<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 6, 1994
CALIFORNIA ENERGY COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 1-9874 94-2213782
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
</TABLE>
10831 Old Mill Road, Omaha, Nebraska 68194
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 402-330-8900
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED FROM LAST REPORT)
<PAGE>
<PAGE>
ITEM 5. OTHER EVENTS
On October 6, 1994, CE Acquisition Company, Inc., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of California Energy Company,
Inc., a Delaware corporation (the "Registrant"), commenced an offer (the
"Offer") to purchase 12,400,000 shares of Common Stock, par value $0.10 per
share ("Shares"), of Magma Power Company, a Nevada corporation (the
"Company"), and the associated Preferred Share Purchase Rights (the "Rights")
to be issued on October 14, 1994 pursuant to the Rights Agreement, dated on
or about October 3, 1994 between the Company and a Rights Agent, at $35 per
Share (and associated Right), net to the seller in cash, without interest
thereon. The 12,400,000 Shares sought pursuant to the Offer constitute
approximately 51% of the Shares on a fully diluted basis. The aggregate
consideration payable by the Purchaser with respect to the Shares to be
purchased in the Offer is approximately $434 million. The Purchaser estimates
that approximately an additional $176 million will be required to effectuate
the Proposed Merger described below. The Offer will expire at 12:00 midnight,
New York City time, on Thursday, November 3, 1994, unless the Offer is
extended.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn before the expiration of the Offer that number of
Shares which, together with Shares beneficially owned by the Purchaser,
represents at least a majority of the Shares outstanding on a fully diluted
basis, (2) the Company having entered into a definitive merger agreement with
the Purchaser to provide for the acquisition of the Company pursuant to the
Offer and the Proposed Merger, (3) the Purchaser being satisfied, in its sole
judgment, that the Purchaser has obtained financing sufficient to enable it
to consummate the Offer and the Proposed Merger, and (4) authorization by the
Registrant's stockholders of the issuance of shares of common stock, par
value $0.0675 per share, of the Registrant ("Registrant Common Stock")
sufficient to complete the Proposed Merger. The Offer is also subject to
certain other terms and conditions.
The purpose of the Offer is to acquire majority control of the Company as
the first step in the acquisition of the entire equity interest in the
Company. The Registrant is seeking to negotiate with the Company a definitive
acquisition agreement (the "Proposed Merger Agreement") pursuant to which the
Purchaser would, as soon as practicable following consummation of the Offer,
consummate a merger or other business combination (the "Proposed Merger")
with the Purchaser or another direct or indirect wholly owned subsidiary of
the Registrant. In the Proposed Merger, each outstanding Share and Right
(other than Shares held by the Registrant, the Purchaser or any other direct
or indirect wholly owned subsidiary of the Registrant, Shares held in the
treasury of the Company and Shares held by stockholders who properly exercise
dissenters' rights under the Nevada General Corporation Law) would be
converted into the right to receive cash and shares of Registrant Common
Stock having a combined cash and market value of $35 per Share. The per Share
amount of cash and Registrant Common Stock to be distributed in the Proposed
Merger would be determined such that the blended purchase price for all
Shares and Rights acquired by the Purchaser and its affiliates in the Offer
and the Proposed Merger would be $25 in cash, without interest thereon, and
$10 in market value of Registrant Common Stock as established within a range
of certain maximum and minimum prices for the Registrant Common Stock.
On October 3, 1994, the Company filed a complaint entitled Magma Power
Company v. California Energy Company, Inc., Case No. CV94-06160, against the
Registrant in the Second Judicial District Court of the State of Nevada in
and for the County of Washoe. The complaint seeks a declaratory judgment that
(i) the Company's Board properly discharged its fiduciary obligations in
adopting the Rights Agreement and an amendment to the Company's Bylaws and,
accordingly, such agreement and amendment were valid and binding, and (ii)
the Merger Moratorium Statute is valid and not in violation of the Commerce
Clause and Supremacy Clause of the United States Constitution. On October 5,
1994, the Registrant removed this action to the United States District Court
for the District of Nevada. The Registrant intends to take any action
necessary to have attempted impediments to the Offer and the Proposed Merger
set aside.
On October 6, 1994, the Purchaser filed a Statement on Schedule 14D-1
relating to the Offer with the Securities and Exchange Commission pursuant to
Rule 14d-3 under the Securities Exchange Act of 1934, a copy of which is
attached hereto as Exhibit 99.1. The foregoing description is qualified in
its entirety by reference to the Offer to Purchase, dated October 6, 1994,
which appears as Exhibit (a)(1) to the Schedule 14D-1 and is hereby
incorporated by reference herein.
2
<PAGE>
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired: None.
(b) Pro forma financial information: None.
(c) Exhibit:
99.1 Statement on Schedule 14D-1 with the Securities and Exchange
Commission on October 6, 1994 pursuant to Rule 14d-3 under the
Securities Exchange Act of 1934.
3
<PAGE>
<PAGE>
SIGNATURES
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/ Steven A. McArthur
Steven A. McArthur
Senior Vice President,
General Counsel and Secretary
October 6, 1994
4
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
- - ----------- ------------------------------------------------------------------------------------ --------
<S> <C>
99.1 Statement on Schedule 14D-1 with the Securities and Exchange Commission on
October 6, 1994 pursuant to Rule 14d-3 under the Securities Exchange Act of 1934.
</TABLE>
5
<PAGE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
(TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934)
MAGMA POWER COMPANY
(Subject Company)
CALIFORNIA ENERGY COMPANY, INC.
CE ACQUISITION COMPANY, INC.
(Bidders)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(Including the Associated Preferred Share Purchase Rights)
(Title of Class of Securities)
94-2213782
(CUSIP Number of Class of Securities)
STEVEN A. MCARTHUR, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CALIFORNIA ENERGY COMPANY, INC.
10831 OLD MILL ROAD
OMAHA, NEBRASKA 68194
(402) 330-8900
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
Copies to:
PETER J. HANLON, ESQ.
MICHAEL A. SCHWARTZ, ESQ.
WILLKIE FARR & GALLAGHER
ONE CITICORP CENTER
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
(212) 821-8000
CALCULATION OF FILING FEE
- - -------------------------------------------------------------------------------
TRANSACTION AMOUNT OF
VALUATION* FILING FEE**
-------------- --------------
$434,000,000 $86,800
- - -------------------------------------------------------------------------------
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of 12,400,000 shares of Common Stock, par value $0.10 per
share, of Magma Power Company at $35 net per share in cash.
** The amount of the filing fee, calculated in accordance with Rule 0-11(d)
under the Securities Exchange Act of 1934, equals 1/50 of one percent of
the aggregate value of cash offered by CE Acquisition Company, Inc. for
such number of shares.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and date of its filing.
Amount Previously Paid: Not Applicable Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons California
Energy Company, Inc.: 94--2213782 ...........................................................
2) Check the Appropriate Box if a Member of a Group
(a) ........................................................................................
(b) ........................................................................................
3) SEC Use Only ................................................................................
4) Sources of Funds..................................... WC, BK ..................................
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) ........
6) Citizenship or Place of Organization............................ DE ..........................
7) Aggregate Amount Beneficially Owned by Each Reporting Person 200,000 ........................
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares ............................
9) Percent of Class Represented by Amount in Row (7).................... 0.8% ...................
10) Type of Reporting Person................................... CO ................................
</TABLE>
2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons CE
Acquisition Company, Inc.: (applied for)
2) Check the Appropriate Box if a Member of a Group
(a).......................................... X .......................................
(b) ................................................................................
3) SEC Use Only ........................................................................
4) Sources of Funds ................................ WC, BK ..............................
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items .............
6) Citizenship or Place of Organization........................ DE ......................
7) Aggregate Amount Beneficially Owned by Each Reporting Person ........ 200,000 .......
8) Check if the Aggregate Amount in Row (7) Excludes Certain Shares ....................
9) Percent of Class Represented by Amount in Row (7)................ 0.8% ...............
10) Type of Reporting Person .............................. CO ............................
</TABLE>
3
<PAGE>
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Magma Power Company, a Nevada
corporation (the "Company"), which has its principal executive offices at
4365 Executive Drive, Suite 900, San Diego, California 92121.
(b) This Statement on Schedule 14D-1 relates to an offer by CE Acquisition
Company, Inc., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of California Energy Company, Inc. ("CECI"), to purchase
12,400,000 shares of common stock, par value $0.10 per share (the "Shares"),
of the Company, and, if applicable, associated Preferred Share Purchase
Rights (the "Rights") to be issued on October 14, 1994 pursuant to the Rights
Agreement, dated on or about October 3, 1994, between the Company and a
Rights Agent, at $35 per Share (and associated Right), net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated October 6, 1994 (the "Offer to
Purchase") and the related Letter of Transmittal (which together with the
Offer to Purchase constitutes the "Offer"), copies of which are attached
hereto as Exhibits (a)(1) and (a)(2), respectively. The information set forth
in the Introduction to the Offer to Purchase is incorporated herein by
reference.
(c) The information concerning the principal market for, and the prices
of, the Shares set forth in Section 6 "Price Range of Shares; Dividends" of
the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) The information set forth in the Introduction and Section 9
"Certain Information Concerning the Purchaser and CECI" of the Offer to
Purchase and Schedule I thereto is incorporated herein by reference.
(e)-(f) During the last five years, neither the Purchaser, CECI nor any
persons controlling the Purchaser, nor, to the best of Purchaser's knowledge,
any of the persons listed on Schedule I to the Offer to Purchase, has during
the last five years (i) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS
WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in Section 9 "Certain Information
Concerning the Purchaser and CECI", Section 10 "Background of the Offer;
Contacts with the Company" and Section 11 "Purpose of the Offer and the
Proposed Merger" of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 13 "Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction and Section 11
"Purpose of the Offer and the Merger" and Section 10 "Background of the
Offer; Contacts with the Company" of the Offer to Purchase is incorporated
herein by reference.
(f)-(g) The information set forth in Section 7 "Effect of the Offer on the
Market for the Shares and Exchange Act Registration" of the Offer to Purchase
is incorporated herein by reference.
4
<PAGE>
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction and Section 9 "Certain
Information Concerning the Purchaser and CECI" of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in Section 9 "Certain Information Concerning
the Purchaser and CECI" of the Offer to Purchase and Schedule I of the Offer
to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Section 9 "Certain
Information Concerning the Purchaser and CECI", Section 11 "Purpose of the
Offer and the Proposed Merger" and Section 12 "Certain Conditions of the
Offer" of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 "Fees and
Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 "Certain Information Concerning the
Purchaser and CECI" of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Introduction and Section 9 "Certain
Information Concerning the Purchaser and CECI" of the Offer to Purchase is
incorporated herein by reference.
(b) and (c) The information set forth in the Introduction and Section 15
"Certain Legal Matters" of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 7 "Effect of the Offer on the
Market for the Shares and Exchange Act Registration", Section 12 "Certain
Conditions of the Offer" and Section 15 "Certain Legal Matters" of the Offer
to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated October 6, 1994.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to their Clients.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Text of Press Release, dated October 4, 1994, issued by California
Energy Company, Inc.
(a)(8) Text of Press Release, dated October 6, 1994, issued by California
Energy Company, Inc.
(a)(9) Form of Summary Advertisement, dated October 6, 1994.
(b) None.
(c)(1) Engagement Letter, dated September 18, 1994, between California
Energy Company, Inc. and Gleacher & Co. Inc.
(c)(2) Engagement Letter, dated September 27, 1994, between California
Energy Company, Inc. and Lehman Brothers Inc.
(d) None.
(e) Not applicable.
(f) None.
5
<PAGE>
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Dated: October 6, 1994
CE ACQUISITION COMPANY, INC.
By: /s/ Steven A. McArthur
------------------------
Steven A. McArthur
Senior Vice President
General Counsel and Secretary
CALIFORNIA ENERGY COMPANY, INC.
By: /s/ Steven A. McArthur
------------------------
Steven A. McArthur
Senior Vice President
General Counsel and Secretary
6
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE NO. IN
SEQUENTIALLY NUMBERED
EXHIBIT NO. DESCRIPTION SCHEDULE
- - ----------- --------------------------------------------------------------------- ---------------------
<S> <C> <C>
(a)(1) Offer to Purchase, dated October 6, 1994.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to their Clients.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Text of Press Release, dated October 4, 1994, issued by California
Energy Company, Inc.
(a)(8) Text of Press Release, dated October 6, 1994, issued by California
Energy Company, Inc.
(a)(9) Form of Summary Advertisement, dated October 6, 1994.
(b) None.
(c)(1) Engagement Letter, dated September 18, 1994, between California
Energy Company, Inc. and Gleacher & Co. Inc.
(c)(2) Engagement Letter, dated September 27, 1994, between California
Energy Company, Inc. and Lehman Brothers Inc.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
12,400,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MAGMA POWER COMPANY
AT
$35 NET PER SHARE
BY
CE ACQUISITION COMPANY, INC.
A WHOLLY OWNED SUBSIDIARY OF
CALIFORNIA ENERGY COMPANY, INC.
- - -------------------------------------------------------------------------------
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, NOVEMBER 3, 1994,
UNLESS THE OFFER IS EXTENDED.
- - -------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN BEFORE THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY THE PURCHASER,
REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED
BASIS, (2) THE COMPANY HAVING ENTERED INTO A DEFINITIVE MERGER AGREEMENT WITH
THE PURCHASER TO PROVIDE FOR THE ACQUISITION OF THE COMPANY PURSUANT TO THE
OFFER AND THE PROPOSED MERGER DESCRIBED HEREIN, (3) THE PURCHASER BEING
SATISFIED, IN ITS SOLE JUDGMENT, THAT THE PURCHASER HAS OBTAINED FINANCING
SUFFICIENT TO ENABLE IT TO CONSUMMATE THE OFFER AND THE PROPOSED MERGER AND
(4) AUTHORIZATION BY CECI'S STOCKHOLDERS OF THE ISSUANCE OF CECI COMMON STOCK
SUFFICIENT TO COMPLETE THE PROPOSED MERGER. THE OFFER IS ALSO SUBJECT TO
CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 12.
IMPORTANT
Any stockholder desiring to tender all or any portion of his Shares (and
the associated Rights) should either (1) complete and sign the enclosed
Letter of Transmittal or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal, have his signature thereon
guaranteed if required by Instruction 1 of the Letter of Transmittal and mail
or deliver the Letter of Transmittal or such facsimile with his certificates
evidencing his Shares and, if separate, the certificates representing the
associated Rights, and any other required documents to the Depositary, or
follow the procedure for book-entry transfer of Shares (and Rights, if
applicable) set forth in Section 4, or (2) request his broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
him. Stockholders having Shares (and Rights, if applicable) registered in the
name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if they desire to tender their Shares and, if applicable, Rights so
registered. Unless and until the Purchaser, in its sole judgment, declares
that the Merger Agreement Condition is satisfied, stockholders will be
required to tender one Right for each Share tendered pursuant to the Offer in
order to effect a valid tender of such Share. A stockholder who desires to
accept the Offer and tender Shares and Rights and whose certificates for such
Shares (and Rights, if applicable) are not immediately available should
tender such Shares (and Rights, if applicable) by following the procedures
for guaranteed delivery set forth in Section 4.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective address and telephone
number set forth on the back cover of this Offer to Purchase. Requests for
additional copies of this Offer to Purchase, the Letter of Transmittal and
other tender offer materials may be directed to the Information Agent or to
brokers, dealers, commercial banks or trust companies.
The Dealer Manager for the Offer is:
GLEACHER & CO. INC.
October 6, 1994
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
INTRODUCTION ........................................................................... 1
THE TENDER OFFER ....................................................................... 4
1. Terms of the Offer; Expiration Date; Proration ................................... 4
2. Acceptance for Payment and Payment for Shares and Rights ......................... 6
3. Withdrawal Rights ................................................................ 7
4. Procedure for Tendering Shares and Rights ........................................ 8
5. Certain Federal Income Tax Consequences .......................................... 11
6. Price Range of Shares; Dividends ................................................. 12
7. Effect of the Offer on the Market for the Shares and Exchange Act Registration .. 13
8. Certain Information Concerning the Company ....................................... 14
9. Certain Information Concerning the Purchaser and CECI ............................ 15
10. Background of the Offer; Contacts with the Company ............................... 16
11. Purpose of the Offer and the Proposed Merger ..................................... 26
12. Certain Conditions of the Offer .................................................. 32
13. Source and Amount of Funds ....................................................... 35
14. Dividends and Distributions ...................................................... 35
15. Certain Legal Matters ............................................................ 36
16. Fees and Expenses ................................................................ 38
17. Miscellaneous .................................................................... 39
Schedule I --Directors and Executive Officers of the Purchaser, CECI and PKS ......... S-1
Schedule II --Schedule of Transactions in Shares During the Past 60 Days
by the Purchaser and CECI ................................................ S-6
</TABLE>
<PAGE>
<PAGE>
To All Holders of Shares of Common Stock (including the Associated
Preferred Share Purchase Rights) of Magma Power Company:
INTRODUCTION
CE Acquisition Company, Inc., a Delaware corporation (the "Purchaser") and
a wholly owned subsidiary of California Energy Company, Inc., a Delaware
corporation ("CECI"), hereby offers to purchase 12,400,000 shares of Common
Stock, par value $0.10 per share ("Shares"), of Magma Power Company, a Nevada
corporation (the "Company"), and (unless and until the Purchaser declares
that the Merger Agreement Condition (as defined below) has been satisfied)
the associated Preferred Share Purchase Rights (the "Rights") to be issued on
October 14, 1994 pursuant to the Rights Agreement, dated on or about October
3, 1994, between the Company and a Rights Agent (the "Rights Agreement"), at
$35 per Share (and associated Right), net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which
together constitute the "Offer"). The 12,400,000 Shares sought pursuant to
the Offer constitute approximately 51% of the Shares on a fully diluted
basis. Unless the context otherwise requires, all references to Shares shall
include the associated Rights. All references to the Rights shall include all
benefits that may inure to holders of the Rights pursuant to the Rights
Agreement.
Tendering stockholders will not be obliged to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of
Gleacher & Co. Inc. (the "Dealer Manager"), Lehman Brothers Inc. ("Lehman"),
IBJ Schroder Bank & Trust Company (the "Depositary") and MacKenzie Partners,
Inc. (the "Information Agent") incurred in connection with the Offer.
The purpose of the Offer is to acquire majority control of the Company as
the first step in the acquisition of the entire equity interest in the
Company. CECI is seeking to negotiate with the Company a definitive
acquisition agreement (the "Proposed Merger Agreement") pursuant to which the
Purchaser would, as soon as practicable following consummation of the Offer,
consummate a merger or other business combination (the "Proposed Merger")
with the Purchaser or another direct or indirect wholly owned subsidiary of
CECI. In the Proposed Merger, each outstanding Share (other than Shares held
by CECI, the Purchaser or any other direct or indirect wholly owned
subsidiary of CECI, Shares held in the treasury of the Company and Shares
held by stockholders who properly exercise dissenters' rights under the
Nevada General Corporation Law (the "NGCL")) would be converted into the
right to receive cash and shares of common stock, par value $0.0675 per
share, of CECI ("CECI Common Stock") having a combined cash and market value
of $35 per Share. The per Share amount of cash and CECI Common Stock to be
distributed in the Proposed Merger would be determined such that the blended
purchase price for all Shares acquired by the Purchaser and its affiliates in
the Offer and the Proposed Merger would be $25 in cash, without interest
thereon, and $10 in market value of CECI Common Stock, as established within
a range of certain maximum and minimum prices for the CECI Common Stock. See
Section 11.
The Offer is conditioned on, among other things, the Company having
entered into a definitive merger agreement with the Purchaser to provide for
the acquisition of the Company pursuant to the Offer and the Proposed Merger.
See Section 12. BY TENDERING SHARES INTO THE OFFER, THE COMPANY'S
STOCKHOLDERS EFFECTIVELY WILL EXPRESS TO THE BOARD OF DIRECTORS OF THE
COMPANY (THE "COMPANY'S BOARD") THAT THEY WISH TO BE ABLE TO ACCEPT THE OFFER
AND TO APPROVE THE PROPOSED MERGER OR A SIMILAR TRANSACTION WITH CECI AND ITS
AFFILIATES. IN THE EVENT THAT CECI IS UNABLE TO NEGOTIATE THE PROPOSED MERGER
AGREEMENT WITH THE COMPANY, THE PURCHASER MAY CHOOSE, UNDER CERTAIN
CIRCUMSTANCES DESCRIBED HEREIN, TO WAIVE SUCH CONDITION AND PURCHASE SHARES
PURSUANT TO THE OFFER, IN WHICH CASE IT WOULD SEEK TO OBTAIN MAXIMUM
REPRESENTATION ON THE COMPANY'S BOARD, EITHER THROUGH THE SOLICITATION OF
PROXIES OR WRITTEN CONSENTS. See Section 11.
IN ORDER TO INCREASE THE LIKELIHOOD THAT THE COMPANY AND THE PURCHASER
ENTER INTO THE PROPOSED MERGER AGREEMENT, THE PURCHASER HAS TAKEN PRELIMINARY
STEPS TO, AMONG OTHER THINGS, COMMENCE A SOLICITATION OF REQUESTS FOR THE
CALLING OF A SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS AT WHICH, AMONG
OTHER THINGS, THE HOLDERS OF SHARES WOULD BE ASKED TO APPROVE EXPANDING THE
SIZE OF THE COMPANY'S BOARD
1
<PAGE>
<PAGE>
FROM 11 TO 15 DIRECTORS AND FILLING FOUR NEW DIRECTORSHIPS CREATED THEREBY
WITH NOMINEES OF THE PURCHASER. THE NOMINEES OF THE PURCHASER WILL BE
COMMITTED TO ENSURING THAT THE OFFER AND THE PROPOSED MERGER GET A FULL AND
FAIR HEARING BY THE COMPANY'S BOARD. ASSUMING ALL FOUR NOMINEES OF THE
PURCHASER ARE ELECTED AT THE SPECIAL MEETING TO SERVE ON THE COMPANY'S BOARD,
THE PURCHASER BELIEVES IT WOULD OBTAIN MAJORITY REPRESENTATION ON THE
COMPANY'S BOARD (EIGHT SEATS OUT OF 15) IF IT SUBSEQUENTLY ELECTED ALL
DIRECTORS STANDING FOR ELECTION AT THE COMPANY'S 1995 ANNUAL MEETING OF
STOCKHOLDERS (THE "1995 ANNUAL MEETING"). THE PURCHASER WOULD BE ABLE TO
ELECT ALL SUCH DIRECTORS AND OBTAIN MAJORITY REPRESENTATION ON THE COMPANY'S
BOARD AT THE 1995 ANNUAL MEETING IF IT WERE TO PURCHASE A MAJORITY OF THE
SHARES PURSUANT TO THE OFFER AND OBTAIN FULL VOTING POWER FOR SUCH SHARES AT
A CONTROL SHARE SPECIAL MEETING (AS DEFINED IN SECTION 11) IF THE CONTROL
SHARE STATUTE (AS DEFINED BELOW) IS APPLICABLE OR BY OTHER MEANS AVAILABLE TO
IT. SEE SECTION 11.
This Offer does not constitute a solicitation of proxies or consents of
stockholders of the Company. Any such solicitation which the Purchaser may
make will be made only pursuant to separate proxy or consent materials in
compliance with the requirements of Section 14 of the Securities Exchange Act
of 1934 (the "Exchange Act"), and the rules and regulations thereunder.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN BEFORE THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY THE PURCHASER,
REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED
BASIS (SUCH CONDITION BEING REFERRED TO AS THE "MINIMUM TENDER CONDITION"),
(2) THE COMPANY HAVING ENTERED INTO A DEFINITIVE MERGER AGREEMENT WITH THE
PURCHASER TO PROVIDE FOR THE ACQUISITION OF THE COMPANY PURSUANT TO THE OFFER
AND THE PROPOSED MERGER (SUCH CONDITION BEING REFERRED TO AS THE "MERGER
AGREEMENT CONDITION"), (3) THE PURCHASER BEING SATISFIED, IN ITS SOLE
JUDGMENT, THAT THE PURCHASER HAS OBTAINED FINANCING SUFFICIENT TO ENABLE IT
TO CONSUMMATE THE OFFER AND THE PROPOSED MERGER (SUCH CONDITION BEING
REFERRED TO AS THE "FINANCING CONDITION") AND (4) AUTHORIZATION BY CECI'S
STOCKHOLDERS OF THE ISSUANCE OF CECI COMMON STOCK SUFFICIENT TO COMPLETE THE
PROPOSED MERGER (SUCH CONDITION BEING HEREIN REFERRED TO AS THE "CECI
STOCKHOLDER APPROVAL CONDITION"). SEE SECTION 12.
The Minimum Tender Condition. The Minimum Tender Condition requires that
the number of Shares tendered and not withdrawn before the expiration of the
Offer, together with the Shares beneficially owned by the Purchaser,
represent at least a majority of the Shares outstanding on a fully diluted
basis. According to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994 (the "June 1994 10-Q"), filed with the Securities
and Exchange Commission (the "Commission") pursuant to the Exchange Act, as
of June 30, 1994, there were 24,027,080 Shares outstanding. According to the
Company's Proxy Statement for the 1994 Annual Meeting of Stockholders, dated
May 11, 1994 (the "1994 Proxy Statement"), filed with the Commission pursuant
to the Exchange Act, as of December 31, 1993, there were 598,250 Shares
subject to outstanding options and, according to the Company's 1993 Annual
Report to Shareholders, there were 19,925 Shares subject to a deferred stock
incentive award program. The Purchaser beneficially owns 200,000 Shares,
representing, based on information in the June 1994 10-Q and the 1994 Proxy
Statement, approximately 1% of the outstanding Shares and approximately 1% of
the outstanding Shares on a fully diluted basis, in each case excluding
treasury shares. The Shares beneficially owned by the Purchaser and CECI were
recently acquired in open market purchases. See Schedule II. For purposes of
the Offer, "fully diluted basis" assumes that all outstanding stock options
and deferred stock awards are presently exercisable.
Based on the foregoing and assuming no additional Shares or rights to
acquire Shares have been issued since June 30, 1994 (other than Shares issued
pursuant to the exercise of the stock options referred to above and deferred
stock options), if the Purchaser purchases 12,400,000 Shares (the "Minimum
Number of Shares") pursuant to the Offer, the Minimum Tender Condition would
be satisfied. The Purchaser is only seeking to purchase the Minimum Number of
Shares pursuant to the Offer. If for any reason the purchase of 12,400,000
Shares pursuant to the Offer would not satisfy the Minimum Tender Condition,
the Purchaser may elect, subject to complying with applicable rules and
regulations of the Commission, (i) to purchase additional Shares in the Offer
such that the aggregate number of Shares purchased pursuant to the Offer
would satisfy the Minimum Tender Condition, (ii) to terminate the Offer,
2
<PAGE>
<PAGE>
not accept for payment any Shares and return all tendered Shares to tendering
stockholders or (iii) to waive or reduce the Minimum Tender Condition and
waive any or all other conditions and accept for payment all Shares validly
tendered and not withdrawn.
The Merger Agreement Condition. The Merger Agreement Condition requires
that the Company enter into a definitive merger agreement with the Purchaser
that would provide for the acquisition of the Company by the Purchaser
pursuant to the Offer and the Proposed Merger. Under the NGCL, in order for
the Company to enter into the Proposed Merger Agreement, such agreement must
be approved by the Company's Board. The Purchaser will require that such
agreement contain provisions requiring the Company's Board to adopt a
resolution providing, or take such other corporate action as may be required
to ensure, that Sections 78.378 through 78.3793, inclusive, of the NGCL (the
"Control Share Statute"), Sections 78.411 through 78.444, inclusive, of the
NGCL (the "Merger Moratorium Statute") and the Rights are inapplicable to the
Offer and the Proposed Merger. See Section 11.
Although the Purchaser has sought to enter into negotiations with the
Company with respect to the Proposed Merger Agreement and continues to pursue
such negotiations, there can be no assurance that such negotiations will
occur or, if such negotiations occur, as to the outcome thereof. In order to
increase the likelihood that the Company and the Purchaser enter into the
Proposed Merger Agreement, the Purchaser has taken preliminary steps to,
among other things, commence a solicitation of requests for the calling of a
special meeting of the Company's stockholders at which, among other things,
the Company's stockholders would be asked to approve expanding the size of
the Company's Board from 11 to 15 directors and filling the four new
directorships created thereby with nominees of the Purchaser. The nominees of
the Purchaser will be committed to ensuring that the Offer and the Proposed
Merger get a full and fair hearing by the Company's Board. Assuming all four
nominees of the Purchaser were elected at the special meeting to serve on the
Company's Board, the Purchaser believes it would obtain majority
representation on the Company's Board (eight seats out of 15) if it
subsequently elected all directors standing for election at the 1995 Annual
Meeting. The Purchaser would be able to elect all such directors and obtain
majority representation on the Company's Board at the 1995 Annual Meeting if
it were to purchase a majority of the Shares pursuant to the Offer and obtain
full voting power for such Shares at a Control Share Special Meeting if the
Control Share Statute is applicable or by other means available to it. See
Section 11.
If the Purchaser determines that it is unlikely that the Merger Agreement
Condition will be satisfied, the Purchaser may, but shall not be required to,
waive the Merger Agreement Condition. The Purchaser does not currently intend
to waive the Merger Agreement Condition unless (A) (i) it determines, in its
sole judgment, that the Control Share Statute is inapplicable to the Offer or
has otherwise been complied with such that all Shares purchased pursuant to
the Offer will have full voting rights or (ii) the Offer is amended to add a
condition requiring that the Control Share Statute be, in the sole judgment
of the Purchaser, inapplicable to the Offer or otherwise have been complied
with such that all Shares purchased pursuant to the Offer will have full
voting rights, (B) (i) it determines, in its sole judgment, that the Merger
Moratorium Statute is invalid or otherwise inapplicable to the Offer and the
Proposed Merger or (ii) the Offer is amended to add a condition requiring
that the Merger Moratorium Statute be, in the sole judgment of the Purchaser,
inapplicable to the Offer and the Proposed Merger, and (C) (i) the Rights
have been redeemed by the Company's Board or the Purchaser is satisfied, in
its sole judgment, that the Rights have been invalidated or are otherwise
inapplicable to the Offer and the Proposed Merger or (ii) the Offer is
amended to add a condition requiring that the Rights have been invalidated or
are otherwise inapplicable to the Offer and the Proposed Merger. The
Purchaser intends to take any action necessary to have attempted impediments
to the Offer and the Proposed Merger set aside. See Section 11.
The Financing Condition. The Financing Condition provides that the Offer
is subject to the condition that the Purchaser shall be satisfied, in its
sole judgment, that the Purchaser has obtained financing sufficient to enable
it to consummate the Offer and the Proposed Merger. The Purchaser estimates
that the total amount of funds required to purchase all outstanding Shares
and Rights in the Offer will be approximately $434 million. The Purchaser
estimates that approximately an additional $176 million will be required to
effectuate the Proposed Merger. The Purchaser will obtain such funds through
borrowings from commercial banks and other financial institutions and through
a capital contribution by
3
<PAGE>
<PAGE>
CECI from CECI's general corporate funds, which at June 30, 1994 aggregated
$379.5 million. The Purchaser anticipates that approximately one-half of the
cash required to purchase Shares and Rights pursuant to the Offer and the
Proposed Merger will be provided through a secured bank credit facility on
terms and conditions to be determined. Although CECI's financial advisor has
confirmed, on the basis of discussions with a number of proposed lenders, to
the Purchaser its belief that the Purchaser can conclude the establishment of
this facility on a timely basis, CECI has not yet received binding
commitments from commercial banks to provide the required bank credit
facility. See Section 11.
