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 21, 1994
CALIFORNIA ENERGY COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9874 94-2213782
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
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>
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 ("Rights") issued on October
14, 1994 pursuant to the Rights Agreement, dated as of October 6, 1994, between
the Company and Chemical Trust Company of California, as Rights Agent (the
"Rights Agreement"), upon the terms and subject to the conditions set forth in
the Offer to Purchase dated October 6, 1994 (the "Offer to Purchase") of the
Purchaser and the Registrant.
On October 21, 1994, the Purchaser and the Registrant increased the price
per Share (and associated Right) from $35 to $38.50 per Share (and associated
Right), upon the terms and subject to the conditions set forth in the Offer to
Purchase, as amended and supplemented by the Supplement, dated October 26, 1994
(the "Supplement").
On October 26, 1994, the Purchaser and the Registrant filed Amendment No.
4 ("Amendment No. 4") to their Tender Offer Statement on Schedule 14D-1, dated
October 6, 1994, 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 Supplement, which appears as Exhibit (a)(11) to Amendment
No. 4 and is hereby incorporated by reference herein.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired: None.
(b) Pro forma financial information: None.
(c) Exhibit:
99.1 Amendment No. 4 to Tender Offer Statement on Schedule 14D-1
filed with the Securities and Exchange Commission on October 26,
1994 pursuant to Rule 14d-3 under the Securities Exchange Act of
1934.
<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.
CE ACQUISITION COMPANY, INC.
By /s/ Steven A. McArthur
-------------------------------------
Name: Steven A. McArthur
Title: Senior Vice President, General
Counsel and Secretary
CALIFORNIA ENERGY COMPANY, INC.
By /s/ Steven A. McArthur
--------------------------------------
Name: Steven A. McArthur
Title: Senior Vice President, General
Counsel and Secretary
October 26, 1994
<PAGE>
EXHIBIT INDEX
Exhibit Page
99.1 Amendment No. 4 to Tender Offer Statement on Schedule 14D-1 filed
with the Securities and Exchange Commission on October 26, 1994
pursuant to Rule 14d-3 under the Securities Exchange Act of 1934.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
Amendment No. 4
(Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934)
MAGMA POWER COMPANY
(Name of Subject Company)
CE ACQUISITION COMPANY, INC.
CALIFORNIA ENERGY 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**
- -------------------------------------------------------------------------------
$477,400,000 $95,480
- -------------------------------------------------------------------------------
*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 $38.50 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.
[X] 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 off-setting 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: $86,800 Filing Party: Same
Form or Registration No.: 5-33882 Date Filed: October 6, 1994
<PAGE>
California Energy Company, Inc., a Delaware corporation ("CECI"), and CE
Acquisition Company, Inc., a Delaware corporation and a wholly owned subsidiary
of CECI (the "Purchaser"), hereby amend and supplement their Tender Offer
Statement on Schedule 14D-1, ("Schedule 14D-1") filed with the Securities and
Exchange Commission (the "Commission") on October 6, 1994, as amended by
Amendments Nos. 1, 2 and 3, with respect to the Purchaser's 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, if applicable,
associated Preferred Share Rights (the "Rights"), 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, the Supplement (as defined below) and its related
Letter of Transmittal constitute the "Offer").
Unless otherwise indicated herein, each capitalized term used but not
defined herein shall have the meaning assigned to such term in the Schedule
14D-1.
Item 1. Security and Subject Company.
The information set forth in Item 1(b) is hereby amended and supplemented
by the following:
The Purchaser has amended and supplemented the Offer to Purchase
pursuant to a Supplement to the Offer to Purchase, dated October 26, 1994 (the
"Supplement"), a copy of which is attached hereto as Exhibit (a)(11). The
information set forth in the Introduction and Section 1 "Amended Terms of the
Offer" of the Supplement is incorporated herein by reference.
The information set forth in Item 1(c) is hereby amended and supplemented
by the following:
The information set forth in Section 3 "Price Range of Shares;
Dividends" of the Supplement is incorporated herein by reference.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
The information set forth in Items 3(a)-(b) is hereby amended and
supplemented by the following:
The information set forth in Section 4 "Background of the Offer Since
October 6, 1994; Contacts with the Company" of the Supplement is incorporated
herein by reference.
<PAGE>
Item 4. Source of Amount of Funds or Other Consideration.
The information set forth in Items 4(a)-(b) is hereby amended and
supplemented by the following:
The information set forth in the Introduction and Section 6 "Source
and Amount of Funds" of the Supplement is incorporated herein by reference.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
The information set forth in Items 5(a)-(e) is hereby amended and
supplemented by the following:
The information set forth in the Introduction, Section 4 "Background
of the Offer Since October 6, 1994; Contacts with the Company" and Section 5
"Purpose of the Offer and the Proposed Merger" of the Supplement 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 Item 7 is hereby amended and supplemented by
the following:
The information set forth in the Introduction, Section 5 "Purpose of
the Offer and the Proposed Merger" and Section 6 "Source and Amount of Funds"
of the Supplement is incorporated herein by reference.
Item 10. Additional Information.
The information set forth in Items 10(b), (c), (d) and (e) is hereby
amended and supplemented by the following:
The information set forth in the Introduction, Section 4 "Background
of the Offer Since October 6, 1994; Contacts with the Company," Section 6
"Source and Amount of Funds" and Section 7 "Certain Legal Matters" of the
Supplement is incorporated herein by reference.
The information set forth in Item 10(f) is hereby amended and supplemented
by the following:
The information set forth in the Supplement, a copy of which is
attached hereto as Exhibit (a)(11), is incorporated herein by reference in its
entirety.
<PAGE>
Item 11. Material to Be Filed as Exhibits.
(a)(11) Supplement to the Offer to Purchase, dated October 26, 1994.
(a)(12) Revised Letter of Transmittal.
(a)(13) Revised Notice of Guaranteed Delivery.
(a)(14) Revised Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees, dated October 26, 1994.
(a)(15) Revised Form of Letter to Clients for Use by Brokers,
Dealers, Commercial Banks, Trust Companies and Other Nominees,
dated October 26, 1994.
(a)(16) Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Subsitute Form W-9.
(b)(1) Commitment Letter, dated October 25, 1994, to California Energy
Company, Inc. and CE Acquisition Company, Inc. from Credit
Suisse.
(f)(1) Solicitation Materials.
<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 26, 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
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
<S> <C> <C>
(a)(11) Supplement to the Offer to Purchase, dated October 26, 1994.
(a)(12) Revised Letter of Transmittal.
(a)(13) Revised Notice of Guaranteed Delivery.
(a)(14) Revised Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees, dated October 26, 1994.
(a)(15) Revised Form of Letter to Clients for Use by Brokers,
Dealers, Commercial Banks, Trust Companies and Other Nominees,
dated October 26, 1994.
(a)(16) Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Subsitute Form W-9.
(b)(1) Commitment Letter, dated October 25, 1994, to California Energy
Company, Inc. and CE Acquisition Company, Inc. from Credit
Suisse.
(f)(1) Solicitation Materials.
</TABLE>
<PAGE>
SUPPLEMENT TO OFFER TO PURCHASE DATED OCTOBER 6, 1994
CE ACQUISITION COMPANY, INC.
A WHOLLY OWNED SUBSIDIARY OF
CALIFORNIA ENERGY COMPANY, INC.
HAS AMENDED ITS OFFER TO PURCHASE TO INCREASE THE PRICE FOR
12,400,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MAGMA POWER COMPANY
TO
$38.50 NET PER SHARE
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS HAVE BEEN
EXTENDED AND WILL NOW EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, NOVEMBER 4, 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 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. SEE SECTION 12 OF THE
OFFER TO PURCHASE.
---------------
IMPORTANT
Except as otherwise set forth in this Supplement, the Purchaser's Offer
continues to be governed by the terms and conditions set forth in its Offer
to Purchase dated October 6, 1994 and the original BLUE Letter of
Transmittal, and the information contained therein continues to be important
to each stockholder's decision with respect to the Offer. Accordingly, this
Supplement should be read carefully in conjunction with such documents, which
have been previously mailed to stockholders.
Any stockholder desiring to tender all or any portion of his Shares (and
the associated Rights) should either (1) complete and sign the original BLUE
or the revised GREEN Letter of Transmittal or a facsimile thereof in
accordance with the instructions in the revised GREEN Letter of Transmittal,
have his signature thereon guaranteed if required by Instruction 1 of either
Letter of Transmittal and mail or deliver either 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 of the Offer to
Purchase, 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 of the Offer to Purchase.
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 on the back cover of this Supplement. Requests for
additional copies of this Supplement, the Offer to Purchase, the revised
GREEN 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 26, 1994
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
INTRODUCTION .................................................................... 1
1. Amended Terms of the Offer ................................................. 2
2. Procedure for Tendering Shares and Rights .................................. 2
3. Price Range of Shares; Dividends ........................................... 3
4. Background of the Offer Since October 6, 1994; Contacts with the Company .. 3
5. Purpose of the Offer and the Proposed Merger ............................... 8
6. Source and Amount of Funds ................................................. 11
7. Certain Legal Matters ...................................................... 12
8. Miscellaneous .............................................................. 13
</TABLE>
<PAGE>
<PAGE>
To All Holders of Shares of Common Stock (including the Associated
Preferred Share Purchase Rights) of Magma Power Company:
INTRODUCTION
The following information amends and supplements the Offer to Purchase
dated October 6, 1994 (the "Offer to Purchase") of CE Acquisition Company,
Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary
of California Energy Company, Inc., a Delaware corporation ("CECI"). The
Purchaser is now offering 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 (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") issued on
October 14, 1994 pursuant to the Rights Agreement, dated as of October 6,
1994, between the Company and Chemical Trust Company of California, as Rights
Agent (the "Rights Agreement"), at $38.50 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, as amended and
supplemented by this Supplement, and in the related Letters of Transmittal
(which together with the Offer to Purchase and this Supplement constitute the
"Offer"). Unless the context otherwise requires, all references to Shares
shall include the associated Rights and all references to the Rights shall
include all benefits that may inure to holders of the Rights pursuant to the
Rights Agreement.
Except as otherwise set forth in this Supplement, the terms and conditions
previously set forth in the Offer to Purchase remain applicable in all
respects to the Offer, and this Supplement should be read in conjunction with
the Offer to Purchase. Unless the context requires otherwise, capitalized
terms used herein but not otherwise defined herein shall have the meanings
ascribed to them in the Offer to Purchase.
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, (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. SEE SECTION 12
OF THE OFFER TO PURCHASE.
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
Company 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 $38.50 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 $28.50 in cash, without interest
thereon, and $10.00 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 5 of this Supplement.
1
<PAGE>
<PAGE>
On October 25, 1994, CECI received from Credit Suisse a fully underwritten
commitment to provide the financing for the Offer and the Proposed Merger.
Such commitment is subject to customary conditions, including the execution
of definitive documentation. See Section 6 of this Supplement.
Stockholders should follow the procedures for tendering Shares set forth
in Section 4 of the Offer to Purchase and Section 2 of this Supplement.
Tendering stockholders may use either the original BLUE Letter of Transmittal
and the original GREY Notice of Guaranteed Delivery for Shares accompanying
the Offer to Purchase, or the revised GREEN Letter of Transmittal and the
revised GOLD Notice of Guaranteed Delivery accompanying this Supplement.
While the original BLUE Letter of Transmittal refers to the Offer to
Purchase, stockholders using such document to tender their Shares (and
associated Rights) will nevertheless receive $38.50 for each Share (and
associated Right) validly tendered and not withdrawn and accepted for payment
pursuant to the Offer, upon the terms and subject to the conditions of the
Offer. Stockholders who have previously validly tendered and not withdrawn
their Shares (and associated Rights) pursuant to the Offer are not required
to take any further action in order to receive, upon the terms and subject to
the conditions of the Offer, the increased price of $38.50 per Share (and
associated Right) with respect to all Shares purchased pursuant to the Offer.
See Section 4 of the Offer to Purchase and Section 1 of this Supplement.
THIS SUPPLEMENT, THE OFFER TO PURCHASE AND THE RELATED LETTERS OF
TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY
BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
1. AMENDED TERMS OF THE OFFER. Section 1 of the Offer to Purchase is
amended and supplemented by Section 1 of this Supplement.
The Purchaser has increased the price per Share (and associated Right) to
be paid pursuant to the Offer from $35 per Share (and associated Right) to
$38.50 per Share (and associated Right), net to the seller in cash and
without interest thereon. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is further extended or amended, the terms and
conditions of any such extension or amendment), all stockholders whose Shares
(and associated Rights) are validly tendered and not withdrawn (including
Shares tendered prior to the date of this Supplement) in accordance with the
procedures set forth in Section 4 of the Offer to Purchase and Section 2 of
this Supplement on or prior to the Expiration Date (as defined below) will
receive the increased price. The term "Expiration Date" means 12:00 midnight,
New York City time, on Friday, November 4, 1994, unless and until the
Purchaser, in its sole judgment, shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date"
shall mean the time and date at which the Offer, as so extended by the
Purchaser, shall expire.
This Supplement, the revised GREEN Letter of Transmittal and other
relevant materials will be mailed by the Company to record holders of Shares
and Rights whose names appear on the Company's stockholder list and the list
of holders of Rights, if any, 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 and list of holders
of Rights 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/or Rights.
2. PROCEDURE FOR TENDERING SHARES AND RIGHTS. Section 4 of the Offer to
Purchase is amended and supplemented by Section 2 of this Supplement.
TENDERING STOCKHOLDERS MAY CONTINUE TO USE THE ORIGINAL BLUE LETTER OF
TRANSMITTAL AND GREY NOTICE OF GUARANTEED DELIVERY THAT WERE PROVIDED WITH
THE OFFER TO PURCHASE. Although such BLUE Letter of Transmittal indicates
that the Offer will expire at 12:00 midnight, New York City time, on
Thursday, November 3, 1994, stockholders will be able to tender (or withdraw)
their Shares and Rights pursuant to the Offer until 12:00 midnight, New York
City time, on Friday, November 4, 1994 (or such later date to which the Offer
may be extended). TENDERING STOCKHOLDERS MAY ALSO USE THE REVISED GREEN
LETTER OF TRANSMITTAL AND GOLD NOTICE OF GUARANTEED DELIVERY PROVIDED WITH
THIS SUPPLEMENT.
2
<PAGE>
<PAGE>
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES AND RIGHTS, THE LETTER
OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE
RISK OF THE TENDERING STOCKHOLDERS, AND THE 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.
3. PRICE RANGE OF SHARES; DIVIDENDS. Section 6 of the Offer to Purchase is
amended and supplemented by Section 3 of this Supplement.
