<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ILLINOIS POWER COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
ILLINOIS POWER LOGO
ILLINOIS POWER COMPANY
500 SOUTH 27TH STREET
DECATUR, ILLINOIS 62525
April , 1998
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders of
Illinois Power Company ("IPC"), to be held on , 1998 at
10:00 a.m., local time, at the principal office of IPC located at 500 South 27th
Street, Decatur, Illinois 62525, to consider and vote upon an amendment to IPC's
Amended and Restated Articles of Incorporation to remove a provision which
limits the ability of IPC to issue or assume unsecured indebtedness (the
"Proposed Amendment"). If the Proposed Amendment is adopted at the special
meeting, you will be entitled to receive from IPC a special cash payment of
$ for each share you held as of April 6, 1998, the record date fixed for
the special meeting. The Proposed Amendment is more fully described in the
enclosed Proxy Statement.
THE BOARD OF DIRECTORS OF IPC BELIEVES THE BEST LONG-TERM INTERESTS OF
SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO VOTE IN FAVOR OF, THE
ADOPTION OF THE PROPOSED AMENDMENT.
Whether or not you plan to attend the special meeting of shareholders, we
ask that you take the following action:
- PLEASE SUPPORT THE PROPOSED AMENDMENT BY VOTING, SIGNING AND DATING THE
ENCLOSED PROXY CARD AND RETURNING IT AS SOON AS POSSIBLE. PROXIES MUST
BE RECEIVED PRIOR TO THE SPECIAL MEETING IN ORDER TO BE COUNTED AS A
VOTE FOR THE PROPOSED AMENDMENT. PLEASE BE AWARE THAT THE PROPOSED
AMENDMENT MUST BE ADOPTED IN ORDER FOR YOU TO RECEIVE A SPECIAL CASH
PAYMENT. A FAILURE TO RETURN A PROXY IS A VOTE AGAINST THE PROPOSED
AMENDMENT.
- Enclose your completed proxy card in the envelope addressed to MacKenzie
Partners, Inc.
If you have any questions on how to vote your shares, please contact:
<TABLE>
<S> <C>
The Information Agent: The Solicitation Agent:
MacKenzie Partners, Inc. Donaldson, Lufkin & Jenrette
(800) 322-2885 (Toll Free) Securities Corporation
(212) 929-5500 (Call Collect) (800) 334-1604 (Toll Free)
(212) 892-3351 (Call Collect)
Attn: Paul Galant or Jeff Dorst
</TABLE>
You may also contact your broker, dealer, commercial bank, trust company or
other nominee with questions on how to vote your shares.
Sincerely,
Leah Manning Stetzner,
General Counsel and Corporate
Secretary
<PAGE> 3
NOTICE AND PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD [ ], 1998
-------------------------
ILLINOIS POWER COMPANY
<PAGE> 4
ILLINOIS POWER LOGO
ILLINOIS POWER COMPANY
500 SOUTH 27TH STREET
DECATUR, ILLINOIS 62525
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD , , 1998
TO SHAREHOLDERS OF
ILLINOIS POWER COMPANY:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Illinois
Power Company ("IPC") will be held at its principal office, 500 South 27th
Street, Decatur, Illinois 62525 on , ,
1998 at 10:00 a.m., local time, for the following purposes:
1. To adopt an amendment to IPC's Amended and Restated Articles of
Incorporation to remove the limitation on the issuance or assumption
of unsecured indebtedness; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors of IPC has fixed the close of business on April 6,
1998 as the record date for determining the shareholders entitled to notice of,
and to vote at, the meeting or any adjournment thereof. Shareholders may be
entitled to dissent from and obtain payment for their shares as a result of the
proposed amendment by delivering to IPC prior to the Special Meeting a written
demand for such payment and not voting in favor of the proposed amendment.
Additional information about dissenters' rights and procedures is set forth in
the enclosed Proxy Statement, including Attachment A thereto which contains the
applicable sections of the Illinois Business Corporation Act of 1983, as
amended, relating to dissenters' rights.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THIS MEETING.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO VOTE,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT TO MACKENZIE PARTNERS, INC. IN
THE ACCOMPANYING POSTAGE-PAID ENVELOPE.
By order of the Board of Directors,
Leah Manning Stetzner,
General Counsel and Corporate
Secretary
April , 1998
<PAGE> 5
ILLINOIS POWER COMPANY
PROXY STATEMENT
PROPOSED AMENDMENT AND PROXY SOLICITATION
INTRODUCTION
This Proxy Statement is first being mailed on or about April , 1998 to
the shareholders of Illinois Power Company, an Illinois corporation ("IPC") in
connection with the solicitation of proxies by the Board of Directors of IPC
(the "Board") for use at a special meeting to be held at its principal office,
500 South 27th Street, Decatur, Illinois 62525 on , , 1998
at 10:00 a.m., local time, or any adjournment or postponement of such meeting
(the "Special Meeting"). The purpose of the Special Meeting is to consider an
amendment (the "Proposed Amendment") to IPC's Amended and Restated Articles of
Incorporation (the "Articles") which would remove a provision of the Articles
that limits IPC's ability to issue or assume unsecured indebtedness (the "Debt
Limitation Provision"). At the Special Meeting, the shareholders of record of
IPC as of April 6, 1998 (the "Record Date") will vote upon the Proposed
Amendment to the Articles.
If the Proposed Amendment is adopted at the Special Meeting, IPC will make
a special cash payment in the amount of $ per share to each holder of each
series of cumulative preferred stock (par value $50 per share) (each a "Series
of Preferred," and the holder thereof a "Preferred Shareholder") of record as of
the Record Date (the "Special Cash Payment"). See "-- Special Cash Payments."
THE BOARD RECOMMENDS VOTING IN FAVOR OF THE PROPOSED AMENDMENT.
Questions or requests for assistance may be directed to MacKenzie Partners,
Inc. (the "Information Agent") or to Donaldson, Lufkin & Jenrette Securities
Corporation (the "Solicitation Agent") at their respective telephone numbers and
addresses set forth on the back cover of this Proxy Statement. Requests for
additional copies of this Proxy Statement, the proxy being sent to record
holders of Shares (or, in the case of participants of the Depository Trust
Company ("DTC"), the DTC participant proxy) (as used herein "Proxy" shall mean
the proxy and/or the DTC participant proxy, as appropriate) or other proxy
materials may be directed to the Information Agent, and such copies will be
furnished promptly at IPC's expense. Preferred Shareholders may also contact
their local broker, dealer, commercial bank or trust company for assistance
concerning the proxy solicitation.
VOTING SECURITIES, RIGHTS AND PROCEDURES
Only holders of record of IPC's voting securities at the close of business
on the Record Date will be entitled to vote in person or by proxy at the Special
Meeting. The outstanding voting securities of IPC are divided into two classes:
common stock (no par value) and cumulative preferred stock (par value $50 per
share). The class of cumulative preferred stock has been issued in six Series of
Preferred: the 4.08% Series of Preferred, the 4.20% Series of Preferred, the
4.26% Series of Preferred, the 4.42% Series of Preferred, the 4.70% Series of
Preferred and the 7.75% Series of Preferred (collectively, the "Shares"). The
record holders of all Shares of the cumulative preferred stock voting together
as one class. The shares of common stock and cumulative preferred stock
outstanding as of the Record Date, and the vote to which each share is entitled
in consideration of the Proposed Amendment, are as follows:
<TABLE>
<CAPTION>
SHARES VOTES PER
CLASS OUTSTANDING SHARE
----- ----------- ---------
<S> <C> <C>
Common Stock (No Par Value)............................. 66,215,292 1 vote
Cumulative Preferred Stock (Par Value $50 Per Share).... 1,139,110 1 vote
</TABLE>
The affirmative votes of the holders of at least two-thirds of the
outstanding shares of IPC's (i) common stock and all series of cumulative
preferred stock, voting together as one class, and (ii) cumulative preferred
stock, all series voting together as one class, are required to approve the
Proposed Amendment to be presented at the Special Meeting. Abstentions and
broker non-votes will have the effect of votes against the Proposed
1
<PAGE> 6
Amendment. ILLINOVA CORPORATION, AN ILLINOIS CORPORATION ("ILN"), WHICH OWNS ALL
OF THE OUTSTANDING SHARES OF COMMON STOCK OF IPC, HAS ADVISED IPC THAT IT
INTENDS TO VOTE ALL OF THE OUTSTANDING SHARES OF COMMON STOCK OF IPC IN FAVOR OF
THE PROPOSED AMENDMENT.
Votes at the Special Meeting will be tabulated preliminarily by the
Information Agent. Inspectors of Election, duly appointed by the presiding
officer of the Special Meeting, will definitively count and tabulate the votes
and determine and announce the results at the Special Meeting. IPC has no
established procedure for confidential voting.
-------------------------
PROXIES
THE ENCLOSED PROXY IS SOLICITED BY IPC'S BOARD, WHICH RECOMMENDS VOTING IN
FAVOR OF THE PROPOSED AMENDMENT. ALL SHARES OF IPC'S COMMON STOCK WILL BE VOTED
IN FAVOR OF THE PROPOSED AMENDMENT. Shares of IPC's cumulative preferred stock
represented by properly executed proxies received at or prior to the Special
Meeting will be voted in accordance with the instructions thereon. If no
instructions are indicated, duly executed proxies will be voted in accordance
with the recommendation of the Board. It is not anticipated that any other
matters will be brought before the Special Meeting. However, the enclosed Proxy
gives discretionary authority to the proxy holders named therein should any
other matters be presented at the Special Meeting, and it is the intention of
the proxy holders to act on any other matters in accordance with their best
judgment.
PROCEDURAL INSTRUCTIONS
If a Preferred Shareholder is a record holder of the Shares of one or more
Series of Preferred as of the close of business on the Record Date, such
Preferred Shareholder may grant a Proxy in favor of, against or abstain from
voting on, the Proposed Amendment by marking the "FOR", "AGAINST" or "ABSTAIN"
box, as applicable, on the enclosed Proxy and signing, dating and returning it
promptly to the Information Agent in the enclosed envelope. Any beneficial owner
of Shares who is not the record holder of such Shares as of the close of
business on the Record Date (as would be the case for any beneficial owner whose
Shares are registered in the name of such owner's broker, dealer, commercial
bank, trust company or other nominee) must arrange with the record holder to
execute and deliver a Proxy on such beneficial owner's behalf. Brokers, dealers,
commercial banks, trust companies and other nominees will be requested to
forward the proxy solicitation materials to the beneficial owners of the Shares
for which they hold of record and IPC will reimburse them for their reasonable
out-of-pocket expenses.
REVOCATION OF PROXIES
Execution of a Proxy will not prevent a shareholder from attending the
Special Meeting and voting in person. Any shareholder giving a proxy may revoke
it at any time before it is voted by delivering to the Secretary of IPC written
notice of revocation bearing a later date than the Proxy, by delivering a duly
executed Proxy bearing a later date, or by voting in person by ballot at the
Special Meeting.