The CECI Stockholder Approval Condition. The CECI Stockholder Approval
Condition requires that CECI's stockholders authorize additional CECI Common
Stock sufficient to complete the Proposed Merger. The rules of The New York
Stock Exchange ("NYSE") require that the issuance of the CECI Common Stock
pursuant to the Offer be approved by a majority of the votes cast at a
meeting of CECI's stockholders at which at least the holders of a majority of
the votes entitled to be cast are represented. CECI intends to seek such
approval at a special meeting of its stockholders, which is expected to be
held in mid-November 1994. Peter Kiewit Sons', Inc. ("PKS"), the holder of
approximately 38% of the outstanding voting power of CECI, has agreed to vote
at such special meeting in favor of the issuance of the CECI Common Stock
pursuant to the Proposed Merger. Because any merger of the Company is
expected to be effected with a subsidiary of CECI rather than with CECI, no
additional approval of CECI's stockholders will be required.
Certain other conditions to consummation of the Offer are described in
Section 12. The Purchaser expressly reserves the right to waive any one or
more of the conditions to the Offer. See Section 12.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended
or amended, the terms and conditions of any extension or amendment), the
Purchaser will accept for payment and pay for all outstanding Shares and, if
applicable, Rights tendered on or before the Expiration Date (as defined
below) and not theretofore withdrawn in accordance with Section 3. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Thursday,
November 3, 1994, unless and until the Purchaser, in its sole discretion,
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by the Purchaser, shall expire. For purposes of the
Offer, a "business day" means any day other than a Saturday, Sunday or
federal holiday and consists of the time period from 12:01 A.M. through 12:00
Midnight, New York City time.
Consummation of the Offer is conditioned upon, among other things,
satisfaction of the Minimum Tender Condition, the Merger Agreement Condition,
the Financing Condition and the CECI Stockholder Approval Condition. If any
or all of such conditions or any or all of the other conditions set forth in
Section 12 are not satisfied prior to the Expiration Date, the Purchaser may
elect to (i) extend the Offer and retain all tendered Shares until the
expiration of the Offer, as extended, subject to the terms of the Offer
(including any rights of the stockholders to withdraw their Shares), (ii)
terminate the Offer and not accept for payment any Shares and return all
tendered Shares to tendering stockholders or (iii) waive any or all other
conditions and, subject to complying with applicable rules and regulations of
the Commission, accept for payment all Shares validly tendered.
If more than 12,400,000 Shares and, if applicable, Rights, shall be
properly tendered on or prior to the Expiration Date and not withdrawn, and
the acquisition of such number of Shares satisfies the Minimum Tender
Condition, the Purchaser will, upon the terms and subject to the conditions
of the Offer, purchase 12,400,000 Shares and Rights on a pro rata basis (with
adjustments to avoid purchases of fractional Shares) based upon the number of
Shares and Rights properly tendered on or prior to the Expiration Date and
not withdrawn. If exactly 12,400,000 Shares and Rights are properly tendered
on or prior to the Expiration Date and not withdrawn, and the acquisition of
such number of Shares and Rights satisfies the Minimum Tender Condition, the
Purchaser will, upon the terms and subject to the conditions
4
<PAGE>
<PAGE>
of the Offer, accept for payment and purchase all such Shares and Rights so
tendered. If fewer than 12,400,000 Shares and Rights shall have been properly
tendered on or prior to the Expiration Date and not withdrawn and the number
of Shares so tendered and not withdrawn shall not have satisfied the Minimum
Tender Condition, the Purchaser may (i) terminate the Offer and return all
tendered Shares and Rights to tendering shareholders, (ii) extend the Offer
and retain all such Shares and such Rights until the expiration of the Offer,
as extended, subject to the terms of the Offer (including any rights of
stockholders to withdraw their Shares), or (iii) waive the Minimum Tender
Condition and purchase all properly tendered Shares and Rights. See Section
12.
Due to the difficulty of determining the precise number of Shares and, if
applicable, Rights properly tendered and not withdrawn, if proration is
required the Purchaser does not expect to announce the final results of
proration or pay for any Shares and, if applicable, Rights until at least
seven Nasdaq National Market ("NNM") trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of Shares and/or
Rights may obtain such preliminary information when it becomes available from
the Information Agent and may be able to obtain such information from their
brokers.
The Purchaser expressly reserves the right, in its sole judgment, at any
time or from time to time, and regardless of whether any of the events set
forth in Section 12 shall have occurred or shall have been determined by the
Purchaser to have occurred, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment
for, any Shares, by giving oral or written notice of such extension to the
Depositary and (ii) to amend the Offer in any respect by giving oral or
written notice of such amendment to the Depositary. The rights reserved by
the Purchaser in this paragraph are in addition to the Purchaser's rights to
terminate the Offer pursuant to Section 12. Any such extension, amendment or
termination will be followed as promptly as practicable by public
announcement thereof, such announcement in the case of an extension to be
issued not later than 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date. The manner in which the
Purchaser will make such public announcement may, if appropriate, be limited
to a release to the Dow Jones News Service. The reservation by the Purchaser
of the right to delay acceptance for payment of or payment for any Shares or
Rights is subject to the provisions of applicable law, which require that the
Purchaser pay the consideration offered or return the Shares or Rights
deposited by or on behalf of stockholders promptly after termination or
withdrawal of the Offer.
If the Purchaser decides to increase or decrease the consideration offered
in the Offer, or to increase or decrease the number of Shares being sought
(other than an increase in the number of Shares being sought that does not
exceed 2% of the number of Shares outstanding), and if at the time that
notice of such increase or decrease is first published, sent or given to
holders of Shares and Rights in the manner specified above, the Offer is
scheduled to expire at any time earlier than the expiration of a period
ending on the tenth business day from, and including, the date that such
notice is first so published, sent or given, the Offer will be extended until
the expiration of such period of ten business days. If the Purchaser waives
any material condition to the Offer (including the Minimum Tender Condition),
or amends the Offer in any other material respect, the Purchaser will extend
the Offer and disseminate additional tender offer materials to the extent
required to comply with the Commission's interpretation of Rules 14d-4(c) and
14d-6(d) under the Exchange Act. The minimum period during which an offer
must remain open following material changes in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the change in terms or
information.
A request is being made to the Company for use of its stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares and Rights. Upon compliance by the Company with this
request, this Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and
Rights and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists and, if applicable, list of holders of Rights
or who are listed as participants in a clearing agency's security position
listing for subsequent transmittal to beneficial owners of Shares and Rights.
5
<PAGE>
<PAGE>
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES AND RIGHTS. Upon the
terms and subject to the conditions of the Offer (including, if the Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment, and will pay for, Shares
validly tendered before the Expiration Date and not properly withdrawn in
accordance with Section 3 (including Shares validly tendered and not
withdrawn during any extension of the Offer, if the Offer is extended,
subject to the terms and conditions of such extension) as soon as practicable
after the last to occur of (i) the Expiration Date and (ii) the expiration or
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), in connection with the
filings to be made related to the Offer. In addition, the Purchaser expressly
reserves the right, in its sole discretion, to delay the acceptance for
payment of or payment for Shares and Rights in order to comply, in whole or
in part, with any other applicable law. Any such delays will be effected in
compliance with Rule 14e-1(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Shares and Rights
promptly after the termination or withdrawal of the Offer).
The per Share consideration paid to any stockholder pursuant to the Offer
will be the highest per Share consideration paid to any other stockholder
pursuant to the Offer. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Shares and, if applicable, Rights (or
timely confirmation (a "Book-Entry Confirmation") of the book-entry transfer
of such Shares and, if applicable, Rights into the Depositary's account at
The Depository Trust Company, Midwest Securities Trust Company or
Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer
Facilities")), pursuant to the procedures set forth in Section 4, (ii) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees, or an Agent's Message (as
defined below) in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares, that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Purchaser may enforce such agreement against the participant.
Payment for Shares and, if applicable, Rights accepted for payment
pursuant to the Offer may be delayed in the event of proration due to the
difficulty of determining the number of Shares and Rights validly tendered
and not withdrawn. See Section 1.
A Notification and Report Form with respect to the Offer will be filed
under the HSR Act on October 6, 1994, and the waiting period with respect to
the Offer under the HSR Act will expire at 11:59 P.M., New York City time, on
October 21, 1994. Before such time, however, either the Federal Trade
Commission (the "FTC") or the Antitrust Division of the Department of Justice
(the "Antitrust Division") may extend the waiting period by requesting
additional information or material from the Purchaser. If such request is
made, the waiting period will expire at 11:59 P.M., New York City time, on
the tenth calendar day after the Purchaser has substantially complied with
such request. Thereafter, the waiting period may be extended only by court
order or with the Purchaser's consent. See Section 15.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn, if, as and when the Purchaser gives oral or written notice
to the Depositary of its acceptance for payment of the tenders of such
Shares. Payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which
will act as agent for the tendering stockholders for purposes of receiving
payment from the Purchaser and transmitting payment to tendering
stockholders. UNDER NO CIRCUMSTANCES WILL THE PURCHASER PAY INTEREST ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason (including because of proration)
or are not paid for because of invalid tender, or if
6
<PAGE>
<PAGE>
certificates are submitted representing more Shares than are tendered,
certificates representing unpurchased or untendered Shares will be returned,
without expense to the tendering stockholder (or, in the case of Shares
tendered by book-entry transfer of such Shares into the Depositary's account
at a Book-Entry Transfer Facility as described in Section 4, such Shares will
be credited to an account maintained within such Book-Entry Transfer
Facility), as soon as practicable following the expiration, termination or
withdrawal of the Offer and determination of the final results of proration.
In the event separate certificates for Rights are issued, similar action will
be taken with respect to unpurchased or untendered Rights.
As required by Commission rules, if the Purchaser were to vary the terms
of the Offer by increasing the consideration to be paid per Share, the
Purchaser will pay such increased consideration for all Shares purchased
pursuant to the Offer, whether or not such Shares have been tendered prior to
such increase in consideration.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more direct or indirect subsidiaries of CECI,
the right to purchase all or any portion of the Shares and Rights tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
the Purchaser of its obligations under the Offer and will in no way prejudice
the rights of tendering stockholders to receive payment for Shares and Rights
validly tendered and accepted for payment pursuant to the Offer.
3. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 3,
tenders of Shares and Rights made pursuant to the Offer are irrevocable.
Shares and Rights tendered pursuant to the Offer may be withdrawn at any time
before the Expiration Date and, unless theretofore accepted for payment by
the Purchaser as provided herein, may also be withdrawn at any time after
December 4, 1994.
If, for any reason whatsoever, acceptance for payment of any Shares and,
if applicable, for Rights tendered pursuant to the Offer is delayed, or if
the Purchaser is unable to accept for payment or pay for Shares and Rights
tendered pursuant to the Offer, then, without prejudice to the Purchaser's
rights set forth herein, the Depositary may, nevertheless, on behalf of the
Purchaser, retain tendered Shares and Rights, and such Shares and Rights may
not be withdrawn except to the extent that the tendering stockholder is
entitled to and duly exercises withdrawal rights as described in this Section
3. Any such delay will be accompanied by an extension of the Offer to the
extent required by law.
In order for a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase. Any notice of withdrawal must specify the name of the person
having tendered the Shares to be withdrawn, and, if applicable, Rights to be
withdrawn, the number of Shares and Rights to be withdrawn and, if
certificates for Shares or Rights have been tendered, the name of the
registered holder of Shares and Rights as set forth in the tendered
certificate, if different from that of the person who tendered such Shares
and Rights. If certificates for Shares ("Share Certificates") or Rights
("Rights Certificates," and together with Share Certificates, "Certificates")
have been delivered or otherwise identified to the Depositary, then, before
the physical release of such Certificates, the serial numbers shown on such
Certificates must be submitted to the Depositary and the signatures on the
notice of withdrawal must be guaranteed by a firm which is a bank, broker,
dealer, credit union, savings association or other entity which is a member
in good standing of the Securities Transfer Agent's Medallion Program
(collectively, "Eligible Institutions"), unless such Shares or Rights have
been tendered for the account of any Eligible Institution. If Shares and
Rights have been delivered pursuant to the procedures for book-entry delivery
as set forth in Section 4, any notice of withdrawal must also specify the
name and the number of the account at the appropriate Book-Entry Transfer
Facility to be credited with the withdrawn Shares or Rights and otherwise
comply with such Book-Entry Transfer Facility's procedures. Withdrawal of
tenders of Shares or Rights may not be rescinded, and any Shares or Rights
properly withdrawn will be deemed not to be validly tendered for purposes of
the Offer. Withdrawn Shares or Rights may, however, be retendered by
repeating one of the procedures described in Section 4 at any time before the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding.
7
<PAGE>
<PAGE>
None of the Purchaser, CECI, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
will incur any liability for failure to give any such notification.
4. PROCEDURE FOR TENDERING SHARES AND RIGHTS. To tender Shares and (prior
to the Distribution Date) Rights validly pursuant to the Offer, a stockholder
must cause a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or an Agent's
Message in connection with a book-entry delivery of Shares and (prior to the
Distribution Date) Rights, and any other required documents, to be received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase and must either cause certificates for tendered Shares and
(prior to the Distribution Date) Rights to be received by the Depositary at
one of such addresses or cause such Shares and Rights to be delivered
pursuant to the procedures for book-entry delivery set forth below (and a
Book-Entry Confirmation to be received by the Depositary), in each case
before the Expiration Date, or (in lieu of the foregoing) such stockholder
must comply with the guaranteed delivery procedure set forth below.
Although the Purchaser has not been able to obtain a copy of the Rights
Agreement, the Purchaser expects, based on rights agreements entered into by
other public companies, that until the Distribution Date (as defined in
Section 11), the Rights will be evidenced by Share Certificates registered in
the names of the holders thereof and, as soon as practicable thereafter,
separate Rights Certificates will be distributed to record holders of Shares
as of the Distribution Date. Until the Distribution Date, the Rights will be
transferable only in connection with the transfer of Shares. The Purchaser
expects that the Rights Agreement provides that as soon as practicable after
the Distribution Date, the Company will send to each record holder of a
Share, as of the close of business on the Distribution Date, a Rights
Certificate evidencing one Right for each Share. See Section 11.
If the Distribution Date does not occur prior to the Expiration Date, a
tender of Shares will also constitute a tender of the associated Rights. If
the Distribution Date occurs and Rights Certificates are distributed by the
Company to holders of Shares prior to the time a holder's Shares are tendered
pursuant to the Offer, in order for Rights (and the corresponding Shares) to
be validly tendered, Rights Certificates representing a number of Rights
equal to the number of Shares tendered must be delivered to the Depositary
or, if book-entry delivery is available with respect to Rights, a Book-Entry
Confirmation must be received by the Depositary with respect thereto. If the
Distribution Date occurs and Rights Certificates are not distributed prior to
the time Shares are tendered pursuant to the Offer, Rights may be tendered
prior to a stockholder receiving Rights Certificates by use of the guaranteed
delivery procedure described below. In any case, a tender of Shares
constitutes an agreement by the tendering stockholder to deliver Rights
Certificates representing a number of Rights equal to the number of Shares
tendered pursuant to the Offer to the Depositary within five business days
after the date Rights Certificates are distributed. The Purchaser reserves
the right to require that the Depositary receive Rights Certificates or a
Book-Entry Confirmation, if available, with respect to such Rights prior to
accepting the related Shares for payment pursuant to the Offer, if the
Distribution Date occurs prior to the Expiration Date.
IF THE PURCHASER DECLARES THAT THE MERGER AGREEMENT CONDITION IS
SATISFIED, THE PURCHASER WILL NOT REQUIRE DELIVERY OF RIGHTS. UNLESS AND
UNTIL THE PURCHASER DECLARES THAT THE MERGER AGREEMENT CONDITION IS
SATISFIED, HOLDERS OF SHARES WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH
SHARE TENDERED TO EFFECT A VALID TENDER OF SUCH SHARE.
The Depositary will establish accounts with respect to the Shares at the
Book-Entry Transfer Facilities for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that
is a participant in any of the Book-Entry Transfer Facilities' systems may
make book-entry delivery of the Shares by causing such Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with such Book-Entry Transfer Facility's procedure for such transfer.
However, although delivery of Shares may be effected through book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility, the
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in
8
<PAGE>
<PAGE>
connection with a book-entry delivery of Shares, and any other required
documents, must, in any case, be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase before the Expiration Date, or the tendering stockholder must
comply with the guaranteed delivery procedure described below.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
If the Distribution Date occurs prior to the Expiration Date, the
Depositary will also make a request to establish an account with respect to
the Rights at each of the Book-Entry Transfer Facilities, but no assurance
can be given that book-entry delivery of Rights will be available. If
book-entry delivery of Rights is available, the foregoing book-entry transfer
procedures will also apply to Rights. Otherwise, if Rights Certificates have
been issued, a tendering stockholder will be required to tender Rights by
means of physical delivery to the Depositary of Rights Certificates (in which
event references in this Offer to Purchase to Book-Entry Confirmations with
respect to Rights will be inapplicable) or pursuant to the guaranteed
delivery procedure set forth below.
Signatures on all Letters of Transmittal must be guaranteed by an Eligible
Institution, except in cases where Shares and Rights are tendered (i) by
registered holders of Shares and Rights (which term includes any participant
in a Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Shares or Rights) who has not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account
of an Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If the Share Certificates or Rights Certificates are registered in the name
of a person other than the signer of the Letter of Transmittal, or if payment
is to be made to a person other than the registered owner of the Certificates
surrendered, then the Certificates must be endorsed or accompanied by duly
executed stock powers, in either case signed exactly as the name or names of
the registered owner or owners appear on the Certificates, with the
signature(s) on the Certificates or stock powers guaranteed as aforesaid. See
Instruction 5 of the Letter of Transmittal.
THE METHOD OF DELIVERY OF SHARES, RIGHTS, THE LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of federal income tax, the Depositary will be
required to withhold, and will withhold, 31% of the gross proceeds otherwise
payable to a stockholder or other payee with respect to Shares or Rights
purchased pursuant to the Offer if the stockholder does not provide his
taxpayer identification number (social security number or employer
identification number) and certify that such number is correct. Each
tendering stockholder should complete and sign the main signature form and
the Substitute Form W-9 included as part of the Letter of Transmittal, so as
to provide the information and certification necessary to avoid backup
withholding, unless an applicable exemption exists and is proved in a manner
satisfactory to the Purchaser and the Depositary.
If a stockholder desires to tender Shares and Rights pursuant to the Offer
and such stockholder's Share Certificates or, if applicable, Rights
Certificates, are not immediately available (including because Rights
Certificates have not yet been distributed by the Company) or such
stockholder cannot deliver the Certificates and all other required documents
to the Depositary before the Expiration Date, such Shares or Rights may
nevertheless be tendered, provided that all of the following conditions are
satisfied:
(a) such tender is made by or through an Eligible Institution; and
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, on or before the Expiration Date;
and
9
<PAGE>
<PAGE>
(c) the certificates for all tendered Shares or Rights, in proper form
for transfer (or a Book-Entry Confirmation), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof)
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and all other documents required by the
Letter of Transmittal are received by the Depositary within (a) five NNM
trading days after the date of execution of such Notice of Guaranteed
Delivery to the Depositary or (b) in the case of Rights, a period ending
on the later of (i) five NNM trading days after the date of execution of
such notice of Guaranteed Delivery and (ii) five business days after the
date Rights Certificates are distributed to stockholders by the Company.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) Certificates, or a Book-Entry Confirmation of such Shares
and, if the Distribution Date has occurred, Rights Certificates or a
Book-Entry Confirmation, if available, with respect to the Rights, (ii) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) (or, in the case of a book-entry transfer, an Agent's Message) and
(iii) any other documents required by the Letter of Transmittal. Accordingly,
payment might not be made to all tendering stockholders at the same time, and
will depend upon when Share Certificates or Rights Certificates or Book-Entry
Confirmations of such Shares (or Rights, if available) are received by the
Depositary.
By executing a Letter of Transmittal as set forth above, the tendering
stockholder irrevocably appoints designees of the Purchaser, and each of
them, as his attorneys-in-fact and proxies, in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares and, if
applicable, Rights tendered by such stockholder and accepted for payment by
the Purchaser and with respect to any and all other Shares and Rights or
other securities issued or issuable in respect of such Shares and Rights on
or after the date of this Offer to Purchase. All such powers of attorney and
proxies shall be considered irrevocable and coupled with an interest in the
tendered Shares and Rights. Such appointment will be effective when, and only
to the extent that, the Purchaser accepts such Shares and Rights for payment.
Upon such appointment, all prior proxies given by such stockholder will be
revoked, and no subsequent proxies may be given by such stockholder (and if
given, will not be deemed effective). The Purchaser's designees will be
empowered, among other things, to exercise all voting and other rights of
such stockholder as they in their sole discretion may deem proper at any
annual, special or adjourned meeting of the stockholders of the Company or
any consent in lieu of any such meeting or otherwise. The Purchaser reserves
the right to require that, in order for the Shares and Rights to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares and Rights, the Purchaser must be able to exercise full voting
and other rights of a record and beneficial holder, including acting by
written consent, with respect thereto.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares or Rights will be
determined by the Purchaser, in its sole discretion, whose determination
shall be final and binding. The Purchaser reserves the absolute right to
reject any and all tenders determined by it not to be in proper form or the
acceptance for payment of which may, in the opinion of its counsel, be
unlawful. The Purchaser also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any
Shares or Rights of any particular stockholder whether or not similar defects
or irregularities are waived in the case of other stockholders. None of the
Purchaser, CECI, the Depositary, the Dealer Manager, the Information Agent or
any other person will be under any duty to give notification of any defects
or irregularities in tenders or shall incur any liability for failure to give
any such notification. The Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and of the
instructions thereto) will be final and binding.
The valid tender of Shares or Rights pursuant to one of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the Offer. The
10
<PAGE>
<PAGE>
Purchaser's acceptance for payment of Shares or Rights tendered pursuant to
the Offer will constitute a binding agreement between the tendering
stockholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following summary is a
general discussion of the material federal income tax consequences to
stockholders of the Company who tender their Shares (and Rights) pursuant to
the Offer. The discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), applicable Treasury regulations thereunder,
administrative procedures, rulings and decisions in effect on the date
hereof, all of which are subject to change (possibly with retroactive effect)
by legislation, administrative action or judicial decision. No ruling has or
will be requested from the Internal Revenue Service (the "Service") regarding
the anticipated tax consequences described herein. The discussion set forth
below does not discuss all aspects of federal income taxation that may be
relevant to a particular stockholder in light of his personal investment
circumstances or to certain types of stockholders subject to special
treatment under the federal income tax laws (for example, tax-exempt
organizations, foreign corporations and individuals who have received Shares
as compensation or who are not citizens or residents of the United States)
and does not discuss any aspect of state, local or foreign taxation. The
discussion is limited to those stockholders who hold the Shares or Rights as
capital assets (generally, property held for investment) within the meaning
of Section 1221 of the Code. STOCKHOLDERS SHOULD CONSULT THEIR INDIVIDUAL TAX
ADVISORS CONCERNING THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE
PROPOSED MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS.
Exchange of Shares and Rights for Cash. The exchange of Shares (and
Rights) by tendering stockholders will be a taxable event for federal income
tax purposes, and may also be a taxable transaction under applicable state,
local and foreign tax laws. A tendering stockholder will generally recognize
gain or loss equal to the difference between the amount of cash received by
the stockholder pursuant to the Offer and the aggregate tax basis in the
Shares tendered by the stockholder and purchased pursuant to the Offer. Gain
or loss will be calculated separately for each block of Shares (and Rights)
tendered by the stockholder and purchased pursuant to the Offer.
Gain or loss recognized by a tendering stockholder will be capital gain or
loss if the Shares (and Rights) are held as capital assets. Such capital gain
or loss will be classified as a long-term capital gain or loss to the extent
that the tendered Shares (and Rights) have a holding period of more than one
year at the time of their purchase pursuant to the Offer. Long-term capital
gains recognized by a tendering individual stockholder will be subject to tax
at a maximum marginal federal rate of 28%. Short-term capital gains
recognized by a tendering individual stockholder will be subject to tax at a
maximum marginal federal rate of 39.6%. Net capital gains recognized by a
tendering corporate stockholder will be subject to tax at a maximum marginal
federal rate of 35%.
Tax Effects of the Proposed Merger. The Offer is subject to the Merger
Agreement Condition and, as described in Section 11 of this Offer to
Purchase, CECI is seeking to have the Company consummate a merger or other
business combination with the Purchaser or another direct or indirect wholly
owned subsidiary of CECI pursuant to which each outstanding Share and Right
(other than Shares and Rights held by CECI, the Purchaser or any other direct
or indirect wholly owned subsidiary of CECI, Shares held in the treasury of
the Company and Shares held by stockholders who properly exercise dissenters'
rights under the NGCL) would be converted into the right to receive cash and
shares of CECI Common Stock having a combined cash and market value of $35
per Share and Right. The per Share amount of cash and CECI Common Stock to be
distributed in the Proposed Merger will be determined such that the blended
purchase price for all Shares and Rights acquired by the Purchaser and its
affiliates in the Offer and the Proposed Merger will be $25 in cash, without
interest thereon, and $10 in market value of CECI Common Stock, as
established within a range of certain maximum and minimum prices for the CECI
Common Stock. See Section 11. If the Proposed Merger is consummated as
described in Section 11, the Proposed Merger would be a taxable transaction
for federal income tax purposes and stockholders who exchange their Shares
and Rights for cash and CECI Common Stock pursuant to the Proposed Merger
will recognize gain or loss in the Proposed Merger equal to the difference
between (i) the sum of the cash and the fair market value of the CECI Common
Stock received in the Proposed Merger and (ii) the holders' adjusted tax
basis for the Shares and Rights exchanged pursuant to the Proposed Merger.
11
<PAGE>
<PAGE>
Backup Withholding. To prevent "backup withholding" of federal income tax
on payments of cash to a stockholder of the Company who exchanges Shares (and
Rights) for cash in the Offer, a stockholder of the Company must, unless an
exception applies under the applicable law and regulations, provide the payor
of such cash with such stockholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such number is correct and that such stockholder is not subject to backup
withholding. A Substitute Form W-9 is included in the Letter of Transmittal.
If the correct TIN and certifications are not provided, a $50 penalty may be
imposed on a stockholder of the Company by the Service, and cash received by
such stockholder in exchange for Shares (or Rights) in the Offer may be
subject to backup withholding at the rate of 31%. Amounts paid as backup
withholding do not constitute an additional tax and would be allowable as a
credit against the stockholder's federal income tax liability.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are quoted on the NNM. The
following table sets forth, for the periods indicated, the reported high and
low sales prices per Share, and the amount of cash dividends paid per Share
for each such period. The information for the fiscal years ended December 31,
1991, 1992 and 1993 is derived from the Company's Annual Reports on Form 10-K
for the fiscal years ended December 31, 1992 and 1993. The information for
subsequent periods is derived from information reported in published
financial sources.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------ ----- -----------
<S> <C> <C> <C>
Fiscal Year Ended December 31, 1991:
First Quarter .........................$32 1/2 22 1/2 -0-
Second Quarter ........................ 34 1/2 28 1/2 -0-
Third Quarter ......................... 30 22 3/4 -0-
Fourth Quarter ........................ 27 1/2 23 1/4 -0-
Fiscal Year Ended December 31, 1992:
First Quarter ......................... 27 1/4 21 -0-
Second Quarter ........................ 25 3/4 19 1/4 -0-
Third Quarter ......................... 24 3/4 19 3/4 -0-
Fourth Quarter ........................ 32 1/4 19 3/4 -0-
Fiscal Year Ended December 31, 1993:
First Quarter ......................... 40 30 3/4 -0-
Second Quarter ........................ 41 1/2 30 3/4 -0-
Third Quarter ......................... 39 29 3/4 -0-
Fourth Quarter ........................ 40 1/2 30 -0-
Fiscal Year Ending December 31, 1994:
First Quarter ......................... 35 1/4 30 3/4 -0-
Second Quarter ........................ 33 1/4 28 -0-
Third Quarter ......................... 35 1/4 26 1/2 -0-
Fourth Quarter (through October 5,
1994) ............................... 35 34 -0-
</TABLE>
On October 3, 1994, the last full trading day prior to CECI's issuance of
the press release announcing its intention to commence the Offer, the
reported closing sale price per Share on the NNM was $34.75. On September 19,
1994, the day of CECI's issuance of the press release announcing the
transmission of a letter to the Company containing a proposal to acquire the
Company in a transaction in which stockholders would receive cash and shares
of CECI Common Stock having a combined cash and market value of $35 per
Share, the reported closing sale price per Share on the NNM was $27.50. The
Offer represents a 27.3% premium over the reported closing sale price per
Share on September 19, 1994. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
The Rights are currently attached to all outstanding Shares and may not be
traded separately. As a result, the sales prices per Share set forth above
are also the high and low sales prices per Share and attached Right during
those periods in which the Rights were outstanding. As described above, as a
result
12
<PAGE>
<PAGE>
of the commencement of the Offer, unless the Rights are redeemed or the
Rights Agreement is amended to provide otherwise, the Rights will separate
and will begin trading apart from the Shares after the Distribution Date. In
such event, stockholders of the Company are urged to obtain a current market
quotation, if any, for the Rights.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES AND EXCHANGE ACT
REGISTRATION. The purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and may reduce the
number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by the public.
After consummation of the Offer, the Shares may no longer meet the
requirements of the National Association of Securities Dealers, Inc. (the
"NASD") for continued inclusion on NNM, which require that an issuer have at
least 200,000 held shares, held by at least 400 stockholders or 300
stockholders of round lots, with a market value of $1 million and have net
tangible assets of at least either $2 million or $4 million, depending on
profitability levels during the issuer's four most recent fiscal years. If
NNM were to cease to publish quotations for the Shares, it is possible that
the Shares would continue to trade in the over-the-counter market and that
price or other quotations would be reported by other sources. The extent of
the public market for such and the availability of such quotations would
depend, however, upon such factors as the number of stockholders and/or the
aggregate market value of such securities remaining at such time, the
interest in maintaining a market in the Shares on the part of securities
firms, the possible termination of registration under the Exchange Act as
described below, and other factors. The Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would
have an adverse or beneficial effect on the market price for, or
marketability of, the Shares or whether it would cause future market prices
to be greater or lesser than the Offer price.
The Shares are currently "margin securities" under the rules of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend
credit on the collateral of such securities for the purpose of buying,
carrying, or trading in securities ("purpose loans"). Depending upon factors
similar to those described above regarding NNM quotations, the securities
might no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations and therefore could no longer be
used as collateral for purpose loans made by brokers. In addition, if
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer constitute "margin securities."
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the
Commission if the outstanding Shares are not listed on a national securities
exchange and there are fewer than 300 holders of record of the Shares. The
termination of the registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company
to holders of the Shares and would make certain of the provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings and the requirements of Rule 13e-3 under the Exchange
Act with respect to "going private" transactions, no longer applicable to the
Shares. Furthermore, "affiliates" of the Company and persons holding
"restricted securities" of the Company may be deprived of the ability to
dispose of the securities pursuant to Rule 144 under the Securities Act of
1933, as amended. If registration of the securities under the Exchange Act
were terminated, the securities would no longer be "margin securities" or
eligible for NNM reporting. The Purchaser intends to seek to cause the
Company to terminate the registration of the Shares under the Exchange Act as
soon as practicable after consummation of the Offer.
Based on publicly available information, the Purchaser expects the Rights
will be attached to the Shares and will not upon issuance be separately
transferable. As a result of the commencement of the Offer, the Distribution
Date may be as early as October 20, 1994. The Purchaser expects that, as soon
as practicable after the Distribution Date, Rights Certificates are to be
sent to all holders of Rights and the Rights will separate from the Shares.
If the Distribution Date occurs and the Rights separate from the Shares, the
foregoing discussion with respect to the effect of the Offer on the market
for the Shares, the NNM listing and Exchange Act registration would apply to
the Rights in a similar manner.
13
<PAGE>
<PAGE>
8. CERTAIN INFORMATION CONCERNING THE COMPANY. According to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (the
"1993 10-K"), the Company is a Nevada corporation with its principal
executive offices located at 4365 Executive Drive, Suite 900, San Diego,
California 92121. According to the 1993 10-K, the Company is principally
engaged in the generation of electricity from geothermal resources, and in
the acquisition of, exploration for and development of geothermal resources.