According to publicly available information, the Company has paid no cash
dividends on the Shares since the date of the Offer to Purchase. The reported
high and low sales prices per Share on the Nasdaq National Market (the "NNM")
for the current quarter through October 24, 1994, were $37 and $34.25,
respectively. On October 20, 1994, the last full trading day prior to CECI's
issuance of the press release announcing its intention to increase the price
per Share (and associated Right) to be paid pursuant to 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 price per Share on the NNM was $27.50. The Offer
represents a 40% 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.
4. BACKGROUND OF THE OFFER SINCE OCTOBER 6, 1994; CONTACTS WITH THE
COMPANY. Section 10 of the Offer to Purchase is supplemented by Section 4 of
this Supplement.
On October 5, 1994, Mr. Ben Holt, a director of CECI and a record holder
of Shares, made a demand to the Company for access to the Company's
stockholder list and other stockholder information necessary to communicate
with stockholders pursuant to the NGCL.
On October 10, 1994, CECI learned through press reports that the Company's
Board had recommended that its stockholders reject the Offer and had further
stated that the Offer at a price of $35 per Share (and associated Right) was
less attractive than remaining independent.
On October 11, 1994, the Company filed with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9 pursuant to the
Exchange Act, formally rejecting the Offer and disclosing, among other
things, that the Company's Board had (i) authorized the Company to enter into
"golden parachute" severance agreements with 15 of the most highly
compensated members of the Company's management, (ii) authorized the Company
to enter into indemnification agreements with each member of the Company's
Board, (iii) amended the Company's Bylaws purporting to eliminate the ability
of the Company's stockholders to act by written consent and (iv) hired
Goldman, Sachs & Co. ("Goldman") to assist the Company's Board with respect
to CECI's proposal.
On October 12, 1994, the Company informed CECI that it had denied Mr.
Holt's demand for the Company's stockholder information under the NGCL, and
that the Company would not currently provide such information to Mr. Holt.
3
<PAGE>
<PAGE>
On October 13, 1994, CECI issued the following press release announcing
the filing of a preliminary proxy statement with the Commission pursuant to
the Exchange Act:
CALIFORNIA ENERGY TO SOLICIT CALL OF SPECIAL MEETING
OF MAGMA STOCKHOLDERS
OMAHA, NEBRASKA, October 13, 1994 -- California Energy Company, Inc.
(NYSE, PSE and LSE: CE) ("CECI") announced today that in order to facilitate
consummation of its pending cash tender offer ("Offer") for 12,400,000
shares, or approximately 51%, of the common stock of Magma Power Company
(NASDAQ:MGMA) ("Magma") at a price of $35 net per share, CECI has filed
materials with the Securities and Exchange Commission ("SEC") to solicit
written requests from Magma shareholders to require Magma to call a Special
Meeting of shareholders. A Special Meeting will provide Magma stockholders
the opportunity to consider and vote on CECI's Special Meeting proposals
which, if approved, would result in certain By-law amendments that would
facilitate CECI's proposal and the election of four (4) CECI nominees to
Magma's Board, who would be committed to removing any impediments to
shareholders being able to freely choose whether to accept the Offer and
approve the proposed merger, thereby ensuring that the Offer and proposed
merger get a full and fair hearing. As previously announced, CECI's tender
offer is to be followed by a second step merger 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.
Today's announcement by CECI to commence a Special Meeting Request
Solicitation follows the decision by Magma's Board of Directors to recommend
that Magma shareholders not tender into CECI's $35 per share Offer because
remaining independent was more attractive to shareholders. In its SEC filing
recommending against CECI's Offer, Magma also disclosed that it had entered
into "Golden Parachute" severance agreements with 15 of the most highly
compensated members of Magma's management as well as indemnity agreements
with Board members in response to CECI's September 19 proposal. CECI intends
to take any appropriate action necessary to have any impediments to its Offer
set aside. David L. Sokol, California Energy's Chairman and Chief Executive
Officer, stated:
"Magma's rejection of our offer, without any attempted negotiation with us,
demonstrates their disregard for Magma shareholders. Rather than maximizing
shareholder value, they have implemented Golden Parachutes for the top 15
members of management, entered into an excessive fee arrangement with Goldman
Sachs and initiated wasteful litigation. These actions alone are estimated to
cost Magma's shareholders between 0.75 and $1.00 per share. We believe that
Magma's Board of Directors have a fiduciary obligation to maximize
shareholder value, not the lifestyles of their friends and co-workers.
It is our understanding that the Magma Board Chairman, President and Chief
Financial Officer began a "road show" presentation for investors yesterday
directed at misrepresenting and discrediting our offer, disparaging
California Energy, and offering extraordinary and unsustainable projections
for Magma's future. Much of the information which Magma presented is
inaccurate, misleading and in our view in violation of the proxy solicitation
rules established by the Securities and Exchange Commission.
Magma's management, again yesterday, stated their hope to investors that we
would just go away. This will not happen unless the shareholders reject our
ultimate offer. It is our belief that Magma's shareholders recognize the
value of our offer and will not allow the Magma management to prosper to
their detriment."
The Special Meeting Request Solicitation will be made only pursuant to
definitive 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 Request Solicitation and MacKenzie
Partners, Inc. is acting as the Information Agent for the tender offer and
Request Solicitation.
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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 325 MW
of power with an additional 300 MW under construction.
On October 13, 1994, CECI issued the following press release regarding the
Company's refusal to provide Mr. Holt with the requested stockholder
information:
MAGMA TO BE SUED TO OBTAIN RELEASE OF MAGMA STOCKHOLDER LIST
OMAHA, Neb., Oct. 13--California Energy Company, Inc. (NYSE, PSE and
LSE: CE) ("CECI") announced today that Magma Power Company (NASDAQ: MGMA)
("Magma"), in an apparent effort to delay the ability of Magma shareholders
to call a special meeting, has denied the request of one of CECI's directors
who is a long-time Magma shareholder, for the Magma shareholder list. As
previously announced, CECI is soliciting requests to call a Special Meeting
of Magma's shareholders in order to provide Magma stockholders the
opportunity to consider and vote on CECI's Special Meeting proposals which,
if approved, would result in certain By-law amendments that would facilitate
CECI's proposal to acquire Magma and the election of four (4) CECI nominees
to Magma's Board, who would be committed to removing any impediments to
shareholders being able to freely choose whether to accept CECI's pending
cash tender offer for 12,400,000 shares at $35 net per share and approve the
proposed second step merger, thereby ensuring that the offer and proposed
merger get a full and fair hearing.
David L. Sokol, California Energy's Chairman and Chief Executive Officer,
stated:
"Magma's denial of access to the list of shareholders is, at best, an
attempt to delay the inevitable, when Magma's Board and management will have
to account for their recent actions in front of their shareholders. Such
obstructionist tactics viewed in light of recent actions to implement "Golden
Parachutes" for 15 of the most highly compensated members of management
simply serve as further evidence of management's improper entrenchment motive
in recommending against CECI's acquisition proposal." Sokol added: "This sort
of irresponsible corporate behavior simply demonstrates the fact that Magma's
management is apparently unwilling to permit its actions to be judged by the
Company's owners and will result in another wasteful lawsuit to the detriment
of Magma's shareholders."
The Special Meeting Request Solicitation will be made only pursuant to
definitive 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 request solicitation and MacKenzie
Partners, Inc. is acting as the Information Agent for the tender offer and
request solicitation.
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 325 MW
of power with an additional 300 MW under construction.
On October 14, Mr. Holt commenced an action in the Second Judicial
District Court for the State of Nevada in and for the County of Washoe (the
"Court"), seeking an order requiring the Company, pursuant to the NGCL, to
turn over to him the stockholder information requested in his demand letter
to the Company. The Court entered an order setting a briefing schedule which
would permit consideration of the matter on an expedited basis. See Section 7
of this Supplement.
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On October 17, 1994, CECI issued the following press release announcing
that it had sued the directors of the Company's Board for, among other
things, breach of their fiduciary duties in failing to consider CECI's
proposal to acquire Magma and for taking obstructionist actions in response
to CECI's proposal:
CALIFORNIA ENERGY SUES MAGMA'S
DIRECTORS FOR BREACH OF FIDUCIARY DUTY
OMAHA, NEBRASKA, October 17, 1994 -- California Energy Company, Inc.
(NYSE, PSE and LSE: CE) ("CECI") announced today that it has sued the
Directors of Magma Power Company (NASDAQ: MGMA) ("Magma"), for, among other
things, breach of their fiduciary duties in failing to properly consider
CECI's proposal to acquire Magma and for taking obstructionist actions in
response to CECI's proposal, such as adopting special indemnity agreements
for themselves, "Golden Parachutes" for 15 Magma executives, a discriminatory
"poison pill" and by-law amendments which are intended to impede the right of
the majority of Magma's shareholders to freely consider CECI's offer and to
entrench current Magma management. In addition, CECI's suit notes that the
Board (which includes five (5) present or former Dow employees out of an 11
member Board) breached its duties by not disclosing to Magma's shareholders
Dow's conflict of interest in the transaction due to the fact that Dow cannot
obtain the same benefit from the tender offer price as other shareholders
because of recent Dow transactions that would invoke the SEC's Section16(b)
short-swing profit disgorgement rule.
David L. Sokol, California Energy's Chairman and Chief Executive Officer,
stated:
"We find it astounding that Magma's Board has not even given serious
consideration to a proposal which would pay shareholders a $7.50 per share
premium over Magma's trading price prior to making the proposal. Moreover,
the Board, while stating our price to be "inadequate," has declined to engage
in a discussion about what price would constitute an adequate offer. Although
we have indicated that we are prepared to negotiate all aspects of our offer,
Magma has refused to engage in price discussions, merely stating that it is
somehow in the best interest of shareholders to remain "independent." At the
same time Magma's Board has also taken actions to impede majority shareholder
action (such as adopting a poison pill and by-law amendments and refusing
access to a shareholder list) which indicate the Board's apparent belief that
shareholders shouldn't be permitted to make up their own minds as to what is
in their best economic interest and which only serve to entrench current
management.
It is also noteworthy that, while attempting to deny shareholders the
right to consider our offer, Magma's Board has taken steps to provide for
management's economic self-interest, such as approving "Golden Parachute"
severance agreements for the 15 most highly compensated members of Magma's
management. These and other obstructionist actions are estimated to cost
shareholders between $0.75 and $1.00 per share. Such actions, viewed in the
context of Dow's conflict of interest, due to its inability to fully benefit
from the tender offer as a result of Section16(b), paint a picture of
management entrenchment plain and simple."
Sokol added:
"It is curious to note that the five (5) Dow Board members recommended
against our $35 per share offer in light of Dow's liquidation of a
significant amount of its Magma holdings (3,635,000 shares) in 1993 at a net
price of $30.88 per share and Dow's recent sale in September 1994 of 857,143
Magma shares at $28.25. Assuming the Section16(b) problems which prevent Dow
from fully benefitting from our offer were fully disclosed to the independent
Magma Board members, we do find it surprising that Magma's Board could be
advised that there was not a conflict that would require the five (5) Dow
members to abstain from voting on our proposal."
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As previously announced, CECI is soliciting requests to call a Special
Meeting of Magma's shareholders in order to provide Magma stockholders the
opportunity to consider and vote on CECI's Special Meeting proposals which,
if approved, would result in certain by-law amendments that would facilitate
CECI's proposal to acquire Magma and the election of four (4) CECI nominees
to Magma's Board, who would be committed to removing any impediments to
shareholders being able to freely choose whether to accept CECI's pending
cash tender offer for 12,400,000 shares at $35 net per share and to approve
the proposed second step merger, thereby ensuring that the offer and proposed
merger get a full and fair hearing. The Special Meeting Request Solicitation
will be made only pursuant to definitive 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
request solicitation and MacKenzie Partners, Inc. is acting as the
Information Agent for the tender offer and request solicitation.
California Energy Company is a leading international developer, owner
and operator of geothermal and other environmentally responsible power
generation facilities. Its six existing facilities currently produce in
excess of 325 MW with an additional 300 MW under construction.
On October 21, 1994, CECI issued the following press release announcing
that the Purchaser had increased the price per Share (and associated Right)
to $38.50 per Share (and associated Right), net to the seller in cash and
without interest thereon:
CALIFORNIA ENERGY INCREASES ITS OFFER
FOR MAGMA POWER TO $38.50 PER SHARE
Omaha, Nebraska, October 21, 1994 -- California Energy Company, Inc.
(NYSE, PSE, LSE: CE) ("CECI") announced today that it has increased its offer
to purchase Magma Power Company to $38.50 per share, consisting of $28.50 per
share in cash and $10.00 per share of CECI stock.
In connection with this enhanced proposal, CECI has extended the
expiration date of its pending cash tender offer for 51%, or 12,400,000 of
Magma's shares to Friday, November 4, 1994 and has increased the cash price
to $38.50 net per share.
CECI also confirmed its intention to solicit consents to call a special
meeting of Magma's shareholders to elect four new members to Magma's Board of
Directors who would ensure that Magma gives proper consideration to this
enhanced offer. CECI also announced it would commence a series of investor
and shareholder presentations beginning Tuesday, October 25, 1994. These
presentations would highlight to Magma shareholders the benefits of the CECI
acquisition proposal.
David L. Sokol, CECI's Chairman and Chief Executive Officer, stated: "We
sincerely hope that Magma's Board of Directors will negotiate and sign a
merger agreement with us so that all Magma shareholders can receive the
benefits of our acquisition offer. In any event, we are now putting forth our
best acquisition proposal, and are beginning a consent solicitation to
provide Magma's shareholders the right to express their views directly on the
merits of our proposal. We have increased the cash price of our Tender Offer
which should provide Magma shareholders with an additional mechanism to
communicate to Magma's Board their support of CECI's acquisition offer."
California Energy Company is a leading international developer, owner
and operator of geothermal and other environmentally responsible power
generation facilities. Its six existing facilities currently produce in
excess of 325 MW of power with an additional 300 MW under construction.
On October 21, 1994, the Company announced that its local Indonesian
partner on the smaller of its two proposed development stage projects in
Indonesia, the Karaha project, had terminated its joint venture with the
Company. On October 25, 1994, CECI and the Purchaser filed their second
amended
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counterclaims which, among other things, seek an injunction requiring the
Company to refrain from taking actions to damage its international
development projects, including the Karaha project. See Section 7 of this
Supplement.
