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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Earliest Event Reported: February 1, 1999
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 February 1, 1999, New England Power Company's parent,
New England Electric System, a Massachusetts business trust
(NEES), Eastern Utilities Associates, a Massachusetts business
trust (EUA), and Research Drive LLC, a Massachusetts limited
liability company which is directly and indirectly wholly owned
by NEES (LLC), entered into an Agreement and Plan of Merger,
dated as of February 1, 1999 (the Merger Agreement), providing
for a merger transaction among NEES, EUA, and LLC. The press
release issued in connection therewith is filed herewith as
Exhibit 99, and is incorporated herein by reference.
Pursuant to the Merger Agreement, LLC will merge with and
into EUA (the Merger), with EUA being the surviving entity and
becoming a wholly-owned subsidiary of NEES. The Merger, which
was unanimously approved by the NEES Board of Directors, the
Board of Trustees of EUA and the Members of LLC, is expected to
occur shortly after all of the conditions to the consummation of
the Merger, including the receipt of EUA shareholder approval by
a two-thirds vote and certain regulatory approvals, are met or
waived. NEES anticipates that the Merger can be consummated in
early 2000. The consummation of this Merger is not contingent
upon the consummation of the Agreement and Plan of Merger, dated
as of December 11, 1998 among NEES, The National Grid Group plc
(National Grid), and NGG Holdings LLC, under which NEES would
become a wholly owned subsidiary of National Grid.
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: February 8, 1999
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
1 Press Release Filed
herewith
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FOR RELEASE: Feb. 1, 1999, 6:00 am
CONTACTS:
NEES EUA
Investors: Investors:
Bob Seega, 508-389-2178 Clifford J. Hebert,
617-357-9590
Media: Media:
Cathy Fair, 508-389-3102 Fred Mason,
508-559-2000 x3662
NEES AND EUA TO MERGE IN $634-MILLION TRANSACTION
Industry Restructuring-Driven Consolidation Continues
WESTBOROUGH, Mass., Feb. 1, 1999 _ In the latest consolidation
driven by the restructuring of the region's electricity industry,
New England Electric System (NYSE:NES) and Eastern Utilities
Associates (NYSE:EUA) announced today that they have signed a
merger agreement under which NEES will acquire all outstanding
shares of EUA for $31 per share in cash, subject to upward
adjustment, as described later.
The merger agreement values the equity of EUA at approximately
$634 million and represents a 23% premium above the price of EUA
shares on Dec. 4, 1998 (the last trading day before other
regional merger announcements affected EUA's share price), and a
5% premium above the closing price on Jan. 29, 1999.
NEES is New England's second largest electric utility, serving
1.3 million customers through its regulated electric companies in
Massachusetts, Rhode Island and New Hampshire. The company
announced on Dec. 14, 1998, that it will merge with National Grid
Group plc, the world's largest independent transmission company,
which is based in Coventry, England. Upon completion of that
merger, NEES will become a wholly owned subsidiary of National
Grid.
The NEES/EUA merger is not contingent upon the NEES/National Grid
merger closing, but has the full support of National Grid,
according to Rick Sergel, president and chief executive officer
of NEES.
EUA is a Boston-based public utility holding company whose
subsidiaries include electric transmission and distribution
utilities in southeastern Massachusetts and northern and south
coastal Rhode Island. These utilities provide electric service
to approximately 300,000 customers.
Upon completion of the merger, EUA's operations will be merged
into NEES's. The combined company will serve 1.6 million
electricity customers in 228 New England communities. The new
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company will serve more electricity customers in both
Massachusetts and Rhode Island than any other company.
NEES and EUA consistently have been the two lowest-cost, major
electric companies in the region. It is expected that the
geographical fit of the two companies will result in even greater
efficiencies. The companies expect to file a rate plan with
state regulators in the near future, which will maintain NEES's
low rates, and bring EUA's rates to NEES levels in the future.