SPECIAL CASH PAYMENTS
Subject to the terms and conditions set forth in this Proxy Statement, if
(but only if) the Proposed Amendment is adopted at the Special Meeting, IPC will
make a Special Cash Payment in the amount of $ for each Share to each Preferred
Shareholder of record as of the Record Date. IPC has been advised that there is
uncertainty under state law, due to the lack of controlling precedent, as to the
permissibility of making Special Cash Payments. While IPC cannot predict how a
court would rule on the issue, IPC believes that the Proposed Amendment is in
the best interests of IPC and its shareholders, and, accordingly, has decided to
make the Special Cash Payments. If the Proposed Amendment is adopted at the
Special Meeting, Special Cash Payments will be paid out of IPC's general funds,
promptly after the Proposed Amendment shall have become effective. However, no
accrued interest will be paid on the Special Cash Payments regardless of any
delay in making such payments.
2
<PAGE> 7
Only Preferred Shareholders of record as of the Record Date (or their legal
representatives or attorneys-in-fact) are entitled to vote at the Special
Meeting and, if the Proposed Amendment is adopted at the Special Meeting, to
receive Special Cash Payments from IPC. Any beneficial holder of Shares who is
not the registered holder of such Shares as of the Record Date (as would be the
case for any beneficial holder whose Shares are registered in the name of such
holder's broker, dealer, commercial bank, trust company or other nominee) must
arrange with the record Preferred Shareholder to execute and deliver a proxy
form on such beneficial owner's behalf. If a beneficial holder of Shares intends
to attend the Special Meeting and vote in person, such beneficial holder must
obtain a legal proxy form from his or her broker, dealer, commercial bank, trust
company or other nominee.
TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE SPECIAL
CASH PAYMENT, EACH PREFERRED SHAREHOLDER MUST NOTIFY IPC OF SUCH PREFERRED
SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER
INFORMATION BY PROPERLY COMPLETING AND EXECUTING THE SUBSTITUTE FORM W-9
INCLUDED IN THE PROXY AND RETURNING IT TO THE INFORMATION AGENT. FOREIGN
PREFERRED SHAREHOLDERS MUST SUBMIT A PROPERLY COMPLETED FORM W-8 IN ORDER TO
AVOID THE APPLICABLE BACKUP WITHHOLDING; PROVIDED, HOWEVER, THAT BACKUP
WITHHOLDING WILL NOT APPLY TO FOREIGN PREFERRED SHAREHOLDERS SUBJECT TO 30% (OR
LOWER TREATY RATE) WITHHOLDING ON SPECIAL CASH PAYMENTS. SEE "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES."
SEPARATE SOLICITATION FEES
Brokers, dealers, commercial banks, trust companies and other nominees will
be requested to forward the proxy solicitation materials to the beneficial
owners of the Shares for which they hold of record and IPC will reimburse them
for their reasonable out-of-pocket expenses. If the Proposed Amendment is
adopted at the Special Meeting, IPC will pay to each designated Soliciting
Dealer (as defined herein) a separate fee of $
per Share for Shares that are voted (and not revoked) in favor of the Proposed
Amendment; provided that with respect to beneficial owners affirmatively voting
2,000 or more Shares, the separate fee shall be paid 80% to the Solicitation
Agent and 20% to any designated Soliciting Dealer (which may be the Solicitation
Agent). A designated "Soliciting Dealer" is an entity obtaining a Proxy, as set
forth on the Proxy or the Notice of Solicited Proxies, and is (i) any broker or
dealer in securities, including a Solicitation Agent in its capacity as a dealer
or broker, which is a member in good standing of any national securities
exchange or of the NASD, (ii) any foreign broker or dealer not eligible for
membership in the NASD which agrees to conform to the NASD's Rules of Fair
Practice in making solicitations, or (iii) any bank or trust company.
No separate fee (other than fees payable to the Solicitation Agent as
provided herein) shall be payable to a Soliciting Dealer with respect to the
vote of Shares by a holder unless the Proxy or the Notice of Solicited Proxies
accompanying such vote designates such Soliciting Dealer. No separate fee shall
be payable to a Soliciting Dealer in respect of Shares registered in the name of
such Soliciting Dealer unless such Shares are held by such Soliciting Dealer as
nominee and such Shares are being voted for the benefit of one or more
beneficial owners identified on the Notice of Solicited Proxies. No separate fee
shall be payable to a Soliciting Dealer if such Soliciting Dealer is required
for any reason to transfer the amount of such fee to a voting holder. No
separate fee shall be paid to a Soliciting Dealer with respect to Shares voted
for such Soliciting Dealer's own account. A Soliciting Dealer shall not be
entitled to a separate fee for Shares beneficially owned by such Soliciting
Dealer. No broker, dealer, bank, trust company or fiduciary shall be deemed to
be the agent of IPC, the Solicitation Agent or the Information Agent for
purposes of the proxy solicitation.
Soliciting Dealers will include any of the organizations described in
clauses (i), (ii) and (iii) above even when the activities of such organizations
in connection with the proxy solicitation consist solely of forwarding to
clients materials relating to the proxy solicitation. No assumption is made, in
making payment to any Soliciting Dealer, that its activities in connection with
the proxy solicitation included any activities other than those described above,
and for all purposes noted in all materials relating to the proxy solicitation,
the term
3
<PAGE> 8
"solicit" shall be deemed to mean no more than "processing proxies" or
"forwarding to customers materials regarding the proxy solicitation."
DISSENTERS' RIGHTS
Section 11.65 of the Illinois Business Corporation Act of 1983, as amended
(the "Business Corporation Act"), provides that a shareholder of an Illinois
corporation is entitled to dissent from, and obtain payment for his or her
shares in the event of, among other things, an amendment of the corporation's
articles of incorporation that materially and adversely affects rights in
respect of a dissenter's shares because it alters or abolishes a preferential
right of such shares. As described herein, the Proposed Amendment would amend
the Articles to remove a covenant which provides that the issuance or assumption
of unsecured indebtedness for certain purposes above a certain threshold
requires the consent of the holders of at least a majority of the total number
of Shares then outstanding. To the extent that the Proposed Amendment is deemed
to alter or abolish a "preferential right" of the Shares within the meaning of
Section 11.65 of the Business Corporation Act, the Preferred Shareholders would
have the right to dissent from the Proposed Amendment and obtain payment of the
fair value of their Shares. Pursuant to Section 11.70 of the Business
Corporation Act, a Preferred Shareholder who elects to dissent from the Proposed
Amendment (a "Dissenter"), must deliver to IPC before the vote on the Proposed
Amendment is taken, a written demand for payment of his or her Shares if the
Proposed Amendment is adopted at the Special Meeting. If a written demand is not
received by that date, the Dissenter will lose the right to dissent and thereby
obtain payment for his or her Shares. A Dissenter also will lose the right to
dissent if the Dissenter votes in favor of the Proposed Amendment.
If the Proposed Amendment gives rise to dissenters' rights under Section
11.65 of the Business Corporation Act and is adopted at the Special Meeting, IPC
will advise any Dissenter meeting the foregoing eligibility requirements of its
opinion as to the estimated fair value of the Shares owned by the Dissenter,
together with supporting information and a commitment to pay for such Shares at
the estimated fair value. A Dissenter who does not agree with IPC's estimated
fair value of the Shares must notify IPC, within 30 days thereafter, of the
Dissenter's estimate of fair value. If, within 60 days thereafter, IPC and the
Dissenter have not agreed upon the fair value of the Shares and the interest
due, IPC must either pay the Dissenter the difference in value demanded by the
Dissenter or file a petition in circuit court requesting the court to determine
the fair value of the Shares and the interest due.
The foregoing summary does not purport to be a complete statement of the
provisions of Sections 11.65 and 11.70 of the Business Corporation Act and is
qualified in its entirety by reference to the relevant portions of such
Sections, copies of which are attached hereto as Attachment A.
A Dissenter who receives payment for his or her Shares upon exercise of the
right of dissent will, subject to the provisions of the Section 302(b) of the
Internal Revenue Code, recognize gain or loss for Federal income tax purposes,
measured by the difference between the cost basis for his or her Shares and the
amount of payment received.
PREFERRED SHAREHOLDERS WHO WISH TO RESERVE THE RIGHT TO EXERCISE
DISSENTERS' RIGHTS SHOULD REVIEW CAREFULLY THE FOREGOING DISCUSSION AND THE
PROVISIONS OF THE BUSINESS CORPORATION ACT SET FORTH IN ATTACHMENT A. THE
FAILURE TO COMPLY STRICTLY WITH THE DESCRIBED PROCEDURES WILL RESULT IN THE LOSS
OF ANY SUCH DISSENTERS' RIGHTS. ANY PREFERRED SHAREHOLDER WHO CONTEMPLATES THE
ASSERTION OF DISSENTERS' RIGHTS IS URGED TO CONSULT HIS OR HER OWN COUNSEL.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
IPC Securities. As noted above, ILN owns all the outstanding common stock
of IPC. ILN, IPC and their subsidiaries and affiliates did not beneficially own
any Shares as of January 31, 1998. None of the pension, profit sharing or other
retirement plans of such entities beneficially owned any Shares as of January
31, 1998. In addition, IPC's and ILN's directors and executive officers did not
beneficially own any Shares as of January 31, 1998. There was no person or group
known by management of IPC to be the beneficial owner of
4
<PAGE> 9
more than 5% of the Shares as of January 31, 1998, except for the State of
Michigan Retirement Systems, 430 W. Allegan, Lansing, MI 48909, which
beneficially owned 150,000, or 13.17%, of the Shares on that date.
ILN Securities. The beneficial ownership of ILN's common stock held by each
director of ILN and IPC, the five most highly compensated executive officers of
ILN and IPC in 1997, all directors and executive officers as a group of ILN and
IPC, and persons or groups owning more than 5%, as of January 31, 1998 (unless
otherwise noted), is set forth in the following table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
------------------------ ----------------------- ----------------
<S> <C> <C>
Larry F. Altenbaumer....................................... 13,092(2) *
David W. Butts............................................. 8,817 *
John G. Cook............................................... 11,894(2) *
Larry D. Haab.............................................. 68,250(2) *
Paul L. Lang............................................... 21,216(2) *
Robert A. Schultz.......................................... 8,551(2) *
J. Joe Adorjan............................................. 0 *
C. Steven McMillan......................................... 1,300 *
Robert M. Powers........................................... 8,550 *
Sheli Z. Rosenberg......................................... 0 *
Walter D. Scott............................................ 5,150 *
Joe J. Stewart............................................. 0 *
Ronald L. Thompson......................................... 3,677 *
Walter M. Vannoy........................................... 5,010 *
Marilou von Ferstel........................................ 4,420 *
John D. Zeglis............................................. 2,626 *
All directors and executive officers as a group............ 187,021 *
Hotchkis & Wiley........................................... 6,321,233 8.8%
800 W. 6th Street, 5th Floor
Los Angeles, CA 90017
Merrill Lynch Asset Management, L.P. ...................... 6,321,253(3) 8.8%
800 Scudders Mill Road
Plainsboro, NJ 08536
State of Michigan Retirement Systems....................... 3,714,300 5.18%
430 W. Allegan
Lansing, MI 48909
</TABLE>
- -------------------------
* Less than 1%.
