SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11 or
or Rule 14a-12
KANSAS CITY POWER AND LIGHT COMPANY
- ----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
WESTERN RESOURCES, INC.
- ----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(I)(1), or 14a-6(I)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(I)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(I)(4)
and 0-11
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2) Aggregate number of securities to which transaction applies:
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computed pursuant to Exchange Act Rule 0-11:*
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/ / Check box if any part of the fee is offset as provided by Exchange Act
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/x/ Filing fee paid with preliminary filing.
The following materials will be used in presentations to be made to the public
beginning June 17, 1996:
Western
Resources(r)
and
KCPL
Recent activities
Western Resources raised its offer to $31.00 with an exchange ratio of 0.933 to
1.100 shares of Western Resources common stock for each KCPL share
WR's projected post-merger dividend is in the range of $2.00 to $2.35 for each
KCPL share
WR expects to mail its exchange offer in early July
UCU/KCPL canceled the May 22 shareholder vote on their original proposal,
presumably because they did not have adequate shareholder support
<PAGE 1>
Western
Resources(r)
and
KCPL
Shareholder advantages
Western Western
Resources' Resources'
Offer (1) KCPL Premium
Price $31.00 $23.875 (2) 30%
Current
dividend $1.92 - $2.27 $ 1.56 23%-45%
Dividend
at closing $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 post-merger indicated
dividend of $2.14 per share as projected in Western's proposed exchange
offer. Western Resources' current
indicated annual dividend is $2.06
(2) KCPL closing share price on April 12, 1996, the last trading day before
the public announcement of the Western Resources Offer
(3) Based on announcement by KCPL/UCU of intent to recommend a dividend of
$1.85 following the close of the proposed combination of KCPL and UCU
<PAGE 2>
Western
Resources(r)
and
KCPL
Implied P/E Ratio and Dividend Yield of Western Resources Offer
Exchange WR 1998 Implied 1998 Payout Implied
Ratio Price EPS(1) P/E Ratio Dividend(2) Ratio Yield
Top of Collar
0.933 $33.25 $2.62 12.7x $2.14 81.7% 6.4%
Bottom of Collar
1.100 $28.125 $2.42 11.6x $2.14 88.4% 7.6%
During the prior 52-week period, the high and low closing prices of Western
Resources' stock were $34.625 and $28.625, respectively
(1) Based on combined company financial forecast
(2) Post-merger projected Western Resources annual dividend
<PAGE 3>
Western
Resources(r)
and
KCPL
Calculation of stock price and dividends to KCPL shareholders --
post-merger indicated dividends
Western Exchange Stock Premium Dividend Increase
Stock Ratio Value to KCPL to KCPL in KCPL
Price WR/KCPL to KCPL April 12 Holders(1)Dividend(2)
$27.00 1.100 $29.70 24.4% $2.35 27.2%
27.50 1.100 30.25 26.7% 2.35 27.2%
28.00 1.100 30.80 29.0% 2.35 27.2%
Collar ----------------------------------------------------------
28.18 1.100 31.00 29.8% 2.35 27.2%
28.50 1.088 31.00 29.8% 2.33 25.8%
29.00 1.069 31.00 29.8% 2.29 23.7%
29.50 1.051 31.00 29.8% 2.25 21.6%
30.00 1.033 31.00 29.8% 2.21 19.5%
30.50 1.016 31.00 29.8% 2.18 17.6%
31.00 1.000 31.00 29.8% 2.14 15.7%
31.50 0.984 31.00 29.8% 2.11 13.8%
32.00 0.969 31.00 29.8% 2.07 12.1%
32.50 0.954 31.00 29.8% 2.04 10.3%
33.00 0.939 31.00 29.8% 2.01 8.6%
33.23 0.933 31.00 29.8% 2.00 7.9%
Collar ----------------------------------------------------------
33.50 0.933 31.26 30.9% 2.00 7.9%
34.00 0.933 31.72 32.9% 2.00 7.9%
34.50 0.933 32.19 34.8% 2.00 7.9%
35.00 0.933 32.66 36.8% 2.00 7.9%
(1) Based on projected 1998 post-merger indicated dividend of $2.14 as
projected in Western's proposed exchange offer and applicable exchange
ratio
(2) Based on announcement by KCPL/UCU of intent to recommend a dividend
of $1.85 following the close of the proposed combination of KCPL and UCU
<PAGE 4>
Western
Resources(r)
and
KCPL
Implied Value of KCPL Offer
[Line Graph]
[Line plotting the effect the exchange ratio would have had if the merger of
WR and KCPL had been effected on that date based on the closing price of
Western Resources' common stock closing price each week from January 19, 1996
to June 14, 1996]
Based on WR's price and exchange ratio of 0.933 to 1.100
WR's offer, had it been in effect, would have yielded
superior stock value ($31.00 or higher) compared to
the implied stock value of a UCU/KCPL combination.
