SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
(Amendment No. 4)
Tender Offer Statement
(Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934)
Kansas City Power & Light Company
(Name of Subject Company)
Western Resources, Inc.
(Bidder)
Common Stock, Without Par Value
(Title of Class of Securities)
48513410
(CUSIP Number of Class of Securities)
John K. Rosenberg
Executive Vice President and General Counsel
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Phone: (913) 575-6300
(Name, Address, including Zip Code, and Telephone
Number, including Area Code, of Agent for Service)
Copies to:
Neil T. Anderson
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
(212) 558-4000
William S. Lamb
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019
(212) 424-8000
This Amendment No. 4 amends and supplements the Tender Offer Statement on
Schedule 14D-1 (the "Schedule 14D-1"), originally filed by Western Resources,
Inc., a Kansas corporation ("Western Resources"), on July 8, 1996 relating to
the exchange offer disclosed therein to exchange all of the outstanding Shares
for shares of Western Resources Common Stock upon the terms and subject to the
conditions set forth in the Prospectus, dated July 3, 1996, and the related
Letter of Transmittal. Capitalized terms used and not defined herein shall
have the meanings set forth in the Schedule 14D-1.
Item 11. Material to be Filed as Exhibits.
Item 11 is hereby amended and supplemented by adding thereto the
following:
(a)(22) Text of a presentation made to the public beginning July 19, 1996.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
WESTERN RESOURCES, INC.
Date July 19, 1996 By /s/ JERRY D. COURINGTON
Jerry D. Courington,
Controller
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INDEX TO EXHIBITS
Sequentially
Numbered
Exhibit No. Description Pages
(a)(22) Text of a presentation made to the public beginning 18
July 19, 1996.
Exhibit No. (a)(22)
The following presentation was made to the public beginning July 19, 1996:
July 19, 1996
"Facts Not Fiction"
Western Resources/KCPL Exchange Offer
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Western Resources and KCPL
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The following material contains opinions and beliefs of Western Resources, in
addition to forecasts, projections, and other forward-looking statements that
are based on unaudited forecasted financial data with respect to Western
Resources' exchange offer. All such forward-looking statements are subject to
the assumptions and variables described in the Western Resources prospectus,
dated July 3, 1996, as it may be amended from time to time. Reference is made
to the prospectus and proxy statement supplement, dated June 17, 1996 for
complete information about Western Resources' offer.
This presentation is neither an offer to exchange nor a solicitation of an
offer to exchange shares of common stock of KCPL. Such offer is made solely by
the Prospectus dated July 3, 1996, and the related Letter of Transmittal, and is
not being made to, nor will tenders be accepted from or on behalf of, holders of
shares of common stock of KCPL in any jurisdiction in which the making of such
offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdictions where securities, blue sky or other laws
require such offer to be made by a licensed broker or dealer, such offer shall
be deemed to be made on behalf of Western Resources, Inc. by Solomon Brothers
Inc. or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
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Western Resources and KCPL
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Fiction:
UtiliCorp and KCPL management have said:
Significant rate reductions could adversely impact Western's
stock price and ability to deliver projected dividends.
Western Resources' proposal is based on "faulty synergies and
savings retentions assumptions" and is not credible
A Western Resources/KCPL merger would create a company ill-
suited for the industry's future
Amortization of the KGE acquisition premium represents a
significant, long-term liability
Concentrated interest in the Wolf Creek asset means increased
business risk
The Western Resources "no layoff" policy is not credible
Western Resources will not be able to use the "pooling of
interests" accounting method due to stock options held by
KCPL offers
Here are the facts .....