On October 25, 1994, CECI issued the following press release announcing
the receipt of a fully underwritten $500,000,000 financing commitment from
Credit Suisse:
CALIFORNIA ENERGY ANNOUNCES RECEIPT OF
FULLY UNDERWRITTEN $500,000,000 FINANCING COMMITMENT
FOR MAGMA ACQUISITION
OMAHA, NE, October 25, 1994 -- California Energy Company, Inc. (NYSE,
PSE, LSE:CE) ("CECI") today announced that it has received a
fully-underwritten $500,000,000 financing commitment from Credit Suisse in
connection with CECI's proposed acquisition of Magma Power Company
(NASDAQ:MGMA) ("Magma"). The financing commitment contains two facilities and
provides funding both for the purchase of tendered Magma common shares
pursuant to CECI's pending cash tender offer for 51%, or 12,400,000 shares of
Magma at $38.50 net per share, and for permanent financing in order to
consummate a merger of the two companies.
David L. Sokol, Chairman and Chief Executive Officer of CECI, stated,
"We believe this $500,000,000 financing commitment, together with over
$300,000,000 of existing cash on hand, demonstrates the strength of our offer
to Magma's shareholders and reinforces our capability to expeditiously
consummate the proposed transaction."
The tender offer facility has a final maturity of 12 months (extendable
to three years) and the permanent financing facility has a final maturity of
8 years with semi-annual amortization from internally-generated funds.
Pricing is based upon Libor or an alternative base rate.
California Energy Company is a leading international developer, owner
and operator of geothermal and other environmentally responsible power
generation facilities. Its six existing facilities currently produce in
excess of 325 MW of power with an additional 300 MW under construction.
Also on October 25, 1994, the Court issued an order in the action filed by
Mr. Holt, granting the relief requested by Mr. Holt by directing that the
Company turn over to Mr. Holt without delay the stockholder list and other
information sought in his demand letter.
5. PURPOSE OF THE OFFER AND THE PROPOSED MERGER. Section 11 of the Offer
to Purchase is amended and supplemented by Section 5 of this Supplement.
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 $38.50 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 $28.50 in cash
and $10.00 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 CECI Common Stock. If the market value of 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 CECI Common Stock (i.e., the top of the range), and if the
market value of the CECI
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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). The effect of the collar provision would be to increase the number of
Shares to be issued in the Proposed Merger (and therefore the value of the
stock consideration to be received in the Proposed Merger) if the market
price of the CECI Common Stock were to be greater than the top of the
established range and to decrease the number of Shares to be issued in the
Proposed Merger (and therefore the value of the stock consideration to be
received in the Proposed Merger) if the market price of the CECI Common Stock
were to be less than the bottom of the established range. CECI intends to
establish such range shortly prior to the Purchaser's entering into the
Proposed Merger Agreement.
The Preferred Share Purchase Rights. According to the Company's
Registration Statement on Form 8-A filed with the Securities and Exchange
Commission (the "Commission") on October 7, 1994, as amended by the Company's
amendment filed with the Commission on October 14, 1994 (the "Form 8-A"), the
Company's Board declared a distribution of one Right for each outstanding
Share to stockholders of record at the close of business on October 14, 1994
and for each Share issued (including Shares distributed from the Company's
treasury) by the Company thereafter and prior to the Distribution Date (as
defined below). The following description of the Rights is based on
information contained in the Form 8-A and is qualified in its entirety by
reference to such Form 8-A.
Each Right entitles the registered holder, subject to the terms of the
Rights Agreement, to purchase from the Company one one-thousandth of a share
(a "Unit") of Series A Preferred Stock, par value $0.10 per share (the
"Preferred Stock"), at a purchase price of $125 per Unit, subject to
adjustment (the "Purchase Price"). Initially, the Rights will attach to all
certificates representing Shares ("Share Certificates") and no separate
certificates representing Rights ("Rights Certificates") will be distributed.
The Rights will separate from the Shares and a "Distribution Date" will occur
upon the earlier of (i) 10 business days following a public announcement (the
date of such announcement being the "Stock Acquisition Date") that a person
or group of affiliated or associated persons (other than the Company, any
subsidiary of the Company or any employee benefit plan of the Company or such
Subsidiary) (an "Acquiring Person") has acquired, obtained the right to
acquire or otherwise obtained beneficial ownership of 10% or more of the then
outstanding Shares (or if certain current holders of 10% or more of the
outstanding Shares have acquired, obtained the right to acquire or otherwise
obtained beneficial ownership of an additional 4% of the Shares), and (ii) 10
business days (or such later date as may be determined by action of the
Company's Board prior to such time as any person becomes an Acquiring Person)
following the commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 20% or more of the then
outstanding Shares. Until the Distribution Date, (i) the Rights will be
evidenced by Share Certificates and will be transferred with and only with
such Share Certificates, (ii) new Share Certificates issued after October 14,
1994 (also including Shares distributed from the Company's treasury) will
contain a notation incorporating the Rights Agreement by reference and (iii)
the surrender for transfer of any certificates representing outstanding
Shares will also constitute the transfer of the Rights associated with the
Shares represented by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Shares as of the close of the
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and the Shares shall remain outstanding, (ii) a
person becomes the beneficial owner of 10% or more of the then outstanding
Shares (or an additional 4% in the case of certain current 10% holders),
(iii) an Acquiring Person engages in one or more "self-dealing" transactions
as set forth in the Rights Agreement, or (iv) during such time as there is an
Acquiring Person, an event occurs which results in such Acquiring Person's
ownership interest being increased by more than 1%, then, in each such case,
each holder of a Right will thereafter have the right to receive, upon
exercise, Units (or, in certain circumstances, Shares,
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cash, property or other securities of the Company) having a value equal to
two times the exercise price of the Right. The exercise price is the Purchase
Price multiplied by the number of Units issuable upon exercise of a Right
prior to the events described in this paragraph. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will
be null and void.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction
and the Company is not the surviving corporation (other than a merger
described in the preceding paragraph), (ii) any person consolidates or
mergers with the Company and all or part of the Shares are converted or
exchanged for securities, cash or property of any other person or (iii) 50%
or more of the Company's assets or earning power are sold or transferred,
each holder of a Right (except Rights which previously have been voided as
described above) shall thereafter have the right to receive, upon exercise,
common stock of the Acquiring Person having a value equal to two times the
exercise price of the Right.
The Purchase Price payable, and the number of Units issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) if holders of
the Preferred Stock are granted certain rights or warrants to subscribe for
Preferred Stock or convertible securities at less than the current market
price of the Preferred Stock, or (iii) upon the distribution to the holders
of the Preferred Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu
thereof, an adjustment in cash may be made based on the market price of the
Preferred Stock prior to the date of exercise.
At any time until ten business days following the Stock Acquisition Date,
a majority of the Independent Directors (as defined in the Rights Agreement)
may redeem the Rights in whole, but not in part, at a price of $0.01 per
Right (the "Redemption Price"), payable, at the election of such majority of
the Independent Directors, in cash or Shares. Immediately upon the action of
a majority of Independent Directors ordering the redemption of the Rights,
the Rights will terminate and the only right of the holders of Rights will be
to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be amended at any time
prior to the Distribution Date. After the Distribution Date, the provisions
of the Rights Agreement may be amended in order to cure any ambiguity, defect
or inconsistency, to make changes which do not adversely affect the interests
of holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption
shall be made at such time as the Rights are not redeemable.
On October 10, 1994, the Company's Board resolved that the Distribution
Date shall not occur until the earlier of (i) such later date as the
Company's Board, in its sole discretion, shall fix by resolution adopted
prior to the Distribution Date and (ii) the date the Purchaser becomes an
Acquiring Person.
UNLESS THE RIGHTS ARE REDEEMED, HAVE BEEN INVALIDATED OR ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER, 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 OF THE OFFER TO PURCHASE AND SECTION 2 OF THIS SUPPLEMENT. IF
SEPARATE RIGHTS CERTIFICATES ARE NOT ISSUED, A TENDER OF SHARES WILL ALSO
CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS.
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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 RIGHTS ARE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER. SEE INTRODUCTION OF THE
OFFER TO PURCHASE AND SECTION 12 OF THE OFFER TO PURCHASE.
6. SOURCE AND AMOUNT OF FUNDS. Section 13 of the Offer to Purchase is
amended and supplemented by Section 6 of this Supplement.
As a result of the increase in the price per Share to be paid pursuant to
the Offer, the Purchaser estimates that approximately $477.4 million will be
required to purchase the 12,400,000 Share and Rights sought pursuant to the
Offer. The Purchaser estimates that approximately an additional $218 million
will be required to effectuate the Proposed Merger. The Purchaser will obtain
such funds through borrowings from commercial banks and through a capital
contribution by CECI from CECI's general corporate funds, which at September
30, 1994 aggregated approximately $316 million.
The Purchaser anticipates that a substantial portion 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. CECI has received a
fully underwritten financing commitment letter from Credit Suisse (the
"Commitment Letter") which states that Credit Suisse will provide, on
specified terms and subject to customary conditions, up to $500,000,000 in
secured bank financing in connection with the Offer and the Proposed Merger.
Such funds, together with a portion of CECI's general corporate funds, will
be sufficient to pay the cash portion of the consideration for the Offer and
the Proposed Merger and related expenses.
The Commitment Letter contemplates (i) a facility of up to $250,000,000 to
capitalize the Purchaser for the purpose of financing the Offer (the "Tender
Facility") and (ii) facilities of up to $500,000,000 for, among other things,
refinancing the Tender Facility and effectuating the Proposed Merger (the
"Merger Facilities" and, together with the Tender Facility, the
"Facilities").
The term of the Tender Facility will be 12 months, extendible for a term
of up to three years from the initial funding at the mutual consent of CECI
and Credit Suisse. The Tender Facility will be a margin loan collateralized
by the Shares purchased pursuant to the Offer and subject to Regulation U
promulgated under the Exchange Act.
The Merger Facilities will be composed of (i) up to a 6-year amortizing
term loan ("Term Loan A") in an expected amount of up to $500,000,000 less
the amount of Term Loan B (as defined below) and (ii) up to a 8-year
amortizing term loan ("Term Loan B") in an expected amount not to be less
than $150,000,000. The Merger Facilities are to be amortized from internally
generated funds and will be secured by an assignment and pledge of the stock
of the Company and all unencumbered assets of the Company.
Interest on loans borrowed under the Facilities will be payable at spreads
of 2.50% above LIBOR (adjusted for reserves) or 1.25% above Base Rate for
loans under the Tender Facility, 2.50% above LIBOR (adjusted for reserves) or
1.50% above Base Rate for Term Loan A, and 3.00% above LIBOR (adjusted for
reserves) or 2.00% above Base Rate for Term Loan B. CECI may elect to incur
loans at either LIBOR or Base Rate.
Credit Suisse's commitment to provide the Facilities is subject to certain
customary conditions, including without limitation (a) a capital investment
in the Purchaser in an amount and form satisfactory to Credit Suisse, (b) the
absence of certain material adverse changes and (c) Credit Suisse's
satisfaction with its due diligence with respect to CECI and the Company.
The definitive documentation relating to the Facilities will contain
representations, warranties, covenants, events of default and conditions
customary for transactions of this size and type.
CECI has agreed to pay certain fees to Credit Suisse with respect to the
Facilities which, in the aggregate, are not material to the transactions
described herein.
11
<PAGE>
<PAGE>
The foregoing description of the Commitment Letter is qualified in its
entirety by reference to the text thereof filed as an exhibit to Amendment
No. 4 to the Tender Offer Statement on Schedule 14D-1 of the Purchaser and
CECI (the "Schedule 14D-1") filed with the Commission in connection with the
Offer, copies of which may be obtained from the offices of the Commission in
the manner set forth in Section 8 of the Offer to Purchase (except that such
information will not be available at the regional offices of the Commission).
When definitive agreements relating to the Facilities are executed, copies
will be filed as exhibits to further amendments to the Schedule 14D-1.
7. CERTAIN LEGAL MATTERS. Section 15 of the Offer to Purchase is amended
and supplemented by Section 7 of this Supplement.
Pending Litigation. On October 3, 1994, the Company filed a complaint
entitled Magma Power Company v. California Energy Company, Inc., Case No.
CV-N-94-06160, 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. CECI
removed this action to the United States District Court for the District of
Nevada (Case No. CV-N-94-00719-DWH).
On October 17, 1994, CECI filed its answer and counterclaims in response
to the Company's complaint. The counterclaims name the Purchaser as an
additional counterclaim plaintiff and the Company's directors as counterclaim
defendants in addition to the Company. CECI's counterclaims seek primarily:
(i) a declaratory judgment that certain actions taken by the Company,
including the amendment to the Company's Bylaws purporting to preclude the
Company stockholders from taking action by written consent, and
implementation of its "poison pill" Rights Agreement, are void and ultra
vires, and constitute a breach of fiduciary duty by the Company's Board; (ii)
an injunction requiring the Company's Board to rescind the amendment to the
Company's Bylaws which purports to eliminate the power of stockholders to act
by written consent, the "golden parachute" severance agreements granted to 15
members of the Company's management and the indemnification agreements
granted to each member of the Company's Board; (iii) an injunction enjoining
the operation of the "poison pill" Rights Agreement and directing the
Company's Board to redeem the Rights provided for in that Agreement; (iv) a
declaratory judgment that the Merger Moratorium Statute is unconstitutional
under the Supremacy Clause and the Commerce Clause of the United States
Constitution; (v) an injunction enjoining the Company's Board from invoking
the terms of the Merger Moratorium Statute or otherwise obstructing the
Offer; and (vi) an injunction requiring the Company to correct all false and
misleading statements in its Schedule 14D-9 and the amendments thereto.
On October 17, 1994, the Company filed an amended complaint, which, in
addition to the relief requested in its original complaint, seeks (i)
declaratory and injunctive relief with respect to certain purportedly false
and misleading disclosures in CECI's and the Purchaser's Schedule 14D-1 and
the Offer to Purchase therein; and (ii) declaratory and injunctive relief
with respect to certain allegedly false and misleading statements made in
CECI's preliminary Request Solicitation Statement filed with the Commission
pursuant to Section 14(a) of the Exchange Act on October 13, 1994.
On October 19, 1994, CECI and the Purchaser filed their answer to the
Company's amended complaint and amended their counterclaims which, in
addition to the relief requested in the original counterclaims, seek an
injunction requiring the Company to correct additional false and misleading
statements reflected in an amendment to its Schedule 14D-9 and in other
statements made by the Company.
On October 25, 1994, CECI and the Purchaser filed their second amended
counterclaims which, in addition to the relief requested in the original and
amended counterclaims, seek an injunction requiring the Company to refrain
from (i) taking actions to damage its international development projects,
including the Karaha project, or (ii) taking other actions designed to waste
corporate assets and block the Offer and the Proposed Merger.
