<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN CONSENT STATEMENT
SCHEDULE 14A INFORMATION
CONSENT STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by party other than the registrant / /
Check the appropriate box:
/ / Preliminary Consent Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Consent Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NIAGARA MOHAWK POWER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Consent Statement,
if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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[LOGO]
- --------------------------------------------------------------------------------
300 ERIE BOULEVARD WEST, SYRACUSE, NEW YORK 13202
--------------------------
OCTOBER 28, 1997
------------------------
Dear Shareholder:
Please find enclosed important information pertaining to the consent that
Niagara Mohawk Power Corporation (the "Corporation") is seeking from holders of
its preferred stock to increase the amount of unsecured indebtedness the
Corporation may issue. Under the Corporation's Certificate of Incorporation, it
and its wholly-owned subsidiaries cannot, without the consent of a majority of
the total number of votes which may be cast by the holders of the Corporation's
preferred stock, issue debt securities representing unsecured indebtedness if
such unsecured indebtedness would exceed (i) 10% of the sum of the secured
indebtedness of the Corporation and its wholly-owned subsidiaries, the capital
of the Corporation and the consolidated surplus of the Corporation plus (ii)
$50,000,000. At present, this would entitle the Corporation to have outstanding
approximately $700 million in unsecured indebtedness. The Corporation is seeking
the consent of the holders of the preferred stock to issue up to $5 billion in
unsecured indebtedness in excess of the present limitation. In particular, the
Corporation anticipates that over half of this amount could be used in
connection with the Master Restructuring Agreement described in the attached
consent solicitation. In addition, the ability to use unsecured indebtedness
will increase the Corporation's flexibility in planning and financing its
business activities. We would greatly appreciate your giving prompt attention to
the enclosed material which you are urged to read in its entirety.
If the necessary number of shares of preferred stock grant consents, all
holders of preferred stock of record on October 23, 1997 will receive a special
cash payment in the amount of $1.00 per share (or $0.25 per share for $25 par
preferred stocks). Information pertaining to the special cash payment is
included with the enclosed material.
It is important that all preferred shareholders, regardless of the number of
shares owned, grant a consent. WE URGE YOU TO GRANT YOUR CONSENT BY MARKING,
SIGNING AND DATING THE ENCLOSED CONSENT CARD, WHICH IS INCLUDED WITHIN, AND
RETURN IT AS SOON AS POSSIBLE. Shareholders are requested to return their
consent by December 3, 1997 (the "Return Date"). Brokers, dealers, commercial
banks, trust companies and other nominees, only, may return consents and Notices
of Solicited Consents by facsimile to D.F. King & Co., Inc. at (212) 269-6061.
The board of directors of the Corporation has not set a record date with
respect to this consent solicitation. Accordingly, under New York law, the
record date for determining shareholders entitled to grant a consent with
respect to this solicitation is October 23, 1997, the date of the board
resolution authorizing the seeking of consents.
If you have any questions regarding the proposed consent, please call
Merrill Lynch & Co., the Solicitation Agent, at (888) 654-8637 (toll-free), D.F.
King & Co., Inc., the Information Agent, at (800) 290-6432 (toll-free), Richard
C. Lathrop of the Corporation at (315) 428-5247 or your broker, dealer,
commercial bank, trust company or other nominee.
Sincerely,
/s/ Kapua A. Rice
Kapua A. Rice
SECRETARY
<PAGE>
NIAGARA MOHAWK POWER CORPORATION
CONSENT STATEMENT
WITH RESPECT TO ITS PREFERRED STOCK
INTRODUCTION
This Consent Statement is first being mailed on or about October 28, 1997 to
the preferred shareholders of Niagara Mohawk Power Corporation, a New York
corporation (the "Corporation"), in connection with the solicitation of consents
by the Board of Directors (the "Board") of the Corporation to the Proposal
described below. Under the Corporation's Certificate of Incorporation, it and
its wholly-owned subsidiaries cannot, without the consent, granted in writing or
by a vote at a special meeting, of a majority of the total number of votes which
may be cast by the holders of the Corporation's preferred stock, issue debt
securities representing unsecured indebtedness if such unsecured indebtedness
would exceed (i) 10% of the sum of the secured indebtedness of the Corporation
and its wholly-owned subsidiaries, the capital of the Corporation and the
consolidated surplus of the Corporation (which amount is the limitation set
forth in the Certificate of Incorporation (the "Charter Limitation")) plus (ii)
$50,000,000 (which additional amount was approved by the preferred shareholders
in 1956 and together with the Charter Limitation is referred to as the "Present
Limitation"). At present, this would entitle the Corporation to have outstanding
approximately $700 million in unsecured indebtedness, approximately $195 million
of which is presently outstanding. The Corporation is seeking the consent of the
holders of the Preferred Stock to issue up to $5 billion in unsecured
indebtedness in excess of the Present Limitation (the "Proposal"). The ability
to use unsecured indebtedness will increase the Corporation's flexibility in
planning and financing its business activities. In particular, the Corporation
anticipates that over half this amount could be used in connection with the
Master Restructuring Agreement described herein.
