this question and... We have not done the synergy studies yet.
We will do that. However, in answering the question specifically,
Barry, I can tell what we've done already in our own roll-ups of 11
different mechanical and facilities companies that we've acquired over
the last few years.
We've done things on overheads like insurance, bonding, gasoline
purchases. I mean minor things like that. Purchasing obviously is a
major component of that and I think purchasing, not only for the
facilities group... We didn't really focus on this, but purchasing for
our whole organization, we're going to have tremendous leverage here.
So those are the kinds of things. Systems that you can put in place.
In terms of actual people in the field, savings, synergies in
that respect, I don't really see those. But I do see corporate types
of savings.
Okay, as I said, we many of us will be around today in here
later. Before you all leave, though, I would like to leave you with
just a couple of points.
First of all, from my standpoint this merger is the absolutely
perfect enabler for our growth strategy. It's been unchanged and
consistent. We had a great opportunity here, I think, to come together
with another entity that one might call an under-appreciated property.
We plan to make the most of it. We plan to make the most of our new
assets, our new customers, and our new employees for the ultimate
sake, and I know it's trite, but for the ultimate sake of enhancing
the shareholder value. That's what we're trying to do.
I'm confident in our strategy and I'm confident that we have the
people to make this new FirstEnergy company a winner in our industry.
Thank you very much for coming this morning.
[applause]
[End of Recording]
<PAGE>
SCRIPT FOR DISCUSSION WITH GPU'S
RETAIL SHAREHOLDERS WHO CALL THE COMPANY
----------------------------------------
SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This presentation contains forward-looking statements within the meaning of
the "safe harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements with respect to revenues, earnings, performance,
strategies, prospects and other aspects of the businesses of FirstEnergy
Corp. and GPU, Inc. are based on current expectations that are subject to
risks and uncertainties. A number of factors could cause actual results or
outcomes to differ materially from those indicated by such forward-looking
statements. These factors include, but are not limited to, risks and
uncertainties set forth in FirstEnergy's and GPU's filings with the SEC,
including risks and uncertainties relating to: failure to obtain expected
synergies from the merger, delays in obtaining or adverse conditions
contained in any required regulatory approvals, changes in laws or
regulations, economic or weather conditions affecting future sales and
margins, changes in markets for energy services, changing energy market
prices, availability and pricing of fuel and other energy commodities,
legislative and regulatory changes (including revised environmental and
safety requirements), availability and cost of capital and other similar
factors. Readers are referred to FirstEnergy's and GPU's most recent
reports filed with the Securities and Exchange Commission.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, FirstEnergy Corp. and GPU, Inc.
will file a joint proxy statement/prospectus with the Securities and
Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE
JOINT PROXY STATEMENT / PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may
obtain a free copy of the joint proxy statement / prospectus (when
available) and other documents filed by FirstEnergy and GPU with the
Commission at the Commission's Web site at http://www.sec.gov. Free copies
of the joint proxy statement / prospectus, once available, and each
company's other filings with the Commission may also be obtained from the
respective companies. Free copies of FirstEnergy's filings may be obtained
by directing a request to FirstEnergy Corp., Investor Services, 76 S. Main
St., Akron, Ohio 44308-1890, Telephone: 1-800-736-3402. Free copies of GPU
filings may be obtained by directing a request to GPU, Inc., 300 Madison
Ave., Morristown, NJ 07962-1911, Telephone: 1-973-401-8204.
FirstEnergy, its directors, certain executive officers, and certain other
employees (Thomas M. Welsh, manager of Communications, and Kurt E. Turosky,
manager of Investor Relations) may be deemed under the rules of the
Commission to be "participants in the solicitation" of proxies from the
security holders of FirstEnergy in favor of the merger. FirstEnergy's
directors, and executive officers beneficially own, in the aggregate, less
than 1% of the outstanding shares of FirstEnergy common stock. Security
holders of FirstEnergy may obtain additional information regarding the
interests of the "participants in the solicitation" by reading the joint
proxy statement/prospectus relating to the merger when it becomes
available.
GPU, its directors (Theodore H. Black, Fred D. Hafer (Chairman; CEO and
President), Thomas B. Hagen, Robert Pokelwaldt, John M. Pietruski,
Catherine A. Rein, Bryan S. Townsend, Carlisle A.H. Trost, Kenneth L. Wolfe
and Patricia K. Woolf), certain executive officers (Ira H. Jolles (Senior
Vice President and General Counsel), Bruce L. Levy (Senior Vice President
and CFO) and Carole B. Snyder (Executive Vice President Corporate Affairs))
and certain other employees (Jeff Dennard (Director of Corporate
Communications), Joanne Barbieri (Manager of Investor Relations) and Ned
Raynolds (Manager of Financial Communications)) may be deemed under rules
of the commission to be "participants in the solicitation" of proxies from
the security holders of GPU in favor of the merger. GPU's directors, and
executive officers beneficially own, in the aggregate, less than 1% of the
outstanding shares of GPU common stock. Security holders of GPU may obtain
additional information regarding the interests of "participants in the
solicitation" by reading the joint proxy statement/prospectus relating to
the merger when it becomes available.
o First Energy (FE) will acquire all of the outstanding shares of GPU's
common stock.
o Shareholders of each company will receive a joint proxy detailing the
transaction within the next 2-3 months. We expect to hold a special
meeting of GPU shareholders to vote on the proposed merger about one
month after we distribute the proxy statement.
o About a month or so before we expect the merger to close, GPU
shareholders will receive a form of election. Each GPU shareholder
will be asked to use this form to make an election to receive cash or
FE common stock in the merger for the shareholder's GPU shares.
o For each share of GPU a shareholder owns, he or she will be able to
elect to receive either $36.50 in cash or the equivalent of $36.50 in
FE common stock (if FE's stock price is between $24.24 and $29.63).
o The proxy statement will detail how the value of the FE stock election
option will change if FE's stock price is greater than $29.63 or less
than $24.24.
o FE will pay one-half of the merger consideration in FE stock and
one-half in cash.
o Although GPU shareholders can elect to receive all FE stock, all cash,
or a combination of both, the aggregate GPU shareholder elections may
result in elections of either too much stock or too much cash. For
example, if 60% of the GPU shares wanted cash and only 40% wanted FE
stock, those shareholders who had elected cash would have to accept
some portion of their consideration in FE stock in order to move the
aggregate payment to the 50% cash and 50% stock level.
o The transaction is expected to be tax-free to GPU shareholders to the
extent you receive FE common stock for your GPU shares, but check with
your tax advisor.
o The transaction is conditioned upon approval from the Securities and
Exchange Commission (SEC), Federal Energy Regulatory Commission
(FERC), Nuclear Regulatory Commission (NRC), Federal Communications
Committee (FCC), and the regulatory commissions from the states of New
Jersey, Pennsylvania and possibly Ohio and anti-trust clearance under
the Hart Scott Rodino Act.
o The merger is expected to be completed within 12 months but completion
could be delayed if it takes longer to obtain regulatory approvals.
The agreement between FE and GPU permits GPU to continue quarterly
dividend payments of $.545 per share until closing.
o GPU's dividend reinvestment plan will remain in effect until the
merger is completed. Once the companies have merged, it is expected
that FE's current annual dividend of $1.50 per share will be
maintained.
o As a GPU shareholder you do not have to do anything now as a result of
the merger announcement. As mentioned previously, you will receive a
proxy statement in a few months. The proxy statement will provide the
details of the transaction. At that time, you will have an opportunity
to vote on the merger.