12
<PAGE>
<PAGE>
CECI intends to take any action necessary to have attempted impediments to
the Offer and the Proposed Merger set aside.
On October 14, 1994, Ben Holt, a stockholder of the Company, and a
director of CECI, filed a complaint entitled Ben Holt v. Magma Power Company,
Case No. CV94-06432, against the Company in the Second Judicial District
Court for the State of Nevada in and for the County of Washoe (the "Court"),
alleging, among other things, that the Company has infringed the plaintiff's
right as a stockholder by denying his statutory right under the NGCL to
demand access to the Company's stockholder list and certain related material
necessary to communicate with the Company's shareholders. The plaintiff
sought an order directing the Company to comply with the demand for the
stockholder list and related information necessary to communicate with
stockholders.
On October 25, 1994, the Court issued an order directing the Company
forthwith and without delay to turn over to Mr. Holt a complete record or
list of the Company's stockholders together with certain other information
concerning stockholders of the Company requested by Mr. Holt in his demand
letter to the Company. The Court ruled expressly that Mr. Holt satisfied the
requirements of the NGCL governing requests for stockholder information in
that he had been a stockholder of the Company for more than six months as of
the time of his demand, and had complied with the Company's request for an
affidavit concerning his request; that Mr. Holt's purpose for requesting
stockholder information of the Company, which was to facilitate CECI's
request for a special meeting of stockholders of the Company and otherwise to
communicate with the other stockholders of the Company concerning CECI's
proposal to acquire the Company through the Offer and the Proposed Merger was
a proper purpose for which to request stockholder information; and that the
public interest is served by granting Mr. Holt's request for stockholder
information.
Antitrust. The required waiting period under the HSR Act was terminated by
the FTC and the Antitrust Division on October 20, 1994.
8. MISCELLANEOUS. CECI and the Purchaser have filed with the Commission an
amendment to the Schedule 14D-1 pursuant to Rule 14d-3 promulgated under the
Exchange Act and are furnishing certain supplemental information with respect
to the Offer. CECI and the Purchaser may file additional amendments to the
Schedule 14D-1. The Tender Offer Statement on Schedule 14D-1 and any and all
amendments thereto, including exhibits, may be examined and copies may be
obtained from the Commission in the same manner as described in Section 8 of
the Offer to Purchase with respect to information concerning the Company
(except that the amendments will not be available at the regional offices of
the Commission).
Except as modified by this Supplement, the terms and conditions set forth
in the Offer to Purchase remain applicable in all respects to the Offer and
this Supplement should be read in conjunction with the Offer to Purchase and
the Letters of Transmittal.
13
<PAGE>
<PAGE>
Facsimile copies of either of the Letters 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
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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>
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 Supplement,
the Offer to Purchase, the Letters 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>
STOCKHOLDERS WISHING TO TENDER THEIR SHARES MAY USE EITHER THIS LETTER OF
TRANSMITTAL OR THE BLUE LETTER OF TRANSMITTAL THAT WAS PROVIDED WITH THE
OFFER TO PURCHASE. STOCKHOLDERS WHO HAVE PREVIOUSLY VALIDLY TENDERED (AND NOT
WITHDRAWN) SHARES USING THE BLUE LETTER OF TRANSMITTAL NEED NOT TAKE ANY
FURTHER ACTION IN ORDER TO TENDER SUCH SHARES.
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MAGMA POWER COMPANY
AT
$38.50 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE
DATED OCTOBER 6, 1994
AND THE SUPPLEMENT THERETO
DATED OCTOBER 26, 1994
BY
CE ACQUISITION COMPANY, INC.
A WHOLLY OWNED SUBSIDIARY OF
CALIFORNIA ENERGY COMPANY, INC.
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS HAVE BEEN
EXTENDED AND WILL NOW EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, NOVEMBER 4, 1994, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
Telephone Number:
(212) 858-2103
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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 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.
<PAGE>
<PAGE>
This revised GREEN Letter of Transmittal or the previously circulated BLUE
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"),
Midwest Securities Trust Company ("MSTC") or 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"), and Section 2 of the
Supplement thereto, dated October 26, 1994 (the "Supplement"), of CE
Acquisition Company, Inc., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of California Energy Company, Inc., a Delaware
corporation ("CECI").
If the Purchaser declares that the Merger Agreement Condition (as defined
below) is satisfied, the Purchaser will not require delivery of Rights (as
defined below). 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 and the
Supplement) 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
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>
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DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Share Certificate(s) Tendered (Attach additional signed list
Holder(s) (Please fill in, if blank) if necessary)
- ---------------------------------------- -------------------------------------------------------------
Total Number of
Shares Represented
Share Certificate by Share Number of Shares
Number(s)* Certificate(s)* Tendered**
- ---------------------------------------- ----------------- ------------------- ---------------------
- ---------------------------------------- ----------------- ------------------- ---------------------
- ---------------------------------------- ----------------- ------------------- ---------------------
- ---------------------------------------- ----------------- ------------------- ---------------------
- ---------------------------------------- ----------------- ------------------- ---------------------
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>
<S> <C> <C> <C>
DESCRIPTION OF RIGHTS TENDERED
- ---------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Rights Certificate(s) Tendered (Attach additional signed list
Holder(s) (Please fill in, if blank) if necessary)*
- ---------------------------------------- ---------------------------------------------------------------
Total Number of
Rights Rights Represented
Certificate by Rights Number of Rights
Number(s)** Certificate(s)** Tendered***
- ---------------------------------------- ----------------- -------------------- ----------------------
- ---------------------------------------- ----------------- -------------------- ----------------------
- ---------------------------------------- ----------------- -------------------- ----------------------
- ---------------------------------------- ----------------- -------------------- ----------------------
- ---------------------------------------- ----------------- -------------------- ----------------------
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 (as defined below)) is satisfied) the associated Preferred
Stock Purchase Rights (the "Rights") issued on October 14, 1994 pursuant to
the Rights Agreement, dated as of October 6, 1994, between the Company and
Chemical Trust Company of California, as Rights Agent (the "Rights
Agreement"), at a price of $38.50 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"), as amended and supplemented by the Supplement to the
Offer to Purchase, dated October 26, 1994 (the "Supplement") (receipt of
which is hereby acknowledged) and in this revised GREEN Letter of Transmittal
(which, together with the Supplement, the Offer to Purchase and the original
BLUE Letter of Transmittal, 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 and in the Supplement) 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
<PAGE>
<PAGE>
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 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
Merger Agreement 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 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
<PAGE>
<PAGE>
legal and personal representatives of the undersigned. Except as stated in
the Offer to Purchase, the Supplement and the Letters of Transmittal, this
tender is irrevocable. 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 Rights 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 and in the Supplement. 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.
<PAGE>
<PAGE>
TENDERING STOCKHOLDERS MAY CONTINUE TO USE THE ORIGINAL BLUE LETTER OF
TRANSMITTAL AND GREY NOTICE OF GUARANTEED DELIVERY THAT WERE PROVIDED WITH
THE OFFER TO PURCHASE. Although such BLUE Letter of Transmittal indicates
that the Offer will expire at 12:00 midnight, New York City time, on
Thursday, November 3, 1994, stockholders will be able to tender (or withdraw)
their Shares and Rights pursuant to the Offer until 12:00 midnight, New York
City time, on Friday, November 4, 1994 (or such later date to which the Offer
may be extended). TENDERING STOCKHOLDERS MAY ALSO USE THIS REVISED GREEN
LETTER OF TRANSMITTAL AND THE GOLD NOTICE OF GUARANTEED DELIVERY PROVIDED
WITH THE SUPPLEMENT.
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 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.
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).
<PAGE>
<PAGE>
(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 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 Supplement, the Offer to
Purchase, and the revised GREEN Letter of Transmittal may be obtained from
either the Information Agent or the Dealer Manager at their respective
address 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.
<PAGE>
<PAGE>
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. 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.
<PAGE>
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 10)
<TABLE>
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<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 Supplement, the revised GREEN 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.
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"), as amended and supplemented by Section 2 of the
Supplement of the Offer to Purchase, dated October 26, 1994 (the
"Supplement"), this revised GOLD 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") issued on October 14, 1994 pursuant to
the Rights Agreement, dated as of October 6, 1994, between the Company and
Chemical Trust Company of California, as Rights Agent (the "Rights
Agreement"), are not immediately available (including, if a Distribution Date
(as defined in the Offer to Purchase and in the Supplement) 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>
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<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. Tendering stockholders may continue to use the original GREY Notice
of Guaranteed Delivery that was provided with the Offer to Purchase.
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, dated October 6, 1994 (the "Offer to Purchase"), as
amended and supplemented by the Supplement thereto, dated October 26, 1994
(the "Supplement"), and in the related Letters 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:
[ ] The Depository Trust Company Area Code and Telephone Number(s):
[ ] 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>
Name of Firm:
- ---------------------------------- --------------------------------
Authorized Signature
Address: Name:
- ---------------------------------- --------------------------------
- ---------------------------------- Please type or print
Zip Code Date:
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.
<PAGE>
GLEACHER & CO. INC.
660 MADISON AVENUE
NEW YORK, NEW YORK 10021
(212) 418-4206
SUPPLEMENT TO OFFER TO PURCHASE DATED OCTOBER 6, 1994
CE ACQUISITION COMPANY, INC.
A WHOLLY OWNED SUBSIDIARY OF
CALIFORNIA ENERGY COMPANY, INC.
HAS AMENDED ITS OFFER TO PURCHASE TO INCREASE THE PRICE FOR
12,400,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MAGMA POWER COMPANY
TO
$38.50 NET PER SHARE
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS HAVE BEEN
EXTENDED AND WILL NOW EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, NOVEMBER 4, 1994, UNLESS THE OFFER IS EXTENDED.
October 26, 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")
issued on October 14, 1994 pursuant to the Rights Agreement, dated as of
October 6, 1994, between the Company and Chemical Trust Company of
California, as Rights Agent (the "Rights Agreement"), at $38.50 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"), as amended and
supplemented by the Supplement thereto, dated October 26, 1994 (the
"Supplement"), and in the revised GREEN Letter of Transmittal (which,
together with the original BLUE Letter of Transmittal, constitute the
"Offer") enclosed herewith.
If the Purchaser declares that the Merger Agreement Condition (as defined
in the Offer to Purchase and in the Supplement) 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
and in the Supplement) 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
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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
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 (AS DEFINED IN THE OFFER TO PURCHASE) 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 Supplement, dated October 26, 1994;
2. The revised GREEN Letter of Transmittal for your use and for the
information of your clients. Facsimile copies of either Letter of
Transmittal may be used to tender Shares (and associated Rights);
3. A revised GOLD 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 revised form of the 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
HAVE BEEN EXTENDED AND WILL NOW EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, NOVEMBER 4, 1994, UNLESS THE OFFER IS EXTENDED.
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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 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 Letters
of Transmittal, the Offer to Purchase, and the Supplement.
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 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
numbers set forth on the back cover of the Offer to Purchase and of the
Supplement. Requests for additional copies of the Supplement, the Offer to
Purchase, the Letters 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.
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SUPPLEMENT TO OFFER TO PURCHASE DATED OCTOBER 6, 1994
CE ACQUISITION COMPANY, INC.
A WHOLLY OWNED SUBSIDIARY OF
CALIFORNIA ENERGY COMPANY, INC.
HAS AMENDED ITS OFFER TO PURCHASE TO INCREASE THE PRICE FOR
12,400,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MAGMA POWER COMPANY
TO
$38.50 NET PER SHARE
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS HAVE BEEN
EXTENDED AND WILL NOW EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, NOVEMBER 4, 1994, UNLESS THE OFFER IS EXTENDED.
October 26, 1994
To Our Clients:
Enclosed for your consideration are the Supplement, dated October 26, 1994
(the "Supplement"), to the Offer to Purchase, dated October 6, 1994 (the
"Offer to Purchase"), and the revised GREEN Letter of Transmittal (which
documents, together with the original BLUE Letter of Transmittal, 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") issued on October 14, 1994 pursuant to the Rights
Agreement, dated as of October 6, 1994, between the Company and Chemical
Trust Company of California, as Rights Agent (the "Rights Agreement") at
$38.50 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 and in the Supplement) 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
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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 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 and below. 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 an increased price of $38.50 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.
2. The Offer, the proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Friday, November 4, 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 (AS DEFINED IN THE OFFER TO PURCHASE)
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.
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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.
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.
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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
Supplement, dated October 26, 1994 (the "Supplement"), to the Offer to
Purchase, dated October 6, 1994 (the "Offer to Purchase"), and the related
revised GREEN Letter of Transmittal (which, together with the original BLUE
Letter of Transmittal, constitute the "Offer") relating to the 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, and the associated
Preferred Share Purchase Rights (the "Rights") issued on October 14, 1994
pursuant to the Rights Agreement, dated as of October 6, 1994, between the
Company and Chemical Trust Company of California, as Rights Agent, (the
"Rights Agreement") at $38.50 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, the Supplement and in the
Letters 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
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Signature
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Print Name(s)
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- -----------------------------------------------------------------------------
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Print Address
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Area Code and Telephone Number
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Tax Identification or Social Security Number
- ---------------
* UNLESS AND UNTIL THE PURCHASER DECLARES THAT THE MERGER AGREEMENT
CONDITION (AS DEFINED IN THE OFFER TO PURCHASE AND IN THE SUPPLEMENT) 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 and Section 2 of the
Supplement. Unless otherwise indicated, it will be assumed that all
Shares and Rights held by us for your account are to be tendered.
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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>
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(1) List first and circle the name of the legal trust, estate, or pension
trust.
(2) List first and circle the name of the person whose number you furnish.
(3) Circle the minor's name and furnish the minor's social security number.
(4) Circle the ward's, minor's, or incompetent person's name and furnish such
person's social security number.
(5) Show the name of the owner.
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.
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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).
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.
<PAGE>
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 (b)(1)
Credit Suisse
Tower 49
12 East 49th Street
New York, New York
October 25, 1994
Mr. John G. Sylvia
Senior Vice President and
Chief Financial Officer
California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68155
Dear Mr. Sylvia:
You have advised Credit Suisse (the "Bank") that CE Acquisition
Company, Inc., a newly formed Delaware corporation ("Newco") and a subsidiary
of California Energy Company, Inc. ("CECI"), has offered to acquire through a
tender offer (the "Tender Offer") 51% of the outstanding shares of common stock
of Magma Power Company, a Nevada corporation ("Magma") and will enter into a
merger with Magma (the "Merger").
