<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
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)
------------------------
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)
------------------------
COPY TO:
DENNIS P. WILBERT, ESQ.
BLACKWELL SANDERS PEPER MARTIN LLP
2300 MAIN, SUITE 1000
KANSAS CITY, MISSOURI 64108
(816) 983-8000
CALCULATION OF FILING FEE:
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
$43,232,000.00 $8,947.00
</TABLE>
* For purposes of calculating the amount of filing fee only. The amount
assumes the purchase of 5,404,000 shares of Common Stock, par value $.01 per
share, of Aquila Gas Pipeline Corporation at $8.00 net per share in cash
which represents all outstanding shares at March 18, 1999 not owned by the
persons filing this statement and shares issuable pursuant to options that
are presently exercisable.
** The amount of the filing fee calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934 equals 1/50th of 1% of the
value of the shares to be purchased and includes the $300.00 filing fee for
the Schedule 13D.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 03839B10 Page 2 of 8 Pages
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS: UTILICORP UNITED INC.
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 44-0541877
- --------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) /X/
(b) / /
- --------------------------------------------------------------------------------
(3) SEC USE ONLY
- --------------------------------------------------------------------------------
(4) SOURCE OF FUNDS:
WC
- --------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) or 2(f):
/ /
- --------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION:
DELAWARE
- --------------------------------------------------------------------------------
(7) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
24,000,000
- --------------------------------------------------------------------------------
(8) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES SHARES:
/ /
- --------------------------------------------------------------------------------
(9) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
81.6%
- --------------------------------------------------------------------------------
(10) TYPE OF REPORTING PERSON:
GM; CO
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 03839B10 Page 3 of 8 Pages
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS: AQUILA ENERGY CORPORATION
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 47-0683480
- --------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) /X/
(b) / /
- --------------------------------------------------------------------------------
(3) SEC USE ONLY
- --------------------------------------------------------------------------------
(4) SOURCE OF FUNDS:
AF
- --------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) or 2(f):
/ /
- --------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION:
DELAWARE
- --------------------------------------------------------------------------------
(7) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
24,000,000
- --------------------------------------------------------------------------------
(8) CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES:
/ /
- --------------------------------------------------------------------------------
(9) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
81.6%
- --------------------------------------------------------------------------------
(10) TYPE OF REPORTING PERSON:
GM; CO
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 03839B10 Page 4 of 8 Pages
- --------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS: AEC ACQUISITIONS, INC.
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) /X/
(b) / /
- --------------------------------------------------------------------------------
(3) SEC USE ONLY
- --------------------------------------------------------------------------------
(4) SOURCE OF FUNDS:
AF
- --------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(e) or 2(f):
/ /
- --------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION:
DELAWARE
- --------------------------------------------------------------------------------
(7) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
0
- --------------------------------------------------------------------------------
(8) CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES:
/ /
- --------------------------------------------------------------------------------
(9) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
0%
- --------------------------------------------------------------------------------
(10) TYPE OF REPORTING PERSON:
GM; CO
- --------------------------------------------------------------------------------
<PAGE>
Page 5 of 8 Pages
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") relates
to a tender offer by 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"), to purchase all
outstanding shares of Common Stock, par value $.01 per share, of Aquila Gas
Pipeline Corporation, a Delaware corporation, not currently directly or
indirectly owned by Purchaser, Aquila or Parent, for a purchase price of $8.00
per share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated April 9,
1999 (the "Offer to Purchase") and in the related Letter of Transmittal (the
"Letter of Transmittal" and, together with the Offer to Purchase, the "Offer"),
and is intended to satisfy the reporting requirements of Section 14(d) of the
Securities Exchange Act of 1934, as amended. This Tender Offer Statement on
Schedule 14D-1 is also intended to satisfy the reporting requirements of Section
13(d) of the Securities Exchange Act of 1934, as amended, and shall constitute
the Schedule 13D of Parent, Aquila and Purchaser. Copies of the Offer to
Purchase and the related Letter of Transmittal are filed with this Schedule
14D-1 as Exhibits (a)(1) and (a)(2) hereto, respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Aquila Gas Pipeline Corporation, a
Delaware corporation (the "Company"), which has its principal executive offices
at One International Centre, 100 N.E. Loop 410, Suite 1000, San Antonio, Texas
78216-4754.
(b) The title of the securities which are the subject of the Offer is the
Company's Common Stock, par value $.01 per share (the "Shares"), and the Offer
is for 5,400,000 Shares, consisting of all outstanding Shares not currently
directly or indirectly owned by Parent, Aquila or Purchaser, and for all Shares
issued upon the exercise of vested, outstanding options, if any, at a price of
$8.00 per Share, net to the seller in cash, without interest thereon. The
information set forth in the section entitled "Introduction" and "The Tender
Offer--Terms of the Offer" of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in the section entitled "The Tender
Offer--Price Range of the Shares; Dividends" of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Schedule 14D-1 is being filed by Parent, Aquila and
Purchaser. The information set forth in the sections entitled "Introduction" and
"The Tender Offer--Certain Information Concerning Parent, Aquila and Purchaser"
of the Offer to Purchase and in Schedule II to the Offer to Purchase is
incorporated herein by reference.
(e)-(f) During the last five (5) years, none of Purchaser, Aquila, Parent
nor, to the best knowledge of Purchaser, Aquila and Parent, any executive
officer or director of Purchaser, Aquila or Parent has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the sections entitled "Introduction;"
"Special Factors--Background of the Offer;" "--Purpose and Structure of the
Offer; Plans for the Company after the Offer" and "The Tender Offer--Certain
Information Concerning Parent, Aquila and Purchaser" and "--Certain Transactions
Between Parent, Aquila and the Company" of the Offer to Purchase is incorporated
herein by reference.
<PAGE>
Page 6 of 8 Pages
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the section entitled "The Tender
Offer--Source and Amount of Funds" of the Offer to Purchase is incorporated
herein by reference.
(b)-(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the sections entitled "Introduction;"
"Special Factors--Purpose and Structure of the Offer; Plans for the Company
after the Offer" and "The Tender Offer--Certain Effects of the Transaction" of
the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the sections entitled "Introduction,"
"Special Factors--Background of the Offer" and "The Tender Offer--Certain
Information Concerning Parent, Aquila and Purchaser" and "--Interests of Certain
Persons in the Offer" of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the sections entitled "Introduction," "Special
Factors--Background of the Offer" and "The Tender Offer--Certain Information
Concerning Parent, Aquila and Purchaser" and "--Interests of Certain Persons in
the Offer" of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the sections entitled "Introduction," "Special
Factors--Background of the Offer" and "The Tender Offer--Fees and Expenses" of
the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in the section entitled "The Tender Offer--Certain
Information Concerning Parent, Aquila and Purchaser" of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in the section entitled "The Tender
Offer--Certain Legal Matters; Regulatory Approvals" of the Offer to Purchase is
incorporated herein by reference.
(c) Not applicable.
(d) Not applicable.
(e) The information set forth in the sections entitled "Special
Factors--Background of the Offer" and "The Tender Offer--Certain Legal Matters;
Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(f) The information set forth in the entire Offer to Purchase and the Letter
of Transmittal, copies of which are filed with this Schedule 14D-1 as Exhibits
(a)(1) and (a)(2), respectively, is incorporated herein by reference.
<PAGE>
Page 7 of 8 Pages
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Text of Press Release issued by Parent, dated April 8, 1999.
(a)(8) Summary Advertisement, dated April 9, 1999.
(a)(9) Letter of President of Parent to stockholders of the Company.
(b) Not applicable.
(c) Not applicable
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Complaint in BRICKELL PARTNERS V. F. JOSEPH BECRAFT, ET AL., C.A.
No. 16777NC.
(g)(2) Complaint in JOSEPH LEONE, ET AL. V. AQUILA GAS PIPELINE
CORPORATION, ET AL., Civil Action No. 16778NC.
(g)(3) Complaint in EUGENIA GLADSTONE VOGEL V. HARVEY J. PADEWER, ET AL.,
Civil Action No. 16775NC.
(g)(4) Complaint in ROBERT RICCUITI V. AQUILA GAS PIPELINE CORPORATION, ET
AL., C.A. No. 16781.
(g)(5) Order of Consolidation in the Court of Chancery of the State of
Delaware in and for New Castle County, dated January 11, 1999.
<PAGE>
Page 8 of 8 Pages
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.
<TABLE>
<S> <C> <C>
Dated: April 9, 1999 AEC ACQUISITIONS, INC.
By: /s/ Robert K. Green
------------------------------------------
Name: Robert K. Green
------------------------------------------
Title: President
------------------------------------------
AQUILA ENERGY CORPORATION
By: /s/ Robert K. Green
------------------------------------------
Name: Robert K. Green
------------------------------------------
Title: Authorized Representative
------------------------------------------
UTILICORP UNITED INC.
By: /s/ Robert K. Green
------------------------------------------
Name: Robert K. Green
------------------------------------------
Title: President and Chief Operating Officer
------------------------------------------
</TABLE>
<PAGE>
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 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 or the 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, 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.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Text of Press Release issued by Parent, dated April 8, 1999
(a)(8) Summary Advertisement, dated April 9, 1999
(a)(9) Letter of President of Parent to stockholders of the Company.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable
(e) Not applicable
(f) Not applicable
(g)(1) Complaint in BRICKELL PARTNERS V. F. JOSEPH BECRAFT, ET AL., C.A. No. 16777NC.
(g)(2) Complaint in JOSEPH LEONE, ET AL. V. AQUILA GAS PIPELINE CORPORATION, ET AL., Civil Action No. 16778NC.
(g)(3) Complaint in EUGENIA GLADSTONE VOGEL V. HARVEY J. PADEWER, ET AL., Civil Action No. 16775NC.
(g)(4) Complaint in ROBERT RICCUITI V. AQUILA GAS PIPELINE CORPORATION, ET AL., C.A. No. 16781.
(g)(5) Order of Consolidation in the Court of Chancery of the State of Delaware in and for New Castle County,
dated January 11, 1999.
</TABLE>
<PAGE>
OFFER TO PURCHASE
EXHIBIT (a)(1)
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AQUILA GAS PIPELINE CORPORATION
AT
$8.00 NET PER SHARE IN CASH
BY
AEC ACQUISITIONS, INC.
AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF UTILICORP UNITED INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, MAY 7, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE AT LEAST THAT NUMBER OF
SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF AQUILA GAS PIPELINE
CORPORATION ("SHARES") THAT WOULD, WHEN AGGREGATED WITH THE SHARES OWNED
DIRECTLY OR INDIRECTLY BY UTILICORP UNITED INC., REPRESENT AT LEAST 90% OF ALL
SHARES THEN OUTSTANDING ON A FULLY-DILUTED BASIS AS DESCRIBED IN THIS OFFER TO
PURCHASE. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "THE TENDER
OFFER--CERTAIN CONDITIONS OF THE OFFER."
THE OFFER IS NOT CONDITIONED ON THE AVAILABILITY OF FINANCING OR ON THE
APPROVAL OF THE BOARD OF DIRECTORS OF AQUILA GAS PIPELINE CORPORATION OR ANY
COMMITTEE THEREOF.
UTILICORP UNITED INC. CURRENTLY BENEFICIALLY OWNS 24,000,000 SHARES,
REPRESENTING APPROXIMATELY 82% OF THE OUTSTANDING SHARES AT MARCH 18, 1999.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
DONALDSON, LUFKIN & JENRETTE
April 9, 1999
<PAGE>
IMPORTANT
Any stockholder desiring to tender all or a portion of such stockholder's
Shares should either (a)(i) complete and sign the Letter of Transmittal or a
facsimile thereof in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal and mail or deliver the Letter of
Transmittal together with the certificate(s) representing tendered Shares and
all other required documents to The Bank of New York (the "Depositary") as
provided in the Letter of Transmittal, or (ii) tender such Shares pursuant to
the procedure for book-entry transfer set forth in "The Tender Offer--Procedure
for Tendering Shares" or (b) request such stockholder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such stockholder. Stockholders having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such person
if they desire to tender their Shares. Any stockholder who desires to tender
Shares and whose certificates representing such Shares are not immediately
available, or who cannot comply with the procedures for book-entry transfer on a
timely basis, may tender such Shares pursuant to the guaranteed delivery
procedure set forth in "The Tender Offer--Procedure for Tendering Shares."
Questions and requests for assistance may be directed to Morrow & Co. (the
"Information Agent") or to Donaldson, Lufkin & Jenrette Securities Corporation
(the "Dealer Manager") at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks and trust companies.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
INTRODUCTION............................................................................................... 1
SPECIAL FACTORS............................................................................................ 3
Background of the Offer.................................................................................. 3
Fairness of the Offer.................................................................................... 9
Analysis of Financial Advisor to Parent.................................................................. 9
Forward Looking Statements............................................................................... 13
Purpose and Structure of the Offer; Plans for the Company After the Offer................................ 13
Certain United States Federal Income Tax Consequences.................................................... 15
Appraisal Rights in the Second Step Merger............................................................... 16
THE TENDER OFFER........................................................................................... 20
Terms of the Offer....................................................................................... 20
Acceptance for Payment and Payment for Shares............................................................ 21
Procedure for Tendering Shares........................................................................... 22
Withdrawal Rights........................................................................................ 25
Price Range of the Shares; Dividends..................................................................... 26
Certain Effects of the Transaction....................................................................... 26
Certain Information Concerning the Company............................................................... 28
Certain Information Concerning Parent, Aquila and Purchaser.............................................. 30
Source and Amount of Funds............................................................................... 32
Certain Conditions of the Offer.......................................................................... 32
Certain Transactions Between Parent, Aquila and the Company.............................................. 35
Interests of Certain Persons in the Offer................................................................ 37
Certain Legal Matters; Regulatory Approvals.............................................................. 39
Fees and Expenses........................................................................................ 40
Miscellaneous............................................................................................ 41
SCHEDULE I................................................................................................. I-1
SCHEDULE II................................................................................................ II-1
ANNEX A.................................................................................................... A-1
</TABLE>
iii
<PAGE>
To the Holders of Common Stock of AQUILA GAS PIPELINE CORPORATION:
INTRODUCTION
AEC Acquisitions, Inc., a Delaware corporation (the "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 offers to purchase all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of Aquila Gas
Pipeline Corporation, a Delaware corporation (the "Company"), not currently
owned by Parent (the "Publicly-held Shares"), at a purchase price of $8.00 per
Share (the "Offer Price"), net to the Seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, as amended and supplemented
from time to time, together constitute the "Offer").
Parent currently beneficially owns 24,000,000 Shares, representing
approximately 82% of the outstanding Shares at March 18, 1999. Nominees of
Parent currently constitute a majority of the members of the Board of Directors
of the Company (the "Company Board"). Upon acquiring at least that number of
Shares that would, when aggregated with the Shares owned directly or indirectly
by Parent, represent at least 90% of the Shares then outstanding on a
fully-diluted basis as described below (the "Minimum Condition"), Parent would
have the power to cause the Company to engage in a merger or other business
combination without the affirmative vote of any other stockholder. Such board
representation and ownership, however, do not give Parent or Purchaser the power
to compel any stockholder of the Company to accept the Offer.
The purpose of the Offer is to enable Parent to own the entire equity
interest in the Company. Parent desires to acquire the minority equity interest
at this time to fully integrate the Company's operations into Parent's existing
wholly-owned gas marketing and trading businesses. Full integration will allow
Parent to achieve additional operating efficiencies and will provide the
flexibility to respond quickly to changes in an increasingly competitive
industry. See "Special Factors--Background of the Offer."
On November 10, 1998, Parent proposed to acquire all of the Publicly-held
Shares for $8.00 per Share (the "Proposal"). The Company Board appointed a
special committee comprised of members of the Company Board not affiliated with
Parent (the "Special Committee") to consider the Proposal. See "Special
Factors--Background of the Offer." As a result of the failure to reach agreement
with the Special Committee, Parent publicly announced on April 8, 1999 its
intention to commence the Offer to give the Company's stockholders the
opportunity to receive the Offer Price, which Parent believes represents a full
and fair price for the Shares for the reasons described below under "Special
Factors--Fairness of the Offer." The Offer has not been approved by the Company
Board or any committee thereof. To the best knowledge of the Parent, Aquila and
Purchaser, no director or executive officer of the Company has made any
recommendation with respect to the Offer. Each stockholder should make its own
determination as to whether to accept or reject the Offer. See "Special
Factors--Background of the Offer."
Parent currently intends, following the consummation of the Offer, to seek
to have the Company effect a merger (the "Second Step Merger") in accordance
with the relevant provisions of the General Corporation Law of the State of
Delaware (the "DGCL") in which Purchaser will be merged with and into the
Company. At the effective time of the Second Step Merger (the "Effective Time"),
each Share not tendered pursuant to the Offer (other than Shares owned by the
Company as treasury stock, Shares owned by Parent, Aquila or Purchaser or any
subsidiary thereof, or Shares with respect to which appraisal rights are
properly exercised under Delaware law) would be converted into the right to
receive an amount in cash equal to the Offer Price (the "Merger Consideration").
Following consummation of the Second Step Merger, the Company would continue as
the surviving corporation (the "Surviving Corporation") and would be a
wholly-owned, indirect subsidiary of Parent.
If Purchaser owns at least 90% of the outstanding Shares following
consummation of the Offer (assuming the transfer of the Shares currently owned
directly or indirectly by the Parent to Purchaser),
1
<PAGE>
Purchaser would have the ability to consummate the Second Step Merger without a
meeting or vote of the Company Board or any committee thereof or of the
stockholders of the Company, pursuant to the "short form" merger provisions of
Section 253 of the DGCL. In such circumstances, Purchaser currently intends to
so effectuate the Second Step Merger as soon as practicable. See "Special
Factors--Purpose and Structure of the Offer; Plans for the Company after the
Offer."
If Parent and Purchaser own less than 90% of the outstanding Shares
following consummation of the Offer, consummation of the Second Step Merger
would require the approval by the Company Board of an agreement between the
Company, Parent and Purchaser with respect to the Second Step Merger (a "Merger
Agreement") and the adoption of the Merger Agreement by the holders of at least
80% of the outstanding Shares. If Parent and Purchaser own less than 90% of the
outstanding Shares following consummation of the Offer, Parent and Purchaser
currently intend to either (i) promptly use their best efforts to take such
steps as are necessary to cause the Second Step Merger to be effective pursuant
to a Merger Agreement, which will, if the Shares remain registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), require filing
with the United States Securities and Exchange Commission (the "Commission")
certain disclosure materials prior to adoption of the Second Step Merger by the
Company's stockholders, or (ii) for an indeterminate period, delay the Second
Step Merger and engage in certain open market or privately negotiated purchases
at prices which may be greater or less than the Offer Price to increase Parent
and Purchaser's combined ownership to or above 90% of the outstanding Shares, so
as to enable Purchaser to effect the Second Step Merger as a "short form"
merger. See "The Tender Offer--Certain Effects of the Transaction." As a
consequence, no assurance can be given as to whether or when Purchaser will
cause the Second Step Merger to be consummated, and similarly, no assurance can
be given as to whether or when the Merger Consideration will be paid to
stockholders who do not tender their Shares in the Offer. IN NO EVENT WILL ANY
INTEREST BE PAID ON THE MERGER CONSIDERATION. See "Special Factors--Purpose and
Structure of the Offer; Plans for the Company After the Offer."
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION. SEE "THE TENDER OFFER--CERTAIN CONDITIONS OF THE OFFER."
PURCHASER RESERVES THE RIGHT (BUT SHALL NOT BE OBLIGATED) TO WAIVE ANY OR ALL
CONDITIONS TO THE OFFER.
THE OFFER IS NOT CONDITIONED ON THE AVAILABILITY OF FINANCING OR ON THE
APPROVAL OF THE COMPANY BOARD OR ANY COMMITTEE THEREOF.
The Company has advised Purchaser that there were (i) 29,400,000 Shares
issued and outstanding, as of March 18, 1999 (the "Outstanding Shares"), and
(ii) 4,000 Shares subject to issuance under options which are presently
exercisable ("Option Shares"). For purposes of calculating the Minimum
Condition, the term "fully-diluted" includes only the Outstanding Shares and the
Option Shares. Based upon the number of Outstanding Shares and Option Shares,
Parent and Purchaser currently believe that approximately 2.46 million
Publicly-held Shares must be tendered and not withdrawn to satisfy the Minimum
Condition.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (the "Company's 10-K"), there were approximately 99
stockholders of record and approximately 1,300 beneficial owners of Shares on
March 18, 1999. In addition, according to the Company's 10-K, as of December 31,
1998, options to purchase approximately 79,000 Shares (the "Company Options")
were outstanding. Purchaser is not offering to acquire the Company Options in
the Offer. Each holder of a Company Option that is vested or becomes vested
prior to the expiration of the Offer may exercise such Company Option prior to
the consummation of the Offer and the Shares received upon such exercise may be
tendered pursuant to the Offer. It is Parent's intention that action be taken in
accordance with the Company's benefit plans so that immediately prior to the
consummation of the Second Step Merger each unexpired Company Option, whether
vested or unvested, and each outstanding stock appreciation right with respect
to Company common stock ("SARs") will be cancelled and will be converted into
either (i) an option ("Parent Options") to purchase shares of common stock, par
value $1.00 per share, of Parent
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("Parent Shares") or (ii) Parent Shares subject to certain restrictions ("Parent
Restricted Shares") as described under "Special Factors--Purpose and Structure
of the Offer; Plans for the Company after the Offer."
In addition, in connection with the Second Step Merger either (i) all
restrictions on the restricted shares granted to Company employees ("Company
Restricted Shares") will lapse pursuant to the terms of the Company's benefit
plans in which case the Company Restricted Shares will be converted into the
right to receive the Merger Consideration or (ii) all Company Restricted Shares
will be exchanged for Parent Restricted Shares as described under "Special
Factors--Purpose and Structure of the Offer; Plans for the Company after the
Offer." See "Special Factors--Purpose and Structure of the Offer; Plans for the
Company after the Offer."
Tendering holders of Shares will not be obligated to pay brokerage fees or
commissions or, except as set forth in the Letter of Transmittal, transfer taxes
on the purchase of Shares by Purchaser pursuant to the Offer. Purchaser will pay
all charges and expenses of Donaldson, Lufkin & Jenrette Securities Corporation
which is acting as the Dealer Manager (in such capacity, the "Dealer Manager")
in connection with the Offer, The Bank of New York which is acting as the
Depositary (the "Depositary") in connection with the Offer, and Morrow & Co.
which is acting as the Information Agent (the "Information Agent") in connection
with the Offer. See "The Tender Offer--Fees and Expenses."
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
SPECIAL FACTORS
BACKGROUND OF THE OFFER
The Company was founded in 1989 by Parent. In 1993, Parent sold a total of
5,400,000 shares of the Company's common stock to the public. Since the closing
of the sale of common stock to the public, the Company has remained an
approximately 82% owned indirect subsidiary of Parent. The Company's common
stock currently is listed on the New York Stock Exchange.
In early 1998, the Company Board and Parent concluded that it was in the
best interests of all the stockholders of the Company to pursue strategic
alternatives to the continued operation of the Company as a publicly-traded
subsidiary of Parent. At its February 10, 1998 meeting, the Company Board
approved the initiation of a process to explore all available strategic
alternatives, including the sale of the Company or the merger or other
combination of the Company with another entity.
On March 10, 1998, the Company issued a press release announcing its
decision to initiate a review of strategic alternatives, including consideration
of selling or merging the Company. Beginning in March 1998, the Company sought
indications of interest from qualified parties who were believed to be
potentially interested in acquiring the Company and sent summary information
concerning the Company to such parties.
In early April 1998, the Company's financial advisor, Merrill Lynch & Co.,
received nonbinding, preliminary indications of interest from seven different
parties regarding the possible acquisition of the Company. These preliminary
indications of interest were, on a per share basis, respectively $13.00; $17.31;
$18.00; $18.00; $17.31-$18.67; $19.39; and $18.71-$20.41. Prior to the receipt
of such indications of interest, none of the parties that the Company had
contacted was permitted to conduct detailed due diligence on the Company. The
parties who submitted preliminary indications of interest were then invited to
conduct detailed due diligence on the Company.
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During the latter part of April and the first half of May 1998, most of the
parties who had submitted nonbinding indications of interest visited the Company
to conduct due diligence, including reviewing the Company's business and
financial affairs, contracts, properties, and other information. The Company
requested that the parties which had submitted the preliminary indications of
interest submit final, binding offers to the Company toward the end of May 1998.
However, the Company did not receive any such binding offers from any of those
parties.
Following the end of May, the Company continued its efforts to sell the
Company. Several parties were approached concerning the possibility of entering
into a negotiated transaction. None of those efforts was successful.
Beginning in June 1998, Parent began to consider making a proposal to
acquire the Publicly-held Shares. On July 15, 1998, Mr. Richard C. Green, Jr.,
Chairman and Chief Executive Officer of Parent, wrote to the Company Board to
express a possible interest in a purchase of the Publicly-held Shares. The text
of the letter was as follows:
During the past few months, the Company has engaged in the process of
exploring strategic alternatives to maximize shareholder value for the
shareholders of the Company. We understand that this process has not
resulted in the receipt of proposals which would maximize shareholder
value.
Nevertheless, we still believe that strategic alternatives should be
pursued, and that it would be in the best interest of all stockholders
for the shares of the Company owned by the minority public stockholders
to be purchased. Accordingly, UtiliCorp is interested in pursuing the
acquisition of the approximately 18% of the Company's common stock not
presently owned by UtiliCorp (the "Public Shares"). The Public Shares
would be acquired at approximately the current market price, not to
exceed $12.50 per share.
This proposal is an indication of interest only, and is not binding on
either UtiliCorp or the Company. Any potential transaction is subject to
approval by the boards of both UtiliCorp and the Company.
The transaction if approved would take the form of a merger of the
Company with a wholly-owned subsidiary of UtiliCorp. The previously
negotiated modification to the tax-sharing agreement between the Company
and UtiliCorp would not apply in such a transaction between UtiliCorp
and the Company.
UtiliCorp remains open to proposals from third parties. If proposals
were made by third parties after the announcement of any potential
transaction between UtiliCorp and the Company, we would consider them
along with the the Company board.
It is important for a decision to be made as soon as possible.
Therefore, we are asking that you respond to this proposal no later than
Wednesday, July 22, 1998.
In the meantime, we are available to meet with the the Company board to
discuss any aspects of this matter.
A few days later, several members of the Company Board, including Mr.
Charles Dempster, a Senior Vice President of Parent and a member and Chairman of
the Company Board, Mr. Jon Mosle, a member of the Company Board who is
unaffiliated with Parent, and Mr. Gary Downey, a member of the Company Board who
is unaffiliated with Parent, discussed the July 15, 1998 letter by telephone.
Mr. Mosle and Mr. Downey both stated that the letter was not adequate as a
proposal because it did not specify a definite price for the Publicly-held
Shares.
In late July or early August 1998, Parent withdrew its July 15 letter
because it did not believe that the prospects were good for negotiating a
transaction at that time in light of the concerns expressed by Messrs.
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Mosle and Downey and the continuing erosion of equity values within the gas
gathering, transmission and marketing industry. On August 6, 1998, the Company
publicly announced that it was no longer considering a sale of the Company as
one of its strategic alternatives.
In approximately October of 1998, Parent concluded that it would be in the
best interests of the Company, the holders of the Publicly-held Shares, and the
Parent for the Parent to purchase the Publicly-held Shares at a premium to the
current market price. Therefore, Parent initiated discussions with Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") concerning a possible purchase
by Parent of the Publicly-traded Shares. Parent retained DLJ to act as its
financial advisor in connection with such possible purchase.
On or about November 9, 1998, Parent advised Mr. Dempster that it intended
to submit a proposal to acquire all of the Publicly-held Shares. Mr. Dempster
advised the Company Board at its November 10, 1998, meeting that he expected
that a proposal from Parent would be received in the near future. The Company
Board then formed the Special Committee consisting of Messrs. Mosle and Downey
for the purpose of considering and responding to any proposal from Parent, with
full authority to negotiate with Parent with regard to any proposal, and, at the
Company's expense, to retain independent legal and financial advisors to assist
the Special Committee. Mr. Robert Howell, who was Senior Vice President of
Parent and a member of the Company Board, announced that he would be directly
involved, as a representative of Parent, in the negotiations with the Special
Committee and that he was therefore resigning from the Company Board, effective
immediately.
On November 10, 1998, Mr. Richard C. Green, Jr. wrote to Mr. Dempster, the
Chairman of the Company Board, and to the Special Committee proposing to acquire
all of the Publicly-held Shares. The letter read in full as follows:
As you know, UtiliCorp United has communicated with the Board of AQP
concerning UtiliCorp's desire to acquire the shares of AQP presently
held by the public. UtiliCorp proposes to acquire all of the shares of
AQP which are not presently held by UtiliCorp or its subsidiaries for a
consideration of $8.00 per share. The consideration would consist of
cash or UtiliCorp stock or a combination thereof to be agreed upon in
negotiations.
It is our understanding that the Board has appointed you as a special
committee, with the responsibility to negotiate with UtiliCorp
concerning the proposed acquisition. We trust that you are in a position
to quickly begin the process of selecting counsel and financial
advisors. We would appreciate a prompt response, in that we would like
to establish a timetable and responsibilities of the parties and their
advisors as soon as possible.