[Line plotting the effect of an exchange ratio of 1 would have had if the
merger of UtiliCorp and KCPL had been effected on that date based on the
closing price of UtiliCorp's common stock closing price each week from
January 19, 1996 to June 14, 1996]
Weighted average valuation of UCU/KCPL at 1 for 1
[Legend]
KCPL/UCU Value - red line
WR Offer to KCPL - dashed green line
(Weekly data 1/19/96 - 6/14/96)
<PAGE5>
Western
Resources(r)
and
KCPL
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)
KGE rates decrease $10 million per year
No electric rate increase for five years
KCPL, KGE, and KPL rates will all be below current national average within
seven years under the Western Resources plan
<PAGE 6>
Western
Resources(r)
and
KCPL
Combined company financial forecast
Top of the Collar Exchange Ratio = 0.933
1998 1999 2000
(dollars in thousands, except per share amounts)
Operating revenues $2,657,262 $2,722,600 $2,796,483
Operating expenses 2,190,826 2,240,197 2,318,175
Transaction costs 88,000 -- --
Operating income 378,436 482,403 478,308
Other income and deductions 61,048 79,611 85,735
Income before interest charges 439,484 562,014 564,043
Interest charges 211,865 204,001 197,225
Net income 227,619 358,013 366,818
Preferred and preference dividends 8,648 12,419 12,419
Earnings applicable to
common stock $218,971 $345,594 $354,399
Average common shares
outstanding 123,188 124,642 125,682
Earnings per common share $1.78 $2.77 $2.82
Earnings per common share excluding
costs to achieve savings and
transaction costs $2.62 $2.79 $2.82
Dividends per share $2.14 $2.18 $2.22
Dividend payout ratio 81.7% 78.1% 78.7%
Projected dividends per share
to KCPL shareholders $2.00 $2.03 $2.07
<PAGE 7>
Western
Resources(r)
and
KCPL
Combined company financial forecast
Bottom of the Collar Exchange Ratio = 1.100
1998 1999 2000
(dollars in thousands, except per share amounts)
Operating revenues $2,657,262 $2,722,600 $2,796,483
Operating expenses 2,190,639 2,239,487 2,316,846
Transaction costs 88,000 -- --
Operating income 378,623 483,113 479,637
Other income and deductions 61,048 79,573 85,735
Income before interest charges 439,671 562,686 565,372
Interest charges 212,335 205,786 200,568
Net income 227,336 356,900 364,804
Preferred and preference dividends 8,648 12,419 12,419
Earnings applicable to
common stock $218,688 $344,481 $352,385
Average common shares
outstanding 133,706 135,188 136,229
Earnings per common share $1.64 $2.55 $2.59
Earnings per common share excluding
costs to achieve savings and
transaction costs $2.42 $2.56 $2.59
Dividends per share $2.14 $2.18 $2.22
Dividend payout ratio 88.4% 85.2% 85.7%
Projected dividends per share
to KCPL shareholders $2.35 $2.40 $2.44
<PAGE 8>
Western
Resources(r)
and
KCPL
Projected merger timeline
KCPL shareholder vote on original
UCU offer CANCELED
Western exchange offer effective Expected early July
Western receives 90%+KCPL stock After effective date
tendered of exchange offer
OR
Western negotiates with KCPL Board " "
OR
Western seeks removal of KCPL Board " "
Western completes merger with KCPL August 1997 - December 1997
<PAGE 9>
Western
Resources(r)
and
KCPL
Action Required
To be able to take advantage of what we believe is the financially superior
Western Resources merger offer--
Vote AGAINST the UCU/KCPL proposal
Support Western Resources with a call to KCPL and to the members of
KCPL's Board of Directors
Tender KCPL shares to Western Resources when exchange offer commences
<PAGE 10>
The preceding material contains forecasts, projections, and other
forward-looking statements, that are based on the unaudited forecasted
financial data with respect to the exchange offer. All such information
is subject to the assumptions and variables described in the Western Resources
preliminary prospectus, dated April 22, 1996, as it may be amended from
time to time.