If the Proposal is approved, the Corporation will make a special cash
payment in the amount of $1.00 per share (or $0.25 per share for $25 par
preferred stocks) to all holders of record on the record date (the "Cash
Payment"). Shareholders are requested to return their consents by the Return
Date of December 3, 1997.
YOUR CONSENT AND PROMPT ACTION ARE IMPORTANT. YOU ARE URGED TO GRANT YOUR
CONSENT BY MARKING, SIGNING, DATING AND RETURNING THE ENCLOSED CONSENT CARD AS
SOON AS POSSIBLE.
CONSENT PROCEDURES
RECORD DATE, VOTING SECURITIES, REQUIRED VOTE
The Board of Directors of the Corporation has not set a record date with
respect to this consent solicitation. Accordingly, under New York law, the
record date for determining shareholders entitled to grant a consent with
respect to this solicitation is October 23, 1997 (the "Record Date"), the date
of the board resolution authorizing the seeking of consents. Only holders of
record of the Corporation's preferred stock at the close of business on the
Record Date will be entitled to grant consents. The Corporation has fifteen
series of preferred stock and the record holders of all shares of all series of
stock
<PAGE>
vote together as one class with respect to the Proposal. The shares of preferred
stock outstanding on the Record Date, and the vote to which each share is
entitled in consideration of the Proposal, are as follows:
<TABLE>
<CAPTION>
SHARES VOTES AGGREGATE CASH PAYMENT
SERIES/CUSIP NUMBER OUTSTANDING PER SHARE VOTES PER SHARE
- ------------------------------------------------------------ ----------- --------------- ---------- ---------------
<S> <C> <C> <C> <C>
CUMULATIVE PREFERRED $100 PAR
3.40% Series/653522 201..................................... 200,000 1 200,000 $ 1.00
3.60% Series/653522 300..................................... 350,000 1 350,000 $ 1.00
3.90% Series/653522 409..................................... 240,000 1 240,000 $ 1.00
4.10% Series/653522 508..................................... 210,000 1 210,000 $ 1.00
4.85% Series/653522 607..................................... 250,000 1 250,000 $ 1.00
5.25% Series/653522 706..................................... 200,000 1 200,000 $ 1.00
6.10% Series/653522 805..................................... 250,000 1 250,000 $ 1.00
7.45% Series................................................ 222,000 1 222,000 $ 1.00
7.72% Series/653522 888..................................... 400,000 1 400,000 $ 1.00
CUMULATIVE PREFERRED $25 PAR
7.85% Series/653522 813..................................... 731,204 1/4 182,801 $ 0.25
8.375% Series............................................... 100,000 1/4 25,000 $ 0.25
9.50% Series/653522 797..................................... 6,000,000 1/4 1,500,000 $ 0.25
ADJUSTABLE RATE PREFERRED $25 PAR
Series A/653522 854......................................... 1,200,000 1/4 300,000 $ 0.25
Series B/653522 847......................................... 1,750,000 1/4 437,500 $ 0.25
Series C/653522 839......................................... 2,000,000 1/4 500,000 $ 0.25
----------
----------
Total Votes Entitled to be Cast............................. 5,267,301
</TABLE>
The consent of a majority of the votes entitled to be cast by the preferred
stock, voting together as one class, is required to consent to the Proposal. The
Corporation's Common Stock is not required to consent to the Proposal.
CONSENT PROCEDURES GENERALLY; EFFECTIVENESS OF CONSENTS
The Corporation is a New York corporation and is, therefore, subject to the
New York Business Corporation Law (the "BCL"). The BCL permits action by less
than unanimous written consent of stockholders where any provision in a
certificate of incorporation not inconsistent with the BCL so provides. The
Certificate of Incorporation of the Corporation specifically provides that a
majority of the total number of votes which may be cast by the holders of all
series of preferred stock may consent in writing to the Corporation's issuance
of unsecured debt in excess of the Charter Limitation.
The Proposal will become effective when properly completed, unrevoked and
effective consent cards (or other forms of consent) indicating consent to the
Proposal, signed by the holders of record on the Record Date of a majority of
the votes entitled to be cast by the preferred stock, are delivered to the
Corporation.
Because the Proposal will become effective only if executed consents are
returned by holders of record on the Record Date of a majority of the votes
entitled to be cast by the preferred stock, the following actions will have the
same effect as withholding consent to the Proposal: (a) failing to execute, date
and return a consent card or (b) executing, dating and returning a consent
marked "WITHHOLDS CONSENT" or "ABSTAINS" as to the Proposal. If returned consent
cards are executed and dated but not marked with respect to the Proposal, the
shareholder will be deemed to have consented to the Proposal.
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PROCEDURAL INSTRUCTIONS
If a shareholder is a record holder of shares of preferred stock as of the
close of business on the Record Date, such shareholder may consent to, withhold
consent to or abstain with respect to the Proposal by marking the "CONSENTS",
"WITHHOLDS CONSENT" or "ABSTAINS" box, as applicable, on the accompanying
consent card and signing, dating and returning it promptly in the enclosed
postage-paid envelope. Any beneficial owner of shares who is not the registered
holder of such shares as of the Record Date (as would be the case for any
beneficial owner whose shares are registered in the name of such owner's broker,
dealer, commercial bank, trust company or other nominee) must arrange with the
record holder to execute and deliver a consent form on such beneficial owner's
behalf.