We would suggest that disclosures concerning this matter be coordinated
between us in order to avoid any premature disclosure.
On November 12, 1998, Parent issued a press release announcing its proposal
to purchase the Publicly-held Shares. The text of the press release was as
follows:
KANSAS CITY, MO--NOVEMBER 12, 1998
UTILICORP UNITED (NYSE:UCU) has submitted a proposal to buy back the
approximately 5.4 million common shares of Aquila Gas Pipeline
Corporation (NYSE:AQP) which it does not already own, representing about
18 percent of outstanding AQP common shares, for $8.00 per share. This
represents an approximately 23 percent premium to the closing AQP share
price of $6.50 on November 11, 1998. The proposal has been submitted in
a letter to the chairman of the board of Aquila Gas Pipeline and an
independent committee of the board of directors. Any agreement in regard
to the proposed buyback of shares, including the form of consideration
to be paid, is subject to negotiations and agreement with the
independent committee.
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Based in San Antonio, Texas, Aquila Gas Pipeline Corporation gathers,
processes and markets natural gas and natural gas liquids through its
natural gas gathering systems and gas processing plants in Texas and
Oklahoma. The company is approximately 82 percent owned by Aquila Energy
Corporation, a wholly-owned subsidiary of UtiliCorp United. The
remaining shares were sold to investors in an initial public offering in
1993.
UtiliCorp is an international electric and gas company with customers
and operations across the U.S. and in Canada, Great Britain, New Zealand
and Australia. Based in Kansas City, Missouri, the Fortune 500 company
operates regulated electric and gas utilities in eight states and one
Canadian province and through the Aquila Energy subsidiary markets
natural gas and electricity across most of North America.
Following Parent's November 12, 1998 announcement of its intention to make
an offer of $8.00 per share for the Publicly-held Shares, four lawsuits were
filed in the Court of Chancery of the State of Delaware against Parent, the
Company and the Company Board. The suits alleged that $8.00 was an inadequate
price for the Shares, that the Company Board and any special committee of the
Company Board had a duty to act in the interests of the Company's stockholders,
and that there was a conflict between the interests of Parent as majority
stockholder and the fiduciary obligations of the Company Board to the minority
stockholders. The suits all sought class action status and asked that any
proposed transaction be enjoined and that unspecified compensatory damages be
awarded. On January 11, 1999, the actions were consolidated as IN RE: AQUILA GAS
PIPELINE CORPORATION SHAREHOLDERS LITIGATION, CONSOLIDATED CASE NO. 16775. By
agreement of the parties, no response from the defendants in the suits has been
filed.
During the balance of November and December, the Special Committee retained
legal advisors and Petrie Parkman & Co. ("Petrie") as financial advisors, and
began to gather information regarding the Company. Mr. Howell had telephone
conversations with each of Messrs. Downey and Mosle during this period. The
discussions were limited to updates on how the Special Committee was progressing
in identifying and retaining its advisors.
During December 1998 and January 1999, DLJ and Petrie conducted due
diligence with respect to the Company.
On January 26, 1999, representatives of DLJ and representatives of Petrie
met to preliminarily review the terms of Parent's Proposal and to discuss the
status of the Special Committee's and its advisors' evaluation of the Proposal.
At such meeting, DLJ described the valuation methodologies employed by Parent
and DLJ in arriving at the proposed consideration of $8.00 per Share. Petrie
responded that their evaluation was still in process, but expressed concern
based on natural gas and natural gas liquids prices and the recent operating and
financial performance of the Company that this might not be the best time to
consider the sale of the Publicly-held Shares. DLJ and Petrie agreed that Petrie
would continue its evaluation and that they would continue their discussions.
On February 1, 1999, the Company Board held a regular meeting. All members
of the Company Board were present. In addition, legal counsel for the Special
Committee was present. At the meeting, the Company Board and the Special
Committee's legal counsel discussed proposals to clarify and elaborate on the
Special Committee's authority and function. In addition, the Company Board
authorized the negotiation of indemnification agreements for the members of the
Special Committee. On February 11, 1999, the Company Board held a special
meeting by telephone, at which resolutions clarifying and elaborating on the
Special Committee's authority and function were adopted. In addition, the
Company Board set the compensation of the members of the Special Committee for
their service on the Special Committee at $35,000 for each Special Committee
member, in addition to payment of a $500 meeting fee for each meeting of the
Special Committee plus expenses. The $35,000 payment is due upon the completion,
rejection, or abandonment of the proposed purchase of the Publicly-held Shares.
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On February 10, 1999, Mr. Robert Green, President and Chief Operating
Officer of Parent, resigned his membership on the Company Board because he was
about to become directly involved in the negotiations with the Special
Committee.
On February 19, 1999, Mr. Robert Green and Mr. Robert Howell, representing
Parent, met with the members of the Special Committee in Dallas, Texas. Also
present at the meeting were representatives of DLJ, representatives of Petrie,
legal counsel for the Special Committee and legal counsel for the Parent. The
meeting involved an extended discussion of the valuation analysis performed by
DLJ, and a discussion with regard to the prospects for changes in natural gas
and natural gas liquids prices. Messrs. Mosle and Downey reiterated that they
were concerned about whether the time was right for the holders of the
Publicly-held Shares to sell, and that they believed that it might be prudent to
wait until market conditions improved for natural gas and natural gas liquids.
Mr. Mosle presented a chart showing the historical stock price performance of
the Company and described his view of the relevant factors that impacted the
stock's performance during and after the attempts to find a qualified purchaser
for the Company during 1998, and up to the public announcement of the Proposal.
Mr. Mosle and Mr. Downey indicated their belief, based on the Company's
historical stock price performance, that the Shares would likely be worth more
in the future than the $8.00 per Share Proposal.
At the conclusion of the meeting, Mr. Mosle told Mr. Howell that he did not
believe that an agreement could be reached that day unless Parent increased its
proposal substantially. The Special Committee and its advisors agreed with
Parent that representatives of DLJ and Petrie would review in detail DLJ's
analysis in order to agree on assumptions, valuation methodologies and the
content of each of their valuations.
Following the February 19 meeting, representatives of DLJ and Petrie spoke
several times in order to compare their respective valuations and the
assumptions underlying those valuations, including a discussion of the Company's
projections, the comparable companies to be utilized, and the comparable
transactions to be utilized in their analyses.
On March 4, 1999, Mr. Downey called Mr. Howell to discuss the status of the
negotiations. Mr. Downey and Mr. Howell did not discuss price during this
conversation.
On March 18, 1999, Mr. Robert Green had a telephone conversation with Mr.
Downey. Mr. Green inquired whether the Special Committee was prepared to make a
counter proposal to the Parent. Mr. Downey said that the Special Committee would
make a counter proposal the next day at the previously scheduled meeting in
Dallas. Mr. Green also spoke by telephone with Mr. Mosle. Mr. Mosle stated that
the Special Committee would provide a responsive proposal at the March 19
meeting.
On March 19, 1999, Mr. Robert Green, representing Parent, met with the
members of the Special Committee in Dallas, Texas. Also present at the meeting
were representatives of DLJ, representatives of Petrie, legal counsel for the
Special Committee and legal counsel for Parent. At the meeting, the Special
Committee repeated its concerns about timing of a transaction in light of market
conditions and the Company's recent operating performance. The Special Committee
reiterated its view of the historic and expected future performance of the
Company's common stock. Mr. Mosle indicated that a price the Committee would be
prepared to recommend would need to be at or above $10.00. Petrie presented a
discounted cash flow analysis to the Special Committee (the "Petrie Analysis").
The Petrie Analysis suggested a range of values for the common stock of the
Company from $4.02 per share to $17.33 per share. Parent does not agree with the
Petrie Analysis. See "Special Factors--Fairness of the Offer". The Special
Committee and Petrie commented that the range supported a $10.00 per share
price, which would be acceptable to the Special Committee. Mr. Green told the
Special Committee he did not believe that Parent would agree to a price above
$8.00 given the performance of publicly traded comparable companies since the
announcement of the Proposal, the analysis of DLJ, Parent's view as to the
fairness of the Offer and the dilutive effect of a higher price to Parent. Mr.
Green indicated that Parent still hoped an
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agreement could be reached with the Special Committee, but would have to
evaluate the status of the Proposal.
Following the March 19 meeting, representatives of DLJ and Petrie discussed
the positions of the Special Committee and Parent and possible methods for the
parties to reach agreement. On March 26, 1999, Mr. Robert Green and Mr. Mosle
discussed the price proposal by telephone. Mr. Mosle stated that it would be
very difficult for the Special Committee to agree to a price under $10.00 per
share. During these follow-up discussions, the parties discussed whether or not
Parent would be willing to increase the proposed price and whether or not the
Special Committee would be willing to consider a price less than $10.00. The
parties also discussed the possibility of providing a contingent payment in
addition to the cash payment which would be payable to holders of Shares based
on future increases of prices for natural gas or natural gas liquids. No
agreement was reached as to any of these matters.
On April 1, 1999, Mr. Robert Green and Mr. Mosle had a further telephone
discussion, in which they concluded that the negotiations between the Parent and
the Special Committee were not going to result in an agreement.
On April 5, 1999, the Parent issued the following press release:
KANSAS CITY, MO. April 5, 1999--UtiliCorp United (NYSE:UCU) today
announced that its negotiations with a special committee of
independent directors of Aquila Gas Pipeline Corporation
(NYSE:AQP) have not resulted in an agreement relating to
UtiliCorp's previous proposal to acquire all the outstanding
shares of Aquila Gas Pipeline that it does not already own.
UtiliCorp currently owns approximately 82 percent of Aquila Gas
Pipeline's outstanding common shares. On November 10, 1998,
UtiliCorp proposed acquiring the approximately 5.4 million shares
of Aquila Gas Pipeline held by the public for $8.00 per share. The
special committee of the Aquila Gas Pipeline board, consisting of
two independent directors, then was formed to negotiate with
UtiliCorp.
UtiliCorp also announced today that it is presently reviewing its
options, including whether or not to proceed with an offer
directly to the public for the shares of Aquila Gas Pipeline. Such
an offer could be equal to, lower than, or higher than the $8.00
per share proposed in November 1998. However, there is no
assurance that any such offer will be made.
Based in San Antonio, Texas, Aquila Gas Pipeline Corporation
gathers, processes and markets natural gas and natural gas liquids
through its natural gas gathering systems and gas processing
plants in Texas and Oklahoma. The company is approximately 82
percent owned by Aquila Energy Corporation, a wholly-owned
subsidiary of UtiliCorp United. The remaining shares were sold to
investors in an initial public offering in 1993.
UtiliCorp is an international electric and gas company with
customers and operations across the U.S. and in Canada, Great
Britain, New Zealand and Australia. Based in Kansas City,
Missouri, the Fortune 500 company operates regulated electric and
gas utilities in eight states and one Canadian province and
through the Aquila Energy subsidiary markets natural gas and
electricity across most of North America.
On April 6, 1999, representatives of DLJ gave an oral and written
presentation to the management of the Parent setting forth its valuation
analyses with respect to the Company.
On April 7, 1999, the executive committee of Parent Board met to consider
whether or not to proceed with an offer to the public to acquire the
Publicly-held Shares. The executive committee authorized the commencement of a
tender offer to purchase all Publicly-held Shares at a price of $8.00 per share.
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FAIRNESS OF THE OFFER
Because Parent currently owns a majority of the Shares of the Company,
Parent, Aquila and Purchaser are deemed "affiliates" of the Company under Rule
12b-2 of the Exchange Act. Accordingly, in compliance with Rule 13e-3 under the
Exchange Act, Purchaser, Aquila and Parent have considered the fairness of the
Offer to the stockholders of the Company other than Parent, and in connection
with the Offer, have filed with the Commission a Rule 13e-3 Transaction
Statement on Schedule 13E-3 (the "Schedule 13E-3").
Purchaser, Aquila and Parent believe the Offer to be fair to the Company's
stockholders other than Parent. In making this determination, Purchaser, Aquila
and Parent have considered the analysis of DLJ as set forth below (See
"--Analysis of Financial Advisor to Parent"), in addition to the following
factors:
(i) The Offer Price represents a 23.1% premium over the closing price for
the shares on November 11, 1998, the last full trading day prior to
announcement of the Proposal (the "Pre-Announcement Date"), and a 61.9%
premium to the Company's stock price 30 days prior to November 12, 1998.
(ii) The Offer Price per share is within the ranges of the implied value
derived from the analysis performed by DLJ and described below.
(iii) The trading prices of the stocks of a comparable group of publicly
traded gathering, transmission and marketing companies mentioned in
DLJ's presentation have, from November 12, 1998 through the close of
trading on April 8, 1999, decreased in four cases (by 21.3%, 16.5%,
6.5% and 0.5%), and increased in one case (by 2.6%). These changes can
be contrasted with the 23.1% premium over the Company's
Pre-Announcement Date trading price referred to in (i) above. No
prediction is made as to changes in the trading prices of such
companies in the future.
(iv) The Offer is an all cash offer for all Publicly-held Shares which the
holders thereof can accept or reject voluntarily, and is not subject to
financing.
(v) The Offer provides stockholders who are considering selling their Shares
with the opportunity to sell all of their Shares at the Offer Price
without incurring the transaction costs typically associated with market
sales.
Parent, Aquila and Purchaser did not find it practicable to, and did not,
assign specific relative weights to the foregoing factors in reaching their
opinion as to the fairness of the Offer.
At the March 19, 1999 meeting among representatives of Parent, the
Independent Committee and their respective advisors, Petrie presented the Petrie
Analysis. The only significant difference between DLJ's discounted cash flow
analysis and the Petrie Analysis is the terminal value used for the Company in
the respective analyses. The Petrie Analysis used a range of terminal values
from $500.0 million to $997.2 million. DLJ's analysis uses terminal values
ranging from $554.0 million to $738.7 million. Parent believes that based on
growth rates of the Company implied by the projections and the future stock
price implied by the terminal values used by Petrie, the range of terminal
values offered by Petrie is too high. As a result, Parent does not concur with
the Petrie Analysis.
ANALYSIS OF FINANCIAL ADVISOR TO PARENT
Parent retained DLJ to act as its financial advisor in connection with a
possible proposal by Parent to acquire the Publicly-held Shares. In connection
with that retention, Parent requested that DLJ perform certain valuation
analyses with respect to the Company and make a presentation to the management
of Parent at a meeting held on April 6, 1999. Parent did not request that DLJ
provide any opinion as to the fairness of the Offer to Parent or its
stockholders, the Company or the holders of the Publicly-held Shares or perform
any independent examination or investigation of the Company's business or
assets. DLJ's presentation does not constitute a recommendation to the holders
of the Publicly-held Shares, as to whether such stockholders should or should
not tender the Shares pursuant to the Offer. The Company
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had no role in Parent's selection of DLJ or in formulating any of the terms
under which DLJ was to prepare its presentation.
Parent selected DLJ as its financial advisor because DLJ is an
internationally recognized investment banking firm that has substantial
experience in the natural gas industry and is familiar with Parent and its
businesses. DLJ was not retained as an advisor or agent to the stockholders of
Parent or any other person. As part of its investment banking business, DLJ is
regularly engaged in the valuation of businesses and securities in connection
with mergers, acquisitions, underwritings, sales and distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. Parent did not impose any restrictions or limitations upon DLJ with
respect to the investigations made or the procedures followed by DLJ in
preparing the DLJ valuation, analysis and presentation.
In preparing its valuation, analysis and presentation, DLJ reviewed
financial and other information that was publicly available or furnished to DLJ
by members of Parent's management who monitor the operations of the Company,
including information provided during discussions with Parent's management.
Included in the information provided by Parent and the Company were certain
financial projections of the Company prepared by the management of the Company.
In addition, DLJ compared certain financial and securities data of the Company
with publicly available information concerning various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the Shares, reviewed prices and premiums paid in certain
other business combinations and conducted such other financial studies, analyses
and investigations as DLJ deemed appropriate for purposes of preparing the DLJ
presentation.
In preparing its presentation, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
it from public sources, that was provided to it by Parent or Parent's
representatives, or that was otherwise reviewed by DLJ. DLJ did not assume
responsibility for making any independent evaluation of the assets or
liabilities of the Company, or for making any independent verification of the
information reviewed by DLJ. The DLJ presentation was necessarily based on
economic, market, financial and other conditions as they existed on, and on the
information made available to DLJ as of, the date of the DLJ presentation.
At the April 6, 1999 meeting with Parent management, DLJ, in order to assist
the Parent management in its consideration of the Offer, delivered a written and
oral presentation analyzing from a financial point of view the consideration to
be offered to the holders of the Publicly-held Shares pursuant to the Offer.
DLJ, prior to making its oral presentation to Parent management, distributed to
the members of Parent management copies of its written presentation. In
delivering its presentation to Parent management, DLJ discussed certain
financial and comparative analyses contained in its written presentation and
other matters it deemed relevant. Among various analyses that DLJ presented to
the Parent Board were the following:
COMPARABLE COMPANY ANALYSIS. DLJ analyzed publicly available selected
historical and projected operating information, stock market data and financial
ratios for two publicly traded natural gas gathering, transportation and
marketing companies ("GTM Companies"). The GTM Companies were Mitchell Energy &
Development Corp. and Western Gas Resources, Inc. DLJ analyzed the enterprise
value of each of the GTM Companies, measured as a multiple of selected financial
data, and the equity value of each of the GTM Companies (using the stock prices
as of April 1, 1999) measured as a multiple of selected financial data.
Enterprise value is defined as equity value plus total debt plus the liquidation
value of the preferred stock, if any, plus the value of minority interests, if
any, minus cash and short-term investments. In examining the GTM Companies, DLJ
compared the enterprise value of the companies to each company's respective 1998
EBITDA and projected 1999 EBITDA. EBITDA is defined as earnings before interest,
taxes, depreciation and amortization. DLJ also analyzed the equity value of the
companies to each company's respective 1998 net income, projected 1999 net
income, 1998 CFFO and projected 1999 CFFO. CFFO is defined as cash flow from
operations. DLJ's analysis of the GTM Companies yielded the
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following averages: a 1998 EBITDA multiple of 7.5x, compared to 9.7x for the
Company; a 1999 EBITDA multiple of 7.7x, compared to 7.6x for the Company; a
1998 CFFO multiple of 4.3x, compared to 6.3x for the Company; and a 1999 CFFO
multiple of 5.1x, compared to 5.0x for the Company. DLJ's analysis of the equity
value of the GTM Companies as a multiple of each company's respective 1998 net
income and projected 1999 net income did not yield any meaningful results.
DLJ then calculated the estimated per share equity value of the Company by
applying the Company's actual and certain forecasted financial results to the
high, low and average multiples derived from its analysis of the GTM Companies.
Based on this analysis, DLJ calculated a range of estimated per Share value of
$3.93 to $7.39.
COMPARABLE MERGER AND ACQUISITION ANALYSIS. DLJ reviewed publicly available
information for a number of selected mergers and acquisitions transactions in
the natural gas gathering, transportation and marketing industry (the "M&A
Transactions"). The acquisitions (acquiror/acquired company) were: (i) Panhandle
Eastern Pipe Line/Texas Eastern Transmission Corporation; (ii) Tejas Gas
Corporation/ Acadian Gas Group; (iii) Sonat Inc./North Carolina Natural Gas
Corporation; (iv) Transok Incorporated/ TEX/CON-Gas Transmission; (v) Enron Gas
Services Corp./Louisiana Resources Company; (vi) Tejas Gas Corporation/Exxon
Corporation's Texas & Louisiana Gas Pipeline; (vii) Equitable Pipeline Company/
Louisiana Intrastate Gas Company, L.L.C.; (viii) ANR Pipeline Company (Coastal
Corp)/Arkla Inc's-natural gas business; (ix) Associated Natural Gas
Incorporated/Grand Valley; (x) K N Energy, Inc./ American Oil and Gas Company;
(xi) Natural Gas Clearinghouse/Trident NGL Holdings, Inc.; (xii) Panhandle
Eastern Corporation/Associated Natural Gas Corporation; (xiii) The Williams
Companies, Inc./ Transco Energy Company; (xiv) LG&E Energy Corporation/Hadson
Corporation; (xv) El Paso Natural Gas Company/Eastex Energy Incorporated; (xvi)
Tejas Power Corporation/certain of Seagull Energy Corporation's natural gas
gathering systems and a gas processing plant; (xvii) The Williams Companies,
Inc./Tenneco Inc.'s Kern River Pipeline; (xviii) NGC Corporation/certain of
Chevron Corp.'s natural gas gathering and processing affiliates; (xix) Texas
Utilities Company/ENSERCH Corporation; (xx) Tejas Gas Corporation/Transok
Incorporated; (xxi) El Paso Energy Corporation/Tenneco Inc.'s energy business;
(xxii) Houston Industries Incorporated/NorAm Energy; (xxiii) Pacific Gas
Transmission Company/Teco Pipeline Company (TRT Holdings); (xxiv) Duke Power
Company/PanEnergy Corp.; (xxv) Transcanada Pipelines Ltd./Enron Louisiana Energy
Company; (xxvi) PG&E Corporation/Valero Natural Gas Company; (xvii)
PacifiCorp/TPC Corporation; (xxviii) Midcoast Energy Resources
Incorporated/Atrion Corporation's natural gas pipeline; (xxix) Shell Oil Company
(Royal Dutch Petroleum Company)/Tejas Gas Corporation; (xxx) Kinder Morgan
Energy Partners/Santa Fe Energy Resources, Inc.; (xxxi) Koch Midstream
Enterprises, Inc. (affiliate of Koch Industries, Inc.)/Delhi Gas Pipeline
Corporation and Delhi Group; (xxxii) K N Energy, Inc./Midcon Corp. (Occidental
Petroleum Corporation); (xxxiii) El Paso Natural Gas Company/DeepTech
International Inc.; (xxxiv) Duke Energy Corporation/Union Pacific Resources
Company; (xxxv) CMS Energy Corporation/PanEnergy Corporation; and (xxxvi) El
Paso Energy Corporation/Cornerstone Natural Gas.
In examining these acquisitions, DLJ analyzed the enterprise value of the
acquired company implied by each of these transactions measured as a multiple of
LTM EBITDA. LTM is defined as latest twelve months. DLJ's analysis of enterprise
value as a multiple of LTM EBITDA yielded a range of 4.3x to 13.1x with an
average of 9.4x. DLJ also analyzed the equity value of the acquired company
implied by each of these transactions as a multiple of LTM net income. DLJ's
analysis of equity value as a multiple of LTM net income yielded a range 9.2x to
46.4x, with an average of 25.2x.
DLJ then calculated the estimated per share equity value of the Company by
applying the Company's actual and certain forecasted financial results to the
high, mean, median and low multiples derived from its analysis of the M&A
Transactions. Based on this analysis, DLJ calculated a range of estimated per
Share value of $4.18 to $6.64.
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PREMIUMS PAID ANALYSIS. DLJ determined the implied premium based on the
consideration over the closing prices one day and one month prior to the
announcement date of transactions in which a parent company acquired the
publicly-held shares of its subsidiary, which subsidiaries are not necessarily
comparable to the Company. The average premiums for the selected transactions
over the closing prices, one day prior to the announcement dates were 23.1% for
all stock deals, 27.0% for all cash deals and 26.2% for all deals. The average
premiums for the selected transactions over the closing prices, one month prior
to the announcement dates were 28.4% for all stock deals, 32.9% for all cash
deals and 31.4% for all deals, respectively. The premiums derived based on the
Offer of $8.00 per Share and the Company's stock price one day and one month
prior to November 12, 1998 were 23.1% and 61.9%, respectively.
DISCOUNTED CASH FLOW ANALYSIS. DLJ performed a discounted cash flow ("DCF")
analysis of the Company using projections and assumptions, as of January 20,
1999, provided by the Company. The DCFs for the Company were estimated using
discount rates ranging from 9.0% to 13.0% and estimated terminal EBITDA
multiples in 2003 for the Company ranging from 6.0x to 8.0x. This analysis
yielded a per Share value ranging from approximately $6.22 to $11.31.
STOCK PRICE HISTORY. DLJ examined the history of the daily closing prices
for the Shares for the latest 12-month period ended April 1, 1999. DLJ also
compared the closing prices for the Shares with the closing prices for common
stock of Western Gas Resources, Inc., Dynegy Inc., MarkWest Hydrocarbon, Inc.,
Questar Corp. and Mitchell Energy & Development Corp. (together, the "Peer
Group"). DLJ's examination of such historical stock prices revealed an average
drop in the stock prices of the Peer Group of approximately 50.0% over such
one-year period.
The summary set forth above does not purport to be a complete description of
the analyses performed by DLJ but describes, in summary form, the principal
elements of the presentation made by DLJ to the management of Parent on April 6,
1999. The preparation of the presentation made by DLJ involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances
and, therefore, such a presentation is not readily susceptible to summary
description. Each of the analyses conducted by DLJ was carried out in order to
provide a different perspective on the valuation of the Company and to add to
the total mix of information available. DLJ did not assign relative weights to
any of its analyses in preparing its presentation. Accordingly, notwithstanding
the separate factors summarized above, DLJ has indicated to Parent that it
believes that its analyses must be viewed in light of each other, that all
analyses must be considered as a whole and that selecting portions of its
analyses and the factors considered by it, without considering all analyses and
factors, could create an incomplete view of the process underlying the DLJ
presentation. The analyses performed by DLJ are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than suggested by such analyses.
In the ordinary course of business, DLJ and its affiliates may own or
actively trade the securities of Parent and the Company for their own accounts
and for the accounts of their customers and, accordingly, may at any time hold a
long or short position in Parent's or the Company's securities. DLJ, as part of
its investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. DLJ
has performed investment banking and other services for Parent in the past,
including (i) acting as co-manager in a $115 million senior notes offering for
Parent in 1997 and (ii) acting as lead manager in a $205 million exchange offer
for Parent in 1999. DLJ has received usual and customary compensation for its
past services for Parent.
The full text of DLJ's written presentation delivered to the management of
Parent has been included as Exhibit (b) to the Schedule 13E-3, and the foregoing
summary is qualified in its entirety by reference to such exhibit. For a
description of the fees payable to DLJ in connection with its engagement, see
"The Tender Offer--Fees and Expenses." The full text of DLJ's written
presentation will be available for inspection and copying at the principal
executive offices of Parent during regular business hours by any
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holder of Shares or such holder's representative who has been so designated in
writing. Also, a copy of DLJ's written presentation will be delivered to any
holder of Shares or such holder's representative who has been so designated in
writing upon written request and at the expense of such holder.
FORWARD LOOKING STATEMENTS
THE MATTERS DISCUSSED UNDER THE HEADINGS "THE TENDER OFFER--CERTAIN
INFORMATION CONCERNING THE COMPANY;" "SPECIAL FACTORS--BACKGROUND OF THE OFFER;"
"--FAIRNESS OF THE OFFER;" AND "--ANALYSIS OF FINANCIAL ADVISOR TO PARENT"
CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES.
STOCKHOLDERS ARE CAUTIONED THAT, IN ADDITION TO THE OTHER FACTORS SET FORTH
UNDER THE HEADINGS "SPECIAL FACTORS--BACKGROUND OF THE OFFER;" "--FAIRNESS OF
THE OFFER;" AND "--ANALYSES OF FINANCIAL ADVISOR TO PARENT," THE FOLLOWING
FACTORS MAY CAUSE THE COMPANY'S ACTUAL FINANCIAL PERFORMANCE TO DIFFER
MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS: (I) THE
ABILITY TO INCREASE TRANSMISSION, GATHERING, PROCESSING AND SALES VOLUMES; (II)
THE DEPLETION OF EXISTING VOLUMES WITHOUT THE ADDITION OF FUTURE GAS SUPPLIES;
(III) THE AVAILABLE NUMBER OF DRILLING LOCATIONS IN CLOSE PROXIMITY TO THE
EXISTING GAS SUPPLIES AND THE RELATED ECONOMIC RESERVES OF THESE DRILLING
LOCATIONS; (IV) THE SUCCESS OF GROWTH STRATEGIES THROUGH ACQUISITION, INTERNAL
PROJECT DEVELOPMENT AND INVESTMENTS IN JOINT VENTURES; (V) THE COMPANY'S ABILITY
TO COMPETE WITH OTHER ENERGY ENTERPRISES WHICH MAY BE LARGER, OFFER MORE
SERVICES AND POSSESS GREATER RESOURCES; (VI) THE PRICES OF NATURAL GAS, NATURAL
GAS LIQUIDS ("NGLS") AND COMPETITIVE FUELS AND FEEDSTOCKS; AND (VII) RISKS
INCIDENT TO THE GATHERING, TRANSPORTATION, PROCESSING AND STORAGE OF NATURAL GAS
AND NGLS, SUCH AS EXPLOSIONS, PRODUCT SPILLS, LEAKS AND FIRES.
PURPOSE AND STRUCTURE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER
PURPOSE. The purpose of the Offer is to enable Parent to acquire the entire
equity interest in the Company. Parent desires to own the Publicly-held Shares
at this time to fully integrate the Company's operations into Parent's existing
wholly-owned gas marketing and trading business. Full integration will allow
Parent to achieve additional operating efficiencies and will provide the
flexibility to respond quickly to changes in an increasingly competitive
industry. See "Plans for the Company after the Offer" below.