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Western Resources and KCPL
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Fact: Reasonable regulatory plan
Fiction:
Significant rate reductions could adversely impact Western's stock price and
ability to deliver projected dividends
Facts:
WR's plan:
- sponsored $99 million in rates decreases over seven years
- addresses accelerated depreciation of Wolf Creek
- in seven years, KCPL and KGE rates below current national
average
Staff proposes $105 million immediately and does not address Wolf Creek
depreciation
Key differences between the WR & staff plans is a matter of timing
KCC ultimately makes the determination, not the staff
WR has paid dividends every year since 1924, and has increased them every year
for the last 20 years
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Western Resources and KCPL
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Fact: Savings are credible
Fiction:
Western Resources proposal is based on "faulty synergies and savings retentions
assumptions" and is not credible
Facts:
A WR/KCPL company will be 40 percent larger by assets than UtiliCorp/KCPL and
will share
- more contiguous service areas
- 100,000 customers in 26 communities
- joint interest in more than $2.2 billion of common plant
- interconnection through five 345 kV lines
Western Resources has demonstrated experience with mergers and acquisitions
- successful (Gas Service; KGE)
- fully-integrated
- attained savings
WR savings estimates are consistent with other industry mergers and acquisitions
Both WR's and UtiliCorp/KCPL's rate reduction plans return about one-third in
savings to customers
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Western Resources and KCPL
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Fact: Savings are credible
Bar graph:
Potential headcount reductions
(% of Total Company)
Low 3.4%
Average 8.5%
High 11.0%
WR/KCPL 7.3%
Bar graph:
Nonfuel O&M Savings - Year 5
(% of Nonfuel Expenses)
Low 5.0%
Average 9.5%
High 15.3%
WR/KCPL 10.7%
Bar graph:
Fuel Savings - Year 5
(% of Fuel Expenses)
Low 0.0%
Average 1.0%
High 3.8%
WR/KCPL 1.2%
Information based on the last nine transactions prior to WR/KCPL offer
Source: WR/KCPL Synergies Quantification
Western Resources and KCPL
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Fact: A well-suited partner
Fiction:
A Western Resources/KCPL merger would create a company ill-suited for industry's
future
Facts:
Western Resources' growth strategy
- strong core business (KPL/KGE/Gas Service)
- significant regional presence (natural gas & electric
marketers)
- strategic national competitor (Westar)
- selective international investments (Wing Group)
Financial similarities
- WR's credit rating of A-**versus UtiliCorp's BBB*
- WR's return on average equity of 11.1 percent versus
UtiliCorp's 8.4 percent*
- WR's total debt/total capital ratio of 47 percent versus
UtiliCorp's 61 percent*
- WR's payout ratio of 74 percent versus UtiliCorp's 100
percent*
WR's requires fewer regulatory approvals than UtiliCorp
WR's integration of service areas demonstrably easier
* Source: 1995 Annual reports
** Western Resources has been placed on credit watch with negative implications,
which Western Resources believes is normal for companies involved in merger
actions
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Western Resources and KCPL
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Fact: Premium is an asset
Fiction:
Amortization of the KGE acquisition premium represents a significant, long-term
liability
Facts:
Western Resources received favorable regulatory treatment of the KGE acquisition
premium
- acquisition premium being recovered through savings
- acquisition premium earning a return through savings
UtiliCorp has significant unrecovered acquisition premium with no regulatory
recovery plan
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Western Resources and KCPL
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Fact: Wolf Creek -- a sound venture
Fiction:
Concentrated interest in the Wolf Creek asset means increased business risk
Facts:
Sound venture:
- Wolf Creek shares proven design and service record with Callaway
- strong management
- high INPO and SALP rankings
- top 1995 electric production
- solid safety record
Concentration of interest:
- KCPL -- 38% of total assets & 60% of total capitalization
- Western Resources -- 20% of total assets & 34% of total capitalization
- after combination, aggregate interest in line with industry average
Commitment to lower Wolf Creek's cost
Wolf Creek ownership was not an issue when KCPL made its bid for KGE in 1990
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Western Resources and KCPL
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Fact: No employee layoffs
Fiction:
The Western Resources "no layoff" policy is not credible
Facts:
WR is committed to no employee layoffs in WR or KCPL
Proposal calls for reduction of 531 positions, not employees, managed by:
- controlled hiring -- during the last six months 138 WR positions held
vacant
- normal annual attrition of 2-3%
- early retirement options
Proven success with KGE
Job opportunities increase with WR business units locating in Kansas City
and Wichita
UtiliCorp/KCPL - reduction of more than 200 positions
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Western Resources and KCPL
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Fact: Employee layoffs
Utilicorp
"The company expects to ... reduce its current employment level
and reallocate resources to better support the company's strategy.
The current estimate of ultimate employee severance costs is $4.7
million. Using a combination of normal attrition and voluntary
and involuntary programs to reduce employee related costs."
[emphasis added]
UtiliCorp Form 10Q
June 1995
Western Resources
"There will be no layoffs as a result of this merger."
John E. Hayes, Jr.
Chairman of the Board
and Chief Executive Officer
Western Resources, Inc.
July 19, 1996
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Western Resources and KCPL
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Fact: Pooling of interest
Fiction:
Western Resources will not be able to use "pooling of interest" accounting
due to stock options held by KCPL officers
Facts:
Generally, if the Western Resources/KCPL combination doesn't qualify,
neither will a UtiliCorp/KCPL transaction
KCPL options held by insiders reflect an insignificant amount and we
believe will not affect pooling
A KCPL pooling violation is at the KCPL board's discretion and we believe
violates their fiduciary responsibilities to the more than 99 percent of
KCPL'S common shareowners whose interest they represent
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Western Resources and KCPL
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Fact: Customer advantages
KCPL rates decrease $28 million per year
- honor Missouri rate reduction of $20 million per year
- reduce KCPL rates $8 million in Kansas (30% better than UCU/KCPL
proposal)
KGE Rates decrease $10 million per year
No electric rates increase for five years
KCPL and KGE rates will all be 10 percent below current national average
within seven years under the Western Resources plan
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Western Resources and KCPL
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Fact: Promises made & kept
Western Resources' 1992 merger with Kansas Gas and Electric
- $32 million in customer rebates
- no layoffs of KGE or KPL employees
- millions of dollars in savings, consistent with projections
- KGE headquarters remains in Wichita
All promised and delivered!