UNDER THE BCL, ONLY SHAREHOLDERS OF RECORD ON THE RECORD DATE ARE ELIGIBLE
TO GIVE THEIR CONSENT TO THE PROPOSALS. THEREFORE, EACH SHAREHOLDER IS URGED,
EVEN IF SUCH SHAREHOLDER HAS SOLD ITS SHARES SUBSEQUENT TO THE RECORD DATE, TO
GRANT ITS CONSENT PURSUANT TO THE ENCLOSED CONSENT CARD WITH RESPECT TO ALL
SHARES HELD AS OF THE RECORD DATE. IF THE CASH PAYMENT IS MADE, IT WILL BE MADE
TO THE HOLDERS OF RECORD ON THE RECORD DATE. IN ADDITION, ANY SHAREHOLDER OWNING
SHARES BENEFICIALLY (BUT NOT OF RECORD), SUCH AS A PERSON WHOSE OWNERSHIP OF
SHARES IS THROUGH A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE, SHOULD CONTACT THAT NOMINEE WITH INSTRUCTIONS TO EXECUTE THE CONSENT
CARD ON SUCH SHAREHOLDER'S BEHALF OR TO HAVE THAT NOMINEE EXECUTE THE CONSENT.
EACH SHAREHOLDER IS URGED TO ENSURE THAT THE RECORD HOLDER OF SUCH SHAREHOLDER'S
SHARES MARKS, SIGNS, DATES AND RETURNS THE ENCLOSED CONSENT CARD AS SOON AS
POSSIBLE.
REVOCATION OF CONSENTS
Executed consents may be revoked at any time, provided that a written, dated
revocation which clearly identifies the consent being revoked is executed and
delivered to Richard C. Lathrop, Shareholder Services, Niagara Mohawk Power
Company, 300 Erie Boulevard West, Syracuse, New York 13202, prior to the time
that the Proposal becomes effective. A revocation may be in any written form
validly signed by the record holder as of the Record Date as long as it clearly
states that the consent previously given is no longer effective.
APPRAISAL RIGHTS
No appraisal rights are or will be available under the BCL in connection
with the Proposal.
OWNERSHIP OF PREFERRED STOCK
The preferred stock is the only class of securities entitled to vote on the
Proposal. There were approximately 5,000 holders of record of shares of
preferred stock as of September 30, 1997.
To the knowledge of the Corporation, as of the Record Date, there are no
beneficial owners of more than 5% of the outstanding shares of preferred stock
and none of the Corporation's directors or executive officers own any shares of
preferred stock.
CASH PAYMENTS
Subject to the terms and conditions set forth in this Consent Statement, if
(but only if) the Proposal is approved, the Corporation will make the applicable
Cash Payment, to each preferred shareholder on the Record Date regardless of
whether such shareholder grants a consent. If the Proposal is approved, Cash
Payments will be paid out of the Corporation's general funds, promptly after the
Proposal is approved.
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However, no accrued interest will be paid on the Cash Payments regardless of any
delay in making payments.
Only preferred shareholders on the Record Date (or their legal
representatives or attorneys-in-fact) are entitled to receive Cash Payments. Any
beneficial owner of shares who is not the registered holder of such shares as of
the Record Date must arrange with the record holder to receive his proportionate
interest in the Cash Payments made to such record holder. The Corporation will
have no responsibility or liability for any aspect of the records relating to or
payments made on account of any beneficial owners's interest in the Cash Payment
made to a record holder of preferred stock.
REASONS FOR THE PROPOSAL
The Proposal would permit the Corporation and its wholly-owned subsidiaries
to issue $5 billion in unsecured debt securities in excess of the Present
Limitation. At present, the Corporation has outstanding approximately $3.4
billion in long-term debt, of which approximately $195 million is unsecured.
As a result of state and federal policy, the Corporation has 157 contracts
to buy power at above market cost from independent power producers ("IPPs"),
even when the power is not needed. The Corporation's payments to IPPs increased
from less than $200 million in 1990 to $1.1 billion in 1996, and if no action
were taken would continue to grow. On July 9, 1997, following months of
negotiations, the Corporation entered into a Master Restructuring Agreement with
sixteen IPPs, pursuant to which in exchange for terminating or restructuring
their contracts, those IPPs would receive $3.6 billion in cash and 46 million in
shares of common stock of the Corporation. In addition, the Corporation and
certain of such IPPs would enter into restructured financial and physical
contracts on terms more favorable to the Corporation than the existing
contracts. The contracts covered by the Master Restructuring Agreement represent
more than 80% of the Corporation's above-market IPP costs.
Consummation of the Master Restructuring Agreement is subject to a number of
conditions that require the approval of a large number of third parties,
including regulatory approvals, amendment or termination of the IPPs' existing
third-party arrangements, creation of new IPP third-party arrangements, approval
of the Corporation's common shareholders and the Corporation's successful
completion of the financing required to accomplish the transaction. The
Corporation hopes to close the Master Restructuring Agreement in the first half
of 1998.