(1) Each person named in the table has sole voting and investment power with
respect to shares of ILN's common stock listed as owned by each person,
unless otherwise noted.
(2) Includes the following shares of common stock issuable pursuant to stock
options exercisable within the next 60 days: Mr. Haab, 56,900; Mr. Lang,
17,800; Mr. Altenbaumer, 17,800; Mr. Butts, 7,900; Mr. Cook, 9,900; and Mr.
Schultz, 6,750.
(3) Merrill Lynch Asset Management, L.P. has shared voting and investment power
with respect to these shares according to its Schedule 13G filed February 2,
1998.
5
<PAGE> 10
BUSINESS TO COME BEFORE THE SPECIAL MEETING
The following Proposed Amendment to the Articles is the only item of
business expected to be presented at the Special Meeting:
To remove in its entirety ARTICLE V, Section 1, Clause (f)(1), limiting
IPC's ability to issue or assume unsecured indebtedness.
THE FOLLOWING STATEMENTS, UNLESS THE CONTEXT OTHERWISE REQUIRES, ARE
SUMMARIES OF THE SUBSTANCE OR GENERAL EFFECT OF PROVISIONS OF THE ARTICLES, AND
ARE QUALIFIED IN THEIR ENTIRETY BY THE ARTICLES, INCLUDING ARTICLE V SECTION 1,
CLAUSE (F)(1) (AS DESCRIBED BELOW).
EXPLANATION OF THE PROPOSED AMENDMENT
The Debt Limitation Provision in the Articles currently prohibits, without
the consent of the holders of a majority of the outstanding Shares, the issuance
or assumption by IPC of any unsecured notes, debentures or other securities
representing unsecured indebtedness (other than for the purpose of refunding
outstanding unsecured indebtedness or for the redemption or retirement of all
outstanding Shares) if, immediately after such issuance or assumption, the total
outstanding principal amount of all securities representing unsecured
indebtedness (including unsecured securities then to be issued or assumed) would
exceed 20% of the aggregate of (i) the total principal amount of all outstanding
secured indebtedness issued or assumed by IPC at the time of such issuance or
assumption and (ii) the capital and surplus of IPC, as then stated on IPC's
books of account. The Proposed Amendment, if adopted, would eliminate in its
entirety the Debt Limitation Provision, as set forth below, from the Articles:
(f)(1) The Corporation shall not, without the consent (given by vote
at a meeting called for that purpose) of the holders of at least a majority
of the total number of shares of Preferred Stock then outstanding, issue
any unsecured notes, debentures or other securities representing unsecured
indebtedness, or assume any such unsecured indebtedness, for purposes other
than (A) the refunding of outstanding unsecured indebtedness theretofore
issued or assumed by the Corporation, (B) the reacquisition, redemption or
other retirement of any indebtedness which reacquisition, redemption or
other retirement has been approved by any regulatory authority having
jurisdiction in the premises, or (C) the reacquisition, redemption or other
retirement of all outstanding shares of Preferred Stock or of any other
class of stock ranking prior to, or on a parity with, Preferred Stock as to
dividends or other distributions, if immediately after such issue or
assumption the total principal amount of all unsecured notes, debentures or
other securities representing unsecured indebtedness issued or assumed by
the Corporation including unsecured indebtedness then to be issued or
assumed would exceed twenty percent (20%) of the aggregate of (a) the total
principal amount of all bonds or other securities representing secured
indebtedness issued or assumed by the Corporation and then to be
outstanding, and (b) the capital and surplus of the Corporation as then to
be stated on the books of account of the Corporation.
REASONS FOR THE PROPOSED AMENDMENT
General. IPC believes that legislative, regulatory, technological and
market developments will lead to a more competitive environment in the electric
utility industry. As competition intensifies, flexibility and cost reduction
will be even more crucial to success. Because the electric utility industry is
extremely capital intensive, control and minimization of financing costs are of
particular importance. In response to the competitive forces and regulatory
changes faced by IPC, IPC has from time to time considered, and expects to
continue to consider, various strategies designed to enhance its competitive
position and to increase its ability to adapt to and anticipate changes in its
utility business.
IPC believes that adoption of the Proposed Amendment is critical to
financial flexibility and capital cost reduction. If the Proposed Amendment is
adopted, the Debt Limitation Provision will be eliminated. Historically, IPC's
debt financing generally has been accomplished through the issuance of long-term
mortgage bonds, unsecured indebtedness and pollution control bonds. IPC has
mortgage bonds outstanding under two mortgages: (i) the 1943 Mortgage and Deed
of Trust, between IPC and Harris Trust and Savings
6
<PAGE> 11
Bank (the "1943 Mortgage"), and (ii) the 1992 General Mortgage and Deed of
Trust, between IPC and Harris Trust and Savings Bank (the "1992 Mortgage").
Mortgage bonds issued under the 1943 Mortgage represent secured indebtedness
placing a first priority lien on substantially all of IPC's assets. While
subject to the prior lien of the 1943 Mortgage, IPC's utility assets are also
subject to the junior lien of the 1992 Mortgage. IPC's mortgage bonds issued
under both the 1943 Mortgage and the 1992 Mortgage contain certain restrictive
covenants with respect to, among other things, the disposition of assets and the
ability to issue additional mortgage bonds. Unsecured indebtedness generally has
fewer restrictions than mortgage bonds. Short-term indebtedness, a lower cost
form of debt available to IPC, represents one type of unsecured indebtedness.
Pollution control bond financing, a more favorable type of financing due to its
tax-exempt status, is available only for very limited purposes.
The Proposed Amendment will not only allow IPC to issue a greater amount of
unsecured indebtedness, but also will allow IPC to issue a greater amount of
total indebtedness. IPC, however, presently has no intention of issuing a
greater amount of unsecured debt or total debt than it would have issued absent
the adoption of the Proposed Amendment. It is IPC's intention to retain
flexibility in the mix of its outstanding debt and therefore have the option to
use more short-term and other unsecured debt and fewer mortgage bonds. In
addition, as a regulated utility, the issuance of any securities by IPC would
continue to be subject to the prior approval of the Illinois Commerce Commission
(the "ICC") (with respect to securities maturing in more than one year) or the
Federal Energy Regulatory Commission (with respect to securities maturing in one
year or less).
Inasmuch as the Debt Limitation Provision contained in the Articles limits
IPC's flexibility in planning and financing its business activities, IPC
believes it ultimately will be at a competitive disadvantage if the Debt
Limitation Provision is not eliminated. The industry's new competitors (for
example, power marketers, exempt wholesale generators, independent power
producers and cogeneration facilities) generally are not subject to the type of
financing restrictions the Debt Limitation Provision imposes on IPC. Recently,
several other utilities with the same or similar charter restrictions have
successfully eliminated such provisions by soliciting their shareholders for the
same or similar amendments. In addition, some potential utility competitors have
no comparable provision restricting the issuance of unsecured debt. Given the
onset of competition in the utility industry, IPC must continue to explore new
ways of reducing costs and enhancing flexibility. IPC believes that the adoption
of the Proposed Amendment will be in the best long-term competitive interests of
its shareholders.
Financial Flexibility. If the Proposed Amendment is adopted, IPC will have
increased flexibility (i) to choose among different types of debt financing and
(ii) to finance projects using the most cost effective means. IPC believes that
various types of unsecured debt alternatives may increase in importance as a
financing option. The availability and flexibility of unsecured debt is
necessary to take full advantage of changing conditions in securities markets.
In addition, although IPC's earnings currently are sufficient to meet the
earnings coverage tests that must be satisfied before issuing additional
mortgage bonds and preferred stock, there is no guarantee that this will be true
in the future. Other utilities have been unable to issue mortgage bonds during
certain periods because of restrictive covenants in their mortgages. IPC's
inability to issue mortgage bonds or preferred stock in the future, combined
with the inability to issue additional unsecured debt, would limit IPC's
financing options to more costly options, including additional common equity.
Moreover, continued reliance on the issuance of mortgage bonds could limit IPC's
ability in the future to strategically redeploy its assets.
Under the Debt Limitation Provision, IPC's use of unsecured short-term
indebtedness is presently restricted. However, IPC believes that the prudent use
of such indebtedness in excess of this provision is vital to effective financial
management of its business. Not only is unsecured short-term indebtedness
generally one of the least expensive forms of capital, it also provides
flexibility in meeting seasonal and business cycle fluctuations in cash
requirements, acts as a bridge between issues of permanent capital and can be
used when unfavorable conditions prevail in the market for long-term capital.
However, because of the Debt Limitation Provision, as of December 31, 1997, the
maximum amount of unsecured indebtedness that IPC was authorized under its
Articles to issue or assume was approximately $612.7 million. As of December 31,
1997,
7
<PAGE> 12
IPC had approximately $444.8 million of unsecured indebtedness outstanding, thus
leaving an additional $167.9 million of capacity available.
Lower Costs. As previously mentioned, IPC's short-term debt issuances
generally represent one of its lowest-cost forms of financing. By increasing its
use of short-term debt, IPC may be able to lower its cost structure further,
thereby making its products more competitive and reducing its business risks.
However, with the Debt Limitation Provision in place, the availability and
corresponding benefits of short-term debt diminish. In addition, although
short-term debt may expose the borrower to more volatility in interest rates, it
should be noted that the cost of short-term debt seldom exceeds the cost of
other forms of capital available at the same time.
FOR ALL THE ABOVE REASONS, IPC'S BOARD BELIEVES THE BEST LONG-TERM
INTERESTS OF SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO VOTE IN
FAVOR OF, THE ADOPTION OF THE PROPOSED AMENDMENT.
CERTAIN EFFECTS OF THE PROPOSED AMENDMENT
If the Proposed Amendment is adopted at the Special Meeting, Preferred
Shareholders will no longer be entitled to the benefits of the Debt Limitation
Provision, which will have been removed by the Proposed Amendment. As discussed
above, the Debt Limitation Provision places restrictions on IPC's ability to
issue or assume unsecured indebtedness. Although IPC's debt instruments may
contain certain restrictions on IPC's ability to issue or assume debt, any such
restrictions may be waived and the increased flexibility afforded IPC by the
removal of the Debt Limitation Provision may permit IPC to take certain actions
that may increase the credit risks with respect to IPC, adversely affecting the
market prices and credit ratings of the Shares, or otherwise be materially
adverse to the interests of the Preferred Shareholders. In addition, to the
extent that IPC elects to issue or assume additional unsecured indebtedness, the
Preferred Shareholders' relative position in IPC's capital structure could be
perceived to decline, which in turn could adversely affect the market prices and
credit ratings of the remaining Shares. Since holders of any debt, including
unsecured indebtedness, would rank ahead of Preferred Shareholders in a
bankruptcy or other liquidation of IPC, the issuance of a greater amount of
unsecured indebtedness may pose additional risk to Preferred Shareholders under
certain circumstances, including circumstances relating to IPC's default in the
repayment of such indebtedness.
RATING AGENCIES
As of the date of this Proxy Statement, each Series of Preferred was rated
baa2 by Moody's Investors Service, Inc. and BBB- by Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies, Inc. (collectively, the
"Rating Agencies"). The Rating Agencies have been advised of the Proposed
Amendment. The Rating Agencies have advised IPC that the adoption of the
Proposed Amendment, in and of itself, will not result in a reduction of the
current ratings of IPC's cumulative preferred stock.
