Securities and Exchange Commission
Washington, DC 20549
Form 8-K
Current Report
Pursuant to Section 13 to 15(d) of the
Securities Exchange Act 1934
Date of Report September 19, 1994
(Date of earliest event reported)
California Energy Company, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-9874 94-2213782
(State of other (Commission File (IRS Employer
jurisdiction of Number) Identification No)
incorporation)
10831 Old Mill Road Omaha, Nebraska 68154
(Address of principal executive offices) Zip Code
Registrant's Telephone Number, including area code: (402)330-8900
N/A
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. Other Events
Execution of Power Purchase Agreements
On September 19, 1994, the Registrant announced that the
Registrant, Bonneville Power Administration ("BPA") and Eugene
Water & Electric Board ("EWEB") executed the final Power Purchase
Agreements for a 30 MW geothermal pilot project planned to be
constructed at the Newberry site near Bend, Oregon. BPA will
purchase 20 MW and EWEB will purchase 10 MW from the facility
under the terms of the 50 year purchase contracts. A copy of the
press release issued by the Registrant is set forth as Exhibit 1
hereto and is incorporated herein by reference.
Proposed Magma Acquisition
On September 19, 1994, the Registrant announced that it had
transmitted a letter to the Chairman and the President and Chief
Executive Officer of Magma Power Company proposing to acquire
Magma Power for $35 per share, consisting of $25 per share in
cash and $10 in market value per share of the Registrant's common
stock. A copy of the press release issued by the Registrant is
set forth as Exhibit 2 hereto and is incorporated herein by
reference.
ITEM 7. Financial Statements and Exhibits
Exhibit 1 - Press Release dated September 19, 1994.
Exhibit 2 - Press Release dated September 19, 1994.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
California Energy Company, Inc.
By: /s/Douglas L. Anderson
Douglas L. Anderson
Assistant Secretary
Dated: September 22, 1994
FOR IMMEDIATE RELEASE
David L. Sokol - Chairman and Chief Executive Officer
Dale R. Schuster, Vice President of Administration (402) 330-8900
David W. Cox, Vice President of External Affairs (402) 330-8900
CALIFORNIA ENERGY SIGNS
30 MW POWER SALES CONTRACTS
OMAHA, NEBRASKA, September 19, 1994 -- California Energy
Company, Inc. (NYSE, PSE and LSE: CE) ("CECI") announced today
that it has executed the final Power Purchase Agreements with
Bonneville Power Administration ("BPA") and Eugene Water and
Electric Board ("EWEB") for a 30 MW geothermal pilot project
planned to be constructed at the Newberry site near Bend, Oregon.
Under the term of the 50 year purchase contracts, BPA will purchase
20 MW and EWEB will purchase 10 MW from the facility. BPA and EWEB
together will have an option for an additional 100 MW should
further expansion of the geothermal field be undertaken by CECI.
CECI has jointly developed the project with EWEB in a cooperative
effort under which CECI will develop, design, construct, and
operate the facility and EWEB will lead the public information
process. The estimated construction and related cost of the pilot
project is approximately $110 million and is currently scheduled to
be operational in 1997.
CECI, BPA and EWEB had executed a Memorandum of Understanding
in 1992 after the 30 MW pilot project was awarded to CECI in
December of 1991. However, the execution of the Power Purchase
Agreements were subject to obtaining a final Environmental Impact
Statement (EIS) for the project, which has now been published.
David Sokol, Chairman and Chief Executive Officer said, "We
are pleased to participate in this public-private partnership and
believe that working together with EWEB and BPA, CECI will be able
to make the pilot project at Newberry an example of the significant
potential of clean, renewable, geothermal power in the Northwest."
Additionally, Mr. Sokol stated, "The finalizing of the Newberry
pilot project, coupled with the recent success of our Philippine
and Indonesian development efforts, demonstrates California
Energy's successful focused and consistent growth strategy."
California Energy Company is a leading international
developer, owner and operator of environmentally responsible power
generation facilities. Its six existing facilities currently
produce in excess of 325 MW with an additional 300 MW under
construction.
# # #
EXHIBIT 2
FOR IMMEDIATE RELEASE
CALIFORNIA ENERGY PROPOSES
$35 PER SHARE FOR MAGMA POWER
OMAHA, NEBRASKA, September 19, 1994 -- California Energy
Company, Inc. (NYSE, PSE and LSE: CE) ("CECI") announced today
that it has transmitted a letter to Paul Pankratz, Chairman, and
Ralph Boeker, President and Chief Executive Officer, of Magma Power
Company (NASDAQ: MGMA), proposing to acquire Magma Power for $35
per share, consisting of $25 per share in cash and $10 in market
value per share of California Energy common stock. California
Energy has received approval from its Board of Directors to
negotiate a definitive merger agreement which is subject to typical
terms and conditions for similar transactions. A copy of
California Energy's letter is attached to this press release.