At present, the Corporation plans to finance approximately 90% of the cash
payment to the IPPs by incurring indebtedness and to use cash on hand for the
remainder. Under the terms of the Master Restructuring Agreement, if such amount
is raised through an underwritten public offering registered with the Securities
and Exchange Commission (an "Offering"), such debt securities would, unless
applicable securitization legislation is enacted in New York, have to be general
unsecured obligations of the Corporation. Thus, to raise the necessary cash in
an Offering, it is necessary to raise the Present Limitation. If the Proposal is
not approved, the Corporation intends to raise the funds necessary for the
Master Restructuring Agreement by obtaining the waiver of the IPPs to this
restriction (which the Company believes it could obtain by offering comparable
security for the Corporation's contractual obligations to the IPPs) or by
raising debt other than in an Offering. In either case, funds could be raised
through a combination of an unsecured Offering to the extent of the Present
Limitation (as it would be increased by further secured borrowings) and further
secured borrowings (which could be secured by a second mortgage interest). Such
borrowings would probably require the Corporation to amend or refinance its
senior debt facility and pay additional mortgage recording taxes.
At present, the Corporation has not finalized the structure of the financing
necessary to fund the Master Restructuring Agreement, although it is presently
considering a combination of bank financing and an Offering. In addition, given
the status of the regulatory proceedings and the timing contemplated by the
Master Restructuring Agreement (in which the IPPs have three months following
receipt of regulatory approval to conclude their third party arrangements and
determine, on an individual basis, if they will go
4
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forward), it is impossible for the Corporation to know if the transaction will
close and the ultimate terms thereof and the impact on the Corporation.
Nonetheless, given the present interest rate environment, the Corporation might
prefund some of this obligation, with indebtedness that could be prepaid should
the transaction not occur, and in any event would like to have the flexibility
to pursue all financing opportunities at an early stage. Accordingly, the
Corporation is seeking approval of the Proposal now to provide it maximum
financing flexibility.
In addition to the requirements of the Master Restructuring Agreement, and
regardless of whether that transaction closes, approval of the Proposal will
provide the Corporation with greater financing flexibility in the future. The
Corporation would then have the flexibility to issue unsecured debt to meet both
capital requirements and to fund first mortgage bond maturities of approximately
$2 billion which will occur through 2006, to the extent that interim cash flow
or other sources of funds are not adequate or, in the latter case, are more
costly.
As competition intensifies in the electric utility industry, as a result of
regulatory, legislative and market developments, flexibility and cost structure
will be even more crucial to success in the future. Given that the electric
industry is extremely capital intensive, controlling and minimizing financing
costs are essential ingredients to operating effectively in the new competitive
environment.
The Corporation believes that adoption of the Proposal is key to meeting the
objectives of flexibility and cost structure. Historically, the Corporation's
debt financing generally has been accomplished through the issuance of long-term
first mortgage bonds. First mortgage bonds represent secured indebtedness
because they place a first priority lien on substantially all of the
Corporation's assets. The Corporation's indenture with respect to its first
mortgage bonds contains certain restrictive covenants with respect to, among
other things, the disposition of assets and the ability to issue additional
first mortgage bonds. In addition, the issuance of mortgage bonds has the added
expense of a New York recording tax of approximately 1%. The Proposal will not
only allow the Corporation to issue a greater amount of unsecured debt, it may
also allow the Corporation to issue a greater amount of total debt. The
Corporation anticipates changing the mix of debt securities toward more
issuances on an unsecured basis to cover the Corporation's capital needs and to
fund future maturities as needed.
FOR THE ABOVE REASONS, THE CORPORATION'S
BOARD BELIEVES THE BEST LONG-TERM INTERESTS
OF SHAREHOLDERS ARE SERVED BY, AND
ENCOURAGES SHAREHOLDERS TO GRANT CONSENTS
FOR, THE ADOPTION OF THE PROPOSAL
CERTAIN EFFECTS OF THE PROPOSAL
At present, the Corporation cannot incur more than approximately $700
million of unsecured indebtedness without the consent of the preferred
shareholders but can incur secured indebtedness without the consent of the
preferred shareholders. While the Corporation's debt instruments contain
restrictions as to the amount of indebtedness, both secured and unsecured, that
may be incurred, such restrictions could be waived. Both secured and unsecured
indebtedness rank prior to the position of the preferred stock. Accordingly, to
the extent the Proposal allows the Corporation to incur a greater amount of
total indebtedness, and such indebtedness increases the credit risks of the
Corporation, the market price and credit rating of the preferred stock could
decline.
RATING AGENCIES
Moody's Investors Service and Standard & Poor's (the "Rating Agencies") have
been advised of the Proposal. The Rating Agencies have advised the Corporation
that the adoption of the Proposal, in and of itself, will not result in a
reduction of the preferred stock's current ratings.
