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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
(Amendment No. 1)
THE ENERGY GROUP PLC
(Name of Subject Company)
PACIFICORP ACQUISITIONS
PACIFICORP
(Bidders)
Ordinary Shares of 10p Each and
American Depositary Shares, Each Representing 4 Ordinary Shares
and Evidenced by American Depositary Receipts
(Title of Class of Securities)
292691 10 2
(CUSIP Number of Class of Securities)
Richard T. O'Brien
PacifiCorp
Port of Portland Building, Suite 1600
700 NE Multnomah
Portland, Oregon 97232
(503) 731-2000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
Copy to:
Stuart W. Chestler
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2300
Portland, Oregon 97204-1268
(503) 294-9500
<PAGE>
14D-1
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1. Name of reporting person
PacifiCorp Acquisitions
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2. Check the appropriate box if a member of a group (a) ___
(b) ___
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3. SEC Use Only
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4. Sources of Funds
AF, BK
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5. Check box if disclosure of legal proceedings is required pursuant
to Items 2(e) OR 2(f) ___
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6. Citizenship or place of organization
England and Wales
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7. Aggregate amount beneficially owned by each reporting person
None (0)
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8. Check box if the aggregate amount in row (7) excludes certain shares
___
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9. Percent of class represented by amount in row (7)
None (0)
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10. Type of reporting person
CO
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2
<PAGE>
14D-1
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1. Name of reporting person
PacifiCorp
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2. Check the appropriate box if a member of a group (a) ___
(b) ___
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3. SEC Use Only
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4. Sources of Funds
BK
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5. Check box if disclosure of legal proceedings is required pursuant
to Items 2(e) OR 2(f) ___
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6. Citizenship or place of organization
Oregon
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7. Aggregate amount beneficially owned by each reporting person
None (0)
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8. Check box if the aggregate amount in row (7) excludes certain shares
___
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9. Percent of class represented by amount in row (7)
None (0)
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10. Type of reporting person
CO
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3
<PAGE>
PacifiCorp Acquisitions and PacifiCorp hereby amend and supplement their
Tender Offer Statement on Schedule 14D-1 (the "Statement"), originally filed on
February 6, 1998, with respect to their offer to purchase all outstanding
Ordinary Shares of 10p each and American Depositary Shares, each representing 4
Ordinary Shares and evidenced by American Depositary Receipts, of The Energy
Group PLC, a public limited company organized under the laws of England and
Wales, as set forth in this Amendment No. 1. Capitalized terms not defined
herein have the meanings assigned thereto in the Statement.
Item 10. Additional Information.
(b), (c) and (f) On February 16, 1998, PacifiCorp issued a press release, a
copy of which is attached hereto as Exhibit (a)(13) and is incorporated herein
by reference.
Item 11. Material to Be Filed as Exhibits.
(a)(13) Press Release, dated February 16, 1998.
4
<PAGE>
SIGNATURES
After due inquiry and to the best of their knowledge and belief, each of
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: February 16, 1998
PACIFICORP ACQUISITIONS
By W.E. PERESSINI
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W.E. Peressini
Deputy Chief Finance Officer
PACIFICORP
By W.E. PERESSINI
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W.E. Peressini
Vice President and Treasurer
5
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
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(a)(13) Press Release, dated February 16, 1998.
Exhibit (a)(13)
Scott Hibbs (503) 731-2123
February 16, 1998
PacifiCorp Questions Texas Utilities' Ability To
Finance Competitive Cash Offer
PORTLAND, Oregon - PacifiCorp (NYSE: PPW) Monday questioned the ability of
Texas Utilities Company (NYSE: TXU) to bid for The Energy Group PLC (NYSE/LSE:
TEG) at a price which would compare favorably with PacifiCorp's cash offer.
PacifiCorp, which posted its cash offer of 765 pence per TEG share on
February 6, believes its cash offer represents both excellent value and
certainty for TEG shareholders. TEG, a London based energy company, owns Eastern
Electricity in the United Kingdom and Peabody Coal Company, the world's largest
private coal company.
Since posting its offer, PacifiCorp has received all specific regulatory
approvals it has sought and which are conditions to its cash offer. By
comparison, Texas has made no substantial announcement since its statement on
January 27 that it was in talks with TEG.
In a statement issued in London Monday, PacifiCorp noted that:
- -- PacifiCorp believes that any bid, cash or otherwise, by Texas would, to
compare favorably with PacifiCorp's offer, need to be significantly in
excess of PacifiCorp's existing cash offer.
- -- If Texas is not able and willing to dispose, in the short term, of some or
all of TEG's Peabody coal assets, PacifiCorp believes that Texas would face
material U.S. regulatory uncertainty and delays, quite apart from any UK
regulatory hurdles it may encounter. Further, Texas' financing needs would
increase considerably in such event.