California Energy Company is an international developer, owner
and operator of geothermal and other environmentally responsible
power generation facilities. Its six existing facilities currently
produce in excess of 300 MW of power with an additional 300 MW
under construction.
CONTACT: John Sylvia - Senior Vice President and Chief Financial Officer
(212) 418-4265
<PAGE>
September 19, 1994
Via Facsimile
Paul M. Pankratz,
Chairman
Ralph W. Boeker,
President and Chief Executive Officer
Magma Power Company
4365 Executive Drive
San Diego, CA 92121
Dear Paul and Ralph:
We have discussed on several occasions during the past 12
months the possible combination of California Energy Company,
Inc. ("California Energy") and Magma Power Company ("Magma").
As you know, California Energy believes strongly that the
strategic benefits which result from merging our companies
would enhance value for the shareholders of both companies,
while improving our shared competitive position in an
increasingly challenging business environment. While we have
been respectful of your desire to move slowly in this matter
in the past, the demands of a rapidly changing domestic and
global marketplace have led us to conclude that it is
appropriate to make a proposal to purchase Magma at this time.
Consequently, pursuant to the authority of its Board of
Directors, California Energy hereby proposes to acquire all
outstanding shares of Magma's common stock for $35 per share,
comprised of $25.00 in cash and $10.00 in market value of
California Energy's common stock. We understand from you that
Magma will complete the financing of its Malitbog geothermal
project in the Philippines in mid-November and we therefore
established our proposal price to reflect fully the value of
this project although our proposal is not contingent on the
completion of such financing.
We hope that our proposed transaction can be consummated
amicably and expect to hear from you promptly. I am available
to meet with you and Magma's Board to discuss this proposal,
and to answer any questions you may have. As you know,
California Energy has substantial cash on hand and our
financial advisor has confirmed to us that we can conclude any
additional financing required to effect the combination of our
two companies on a timely basis.
As I have stressed in our past discussions, we would prefer
that the combination of Magma and California Energy be
effected on a friendly, consensual basis in which the
interests of our respective shareholders, employees, customers
and business partners are fairly served. We are, of course,
prepared to negotiate in good faith all aspects of our
proposal and to work out the terms of a mutually satisfactory
merger agreement, containing terms and conditions typical for
a transaction of this type.
Under the circumstances, we believe that Magma's Board of
Directors has a fiduciary responsibility to provide its
shareholders with the opportunity to take advantage of this
proposal. While we hope that it will not become necessary for
us to approach your shareholders directly, in the event that
you do not respond to this proposal promptly, we reserve the
right to approach your shareholders directly with a tender
offer and/or a consent solicitation to call a special meeting
of shareholders for purposes of acting on this proposal and
electing directors.
Our companies, and the three of us personally, have enjoyed
cordial relations for some time. While I have consistently
expressed to you our belief that a business combination of
California Energy and Magma has strong commercial advantages,
my colleagues and I have also expressed our regard for the
quality of Magma's projects and the professionalism of its
management. As we are all keenly aware, the independent power
industry is undergoing fundamental change as a result of the
accelerating deregulation in the U.S. electric utility
industry. Simultaneously, our greatest growth opportunities
have shifted from the domestic market to the international
arena. While our growth prospects internationally are
extremely favorable, they also require dramatically expanded
developmental, financial, construction and operational
resources and talents. We are confident that the combination
of our companies will advance us to the forefront of the
global competition and will greatly enhance our probability of
successful growth with diligent risk management. We also
believe that the combined company would obtain a powerful
strategic advantage on international projects by being able to
draw upon the engineering talents of The Dow Chemical Company
and the construction expertise and capabilities of Peter
Kiewit Sons' Inc., California Energy's largest shareholder.
California Energy continues to experience strong growth and
remains committed to rapid international expansion. We have
this year successfully financed and placed over 300 MW of
geothermal power in construction in the Philippines and
believe that Magma's experienced management team and dedicated
employees will be an important addition to California Energy
as it pursues its aggressive development strategy.
Paul, as you, Ralph and I discussed on our phone call last
Thursday, the combination of our two companies is
fundamentally an economic decision and should additionally
provide for the proper and fair treatment of both companies'
employees. I can assure you that in any such transaction, we
would work together to ensure a high level of opportunity and
satisfaction for our combined employee group. It is my
personal hope that you and your advisors will share our
enthusiasm for the combination we have proposed and that we
can promptly provide for our respective shareholders the
enhanced value which it will create.
I encourage you to contact me at your earliest convenience;
additionally, your advisors may contact directly Mr. James
Goodwin of Gleacher & Co. (212-418-4218), California Energy
Company's financial advisor.
Sincerely yours,
/s/ David L. Sokol
David L. Sokol
Chairman, President and
Chief Executive Officer
cc: Board of Directors of Magma Power Company
c/o Magma Power Company