Set forth below is certain summary consolidated financial information with
respect to the Company derived from the information contained in the 1993
10-K, the June 1994 10-Q and the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993. More comprehensive financial information is
included in reports and other documents filed with the Commission, and the
following summary is qualified in its entirety by reference to such reports
and other documents and all financial information (including any related
notes) contained therein. Such reports and other documents may be examined
and copies may be obtained in the manner set forth below.
MAGMA POWER COMPANY
CONSOLIDATED SUMMARY FINANCIAL DATA
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------- --------------------
1991 1992 1993 1993 1994
--------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues ................... $94,891 $108,966 $167,138 $67,466 $87,221
Operating revenues(1) ............ 84,135 100,313 162,943 64,737 84,755
Income from operations ........... 41,204 49,667 74,913 27,174 34,776
Cumulative effect of change in
accounting principle ............ -- 17,833 -- -- --
Net income ....................... 33,941 54,191 52,135 19,016 23,994
Net income per share (assuming no
dilution) ....................... 1.44 2.36(2) 2.17 0.79 1.00
Weighted average common shares
outstanding (assuming no
dilution) ....................... 23,611 22,936 24,063 24,007 24,011
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- ----------------------
1992 1993 1993 1994
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital ........ $ 74,524 $ 69,719 $(90,989 ) $ 73,102
Total assets ........... 396,650 611,311 576,529 619,052
Non-current liabilities 95,689 211,896 101,686 193,498
Stockholders' equity .. 282,260 351,918 304,323 375,415
Book value per share . 12.28 14.67 13.17 15.62
</TABLE>
(1) Operating revenues exclude interest and other income.
(2) Income per share, assuming no dilution, before cumulative effect of
change in accounting principle, was $1.59.
14
<PAGE>
<PAGE>
Except where otherwise stated, the information concerning the Company
contained in this Offer to Purchase has been taken from or based upon
publicly available documents and records on file with the Commission and
other public sources. Although neither the Purchaser, CECI, the Dealer
Manager, Lehman nor the Information Agent has any knowledge that would
indicate that any statements contained herein based on such documents and
records are untrue, none of the Purchaser, CECI, the Dealer Manager, Lehman
or the Information Agent takes responsibility for the accuracy or
completeness of the information contained in such documents and records, or
for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to the Purchaser, CECI, the Dealer Manager, Lehman or the Information
Agent.
The Company is subject to the informational filing requirements of the
Exchange Act and in accordance therewith is obliged to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted
to them, the principal holders of the Company's securities, any material
interests of such persons in transactions with the Company and other matters
is required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements
and other information may be inspected at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies may be obtained, by
mail, upon payment of the Commission's customary charges, by writing to its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, such material should also be available for inspection at the
National Association of Securities Dealers, Inc., 1735 K Street, NW,
Washington, D.C. 20006. Except as otherwise noted in this Offer to Purchase,
all of the information with respect to the Company and its affiliates set
forth in this Offer to Purchase has been derived from publicly available
information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND CECI. CECI, together
with its subsidiaries, is primarily engaged in the exploration for and
development of geothermal resources and the development, ownership and
operation of environmentally responsible independent power production
facilities worldwide utilizing geothermal resources or other energy sources,
such as hydroelectric, natural gas, oil and coal. CECI was an early
participant in the domestic independent power market and is now one of the
largest geothermal power producers in the United States. CECI is also
actively pursuing opportunities in the international independent power
market. For the year ended December 31, 1993 and the six months ended June
30, 1994, CECI had revenues of $149.3 million and $80.7 million,
respectively, and net income of $47.2 million and $15.0 million,
respectively. As of June 30, 1994, CECI had cash and short-term investments
of $379.5 million.
Kiewit Energy Company ("Kiewit Energy"), a wholly owned subsidiary of PKS,
is an approximate 43% stockholder (on a fully-diluted basis) in CECI. PKS, a
Delaware corporation, is a large employee-owned company which had
approximately $2.2 billion in revenues in 1993 from its interests in
construction, mining, energy and telecommunications. PKS is one of the
largest construction companies in North America and has been in the
construction business since 1884. PKS is a joint venture participant in a
number of CECI's international private power projects.
The principal executive offices of the Purchaser and CECI are located at
10831 Old Mill Road, Omaha, Nebraska 68154 and their telephone number is
(402) 330-8900. The Purchaser is a wholly owned subsidiary of CECI and has
not conducted any business except in connection with the Offer. CECI and the
Purchaser were incorporated in 1971 and 1994, respectively, under the laws of
the State of Delaware. The principal executive offices of PKS are located at
1000 Kiewit Plaza, Omaha, Nebraska 68131, and its telephone number is (402)
342-2052. PKS was incorporated in 1941 under the laws of the State of
Delaware.
15
<PAGE>
<PAGE>
CALIFORNIA ENERGY COMPANY, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------- --------------------
1991 1992 1993 1993 1994
---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales of electricity and steam ...... $106,184 $117,342 $132,059 $59,613 $67,669
Interest and other income ............ 9,379 10,187 17,194 7,470 12,995
Cumulative effect of change in
accounting principle ................ -- -- 4,100 4,100 --
Extraordinary item ................... -- (4,991) -- -- (2007)
Net income ........................... 26,582 33,819 47,174 22,234 14,979
Net income available to common shares 26,582 29,544 42,544 19,984 12,543
Net income per share ................. .75 .79(1) 1.11(2) .52(2) .34(1)
Average number of shares outstanding 35,471 37,495 38,485 38,557 36,827
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------- ------------------------
1992 1993 1993 1994
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets ........ $580,550 $715,984 $686,302 $1,047,142
Total liabilities .. 336,272 425,393 419,682 791,601
Stockholders' equity 168,764 211,503 189,342 174,542
<FN>
(1) Income per share, before extraordinary item, was $.92 and $.40 for the
periods ended December 31, 1992, and June 30, 1994, respectively.
(2) Income per share, before cumulative effect of change in accounting
principle, was $1.00 and $.41 for the periods ended December 31, 1993
and June 30, 1993, respectively.
</TABLE>
Schedule II hereto sets forth transactions in the Shares effected during
the past 60 days by the Purchaser and its affiliates. Except as set forth in
this Offer to Purchase and Schedule II hereto, none of the Purchaser, CECI,
PKS or, to the best knowledge of the Purchaser, any of the persons listed in
Schedule I hereto, or any associate or majority-owned subsidiary of such
persons, beneficially owns any equity security of the Company, and none of
the Purchaser, CECI, PKS or, to the best knowledge of the Purchaser, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as otherwise stated in this Offer to Purchase, (i) there have not
been any contacts, transactions or negotiations between the Purchaser, CECI,
PKS or, to the best knowledge of the Purchaser, any of the persons listed in
Schedule I hereto, on the one hand, and the Company or any of its directors,
officers or affiliates, on the other hand, concerning a merger, consolidation
or acquisition, a tender offer or other acquisition of securities, an
election of directors, or a sale or other transfer of a material amount of
assets, or that are otherwise required to be disclosed pursuant to the rules
and regulations of the Commission, and (ii) none of the Purchaser, CECI, PKS
or, to the best knowledge of the Purchaser, any of the persons listed in
Schedule I hereto has any contract, arrangement, understanding or
relationship with any person with respect to any securities of the Company.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In May 1991, representatives of CECI and the Company entered into
discussions and meetings to explore the possibility of combining the
companies, and the two companies exchanged certain information concerning
their respective businesses for the purpose of considering such a business
combination or other acquisition transaction. At the end of May 1991, the
discussions were terminated as a result of the inability of the parties to
reach agreement concerning price and certain other terms.
16
<PAGE>
<PAGE>
In August 1991, the Company's representatives contacted CECI for the
purpose of again exploring the possibility of combining the companies. In
September 1991, a number of conversations between CECI's and the Company's
representatives were held regarding a possible merger of the Company with and
into CECI. Based upon those conversations, on September 26, 1991, after
receiving the approval of CECI's Executive Committee, CECI transmitted a
proposed letter of intent to the Company. The proposed letter of intent
contemplated a consensual merger of the Company with and into CECI. Pursuant
to the proposed merger, each outstanding Share would have been exchanged for
approximately two shares of CECI Common Stock in a transaction accounted for
on a pooling of interests basis. Such a transaction would have represented a
value of $30.25 for each Share (approximately a 20% premium to the
then-prevailing market price) based upon the then current market values of
the respective companies' common stocks.
Upon its receipt of the proposed letter of intent, the Company indicated
to CECI that the proposal would be promptly considered and, after certain
discussions by representatives of the parties in the intervening days, on
October 2, 1991, the Company advised CECI that the Company's Board had
considered CECI's proposal and that the Company had no interest in pursuing
the proposed pooling of interests combination transaction. Following the
expiration of its proposal, CECI elected not to pursue the proposed pooling
of interests combination transaction any further at that time. Shortly
thereafter, CECI sought reimbursement from the Company of certain costs and
other expenses related to the foregoing discussions but subsequently withdrew
its claim for reimbursement.
In August 1993, David L. Sokol, the Chairman, Chief Executive Officer and
President of CECI, contacted Paul M. Pankratz, then Chairman and Chief
Executive Officer of the Company in order to propose a meeting to discuss
various matters of mutual interest. At a meeting in San Diego in September
1993, Mr. Sokol and Steven A. McArthur, Senior Vice President, General
Counsel and Secretary of CECI, and Mr. Pankratz, Ralph W. Boeker, President
of the Company, and Jon R. Peele, Executive Vice President and General
Counsel of the Company, discussed principally the possibility of joint
venturing or other cooperation in respect of certain pending power
development projects in the Philippines and the possible sharing of legal
costs and information in respect of certain domestic regulatory proceedings
in which the companies had a common interest. During the course of those
discussions, Mr. Sokol suggested to the Company's management that such
potential cost savings were illustrative of certain of the synergies that a
combination of the companies could achieve. However, no agreements or
understandings were reached between CECI and the Company as a result of these
discussions. In addition, at that meeting CECI suggested to the Company that
it consider utilizing PKS as the Company's general contractor in respect of
the Company's pending projects in the Philippines. The Company's management
agreed to meet with PKS regarding its possible role as a contractor in the
Philippines. The meeting between the Company and PKS was held in the Fall of
1993, but no agreements or understandings were reached with PKS and no
further discussions were held in respect of such matters.
In January 1994, Mr. Sokol again contacted Mr. Pankratz by telephone in an
effort to resume the foregoing discussions and, at Mr. Pankratz's suggestion,
Mr. Sokol was asked to contact Mr. Boeker, the President and recently
appointed Chief Executive Officer of the Company, to discuss these matters
further. In an April 1994 telephone conversation between Mr. Sokol and Mr.
Boeker, the possibility of cooperation with respect to international joint
ventures between the companies and other possible synergies between the
companies were again generally discussed, but no agreements or understandings
were reached. At Mr. Boeker's suggestion, it was tentatively agreed that they
would resume their discussions in July 1994.
On or about June 20, 1994, Mr. Sokol contacted Mr. Boeker and proposed a
meeting in person between members of management of the two companies to
discuss the possible combination of CECI and the Company. As a result of that
conversation, an August 11, 1994 meeting was scheduled to be held between Mr.
Sokol and Mr. Boeker and other representatives of their companies.
On August 9, 1994, Mr. Sokol was advised that Mr. Boeker had cancelled the
scheduled August 11 meeting. On August 10, 1994, Mr. Sokol spoke to Mr.
Boeker by telephone, and was advised that the Company's decision to cancel
was principally due to the desire of the Company's management to dedicate
17
<PAGE>
<PAGE>
their full attention to the pending financing of the Company's Malitbog
project in the Philippines. Accordingly, Mr. Boeker suggested that he would
schedule a meeting with Mr. Sokol toward the end of September 1994, which is
when the Company expected to close the financing.
On September 15, 1994, Mr. Sokol contacted a member of the Company's
Board, in an effort to determine whether the Company had a serious interest
in discussing a negotiated combination of the companies within a time frame
that would recognize CECI's desire to make certain decisions regarding the
strategic direction it wished to pursue in the changing global marketplace.
The director stated that he was aware of certain of the past discussions
between the companies, but would ask the Company's management to respond
directly to Mr. Sokol's inquiry.
Later that same day, Messrs. Pankratz and Boeker called Mr. Sokol and
advised him that the closing of the financing for the Company's Malitbog
project had been delayed and was expected to occur on or about November 18,
1994 and suggested that they would be available to meet with Mr. Sokol
shortly after the closing of such financing. Mr. Sokol stated that CECI was
considering a number of strategic alternatives, including a possible
combination with the Company, and that CECI's strategic planning had reached
a stage where a prompt decision concerning entering into negotiations
regarding any possible combination with the Company was required. Mr. Sokol
further stated his belief that it was unnecessary to wait until after the
closing of the Malitbog financing because CECI was prepared to negotiate in
good faith on a basis that would value the Company as though such financing
had closed. Messrs. Boeker and Pankratz reiterated that they would agree to
meet only after the Malitbog closing and Mr. Sokol concluded the call by
reiterating CECI's need to act upon certain of its strategic alternatives on
a prompt basis.
On September 19, 1994, Mr. Sokol sent the following letter to Messrs.
Pankratz and Boeker:
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 interest 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.
18
<PAGE>
<PAGE>
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
19
<PAGE>
<PAGE>
On September 20, 1994, Mr. Pankratz sent the following letter to Mr.
Sokol:
Dear David:
We have received your letter of September 19, 1994 regarding your unsolicited
proposal to purchase Magma Power Company for a combination of cash and
securities. The purpose of this letter is to advise you that the Magma Board
of Directors will consider your proposal in due course and inform you of its
decision after completion of its evaluation.
Very truly yours,
/s/ Paul M. Pankratz
Paul M. Pankratz
Chairman of the Board
During the week of September 19, 1994, representatives of CECI contacted
management of The Dow Chemical Company ("Dow"), the beneficial owner of
approximately 21% of the Shares, to determine Dow's reaction to CECI's
proposal of September 19, 1994. The CECI representatives were told Dow was
evaluating the Offer. During the week of September 26, 1994, CECI's financial
representatives contacted management of Dow to inquire as to the
circumstances surrounding a recent sale by Dow of 857,143 Shares for $28.25
per Share and an associated option agreement to acquire such Shares at the
same price, which Dow had reported in filings with the Commission, and in
particular whether any impediments existed to Dow's ability to freely dispose
of such Shares and whether any structural changes to CECI's merger proposal
would be helpful in this regard. Dow reported that it was considering such
issues in the context of CECI's proposal.
On September 26, 1994, Mr. Sokol sent a follow-up letter to his letter of
September 19, 1994 to Messrs. Boeker and Pankratz:
Dear Ralph and Paul:
As I stated in my letter of September 19, 1994, we believe that the
combination of California Energy and Magma Power is in the best interest of
the shareholders of both companies and the favorable market reaction to our
proposal would appear to validate this belief.
Not having heard from you since Paul's letter of the 20th, I am writing to
reiterate our desire that the proposed transaction be consummated on an
amicable and consensual basis. In this spirit, I am available to meet with
you, Magma's directors or any appropriate committee of the Board and its
independent financial and legal advisors to discuss our proposal and to
answer any questions you may have.
However, in order to be in a position to satisfy certain legal time periods
which I understand are applicable to our proposal, and as an expression of
our strong commitment to this transaction, we intend to take this matter
directly to Magma's shareholders. Please understand that our decision to move
forward in this fashion is not intended to preclude the direct, friendly
negotiation we seek. Accordingly, if you do wish to arrange a meeting, please
contact me today directly at (402) 334-3710 or our advisors, Gleacher & Co.
at (212) 418-4200.
Sincerely yours,
/s/ David L. Sokol
David L. Sokol
Chairman, President and
Chief Executive Officer
20
<PAGE>
<PAGE>
On September 28, 1994, after telephone discussions between CECI's
financial advisors and the Company's financial advisors regarding CECI's
request to arrange a meeting between the parties, Messrs. Sokol and McArthur,
together with representatives from CECI's financial advisors, met with
representatives from the Company's financial advisor in order to introduce
CECI and to further elaborate and answer questions with respect to the
details of CECI's proposal. CECI provided the representatives from the
Company's financial advisors with copies of a draft merger agreement for
review by the Company's Board. At the end of the meeting, Mr. Sokol delivered
the following letter to Messrs. Boeker and Pankratz:
Dear Ralph and Paul:
I had hoped that we would meet directly this week to discuss the combination
of California Energy and Magma. While I am personally disappointed that
neither of you nor a representative of your Board will be present, we have
nevertheless agreed to meet with Goldman Sachs, on Wednesday, September 28,
1994, to discuss any questions your advisors may have regarding our proposal
and deliver a draft merger agreement for review by your Board.
As a condition to the meeting with Goldman Sachs, you have requested that we
refrain from commencing a tender offer or making any press release about this
matter until Tuesday, October 4, 1994, the day subsequent to the completion
of Magma's Board of Directors meeting scheduled for October 2nd and 3rd. We
have accepted this condition and understand that Magma's Board will fully
consider our proposal at this extended meeting.
The decision we have made to await the outcome of the deliberations of
Magma's Board before taking further action should not be interpreted as any
willingness on our part to delay a process which, from our perspective, has
moved too slowly in the past. Although we have acceded to your request for
more time, I want to be clear about our intentions after Monday so that there
are no surprises between us. Accordingly, if your Board does not authorize
meaningful merger negotiations between us by the close of business on Monday,
October 3, 1994, we will commence a tender offer for Magma's common shares
promptly on October 4, 1994.
Sincerely yours,
/s/ David L. Sokol
David L. Sokol
Chairman, President and
Chief Executive Officer
cc: Mr. Mac Heller
Goldman, Sachs & Co.
21
<PAGE>
<PAGE>
On October 3, 1994, the Company's financial advisors informed CECI's
financial advisors that the Company's Board had authorized the Company to
enter into the Rights Agreement at its Board meeting which concluded on such
date, but that the Company's Board had also authorized the Company's
financial advisors to meet with CECI's financial advisors as soon as possible
and, accordingly, a meeting was scheduled for the morning of October 4, 1994.
CECI subsequently learned through press reports that the Company had amended
its Bylaws to require that stockholder action occur only at a regular or
special meeting of stockholders rather than by way of a written consent
solicitation and that the Company also had filed a complaint against CECI
seeking a declaratory judgment that (i) the Company's Board had properly
discharged its fiduciary duties in adopting the Rights Agreement and an
amendment to the Company's Bylaws and, accordingly, such agreement and
amendment were valid and binding, and (ii) the Merger Moratorium Statute is
valid and not in violation of the Commerce Clause and Supremacy Clause of the
United States Constitution.
On October 4, 1994, at the meeting between CECI's financial advisors and
the Company's financial advisors, the Company's financial advisors summarized
the actions taken at the Company's Board meeting held on October 2, 1994 and
October 3, 1994, and indicated that although the Company's Board had not
rejected CECI's proposal, the Company's Board would prefer that CECI withdraw
its merger proposal. The Company's financial advisors then indicated that the
Company's Board believed that CECI's proposed price was too low and
referenced the Company's future opportunities but declined to provide any
specific information or financial analysis indicating what price the
Company's Board would consider favorably with respect to a sale of the
Company or as to why CECI's proposed price did not correctly value the
Company's businesses.
Subsequently, CECI announced that the Offer would commence on October 6,
1994 and issued the following press release:
CALIFORNIA ENERGY TO MAKE CASH TENDER OFFER FOR
51% OF MAGMA POWER AT $35 PER SHARE
OMAHA, NE, October 4, 1994--California Energy Company, Inc. (NYSE,
PSE, LSE:CE) announced today that a wholly owned subsidiary of
California Energy will commence on Thursday a cash tender offer for
12,400,000 shares, or approximately 51%, of the common stock of Magma
Power Company (NASDAQ:MGMA) at a price of $35 net per share as a first
step in implementing its September 19 proposal to acquire all Magma's
shares for a combination of $25 in cash and $10 in market value of
California Energy common stock. The tender offer is conditioned upon,
among other things, entering into a merger agreement with Magma Power
providing for a second-step merger, although, under certain
circumstances California Energy could waive the merger agreement
condition, in which case it would seek to obtain majority
representation on Magma's Board.
Today's announcement follows unsuccessful discussions between
representatives of the companies that occurred today following
yesterday's decision by Magma's Board of Directors to adopt a poison
pill and take certain other defensive actions in response to California
Energy's September 19 proposal. California Energy intends to take any
action necessary to have attempted impediments to its offer set aside.
David L. Sokol, California Energy's Chairman and Chief Executive
Officer, stated:
"We have attempted in every reasonable way possible to commence merger
negotiations with Magma in order to allow their shareholders to achieve value
from our proposal. At Magma's request last week, we delayed commencement of a
tender offer to permit Magma's Board to fully consider our proposal.
Following this morning's disappointing meeting with Magma's advisors, we have
concluded that allowing the shareholders to vote through a tender offer and
consent solicitation is the only way to move forward in an efficient manner."
Sokol further stated that "We believe that the price which we have offered is
fair and represents full value for Magma. We believe
22
<PAGE>
<PAGE>
that this transaction represents a unique fit for us and as such allows us to
value Magma at a higher value than other potential bidders." Sokol further
noted that "Our price represents a 27.3% premium to the value of Magma's
stock the day we initially made the proposal.''
California Energy also intends to take appropriate action to ensure
its right to call a special meeting of Magma's shareholders to elect
directors to Magma's Board and to take other actions that it believes
will facilitate consummation of its tender offer and the proposed
second-step merger with Magma. The tender offer and consent
solicitations will be made only pursuant to definitive offering and
solicitation documents, which will be filed with the Securities and
Exchange Commission and mailed to Magma stockholders. Gleacher & Co.
Inc. is acting as Financial Advisor to California Energy and Dealer
Manager in connection with the tender offer and MacKenzie Partners,
Inc. is acting as the Information Agent for the tender offer.
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 325MW of power with an additional 300MW under construction.
On October 5, 1994, Mr. Sokol sent the following letter to Messrs. Boeker
and Pankratz:
Dear Paul and Ralph:
At your request, we delayed taking any formal action to implement our
acquisition proposal dated September 19th. We did so in the hope that you or
your advisors would be willing to have good faith discussions about our
proposal.
Unfortunately, the October 3rd meeting between Gleacher & Co. and Goldman
Sachs was entirely unproductive. Goldman Sachs was unwilling to discuss our
$35 per share proposal or to share information which would demonstrate that
Magma might be worth more than $35 per share. It now appears that your
request that we delay commencing a tender offer last week was simply a device
to buy the time necessary to adopt a poison pill in response to our offer, as
well as other by-law amendments designed to impede majority shareholder
action and to file lawsuits against us which your advisors did not even have
the courtesy to inform us of before we read about them in the newspaper,
notwithstanding the courtesies we had formerly extended to you and to them.
We now find it necessary to make our proposal directly to shareholders. As a
first step, California Energy will be commencing a cash tender offer on
Thursday to acquire 51% of Magma's common shares for $35 net per share, to be
followed by a merger in which all shareholders will receive $35 per Magma
share, consisting of a combination of cash and California Energy common
stock. The steps which you have taken, to litigate rather than to negotiate,
leave us no choice but to respond accordingly. Such litigation and other
steps which you have chosen to take are wasteful of corporate assets and are
in no way in your shareholders' interest. We would clearly prefer not to
engage in proxy contests and litigation in various forums; however, you have
left us no alternative.
We note your unfortunate attempt to discredit our offer by calling it
"coercive". Apparently this is a continuation of your ongoing strategy of
delay, litigation and otherwise working to keep our offer from receiving fair
consideration by Magma's shareholders.
Further, in response to a press release today from The Dow Chemical Company,
we want to once again emphasize that our merger agreement would provide all
Magma shareholders the same total consideration of $35 per share. We also
note that our proposed price of $35 per share is substantially in excess of
the price that Dow recently received from the sale of the majority of its
Magma holdings.
Moreover, as we have no assurance that your Board has had the benefit of a
fair presentation of our views, I will restate some of the more salient
points we made to your advisors:
For those of your Directors who have had only a brief introduction to
California Energy, our company operates independent power facilities
aggregating over 300MW and has over 325MW
23
<PAGE>
<PAGE>
under construction. For the year ended December 31, 1993 and the six months
ended June 30, 1994, California Energy had revenues of $149.3 million and
$80.7 million, respectively, and a net income of $47.2 million and $15.0
million, respectively. As of June 30, 1994, California Energy had cash and
short-term investments of $379.5 million.
Kiewit Energy Company, a wholly owned subsidiary of Peter Kiewit Sons' Inc.
("PKS"), is an approximate 43% stockholder (on a fully-diluted basis) in
California Energy. PKS, a Delaware corporation, is a large employee-owned
company which had approximately $2.2 billion in revenues in 1993 from its
interests in construction, mining, energy and telecommunications. PKS is one
of the largest construction companies in North America and has been in the
construction business since 1884. PKS is a joint venture participant in a
number of California Energy's international private power projects.
In addition, I provide the following summary of recent developments reported
by California Energy in the first nine months of 1994:
o In January 1994, California Energy signed an International Joint Venture
agreement with PKS.
o In February 1994, California Energy established a Singapore office to
oversee its Asian project development activities.
o In March 1994, California Energy closed its $400 million Senior Note
offering to fund, among other things, international projects and corporate or
project acquisitions.
o In April 1994, California Energy closed a $162 million construction and
term project financing for, and commenced construction of, its 128MW Upper
Mahiao geothermal project in the Philippines.
o In May 1994, California Energy's wholly-owned engineering subsidiary, The
Ben Holt Co., became a 20% partner in a construction joint venture with a
subsidiary of PKS which will construct the Mahanagdong project under a $201
million turnkey contract.
o In June 1994, California Energy completed construction of a 50MW gas
turbine cogeneration project in Yuma, Arizona and commenced commercial
operation under a 30-year power sales contract with San Diego Gas & Electric
Company.
o In August 1994, California Energy closed a $240 million construction and
term project financing for, and commenced construction of, the 180MW
Mahanagdong geothermal project in the Philippines.
o In September 1994, California Energy submitted a definitive proposal for
the Casecnan 100MW hydroelectric and irrigation (water sales) project in the
Philippines.
o In September 1994, California Energy signed power sales contracts for the
30MW of output from its Newberry geothermal project in Oregon, after the
final environmental impact statement record of decision was published by the
U.S. Forest Service.
o In September 1994, California Energy opened its Manila office to oversee
its over 300MW of current Philippine power project construction activities
and new project development activities.
We believe it would also be useful for your Board to understand the clear
benefits we see from our proposal.
California Energy believes that combining the businesses of the two companies
would provide an excellent strategic fit and that the synergies and other
benefits which would result from combining the operations of Magma and
California Energy pursuant to the proposed merger would enhance value for the
stockholders of both companies, and would strengthen the combined companies'
competitive position in the increasingly challenging business environment and
global markets in which they presently operate.
Each of Magma and California Energy have separately indicated their
respective beliefs that, in the next several years, the greatest
opportunities for financially attractive development projects
24
<PAGE>
<PAGE>
will be found in the international markets and each company is engaged in, or
otherwise pursuing, geothermal power and other power development projects in
the Philippines and Indonesia, and elsewhere overseas where competition is
strong and involves much larger entities than either company.
California Energy believes that the combined companies' international growth
prospects would be substantially enhanced by the expanded development,
financial, construction and operational resources and capabilities resulting
from the proposed merger and that certain domestic and international
synergies would also result from such a transaction.
The expected operational and other synergies include the following:
o Competitive Cost Advantage --Competition among independent power producers
internationally, which California Energy believes holds the majority of
attractive investment opportunities over the next several years, is primarily
based on the cost to produce power and accordingly, geothermal energy
competes directly with oil, gas and coal-fired plants (e.g., the Pagbilao and
Paiton projects in the Philippines and Indonesia, respectively). Thus,
neither California Energy nor Magma are competing internationally only
against other "renewables," such as solar or wind, and as you know, over the
last several years domestic competition has also increasingly focused on the
low cost provider as a result of increasing domestic deregulation. California
Energy believes that a combination with Magma would create an enterprise with
the ability to reduce its average cost per KWh by expanding its asset base,
without materially expanding its cost structure, and therefore allowing it to
be more price competitive with traditional fossil fuel power plants, which
California Energy believes will be its primary competition in the future.
This benefit of scale associated with a combination of California Energy and
Magma should provide the resulting entity with a competitive advantage as it
pursues both international and domestic power sales opportunities with
potential customers who consider both the price of power and the provider's
capabilities as the primary factors in their evaluation of potential power
suppliers.
o Operational Efficiencies --Combination of the businesses of California
Energy and Magma would provide an opportunity to efficiently integrate all
aspects of their respective domestic and international operations resulting
in significant expected cost savings.
o Increased Size, Diversification And Stability --The combined companies
would be advantaged by their expanded asset base and diversification in their
resource production facilities and sources of revenue, which the Company
believes should result in an overall long-term enhanced credit profile and an
improved access to capital at decreased costs. As a larger entity, we believe
the combined companies would have the critical mass with which to more
effectively compete against larger competitors in international markets and
an increasingly deregulated domestic market place.
o Development Opportunities --The combined companies should be able to
increase their development programs and activities, both domestically and
internationally, by pursuing additional development opportunities rather than
pursuing parallel paths with respect to the same countries, thereby enhancing
the ability of the combined companies to obtain and successfully complete new
power projects. In addition, the expanded size and capabilities of the
combined companies is expected to enhance its reputation with sovereign
government and state utility customers and therefore enhance its ability to
successfully compete for new projects.
As your advisors know, the price we have offered is based on a detailed
financial analysis of publicly available information which we believe fully
values all projects which Magma has publicly reported it is currently
operating, constructing, financing or developing. Moreover, as your Board is
no doubt aware from its review of the proposed merger agreement we provided
to you last week, we believe that in the context of a negotiated transaction
we had attempted to more than fairly provide for the interests of employees
in that agreement. Lastly, in response to your advisors' questions regarding
the response of Magma's and California Energy's foreign
25
<PAGE>
<PAGE>
customers to our proposal, we are pleased to report that the response to our
inquiry from such customers, like that of the stock market, was highly
favorable and we can obtain any further assurances in this regard that your
Board desires.
In short, we believe the proposed transaction makes eminent good sense, and
we urge your Board to either (i) authorize merger discussions with us, (ii)
auction the company to the highest bidder, or (iii) let the shareholders
decide freely whether to accept our proposal without attempting to impose
artificial impediments which will simply add additional costs, time, needless
and unproductive litigation and distraction of management to a process in
which the majority of Magma's owners will eventually decide the issue on the
merits. Let me once more extend to you my willingness, now or in the future,
to meet with you at any time in order to negotiate a successful merger of our
companies which will best serve our shareholders, customers and employees.
Sincerely,
/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
On October 6, the Purchaser commenced the Offer.
11. PURPOSE OF THE OFFER AND THE PROPOSED MERGER.
General. The purpose of the Offer is to acquire majority control of the
Company as the first step in the acquisition of the entire equity interest in
the Company. The purpose of the Proposed Merger is to acquire all Shares not
beneficially owned by the Purchaser following consummation of the Offer.
