<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported):
February 3, 1998
PACIFICORP
(Exact name of registrant as specified in its charter)
State of Oregon 1-5152 93-0246090
(State of Incorporation) (Commission (I.R.S. Employer
File No.) Identification No.)
700 N.E. Multnomah, Suite 1600, Portland, Oregon 97232-4116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(503) 731-2000
No Change
(Former Name or Former Address, if changed since last report)
<PAGE>2
Item 5. OTHER EVENTS
Information contained in the news release of PacifiCorp (the
"Company") issued February 3, 1998 relating to the proposed cash offer by a
subsidiary of the Company for all outstanding shares of The Energy Group is
incorporated herein by reference. Also incorporated by reference is the
information contained in the announcement of PacifiCorp and The Energy Group,
dated February 3, 1998, relating to the proposed cash offer for shares of The
Energy Group.
Item 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS
(c) Exhibits.
99(a) PacifiCorp news release issued February 3, 1998.
99(b) Announcement of PacifiCorp and The Energy Group, dated
February 3, 1998, relating to the proposed cash offer
for shares of The Energy Group.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACIFICORP
(Registrant)
By: RICHARD T. O'BRIEN
________________________________
Richard T. O'Brien
Senior Vice President and
Chief Financial Officer
Date: February 4, 1998
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
_______ ___________ ____
<S> <C> <C>
99(a) PacifiCorp news release issued February 3, 1998.
99(b) Announcement of PacifiCorp and The Energy Group,
dated February 3, 1998, relating to the proposed
cash offer for shares of The Energy Group.
</TABLE>
<PAGE>
EXHIBIT 99(a)
_____________________________________________________________________________
PACIFICORP NEWS RELEASE
_____________________________________________________________________________
FOR FURTHER INFORMATION CONTACT:
Scott Hibbs, for investors, (503) 731-2123
Angela Hult, for investors (503) 731-2192
Dave Kvamme, for media (503) 464-6272
Jan Johnson, for media (503) 464-6268
February 3, 1998
PACIFICORP MAKES NEW AGREED BID FOR THE ENERGY GROUP
PORTLAND, Oregon - PacifiCorp (NYSE: PPW), a diversified energy company
in the United States and Australia, announced today a new cash tender offer of
7.65 pounds ($12.62) per ordinary share for The Energy Group PLC (LSE/NYSE:
TEG), a diversified energy company in the United Kingdom, the U.S. and
Australia.
The boards of directors of both companies unanimously approved the
transaction. The 7.65 pound offer, made by PacifiCorp Group Holdings Company,
a wholly owned subsidiary of PacifiCorp, is 10 percent higher than the
original bid made June 13, 1997.
The transaction is valued at $10.7 billion, including the purchase of
521 million shares of equity and the assumption of $4.1 billion of The Energy
Group's gross debt. Proceeds for the acquisition will come from $1.8 billion
in cash, raised through sales of non-core assets which have been occurring
since the time of PacifiCorp's original bid for The Energy Group, and $4.8
billion in borrowings.
"The merger of PacifiCorp and The Energy Group will create a premier
global energy company, poised to compete effectively on three continents as
the energy markets across the world are being restructured," said Fred
Buckman, President and Chief Executive Officer of PacifiCorp. "The
acquisition represents a landmark step in achieving our strategy."
Derek Bonham, chairman of The Energy Group, said, "We have continued to
demonstrate the soundness of our business. PacifiCorp recognizes the benefits
of this strategy and has again offered a price that represents excellent value
for our shareholders and the Board of The Energy Group has no hesitation in
recommending it."
The original bid lapsed after the president of the Board of Trade,
Margaret Beckett, referred the transaction to the Monopolies and Mergers
Commission. Because the UK government cleared the transaction in December,
the transaction is not conditional upon further regulatory approvals in the
UK.
(more)
<PAGE>
With respect to U.S. regulatory approvals, PacifiCorp and The Energy
Group have agreed with the staff of the Federal Trade Commission on the form
of a consent decree that will require divestiture of two mines owned by
Peabody, a subsidiary of The Energy Group. The consent order is awaiting
approval by the FTC.
