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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
(PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. 1)
AQUILA GAS PIPELINE CORPORATION
(NAME OF SUBJECT COMPANY)
UTILICORP UNITED INC.
AQUILA ENERGY CORPORATION
AEC ACQUISITIONS, INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
03839B10
(CUSIP NUMBER OF CLASS OF SECURITIES)
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ROBERT K. GREEN
PRESIDENT AND CHIEF OPERATING OFFICER
UTILICORP UNITED INC.
20 WEST NINTH STREET
KANSAS CITY, MISSOURI 64105
(816) 421-6600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
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COPY TO:
DENNIS D. WILBERT, ESQ.
JEFFREY T. HAUGHEY, ESQ.
BLACKWELL SANDERS PEPER MARTIN LLP
2300 MAIN STREET
KANSAS CITY, MISSOURI 64108
(816) 983-8000
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AEC Acquisitions, Inc., a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of Aquila Energy Corporation, a Delaware corporation
("Aquila"), which in turn is a wholly-owned subsidiary of UtiliCorp United Inc.,
a Delaware corporation ("Parent"), hereby amend and supplement their Tender
Offer Statement on Schedule 14D-1, filed with the Securities and Exchange
Commission (the "Commission") on April 9, 1999 (the "Schedule 14D-1").
Capitalized terms not defined herein have the meaning ascribed to them in the
Schedule 14D-1.
ITEM 10. ADDITIONAL INFORMATION.
Item 10(e) of the Schedule 14D-1 is hereby amended and supplemented to add
the following information:
In mid November 1998, four lawsuits were filed in the Court of Chancery of
the State of Delaware against Parent, the Company and the Company Board. On
January 11, 1999, the actions were consolidated as In Re: Aquila Gas Pipeline
Corporation Shareholders Litigation, Consolidated Case No. 16775.
On April 16, 1999, an amended class action complaint was filed in the Court
of Chancery of the State of Delaware. The amended complaint alleges, among other
things, that (i) Parent and the defendant directors of the Company who are
affiliated with Parent have breached their fiduciary duties to the Company's
public stockholders, (ii) the Offering Price is inadequate and (iii) the
offering materials omit material information. The amended class action complaint
seeks to (a) enjoin the defendants from consummating the tender offer by Parent,
(b) require Parent to make supplemental disclosures of the offering materials
and (c) recover monetary damages and costs.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 of the Schedule 14D-1 is hereby amended to add the following
exhibit:
(g)(6) Amended Class Action Complaint: In re Aquila Gas Pipeline Corporation
Shareholders Litigation, Consolidated Civil Action No. 16775 (Del Ch.
filed April 16, 1999).
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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.
Dated: April 22, 1999 UTILICORP UNITED INC.
By: /s/ Robert K. Green
Name: Robert K. Green
Title: President and
Chief Operating Officer
AQUILA ENERGY CORPORATION
By: /s/ Robert K. Green
Name: Robert K. Green
Title: Authorized Representative
AEC ACQUISITIONS, INC.
By: /s/ Robert K. Green
Name: Robert K. Green
Title: President
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EXCERPT FROM RESOLUTIONS OF AQUILA ENERGY CORPORATION
RESOLVED, that the proposal to offer to purchase all of the outstanding
shares of common stock of Aquila Gas Pipeline Corporation not currently held by
UtiliCorp United Inc. ("UCU") or affiliates of the UCU ("AQP Common Stock") at a
price of $8.00 per share, and on substantially the terms and conditions
presented to this meeting, with such modifications thereto as any of the
following officers Authorized Representative (as defined below) shall deem to be
necessary or desirable (the "Tender Offer") be, and the same hereby is, approved
and authorized, and that the Chairman, President, any Vice-President or
Assistant Vice President, the Secretary or the Treasurer of the Company, or
Robert K. Green (the "Authorized Representative") be, and hereby are, authorized
and directed to do all things deemed necessary or desirable to carry out the
Tender Offer.