Pursuant to your request, we are pleased to inform you that we
hereby commit (i) to underwrite the financing of the Tender Offer in the
principal amount of up to $250,000,000 (the "Tender Facility") and (ii) to
underwrite the financing of the Merger in the principal amount of up to
$500,000,000 (the "Merger Facility"), in each case on the terms and conditions
described in the attached term sheets (the "Term Sheets"). This commitment is
subject to (i) the preparation, execution and delivery of mutually acceptable
loan and security documentation incorporating substantially the terms and
conditions outlined in the Term Sheets, (ii) the absence of a material adverse
change in the financial condition or operations of CECI or Magma and (iii) the
Bank's satisfaction with its due diligence with respect to CECI and Magma.
<PAGE>
It is understood that, as provided in the Term Sheets, the Bank
will act as Agent for the Tender Facility and the Merger Facility, with the
right to syndicate the Tender Facility and Merger Facility to additional
lending institutions.
CECI and Newco acknowledge their joint and several obligation
to pay fees and expenses as described in the Term Sheets and as otherwise
agreed to by the Bank, Newco and CECI.
CECI and Newco each jointly and severally hereby agrees to
indemnify and hold harmless the Bank and each other lending institution that
may participate in the Tender Facility or the Merger Facility, their respective
affiliates and each of their respective directors, officers, employees, agents
and advisors (each, an "Indemnified Party"), from and against any and all
claims, damages, liabilities (including for securities liabilities), losses and
expenses, including without limitation, fees, expenses and disbursements of
counsel, which may be incurred by or asserted against an Indemnified Party in
connection with the Bank's commitment or participation in the transactions
contemplated hereby, this letter, the Tender Facility, the Merger Facility, the
Tender Offer, the Merger or any related matter or any investigation, litigation
or proceeding in connection therewith and whether or not the Tender Offer, the
Merger or the financing herein contemplated is consummated, except to the
extent such claim, damage, loss, liability or expenses is found in a final non-
appealable judgment by a court of competent jurisdiction to have resulted from
such Indemnified Party's own gross negligence or willful misconduct.
In further consideration of the commitment of the Bank
hereunder, and recognizing that in connection herewith the Bank is incurring
out-of-pocket costs and expenses, CECI and Newco each jointly and severally
agrees to reimburse the Bank for all out-of-pocket costs and expenses
(including fees and disbursements of outside counsel for the Bank), incurred or
sustained by the Bank in connection with the transactions contemplated hereby
whether or not such transactions occur and whether incurred before or after the
execution by CECI and Newco of this letter.
Please evidence your acceptance of the Term Sheets and the
other matters referred to herein by signing in the space provided below and
returning a copy of this letter to us on or before October 25, 1994, the date
on which the
<PAGE>
Bank's commitment set forth above (if not accepted prior thereto) will expire.
Very truly yours,
CREDIT SUISSE
By: /s/ Scott E. Zoellner
Name: Scott E. Zoellner
Title: Associate
By: /s/ Peter R. Nardin
Name: Peter R. Nardin
Title: Member of Senior
Management
Accepted this 25th day
of October, 1994
CALIFORNIA ENERGY COMPANY, INC.
By: /s/ John G. Sylvia
Name: John G. Sylvia
Title: Senior Vice President and
Chief Financial Officer
By: /s/ John G. Sylvia
Name: John G. Sylvia
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
CONFIDENTIAL
California Energy Company
SUMMARY OF TERMS AND CONDITIONS
UP TO $250,000,000 TENDER OFFER FACILITY
<TABLE>
<S> <C>
Borrower: California Energy Company on a non-recourse basis in form satisfactory to the Agent.
Agent/Arranger/
Underwriter: Credit Suisse
Lenders: The Agent and any other financial institutions to which the facility may be syndicated by
the Agent.
Facility: Up to a $250,000,000 12-month tender offer facility (the "Facility") subject to
Regulation U and renewable/extendable for a term of up to three-years from initial
funding at the mutual consent of both the Borrower and Lenders.
Use of Proceeds: The Borrower proposes to capitalize CE Acquisition Company, Inc., a wholly-owned
subsidiary ("Newco"), for the purpose of tendering for 51% of the stock of Magma
Power Company (the "Target"). A condition of the tender will be the execution and
delivery of a definitive merger agreement between Newco and the Target (the "Merger
Agreement Condition"), although that condition may be waived by the Borrower as
contemplated in the Offer to Purchase of the Borrower and Newco dated October 6,
1994, as it may be amended, (the "Offer to Purchase") under the caption "The Merger
Agreement Condition." No material amendment to the Offer to Purchase shall be
effective for purposes of this term sheet without the prior written consent of the Bank.
If the Merger Agreement Condition is not waived, the form of the merger agreement
shall be satisfactory to the Agent. Funds provided by the Facility will be advanced by
the Borrower to Newco to purchase a secured note of Newco (the "Newco Secured
Tender Note"). The proceeds from the sale of the Newco Secured Tender Note will be
used, together with the Borrower's capital investment in Newco and other available
moneys which will be in an amount and form satisfactory to the Agent, to purchase the
tendered stock of the Target, and to pay related fees and costs of the transaction. The
economic terms of the Newco Secured Tender Note will mirror the terms of the Facility.
Borrowing Options: Adjusted LIBOR and Base Rate.
<PAGE>
"Adjusted LIBOR" means the average (rounded upward to the next higher 1/16 of 1%)
of the rates offered to the reference Lenders in the London interbank market for deposits
in an amount and maturity corresponding to the interest period for the advance. LIBOR
will be adjusted for reserves and other regulatory requirements, as appropriate.
"Base Rate" means the higher of the Agent's prime rate or the federal funds rate +
0.50% per annum.
Applicable
Interest Margins: LIBOR + 2.50%
Base Rate + 1.25%
Computation of
Interest: Interest on Base Rate loan segments will be payable quarterly in arrears and calculated
on the basis of the actual number of days elapsed over a 365/366 day year.
Interest on LIBOR loan segments will be payable in arrears (i) at the end of each
applicable interest period and (ii) in the case of any interest period longer than three
months, every three months during such period. Interest on LIBOR loan segments will
be calculated on the basis of the actual number of days elapsed over a 360 day year.
Default Rate: All applicable margins will be increased by 2.00% per annum and all loan segments shall
be maintained as Base Rate loan segments effective in the case of LIBOR loan segments
at the end of each then existing period.
Scheduled
Amortization: The Facility will not be subject to a scheduled amortization prior to its maturity.
Mandatory
Prepayments: Subject to mandatory prepayment as a whole in connection with (i) any sale of any of the
ownership interest of the Target by Newco; (ii) a permanent injunction of the merger
between Newco and the Target; and (iii) the closing of the merger between Newco and
the Target. Subject to mandatory prepayment in part in an amount equal to the proceeds
of any dividends, loans, advances or other distributions from Target to Newco or from
Newco to Borrower.
Optional
Prepayments: Optional prepayments will be permitted at any time in excess of a threshold amount
without premium or penalty other than payment of applicable "breakage" costs on LIBOR
loan segments. Required notice to the Agent will be (i) one Business Day prior to the
date of prepayment of any Base Rate loan segment and (ii) three Business Days prior to
the date of prepayment of any LIBOR loan segment.
<PAGE>
Application of
Prepayments: All principal reductions shall be permanent. Prepayments will be applied first to Base
Rate loan segments and then to LIBOR loan segments. The prepayment of LIBOR loan
segments will be subject to the payment of "breakage" costs if the date of prepayment
is not the last day of an interest period unless, at the option of the Borrower, the
prepayment amount is escrowed with the Agent and invested in United States Treasury
Securities to the last day of the applicable interest period.
Security: The Facility will be secured by an assignment and a pledge of the Newco Secured Tender
Note, including the Target stock pledged as security thereunder in form satisfactory to
Agent. Payments on the collateral will be paid directly to the Agent, as collateral agent
for the Lenders. The Borrower will provide for the payment of interest on the Facility
in a manner satisfactory to the Agent. The Facility will be non-recourse to the Borrower,
and the Lenders will agree to make an appropriate election under Section 1111(b) of the
Bankruptcy Code to continue such non-recourse status in any proceeding involving
Borrower as Debtor under the Bankruptcy Code.
Representations and
Warranties at
Closing: Those customarily found in credit facilities of this nature and any additional appropriate
to this transaction with respect to the Borrower and, as applicable, its subsidiaries
including, without limitation, the following:
1. Corporate organization, existence and power.
2. Corporate and government authorization, no contravention, legality, validity,
binding effect and enforceability of all documentation related to this transaction.
3. The financial information of the Borrower, Newco and their material subsidiaries
(to the best knowledge of Borrower based upon information available to it in the
case of Target and its subsidiaries).
4. No material adverse change in the Borrower, Newco and their material subsidiaries
(to the best knowledge of Borrower based upon information available to it in the
case of Target and its subsidiaries).
5. No material litigation (other than litigation to which Target is a party and which
is described in the Target's Form 10-K for the year ended December 31, 1993 and
as described in Section 15 of the Offer to Purchase (the "Magma Litigation")).
6. Absence of default(s) or Event of Default(s).
<PAGE>
7. Compliance with ERISA (to the best knowledge of Borrower based upon
information available to it in the case of Target and its subsidiaries).
8. Regulatory approvals, consents, filings and compliance with laws.
9. Existence, incorporation etc. of subsidiaries.
10. Environmental compliance.
11. Not an investment company.
12. Full disclosure.
13. Payment of taxes.
14. Adequate insurance.
Conditions Precedent
to Closing: Those customarily found in credit facilities of this nature and any additional appropriate
to this transaction with respect to the Borrower and, as applicable, its subsidiaries
including, without limitation, a capital investment in Newco in an amount and form
satisfactory to the Agent, provision for an adequate level of working capital, provisions
effective at the Merger, to insure Alto Peak and Malitbog equity commitments and
ownership interest in Alto Peak and Malitbog satisfactory to Agent, no waiver of Tender
Offer Conditions that are deemed material by Agent (other than the Merger Agreement
Condition as contemplated by the Offer to Purchase) without the prior written consent of
the Bank, receipt of appropriate certificates and legal opinions, accuracy of
representations and warranties, absence of defaults and material litigation (excluding the
Magma Litigation), evidence of authority, receipt of required governmental approvals,
consents and filings of all persons, compliance with laws (including without limitation,
environmental, labor and ERISA), absence of material adverse change in the Borrower,
Newco, the Target and their respective subsidiaries, satisfactory due diligence by the
Agent customary with tender offer facilities and payment of fees.
Covenants: Those customarily found in a credit facility of this nature and any additional appropriate
to this transaction with respect to the Borrower and, as applicable, its subsidiaries
including, without limitation, covenants regarding compliance with laws (including
ERISA), payment of taxes, maintenance of insurance, preservation of corporate existence,
visitation rights, keeping of books, maintenance of properties, use of proceeds, margin
stock, transactions with affiliates, notice of defaults, delivery of unaudited (quarterly) and
audited (annual) financial statements of the Borrower, Newco and its significant
subsidiaries, monthly delivery of an officer's certificate, in form and substance
reasonably satisfactory to the Agent, certifying the absence of (i) a material adverse
<PAGE>
change in the financial condition or operations of the Borrower and its subsidiaries, taken
as a whole, or (ii) a material adverse change in the financial condition or operations of
Newco and its subsidiaries, taken as a whole (and, in either case, which could reasonably
be expected to materially impact the ability of the Borrower to service the Facility or the
ability of the Agent on behalf of the Lenders to realize upon the collateral securing the
Facility), and other customary financial reporting requirements as any Lender may
reasonably requests; and without limitation, the following restrictions and limitations
(subject to such baskets and exceptions as the parties may agree):
1. Negative pledge of all stock and unencumbered assets of Newco and its
subsidiaries.
2. Limitation on guaranties by Newco and Borrower.
3. Limitation on mergers and sales of assets.
4. Limitation on investment in other persons.
5. Prohibition on restricted payments.
6. Maintenance of ownership of Newco and all subsidiaries.
7. Prohibition on incurrence of additional debt at Newco and its subsidiaries.
8. Limitation on dividends from Newco to Borrower unless the proceeds are used to
pay down the Facility in amounts to be agreed upon.
9. Limitation on the up-streaming of any assets or funds from Newco and its
subsidiaries to the Borrower unless the proceeds are used to pay down the Facility
in amounts to be agreed upon.
10. Restrictions on change in nature of business, except as contemplated by the Merger.
Appropriate language modifications will be made to cover situations where Borrower is
unable to control the Target; provided that in all events the Lenders shall receive the
protections intended to be received from these covenants.
Financial Covenants: Those customarily found in a Regulation U credit facility of similar nature or as may be
appropriate for this transaction.
Events of Default: Those customarily found in credit facilities of this nature and any additional appropriate
to this transaction with respect to the Borrower and, as applicable, its subsidiaries
including, without limitation, permanent injunction of the merger contemplated by the
<PAGE>
Merger Agreement Condition; breach of representation or warranty in any material
respect; default in any covenant or financial covenant; material cross default; bankruptcy;
insolvency; change of control (except under circumstances mutually satisfactory to the
parties); certain ERISA defaults; the failure to pay one or more final judgments
aggregating more than a specified threshold to be mutually agreed; failure to make a
payment in connection with the Facility when due; and pledge agreement shall cease to
be in full force and effect or the Borrower shall so assert.
Cost and Yield
Protection: Standard provisions for illegality, inability to determine rate, indemnification for
breakage of LIBOR funding and increased costs or reduced return, including those arising
from reserve requirements, taxes and capital requirements; provided that increased costs
may be applied retroactively for a maximum of 90 days preceding written notice to the
Borrower and will not be more, in the case of any participant, than the applicable
fronting Lender would have been entitled to claim.
Assignments and
Participations: Lenders will have a right (i) to sell assignments in amounts of at least $5 million with the
consent of the Borrower and the Agent, which consent shall not be unreasonably
withheld, provided that the consent of the Borrower will not be required for assignments
among Lenders or by a Lender to any of its affiliates or to the Federal Reserve Bank, and
(ii) to sell participations in all or a part of their loans or commitments with the
transferability of voting rights limited to principal, rate, fees and term. The Borrower
shall not be responsible for the costs and expenses of syndication of the Facility except
as provided under "Expenses" below.
Waivers
and Amendments: With the exception of decreases in interest rates or fees, increases in commitment
amounts, extension of maturities and times for payment, changes in funding and yield
protections and indemnities, changes in sharing provisions among Lenders, changes in
several nature of the obligations of the Lenders, changes in the percentage of the Lenders
necessary to act, assignment by the Borrower of rights or obligations under any of the
documentation for the Facility and release of the pledged collateral (which shall require
consent of all the Lenders), amendments to and waivers of provisions of the loan
documents shall be made or given by Lenders holding a majority of commitments under
the Facility.