Peabody and Eastern Electricity in the UK are TEG's main business units.
The Energy Group is awaiting approval from the Federal Energy Regulatory
Commission on the sale of certain assets of Citizens Power. FERC approval is
a condition of the offer made today and is expected in the near future.
PacifiCorp is mailing formal tender offer documents to The Energy Group
shareholders starting Thursday and expects to close the transaction this
Spring.
Upon completion of the transaction, the combined company will have 5
million customers, 17,000 megawatts of generation and more than 10 billion
tons of coal reserves in the United States, the United Kingdom and Australia.
The combination is expected to be accretive to PacifiCorp's earnings in
the first year following completion of the transaction and thereafter, even
without considering the benefits of synergy resulting from cost reductions and
revenue enhancements. This statement should not be interpreted to mean that
PacifiCorp's total reported earnings per share will necessarily be greater
than those for the year ended December 31, 1997.
The debt financing will be provided through multiple debt facilities
arranged by Citibank; Goldman, Sachs & Co.; and J.P. Morgan. Goldman, Sachs &
Co. is PacifiCorp's financial adviser for the transaction. The Energy Group
is represented by Lazard and Morgan Stanley & Co. Limited.
The Energy Group owns Eastern, the largest British regional electric
company (REC) with 3.1 million retail electric and gas customers. PacifiCorp
has 1.4 million retail electric customers in the western U.S. and 550,000 in
the State of Victoria, Australia.
Eastern, one of the lowest-cost electricity suppliers in the UK, is well
positioned to prosper when the UK market becomes fully competitive later this
year. UK electricity customers with demand for more than 100 kilowatts
already can choose their supplier.
The Energy Group also owns the world's largest private coal company,
Peabody, which is a low-cost, low-sulfur coal producer with more than 9
billion tons of reserves in the U.S. and 466 million tons of reserves in
Australia. Peabody provides fuel to more than 150 power plants in the U.S.
PacifiCorp is also a major coal operator in the U.S. where it has 421
million tons of reserves and in Australia with 450 million tons.
(more)
<PAGE>
PacifiCorp and The Energy Group both have natural gas marketing skills
and assets. Last year, PacifiCorp purchased TPC Corporation, a Houston-based
natural gas storage and marketing company. The Energy Group is one of the
largest natural gas suppliers in the UK.
PacifiCorp owns or controls 10,000 megawatts of generation in the U.S.,
while TEG has 6,700 megawatts of generation in the UK. PacifiCorp is one of
the lowest cost providers of electricity in the U.S., with average production
costs 25% less than the national average.
The combined company is positioned to be the premier power sales,
marketing and trading company in the U.S. It joins PacifiCorp's significant
western U.S. power marketing business, its expanding eastern U.S. energy
marketing business, Citizens Power's energy marketing and contract
restructuring expertise and Peabody's presence as one of the largest suppliers
of fuel to the U.S. electricity industry.
PacifiCorp intends to invite Bonham and John Devaney, Chief Executive of
Eastern, to join the Board of Directors of PacifiCorp following the
acquisition.
In addition, PacifiCorp intends that a management committee will be
formed consisting of Bonham and Devaney, as well as Eric Anstee, Finance
Director of The Energy Group, Irl Englehardt, Chief Executive of Peabody, and
Fred Buckman, Richard O'Brien, Verl Topham and Dennis Steinberg from
PacifiCorp.
Fred Buckman will remain as President and Chief Executive Officer of the
combined group.
###
<PAGE>1
EXHIBIT 99(b)
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
CANADA, AUSTRALIA OR JAPAN.
[PACIFICORP LOGO] [ENERGY GROUP LOGO]
FOR IMMEDIATE RELEASE 3 February 1998
RENEWED RECOMMENDED CASH OFFER BY PACIFICORP
FOR THE ENERGY GROUP PLC
. PacifiCorp and The Energy Group announce the terms of a renewed
recommended cash offer for The Energy Group to be made by Goldman Sachs
International on behalf of PacifiCorp Acquisitions, a wholly owned
subsidiary of PacifiCorp.
