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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Earliest Event Reported: December 11, 1998
NEW ENGLAND POWER COMPANY
(exact name of registrant as specified in charter)
Massachusetts 1-6564 04-1663070
(state or other (Commission (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation)
25 Research Drive, Westborough, Massachusetts 01582
(Address of principal executive offices)
(508) 389-2000
(Registrant's telephone number, including area code)
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Item 5. Other Events
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On December 11, 1998, New England Power Company's parent, New
England Electric System, a Massachusetts business trust (NEES),
The National Grid Group plc, a public limited company incorporated
under the laws of England and Wales with registration number
2367004 (National Grid) and Iosta LLC, a Massachusetts limited
liability company which is directly and indirectly wholly owned by
National Grid (Iosta), entered into an Agreement and Plan of
Merger, dated as of December 11, 1998 (the Merger Agreement),
providing for a merger transaction among NEES, National Grid and
Iosta. The press release issued in connection therewith is filed
herewith as Exhibit 99, and is incorporated herein by reference.
Pursuant to the Merger Agreement, Iosta will merge with and
into NEES (the Merger), with NEES being the surviving entity and
becoming a wholly-owned subsidiary of National Grid. The Merger,
which was unanimously approved by the boards of directors of NEES,
National Grid and Iosta, is expected to occur shortly after all of
the conditions to the consummation of the Merger, including the
receipt of shareholder approvals and certain regulatory approvals,
are met or waived. NEES anticipates that the Merger can be
consummated in early 2000.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
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(c) Exhibits
(1) Press Release
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SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this Current Report on
Form 8-K to be signed on its behalf by the undersigned thereunto
duly authorized.
NEW ENGLAND POWER COMPANY
s/John G. Cochrane
By
John G. Cochrane
Treasurer
Date: December 22, 1998
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
1 Press Release Filed
herewith
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FOR RELEASE: Dec. 14, 1998
CONTACTS:
NEES NATIONAL GRID
Investors: Investors:
Bob Seega, 508-389-2178 Jill Sherrett
011-44-171-620-9191
Media:
Until 6:00 a.m.: Media:
Susan Stevens, 617-236-5800 x2811 Margaret Stewart
011-44-171-620-9191
After 6:00 a.m.:
Amy Tull, 508-389-3283
NEES AND NATIONAL GRID TO MERGE IN $3.2 BILLION TRANSACTION
WESTBOROUGH, Mass., Dec. 14, 1998 The National Grid Group plc
(LSE:NGG) and New England Electric System (NYSE:NES) announced
today that they have signed a merger agreement under which
National Grid will acquire all of the outstanding shares of NEES.
Under the terms of the agreement, NEES shareholders will receive
$53.75 in cash (subject to upward adjustment) for each NEES share
held. The terms value the equity of NEES at approximately $3.2
billion and represent a premium of 25% above the closing price of
NEES shares on Dec. 11, 1998.
National Grid is the owner and operator of the England and
Wales high-voltage transmission network, including
interconnectors with Scotland and France. National Grid is the
world's largest privately owned transmission company, and has
almost a decade of experience running a transmission network in a
competitive market. It is listed on the London Stock Exchange
with a market capitalization of $12.4 billion.
NEES will become the base of U.S. operations for National Grid,
and will provide a regional platform for growth in transmission
and distribution.
"For NEES and our employees, this transaction not only keeps
jobs in New England, it represents a tremendous opportunity for
growth as the base of U.S. operations for a large and successful
company. For our customers and the region, it is an opportunity to
benefit from National Grid's proven track record of delivering
high-quality, low-cost transmission service in the competitive UK
market. National Grid's considerable experience should benefit
customers here as the competitive electricity market develops in
the northeast," said Rick Sergel, president and chief executive
officer of NEES.
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"Most important, our customers will continue to receive the
same great service from the same people in the yellow trucks, 24
hours a day; and they will continue to receive rates among the
lowest in the region. The only difference is that we will have the
resources of an international leader behind us," Sergel said.
Commenting on the acquisition, David Jones, chief executive of
National Grid, said: "NEES has a strong reputation for efficient
service to customers, and has already played a prominent role in
the regulatory developments in the region. The chemistry between
the management teams is excellent, and by combining our expertise
with that of NEES, I am confident that as a group we will be able
to deliver on the exciting prospects in the northeast U.S. and
continue to enhance value for National Grid shareholders."
According to National Grid, the acquisition:
- - represents a significant investment in an efficient, focused
transmission and distribution business with a strong
operational track record, which will benefit further from
National Grid's core skills;
- - enhances National Grid's earnings per share before the
amortization of goodwill and significantly enhances National
Grid's cash flow per share immediately following the
acquisition;
- - provides the right point of entry into the U.S. for National
Grid, given New England's favorable economic climate and its
advanced state of regulatory evolution toward performance-
based regulation;
- - brings National Grid a high-quality management team with proven
distribution expertise and a shared view of the industry's
future development in the northeast U.S.; and
- - provides an excellent regional platform for growth in
transmission and distribution.
Rick Sergel will continue as president and chief executive
officer of NEES and will join the National Grid Board as an
executive director, together with one of NEES's outside directors.
Alfred D. Houston, NEES chairman, will step down upon the closing
of the merger, and will serve as a consultant for two years. A
NEES advisory board will be established for two years.
Upon completion of the acquisition, NEES will become a wholly
owned subsidiary of National Grid. NEES and its subsidiary names
will remain the same. Headquarters for U.S. operations will
remain in Massachusetts, and the strong links forged by NEES with
its local communities in Massachusetts, Rhode Island and New
Hampshire will be maintained, according to National Grid.
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The acquisition is subject to a number of regulatory and other
approvals and consents, including approvals by the U.S. Securities
and Exchange Commission, Federal Energy Regulatory Commission, and
Nuclear Regulatory Commission, support from the states in which
NEES operates, and Hart-Scott-Rodino approval. The acquisition
also requires approval by shareholders of both companies, and is
expected to be completed by early 2000.
NEES shareholders will receive a cash payment of $53.75 for
each share held when the merger is completed. The cash payment
will be subject to an increase if the completion of the merger does
not take place on or before the date following six months after
approval of the merger by NEES shareholders. The amount of any
such adjustment will be determined using a daily accrual rate of
$0.0033 until closing, up to a maximum increase of $0.60 per
share.
Merrill Lynch & Co. served as financial advisor and delivered a
fairness opinion to NEES. Rothschild and Dresdner Kleinwort
Benson are jointly advising National Grid. Dresdner Kleinwort
Benson Securities and HSBC Securities are brokers to National
Grid.
More information on the merger agreement and both companies is
available on the NEES web site at www.nees.com, and the National
Grid web site at www.ngc.co.uk.
NEES is a public utility holding company headquartered in
Westborough, Mass. Its subsidiaries Massachusetts Electric
Company, Narragansett Electric Company, Granite State Electric
Company, and Nantucket Electric Company serve approximately 1.3
million customers in Massachusetts, Rhode Island and New
Hampshire. Unregulated subsidiaries include AllEnergy, an energy
marketing company, and NEESCom, a telecommunications company.
This document contains statements that may be considered forward
looking under the securities laws. Actual results may differ
materially. For a list of factors that could influence results,
please refer to NEES's Form 10-Q for the period ended Sept. 30,
1998. The transaction is also subject to contingencies as
discussed herein.