Ratings are not recommendations to purchase, hold or sell the Shares
inasmuch as the ratings do not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished to
the Rating Agencies by IPC and obtained from other sources. The ratings may be
changed, suspended or withdrawn as a result of changes in, or the unavailability
of, such information.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
ILN's Board of Directors has selected Price Waterhouse LLP as independent
accountants for ILN and its subsidiaries, including IPC, for the year 1998. A
representative of Price Waterhouse LLP is expected to be present at the Special
Meeting with the opportunity to make a statement and to respond to appropriate
questions from shareholders.
8
<PAGE> 13
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Schiff Hardin & Waite, counsel to IPC, the following
summary describes the principal United States federal income tax consequences of
the receipt of Special Cash Payments and the adoption of the Proposed Amendment.
This summary is based on the Internal Revenue Code of 1986, as amended to the
date hereof (the "Code"), administrative pronouncements, judicial decisions and
existing and proposed Treasury Regulations, changes to any of which subsequent
to the date of this Proxy Statement may adversely affect the tax consequences
described herein, possibly on a retroactive basis. This summary is addressed to
Preferred Shareholders who hold Shares as capital assets within the meaning of
Section 1221 of the Code. This summary does not discuss all of the tax
consequences that may be relevant to a Preferred Shareholder in light of such
Preferred Shareholder's particular circumstances or to Preferred Shareholders
subject to special rules (including certain financial institutions, tax-exempt
organizations, insurance companies, dealers in securities or currencies, and
Preferred Shareholders who are not citizens or residents of the United States).
Preferred Shareholders should consult their tax advisors with regard to the
application of the United States federal income tax laws to their particular
situations as well as any tax consequences arising under the laws of any state,
local or foreign taxing jurisdiction.
As used herein, the term "United States Holder" means an owner of a Share
that is for United States federal income tax purposes (i) a citizen or resident
of the United States; (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof; (iii) an estate, or for taxable years beginning on or
before December 31, 1996, in general, any trust, the income of which is subject
to United States federal income taxation regardless of its source; or (iv) for
taxable years beginning after December 31, 1996, any trust if a court within the
United States is able to exercise primary supervision over the administration of
such trust and one or more United States fiduciaries have the authority to
control all substantial decisions of such trust. A "Non-United States Holder" is
a Preferred Shareholder that is not a United States Holder.
SPECIAL CASH PAYMENTS; MODIFICATION OF ARTICLES
United States Holders. There is no direct authority concerning the Federal
income tax consequences of the receipt of Special Cash Payments. IPC will, for
information reporting purposes, treat Special Cash Payments as ordinary dividend
income to recipient United States Holders.
Non-United States Holders. IPC will treat Special Cash Payments paid to a
Non-United States Holder of Shares as subject to withholding of United States
Federal income tax at a 30% rate. However, Special Cash Payments that are
effectively connected with the conduct of a trade or business by the Non-United
States Holder within the United States are not subject to the withholding tax
(provided such Non-United States Holder provides two originals of Internal
Revenue Service ("IRS") Form 4224 stating that such Special Cash Payments are so
effectively connected), but instead are subject to United States Federal income
tax on a net income basis at applicable graduated individual or corporate rates.
Any such effectively connected Special Cash Payments received by a foreign
corporation may, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate (or such lower rate as may be specified by an
applicable income tax treaty). A Non-United States Holder of Shares eligible for
a reduced rate of United States withholding tax pursuant to an income tax treaty
may obtain a refund of any excess amounts withheld by filing an appropriate
claim for refund with the IRS.
Preferred Shareholders will not recognize any taxable gain or loss with
respect to the Shares as a result of the modification of the Articles by the
Proposed Amendment.
BACKUP WITHHOLDING
ANY PREFERRED SHAREHOLDER WHO FAILS TO COMPLETE AND SIGN THE SUBSTITUTE
FORM W-9 THAT IS INCLUDED IN THE PROXY (OR, IN THE CASE OF A FOREIGN
9
<PAGE> 14
PREFERRED SHAREHOLDER, FORM W-8 OBTAINABLE FROM THE INFORMATION AGENT) MAY BE
SUBJECT TO A REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING OF 31% OF THE
SPECIAL CASH PAYMENT IN THE EVENT THE PROPOSED AMENDMENT IS ADOPTED AT THE
SPECIAL MEETING. To prevent backup United States Federal income tax withholding
with respect to the Special Cash Payment, a United States Holder must provide
IPC with the Preferred Shareholder's correct taxpayer identification number and
certify that the Preferred Shareholder is not subject to backup withholding of
Federal income tax by completing the Substitute Form W-9 included in the Proxy
and returning it to the Information Agent. Certain Preferred Shareholders
(including, among others, all corporations and certain foreign shareholders) are
exempt from backup withholding. For a corporate United States Holder to qualify
for such exemption, such Preferred Shareholder must provide IPC with a properly
completed and executed Substitute Form W-9 attesting to its exempt status. In
order for a foreign Preferred Shareholder to qualify as an exempt recipient, the
foreign holder must submit a Form W-8, Certificate of Foreign Status, signed
under penalties of perjury, attesting to that Preferred Shareholder's exempt
status. A copy of Form W-8 may be obtained from the Information Agent.
Unless a Preferred Shareholder provides the appropriate certification,
under the applicable law and regulations concerning "backup withholding" of
United States Federal income tax, IPC will be required to withhold, and will
withhold, 31% of the gross proceeds otherwise payable to such Preferred
Shareholder or other payee. The amount of any backup withholding from a payment
to a Preferred Shareholder will be allowed as a credit against such Preferred
Shareholder's United States federal income tax liability and may entitle such
Preferred Shareholder to a refund, provided that the required information is
furnished to the IRS. However, backup withholding is not required for amounts
subject to withholding discussed above under "Non-United States Holders."
FEES AND EXPENSES
Donaldson, Lufkin & Jenrette Securities Corporation will act as the
Solicitation Agent for IPC in connection with the proxy solicitation. The
Solicitation Agent will solicit Proxies, will attempt to respond to inquiries of
Preferred Shareholders and will receive a fee for such services equal to $
per Share for any Shares that are voted in favor of the Proposed Amendment,
provided that the Proposed Amendment is adopted at the Special Meeting. The
Solicitation Agent will also be reimbursed by IPC for its reasonable out-
of-pocket expenses, including attorneys' fees, and will be indemnified against
certain liabilities, including certain liabilities under the federal securities
laws, in connection with its engagement as Solicitation Agent. The Solicitation
Agent has rendered, is currently rendering and is expected to continue to render
various investment banking and other advisory services to IPC. The Solicitation
Agent has received, and will continue to receive, customary compensation from
IPC for such services.
IPC has retained MacKenzie Partners, Inc. as the Information Agent in
connection with the proxy solicitation. The Information Agent will solicit
Proxies and be responsible for collecting Proxies. The Information Agent will
receive reasonable and customary compensation for its services and will also be
reimbursed for reasonable out-of-pocket expenses, including attorneys' fees. IPC
has agreed to indemnify the Information Agent against certain liabilities,
including certain liabilities under the federal securities laws, in connection
with the proxy solicitation.
CERTAIN INFORMATION REGARDING IPC AND ILN;
INCORPORATION BY REFERENCE
GENERAL
IPC, organized in 1923, is a combination electric and gas utility and a
subsidiary of ILN. IPC is engaged in the generation, transmission, distribution
and sale of electric energy and the distribution, transportation and sale of
natural gas in the State of Illinois. Its service area is a widely diversified
industrial and agricultural area comprising approximately 15,000 square miles in
northern, central and southern Illinois. Electric service is provided at retail
to 310 incorporated municipalities, adjacent suburban and rural areas and
numerous
10
<PAGE> 15
unincorporated municipalities. Gas service is provided to 257 incorporated
municipalities, adjacent suburban areas and numerous unincorporated
municipalities. The larger cities served include Decatur, East St. Louis (gas
only), Champaign, Danville, Belleville, Granite City, Bloomington (electric
only), Galesburg, Urbana and Normal (electric only).
ILN is a holding company organized in Illinois in May 1994, which conducts
substantially all of its business through its subsidiaries. In addition to IPC,
ILN has two other principal operating subsidiaries: Illinova Generating Company,
organized in October 1992, is an independent power company which invests in
energy supply projects and competes in the independent power market worldwide;
and Illinova Energy Partners, Inc., organized in July 1994, is in the business
of (i) developing and marketing energy-related services to the unregulated
energy market in the United States and (ii) brokering and marketing electric
power and gas to various customers. IPC's financial position and results of
operations are currently the principal factors affecting ILN's consolidated
financial position and results of operation.
INCORPORATION BY REFERENCE
IPC and ILN are subject to the informational requirements of the Exchange
Act and in accordance therewith file reports and other information with the
Securities and Exchange Commission (the "SEC"). Such reports and other
information may be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549; 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and Seven World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the SEC, 450 Fifth Street,
N.W., Washington D.C. 20549 at prescribed rates. The SEC maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC,
including IPC and ILN. Reports, proxy materials and other information about IPC
and ILN are also available at the offices of the NYSE, 20 Broad Street, New
York, New York 10005. IPC has filed this Proxy Statement (and related documents)
with the SEC pursuant to Rule 14a-6 of the Exchange Act.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION;
INCORPORATION BY REFERENCE
Set forth below is certain consolidated historical financial information of
IPC and its subsidiaries. The historical financial information (other than the
ratios of earnings to fixed charges) was derived from the audited consolidated
financial statements included in IPC's Annual Report on Form 10-K for the year
ended December 31, 1997.
CONDENSED INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
---- ----
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C>
Operating Revenues.......................................... $ 1,773.9 $ 1,688.7
Operating Income............................................ 278.7 361.4
Allowance for Borrowed Funds Used During Construction....... (5.0) (6.5)
Interest Expense............................................ 128.7 133.0
Net Income (Loss)........................................... (44.2) 228.6
Less-Preferred Dividend Requirement....................... 21.5 22.3
Plus -- Carrying Amount Over (Under) Consideration Paid
for Redeemed Preferred Stock of Subsidiary............. 0.2 (0.7)
Net Income (Loss) Applicable to Common Stock................ (65.5) 205.6
Ratio of Earnings to Fixed Charges.......................... 1.24 3.40
</TABLE>
11
<PAGE> 16
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1996
---- ----
(MILLIONS)
<S> <C> <C>
Assets
Plant and property........................................ $7,353.4 $6,981.5
Less -- accumulated depreciation.......................... 2,808.1 2,419.7
-------- --------
Net utility plant...................................... 4,545.3 4,561.8
Nuclear fuel under capital lease.......................... 133.0 101.7
Investments and other assets.............................. 5.9 14.5
Current assets............................................ 414.8 444.3
Deferred charges.......................................... 192.5 446.2
-------- --------
Total................................................ $5,291.5 $5,568.5
======== ========
Capital and Liabilities
Common stock.............................................. $1,417.3 $1,416.4
Treasury stock............................................ (207.7) (86.2)
Retained earnings......................................... 89.5 245.9
Preferred stock........................................... 57.1 96.2
Mandatorily redeemable preferred stock.................... 197.0 197.0
Long-term debt............................................ 1,617.5 1,636.4
-------- --------
Total capitalization................................. 3,170.7 3,505.7
Current liabilities....................................... 729.1 655.5
Deferred credits and other noncurrent liabilities......... 1,391.7 1,407.3
-------- --------
Total................................................ $5,291.5 $5,568.5
======== ========
</TABLE>
The financial statements of IPC and related information included in its
Annual Report on Form 10-K for the year ended December 31, 1997, and its Current
Reports on Form 8-K, dated February 13, 1998, January 21, 1998 and April 13,
1998, each as filed with the SEC, are hereby incorporated by reference. All
documents subsequently filed by IPC pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Proxy Statement shall be deemed
to be incorporated by reference in this Proxy Statement and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Proxy Statement to the extent
that a statement contained herein or in any other subsequently filed documents
which is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this Proxy
Statement.