. The Offer values each Energy Group Share at 765 pence, and includes a
Loan Note Alternative.
. The Offer values the fully diluted share capital of The Energy Group at
approximately pound sterling 4,055 million.
. The Offer represents a premium of approximately 17 per cent. to the
Closing Price of 652 pence per Energy Group Share on 18 December 1997
(the day immediately prior to the clearance of the Original Offer by the
President of the Board of Trade) and a premium of approximately 36 per
cent. to the Closing Price of 561.5 pence per Energy Group Share on 9
June 1997, the day before the announcement by The Energy Group that it
was involved in talks with PacifiCorp in relation to the Original Offer.
. The board of The Energy Group, which has been so advised by Lazard and
Morgan Stanley, its financial advisers, considers the terms of the Offer
to be fair and reasonable. In providing advice to the board of The
Energy Group, Lazard and Morgan Stanley have taken account of the
directors of The Energy Group's commercial assessment of the Offer.
Accordingly, the directors of The Energy Group will unanimously
recommend all holders of Energy Group Shares and Energy Group ADSs to
accept the Offer, as they have irrevocably undertaken to do in respect
of their personal holdings of 96,000 Energy Group Shares and 1,550
Energy Group ADSs (each Energy Group ADS representing four Energy Group
Shares).
. The Combined Group's strategy is to be an international vertically
integrated energy business. It intends to capitalise on the on-going
liberalisation of the world-wide energy industry by providing customers
with a wide array of energy products and services, at the same time
reducing costs and increasing efficiency in its core markets. It intends
to build strong positions in power generation, energy marketing and
distribution, including by expanding into high growth international
markets.
. The Combined Group will be an international low cost provider with over
5 million energy customers across the United States, the United Kingdom
and Australia; 17,000 megawatts of generation capacity; and over 10
billion tons of proven and probable coal reserves, of which half are low
sulphur.
<PAGE>2
. The Original Offer, announced jointly by PacifiCorp and The Energy Group
on 13 June 1997, valued each Energy Group Share at 695.5 pence
(including a dividend per share of 5.5 pence (net) paid on 4 July 1997).
The Original Offer lapsed when it was referred to the Monopolies and
Mergers Commission on 1 August 1997. The acquisition of The Energy Group
by PacifiCorp was subsequently cleared by the President of the Board of
Trade on 19 December 1997.
. PacifiCorp has stated that, subject to all Conditions having become or
been declared satisfied, fulfilled, or where applicable waived, it
intends to invite Mr Derek Bonham and Mr John Devaney to join the board
of directors of PacifiCorp. Mr Frederick Buckman will remain as a
director and President and Chief Executive Officer of the Combined
Group.
. In addition, PacificCorp intends, subject to approval of the PacificCorp
board of directors, to invite Mr Bonham, Mr Devaney, Mr Eric Anstee and
Mr Irl Engelhardt to join PacifiCorp senior executives, Mr Frederick
Buckman, Mr Verl Topham, Mr Dennis Steinberg and Mr Richard O'Brien to
form part of a management committee to coordinate the activities of the
Combined Group and, except in the case of Mr Bonham, to take up certain
executive positions within the Combined Group.
Commenting on the Offer, Mr Frederick Buckman, President and Chief
Executive Officer of PacifiCorp, said:
"We are delighted to announce a new agreed offer for The Energy Group.
The Acquisition represents a landmark step in achieving our strategy. The
combination of PacifiCorp and The Energy Group will create a premier global
energy company, poised to compete effectively on three continents, as the
energy markets across the world are being restructured."
Mr Derek Bonham, Chairman of The Energy Group, said:
"We have continued to demonstrate the soundness of our businesses since
the Board recommended the first offer by PacifiCorp. We have successfully
taken further steps to implement our strategy. PacifiCorp recognises the
benefits of this strategy and has again offered a price that represents
excellent value for our shareholders and the board of The Energy Group has no
hesitation in recommending it."