RESOLVED FURTHER, that the aforementioned officers of the Company and the
Authorized Representative be, and hereby are, authorized and empowered to
prepare, execute, and file with the appropriate regulatory agencies, stock
exchanges and other bodies, all forms, schedules, and other documents (including
any and all amendments, exhibits, schedules, supplements, and other documents
and papers) which any of such officers or the Authorized Representative deems
necessary or desirable in connection with the Tender Offer, and to do such other
acts and things which in the judgment of any of such officers or the Authorized
Representative may be necessary or desirable in connection with the
commencement, extension, or consummation of the Tender Offer.
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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(g)(6) Amended Consolidated Class Action Complaint: In re Aquila Gas Pipeline
Corporation Shareholders Litigation, Consolidated Civil Action
No. 16775 (Del Ch. filed April 16, 1999).
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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IN RE AQUILA GAS PIPELINE CORPORATION : CONSOLIDATED
SHAREHOLDERS LITIGATION : CIVIL ACTION NO. 16775
- ------------------------------------------------------------------------x
NOTICE OF FILING AMENDED CLASS ACTION COMPLAINT
TO: Donald J. Wolfe, Jr., Esquire
Potter Anderson & Corroon LLP
The Hercules Plaza
1313 N. Market Street
Wilmington, Delaware 19899
Alan J. Stone, Esquire
Morris Nichols Arsht & Tunnell
1201 N. Market Street
Wilmington, Delaware 19899
PLEASE TAKE NOTICE that plaintiffs herewith file the attached Amended Class
Action Complaint as of right pursuant to Rule 15(a).
In compliance with Rule 15(aa), plaintiffs aver that the Amended Complaint
is in full substitution for the Complaint filed in C.A. No. 16775 designated as
the operative complaint in the consolidated action.
ROSENTHAL, MONHAIT,
GROSS & GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, Delaware 19899-1070
(302) 656-4433
Attorneys for Plaintiffs
April 16, 1999
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 16th day of April, 1999, two copies of the
foregoing Notice Of Filing and Amended Class Action Complaint and Amended Class
Action Complaint were served, by hand delivery, upon:
Donald J. Wolf, Jr., Esquire
Potter Anderson & Corroon LLP
The Hercules Plaza
1313 N. Market Street
Wilmington, Delaware 19899
Alan J. Stone, Esquire
Morris Nichols Arsht & Tunnell
1201 N. Market Street
Wilmington, Delaware 19899
/s/ Joseph A. Rosenthal
Joseph A. Rosenthal
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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IN RE AQUILA GAS PIPELINE CORPORATION : CONSOLIDATED
SHAREHOLDERS LITIGATION : CIVIL ACTION NO. 16775
- ------------------------------------------------------------------------x
AMENDED CLASS ACTION COMPLAINT
Plaintiffs allege upon personal knowledge with respect to themselves, and
upon information and belief as to all other allegations herein, as follows:
NATURE OF THE ACTION
1. This is a stockholders' class action on behalf of the public
stockholders of Aquila Gas Pipeline Corporation ("Aquila" or the "Company"), in
connection with the acquisition of the publicly owned shares of Aquila common
stock by its majority controlling shareholder, defendant Utilicorp United Inc.
("Utilicorp").
2. Utilicorp is attempting to take advantage of its position of control
over Aquila. Through representation on Aquila's Board of Directors and
Utilicorp's collaboration with Aquila in business ventures, Utilicorp is well
aware that Aquila is poised for explosive growth in the near future.
3. The consideration that Utilicorp has offered to members of the Class (as
defined below) in the proposed acquisition is unfair and inadequate because,
among other things, the intrinsic value of Aquila's common stock is materially
in excess of the amount offered, giving due consideration to the Company's
promising growth and anticipated operating results, net asset value and
profitability.
4. The inadequacy of the offer has already been determined by the special
committee members appointed by the Aquila Board who have rejected the offer.
Despite this rejection,
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Utilicorp is now employing its control over Aquila to cram-down its inadequate
buy-out proposal at the same price as previously offered and rejected by the
special committee, in violation of Utilicorp's fiduciary obligations to be
entirely fair to the Class.
5. Utilicorp has further breached its fiduciary duties owed to Aquila
shareholders by issuing tender offer materials that contain material
misrepresentations and omissions about the $8.00 offer.