The Purchaser is seeking to enter into the Proposed Merger with the
Company as promptly as practicable following consummation of the Offer. Under
the Proposed Merger Agreement, at the effective time of the Proposed Merger,
each outstanding Share (other than Shares held by CECI, the Purchaser or any
other direct or indirect wholly owned subsidiary of CECI, Shares held in the
treasury of the Company and Shares held by stockholders who properly exercise
dissenters' rights under the NGCL) would be converted into the right to
receive cash and shares of CECI Common Stock having a combined cash and
market value of $35 per Share. The per Share amount of cash and CECI Common
Stock to be distributed in the Proposed Merger will be determined such that
the blended purchase price for all Shares acquired by the Purchaser and its
affiliates in the Offer and the Proposed Merger will be $25 in cash, without
interest thereon, and $10 in market value of CECI Common Stock, subject to a
collar provision in the Proposed Merger Agreement which would provide a range
of maximum and minimum prices for the CECI Common Stock. If the market value
of the CECI Common Stock were to exceed the top of such range, the number of
shares of CECI Common Stock to be issued in the Proposed Merger would be
based on the maximum price for the CECI Common Stock (i.e., the top of the
range), and if the market value of the CECI Common Stock were to be less than
the bottom of such range, the number of shares of CECI Common Stock to be
issued in the Proposed Merger would be based on the minimum price for the
CECI Common Stock (i.e., the bottom of the range). CECI intends to establish
such range shortly prior to the Purchaser's entering into the Proposed Merger
Agreement.
Consummation of the Proposed Merger will require approval by the Company's
Board and the affirmative vote of the holders of a majority of the
outstanding Shares. The Purchaser intends to vote all Shares acquired by it
in favor of the Proposed Merger, and, if the Purchaser purchases the Minimum
Number of Shares pursuant to the Offer, the Purchaser would have a sufficient
number of Shares to approve the Proposed Merger without the affirmative vote
of any other holder of Shares and to elect directors as described below.
Although the Purchaser will seek consummation of the Proposed Merger as
26
<PAGE>
<PAGE>
soon as practicable following the purchase of Shares pursuant to the Offer,
the exact timing and details of the Proposed Merger will depend on a variety
of factors and legal requirements, including, among other things, whether the
conditions to the Offer have been satisfied or waived.
The Offer is conditioned upon, among other things, the Company and the
Purchaser entering into the Proposed Merger Agreement. Although the Purchaser
has sought to enter into negotiations with the Company with respect to the
Proposed Merger Agreement and continues to pursue such negotiations, there
can be no assurance that such negotiations will occur or, if such
negotiations occur, as to the outcome thereof. In the event CECI is unable to
negotiate the Proposed Merger Agreement with the Company, the Purchaser may,
in its sole discretion, choose to waive such condition (if certain other
events occurred or conditions were added, as discussed more fully below) and
purchase Shares pursuant to the Offer, in which case it would seek to obtain
maximum representation on the Company's Board, either through the
solicitation of proxies or written consents.
IN ORDER TO INCREASE THE LIKELIHOOD THAT THE COMPANY AND THE PURCHASER
ENTER INTO THE PROPOSED MERGER AGREEMENT, THE PURCHASER HAS TAKEN PRELIMINARY
STEPS TO, AMONG OTHER THINGS, COMMENCE A SOLICITATION OF REQUESTS FOR THE
CALLING OF A SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS AT WHICH, AMONG
OTHER THINGS, THE HOLDERS OF SHARES WOULD BE ASKED TO APPROVE EXPANDING THE
SIZE OF THE COMPANY'S BOARD FROM 11 TO 15 DIRECTORS AND FILLING FOUR NEW
DIRECTORSHIPS CREATED THEREBY WITH NOMINEES OF THE PURCHASER. THE NOMINEES OF
THE PURCHASER WILL BE COMMITTED TO ENSURING THAT THE OFFER AND THE PROPOSED
MERGER GET A FULL AND FAIR HEARING BY THE COMPANY'S BOARD. ASSUMING ALL FOUR
NOMINEES OF THE PURCHASER WERE ELECTED AT THE SPECIAL MEETING TO SERVE ON THE
COMPANY'S BOARD, THE PURCHASER BELIEVES IT WOULD OBTAIN MAJORITY
REPRESENTATION ON THE COMPANY'S BOARD (EIGHT SEATS OUT OF 15) IF IT
SUBSEQUENTLY ELECTED ALL DIRECTORS STANDING FOR ELECTION AT THE 1995 ANNUAL
MEETING. THE PURCHASER WOULD BE ABLE TO ELECT ALL SUCH DIRECTORS AND OBTAIN
MAJORITY REPRESENTATION ON THE COMPANY'S BOARD AT THE 1995 ANNUAL MEETING IF
IT WERE TO PURCHASE A MAJORITY OF THE SHARES PURSUANT TO THE OFFER AND OBTAIN
FULL VOTING POWER FOR SUCH SHARES AT A CONTROL SHARE SPECIAL MEETING IF THE
CONTROL SHARE STATUTE IS APPLICABLE OR BY OTHER MEANS AVAILABLE TO IT.
The Purchaser would seek stockholder approval at such special meeting to
amend the Company's Bylaws to require that certain actions, including
issuances of securities, dispositions of assets, taking certain compensation,
benefit and employment actions, entering into material commitments or
contracts, and certain incurrences of debt, be approved by directors
constituting at least 80% of all the members of the Company's Board. The
purpose of such Bylaw amendment would be to require the approval of at least
one nominee of the Purchaser (if all four Purchaser nominees were to be
seated on the Company's Board) of certain actions that could adversely affect
the Purchaser's ability to consummate the Offer or protect its majority
investment in the Company following consummation of the Offer.
If the Purchaser determines that it is unlikely that the Merger Agreement
Condition will be satisfied, the Purchaser may, but shall not be required to,
waive the Merger Agreement Condition. The Purchaser does not currently intend
to waive the Merger Agreement Condition unless (A) (i) it determines, in its
sole discretion, that the Control Share Statute is inapplicable to the Offer
or has otherwise been complied with such that all Shares purchased pursuant
to the Offer will have full voting rights or (ii) the Offer is amended to add
a condition requiring that the Control Share Statute be, in the sole judgment
of the Purchaser, inapplicable to the Offer or otherwise have been complied
with such that all Shares purchased pursuant to the Offer will have full
voting rights, (B) (i) it determines, in its sole judgment, that the Merger
Moratorium Statute is invalid or otherwise inapplicable to the Offer and the
Proposed Merger or (ii) the Offer is amended to add a condition requiring
that the Merger Moratorium Statute be, in the sole judgment of the Purchaser,
inapplicable to the Offer and the Proposed Merger, and (C) (i) the Rights
have been redeemed by the Company's Board or the Purchaser is satisfied, in
its sole judgment, that the Rights have been invalidated or are otherwise
inapplicable to the Offer and the Proposed Merger, or (ii) the Offer is
amended to add a condition requiring that the Rights have been invalidated or
are otherwise inapplicable to the Offer and the Proposed Merger. The
Purchaser intends to take any action necessary to have attempted impediments
to the Offer and the Proposed Merger set aside.
The Purchaser has taken preliminary steps in anticipation of a Control
Share Special Meeting which meeting the Purchaser would consider requesting
the Company to call for the purpose of approving that
27
<PAGE>
<PAGE>
all Shares acquired by the Purchaser will be accorded full voting rights
under the Control Share Statute. This Offer to Purchase and the related
Letter of Transmittal and other documents do not constitute a request to the
Company to call a Control Share Special Meeting, and, although the Purchaser
reserves the right to do so, the Purchaser is not now soliciting proxies in
connection with a Control Share Special Meeting. The purpose of such
preliminary steps and any request for a Control Share Special Meeting that
the Purchaser might make is to prepare for the possibility that the Purchaser
may determine that it is unlikely that the Merger Agreement Condition will be
satisfied and, in the sole discretion of the Purchaser, the waiver of such
condition. The Purchaser reserves the right to take any other action with
respect to the Control Share Statute it may deem necessary or appropriate,
including seeking to amend the Company's Bylaws to render such statute
inapplicable.
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS OF
STOCKHOLDERS OF THE COMPANY. ANY SUCH SOLICITATION WHICH THE PURCHASER MAY
MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY OR CONSENT MATERIALS IN
COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14 OF THE EXCHANGE ACT AND THE
RULES AND REGULATIONS THEREUNDER.
Dissenters' and Related Rights. Holders of Shares do not have dissenters'
rights as a result of the Offer. If the Proposed Merger is consummated,
however, stockholders of the Company who did not vote in favor of the
Proposed Merger will have certain rights under the NGCL to dissent and demand
payment of the fair value of their Shares in light of the merger. Such
rights, if a dissenting stockholder complied with the applicable statutory
procedures, could lead to a judicial determination of the fair value required
to be paid to such dissenting holder of his Shares. In connection with a
merger, "fair value" is defined under the NGCL to mean the value of the
Shares held by the dissenter immediately before the effectuation of the
corporate action to which he objects (i.e., the Proposed Merger), excluding
any appreciation or depreciation in anticipation of the corporate action,
unless exclusion would be inequitable.
The Purchaser cannot make any representation as to the outcome of such
appraisal of fair value as determined by the Nevada courts in connection with
the Proposed Merger, and stockholders should recognize that such an appraisal
could result in a determination of a value higher or lower than, or
equivalent to, the consideration per Share provided in the Offer. In an
appraisal proceeding, moreover, the Purchaser may argue that for purposes of
such proceeding the fair value of the Shares in connection with the Proposed
Merger is less than the consideration per Share provided in the Offer.
The Proposed Merger would have to comply with any applicable federal law.
The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Proposed Merger. However, Rule
13e-3 would be inapplicable if (i) the Shares are deregistered under the
Exchange Act prior to the Proposed Merger or other business combination or
(ii) the Proposed Merger or other business combination is consummated within
one year after the purchase of the Shares pursuant to the Offer and the
amount paid per Share in the Proposed Merger or other business combination is
at least equal to the amount paid per Share in the Offer. If applicable, Rule
13e-3 requires, among other things, that certain financial information
concerning the fairness of the proposed transaction and the consideration
offered to minority stockholders in such transaction be filed with the
Commission and disclosed to stockholders prior to consummation of the
transaction.
The Preferred Share Purchase Rights. According to press reports, the
Company's Board adopted the Rights Agreement, pursuant to which the Company's
Board declared a dividend of one Right for each outstanding Share. The
dividend is payable to the Company's stockholders of record on October 14,
1994. Each Right will entitle stockholders to buy one-one thousandth of a
newly issued share (a "Unit") of Series A Preferred Stock of the Company at
an exercise price of $125.
Although the Purchaser has not been able to obtain a copy of the Rights
Agreement, the Purchaser expects, based on rights agreements entered into by
other public companies, that initially the Rights will be attached to all
certificates representing Shares then outstanding, and no separate Rights
Certificates will be distributed. The Purchaser expects the Rights will
separate from the Shares and a "Distribution Date" will occur upon the
earlier of (i) ten days following a public announcement that a person or
group
28
<PAGE>
<PAGE>
of affiliated or associated persons has acquired beneficial ownership of 10%
or more of the outstanding Shares, or (ii) ten business days following the
commencement of a tender offer or exchange offer that would result in a
person or group beneficially owning 20% or more of such outstanding Shares.
If any person becomes the beneficial owner of 10% or more of the Shares or
if a holder of 10% or more of the Shares engages in certain self-dealing
transactions or a merger transaction in which the Company is the surviving
corporation and its Shares remain outstanding, then each Right not owned by
such person or certain related parties will entitle its holder to purchase,
at the Right's then-current exercise price, shares of the Units of the
Company's Series A Preferred Stock (or, in certain circumstances, Shares,
cash, property or other securities of the Company) having a market value
equal to twice the then-current exercise price. In addition, if the Company
is involved in a merger or other business combination transaction with
another person after which its common stock does not remain outstanding, or
sells 50% or more of its assets or earning power to another person, each
Right will entitle its holder to purchase, at the Right's then-current
exercise price, shares of common stock of such other person having market
value equal to twice the then-current exercise price. The foregoing does not
apply to existing 10% or greater stockholders of the Company, unless the
existing stockholder increases its ownership interest by 4% or more.
The Company will generally be entitled to redeem the Rights at $.01 per
Right at any time until the tenth business day following public announcement
that a person or group has acquired 10% or more of the Shares.
UNLESS THE RIGHTS ARE REDEEMED, STOCKHOLDERS WILL BE REQUIRED TO TENDER
ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF SUCH
SHARE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 4. IF SEPARATE
RIGHTS CERTIFICATES ARE NOT ISSUED, A TENDER OF SHARES WILL ALSO CONSTITUTE A
TENDER OF THE RIGHTS. SEE SECTIONS 1 AND 4.
The Offer is conditioned on, among other things, the Merger Agreement
Condition being satisfied. The Purchaser intends to take any action necessary
to have attempted impediments to the Offer and the Proposed Merger set aside.
If the Purchaser enters into the Merger Agreement with the Company, such
agreement will require the Company's Board to adopt a resolution providing,
or take such other corporate action as may be required to ensure, that any
restrictions that may purport to be imposed by the Rights are inapplicable to
the Offer and the Proposed Merger. See Introduction and Section 12.
Control Share Statute. The Control Share Statute provides that it applies
to certain acquisitions of shares of a corporation (an "issuing corporation")
incorporated in Nevada that has 200 or more stockholders, at least 100 of
whom are stockholders of record and residents of Nevada and that does
business in Nevada directly or through an affiliated corporation. The Control
Share Statute purports to deny voting rights to shares that are acquired by a
person and persons acting in association with such person ("associates") the
total number of which is sufficient to enable the acquiring person and his
associates (each an "Acquiring Person") to exercise voting power at or above
any of three thresholds (20%, 33-1/3% or a majority of the outstanding voting
power of the issuing corporation), and any shares acquired by such persons
within 90 days before such acquisition ("Control Shares"), unless, among
other exceptions, (i) the articles of incorporation or bylaws of the
corporation in effect on the tenth day following such acquisition (the "Tenth
Day") provide that the provisions of the Control Share Statute do not apply
or (ii) voting rights for such Control Shares shall have been approved at a
meeting of stockholders (the "Control Share Special Meeting") by the
affirmative vote of the holders of a majority of the issuing corporation's
outstanding shares, excluding those held by an Acquiring Person or any
officer or any person who is deemed to be both an employee and director of
the corporation.
Based on publicly available information, the Purchaser cannot determine
whether the requisite number of record stockholders of the Company are Nevada
residents and whether the Company does business in Nevada such that the
Control Share Statute would apply to Shares purchased pursuant to the Offer.
In addition, the Control Share Statute will not apply if the articles of
incorporation or the bylaws of the corporation in effect on the Tenth Day
provide that the provisions of the Control Share Statute do
29
<PAGE>
<PAGE>
not apply. However, if the Control Share Statute applies then by its terms an
Acquiring Person may obtain only such voting rights in the Control Shares as
are conferred by a resolution of the stockholders of the corporation,
approved at a special or annual meeting of the stockholders. Except as
otherwise provided by the articles of incorporation, a resolution of the
stockholders granting voting rights to the Control Shares acquired by an
Acquiring Person must be approved by the holders of a majority of the voting
power of the corporation, excluding those shares held by any person deemed to
be an interested stockholder which includes an Acquiring Person or any
officer or any person who is deemed to be both an employee and director of
the corporation. Under the terms of the Control Share Statute, the Purchaser
may deliver an offeror's statement to the Company that contains a request
that a Control Share Special Meeting be called for the purpose of considering
whether voting rights shall be authorized for the Shares to be acquired by
the Purchaser and its associates pursuant to the Offer or otherwise. If the
Purchaser were to deliver an offeror's statement containing a request for a
Control Share Special Meeting to the Company, the Control Share Special
Meeting must be called within ten days, may not be held earlier than thirty
days (unless otherwise requested by the Purchaser), and must be held no later
than fifty days (unless otherwise agreed to by the Purchaser), after delivery
to the Company of the request for the Control Share Special Meeting.
This Offer is not being delivered pursuant to the provisions of the
Control Share Statute, and shall not, and is not intended to, be construed as
an offeror's statement or a request for a special meeting of stockholders
within the meaning of the Control Share Statute. Notwithstanding the
foregoing, the Purchaser and CECI reserve their rights to deliver at a future
time an offeror's statement to the Company in connection with the Offer and,
contemporaneously therewith, to request that the Company call the Control
Share Special Meeting.
The Control Share Statute provides that if full voting rights for Control
Shares owned by an Acquiring Person are authorized at a meeting of
stockholders, and if the Acquiring Person acquires a majority or more of the
voting power of the issuing corporation's outstanding shares, each
stockholder of record who has not voted in favor of approving such voting
rights may demand that the corporation purchase his stock for "fair value."
In connection with the Control Share Statute, "fair value" is defined under
the NGCL to mean a value not less than the highest price per share paid by
the Acquiring Person in the acquisition.
The Control Share Statute further provides that, if so provided in the
articles of incorporation or bylaws of the issuing corporation in effect on
the Tenth Day, the corporation may call not less than all of such Control
Shares for redemption at the average price paid for such shares if (i) an
offeror's statement is not delivered on or before the Tenth Day or (ii) the
Control Shares are not accorded full voting rights by the disinterested
stockholders.
NEITHER THE PURCHASER NOR CECI IS CURRENTLY SOLICITING PROXIES WITH
RESPECT TO ANY PROPOSAL TO BE CONSIDERED BY STOCKHOLDERS UNDER THE CONTROL
SHARE STATUTE. THE PURCHASER, IN ITS SOLE DISCRETION, MAY SEEK OTHER MEANS,
INCLUDING LEGAL OR ADMINISTRATIVE PROCEEDINGS OR AMENDMENT OF THE COMPANY'S
BYLAWS, TO ESTABLISH THE VOTING RIGHTS OF SHARES TENDERED PURSUANT TO THE
OFFER. THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS, THE MERGER AGREEMENT
CONDITION BEING SATISFIED. THE PURCHASER INTENDS TO TAKE ANY ACTION NECESSARY
TO HAVE ATTEMPTED IMPEDIMENTS TO THE OFFER AND THE PROPOSED MERGER SET ASIDE.
IF THE PURCHASER ENTERS INTO THE MERGER AGREEMENT WITH THE COMPANY, SUCH
AGREEMENT WILL REQUIRE THE COMPANY'S BOARD TO ADOPT A RESOLUTION PROVIDING,
OR TAKE SUCH OTHER CORPORATE ACTION AS MAY BE REQUIRED TO ENSURE, THAT ANY
RESTRICTIONS THAT MAY PURPORT TO BE IMPOSED BY THE CONTROL SHARE STATUTE ARE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER. SEE INTRODUCTION AND
SECTION 12.
The Merger Moratorium Statute. The Merger Moratorium Statute provides that
it applies to certain business combinations involving a Nevada corporation
and an "Interested Stockholder" of such corporation (defined generally as any
person beneficially owning, directly or indirectly, or through an associate
or affiliate, 10% or more of such corporation's voting stock). In general,
these provisions state that an Interested Stockholder may not engage in a
"Combination" (defined as a variety of transactions, including mergers, as
set forth in the following paragraph) with a Nevada corporation which has 200
or more stockholders for three years following the date such person became an
Interested Stockholder
30
<PAGE>
<PAGE>
unless, before such person became an Interested Stockholder, the board of
directors of the corporation approved the Combination or the transaction in
which the Interested Stockholder became an Interested Stockholder. The Merger
Moratorium Statute would also purport to prohibit a Combination after the
expiration of such three years unless certain requirements (described below)
were satisfied.
The Merger Moratorium Statute provides that during the three-year period
following a person's becoming an Interested Stockholder, the corporation may
not merge or consolidate with the Interested Stockholder, or any affiliate or
associate thereof, and also may not engage in certain other "Combinations"
with the Interested Stockholder or any affiliate or associate thereof,
including, without limitation (i) any sale, lease exchange, mortgage, pledge,
transfer or other disposition of assets (a) equal to 5% or more of the
aggregate market value of all assets of the corporation determined on a
consolidated basis, (b) equal to 5% or more of the aggregate market value of
all the outstanding stock of the corporation or (c) representing 10% or more
of the earning power or net income of the corporation, determined on a
consolidated basis; (ii) the issuance or transfer by the corporation or by
any subsidiaries thereof of any stock of the corporation or of such
subsidiaries having an aggregate market value equal to 5% or more of the
aggregate market value of all the outstanding shares of the corporation to
the Interested Stockholder, except pursuant to a transaction which effects a
pro rata distribution to all stockholders of the corporation; (iii) the
adoption of any plan or proposal for the liquidation or dissolution of the
corporation proposed by, or under any agreement, arrangement or understanding
with, the Interested Stockholder or any affiliate or associate thereof; (iv)
any reclassification of securities, any recapitalization of the corporation,
or any merger or consolidation of the corporation with any of its
subsidiaries; (v) any transaction involving the corporation or certain
subsidiaries thereof which has the effect of increasing the proportionate
share of the voting stock of any class or series, or securities convertible
into the stock of any class or series, of the corporation or any such
subsidiary which is owned directly or indirectly by the Interested
Stockholder (except as a result of immaterial changes due to fractional share
adjustments); or (vi) any receipt by the Interested Stockholder of the
benefit (except proportionately as a stockholder of such corporation) of any
loans, advances, guarantees, pledges or other financial assistance or tax
credit or tax advantage provided by or through the corporation.
The Merger Moratorium Statute also purports to prohibit the Interested
Stockholder from entering into a Combination with the corporation after such
three-year period unless one of three conditions are satisfied: (i) the board
of directors of the corporation had, before such person became an Interested
Stockholder, approved either the Combination or the purchase of shares that
caused the Interested Stockholder to become an Interested Stockholder, (ii)
the Combination is approved by the majority of the shares held by
"disinterested" stockholders, or (iii) certain "fair price" criteria
(including a requirement that the Interested Stockholder and its affiliates
and associates have not purchased any additional shares) have been satisfied.
Absent approval by the Company's Board of the Offer or the Proposed Merger
prior to consummation of the Offer, the Merger Moratorium Statute would
purport to prohibit, among other things, consummation of the Proposed Merger
(or other business combination with the Purchaser or any other subsidiary of
CECI) for a period of three years following consummation of the Offer and
would place significant pre-conditions on the consummation of any such
transaction thereafter. THE OFFER IS CONDITIONED ON, AMONG OTHER THINGS, THE
MERGER AGREEMENT CONDITION BEING SATISFIED. THE PURCHASER INTENDS TO TAKE ANY
ACTION NECESSARY TO HAVE ATTEMPTED IMPEDIMENTS TO THE OFFER AND THE PROPOSED
MERGER SET ASIDE. IF THE PURCHASER ENTERS INTO THE PROPOSED MERGER AGREEMENT
WITH THE COMPANY, SUCH AGREEMENT WILL REQUIRE THE COMPANY'S BOARD TO ADOPT A
RESOLUTION PROVIDING, OR TAKE SUCH OTHER CORPORATE ACTION AS MAY BE REQUIRED
TO ENSURE, THAT ANY RESTRICTIONS THAT MAY PURPORT TO BE IMPOSED BY THE MERGER
MORATORIUM STATUTE ARE INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER. SEE
INTRODUCTION AND SECTION 12.
Articles of Incorporation and Bylaws. The Company's Restated Articles of
Incorporation (the "Articles") provide that the Company's Board shall be
divided into three classes of directors serving staggered three-year terms,
with each such class consisting, as nearly as practicable, of one-third of
the total number of directors constituting the Company's Board. As a result,
approximately one-third of the Company's Board will be elected each year. In
addition, the Articles provide that the number of directors shall be fixed
from time to time by resolution of the Company's Board or the stockholders
within a range of three to 15.
31
<PAGE>
<PAGE>
The Company's Bylaws previously permitted stockholders to act by written
consent without a meeting, except for the purpose of electing directors of
the Company. However, on October 4, 1994, CECI learned that the Company's
Board had amended the Company's Bylaws to require that stockholder action
occur only at a regular or special meeting of stockholders rather than by way
of written consent solicitation. The Purchaser intends to take any action
necessary to have attempted impediments to the Offer and the Proposed Merger
set aside. See Section 15. Special meetings of stockholders are required to
be called upon the request in writing of a majority of the directors then in
office or of stockholders owning a majority of the capital stock entitled to
vote at such meeting.
Plans for the Company. In connection with the Offer, CECI and the
Purchaser have reviewed, and will continue to review, on the basis of
publicly available information, various possible business strategies that
they might consider in the event that the Purchaser acquires control of the
Company, whether pursuant to the Proposed Merger Agreement or otherwise. In
addition, if and to the extent that the Purchaser acquires control of the
Company or otherwise obtains access to the books and records of the Company,
CECI and the Purchaser intend to conduct a detailed review of the Company and
its assets, corporate structure, dividend policy, capitalization, operations,
properties, policies, management and personnel and consider and determine
what, if any, changes would be desirable in light of the circumstances which
then exist. Such strategies could include, among other things, changes in the
Company's business, corporate structure, certificate of incorporation,
Bylaws, capitalization, management or dividend policy. As described above,
however, the Purchaser's ability to effect any such changes or transactions
and the timing thereof will depend in part on the Purchaser's ability to gain
control of the Company's Board.
Except as indicated in this Offer to Purchase, the Purchaser has no
present plans or proposals which relate to or would result in an
extraordinary corporate transaction, such as a merger, reorganization,
liquidation, relocation of operations, or sale or transfer of assets,
involving the Company or any of its subsidiaries, or any material changes in
the Company's corporate structure or business or the composition of the
Company's Board or the Company's management or personnel.
12. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, and in addition to, and not in limitation of, the Purchaser's
rights to amend the Offer in any respect at any time in its sole discretion,
the Purchaser shall not be required to accept for payment or pay for, or may
delay the acceptance for payment of or payment for, tendered Shares (subject
to Rule 14e-1(c) under the Exchange Act), or may, in the sole discretion of
the Purchaser, terminate the Offer as to any Shares not then paid for if (i)
at or before the Expiration Date any one or more of the Minimum Tender
Condition, the Merger Agreement Condition, the Financing Condition or the
CECI Stockholder Approval Condition shall not have been satisfied or (ii) on
or after the date of this Offer to Purchase, and at or before the time of
payment for any of such Shares, any of the following events shall occur or
shall be determined by the Purchaser to have occurred:
(a) there shall be threatened, instituted or pending any action or
proceeding by any government or governmental authority or agency,
domestic or foreign, or by any other person, domestic or foreign, before
any court or governmental authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, to delay or otherwise directly or
indirectly to restrain or prohibit the making of the Offer, the
acceptance for payment of or payment for some of or all the Shares by the
Purchaser or any other affiliates of CECI, the consummation by the
Purchaser or any other affiliates of CECI of a merger or other business
combination with the Company, seeking to obtain material damages or
otherwise directly or indirectly relating to the transactions
contemplated by the Offer or any such merger or business combination,
(ii) seeking to prohibit the ownership or operation by CECI, the
Purchaser or any other affiliates of CECI of all or any portion of the
business or assets of the Company and its subsidiaries or of the
Purchaser, or to compel CECI, the Purchaser or any other affiliates of
CECI to dispose of or hold separately all or any portion of the business
or assets of the Purchaser or the Company or any of its subsidiaries or
seeking to impose any limitation on the ability of CECI, the Purchaser or
any other affiliates of CECI to conduct their business or own such
assets, (iii) seeking to impose or confirm limitations on the ability of
CECI, the Purchaser or any other affiliates of CECI effectively to
exercise full rights of ownership of the
32
<PAGE>
<PAGE>
Shares, including, without limitation, the right to vote any Shares
acquired by any such person on all matters properly presented to the
Company's stockholders, (iv) seeking to require divestiture by CECI, the
Purchaser or any other affiliates of CECI of any Shares, (v) otherwise
directly or indirectly relating to the Offer or which otherwise, in the
sole judgment of the Purchaser, might materially adversely affect CECI,
the Purchaser or any other affiliates of CECI or the value of the Shares,
or (vi) in the sole judgment of the Purchaser, materially adversely
affecting the business, properties, assets, liabilities, capitalization,
stockholders' equity, condition (financial or other), operations,
licenses or franchises, results of operations or prospects of the Company
or any of its subsidiaries, joint ventures or partnerships; provided that
the condition specified in this paragraph (a) shall not be deemed to
exist by reason of any court proceeding pending on the date hereof and
known to the Purchaser, unless in the sole judgment of the Purchaser
there is any adverse development in any such proceeding after the date
hereof, or before the date hereof if not known to the Purchaser on the
date hereof, which might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (vi) above;
(b) there shall be any action taken, or any statute, rule,
regulation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable (i)
to the Purchaser, CECI or any affiliate of CECI or (ii) to the Offer or
the Proposed Merger or other similar business combination by the
Purchaser or any affiliate of CECI with the Company, by any court,
government or governmental, administrative or regulatory authority or
agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Offer or to any such
Proposed Merger or business combination, which, in the sole judgment of
the Purchaser, might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (vi) of paragraph (a)
above;
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the
business, properties, assets, liabilities, capitalization, stockholders'
equity, condition (financial or other), operations, licenses, franchises,
permits, permit applications, results of operations or prospects of the
Company or any of its subsidiaries which, in the sole judgment of the
Purchaser, is or may be materially adverse, or the Purchaser shall have
become aware of any fact which, in the sole judgment of the Purchaser,
has or may have material adverse significance with respect to either the
value of the Company or any of its subsidiaries or the value of the
Shares to the Purchaser;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, or any material adverse
change in prices generally of shares on the NYSE or the NNM, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks by federal or state authorities in the United States,
(iii) any limitation (whether or not mandatory) by any governmental
authority or agency on, or other event which, in the sole judgment of the
Purchaser, might affect the extension of credit by banks or other lending
institutions, (iv) a commencement of a war, armed hostilities or other
national or international calamity directly or indirectly involving the
United States, (v) a material change in United States or any other
currency exchange rates or a suspension of, or limitation on, the markets
therefor, or (vi) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or
worsening thereof;
(e) other than the redemption of the Rights at the Redemption Price,
the Company or any of its subsidiaries, joint ventures or partnerships or
other affiliates shall have (i) split, combined or otherwise changed, or
authorized or proposed the split, combination or other change of the
Shares or its capitalization, (ii) acquired or otherwise caused a
reduction in the number of, or authorized or proposed the acquisition or
other reduction in the number of, any presently outstanding Shares or
other securities or other equity interests, (iii) issued, distributed or
sold, or authorized or proposed the issuance, distribution or sale of,
additional Shares, other than Shares issued or sold upon the exercise or
conversion (in accordance with the present terms thereof) of employee
stock options outstanding on the date of this Offer to Purchase, shares
of any other class of capital stock or other equity interests, other
voting securities, debt securities or any securities convertible into, or
33
<PAGE>
<PAGE>
rights, warrants or options, conditional or otherwise, to acquire, any of
the foregoing, (iv) declared, paid or proposed to declare or pay any cash
dividend or other distribution on any shares of capital stock of the
Company, (v) altered or proposed to alter any material term of any
outstanding security or material contract, permit or license, (vi)
incurred any debt otherwise than in the ordinary course of business or
any debt containing, in the sole judgment of the Purchaser, burdensome
covenants or security provisions, (vii) authorized, recommended, proposed
or entered into an agreement with respect to any merger, consolidation,
recapitalization, liquidation, dissolution, business combination,
acquisition of assets, disposition of assets, release or relinquishment
of any material contractual or other right of the Company or any of its
subsidiaries or any comparable event not in the ordinary course of
business, (viii) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into,
any agreement or arrangement with any person or group that in the
Purchaser's sole opinion could adversely affect either the value of the
Company or any of its subsidiaries, joint ventures or partnerships or the
value of the Shares to the Purchaser, (ix) entered into any employment,
change in control, severance, executive compensation or similar
agreement, arrangement or plan with or for one or more of its employees,
consultants or directors, or entered into or amended, or made grants or
awards pursuant to, any agreements, arrangements or plans so as to
provide for increased benefits to one or more employees, consultants or
directors, or taken any action to fund, secure or accelerate the funding
of compensation or benefits provided for one or more employees,
consultants or directors, whether or not as a result of or in connection
with the transactions contemplated by the Offer, (x) except as may be
required by law, taken any action to terminate or amend any employee
benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended) of the Company or any of its
subsidiaries, or the Purchaser shall have become aware of any such action
which was not previously disclosed in publicly available filings, or (xi)
amended or authorized or proposed any amendment to its certificate of
incorporation or Bylaws or similar organizational documents, or the
Purchaser shall become aware that the Company or any of its subsidiaries
shall have proposed or adopted any such amendment which shall not have
been previously disclosed;
(f) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including the Company
or any of its subsidiaries or affiliates), or it shall have been publicly
disclosed or the Purchaser shall have otherwise learned that (i) any
person, entity (including the Company or any of its subsidiaries) or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act)
shall have acquired or proposed to acquire beneficial ownership of more
than 5% of any class or series of capital stock of the Company (including
the Shares), through the acquisition of stock, the formation of a group
or otherwise, or shall have been granted any right, option or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 5%
or any class or series of capital stock of the Company (including the
Shares) other than acquisitions for bona fide arbitrage purposes only and
except as disclosed in a Schedule 13D or 13G on file with the Commission
on the date of this Offer to Purchase, (ii) any such person, entity or
group which before the date of this Offer to Purchase had filed such a
Schedule with the Commission has acquired or proposes to acquire, through
the acquisition of stock, the formation of a group or otherwise,
beneficial ownership of 1% or more of any class or series of capital
stock of the Company (including the Shares), or shall have been granted
any right, option or warrant, conditional or otherwise, to acquire
beneficial ownership of 1% or more of any class or series of capital
stock of the Company (including the Shares), (iii) any person or group
shall have entered into a definitive agreement or an agreement in
principle or made a proposal with respect to a tender offer or exchange
offer or a merger, consolidation or other business combination with or
involving the Company, or (iv) any person shall have filed a Notification
and Report Form under the HSR Act or made a public announcement
reflecting an intent to acquire the Company or any assets or securities
of the Company;
(g) the Purchaser shall have reached an agreement or understanding
with the Company providing for termination of the Offer, or the Purchaser
or any of its affiliates shall have entered into a definitive agreement
or announced an agreement in principle with the Company providing for a
merger or other business combination with the Company or the purchase of
stock or assets of the Company;
34
<PAGE>
<PAGE>
(h) the Purchaser shall become aware (i) that any material
contractual right of the Company or any of its subsidiaries or affiliates
shall be impaired or otherwise adversely affected or that any material
amount of indebtedness of the Company or any of its subsidiaries, joint
ventures or partnerships shall become accelerated or otherwise become due
before its stated due date, in either case with or without notice or the
lapse of time or both, as a result of the transactions contemplated by
the Offer or (ii) of any covenant, term or condition in any of the
Company's or any of its subsidiaries', joint ventures' or partnerships'
instruments or agreements that are or may be materially adverse to the
value of the Shares in the hands of the Purchaser (including, but not
limited to, any event of default that may ensue as a result of the
consummation of the Offer or the acquisition of control of the Company);
or
(i) CECI or the Purchaser shall not have obtained any waiver,
consent, extension, approval, action or non-action from any governmental
authority or agency which is necessary to consummate the Offer, including
without limitation, the expiration or termination of the waiting period
under the HSR Act;
which, in the sole judgment of the Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by the Purchaser or
any of its affiliates) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
or payment.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser regardless of the circumstances giving rise to
such condition or may be waived by the Purchaser in whole or in part at any
time and from time to time in the sole discretion of the Purchaser. Any
determination by the Purchaser concerning any event described in this Section
12 shall be final and binding upon all parties.