5
<PAGE>
Ratings are not recommendations to purchase, hold or sell shares of the
preferred stock inasmuch as the ratings do not comment as to market price or
suitability for a particular investor. The ratings are based on current
information furnished to the Rating Agencies by the Corporation and obtained
from other sources. The ratings may be changed, suspended or withdrawn as a
result of changes in, or the unavailability of, such information.
FINANCIAL AND OTHER INFORMATION RELATING TO THE CORPORATION
The financial statements of the Corporation and related information included
in its Annual Report on Form 10-K for the year ended December 31, 1996, as
amended, its Quarterly Report on Form 10-Q for the six month period ended June
30, 1997 and its Current Reports on Form 8-K dated July 10, 1997 and October 17,
1997, as filed with the SEC, are hereby incorporated by reference. The
Corporation will provide without charge, upon the written or oral request of any
person (including any beneficial owner) to whom this Consent Statement is
delivered, a copy of such information (excluding certain exhibits). Such
requests for information should be directed to Investor Relations Department,
Niagara Mohawk Power Corporation, 300 Erie Boulevard West, Syracuse, NY 13202,
telephone (315) 428-6012.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Preferred shareholders should consult their own tax advisors in light of
their particular circumstances as to the application of United States federal
income tax laws, as well as the effect of any state, local, or foreign tax laws.
As used herein, the term "United States Holder" means a preferred
shareholder that is for United States federal income tax purposes, (i) a citizen
or resident of the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any state thereof or the District of
Columbia, or (iii) an estate or trust specified as being a "United States
Person" in the Code.
CASH PAYMENTS
Though not entirely free from doubt, it is believed that the Cash Payments
will be treated as ordinary dividend income to recipient United States Holders,
and the Corporation will treat such payments accordingly.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The amount of the Cash Payment paid to a United States Holder will be
reported to such holder and to the Internal Revenue Service in the same way all
cash dividends are reported. Backup withholding at a rate of 31% will apply to
any such payments made to non-exempt United States Holders for whom backup
withholding applies with regards to the payment of regular cash dividends.
SOLICITATION OF CONSENTS
Consents will be solicited by mail, telephone, telegraph, telex, telecopier
and in person. Solicitation may be made by directors, officers, investor
relations personnel and other regular employees of the Corporation. No such
employees will receive additional compensation for such solicitation.
Brokers, dealers, commercial banks, trust companies and other nominees will
be requested to forward the solicitation materials to the beneficial owners of
preferred stock for which they hold of record and the Corporation will reimburse
them for their reasonable out-of-pocket expenses. In addition, if the Proposal
is approved, the Corporation will pay to each designated Soliciting Dealer a
solicitation fee of $1.00 per share ($0.25 per share for $25 par preferred
stocks) for each share of preferred stock as to which a consent is granted (and
not revoked) by a beneficial owner holding less than 2,500 (or 10,000 with
respect to $25 par preferred stocks) shares if such consent is received prior to
the effectiveness of the Proposal. A
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designated Soliciting Dealer is an entity obtaining the consent as set forth on
the consent or the Notice of Solicited Consents and it is (a) any broker or
dealer in securities, including the Solicitation Agent in its capacity as a
dealer or broker, which is a member of any national securities exchange or of
the NASD, (b) any foreign broker or dealer not eligible for membership in the
NASD which agrees to conform to the NASD's Rules of Fair Practice in making
solicitations, or (c) any bank or trust company.
No solicitation fee (other than solicitation fees payable to the
Solicitation Agent as provided below) shall be payable to a Soliciting Dealer
with respect to the granting of a consent with respect to shares by a holder
except as set forth on the consent or a Notice of Solicited Consents. No
solicitation fee shall be payable to a Soliciting Dealer in respect of shares
registered in the name of such Soliciting Dealer unless such shares are held by
such Soliciting Dealer as nominee and a consent is being granted with respect to
such shares by one or more beneficial owners identified on the Notice of
Solicited Consents. No solicitation fee shall be payable to a Soliciting Dealer
if such Soliciting Dealer is required for any reason to transfer the amount of
such fee to a consenting holder. No solicitation fee shall be paid to a
Soliciting Dealer with respect to shares held for its own account or shares
beneficially owned by such Soliciting Dealer. No broker, dealer, commercial
bank, trust company or other nominee shall be deemed to be the agent of the
Corporation, the Solicitation Agent or D.F. King for purposes of this
solicitation.
Soliciting Dealers will include any of the organizations described in
clauses (a), (b) and (c) above even when the activities of such organizations in
connection with the solicitation consist solely of forwarding to clients
materials related to the solicitation, and granting consents as directed by
beneficial owners thereof. No Soliciting Dealer is required to make any
recommendation to holders of shares as to whether to grant a consent. No
assumption is made, in making payment to any Soliciting Dealer, that its
activities in connection with the solicitation included any activities other
than those described above, and for all purposes noted in all materials relating
to the solicitation, the term "solicit" shall be deemed to mean no more than
"processing consents" or "forwarding to customers materials regarding the
solicitation."