THE PARTIES
6. Plaintiff Eugenia Gladstone Vogel is and at all relevant times has been
the owner of shares of Aquila common stock.
7. Plaintiff Brickell Partners is and at all relevant times has been the
owner of shares of Aquila common stock.
8. Plaintiff Joseph Leone is and at all relevant times has been the owner
of shares of Aquila common stock.
9. Plaintiff Robert Riccuiti is and at all relevant times has been the
owner of shares of Aquila common stock.
10. Aquila is a Delaware corporation. Aquila gathers, processes and markets
natural gas and natural gas liquids through its natural gas gathering systems
and gas processing plants.
11. (a) Defendant Utilicorp is a Delaware corporation with its principal
executive offices located at 20 West Ninth Street, Kansas City, Missouri.
Utilicorp is an international electric and gas company.
(b) Utilicorp and its affiliates hold approximately 24 million shares -- or
82% of the outstanding common stock -- of Aquila. As such, Utilicorp and its
representatives on the Aquila board control and dominate Aquila's affairs.
Utilicorp, therefore, is a controlling
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shareholder and owes fiduciary obligations of good faith, candor, loyalty
and fair dealing to the public shareholders of Aquila.
12. (a) Defendants Harvey J. Padewer, Robert L. Howell and Charles K.
Dempster are directors of Aquila (collectively, the "Individual Defendants").
(b) In addition, Defendant Padewer is Vice Chairman of Aquila and Defendant
Dempster is Chairman of the Company's Board.
(c) Defendants Padewer, Howell and Dempster, who constitute the majority of
the Aquila Board, are Utilicorp appointees to the Aquila Board of Directors and
are also employed and/or affiliated with Utilicorp-related entities.
13. Gary L. Downey ("Downey") and Jon L. Mosle, Jr. ("Mosle") are also
directors of Aquila but are not named as defendants in this complaint.
14. By virtue of their positions as directors and/or officers of Aquila
and/or their exercise of control and dominant ownership over the business and
corporate affairs of Aquila, each and every one of the Individual Defendants
(who, collectively, constitute a majority of the Board) and Utilicorp have, and
at all relevant times had, the power to control and influence, and engage in the
practices complained of herein. Each Individual Defendant and Utilicorp owed and
owes Aquila's public stockholders fiduciary obligations and were and are
required to: use their ability to control and manage Aquila in a fair, just and
equitable manner; act in furtherance of the best interests of Aquila's public
stockholders; refrain from abusing their positions of control; and not favor
their own interests at the expense of Aquila's public stockholders.
15. As discussed in detail below, Utilicorp, in concert with the Individual
Defendants have breached their fiduciary duties to Aquila's public stockholders
by acting to cause or
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facilitate Utilicorp's acquisition of the publicly-held minority shares of
Aquila for unfair and inadequate consideration.
CLASS ACTION ALLEGATIONS
16. Plaintiffs bring this action pursuant to Rule 23 of the Rules of this
Court, on behalf of themselves and all other shareholders of the Company (except
the defendants herein and any person, firm, trust, corporation, or other entity
related to or affiliated with them and their successors in interest) who are or
will be threatened with injury arising from defendants' actions complained of
herein (the "Class").
17. This action is properly maintainable as a class action for the
following reasons:
a. The Class is so numerous that joinder of all members is impracticable.
There are in excess of 5.29 million shares of Aquila common stock held by
hundreds if not thousands of stockholders who are members of the Class.
b. There are questions of law and fact that are common to the Class
and that predominate over questions affecting any individual class member.
The common questions include, inter alia, the following:
i) Whether defendants have engaged in and are continuing to
engage in conduct which unfairly benefits Utilicorp at the expense of
the members of the Class;
ii) Whether the Individual Defendants, as officers and/or
directors of the Company, and Utilicorp, the controlling stockholder
of Aquila, are violating their fiduciary duties to plaintiffs and the
other members of the Class;
iii) Whether plaintiffs and the other members of the Class would
be irreparably damaged were Defendants not enjoined from the conduct
described herein; and
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iv) Whether defendants have initiated and timed Utilicorp's
buy-out of Aquila shares to unfairly benefit Utilicorp at the expense
of Aquila's public shareholders.
c. The claims of plaintiffs are typical of the claims of the other
members of the Class in that all members of the Class will be damaged alike
by defendants' actions.
d. Plaintiffs are committed to prosecuting this action and have
retained competent counsel experienced in litigation of this nature.