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Western Resources and KCPL
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Fact: UtiliCorp's track record
What Rick Green says .....
"We strive to manage our growth to avoid the problems that can occur while
adding new properties and businesses."
"The ..... businesses we develop must be well positioned and well managed.
(UtiliCorp Annual Report 1990, p. 11 & p. 12)
"To begin with we are selective in our acquisitions."
"Our commitments to profitable long-term growth has not changed. Nor have the
principles we will follow in achieving that growth."
(UtiliCorp Annual Report 1990, p. 11 & p. 12)
"This approach has proven to be beneficial for UtiliCorp's ... shareholders....
That is why we look forward to similar growth in the years ahead." (UtiliCorp
Annual Report 1990, p. 12)
"Our target for earnings growth in 1995 is again 4 to 6 percent." (Rick Green's
letter to shareholders in the 1994 annual report, p. 7)
"In terms of laying a solid foundation for the future, 1995 was the greatest
growth year in your company's history." (Rick Green's letter to shareholders in
the 1995 annual report, p. 2)
What Rick Green does .....
In 1992, UtiliCorp recognized an $18 million pretax charge to earnings related
to improper payments by employees of its wholly owned subsidiary, Aquila Energy
Resources. This was followed by class action shareholder suit alleging
securities fraud and failure to disclose massive misappropriation of funds. (See
UtiliCorp 1994 Annual Report, p. 46 and Alper et. al. v. UtiliCorp United, Inc.)
Since 1984, UtiliCorp has acquired properties in Canada, Australia, United
Kingdom, Jamaica and various non-contiguous United States with little or no
operational integration.
These investment principles have caused UtiliCorp to record write-offs in excess
of $120 million reflecting losses on bad investments and employee fraud since
1992. (See UtiliCorp 1995 Annual Report, pp. 45 & 46, and UtiliCorp 1994 Annual
Report, p. 46)
The 10 year average growth rate in UtiliCorp's earnings-per-share was a negative
.45% (See UtiliCorp 1995 Annual Report, p. 57)
UtiliCorp had invested, at year-end 1995, some $1.8 billion in non-electric and
non-gas assets (46% of total assets) which earned below pass book. For the
1993-1994 period, the rate of return on these assets was negative.
(See UtiliCorp 1995 Annual Report, p. 54)
"UtiliCorp's 1995 earnings available for common shares were $77.7 million or 15%
below earnings available in 1994." (See UtiliCorp 1995 Annual Report, p. 24)
1995 earnings per share were 17% below 1994 earnings per share. (See UtiliCorp
1995 Annual Report, p. 37)
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Western Resources and KCPL
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Fact: Western Resources' track record
Line graph:
Since KPL/KGE merger, Net Income (millions)
Actual Projected
1992 127.9 166.5
1993 177.4 162.5
1994 187.4 171.0
1995 181.7 179.1
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Western Resources and KCPL
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Fact: Western Resources' track record
Line graph:
Since KPL/KGE merger, Earnings Per Share
Actual Projected
1992 $2.20 $2.60
1993 $2.76 $2.53
1994 $2.82 $2.68
1995 $2.71 $2.81
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Western Resources and KCPL
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Fact: Bottom line -- WR offers better value:
Western Western
Resources' Resources'
Offer (1) KCPL Premium
Price $31.00 $23.875 (2) 30%
Current indicated
dividend per KCPL
share $1.92-$2.27 $1.56 23%-45%
Indicated dividend
at closing per KCPL
share $2.00-$2.35 $1.85 (3) 8%-27%
(1) Subject to exchange ratio of 0.933-1.100 Western Resources shares for each
KCPL share. Dividend at closing based on 1998 post-merger annual dividend rate
of $2.14 per Western Resources' share as projected in Western Resources'
exchange offer and the exchange ratio. Western Resources' current indicated
annual dividend is $2.06 per share
(2) KCPL closing share price on April 12, 1996, the last trading day before the
public announcement of the initial Western Resources offer
(3) Based on announcement by KCPL/UCU of intent to recommend an annual dividend
rate of $1.85 per share following the close of the proposed combination of KCPL
and UCU
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Western Resources and KCPL
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This presentation is neither an offer to exchange nor a solicitation of an offer
to exchange shares of common stock of KCPL. Such offer is made solely by the
Prospectus dated July 3, 1996, and the related Letter of Transmittal, and is
not being made to, nor will tenders be accepted from or on behalf of, holders
of shares of common stock of KCPL in any jurisdiction in which the making of
such offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. In any jurisdictions where securities, blue sky or other
laws require such offer to be made by a licensed broker or dealer, such offer
shall be deemed to be made on behalf of Western Resources, Inc. by Salomon
Brothers Inc. or one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