- -- If Texas were to experience similar delays to those experienced by
PacifiCorp in obtaining regulatory approvals, PacifiCorp estimates that
Texas would need to offer a price exceeding 820 pence in cash to equate to
PacifiCorp's current 765 pence cash offer, based only on the time value of
money.
<PAGE>
News Release Page 2
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- -- If Texas were to include an equity component in its bid consideration,
PacifiCorp believes that Texas would need to offer even more in such
circumstances.
- -- PacifiCorp believes that Texas' credit ratings of Baa3 and BBB constrain
its ability to raise debt financing for any potential cash offer.
- -- If Texas were to maintain its current credit ratings, PacifiCorp believes
that Texas would be required to issue a significant amount of equity as
part of a bid, either as consideration to TEG shareholders or as part of
what would need to be the largest equity offering (or series of offerings)
ever undertaken by a U.S. electric utility.
- -- Texas is believed to be considering the sale of TEG's Peabody coal assets
as part of a potential offer, but has not commented on how any talks with
potential purchasers of Peabody are progressing, if at all.
The Peabody assets are a key part of PacifiCorp's proposed combination with
TEG. PacifiCorp places value on the significant synergies Peabody provides,
including ongoing opportunities for growth through integration,
rationalization and restructuring of Peabody's large portfolio of coal
assets, and administrative savings.
Without Peabody, Texas would not be able to achieve those synergies.
Nomura International plc withdrew from talks with TEG partly due to its
lack of confidence to reach a satisfactory conclusion as to the disposal of
the Peabody assets.
PacifiCorp, one of the lowest cost electricity producers in the United
States, is a multinational energy company with 1.4 million retail electric
customers in the western United States and 550,000 customers in the State of
Victoria in Australia. PacifiCorp, which has more than 10,000 megawatts of
generation capacity, also is the largest investor-owned bulk power marketer in
the western U.S., and is an active electricity and gas marketer in the eastern
U.S.
- --------------
The information in this announcement includes certain forward-looking
statements. There can be no assurance that the results or other outcomes
predicted will be realized. Actual results or outcomes will vary from those
represented by the forecasts, and those variations may be material.
The information contained in this announcement supersedes any prior
reported statements which may have been attributed to PacifiCorp Acquisitions,
any of its affiliates, or any of their respective advisors or agents concerning
the subject matter hereof. Any such prior reported statements should be
disregarded.
<PAGE>
News Release Page 3
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Sources and Bases
1. Acquisition and Financing Analysis
The analysis set out below, which is based on a number of stated
assumptions, shows the cost that would be incurred by Texas were it to
acquire TEG at a cash price of 800 pence per TEG share (as speculated by
most market commentators).
It also shows the amount of debt and equity which Texas would be required
to raise based on an assumed pro forma total debt to capital ratio and
includes a sensitivity analysis based on different prices and different
such ratios. It is assumed that Texas would, in making a bid for TEG, wish
to maintain its current credit ratings.
PacifiCorp acknowledges that the following analysis represents only one of
a number of possible scenarios which might apply to any acquisition by
Texas of TEG, and that the method of financing which Texas may adopt may
differ from that set out below. If Texas were to include an equity
component in its bid consideration, its credit ratings may be affected
differently.
(a) Cost of Acquiring TEG Equity
The following assumptions have been used in calculating the cost of
acquiring the fully diluted share capital of TEG. The cost of TEG's equity
is calculated using the cash cancellation method of acquiring the 9,228,858
TEG shares which could fall to be issued on exercise in full of options and
vesting of all outstanding awards granted under The Energy Group Share
Schemes.
Purchase price per TEG share 800 pence
Number of shares in issue on 2 February 1998 520,857,817
Dollar sterling exchange rate $1.6393:(pound)1
Cost of acquiring TEG Equity (pound)4,192 million
($6,873 million)
(b) Disposal of Peabody
It has been assumed that Texas would be able to dispose of Peabody and that
the net proceeds of such disposal by Texas would be $2,200 million, after
payment of fees, costs and tax.
If Texas is not able or willing to dispose of some or all of TEG's Peabody
coal assets, its financing needs would increase considerably. This analysis
is not therefore directly comparable to PacifiCorp's proposed acquisition
of TEG in which PacifiCorp would retain the majority of Peabody.
<PAGE>
News Release Page 4
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(c) TEG Net Debt
The following sets out the calculation of TEG debt (net of cash) which
would be required to be refinanced or assumed by Texas on acquiring TEG.
The total cash available has been reduced by an amount of approximately
(pound)408 million, which is PacifiCorp's estimate of the restricted cash
required to be used to repay financial leases for TEG's electricity
generation plants.
------------------ ------------------
(pound) million $ million
------------------ ------------------
Gross debt 2,768 4,538
Total cash and short term (1,303) (2,136)
deposits
Less restricted cash 408 669
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Available cash (895) (1,467)
TEG Net Debt 1,873 3,070
Source: (except in relation to restricted cash): The Energy Group PLC,
Interim Results Presentation, 12 November 1997.