13. SOURCE AND AMOUNT OF FUNDS. The Purchaser estimates that the total
amount of funds required to purchase all outstanding Shares in the Offer will
be approximately $434 million. The Purchaser estimates that approximately an
additional $176 million will be required to effectuate the Proposed Merger.
The Purchaser will obtain such funds through borrowings from commercial banks
and other financial institutions and through a capital contribution by CECI
from CECI's general corporate funds, which at June 30, 1994 aggregated $379.5
million.
The Purchaser anticipates that approximately one-half of the cash required
to purchase Shares and Rights pursuant to the Offer and the Proposed Merger
will be provided through a secured bank credit facility on terms and
conditions to be determined. Although CECI's financial advisor has confirmed,
on the basis of discussions with a number of proposed lenders, to the
Purchaser its belief that the Purchaser can conclude the establishment of
this facility on a timely basis, CECI has not yet received binding
commitments from commercial banks to provide the required bank credit
facility. Although no definitive plan or arrangement for repayment of
borrowings under the credit facilities has been made, CECI anticipates such
borrowings will be repaid with internally generated funds and from other
sources which may include the proceeds of future equity or debt financings.
No plans or arrangements have been made for any future financings.
This Offer constitutes neither an offer to sell nor solicitation of an
offer to buy any securities to be sold in connection with the Proposed Merger
or any financing for the Offer.
14. DIVIDENDS AND DISTRIBUTIONS. If, on or after the date of this Offer to
Purchase, the Company should split, combine or otherwise change the Shares or
its capitalization, or shall disclose that it has taken any such action,
then, subject to the provisions of Section 13, the Purchaser may, in its sole
judgment, make such adjustments as it deems appropriate to reflect such
split, combination or other change in the purchase price and the other terms
of the Offer (including, without limitation, the number and type of
securities offered to be purchased, the amounts payable therefor and the fees
payable hereunder).
If, on or after the date of this Offer to Purchase, the Company should
declare or pay any cash or stock dividend or other distribution on or issue
any rights with respect to the Shares, payable or distributable to
stockholders of record on a date before the transfer to the name of the
Purchaser or its nominee or transferee on the Company's stock transfer
records of the Shares accepted for payment pursuant to the
35
<PAGE>
<PAGE>
Offer, then, subject to the provisions of Section 12, (i) the purchase price
per Share payable by the Purchaser pursuant to the Offer will be reduced by
the amount of any such cash dividend or cash distribution and (ii) the whole
of any such non-cash dividend, distribution or right will be received and
held by the tendering stockholder for the account of the Purchaser and shall
be required to be promptly remitted and transferred by each tendering
stockholder to the Depositary for the account of the Purchaser, accompanied
by appropriate documentation of transfer. Pending such remittance, the
Purchaser will be entitled to all rights and privileges as owner of any such
non-cash dividend, distribution or right and may withhold the entire purchase
price or deduct from the purchase price the amount or value thereof, as
determined by the Purchaser in its sole discretion.
Notwithstanding the foregoing provisions of this Section 14, if the Rights
are redeemed by the Company's Board in accordance with the terms of the
Rights Agreement, tendering stockholders who are holders of record as of the
applicable record date will be entitled to receive and retain the Redemption
Price for each Right in accordance with the Rights Agreement.
15. CERTAIN LEGAL MATTERS. Except as otherwise disclosed herein, on the
basis of an examination of publicly available filings with respect to the
Company, the Purchaser is not aware of any licenses or other regulatory
permits which appear to be material to the business of the Company and which
might be adversely affected by the acquisition of Shares by the Purchaser
pursuant to the Offer or of any approval or other action by any governmental,
administrative or regulatory agency or authority which would be required for
the acquisition or ownership of Shares by the Purchaser as contemplated
herein. Should any such approval or other action be required, it is currently
contemplated that such approval or action would be sought. The Purchaser is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of Shares pursuant to the Offer pending such approval
or other action. There cannot be any assurance that any such approval or
other action, if needed, would be obtained without substantial conditions or
that adverse consequences might not result to the Company's business or that
certain parts of the Company's business might not have to be disposed of if
such approvals were not obtained or such other actions were not taken, any of
which could cause the Purchaser to elect to terminate the Offer pursuant to
Section 12.
Pending Litigation. On October 3, 1994, the Company filed a complaint
entitled Magma Power Company v. California Energy Company, Inc., Case No.
CV94-06160, against CECI in the Second Judicial District Court of the State
of Nevada in and for the County of Washoe. The complaint seeks a declaratory
judgment that (i) the Company's Board properly discharged its fiduciary
obligations in adopting the Rights Agreement and an amendment to the
Company's Bylaws and, accordingly, such documents were valid and binding, and
(ii) the Merger Moratorium Statute is valid and not in violation of the
Commerce Clause and Supremacy Clause of the United States Constitution. On
October 5, 1994, CECI removed this action to the United States District Court
for the District of Nevada. CECI intends to take any action necessary to have
attempted impediments to the Offer and the Proposed Merger set aside.
On September 20, 1994, William Steiner, a stockholder of the Company,
filed a class action complaint entitled William Steiner, et al. v. Paul M.
Pankratz, et al., Case No. 680986, against the Company and its directors in
the Superior Court of the State of California in and for the County of San
Diego, alleging, among other things, that the Company's stockholders have
been, and continue to be, deprived of the opportunity to fully realize the
benefits of their investment in the Company as a result of the directors'
refusal to properly consider CECI's offer for the Company, which actions are
alleged to constitute unfair dealing and a breach of fiduciary duty. As
relief, the complaint seeks an order directing the Company's directors to
carry out their fiduciary duties to the Company's stockholders by cooperating
fully with CECI or any other entity making a bona fide offer for the Company,
as well as damages and costs.
On October 4, 1994, Charles Miller, a stockholder of the Company, filed a
class action complaint entitled Charles Miller, et al. v. Magma Power
Company, et al., Case No. CV94-06187, against the Company, its directors and
The Dow Chemical Company in the Second Judicial District Court of the State
of Nevada in and for the County of Washoe, alleging, among other things, that
the defendants' unwillingness to seriously consider CECI's proposal to
acquire the Company and its implementation of defensive measures constitute
breaches of the fiduciary duty owed to the Company's stockholders. As
36
<PAGE>
<PAGE>
relief, the complaint seeks a declaration that defendants have breached their
fiduciary duties, an order directing the defendants to fairly evaluate
alternatives designed to maximize value for the Company's stockholders, and
an injunction with respect to the implementation of the Company's "poison
pill" or other defensive measures, as well as damages and costs.
State Takeover Laws. A number of states (including Nevada) have adopted
laws and regulations containing restrictions that apply to offers to acquire
securities of corporations which are incorporated and/or have assets,
stockholders and/or conduct business therein. In 1982, the United States
Supreme Court in Edgar v. Mite Corp. invalidated on constitutional grounds
the Illinois Business Takeovers Statute which, as a matter of state
securities law, imposed procedural requirements of additional filings, a
waiting period and a fairness hearing on tender offers, on the ground that
the requirements imposed by the state takeover statute which made takeovers
of corporations meeting certain requirements more difficult, conflicted with
federal law. The reasoning in that decision is likely to apply to other state
takeover statutes that purport to impose similar requirements on the Offer.
In 1987, the United States Supreme Court in CTS Corp. v. Dynamics Corp. of
America held that the State of Indiana could, as a matter of corporate law
and, in particular, those aspects of corporate law concerning corporate
governance, constitutionally disqualify a potential acquiror from voting on
the affairs of a target corporation, without the prior approval of a majority
vote of those stockholders of the corporation who had no interest in the
acquisition and who were neither officers nor directors and employees of the
corporation, provided that such laws were applicable only to Indiana
corporations. Subsequently, certain United States District Courts have ruled
that state takeover statutes, even of the type upheld in CTS Corp., are
unconstitutional insofar as they apply to corporations incorporated outside
that state. In TLX Acquisition Corp. v. Telex Corp., a United States District
Court in Oklahoma ruled that Oklahoma takeover statutes were unconstitutional
insofar as they applied to corporations incorporated outside Oklahoma in that
they would subject such corporations to inconsistent regulations. Similarly
in Tyson Foods, Inc. v. McReynolds, a United States District Court in
Tennessee ruled that four Tennessee takeover statutes were unconstitutional
as they applied to corporations incorporated outside Tennessee. This decision
was affirmed by the United States Court of Appeals for the Sixth Circuit. The
reasoning of these cases may indicate that application of the takeover
statutes of states other than Nevada to the Offer could be unconstitutional.
Various states, including Nevada, also have enacted merger moratorium
statutes that regulate the circumstances under which a corporation may merge
or enter into other business combinations with an acquiror of certain
percentages of their outstanding stock. In Amanda Acquisition Corp. v.
Universal Foods Corp., the United States Court of Appeals for the Seventh
Circuit held that the state of Wisconsin could, as a matter of state law,
prohibit for a period of three years, a Wisconsin corporation from entering
into certain business combinations, including a merger, with a holder of 10%
or more of the outstanding stock of the corporation, unless the corporation's
Board of Directors had approved the transaction prior to the time the
acquiror purchased its 10% interest in the corporation. Certiorari to the
United States Supreme Court was denied.
The Company and certain of its subsidiaries conduct business in a number
of states throughout the United States, some of which have enacted takeover
statutes. The Purchaser does not know whether any or all of these statutes
will by their terms apply to the Offer. To the extent that state takeover
statutes (including the Merger Moratorium Statute) and regulations purport to
apply to the Offer and the Proposed Merger, and contain provisions that
impose requirements that conflict with the United States Constitution or
conflict with the federal securities laws applicable to the Offer and the
Proposed Merger, the Purchaser believes that such statutes and regulations
are unconstitutional and/or preempted by federal law. Should the Company, any
government agency or official or any other person seek to apply any such
statute to the Offer, the Purchaser will take such action as then appears
desirable and may contest the validity of such statutes and the application
of such statutes to the Offer in appropriate judicial or administrative
proceedings. If it is asserted that one or more state takeover laws is
applicable to the Offer and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Purchaser may be
required to file certain information with, or receive approvals from, the
relevant state
37
<PAGE>
<PAGE>
authorities, and, if enjoined, the Purchaser may be unable to purchase Shares
tendered pursuant to the Offer or may be delayed in consummating the Offer.
In the circumstances described above, the Purchaser may not be obliged to
purchase any Shares tendered. See Section 12.
Antitrust. Under the HSR Act, certain acquisition transactions may not be
consummated unless certain information has been furnished to the FTC and the
Antitrust Division and certain waiting period requirements have been
satisfied. The Offer is subject to these requirements. See Section 2.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, purchases cannot be made until the expiration of a
15-day waiting period after October 21, 1994, the date on which certain
required information and documentary material will be furnished by the
Purchaser to the FTC and the Antitrust Division with respect to the Offer,
unless both the FTC and the Antitrust Division terminate the waiting period
with respect thereto. If, within such 15-day waiting period, either the FTC
or the Antitrust Division requests additional information or documentary
material relevant to the Offer, the waiting period will be extended for an
additional period of ten days following the date of substantial compliance
with such requests. Accordingly, the required waiting period will expire at
11:59 P.M., New York City time, on October 21, 1994, unless a request for
additional information or documentary material is received before then.
Thereafter, the waiting period could be extended only by court order or with
the Purchaser's consent.
A request will be made pursuant to the HSR Act for early termination of
the waiting period applicable to the Offer. There can be no assurance,
however, that the 15-day HSR Act waiting period will be terminated early. The
Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirement imposed by the HSR Act has
been satisfied.
The Antitrust Division, the FTC and state authorities frequently
scrutinize the legality under the antitrust laws of transactions such as the
acquisition of Shares pursuant to the Offer. At any time before or after the
consummation of any of such transactions, the Antitrust Division, the FTC or
state authorities could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin
the purchase of Shares pursuant to the Offer or otherwise or the consummation
of the Proposed Merger, or seeking the divestiture of Shares acquired by the
Purchaser or the divestiture of substantial assets of the Company. Private
parties may also seek to take action under the antitrust laws. The Purchaser
believes that the acquisition of Shares pursuant to the Offer will not
violate the antitrust laws. However, there can not be any assurance that a
challenge to the Offer on antitrust grounds will not be made, or if such a
challenge is made, what the result will be. See Section 12 for certain
conditions of the Offer, including conditions with respect to injunctions and
certain governmental actions.
16. FEES AND EXPENSES. Gleacher & Co. Inc. ("Gleacher") is acting as
financial advisor to the Purchaser and CECI in connection with the
transactions described in this Offer, as Dealer Manager for the Offer and as
co-arranger of the debt financing. Lehman Brothers Inc. ("Lehman") is also
acting as financial advisor to the Purchaser and CECI and as co-arranger of
the debt financing.
CECI has agreed to pay Gleacher a fee of (a) $250,000 payable upon the
public announcement of an offer to acquire at least 50.1% of the Shares; (b)
$500,000 payable 45 calendar days after the commencement of a tender or
exchange offer, assuming the offer is outstanding at such time; and (c)
$4,000,000 payable upon completion of the direct or indirect acquisition by
CECI, whether alone or in partnership with another company, by merger,
acquisition of securities, or otherwise, of 50.1% or more of the equity
securities of the Company. Any fees payable in (a) or (b) above will be
credited against the fee described in (c). CECI has also agreed to pay
Gleacher a fee equal to .25% of the principal amount of debt financing
arranged in connection with such acquisition. Gleacher will also be
reimbursed for its out-of-pocket expenses in connection with its engagement
in connection with the Offer, including the reasonable fees and expenses of
its counsel. CECI has also agreed to indemnify Gleacher and certain related
persons against certain losses, claims, damages or liabilities and expenses
in connection with the Offer, including certain liabilities under the federal
securities laws.
CECI has agreed to pay Lehman a fee of $1,000,000 payable upon the
completion of the direct or indirect acquisition by CECI (whether alone or in
partnership with another company, by merger,
38
<PAGE>
<PAGE>
acquisition of securities, or otherwise), of 50.1% or more of the equity
securities of the Company or any of the businesses or assets of the Company.
CECI has also agreed to pay Lehman a fee equal to .25% of the principal
amount of debt financing arranged in connection with such acquisition. CECI
has also agreed to indemnify Lehman and certain related persons against
certain losses, claims, damages or liabilities and expenses in connection
with the Offer, including certain liabilities under the federal securities
laws.
MacKenzie Partners, Inc. has been retained by the Purchaser to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, facsimile, telegraph and
personal interviews and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners
of Shares. The Information Agent will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities
and expenses in connection therewith, including certain liabilities under the
federal securities laws.
In addition, IBJ Schroder Bank & Trust Company has been retained as the
Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed
for certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the federal securities laws.
Neither CECI nor the Purchaser will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
the Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
17. MISCELLANEOUS. The Offer is being made to all holders of Shares. The
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to a state statute.
If the Purchaser becomes aware of any state where the making of the Offer is
so prohibited, the Purchaser will make a good faith effort to comply with any
such statute or seek to have such statute declared inapplicable to the Offer.
If, after such good faith effort, the Purchaser cannot comply with any
applicable statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of the Purchaser by Gleacher or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
The Purchaser has filed with the Commission a Statement on Schedule 14D-1,
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer, and may file amendments thereto. Such
Statement and any amendments thereto, including exhibits, may be examined and
copies may be obtained from the principal office of the Commission in
Washington, D.C. in the manner set forth in Section 8 of this Offer to
Purchase.
No person has been authorized to give any information or make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
39
<PAGE>
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF THE PURCHASER, CECI AND PKS
The following information sets forth the name, business address and
present principal occupation and five year employment history of each of the
directors and executive officers of the Purchaser, CECI and PKS. Each of the
directors and executive officers is a citizen of the United States. Unless
otherwise indicated, the business address of (i) each of the directors and
executive Officers of CECI and the Purchaser named below is 10831 Old Mill
Road, Omaha, Nebraska 68154 and (ii) each of the directors and executive
officers of PKS named below is 1000 Kiewit Plaza, Omaha, Nebraska 68131.
Although information is provided herein with respect to PKS, by furnishing
such information CECI is expressing no view with respect to whether or not
PKS may be deemed to be a control person of CECI.
DIRECTORS AND EXECUTIVE OFFICERS OF CECI
<TABLE>
<CAPTION>
NAME AGE POSITION
- - --------------------- ----- --------------------------------------------------
<S> <C> <C>
David L. Sokol ....... 38 President and Chief Executive Officer, Chairman
of the Board of Directors, Director
Thomas R. Mason ...... 50 Senior Vice President, Engineering, Construction
and Operations
Steven A. McArthur .. 36 Senior Vice President, General Counsel and
Secretary
Donald M. O'Shei, Sr. 60 Senior Vice President, Asia Division
John G. Sylvia ....... 35 Senior Vice President, Chief Financial Officer
and Treasurer
Gregory E. Abel ...... 32 Vice President, Chief Accounting Officer and
Controller
Edward F. Bazemore .. 57 Vice President, Human Resources
David W. Cox ......... 38 Vice President, Legislative and Regulatory Affairs
Vincent B. Fesmire .. 53 Vice President, Development and Implementation
Dale R. Schuster .... 42 Vice President, Administration
Edgar D. Aronson .... 59 Director
Judith E. Ayres ...... 49 Director
James Q. Crowe ....... 44 Director
Richard K. Davidson . 52 Director
Ben Holt ............. 80 Director
Richard R. Jaros .... 42 Director
Everett B. Laybourne 82 Director
Herbert L. Oakes, Jr. 47 Director
Walter Scott, Jr. ... 62 Director
Barton W. Shackelford 73 Director
David E. Wit ......... 32 Director
</TABLE>
David L. Sokol, 38, Chairman of the Board of Directors, President and
Chief Executive Officer. Mr. Sokol has served as President and Chief
Executive Officer of CECI since April 19, 1993, as Chairman of the Board of
Directors since May 5, 1994 and has been a director of CECI since March 1991.
Formerly, Mr. Sokol was Chairman, President and Chief Executive Officer of
CECI from February 1991 until January 1992. Mr. Sokol has served as Chairman,
President and Chief Executive Officer of the Purchaser since its formation on
September 22, 1994. Mr. Sokol was the President and Chief Operating Officer
of, and a director of, JWP, Inc., from January 27, 1992 to October 1, 1992.
From November 1990 until February 1991, Mr. Sokol was the President and Chief
Executive Officer of Kiewit Energy Company, the largest stockholder of CECI
and a wholly owned subsidiary of PKS. From 1983 to November 1990, Mr. Sokol
was the President and Chief Executive Officer of Ogden Projects, Inc.
S-1
<PAGE>
<PAGE>
Thomas R. Mason, 50, Senior Vice President, Engineering, Construction and
Operations. Mr. Mason joined CECI in March 1991. From October 1989 to March
1991, Mr. Mason was Vice President and General Manager of Kiewit Energy
Company. Mr. Mason acted as a consultant in the energy field from June 1988
to October 1989. Prior to that, Mr. Mason was Director of Marketing for
Energy Factors, Inc., a non-utility developer of power facilities.
Steven A. McArthur, 36, Senior Vice President, General Counsel and
Secretary. Mr. McArthur joined CECI in February 1991. Mr. McArthur has served
as a director, Senior Vice President, General Counsel and Secretary of the
Purchaser since its formation on September 22, 1994. From 1988 to 1991 he was
an attorney in the Corporate Finance Group at Shearman & Sterling in San
Francisco. From 1984 to 1988 he was an attorney in the Corporate Finance
Group at Winthrop, Stimson, Putnam & Roberts in New York.
Donald M. O'Shei, Sr., 60, Senior Vice President, Asia Division and
President, CE International, Ltd. General O'Shei was in charge of engineering
and operations for CECI from October 1988 until October 1991. He rejoined
CECI as a Vice President in August 1992. Previously he was President and
Chief Executive Officer of AWD Technologies, Inc., a hazardous waste
remediation firm, and President and General Manager of its predecessor
company, Atkinson-Woodward Clyde. He was a brigadier general in the U.S. Army
prior to joining the Guy F. Atkinson Co. in 1982 as Director of Corporate
Planning and Development.
John G. Sylvia, 35, Senior Vice President, Chief Financial Officer and
Treasurer. Mr. Sylvia joined CECI in 1988. Mr. Sylvia has served as a
director, Senior Vice President, Chief Financial Officer and Treasurer of the
Purchaser since its formation on September 22, 1994. From 1985 to 1988, Mr.
Sylvia was a Vice President in the San Francisco office of the Royal Bank of
Canada, with responsibility for corporate and capital markets banking. From
1986 to 1990, Mr. Sylvia served as an Adjunct Professor of Applied Economics
at the University of San Francisco. From 1982 to 1985, Mr. Sylvia was a Vice
President with Bank of America.
Gregory E. Abel, 32, Vice President, Chief Accounting Officer and
Controller. Mr. Abel joined CECI in 1992. Mr. Abel is a Chartered Accountant
and from 1984 to 1992 he was employed by Price Waterhouse. As a Manager in
the San Francisco office of Price Waterhouse, he was responsible for clients
in the energy industry.
Edward F. Bazemore, 57, Vice President, Human Resources. Mr. Bazemore
joined CECI in July 1991. From 1989 to 1991, he was Vice President, Human
Resources, at Ogden Projects, Inc. in New Jersey. Prior to that, Mr. Bazemore
was Director of Human Resources for Ricoh Corporation, also in New Jersey.
Previously, he was Director of Industrial Relations for Scripto, Inc. in
Atlanta, Georgia.
David W. Cox, 38, Vice President, Legislative and Regulatory Affairs. Mr.
Cox joined CECI in 1990. From 1987 to 1990 Mr. Cox was a Vice President with
Bank of America N.T. & S.A. in the Consumer Technology and Finance Group.
From 1984 to 1987, Mr. Cox held a variety of management positions at First
Interstate Bank.
Vincent B. Fesmire, 53, Vice President, Development and Implementation.
Mr. Fesmire joined the Company in October 1993. Prior to joining CECI, Mr.
Fesmire was employed for 19 years with Stone & Webster, an engineering firm,
serving in various management level capacities with an expertise in
geothermal design engineering.
Dale R. Schuster, 42, Vice President , Administration. Mr. Schuster joined
CECI in July 1994. From 1994 until joining CECI, he was Senior Vice President
and General Manager of AutoInfo, Inc., a software development and information
systems company, and prior to that, Vice President and General Manager of
ValCom, Inc.
Edgar D. Aronson, 59. Mr. Aronson has been a director of CECI since April
1983. Mr. Aronson founded EDACO Inc., a private venture capital company, in
1981, and has been President of EDACO since that time. Prior to that, Mr.
Aronson was Chairman, Dillon, Read International from 1979 to 1981 and a
General Partner in charge of the International Department at Salomon Brothers
Inc from 1973 to 1979.
S-2
<PAGE>
<PAGE>
Judith E. Ayres, 49. Ms. Ayres has been a director of CECI since July
1990. Since 1989 Ms. Ayres has been Principal of The Environmental Group, an
environmental consulting firm in San Francisco, California. From 1988 to
1989, Ms. Ayres was a Vice President/Principal of William D. Ruckelshaus
Associates, an environmental consulting firm. From 1983 to 1988 Ms. Ayres was
the Regional Administrator of Region 9 (Arizona, California, Hawaii, Nevada
and the Western Pacific Islands) of the United States Environmental
Protection Agency.
James Q. Crowe, 44. Mr. Crowe has been a director of CECI since March
1991. Mr. Crowe is Chairman and Chief Executive Officer of MFS Communications
Company, Inc., a publicly traded company in which PKS holds a majority
ownership interest. Prior to assuming his current position in 1991, Mr. Crowe
was President of Kiewit Industrial Company, a [major] subsidiary of PKS.
Before joining Kiewit Industrial Company in 1986, Mr. Crowe was Group Vice
President, Power Group at Morrison-Knudsen Corporation. Mr. Crowe is a
director of C-TEC Corporation, a publicly traded company in which PKS holds a
majority ownership interest.
Richard K. Davidson, 52. Mr. Davidson was appointed a director of CECI in
March 1993. Mr. Davidson has been Chairman and Chief Executive Officer of
Union Pacific Railroad since 1991. From 1989 to 1991 he was Executive Vice
President--Operations of Union Pacific Railroad, and from 1986 to 1989 he was
Vice President--Operations of Union Pacific Railroad. Mr. Davidson is also a
director of FirsTier Financial, Inc., Chicago & Northwestern Holdings
Corporation and Missouri Pacific Railroad Company.
Ben Holt, 80. Mr. Holt has been a director of CECI since September 1993.
Mr. Holt is the founder, and was Chairman and Chief Executive Officer, of The
Ben Holt Co., an engineering firm located in Pasadena, California, which CECI
acquired in September 1993. Mr. Holt retired as Chairman and CEO of The Ben
Holt Co. in December 1993 and is currently a consultant to CECI. Mr. Holt is
a beneficial owner of 3,763 Shares, representing less than 1% of the
outstanding Shares.
Richard R. Jaros, 42. Mr. Jaros has been a director of CECI since March
1991. Mr. Jaros served as Chairman of the Board from April 19, 1993 to May 5,
1994 and served as President and Chief Operating Officer of CECI from January
8, 1992 to April 19, 1993. From 1990 until January 8, 1992, Mr. Jaros served
as a Vice President of PKS and is currently an Executive Vice President and a
director of PKS. Mr. Jaros serves as a director of MFS Communications
Company, Inc. and C-TEC Corporation, both of which are publicly traded
companies in which PKS holds a majority ownership interest. From 1986 to
1990, Mr. Jaros served as a Vice President for Mergers and Acquisitions for
Kiewit Holdings, a subsidiary of PKS.
Everett B. Laybourne, 82. Mr. Laybourne has been a director of CECI since
May 1988. For many years he served as counsel for a number of major
publicly-held corporations. He also presently serves as a Vice President and
Trustee of The Ralph M. Parsons Foundation and as National Board Chairman of
WAIF, Inc. From 1969 to 1988, Mr. Laybourne was senior partner in the law
firm of MacDonald, Halsted & Laybourne in Los Angeles, California, whose
successor firm was Baker & McKenzie to which he acted for five years in an of
counsel capacity. He continues in the practice of law in Los Angeles.
Herbert L. Oakes, Jr., 47. Mr. Oakes has been a director of CECI since
October 1987. In 1982, Mr. Oakes founded and became President of H.L. Oakes &
Co., Inc., a corporate advisor and dealer in securities. From 1988 to the
present, Mr. Oakes has served as a Managing Director of Oakes, Fitzwilliams,
Co., Limited, a member of the Securities and Futures Authority Limited and
The London Stock Exchange. Mr. Oakes is a director of Shared Technologies,
Inc., Harcor Energy Inc. and New World Power Corporation.
Walter Scott, Jr., 62. Mr. Scott has been a director of CECI since June
1991. Mr. Scott was the Chairman and Chief Executive Officer of CECI from
January 8, 1992 until April 19, 1993. Mr. Scott is Chairman and President of
PKS, a position he has held since 1979. Mr. Scott is a director of Berkshire
Hathaway, Inc., Burlington Resources, Inc., ConAgra, Inc., FirsTier
Financial, Inc., and Valmont Industries, Inc. Mr. Scott also serves as a
director of MFS Communications Company, Inc. and C-TEC Corporation, both
publicly traded companies in which PKS holds a majority ownership interest.
S-3
<PAGE>
<PAGE>
Barton W. Shackelford, 73. Mr. Shackelford has been a director of CECI
since June 1986. Mr. Shackelford served as President and a director of
Pacific Gas & Electric Company from 1979 until his retirement in 1985. He is
a director of Harding Associates, Inc.
David E. Wit, 32. Mr. Wit has been a director of CECI since April 1987. He
is co-founder and Co-Chief Executive Officer of Logicat, Inc., a software
development/publishing firm. Prior to working at Logicat, Inc. Mr. Wit worked
at E.M. Warburg, Pincus & Company, where he analyzed seed-stage financing and
technology investments.
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
The names of each director of the Purchaser are set forth below. The other
required information with respect to each such person is set forth under
"Directors and Executive Officers of CECI" above.
<TABLE>
<CAPTION>
NAME AGE
- - ------------------- -----
<S> <C>
David L. Sokol ..... 38
Steven A. McArthur 36
John G. Sylvia ..... 35
</TABLE>
All current executive officers of CECI hold the same offices at the
Purchaser. See "Directors and Executive Officers of CECI" above.
DIRECTORS AND EXECUTIVE OFFICERS OF PKS
Richard W. Colf, 51. Mr. Colf became a director of PKS in 1994. Mr. Colf
has been a director of Kiewit Construction Group Inc. since 1992 and a Vice
President of Kiewit Pacific since 1987.
James Q. Crowe (see "Directors and Executive Officers of CECI" above).
Robert B. Daugherty, 72. Mr. Daugherty has been a director of PKS since
1986. He serves as Chairman of the Board of Valmont Industries, Inc. and is a
director of KN Energy, Inc. Mr. Daugherty's business address is 8805 Indian
Hill Drive, Guarantee Centre, Suite 225, Omaha, Nebraska 68114.