The Corporation has retained D.F. King & Co., Inc. ("D.F. King") to assist
in connection with this consent solicitation for which D.F. King will be paid a
fee estimated to be $20,000 and will be reimbursed for reasonable out-of-pocket
expenses. The Corporation will indemnify D.F. King against certain liabilities
and expenses in connection with the consent solicitation, including liabilities
under the federal securities laws.
Merrill Lynch & Co. ("Merrill Lynch") has been retained as Solicitation
Agent. The Corporation has agreed to pay Merrill Lynch a fee of $.50 ($0.125 for
$25 par preferred stocks) for each share of preferred stock as to which a
consent is granted (and not revoked) for such engagement. The Corporation has
also agreed to reimburse Merrill Lynch for its reasonable out-of-pocket
expenses, including the fees and expenses of its legal counsel, incurred in
furtherance of such services, and has agreed to indemnify Merrill Lynch and
certain related persons and entities against certain liabilities and expenses in
connection with its engagement, including certain liabilities under the federal
securities laws.
The expenses related directly to the consent solicitation will be borne by
the Corporation.
YOUR CONSENT AND PROMPT ACTION ARE IMPORTANT. YOU ARE URGED TO GRANT YOUR
CONSENT BY MARKING, SIGNING, DATING AND RETURNING THE ENCLOSED CONSENT CARD AS
SOON AS POSSIBLE.
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DELIVERY OF CONSENTS
Properly executed consents should be received by mail as soon as possible.
The Return Date is December 3, 1997. If sufficient consents are not received on
or prior to the Return Date, the Corporation presently intends to continue to
solicit consents. Such consents should be mailed or delivered to D.F. King at
the address set forth below. If you have any questions concerning this consent
solicitation or the procedures to be followed to execute and deliver a consent
or need additional copies of documents, please contact D.F. King & Co. at the
address or phone numbers specified below. Proposals of shareholders intended to
be presented at the 1998 Annual Meeting must be received by the Corporation on
or before December 2, 1997, to be considered for inclusion in the Corporation's
Proxy Statement and Form of Proxy relating to that meeting.
By Order of the Board of Directors
Kapua A. Rice
Secretary
Dated: October 28, 1997
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To obtain additional copies of this Consent Statement, please contact the
Information Agent.
The Information Agent for the Consent is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Collect: 212-269-5550
(800) 290-6432 (toll-free)
Questions concerning the Consents should be directed to the Solicitation Agent.
The Solicitation Agent for the Consent is:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281
(888) 654-8637 (toll-free)
<PAGE>
NIAGARA MOHAWK POWER CORPORATION
CONSENT SOLICITED BY NIAGARA MOHAWK POWER CORPORATION
TO ACTION OF PREFERRED SHAREHOLDERS WITHOUT A MEETING
The undersigned, a holder of record of shares of preferred stock of Niagara
Mohawk Power Corporation (the "Corporation") on the record date, October 23,
1997, for this consent solicitation, hereby acknowledges receipt of the Consent
Statement dated October 28, 1997 (the "Consent Statement"), and consents
pursuant to the Corporation's Certificate of Incorporation, with respect to all
of the shares of preferred stock held by the undersigned, to the adoption of the
following proposal (the "Proposal") without a meeting of the shareholders of the
Corporation (except as otherwise specified below).
THE CORPORATION URGES YOU TO CONSENT TO THE PROPOSAL.
Proposal: Consent to the incurrence of $5 billion in unsecured debt in excess of
the Present Limitation applicable to the Corporation as set forth in
the Consent Statement.
/ / Consents / / Withholds Consent / / Abstains
PLEASE VOTE PROMPTLY!
IF RETURNED CARDS ARE EXECUTED AND DATED BUT NOT MARKED WITH RESPECT TO THE
PROPOSAL THE UNDERSIGNED WILL BE DEEMED TO HAVE CONSENTED TO THE PROPOSAL.
Consents can only be given by the
shareholder of record on the Record
Date. Please sign your name below
exactly as it appears on your stock
certificate or on the label affixed
hereto. If shares are held jointly,
each shareholder should sign. When
signing as officer, director,
shareholder, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by president or
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Date _______________________________
____________________________________
Signatures
____________________________________
Title or Authority
____________________________________
Signature
____________________________________
(If held jointly)
PLEASE MARK, SIGN, DATE AND RETURN YOUR CONSENT PROMPTLY.
<PAGE>
NIAGARA MOHAWK POWER CORPORATION
SOLICITED FEES
Pursuant to the terms of the Consent Statement dated October 28, 1997, Niagara
Mohawk Power Corporation will pay to designated brokers and dealers a
solicitation fee of $1.00 ($0.25 for $25 par preferred stocks) per share for any
retail or registered Shares as to which consents are granted in favor (and not
revoked) of the Proposal by beneficial owners of less than 2,500 (10,000 with
respect to $25 par preferred stocks) shares if such consents are received prior
to the effectiveness of the Proposal. No such fee shall be payable to a broker
or dealer with respect to the vote of shares by a holder unless the consent
designates such broker or dealer. However, soliciting brokers and dealers will
not be entitled to a solicitation fee for shares beneficially owned by such
broker or dealer.