STRUCTURE. The Offer is structured so that no approval of the holders of
the Publicly-held Shares (other than satisfaction of the Minimum Condition) or
of the Company Board or any committee thereof is required. Purchaser will,
subject to the conditions of the Offer, accept for payment Shares properly
tendered in accordance with this Offer to Purchase and the Letter of
Transmittal.
PLANS FOR THE COMPANY AFTER THE OFFER. Depending upon the number of Shares
purchased pursuant to the Offer and the aggregate market value of any Shares not
purchased pursuant to the Offer, the Shares may no longer meet the standards for
continued listing for quotation on the New York Stock Exchange and may, upon the
initiative of the New York Stock Exchange, be delisted therefrom. The New York
Stock Exchange published guidelines indicate that the New York Stock Exchange
would consider delisting the Shares if, among other things, the number of
holders of Shares should fall below 1,200 and the average monthly trading volume
is less than 100,000 Shares or if the number of Publicly-held Shares should fall
below 600,000 or if the aggregate market value of the Publicly-held Shares
should fall below $8,000,000. In the event that the Shares are no longer listed
for quotation on the New York Stock Exchange, it is possible that the Shares
would continue to trade in the over-the-counter market and that price quotations
would be reported by other sources. The extent of the public market for the
Shares and the availability of such quotations would, however, depend on the
number of holders of Shares remaining at such time, the interest in maintaining
a market in Shares on the part of securities firms, the possible termination of
registration of shares under the Exchange Act, as described below, and other
factors. To the extent the Shares are delisted from the New York Stock Exchange,
the market for Shares would likely be affected adversely. Further, Purchaser
cannot predict whether a reduction in the number of Shares that might otherwise
trade publicly, if any, as a result of the Offer, would have an adverse or
beneficial effect on the
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market price for or marketability of the Shares or whether it would cause future
market prices to be greater or less than the Offer Price. See "The Tender
Offer--Certain Effects of the Transaction."
Following consummation of the Offer, Parent currently intends to have the
Company consummate the Second Step Merger. In such event, in accordance with the
relevant provisions of the DGCL, Purchaser would be merged with and into the
Company. The purpose of the Second Step Merger would be to acquire all
Publicly-held Shares not tendered and purchased pursuant to the Offer or
otherwise directly or indirectly held by Purchaser or Parent. In the Second Step
Merger, each then-outstanding Share (other than Shares owned by the Company as
treasury stock, Shares directly or indirectly owned by Parent or Purchaser, or
Shares with respect to which appraisal rights are properly exercised under
Delaware law) would be converted into the right to receive the Merger
Consideration. See "Special Factors--Appraisal Rights in the Merger." Following
consummation of the Second Step Merger, the Company would continue as the
Surviving Corporation and would be an indirect wholly-owned subsidiary of
Parent.
If Purchaser owns at least 90% of the outstanding Shares following
consummation of the Offer (assuming the transfer of the Shares currently
directly or indirectly owned by the Parent to Purchaser), Purchaser would have
the ability to consummate the Second Step Merger without a meeting or vote of
the Company Board or of the stockholders of the Company pursuant to the "short
form" merger provisions of Section 253 of the DGCL. In such circumstances,
Purchaser currently intends to so effectuate the Second Step Merger as soon as
practicable.
If Parent and Purchaser own less than 90% of the outstanding Shares
following consummation of the Offer, consummation of the Second Step Merger
would require the approval by the Company Board of a Merger Agreement and the
adoption of a Merger Agreement by the holders of at least 80% of the outstanding
Shares. If Parent and Purchaser own less than 90% of the outstanding Shares
following consummation of the Offer, Parent and Purchaser currently intend to
either (i) promptly use their best efforts to take such steps as are necessary
to cause the Second Step Merger to be effective pursuant to a Merger Agreement,
including voting the Shares owned by them for adoption of the Merger Agreement,
which will, if the Shares remain registered under the Exchange Act, require
filing with the Commission certain disclosure materials prior to adoption of the
Second Step Merger by the Company's stockholders, or (ii) for an indeterminate
period, delay the Second Step Merger and engage in certain open market or
privately negotiated purchases, at prices which may be greater or less than the
Offer Price, in order to increase Parent and Purchaser's combined ownership to
or above 90% of the outstanding Shares, so as to enable Purchaser to effect the
Second Step Merger as a "short form" merger. Any such acquisition of Shares by
Purchaser would have to be made in accordance with applicable legal
requirements, including those of Regulation 13D and Rules 10b-18 and 13e-3 under
the Exchange Act. See "The Tender Offer-- Certain Effects of the Transaction."
As a consequence, no assurance can be given as to whether or when Purchaser will
cause the Second Step Merger to be consummated and, similarly, no assurance can
be given as to whether or when the Merger Consideration will be paid to
stockholders who do not tender their Shares in the Offer. In no event will any
interest be paid on the Merger Consideration. After completion or termination of
the Offer, Parent and Purchaser also reserve the right, but have no current
intention, to sell Shares in open market or negotiated transactions.
Purchaser is not offering to acquire outstanding Company Options in the
Offer. Each holder of a Company Option that is vested or becomes vested prior to
the expiration of the Offer may exercise such Company Option prior to the
consummation of the Offer and the Shares received upon such exercise may be
tendered pursuant to the Offer. It is Parent's intention that action be taken in
accordance with the Company's benefit plans so that immediately prior to the
consummation of the Second Step Merger each unexpired Company Option, whether
vested or unvested, and each outstanding SAR will be cancelled and will entitle
each holder thereof, in settlement therefor, to receive either (i) a Parent
Option to acquire a number of Parent Shares equal to (a) the number of shares
subject to such Company Option or SAR multiplied by (b) the Conversion Fraction
(defined below) or (ii) a number of Parent Restricted Shares with a value as of
the closing date of the Second Step Merger equal to the value of the Company
Options
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and SARs as of the closing date of the Second Step Merger as determined by a
commonly accepted valuation. The exercise price applicable to such Parent Option
would be equal to (x) the exercise price applicable to the Company Option or the
fair market value of the shares of Company common stock on the date the SAR was
granted divided by (y) the Conversion Fraction. The Conversion Fraction would
have a numerator equal to the Merger Consideration (per share) and a denominator
equal to the closing price for Parent's Shares on the day the Second-Step Merger
becomes effective.
In addition, in connection with the Second Step Merger either (i) all
restrictions on the Company Restricted Shares will lapse pursuant to the terms
of the Company's benefit plans or (ii) all Company Restricted Shares will be
exchanged for Parent Restricted Shares. If the restrictions on the Company
Restricted Shares lapse prior to the Second Step Merger, such Company Restricted
Shares (other than Company Restricted Shares with respect to which appraisal
rights are properly exercised under Delaware law) will be converted into the
right to receive the Merger Consideration. If the Company Restricted Shares are
exchanged for Parent Restricted Shares, each Company Restricted Share will be
exchanged for a Parent Restricted Share with a value as of the closing date of
the Second Step Merger equal to the value of the Company Restricted Share as of
the closing date of the Second Step Merger as determined by a commonly accepted
valuation.
Following the Second Step Merger, the Company would be a wholly-owned,
indirect subsidiary of Parent. Parent and Purchaser currently intend to seek to
retain all management and other personnel employed by the Company, to retain the
Company's headquarters and other facilities at their present locations, and,
except as described below, continue the Company's employee benefit plans for the
foreseeable future. Parent currently intends to terminate the Company's stock
option plans, SAR plans and restricted stock plans and include appropriate
employees in Parent's stock incentive plan. Because of differences in the
policies under which the plans are operated, this change could result in Parent
options being granted to fewer Company employees and in smaller amounts than
under the past operation of the Company's stock option plans. Parent currently
intends to continue to maintain the Company as an indirect subsidiary. Parent
may consolidate certain administrative functions currently conducted by Company
personnel. No assurance can be given, however, that the Parent will not change
its present plans with regard to the Company. See "Special Factors--Background
of the Offer."
Except as otherwise described in this Offer to Purchase, Parent, Aquila and
Purchaser have no current plans or proposals which relate to or would result in:
(a) an extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries; (b) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries; (c) any change in the present Company Board or management of the
Company, including, but not limited to, any plans or proposals to change the
number or term of directors, to fill any existing vacancy on the Company Board
or to change any material term of the employment contract of any executive
officer; (d) any material change in the present dividend rate or policy or
indebtedness or capitalization of the Company; (e) any other material change in
the Company's corporate structure or business; (f) a class of securities of the
Company to be delisted from the New York Stock Exchange or cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; (g) a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act; or (h) the suspension of the Company's obligation to file
reports pursuant to Section 15(d) of the Exchange Act.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
of the Offer and the Second Step Merger to holders whose Shares are purchased
pursuant to the Offer or whose Shares are converted to cash in the Second Step
Merger (including pursuant to the exercise of appraisal rights). The discussion
applies only to holders of Shares in whose hands Shares are capital assets, and
may not apply to Shares received pursuant to the exercise of employee stock
options or otherwise as compensation, or to
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holders of Shares who are in special tax situations (such as insurance
companies, tax-exempt organizations, non-United States persons or persons who
have engaged in "straddles" or other hedging transactions with respect to their
Shares).
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR GENERAL
INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S OWN
TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH
HOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE SECOND STEP MERGER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER INCOME
TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Second Step
Merger (including pursuant to the exercise of appraisal rights) will be a
taxable transaction for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and also may be a taxable transaction
under applicable state, local, foreign and other income tax laws. In general,
for federal income tax purposes, a holder of Shares will recognize gain or loss
equal to the difference between his or her adjusted tax basis in the Shares and
the amount of cash received therefor. Gain or loss must be determined separately
for each block of Shares (i.e., Shares acquired at the same cost in a single
transaction). Such gain or loss generally will be capital gain or loss provided
the Shares are a capital asset in the hands of the stockholders and will be
long-term capital gain or loss if, on the date of sale (or, if applicable, the
date of the Second Step Merger), the Shares were held for more than one year. If
a holder exercises such holder's appraisal rights and receives an amount treated
as interest for federal income tax purposes, such amount will be taxed as
ordinary income.
Payments in connection with the Offer or the Second Step Merger may be
subject to "backup withholding" at a rate of 31%. Backup withholding generally
applies if the holder (a) fails to furnish such holder's social security number
or taxpayer identification number ("TIN"), (b) furnishes an incorrect TIN, (c)
is subject to backup withholding due to previous failures to include reportable
interest or dividend payments on such holder's federal income tax return, or (d)
under certain circumstances, fails to provide a certified statement, signed
under penalties of perjury, that the TIN provided is such holder's correct
number and that such holder is not subject to backup withholding. Backup
withholding is not an additional tax, but rather it is an advance tax payment
that is subject to refund if and to the extent that it results in an overpayment
of tax. Certain taxpayers are generally exempt from backup withholding,
including corporations and financial institutions. Certain penalties apply for
failure to furnish correct information and for failure to include reportable
payments in income. Each holder of Shares should consult with his or her own tax
advisor as to his or her qualification for exemption from backup withholding and
the procedure for obtaining such exemption. Tendering holders of Shares may be
able to prevent backup withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. See "The Tender Offer-- Procedure for
Tendering Shares."
APPRAISAL RIGHTS IN THE SECOND STEP MERGER
No appraisal rights are available in connection with the Offer. If the
Second Step Merger is consummated, however, record stockholders of the Company
who have not tendered their Shares will have certain rights under the DGCL to an
appraisal of, and to receive payment in cash of the fair value of, their Shares
(the "Appraisal Shares"). Stockholders who perfect appraisal rights by complying
with the procedures set forth in Section 262 of the DGCL ("Section 262") will
have the fair value of their Appraisal Shares (exclusive of any element of value
arising from the accomplishment or expectation of the Second Step Merger)
determined by the Delaware Court of Chancery and will be entitled to receive a
cash payment equal to such fair value from the Surviving Corporation. In
addition, such stockholders may be entitled to receive payment of a fair rate of
interest from the date of consummation of the Second Step Merger on the amount
determined to be the fair value of their Appraisal Shares. THE PRESERVATION AND
EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE
PROVISIONS OF THE DGCL. Annex A
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attached to this Offer to Purchase sets forth Section 262, which will only be
available in connection with the Second Step Merger.
Under Section 262, if the Second Step Merger is submitted to the
stockholders of the Company at a meeting thereof, the Company must, not less
than 20 days prior to the meeting held for the purpose of obtaining stockholder
approval of the Second Step Merger, notify each of the Company stockholders
entitled to appraisal rights that such rights are available, and must include in
such notice a copy of Section 262. If the Second Step Merger is accomplished
pursuant to Section 228 or Section 253 of the DGCL, the Company, either before
the effective date of the Second Step Merger or within ten days thereafter, must
notify each of the stockholders entitled to appraisal rights of the effective
date of the Second Step Merger and that appraisal rights are available, and must
include in such notice a copy of Section 262.
A holder of Appraisal Shares wishing to exercise such holder's appraisal
rights will be required to deliver to the Company before the taking of the vote
on the Second Step Merger or within 20 days after the date of mailing the notice
described in the preceding paragraph, as the case may be, a written demand for
appraisal of such holder's Appraisal Shares. A holder of Appraisal Shares
wishing to exercise such holder's appraisal rights must be the record holder of
such Appraisal Shares on the date the written demand for appraisal (as described
below) is made and must continue to hold such Appraisal Shares of record through
the Effective Time. Accordingly, a holder of Appraisal Shares who is the record
holder of Appraisal Shares on the date the written demand for appraisal is made
(if such demand is made prior to the effectiveness of the Second Step Merger),
but who thereafter transfers such Appraisal Shares prior to the consummation of
the Second Step Merger, will lose any right to appraisal in respect of such
Appraisal Shares. A demand for appraisal must be executed by or on behalf of the
stockholder of record and must reasonably inform the Surviving Corporation of
the identity of the stockholder of record and that such stockholder intends
thereby to demand an appraisal of the Appraisal Shares.
A person having a beneficial interest in Appraisal Shares that are held of
record in the name of another person, such as a broker, fiduciary, depository or
other nominee, will have to act to cause the record holder to follow the
requisite steps properly and in a timely manner to perfect appraisal rights. If
the Appraisal Shares are owned of record by a person other than the beneficial
owner, including a broker, fiduciary (such as trustee, guardian or custodian),
depository or other nominee, the demand will have to be executed by or for the
record holder. If the Appraisal Shares are owned of record by more than one
person, as in a joint tenancy or tenancy in common, the demand will have to be
executed by or for all joint owners. An authorized agent, including agent for
two or more joint owners, may execute a demand for appraisal for a stockholder
of record, provided that the agent identified the record owner and expressly
discloses that fact, in making the demand, the agent is acting as agent for the
record owner. If a stockholder owns Appraisal Shares through a broker who in
turn holds the shares through a central securities depository nominee such as
CEDE & Co., a demand for appraisal of such shares will have to be made by or on
behalf of the depository nominee and must identify the depository nominee as
record holder.
A record holder, such as a broker, fiduciary, depository or other nominee,
who holds Appraisal Shares as a nominee for others, will be able to exercise
appraisal rights with respect to the shares held for all or less than all of the
beneficial owners of those shares as to which such person is the record owner.
In such case, the written demand must set forth the number of shares covered by
the demand. Where the number of shares is not expressly stated, the demand will
be presumed to cover all Share standing in the name of such record owner.
Within 120 days after the Effective Time, but not thereafter, the Surviving
Corporation or any stockholder who has complied with the statutory requirements
summarized above and who is otherwise entitled to appraisal rights may file a
petition in the Delaware Court of Chancery demanding a determination of the fair
value of the Appraisal Shares. There is no present intention on the part of
Purchaser to file
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an appraisal petition and stockholders who seek to exercise appraisal rights
should not assume that Purchaser will file such a petition or that Purchaser
will initiate any negotiations with respect to the fair value of such Shares.
Accordingly, it will be the obligation of the stockholders seeking appraisal
rights to initiate all necessary action to perfect any appraisal rights within
the time prescribed in Section 262. Within 120 days after the effective date of
the Second Step Merger, any stockholder who has theretofore complied with the
provisions of Section 262 will be entitled, upon written request, to receive
from Purchaser a statement setting forth the aggregate number of Shares not
voting in favor of the Second Step Merger and with respect to which demands for
appraisal were received by Purchaser and the number of holder of such Shares.
Such statement must be mailed within 10 days after the written request therefor
has been received by Purchaser.
If a petition for appraisal is timely filed, after hearing on such petition,
the Delaware Chancery Court will determine the stockholders entitled to
appraisal rights and will appraise the fair value of their Appraisal Shares,
exclusive of any element of value arising from the accomplishment or expectation
of the Second Step Merger, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. In WEINBERGER V. UOP,
Inc., the Delaware Supreme Court stated that "proof of value by any techniques
or methods which are generally considered acceptable in the financial community
and otherwise admissible in court" should be considered in an appraisal
proceeding and that "(f)air price obviously requires consideration of all
relevant factors involving the value of a company." The Delaware Supreme Court
has stated that in making this determination of fair value, the court must
consider market value, asset value, dividends, earnings prospects, the nature of
the enterprise and any other factors which could be ascertained as of the date
of the merger which may throw any light on the future prospects of the merged
corporation. Section 262 provides that fair value is to be "exclusive of any
element of value arising from the accomplishment or expectation of the merger."
In CEDE & CO. V. TECHNICOLOR, INC., the Delaware Supreme court stated that this
exclusion is a "narrow exclusion (that) does not encompass known elements of
value," but which rather applies only to the speculative elements of value
arising from the accomplishment or expectation of the merger. In WEINBERGER, the
Delaware supreme Court construed Section 262 to mean that "elements of future
value, including the nature of the enterprise, which are not known or
susceptible of proof as of the date of the merger and not the product of
speculation may be considered." In addition, Delaware courts have decided that
the statutory appraisal remedy, depending on the factual circumstances, may not
be a stockholder's exclusive remedy in connection with transactions such as a
merger. Stockholders should recognize that the fair value of Appraisal Shares
determined in an appraisal proceeding could be less than, the same as or more
than the Merger Consideration. In addition, although Purchaser believes that the
Merger Consideration is fair, it reserves the right to assert in any appraisal
proceeding that, for purposes of Section 262, the fair value of the Shares is
less than the Merger Consideration.
The costs of the proceeding may be determined by the Delaware Court of
Chancery and taxed upon the parties as the Delaware Court of Chancery deems
equitable in the circumstances. However, costs do not include attorneys' fees or
expert witness fees. Upon application of a stockholder, the Delaware Court of
Chancery may also order all or a portion of the expenses incurred by any
stockholder including reasonable attorneys' fees and the fees and expenses of
experts, to be charged pro rata against the value of all of the Appraisal Shares
entitled to appraisal.
Any holder of Appraisal Shares who has duly demanded an appraisal in
compliance with Section 262 will not, from and after the Effective Time of the
Second Step Merger, be entitled to vote the Appraisal Shares subject to such
demand for any purpose or to receive payment of dividends or other distributions
on those Appraisal Shares (except dividends or other distributions payable to
stockholders of record at a date which is prior to the Effective Time.)
At any time within 60 days after the effective date of the Second Step
Merger, any stockholder shall have the right to withdraw its demand for
appraisal and to accept the Merger Consideration. After this period, the
stockholder may withdraw its demand for appraisal only with the consent of
Purchaser. If any
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stockholder who properly demands appraisal of such holder's Appraisal Shares
under Section 262 fails to perfect, or effectively withdraws or loses, such
holder's right to appraisal, as provided in the DGCL, the Appraisal Shares of
such stockholder will be converted into the right to receive the Merger
Consideration. A stockholder will fail to perfect, or effectively lose or
withdraw, such stockholder's right to appraisal if, among other things, no
petition for appraisal is filed within 120 days after the consummation of the
Second Step Merger, or if the stockholder delivers to the Surviving Corporation
a written withdrawal of such stockholder's demand for appraisal.
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THE TENDER OFFER
TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date (as defined below) and not theretofore
withdrawn in accordance with the terms set forth in "The Tender
Offer--Withdrawal Rights." The term "Expiration Date" means 12:00 Midnight, New
York City time, on Friday, May 7, 1999, unless Purchaser shall have extended the
period for which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by
Purchaser, shall expire. UNDER NO CIRCUMSTANCES WILL ANY INTEREST BE PAID ON THE
OFFER PRICE FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION AND CERTAIN OTHER CONDITIONS. SEE "THE TENDER OFFER--CERTAIN
CONDITIONS OF THE OFFER."
THE OFFER IS NOT CONDITIONED ON THE AVAILABILITY OF FINANCING OR ON THE
APPROVAL OF THE COMPANY BOARD OR ANY COMMITTEE THEREOF.
Purchaser reserves the right (but shall not be obligated), in accordance
with applicable rules and regulations of the Commission, to waive any condition
of the Offer. If any of the conditions described in "The Tender Offer--Certain
Conditions of the Offer" have not been satisfied by 12:00 Midnight, New York
City time, on Friday, May 7, 1999 (or any other time then set as the Expiration
Date), Purchaser may elect to (1) extend the Offer and, subject to applicable
withdrawal rights, retain all tendered Shares until the expiration of the Offer,
as extended, (2) subject to complying with applicable rules and regulations of
the Commission, waive such conditions and accept for payment all Shares so
tendered and not extend the Offer or (3) terminate the Offer, not accept for
payment any Shares and return all tendered Shares to tendering stockholders.
Assuming the prior satisfaction or waiver of the conditions of the Offer and
subject to the preceding sentence, Purchaser will, and Parent will cause
Purchaser to, accept for payment and pay for Shares validly tendered and not
withdrawn pursuant to the Offer as soon as legally permitted after the
commencement thereof.
Purchaser reserves the right (but will not be obligated), at any time or
from time to time in its sole discretion, to extend the period during which the
Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. There can be
no assurance that Purchaser will exercise its right to extend the Offer. Any
extension of the period during which the Offer is open, delay in acceptance for
payment of the Shares or payment, termination or amendment of the Offer will be
followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rules
14d-4(c) and 14e-1(d) under the Exchange Act. Without limiting the obligation of
Purchaser under such rules or the manner in which Purchaser may choose to make
any public announcement, Purchaser currently intends to make announcements by
issuing a press release to Business Wire and making any appropriate filing with
the Commission.
Subject to the applicable rules and regulations of the Commission, Purchaser
also expressly reserves the right, at any time and from time to time, (i) to
delay payment for any Shares regardless of whether such Shares were theretofore
accepted for payment or to terminate the Offer and not to accept for payment or
pay for any Shares not theretofore accepted for payment or paid for, upon the
occurrence of any of the conditions specified in "The Tender Offer--Certain
Conditions of the Offer," by giving oral or written notice of such delay or
termination to the Depositary and (ii) to amend the Offer in any respect.
Purchaser's right to delay payment for any Shares or not to pay for any Shares
theretofore accepted for payment is subject to the applicable rules and
regulations of the Commission, including Rule 14e-1(c) of
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the Exchange Act, relating to Purchaser's obligation to pay for or return
tendered Shares promptly after the termination or withdrawal of the Offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials and extend
the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1
under the Exchange Act or otherwise. The minimum period during which a tender
offer must remain open following material changes in the terms of the Offer or
the information concerning the Offer, other than a change in price or a change
in percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the changes in such terms
or information. With respect to a change in price or a change in percentage of
securities sought, an extension of a minimum of ten business days is generally
required to allow for adequate dissemination to stockholders and investor
response.
Requests have been made to the Company for use of the Company's stockholder
list and security position listings for disseminating the Offer to holders of
Shares and communicating with holders of Shares in connection with the Offer.
This Offer to Purchase and related Letter of Transmittal and other relevant
materials have been mailed to record holders of Shares, and have been furnished
to brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the stockholder lists, or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment, and will pay for, all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with the terms set forth in "The Tender Offer--Withdrawal Rights"
promptly after the latest to occur of (a) the Expiration Date, (b) the
satisfaction of the Minimum Condition, and (c) subject to compliance with the
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, the satisfaction or waiver of the other conditions to
the Offer set forth under "The Tender Offer--Certain Conditions of the Offer."
Subject to such compliance, Purchaser expressly reserves the right to delay
payment for Shares in order to comply in whole or in part with any applicable
law. In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) the Share
certificates or timely confirmation (a "Book-Entry Confirmation") of a
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in "The Tender Offer--Procedure for Tendering Shares," (ii)
a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), with all required signature guarantees, or in the
case of the book-entry transfer, an Agent's Message (as defined below) and (iii)
any other documents required by the Letter of Transmittal. The term "Agent's
Message" means a message transmitted by a Book-Entry Transfer Facility to, and
received by, the Depositary and forming a part of a Book-Entry Confirmation,
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the participant in the Book-Entry Transfer Facility
tendering the Shares that are the subject of such Book-Entry Confirmation, that
such participant has received and agrees to be bound by the terms of the Letter
of Transmittal, and that Purchaser may enforce such agreement against the
participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, the Shares validly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment. In all cases,
payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from Purchaser and
transmitting such payment to tendering stockholders. Upon the deposit of funds
with the Depositary for the purpose of making payments to tendering
stockholders, Purchaser's obligation to make
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<PAGE>
such payment shall be satisfied, and tendering stockholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer
is delayed, or Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to Purchaser's rights under "The
Tender Offer--Terms of the Offer," the Depositary may, nevertheless, on behalf
of Purchaser, retain tendered Shares, and, subject to compliance with the
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, such Shares may not be withdrawn, except to the extent
that the tendering stockholders are entitled to withdrawal rights as described
in "The Tender Offer--Withdrawal Rights" below. UNDER NO CIRCUMSTANCES WILL ANY
INTEREST BE PAID ON THE OFFER PRICE FOR TENDERED SHARES, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason or if certificates are submitted
representing more Shares than are tendered, certificates representing such
unpurchased or untendered Shares will be returned, without expense, to the
tendering stockholder (or, in the case of Shares delivered by book-entry
transfer to the Book-Entry Transfer Facility, such Shares will be credited to an
account maintained within the Book-Entry Transfer Facility) as promptly as
practicable following the expiration, termination or withdrawal of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment.
PROCEDURE FOR TENDERING SHARES
VALID TENDERS. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees, or in the case of a
book entry transfer, an Agent's Message, and any other required documents, must
be received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure set forth below.
In addition, either (i) certificates representing such Shares must be received
by the Depositary along with the Letter of Transmittal or such Shares must be
tendered pursuant to the procedure for book-entry transfer set forth below, and
a Book-Entry Confirmation must be received by the Depositary, in each case prior
to the Expiration Date, or (ii) the guaranteed delivery procedure set forth
below must be complied with. No alternative, conditional or contingent tenders
will be accepted. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
BOOK-ENTRY TRANSFER. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. Although delivery of Shares
may be effected through book-entry at the Book-Entry Transfer Facility prior to
the Expiration Date, (i) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other required documents, must, in any case, be transmitted
to, and received by, the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or (ii) the
guaranteed delivery procedures described below must be complied with.
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<PAGE>
SIGNATURE GUARANTEES. Signatures on the Letter of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agents
Medallion Program, or by any other bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Exchange Act (each of the
foregoing being referred to as an "Eligible Institution" and, collectively, as
"Eligible Institutions"), unless the Shares tendered thereby are tendered (i) by
a registered holder of Shares who has not completed either the box labeled
"Special Delivery Instructions" or the box labeled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of any
Eligible Institution. If the certificates evidencing Shares are registered in
the name of a person or persons other than the signer of the Letter of
Transmittal, or if payment is to be made, or delivered to, or certificates for
unpurchased Shares are to be issued or returned to, a person other than the
registered owner or owners, then the tendered certificates must be endorsed or
accompanied by duly executed stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates, with
the signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the Letter of Transmittal. See Instructions 1 and 5
to the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all of
the following guaranteed delivery procedures are duly complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser herewith, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation), together with a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile
thereof) and any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery. A "New York Stock
Exchange trading day" is any day on which The New York Stock Exchange
is open for business.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, facsimile transmission or mail, to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE STOCKHOLDER TENDERING SUCH SHARES. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED IS
RECOMMENDED.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares or a Book-Entry
Confirmation, (ii) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), with all required signature guarantees
or, in the case of book-entry transfer, an Agent's Message, and (iii) any other
documents required by the Letter of Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent backup federal income tax
withholding with respect to payment of the Offer Price of Shares purchased
pursuant to the Offer, each tendering stockholder must provide the Depositary
with his or her correct Tax Identification Number and certify that such
stockholder is not subject to backup federal income tax withholding by
completing the Substitute
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Form W-9 included in the Letter of Transmittal. See "Special Factors--Certain
United States Federal Income Tax Consequences" of this Offer to Purchase and
Instruction 10 of the Letter of Transmittal. If the stockholder is a nonresident
alien or foreign entity not subject to back-up withholding, the stockholder must
give the Depositary a completed Form W-8 Certificate of Foreign Status prior to
receipt of any payments.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by Purchaser in its sole discretion,
and its determination will be final and binding on all parties. Purchaser
reserves the absolute right to reject any or all tenders of any Shares that are
determined by it not to be in proper form or the acceptance of or payment for
which may, in the opinion of Purchaser, be unlawful. Purchaser also reserves the
absolute right to waive any of the conditions of the Offer or any defect or
irregularity in the tender of any Shares. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding on all parties. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of Purchaser, Aquila, Parent, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
APPOINTMENT; RELEASE. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
stockholder irrevocably appoints designees of Purchaser as such stockholder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by Purchaser (and with respect to any and all other Shares
or other securities or rights issued or issuable in respect of such Shares on or
after April 9, 1999). All such powers of attorney and proxies shall be
considered coupled with an interest in the tendered Shares. This appointment is
effective upon the acceptance for payment of the Shares by Purchaser. Upon
acceptance for payment, all prior powers of attorney and proxies given by the
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked, and no subsequent proxies may be given or
written consent executed (and if given or executed will not be deemed
effective). The designees of Purchaser will, with respect to the Shares and
other securities or rights, be empowered to exercise all voting and other rights
of such stockholder as they in their sole judgment deem proper in respect of any
annual or special meeting of the Company's stockholders, any adjournment or
postponement thereof, actions by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's acceptance for payment
for such Shares, Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares, including voting at any meeting of
stockholders (whether annual or special or whether or not adjourned) or acting
by written consent without a meeting in respect of such Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty that (i) such stockholder has the full power and authority to
tender, sell, assign and transfer the tendered Shares (and any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after April 9, 1999); and (ii) when the same are accepted for payment by
Purchaser, Purchaser will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claims. Purchaser's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the tendering
stockholder and Purchaser upon the terms and subject to the conditions of the
Offer.