"This merger of New England's two most cost-conscious electric
companies is a natural fit in philosophy, geography and corporate
structure," Sergel said. "Furthermore, it is the first step in
fulfilling the promise of the NEES/National Grid merger."
"EUA and NEES share a long history of providing customers with
high-quality service at low rates. The synergies between the two
companies will create an even stronger company for our
customers," EUA Chairman and Chief Executive Officer Donald G.
Pardus said. "Equally important, NEES and EUA customers will
continue to receive the same great service from the same people."
Sergel will be president and chief executive officer of the
combined company upon completion of the merger. Both Pardus and
EUA President and Chief Operating Officer John R. Stevens have
opted to retire upon the merger's completion. EUA board members
will be offered positions on the NEES Advisory Board, and Pardus
and Sergel will appoint a transition team representing both
companies. EUA Executive Vice President Robert G. Powderly will
become president of New England Power Service Company, NEES's
subsidiary that provides administrative and support services to
the other subsidiaries.
"These are the logical steps to take to ensure a smooth
transition as EUA and NEES mesh into a larger, even more
efficient, finely tuned operation," Pardus said.
The combined company will have approximately 250 fewer positions.
"Our goal is to attain this through voluntary early retirement
and attrition," Sergel said. NEES will honor EUA's labor
contracts.
The merger is subject to regulatory approvals by the Securities
and Exchange Commission, Federal Energy Regulatory Commission,
Nuclear Regulatory Commission, and the state utility commissions
in Massachusetts and Rhode Island. NEES expects to submit all
principal regulatory filings, related both to EUA and National
Grid, this month. The merger also requires approval by EUA
shareholders. The merger is expected to be completed by early
2000.
EUA shareholders will receive a cash payment of $31 for each
share held when the merger is completed. The cash payment will
be subject to an increase of $0.003 per share per day if the
merger is not completed on or before the date following six
months after approval of the merger by EUA shareholders. NEES
will finance the acquisition in part with cash received from the
sale of its generating business in September 1998.
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EUA shareholders will continue to receive dividends at the
current level as declared by the EUA Board of Trustees, until
closing of the merger.
Merrill Lynch & Co., Inc. served as financial advisor and
delivered a fairness opinion to NEES, as did Salomon Smith Barney
Inc. for EUA.
NEES is a public utility holding company headquartered in
Westborough, Mass. Massachusetts Electric Company serves 970,000
customers in 146 communities, and Nantucket Electric Company
serves 10,000 customers on the island of Nantucket. Narragansett
Electric Company serves 330,000 customers in 27 Rhode Island
communities, and Granite State Electric Company serves 36,000
customers in 21 New Hampshire communities. Information about
NEES is available on the World Wide Web at http://www.nees.com.
Unregulated NEES subsidiaries include AllEnergy, an energy
marketing company, and NEESCom, a telecommunications company.
NEES subsidiaries employ 3,200 people.
EUA is a public utility holding company headquartered in Boston,
Mass., whose shares are traded on the New York and Pacific Stock
Exchanges. Subsidiaries include Eastern Edison Co., which serves
184,000 customers in 22 communities; Blackstone Valley Electric
Co., which serves 85,000 customers in 7 communities; and Newport
Electric Corp., which serves 33,000 customers in 4 communities.
Unregulated subsidiaries include EUA Cogenex Corp. Together, the
regulated and unregulated companies are known as the EUA System.
Information about EUA is available on the World Wide Web at
http://www.eua.com.
This news release may contain statements that are "forward
looking statements" under the federal securities law. Actual
results could differ materially from those discussed, and there
can be no assurance that estimates of future results can be
achieved. For a list of factors that could influence results,
please refer to the earnings section of NEES's Form 10-Q for the
period ended Sept. 30, 1998. The NEES/EUA merger is also subject
to contingencies as discussed herein. The NEES/National Grid
merger is subject to the contingencies listed in NEES's Form 8-K
dated Dec. 11, 1998.