The above signed represents that the Soliciting Dealer (as defined in the
Consent Statement) who solicited and obtained this vote in favor of the proposed
amendment is:
Name of Firm: __________________________________________________________________
Please Print
Name of Individual Broker or Financial Consultant: _____________________________
Telephone Number of Broker or Financial Consultant: ____________________________
Identification Number (if known): ______________________________________________
Address: _______________________________________________________________________
Include Zip Code
The acceptance of compensation by such broker or dealer will constitute a
representation by it that: (a) it has complied with the applicable requirements
of the Securities Exchange Act of 1934, as amended and the applicable rules and
regulations thereunder, in connection with such solicitation; (b) it is entitled
to such compensation for such solicitation under the terms and conditions of the
Consent Statement; (c) in soliciting votes of shares it has used no solicitation
materials other than those furnished by Niagara Mohawk Power Corporation; and
(d) if it is a foreign broker or dealer not eligible for membership in the
National Association of Securities Dealers, Inc. (the "NASD"), it has agreed to
conform to the NASD's Rules of Fair Practice in making solicitations.
<PAGE>
MERRILL LYNCH & CO.
NIAGARA MOHAWK POWER CORPORATION
CONSENT SOLICITATION
WITH RESPECT TO ITS PREFERRED STOCK
------------------------
SHAREHOLDERS ARE REQUESTED TO RETURN CONSENTS BY THE RETURN DATE OF DECEMBER 3,
1997.
------------------------------
October 28, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Niagara Mohawk Power Corporation, a New York
corporation ( "the Corporation"), to act as Solicitation Agent and in connection
therewith are enclosing the letter to preferred shareholders, consent statement
and consent. If the Proposal described in the consent statement is approved by
the Corporation's preferred shareholders, the Corporation will make a special
cash payment in the amount of $1.00 per share ($0.25 for $25 par preferred
stocks) to each holder of preferred stock.
We are asking you to contact your clients for whom you hold shares
registered in your name (or in the name of your nominee) or who hold shares
registered in their own names. PLEASE BRING THE SOLICITATION TO THEIR ATTENTION
AS PROMPTLY AS POSSIBLE. The Corporation will reimburse you for your reasonable
out-of-pocket expenses.
If the Proposal is approved, the Corporation will pay to each designated
Soliciting Dealer a solicitation fee of $1.00 per share ($0.25 per share for $25
par preferred stocks) for each share of preferred stock as to which a consent is
granted (and not revoked) by a beneficial owner holding less than 2,500 (or
10,000 with respect to $25 par preferred stocks) shares if such consent is
received prior to the effectiveness of the Proposal. A designated Soliciting
Dealer is an entity obtaining the consent as set forth on the consent or the
Notice of Solicited Consents and it is (i) any broker or dealer in securities,
including the Solicitation Agent in its capacity as a broker or dealer, which is
a member of any national securities exchange or of the National Association of
Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not
eligible for membership in the NASD which agrees to conform to the NASD's Rules
of Fair Practice in making solicitations, or (iii) any bank or trust company. No
solicitation fee (other than solicitation fees payable to the Solicitation
Agent) shall be payable to a Soliciting Dealer with respect to the consent by a
holder unless the consent designates such Soliciting Dealer or a Notice of
Solicited Consents is provided. No solicitation fee shall be payable to a
Soliciting Dealer in respect of shares registered in the name of such Soliciting
Dealer unless such shares are held by such Soliciting Dealer as nominee and a
consent is being granted with respect to such shares by one or more beneficial
owners identified on the Notice of Solicited Consents attached hereto. No
solicitation fee shall be payable to a Soliciting Dealer if such Soliciting
Dealer is required for any reason to transfer the amount of such fee to a
consenting holder. No solicitation fee shall be payable to a Soliciting Dealer
with respect to shares held in such Soliciting Dealer's own account or shares
beneficially owned by such Soliciting Dealer. No broker, dealer, commercial
bank, trust company or other nominee shall be deemed to be the agent of the
Company, the Solicitation Agent or D.F. King & Co., Inc.
Any inquiries you may have with respect to the consents should be directed
to Merrill Lynch & Co. at (888) 654-8637 (toll-free).
Merrill Lynch & Co.
<PAGE>
NIAGARA MOHAWK POWER CORPORATION
NOTICE OF SOLICITED CONSENTS
Beneficial Owners of Less than 2,500 Shares (or 10,000 Shares of $25 Par
Preferred Stocks)
List below the number of shares as to which consents were granted by
beneficial owners whose consent you have solicited. All shares in a series of
preferred stock beneficially owned by a beneficial owner, whether in one account
or several, and in however many capacities, must be aggregated for purposes of
determining the 2,500 (or 10,000) share limit. Any questions as to what
constitutes beneficial ownership should be directed to D.F. King & Co., Inc.
("D.F. King").