Western Resources has filed exchange offer materials with the Securities and
Exchange Commission and intends to make its offer directly to shareholders of
KCPL as soon as its registration statement has been declared effective by the
Securities and Exchange Commission.
A registration statement relating to the Western Resources securities referred
to in these materials has been filed with the Securities and Exchange Commission
but has not yet become effective. Such securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. These materials shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such state.
<PAGE 11>
Western
Resources(r)
and
KCPL
Contacts
Georgeson & Company, Inc.
Wall Street Plaza
New York, New York 10005
800-223-2064
Rick Kready
Western Resources
818 Kansas Avenue
Topeka, Kansas 66612
913-575-8226
<PAGE 12>
The following phonescript was used on June 17, 1996:
OUTLINE FOR
ANALYST CALL AND
NEWS CONFERENCE
JUNE 17, 1996
JOHN E. HAYES, JR.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
WESTERN RESOURCES, INC.
Good morning.
This is John Hayes, chairman and chief executive officer of Western Resources.
Thank you for joining us this morning. I will make a few opening comments, then
open it up for any questions you may have.
[Joining with me in this call are:
-David Wittig, President, Western Resources
-Steve Kitchen, Executive Vice President and Chief Financial Officer]
As you know, we have made an offer to merge with Kansas City Power &
Light Company. It is our view that the benefits of combining KCPL and Western
Resources are simply too great to pass up.
Because of this opportunity for shareowners, customers, employees and
the communities we serve, the Board of Directors of Western Resources has
authorized me to make the following increase in our proposal:
We are now offering KCPL shareowners $31 of Western Resources stock per
KCPL share (within a collar of .933 and 1.1). That is an increase from our
original proposal of $28 per share. This new price represents a 30% premium
over KCPL's closing price on April 12, 1996, the last trading day prior to the
announcement of our original offer, and a 20% premium over last Friday's
closing price.
The projected dividend range per KCPL share also goes up in this offer.
Western Resources projects that the annual dividend at closing in 1998 will
range from $2.00 to $2.35. This compares with the announced UtiliCorp
intention to recommend $1.85.
Raising our offer reflects our belief that this merger makes great
business sense, and we must aggressively pursue its completion.
Our plan is to move forward. We anticipate that the Securities and
Exchange Commission will declare effective our registration statement in early
July.
Immediately upon the SEC action, we will mail exchange offer materials
to KCPL shareowners.
We urge the KCPL Board of Directors to accept our offer, which, we
believe, is clearly financially superior to the UtiliCorp proposal. In our
view, the recent restructuring of the UtiliCorp proposal is an obvious attempt
to restrict the voice of shareowners.
We remain hopeful that KCPL's management and board will see the merits
and benefits of our new offer and for the sake of their shareowners, employees
and customers, take the opportunity to meet with us personally to discuss the
offer.
[PAUSE]
Now... let me entertain your questions.
<PAGE13>
The following press release / employee update was issued on June 17, 1996:
WESTERN RESOURCES RAISES KCPL MERGER OFFER
TO $31 FROM $28 PER KCPL COMMON SHARE
KCPL DIVIDENDS TO INCREASE
TOPEKA, Kansas, June 17, 1996 -- Western Resources today increased the
price in its offer to merge with Kansas City Power & Light Company (KCPL) to
$31 from $28 in Western Resources common shares for each share of KCPL common
stock. The increased offer, which remains a tax-free, stock-for-stock
transaction, is valued at $1.9 billion.
With the higher offer of $31, the offer represents a 30 percent premium
over the closing price of KCPL's common stock immediately prior to Western
Resources' announcement of its original offer and a 20 percent premium over
last Friday's closing price.
Under the revised offer, following the merger KCPL shareholders would
receive a dividend of between $2.00 and $2.35 per KCPL common share based on
Western Resources' projected 1998 annual dividend.
"This merger makes great business sense, and we must pursue its
completion. We urge the KCPL board of directors to accept our offer that we
believe is clearly financially superior to the UtiliCorp proposal," said John
E. Hayes, Jr., Western Resources chairman of the board and chief executive
officer.
"A combined Western Resources/KCPL will be better positioned to lead
the reshaping of the increasingly competitive marketplace. Together, we will
be able to create additional value for our shareholders and our customers," he
said.