Increased Costs/
Changed
Circumstances: The Agreement will contain customary provisions protecting the Lenders in the event of
unavailability of funding, illegality, capital adequacy requirements, increased costs, and
funding losses and shall provide for all payments to be made free and clear of taxes.
<PAGE>
Indemnification: The Borrower will indemnify the Agent and the Lenders against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements relating to the transactions and the enforcement of the Agent's and/or
Lenders' rights and remedies with respect to the loan documents, or the Borrower's use
of loan proceeds or the commitments, in each case including but not limited to attorneys'
fees and settlement costs whether or not the transaction contemplated herein is
consummated.
Expenses: The Borrower will pay all legal and other out-of-pocket expenses of the Agent related to
this transaction pursuant to a schedule to be agreed to by the parties and any subsequent
amendments or waivers; provided, however, that the Borrower shall not be liable for any
such expenses incurred in connection with the syndication of the Facility except for any
such expenses in connection with the syndication by the Agent of the Facility to any
entity that becomes a lender on the closing of the Facility or within 90 days thereafter.
Governing Law: The State of New York.
<PAGE>
CONFIDENTIAL
California Energy Company
SUMMARY OF TERMS AND CONDITIONS
UP TO $500,000,000 IN MERGER FACILITIES
Borrower: California Energy Company on a non-recourse basis in form satisfactory to the Agent
Agent/Arranger/
Underwriter: Credit Suisse
Lenders: The Agent and any other financial institutions to be arranged by the Agent.
Facilities: Up to $500,000,000 in credit facilities (the "Facilities") composed of:
(i) Up to a 6-year amortizing term loan ("Term Loan A") in an expected amount of
up to $500,000,000 less the amount of the Term Loan B and
(ii) Up to an 8-year amortizing term loan ("Term Loan B") in an expected amount not
to be less than $150,000,000.
Use of Proceeds: The Borrower proposes to capitalize CE Acquisition Company, Inc., a wholly-owned
subsidiary ("Newco", which term shall also include the surviving corporation in the
Merger (as defined below)), for the purpose of tendering for 51% of the stock of Magma
Power Company (the "Target") and entering into a merger with the Target (the
"Merger"). Funds provided by the Facilities will be advanced by the Borrower to Newco
to purchase a secured term note of Newco (the "Newco Secured Term Note"). The
proceeds from the sale of the Newco Secured Term Note will be used, together with the
Borrower's capital investment in Newco, which will be in an amount and form
satisfactory to the Agent, adequate provision of working capital and other available
moneys, to fund the merger consideration payable in connection with the Merger, to
refinance the Borrower's Tender Offer Facility by repaying its earlier advance to Newco
to purchase the tendered stock of the Target evidenced by the Newco Secured Tender
Note, to repay or acquire certain existing debt of the Target and to pay related fees and
costs of the transaction. The economic terms of the Newco Secured Term Note will
mirror the terms of the Facilities. Upon consummation of the Merger, the Target shall
expressly assume the obligations of Newco under the Newco Secured Term Note.
<PAGE>
Borrowing Options: Adjusted LIBOR and Base Rate.
"Adjusted LIBOR" means the average (rounded upward to the next higher 1/16 of 1%)
of the rates offered to the reference Lenders in the London interbank market for deposits
in an amount and maturity corresponding to the interest period for the advance. LIBOR
will be adjusted for reserves and other regulatory requirements, as appropriate.
"Base Rate" means the higher of the Agent's prime rate or the federal funds rate +
0.50% per annum.
Applicable
Interest Margins: Term Loan A: LIBOR + 2.50%
Base Rate + 1.50%
Term Loan B: LIBOR + 3.00%
Base Rate + 2.00%
Computation of
Interest: Interest on Base Rate loan segments will be payable quarterly in arrears and calculated
on the basis of the actual number of days elapsed over a 365/366 day year.
Interest on LIBOR loan segments will be payable in arrears (i) at the end of each
applicable interest period and (ii) in the case of any interest period longer than three
months, every three months during such period. Interest on LIBOR loan segments will
be calculated on the basis of the actual number of days elapsed over a 360 day year.
Default Rate: All applicable margins will be increased by 2.00% per annum and all loan segments shall
be maintained as Base Rate loan segments effective in the case of LIBOR loan segments
at the end of each then existing period.
Total annual amortization in accordance with the following table, with payments to be
made semi-annually (the amount and timing of actual semi-annual payments to be
determined after review of cash flows):
<PAGE>
Term Loan A Term Loan B
Scheduled Annual Annual
Amortization: Year Amortization Year Amortization
1 $20,000,000 1 $0
2 $30,000,000 2 $0
3 $50,000,000 3 $0
4 $75,000,000 4 $0
5 $80,000,000 5 $0
6 $95,000,000 6 $0
------------
7 $75,000,000
Total $350,000,000 8 $75,000,000
------------
Total $150,000,000
Mandatory
Prepayments: From the excess cash flow and capital transactions of Newco, including without limitation
cash proceeds of asset sales and refinancing, on terms to be mutually agreed. Also from
any other monies received from Newco other than through the Newco Secured Term
Note except as mutually agreed to by the parties.
Optional
Prepayments: Optional prepayments will be permitted at any time in excess of a threshold amount
without premium or penalty other than payment of applicable "breakage" costs on LIBOR
loan segments. Required notice to the Agent will be (i) one Business Day prior to the
date of prepayment of any Base Rate loan segment and (ii) three Business Days prior to
the date of prepayment of any LIBOR loan segment.
Application of
Prepayments: Mandatory prepayments will be applied pro rata to each remaining mandatory
amortization payment under the Facilities. All principal reductions shall be permanent.
Prepayments will be applied first to Base Rate loan segments and then to LIBOR loan
segments. The prepayment of LIBOR loan segments will be subject to the payment of
"breakage" costs if the date of prepayment is not the last day of an interest period unless,
at the option of the Borrower, the prepayment amount is escrowed with the Agent and
invested in United States Treasury Securities to the last day of the applicable interest
period. Optional prepayments will be applied in a manner to be agreed.
Security: The Facilities will be secured by an assignment and pledge of the stock of Target and all
other unencumbered assets of Target and its subsidiaries securing the Newco Secured
Term Note. The Facilities will be non-recourse to the Borrower and the Lenders will
<PAGE>
agree to make an appropriate election under Section 1111(b) of the Bankruptcy Code to
continue such non-recourse status in any proceeding involving the Borrower as Debtor
under the Bankruptcy Code.
Representations and
Warranties: Those customarily found in credit facilities of this nature and any additional appropriate
to this transaction with respect to the Borrower and, as applicable, its subsidiaries
including, without limitation, the following:
1. Corporate organization, existence and power including the merger of Newco and
the Target and all related transactions.
2. Corporate and government authorization, no contravention, legality, validity,
binding effect and enforceability of all documentation related to this transaction.
3. The financial information of the Borrower, Newco and their material subsidiaries.
4. No material adverse change in the Borrower, Newco and their material subsidiaries.
5. No material litigation (other than litigation to which the Target is a party and which
is described in the Target's Form 10-K for the year ended December 31, 1993 and
as described in the Offer to Purchase (the "Offer to Purchase") of the Borrower
and Newco dated October 6, 1994, as it may be amended (the "Magma
Litigation")). No material amendments to the Offer to Purchase shall be effective
for purposes of this term sheet without the prior written consent of the Bank.
6. Absence of default(s) or Event of Default(s).
7. Compliance with ERISA.
8. Regulatory approvals, consents, filings and compliance with laws.
9. Existence, incorporation etc. of subsidiaries.
10. Environmental compliance.
11. Not an investment company.
12. Full disclosure.
13. Payment of taxes.
<PAGE>
14. Adequate insurance.
Conditions Precedent
to Closing: Those customarily found in credit facilities of this nature and any additional appropriate
to this transaction with respect to the Borrower and, as applicable, its subsidiaries
including, without limitation, a capital investment in Newco in an amount and form
satisfactory to the Agent, provision for an adequate level of working capital, provisions
to insure Alto Peak and Malitbog equity commitments and ownership interest in Alto
Peak and Malitbog satisfactory to the Agent, receipt of appropriate certificates and legal
opinions, accuracy of representations and warranties, absence of defaults and material
litigation (excluding the Magma Litigation), evidence of authority, receipt of required
governmental approvals, consents and filings of all persons, consummation of the merger
pursuant to a definitive merger agreement between Newco and the Target satisfactory to
Agent, compliance with laws (including without limitation, environmental, labor and
ERISA), absence of material adverse change in the Borrower, Newco, the Target and
their respective subsidiaries (in each case, taken as a whole), satisfactory due diligence
by the Agent and payment of fees.
Covenants: Those customarily found in credit facilities of this nature and any additional appropriate
to this transaction with respect to the Borrower and its subsidiaries, as applicable,
including, without limitation, covenants regarding compliance with laws (including
ERISA), payment of taxes, maintenance of insurance, preservation of corporate existence,
visitation rights, keeping of books, maintenance of properties, use of proceeds, margin
stock, transactions with affiliates, notice of defaults, delivery of the unaudited (quarterly)
and audited (annual) financial statements of the Borrower, Newco and its significant
subsidiaries, quarterly delivery with financial statements of an officer's certificate, in
form and substance reasonably satisfactory to the Agent, certifying the absence of (i) a
material adverse change in the financial condition or operations of the Borrower and its
subsidiaries, taken as a whole, or (ii) a material adverse change in the financial condition
or operations of Newco and its subsidiaries, taken as a whole (and, in either case, which
could reasonably be expected to materially impact the ability of Borrower to service the
Facilities or the ability of the Agent on behalf of the Lenders to realize upon the
collateral securing the Facilities), and other customary financial reporting requirements
as any Lender may reasonably request; and without limitation, the following restrictions
and limitations (subject to such baskets and exceptions as the parties may agree):
1. Negative pledge of all stock and unencumbered assets of Newco and its
subsidiaries.
2. Limitation on guaranties by Newco and its subsidiaries.
<PAGE>
3. Limitation on mergers and sales of assets by Newco and its subsidiaries.
4. Limitation on investment in other persons by Newco and its subsidiaries.
5. Prohibition on restricted payments by Newco and its subsidiaries.
6. Maintenance of ownership of Newco and all subsidiaries.
7. Prohibition on incurrence of additional debt at Newco and its subsidiaries.
8. Limitation on dividends on Newco stock to Borrower unless proceeds used to pay
down the Facilities in amounts to be agreed upon.
9. Limitation on the up-streaming of any assets or funds from Newco and its
subsidiaries to the Borrower unless the proceeds are used to pay down the Facilities
in amounts to be agreed upon.
10. Restrictions on change in nature of business.
11. Limitation on amendments to the merger agreement.
Financial Covenants: Those customarily found in credit facilities of this nature and any additional appropriate
to this transaction with respect to Newco and, as applicable, its subsidiaries including,
without limitation, the following:
1. Minimum interest coverage ratio.
2. Maximum leverage ratio.
3. Minimum operating cash flow.
Events of Default: Those customarily found in credit facilities of this nature and any additional appropriate
to this transaction with respect to the Borrower and, as applicable, its subsidiaries
including, without limitation, breach of representation or warranty in any material
respect; default in any covenant or financial covenant; permanent injunction of the
Merger; material cross default with respect to Newco and its subsidiaries; payment
default under any other agreement to which the Borrower is a party involving
indebtedness in excess of $50,000,000, or other default under any such agreement
resulting in acceleration which is not rescinded within 30 days; bankruptcy; insolvency;
change of control (except under circumstances mutually satisfactory to the parties);
certain ERISA defaults (which in the case of the Borrower shall only include such
<PAGE>
defaults as the Agent determines to materially adversely affect the collateral for the
Facilities); the failure to pay one or more final judgments aggregating more than a
specified threshold to be mutually agreed; failure to make a payment in connection with
the Facilities when due; pledge agreement shall cease to be in full force and effect or the
Borrower shall so assert.
Cost and Yield
Protection: Standard provisions for illegality, inability to determine rate, indemnification for
breakage of LIBOR funding and increased costs or reduced return, including those arising
from reserve requirements, taxes and capital requirements; provided that increased costs
may be applied retroactively for a maximum of 90 days preceding written notice to the
Borrower and will not be more, in the case of any participant, than the applicable
fronting Lender would have been entitled to claim.
Assignments and
Participations: Lenders will have a right (i) to sell assignments in amounts of at least $5 million with the
consent of the Borrower and the Agent, which consent shall not be unreasonably
withheld, provided that the consent of the Borrower will not be required for assignments
among Lenders or by a Lender to any of its affiliates or to the Federal Reserve Bank, and
(ii) to sell participations in all or a part of their loans or commitments with the
transferability of voting rights limited to principal, rate, fees and term. The Borrower
shall not be responsible for the costs and expenses of syndication of the Facilities except
as provided under "Expenses" below.
Waivers
and Amendments: With the exception of decreases in interest rates or fees, increases in commitment
amounts, extension of maturities and times for payment, changes in funding and yield
protections and indemnities, changes in sharing provisions among Lenders, changes in
several nature of the obligations of the Lenders, changes in the percentage of the Lenders
necessary to act, assignment by the Borrower of rights or obligations under any of the
documentation for the Facilities and release of the pledged collateral (which shall require
consent of all the Lenders), amendments to and waivers of provisions of the loan
documents shall be made or given by Lenders holding a majority of commitments under
the Facilities.
Increased Costs/
Changed
Circumstances: The Agreement will contain customary provisions protecting the Lenders in the event of
unavailability of funding, illegality, capital adequacy requirements, increased costs, and
funding losses and shall provide for all payments to be made free and clear of taxes.
<PAGE>
Indemnification: The Borrower will indemnify the Agent and the Lenders against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements relating to the enforcement of the Agent's and/or Lenders' rights and
remedies with respect to the loan documents, or the Borrower's use of loan proceeds or
the commitments, in each case including but not limited to attorneys' fees and settlement
costs whether or not the transaction contemplated herein is consummated.
Expenses: The Borrower will pay all legal and other out-of-pocket expenses of the Agent related to
this transaction pursuant to a schedule to be agreed to by the parties and any subsequent
amendments or waivers; provided, however, that the Borrower shall not be liable for any
such expenses incurred in connection with the syndication of the Facilities except for any
such expenses in connection with the syndication by the Agent of the Facilities to any
entity that becomes a lender on the closing of the Facilities or within 90 days thereafter.
Governing Law: The State of New York.
</TABLE>
CONTACTS:
James Protos
MacKenzie Partners, Inc.
(212) 929-5397
or
Evan Collins
MacKenzie Partners, Inc.