Richard Geary, 59. Mr. Geary has been a director of PKS since 1988. Mr.
Geary is employed as an Executive Vice President of KCG and President of
Kiewit Pacific Co., a subsidiary of PKS.
Bruce E. Grewcock, 40. Mr. Grewcock became a director of PKS in 1994. Mr.
Grewcock has been President (since 1992), a Senior Vice President
(1992-1992), and a Vice President (1987-1991) of Kiewit Mining Group Inc., a
subsidiary of PKS.
Charles M. Harper, 66. Mr. Harper has been a director of PKS since 1986.
Mr. Harper is the Chairman of the Board and Chief Executive Officer of RJR
Nabisco Holdings Corp. and formerly served as the Chairman of the Board of
ConAgra, Inc. Mr. Harper's business address is One Central Park Plaza, Suite
1500, Omaha, Nebraska 68102.
Richard R. Jaros (see "Directors and Executive Officers of CECI" above).
Robert E. Julian 55. Mr. Julian has been a director since 1987, Executive
Vice President-Chief Financial Officer of PKS since 1991 and Vice
President-Chief Financial Officer of PKS from 1989 to 1991. Mr. Julian was
Vice President-Chief Financial Officer of PKS from 1984 to 1991. Mr. Julian
is a director of Kiewit Diversified Group Inc., a wholly owned subsidiary of
PKS ("KDG"). In addition, Mr. Julian has been a director of MFS
Communications Company since January 1992 and of C-TEC Corporation since
December 1993.
Leonard W. Kearney, 53. Mr. Kearney has been a director of PKS since 1989.
He is the President of Kiewit Construction Company and Kiewit Western Co. and
a Vice President of KDG.
Peter Kiewit, Jr., 68. Mr. Kiewit has been a director of PKS since 1966
and is Of Counsel to the law firm of Gallagher & Kennedy, Phoenix, Arizona.
Walter Scott (see "Directors and Executive Officers of CECI" above).
S-4
<PAGE>
<PAGE>
Kenneth E. Stinson, 52. Mr. Stinson has been an Executive Vice President
of PKS since 1991 and a director of PKS since 1987. He formerly served as a
Vice President of PKS. He has been the President of Kiewit Construction Group
Inc., an affiliate of PKS ("KCG"), since 1992 and a director of such company
since 1986. In addition, Mr. Stinson served as President of Kiewit Coal
Properties Inc., an affiliate of PKS from 1989 to 1992 and a director of such
company since prior to 1988. Mr. Stinson is also a director of KDG, MFS
Communications Company, Inc. and C-TEC Corporation.
George B. Toll, Jr., 58. Mr. Toll is a director of PKS and serves as an
Executive Vice President of KDG.
S-5
<PAGE>
<PAGE>
SCHEDULE II
SCHEDULE OF TRANSACTIONS IN SHARES
DURING THE PAST 60 DAYS
BY THE PURCHASER AND CECI
<TABLE>
<CAPTION>
SHARES PRICE PER
TRANSACTION DATE ACQUIRED* SHARE**
- - ------------------ ----------- -----------
<S> <C> <C>
September 15, 1994 50,000 $27.25
September 15, 1994 50,000 27.62
September 16, 1994 100,000 28.00
Total ............ 200,000
</TABLE>
* All transactions set forth in the table above were effected by the
Purchaser through a registered broker on the NNM.
** All prices are exclusive of commissions.
S-6
<PAGE>
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of
its addresses set forth below:
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
Telephone Number:
(212) 858-2103
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Delivery:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Attn: Reorganization New York, New York 10004
New York, New York Operations Department Attn: Reorganization
10274-0084 Operations Department
Attn: Reorganization
Operations Department
Confirm Facsimile by
Telephone: (212) 858-2103
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth below. Requests for additional copies of this Offer to
Purchase, the Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or to brokers, dealers, commercial banks or
trust companies.
The Information Agent for the Offer is:
MacKenzie
Partners, Inc.
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Collect)
or
CALL TOLL FREE (800) 322-2885
The Dealer Manager for the Offer is:
GLEACHER & CO. INC.
660 Madison Avenue
New York, New York 10021
(212) 418-4206
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MAGMA POWER COMPANY
PURSUANT TO THE OFFER TO PURCHASE
DATED OCTOBER 6, 1994
BY
CE ACQUISITION COMPANY, INC.
A WHOLLY OWNED SUBSIDIARY OF
CALIFORNIA ENERGY COMPANY, INC.
- - -------------------------------------------------------------------------------
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, NOVEMBER 3, 1994,
UNLESS THE OFFER IS EXTENDED.
- - -------------------------------------------------------------------------------
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
Telephone Number:
(212) 858-2103
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: Facsimile Number: (212) 858-2611 By Hand or Overnight Delivery:
P.O. Box 84 Attn: Reorganization Operations One State Street
Bowling Green Station Department New York, New York 10004
New York, New York Attn: Reorganization Operations
10274-0084 Department
Attn: Reorganization Operations
Department
Confirm Facsimile by Telephone:
(212) 858-2103
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates for Shares ("Share Certificates") and/or Rights ("Rights
Certificates") are to be forwarded herewith or if delivery is to be made by
book-entry transfer to the account maintained by the IBJ Schroder Bank &
Trust Company (the "Depositary") at The Depository Trust Company ("DTC"), the
Midwest Securities Trust Company ("MSTC") or the Philadelphia Depository
Trust Company ("PHDTC") (collectively, the "Book-Entry Transfer Facilities")
pursuant to the procedures set forth in Section 4 of the Offer to Purchase,
dated October 6, 1994 (the "Offer to Purchase"), of CE Acquisition Company,
Inc., a Delaware corporation and a wholly owned subsidiary of California
Energy Company, Inc., a Delaware corporation.
<PAGE>
<PAGE>
If the Purchaser declares that the Merger Agreement Condition (as defined
below) is satisfied, the Purchaser will not require delivery of Rights.
Unless and until the Purchaser declares that the Merger Agreement Condition
is satisfied, holders of Shares will be required to tender one Right for each
Share tendered to effect a valid tender of such Share. If the Distribution
Date (as defined in the Offer to Purchase) has not occurred prior to the time
Shares are tendered pursuant to the Offer, a tender of Shares will constitute
a tender of the associated Rights. If the Distribution Date occurs and the
Rights Certificates are distributed by the Company to holders of Shares prior
to the time a holder's Shares are tendered pursuant to the Offer, in order
for Rights (and the corresponding Shares) to be validly tendered, Rights
Certificates representing a number of Rights equal to the number of Shares
tendered must be delivered to the Depositary or, if book-entry delivery is
available with respect to Rights, a book-entry confirmation must be received
by the Depositary with respect thereto. If the Distribution Date occurs and
Rights Certificates are not distributed prior to the time Shares are tendered
pursuant to the Offer, Rights may be tendered prior to a stockholder
receiving Rights Certificates by use of the guaranteed delivery procedures
described in Section 4 of the Offer to Purchase and below. In any case, a
tender of Shares constitutes an agreement by the tendering stockholder to
deliver Rights Certificates representing a number of Rights equal to the
number of Shares tendered pursuant to the Offer to the Depositary within five
business days after the date Rights Certificates are distributed. The
Purchaser reserves the right to require that the Depositary receive Rights
Certificates, or a Book-Entry Confirmation (as defined in the Offer to
Purchase), if available, with respect to such Rights prior to accepting the
corresponding Shares for payment pursuant to the Offer if Rights Certificates
have been distributed to holders of Shares at such time.
If a stockholder desires to accept the Offer and tender Shares and Rights
(as defined below) pursuant to the Offer and such stockholder's Share
Certificates and, if applicable, Rights Certificates, are not immediately
available or time will not permit all required documents to reach the
Depositary prior to the expiration of the Offer (the "Expiration Date"), or
the procedures for book-entry transfer cannot be completed on a timely basis,
such Shares or Rights may nevertheless be tendered if the guaranteed delivery
procedures set forth in Section 4 of the Offer to Purchase are followed. See
Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
- - --------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S) (PLEASE FILL SHARE CERTIFICATE(S) TENDERED (ATTACH ADDITIONAL SIGNED LIST
IN, IF BLANK) IF NECESSARY)
- - ------------------------------------ ------------------------------------------------------------
TOTAL NUMBER OF
SHARES REPRESENTED
SHARE CERTIFICATE BY SHARE NUMBER OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
----------------- ------------------ ---------------------
<S> <C> <C> <C>
----------------- ------------------ ---------------------
----------------- ------------------ ---------------------
----------------- ------------------ ---------------------
----------------- ------------------ ---------------------
TOTAL SHARES:
- - ------------------------------------ ----------------- ------------------ ---------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares described above are being
tendered. See Instruction 4.
- - --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION OF RIGHTS TENDERED
- - -------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S) (PLEASE FILL RIGHTS CERTIFICATE(S) TENDERED (ATTACH ADDITIONAL SIGNED
IN, IF BLANK) LIST IF NECESSARY)*
- - ------------------------------------ -----------------------------------------------------------
TOTAL NUMBER OF
RIGHTS RIGHTS REPRESENTED
CERTIFICATE BY RIGHTS NUMBER OF RIGHTS
NUMBER(S)** CERTIFICATE(S)** TENDERED***
----------------- ------------------ --------------------
<S> <C> <C> <C>
----------------- ------------------ --------------------
----------------- ------------------ --------------------
----------------- ------------------ --------------------
----------------- ------------------ --------------------
TOTAL RIGHTS:
- - ------------------------------------ ----------------- ------------------ --------------------
* If the tendered Rights are represented by separate Rights Certificates, complete using the
certificate numbers of such Rights Certificates. Stockholders tendering Rights which are not
represented by separate Rights Certificates should retain a copy of this Letter of Transmittal
in order to accurately complete this Letter of Transmittal if Rights Certificates are received.
** Need not be completed by stockholders tendering by book-entry transfer.
*** Unless otherwise indicated, it will be assumed that all Rights evidenced by Rights
Certificates delivered to the Depositary are being tendered. See Instruction 4.
- - -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution__________________________________________________
Check box of Book-Entry Transfer Facility: [ ] DTC [ ] MSTC [ ] PHDTC
Account Number ________________________________________________________________
Transaction Code Number________________________________________________________
[ ] CHECK HERE IF TENDERED RIGHTS ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution _________________________________________________
Check box of Book-Entry Transfer Facility: [ ] DTC [ ] MSTC [ ] PHDTC
Account Number ________________________________________________________________
Transaction Code Number _______________________________________________________
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) ________________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Window Ticket Number (If Any) _________________________________________________
Name of Institution which Guaranteed Delivery _________________________________
If delivery is by book-entry transfer, check one box:
[ ] DTC [ ] MSTC [ ] PHDTC
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY
[ ] CHECK HERE IF TENDERED RIGHTS ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) ________________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Window Ticket Number (If Available) ___________________________________________
Name of Institution which Guaranteed Delivery _________________________________
If delivery is by book-entry transfer, check one box:
[ ] DTC [ ] MSTC [ ] PHDTC
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY
<PAGE>
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
Ladies and Gentlemen:
The undersigned hereby tenders to CE Acquisition Company, Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of California
Energy Company, Inc., a Delaware corporation ("CECI"), the above described
shares of common stock, par value $0.10 per share (the "Shares"), of Magma
Power Company, a Nevada corporation (the "Company"), pursuant to the
Purchaser's offer to purchase 12,400,000 Shares, and (unless and until the
Purchaser declares that the Merger Agreement Condition (as defined in the
Offer to Purchase described below) is satisfied), the associated Preferred
Stock Purchase Rights (the "Rights") to be issued on October 14, 1994
pursuant to the Rights Agreement, dated on or about October 3, 1994 (the
"Rights Agreement"), between the Company and a Rights Agent, at a price of
$35 per Share (and associated Right), net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated October 6, 1994 (the "Offer to Purchase"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which, together with the Offer to Purchase, constitutes the "Offer"). All
references to the Rights shall include all benefits which may inure to the
stockholders of the Company pursuant to the Rights Agreement and, unless the
context otherwise requires, all references to Shares shall include the
Rights. The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole and from time to time in part, to one or more
direct or indirect subsidiaries of CECI, the right to purchase Shares and
Rights tendered pursuant to the Offer, but any such transfer or assignment
will not relieve the Purchaser of its obligations under the Offer or
prejudice the rights of tendering stockholders to receive payment for Shares
or Rights validly tendered and accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares and
Rights tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns and transfers
to, or upon the order of, the Purchaser all right, title and interest in and
to all the Shares and Rights that are being tendered hereby and that are
being accepted for purchase pursuant to the Offer (and any and all dividends,
distributions, stock splits, other Shares, rights or other securities issued
or issuable in respect of the Shares and Rights on or after October 6, 1994)
which are payable or distributable to stockholders of record on a date prior
to the transfer into the name of the Purchaser or its nominees or transferees
on the Company's stock transfer records of the Shares and Rights purchased
pursuant to the Offer (a "Distribution"), and irrevocably constitutes and
appoints the Depositary the true and lawful attorney-in-fact and proxy of the
undersigned with respect to such Shares and Rights (and any dividends,
distributions, other Shares, rights or securities, including Distributions)
with full power of substitution and resubstitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (a)
deliver certificates for such Shares and Rights (and any such dividends,
distributions, other Shares, rights or securities, including Distributions),
or transfer ownership of such Shares and Rights on the account books
maintained by a Book-Entry Transfer Facility, together in either such case
with all accompanying evidences of transfer and authenticity, to or upon the
order of the Purchaser upon receipt by the Depositary, as the undersigned's
agent, of the purchase price (adjusted, if appropriate, as provided in the
Offer to Purchase), (b) present such Shares and Rights (and any dividends,
distributions, other Shares, rights or securities, including Distributions)
for transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares and
Rights (and any such dividends, distributions, other Shares, rights or
securities, including Distributions), all in accordance with the terms of the
Offer.
The undersigned understands that if the Distribution Date (as defined in
the Offer to Purchase) has occurred and Rights Certificates have been
distributed by the Company to holders of Shares prior to the time a holder's
Shares are tendered herewith, then for Rights (and the corresponding Shares)
to be validly tendered, Rights Certificates representing a number of Rights
equal to the number of Shares being tendered herewith must be delivered to
the Depositary, or if book-entry delivery is available with respect to
Rights, a Book-Entry Confirmation must be received by the Depositary with
respect thereto. If the Distribution Date has occurred and Rights
Certificates have not been distributed prior to the time Shares
<PAGE>
<PAGE>
are tendered herewith, Rights may be tendered prior to a stockholder's
receiving Rights Certificates by use of the guaranteed delivery procedures
described in Section 4 of the Offer to Purchase. In any case, the undersigned
agrees to deliver Rights Certificates representing a number of Rights equal
to the number of Shares tendered herewith to the Depositary within five
business days after the date such Rights Certificates are distributed. The
undersigned understands that if the Rights Condition is not satisfied, the
Purchaser reserves the right to require that the Depositary receive Rights
Certificates, or a Book-Entry Confirmation, if available, with respect to
such Rights prior to accepting the corresponding Shares for payment, if the
Distribution Date occurs prior to the Expiration Date. In that event, payment
for Shares tendered and accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of, among other things, such
Rights Certificates.
The undersigned hereby irrevocably appoints David L. Sokol, Steven A.
McArthur and John G. Sylvia and each of them, or any other designees of the
Purchaser, the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution and resubstitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to vote or act
by written consent in such manner as each such attorney and proxy or his
substitute shall in his sole discretion deem proper, and otherwise to act
with respect to all the Shares and Rights tendered hereby that have been
accepted for payment by the Purchaser prior to the time of such vote or
action (and any and all non-cash dividends, distributions, other Shares,
rights or securities issued or issuable in respect thereof on or after
October 6, 1994), at any meeting of stockholders (whether regular or special
and whether or not an adjourned meeting) of the Company, or consent in lieu
of any such meeting, or otherwise. All such powers of attorney and proxies
are irrevocable and coupled with an interest in the tendered Shares and
Rights and are granted in consideration of, and are effective when, and only
to the extent that, the Purchaser accepts such Shares and Rights for payment.
Such acceptance for payment shall revoke any other proxies granted by the
undersigned at any time with respect to such Shares and Rights (and any such
non-cash dividends, distributions, other Shares, rights or other securities,
including Distributions) and no subsequent proxies or written consents will
be given (and if given will be deemed not to be effective) with respect
thereto by the undersigned. The Purchaser reserves the right to require that
in order for Shares and Rights to be properly tendered, immediately upon the
Purchaser's acceptance of such Shares and Rights for purchase, the Purchaser
is able to exercise full voting and other rights of a record and beneficial
holder, including act by written consent, with respect to such Shares and
Rights (and any Distributions).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares and
Rights tendered hereby (and any and all dividends, distributions, other
Shares, rights or other securities issued or issuable in respect thereof,
including Distributions, on or after October 6, 1994) and that, when the same
are accepted for payment by the Purchaser, the Purchaser will acquire good
and unencumbered title thereto, free and clear of all pledges, liens,
restrictions, charges, proxies and encumbrances and the same will not be
subject to any adverse claim.
Upon request, the undersigned will execute and deliver any additional
documents deemed by the Depositary or the Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares
tendered hereby (and any and all dividends, distributions, such other Shares,
rights or other securities, including Distributions). In addition, the
undersigned shall promptly remit and transfer to the Depositary for the
account of the Purchaser any and all other Shares and Rights or other
securities, including Distributions, issued to the undersigned on or after
October 6, 1994 in respect of Shares and Rights tendered hereby, accompanied
by appropriate documentation of transfer, and, pending such remittance or
appropriate assurance thereof, the Purchaser shall be entitled to all rights
and privileges as owner of any such other Shares and Rights or other
securities and may withhold the entire consideration or deduct from the
consideration the amount or value thereof, as determined by the Purchaser in
its sole discretion.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or
incapacity of the undersigned and any obligation of the undersigned hereunder
shall be binding upon the successors, assigns, heirs, executors,
administrators and legal and personal representatives of the undersigned.
Except as stated in the Offer to Purchase and this Letter of Transmittal,
this tender is irrevocable.
<PAGE>
<PAGE>
The undersigned understands that tenders of Shares and Rights pursuant to
any one of the procedures described in the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates
for Shares and Rights not tendered or accepted for payment in the name(s) of
the registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates
for Shares and Rights not tendered or accepted for payment (and accompanying
documents, as appropriate) to the registered holder(s) appearing under
"Description of Shares Tendered" and "Description of Rights Tendered" at the
address shown below the undersigned's signature. If both the Special Delivery
Instructions and the Special Payment Instructions are completed, please issue
the check for the purchase price, and/or return any certificates for Shares
and Rights not tendered or accepted for payment in the name of, and deliver
said certificates and check and return such certificates to, the person or
persons so indicated. Stockholders delivering Shares and Rights by book-entry
transfer may request that any Shares and Rights not accepted for payment be
returned by crediting such account maintained at a Book-Entry Transfer
Facility as such stockholder may designate by making an appropriate entry
under "Special Payment Instructions." The undersigned recognizes that the
Purchaser has no obligation pursuant to the Special Payment Instructions to
transfer any Shares and Rights from the name of the registered holder thereof
if the Purchaser does not accept for payment any of the Shares and Rights so
tendered.
<PAGE>
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares and/or Rights not tendered or
not purchased and/or the check for the purchase price of Shares or Rights
purchased are to be issued in the name of someone other than the undersigned,
or if the Shares or Rights delivered by book-entry transfer which are not
purchased are to be returned by credit to an account maintained at a
Book-Entry Transfer Facility other than that designated above.
Issue [ ] check [ ] Certificate(s) to:
Name ____________________________________________________________
(Please Print)
Address _________________________________________________________
_________________________________________________________
(Include Zip Code)
__________________________________________________________________
(Tax Identification or Social Security No.)
(See Substitute Form W-9 on the reverse hereof)
[ ] Credit unpurchased Shares or Rights delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below:
Check appropriate box:
[ ] DTC [ ] MSTC [ ] PHDTC
_________________________________________________________________
(Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares and/or Rights not tendered or
not purchased and/or the check for the purchase price of Shares or Rights
purchased are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
Mail [ ] check [ ] Certificate(s) to:
Name ____________________________________________________________
(Please Print)
Address _________________________________________________________
_________________________________________________________
(Include Zip Code)
__________________________________________________________________
(Tax Identification or Social Security No.)
(See Substitute Form W-9 on the reverse hereof)
<PAGE>
<PAGE>
STOCKHOLDERS SIGN HERE
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
DATED: _______________
IMPORTANT: COMPLETE AND SIGN THE SUBSTITUTE FORM W-9
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or Rights Certificate(s) on a security position listing
or by person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity,
please provide the following information. See Instruction 5.)
Name(s):
---------------------------------------------------------------------
- - -----------------------------------------------------------------------------
(Please Print)
Capacity (full title):
-------------------------------------------------------
- - -----------------------------------------------------------------------------
Address:
---------------------------------------------------------------------
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number:
---------------------------------------------
Tax Identification or Social Security Number:
-------------------------------
- - -----------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5 to determine if required.)
Authorized Signature:
-------------------------------------------------------
Name:
-----------------------------------------------------------------------
Name of Firm:
---------------------------------------------------------------
Title:
----------------------------------------------------------------------
Address:
--------------------------------------------------------------------
Area Code and Telephone Number:
---------------------------------------------
Dated:
----------------------------------------------------------------------
<PAGE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder of the Shares or Rights (which term, for the purposes of
this document, shall include any participant in a Book-Entry Transfer
Facility whose name appears on a security position listing as the owner of
Shares) tendered herewith, unless such holder has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the reverse hereof or (ii) if such Shares are to be tendered
for the account of a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agent's Medallion Program (collectively, "Eligible Institutions"). In all
other cases, all signatures on the Letter of Transmittal must be guaranteed
by an Eligible Institution. If the Share Certificates or Rights Certificates
are registered in the name of a person other than the signer of this Letter
of Transmittal, or payment of the purchase price is to be made or
certificates for unpurchased Shares and Rights are to be issued or returned
to a person other than the registered owner, then the tendered certificates
must be endorsed or accompanied by duly executed stock powers, in either case
signed exactly as the name or names of the registered owner or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed by an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if certificates are to
be forwarded herewith or if tenders of Shares or Rights are to be made
pursuant to the procedures for delivery by book-entry transfer set forth in
the Offer to Purchase. Certificates for all physically tendered Shares, or
timely confirmation of any book-entry transfer into the Depositary's accounts
at DTC, MSTC or PHDTC or Shares tendered by book-entry transfer, as the case
may be, as well as a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees, or
an Agent's Message in the case of a book-entry delivery, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Offer to Purchase) and Rights
Certificates, or Book-Entry Confirmation of a transfer of Rights into the
Depositary's account at a Book-Entry Transfer Facility, if available
(together with, if Rights are forwarded separately from Shares, a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof)
with any required signature guarantee, and any other documents required by
this Letter of Transmittal), must be received by the Depositary at one of the
addresses set forth herein prior to the Expiration Date or, if later, within
five business days after the date such Rights Certificates are distributed.
Stockholders whose Share Certificates or Right Certificates are not
immediately available (including, if the Distribution Date has occurred,
because Rights Certificates have not yet been distributed by the Company), or
who cannot deliver their certificates and all other required documents to the
Depositary on or prior to the Expiration Date or who cannot complete the
procedures for delivery by book-entry transfer on a timely basis may tender
their Shares and/or Rights by properly completing and duly executing the
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure
set forth in the Offer to Purchase. Pursuant to such procedure: (i) such
tender must be made by or through an Eligible Institution, (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by the Purchaser, must be received by the Depositary on or
before the Expiration Date and (iii) the certificates for all tendered Shares
and/or Rights or confirmation of any book-entry transfer into the
Depositary's account at DTC, MSTC or PHDTC of Shares and/or Rights tendered
by book-entry transfer, as the case may be, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees (or, in the case of a book-entry transfer,
an Agent's Message (as defined in the Offer to Purchase)), and all other
documents required by this Letter of Transmittal, must be received by the
Depositary within (a) in the case of Shares, five Nasdaq National Market
("NNM") trading days after the date of execution of such Notice of Guaranteed
Delivery to the Depositary or (b) in the case of Rights, a period ending on
the later of (i) five NNM trading days after the date of execution of such
Notice of Guaranteed Delivery and (ii) five business days after Rights
Certificates are distributed to stockholders by the Company, all as provided
in the Offer to Purchase. If Share Certificates are forwarded separately to
the Depositary, a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, RIGHTS CERTIFICATES, THIS
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY
THROUGH A BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE
TENDERING STOCKHOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION
2, THE DELIV-
<PAGE>
<PAGE>
ERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares or Rights will be purchased. All tendering stockholders, by
execution of this Letter of Transmittal (or facsimile thereof), waive any
right to receive any notice of the acceptance of their Shares or Rights for
payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares or Rights should be listed on
a separate signed schedule attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares or Rights evidenced by any
certificate submitted are to be tendered, fill in the number of Shares or
Rights which are to be tendered in the box entitled "Number of Shares
Tendered" or "Number of Rights Tendered." In such case, new certificate(s)
for the remainder of the Shares or Rights that were evidenced by old
certificate(s) will be sent to the registered holder, unless otherwise
provided in the boxes entitled "Special Payment Instructions" or "Special
Delivery Instructions" on this Letter of Transmittal, as soon as practicable
after the Expiration Date. All Shares or Rights represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. (a)
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares and Rights tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever.
(b) If any of the Shares or Rights tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of
Transmittal.
(c) If any tendered Shares or Rights are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
(d) If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of such person's authority so
to act must be submitted.
(e) When this Letter of Transmittal is signed by the registered holder(s)
of the Shares or Rights listed and transmitted hereby, no endorsements of
certificates or separate stock powers are required unless payment is to be
made to, or certificates for Shares or Rights not tendered or purchased are
to be issued in the name of, a person other than the registered holder(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution (unless signed by an Eligible Institution).
(f) If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares or Rights listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holder(s) appear on the
certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution (unless signed by an Eligible
Institution).
(g) Unless and until the Purchaser declares the Merger Agreement Condition
to be satisfied, if Rights Certificates have been distributed to holders of
Shares, such holders are required to tender Rights Certificate(s)
representing a number of Rights equal to the number of Shares tendered in
order to effect a valid tender of such Shares. It is necessary that
stockholders follow all such signature requirements of this Instruction 5
with respect to the Rights in order to tender such Rights.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect
to the transfer and sale of purchased Shares and Rights to it or its order
pursuant to the Offer. If payment of the purchase price is to be made to, or
if certificates for Shares and Rights not tendered or purchased are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the
<PAGE>
<PAGE>
amount of any stock transfer taxes (whether imposed on the registered holder
or such other person) payable on account of the transfer to such person will
be deducted from the purchase price unless satisfactory evidence of the
payment of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER
OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for unpurchased Shares or Rights are to
be returned to, a person other than the signer of this Letter of Transmittal
or if a check is to be sent and/or certificates for unpurchased Shares or
Rights are to be returned to someone other than the signer of this Letter of
Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. Stockholders
tendering Shares or Rights by book-entry transfer may request that the Shares
or Rights not purchased be credited to such account maintained at a
Book-Entry Transfer Facility as such stockholder may designate hereon. If no
such instructions are given, such Shares or Rights not purchased will be
returned by crediting the account at a Book-Entry Transfer Facility
designated above. See Instruction 1.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from, either the Information Agent or
the Dealer Manager at their respective addresses set forth below or from your
broker, dealer, commercial bank or trust company.
9. IRREGULARITIES. All questions as to the validity (including time of
receipt) and acceptance for payment of any tender of Shares or Rights will be
determined by the Purchaser, in its sole discretion, whose determination
shall be final and binding. The Purchaser reserves the absolute right to
reject any and all tenders determined by it not to be in the appropriate form
or the acceptance for purchase of which may, in the opinion of its counsel,
be unlawful. As set forth in the Offer to Purchase, the Purchaser also
reserves the absolute right to waive any of the conditions of the Offer or
any defect or irregularity in the tender of any Shares or Rights of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. The Purchaser's interpretations of
the terms and conditions of the Offer (including these instructions) will be
final and binding. Unless waived, any defects or irregularities must be cured
within such time as the Purchaser shall determine. None of the Purchaser, the
Dealer Manager, the Depositary, the Information Agent or any other person
will be under any duty to give notice of any defects or irregularities in
tenders or shall incur any liability for failure to give any such
notification. Tenders shall not be deemed to have been made until all defects
and irregularities have been cured or waived.
10. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under federal income tax
laws, a stockholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below and certify under
penalties of perjury that such number is correct and that such stockholder is
not subject to backup withholding. If the Depositary is not provided with the
correct TIN and certifications are not provided, the Internal Revenue Service
may subject the stockholder or other payee to a $50 penalty. In addition,
payments that are made to such stockholder or other payee with respect to
Shares or Rights purchased pursuant to the Offer may be subject to 31% backup
withholding.
Certain stockholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, the stockholder must submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. A Form
W-8 can be obtained from the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained
from the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is
checked, the stockholder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. Notwithstanding that the box in Part 3 is checked and the
Certificate of Awaiting Taxpayer Identification Number is completed, the
Depositary will withhold 31% of all payments made prior to the time a
properly certified TIN is provided to the Depositary.
3
<PAGE>
<PAGE>
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or Rights or of the last transferee appearing on the transfers
attached to, or endorsed on, the Shares or Rights. If the Shares or Rights
are in more than one name or are not in the name of the actual owner, consult
the enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for additional guidance on which number to report.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares or Rights has been lost, destroyed or stolen, the
stockholder should promptly notify the Information Agent. The stockholder
will then be instructed as to the steps that must be taken in order to
replace the certificate(s). This Letter of Transmittal and related documents
cannot be processed until the procedures for replacing lost or destroyed
certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) OR AN
AGENT'S MESSAGE, TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 10)
<TABLE>
<CAPTION>
<S> <C> <C>
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY
SUBSTITUTE Form W-9 PART 1 --PLEASE PROVIDE YOUR TIN IN THE Social security number
BOX AT RIGHT AND CERTIFY BY SIGNING AND OR ______________________________
DATING BELOW Employer identification number
-------------------------------------------------------------------------------------------
Department of PART 2 --CERTIFICATION --UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
the Treasury (1) The number shown on this form is my correct Taxpayer Identification Number (or I
Internal Revenue Service am waiting for a number to be issued to me); and
PAYER'S REQUEST FOR TAXPAYER (2) I am not subject to backup withholding because (i) I am exempt from backup withholding, (ii) I
IDENTIFICATION NUMBER (TIN) have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in part 2 above if you have been
notified by the IRS that you are subject to backup withholding because of under-reporting
interest or dividends on your tax return. However, if after being notified by the IRS that you
were subject to backup withholding you received another notification from the IRS stating that
you are no longer subject to backup withholding, do not cross out item (2).
----------------------------------------------------------------------------------------
SIGNATURE ................ DATE ................ PART 3
NAME (Please Print)............................... Awaiting TIN -- [ ]
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE>
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3
OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (i) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(ii) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
60 days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
Signature ....................................................
Date ......................................................
Name (Please Print) .............................................
FACSIMILE COPIES OF THIS LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND
DULY EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR
SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH
STOCKHOLDER OF THE COMPANY OR HIS BROKER, DEALER, COMMERCIAL BANK, TRUST
COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH
ABOVE.
<PAGE>
<PAGE>
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager as set forth below. Requests for additional
copies of the Offer to Purchase, the Letter of Transmittal and other tender
offer materials may be directed to the Information Agent or to brokers,
dealers, commercial banks or trust companies.
The Information Agent for the Offer is:
MacKenzie Partners, Inc.
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
OR
CALL TOLL FREE (800) 322-2885
The Dealer Manager for the Offer is:
GLEACHER & CO. INC.