IPC will provide without charge to each person to whom a copy of this Proxy
Statement has been delivered, on the written or oral request of any such person,
a copy of any or all of the documents described above which have been
incorporated by reference in this Proxy Statement, other than exhibits to such
documents. Written requests for copies of such documents should be addressed to
the Shareholder Services Department, Illinois Power Company at 500 South 27th
Street, Decatur, Illinois 62525 (telephone (800) 800-8220) or at the Illinova
Website on the World Wide Web at http://www.illinova.com. The information
relating to IPC and ILN contained in this Proxy Statement does not purport to be
comprehensive and should be read together with the information contained in the
documents incorporated by reference.
SHAREHOLDER PROPOSALS
If a shareholder intends to present a proposal at the 1999 Annual Meeting
of Shareholders of IPC, the proposal must be received by the Corporate Secretary
of IPC not later than November 12, 1998 for inclusion in IPC's proxy or
information statement and form of proxy, if applicable.
12
<PAGE> 17
OTHER BUSINESS
Management does not know of any matter which will be presented for
consideration at the Special Meeting other than the matters described in the
accompanying Notice of Special Meeting.
ILLINOIS POWER COMPANY
Decatur, Illinois
April , 1998
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<PAGE> 18
ATTACHMENT A
ILLINOIS DISSENTERS' RIGHTS
SECTION 11.65. RIGHT TO DISSENT.
(a) A shareholder of a corporation is entitled to dissent from, and obtain
payment for his or her shares in the event of any of the following corporate
actions:
(1) consummation of a plan of merger or consolidation or a plan of
share exchange to which the corporation is a party if
(i) shareholder authorization is required for the merger or
consolidation or the share exchange by Section 11.20 or the articles of
incorporation or
(ii) the corporation is a subsidiary that is merged with its parent
or another subsidiary under Section 11.30;
(2) consummation of sale, lease or exchange of all, or substantially
all, of the property and assets of the corporation other than in the usual
and regular course of business;
(3) an amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of such shares;
(ii) alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of such shares;
(iii) in the case of a corporation incorporated prior to January 1,
1982, limits or eliminates cumulative voting rights with respect to such
shares; or
(4) any other corporate action taken pursuant to a shareholder vote if
the articles of incorporation, by-laws, or a resolution of the board of
directors provide that shareholders are entitled to dissent and obtain
payment for their shares in accordance with the procedures set forth in
Section 11.70 or as may be otherwise provided in the articles, by-laws or
resolution.
(b) A shareholder entitled to dissent and obtain payment for his or her
shares under this Section may not challenge the corporate action creating his or
her entitlement unless the action is fraudulent with respect to the shareholder
or the corporation or constitutes a breach of a fiduciary duty owed to the
shareholder.
(c) A record owner of shares may assert dissenters' rights as to fewer than
all the shares recorded in such person's name only if such person dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the record owner asserts dissenters' rights. The rights of a partial dissenter
are determined as if the shares as to which dissent is made and other shares
were recorded in the names of different shareholders. A beneficial owner of
shares who is not the record owner may assert dissenters' rights as to shares
held on such person's behalf only if the beneficial owner submits to the
corporation the record owner's written consent to the dissent before or at the
same time the beneficial owner asserts dissenters' rights.
SECTION 11.70. PROCEDURE TO DISSENT.
(a) If the corporate action giving rise to the right to dissent is to be
approved at a meeting of shareholders, the notice of meeting shall inform the
shareholders of their right to dissent and the procedure to dissent. If, prior
to the meeting, the corporation furnishes to the shareholders material
information with respect to the transaction that will objectively enable a
shareholder to vote on the transaction and to determine whether or not to
exercise dissenters' rights, a shareholder may assert dissenters' rights only if
the shareholder delivers to the corporation before the vote is taken a written
demand for payment for his or her shares if the proposed action is consummated,
and the shareholder does not vote in favor of the proposed action.
A-1
<PAGE> 19
(b) If the corporate action giving rise to the right to dissent is not to
be approved at a meeting of shareholders, the notice to shareholders describing
the action taken under Section 11.30 or Section 7.10 shall inform the
shareholders of their right to dissent and the procedure to dissent. If, prior
to or concurrently with the notice, the corporation furnishes to the
shareholders material information with respect to the transaction that will
objectively enable a shareholder to determine whether or not to exercise
dissenters' rights, a shareholder may assert dissenters' rights only if he or
she delivers to the corporation within 30 days from the date of mailing the
notice a written demand for payment for his or her shares.
(c) Within 10 days after the date on which the corporate action giving rise
to the right to dissent is effective or 30 days after the shareholder delivers
to the corporation the written demand for payment, whichever is later, the
corporation shall send each shareholder who has delivered a written demand for
payment a statement setting forth the opinion of the corporation as to the
estimated fair value of the shares, the corporation's latest balance sheet as of
the end of a fiscal year ending not earlier than 16 months before the delivery
of the statement, together with the statement of income for that year and the
latest available interim financial statements, and either a commitment to pay
for the shares of the dissenting shareholder at the estimated fair value thereof
upon transmittal to the corporation of the certificate or certificates, or other
evidence of ownership, with respect to the shares, or instructions to the
dissenting shareholder to sell his or her shares within 10 days after delivery
of the corporation's statement to the shareholder. The corporation may instruct
the shareholder to sell only if there is public market for the shares at which
the shares may be readily sold. If the shareholder does not sell within that 10
day period after being so instructed by the corporation, for purposes of this
Section the shareholder shall be deemed to have sold his or her shares at the
average closing price of the shares, if listed on a national exchange, or the
average of the bid and asked price with respect to the shares quoted by a
principal market maker, if not listed on a national exchange, during that 10 day
period.
(d) A shareholder who makes written demand for payment under this Section
retains all other rights of a shareholder until those rights are canceled or
modified by the consummation of the proposed corporate action. Upon consummation
of that action, the corporation shall pay to each dissenter who transmits to the
corporation the certificate or other evidence of ownership of the shares the
amount the corporation estimates to be the fair value of the shares, plus
accrued interest, accompanied by a written explanation of how the interest was
calculated.
(e) If the shareholder does not agree with the opinion of the corporation
as to the estimated fair value of the shares or the amount of interest due, the
shareholder, within 30 days from the delivery of the corporation's statement of
value, shall notify the corporation in writing of the shareholder's estimated
fair value and amount of interest due and demand payment for the difference
between the shareholder's estimate of fair value and interest due and the amount
of the payment by the corporation or the proceeds of sale by the shareholder,
whichever is applicable because of the procedure for which the corporation opted
pursuant to subsection (c).
(f) If, within 60 days from delivery to the corporation of the shareholder
notification of estimate of fair value of the shares and interest due, the
corporation and the dissenting shareholder have not agreed in writing upon the
fair value of the shares and interest due, the corporation shall either pay the
difference in value demanded by the shareholder, with interest, or file a
petition in the circuit court of the county in which either the registered
office or the principal office of the corporation is located, requesting the
court to determine the fair value of the shares and interest due. The
corporation shall make all dissenters, whether or not residents of this State,
whose demands remain unsettled parties to the proceeding as an action against
their shares and all parties shall be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication as
provided by law. Failure of the corporation to commence an action pursuant to
this Section shall not limit or affect the right of the dissenting shareholders
to otherwise commence an action as permitted by law.
(g) The jurisdiction of the court in which the proceeding is commenced
under subsection (f) by a corporation is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision of the question of fair value. The appraisers have the power described
in the order appointing them, or in any amendment to it.
A-2
<PAGE> 20
(h) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds that the fair value of his or
her shares, plus interest, exceeds the amount paid by the corporation or the
proceeds of sale by the shareholder, whichever amount is applicable.
(i) The court, in a proceeding commenced under subsection (f), shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of the appraisers, if any, appointed by the court under subsection (g),
but shall exclude the fees and expenses of counsel and experts for the
respective parties. If the fair value of the shares as determined by the court
materially exceeds the amount which the corporation estimated to be the fair
value of the shares or if no estimate was made in accordance with subsection
(c), then all or any part of the costs may be assessed against the corporation.
If the amount which any dissenter estimated to be the fair value of the shares
materially exceeds the fair value of the shares as determined by the court, then
all or any part of the costs may be assessed against that dissenter. The court
may also assess the fees and expenses of counsel and experts for the respective
parties, in amounts the court finds equitable, as follows:
(1) Against the corporation and in favor of any or all dissenters if
the court finds that the corporation did not substantially comply with the
requirements of subsections (a), (b), (c), (d), or (f).
(2) Against either the corporation or a dissenter and in favor of any
other party if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this Section.
If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and that the fees for
those services should not be assessed against the corporation, the court may
award to that counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who are benefitted. Except as otherwise provided in this Section,
the practice, procedure, judgment and costs shall be governed by the Code of
Civil Procedure.
(j) As used in this Section:
(1) "Fair value", with respect to a dissenter's shares, means the
value of the shares immediately before the consummation of the corporate
action to which the dissenter objects excluding any appreciation or
depreciation in anticipation of the corporate action, unless exclusion
would be inequitable.
(2) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
A-3
<PAGE> 21
Facsimile copies of the Proxy will be accepted from any holder. The Proxy
should be sent or delivered by each voting Preferred Shareholder of IPC or his
or her broker, dealer, bank or trust company to the Information Agent at its
address set forth below.
Any questions or requests for assistance may be directed to the Information
Agent or the Solicitation Agent at their respective telephone numbers and
addresses listed below. Requests for additional copies of this Proxy Statement,
the Proxy or other proxy materials may be directed to the Information Agent, and
such copies will be furnished promptly at IPC's expense. Preferred Shareholders
may also contact their local broker, dealer, commercial bank or trust company
for assistance concerning the proxy solicitation.