By accepting the Offer through the tender of Publicly-held Shares and the
receipt of payment for Publicly-held Shares, a tendering stockholder is (under
Parent's and Purchaser's view of applicable law) barred from thereafter
attacking in any legal proceeding the fairness of the consideration received by
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stockholders in the Offer. For this reason, the Letter of Transmittal to be
executed by tendering stockholders includes a release of any such claims, which
will be effective upon receipt of payment for Publicly-held Shares.
WITHDRAWAL RIGHTS
Except as otherwise provided in this section, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date, and, unless theretofore
accepted for payment pursuant to the Offer, may also be withdrawn at any time
after June 8, 1999. If purchase of or payment for Shares is delayed for any
reason or if Purchaser is unable to purchase or pay for Shares for any reason,
then, without prejudice to Purchaser's rights under the Offer, tendered Shares
may be retained by the Depositary on behalf of Purchaser, and may not be
withdrawn except to the extent that tendering stockholders are entitled to
withdrawal rights as set forth in this section, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the offer.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name in which the
certificates representing such Shares are registered, if different from that of
the person who tendered the Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer set forth in "The
Tender Offer--Procedure for Tendering Shares", any notice of withdrawal also
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares. All questions as to the form
and validity (including time of receipt) of notices of withdrawal will be
determined by Purchaser in its sole discretion, and its determination will be
final and binding on all parties. None of Purchaser, Aquila, Parent, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal, or incur any liability for failure to give any such
notification. Any Shares properly withdrawn will be deemed not validly tendered
for purposes of the Offer, but may be retendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in "The Tender
Offer--Procedure for Tendering Shares."
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PRICE RANGE OF THE SHARES; DIVIDENDS
According to the Company's 10-K, the Shares are quoted on The New York Stock
Exchange under the symbol "AQP." The following table sets forth, for the periods
indicated, the dividends paid on the Shares and the reported high and low sales
prices of the Shares on the New York Stock Exchange as reported in the Company's
10-K with respect to periods occurring in 1997 and 1998 and as reported by IDD
Information Services for the first quarter of 1999:
<TABLE>
<CAPTION>
DIVIDENDS
PAID
PER
HIGH LOW SHARE
------- ------- -------
<S> <C> <C> <C>
1997:
First Quarter................................................................ $15 5/8 $12 1/2 $.0125
Second Quarter............................................................... $15 1/4 $13 1/4 $.0125
Third Quarter................................................................ $14 $ 9 5/8 $.0125
Fourth Quarter............................................................... $14 5/16 $12 7/16 $.0125
1998:
First Quarter................................................................ $16 3/8 $10 $.0125
Second Quarter............................................................... $19 $11 5/16 $.0125
Third Quarter................................................................ $12 9/16 $ 6 $.0125
Fourth Quarter............................................................... $ 8 11/16 $ 4 5/8 $.0125
1999:
First Quarter................................................................ $ 9 $ 7 1/4 $.0125
</TABLE>
According to published sources, on November 11, 1998, the last full trading
day prior to Parent's public announcement of the Proposal, the closing price of
the Shares on the New York Stock Exchange was $6.50 per Share. STOCKHOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The majority of the Company's earnings are generated by Aquila Southwest
Energy Corporation ("Aquila Southwest"), a wholly-owned subsidiary of the
Company. The amount available for the payment of dividends to the Company by
Aquila Southwest under the financial covenants contained in the indenture
governing the 8.29% Senior Notes due 2002 of Aquila Southwest ("8.29% Senior
Notes") is limited. These covenants provide that no dividends may be paid by
Aquila Southwest unless (i) there are no existing defaults under the indenture,
(ii) Aquila Southwest's ratio of consolidated debt to consolidated
capitalization does not exceed .55 to 1.0 through December 31, 1995 and
thereafter, (iii) the pro forma fixed charges coverage ratio is not less than
1.5 to 1.0, and (iv) the aggregate dividend payment does not exceed the sum of
(a) 50% of consolidated net income from July 1, 1992 through December 31, 1995,
plus (b) increasing percentages of net income subsequent to December 31, 1995,
plus (c) the net cash proceeds from the sale of Aquila Southwest stock after
June 30, 1992, plus (d) the net cash proceeds from the conversion of any
convertible debt securities. Accordingly, there can be no assurance that
dividends will be paid by the Company in the future.
CERTAIN EFFECTS OF THE TRANSACTION
EFFECT UPON THE SHARES. The purchase of Publicly-held Shares by Purchaser
pursuant to the Offer will reduce the number of Shares that might otherwise
trade publicly and will reduce the number of holders of Shares, which could
adversely affect the liquidity and market value of the remaining Publicly-held
Shares. According to the Company's 10-K, as of March 18, 1999 there were
approximately 99 stockholders of record and approximately 1,300 beneficial
owners of the Shares.
26
<PAGE>
Depending upon the number of Shares purchased pursuant to the Offer and the
aggregate market value of any Shares not purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued listing for quotation on
the New York Stock Exchange and may, upon the initiative of the New York Stock
Exchange, be delisted therefrom. The New York Stock Exchange published
guidelines indicate that the New York Stock Exchange would consider delisting
the Shares if, among other things, the number of holders of Shares should fall
below 1,200 and the average monthly trading volume is less than 100,000 Shares
or if the number of Publicly-held Shares should fall below 600,000 or if the
aggregate market value of the Publicly-held Shares should fall below $8,000,000.
In the event that the Shares are no longer included in the New York Stock
Exchange, it is possible that the Shares would continue to trade in the
over-the-counter market and that price quotations would be reported by other
sources. The extent of the public market for the Shares and the availability of
such quotations would, however, depend on the number of holders of Shares
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration of the
Shares under the Exchange Act, as described below, and other factors. To the
extent the Shares are delisted from quotation on the New York Stock Exchange,
the market for the Shares would likely be affected adversely. Further, Purchaser
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly, if any, as a result of the Offer would have an adverse
or beneficial effect on the market price for or marketability of the Shares or
whether it would cause future market prices to be greater or less than the Offer
Price. If the Shares are delisted because of a decline in the number of
stockholders or publicly held shares, Company Restricted Shares granted under
the Company's 1994 Restricted Stock Plan will vest.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if there are fewer than 300 holders of record of Shares. If such registration
were terminated, the Company would no longer legally be required to disclose
publicly in proxy materials distributed to stockholders the information which it
now must provide under the Exchange Act or to make public disclosure of
financial and other information in annual, quarterly and other reports required
to be filed with the Commission under the Exchange Act; and the executive
officers and directors of the Company and beneficial owners of more than 10% of
the Shares would no longer be subject to the "short-swing" insider trading
reporting and profit recovery provisions of the Exchange Act. Furthermore, if
such registration were terminated, persons holding "restricted securities" of
the Company may be deprived of their ability to dispose of such securities under
Rule 144 or 144A promulgated under the Securities Act of 1933, as amended.
If the registration of the Shares is not terminated and the Shares are not
delisted after consummation of the Offer and prior to the Second Step Merger,
then the Shares will cease to be listed on the New York Stock Exchange, and the
registration of the Shares under the Exchange Act will be terminated, following
the Second Step Merger.
INCREASED INTEREST IN STOCKHOLDERS' EQUITY AND NET INCOME OF THE
COMPANY. In the event that the Offer is consummated, the interest of Parent in
the stockholders' equity and net income of the Company, in terms of both
percentages and dollar amounts, will increase in direct proportion to the
increase in the percentage of outstanding Shares owned directly or indirectly by
Parent resulting from the Share acquisitions pursuant to the Offer. If all of
the outstanding Shares are purchased pursuant to the Offer, Parent's beneficial
interest in the stockholders' equity and net income of the Company at December
31, 1998, as reflected in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (the "Company's 10-K") would increase to
100%, or to approximately $226.8 million and approximately $4.9 million,
respectively. If all of the outstanding Shares are purchased pursuant to the
Offer, Purchaser's and Parent's beneficial interest in the stockholders' equity
and net income of the Company at December 31, 1997, as reflected in the
Company's 10-K would increase to 100%, or to approximately $223.4 million and
approximately $25.2 million, respectively. See "The Tender Offer--Certain
Information Concerning the Company" and "--Certain Information Concerning
Parent, Aquila and Purchaser."
27
<PAGE>
CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal offices located at
100 N.E. Loop 410, Suite 1000, San Antonio, Texas 78216-4754. The following
description of the Company's business has been taken from and is qualified in
its entirety by reference to the Company's 10-K.
Aquila Gas Pipeline Corporation (the Company) is engaged in the
business of purchasing, gathering, processing, transporting and
marketing natural gas and natural gas liquids (NGLs). The Company,
through its direct and indirect subsidiaries, owns and/or operates an
interest in eleven active natural gas gathering systems and four natural
gas processing plants in Texas and Oklahoma. In addition, the Company
currently owns a 35% interest in Oasis Pipe Line Company (Oasis) which
owns an intrastate pipeline system that connects the Waha, Texas hub to
major marketing pipelines at the Katy, Texas hub. The Company provides
essential services to natural gas producers by connecting producers'
wells to the Company's gathering systems, compressing and treating the
natural gas, gathering the natural gas for delivery to its processing
plants, processing the gas to remove NGLs and providing access for the
natural gas and NGLs to various markets. The Company ranks as one of the
leading independent producers of NGLs in the United States. In addition,
the Company purchases, markets and arranges for delivery of natural gas
outside of its pipeline systems.
Substantially all of the Company's revenues are attributable to
sales of natural gas and NGLs. These sales occur on the Company's
facilities as well as on third party gathering and transport lines
(off-system). The Company performs three functions that add value to the
natural gas stream received at the wellhead and enable the Company to
realize a profit upon such sales. First, the Company provides gathering,
compression and treatment services prior to delivery of the natural gas
to processing facilities or transport pipelines. Second, the Company
processes natural gas at its processing facilities, thereby separating
the stream into NGLs and residue gas which can generally be sold
separately for a greater combined price than the price of natural gas
from the wellhead. Third, the Company purchases natural gas from
producers in the field and other gas marketing companies and sells
natural gas to large volume customers, of which off-system sales
represent 66% of the Company's operating revenues in 1998. The Company
also transports third party natural gas for a fee, which presently
represents less than 1% of operating revenues.
The Company's principal assets are located in major gas producing
areas in southeast Texas and western Oklahoma. The Company's Southeast
Texas Pipeline System (the SETPS) is located in the Austin Chalk trend
in southeast Texas and consists of approximately 2,338 miles of pipe
with total gross gas throughput capacity of approximately 732 million
cubic feet per day (MMcf/ d). The Company's western Oklahoma pipeline
systems, located in the Anadarko Basin, consist of approximately 487
miles of pipe with total gross throughput of approximately 140 MMcf/d.
The Company has several other gathering systems located in east, west
and south Texas totaling approximately 578 miles of pipe with total gas
throughput capacity of approximately 348 MMcf/d.
The Company's LaGrange, Texas natural gas processing plant, which is
connected to the SETPS, is one of the largest NGLs producing facilities
in the United States with a gas throughput capacity of approximately 230
MMcf/d. The Company also has an interest in three additional natural gas
processing plants with gas throughput capacity aggregating 268 MMcf/d.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning the Company's directors and officers (including
their remuneration, stock options granted to them and shares held by them), the
principal holders of the Company's securities, and any material interest of such
persons in transactions with the Company is required to be disclosed in proxy
28
<PAGE>
statements and annual reports distributed to the Company's stockholders and
filed with the Commission. Such reports, proxy statements and other information
are available for inspection and copying at the public reference facilities of
the Commission located at Judiciary Plaza, 450 Fifth Street, N. W., Washington,
D.C. 20549, and at the regional offices of the Commission located at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven
World Trade Center, Suite 1300, New York, New York 10048. Copies of this
material may also be obtained by mail, upon payment of the Commission's
customary fees from the Commission's principal office at 450 Fifth Street, N.
W., Washington, D.C. 20549. The Commission also maintains an Internet site on
the World Wide Web at HTTP://WWW.SEC.GOV > that contains reports, proxy
statements and other information. The Common Stock of the Company is traded on
the New York Stock Exchange. Reports, proxy statements and other information
concerning the Company should also be available for inspection at 11 Wall
Street, New York, New York 10005.
The name, address, principal occupation or employment, five-year employment
history and citizenship of each director and executive officer of the Company is
set forth in Schedule I hereto.
The following tables set forth certain summary financial information with
respect to the Company derived from the audited financial statements contained
in the Company's 10-K. The following summary is qualified in its entirety by
reference to the more comprehensive financial information included in such
documents, including the financial statements and related notes contained
therein as well as other documents filed by the Company with the Commission,
which are available for inspection in the manner set forth above.
ALTHOUGH NEITHER PARENT, AQUILA NOR THE PURCHASER HAS ANY KNOWLEDGE THAT ANY
SUCH INFORMATION IS UNTRUE, NEITHER PARENT, AQUILA NOR THE PURCHASER TAKES ANY
RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF INFORMATION CONTAINED IN THIS
OFFER TO PURCHASE WITH RESPECT TO THE COMPANY OR ANY OF ITS SUBSIDIARIES OR
AFFILIATES OR FOR ANY FAILURE BY THE COMPANY TO DISCLOSE EVENTS WHICH MAY HAVE
OCCURRED OR MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF ANY SUCH INFORMATION.
THE COMPANY
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
1998 1997 1996
------------- ------------- -------------
(IN MILLIONS, EXCEPT
SHARE DATA AND RATIO)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Sales............................................................. $ 893.2 $ 1,013.9 $ 799.3
Income from operations............................................ 16.6 55.5 68.3
Net income........................................................ 4.9 25.2 32.4
Weighted average common shares outstanding........................ 29.4 29.4 29.4
Basic earnings per common share................................... .17 .86 1.10
Diluted earnings per common share................................. .17 .86 1.10
Cash dividends declared per common share.......................... .05 .05 .05
Ratio of earnings to fixed charges................................ 1.26x 3.27x 4.27x
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------------
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total assets...................................................... $ 635.4 $ 646.3 $ 728.5
Total assets less deferred research and development charges and
excess cost of assets acquired over book value.................. 607.6 614.4 691.2
Short-term debt (including current maturities).................... 12.5 12.5 12.8
Cash and Cash Equivalents......................................... 2.1 5.3 17.7
Working Capital (deficit)......................................... (24.0) (7.8) .3
Long-term debt.................................................... 197.5 224.0 277.4
Stockholders equity............................................... 226.8 223.4 199.7
Book Value Per share.............................................. 7.71 7.60 6.79
</TABLE>
CERTAIN INFORMATION CONCERNING PARENT, AQUILA AND PURCHASER
Parent is a Delaware corporation with its principal office located at 20
West Ninth Street, Kansas City, Missouri 64105. The Purchaser is a multinational
energy and energy solutions provider headquartered in Kansas City, Missouri. The
Purchaser began as Missouri Public Service Company in 1917 and reincorporated as
UtiliCorp United Inc. in 1985. The Purchaser has regulated utility operations in
eight states and British Columbia, Canada and nonregulated energy operations
throughout the United States and in New Zealand, Australia, the United Kingdom
and Canada.
Aquila is a Delaware corporation and a wholly-owned subsidiary of the Parent
with its principal office located at 2533 North 117th Avenue, Omaha, Nebraska
68164. Aquila is a natural gas and electricity marketing and trading business.
Aquila was established as a separate subsidiary in 1986 to take advantage of the
natural gas and electricity marketing and transportation opportunities created
by the deregulation of those industries.
Purchaser is a Delaware corporation with its principal executive offices
located at 20 West Ninth Street, Kansas City, Missouri 64105. Purchaser is a
wholly-owned subsidiary of Aquila which, in turn, is a wholly-owned subsidiary
of Parent. Purchaser was organized for the specific purpose of acquiring the
Shares and has not conducted any unrelated activities since its organization.
The name, business address, citizenship, present principal employment or
occupation and five-year employment history of each of the executive officers of
Parent, Aquila and Purchaser are set forth in Schedule II hereto.
Except as described in this Offer to Purchase, (i) none of Parent, Aquila or
Purchaser nor, to the best of Parent's, Aquila's and Purchaser's knowledge, any
of the persons listed in Schedule II hereto, or any associate or majority-owned
subsidiary of Parent or any of the persons so listed, beneficially owns or has
any right to acquire directly or indirectly any Shares or has any contract,
arrangement, understanding or relationship with any other person with respect to
any Shares, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any
Shares, joint ventures, loan or option arrangements, puts or calls, guaranties
of loans, guaranties against loss, or the giving or withholding of proxies, and
(ii) none of Parent, Aquila or Purchaser nor, to the best knowledge of Parent,
Aquila and Purchaser any of the other persons referred to above, or any of the
respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any Shares during the past 60 days.
Except as set forth in this Offer to Purchase, since January 1, 1996,
neither Parent, Aquila or Purchaser nor, to the best knowledge of Parent, Aquila
or Purchaser any of the persons listed on Schedule II hereto, has had any
transaction with the Company or any of its executive officers, directors or
affiliates that is required to be reported under the rules and regulations of
the Commission applicable to the Offer.
30
<PAGE>
Except as set forth in this Offer to Purchase, since January 1, 1996, there have
been no contacts, negotiations or transactions between Parent, Aquila,
Purchaser, or any of their subsidiaries or, to the best knowledge of Parent,
Aquila or Purchaser, any of the persons listed in Schedule II to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other hand,
concerning an acquisition, consolidation or merger; a tender offer for or other
acquisition of securities of any class of the Company; an election of directors
of the Company; or a sale or other transfer of a material amount of assets of
the Company or any of its subsidiaries.
The following tables set forth certain selected consolidated financial
information with respect to Parent and its subsidiaries excerpted from the
information contained in Parent's 1998 Annual Report on Form 10-K for the fiscal
year ended December 31, 1998. The following summary is qualified in its entirety
by reference to the more comprehensive financial information included in such
documents, including the financial statements and related notes contained
therein as well as other documents filed by Parent with the Commission, which
are incorporated by reference and available for inspection in the manner set
forth under "The Tender Offer--Certain Information Concerning the Company."
PARENT
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
1998 1997 1996
---------- --------- ---------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
INCOME STATEMENT DATE:
Sales....................................................................... $ 12,563.4 $ 8,926.3 $ 4,332.3
Earnings before extraordinary item and cumulative effect of software
accounting change......................................................... 132.2 134.1 105.8
Income from operations...................................................... 240.8 243.3 225.8
Net income.................................................................. 132.2 122.1 105.8
Earnings available for common shares........................................ 132.2 121.8 103.7
Weighted average common shares outstanding
Basic..................................................................... 80.07 80.42 70.81
Diluted................................................................... 81.18 81.00 71.29
Basic earnings per share before extraordinary item and cumulative effect of
software accounting change................................................ 1.65 1.66 1.46
Loss on retirement of debt.................................................. -- (.09) --
Cumulative effect of software accounting change............................. -- (.06) --
Basic earnings per share.................................................... 1.65 1.51 1.46
Diluted earnings per share before extraordinary item and cumulative effect
of software accounting change............................................. 1.63 1.66 1.46
Loss on retirement of debt per share........................................ -- (.09) --
Cumulative effect of software accounting change per share................... -- (.06) --
Diluted earnings per share.................................................. 1.63 1.51 1.46
Cash dividends per share.................................................... 1.20 1.17 1.17
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
1998 1997 1996
---------- --------- ---------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total assets................................................................ $ 5,991.5 $ 5,113.5 $ 4,739.8
Total assets less deferred research and development charges and excess cost
of assets acquired over book value........................................ 5,794.1 4,994.2 4,613.5
Working Capital (deficit)................................................... (327.3) (195.5) (215.1)
Short-term debt (including current maturities).............................. 484.4 263.4 277.7
Long-term debt.............................................................. 1,375.8 1,358.6 1,470.7
Company-obligated mandatorily redeemable preferred securities of a
partnership............................................................... 100.0 100.0 100.0
Preference and preferred stock.............................................. -- -- 25.0
Common shareholders' equity................................................. 1,446.3 1,163.6 1,158.0
Book value per share........................................................ 15.83 14.43 14.49
</TABLE>
Parent is subject to the informational requirements of the Exchange Act and,
in accordance therewith, files reports relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
Parent's directors and officers, their remuneration, stock options and other
matters, the principal holders of Parent's securities and any material interest
of such persons in transactions with Parent is required to be disclosed in proxy
statements distributed to Parent's stockholders and filed with the Commission.
Such reports, proxy statements and other information should be available for
inspection at the Commission and copies thereof should be obtainable from the
Commission in the same manner as is set forth under "The Tender Offer--Certain
Information Concerning the Company."
SOURCE AND AMOUNT OF FUNDS
Purchaser estimates that the total amount of funds required to purchase the
Shares not currently directly or indirectly owned by Parent will be
approximately $43.2 million (excluding approximately $1.5 million of payment of
estimated costs and expenses.) Parent will contribute to Purchaser the funds
necessary to purchase the Shares. Parent will obtain such funds from its working
capital. In addition, Parent Options and Parent Restricted Shares (or any
combination thereof) may be issued in connection with the Second Step Merger to
holders of Company Options, SARs and Company Restricted Shares in exchange for
such Company Options, SARs and Company Restricted Shares. The Offer and the
Second Step Merger are not contingent on obtaining any financing from any third
party.
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term or provision of the Offer, Purchaser shall
not be required to, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), accept for payment, purchase or pay for
any Shares of the Company tendered, and may terminate or amend the Offer and may
postpone the acceptance for payment of and payment for any Shares, if (i) the
Minimum Condition has not been satisfied, or (ii) at any time prior to the
expiration of the Offer any of the following shall occur or exist:
(a) there shall have been threatened, instituted or be pending any action,
proceeding, application, claim or counterclaim by any government or
governmental authority or agency, domestic or foreign, or by any other
person, domestic or foreign, before any court or governmental regulatory
or administrative agency, authority or tribunal, domestic or foreign, (i)
challenging the acquisition by Parent, Aquila or Purchaser of the Shares,
seeking to restrain or prohibit the making or consummation of the Offer
or the Second Step Merger; (ii) seeking to obtain from Parent, Aquila or
Purchaser any damages, fines or legal sanctions relating to the Offer or
the Second Step
32
<PAGE>
Merger; (iii) seeking to prohibit or limit the ownership or operation by
Parent, Aquila or Purchaser or any of their affiliates of any portion of
the business or assets of the Company or to compel Parent, Aquila or
Purchaser or any of their affiliates to dispose of or hold separate all
or any portion of the business or assets of the Company or of Purchaser
or seeking to impose any limitation on the ability of Parent, Aquila or
Purchaser or any of their affiliates to conduct such business or own such
assets; (iv) seeking to impose or confirm limitations on the ability of
Parent, Aquila or Purchaser or any of their affiliates effectively to
exercise full rights of ownership of the Shares, including, without
limitation, the right to vote any Shares acquired or owned by Parent,
Aquila or Purchaser or any of their affiliates on all matters properly
presented to the Company's stockholders; (v) seeking to require
divestiture by Parent, Aquila or Purchaser or any of their affiliates of
any Shares; or (vi) which would otherwise in the reasonable judgment of
Purchaser, Aquila or Parent, materially adversely affect the Company or
adversely affect the benefits which Purchaser, Aquila or Parent expects
to derive from the successful completion of the Offer and/or the Second
Step Merger; or
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction proposed, enacted,
promulgated, entered, enforced, issued or deemed applicable to the Offer,
the Second Step Merger, or other similar business combination by
Purchaser or any affiliate of Parent with the Company, or any other
action shall have been taken by any government, governmental authority or
agency or court with respect to a proceeding described in paragraph (a)
above, domestic or foreign, that has, or, in Parent's reasonable
discretion, could be expected to result in, any of the consequences
referred to in paragraph (a) above; or
(c) any approval, permit, authorization, favorable review or consent of any
court or governmental entity shall not have been obtained on terms
satisfactory to Purchaser in its reasonable discretion or Purchaser is
advised, or otherwise has reason to believe, that any such approval,
permit, authorization, review or consent will be denied or substantially
delayed, or will not be given other than upon terms or conditions that
would, in Purchaser's reasonable judgment, make it impracticable to
proceed with the Offer; or
(d) any change shall have occurred or been threatened (or any condition,
event or development shall have occurred or been threatened involving a
prospective change) in the business, properties, assets, liabilities,
capitalization, stockholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
the Company that, in the reasonable judgment of Parent, is or may be
materially adverse to the Company or to the value of the Shares to
Purchaser, Parent or any other affiliate of Parent or Purchaser, or
Parent shall have become aware of any facts that, in the reasonable
judgment of Parent, have or may have material adverse significance with
respect to either the value of the Company or the value of the Shares to
Purchaser, Parent or any other affiliate of Parent; or
(e) there shall have occurred or been threatened (i) any general suspension
of trading in, or limitation on prices for, securities on the New York
Stock Exchange, Inc., any other national securities exchange or in the
over-the-counter market in the United States; (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States (whether or not mandatory); (iii) any extraordinary or
material adverse change in the financial markets or major stock exchange
indices in the United States or abroad or in the market price of Shares;
(iv) any material change in United States currency exchange rates or any
other currency exchange rates or a suspension of, or limitation on, the
markets therefor; (v) the commencement or continuation of a war or armed
hostilities or other international calamity directly or indirectly
involving the United States; or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
33
<PAGE>
(f) unless Parent shall have consented in writing, the Company shall have
(i) split, combined or otherwise changed, or authorized or proposed a
split, combination or other change of, the Shares or its capitalization;
(ii) issued, distributed, pledged or sold, or authorized, proposed or
announced the issuance, distribution, pledge or sale of (A) any shares of
capital stock (including, without limitation, the Shares), or securities
convertible into any such Shares, or any rights, warrants or options to
acquire any such Shares or convertible securities, or (B) any other
securities in respect of, in lieu of, or in substitution for Shares;
(iii) purchased or otherwise acquired or caused a reduction in the number
of, or proposed or offered to purchase or otherwise acquire or cause a
reduction in the number of, any outstanding Shares or other securities of
the Company; (iv) declared or paid any dividend or distribution on any
shares of capital stock or issued, or authorized, recommended or proposed
the issuance of, any other distribution in respect of the Shares, whether
payable in cash, securities or other property, or altered or proposed to
alter any material term of any outstanding security; (v) issued, or
announced its intention to issue, any debt securities or any rights,
warrants or options entitling the holder thereof to purchase or otherwise
acquire any debt securities, or incurred, or announced its intention to
incur, any debt other than in the ordinary course of business and
consistent with its past practice; (vi) authorized, recommended, proposed
or publicly announced its intention to enter into (A) any merger,
consolidation, liquidation, dissolution, business combination,
acquisition of assets or securities or disposition of assets or
securities other than in the ordinary course of business, (B) any
material change in its capitalization, (C) any release or relinquishment
of any material contract rights, or (D) any comparable event not in the
ordinary course of business; (vii) authorized, recommended or proposed or
announced its intention to authorize, recommend or propose any
transaction which could adversely affect the value of the Shares; (viii)
proposed, adopted or authorized any amendment to its Certificate of
Incorporation or Bylaws or similar organizational documents or Purchaser
or Parent shall have learned about any such proposal or amendment which
shall not have been previously disclosed; (ix) entered into any new
material contracts or canceled or substantially changed the terms of any
existing material contracts; or (x) agreed in writing or otherwise to
take any of the foregoing actions; or
(g) the Company shall have (i) entered into any employment, severance or
similar agreement, arrangement or plan with any of its employees other
than in the ordinary course of business; (ii) entered into or amended any
agreements, arrangements or plans so as to provide for increased or
accelerated benefits to any employee as a result of or in connection with
the transactions contemplated by the Offer, the Second Step Merger or
other business combination; or (iii) except as may be required by law,
taken any action to terminate or amend any employee benefit plan (as
defined in Section 3(2) of the Employee Retirement and Income Security
Act of 1974, as amended) of the Company, or Purchaser or Parent shall
have become aware of any such action that was not disclosed in publicly
available filings prior to the date of this Offer to Purchase; or
(h) Purchaser, Parent or another affiliate of Parent and the Company shall
have entered into an agreement that the Offer be terminated or amended or
Purchaser, Parent or another affiliate of Parent shall have entered into
an agreement with the Company providing for a merger or other business
combination with the Company, which, in the reasonable judgment of Parent
or Purchaser in any such case, and regardless of the circumstances
(including any action or inaction by Purchaser, Parent or any affiliate
of Parent) giving rise to any such condition makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of Parent, Aquila and
Purchaser and may be asserted by Parent, Aquila or Purchaser regardless of the
circumstances giving rise to any such condition and may be waived by Parent,
Aquila or Purchaser, in whole or in part, at any time and from time to time, in
their sole discretion. The failure by Parent, Aquila or Purchaser at any time to
exercise any of the foregoing
34
<PAGE>
rights will not be deemed a waiver of any such right, and the waiver of such
right with respect to any particular facts or circumstances shall not be deemed
a waiver with respect to any other facts or circumstances, and each such right
will be deemed an ongoing right which may be asserted at any time and from time
to time. Any determination by Parent, Aquila or Purchaser concerning the events
described above will be final and binding upon all parties.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be returned
by the Depositary to the tendering stockholders.