660 Madison Avenue
New York, New York 10021
(212) 418-4206
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MAGMA POWER COMPANY
As set forth in Section 4 of the Offer to Purchase, dated October 6, 1994
(the "Offer to Purchase"), this Notice of Guaranteed Delivery or one
substantially equivalent hereto must be used to accept the Offer (as defined
below) if certificates representing shares of common stock, par value $0.10
per share (the "Shares"), of Magma Power Company, a Nevada corporation (the
"Company"), and/or, if applicable, certificates for the associated Preferred
Share Purchase Rights (the "Rights") to be issued on October 14, 1994
pursuant to the Rights Agreement, dated on or about October 3, 1994, between
the Company and a Rights Agent, are not immediately available (including, if
a Distribution Date (as defined in the Offer to Purchase) has occurred,
because certificates for Rights have not yet been distributed by the Company)
or time will not permit all required documents to reach IBJ Schroder Bank &
Trust Company (the "Depositary") on or prior to the Expiration Date (as
defined in the Offer to Purchase), or the procedures for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or sent by telegram, facsimile
transmission or mail to the Depositary.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
Telephone Number:
(212) 858-2103
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: Facsimile Number: By Hand or Overnight Delivery:
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station Attn: Reorganization Operations New York, New York 10004
New York, New York 10274-0084 Department Attn: Reorganization Operations
Attn: Reorganization Operations Department
Department
Confirm Facsimile by Telephone:
(212) 858-2103
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION
TO A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID
DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto (see
Instructions 1 and 5 of the Letter of Transmittal), such signature guarantee
must appear on the applicable space provided in the signature box on the
Letter of Transmittal.
<PAGE>
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to CE Acquisition Company, Inc., a Delaware
corporation, upon the terms and subject to the conditions set forth in the
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"), receipt of which is hereby acknowledged, the number
of Shares and Rights indicated below pursuant to the guaranteed delivery
procedure set forth in Section 4 of the Offer to Purchase.
<TABLE>
<CAPTION>
<S> <C>
Number of Shares: Dated:
- - -------------------------------------------- ---------------------------------------
Number of Rights: Name(s) of Record Holder(s):
- - --------------------------------------------
Certificate No(s). (if available): ---------------------------------------
- - --------------------------------------------- ---------------------------------------
- - --------------------------------------------- Address(es):
---------------------------------------
If Shares will be tendered by book- ---------------------------------------
entry transfer, check one box: Area Code and Telephone Number(s):
[ ] The Depository Trust Company ---------------------------------------
[ ] Midwest Securities Trust Company
[ ] Philadelphia Depository Trust Company Signature(s):
---------------------------------------
Account Number: ---------------------------------------
- - --------------------------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agent's Medallion Program, hereby (a) represents that the
tender of shares effected hereby complies with Rule 14e-4 under the
Securities Exchange Act of 1934 and (b) guarantees to deliver to the
Depositary, at one of its addresses set forth above, the certificates
representing all tendered Shares and/or Rights, in proper form for transfer,
or confirmation of a book-entry transfer of such Shares and/or Rights,
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or an Agent's
Message (as defined in the Offer to Purchase) in the case of book-entry
delivery, and any other documents required by the Letter of Transmittal
within (a) in the case of Shares, five Nasdaq National Market ("NNM") trading
days after the date of execution of this Notice of Guaranteed Delivery or (b)
in the case of Rights, a period ending on the later of (x) five NNM trading
days after the date of execution of this Notice of Guaranteed Delivery and
(y) five business days after the date certificates for Rights are distributed
to holders of Shares by the Company.
<TABLE>
<CAPTION>
<S> <C> <C>
Name of Firm:
-------------------------
---------------------- Authorized Signature
Name:
Address: -------------------------
- - ----------------------- Please type or print
- - ----------------------- Date:
Zip Code -------------------------
Area Code and
Telephone Number:
--------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES OR RIGHTS WITH THIS NOTICE OF
GUARANTEED DELIVERY. CERTIFICATES FOR SHARES OR RIGHTS SHOULD BE SENT
WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
GLEACHER & CO. INC.
660 Madison Avenue
New York, New York 10021
(212) 418-4206
OFFER TO PURCHASE FOR CASH
12,400,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MAGMA POWER COMPANY
AT
$35 NET PER SHARE
BY
CE ACQUISITION COMPANY, INC.
A WHOLLY OWNED SUBSIDIARY OF
CALIFORNIA ENERGY COMPANY, INC.
- - -------------------------------------------------------------------------------
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, NOVEMBER 3, 1994,
UNLESS THE OFFER IS EXTENDED.
- - -------------------------------------------------------------------------------
October 6, 1994
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by CE ACQUISITION COMPANY, INC., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of California
Energy Company, Inc. ("CECI"), to act as the Dealer Manager in connection
with its offer to purchase 12,400,000 shares of common stock, par value $0.10
per share (the "Shares"), of Magma Power Company, a Nevada corporation (the
"Company"), and the associated Preferred Share Purchase Rights (the "Rights")
to be issued on October 14, 1994 pursuant to the Rights Agreement, dated on
or about October 3, 1994 between the Company and a Rights Agent, at $35 per
Share (and associated Right), net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated October 6, 1994 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which together constitute the "Offer")
enclosed herewith.
If the Purchaser declares that the Merger Agreement Condition (as defined
in the Offer to Purchase) is satisfied, the Purchaser will not require
delivery of Rights. Unless and until the Purchaser declares that the Merger
Agreement Condition is satisfied, holders of Shares will be required to
tender one Right for each Share tendered to effect a valid tender of such
Share. If the Distribution Date (as defined in the Offer to Purchase) has not
occurred prior to the time Shares are tendered pursuant to the Offer, a
tender of Shares will constitute a tender of the associated Rights. If the
Distribution Date occurs and the certificates representing Rights ("Rights
Certificates") are distributed by the Company to holders of Shares prior to
the time a holder's Shares are tendered pursuant to the Offer, in order for
Rights (and the corresponding Shares) to be validly tendered, Rights
Certificates representing a number of Rights equal to the number of Shares
tendered must be delivered to IBJ Schroder Bank & Trust Company (the
"Depositary") or, if book-entry delivery is available with respect to Rights,
a book-entry confirmation must be received by the Depositary with respect
thereto. If the Distribution Date occurs and Rights Certificates are not
distributed prior to the time Shares are tendered pursuant to the Offer,
Rights may be tendered prior to a stockholder receiving Rights Certificates
by use of the guaranteed delivery procedures described in Section 4 of the
Offer to
<PAGE>
<PAGE>
Purchase and below. In any case, a tender of Shares constitutes an agreement
by the tendering stockholder to deliver Rights Certificates representing a
number of Rights equal to the number of Shares tendered pursuant to the Offer
to the Depositary within five business days after the date Rights
Certificates are distributed. The Purchaser reserves the right to require
that the Depositary receive Rights Certificates, or a book-entry
confirmation, if available, with respect to such Rights prior to accepting
the corresponding Shares for payment pursuant to the Offer, if the
Distribution Date occurs prior to the expiration of the Offer (the
"Expiration Date"). Holders of Shares and Rights whose certificates for such
Shares ("Share Certificates") or, if applicable, Rights Certificates, are not
immediately available (including, if the Distribution Date has occurred,
because Rights Certificates have not yet been distributed) or who cannot
deliver their Share Certificates or, if applicable, their Rights
Certificates, and all other required documents to the Depositary on or prior
to the Expiration Date, or who cannot complete the procedures for book-entry
transfer on a timely basis, must tender their Shares and Rights according to
the guaranteed delivery procedures set forth in Section 4 of the Offer to
Purchase. All references to Rights shall include all benefits which may inure
to stockholders pursuant to the Rights Agreement and, unless the context
requires otherwise, all references to Shares shall include the Rights.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN BEFORE THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY THE PURCHASER,
REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED
BASIS, (2) THE COMPANY HAVING ENTERED INTO A DEFINITIVE MERGER AGREEMENT WITH
THE PURCHASER TO PROVIDE FOR THE ACQUISITION OF THE COMPANY PURSUANT TO THE
OFFER AND THE PROPOSED MERGER (AS DEFINED IN THE OFFER TO PURCHASE), (3) THE
PURCHASER BEING SATISFIED, IN ITS SOLE JUDGMENT, THAT THE PURCHASER HAS
OBTAINED FINANCING SUFFICIENT TO ENABLE IT TO CONSUMMATE THE OFFER AND THE
PROPOSED MERGER AND (4) AUTHORIZATION BY CECI'S STOCKHOLDERS OF THE ISSUANCE
OF CECI COMMON STOCK SUFFICIENT TO COMPLETE THE PROPOSED MERGER. THE OFFER IS
ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS.
Enclosed herewith for your information and for forwarding to your clients
for whose accounts you hold Shares (and associated Rights) registered in your
name or in the name of your nominee are copies of the following documents:
1. The Offer to Purchase, dated October 6, 1994;
2. The Letter of Transmittal for your use and for the information of
your clients. Facsimile copies of the Letter of Transmittal may be used to
tender Shares (and associated Rights);
3. A Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares (and associated Rights) are not immediately
available or if such certificates and all other required documents cannot
be delivered to the Depositary before the expiration of the Offer or if
the procedures for book-entry transfer cannot be completed on a timely
basis;
4. A printed form of letter which may be sent to your clients for
whose account you hold Shares (and associated Rights) registered in your
name or in the name of your nominee, with space provided for obtaining
such clients' instructions with regard to the Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, NOVEMBER 3,
1994, UNLESS THE OFFER IS EXTENDED.
In order to accept the Offer, (i) a duly executed and properly completed
Letter of Transmittal with any required signature guarantees or any Agent's
Message (as defined in the Offer to Purchase), or other documentation should
be sent to the Depositary, and (ii) either certificates representing the
tendered Shares (and, if applicable, certificates representing the tendered
Rights) should be delivered to the Depositary or such Shares (and, if
applicable, such
2
<PAGE>
<PAGE>
Rights, if available with respect to such Rights) should be tendered by
book-entry transfer into the Depositary's account maintained at one of the
Book-Entry Transfer Facilities (as defined in the Offer to Purchase), all in
accordance with the instructions set forth in the Letter of Transmittal and
the Offer to Purchase.
If holders of Shares wish to tender, but it is impractical for them to
forward their certificates for such Shares and associated Rights or other
required documentation on or prior to the expiration of the Offer or to
comply with the book-entry transfer procedures on a timely basis, a tender
may be effected by following the guaranteed delivery procedures specified in
Section 4 of the accompanying Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer
or other person (other than the Dealer Manager and the Information Agent, as
described in the Offer to Purchase) for soliciting tenders of Shares and
associated Rights pursuant to the Offer. The Purchaser will, however, upon
request, reimburse you for customary clerical and mailing expenses incurred
by you in forwarding any of the enclosed materials to your clients. The
Purchaser will pay or cause to be paid any stock transfer taxes payable on
the transfer of Shares and associated Rights to it, except as otherwise
provided in Instruction 6 of the enclosed Letter of Transmittal.
Any questions or requests for assistance may be directed to the
Information Agent or to the Dealer Manager at its address and telephone
number set forth on the back cover of the Offer to Purchase. Requests for
additional copies of the Offer to Purchase, the Letter of Transmittal and
other tender offer materials may be directed to the Information Agent or to
brokers, dealers, commercial banks or trust companies.
Very truly yours,
GLEACHER & CO. INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, CECI, THE DEALER MANAGER, THE
DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT
ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
12,400,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MAGMA POWER COMPANY
AT
$35 NET PER SHARE
BY
CE ACQUISITION COMPANY, INC.
A WHOLLY OWNED SUBSIDIARY OF
CALIFORNIA ENERGY COMPANY, INC.
- - -------------------------------------------------------------------------------
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, NOVEMBER 3, 1994,
UNLESS THE OFFER IS EXTENDED.
- - -------------------------------------------------------------------------------
October 6, 1994
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated October 6,
1994 (the "Offer to Purchase") and the related Letter of Transmittal (which
together constitute the "Offer") relating to an offer by CE Acquisition
Company, Inc., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of California Energy Company, Inc. ("CECI"), to purchase
12,400,000 shares of common stock, par value $0.10 per share (the "Shares"),
of Magma Power Company, a Nevada Corporation (the "Company"), and the
associated Preferred Share Purchase Rights (the "Rights") to be issued on
October 14, 1994 pursuant to the Rights Agreement, dated on or about October
3, 1994, between the Company and a Rights Agent, at $35 per Share (and
associated Right), net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer.
If the Purchaser declares that the Merger Agreement Condition (as defined
in the Offer to Purchase) is satisfied, the Purchaser will not require
delivery of Rights. Unless and until the Purchaser declares that the Merger
Agreement Condition is satisfied, holders of Shares will be required to
tender one Right for each Share tendered to effect a valid tender of such
Share. IF THE DISTRIBUTION DATE (AS DEFINED IN THE OFFER TO PURCHASE) HAS NOT
OCCURRED PRIOR TO THE TIME SHARES ARE TENDERED PURSUANT TO THE OFFER, A
TENDER OF SHARES WILL CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS. IF THE
DISTRIBUTION DATE OCCURS AND THE CERTIFICATES REPRESENTING RIGHTS ("RIGHTS
CERTIFICATES") ARE DISTRIBUTED BY THE COMPANY TO HOLDERS OF SHARES PRIOR TO
THE TIME A HOLDER'S SHARES ARE TENDERED PURSUANT TO THE OFFER, IN ORDER FOR
RIGHTS (AND THE CORRESPONDING SHARES) TO BE VALIDLY TENDERED, RIGHTS
CERTIFICATES REPRESENTING A NUMBER OF RIGHTS EQUAL TO THE NUMBER OF SHARES
TENDERED MUST BE DELIVERED TO IBJ SCHRODER BANK & TRUST COMPANY (THE
"DEPOSITARY") OR, IF BOOK-ENTRY DELIVERY IS AVAILABLE WITH RESPECT TO RIGHTS,
A BOOK-ENTRY CONFIRMATION MUST BE RECEIVED BY THE DEPOSITARY WITH RESPECT
THERETO. If the Distribution Date occurs and Rights Certificates are not
distributed prior to the time Shares are tendered pursuant to the Offer,
Rights may be tendered prior to a stockholder receiving Rights Certificates
by use of the guaranteed delivery procedures described in Section 4 of the
Offer to Purchase and below. In any case, a tender of Shares constitutes an
agreement by the tendering stockholder to deliver Rights Certificates
representing a number of Rights equal to the number of Shares tendered
pursuant to the Offer to the Depositary within five business days after the
date Rights Certificates are distributed. The Purchaser reserves the right to
require that the Depositary receive Rights Certificates, or a book-entry
confirmation, if available, with respect to such Rights prior to accepting
the corresponding Shares for payment pursuant to the Offer, if the
Distribution Date occurs prior to the expiration of the Offer (the
"Expiration Date"). Holders of Shares and Rights
<PAGE>
<PAGE>
whose certificates for such Shares ("Share Certificates") or, if applicable,
Rights Certificates, are not immediately available (including, if the
Distribution Date has occurred, because Rights Certificates have not yet been
distributed) or who cannot deliver their Share Certificates or, if
applicable, their Rights Certificates, and all other required documents to
the Depositary on or prior to the Expiration Date, or who cannot complete the
procedures for book-entry transfer on a timely basis, must tender their
Shares and Rights according to the guaranteed delivery procedures set forth
in Section 4 of the Offer to Purchase. All references to Rights shall include
all benefits which may inure to stockholders pursuant to the Rights Agreement
and, unless the context requires otherwise, all references to Shares shall
include the Rights.
THIS MATERIAL IS BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER OF SHARES
AND ASSOCIATED RIGHTS CARRIED BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN
YOUR NAME. A TENDER OF SUCH SHARES AND RIGHTS CAN BE MADE ONLY BY US AS THE
HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL
IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO
TENDER SHARES OR RIGHTS HELD BY US FOR YOUR ACCOUNT. ACCORDINGLY, WE REQUIRE
INSTRUCTIONS AS TO WHETHER YOU WISH TO TENDER ANY OR ALL OF SUCH SHARES AND
RIGHTS HELD BY US FOR YOUR ACCOUNT, UPON THE TERMS AND SUBJECT TO THE
CONDITIONS SET FORTH IN THE OFFER.
Please note the following:
1. The Purchaser is offering to purchase 12,400,000 Shares (and
associated Rights) at $35 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth
in the Offer.
2. The Offer, the proration period and withdrawal rights will expire
at 12:00 Midnight, New York City time, on Thursday, November 3, 1994,
unless the Offer is extended.
3. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN BEFORE THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY THE
PURCHASER, REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A
FULLY DILUTED BASIS, (2) THE COMPANY HAVING ENTERED INTO A DEFINITIVE
MERGER AGREEMENT WITH THE PURCHASER TO PROVIDE FOR THE ACQUISITION OF THE
COMPANY PURSUANT TO THE OFFER AND THE PROPOSED MERGER (AS DEFINED IN THE
OFFER TO PURCHASE), (3) THE PURCHASER BEING SATISFIED, IN ITS SOLE
JUDGMENT, THAT THE PURCHASER HAS OBTAINED FINANCING SUFFICIENT TO ENABLE
IT TO CONSUMMATE THE OFFER AND THE PROPOSED MERGER, AND (4) AUTHORIZATION
BY CECI'S STOCKHOLDERS OF THE ISSUANCE OF CECI COMMON STOCK SUFFICIENT TO
COMPLETE THE PROPOSED MERGER. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
TERMS AND CONDITIONS.
4. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares or Rights
pursuant to the Offer.
5. Payment for Shares accepted for payment pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates
for such Shares and, if applicable, Rights Certificates for the associated
Rights, or timely confirmation of the book-entry transfer of such Shares
and, if applicable, Rights (if available with respect to such Rights),
into the Depositary's account at The Depository Trust Company, Midwest
Securities Trust Company or Philadelphia Depository Trust Company
(collectively, the "Book-Entry Transfer Facilities"), pursuant to the
procedures set forth in Section 4 of the Offer to Purchase, (ii) the
Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees or an Agent's
Message (as defined in the Offer to Purchase) (as described in Section 4
of the Offer to Purchase) in connection with a book-entry transfer, and
(iii) any other documents required by the Letter of Transmittal.
Accordingly, payment may not be made to all tendering stockholders at the
same time depending upon when certificates for, or confirmations of
book-entry transfer of, such Shares (or Rights, if available with respect
to such Rights) into the Depositary's account at a Book-Entry Transfer
Facility are actually received by the Depositary.
If you wish to have us tender any or all of the Shares and/or Rights held
by us for your account, please so instruct us by completing, executing and
returning to us the instruction form contained in this letter. If you
authorize a tender of your Shares and/or Rights, all such Shares and such
Rights will be tendered unless otherwise indicated in such instruction form.
Your authorization to tender Shares shall be deemed authorization to tender
the associated Rights regardless of whether they are separate from the
Shares. Please forward your instructions to us in ample time to permit us to
submit a tender on your behalf prior to the expiration of the Offer. The
Letter of Transmittal is furnished to you for your information only and
cannot be used by you to tender Shares held by us for your account.
2
<PAGE>
<PAGE>
The Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to state statute. If
the Purchaser becomes aware of any state where the making of the Offer is so
prohibited, the Purchaser will make a good faith effort to comply with any
such statute or seek to have such statute declared inapplicable to the Offer.
If, after such good faith effort, the Purchaser cannot comply with any
applicable statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares and/or Rights in such
states. In those jurisdictions where the laws require the Offer to be made by
a licensed broker or dealer, the Offer is being made on behalf of the
Purchaser by Gleacher & Co. Inc. or one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
3
<PAGE>
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
12,400,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MAGMA POWER COMPANY
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated October 6, 1994 (the "Offer to Purchase") and the
related Letter of Transmittal (which together constitute the "Offer")
relating to the offer by CE Acquisition Company, Inc., a Delaware corporation
(the "Purchaser") and wholly owned subsidiary of California Energy Company,
Inc. ("CECI"), to purchase 12,400,000 shares of common stock, par value $0.10
per share (the "Shares"), of Magma Power Company, a Nevada corporation, and
the associated Preferred Share Purchase Rights (the "Rights") to be issued on
October 14, 1994, pursuant to the Rights Agreement, dated on or about October
3, 1994, between the Company and a Rights Agent, at $35 per Share (and
associated Right), net to the seller in cash, without interest thereon upon
the terms and subject to the conditions set forth in the Offer to Purchase
and in the related Letter of Transmittal.
This will instruct you to tender to the Purchaser the number of Shares and
Rights indicated below (or if no number is indicated below, all Shares and
Rights) which are held by you for the account of the undersigned, upon the
terms and subject to the conditions set forth in the Offer.
Dated: _______________
Number of Shares to be Tendered*
_______________Shares
Number of Rights to be Tendered*
_______________Rights
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
Signature(s)
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
Print Name(s)
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
Print Address
- - -----------------------------------------------------------------------------
Area Code and Telephone Number
- - -----------------------------------------------------------------------------
Tax Identification or Social Security Number
- - ---------------
* UNLESS AND UNTIL THE PURCHASER DECLARES THAT THE MERGER AGREEMENT CONDITION
(AS DEFINED IN THE OFFER TO PURCHASE) IS SATISFIED, HOLDERS OF SHARES ARE
REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED TO EFFECT A VALID
TENDER OF SUCH SHARE. IF CERTIFICATES REPRESENTING RIGHTS ("RIGHTS
CERTIFICATES") HAVE BEEN DISTRIBUTED BY THE COMPANY TO HOLDERS OF SHARES
PRIOR TO THE TIME A HOLDER'S SHARES ARE TENDERED PURSUANT TO THE OFFER, SUCH
HOLDERS WILL BE REQUIRED TO VALIDLY TENDER RIGHTS CERTIFICATES REPRESENTING
A NUMBER OF RIGHTS EQUAL TO THE NUMBER OF SHARES BEING TENDERED IN ORDER TO
EFFECT A VALID TENDER OF SUCH SHARES. If separate Rights Certificates have
not been issued, a tender of Shares will also constitute a tender of the
associated Rights and only the line with respect to "Number of Shares to be
Tendered" should be filled in. See Section 4 of the Offer to Purchase.
Unless otherwise indicated, it will be assumed that all Shares and Rights
held by us for your account are to be tendered.
4
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
GIVE THE SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- - --------------------------------------- ----------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of the individuals (1)
3. Husband and wife (joint account) The actual owner of the
account or, if joint funds,
either person (2)
4. Custodian account of a minor The minor (2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor
is the only contributor
the minor (1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent person (3)
minor, or incompetent person
7. a. The usual revocable savings The grantor-trustee (1)
trust account (grantor is also
trustee)
b. So-called trust account that is The actual owner (1)
not a legal or valid trust under
State law
8. Sole proprietorship account The owner (4)
<CAPTION>
GIVE THE EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- - --------------------------------------- ----------------------------
9. A valid trust, estate, or pension Legal entity (Do not furnish
trust the identifying number of the
personal representative or
trustee unless the legal entity
itself is not designated in the
account title.) (5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department The public entity
of Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- - --------------------------------------- ----------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security
<PAGE>
number.
(3) Circle the ward's, minor's, or incompetent person's name and furnish
such person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
<PAGE>
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments
including the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an individual
retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign
government, or agency or instrumentality thereof.
o An international organization or any agency, or instrumentality
thereof.
o A registered dealer in securities or commodities registered
in the U.S. or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a non-exempt
trust described in section 4947(a)(1).
o An entity registered at all times under the
Investment Company Act of 1940.
o A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid
in money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you
have not provided your correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt interest dividends
under section 852).
<PAGE>
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS. ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Beginning January 1, 1993,
payers must generally withhold 31% of taxable interest, dividend, and certain
other payments to a payee who does not furnish a taxpayer identification
number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE
2
Exhibit 99.(a)(7)
October 5, 1994
MacKenzie
PARTNERS, INC.
News Release 156 Fifth Avenue
New York, NY 10010
212 929-5500
CONTACT: FAX 212 929-0308
Mark H. Harnett
MacKenzie Partners, Inc.
(212) 929-5877
FOR IMMEDIATE RELEASE:
CALIFORNIA ENERGY TO MAKE CASH TENDER OFFER FOR
51% OF MAGMA POWER AT $35 PER SHARE
OMAHA, NE, October 4, 1994 -- California Energy Company, Inc.
(NYSE, PSE, LSE:CE) announced today that a wholly owned
subsidiary of California Energy will commence on Thursday a cash
tender offer for 12,400,000 shares, or approximately 51%, of the
common stock of Magma Power Company (NASDAQ:MGMA) at a price of
$35 net per share as a first step in implementing its September
19 proposal to acquire all Magma's shares for a combination of
$25 in cash and $10 in market value of California Energy common
stock. The tender offer is conditioned upon, among other things,
entering into a merger agreement with Magma Power providing for a
second-step merger, although, under certain circumstances
California Energy could waive the merger agreement condition, in
which case it would seek to obtain majority representation on
Magma's Board.
Today's announcement follows unsuccessful discussions between
representatives of the companies that occurred today following
yesterday's decision by Magma's Board of Directors to adopt a
poison pill and take certain other defensive actions in response
to California Energy's September 19 proposal. California Energy
intends to take any action necessary to have attempted
impediments to its offer set aside. David L. Sokol, California
Energy's Chairman and Chief Executive Officer, stated:
"We have attempted in every reasonable way possible to
commence merger negotiations with Magma in order to allow
their shareholders to achieve value from our proposal. At
Magma's request last week, we delayed commencement of a
tender offer to permit Magma's Board to fully consider our
proposal. Following this morning's disappointing meeting
with Magma's advisors, we have concluded that allowing the
shareholders to vote through a tender offer and consent
solicitation is the only way to move forward in an efficient
manner." Sokol further stated that "We believe that the
price which we have offered is fair and represents full
<PAGE>
CALIFORNIA ENERGY/MAGMA POWER --
TENDER OFFER
October 4, 1994
page 2
value for Magma. We believe that this transaction represents a
unique fit for us and as such allows us to value Magma at a
higher value than other potential bidders." Sokol further noted
that "Our price represents a 27.3% premium to the value of
Magma's stock the day we initially made the proposal."
California Energy also intends to make appropriate action to
ensure its right to call a special meeting of Magma's
shareholders to elect directors to Magma's Board and to take
other actions that it believes will facilitate consummation of
its tender offer and the proposed second-step merger with Magma.
The tender offer and consent solicitations will be made only
pursuant to definitive offering and solicitation documents, which
will be filed with the Securities and Exchange Commission and
mailed to Magma stockholders. Gleacher & Co. Inc. is acting as
Financial Advisor to California Energy and Dealer Manager in
connection with the tender offer and MacKenzie Partners, Inc. is
acting as the Information Agent for the tender offer.
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 325MW of power with an additional
300MW under construction.
# # #
Exhibit 99.(a)8
CONTACT:
Mark H. Harnett
MacKenzie Partners, Inc.
(212) 929-5877
FOR IMMEDIATE RELEASE:
CALIFORNIA ENERGY COMMENCES CASH TENDER OFFER FOR
51% OF MAGMA POWER AT $35 PER SHARE
OMAHA, NE, October 6, 1994 -- California Energy Company, Inc.
(NYSE, PSE, LSE:CE) announced today that a wholly owned subsidiary
of California Energy commenced today its previously announced cash
tender offer for 12,400,000 shares, or approximately 51%, of the
common stock of Magma Power Company (NASDAQ:MGMA) at a price of $35
net per share as a first step in implementing its September 19
proposal to acquire all Magma shares for a combination of $25 in
cash and $10 in market value of California Energy common stock.
The Offer, the proration period and withdrawal rights will expire
at 12:00 midnight, New York City time, on Thursday, November 3,
1994, unless the Offer is extended. Other terms and conditions of
the Offer are set forth in the definitive tender offer documents
being filed with the Securities and Exchange Commission and mailed
to Magma's stockholders.
Gleacher & Co. Inc. is acting as Financial Advisor and Dealer
Manager to California Energy in connection with the tender offer
and MacKenzie Partners, Inc. is acting as the Information Agent for
the tender offer.
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 325MW of power with an additional 300MW under
construction.
# # #
Exhibit 99.(a)(9)
This announcement is neither an offer to purchase nor a
solicitation of an offer to sell Shares. The Offer is made solely
by the Offer to Purchase dated October 6, 1994 and the related Letter of
Transmittal and is being made to all holders of Shares. The Offer is not being
made to (nor will tenders be accepted from or on behalf of)
holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of CE Acquisition Company, Inc.
by Gleacher & Co. Inc. or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash 12,400,000 Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Magma Power Company
at
$35 Net Per Share
by
CE Acquisition Company, Inc.
a wholly owned subsidiary of
California Energy Company, Inc.
CE Acquisition Company, Inc., a Delaware corporation (the
``Purchaser'') and a wholly owned subsidiary of California Energy
Company, Inc., a Delaware corporation (``CECI''), hereby offers to purchase
12,400,000 shares of Common Stock, par value $0.10 per share (the
``Shares''), of Magma Power Company (the ``Company''), a
Nevada corporation, and the associated Preferred Share Purchase Rights
(the ``Rights'') to be issued on October 14, 1994,
pursuant to the Rights Agreement (the ``Rights Agreement'') dated
on or about October 3, 1994 between the Company and a Rights Agent,
at a price of $35 per Share (and associated Right), net to the seller in
cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase
dated October 6, 1994 (the ``Offer to Purchase'') and in the
related Letter of Transmittal (which together constitute the
``Offer'').
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, NOVEMBER 3, 1994, UNLESS THE OFFER
IS EXTENDED.
The Offer is conditioned upon, among other things, (1) there
being validly tendered and not withdrawn before the expiration of
the Offer that number of Shares which, together with Shares
beneficially owned by the Purchaser, represents at least a majority
of the Shares outstanding on a fully diluted basis (such condition
being referred to as the ``Minimum Tender Condition''), (2) the
Company having entered into a definitive merger
agreement with the Purchaser to provide for the acquisition of the
Company pursuant to the Offer and the Proposed Merger (as defined
below), (such condition being referred to as the ``Merger Agreement
Condition''), (3) the Purchaser being satisfied, in its sole
judgment, that the Purchaser has
obtained financing sufficient to enable it to consummate the Offer
and the Proposed Merger, and (4) authorization by CECI's
stockholders of the issuance of CECI Common Stock (as defined below)
sufficient to complete the Proposed Merger.
The purpose of the Offer is to acquire majority control of the
Company as the first step in the acquisition of the entire equity
interest in the Company. CECI is seeking to negotiate with the Company a
definitive acquisition agreement (the ``Proposed Merger Agreement'')
pursuant to which the Purchaser would, as soon as practicable
following consummation of the Offer, consummate
a merger or other business combination (the ``Proposed Merger'')
with the Purchaser or another direct or indirect wholly owned subsidiary
of CECI. In the Proposed Merger, each outstanding Share (other than
Shares held by CECI, the Purchaser or any other direct or indirect wholly
owned subsidiary of CECI, Shares held in the treasury of the Company and
Shares held by stockholders who properly exercise dissenters' rights
under the Nevada General Corporation Law (the ``NGCL'')) would be
converted into the right to receive cash and shares of
common stock, par value $0.0675 per share, of CECI (``CECI Common
Stock'') having a combined cash and market value of $35 per Share.
The per Share amount of cash and CECI Common Stock to be distributed in the
Proposed Merger would be determined such that the blended purchase
price for all Shares acquired by the Purchaser and its affiliates in the
Offer and the Proposed Merger would be $25 in cash, without interest
thereon, and $10 in market value of CECI Common Stock, as established within
a range of maximum and minimum prices for the CECI Common Stock.
The Purchaser expressly reserves the right, in its sole
judgment, at any time or from time to time and regardless of
whether any of the events set forth in Section 12 of the Offer to
Purchase shall have occurred or shall have been determined by the
<PAGE>
Purchaser to have occurred, (i) to extend the period of time during
which the Offer is open and thereby delay acceptance for payment
of, and the payment for, any Shares, by giving oral or written
notice of such extension to the Depositary (as defined in the Offer
to Purchase) and (ii) to amend the Offer in any respect by giving
oral or written notice of such amendment to the Depositary.