The Information Agent:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(800) 322-2885 (Toll Free)
(212) 929-5500 (Call Collect)
If forwarding Proxies by facsimile:
<TABLE>
<S> <C>
Confirm by
Facsimile: telephone:
(212) 929-0308 (212) 929-5500
</TABLE>
The Solicitation Agent:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
(800) 334-1604 (Toll Free)
(212) 892-3351 (Call Collect)
Attn: Paul Galant or Jeff Dorst
<PAGE> 22
PROXY
4.08% SERIES CUMULATIVE PREFERRED STOCK, CUSIP NUMBER 452092 20 8
4.20% SERIES CUMULATIVE PREFERRED STOCK, CUSIP NUMBER 452092 30 7
4.26% SERIES CUMULATIVE PREFERRED STOCK, CUSIP NUMBER 452092 40 6
4.42% SERIES CUMULATIVE PREFERRED STOCK, CUSIP NUMBER 452092 50 5
4.70% SERIES CUMULATIVE PREFERRED STOCK, CUSIP NUMBER 452092 60 4
7.75% SERIES CUMULATIVE PREFERRED STOCK, CUSIP NUMBER 452092 79 4
The undersigned hereby appoints Larry D. Haab and Leah Manning Stetzner, or
either of them, as proxies, each with the power to appoint his or her
substitute, and hereby authorizes them to represent and to vote as designated
hereunder and in their discretion with respect to any other business properly
brought before the Special Meeting, all the shares of any and all of the series
of cumulative preferred stock listed above of Illinois Power Company ("IPC")
which the undersigned is entitled to vote at the Special Meeting of Shareholders
to be held on , 1998, or any adjournment(s) or postponement(s)
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF IPC. When
properly executed, this Proxy will be voted in the manner directed herein by the
undersigned shareholder(s). If no direction is made, the Proxy will be voted for
Item 1.
INDICATE YOUR VOTE BY AN (X). THE BOARD OF DIRECTORS OF IPC RECOMMENDS
VOTING FOR ITEM 1.
ITEM 1.
To remove in its entirety ARTICLE V, Section 1, Clause (f)(1) from the
Amended and Restated Articles of Incorporation of IPC (the "Articles"), which
limits IPC's ability to issue or assume unsecured indebtedness.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
NOTE: IF THE PROPOSED AMENDMENT IS ADOPTED AT THE SPECIAL MEETING, IPC WILL MAKE
A SPECIAL CASH PAYMENT TO EACH PREFERRED SHAREHOLDER OF RECORD AS OF APRIL 6,
1998, (THE "RECORD DATE"). THE SUBSTITUTE FORM W-9 CONTAINED HEREIN SHOULD BE
COMPLETED TO AVOID BACK-UP WITHHOLDING ON THE SPECIAL CASH PAYMENT.
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS OF IPC AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO
ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Any holder of Shares held of record on the Record Date in the name of
another holder must establish to the satisfaction of IPC his or her entitlement
to exercise or transfer this Proxy. This will ordinarily require an assignment
by such record holder in blank, or if not in blank, to and from each successive
transferee, including the holder, with each signature guaranteed by an Eligible
Institution.
Please check box if you plan to attend the Special Meeting. [ ]
Signature
------------------------------------------------ Date:
-----------------------------------------------, 1998
Print Name:
---------------------------------------------
<PAGE> 23
NOTICE OF SOLICITED PROXIES
If the Proposed Amendment is adopted at the Special Meeting, IPC will pay
to each designated Soliciting Dealer (as defined below) a separate fee of $
per Share for Shares which are voted (and not revoked) in favor of the Proposed
Amendment provided that with respect to beneficial owners affirmatively voting
2,000 or more Shares shall be paid 80% to the Solicitation Agent and 20% to any
designated Soliciting Dealer (which may be the Solicitation Agent). However,
Soliciting Dealers will not be entitled to a fee for Shares beneficially owned
by such Soliciting Dealer. For purposes of this paragraph, a "Soliciting Dealer"
shall include: (a) any broker or dealer in securities, including the
Solicitation Agent in its capacity as a dealer or broker, which is a member in
good standing of any national securities exchange or of the National Association
of Securities Dealers, Inc. (the "NASD"), (b) any foreign broker or dealer not
eligible for membership in the NASD which agrees to conform to the NASD's Rules
of Fair Practice in making solicitations, or (c) any bank or trust company. No
separate fee shall be payable to a Soliciting Dealer with respect to the vote of
Shares in favor of the Proposed Amendment by a holder unless the Proxy or the
Notice of Solicited Proxies relating to such Shares designates such Soliciting
Dealer. No such fee shall be payable to a Soliciting Dealer in respect of Shares
registered in the name of such Soliciting Dealer unless such Shares are held by
such Soliciting Dealer as nominee and such Shares are being voted for the
benefit of one or more beneficial owners identified on the Notice of Solicited
Proxies. No such fee shall be payable to a Soliciting Dealer with respect to the
vote of Shares by the holder of record, for the benefit of the beneficial owner,
unless the beneficial owner has designated such Soliciting Dealer in the Letter
from the Solicitation Agent to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees (the "Broker Letter").
The above signed represents that the Soliciting Dealer which solicited and
obtained this vote in favor of the Proposed Amendment is:
Name of Firm:
- --------------------------------------------------------------------------------
(Please Print)
Name of Individual Broker
or Financial Consultant:
- --------------------------------------------------------------------------------
(Please Print)
Telephone Number of Broker
or Financial Consultant:
- --------------------------------------------------------------------------------
Identification Number (if known):
- ---------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(Include Zip Code)
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that (a) it has complied with the applicable requirements
of the Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (b) it is entitled
to such compensation for such solicitation under the terms and conditions of the
Proxy Statement; (c) in soliciting votes in favor of the Proposed Amendment, it
has used no solicitation materials other than those furnished by IPC; and (d) if
it is a foreign broker or dealer not eligible for membership in the NASD, it has
agreed to conform to the NASD's Rules of Fair Practice in making solicitations.
<PAGE> 24
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: ILLINOIS POWER COMPANY
- ------------------------------------------------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
SUBSTITUTE CERTIFY BY SIGNING AND DATING BELOW. -----------------------------
FORM W-9 Social Security Number(s)
OR --------------------------
Employer Identification Number
-------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2-- PART 3--
INTERNAL REVENUE SERVICE CERTIFICATION -- Under Penalties of Perjury, I certify Awaiting TIN [ ]
that:
(1) The number shown on this form is my correct taxpayer
identification number (or a TIN has not been issued
to me but I have mailed or delivered an application
to receive a TIN or intend to do so in the near
future),
(2) I am not subject to backup withholding either
because (a) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or (b) the IRS has
notified me that I am no longer subject to backup
withholding.
-------------------------------------------------------------------------------------------
You must cross out item (2) above if you have been notified by the IRS that you are
PAYER'S REQUEST FOR currently subject to backup withholding because of underreporting interest or dividends
TAXPAYER IDENTIFICATION on your tax return.
NUMBER (TIN) SIGNATURE _________________________________ DATE ____________________________ 1998
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY SPECIAL CASH PAYMENTS MADE TO YOU. PLEASE REVIEW THE
ENCLOSED CERTIFICATION "GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
2 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to do so
in the near future. I understand that if I do not provide a taxpayer
identification number by the time of payment, 31% of all payments of the
purchase price made to me will be withheld until I provide such a number.
SIGNATURE __________________________________________________ DATE ____________
<PAGE> 25
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
PURPOSE OF FORM.--A person who is required to file an information return
with the IRS must obtain your correct Taxpayer Identification Number (TIN) to
report income paid to you, real estate transactions, mortgage interest you paid,
the acquisition or abandonment of secured property or contributions you made to
an IRA. Use the accompanying Substitute Form W-9 to furnish your correct TIN to
the requester (the person asking you to furnish your TIN) and, when applicable,
(1) to certify that the TIN you are furnishing is correct (or that you are
waiting for a number to be issued), (2) to certify that you are not subject to
backup withholding, or (3) to claim exemption from backup withholding if you are
an exempt payee. Furnishing your correct TIN and making the appropriate
certifications will prevent certain payments from being subject to backup
withholding.
HOW TO OBTAIN A TIN.--If you do not have a TIN, apply for one immediately.
To apply, get Form SS-5, Application for a Social Security Card (for
individuals), from your local office of the Social Security Administration, or
Form SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your local IRS office.
To complete Substitute Form W-9 if you do not have a TIN, write "Applied
for" in the space for the TIN in Part 1, sign and date the form, and give it to
the requester. Generally, you must obtain a TIN and furnish it to the requester
by the time of payment. If the requester does not receive your TIN by the time
of payment, backup withholding, if applicable, will begin and continue until you
furnish your TIN to the requester.
Note: Writing "Applied for" on the form means that you have already applied
for a TIN OR that you intend to apply for one in the near future.
As soon as you receive your TIN, complete another Substitute Form W-9,
include your TIN, sign and date the form, and give it to the requester.
WHAT IS BACKUP WITHHOLDING?--Persons making certain payments to you are
required to withhold and pay to the IRS 31% of such payments under certain
conditions. This is called "backup withholding". Payments that could be subject
to backup withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, non-employee compensation and certain payments
from fishing boat operators, but do not include real estate transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS notifies the requester that you furnished an incorrect TIN, or
3. You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax
return (for reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts
opened after 1983 only), or
5. You do not certify your TIN. This applies only to reportable interest,
dividend, broker or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.
Certain payees and payments are exempt from backup withholding and
information reporting. See Payees and Payments Exempt From Backup Withholding,
below, and Exempt Payees under Specific Instructions, below, if you are an
exempt payee.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING.--The following is a list
of payees exempt from backup withholding and for which no information reporting
is required. For interest and dividends, all listed payees are exempt except
item (9). For broker transactions, payees listed in (1) through (13) and a
person registered under the Investment Advisers Act of 1940 who regularly acts
as a broker are exempt. Payments subject to reporting under sections 6041 and
6041A are generally exempt from backup withholding only if made to payees
described in items (1) through (7), except a corporation that provides medical
and health care services or bills and collects payments for such services is not
exempt from backup withholding or information reporting. Only payees described
in items (2) through (6) are exempt from backup withholding for barter exchange
transactions, patronage dividends and payments by certain fishing boat
operations.
(1) A corporation. (2) An organization exempt from tax under section 501(a),
or an IRA, or a custodial account under section 403(b)(7). (3) The United States
or any of its agencies or instrumentalities. (4) A state, the District of
Columbia, a possession of the United States or any of their political
subdivisions or instrumentalities. (5) A foreign government or any of its
political subdivisions, agencies, or instrumentalities. (6) An international
organization or any of its agencies or instrumentalities. (7) A foreign central
bank of issue. (8) A dealer in securities or commodities required to register in
the United States or a possession of the United States. (9) A futures commission
merchant registered with the Commodity Futures Trading Commission. (10) A real
estate investment trust. (11) An entity registered at all times during the tax
year under the Investment Company Act of 1940. (12) A common trust fund operated
by a bank under section 584(a). (13) A financial institution. (14) A middleman
known in the investment community as a nominee or listed in the most recent
publication of the American Society of Corporate Secretaries, Inc., Nominee
List. (15) A trust exempt from tax under section 664 or described in section
4947.
Payments of dividend and patronage dividends generally not subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have not
provided your correct TIN to the payer.
- Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A and 605ON, and their regulations.