CERTAIN TRANSACTIONS BETWEEN PARENT, AQUILA AND THE COMPANY
The Company enters into various types of transactions with Parent, Aquila
and affiliates thereof. The following table summarizes transactions between the
Company and related parties for the indicated periods:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1998 1997 1996
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Natural gas sales to Parent subsidiaries and Aquila under Gas Sales Agreements... $ 64,977 $ 55,886 $ 24,929
Purchases of natural gas from Aquila under Gas Sales Agreements.................. $ 31,639 $ 45,190 $ 14,278
Interest expense with Aquila and Parent.......................................... $ 10,136 $ 11,403 $ 9,061
Expense (benefit) under Tax Sharing Agreement.................................... $ (1,158) $ 14,963 $ 20,089
</TABLE>
GAS SALES AGREEMENTS. The Company has entered into two gas sales agreements
(the "Gas Sales Agreements") effective September 1, 1993, pursuant to which the
Company sells to a subsidiary of Aquila substantially all of its gas quantities
available from its Elk City and Mooreland systems located in Oklahoma. The Gas
Sales Agreements provide pricing terms for the gas based on published monthly
index prices of interstate pipelines connected to the Elk City and Mooreland
systems. The Gas Sales Agreements expired on September 1, 1998, and the pricing
terms for such gas is being redetermined on a monthly basis.
AQUILA REVOLVERS. A Company subsidiary, Aquila Southwest Energy Corporation
("ASW"), has entered into a $50.0 million revolving credit agreement between ASW
and Aquila (the "Aquila Revolver"). As of December 31, 1998, there was $30.1
million outstanding under this credit agreement. This revolver bears interest at
ASW's election of either a base rate (the higher of a bank prime rate or
one-half of 1% above the Federal Funds rate), an adjusted certificate of deposit
rate or a Eurodollar rate. The maturity date on this revolver automatically
renews in one-year periods from each commitment period (October of each year)
unless Aquila gives at least a one-year notice not to renew from the commitment
period. Currently, the maturity date is October of 2000. ASW is obligated to pay
a commitment fee on any unused portion of the Aquila Revolver at the rate of
one-fourth of 1% per annum. All principal outstanding is due at the end of the
Aquila Revolver's term. Amounts may be prepaid at any time.
Under the Aquila Revolver, ASW may not pledge its assets to secure
indebtedness except for certain permitted liens. Amounts outstanding under the
Aquila Revolver are expressly subordinate to the Aquila Southwest 8.29% Senior
Notes due 2002 ("8.29% Senior Notes"). Certain limitations are placed on ASW's
obligation to make payments on the Aquila Revolver in the event of default under
the terms of the 8.29% Senior Notes.
In September 1994, the Company entered into an additional agreement with
Aquila that provides an unsecured revolving credit facility for borrowing up to
an amount equal to the difference between $125.0 million and the balance
outstanding on the $50.0 million revolving credit facility described above. As
of December 31, 1998, there was $63.6 million outstanding under this credit
agreement. On February 1, 1998, the revolving credit facility's commitment was
voluntarily reduced by $10.0 million to $115.0 million.
35
<PAGE>
This revolver bears interest at the Company's election of either a base rate
(the higher of a bank prime rate or one-half of 1% above the Federal Funds
rate), an adjusted certificate of deposit rate or a Eurodollar rate. The
maturity date on this revolver automatically renews in one-year periods from
each commitment period (December of each year) unless Aquila gives at least a
one-year notice not to renew from the commitment period. Currently, the maturity
date is December 2000. The Company must pay an annual commitment fee to Aquila
of one-fourth of 1% on the unutilized portion of the revolving credit facility.
In July 1996, a Company subsidiary, AQP Holdings L.P. ("Holdings"), entered
into an unsecured $3.0 million revolving note agreement with Aquila. The note
bears interest at a bank prime rate and matures in December of 1999. In February
1997, the revolving note agreement was paid off and there was not a balance
outstanding at December 31, 1998.
AQUILA LOAN AGREEMENTS. In September 1995, the Company entered into a Loan
Agreement (the "Loan) with Aquila for an amount of $50.0 million. The Loan is
unsecured and bears interest at 6.47% due semi-annually. The principal amount of
the Loan is required to be repaid to Aquila by June 1, 2005. The Loan contains
various covenants including certain financial covenants related to net worth. As
of December 31, 1998, there was $50.0 million outstanding under the Loan.
The Company has another loan agreement (the "Second Loan Agreement") with
Aquila for an amount of $16.3 million. The Second Loan Agreement is unsecured
and bears interest at 6.83% due semi-annually. The principal amount of the
Second Loan Agreement shall be repaid to Aquila by October 15, 2006. The Second
Loan Agreement also requires the Company to comply with certain financial
covenants and limits the activities of the Company in other ways. As of December
31, 1998, there was $16.3 million outstanding under the Second Loan Agreement.
TAX SHARING AGREEMENT. The Company, Aquila and Parent have entered into a
tax sharing agreement (the "Tax Sharing Agreement") which provides for the
allocation of liabilities, procedures to be followed and other matters with
respect to certain taxes for tax years beginning after December 31, 1992, in
which the Parent, Aquila, the Company and its subsidiaries (the "Combined
Consolidated Group") are included in a consolidated federal income tax return
filed for the Combined Consolidated Group.
Under the Tax Sharing Agreement, Parent has sole and exclusive
responsibility for the preparation and filing of the consolidated U.S. federal
income tax return of the Combined Consolidated Group beginning in 1993. Parent
is responsible for making all federal income tax payments on behalf of the
Combined Consolidated Group. Estimated tax sharing payments will be made by the
Company to Parent for each taxable year in which a combined consolidated return
is filed. If a return reflects a net operating loss, net capital loss, excess
tax credit or other tax attributes, Parent will pay the Company the refund which
the Company would have received as a result of the carryback of such attribute
to any taxable year or years subsequent to December 31, 1992 in which the
Company and its subsidiaries are included in the Combined Consolidated Group. An
amendment to the Tax Sharing Agreement was signed effective December 1, 1995,
that specifies the manner in which the Company would be liable to Parent in the
event of a potential adjustment by the Internal Revenue Service relating to
Parent's consolidated federal income tax returns for a certain depreciation
expense issue through 1992. The amendment also provides for Parent to pay the
interest, if any, relating to the potential adjustment up to $1.5 million.
The principles expressed above with respect to federal income tax matters
apply equally to state and local income and franchise tax matters under the Tax
Sharing Agreement.
AGENCY AGREEMENT WITH AQUILA ENERGY MARKETING. Effective January 1, 1999,
the Company entered into an agreement with Aquila Energy Marketing Corporation
("AEM"), a wholly-owned subsidiary of Aquila, to outsource conduct its natural
gas marketing activities. Under the agreement, AEM will conduct all natural gas
marketing activities on behalf of the Company. The Company will receive all
gross margins associated with such marketing activities and will reimburse to
AEM all costs associated with performing
36
<PAGE>
these services. All previous employees of the Company in this natural gas
marketing capacity have been employed by AEM.
INTERESTS OF CERTAIN PERSONS IN THE OFFER
The Company's Common Stock is the Company's only outstanding class of voting
securities. The following table is derived from the Company's 10-K which sets
forth certain information as of March 18, 1999, and information supplied by the
Company by (i) certain executive officers and directors of the Company; (ii)
certain persons controlling the Company; and (iii) certain executive officers
and directors of any corporation ultimately in control of the Company. The terms
"control" and "controlling" have the meanings set forth in Rule 12b-2
promulgated under the Exchange Act.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
BENEFICIAL
OWNERSHIP OF COMMON PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER STOCK COMMON STOCK
- ----------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
UtiliCorp United Inc. ....................................................... 24,000,000(1) 81.6%
20 West Ninth Street
Kansas City, Missouri 64105
Aquila Energy Corporation ................................................... 24,000,000 81.6%
2533 North 117th Avenue
Omaha, Nebraska 68164
AEC Acquisitions, Inc. ...................................................... -- --
20 West Ninth Street
Kansas City, Missouri 64105
Charles K. Dempster(2)(3)(5)................................................. 1,251 *
Gary L. Downey(2)............................................................ 2,985(6) *
Travis H. Lynch(2)........................................................... 4,911 *
Jon L. Mosle, Jr.(2)......................................................... 3,985(6) *
F. Joseph Becraft(2)......................................................... 7,000 *
Edward K. Mills(2)(3)........................................................ -- --
Lawrence Clayton(3).......................................................... -- --
D. James LaBauve(2).......................................................... 1 --
Robert Truesdell(2).......................................................... 100 --
Martin H. Zolkoski(2)........................................................ -- --
John Pascador(2)............................................................. -- --
Richard C. Green, Jr.(3)(5).................................................. 10,700(7)
Robert K. Green(3)(4)(5)..................................................... 10,700(7) *
Avis G. Tucker(5)............................................................ 5,000 *
L. Patton Kline(5)........................................................... -- --
John R. Baker(5)............................................................. -- --
Dr. Stanley O. Ikenberry(5).................................................. 1,000 *
Irvine O. Hockaday, Jr.(5)................................................... -- --
Robert F. Jackson(5)......................................................... -- --
Herman Cain(5)............................................................... -- --
James G. Miller(5)........................................................... -- --
James S. Brook(5)............................................................ -- --
</TABLE>
- ------------------------
* Less than 1% of the Company's outstanding Common Stock.
(1) Includes 24,000,000 Shares owned directly by Aquila. The Parent may be
considered a beneficial owner of the common stock held of record by Aquila
due to its control position with respect to Aquila.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
37
<PAGE>
(2) Director or executive officer of the Company.
(3) Director or executive officer of Aquila.
(4) Director of executive officer of Purchaser.
(5) Director or executive officer of Parent.
(6) Includes 506 shares issued within the last 60 days pursuant to the 1996
Non-Employee Director Stock Plan.
(7) Includes 5,000 Shares owned directly by Green Street Capital, Inc., a
corporation of which Messrs. Green and Green are shareholders.
Parent believes that it is the present intention of all directors and
executive officers named in the table above other than Messrs. Downey and Mosle,
to tender their Shares in accordance with the Offer. Parent has no information
regarding whether Messrs. Downey and Mosle will tender their Shares in
accordance with the Offer. Other than Mr. Robert Green, to Parent's, Aquila's
and Purchaser's best knowledge, no person named in the table above has made any
recommendation with respect to the Offer.
Outside directors of the Company receive $2,000 per board meeting attended
and $500 for each committee meeting attended regardless of whether such
committee meeting is held separately or in conjunction with a board meeting. In
addition, outside directors are reimbursed for their reasonable expenses in
attending meetings of the Company Board or any committee and each outside
director receives $2,000 of Company common stock each quarter pursuant to the
Company's 1996 Non-Employee Director Stock Plan. Also, each member of the
Independent Committee will receive $35,000 for their service on such committee
in addition to payment of regular attendance fees and expenses. The $35,000
payment is due upon the completion, rejection or abandonment of the proposed
purchase of the Publicly-held Shares. As set forth in Schedules I and II hereto,
two members of the Company Board are executive officers of Parent or Aquila.
The Company has a stock appreciation rights plan, as amended, for key
members of management. Under the plan, the Company can award a total of 700,000
stock appreciation rights ("SAR"), each SAR giving the holder, upon exercise,
the right to receive a cash payment for the difference between the fair market
value of the Company's common stock on the date of grant and the fair market
value on the exercise date. Each SAR has a term of ten years from the date of
grant in which the employee may exercise the SAR. Based upon information
provided by the Company. Messrs. Lynch and Demptser have SARs with respect to
35,000 shares and 44,844 shares, respectively.
The Company awards its common stock to certain employees of the Company as
restricted stock awards. The shares issued as restricted stock awards are held
by the Company until certain restrictions lapse, generally on the second or
third award anniversary. Based upon information provided by the Company, Mr.
Becraft has 5,000 Company Restricted Shares.
In 1996, the Company's stockholders approved the 1996 Non-Employee Director
Stock Plan (the "1996 Stock Plan"). The 1996 Stock Plan authorizes the issuance
of a maximum of 100,000 shares of the Company's common stock based on the fair
market value of the Company's common stock on the date of issuance. Each
non-employee director is to receive common stock of the Company equal to $2,000
on a quarterly basis for the services performed in the preceding quarter.
In 1997, the Company's stockholders approved the Aquila Gas Pipeline
Corporation 1997 Stock Incentive Plan (the "Plan"), which provides for the
granting of incentive stock options, nonqualified stock options, awards of
restricted stock, stock appreciation rights, performance units or performance
shares and other stock-based awards to eligible employees. The Company has
reserved 500,000 shares of common stock for issuance in accordance with the
Plan. Stock options vest pursuant to the individual stock option agreements with
unexercised options expiring 10 years from the date of grant. These options vest
at 25% after the second anniversary, 25% after the third anniversary and the
remaining 50% after the fourth anniversary of the grant date. Based upon
information provided by the Company, the following individuals have unvested
options to purchase the following number of Shares pursuant to the Plan: Mr.
Becraft,
38
<PAGE>
36,000 Shares; Mr. Lynch, 4,000 Shares; Mr. Dempster, 10,000 Shares; and Mr.
Robert Green, 5,000 Shares.
Based on information provided by the Company, in January and February of
1997, Parent purchased approximately 14,769 Shares in the market at market
price. During that same period, Parent contributed all such Shares to the
Company. The Company placed those Shares in treasury and has utilized them, from
time to time, to satisfy obligations under existing employee benefit plans,
including stock issued to executive officers and directors. Based upon publicly
available information, on August 19, 1997, Joseph Becraft purchased 2,000 Shares
at $10.00 per Share in an open market transaction.
CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
Except as set forth herein, neither Purchaser nor Parent is aware of any
approval or other action by any governmental, administrative or regulatory
agency or authority or public body, domestic or foreign, that would be required
for the Offer, the Second Step Merger or ownership of Shares by Purchaser
pursuant to the Offer. Should any such approval or other action be required, it
is presently contemplated that such approval or action would be sought, but
Purchaser has no current intention to delay acceptance for payment of Shares
tendered pursuant to the Offer pending the outcome of any such matter, subject,
however, to Purchaser's right to decline to purchase Shares if any of the
conditions specified in "The Tender Offer--Certain Conditions of the Offer"
shall have occurred. There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the Company's business or that certain
parts of the Company's business might not have to be disposed of in the event
that such approvals were not obtained or such other actions were not taken or in
order to obtain any such approval or other action, any of which could cause
Purchaser to decline to accept for payment or pay for any Shares tendered.
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to the conditions, including conditions relating to legal matters
discussed under this heading entitled "The Tender Offer--Certain Legal Matters;
Regulatory Approvals."
STATE TAKEOVER LAWS. A number of states (including Delaware where the
Company is incorporated) have adopted takeover laws and regulations which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, stockholders, principal executive offices or principal places of
business therein. Parent, Aquila and Purchaser believe that the takeover laws of
Delaware will not affect the Offer and the Second Step Merger due to the nature
of the Parent's existing ownership interest in the Company. To the extent that
certain provisions of takeover statutes in states other than Delaware purport to
apply to the Offer or the Second Step Merger, Parent, Aquila and Purchaser
believe that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in EDGAR V. MITE CORP., invalidated on constitutional grounds
the Illinois Business Takeovers Statute, which as a matter of state securities
law made takeovers of corporations meeting certain requirements more difficult.
The reasoning in such decision is likely to apply to certain other state
takeover statutes. In 1987, however, in CTS CORP. V. DYNAMICS CORP. of America,
the Supreme Court of the United States held that the State of Indiana could as a
matter of corporate law and, in particular, those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, a number of Federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
Neither Parent, Aquila nor Purchaser has attempted to comply with any state
takeover statutes in connection with the Offer or the Second Step Merger and
believes none of such laws to be applicable to the Offer or the Second Step
Merger. Parent, Aquila and Purchaser reserve the right to challenge the validity
or applicability of any state law allegedly applicable to the Offer, and nothing
in this Offer to Purchase nor any action taken in connection herewith is
intended as a waiver of that right. In the event that
39
<PAGE>
it is asserted that one or more takeover statutes apply to the Offer, and it is
not determined by an appropriate court that such statute or statutes do not
apply or are invalid as applied to the Offer, as applicable, Parent, Aquila and
Purchaser may be required to file certain documents with, or receive approvals
from, the relevant state authorities, and Purchaser might be unable to accept
for payment or purchase Shares tendered pursuant to the Offer or be delayed in
continuing or consummating the Offer. In such case, Purchaser may not be
obligated to accept for purchase, or pay for, any Shares tendered.
APPRAISAL RIGHTS. Holders of the Shares do not have appraisal rights as a
result of the Offer. However if the Second Step Merger is consummated, holders
of the Shares in connection with the Second Step Merger will have certain rights
pursuant to the provisions of Section 262 of the DGCL to dissent and demand
appraisal of their Shares. Under Section 262, dissenting stockholders who comply
with the applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the Second Step Merger) and to receive payment of such fair
value in cash, together with a fair rate of interest, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors other
than, or in addition to, the price per Share to be paid in the Second Step
Merger or the market value of the Shares. The value so determined could be more
or less than the price per Share to be paid in the Second Step Merger. See
"Special Factors--Appraisal Rights in the Merger" and Annex A to this Offer to
Purchase.
GOING PRIVATE TRANSACTIONS. The Offer constitutes a "going private"
transaction under Rule 13e-3 of the Exchange Act. Consequently, Purchaser and
Parent have filed with the Commission the Schedule 13E-3, together with
exhibits, in addition to filing with the Commission a Tender Offer Statement on
Schedule 14D-1 (the "Schedule 14D-1"). Pursuant to Rule 13e-3, this Offer to
Purchase contains information relating to, among other matters, the fairness of
the Offer to the Company's stockholders.
LEGAL PROCEEDINGS. Neither Purchaser nor Parent is aware of any pending or
overtly threatened legal proceedings which would affect the Offer or the Second
Step Merger other than as described under "Special Factors--Background of the
Offer." If any such matters were to arise, Purchaser could decline to accept for
payment or pay for any Shares tendered in the Offer. See "The Tender
Offer--Certain Conditions of the Offer."
FEES AND EXPENSES
Parent and Purchaser have engaged Donaldson Lufkin & Jenrette ("DLJ") as the
Dealer Manager in connection with the Offer. In addition, DLJ is acting as
financial advisor to Parent in connection with the proposed acquisition of
Shares of the Company. In consideration for these services, Parent has agreed to
pay DLJ a fee equal to (i) $150,000, which was payable when the Parent retained
DLJ, (ii) $150,000, payable upon the earlier of (x) commencement of the Offer or
(y) the execution of a definitive agreement providing for the acquisition of the
Company by Parent and (iii) $1,000,000 (against which the fees in clauses (i)
and (ii) will be credited), payable upon consummation of a transaction in which
the Company is acquired by Parent or otherwise. Purchaser also has agreed to
reimburse DLJ for its expenses, including reasonable counsel fees and expenses,
and to indemnify it against certain liabilities and expenses, including certain
liabilities under the federal securities laws.
Purchaser has retained Morrow & Co. to act as the Information Agent and The
Bank of New York to act as the Depositary in connection with the Offer. The
Information Agent may contact holders of Shares by mail, telephone, telegraph
and personal interview and may request brokers, dealers and other nominee
stockholders to forward the Offer materials to beneficial owners. The
Information Agent will receive a fee for services as Information Agent estimated
to be $20,000 and will be reimbursed for certain out-of-pocket expenses. The
Depositary will receive reasonable and customary compensation for services
relating to the Offer and will be reimbursed for certain out-of-pocket expenses.
Purchaser has also agreed to indemnify the Information Agent and the Depositary
against certain liabilities and expenses in connection with the Offer, including
certain liabilities under the federal securities laws.
40
<PAGE>
Neither Purchaser, Aquila nor Parent, nor any officer, director,
stockholder, agent or other representative of Purchaser, Aquila or Parent, will
pay any fees or commissions to any broker or dealer or any other person for
soliciting tenders of Shares pursuant to the Offer (other than to the
Information Agent and the Dealer Manager). Brokers, dealers, commercial banks,
trust companies and other nominees will, upon request, be reimbursed by
Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
Expenses estimated to be incurred by Parent, Aquila and Purchaser in
connection with the Offer are as follows:
<TABLE>
<CAPTION>
Financial Advisor fees and expenses............................. $1,025,000
<S> <C>
Depositary...................................................... $ 30,000
Information Agent............................................... $ 20,000
Legal Fees...................................................... $ 275,000
Printing, mailing and distribution expenses..................... $ 125,000
Commission filing fee........................................... $ 8,947
Accounting fees................................................. $ 5,000
Miscellaneous fees and expenses................................. $ 11,053
---------
Total........................................................... $1,500,000
---------
---------
</TABLE>
MISCELLANEOUS
Neither Parent, Aquila nor Purchaser is aware of any state where the making
of the Offer is prohibited by administrative or judicial action pursuant to any
valid state statute. If Parent or Purchaser becomes aware of any valid state
statute prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Parent and Purchaser will make a good faith effort to comply with such
state statute. If, after such good faith effort, the Offer cannot comply with
such state statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) the holders of Shares in such state. Each of Parent or
Purchaser may, in its discretion, however, take such action as it may deem
necessary to make the Offer in any jurisdiction and extend the Offer to holders
of Shares in any such jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Purchaser by the
Dealer Manager or one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, AQUILA OR PARENT NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THE
DELIVERY OF THIS OFFER TO PURCHASE NOR ANY PURCHASE PURSUANT TO THE OFFER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF PURCHASER, PARENT OR THE COMPANY SINCE THE DATE AS OF WHICH
INFORMATION IS FURNISHED OR THE DATE OF THIS OFFER TO PURCHASE.
Purchaser, Aquila and Parent have filed with the Commission a (i) Tender
Offer Statement on Schedule 14D-1, together with exhibits, pursuant to Rule
14d-3 under the Exchange Act and (ii) a Schedule 13D, pursuant to Section 13(d)
of the Exchange Act furnishing certain additional information with respect to
the Offer. In addition, Parent, Aquila and Purchaser have filed with the
Commission the Schedule 13E-3, together with exhibits, pursuant to Rule 13e-3
under the Exchange Act. Such Schedules and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the Commission in the
manner set forth herein (except that they will not be available at the regional
offices of the Commission).
AEC ACQUISITIONS, INC.
AQUILA ENERGY CORPORATION
UTILICORP UNITED INC.
April 9, 1999
41
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth, for each executive officer and director of
the Company, the name, business or residence address, principal occupation or
employment at the present time and during the last five years, and the name of
any corporation or other organization in which such employment is conducted.
Except as otherwise indicated, all of the persons listed below are citizens of
the United States of America. Each occupation set forth opposite a person's
name, unless otherwise indicated, refers to employment with the Company. Unless
otherwise indicated, the principal business address of each director or
executive officer of the Company is One International Centre, 100 N. E. Loop
410, Suite 1000, San Antonio, Texas 78216. Directors of the Company are
indicated with an asterisk (*).
<TABLE>
<CAPTION>
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT DURING THE PAST FIVE YEARS
- -------------------------------- --------------------------------------- ---------------------------------------
<S> <C> <C>
Charles K. Dempster* ........... Chairman of the Board of the Company President of Aquila and director of
20 West Ninth Street (since August 1993); Chairman of the various affiliates of Parent (from
Kansas City, Missouri 64105 Board and Chief Executive Officer of January 1993 through November 1995).
Aquila (since November 1998); Senior
Vice President of Parent (since January
1996); and Chairman and Chief Executive
Officer of UtiliCorp U.K., Inc. (since
November 1995).
Gary L. Downey*................. Retired
Edward K. Mills* ............... Director (since February 1999); Various positions with Aquila (since
2533 North 117th Avenue President and Chief Operating Officer March 1993).
Omaha, Nebraska 68164 of Aquila (since November 1998); and
Vice President of Parent (since July
1998).
Jon L. Mosle, Jr.*.............. Independent Consultant (since 1992).
F. Joseph Becraft*.............. President and Chief Executive Officer President and Chief Executive Officer
of the Company (since August 1997). and other positions with Valero Energy
Corporation (from May 1995 through
November 1996); and President and Chief
Executive Officer of Transok, Inc.
(from 1989 through April 1995).
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT DURING THE PAST FIVE YEARS
- -------------------------------- --------------------------------------- ---------------------------------------
<S> <C> <C>
Travis H. Lynch................. Vice President, Gas Supply (since
August 1993).
D. James LaBauve................ Vice President, Regulatory and Director, Regulatory and Administration
Administration (since March 23, 1999) (from March 1, 1999 through March 22,
1999); Senior Attorney Blackwell
Sanders Peper Martin LLP (from March
1995 through February 26, 1999); Vice
President, Regulatory of the Company
(from May 1994 through March 1995); and
Senior Attorney, Aquila (from November
1990 through May 1994).
Robert Truesdell................ Vice President, Operations and Director of Operations and Technical
Technical Services (since March 23, Services (from March 1, 1999 through
1999) March 22, 1999); Manager Region 1 (from
October 1998 through February 26,
1999); and Operations Superintendent
(from October 1985 through October
1998).
Martin H. Zolkoski.............. Vice President, Business Development Director of Business Development (from
(since February 1, 1999) January 4, 1999 through January 29,
1999); Senior Vice President, Koch
Midstream Services Company (from
September 1997 through January 1999);
and Vice President, Planning and
Business Development, Valero
Transmission Company (from February
1994 through September 1997).
John G. Pascador................ Controller and Chief Accounting Officer Controller (from December 1995 through
(since November 1998). November 1998); various positions with
the Company (since May 1994); and Audit
Manager with Arthur Andersen LLP (prior
to May 1994).
</TABLE>
I-2
<PAGE>
SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, AQUILA AND PURCHASER
The following table sets forth, for each executive officer and director of
Parent, the name, business or residence address, principal occupation or
employment at the present time and during the last five years, and the name of
any corporation or other organization in which such employment is conducted or
was conducted. Except as otherwise indicated, all of the persons listed below
are citizens of the United States of America. Each occupation set forth opposite
a person's name, unless otherwise indicated, refers to employment with Parent.
Unless otherwise indicated, the principal business address of each director or
executive officer is 20 West Ninth Street, Kansas City, Missouri 64105.
Directors of Parent are indicated with an asterisk (*). Unless otherwise
indicated, none of the persons listed below has bought or sold any Shares within
the past 60 days.
<TABLE>
<CAPTION>
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT DURING THE PAST FIVE YEARS
- ----------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Richard C. Green, Jr.*............. Chairman of the Board and Chief
Executive Officer.
Avis G. Tucker* ................... Editor and publisher of THE
The Daily Star Journal DAILY-STAR JOURNAL in Warrensburg,
135 East Market Missouri.
Warrensburg, Missouri 64093
L. Patton Kline*................... Retired
John R. Baker*..................... Retired Vice Chairman of the Board (from May
1991 through December 1995).
Stanley O. Ikenberry* ............. President of the American Council on President of the University of
University of Illinois Education; and Regent Professor and Illinois (from 1979 through 1995).
1007 W. Nevada President Emeritus of the University
Urbana, Illinois 61801 of Illinois.
Irvine O. Hockaday, Jr.* .......... President and Chief Executive
2501 McGee Director of Hallmark Cards, Inc.
Kansas City, Missouri 64108
Robert F. Jackson*................. Retired
Herman Cain* ...................... Chairman of the Board of Godfathers
9140 West Dodge Road Pizza, Inc.
Omaha, Nebraska 68114
Robert K. Green*................... President and Chief Operating Officer Managing Executive Vice President
(since February 1996). (from January 1993 through February
1996).
James G. Miller.................... Senior Vice President
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT DURING THE PAST FIVE YEARS
- ----------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Charles K. Dempster................ Chairman of the Board of the Company President of Aquila and director of
(since August 1993); Chairman of the various affiliates of Parent (from
Board and Chief Executive Officer of January 1993 through November 1995).
Aquila (since November 1998); Senior
Vice President of Parent (since
January 1996); and Chairman and Chief
Executive Officer of UtiliCorp U.K.,
Inc. (since November 1995).