Accordingly, plaintiffs are adequate representatives of the Class.
SUBSTANTIVE ALLEGATIONS
A. The Company
18. Aquila was founded in 1989 by Utilicorp to acquire natural gas
gathering and process assets. Aquila gathers, processes and markets natural gas
and natural gas liquids through eleven natural gas gathering systems and four
gas processing plants. In 1993, 5.4 million shares of the Company's stock were
sold to the public.
19. Prior to 1998, Aquila had enjoyed significant improving operating
revenues over the past several years. Operating revenues were $485.8 million,
$797.3 million and $1.014 billion for the years 1995 through 1997, respectively.
During 1996 and 1997, Aquila's stock was trading in a $10-$16 price range.
20. In spite of these gains, because of, inter alia, the relatively warm
1997-1998 winter, fiscal 1998 was a difficult year for Aquila. In particular,
during 1998, the price for natural gas liquids was about $0.24 per gallon or
approximately $0.15 per gallon below 1997 prices. Each $0.10 change decreases
Aquila's earnings by almost $1.5 million or $.05 per share. Lower prices not
only negatively impact margins but also gas processing volume.
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B. Utilicorp Makes A Proposal To Purchase The Publicly-Held Aquila Shares
21. In July 1998, Richard C. Green, Jr. ("Green"), Utilicorp's Chairman and
Chief Executive Officer, wrote to the Company's Board and expressed an interest
in purchasing Aquila's publicly-held shares for a price "not to exceed $12.50
per share." Several weeks later, Utilicorp withdrew its written expression of
interest.
22. Thereafter, taking advantage of the short-term price weakness for
natural gas and natural gas liquids and the concomitant temporary downturn in
the Company's stock price, on or about November 10, 1998, Utilicorp proposed to
acquire Aquila's publicly owned shares at the artificially low price of $8 per
share. As recently as June 3, 1998, Oppenheimer analysts valued Aquila in an
acquisition transaction at $16-$18 per share.
23. In response to Utilicorp's acquisition proposal, the Company appointed
a special committee of Aquila directors, consisting of Downey and Mosle, to
consider and respond to the proposed offer (the "Special Committee").
24. Thereafter, on numerous occasions, the Special Committee, along with
its financial advisor Petrie Parkman & Co. ("Petrie"), expressed its concern
that the Company's shares would likely be worth more in the future than the
$8.00 proposed for each Aquila share and that agreement could not be reached
unless Utilicorp substantially increased its offer. The Special Committee
repeatedly expressed its view that it was prepared to recommend an offer at or
above $10.00 per share based on Petrie's discounted cash flow analysis, which
valued the Company's shares up to $17.33 per share. Indeed, Donaldson, Lufkin &
Jenrette ("DLJ"), Utilicorp's financial advisor, valued Aquila's shares up to
$11.31 in its discounted cash flow analysis.
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25. On April 1, 1999, the Special Committee concluded that its negotiations
with Utilicorp were not going to result in an agreement and the discussions
broke-down.
C. Utilicorp Launches A Tender Offer For Aquila's Publicly-held Shares
26. On April 9, 1999, Utilicorp filed a Schedule 14D-1 Tender Offer
Statement (the "14D-1") with the Securities and Exchange Commission and made an
offer directly to the Company's stockholders to acquire the Company's
publicly-held shares for $8.00 per share.
27. At $8.00 per share, the Company is valued at less that $240 million or
less than three times last year's earnings before interest, taxes and
depreciation ("EBITD") and less than five times 1998's projected EBITD. Natural
gas companies are typically valued at 8 to 9 times EBITD.
