SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/X/ Soliciting Material Pursuant to Rule 14a-12
NIAGARA MOHAWK HOLDINGS, INC.
NIAGARA MOHAWK POWER CORPORATION
--------------------------------------------------------------------------------
(Name of Each Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or 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 is determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / 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 or 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:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
[Letter to Shareholders from William E. Davis dated September 14, 2000]
[LOGO - Niagara Mohawk Holdings;
Letterhead of William E. Davis]
September 14, 2000
Dear Shareholder:
On September 5, Niagara Mohawk announced a merger agreement that will make
Niagara Mohawk a key part of the National Grid Group plc.
National Grid Group will acquire Niagara Mohawk Holdings in exchange for a
mixture of cash and National Grid Group American Depositary Shares (ADS)
representing the common stock of The National Grid Group in the U.S.
Expected to be completed by late 2001, the merger is subject to governmental
regulatory approvals and is subject to a number of conditions including sale of
our Nine Mile Point nuclear assets or implementation of other arrangements
satisfactory to National Grid, and the approval of National Grid and Niagara
Mohawk shareholders.
Under the terms of the merger agreement, Niagara Mohawk shareholders will
receive $19.00 for each Niagara Mohawk share held. The $19.00 value represents a
37 percent premium to our closing price of $13 7/8 on Friday, September 1. We
have agreed to a fixed price transaction structure with a collar mechanism,
under which our shareholders will receive a fixed value of $19.00 per share so
long as the National Grid ADS price is between $32.50 and $51.00. The closing
price of National Grid ADS on Friday, September 1 was $41.75. If the ADS price
moves outside of the collar limits, our shareholders begin to share in the
upside or downside value of National Grid Group.
The total consideration being offered will be comprised of two-thirds new
National Grid ADSs (ADSs represent the common stock of National Grid Group in
the U.S.) and one-third cash.
Our shareholders can elect to receive either cash or National Grid ADSs, or a
combination of both, subject to the total consideration offered being two-thirds
National Grid ADSs and one-third cash. National Grid may, at their discretion,
increase the cash proportion of the total consideration to satisfy the cash
elections of our shareholders. Otherwise, the cash elections of our shareholders
will be settled on a pro-rata allocation basis.
Shareholders who elect to receive National Grid ADSs will also enjoy dividend
payments. The dividend on National Grid ADSs, based on the September 1 closing
price, represents an annual yield of about 2.5 percent.
The National Grid Group is a rapidly growing international transmission,
distribution and telecommunications company headquartered in London that ranks
high in independent customer satisfaction surveys and enjoys a strong reputation
for delivering on its promises to lower electricity costs for customers.
Page 2 September 14, 2000
Earlier this year, National Grid acquired New England Electric System (NEES) and
Eastern Utilities Associates (EUA), creating National Grid USA. National Grid
USA's family of companies include Massachusetts Electric, Narragansett Electric,
Granite State Electric and Nantucket Electric.
This merger represents National Grid's third U.S. acquisition and will create
the ninth largest electric utility in the U.S. with an electric customer base of
3.2 million. With Niagara Mohawk, National Grid will be the largest independent
owner of transmission assets (by miles) and will have the second largest
distribution business (by power delivered) in the New England/New York market.
We believe this merger clearly represents the best interests of Niagara Mohawk
shareholders.
If you have any further questions or concerns, please call Shareholders Services
at 315-428-6750 (Syracuse) or 800-448-5450 (elsewhere in the continental U.S.).
You can also visit our website at www.NiagaraMohawk.com.
Sincerely,
/s/ William E. Davis
William E. Davis
************************************************************************************
National Grid and Niagara Mohawk will be filing a proxy statement and other
relevant documents concerning the merger with the United States Securities and
Exchange Commission (the "SEC"). WE URGE INVESTORS TO READ THE PROXY STATEMENT
AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY CONTAIN
IMPORTANT INFORMATION. Investors will be able to obtain the documents free of
charge at the SEC's website, http://www.sec.gov or at the SEC's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, documents
filed with the SEC by Niagara Mohawk will be available free of charge by
contacting Niagara Mohawk at the following address and telephone number:
Investor Relations, Niagara Mohawk Holdings, Inc., 300 Erie Boulevard West,
Syracuse, NY 13202, telephone: 315-428-3134. Documents filed with the SEC by
National Grid can be obtained by contacting National Grid at the following
address and telephone number: David Forward, National Grid Group plc, 15
Marylebone Road, London, NW1 5JD, telephone: 020-7312-5600.
PLEASE READ THE PROXY STATEMENT CAREFULLY BEFORE MAKING A DECISION CONCERNING
THE MERGER.
