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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) - OCTOBER 6, 1999
MINNESOTA POWER, INC.
A Minnesota Corporation
Commission File No. 1-3548
IRS Employer Identification No. 41-0418150
30 West Superior Street
Duluth, Minnesota 55802-2093
Telephone - (218) 722-2641
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ITEM 5. OTHER EVENTS.
Reference is made to the Annual Report on Form 10-K for the year ended December
31, 1998 (1998 Form 10-K) of Minnesota Power, Inc. (Minnesota Power or Company)
for background information on the following update. The cited reference is to
the Company's 1998 Form 10-K.
Ref. Page 22. - Fifth and Six Paragraphs
Ref. Form 8-K dated and filed May 27, 1999
Ref. Form 8-K dated and filed June 15, 1999
Ref. 10-Q for the quarter ended June 30, 1999 Page 11. - Fifth through Seventh
Paragraph
Minnesota Power owns 7.3 million shares, or 19.9 percent, of Capital Re
Corporation (Capital Re). On June 10, 1999 Capital Re and ACE Limited (ACE)
signed an agreement providing for the merger of Capital Re with ACE. Under the
terms of the Agreement and Plan of Merger (Merger Agreement), Capital Re's
shareholders would receive 0.6 ordinary shares of ACE for each share of Capital
Re at closing, subject to a maximum value to Capital Re shareholders of $22 per
share.
On October 6, 1999 Capital Re received an unsolicited all-cash acquisition offer
from XL Capital Ltd. (XL Capital). To consider XL Capital's offer, Capital Re
postponed its October 7, 1999 shareholder meeting at which there was to be a
vote on the proposed merger with ACE. Capital Re has since received from ACE
proposed amendments to the Merger Agreement and competing offers from XL
Capital. Minnesota Power is unable to predict the timing or acceptance of any
offer.
Minnesota Power's financial results for the quarter and six months ended June
30, 1999 included a $24.1 million non-cash charge. The non-cash charge reflected
an estimated Capital Re valuation of $17 per share based on ACE's stock price at
that time and the exchange ratio in the ACE Merger Agreement. Additional
adjustments to Minnesota Power's investment in Capital Re will be recognized at
the time when a Capital Re transaction is finalized, and subsequently when any
stock received from the transaction is sold. Minnesota Power accounts for its
investment in Capital Re as an available-for-sale security.
Capital Re is a financial guaranty reinsurance and specialty insurance company
that trades on the New York Stock Exchange under the symbol KRE. ACE through its
subsidiaries, provides a broad range of insurance and reinsurance products for a
diverse group of international clients. ACE trades on the New York Stock
Exchange under the symbol ACL. XL Capital, through its wholly owned
subsidiaries, provides excess liability insurance coverage to industrial,
commercial and other enterprises. XL Capital trades on the New York Stock
Exchange under the symbol XL.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Minnesota Power, Inc.
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(Registrant)
October 20, 1999 D. G. Gartzke
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David G. Gartzke
Senior Vice President - Finance
and Chief Financial Officer
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