Any such extension, amendment or termination will be followed as
promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be issued not later than
9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date (as defined in
the Offer to Purchase). During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the
Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares.
If the Purchaser declares that the Merger Agreement Condition
is satisfied, the Purchaser will not require delivery of Rights.
Unless and until the Purchaser declares that the Merger Agreement
Condition is satisfied, holders of Shares will be required to
tender one Right for each Share tendered to effect a
valid tender of such Share. If the Shares and Rights have not
separated prior to the time Shares are tendered pursuant to the
Offer, a tender of Shares will constitute a tender of the Rights.
If such separation occurs and the certificates representing Rights
(``Rights Certificates'') are distributed by the Company to
holders of Shares prior to the time a holder's Shares are tendered
pursuant to the Offer, in order for Rights (and the corresponding
Shares) to be validly tendered, Rights Certificates representing a
number of Rights equal to the number of Shares tendered must be delivered
to the Depositary or, if book-entry delivery is available with
respect to Rights, a book-entry confirmation must be received by the
Depositary with respect thereto. If Shares and Rights are to
separate but Rights Certificates are not distributed prior to the
time Shares are tendered pursuant to the Offer, Rights may be
tendered prior to a stockholder receiving Rights Certificates by
use of the guaranteed delivery procedures described in the Offer to
Purchase and below. In any case, a tender of Shares
constitutes an agreement by the tendering stockholder to deliver
Rights Certificates representing a number of Rights equal to the
number of Shares tendered pursuant to the Offer to the Depositary within
five (5) business days after the date Rights Certificates are
distributed. The Purchaser reserves the right to require
that the Depositary receive Rights Certificates, or a book-entry
confirmation, if available, with respect to such Rights prior to
accepting the corresponding Shares for payment pursuant to the Offer
if Rights Certificates have been distributed to holders of shares
at such time.
If more than 12,400,000 Shares and, if applicable, Rights,
shall be properly tendered on or prior to the Expiration Date and
not withdrawn in accordance with Section 3 of the Offer to Purchase,
and the acquisition of such number of Shares and Rights satisfies the
Minimum Tender Condition, the Purchaser will,
upon the terms and subject to the conditions of the Offer, purchase
12,400,000 Shares and Rights on a pro rata basis (with adjustments
to avoid purchases of fractional Shares or Rights) based upon the
number of Shares properly tendered on or prior to the Expiration Date and not
withdrawn. If exactly 12,400,000 Shares and Rights are properly tendered
on or prior to the Expiration Date and not withdrawn, and the acquisition
of such number of Shares and Rights satisfies the Minimum Tender
Condition, the Purchaser will, upon the terms and subject to the
conditions of the Offer, accept for payment and purchase all
such Shares and Rights so tendered. If fewer than 12,400,000 Shares
and Rights shall have been properly tendered on or prior to the
Expiration Date and not withdrawn, and the number of Shares so tendered
and not withdrawn shall not have satisfied the Minimum Tender Condition, the
Purchaser may (i) terminate the Offer and return all tendered Shares and
Rights to tendering stockholders, (ii) extend the Offer and retain all
such Shares and Rights until the expiration of the Offer, as extended,
subject to the terms of the Offer (including any rights of stockholders
to withdraw their Shares), or (iii) waive the Minimum Tender
Condition and purchase all properly tendered Shares and Rights. Due
to the difficulty of determining the precise number of Shares and,
if applicable, Rights properly tendered and not withdrawn, if proration is
required, the Purchaser does not expect to announce the final results of
proration or pay for any Shares or Rights until at least seven Nasdaq
National Market trading days after the Expiration Date. Preliminary
results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Holders of
Shares and/or Rights may obtain such preliminary information when
it becomes available from the Information Agent and may be able to obtain
such information from their brokers.
For purposes of the Offer, the Purchaser will be deemed to
have accepted for payment, and thereby purchased, Shares and Rights
validly tendered and not withdrawn as, if and when the Purchaser gives
oral or written notice to the Depositary of the Purchaser's acceptance of such
Shares and Rights for payment pursuant to the Offer. In all cases, upon the
terms and subject to the conditions of the Offer, payment for Shares and Rights
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting payment to validly tendering stockholders. Under no circumstances
will interest on the purchase price for Shares and Rights be paid by the
Purchaser by reason of any delay in making such payment. In all cases,
<PAGE>
payment for Shares and Rights purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (a)
certificates for such Shares (``Certificates'') or a book-entry
confirmation of the book-entry transfer of such Shares and into the
Depositary's account at the Depository Trust Company, the Midwest
Securities Trust Company or the Philadelphia Depository Trust Company
(collectively, the ``Book-Entry Transfer Facilities''), pursuant to the
procedures set forth in the Offer to Purchase, and, if the
Distribution Date has occurred, certificates for the associated
Rights (or confirmation of a Book-Entry Transfer of such Rights, if
available with respect to the Rights), (b) the Letter of Transmittal (or
facsimile thereof) properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry transfer, and (c) any other
documents required by the Letter of Transmittal.
If, for any reason whatsoever, acceptance for payment of any
Shares and, if applicable, Rights tendered to the Offer is delayed,
or if the Purchaser is unable to accept for payment or pay for Shares
and Rights tendered pursuant to the Offer, then, without prejudice to the
Purchaser's rights set forth in the Offer to Purchase, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares and Rights
and such Shares and Rights may not be withdrawn except to the extent that the
tendering stockholder is entitled to and duly exercises withdrawal rights as
described in Section 3 of the Offer to Purchase. Any such delay will be by an
extension of the Offer to the extent required by law.
If certain events occur, the Purchaser will not be obligated
to accept for payment or pay for any Shares or Rights tendered
pursuant to the Offer. If any tendered Shares or Rights are not purchased
pursuant to the Offer for any reason (including because of proration) or
are not paid for because of invalid tender, or if Certificates are submitted
representing more Shares or Rights than are tendered, Certificates representing
unpurchased or untendered Shares or Rights will be returned, without expense
to the tendering stockholder (or, in the case of Shares or Rights delivered by
book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 4 of the Offer to
Purchase, such Shares or Rights will be credited to an
account maintained within such Book-Entry Transfer Facility),
as soon as practicable following the expiration, termination or
withdrawal of the Offer and determination of the final results of proration.
Except as otherwise provided in Section 3 of the Offer to
Purchase, tenders of Shares and Rights made pursuant to the Offer
are irrevocable. Shares and Rights tendered pursuant to the Offer may be
withdrawn at any time prior to 12:00 Midnight, New York City time, on Thursday,
November 3, 1994 (or if the Purchaser shall have extended the period of time
for
which the Offer is open, at the latest time and date at which the Offer, as
so extended by the Purchaser, shall expire) and unless theretofore accepted for
payment and paid for by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after December 4, 1994. In order for a withdrawal to be
effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of the Offer to Purchase. Any notice of
withdrawal must specify the name of the person who tendered the Shares
to be withdrawn and, if applicable, the number of Rights to be
withdrawn, the number of Shares and Rights to be withdrawn, and if
Certificates for Shares or Rights have been tendered, the name of the
registered holder of the Shares and Rights as set forth in the tendered
Certificate, if different from that of the person
who tendered such Shares and Rights. If Certificates for Shares or
Rights have been delivered or otherwise identified to the
Depositary, then prior to the physical release of such Certificates, the
serial numbers shown on such Certificates evidencing the Shares to be
withdrawn must be submitted to the Depositary and the signature on the
notice of withdrawal must be guaranteed by a firm which is a bank, broker,
dealer, credit union, savings association or other entity that is a member in
good standing of the Securities Transfer Agent's Medallion Program (an
``Eligible Institution''), unless such Shares or Rights
have been tendered for the account of an Eligible Institution. If
Shares and Rights have been tendered pursuant to the procedures for
book-entry transfer set forth in Section 4 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at
the appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Shares and Rights and otherwise comply with such Book-Entry
Transfer Facility's procedures. Withdrawal of tenders of Shares and Rights
may not be rescinded, and any Shares and Rights properly withdrawn will be
deemed not to be validly tendered for purposes of
the Offer. Withdrawn Shares or Rights may, however, be retendered
by repeating one of the procedures in Section 4 of the Offer to
Purchase at any time before the Expiration Date. The Purchaser, in its sole
judgment, will determine all questions as to the form and validity (including
time of receipt) of notices of withdrawal, and such determination will be
final and binding. Any Shares or Rights properly withdrawn will be deemed
not validly tendered for the purposes of the Offer, but may be retendered at
any subsequent time prior to the Expiration Date by following the procedures
described in Section 3 of the Offer to Purchase.
The information required to be disclosed by Rule
14d-6(e)(1)(vii) of the General Rules and Regulations under the
Securities Exchange Act of 1934 is contained in the Offer to Purchase and is
incorporated herein by reference.
A request is being made to the Company for the use of the
Company's stockholder lists and security position listing for the
<PAGE>
purpose of disseminating the Offer to holders of Shares and Rights. Upon
compliance by the Company with such request, the Offer to Purchase, the related
Letter of Transmittal and other relevant materials will be mailed to record
holders of Shares and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list, or, if applicable, who are listed
as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of
Shares and Rights.
The Offer to Purchase and the related Letter of Transmittal
contain important information which should be read carefully before
any decision is made with respect to the Offer.
Questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below. Requests for copies of the
Offer to Purchase, the Letter of Transmittal and other related materials may
be directed to the Information Agent or to brokers, dealers, commercial banks
or trust companies.
The Information Agent for the Offer is:
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
GLEACHER & CO. INC.
660 Madison Avenue
New York, New York 10021
(212) 418-4206
October 6, 1994
Farrington & Favia #10924
MacKenzie & Partners
10-5-94 Proof 6
(MACKENZIE) et/jn/et/jn/et
rs of Shares and Rights.
Exhibit 99.(c)(1)
Gleacher & Co., Inc.
660 Madison Avenue
New York, NY 10021
September 18, 1994
PERSONAL AND CONFIDENTIAL
Mr. David L. Sokol
Chairman, President,
Chief Executive Officer
California Energy Company, Inc.
10831 Old Mill Road
Omaha, NE 68154
Dear David:
This letter will confirm that California Energy Company, Inc.
(the "Company") has engaged Gleacher & Co. Inc. ("Gleacher &
Co.") to act as financial advisor in connection with the possible
acquisition of Magma Power Company ("Magma").
The Assignment
During the term of its engagement hereunder, Gleacher & Co. will
act as lead Dealer Manager in connection with any offer and will
provide the Company with financial advice and assistance in
connection with the proposed transaction, including advice and
assistance with respect to defining objectives, structuring and
planning the transaction, performing valuation analysis,
negotiating the transaction and conducting due diligence, as
requested by the Company.
Gleacher & Co.'s compensation is as follows:
(a) A fee of $250,000 payable upon the public announcement of an
offer to acquire at least 50.1% of the common stock of
Magma;
(b) An additional fee of $500,000 payable 45 calendar days after
the commencement of a tender or exchange offer, assuming the
offer is outstanding at such time;
(c) A fee of $4,000,000 payable upon the completion of the
direct or indirect acquisition by the Company, either alone
or in partnership with another company, by merger,
<PAGE>
California Energy Company, Inc.
September 18, 1994
Page 2
acquisition of securities, or otherwise, of 50.1% or more of
the equity securities of Magma. Any fees payable in (a) and
(b) above will be credited against such fee.
The Company also engages Gleacher & Co. (together with Lehman
Brothers) to advise on arranging debt financing for the
transaction. The Company will pay to Gleacher & Co. a fee equal
to 0.25% of the principal amount of debt directly arranged by the
Lehman Brothers and Gleacher & Co. team in the transaction.
Other Matters
In addition to any fees that may be payable to Gleacher & Co.,
the Company agrees to reimburse Gleacher & Co. for all reasonable
travel and other reasonable out-of-pocket expenses incurred in
connection with Gleacher & Co.'s engagement hereunder, including
all reasonable fees and disbursements of Gleacher & Co.'s legal
counsel and any other professional advisors.
Gleacher & Co. shall provide reasonable documentation with
respect to out-of-pocket expenses and obtain the Company's
approval before incurring significant costs in connection with
attorneys and other professional advisors. Gleacher & Co. will
consult with the Company before selecting attorneys and other
professional advisors.
In connection with the foregoing and for no additional
compensation, Gleacher & Co. will, upon request, render a
fairness opinion, or opinions, which may be in such form as
Gleacher & Co. shall determine and may be qualified in such a
manner as Gleacher & Co. deems appropriate.
The Company recognizes and confirms that in advising the Company
in completing its engagement hereunder, Gleacher & Co. will be
using and relying on non-public data, material and other
information furnished to Gleacher & Co. by the Company. It is
understood that in performing this engagement Gleacher & Co. may
reasonably rely upon any information so supplied without
independent verification. Gleacher & Co. will hold in confidence
all non-public information received from the Company and will not
use such information in a manner adverse to the Company, or for
any purpose not contemplated by this letter or otherwise required
by law. Upon the Company's request, Gleacher & Co. will promptly
return or destroy all such information and all copies thereof and
will confirm to the Company in writing that Gleacher & Co. has
complied with the requirements of this sentence.
The Company acknowledges that all advice given by Gleacher & Co.
<PAGE>
California Energy Company, Inc.
September 18, 1994
Page 3
in connection with its engagement hereunder is intended solely
for the benefit and use of the management and Board of Directors
of the Company in considering any transaction to which such
advice relates and, except as may be required by applicable law,
the Company agrees that no such advice shall be used for any
other purpose or be reproduced, disseminated, quoted or referred
to at any time, in any manner or for any purpose, nor shall any
public references to Gleacher & Co. be made by or on behalf of
the Company, in each case without Gleacher & Co.'s prior written
consent which shall not be unreasonably withheld. The foregoing
shall not prohibit the Company from disclosing any such advice or
opinions to the extent such disclosure may be required by law,
provided that the Company shall notify Gleacher & Co. prior to
any such disclosure and, if time permits and Gleacher & Co. so
desires, offer Gleacher & Co. an opportunity to comment on such
disclosure and/or take appropriate steps to preserve the
confidentiality of such matters.
The Company recognizes that Gleacher & Co. has been retained only
by the Company and that its engagement is not deemed to be on
behalf of and is not intended to confer rights upon any other
shareholder of the Company, or any other person not a party
hereto as against Gleacher & Co. or any of its affiliates, the
respective limited and general partners, directors, officers,
agents and employees of Gleacher & Co. or its affiliates or each
other person, if any, controlling either of Gleacher & Co. or any
of its affiliates. Unless otherwise expressly stated in writing
by Gleacher & Co., no one other than the Company, is authorized
to rely upon this engagement of Gleacher & Co. or any statements
or conduct by Gleacher & Co.
In connection with matters described in this letter, the Company
and Gleacher & Co. have entered into a separate letter agreement,
dated the date hereof, providing for indemnification,
contribution and reimbursement of Gleacher & Co. and certain
other individuals and entities.
Any right to trial by jury with respect to any claim or action
arising out of this agreement or conduct in connection with the
engagement is hereby waived by the parties hereto and their
affiliates. This agreement shall be deemed made in New York.
This agreement and all controversies arising from or related to
performance under this agreement shall be governed by the laws of
the state of New York, without regard to such state's rules
concerning conflicts of laws. All controversies arising from or
related to performance under this agreement shall be adjudicated
in State or Federal court within the State of New York.
<PAGE>
California Energy Company, Inc.
September 18, 1994
Page 4
Gleacher & Co. may assign its rights and obligations under this
letter agreement to any partnership of which Gleacher & Co. is
the general partner or to any other entity which succeeds to the
business of Gleacher & Co. so long as Mr. Eric J. Gleacher is a
partner or principal of the successor entity, in each case,
without the consent of the Company. The Company shall not be
obligated to pay Gleacher & Co. any additional fees pursuant to
this agreement as a result of such assignment. The provisions of
this agreement (including the attached letter agreement) shall be
binding upon and inure to the benefit of any successors, assigns,
heirs and personal representatives of the Company and Gleacher &
Co.
Gleacher & Co.'s services hereunder may be terminated with or
without cause by the Company or by Gleacher & Co. at any time.
Upon termination, this agreement shall have no further force or
effect except that (i) any fees earned or payable pursuant to
this letter agreement as of the date of termination and any out-
of-pocket expenses incurred by Gleacher & Co. prior to the date
of termination shall be paid or reimbursed in accordance with the
terms of this agreement; (ii) in the case of termination by the
Company, Gleacher & Co. shall be entitled to any fees that would
otherwise be payable pursuant to this letter agreement for any
acquisition of control transaction involving the Company and
Magma Power effected within one year of such termination, and
(iii) the indemnity, contribution and other provisions as
contained in the attached letter agreement shall continue to
apply notwithstanding termination.
Gleacher & Co. is pleased to accept this engagement and looks
forward to working with the Company on this important
transaction. Please confirm that the foregoing is in accordance
<PAGE>
California Energy Company, Inc.
September 18, 1994
Page 5
with the Company's understanding by signing and returning to
Gleacher & Co. the enclosed duplicate of this letter.
Very truly yours,
GLEACHER & CO.
/s/ James Goodwin
------------------
James Goodwin
Managing Director
Accepted and Agreed to:
CALIFORNIA ENERGY COMPANY, INC.
By: /s/ David L. Sokol
------------------
David L. Sokol
Chairman, President, Chief
Executive Officer
<PAGE>
Gleacher & Co. Inc.
667 Madison Avenue
New York, New York 10021
Gentlemen:
In connection with the activities of Gleacher & Co. Inc.
("Gleacher & Co.") pursuant to a letter agreement, dated as of
the date hereof, between California Energy Company, Inc. (The
"Company") and Gleacher & Co., as the same may be amended from
time to time, including without limitation any activities of
Gleacher & Co. in connection with any transaction contemplated by
such letter agreement, whether occurring before, at or after the
date hereof, the Company agrees for a period of six years from
the date of termination of Gleacher & Co.'s engagement hereunder,
to indemnify and hold harmless Gleacher & Co. and its affiliates,
the respective limited and general partners, directors, officers,
agents and employees of Gleacher & Co. and its affiliates and
each other person, if any, controlling Gleacher & Co. or any of
its affiliates (hereinafter collectively referred to as the
"indemnified parties"), to the full extent lawful, from and
against any losses, damages, liabilities, expenses or claims (or
actions in respect thereof, including, without limitation,
shareholder and derivative actions) related to or otherwise
arising out of such engagement or Gleacher & Co.'s role in
connection therewith, relating to an action commenced within six
years following the termination of Gleacher & Co.'s engagement
and will undertake the legal defense of any indemnified party
(with counsel, which may be outside counsel to the Company,
reasonably acceptable to such indemnified party) and reimburse
any indemnified party for all other reasonable expenses as they
are incurred by any indemnified party in connection with
investigating, preparing or defending any claim, action,
proceeding or investigation, in connection with pending or
threatened litigation to which any indemnified party is or may be
made a party, arising in connection with or related to Gleacher &
Co.'s engagement or Gleacher & Co.'s role in connection
therewith. If, in the written opinion of counsel to any
indemnified party, there is a significant potential for a
conflict of interest between any of the indemnified parties and
the Company, then the Company will pay the reasonable fees and
expenses of one national and local separate counsel acting for
all such indemnified parties. For any action commenced after
three years from the date of termination of Gleacher & Co.'s
engagement, Gleacher & Co. will contribute up to $500,000 to the
costs of defending such action. The Company will not, however,
be responsible for any losses, damages, liabilities, expenses or
claims to the extent they are finally judicially determined to
have resulted from any indemnified party's bad faith or gross
negligence. The Company also agrees that no indemnified party
<PAGE>
Gleacher & Co. Inc.
September 23, 1994
Page 2
will have any liability (whether direct or indirect, in contract,
tort or otherwise) to the Company for or in connection with such
engagement except to the extent that any such liability for
losses, damages, liabilities, expenses or claims incurred by the
Company result from such indemnified party's bad faith or gross
negligence.
In the event that the foregoing indemnity is unavailable to any
indemnified party for any reason or insufficient to hold any
indemnified party harmless, then the Company agrees to contribute
to any such losses, damages, liabilities, expenses, claims or
actions and will do so in such proportion as is appropriate to
reflect the relative benefits received (or anticipated to be
received) by, and the relative fault of, the indemnified parties,
on the one hand, and the Company and the Company's
securityholders, on the other, as well as any other relevant
equitable considerations, from any actual or proposed
transaction. The Company and Gleacher & Co. agree that it would
not be just and equitable if contribution were determined by pro
rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to
above.
The Company agrees that it will not, without the prior written
consent of Gleacher & Co., which consent shall not be
unreasonably withheld, settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether
or not Gleacher & Co. is an actual or potential party to such
claim or action) unless such settlement, compromise or consent
includes an unconditional release of Gleacher & Co. from all
liability arising out of such claim, action, suit or proceeding
unless the claims not released relate to the bad faith or gross
negligence of any indemnified party.
The foregoing agreement shall be in addition to any rights that
any indemnified party may have at common law or otherwise, and
shall be in addition to any liability which the Company may
otherwise have. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any claim
which is subject to this agreement is brought against Gleacher &
Co. or the Company. ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY CLAIM OR ACTION ARISING OUT OF THIS AGREEMENT IS WAIVED.
Gleacher & Co. may assign its rights and obligations under this
letter agreement to any partnership of which Gleacher & Co. is
the general partner or to any other entity, of which Eric J.
Gleacher is a partner or principal, which succeeds to the
<PAGE>
Gleacher & Co. Inc.
September 23, 1994
Page 3
business of Gleacher & Co., in each case, without the consent of
the Company. This agreement shall remain in full force and
effect following the completion or termination of Gleacher &
Co.'s engagement and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal
representatives of the Company and any indemnified party.
Very truly yours, Accepted:
CALIFORNIA ENERGY COMPANY, INC. GLEACHER & CO. INC.
By: /s/David L. Sokol By: /s/James Goodwin
----------------- ----------------
Date: September 19, 1994 Date: September 18, 1994
------------------ ------------------
Exhibit 99.(c)(2)
LEHMAN BROTHERS
September 27, 1994
California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154
Attention: Mr. David L. Sokol
Chairman, President and Chief Executive Officer
Dear David:
This letter agreement (this "Agreement") will confirm
the understanding and agreement between Lehman Brothers Inc.
("Lehman Brothers") and California Energy Company, Inc. (the
"Company" or "CEC"):
1. The Company hereby engages Lehman Brothers to
render financial advisory services to the Company
concerning its acquisition of Magma Power Company
("Magma").
2. Lehman Brothers hereby accepts the engagement and,
in that connection, agrees to:
(a) provide advisory services, in conjunction
with Gleacher and Company ("Gleacher"),
including general business and financial
analysis, transaction feasibility analysis
and pricing of the prospective acquisition of
Magma; and
(b) assist, in conjunction with Gleacher, in
corporate capital planning for such
acquisition, including the identification of
commercial bank acquisition financing, and
assist in the arrangement of such financing.
3. For purposes of this Agreement, an "acquisition"
of Magma shall mean any transaction or series or
combination of transactions, other than in the
ordinary course of business, whereby, directly or
indirectly, control of a majority equity interest
in Magma or any of its businesses or assets is
transferred to the Company or any of its
affiliates for consideration, including, without
limitation, a sale or exchange of capital stock or
assets, a merger or consolidation, a tender or
exchange offer, a leveraged buy-out, or any
similar transaction.
4. The term of Lehman Brothers' engagement hereunder
shall extend from the date hereof until terminated
as set forth below. Subject to the provisions of
paragraphs 5 through 14, which shall survive any
termination of this Agreement, either party may
terminate Lehman Brothers' engagement hereunder at
any time by giving the other party at least 10
days' prior written notice.
5. As compensation for the services rendered by
Lehman Brothers hereunder, the Company shall pay
Lehman Brothers as follows:
(a) If an acquisition of Magma occurs either
(i) during the term of Lehman Brothers
engagement hereunder, or
(ii) at any time during a period of six
months following the effective date of
termination of Lehman Brothers'
engagement hereunder
then the Company shall pay to Lehman Brothers a
financial advisory fee equal to $1,000,000,
payable at the closing of such acquisition.
(b) In conjunction with such acquisition, Lehman
Brothers will also act as the lead arranger
for the placement of any commercial bank
financing necessary for the Company to
complete the acquisition. In consideration
thereof, the Company will pay Lehman Brothers
a fee equal to one quarter of 1% (0.25%) of
the total principal amount of any such
<PAGE>
commercial bank financing arranged by Lehman
Brothers and Gleacher. Compensation which is
payable pursuant to this subparagraph (b)
shall be paid by the Company upon the closing
of the acquisition; provided, however, that
the aggregate compensation payable to Lehman
Brothers under this Agreement shall not
exceed $2,250,000.
6. The Company shall:
(a) indemnify Lehman Brothers and hold it
harmless against any and all losses, claims,
damages or liabilities to which Lehman
Brothers may become subject arising in any
manner out of or in connection with the
rendering of services by Lehman Brothers
hereunder, except to the extent it is finally
judicially determined that such losses,
claims, damages or liabilities resulted from
the negligence or willful misconduct of
Lehman Brothers; and
(b) subject to the Company's right to assume
Lehman's legal defense pursuant to the
following paragraph, reimburse Lehman
Brothers promptly for any legal or other
expenses reasonably incurred by it in
connection with investigating, preparing to
defend or defending, or providing evidence in
or preparing to serve or serving as a witness
with respect to, any lawsuits,
investigations, claims or other proceedings
arising in any manner out of or in connection
with the rendering of services by Lehman
Brothers hereunder (including, without
limitation, in connection with the
enforcement of this Agreement and the
indemnification obligations set forth
herein); provided, however, that in the event
a final judicial determination is made to the
effect specified in subparagraph 6(a) above,
Lehman Brothers will promptly remit to the
Company any amounts reimbursed under this
subparagraph 6(b); and provided further that,
with respect to claims made after three years
from the date hereof, Lehman brothers shall
contribute $50,000 to the defense thereof.
The Company agrees that the indemnification and
reimbursement commitments set forth in this
paragraph 6 shall apply whether or not Lehman
Brothers is a formal party to any such lawsuits,
claims or other proceedings and that such
commitments shall extend upon the terms set forth
in this paragraph to any controlling person,
affiliate, director, officer, employee or agent of
Lehman Brothers (each, with Lehman Brothers, an
"Indemnified Person"). The Company further agrees
that, without Lehman Brothers' prior written
consent, which consent will not be unreasonably
withheld, it will not enter into any settlement of
a lawsuit, claim or other proceeding arising out
of the transactions contemplated by this Agreement
unless such settlement includes an explicit and
unconditional release from the party bringing such
lawsuit, claim or other proceeding of all
Indemnified Persons, except to the extent the
claims not released relate to Lehman Brothers'
negligence or willful misconduct.
If indemnification is to be sought hereunder by an
Indemnified Person, then such Indemnified Person
shall notify the Company of the commencement of
any action or proceeding in respect thereof;
provided, however, that the failure so to notify
the Company shall not relieve the Company of any
liability that it may have to such Indemnified
Person pursuant to this paragraph 6 except to the
extent the Company has been prejudiced in any
material respect by such failure or from any
liability that it may have to such Indemnified
Person other than pursuant to this paragraph 6.
Notwithstanding the above, following such
notification, the Company may elect in writing to
assume the defense of such action or proceeding,
and, upon such election, it shall not be liable
for any legal costs subsequently incurred by such
Indemnified Person (other than reasonable costs of
investigation or providing evidence) in connection
therewith, unless (i) the Company has failed to
provide counsel reasonably satisfactory to such
Indemnified Person in a timely manner, (ii)
counsel which has been provided by the Company
reasonably determines that its representation of
such Indemnified Person would present it with a
<PAGE>
conflict of interest or (iii) outside counsel to
the Indemnified Person provides a written opinion
that there is a significant potential for a
conflict of interest. In connection with any one
action or proceeding, the Company shall not be
responsible for the fees and expenses of more than
one separate law firm in any one jurisdiction for
all Indemnified Persons.
7. The Company and Lehman Brothers agree that if any
indemnification or reimbursement sought pursuant
to the preceding paragraph 6 is judicially
determined to be unavailable for a reason other
than the negligence or willful misconduct of
Lehman Brothers, then, whether or not Lehman
Brothers is the Indemnified Person, the Company
and Lehman Brothers shall contribute to the
losses, claims, damages, liabilities and expenses
for which such indemnification or reimbursement is
held unavailable (i) in such proportion as is
appropriate to reflect the relative benefits to
the Company on the one hand, and Lehman Brothers
on the other hand, in connection with the
transactions to which such indemnification or
reimbursement relates, or (ii) if the allocation
provided by clause (i) above is judicially
determined not to be permitted, in such proportion
as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the
relative faults of the Company on the one hand,
and Lehman brothers on the other hand, as well as
any other equitable considerations; provided,
however, that in no event shall the amount to be
contributed by Lehman Brothers pursuant to this
paragraph exceed the amount of the fees actually
received by Lehman Brothers hereunder.
8. Except as contemplated by the terms hereof or as
required by applicable law or pursuant to an order
entered or subpoena issued by a court of competent
jurisdiction, Lehman Brothers shall keep
confidential all material non-public information
provided to it by the Company, and shall not
disclose such information to any third party,
other than to such of its employees and advisors
as Lehman Brothers determines to have a need to
know.
9. Except as required by applicable law, any advice
to be provided by Lehman Brothers under this
Agreement shall not be disclosed publicly or made
available to third parties without the prior
approval of Lehman Brothers, which approval shall
not be unreasonably withheld, and accordingly such
advice shall not be relied upon by any person or
entity other than the Company.
10. The Company agrees that Lehman Brothers has the
right following the closing of an acquisition to
place advertisements in financial and other
newspapers and journals at its own expense
describing its services to the Company hereunder,
provided that Lehman Brothers will submit a copy
of any such advertisements to the Company for its
prior approval, which approval shall not be
unreasonably withheld.
11. The Company and Lehman Brothers each represent to
the other that, except for Gleacher, there is no
other person or entity that is entitled to a
finder's fee or any type of brokerage commission
in connection with the transactions contemplated
by this Agreement as a result of any agreement or
understanding with it.
12. Nothing in this Agreement, express or implied, is
intended to confer or does confer on any person or
entity other than the parties hereto or their
respective successors and assigns, and to the
extent expressly set forth herein, the Indemnified
Persons, any rights or remedies under or by reason
of this Agreement or as a result of the services
to be rendered by Lehman Brothers hereunder. The
Company further agrees that neither Lehman
Brothers nor any of its controlling persons,
affiliates, directors, officers, employees or
agents shall have any liability to the Company or
any person asserting claims on behalf of or in
right of the Company for any losses, claims,
damages, liabilities or expenses arising out of or
relating to this Agreement or the services to be
rendered by Lehman Brothers hereunder, except to
the extent it is finally judicially determined
that such losses, claims, damages, liabilities or
expenses resulted from the negligence or willful
misconduct of Lehman Brothers.
<PAGE>
13. The invalidity or unenforceability of any
provision of this Agreement shall not affect the
validity or enforceability of any other provisions
of this Agreement, which shall remain in full
force and effect.
14. This Agreement may not be amended or modified
except in writing signed by each of the parties
and shall be governed by and construed and
enforced in accordance with the laws of the State
of New York. Any right to trial by jury with
respect to any lawsuit, claim or other proceeding
arising out of or relating to this Agreement or
the services to be rendered by Lehman Brothers
hereunder is expressly and irrevocably waived.
If the foregoing correctly sets forth the understanding
and agreement between Lehman Brothers and the Company, please so
indicate in the space provided for that purpose below, whereupon
this letter shall constitute a binding agreement as of the date
hereof.
LEHMAN BROTHERS INC.
By: /s/ Joseph G. Sauvage
----------------------
Managing Director
AGREED:
CALIFORNIA ENERGY COMPANY, INC.
By: /s/ David L. Sokol
-------------------
Name: David L. Sokol
Title: Chairman, President and
Chief Executive Officer