D. The 14D-1 Omits Material Information Necessary For Aquila's Public
Shareholders To Make An Informed Decision Whether To Tender Their Shares
28. In an attempt to cause Aquila's public shareholders to tender their
shares, defendants wrongfully and deliberately determined not to disclose in the
14D-1 the following information:
a. the estimated or anticipated results from such Company assets as
the Oasis Pipe Line Company ("Oasis"), the South East Texas Pipeline System
("SETPS"), the Western Oklahoma pipeline system located in the Anadarko
Basin and the LaGrange, Texas natural gas processing plant, and the impact
of these operations on the operating cash flow, earnings or share price of
Aquila;
b. a description of the methodology by which the Special Committee
evaluated and ultimately rejected the $8.00 per share offer;
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c. the current and future pricing terms relating to the gas sales
agreements pursuant to which the Company sells to a subsidiary
substantially all of its gas quantities available from its Elk City and
Mooreland systems;
d. any Aquila or Utilicorp projections of Aquila's future results; and
e. a description of or facts evidencing the method or manner by which
the $8.00 Tender Offer price was established.
29. Such information is highly material to Aquila's public shareholders'
decision as to whether to tender their shares in response to Utilicorp's offer
or whether to decline the offer.
E. Defendants' Other Wrongful Conduct
30. Any transaction to acquire the Company at the price being considered
does not represent the true value of the Company and is unfair and inadequate
and constitutes unfair dealing.
31. Because the inadequate offer has already been rejected by the Special
Committee, Utilicorp is now employing its control over Aquila to cram-down its
inadequate buy-out proposal at the same price as previously offered.
32. Because Utilicorp is in possession of proprietary corporate information
concerning Aquila's future financial prospects, the degree of knowledge and
economic power between Utilicorp and the class members is unequal, making it
grossly and inherently unfair for Utilicorp to obtain the remaining 18% of
Aquila's shares at the unfair and inadequate price that it has proposed.
33. By offering a grossly inadequate price for Aquila's shares and
threatening or planning to use its control of Aquila to force consummation of
the transaction, Utilicorp is violating its fiduciary duties as majority
shareholder of Aquila.
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34. Any buy-out of Aquila public shareholders by Utilicorp on the terms
offered will deny class members their right to share proportionately and
equitably in the true value of Aquila's valuable and profitable business, and
future growth in profits and earnings, at a time when the Company is poised to
increase its profitability.
35. Because Utilicorp controls 82% of Aquila and dominates its Board, no
auction or market check can be effected to establish Aquila's worth through
arm's-length bargaining. Thus, Utilicorp has the power and is exercising its
power to acquire Aquila's minority shares and dictate terms which are in
Utilicorp's best interest, without competing bids and regardless of the wishes
or best interests of the class members or the intrinsic value of Aquila's stock.
36. By reason of the foregoing, defendants have breached and will continue
to breach their duties to the minority public shareholders of Aquila and are
engaging in improper, unfair dealing and wrongful and coercive conduct.
37. Plaintiffs and the Class will suffer irreparable harm unless defendants
are enjoined from breaching their fiduciary duties and from carrying out the
aforesaid plan and scheme.
38. Plaintiffs have no adequate remedy at law.
WHEREFORE, plaintiffs demand judgment and preliminary and permanent relief,
including injunctive relief, in their favor and in favor of the Class and
against defendants as follows:
A. Declaring that this action is properly maintainable as a class action,
and certifying plaintiffs as class representatives;
B. Ordering that defendants make full, prompt corrective disclosures of any
and all material information not yet disclosed;
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C. Enjoining the proposed transaction and, if the transaction is
consummated, rescinding the transaction;
D. Awarding plaintiffs and the Class compensatory damages and/or rescissory
damages;
E. Awarding plaintiffs the costs and disbursements of this action,
including a reasonable allowance for plaintiffs' attorneys' and experts' fees;
and
F. Granting such other, and further relief as this Court may deem to be
just and proper.
ROSENTHAL, MONHAIT,
GROSS & GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, Delaware 19899-1070
(302) 656-4433
Attorneys for Plaintiffs
OF COUNSEL:
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
One Pennsylvania Plaza
New York, NY 10119
(212) 594-5300
WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
488 Madison Avenue
New York, NY 10022
(212) 935-7400
Plaintiffs' Co-Lead Counsel
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