ALL NOTICES OF SOLICITED CONSENTS SHOULD BE RETURNED TO D.F. KING AT THE
ADDRESS SET FORTH IN THE SOLICITATION STATEMENT WITHIN THREE NEW YORK STOCK
EXCHANGE TRADING DAYS AFTER THE COMPANY ANNOUNCES IT HAS RECEIVED SUFFICIENT
CONSENTS TO APPROVE THE PROPOSAL. NOTICES MAY BE FAXED TO D.F. KING AT (212)
269-6061 (CONFIRMATION TELEPHONE NUMBER (212) 269-5550 (ext. 6831)). ALL
QUESTIONS CONCERNING THE NOTICES OF SOLICITED CONSENTS SHOULD BE DIRECTED TO
D.F. KING AT THE TELEPHONE NUMBER SET FORTH IN THE SOLICITATION STATEMENT.
<TABLE>
<CAPTION>
$100 PAR
- ---------------------------- NUMBER OF NUMBER OF $25 PAR NUMBER OF NUMBER OF
ISSUE SHARES BENEFICIAL ------------------------------ SHARES BENEFICIAL
DESCRIPTION/CUSIP CONSENTED OWNERS ISSUE DESCRIPTION/CUSIP CONSENTED OWNERS
- ---------------------------- ---------- ------------- ------------------------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
Cumulative Preferred Cumulative Preferred
3.40% Series/653522 201 7.85% Series/653522 813
------- ------- ------- -------
3.60% Series/653522 300 8.375% Series
------- ------- ------- -------
3.90% Series/653522 409 9.50% Series/653522 797
------- ------- ------- -------
4.10% Series/653522 508
------- -------
4.85% Series/653522 607 Adjustable Rate Preferred
------- -------
5.25% Series/653522 706 Series A/653522 854
------- -------
------- -------
6.10% Series/653522 805 Series B/653522 847
------- -------
------- -------
7.45% Series Series C/653522 839
------- -------
------- -------
7.72% Series/653522 888
------- -------
</TABLE>
The undersigned hereby confirms that (i) it has complied with the applicable
requirements of the Securities Exchange Act of 1934, as amended and the
applicable rules and regulations thereunder, in connection with such
solicitation; (ii) it is entitled to such compensation for such solicitation
under the terms and conditions of the Consent Statement; (iii) in soliciting
votes of shares it has used no solicitation materials other than those furnished
by Niagara Mohawk Power Corporation; and (iv) if it is a foreign broker or
dealer not eligible for membership in the National Association of Securities
Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's Rules of Fair
Practice in making solicitations.
The payment of compensation to any broker or dealer is dependent on such
broker or dealer returning a Notice of Solicited Consents to D.F. King & Co.,
Inc.
<TABLE>
<S> <C>
Date:
DTC Participant Name: Authorized Signature:
DTC Participant Number: Print Name:
Name of Firm: Telephone Number:
Address:
Medallion Stamp:
</TABLE>
<PAGE>
NIAGARA MOHAWK POWER CORPORATION
CONSENT SOLICITED BY NIAGARA MOHAWK POWER CORPORATION
TO ACTION OF PREFERRED SHAREHOLDERS WITHOUT A MEETING
DTC PARTICIPANT CONSENT FORM
The undersigned, a holder of record of shares of preferred stock of Niagara
Mohawk Power Corporation (the "Corporation") on the record date, October 23,
1997, for this consent solicitation, hereby acknowledges receipt of the Consent
Statement dated October 28, 1997 (the "Consent Statement"), and consents
pursuant to the Corporation's Certificate of Incorporation, with respect to all
of the shares of preferred stock held by the undersigned, to the adoption of the
following proposal (the "Proposal") without a meeting of the shareholders of the
Corporation (except as otherwise specified below).
Proposal: Consent to the incurrence of $5 billion in unsecured debt in
excess of the Present Limitation applicable to the
Corporation as set forth in the Consent Statement.
<TABLE>
<CAPTION>
NUMBER OF SHARES CONSENTING:
-------------------------------------------------------
<S> <C> <C> <C>
ISSUE DESCRIPTION/CUSIP CONSENTS WITHHOLDS CONSENT ABSTAINS
- ----------------------------------- ----------------- ----------------- -----------------
Cumulative Preferred $100 Par
3.40% Series/653522 201
------------- ------------- -------------
3.60% Series/653522 300
------------- ------------- -------------
3.90% Series/653522 409
------------- ------------- -------------
4.10% Series/653522 508
------------- ------------- -------------
4.85% Series/653522 607
------------- ------------- -------------
5.25% Series/653522 706
------------- ------------- -------------
6.10% Series/653522 805
------------- ------------- -------------
7.45% Series
------------- ------------- -------------
7.72% Series/653522 888
------------- ------------- -------------
Cumulative Preferred $25 Par
7.85% Series/653522 813
------------- ------------- -------------
8.375% Series
------------- ------------- -------------
9.50% Series/653522 797
------------- ------------- -------------
Adjustable Rate Preferred $25 Par
Series A/653522 854
------------- ------------- -------------
Series B/653522 847
------------- ------------- -------------
Series C/653522 839
------------- ------------- -------------
</TABLE>
<TABLE>
<S> <C>
Date:
DTC Participant Name: Authorized Signature:
DTC Participant Number: Print Name:
Name of Firm: Telephone Number:
Address:
Medallion Stamp:
</TABLE>