(212) 929-5500
FOR IMMEDIATE RELEASE
CALIFORNIA ENERGY ANNOUNCES SCHEDULE OF MEETING FOR
THE WEEK OF OCTOBER 24
OMAHA, NE., October 24, 1994 -- California Energy Company,
Inc. (NYSE: CE; PSE and LSE) today announced its schedule of
meetings with securities analysts, shareholders and bondholders
of Magma Power Company (NASDAQ: MGMA) for the week of October 24.
The schedule is as follows:
Tuesday, October 25, 4:30 p.m. -- Boston, Massachusetts
Four Seasons Hotel
200 Boylston Street
Wendell Phillips Room
Wednesday, October 26, 4:30 p.m., New York, New York
Helmsley Palace Hotel
455 Madison Avenue
Renaissance A Room
Friday, October 28, 12:00 noon, Los Angeles, California
Sheraton Grande Hotel
333 South Figueroa Street
Conference Room Suite 310
Shareholders, bondholders and securities analysts who wish to
attend should contact James Protos (212) 929-5397 or Evan Collins
(212) 929-5500 at MacKenzie Partners, Inc. to confirm interest
and receive an invitation.
# # #
1
<PAGE>
[CE logo appears here]
CALIFORNIA ENERGY COMPANY, INC.
October 1994
2
<PAGE>
[CE logo appears here]
OBJECTIVE: SECURE YOUR APPROVAL FOR THE PROPOSED TRANSACTION
3
<PAGE>
[CE logo appears here]
FIVE REASONS TO ACCEPT THE OFFER
- - $38.50/Share Represents Fair Value (40% premium)
- - CE and Magma Combination Benefits All Shareholders
- - CE Management is Best Able to Meet Future Challenges
- - Offer Contains No Significant Contingencies
- - Magma's Share Price is Expected to Plummet if California Energy
Retracts its Offer
4
<PAGE>
[CE logo appears here]
REASONS TO ACCEPT CALIFORNIA ENERGY'S OFFER
WHAT SHOULD WE CONCLUDE FROM THE
OWNERSHIP TREND OF CE'S AND MAGMA'S LARGEST SHAREHOLDERS?
[A bar graph is presented depicting the following information.]
<TABLE>
<CAPTION>
Month/Year Ownership(a)
- ---------- ------------
<S> <C> <C>
Apr-90 Dow 39.0%
Kiewit 0.0%
Apr-91 Dow 24.0%
Kiewit 29.0%
Apr-92 Dow 24.0%
Kiewit 35.0%
Apr-93 Dow 24.0%
Kiewit 37.0%
Apr-94 Dow 5.0%
Kiewit 38.0%
Sep-93 Dow 5.0%
Kiewit 44.0%
<FN>
____________________
(a) Data from Proxy Statements and 13D Filings. Dow beneficial ownership
net of 4,000,005 shares placed in escrow under Subordinated
Exchangeable Note Offering dated April 11, 1991.
</TABLE>
5
<PAGE>
[CE logo appears here]
REASONS TO ACCEPT CALIFORNIA ENERGY'S OFFER
WHICH MANAGEMENT TEAM CAN BEST CREATE
LONG-TERM SHAREHOLDER VALUE?
<TABLE>
<CAPTION>
Magma Executive Experience Beneficial
Officers(a) Age Dow IPP Ownership
- --------------- --- --- --- ----------
<S> <C> <C> <C> <C>
Paul M. Pankratz 62 35 2 66,100
Ralph W. Boeker 60 34 1 15,000
John R. Peele 50 5 6 19,500
Wallace C. Diokmann 51 2 6 17,159
Trond Aschehoug 51 25 2 12,450
Kenneth J. Kerr 50 28 1 16,000
Average per
Executive Officer 54 22 3 24,368
CE Executive IPP Beneficial
Officers(a) Age Experience Ownership
- ------------ --- ---------- ----------
David L. Sokol 38 16 394,431
Thomas R. Mason 51 16 55,420
Steven A. McArthur 36 4 68,416
Donald O'Shei Sr. 61 8 38,545
John G. Sylvia 36 9 60,270
Average Per
Executive Officer 44 10 123,416
CE management: 10 years younger, 3X the IPP experience, and 3X the personal
stake
<FN>
____________________
(a) Statistics are based on the Magma 1994 Proxy Statement and the CE
Proxy Statement.
</TABLE>
6
<PAGE>
[CE logo appears here]
REASONS TO ACCEPT CALIFORNIA ENERGY'S OFFER
DOW AND MAGMA MANAGEMENT - NET SELLERS
[Graphic Representing Certain Sales of Magma Common Stock
by Dow and by Certain Members of Magma Management.]
<TABLE>
<CAPTION>
Magma Power
Date Share Price
-------- -----------
<S> <C>
10/21/93 $37.75
12/21/93 34.00
2/02/94 33.75
3/25/94 34.25
5/18/94 31.25
7/08/94 29.50
8/30/94 29.00
10/21/94 37.00
</TABLE>
7
<PAGE>
[CE logo appears here]
REASONS TO ACCEPT CALIFORNIA ENERGY'S OFFER
WHAT MAGMA SHAREHOLDERS MISSED
[Graphic Representing Market Price of Magma Common Stock
Relative to Market Price of California Energy's Offered
Consideration in October 1991(a)]
<TABLE>
<CAPTION>
Price Per Share
----------------------------------
1991 Proposed Magma Power
Date CE Consideration Share Price
-------- ---------------- -----------
<S> <C> <C>
10/01/91 $29 $26
3/27/92 24 22
9/18/92 26 22
3/19/93 42 39
9/10/93 37 39
3/04/94 36 31
8/31/94 35 29
<FN>
____________________
(a) Exchange Ratio = 2.0168
</TABLE>
8
<PAGE>
[CE logo appears here]
OVERVIEW
DISCUSSION TOPICS
- - Transaction Rationale
- - California Energy Offer and Magma Response
- - Profile of California Energy
- - Comparison of California Energy and Magma
- - Correcting the Misstatements and Omissions - What Magma
Didn't Tell You
- - Five Reasons to Accept the Offer
- - Questions
9
<PAGE>
[CE logo appears here]
TRANSACTION RATIONALE
10
<PAGE>
[CE logo appears here]
TRANSACTION RATIONALE
INDUSTRY TRENDS
- - International Markets Provide Most Attractive Investment Opportunities
- - IPP Industry is Highly Competitive - Critical Mass and Name
Recognition are Important
- Competition not limited to renewables
- Increased project size with more complex development and
financing process
- Enhanced access to public capital markets - "Brand Names"
- Credibility with foreign governments
- - Future Global Leaders Will Need to be "Full Service Providers"
11
<PAGE>
[CE logo appears here]
TRANSACTION RATIONALE
OVERVIEW
- - Creates One of the Largest Global IPPs
1993 SUMMARY FINANCIAL STATISTICS ($MM)
<TABLE>
<CAPTION>
CE Magma
---- -----
<S> <C> <C>
Sales $149 $167
EBITDA 102 106
PROJECT PORTFOLIO (MWs)
Operation 325 244
Construction 300 0
Development 930 [1,132](a)
<FN>
- ---------------
(a) Pursuant to October 21, 1994 Magma Press Release.
</TABLE>
12
<PAGE>
[CE logo appears here]
TRANSACTION RATIONALE
SYNERGIES
- - Critical Mass
- - Greater Access to Capital and Financial Flexibility
- - Enhanced Name Recognition
- - Broaden International Development Resources
- - Corporate/Operating Efficiencies and Cost Reductions
- - Increased Equity Base
13
<PAGE>
[CE logo appears here]
CALIFORNIA ENERGY OFFER AND MAGMA RESPONSE
14
<PAGE>
[CE logo appears here]
CALIFORNIA ENERGY OFFER AND MAGMA RESPONSE
CALIFORNIA ENERGY OFFER
- - Price
- $38.50 per share: Cash $28.50
Stock 10.00
- 40% premium
- Offer price fully values new project opportunities and expected
synergies
- - History of Discussions
- Long history of contacts over past 3 1/2 years - no progress
- $30.25 per Magma share stock transaction proposed in 1991
- - Rationale for CE Offer
- Magma unwillingness to negotiate
- Merger makes economic sense for CE and Magma shareholders
- Allows Magma shareholders to decide
15
<PAGE>
[CE logo appears here]
CALIFORNIA ENERGY OFFER AND MAGMA RESPONSE
MAGMA RESPONSE
- - Magma Has Made Numerous Efforts to Thwart CE and Deprive Shareholders
the Opportunity to Maximize Value
- Refusal to negotiate
- Stalling for time
- Implementation of Anti-Takeover impediments
<TABLE>
<CAPTION>
Date Event
__________________ _________________________________________________
<S> <C>
September 19, 1994 - CE Offers to Acquire Magma for $35 per Share
September 25, 1994 - Magma Requests that CE Delay Tender Offer
until October 4 - CE Agrees
October 3, 1994 - Magma Board Adopts Poison Pill and Golden
Parachutes
- Magma Commences Litigation Against CE
October 4, 1994 - CE Announces Cash Tender Offer to Purchase
51% of Magma for $35 per Share
October 10, 1994 - Magma Board Recommends that Shareholders
Reject CE Proposal
October 21, 1994 - CE Offers to Acquire Magma for $38.50 per
Share
</TABLE>
16
<PAGE>
[CE logo appears here]
CALIFORNIA ENERGY OFFER AND MAGMA RESPONSE
COST TO SHAREHOLDERS OF MAGMA'S RECENT ACTIONS
<TABLE>
<CAPTION>
ESTIMATED COSTS
------------------------------
MAGMA CE
------------- -----------
<S> <C> <C>
Golden Parachutes/Option Acceleration(a) $ 7,364,338
Legal/Litigation 4,000,000 $4,000,000
P.R./Advertising 250,000 250,000
Printing 250,000 250,000
Proxy Solicitation 225,000 225,000
Goldman, Sachs 5,750,016
Roadshow 25,000 25,000
Total $17,864,354 $4,750,000
Combined Total Cost $22,614,354
</TABLE>
CONCLUSION: IS THIS REALLY IN THE BEST INTERESTS OF MAGMA SHAREHOLDERS?
(a) Based on 1994 Proxy Statement.
17
<PAGE>
[CE logo appears here]
CALIFORNIA ENERGY OFFER AND MAGMA RESPONSE
<TABLE>
<CAPTION>
MAGMA CLAIM CE RESPONSE
<S> <C>
Conditional upon Financing - Binding Bank Commitment for
$500 million
"It is not David Sokol's God-given - "It is not Ralph Boeker's
right to acquire Magma" - Ralph God-given right to deny
Boeker in Dow Jones interview his shareholders maximum value
and entrench himself" - David
Sokol
High Leverage of Combined Company - Proper utilization of balance
sheet
- Leverage indicates non-
recourse project financing
success
- Combined companies have
enhanced access to new capital
in future
- Kiewit remains an important
shareholder
Too Many Other Conditions
CE Shareholder Vote - Kiewit supports transaction
(38% vote)
Merger Agreement - Poison pill necessitates
approach
Coercive: 51% Offer - Offer strategy determined by
Magma Board's refusal to
negotiate
</TABLE>
18
<PAGE>
[CE logo appears here]
PROFILE OF CALIFORNIA ENERGY
19
<PAGE>
[CE logo appears here]
PROFILE OF CALIFORNIA ENERGY
MISSION STATEMENT
"TO BE THE LEADING GLOBAL PROVIDER OF INDEPENDENTLY
DEVELOPED, OWNED AND OPERATED ELECTRICAL ENERGY
FACILITIES UTILIZING ENVIRONMENTALLY RESPONSIBLE TECHNOLOGY"
20
<PAGE>
[CE logo appears here]
PROFILE OF CALIFORNIA ENERGY
OVERVIEW
- - Clearly Defined Long-Term Strategy with a Focus and Strong Reputation:
- Operational excellence
- Recognized leader in development
- Engineering and construction control
- Financial innovation and strict adherence to internal rate of
return and risk minimization standards
- Strong management team with a proven successful track record
CALIFORNIA ENERGY WAS AWARDED THE "STRATEGIC
CONTINUITY AWARD" FOR PURSUING A SUCCESSFUL
BUSINESS STRATEGY BY INDEPENDENT ENERGY MAGAZINE
SEPTEMBER, 1994
21
<PAGE>
[CE logo appears here]
PROFILE OF CALIFORNIA ENERGY
[Two adjacent bar graphs are presented depicting
the following information.]
<TABLE>
<CAPTION>
REVENUE (millions)
- ------------------------------------------
Year 1989-1993 Growth Rate: 33%
- ---- ---------------------------
<S> <C>
1989 $48
1990 97
1991 116
1992 128
1993 149
EARNINGS (millions)(a)
Year 1989-1993 Growth Rate: 43%
1989 $10
1990 12
1991 27
1992 39
1993 43
<FN>
____________________
(a) Before extraordinary items, change in accounting principle, and
preferred dividends.
</TABLE>
22
<PAGE>
[CE logo appears here]
PROFILE OF CALIFORNIA ENERGY
EARNINGS PER SHARE(a)
[A bar graph is presented depicting the following information.]
1989-1993 Growth Rate: 27%
<TABLE>
<CAPTION>
Year Earnings Per Share
- ---- ------------------
<S> <C>
1989 $0.38
1990 0.44
1991 0.75
1992 0.92
1993 1.00
<FN>
____________________
(a) Before extraordinary items and change in accounting principle.
</TABLE>
23
<PAGE>
[CE logo appears here]
PROFILE OF CALIFORNIA ENERGY
FIRST NINE MONTHS REVENUE AND EARNINGS(a)
[Two adjacent bar graphs are presented depicting
the following information.]
<TABLE>
<CAPTION>
REVENUE
- ----------------------------
Year $ in Millions
- ---- -------------
<S> <C>
1993 $113.3
1994 139.2
EARNINGS
- ----------------------------
Year $ in Millions
- ---- -------------
1993 $34.8
1994 38.3(b)
<FN>
____________________
(a) Before extraordinary items, change in accounting principle and
preferred dividends.
(b) Before effect of Senior Discount Notes.
</TABLE>
24
<PAGE>
[CE logo appears here]
PROFILE OF CALIFORNIA ENERGY
CE HAS CONSISTENTLY OUTPERFORMED MAGMA(a)
[Three adjacent bar graphs are presented depicting
the following information.]