<PAGE>3
This summary should be read in conjunction with the attached
announcement. The Conditions of the Offer are set out in Appendix I of the
attached announcement and definitions of certain expressions used in this
announcement are set out in Appendix IV of the attached announcement.
ENQUIRIES
PACIFICORP Scott Hibbs (investors) 1 503 731 2123
Angela Hult (investors) 1 503 731 2192
Dave Kvamme (press) 1 503 464 6272
Anita Marks (press) 1 503 464 6268
GOLDMAN SACHS INTERNATIONAL Richard Sapp 44 171 774 1000
Meyrick Cox 44 171 774 1000
GAVIN ANDERSON Howard Lee 44 171 457 2345
Marc Popiolek 44 171 457 2345
THE ENERGY GROUP Aviva Gershuny-Roth 44 171 647 3200
LAZARD David Anderson 44 171 588 2721
John Wilford 44 171 588 2721
MORGAN STANLEY Piers de Montfort 44 171 513 5007
BRUNSWICK Louise Charlton 44 171 404 5959
The Offer will not be made, directly or indirectly, in or into Canada,
Australia or Japan. Accordingly, copies of this announcement are not being,
and must not be, mailed or otherwise distributed or sent in or into Canada,
Australia or Japan.
Goldman Sachs International, which is regulated in the United Kingdom by
The Securities and Futures Authority Limited, is acting for PacifiCorp
Acquisitions and PacifiCorp and for no one else in connection with the Offer
and will not be responsible to anyone other than PacifiCorp Acquisitions and
PacifiCorp for providing the protections afforded to its customers or for
giving advice in relation to the Offer. Goldman Sachs International will be
acting through Goldman, Sachs & Co. for the purposes of making the Offer in
and into the United States.
Lazard and Morgan Stanley & Co. Limited, which are regulated in the
United Kingdom by The Securities and Futures Authority Limited, are acting for
The Energy Group and for no one else in connection with the Offer and will not
be responsible to anyone other than The Energy Group for providing the
protections afforded to their customers or for giving advice in relation to
the Offer.
<PAGE>4
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
CANADA, AUSTRALIA OR JAPAN.
[PACIFICORP LOGO] [ENERGY GROUP LOGO]
FOR IMMEDIATE RELEASE 3 February 1998
RENEWED RECOMMENDED CASH OFFER BY PACIFICORP
FOR THE ENERGY GROUP PLC
1 INTRODUCTION
On 13 June 1997, the boards of PacifiCorp and The Energy Group announced
the terms of a recommended cash offer for the whole of the share capital of
The Energy Group. The Original Offer was referred to the Monopolies and
Mergers Commission on 1 August 1997. The acquisition of The Energy Group by
PacifiCorp was subsequently cleared by the President of the Board of Trade on
19 December 1997. Following further discussions, the boards of PacifiCorp and
The Energy Group announce the terms of a renewed recommended cash offer to be
made by Goldman Sachs International on behalf of PacifiCorp Acquisitions, a
wholly owned subsidiary of PacifiCorp, for the whole of the issued and to be
issued share capital of The Energy Group.
The board of The Energy Group, which has been so advised by Lazard and
Morgan Stanley, its financial advisers, considers the terms of the Offer to be
fair and reasonable. In providing advice to the board of The Energy Group,
Lazard and Morgan Stanley have taken account of the directors of The Energy
Group's commercial assessment of the Offer. Accordingly, the directors of The
Energy Group will unanimously recommend all holders of Energy Group Shares and
Energy Group ADSs to accept the Offer, as they have irrevocably undertaken to
do in respect of their personal holdings of 96,000 Energy Group Shares and
1,550 Energy Group ADSs.
As previously announced, the board of The Energy Group has received
approaches from each of Nomura International plc and Texas Utilities Co.
expressing an interest in acquiring The Energy Group. Both parties have had
access to management and have been provided with certain information about the
TEG Group. No offer has been received from either party and it is uncertain
whether an offer will be received from either party.
The definitions of certain expressions used in this announcement are
contained in Appendix IV.