"We believe the recent restructuring of the UtiliCorp/KCPL merger
proposal is an obvious attempt to restrict the voice of KCPL shareholders. Our
$31 offer per KCPL common share equates to better value, a stronger company,
and economic benefits to our bi-state area."
Hayes said the company anticipates the registration statement for its
exchange offer for KCPL will be declared effective by the Securities and
Exchange Commission in early July. Immediately thereafter, the company will
mail exchange offer materials to KCPL shareholders.
"We remain hopeful that KCPL's management and board will see the merits
and benefits of our new offer and, for the sake of their shareholders,
employees, and customers, take the opportunity to meet with us personally to
discuss our offer," said Hayes.
A copy of the correspondence sent today to KCPL is attached.
Western Resources (NYSE:WR) is a diversified energy company. Its
utilities, KPL and KGE, operating in Kansas and Oklahoma, provide natural gas
service to approximately 650,000 customers and electric service to
approximately 600,000 customers. Through its subsidiaries, Westar Business
Services, Westar Consumer Services, Westar Capital, and The Wing Group,
energy-related products and services are developed and marketed in the
continental U.S., and offshore.
For more information about Western Resources and its operating
companies, visit us on the Internet at http://www.wstnres.com.
<PAGE14>
(Letter of John E. Hayes, Jr., Chairman of the Board and Chief Executive
Officer of Western Resources, Inc.)
June 17, 1996
Mr. A. Drue Jennings
Chairman of the Board, President
and Chief Executive Officer
Kansas City Power & Light Company
1201 Walnut
Kansas City, MO 64141-9679
Dear Drue,
The Board of Directors of Western Resources feels so strongly
about the benefits of combining our companies that it has authorized me
to make the following revised merger offer:
KCPL shareowners would receive $31 in Western Resources common
stock in exchange for each share of KCPL common stock. The
exchange ratio has a protective collar so that KCPL shareowners
will receive at least 0.933 and as much as 1.1 shares of Western
Resources common stock for each share of KCPL common stock.
This new price represents a 30% premium over KCPL's closing
price on April 12, 1996, the last trading day prior to the
announcement of our original offer, and a 20% premium over last
Friday's closing price.
Under this revised offer, following the merger KCPL shareowners
would receive a dividend of between $2.00 and $2.35 per KCPL share
based on Western Resources' projected 1998 annual dividend.
As I stated to you in my letter of April 14th, a combined
KCPL/Western Resources will be better positioned to lead the reshaping
of the increasingly competitive marketplace brought about by technology,
customer and legislative demands.
Our four part business strategy consists of the following
elements:
a strong core utility business,
a strong regional presence as a total energy provider,
a branded national presence that will cause us to be among the
leading diversified energy and related services companies in the
U.S., and being a leader in the international energy business.
We will be able to create value because of our larger scale,
expanded access to future energy customers, and the complementary nature
of our growing energy and unregulated businesses.
This offer is, of course, contingent upon receipt of necessary
approvals from shareowners, regulatory and other governmental agencies,
and the availability of pooling of interest accounting. In addition,
this offer is expressly conditioned on KCPL's compliance with and
termination of its obligations under your Amended and Restated Agreement
and Plan of Merger, dated as of May 20, 1996.
Western Resources is prepared to negotiate a friendly transaction
with KCPL that will deliver superior value to your shareowners. Make no
mistake, however, if you again refuse to discuss our revised offer with
us, we will continue the pursuit of our offer by directly seeking the
support of your shareowners. Restructuring your deal is an obvious
attempt to disenfranchise your shareowners, raising one essential
question... who really owns KCPL, the management or the shareowners?
As I am sure you can appreciate, time is of the essence.
Accordingly, we would appreciate hearing from you as soon as
practicable, and in any event, no later than noon on Monday, June 24,
1996.
Sincerely,
/s/ John
Western Resources has filed exchange offer materials with the
Securities and Exchange Commission and intends to make its offer
directly to shareholders of KCPL as soon as its registration
statement has been declared effective by the Securities and
Exchange Commission.
A registration statement relating to the Western Resources securities
referred to in these materials has been filed with the Securities and
Exchange Commission but has not yet become effective. Such securities may
not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. These materials shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any state in which such
offer, solicitation, or sale would be unlawful prior to registration or
qualification under the securities law of any such state.
<PAGE15>