<TABLE>
<CAPTION>
REVENUE GROWTH
- -----------------------------
Company Revenue Growth
- ------- --------------
<S> <C>
CE 33%
Magma 28%
EARNINGS GROWTH(b)
- ------------------------------
Company Earnings Growth
- ------- ---------------
CE 43%
Magma 24%
EPS GROWTH(b)
- -------------------------
Company EPS Growth
- ------- ----------
CE 27%
Magma 21%
<FN>
____________________
(a) Based on 1989-1993 Compound Annual Growth Rates.
(b) Before extraordinary items, change in accounting principle, and
preferred dividends.
</TABLE>
25
<PAGE>
[CE logo appears here]
PROFILE OF CALIFORNIA ENERGY
<TABLE>
<CAPTION>
STRENGTHS
<S> <C>
DEVELOPMENT x David Sokol developed 16 projects for Ogden in 6
years
x Kiewit 50/50 JV
- Sharing of development expenses
- Investment diversification
x Proven ability to complete projects in a timely
manner
x Strict adherence to internal standards
ENGINEERING x Global geothermal facility design experience
(including Salton Sea)
x Experience in other technologies
FINANCING x First investment grade IPP - $560 mm Coso Funding
Notes
x Largest corporate debt offering by IPP - $400 mm
Discount Notes Offering
x Full use of balance sheet to minimize equity
issuance
CONSTRUCTION x CE and Kiewit Relationship
- Arm's length
- CE flexibility to match best contractor with
project
- Foreign construction risk management
- Proven success in power construction
- Readily financeable
- Quality reputation
- Must competitively bid for projects
OPERATIONS x Coso Performance
- Demonstrated history of cost management
- Demonstrated consistent high reliability and
performance
- One of, if not the best, safety records in the
industry
- Geotechnical systems such as 3D reservoir modeling
CALIFORNIA ENERGY IS AN INTERNATIONAL FULL SERVICE PROVIDER
26
<PAGE>
[CE logo appears here]
PROFILE OF CALIFORNIA ENERGY
PETER KIEWIT & SONS OVERVIEW
- - Kiewit is a Global Infrastructure, Construction, Mining,
Communications and Energy Company with $2.2 billion in Revenue and
$261 million in Earnings in 1993
- - Recognized by Forbes and Warren Buffett as One of the Best Run
Companies in America (Forbes feature article, October 24, 1994)
- - Reputation for Successfully Managing and Completing Large Complex
Projects Worldwide
- - Involved in 5 Main Businesses:
</TABLE>
<TABLE>
<CAPTION>
Market Percent
Company Capitalization Ownership Industry
- ------- -------------- --------- --------
<S> <C> <C> <C>
MFS Communications $2,316 Million 71% Communications
California Energy $546 Million 43 IPP
C-TEC $409 Million 57 Cable TV/
Telecommunications
Kiewit Mining Private 100 Mining
Kiewit Construction Private 100 Construction
</TABLE>
27
<PAGE>
[CE logo appears here]
COMPARISON OF CALIFORNIA ENERGY AND MAGMA
28
<PAGE>
[CE logo appears here]
COMPARISON OF CALIFORNIA ENERGY AND MAGMA
CE SETS THE STANDARD FOR OPERATING EXCELLENCE
<TABLE>
<CAPTION>
OPERATING EXPENSES PER KWH EMPLOYEES PER MW
- -------------------------- -------------------------
<S> <C> <C> <C>
California Energy
Coso 1993 2.38cents California Energy 0.569
California Energy
Coso 1994 2.28cents Magma 1.360
Magma 1993 4.2cents
Magma Stated
Goal for 1998 2.5cents
</TABLE>
[A bar graph is presented depicting the following information.]
<TABLE>
<CAPTION>
Year % of Contract Capacity
- ---- ----------------------
<S> <C> <C>
1991 Magma 105.0%
CE 102.8%
1992 Magma 107.7%
CE 108.6%
1993 Magma 110.0%
CE 118.9%
1994 (YTD) Magma 113.0%
CE 120.6%
Avg. Magma 109.0%
CE 113.0%
</TABLE>
29
<PAGE>
[CE logo appears here]
COMPARISON OF CALIFORNIA ENERGY AND MAGMA
<TABLE>
<CAPTION>
PERFORMANCE SCORECARD
CE MAGMA
------------ --------------
1994 PROJECT DEVELOPMENT
<S> <C> <C>
Capital Raised $802 million $135 million
(Refinancing)
New Projects Financed Upper Mahiao None
Mahanagdong
Projects Completed Yuma None
1993 COSO OPERATING PERFORMANCE
Operating Expenses/KWH 2.38cents 4.2cents
Plant Operations 118.9% 110.0%
(% of Contract Capacity)
1989-1993 CAGR
Revenue 33% 28%
Earnings 43% 24%
EPS 27% 21%
</TABLE>
CONCLUSION: WHICH COMPANY IS DRIVING THE BUSINESS?
30
<PAGE>
[CE logo appears here]
COMPARISON OF CALIFORNIA ENERGY AND MAGMA
RELATIVE PROJECT DEVELOPMENT SUCCESS
<TABLE>
<CAPTION>
CONTRACT FINANCIAL
AWARD CLOSE CE MAGMA
-------- --------- ---- -----
IN OPERATION, CONSTRUCTION
OR FINANCED
<S> <C> <C> <C> <C>
MWs currently owned
in operation 197 154
MWs financed and
under construction
Upper Mahiao 9/93 4/94 120
Mahanagdong(a) 9/93 8/94 90
Subtotal 407 154
UNDER DEVELOPMENT
MWs under contract,
no financing
Newberry, Oregon 9/94 30
Malitbog 9/93 231
Fish Lake 3/92 36
Subtotal 30 267
MWs under development,
in contract negotiations
Indonesia: Dieng Patuha 800
Philippines: Casecnan 100
Philippines: Alto Peak 72
Nevada: Sheep Mountain 200
Indonesia: Wayang Windu 280
Indonesia: Karaha [150](b)
California: BRPU (currently stayed by CPUC) 163
Subtotal 900 [865](b)
Total Operation, Construction, Financed &
Development 1,337 [1,286](b)
CONCLUSION: WHO HAS MADE "REAL" MWs?
<FN>
____________________
(a) Mahanagdong is a 180MW plant that was fully financed by CE.
(b) Pursuant to October 21, 1994 Magma Press Release.
</TABLE>
31
<PAGE>
[CE logo appears here]
CORRECTING THE MISSTATEMENTS AND OMISSIONS --
WHAT MAGMA DIDN'T TELL YOU
32
<PAGE>
[CE logo appears here]
CORRECTING THE MISSTATEMENTS AND OMISSIONS
WHAT MAGMA DIDN'T TELL YOU
#1 CONSTRUCTION:
- - Magma Misstatements and Omissions
- Magma uses multiple E&C contractors and CE uses single-source
(Kiewit)
- - The Facts
- Kiewit competes for all construction opportunities on an arm's
length basis
- Since Kiewit investment, CE has used multiple contractors:
- Raytheon built Yuma (50 MW)
- Ormat building Upper Mahiao (120 MW)
- Kiewit building Mahanagdong (180 MW)
- Casecnan E&C - not selected
- Magma claim of multiple contractors not verifiable due to limited
construction activity
#2 OWNERSHIP:
- - Magma Misstatements and Omissions
- Magma retains 50% or greater ownership and CE retains 50% or less
- - The Facts
- California Energy (All operated by CE):
<TABLE>
<S> <C>
Navy I 46%
Navy II 50%
BLM 48%
Desert Peak 100%
Roosevelt Hot Springs 70%
Yuma 100%
Upper Mahiao 100%
Mahanagdong 50%
- Magma Power (4 of 7 projects):
Vulcan 50%
Hoch 50%
Elmore 50%
Leathers 50%
</TABLE>
33
<PAGE>
[CE logo appears here]
#3 OPERATING PERFORMANCE:
- - Magma Misstatements and Omissions
- Magma has operated at 109% of contracted capacity in the last 4
years and CE has operated at 96% of contracted capacity 1991-1993
- - The Facts
- Since 1991, Coso has averaged 113% of contracted capacity
- Coso currently operates at 128% of contracted capacity
#4 PLANT DEPRECIATION:
- - Magma Misstatements and Omissions
- Magma depreciates plants over a 20 year period and CE over a 37.5
year period
- - The Facts
- Weighted average depreciation for ALL CE geothermal depreciable
assets is 24.6 years vs. 20 years for Magma
#5 HIGHLY LEVERAGED:
- - Magma Misstatements and Omissions
- Magma's Debt/Total Capital ratio is 24.9% and CE's is 76.1%
- - The Facts
- Net Debt/Total Capitalization: 35.3%
- Net Debt (excluding non-recourse project financing)/Total
Capitalization: 13.0%
- Magma balance sheet is unleveraged due to absence of new project
financings
#6 RESOURCE MANAGEMENT:
- - Magma Misstatements and Omissions
- Magma wells experience little if any decline while new Coso wells
decline 35% to 45% in first year
34
<PAGE>
[CE logo appears here]
- - The Facts
- Average decline for Coso is currently about 11% which is in line
with original projections
- As Magma expands their use of the resource their declines will
naturally increase. Additionally, Salton Sea is a different type
of reservoir
#7 ROYALTY PAYMENTS:
- - Magma Misstatements and Omissions
- Magma's royalties are levelized, while CE's are back-end loaded
- - The Facts
- Back-end loaded royalty payments provide NPV benefits to
shareholders and are evidence of superior negotiating
#8 COST REDUCTION:
- - Magma Misstatements and Omissions
- Magma has a public plan to reduce cost to 2.5cents by 1998, while CE
has no publicly announced plan
- - The Facts
- Beginning in 1991, CE implemented cost reduction programs leading
to a current cost of 2.28cents per Kwh compared to Magma's current
cost of 4.2cents
CONCLUSION: THE FACTS SPEAK FOR THEMSELVES
35
<PAGE>
[CE logo appears here]
FIVE REASONS TO ACCEPT CALIFORNIA ENERGY'S OFFER
36
<PAGE>
[CE logo appears here]
FIVE REASONS TO ACCEPT THE OFFER
REASON #1 - $38.50/SHARE REPRESENTS FAIR VALUE
- - Proof:
- 40% premium to market price prior to CE offer
- Substantial premium to Magma's discounted cash flow value
which reflects real and potential development opportunities
- DLJ indicates $35.00/share is a fair price.
- Wall Street Transcript quotes Ralph Boeker, Magma CEO: "I
don't think we're totally undervalued" on August 1, 1994
when stock price was $28.75
- Obviously, two of your top executives agree, Mr. Boeker.
They sold 10,000 shares at an average price of $34.25 in
1994.
- On October 10, 1994, Mr. Boeker said, "In making its offer
at this time, California Energy is trying to buy Magma at a
bargain price that does not remotely reflect Magma's
intrinsic value and long-term strategic promise."
WHICH WAY IS IT, MR. BOEKER?
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[CE logo appears here]
FIVE REASONS TO ACCEPT THE OFFER
REASON #2 - CE AND MAGMA COMBINATION BENEFITS ALL SHAREHOLDERS
- - Benefits include:
- Strong combined annual cash flow
- Anticipated cost reductions
- Operational efficiencies
- Increased size, stability and diversification of asset base
and geothermal resources
- Increased global development opportunities
38
<PAGE>
[CE logo appears here]
FIVE REASONS TO ACCEPT THE OFFER
REASON #3 - CE MANAGEMENT IS BEST ABLE TO MEET FUTURE CHALLENGES
- - International IPP Development Requires More than Just Caretaker
Management
- David Sokol, CEO, and his team at Ogden Projects, successfully
developed, financed and constructed 16 power projects in 6 years
- CE's management team has completed the most innovative financings
in the industry ($560mm Coso Funding, $400 million zero coupon
Senior Notes)
- CE's management team averages 10 years experience in the IPP
industry while Magma's management team averages only 3 years
- - Kiewit Beneficially Owns 43.3% of CE Stock and has been Extremely
Supportive
39
<PAGE>
[CE logo appears here]
FIVE REASONS TO ACCEPT THE OFFER
REASON #4 - OFFER CONTAINS NO SIGNIFICANT CONTINGENCIES
- - Merger Agreement
- - Financing in Place
- CE has $300mm Cash
- Binding Bank Commitments for $500mm
- - Kiewit Votes 38% of CE Stock and Has Approved the Deal
CE PREFERS TO OFFER THE SAME CONSIDERATION TO ALL SHAREHOLDERS
40
<PAGE>
[CE logo appears here]
FIVE REASONS TO ACCEPT THE OFFER
REASON #5 - MAGMA'S SHARE PRICE IS EXPECTED TO PLUMMET
IF CALIFORNIA ENERGY RETRACTS ITS OFFER
- - No Other Offers have been Announced
- - Magma's Share Price has Declined Steadily Throughout 1994
- - Offer Price Exceeds Magma's LTM Trading Level
- - Dow Sales of Magma Stock have been at Prices Below CE's Offer
- - JP Morgan Research Analyst warns, "If the CE deal were to fall
through, Magma shares could fall significantly (possibly as low as the
pre-bid level of $27.50)"
- - CE will not Overpay for an Acquisition and is Willing to Walk Away if
the Price is Not Right (e.g., Westmoreland Energy)
41
<PAGE>
[CE logo appears here]
CONCLUSION
OUR OFFER MAXIMIZES THE VALUE OF YOUR MAGMA INVESTMENT
WE URGE YOUR ACCEPTANCE
42
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GRAPHICS APPENDIX
(Pursuant Rule 304(a) of Regulation S-T)
Description of Graphical Elements
Page 5
See description on Page 5.
Page 7
Graphical depiction of certain sales of Magma common stock by Dow and
by certain members of Magma management. Graphical element is a line
graph, the vertical axis of which is marked in $1 dollar increments
from $25 to $40 and the horizontal axis of which is marked with
certain dates from January 13, 1994 through October 21, 1994. The
graph contains a wavering horizontal line representing the market
price of Magma's common stock during the periods indicated and is
marked to indicate the date of certain sales by Dow and by certain
members of Magma management.
Page 8
Graphical depiction of market price of Magma common stock relative to
market price of California Energy's offered consideration in October
1991. Graphical element is a line graph, the vertical axis of which
is marked in $5 dollar increments from $10 to $50 and the horizontal
axis of which is marked with certain dates from October 1, 1991
through August 31, 1994. The graph contains two wavering horizontal
lines, one of which represents the market price of Magma's common
stock during the periods indicated and the other of which represents
the market price of California Energy's offered consideration in
October 1991 during the periods indicated. [California Energy's
offered consideration is based on an exchange ratio of 2.0168.]
Page 22
See description on Page 22.
Page 23
See description on Page 23.
Page 24
See description on Page 24.
Page 25
See description on Page 25.
Page 29
See description on Page 29.
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