2 THE OFFER
The Offer will be subject to the Conditions set out in Appendix I which
will, together with the further terms of the Offer, appear in the Offer
Document and will be made by Goldman Sachs International, on behalf of
PacifiCorp Acquisitions, on the following basis:
FOR EACH ENERGY GROUP SHARE 765 PENCE; AND
FOR EACH ENERGY GROUP ADS POUND STERLING 30.60
The Offer values The Energy Group at approximately pound sterling 4,055
million (assuming the exercise in full of all outstanding options and the
vesting of all outstanding awards under the Energy Group Share
<PAGE>5
Schemes). The Offer represents a premium of approximately 17 per
cent. to the Closing Price of 652 pence per Energy Group Share on 18 December
1997 (the day immediately prior to the clearance of the Original Offer by the
President of the Board of Trade) and represents a premium of approximately 36
per cent. to the Closing Price of 561.5 pence per Energy Group Share on 9 June
1997, the day before the announcement by The Energy Group that it was involved
in talks with PacifiCorp in relation to the Original Offer.
The Offer will be subject to the applicable requirements of both the
City Code in the United Kingdom and United States federal securities laws.
3 LOAN NOTE ALTERNATIVE
A Loan Note Alternative will be available to holders of Energy Group
Shares (other than persons who are citizens or residents of the United States
and certain other overseas shareholders) who validly accept the Offer on the
basis of, for every pound sterling 1 of cash under the Offer, pound sterling 1
nominal of Loan Notes, subject to aggregate valid elections being received on
or before the date on which all the Conditions are waived, fulfilled or
satisfied as applicable, for in excess of pound sterling 1 million nominal
value of Loan Notes. If insufficient elections are received, holders of Energy
Group Shares who elect for the Loan Note Alternative will instead receive cash
in accordance with the terms of the Offer. Subject as aforesaid, the Loan Note
Alternative will remain open as long as the Offer is open for acceptance. The
Loan Notes will bear interest at a rate per annum of 0.5 per cent. below
LIBOR.
Goldman Sachs International has advised that, based on market conditions
on 30 January 1998 (the latest practicable date prior to the publication of
this announcement), in its opinion, if the Loan Notes had then been in issue,
the value of each pound sterling 1 nominal would have been approximately 98
pence.
In considering the Loan Note Alternative, holders of Energy Group Shares
should note that the obligations of the issuer of the Loan Notes are not
guaranteed or secured.
A summary of the terms of the Loan Notes is set out in Appendix II to
this announcement.
4 INFORMATION ON THE PACIFICORP GROUP
PacifiCorp, one of the lowest-cost electricity producers in the United
States, is a multinational energy company based in Portland, Oregon.
PacifiCorp serves approximately 1.4 million retail customers in Oregon,
Washington, California, Montana, Idaho, Utah and Wyoming. PacifiCorp is the
largest investor-owned bulk power marketer in the western United States and is
an active electrical and gas marketer in the eastern United States.
PacifiCorp operates one of the largest open-access transmission systems
in the United States with over 150 access points across 15,000 circuit miles
and, together with its affiliates, has generating capacity of over 10,000
megawatts. It is the twelfth largest coal producer in the United States,
producing 22.6 million tonnes in 1996. In 1996, the average electricity
production costs at its coal-fired plants were 25 per cent. lower than the
national average.
PacifiCorp also has substantial operations in Australia through
Powercor, the largest electricity distribution business in Victoria and its
19.9 per cent. partnership interest in the Hazelwood power generating station
and associated mine.
PacifiCorp is listed on the New York and Pacific Stock Exchanges under
the symbol "PPW". For the year ended 31 December 1997, PacifiCorp reported
earnings on common stock of $451 million, or $1.52 per share, excluding asset
sale gains and a series of special charges and other adjustments recorded in
1997. As at the close of trading on the New York Stock Exchange on 30 January
1998, PacifiCorp had an equity market capitalisation of approximately
$6.9 billion.
<PAGE>6
PacifiCorp Acquisitions, a wholly owned subsidiary of PacifiCorp, is an
unlimited company incorporated in England and Wales on 9 June 1997 for the
purpose of making the Original Offer.