PENALTIES
FAILURE TO FURNISH TIN.--If you fail to furnish your correct TIN to a
requester, you will be subject to a penalty of $50 for each such failure
unless your failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
MISUSE OF TINS.--If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
<PAGE> 26
SPECIAL INSTRUCTIONS
NAME.--If you are an individual, you must generally provide the name shown
on your Social Security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
Social Security card, and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either the SSN or EIN. You may also enter your business name or "doing business
as" name on the business name line. Enter your name(s) as shown on your Social
Security card and/or as it was used to apply for your EIN on Form SS-4.
TAXPAYER IDENTIFICATION NUMBER.--You must enter your TIN in the appropriate
box. If you are a sole proprietor, you may enter your SSN or EIN. See the chart
below for further clarification of name and TIN combinations. If you do not have
a TIN, follow the instructions under How to Obtain a TIN on page 1.
EXEMPT PAYEES.--If you are exempt from backup withholding, you should
complete the Substitute Form W-9 to avoid possible erroneous backup withholding.
Enter your correct TIN in Par 1, write "EXEMPT" in the block in Part 2, and sign
and date the form, if you are a non-resident alien or foreign entity not subject
to backup withholding, give the requester a completed Form W-8, Certificate of
Foreign Status.
SIGNING THE CERTIFICATION
1. INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984
AND BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. You are required to furnish
your correct TIN, but you are not required to sign the certification.
2. INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED AFTER 1983
AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item 2 in the certification before signing the form.
3. REAL ESTATE TRANSACTIONS. You must sign the certification. You may cross
out item 2 of the certification.
4. OTHER PAYMENTS. You are required to furnish your correct TIN, but you are
not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees) and payments to certain
fishing boat crew members.
5. MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY OR IRA CONTRIBUTIONS. You are required to furnish your correct TIN, but
you are not required to sign the certification.
6. EXEMPT PAYEES AND PAYMENTS. If you are exempt from backup withholding, you
should complete this form to avoid possible erroneous backup withholding. Enter
your correct TIN in Part 1, write "EXEMPT" in the block in Part II, and sign and
date the form. If you are a nonresident alien or foreign entity not subject to
backup withholding, give the requester a complete Form W-8, Certificate of
Foreign Status.
7. TIN "APPLIED FOR." Follow the instructions under How To Obtain a TIN on
page 1, and sign and date the Substitute Form W-9.
SIGNATURE.--For a joint account, only the person whose TIN is shown in Part I
should sign.
PRIVACY ACT NOTICE.--Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your TIN whether or not you are required to file a tax return. Payers must
generally withhold 31% of taxable interest, dividend and certain other payments
to a payee who does not furnish a TIN to a payer. Certain penalties may also
apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE NAME AND SSN OF:
- --------------------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, the first individual
on the account(l)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-trustee(l)
trust (grantor is also
trustee)
b. So-called trust account that is The actual owner(l)
not a legal or valid trust
under state law
5. Sole proprietorship The owner(3)
6. A valid trust, estate, or pension Legal entity(4)
trust
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE NAME AND SSN OF:
- --------------------------------------------------------------------
<S> <C>
7. Corporate The corporation
8. Association, club, religious, The organization
charitable, educational or other
tax-exempt organization
9. Partnership The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state or
local government, school district
or prison) that receives
agriculture program payments
</TABLE>
==================================================================
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title).
NOTE:If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE> 27
ILLINOIS POWER COMPANY
PROXY SOLICITED BY ILLINOIS POWER COMPANY
DTC PARTICIPANT PROXY
The undersigned, a holder of record of shares of preferred stock of
Illinois Power Company ("IPC") on the record date, April 6, 1998, for this proxy
solicitation, hereby acknowledges receipt of the Proxy Statement dated April ,
1998 (the "Proxy Statement"), and hereby appoints Larry D. Haab and Leah Manning
Stetzner, or either of them, as proxies, each with the power to appoint his or
her substitute, and hereby authorizes them to represent and to vote as
designated hereunder and in their discretion with respect to any other business
properly brought before the Special Meeting, the shares of cumulative preferred
stock of IPC which the undersigned is entitled to vote, and which are set forth
below, at the Special Meeting of Shareholders to be held on ,
1998, or any adjournment(s) or postponement(s) thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF IPC. When
properly executed, this Proxy will be voted in the manner directed herein by the
undersigned shareholder(s). If no direction is made, the Proxy will be voted for
Item 1.
INDICATE YOUR VOTES BY COMPLETING THE TABLE BELOW. THE BOARD OF DIRECTORS
OF IPC RECOMMENDS VOTING FOR ITEM 1.
ITEM 1.
To remove in its entirety ARTICLE V, Section 1, Clause (f)(1) from the
Amended and Restated Articles of Incorporation of IPC (the "Articles"), which
limits IPC's ability to issue or assume unsecured indebtedness.
NOTE: IF THE PROPOSED AMENDMENT IS ADOPTED AT THE SPECIAL MEETING, IPC WILL MAKE
A SPECIAL CASH PAYMENT TO EACH PREFERRED SHAREHOLDER OF RECORD AS OF APRIL 6,
1998.
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS OF IPC AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO
ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
DTC participants should forward the completed DTC Participant Proxy by
facsimile to MacKenzie Partners, Inc., the Information Agent at (212) 929-0308
and should confirm its receipt by telephone at (212) 929-5500.
<TABLE>
<CAPTION>
NUMBER OF SHARES VOTING:
-------------------------------------------------------
ISSUE DESCRIPTION/CUSIP FOR AGAINST ABSTAIN
- ----------------------- --- ------- -------
<S> <C> <C> <C>
Cumulative Preferred Stock ($50 Par
Value)
4.08% Series/452092 20 8
----------------- ----------------- -----------------
4.20% Series/452092 30 7
----------------- ----------------- -----------------
4.26% Series/452092 40 6
----------------- ----------------- -----------------
4.42% Series/452092 50 5
----------------- ----------------- -----------------
4.70% Series/452092 60 4
----------------- ----------------- -----------------
7.75% Series/452092 79 4
----------------- ----------------- -----------------
Date: -------------------------------------------- Authorized Signature:
-----------------------------------
DTC Participant Name: ------------------------ Print Name:
---------------------------------------------
DTC Participant Number: --------------------- Telephone Number:
-------------------------------------
Address: ----------------------------------------
Medallion Stamp:
</TABLE>
<PAGE> 28
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
THE SOLICITATION AGENT FOR
SOLICITATION OF PROXIES
FOR A SPECIAL MEETING OF THE SHAREHOLDERS OF
ILLINOIS POWER COMPANY
THE SPECIAL MEETING OF SHAREHOLDERS WILL BE HELD AT THE PRINCIPAL OFFICE OF
ILLINOIS POWER COMPANY, AT 10:00 A.M., LOCAL TIME, ON , 1998.
April , 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Illinois Power Company, an Illinois corporation
("IPC"), to act as Solicitation Agent (the "Solicitation Agent") and in
connection therewith are enclosing the material listed below relating to the
solicitation of proxies in connection with a special meeting of the shareholders
of IPC (the "Special Meeting") to consider and vote upon a proposed amendment to
IPC's Amended and Restated Articles of Incorporation to remove a provision which
limits the ability of IPC to issue or assume unsecured indebtedness (the
"Proposed Amendment").
PREFERRED SHAREHOLDERS OF RECORD AS OF APRIL 6, 1998 (THE "RECORD DATE")
ARE BEING ASKED TO VOTE ON THE PROPOSED AMENDMENT BY CASTING THEIR VOTE, SIGNING
AND RETURNING THE PROXY ENCLOSED HEREWITH OR BY VOTING IN PERSON AT THE SPECIAL
MEETING. IF THE PROPOSED AMENDMENT IS ADOPTED BY IPC'S SHAREHOLDERS, IPC WILL
MAKE A SPECIAL CASH PAYMENT IN THE AMOUNT OF $ PER SHARE TO EACH PREFERRED
SHAREHOLDER OF RECORD AS OF THE RECORD DATE. SEE "PROPOSED AMENDMENT AND PROXY
SOLICITATION" IN THE PROXY STATEMENT (THE "PROXY STATEMENT").
THE BOARD OF DIRECTORS OF IPC RECOMMENDS VOTING IN FAVOR OF THE PROPOSED
AMENDMENT.
We are asking you to contact your clients for whom you hold shares of IPC's
cumulative preferred stock (par value $50 per share) (collectively, the
"Shares") registered in your name (or in the name of your nominee) or who hold
Shares registered in their own names. Please bring the proxy solicitation to
their attention as promptly as possible.
If the Proposed Amendment is adopted at the Special Meeting, IPC will pay
to each designated Soliciting Dealer (as defined below) a separate fee of $
per Share for Shares which are voted (and not revoked) in favor of the Proposed
Amendment; provided that with respect to beneficial owners affirmatively voting
2,000 or more Shares, the separate fee shall be paid 80% to the Solicitation
Agent and 20% to any designated Soliciting Dealer (which may be the Solicitation
Agent). A designated "Soliciting Dealer" is an entity obtaining the Proxy, if
the Proxy or Notice of Solicited Proxies, as the case may be, shall include its
name and it is (i) any broker or dealer in securities, including the
Solicitation Agent in its capacity as a broker or dealer, which is a member in
good standing of any national securities exchange or of the National Association
of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not
eligible for membership in the NASD which agrees to conform to the NASD's Rules
of Fair Practice in making solicitations, or (iii) any bank or trust company. No
separate fee (other than fees payable to the Solicitation Agent as provided
above) shall be payable to a Soliciting Dealer with respect to the vote of
Shares by a holder unless the Proxy or Notice of Solicited Proxies accompanying
such vote designates such Soliciting Dealer. No
<PAGE> 29
separate fee shall be payable to a Soliciting Dealer in respect of Shares
registered in the name of such Soliciting Dealer unless such Shares are held by
such Soliciting Dealer as nominee and such Shares are being voted for the
benefit of one or more beneficial owners identified on the Proxy or on the
Notice of Solicited Proxies. No separate fee shall be payable to a Soliciting
Dealer if such Soliciting Dealer is required for any reason to transfer the
amount of such fee to a depositing holder (other than itself). No separate fee
shall be paid to a Soliciting Dealer with respect to Shares voted for such
Soliciting Dealer's own account. A Soliciting Dealer shall not be entitled to a
separate fee for Shares beneficially owned by such Soliciting Dealer. No broker,
dealer, bank, trust company or fiduciary shall be deemed to be the agent of IPC,
the Solicitation Agent or the Information Agent (as defined below) for purposes
of the proxy solicitation.
Soliciting Dealers will include any of the organizations described in
clauses (i), (ii) and (iii) above even when the activities of such organizations
in connection with the proxy solicitation consist solely of forwarding to
clients materials relating to the proxy solicitation, including the Proxy
Statement, the Proxy and the other proxy materials. No Soliciting Dealer is
required to make any recommendation to holders of Shares as to whether to vote
in favor of the Proposed Amendment. No assumption is made, in making payment to
any Soliciting Dealer, that its activities in connection with the proxy
solicitation included any activities other than those described above, and for
all purposes noted in all materials relating to the proxy solicitation, the term
"solicit" shall be deemed to mean no more than "processing proxies" or
"forwarding to customers materials regarding the proxy solicitation."