This document does not constitute a solicitation by Niagara Mohawk or its board
of directors of any approval or action of its shareholders. Niagara Mohawk and
its board of directors will be soliciting proxies from Niagara Mohawk
shareholders in favor of the merger. You can obtain more information about
Niagara Mohawk's directors and officers and their beneficial interests in
Niagara Mohawk's common stock and in the transaction, which will constitute a
"change in control" for purposes of the employment agreements of certain Niagara
Mohawk executives, by accessing Niagara Mohawk's 2000 Proxy Statement available
on the SEC's website, http://www.sec.gov, and Niagara Mohawk's website,
http://www.niagaramohawk.com. Updated information with respect to the security
holdings of these individuals, and their interests in the transaction and the
solicitation, will be included in the final proxy statement to be filed with the
SEC.
CAUTIONARY STATEMENT -- Certain information in this letter concerning the
transaction with National Grid is forward-looking, including statements
regarding the consideration per share that Niagara Mohawk's shareholders are
projected to receive from the transaction and Niagara Mohawk's expectation as to
the closing date of the transaction. Forward-looking information is based on
management's estimates, assumptions and projections, and is subject to
significant uncertainties, many of which are beyond Niagara Mohawk's control.
Important risk factors could cause the actual future results to differ
materially from those currently estimated by management. Risk factors that could
materially affect statements made concerning the National Grid transaction
include, but are not limited to: the timely receipt of necessary shareholder,
regulatory and other consents and approvals needed to complete the transaction,
which could be delayed for a variety of reasons related or not related to the
transaction itself; the fulfillment of all of the closing conditions specified
in the transaction documents; and the dollar equivalent of the market price of
National Grid ordinary shares.
NATIONAL GRID LOGO NIAGARA MOHAWK LOGO
NATIONAL GRID (LSE, NYSE: NGG) /NIAGARA MOHAWK (NYSE: NMK)
MERGER HIGHLIGHTS
--------------------------------------------------------------------------------
WHAT THE TRANSACTION CREATES:
-----------------------------
o The merger will create the ninth largest electric utility in the U.S. with
U.S. revenues of approximately $6.7 billion, a customer base of 3.2
million and a service territory covering 29,450 square miles.
o As National Grid's third and largest acquisition in the U.S., Niagara
Mohawk will double the size of National Grid USA, and will create a U.S.
business equal in size to National Grid's U.K. business.
o The merger will make National Grid the largest transmission business (by
miles) and the second largest distribution business (by customers) in the
New England/New York market.
o Niagara Mohawk will keep its operating headquarters in Syracuse. Upon
completion of the transaction, Niagara Mohawk's operating company is
expected to keep its name, with the tagline "a National Grid Company."
TRANSACTION SUMMARY:
--------------------
Terms: Niagara Mohawk stock for National Grid ADSs (i.e. shares)
and/or cash
Closing: Expected to be completed by late 2001, subject to regulatory
approvals, and shareholder approval of both companies
COMBINED TERRITORY:
-------------------
o National Grid USA's operating companies include Massachusetts Electric,
Narragansett Electric (R.I.), Granite State Electric (N.H.), and Nantucket
Electric (Mass.)
o Niagara Mohawk's service territory covers much of upstate New York, including
Buffalo, Watertown, Syracuse, Utica, and Albany
o National Grid USA's service territory includes a large portion of
Massachusetts, virtually all of Rhode Island, and a few communities in New
Hampshire
KEY FACTS NATIONAL GRID USA NIAGARA MOHAWK PRO FORMA COMBINED
--------- ----------------- -------------- ------------------
Electric Service Territory (sq. miles): 5,351 24,099 29,450
Miles of Transmission Lines: 2,996 9,327 12,323
Miles of Distribution Lines: 30,999 118,670 149,669
Total Electric Customer (000's): 1,677 1,554 3,231
Gas Service Territory (sq. miles): n/a 4,829 4,829
Total Gas Customers (000's): n/a 542 542
COMBINED LEADERSHIP:
--------------------
o James Ross will remain Chairman and nonexecutive director of National Grid
Group
o David Jones will remain Chief Executive and executive director of National
Grid Group
o Rick Sergel will remain President and Chief Executive Officer of National
Grid USA and an executive director of National Grid Group
o William E. Davis, Chairman and Chief Executive Officer of Niagara Mohawk,
will become Chairman of National Grid USA and an executive director of
National Grid Group for two years after the merger closes
o Another Niagara Mohawk director will join National Grid Group's Board
o Three Niagara Mohawk executives will join National Grid USA's Board