James S. Brook..................... Vice President, Controller and Chief
Accounting Officer.
</TABLE>
The following table sets forth, for each executive officer and director of
Aquila, the name, business or residence address, principal occupation or
employment at the present time and during the last five years, and the name of
any corporation or other organization in which such employment is conducted or
was conducted. Except as otherwise indicated, all of the persons listed below
are citizens of the United States of America. Each occupation set forth opposite
a person's name, unless otherwise indicated, refers to employment with Aquila.
Unless otherwise indicated, the principal business address of each director or
executive officer is 2533 North 117th Avenue, Omaha, Nebraska 68164. Directors
of Aquila are indicated with an asterisk (*). Unless otherwise indicated, none
of the persons listed below has bought or sold any Shares within the past 60
days.
<TABLE>
<CAPTION>
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT DURING THE PAST FIVE YEARS
- ----------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Richard C. Green, Jr.* ............ Chairman of the Board and Chief
20 West Ninth Street Executive Officer of Parent
Kansas City, Missouri 64105
Robert K. Green* .................. President and Chief Operating Officer Managing Executive Vice President
20 West Ninth Street of Parent (since February 1996). (from January 1993 through February
Kansas City, Missouri 64105 1996).
Charles K. Dempster* .............. Chairman of the Board of the Company President of Aquila and director of
20 West Ninth Street (since August 1993); Chairman of the various affiliates of Parent (from
Kansas City, Missouri 64105 Board and Chief Executive Officer of January 1993 through November 1995).
Aquila (since November 1998); Senior
Vice President of Parent (since
January 1996); and Chairman and Chief
Executive Officer of UtiliCorp U.K.,
Inc. (since November 1995).
Edward K. Mills*................... President and Chief Operating Officer Various positions with Aquila (since
of Aquila (since November 1998); Vice March 1993).
President of Parent (since July
1998).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT DURING THE PAST FIVE YEARS
- ----------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Lawrence Clayton................... Senior Vice President (since July Vice President (since August 1994);
1997) Chief Financial Officer of Sunrise
Energy Services, Inc. (from June 1990
through August 1994.)
</TABLE>
The following table sets forth, for each executive officer and director of
Purchaser, the name, business or residence address, principal occupation or
employment at the present time and during the last five years, and the name of
any corporation or other organization in which such employment is conducted or
was conducted. Except as otherwise indicated, all of the persons listed below
are citizens of the United States of America. Each occupation set forth opposite
a person's name, unless otherwise indicated, refers to employment with
Purchaser. Unless otherwise indicated, the principal business address of each
director or executive officer is 20 West Ninth Street, Kansas City, Missouri
64105. Directors of Purchaser are indicated with an asterisk (*).
<TABLE>
<CAPTION>
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT DURING THE PAST FIVE YEARS
- ----------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Robert K. Green*................... President and Chief Operating Officer Managing Executive Vice President
of Parent (since February 1996). (from January 1993 through February
1996).
</TABLE>
II-3
<PAGE>
ANNEX A
Set forth below is Section 262 of the General Corporation Law of the State
of Delaware regarding appraisal rights, which rights will only be available in
connection with the Second Step Merger.
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
Section 262 Appraisal Rights--
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented
thereto in writing pursuant to sec. 228 of this title shall be entitled
to an appraisal by the Court of Chancery of the fair value of the
stockholder's shares of stock under the circumstances described in
subsection (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a non-stock corporation; the words "stock"
and "share" mean and include what is ordinarily meant by those words and
also membership or membership interest of a member of a non-stock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which
stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation
to be effected pursuant to sec. 251 (other than a merger effected
pursuant to sec. 251(g) of this title), sec. 252, sec. 254, sec. 257,
sec. 258, sec. 263 or sec. 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date
fixed to determine the stockholders entitled to receive notice of and
to vote at the meeting of stockholders to act upon the agreement of
merger or consolidation, were either (i) listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by
more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof
are required by the terms of an agreement of merger or consolidation
pursuant to sec. 251, 252, 254, 257, 258, 263 and 264 of this title
to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts
in respect thereof) or depository receipts at the effective date
of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market
system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of
this paragraph; or
A-1
<PAGE>
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c.
of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned
by the parent corporation immediately prior to the merger, appraisal
rights shall be available for the shares of the subsidiary Delaware
corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section,
shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior
to the meeting, shall notify each of its stockholders who was such on
the record date for such meeting with respect to shares for which
appraisal rights are available pursuant to subsections (b) or (c)
hereof that appraisal rights are available for any or all of the
shares of the constituent corporations, and shall include in such
notice a copy of this section. Each stockholder electing to demand
the appraisal such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares. A
proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action
must do so by a separate written demand as herein provided. Within 10
days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of
each constituent corporation who has complied with this subsection
and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228 or
sec. 253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series
of stock of such constituent corporation who are entitled to
appraisal rights of the approval of the merger or consolidation and
that appraisal rights are available for any or all shares of such
class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or
consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of
stock of a constituent corporation that are entitled to appraisal
rights. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date
of mailing of such notice, demand in writing from the surviving or
resulting corporation the appraisal of such holder's shares. Such
demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the
merger or consolidation, either (i) each such constituent corporation
A-2
<PAGE>
shall send a second notice before the effective date of the merger or
consolidation notifying each of the holders of any class or series of
stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii)
the surviving or resulting corporation shall send such a second
notice to all such holders on or within 10 days after such effective
date; provided, however, that if such second notice is sent more than
20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal
rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that
is required to give either notice that such notice has been given
shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix, in
advance, a record date that shall be not more than 10 days prior to
the date the notice is given, provided, that if the notice is given
on or after the effective date of the merger or consolidation, the
record date shall be such effective date. If no record date is fixed
and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise
entitled to appraisal rights, may file a petition in the Court of
Chancery demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days
after the effective date of the merger or consolidation, any stockholder
shall have the right to withdraw his demand for appraisal and to accept
the terms offered upon the merger or consolidation. Within 120 days after
the effective date of the merger or consolidation, any stockholder who
has complied with the requirements of subsections (a) and (d) hereof,
upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement
setting forth the aggregate number of shares not voted in favor of the
merger or consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days
after his written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d)
hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the
Register in Chancery in which the petition was filed a duly verified list
containing the names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the value of
their shares have not been reached by the surviving or resulting
corporation. If the petition shall be filed by the surviving or resulting
corporation, the petition shall be accompanied by such a duly verified
list. The Register in Chancery, if so ordered by the Court, shall give
notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation
and to the stockholders shown on the list at the addresses therein
stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by
mail and by publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock
represented by certificates to submit their certificates of stock to the
Register in Chancery for notation thereon
A-3
<PAGE>
of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any,
to be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account all
relevant factors. In determining the fair rate of interest, the Court may
consider all relevant factors, including the rate of interest which the
surviving or resulting corporation would have had to pay to borrow money
during the pendency of the proceeding. Upon application by the surviving
or resulting corporation or by any stockholder entitled to participate in
the appraisal proceeding, the Court may, in its discretion, permit
discovery or other pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder entitled to
an appraisal. Any stockholder whose name appears on the list filed by the
surviving or resulting corporation pursuant to subsection (f) of this
section and who has submitted his certificates of stock to the Register
in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that he is not entitled to
appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation
to the stockholders entitled thereto. Interest may be simple or compound,
as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith,
and the case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates representing such stock.
The Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting corporation
be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the
value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in
subsection (d) of this section shall be entitled to vote such stock for
any purpose or to receive payment of dividends or other distributions on
the stock (except dividends or other distributions payable to
stockholders of record at a date which is prior to the effective date of
the merger or consolidation); provided, however, that if no petition for
an appraisal shall be filed within the time provided in subsection (e) of
this section, or if such stockholder shall deliver to the surviving or
resulting corporation a written withdrawal of such stockholder's demand
for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an
appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of
authorized and unissued shares of the surviving or resulting corporation.
A-4
<PAGE>
The Depositary for the Offer is:
The Bank of New York
Tender & Exchange Department
101 Barclay Street
Receive & Deliver Window
New York, New York 10286
BY FACSIMILE TRANSMISSION
(Eligible Institutions Only)
(212) 815-6213
For Information by Telephone
(800) 507-9357
Questions and requests for assistance should be directed to the Information
Agent at its respective address or telephone numbers set forth below. Additional
copies of this Offer to Purchase, the Letter of Transmittal and all other tender
offer materials may be obtained from the Information Agent as set forth below,
and will be furnished promptly at the Purchasers' expense. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO]
445 Park Avenue, 5th Floor
New York, New York 10022
Toll Free: (800) 566-9061
Call Collect: (212) 754-8000
Banks and Brokerage Firms, please call:
Toll Free: (800) 662-5200
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, New York 10172
(877) 864-4755
(Toll Free)
(212) 892-0314
------------------------
<PAGE>
LETTER OF TRANSMITTAL
EXHIBIT (a)(2)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
AQUILA GAS PIPELINE CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED APRIL 9, 1999
BY
AEC ACQUISITIONS, INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
UTILICORP UNITED INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MAY 7, 1999 UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
The Bank of New York
<TABLE>
<S> <C> <C>
BY MAIL: BY FACSIMILE TRANSMISSION BY HAND OR
Tender & Exchange (Eligible Institutions Only) COURIER OVERNIGHT
Department (212) 815-6213 Tender & Exchange
P.O. Box 11248 For Information by Telephone Department
New York, New York (800) 507-9357 101 Barclay Street
10286-1248 Receive & Deliver Window
New York, New York 10286
</TABLE>
Your bank or broker can assist you in completing this Letter of Transmittal.
The instructions enclosed with this Letter of Transmittal must be followed and
should be read carefully. Questions and requests for additional copies of the
Offer to Purchase (as defined below) and this Letter of Transmittal may be
directed to the Information Agent as indicated in Instruction 8.
Delivery of this Letter of Transmittal to an address other than as set forth
above, or transmission of instructions via facsimile or telex number other than
as set forth above, will not constitute valid delivery.
This Letter of Transmittal is to be completed by stockholders if
certificates for Shares (as defined below) are to be forwarded herewith or if
tenders of Shares are to be made by book-entry transfer into the account of the
Bank of New York as Depositary (the "Depositary") at The Depository Trust
Company ("DTC") (the "Book-Entry Transfer Facility") pursuant to the procedures
set forth in the section entitled "The Tender Offer--Procedure for Tendering
Shares" of the Offer to Purchase. Stockholders who tender Shares by book-entry
transfer are referred to herein as "Book-Entry Stockholders." Holders of Shares
whose certificates for such Shares (the "Share Certificates") are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary prior to the Expiration Date (as
defined in the section entitled "The Tender Offer--Terms of the Offer" of the
Offer to Purchase), or who cannot complete the procedure for book-entry transfer
on a timely basis, must tender their Shares according to the guaranteed delivery
procedure set forth in the section entitled "The Tender Offer-- Procedure for
Tendering Shares" of the Offer to Purchase. See Instruction 2. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
----------------------------------------------------------------------------------------------------
NAME(S) & ADDRESS(ES)
OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATES ENCLOSED
APPEAR(S) ON (ATTACH ADDITIONAL SIGNED SCHEDULE IF
CERTIFICATE(S) NECESSARY)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
SHARE TOTAL NUMBER NUMBER OF
CERTIFICATE(S) OF SHARES SHARES
NUMBER(S)* REPRESENTED BY TENDERED**
CERTIFICATE(S)*
- ------------------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, all Shares represented by certificates delivered to the Depositary
will be deemed to have been tendered. See Instruction 4.
- ----------------------------------------------------------------------------------------------------
</TABLE>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE
ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
Check Box of Book-Entry Transfer Facility:
/ / DTC
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to AEC Acquisitions, Inc., a Delaware
corporation (the "Purchaser"), the above-described shares of common stock, $.01
par value (the "Shares"), of Aquila Gas Pipeline Corporation, a Delaware
corporation (the "Company"), at a purchase price of $8.00 per Share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated April 9, 1999 and any amendments or
supplements thereto (the "Offer to Purchase"), and in this Letter of Transmittal
(which, together constitute the "Offer"), receipt of which is hereby
acknowledged. The undersigned understands that the Purchaser reserves the right
to transfer or assign, in whole or from time to time in part, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment for the Shares
tendered herewith in accordance with the terms and conditions of the Offer, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Purchaser all right, title and interest in and to all of the Shares that are
being tendered hereby and any and all noncash dividends, distributions
(including additional Shares) or rights declared, paid or issued with respect to
the tendered Shares on or after April 9, 1999 and payable or distributable to
the undersigned on a date prior to the transfer to the name of the Purchaser or
a nominee or transferee of the Purchaser on the Company's stock transfer records
of the Shares tendered herewith (a "Distribution"). The undersigned hereby
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and any Distribution) with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) to (a) deliver such Share Certificates (as defined
herein) (and any Distribution) or transfer ownership of such Shares (and any
Distribution) on the account books maintained by the Book-Entry Transfer
Facility, together in either case with appropriate evidence of transfer and
authenticity, to the Depositary for the account of the Purchaser, and (b)
present such Shares (and any Distribution) for transfer on the books of the
Company, and receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any Distribution), all in accordance
with the terms and subject to the conditions of the Offer.
The undersigned irrevocably appoints designees of the Purchaser as such
stockholder's proxy, each with full power of substitution to the full extent of
such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
Distribution. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior proxies given by such stockholder with respect to such Shares
(and, if applicable, such other shares and securities) will be revoked without
further action, and no subsequent proxies may be given nor any subsequent
written consents executed (and if given or executed, will not be deemed
effective). The designees of the Purchaser will be empowered to exercise all
voting and other rights of such stockholder as they in their sole discretion may
deem proper at any annual or special meeting of the Company's stockholders or
any adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. The Purchaser reserves the right to require that, in order
for Shares to be deemed validly tendered, immediately upon the Purchaser's
payment for such Shares, the Purchaser must be able to exercise full voting
rights with respect to such Shares.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distribution) and (b) when the Shares are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title to such Shares (and any Distribution), free and clear of all
liens, restrictions, charges and encumbrances, and the same will not be subject
to any adverse claim. The undersigned, upon request, will execute and deliver
any additional documents deemed by the Depositary or the Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and any Distribution). In addition, the undersigned
shall promptly remit and transfer to the Depositary for the account of the
Purchaser any and all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and pending such
remittance or appropriate assurance thereof, the Purchaser will be, subject to
applicable law, entitled to all rights and privileges as owner of such
Distribution and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by the Purchaser in
its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors and assigns of
the undersigned.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in the section entitled "The Tender Offer--Procedure for
Tendering Shares" of the Offer to Purchase and in the instructions hereto will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions set forth in the Offer, including the
undersigned's representations that the undersigned owns the Shares being
tendered. The undersigned acknowledges that no interest will be paid on the
offer price for tendered Shares regardless of any extension of the Offer or any
delay in making such payment.
<PAGE>
Unless otherwise indicated herein under "Special Payment Instructions,"
please mail the check for the purchase price and/or issue or return any
certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the Special Delivery Instructions and Special Payment Instructions are
completed, please issue the check for the purchase price and/or issue or return
any certificate(s) for Shares not tendered or accepted for payment in the name
of, and deliver such check and/or such certificate to, the person or persons so
indicated.
The undersigned recognizes that the Purchaser has no obligation, pursuant to
the Special Payment Instructions, to transfer any Shares from the name(s) of the
registered holder(s) thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
Effective upon the receipt of payment for tendered Shares by the undersigned
stockholder(s), the undersigned stockholder(s), on behalf of themselves and on
behalf of any beneficial owner of the tendered Shares, and on behalf of all
spouses, heirs, predecessors, successors, assigns, representatives, agents,
parent or subsidiary corporations of such tendering stockholder(s) or such
beneficial owner of the tendered Shares (including without limitation any trust
of which the undersigned tendering stockholder(s) is the trustee or which is for
the benefit of any undersigned tendering stockholder(s) or member of his
family), releases and discharges any and all claims that any such person or
entity has, had or may have against Parent, Purchaser, the Company and, without
limitation, the Other Related Persons (as defined in the following sentence)
arising out of, or related to, the price offered in the Offer or the
consideration received by tendering stockholder(s) in the Offer. The term "Other
Related Persons" as used in the preceding sentence shall mean each of Parent's,
Purchaser's, and Company's past or present directors, officers, employees,
partners, principals, agents, insurers or co-insurers, controlling stockholders,
parent or subsidiary corporations, affiliates, attorneys, advisors, legal
representatives, and assigns.
- ------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the payment and the check for the
purchase price of Shares accepted for payment are to be issued in the name
of someone other than the undersigned.
Issue / / check / / certificate(s) to:
Name(s): ___________________________________________________________________
(PLEASE TYPE OR PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
------------------------------------------------------------------
------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned or
to the undersigned at an address other than that shown above.
Mail / / check / / certificate(s) to:
Name(s): ___________________________________________________________________
(PLEASE TYPE OR PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
- -----------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
SIGN HERE
AND COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN
____________________________________________________________________________
____________________________________________________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
Dated: _____________, 1999
(MUST BE SIGNED BY THE REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S)
ON CERTIFICATE(S) OR ON A SECURITY POSITION LISTING OR BY PERSON(S)
AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY CERTIFICATE(S) AND DOCUMENTS
TRANSMITTED HEREWITH. IF SIGNATURE IS BY TRUSTEE, EXECUTOR, ADMINISTRATOR,
GUARDIAN, ATTORNEY-IN-FACT, AGENT, OFFICER OF A CORPORATION OR ANOTHER
ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE SET FORTH FULL
TITLE AND SEE INSTRUCTION 5.)
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity (Full Title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE A ZIP CODE)
Area Code and Telephone Number.: ________________________________________
Tax Identification or Social Security No.: _________________________________
COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature(s): ___________________________________________________
Name: ______________________________________________________________________
(PLEASE TYPE OR PRINT)
Title: _____________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Dated: _____________, 1999
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) of Shares (which term, for purposes of this document, shall
include any participant in the Book-Entry Transfer Facility whose name appears
on a security position listing as the owner of Share(s)), unless such holder has
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" included herein or (ii) if such Shares
are tendered for the account of a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc. or by a commercial bank or trust company having an office or
correspondent in the United States (each of the foregoing being referred to as
an "Eligible Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed either if certificates are to be forwarded
herewith or if tenders are to be made pursuant to the procedure for tender by
book-entry transfer set forth in the section entitled "The Tender
Offer--Procedure for Tendering Shares" of the Offer to Purchase. Share
Certificates, or timely confirmation (a "Book-Entry Confirmation") of a
book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a
facsimile hereof), properly completed and duly executed, with any required
signature guarantees and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date. Stockholders whose Share Certificates
are not immediately available, or who cannot deliver their Share Certificates
and all other required documents to the Depositary prior to the Expiration Date,
or who cannot complete the procedure for delivery by book-entry transfer on a
timely basis, may tender their Shares by properly completing and duly executing
a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure
set forth in the section entitled "The Tender Offer--Procedure for Tendering
Shares" of the Offer to Purchase. Pursuant to such procedure: (i) such tender
must be made by or through an Eligible Institution; (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by the Purchaser (with any required signature guarantees) must be
received by the Depositary prior to the Expiration Date; and (iii) the Share
Certificates (or a Book-Entry Confirmation) representing all tendered Shares, in
proper form for transfer, in each case together with the Letter of Transmittal
(or a facsimile hereof), properly completed and duly executed, with any required
signature guarantees and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space herein is inadequate, the certificate
numbers and/or the number of Shares should be listed on a separate signed
schedule attached hereto.
4. PARTIAL TENDERS. (NOT APPLICABLE TO BOOK-ENTRY-STOCKHOLDERS.) If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, new Share Certificates for
the Shares that were evidenced by your old Share Certificates, but were not
tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
purchase of Shares pursuant to the Offer. All Shares represented by Share
Certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles thereof) as there are different
registrations of certificates.
If this Letter of Transmittal or any certificate(s) or stock power(s) is
signed by a trustee, executor, administrator, attorney-in-fact, officer of a
corporation or another acting in a fiduciary or representative capacity, such
person should
<PAGE>
so indicate when signing, and proper evidence satisfactory to the Purchaser of
such person's authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment of the purchase price for
Shares is to be made to or certificates for Shares not tendered or purchased are
to be issued in the name of a person other than the registered holder(s).
Signatures on such certificates or stock powers must then be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificate(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as provided in this Instruction 6, the
Purchaser will pay any stock transfer taxes with respect to the transfer and
sale of the purchased Shares pursuant to the Offer. If, however, payment of the
purchase price is to be made to, or (in the circumstances permitted hereby and
if applicable) if certificates for Shares not tendered or purchased are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of stock transfer taxes
(whether imposed on the registered holder or such person) payable on account of
the transfer to such person will be deducted from the purchase price if
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
not submitted. Except as provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the certificate(s) listed in
this Letter of Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal, or if a check and/or such certificates are to be mailed
to a person other than the signer of this Letter of Transmittal or to an address
other than that shown in this Letter of Transmittal, the appropriate boxes on
this Letter of Transmittal should be completed.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to the Information Agent at the address and telephone
numbers set forth below. Additional copies of the Offer to Purchase, this Letter
of Transmittal and the Notice of Guaranteed Delivery may also be obtained from
the Information Agent or brokers, dealers, commercial banks or trust companies.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion. See the section entitled "The Tender Offer--Certain Conditions of
the Offer" of the Offer to Purchase.
10. SUBSTITUTE FORM W-9. The tendering stockholder generally is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the stockholder's social security or federal employer identification
number, on Substitute Form W-9 contained herein. Failure to provide the
information on the form may subject the tendering stockholder to 31% federal
income tax withholding on the payment of the purchase price for Shares. The box
in Part I of the Substitute Form W-9 may be checked if the stockholder has not
been issued a TIN and has applied for a number or intends to apply for a number
in the near future. If the box in Part I is checked and the Depositary is not
provided with a TIN within 60 days, the Depositary will thereafter withhold 31%
of any purchase price payment made for Shares before a TIN is provided to the
Depositary.
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a tendering stockholder whose tendered shares
are accepted for purchase generally is required by law to provide the Depositary
(as payer) with such stockholder's correct TIN on Substitute Form W-9 contained
herein. If such stockholder is an individual, the TIN is such stockholder's
social security number. If the Depositary is not provided with the correct TIN,
the stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to any stockholder with respect to
Shares pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments of the purchase price for Shares,
each tendering stockholder generally is required to notify the Depositary of his
or her correct TIN by completing the Substitute Form W-9 contained herein,
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
stockholder is awaiting a TIN), and that (1) such stockholder has not been
notified by the Internal Revenue Service that such stockholder is subject to
backup withholding as a result of a failure to report all interest or dividends,
or (2) the Internal Revenue Service has notified such stockholder that such
stockholder is no longer subject to backup withholding (see Part II of
Substitute Form W-9).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
<PAGE>
PAYER'S NAME: THE BANK OF NEW YORK, AS DEPOSITARY AGENT
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--Taxpayer Identification Social Security Number
FORM W-9 Number-- For All Accounts enter
Department of the Treasury your taxpayer identification
Internal Revenue Service number in the appropriate box.
For most individuals and sole OR
proprietors, this is your Employer Identification Number
Social Security Number. For
other entities, it is your
Employer Identification Number.
If you do not have a number,
see "How to Obtain a TIN" in If awaiting TIN, write
the enclosed GUIDELINES. "Applied For".
Note: If the account is in more
than one name, see the chart on
page 2 of the enclosed
GUIDELINES to determine what
number to enter.
PART II--For Payees Exempt From
Backup Withholding (see
enclosed GUIDELINES and
complete as instructed
therein).
- ---------------------------------------------------------------------------------------------------
PART III CERTIFICATION.--Under penalties of perjury, I certify
that:
(1) The number shown on this form is my correct taxpayer
identification number, or I am waiting for a number to be issued
to me and either (a) I have mailed or delivered an application to
Payer's Request receive a taxpayer identification number to the appropriate
for Taxpayer Internal Revenue Service Center or Social Security Administration
Identification Number Office or (b) I intend to mail or deliver an application in the
near future. I understand that if I do not provide a taxpayer
identification number, 31% of all reportable payments made to me
thereafter will be withheld until I provide a number;
(2) I am not subject to backup withholding because (a) I am
exempt from backup withholding, or (b) I have not been notified
by the Internal Revenue Service ("IRS") that I am subject to
backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am
no longer subject to backup withholding; and
(3) Any other information provided on this form is true, correct
and complete.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if
you have been notified by the IRS that you are currently subject
to backup withholding because of underreporting interest or
dividends on your tax return. However, if after being notified by
the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject
to backup withholding; do not cross out item (2).
SIGNATURE ------------------------------------- DATE
------------------- , 1999
- ---------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR INSTRUCTIONS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN
THE BOX IN PART III OF THE SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty 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 mail or deliver an application 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 pursuant to the
Offer made to me thereafter will be withheld until I provide a number.
SIGNATURE
-------------------------------------------------------- DATE
------------------ , 1999
- --------------------------------------------------------------------------------
IMPORTANT: If a stockholder desires to accept the Offer, this Letter of
Transmittal (or a facsimile hereof), together with certificates or confirmation
of Book-Entry Transfer and all other required documents, or the notice of
guaranteed delivery, must be received by the Depositary prior to the Expiration
Date.
<PAGE>
For additional information, please contact the Information Agent or the
Dealer Manager.
The Information Agent for the Offer is:
Morrow & Co., Inc.
(LOGO)
Banks and Brokerage Firms please call:
(800) 662-5200
Toll Free (800) 566-9061
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
277 PARK AVENUE
NEW YORK, NEW YORK 10172
(877) 864-4755
(TOLL FREE)
(212) 892-0314
<PAGE>
NOTICE OF GUARANTEED DELIVERY
EXHIBIT (a)(3)
<PAGE>
NOTICE OF GUARANTEED DELIVERY
TO
TENDER OF SHARES OF COMMON STOCK
OF
AQUILA GAS PIPELINE CORPORATION
AS SET FORTH IN THE SECTION ENTITLED "THE TENDER OFFER--PROCEDURE FOR
TENDERING SHARES" OF THE OFFER TO PURCHASE (AS DEFINED BELOW), THIS INSTRUMENT
OR ONE SUBSTANTIALLY EQUIVALENT HERETO MUST BE USED TO ACCEPT THE OFFER (AS
DEFINED BELOW) IF CERTIFICATES FOR SHARES (AS DEFINED BELOW) ARE NOT IMMEDIATELY
AVAILABLE OR THE CERTIFICATES FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS CANNOT
BE DELIVERED TO THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE
OFFER TO PURCHASE) OR IF THE PROCEDURE FOR DELIVERY BY BOOK-ENTRY TRANSFER
CANNOT BE COMPLETED ON A TIMELY BASIS. THIS INSTRUMENT MAY BE DELIVERED BY HAND
OR TRANSMITTED BY TELEGRAM, TELEX, FACSIMILE TRANSMISSION OR MAIL TO THE
DEPOSITARY.
THE DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
<S> <C> <C>
BY MAIL: FACSIMILE: BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department (For Eligible Institutions Only) Tender & Exchange Department
P. O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station For Information Telephone Receive and Deliver Window
New York, New York 10286-1248 (800) 507-9357 New York, New York 10286
</TABLE>
Delivery of this instrument to an address other than as set forth above, or
transmission of instruction via facsimile transmission or telex number other
than as set forth above, will not constitute valid delivery.
Ladies and Gentlemen:
The undersigned hereby tenders to AEC Acquisitions, Inc., a Delaware
corporation (the "Purchaser") and an indirect, wholly-owned subsidiary of
UtiliCorp United Inc., a Delaware corporation, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated April 9, 1999 (the "Offer to
Purchase") and in the related Letter of Transmittal (which together constitute
the "Offer"), receipt of which are hereby acknowledged, the number of shares of
Common Stock, $.01 par value (the "Shares"), indicated below of Aquila Gas
Pipeline Corporation, a Delaware corporation, pursuant to the guaranteed
delivery procedure set forth in the Section entitled "The Tender Offer--
Procedure for Tendering Shares" of the Offer to Purchase.
<TABLE>
<S> <C>
Signature(s) Address (escrows)
Name(s) Zip Code
Please Type or Print Area Code and Tel. No(s)
Number of Shares (Check box if Shares will be tendered by
Certificate Nos. (If Available) book- entry transfer)
Dated / / The Depository Trust Company
</TABLE>
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended, guarantees the delivery to the Depositary of the Shares tendered
hereby, together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile(s) thereof) and any other required
documents, or an Agent's Message (as defined in the Offer to Purchase) in the
case of a book-entry delivery of Shares, all within three New York Stock
Exchange trading days of the date hereof.
<TABLE>
<S> <C>
Name of Firm Authorized Signature
Name:
Address (Please Print or Type)
City, State Title:
Zip Code
Area Code and Tel. No.
Authorized Signature
</TABLE>
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
LETTER TO BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES
AND OTHER NOMINEES
EXHIBIT (a)(4)
<PAGE>
DONALDSON, LUFKIN & JENRETTE
277 PARK AVENUE
NEW YORK, NEW YORK 10172
(877) 864-4755
(TOLL FREE)
(212) 892-0314
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AQUILA GAS PIPELINE CORPORATION
AT
$8.00 NET PER SHARE IN CASH
BY
AEC ACQUISITIONS, INC.
AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF
UTILICORP UNITED INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, MAY 7, 1999 UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
April 9, 1999
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We are asking you to contact your clients for whom you hold shares of Common
Stock, $.01 par value (the "Shares"), of Aquila Gas Pipeline Corporation, a
Delaware corporation (the "Company"). Please bring to their attention as
promptly as possible the offer being made by AEC Acquisitions, Inc., a Delaware
corporation ("Purchaser"), and an indirect, wholly-owned subsidiary of UtiliCorp
United Inc., a Delaware corporation ("Parent"), to purchase all outstanding
Shares not owned by Parent or affiliates of Parent, at a purchase price of $8.00
per share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated April 9, 1999
(the "Offer to Purchase") and in the related Letter of Transmittal (which
together with any amendments or supplements thereto, collectively constitute the
"Offer"). All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Offer to Purchase.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE AT LEAST THAT NUMBER OF
SHARES THAT WOULD, WHEN AGGREGATED WITH THE SHARES OWNED DIRECTLY OR INDIRECTLY
BY PARENT, REPRESENT AT LEAST 90% OF ALL SHARES THEN OUTSTANDING ON A
FULLY-DILUTED BASIS AS DESCRIBED IN THE OFFER TO PURCHASE (THE "MINIMUM
CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "THE
TENDER OFFER--CERTAIN CONDITIONS OF THE OFFER" OF THE OFFER TO PURCHASE.
THE OFFER IS NOT CONDITIONED ON THE AVAILABILITY OF FINANCING OR ON THE
APPROVAL OF THE BOARD OF DIRECTORS OF THE COMPANY OR ANY COMMITTEE THEREOF.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares in your name or in the name of your nominee.
<PAGE>
Enclosed herewith for your information and for forwarding to your clients
are copies of the following documents:
1. Letter of UtiliCorp United Inc. President to Aquila Gas Pipeline
Corporation Stockholders
2. The Offer to Purchase dated April 9, 1999.
3. The Letter of Transmittal to be used in accepting the Offer. Facsimile
copies of the Letter of Transmittal (with manual signatures) may be used to
tender Shares.
4. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if neither of the two procedures for tendering Shares set forth in the
Offer to Purchase can be completed on a timely basis.
5. A printed form of letter that may be sent to your clients for whose
accounts you hold Shares registered in your name, with space provided for
obtaining such clients' instructions with regard to the Offer.
6. Guidelines of the Internal Revenue Service for certification of Taxpayer
Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Bank of New York.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MAY 7, 1999, UNLESS THE OFFER IS
EXTENDED (THE "EXPIRATION DATE").
Please note the following:
1. The tender price is $8.00 per Share, net to the seller in cash, without
interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer is conditioned upon the satisfaction of the Minimum Condition.
The Offer is also subject to certain other conditions. See "The Tender
Offer--Certain Conditions of the Offer" of the Offer to Purchase.
4. The Offer is not conditioned on the availability of financing or on the
approval of the Board of Directors of the Company or any committee thereof.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in the Letter of Transmittal, stock transfer
taxes on the transfer of Shares pursuant to the Offer.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and any
required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message, and any other required documents should be sent to the
Depositary and (ii) Share Certificates representing the tendered Shares or a
timely Book-Entry Confirmation should be delivered to the Depositary in
accordance with the instructions set forth in the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may be
effected by following the guaranteed delivery procedures specified in the
section subtitled "The Tender Offer--Procedure for Tendering Shares" in the
Offer to Purchase.
Neither Purchaser, Parent, nor any officer, director, stockholder, agent or
other representative of Purchaser will pay any fees or commissions to any
broker, dealer or other person (other than the Depositary, the Dealer-Manager
and the Information Agent as described in the Offer to Purchase) for soliciting
tenders of Shares pursuant to the Offer. Purchaser will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. Purchaser will pay or
cause to be paid any transfer taxes payable on the transfer of Shares to it,
except as otherwise provided in the Letter of Transmittal.
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent at the address and telephone number as set forth on the
back cover of the Offer to Purchase.
Requests for additional copies of the enclosed materials may be directed to
the Information Agent at the address and telephone number set forth on the back
cover of the Offer to Purchase.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS THE AGENT OF PARENT, PURCHASER, THE DEPOSITARY, THE
INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
LETTER TO CLIENTS FOR USE BY BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES
EXHIBIT (a)(5)
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AQUILA GAS PIPELINE CORPORATION
AT
$8.00 NET PER SHARE IN CASH
BY
AEC ACQUISITIONS, INC.
AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF
UTILICORP UNITED INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, MAY 7, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated April 9, 1999
(the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended and supplemented from time to time, together constitute the "Offer")
relating to an offer by AEC Acquisitions, Inc., a Delaware corporation
("Purchaser"), and an indirect, wholly-owned subsidiary of UtiliCorp United
Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of
common stock, par value $0.01 per share (the "Shares"), of Aquila Gas Pipeline
Corporation, a Delaware corporation (the "Company"), not directly or indirectly
owned by Parent, at a purchase price of $8.00 per Share (the "Offer Price"), net
to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer.
This material is being forwarded to you as the beneficial owner of Shares
carried by us in your account but not registered in your name.
A TENDER OF SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR
YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR
YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any or
all of the Shares held by us for your account, upon the terms and conditions set
forth in the Offer.
Please note the following:
1. The tender price is $8.00 per Share, net to you in cash, without
interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Friday, May 7, 1999, unless the Offer is extended (the "Expiration
Date").
4. The Offer is conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the Expiration Date at least that
number of Shares that would, when aggregated with the Shares owned directly or
indirectly by Parent, represent at least 90% of all Shares then outstanding on a
fully-diluted basis as described in the Offer to Purchase. The Offer is also
subject to certain other conditions set forth in the Offer to Purchase.
<PAGE>
5. The Offer is not conditioned on the availability of financing or on the
approval of the Board of Directors of the Company or any committee thereof.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in the Letter of Transmittal, stock transfer
taxes on the transfer of Shares pursuant to the Offer.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing, attaching and returning to
us the instruction form contained in this letter. An envelope to return your
instruction form to us is enclosed. If you authorize us to tender your Shares,
all such Shares will be tendered unless otherwise indicated in such instruction
form. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US
AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making of the Offer or acceptance
thereof would not be in compliance with the securities laws of such
jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER
TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AQUILA GAS PIPELINE CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated April 9, 1999 (the "Offer to Purchase") and the related Letter
of Transmittal in connection with the offer by AEC Acquisitions, Inc., a
Delaware corporation ("Purchaser"), and an, indirect wholly-owned subsidiary of
UtiliCorp United Inc., a Delaware corporation, to purchase all outstanding
shares of common stock, par value $0.01 per share (the "Shares"), of Aquila Gas
Pipeline Corporation, a Delaware corporation, not owned by Parent or affiliates
of Parent.
This will instruct you to tender to Purchaser the number of Shares indicated
below (or if no number is indicated below, all Shares) which are held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
NUMBER OF SHARES SIGN HERE
TO BE TENDERED: ---------------------------------------------
- ------------ SHARES ---------------------------------------------
Signature(s)
---------------------------------------------
---------------------------------------------
Print Name(s)
---------------------------------------------
---------------------------------------------
Print Address(es)
---------------------------------------------
Area Code and Telephone Number(s)
---------------------------------------------
Taxpayer Identification or Social Security
Number(s)
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
EXHIBIT (a)(6)
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU)
TO GIVE THE PAYER.
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer. All "Section" references are to the Internal Revenue Code of
1986, as amended. "IRS" is the Internal Revenue Service.
- -------------------------------------------
<TABLE>
<CAPTION>
GIVE THE SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF--
<C> <S> <C>
1. Individual The individual
2. Two or more The actual owner of
individuals (joint) the account or, if
account) combined funds, the
first individual on
the account (1)
3. Custodian account of a The minor (2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor- trustee
savings trust (1)
account (grantor is
also trustee)
b. So-called trust The actual owner (1)
account that is not
a legal or valid
trust under state
law
5. Sole proprietorship The owner (3)
</TABLE>
- -------------------------------------------
- -------------------------------------------
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION NUMBER
FOR THIS TYPE OF ACCOUNT: OF--
<C> <S> <C>
6. A valid trust, estate, The legal entity (4)
or pension trust
7. Corporate The corporation
8. Association, club, The organization
religious, charitable,
educational, or other
tax exempt
organization
9. Partnership The partnership
10. A broker or registered The broker or nominee
nominee
11. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ------------------------------------------
- ------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification number 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 LISTED, THE NUMBER
WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
OBTAINING A NUMBER
If you don't have a taxpayer identification number, obtain Form SS-5,
Application for a Social Security Card, at the local Social Security
Administration office, or Form SS-4, Application for Employer Identification
Number, by calling 1-800-TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
PAYEES SPECIFICALLY EXEMPTED FROM WITHHOLDING INCLUDE:
- An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)(7),
if the account satisfies the requirements of Section 401(f)(2).
- The United States or a state thereof, the District of Columbia, a
possession of the United States, or a political subdivision or
wholly-owned agency or instrumentality of any one or more of the
foregoing.
- An international organization or any agency or instrumentality thereof.
- A foreign government and any political subdivision, agency or
instrumentality thereof.
PAYEES THAT MAY BE EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
- A corporation.
- A financial institution.
- A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
- A futures commission merchant registered with the Commodity Futures
Trading Commission.
- A foreign central bank of issue.
PAYMENTS OF DIVIDENDS AND PATRONAGE DIVIDENDS GENERALLY EXEMPT FROM BACKUP
WITHHOLDING INCLUDE:
- 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 alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by ESOP.
PAYMENTS OF INTEREST GENERALLY EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- Payments described in Section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under Section 1451.
- Payments made by certain foreign organizations.
CERTAIN PAYMENTS, OTHER THAN PAYMENTS OF INTEREST, DIVIDENDS, AND PATRONAGE
DIVIDENDS, THAT ARE EXEMPT FROM INFORMATION REPORTING ARE ALSO EXEMPT FROM
BACKUP WITHHOLDING. FOR DETAILS, SEE SECTIONS 6041, 6041A, 6042, 6044, 6045,
6049, 6050A AND 6050N AND THE REGULATIONS THEREUNDER.
EXEMPT PAYEES SHOULD COMPLETE A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE
ERRONEOUS BACKUP WITHHOLDING. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE
"EXEMPT" ON THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE.--Section 6109 requires you to provide your correct
taxpayer identification number to payers who must report the payments to the
IRS. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your return and may also provide this information
<PAGE>
to various government agencies for tax enforcement or litigation purposes.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty
of $50 for each such failure unless your failure is due to reasonable cause
and not to willful neglect.
(2) 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.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE>
TEXT OF PRESS RELEASE ISSUED BY PARENT DATED APRIL 8, 1999
EXHIBIT(a)(7)
<PAGE>
MEDIA CONTACTS:
Ethan Hirsh (816) 467-3509
Media Relations (816) 467-3000
INVESTOR RELATIONS
Ellen Fairchild (816) 467-3506
Dale Wolf (816) 467-3536
UTILICORP TO BEGIN $8.00 PER SHARE TENDER OFFER
FOR ALL PUBLICLY HELD SHARES OF AQUILA GAS PIPELINE CORPORATION
KANSAS CITY, MO, April 8, 1999 -- UtiliCorp United (NYSE:UCU) today
announced that it expects to commence on Friday, April 9 a cash tender offer of
$8.00 per share for all outstanding shares of common stock of Aquila Gas
Pipeline Corporation (NYSE:AQP) that it does not currently own. UtiliCorp owns
approximately 82 percent of AQP shares, and approximately 18 percent, or 5.4
million shares, are held by the public.
Consummation of the tender offer will be conditioned upon UtiliCorp
receiving a sufficient number of shares to own at least 90 percent of all
outstanding Aquila Gas Pipeline shares, but is not conditioned upon financing or
any approval by the Aquila Gas Pipeline Board of Directors or any of its
committees. The offer will be scheduled to expire at least 20 business days
after its commencement.
UtiliCorp's offer of $8.00 per share represents an approximately 23 percent
premium over Aquila Gas Pipeline's closing price of $6.50 on November 11, 1998
immediately prior to announcement of its original proposal to purchase the
publicly held AQP common shares.
Donaldson Lufkin & Jenrette Corporation is the Dealer Manager and Morrow &
Co. is Information Agent for the tender offer.
UtiliCorp intends to acquire shares not tendered in the offer through a
merger in which the remaining shareholders would receive the same price as is
paid in the tender offer. The timing and actual terms of the merger will depend
on the results of the tender offer.
Based in San Antonio, Texas, Aquila Gas Pipeline Corporation gathers,
processes and markets natural gas and natural gas liquids through its natural
gas gathering systems and gas processing plants in Texas and Oklahoma. The
company is approximately 82 percent owned by Aquila Energy Corporation, a
wholly-owned subsidiary of UtiliCorp United. The remaining shares were sold to
investors in an initial public offering in 1993.
UtiliCorp is an international electric and gas company with customers and
operations across the U.S. and in Canada, Great Britain, New Zealand and
Australia. Based in Kansas City, Missouri, the FORTUNE 500 company operates
regulated electric and gas utilities in eight states and one Canadian province
and through the Aquila Energy subsidiary markets natural gas and electricity
across most of North America.
# # #
<PAGE>
SUMMARY ADVERTISEMENT, DATED APRIL 9, 1999
EXHIBIT (a)(8)
<PAGE>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE, DATED
APRIL 9, 1999, AND THE RELATED LETTER OF TRANSMITTAL, AND IS BEING MADE TO
ALL HOLDERS OF SHARES. PURCHASER IS NOT AWARE OF ANY STATE WHERE THE
MAKING OF THE OFFER IS PROHIBITED BY ADMINISTRATIVE OR JUDICIAL ACTION
PURSUANT TO ANY VALID STATE STATUTE. IF PURCHASER BECOMES AWARE OF
ANY VALID STATE STATUTE PROHIBITING THE MAKING OF THE OFFER OR
THE ACCEPTANCE OF SHARES PURSUANT THERETO, PURCHASER WILL MAKE
A GOOD FAITH EFFORT TO COMPLY WITH SUCH STATE STATUTE. IF,
AFTER SUCH GOOD FAITH EFFORT, THE PURCHASER CANNOT COMPLY
WITH SUCH STATE STATUTE, THE OFFER WILL NOT BE MADE TO
(NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF)
THE HOLDERS OF SHARES IN SUCH STATE. IN ANY
JURISDICTION WHERE THE SECURITIES, BLUE SKY
OR OTHER LAWS REQUIRE THE OFFER TO BE MADE
BY A LICENSED BROKER OR DEALER, THE
OFFER SHALL BE DEEMED TO BE MADE ON
BEHALF OF PURCHASER BY DONALDSON,
LUFKIN & JENRETTE SECURITIES
CORPORATION OR ONE OR MORE
REGISTERED BROKERS OR
DEALERS LICENSED UNDER
THE LAWS OF SUCH
JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AQUILA GAS PIPELINE CORPORATION
AT
$8.00 NET PER SHARE
BY
AEC ACQUISITIONS, INC.
AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF
UTILICORP UNITED INC.
AEC Acquisitions, Inc., a Delaware corporation ("Purchaser") and an
indirect, wholly-owned subsidiary of UtiliCorp United Inc., a Delaware
corporation ("Parent"), is offering to purchase all outstanding shares of common
stock, par value $0.01 per share (the "Shares"), of Aquila Gas Pipeline
Corporation, a Delaware corporation (the "Company"), not directly or indirectly
owned by Parent, at a purchase price of $8.00 per Share (the "Offer Price"), net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated April 9, 1999 (the
"Offer to Purchase") and in the related Letter of Transmittal (which, as amended
and supplemented from time to time, together constitute the "Offer"). Following
the Offer, Purchaser intends to seek to have the Company effect the Second Step
Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MAY 7, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there having been validly
tendered and not withdrawn prior to the expiration date at least that number of
shares that would, when aggregated with the shares owned directly or indirectly
by Parent, represent at least 90% of all shares then outstanding on a
fully-diluted basis as described in the Offer to Purchase. The Offer is also
subject to certain other conditions. See "The Tender Offer--Certain Conditions
of the Offer" of the Offer to Purchase.
The Offer is not conditioned on the availability of financing or on the
approval of the Board of Directors of the Company or any committee thereof.
Parent currently beneficially owns 24,000,000 Shares, representing
approximately 82% of the outstanding shares at March 18, 1999. Parent has
negotiated with the Company, represented by a special committee of the Board of
Directors of the Company (the "Special Committee"), as to the terms of the
acquisition of the Shares not owned by Parent. These negotiations have been
unsuccessful to date. Accordingly, the Offer has not been approved by the Board
of Directors of the Company or any committee thereof. To the best knowledge of
the Parent and Purchaser, no director or executive officer of the Company has
made any recommendation with respect to the Offer.
Parent and Purchaser currently intend, following the consummation of the
Offer, to seek to have the Company effect a merger (the "Second Step Merger") in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware (the "DGCL"), in which Purchaser will be merged with and into
the Company. At the effective time of the Second Step Merger, each Share not
tendered pursuant to the Offer (other than Shares owned by the Company as
treasury stock, Shares owned by Parent or Purchaser or any subsidiary thereof,
or Shares with respect to which appraisal rights are properly exercised under
Delaware law) would be converted into the right to receive an amount in cash
equal to the Offer Price. Following consummation of the Second Step Merger, the
Company would continue as the surviving corporation and would be a wholly-owned,
indirect subsidiary of Parent. If Purchaser owns at least 90% of the outstanding
Shares following consummation of the Offer (assuming the transfer of Parent's
currently-owned Shares to Purchaser), Purchaser would have the ability to
consummate the Second Step Merger without a meeting or vote of the Board of
Directors of the Company or any committee thereof or of the stockholders of the
Company, pursuant to the "short form" merger provisions of Section 253 of the
DGCL. In such circumstances, Purchaser currently intends to so effectuate the
Second Step Merger as soon as practicable. If Parent and Purchaser own less than
90% of the outstanding Shares following consummation of the Offer, consummation
of the Second Step Merger would require the approval by the Board of Directors
of the Company of an agreement between the Company, Parent and Purchaser with
respect to the Second Step Merger (the "Merger Agreement") and the adoption of
the Merger Agreement by the holders of at least 80% of the outstanding Shares.
As a consequence, no assurance can be given as to whether or when Purchaser will
cause the Second Step Merger to be consummated and, similarly, no assurance can
be given as to whether or when an amount in cash equal to the Offer Price will
be paid to stockholders who do not tender their Shares in the Offer. The timing
of the Second Step Merger is set forth in the section entitled "Special
Factors--Purpose and Structure of the Offer; Plans for the Company after the
Offer" of the Offer to Purchase.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, the Shares validly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to The Bank of
New York (the "Depositary") of Purchaser's acceptance of such Shares for payment
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from Purchaser
<PAGE>
and transmitting such payment to tendering stockholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for the Shares be paid, regardless of any extension of the Offer or any delay in
making such payment. In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) the certificates evidencing such Shares (the "Share
Certificates") or timely confirmation (a "Book-Entry Confirmation") of a
book-entry transfer of such Shares into the Depositary's account at a Book-Entry
Transfer Facility (as defined in the section entitled "The Tender
Offer--Acceptance for Payment and Payment of Shares" of the Offer to Purchase)
pursuant to the procedures set forth in the section entitled "The Tender
Offer--Procedure for Tendering Shares" of the Offer to Purchase, (ii) the Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees or an Agent's Message, as defined below,
in connection with a book-entry transfer and (iii) any other documents required
under the Letter of Transmittal. The term "Agent's Message" means a message,
transmitted by a Book-Entry Transfer Facility to, and received by, the
Depositary and forming a part of a Book-Entry Confirmation, which states that
the Book-Entry Transfer Facility has received an express acknowledgment from the
participant in such Book-Entry Transfer Facility tendering the Shares that are
the subject of such Book-Entry Confirmation, that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
Purchaser expressly reserves the right (but will not be obligated), at any
time or from time to time in its sole discretion, to extend the period of time
during which the Offer is open, including upon the occurrence of any condition
specified in the section entitled "The Tender Offer--Certain Conditions of the
Offer" of the Offer to Purchase, by giving oral or written notice of such
extension to the Depositary. Any such extension will be followed as promptly as
practicable by public announcement thereof, such announcement to be made not
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date of the Offer. During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer and to the rights of a tendering stockholder to withdraw such
stockholder's Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City
time, on Friday, May 7, 1999 (or the latest time and date at which the Offer, if
extended by Purchaser, shall expire) and, unless theretofore accepted for
payment pursuant to the Offer, may also be withdrawn at any time after June 8,
1999. For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at its address set forth on the back cover page of the Offer to
Purchase. Any such notice of withdrawal must also specify the name of the person
who tendered the Shares to be withdrawn, the number of Shares to be withdrawn
and the name of the registered holder of such Shares, if different from that of
the person who tendered such Shares. If Share Certificates evidencing Shares to
be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such Share Certificates, the serial
numbers shown on such Share Certificates must be submitted to the Depositary,
and the signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution (as defined in the section entitled "The Tender Offer--
Procedure for Tendering Shares" of the Offer to Purchase), unless such Shares
have been tendered for the account of an Eligible Institution. If Shares have
been tendered pursuant to the procedures for book-entry transfer as set forth in
the section entitled "The Tender Offer--Procedure for Tendering Shares" of the
Offer to Purchase, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares and must otherwise comply with the Book-Entry Transfer
Facility's procedures. All questions as to the form and validity (including the
time of receipt) of any notice of withdrawal will be determined by Purchaser, in
its sole discretion, whose determination will be final and binding on all
parties.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) and Rule
13e-3(e)(1) of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference.
Requests have been made to the Company for use of the Company's stockholder
list and security position listings for disseminating the Offer to holders of
Shares and communicating with holders of Shares in connection with the Offer.
The Offer to Purchase and the related Letter of Transmittal will be mailed to
record holders of Shares whose names appear on the Company's stockholder list
and will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager as set forth below and additional copies of the
Offer to Purchase and the related Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent and will be furnished
promptly at Purchaser's expense. No fees or commissions will be paid to brokers,
dealers or other persons (other than the Information Agent and the Dealer
Manager) for soliciting tenders of Shares pursuant to the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Banks and Brokerage Firms call
(800) 662-5200
Shareholders Please Call:
(800) 566-9061
THE DEALER MANAGER FOR THE OFFER IS:
DONALDSON, LUFKIN & JENRETTE
277 Park Avenue
New York, New York 10172
(877) 864-4755
(Toll Free)
April 9, 1999 (212) 892-0314
<PAGE>
LETTER OF PRESIDENT OF PARENT TO STOCKHOLDERS
OF THE COMPANY
EXHIBIT (A)(9)
<PAGE>
<TABLE>
<CAPTION>
20 West Ninth Street
<S> <C> <C> <C>
Kansas City, Missouri 64105-1711
816-467-3505
Fax: 816-467-3595
</TABLE>
[LOGO]
<TABLE>
<CAPTION>
ROBERT K. GREEN
<S> <C> <C> <C>
President
</TABLE>
April 9, 1999
Dear Fellow Stockholder:
Enclosed with this letter is an offer by UtiliCorp United to purchase, for $8.00
cash per share, all of your shares of common stock of Aquila Gas Pipeline
Corporation. On November 12, 1998, UtiliCorp announced a proposal to acquire
these shares for $8.00 per share. Since that time, we have been negotiating this
proposed acquisition with a Special Committee made up of independent members of
the board of directors of Aquila Gas Pipeline.
To our disappointment, our negotiations did not result in an agreement with the
Special Committee. Nevertheless, we believe it is now appropriate to make an
offer directly to you, the public stockholders of Aquila, to give you the
opportunity to decide for yourselves whether to accept UtiliCorp's offer.
I encourage you to read carefully the enclosed Offer to Purchase and the related
materials in which the information about our offer is set forth in detail. As
you will see, we are firmly of the view that $8.00 per share is a full and fair
price for the shares. The $8.00 offer price represents a 23.1% premium over the
closing price for the Aquila Gas Pipeline stock on the last trading date prior
to announcement of the proposal, and a 61.9% premium to the stock price a month
before that. The fairness of the $8.00 per share proposal is further supported
by a number of valuation methodologies, which are described in the Offer to
Purchase. This offer gives you the opportunity to accept an all-cash price for
your shares, without incurring transaction costs typically associated with
market sales. (For more information, please refer to the sections entitled
"Fairness of the Offer" and "Analysis of Financial Advisor to Parent" in the
Offer to Purchase.)
Please note that the offer is set to expire at midnight on May 7, 1999. All
questions concerning the offer should be referred to Donaldson, Lufkin &
Jenrette Securities Corporation, the Dealer Manager, at (877) 864-4755 or Morrow
& Co., Inc., the Information Agent, at (800) 566-9061.
Sincerely,
/s/ Bob Green
<PAGE>
IN THE COURT CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
<TABLE>
<S> <C>
BRICKELL PARTNERS,
Plaintiff,
C.A. No. 16777NC
- against -
CLASS ACTION
COMPLAINT
F. JOSEPH BECRAFT, CHARLES K.
DEMPSTER, HARVEY J. PADEWER,
ROBERT K. GREEN, GARY L. DOWNEY,
ROBERT L. HOWELL, JON L. MOSLE,
JR., AQUILA GAS PIPELINE
CORPORATION, and UTILICORP
UNITED INC.,
Defendants.
</TABLE>
Plaintiff, by its attorneys, alleges upon personal knowledge as to its
own acts and upon information and belief as to all other matters, as follows:
1. Plaintiff brings this action individually and as a class action on
behalf of all persons, other than defendants, who own the securities of
Aquila Gas Pipeline Corporation ("Aquila" or the "Company") and who are
similarly situated (the "Class"), for injunctive and other appropriate relief
in connection with a proposal by UtiliCorp United Inc. ("UtiliCorp") to buy
the remaining shares of Aquila that it does not already own. Utilicorp,
through its subsidiary Aquila Energy Corporation, is the controlling
shareholder of Aquila, owning approximately 82% of the Company's outstanding
shares.
<PAGE>
PARTIES
2. Plaintiff is and, at all relevant times, has been the owner of
shares of Aquila common stock.
3. Aquila is a corporation duly organized and existing under the laws
of the State of Delaware. The Company owns and operates natural gas pipelines
and the sale of natural gas. Aquila had approximately 29,400,000 share of
common stock outstanding. UtiliCorp owns approximately 24,108,000 shares of
the Company's outstanding stock. Aquila stock trades on the New York Stock
Exchange.
4. Defendant F. Joseph Becraft is and at all relevant times hereto has
been the President, Chief Executive Officer and a director of Aquila.
5. Defendant Charles K. Dempster is and at all relevant times hereto
has been the Chairman of Aquila's Board of Directors.
6. Defendant Harvey J. Padewer is and at all relevant times has been the
Vice Chairman of Aquila's Board of Directors. Mr. Padewer is a Senior Vice
President of both UtiliCorp Power Services and UtiliCorp Energy Resources.
7. Defendant Robert K. Green is and at all relevant times has been a
director of Aquila. Mr. Green is also the President of UtiliCorp.
8. Defendant Robert L. Howell is and at all relevant times hereto has
been a director of Aquila. Mr. Howell is also a Senior Vice President of
UtiliCorp.
2
<PAGE>
9. Defendants Gary L. Downey and Jon L. Mosle, Jr. are and at all
relevant times hereto have been directors of Aquila.
10. Defendant UtiliCorp is a corporation duly organized and existing
under the laws of the State of Delaware. UtiliCorp is the sole stockholder of
Aquila Energy Corporation and the beneficial holder of stock representing
approximately 82% of the economic interest in Aquila.
CLASS ACTION ALLEGATIONS
11. Plaintiff brings this action on its own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf
of all stockholders of the Company (except defendants herein and any person,
firm, trust, corporation, or other entity related to or affiliated with any
of the defendants), who are and will be threatened with injury arising from
defendants' actions as is described more fully below.
12. This action is properly maintainable as a class action.
13. The Class is so numerous that joinder of all members is
impracticable. There are hundreds of record and beneficial stockholders who
belong to the Class.
14. There are questions of law and fact common to the Class including,
INTER ALIA, whether:
a. defendants have breached and will continue to breach their
fiduciary and other common law duties owed by them to plaintiff and the
members of the Class; and
3
<PAGE>
b. plaintiff and the other members of the Class would be
irreparably damaged by the wrongs complained of herein.
c. Plaintiff is committed to prosecuting the action and has
retained competent counsel experienced in litigation of this nature.
Plaintiff's claims are typical of the claims of the other members of the
Class and plaintiff has the same interests as the other members of the Class.
Accordingly, plaintiff is an adequate representative of the Class.
d. The prosecution of separate actions by individual members of
the Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to
individual members of the Class which would as a practical matter be
dispositive of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to protect
their interests.
e. The defendants have acted, or refused to act, on grounds
generally applicable to, and causing injury to, the Class and, therefore,
preliminary and final injunctive relief on behalf of the Class as a whole is
appropriate.