IPC will also, upon request, reimburse Soliciting Dealers for reasonable
and customary handling and mailing expenses incurred by them in forwarding
materials relating to the proxy solicitation to their customers.
IN ORDER FOR A SOLICITING DEALER TO RECEIVE A SEPARATE FEE SUCH SOLICITING
DEALER MUST BE DESIGNATED ON THE APPLICABLE PROXY OR THE INFORMATION AGENT MUST
HAVE RECEIVED FROM SUCH SOLICITING DEALER A PROPERLY COMPLETED AND DULY EXECUTED
NOTICE OF SOLICITED PROXIES IN THE FORM ATTACHED HERETO WITHIN THREE BUSINESS
DAYS AFTER THE DATE OF THE SPECIAL MEETING.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name (or in the name of your nominee), we are
enclosing the following documents:
1. The Notice and Proxy Statement, dated April , 1998 together with a
cover letter to shareholders of IPC.
2. A Proxy for your use and for the information of your clients.
3. A DTC Participant Proxy for the use of DTC participants.
4. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, with
space for obtaining such clients' instructions with regard to the proxy
solicitation by IPC.
5. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9, providing information relating to
backup federal income tax withholding.
6. A return envelope addressed to MacKenzie Partners, Inc., the Information
Agent.
DTC PARTICIPANTS SHOULD FORWARD THEIR COMPLETED DTC PARTICIPANT PROXY BY
FACSIMILE TO THE INFORMATION AGENT AT (212) 929-0308 AND SHOULD CONFIRM ITS
RECEIPT BY TELEPHONE AT (212) 929-5500.
We urge you to contact your clients as promptly as possible. Please note
that the Special Meeting is scheduled for , 1998, at 10:00 a.m., local
time at IPC's principal office, 500 South 27th Street, Decatur, Illinois 62525.
<PAGE> 30
Any questions or requests for assistance or additional copies of the
enclosed materials may be directed to MacKenzie Partners, Inc., the Information
Agent, or to us, as Solicitation Agent, at the respective addresses and
telephone numbers set forth on the back cover of the enclosed Proxy Statement.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS THE AGENT OF IPC, THE SOLICITATION AGENT OR THE INFORMATION
AGENT, OR AUTHORIZES YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE PROXY SOLICITATION
OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 31
NOTICE OF SOLICITED PROXIES
FOR THE CUMULATIVE PREFERRED STOCK OF IPC
List below the number of Shares voted in favor of the Proposed Amendment by
each beneficial owner whose vote you have solicited. All Shares in a Series of
Preferred beneficially owned by a beneficial owner, whether in one account or
several, and in however many capacities, must be aggregated for purposes of
completing the table below. Any questions as to what constitutes beneficial
ownership should be directed to Illinois Power Company ("IPC"). If the space
below is inadequate, list the Shares in a separate signed schedule and affix the
list to this Notice of Solicited Proxies.
ALL NOTICES OF SOLICITED PROXIES SHOULD BE RETURNED TO, AND ALL QUESTIONS
CONCERNING THE NOTICES OF SOLICITED PROXIES SHOULD BE DIRECTED TO, MACKENZIE
PARTNERS, INC. THE INFORMATION AGENT. ALL NOTICES OF SOLICITED PROXIES MUST BE
RECEIVED BY THE INFORMATION AGENT WITHIN THREE BUSINESS DAYS AFTER THE DATE OF
THE SPECIAL MEETING.
PROXIES SOLICITED FOR BENEFICIAL HOLDERS VOTING LESS THAN 2,000 SHARES IN FAVOR
OF THE PROPOSED AMENDMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY
SOLICITING DEALER
- ------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VOTED IN
FAVOR OF THE
SERIES OF PROPOSED
BENEFICIAL OWNERS PREFERRED AMENDMENT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Beneficial Owner No. 1
- ------------------------------------------------------------------------------------------------------------
Beneficial Owner No. 2
- ------------------------------------------------------------------------------------------------------------
Beneficial Owner No. 3
- ------------------------------------------------------------------------------------------------------------
Beneficial Owner No. 4
- ------------------------------------------------------------------------------------------------------------
Beneficial Owner No. 5
- ------------------------------------------------------------------------------------------------------------
Beneficial Owner No. 6
- ------------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------
</TABLE>
PROXIES SOLICITED FOR BENEFICIAL HOLDERS VOTING 2,000 OR MORE SHARES IN FAVOR OF
THE PROPOSED AMENDMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
TO BE COMPLETED BY
SOLICITING DEALER
- ------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VOTED IN
FAVOR OF THE
SERIES OF PROPOSED
BENEFICIAL OWNERS PREFERRED AMENDMENT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Beneficial Owner No. 1
- ------------------------------------------------------------------------------------------------------------
Beneficial Owner No. 2
- ------------------------------------------------------------------------------------------------------------
Beneficial Owner No. 3
- ------------------------------------------------------------------------------------------------------------
Beneficial Owner No. 4
- ------------------------------------------------------------------------------------------------------------
Beneficial Owner No. 5
- ------------------------------------------------------------------------------------------------------------
Beneficial Owner No. 6
- ------------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------
</TABLE>
All questions as to the validity, form and eligibility (including time of
receipt) of any Notice of Solicited Proxies will be determined by the IPC, in
its sole discretion, which determination will be final and binding.
<PAGE> 32
Neither IPC, MacKenzie Partners, Inc. nor any other person will be under any
duty to give notification of any defects or irregularities in any Notice of
Solicited Proxies or incur any liability for failure to give such notification.
PLEASE COMPLETE THE SIGNATURE FORM BELOW.
The undersigned hereby confirms that: (i) it has complied with the
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the applicable rules and regulations thereunder, in connection with such
solicitation; (ii) it is entitled to such compensation for such solicitation
under the terms and conditions of the Proxy Statement; (iii) in soliciting
Proxies, it has used no soliciting materials other than those furnished by IPC;
and (iv) if it is a foreign broker or dealer not eligible for membership in the
NASD, it has agreed to conform to the NASD's Rules of Fair Practice in making
solicitations.
- ------------------------------------------------------
Firm Name
- ------------------------------------------------------
By:
Title:
- ------------------------------------------------------
Address (including Zip Code)
- ------------------------------------------------------
Area Code and Telephone Number
<PAGE> 33
- --------------------------------------------------------------------------------
SEPARATE FEE PAYMENT INSTRUCTIONS
Issue check to:
Name:
-------------------------------------------------------------------------
(Please Print)
Address:
----------------------------------------------------------------------
------------------------------------------------------------------------------
(Include Zip Code)
------------------------------------------------------------------------------
(Taxpayer Identification or Social Security No.)
- --------------------------------------------------------------------------------
<PAGE> 34
SOLICITATION OF PROXIES FOR A SPECIAL MEETING OF THE SHAREHOLDERS
OF
ILLINOIS POWER COMPANY
THE SPECIAL MEETING OF ILLINOIS POWER COMPANY'S SHAREHOLDERS IS SCHEDULED TO BE
HELD AT 10:00 A.M., LOCAL TIME AT THE PRINCIPAL OFFICE OF ILLINOIS POWER
COMPANY, ON , 1998.
April , 1998
To Our Clients:
Enclosed for your consideration are the Proxy Statement, dated April ,
1998 (the "Proxy Statement"), a Proxy to be used for each series of cumulative
preferred stock (par value $50 per share) (each a "Series of Preferred" and the
holder thereof a "Preferred Shareholder") of Illinois Power Company, an Illinois
corporation ("IPC") and direct utility subsidiary of Illinova Corporation, an
Illinois corporation ("ILN"), of which you own shares. IPC is soliciting proxies
in connection with a special meeting of its shareholders (the "Special Meeting")
to consider and vote upon a proposed amendment to IPC's Amended and Restated
Articles of Incorporation which would remove a provision which limits the
ability of IPC to issue or assume unsecured indebtedness (the "Proposed
Amendment"). IPC's Board of Directors recommends voting in favor of the Proposed
Amendment. If the Proposed Amendment is adopted by IPC's shareholders, IPC will
make a special cash payment in the amount of $ per Share to each Preferred
Shareholder of record as of April 6, 1998. See "Proposed Amendment and Proxy
Solicitation" in the Proxy Statement.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT BUT NOT
REGISTERED IN YOUR NAME. A VOTE OF SUCH SHARES CAN BE MADE ONLY BY US AS THE
HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. ANY PROXY FURNISHED TO YOU
IS SOLELY FOR YOUR INFORMATION AND CANNOT BE USED BY YOU TO VOTE SHARES HELD BY
US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to vote any or all of the
Shares held by us for your account, upon the terms and subject to the conditions
set forth in the Proxy Statement.
PLEASE READ THE FOLLOWING INFORMATION CAREFULLY:
(1) The Special Meeting is scheduled to be held on , 1998 at
10:00 a.m., local time at the principal office of IPC, 500 South 27th Street,
Decatur, Illinois 62525. Your instructions to us should be forwarded to us in
ample time to permit us to submit a Proxy on your behalf by the date of the
Special Meeting. If you would like to revoke your Proxy, you may do so, until
the Proposed Amendment is voted on at the Special Meeting.
(2) If the Proposed Amendment is adopted at the Special Meeting, IPC will
make a special cash payment in the amount of $ per Share to each Preferred
Shareholder of record as of April 6, 1998.
THE BOARD OF DIRECTORS OF IPC RECOMMENDS VOTING IN FAVOR OF THE PROPOSED
AMENDMENT.
If you wish to have us vote any or all of your Shares held by us for your
account upon the terms and subject to the conditions set forth in the Proxy
Statement, please so instruct us by completing, executing, detaching and
returning to us the instruction form on the detachable part hereof. An envelope
to return your instructions to us is enclosed. If you authorize the voting of
your Shares, all such Shares will be voted unless otherwise specified on the
detachable part hereof. Your instructions should be forwarded to us in ample
time to permit us to submit a vote on your behalf by the date of the Special
Meeting.
<PAGE> 35
INSTRUCTIONS
WITH RESPECT TO THE PROXY SOLICITATION
BY
ILLINOIS POWER COMPANY
The undersigned acknowledges receipt of your letter and the enclosed Proxy
Statement, dated April , 1998 and Proxy with respect to a solicitation of
proxies by Illinois Power Company ("IPC") for a special meeting of the
shareholders of IPC to consider and vote upon a proposed amendment to IPC's
Amended and Restated Articles of Incorporation, as set forth in the Proxy
Statement (the "Proposed Amendment").
You are instructed to vote as designated hereunder in respect of the
Proposed Amendment all shares which the undersigned is entitled to vote at the
Special Meeting:*
[ ] FOR [ ] AGAINST [ ] ABSTAIN
SIGN HERE
------------------------------------
Signature(s):
------------------------------------
Name(s):
------------------------------------
Address:
------------------------------------
Social Security or Taxpayer
Identification No.:
Dated: _______________________, 1998
- -------------------------
* By executing and returning these Instructions, unless otherwise indicated, it
will be assumed that all shares held by us for your account are to be voted
FOR the Proposed Amendment.