(d) Net Cost to Texas
It has been assumed that Texas would incur transaction costs of
approximately $250 million.
<TABLE>
<CAPTION>
------------------ ------------------
(pound) million $ million
------------------ ------------------
<S> <C> <C>
Cost of TEG equity (set out in (a) above) 4,192 6,873
Less Peabody disposal net proceeds (set out in (b) above) (1,342) (2,200)
Plus TEG net debt (set out in (c) above) 1,873 3,070
Plus Financing costs, advisors and legal fees, and other 153 250
costs
Total cost to be financed by Texas 4,876 7,993
===== =====
</TABLE>
<PAGE>
News Release Page 5
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(e) Effect on Texas' Capitalization
The following sets out the effect of the acquisition of TEG on Texas' total
capitalization assuming a pro forma post acquisition total debt to capital
ratio of 67%, being a ratio which PacifiCorp is advised to be the
reasonable maximum appropriate for Texas in order to maintain its current
credit ratings following the acquisition of TEG on the basis outlined
above. See also the sensitivity analysis set in (f) below. For the
calculation of this ratio, preferred stock has been included as debt at 75%
of book value for both non-mandatory redeemable preferred stock and trust
preferred stock, and at 10% of book value for mandatory redeemable
preferred stock, which PacifiCorp believes is how the credit rating
agencies would typically treat such stock. Texas' total preferred stock
includes approximately $21 million of mandatory redeemable preferred stock.
<TABLE>
<CAPTION>
-------------------------------------------------------
Current Stand Acquisition Pro Forma
Alone Financing Post
$ millions Acquisition
-------------------------------------------------------
<S> <C> <C> <C>
Gross debt $10,977 $ 6,296 $17,272
Preferred stock 1,100 1,100
Common equity 6,921 1,697 8,619
Total capital 18,997 26,991
Total debt 11,788 18,084
Total debt to capital ratio 62.1% 67.0%
- --------------
Source (Texas' financial information): Texas S-4 filing, 10 February 1998 and
10-Q filing, 30 September 1997 Source (treatment of preferred stock): Standard &
Poor's Creditweek, 25 March 1996.
</TABLE>
(f) Sensitivity of equity requirement
The table below sets out the amount of equity required to be raised by Texas
assuming offer price of 800 pence and 825 pence at various debt to total capital
ratios.
<PAGE>
News Release Page 6
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<TABLE>
<CAPTION>
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Total Debt to Texas Equity Requirement at Offer Price of
Capital Ratio (%)
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800 pence 825 pence
- --------------------------------------------------------------------------------------
<S> <C> <C>
63% $2,777 million $2,857 million
64 2,507 2,585
65 2,237 2,313
66 1,967 2,041
67 1,697 1,769
68 1,428 1,497
69 1,158 1,224
70 888 952
71 618 680
</TABLE>
(g) Standard & Poor's US Utilities Financial Ratio Medians
The table below shows the total debt to capital ratios of US electric
utilities based on their credit ratings and their business positions. Total
debt to capital is one of a number of key measures used by the credit
rating agencies in determining the credit rating of a company's debt.
<TABLE>
<CAPTION>
--------------------------------------------------
Total Debt to Capital Ratio
--------------------------------------------------
S & P Credit Ratings A BBB BB
--------------------------------------------------
<S> <C> <C> <C>
Above-average business position 52% 59% 65%
Average business position 47 54 60
Below-average business position 41 48 54
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Source: Standard & Poor's Global Sector Review, 1997. Financial ratio medians
are the average of ratios derived from Standard & Poor's financial projections
for companies rated both publicly and confidentially.
</TABLE>
2. Texas' Credit Ratings
Texas is currently rated BBB by Standard & Poor's and Baa3 by Moodys.
Source: Standard & Poor's Summary Analysis, 30 January 1998; Moody's Release, 27
January 1998.
<PAGE>
News Release Page 7
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3. Equity Offerings by US Public Electric Utilities
Set out below is a table comprising the five largest equity offerings by US
public electric utilities.
<TABLE>
<CAPTION>
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Company Date Offering Size Percent of Market
Capitalization
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Duke Power March 1994 $515 million 7%
Central & South West February 1996 356 7
Commonwealth Edison February 1985 283 6
GPU Inc. February 1998 277 6
FPL Group November 1990 276 7
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Source: Securities Data Corporation.
</TABLE>
4. Size of Possible Equity Offerings Relative to Texas' Equity Market
Capitalization
The table below shows, assuming equity offerings by Texas of various sizes, the
relative size of such equity offerings compared to Texas' current equity market
capitalization.
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Size of Possible Offering Proportion of Market Capitalization
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$2,777 million 28%
2,237 23
1,697 17
1,158 12
618 6
Texas' market capitalization at the close of business on 13 February 1998 was
$9,763 million.
- --------------
Source: Bloomberg.
5. Time Value of Money
PacifiCorp assumes a time value of money for TEG shareholders of approximately
12 per cent per annum for equity investments.
###