SUBSTANTIVE ALLEGATIONS
15. On November 12, 1998, UtiliCorp announced it intended to buy the
publicly-traded shares of Aquila that it did not already own.
4
<PAGE>
16. UtiliCorp, which holds 82% of Aquila's outstanding stock, seeks to
take Aquila private by squeezing out Aquila's public shareholders at a price
which is wholly inadequate. Pursuant to the terms of the offer, UtiliCorp
would pay $8.00 per share for each publicly held share of Aquila.
17. Because of its control over the Board, UtiliCorp is in a position
to, and in fact can, dictate the terms of the proposed transaction so that
the Individual Defendants will ultimately have no choice but to accede to
UtiliCorp's wishes. UtiliCorp is attempting to acquire the remainder of
Aquila at less than fair value by taking advantage of the temporary downturn
in the price of natural gas.
18. In light of what has publicly been disclosed about Aquila's present
business and future prospects, the proposed transaction is unfair,
inadequate, and provides value to Aquila's stockholders substantially below
the fair or inherent value of the Company. The intrinsic value of the equity
of Aquila is materially greater than the consideration contemplated by the
proposed transaction price, taking into account Aquila's asset value, its
expected growth, and its revenues and cash flow and earnings power.
19. The proposed transaction is wrongful, unfair, and harmful to Aquila
public stockholders, and will deny Class members their right to share
proportionately in the true value of Aquila's valuable assets, and future
growth in profits and earnings, while usurping the same for the benefit of
UtiliCorp.
5
<PAGE>
20. Defendants have violated their fiduciary and other common law
duties owed to the plaintiff and the other members of the Class in that they
have not and are note exercising independent business judgment, and have acted
and are acting to the detriment of the Class.
21. As a result of defendants' action, plaintiff and the Class have
been and will be damaged by the breaches of fiduciary duty and, therefore,
plaintiff and the Class will not receive the fair value of Aquila's assets
and businesses.
22. Unless enjoined by this Court, defendants will continue to breach
their fiduciary duties owed to plaintiff and the Class, and Utilicorp will
succeed in its plan to exclude plaintiff and the Class from the fair
proportionate share of Aquila's valuable assets and businesses, to the
irreparable harm of the Class.
23. Plaintiff and the Class have no adequate remedy of law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
A. declaring that this lawsuit is properly maintainable as a class
action and certifying plaintiff as representative of the Class;
B. preliminarily and permanently enjoining defendants and their
counsel, agents, employees, and all persons acting under, in concert with, or
for them, from proceeding with or implementing the transaction;
6
<PAGE>
C. in the event the transaction is consummated, rescinding it and
setting it aside;
D. awarding compensatory damages against defendants, jointly and
severally, in an amount to be determined at trial, together with prejudgment
interest at the maximum rate allowable by law;
E. awarding plaintiff and the Class their costs and disbursements and
reasonable allowances for plaintiff's counsel and experts' fees and expenses;
and
F. granting such other and further relief as may be just and proper.
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
By: /s/ Illegible
----------------------------------
Mellon Bank Center, Suite 1401
919 Market Street
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
Of Counsel:
WECHSLER HARWOOD
HALEBIAN & FEFFER LLP
488 Madison Avenue
New York, New York 10022
(212) 935-7400
7
<PAGE>
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ------------------------------------
JOSEPH LEONE, on behalf
of himself and all others
similarly situated,
Civil Action No. 16778NC
Plaintiff,
-against-
AQUILA GAS PIPELINE CORPORATION,
HARVEY J. PADEWAR, CHARLES K.
DEMPSTER, ROBERT K. GREEN,
GARY L. DOWNEY, ROBERT L. HOWELL,
JON L. MOSLE, JR., F. JOSEPH BECRAFT
and UTILICORP UNITED INC.,
Defendants.
- -------------------------------------
COMPLAINT
Plaintiff, by his attorneys, for his complaint against defendants,
alleges upon personal knowledge with respect to paragraph 3, 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")
for injunctive or other appropriate relief in connection with the proposed
acquisition of the publicly owned shares of Aquila's common stock by its
controlling shareholder, defendant Utilicorp United Inc. ("Utilicorp").
<PAGE>
2. The consideration that Utilicorp has offered to members of the class
(as defined below) in the proposed stock acquisition is unfair and inadequate
because, among other things, the intrinsic value of Aquila's stock is
materially in excess of the amount offered, giving due consideration to the
Company's growth and anticipated operating results, net asset value and
profitability.
THE PARTIES
3. Plaintiff has been the owner of the common stock of the Company since
prior to the transaction herein complained of and continuously to date.
4. Aquila is a corporation duly organized and existing under the laws
of the State of Delaware.
5. Defendant Utilicorp is a corporation duly organized and existing
under the laws of the State of Delaware. Utilicorp controls approximately 82%
of the outstanding common stock of Aquila.
6. Defendant F. Joseph Becraft is President, Chief Executive Officer
and a director of the Company.
7. Defendants Harvey J. Padewar, Charles K. Dempster, Robert K. Green,
Gary L. Downey, Robert L. Howell are directors of Aquila.
8. The defendants named in paragraphs 6 and 7 are in a fiduciary
relationship with plaintiff and the other public stockholders of Aquila and
owe them the highest obligations of good faith and fair dealing.
9. Defendant Utilicorp, by reason of its 82% ownership of Aquila's
common stock, is in a fiduciary relationship with plaintiff and the other
public
-2-
<PAGE>
stockholders of Aquila and owes them the highest obligations of good faith
and fair dealing.
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this action on his own behalf and as a class action
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all
Aquila stockholders (except defendants herein and any person, firm, trust,
corporation or other entity related to or affiliated with any of the
defendants) and their successors in interest, who are or will be threatened
with injury arising from defendants' actions as more fully described herein.
11. This action is properly maintainable as a class action.
12. The class of stockholders for whose benefit this action is brought
is so numerous that joinder of all class members is impracticable. There are
approximately 29 million shares of Aquila common stock outstanding.
13. There are questions of law and fact which are common to the Class
and which predominate over questions affecting any individual Class member.
The common questions include, INTER ALIA, the following:
(a) whether defendants have breached their fiduciary and other
common law duties owned by them to plaintiff and the members of the Class;
(b) whether the transaction, hereinafter described, constitutes a
breach of Utilicorp's duty to deal fairly with plaintiff and the other
members of the Class; and
-3-
<PAGE>
(c) whether plaintiff and the other members of the Class will be
damaged irreparably by the wrongs complained of.
14. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of
plaintiff are typical of the claims of the other members of the Class and
plaintiff has the same interests as the other members of the Class.
Accordingly, plaintiff will fairly and adequately represent the Class.
15. The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class and establish incompatible
standards of conduct for the party opposing the Class.
16. Defendants have acted and are about to act on grounds generally
applicable to the Class, thereby making appropriate final injunctive relief
with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
17. On November 12, 1998, it was announced that Utilicorp had offered to
buy the approximately 18% of Aquila that it did not own for $8.00 per share.
18. The consideration to be paid to Class members in the transaction is
unfair and inadequate because, among other things, the intrinsic value of
Aquila's common stock is materially in excess of the amount offered for those
securities.
19. The Individual Defendants and Utilicorp are engaged in unfair
dealing to the detriment of the Class to whom they owe the highest fiduciary
duties.
-4-
<PAGE>
20. Utilicorp has breached its duty of loyalty to Aquila's public
stockholders by using its control of Aquila to seek to force plaintiff and
the Class to sell their equity interest in Aquila at an unfair price, and
deprive Aquila's public shareholders of fair value to which they are
entitled. The Individual Defendants have also breached the duties of loyalty
and due care by not taking adequate measures to ensure that the interests of
Aquila's public shareholders are properly protected from overreaching.
21. The terms of the transaction are unfair to the Class, and the
unfairness is compounded by the gross disparity between the knowledge and
information possessed by Utilicorp by virtue of its control of Aquila and
that possessed by Aquila's public shareholders. Utilicorp's intent is to take
advantage of this disparity and to induce the Class to relinquish their
shares in the acquisition at an unfair price on the basis of incomplete or
inadequate information.
22. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
A. declaring this to be a proper class action;
B. enjoining, preliminarily and permanently, the transaction complained
of;
C. to the extent, if any, that the transaction complained of is
consummated prior to the entry of this Court's final judgment, rescinding the
same or awarding rescissory damages to the Class;
-5-
<PAGE>
D. directing that defendants account to plaintiff and the Class for all
damages caused to them and account for all profits and any special benefits
obtained by defendants as a result of their unlawful conduct;
E. awarding to plaintiff the costs and disbursements of this action,
including a reasonable allowance for the fees and expenses of plaintiff's
attorneys and experts; and
F. granting such other and further relief as the Court deems
appropriate.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: Illegible
-------------------------------------
Suite 1401, Mellon Bank Center
P.O.Box 1070
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
FARUQI & FARUQI, LLP
415 Madison Avenue
New York, New York 10017
(212) 986-1074
-6-
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
<TABLE>
<S> <C>
EUGENIA GLADSTONE VOGEL, CIVIL ACTION NO. 16775-NC
Plaintiff SUMMONS PURSUANT
TO 10 DEL.C. Sec. 3114
VS.
HARVEY J. PADEWER, ROBERT L. HOWELL, GARY L. DOWNEY,
CHARLES K. DEMPSTER, JON L. MOSLE, JR., AQUILA GAS
PIPELINE CORPORATION, and UTILICORP UNITED INC.,
Defendants
</TABLE>
TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named individual defendants by service pursuant to
10 DEL.C. Sec. 3114 upon Aquila Gas Pipeline Corporation, a Delaware
corporation, by serving its registered agent The Corporation Trust Company,
which is designated for service of process in Delaware, so that within the
time required by law, such defendants shall serve upon Joseph A. Rosenthal,
Esq., plaintiff's attorney whose address is Suite 1401, Mellon Bank Center
P.O. Box 1070 Wilm, DE 19899-1070 an answer to the complaint.
To serve upon defendants a copy hereof, of the complaint, and of a
statement of plaintiff filed pursuant to Chancery Court Rule 4(dc)(1).
TO THE ABOVE NAMED DEFENDANTS:
In case of our failure, within the time permitted by 10 DEL.C. Sec
3114*, to serve on plaintiff's attorney named above an answer to the
complaint, judgment by default may be rendered against you for the relief
demanded in the complaint.
Dated November 13, 1998 /s/ Dianne M. Kempski
------------------------------
Register in Chancery
*The text of 10 DEL.C. Sec. 3114 is set our on the reverse of this Summons
<PAGE>
IN THE COURT CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
<TABLE>
<S> <C>
BRICKELL PARTNERS,
Plaintiff,
C.A. No. 16777NC
- against -
CLASS ACTION
COMPLAINT
F. JOSEPH BECRAFT, CHARLES K.
DEMPSTER, HARVEY J. PADEWER,
ROBERT K. GREEN, GARY L. DOWNEY,
ROBERT L. HOWELL, JON L. MOSLE,
JR., AQUILA GAS PIPELINE
CORPORATION, and UTILICORP
UNITED INC.,
Defendants.
</TABLE>
Plaintiff, by its attorneys, alleges upon personal knowledge as to its
own acts and upon information and belief as to all other matters, as follows:
1. Plaintiff brings this action individually and as a class action on
behalf of all persons, other than defendants, who own the securities of
Aquila Gas Pipeline Corporation ("Aquila" or the "Company") and who are
similarly situated (the "Class"), for injunctive and other appropriate relief
in connection with a proposal by UtiliCorp United Inc. ("UtiliCorp") to buy
the remaining shares of Aquila that it does not already own. Utilicorp,
through its subsidiary Aquila Energy Corporation, is the controlling
shareholder of Aquila, owning approximately 82% of the Company's outstanding
shares.
<PAGE>
PARTIES
2. Plaintiff is and, at all relevant times, has been the owner of
shares of Aquila common stock.
3. Aquila is a corporation duly organized and existing under the laws
of the State of Delaware. The Company owns and operates natural gas pipelines
and the sale of natural gas. Aquila had approximately 29,400,000 share of
common stock outstanding. UtiliCorp owns approximately 24,108,000 shares of
the Company's outstanding stock. Aquila stock trades on the New York Stock
Exchange.
4. Defendant F. Joseph Becraft is and at all relevant times hereto has
been the President, Chief Executive Officer and a director of Aquila.
5. Defendant Charles K. Dempster is and at all relevant times hereto
has been the Chairman of Aquila's Board of Directors.
6. Defendant Harvey J. Padewer is and at all relevant times has been the
Vice Chairman of Aquila's Board of Directors. Mr. Padewer is a Senior Vice
President of both UtiliCorp Power Services and UtiliCorp Energy Resources.
7. Defendant Robert K. Green is and at all relevant times has been a
director of Aquila. Mr. Green is also the President of UtiliCorp.
8. Defendant Robert L. Howell is and at all relevant times hereto has
been a director of Aquila. Mr. Howell is also a Senior Vice President of
UtiliCorp.
2
<PAGE>
9. Defendants Gary L. Downey and Jon L. Mosle, Jr. are and at all
relevant times hereto have been directors of Aquila.
10. Defendant UtiliCorp is a corporation duly organized and existing
under the laws of the State of Delaware. UtiliCorp is the sole stockholder of
Aquila Energy Corporation and the beneficial holder of stock representing
approximately 82% of the economic interest in Aquila.
CLASS ACTION ALLEGATIONS
11. Plaintiff brings this action on its own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf
of all stockholders of the Company (except defendants herein and any person,
firm, trust, corporation, or other entity related to or affiliated with any
of the defendants), who are and will be threatened with injury arising from
defendants' actions as is described more fully below.
12. This action is properly maintainable as a class action.
13. The Class is so numerous that joinder of all members is
impracticable. There are hundreds of record and beneficial stockholders who
belong to the Class.
14. There are questions of law and fact common to the Class including,
INTER ALIA, whether:
a. defendants have breached and will continue to breach their
fiduciary and other common law duties owed by them to plaintiff and the
members of the Class; and
3
<PAGE>
b. plaintiff and the other members of the Class would be
irreparably damaged by the wrongs complained of herein.
c. Plaintiff is committed to prosecuting the action and has
retained competent counsel experienced in litigation of this nature.
Plaintiff's claims are typical of the claims of the other members of the
Class and plaintiff has the same interests as the other members of the Class.
Accordingly, plaintiff is an adequate representative of the Class.
d. The prosecution of separate actions by individual members of
the Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to
individual members of the Class which would as a practical matter be
dispositive of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to protect
their interests.
e. The defendants have acted, or refused to act, on grounds
generally applicable to, and causing injury to, the Class and, therefore,
preliminary and final injunctive relief on behalf of the Class as a whole is
appropriate.
SUBSTANTIVE ALLEGATIONS
15. On November 12, 1998, UtiliCorp announced it intended to buy the
publicly-traded shares of Aquila that it did not already own.
4
<PAGE>
16. UtiliCorp, which holds 82% of Aquila's outstanding stock, seeks to
take Aquila private by squeezing out Aquila's public shareholders at a price
which is wholly inadequate. Pursuant to the terms of the offer, UtiliCorp
would pay $8.00 per share for each publicly held share of Aquila.
17. Because of its control over the Board, UtiliCorp is in a position
to, and in fact can, dictate the terms of the proposed transaction so that
the Individual Defendants will ultimately have no choice but to accede to
UtiliCorp's wishes. UtiliCorp is attempting to acquire the remainder of
Aquila at less than fair value by taking advantage of the temporary downturn
in the price of natural gas.
18. In light of what has publicly been disclosed about Aquila's present
business and future prospects, the proposed transaction is unfair,
inadequate, and provides value to Aquila's stockholders substantially below
the fair or inherent value of the Company. The intrinsic value of the equity
of Aquila is materially greater than the consideration contemplated by the
proposed transaction price, taking into account Aquila's asset value, its
expected growth, and its revenues and cash flow and earnings power.
19. The proposed transaction is wrongful, unfair, and harmful to Aquila
public stockholders, and will deny Class members their right to share
proportionately in the true value of Aquila's valuable assets, and future
growth in profits and earnings, while usurping the same for the benefit of
UtiliCorp.
5
<PAGE>
20. Defendants have violated their fiduciary and other common law
duties owed to the plaintiff and the other members of the Class in that they
have not and are note exercising independent business judgment, and have acted
and are acting to the detriment of the Class.
21. As a result of defendants' action, plaintiff and the Class have
been and will be damaged by the breaches of fiduciary duty and, therefore,
plaintiff and the Class will not receive the fair value of Aquila's assets
and businesses.
22. Unless enjoined by this Court, defendants will continue to breach
their fiduciary duties owed to plaintiff and the Class, and Utilicorp will
succeed in its plan to exclude plaintiff and the Class from the fair
proportionate share of Aquila's valuable assets and businesses, to the
irreparable harm of the Class.
23. Plaintiff and the Class have no adequate remedy of law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
A. declaring that this lawsuit is properly maintainable as a class
action and certifying plaintiff as representative of the Class;
B. preliminarily and permanently enjoining defendants and their
counsel, agents, employees, and all persons acting under, in concert with, or
for them, from proceeding with or implementing the transaction;
6
<PAGE>
C. in the event the transaction is consummated, rescinding it and
setting it aside;
D. awarding compensatory damages against defendants, jointly and
severally, in an amount to be determined at trial, together with prejudgment
interest at the maximum rate allowable by law;
E. awarding plaintiff and the Class their costs and disbursements and
reasonable allowances for plaintiff's counsel and experts' fees and expenses;
and
F. granting such other and further relief as may be just and proper.
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
By: /s/ Illegible
----------------------------------
Mellon Bank Center, Suite 1401
919 Market Street
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
Of Counsel:
WECHSLER HARWOOD
HALEBIAN & FEFFER LLP
488 Madison Avenue
New York, New York 10022
(212) 935-7400
7
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ---------------------------------
ROBERT RICCUITI C.A. No. 16781
Plaintiff, CLASS ACTION COMPLAINT
-against-
AQUILA GAS PIPELINE CORPORATION,
UTILICORP UNITED INC.,
F. JOSEPH BECRAFT, CHARLES K. DEMPSTER,
GARY L. DOWNEY, ROBERT L. HOWELL,
JON L. MOSLE, JR., HARVEY J. PADEWER,
and ROBERT K. GREEN,
Defendants.
Plaintiff, by his attorneys, for his complaint, alleges upon personal
knowledge as to himself and his own acts and upon information and belief as
to all other matters, as follows:
OVERVIEW OF THE ACTION
1. Plaintiff brings this action individually and a class action on
behalf of all persons, other than defendants, who own the common stock of
Aquila Gas Pipeline Corporation ("AQP" or the "Company") and who are
similarily situated (the "Class"), for injunctive and other appropriate relief.
2. Utilicorp United Inc. ("Utilicorp"), the owner of 81.6% of the
Company's common outstanding stock, has made an offer to buy the
approximately 5.4 million shares of the common stock of the Company that it
does not already own for $8 per share, significantly below the value of AQP's
assets and businesses and below the Company's common stock trading price for
the past year.
<PAGE>
3. The $8 price offered by Utilicorp was determined without regard to
the best interests of the public shareholders of AQP. The acts of the
defendants, as more particularly alleged herein, constitute a breach of their
fiduciary duties to plaintiff and the Class.
PARTIES
4. Plaintiff Robert Riccuiti is and has been at all relevant times th
eowner of shares of the common stock of AQP.
5. AQP is a corporation duly organized under the laws of the state of
Delaware with its principal executive offices located at 100 N.E. Loop 410,
San Antonio, Texas 78216. The Company purchases, gathers, transports, and
markets natural gas and natural gas liquids in Texas and Oklahoma. As of
March 27, 1998, the Company had 29,400,000 shares of common stock
outstanding, which are held by approximately 1,200 shareholders of record.
6. Defendant Utilicorp owns 81.6% or approximately 24,000,000 shares of
the Company's outstanding common stock. Utilicorp is a corporation organized
under the laws of the State of Delaware with its principal offices located at
20 West Ninth Street, Kansas City, Missouri. Utilicorp supplies electric
service in four states, parts of Canada; supplies natural gas utility service
in eight states; and markets gas throughout the United States and Canada.
7. Defendant Charles K. Dempster is the Chairman of the Board of
the Company. Defendant Dempster is also Chairman of the
<PAGE>
Board and Chief Executive Officer of Utilicorp U.K. Inc., an affiliate of
Utilicorp.
8. Defendant F. Joseph Becraft is a member of the Board of Directors and
President and Chief Executive Officer of the Company.
9. Defendant Robert K. Green is a director of AQP and has served as
President of Utilicorp.
10. Defendant Harvey J. Padewer is a director of AQP. He is Vice Chairman
of AQP and Senior Vice President of several subsidiaries of Utilicorp.
11. Defendant Robert L. Howell is a director of AQP and has served as a
Senior Vice President of Utilicorp.
12. Defendant Jon L. Mosle, Jr. is a director of AQP.
13. Defendant Gary L. Downey is a director of AQP.
14. The Individual Defendants owe fiduciary duties of fair dealing,
candor, loyalty and due care to plaintiff and the other members of the class.
Because of its position as majority shareholder, defendant Utilicorp owes
fiduciary duties of fair dealing, candor, loyalty and due care to plaintiff
and the other members of the class.
CLASS ACTION ALLEGATIONS
15. Plaintiff brings this action on his own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all
holders of the Company's common stock (except defendants herein and any
person, firm, trust, corporation, or other entity related to or affiliated
with any of the
<PAGE>
defendants), who are or will be threatened with injury arising from
defendants' actions as more fully described below (the "Class").
16. This action is properly maintainable as a class action.
17. The Class is so numerous that joinder of all members is
impracticable. The Company has approximately 1,200 common shareholders of
record.
18. There are questions of law and fact common to the Class that
predominate over questions affecting any individual class member. The common
questions include, INTER ALIA, whether:
(a) defendants have engaged in conduct constituting unfair dealing
and have engaged in a plan and scheme to favor Utilicorp at the expense of
the Company's and its shareholders;
(b) defendants have engaged and are continuing to prevent plaintiff
and the Class from receiving fair value in a transaction which will eliminate
their interest in the Company;
(c) defendants have breached the fiduciary and other common law
duties owed by them to plaintiff and the members of the Class; and
(d) plaintiff and the other members of the Class will be
irreparably damaged if the transaction complained of herein is consummated.
19. Plaintiff is committed to prosecuting the action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's
claims are typical of the claims of the other members of the Class and
plaintiff has the same interests as the
<PAGE>
other members of the Class. Accordingly, plaintiff is an adequate
representative of the Class.
SUBSTANTIVE ALLEGATIONS
20. On or about November 12, 1998, defendant Utilicorp offered to
purchase all of the publicly owned shares of the Company for $8 per share,
well below the current value of its assets and businesses and below the
average trading price for the Company's Common stock for the past year.
21. Utilicorp, which presently controls about 82% of the Company's
equity, seeks to take AQP private by squeezing out AQP's public shareholders
at a price which is wholly inadequate.
22. Prior to 1998, AQP 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, AQP's stock was trading in a $10-$16
price range.
23. In spite of these gains, because of, INTER ALIA, the relatively warm
1997-1998 winter, fiscal 1998 has been a difficult year and the price of the
Company's common stock has fallen. In particular, the price for natural gas
liquids is about $0.24 per gallon or approximately $0.14 per gallon below
1997 prices. Each $.01 change increases AQP's EARNINGS by almost $1.5 million
or $.05/share. Lower prices not only negatively impact margins but also gas
processing volume.
24. Taking advantage of the short-term price weakness for natural gas
and natural gas liquids and the concomitant temporary
<PAGE>
downturn in the Company's stock price, Utilicorp has proposed to acquire
AQP's publicly owned shares at the artificially low price of $8 per share.
Indeed, as recently as June 3, 1998, Oppenheimer analysts were valuing AQP in
an acquisition transaction at $16-$18 per share.
25. Because of its difficult operating environment and poor performance,
as of October 1998, the Company trades at a price earnings multiple and a
price to cash flow multiple of less than 50% as compared to its peer groups.
Moreover, AQP's peer group trades at a price to tangible book value of 2.62.
In contrast, AQP trades at only 0.93 to tangible book value.
26. Moreover, at $8 a share, the Company's equity is valued at less than
$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 company analysts typically value such companies at 8 to 9
times EBITD.
27. Because Utilicorp has effectively capped the price of AQP common
stock at $8 per share, Utilicorp has engaged in unfair dealing toward
plaintiff and the other members of the Class.
28. Because of Utilicorp's overwhelming control, the Individual
Defendants cannot and will not exercise independent judgment to protect the
Class against Utilicorp's overreaching.
29. As a result of defendants' actions, plaintiff and the Class have
been and will be damaged in that they are the victims of unfair dealing and
will not receive the fair value of the Company's assets and businesses.
<PAGE>
30. Unless enjoined by this court, defendants will continue to breach
their fiduciary duties owed to plaintiff and the Class, and Utilicorp will
succeed in its plan to deny the Class of its fair proportionate share of the
Company's assets and values.
31. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff prays for judgment, and relief as follows:
A. declaring that this lawsuit is properly maintainable as a class
action and certifying plaintiff as representative of the Class;
B. preliminarily and permanently enjoining defendants and their
counsel, agents, employees, and all persons acting under, in concert with, or
for them, from proceeding with or implementing the transaction;
C. in the event the transaction is consummated, rescinding it and
setting it aside;
D. awarding compensatory damages against defendants, jointly and
severally, in an amount to be determined at trial, together with prejudgment
interest at the maximum rate allowable by law;
E. awarding plaintiff and the Class their costs and disbursements and
reasonable allowances for plaintiff's counsel and experts' fees and expenses;
and
<PAGE>
F. granting such other and further relief as may be just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: Illegible
-----------------------------------
Mellon Bank Center, Suite 1401
Wilmington, DE 19899
Tel. (302) 656-4433
Attorneys for Plaintiff
Of Counsel:
ELWOOD S. SIMON & ASSOCIATES, P.C.
355 South Woodward Avenue
Suite 250
Birmingham, MI 48009
GARWIN, BRONZAFT, GERSTEIN & FISHER, L.L.P.
Scott W. Fisher, Esq.
1501 Broadway, Suite 1416
New York, New York 10036
(212) 398-0055
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ----------------------------------------
EUGENIA GLADSTONE VOGEL,
Plaintiff,
v. C.A. No. 16775
HARVEY J. PADEWER et al.,
Defendants.
- ----------------------------------------
BRICKELL PARTNERS,
Plaintiff,
v. C.A. No 16777
F. JOSEPH BECRAFT et al.,
Defendants.
- ----------------------------------------
JOSEPH LEONE,
Plaintiff,
v. C.A. No. 16778
AQUILA GAS PIPELINE CORPORATION et al.,
Defendants.
- ----------------------------------------
ROBERT RICCUITI,
Plaintiff,
v. C.A. No. 16781
AQUILA GAS PIPELINE CORPORATION, et al.,
Defendants. ORDER OF CONSOLIDATION
- ----------------------------------------
<PAGE>
It appearing that the above-captioned actions involve the same subject
matter, and that the administration of justice would be best served by
consolidated the actions.
IT IS, this 11th day of January 1998, ORDERED AS FOLLOWS:
1. The above-captioned actions shall be consolidated for all purposes.
2. Hereafter, papers need only be filed in Civil Action No. 16775.
3. The caption of the consolidated action shall be as follows:
---------------------------------
IN RE AQUILA GAS PIPELINE CONSOLIDATED
CORPORATION SHAREHOLDERS C.A. No. 16775
LITIGATION
---------------------------------
4. The law firms of FARUQI & FARUQI, LLP, 415 Madison Avenue, New York,
NY 10017; GARWIN, BRONZAFT, GERSTEIN & FISHER, L.L.P., 1501 Broadway, Suite
1416, New York, NY 10036; MILBERG WEISS BERSHAD HYNES & LERACH LLP, One
Pennsylvania Plaza, New York, NY 10119; ELWOOD S. SIMON & ASSOCIATES, P.C.,
355 S. Woodward Avenue, Suite 250, Birmingham, MI 48009; and WECHSLER HARWOOD
HALEBIAN & FEFFER LLP, 488 Madison Avenue, 8th Floor, New York, NY 10022
shall constitute plaintiffs' Committee of the Whole. The law firms of MILBERG
WEISS BERSHAD HYNES & LERACH LLP and WECHSLER HARWOOD HALEBIAN & FEFFER LLP
are hereby designated as plaintiffs' Co-Lead Counsel. The law firm of
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A., Suite 1401, Mellon Bank Center,
P.O Box 1070, Wilmington, DE 19899 is designated as Delaware Liaison Counsel
for plaintiffs.
5. All documents previously served and filed to date in any of the
cases consolidated herein are deemed a part of the record in the consolidated
action. The complaint filed in C.A. No. 16775 is hereby designated as the
complaint in the
2
<PAGE>
consolidated action. Defendants need not respond to the complaints heretofore
filed in any of the other constituent actions.
6. Plaintiffs' Co-Lead Counsel shall set policy for plaintiffs for the
prosecution of this litigation, delegate and monitor the work performed by
plaintiffs' attorneys to ensure that there is no duplication of effort or
unnecessary expense, coordinate on behalf of plaintiffs the initiation and
conduct of discovery proceedings, and provide supervision and coordination of
the activities of plaintiffs' counsel.
(Signature)
-------------------------------
Vice Chancellor
3