5 INFORMATION ON THE ENERGY GROUP
The Energy Group is a diversified international energy group which
includes Peabody, the world's largest private producer of coal, and Eastern,
one of the leading integrated electricity and gas groups in the United
Kingdom.
Peabody, the largest producer of coal in the United States, operates 25
underground surface mines in the United States and three surface mines in
Australia.
. As at 31 March 1997, Peabody owned or controlled 9.5 billion tons
of proven and probable coal reserves;
. in the six months ended 31 March 1997, Peabody sold 81.4 million
tons of coal world-wide and had an estimated 14.4 per cent. of the
US market; and
. Peabody Australia, one of the 10 largest coal producers in
Australia, has interests in four surface mines in New South Wales,
three of which are currently in operation. Peabody's equity share
of the coal sales of these mines amounted to 3.5 million tons in
the six months ended 31 March 1997 and its equity share of the
proven and probable reserves associated with these mines as at
31 March 1997 amounted to 466 million tons.
Through Eastern, The Energy Group is one of the leading integrated
electricity and gas groups in the United Kingdom and is involved in a wide
range of operations:
. Eastern Generation, the fourth largest generator of electricity in
Great Britain, currently owns, operates or has an interest in
eight power stations, representing approximately 10 per cent. of
the United Kingdom's total registered generating capacity as at
31 March 1997.
. Eastern Power & Energy Trading manages for the TEG Group the price
and volume risks associated with the generation, wholesaling and
sale to end users of electricity. These exposures are managed by
trading its contract portfolio and by bidding Eastern's generation
output into the Electricity Pool. It also has small equity
interests in three natural gas producing fields in the North Sea.
. Eastern Natural Gas is one of the largest suppliers of natural gas
in the United Kingdom after Centrica plc.
. Eastern Electricity is the largest supplier and distributor of
electricity in England and Wales, with over three million
customers and an authorised area covering approximately 20,300
sq. km. in the east of England and parts of north London.
The TEG Group also includes Citizens Power, one of the leading US power
marketing firms which was acquired by The Energy Group in May 1997. Its
headquarters are in Boston and it has field offices in Milwaukee, Denver and
Toronto.
On a pro forma basis for the year ended 31 March 1997, The Energy Group
reported consolidated turnover of pound sterling 4,460 million and
consolidated net income of pound sterling 286 million. The Energy Group's
results for the nine months ended 31 December 1997 will be announced shortly.
6 REASONS FOR THE OFFER
A number of trends in the world energy industry are influencing
PacifiCorp and The Energy Group. Energy providers have been required to
provide better service, lower prices and more choice to their customers in the
United States, the United Kingdom, Europe and Australia. The deregulation of
electricity markets has led to increased customer choice and competition among
suppliers. Industry participants have reacted to this by restructuring their
businesses and diversifying their activities.
<PAGE>7
The Combined Group will be an international low-cost power provider,
with:
. over five million retail electricity customers across the United
States, the United Kingdom and Australia;
. 17,000 megawatts of generation capacity; and
. over 10 billion tons of proven and probable coal reserves, of
which half are low sulphur.
The Combined Group's strategy is to be an international vertically
integrated energy business. It intends to capitalise on the on-going
liberalisation of the world-wide energy industry by providing customers with a
wide array of energy products and services, at the same time reducing costs
and increasing efficiency in its core markets. It intends to build strong
positions in power generation, energy marketing and distribution, including by
expanding into high growth international markets.
The combination of PacifiCorp and The Energy Group will create a premier
energy provider able to:
. continue both companies' proven ability in providing value added
services to customers at competitive prices;
. capitalise on deregulation in markets both at home and abroad and
further enhance competition;
. integrate fuel management, power generation, energy marketing and
distribution to customers on three continents;
. build on existing skills and adopt best practices in mining,
energy marketing, trading and risk management and information
technology; and
. increase the efficient utilisation of generation resources through
effective fuel management and plant optimisation.
PacifiCorp believes that the transaction will be accretive to earnings
in the first year following the completion of the Acquisition and thereafter,
without considering the benefits of synergies resulting from potential cost
reductions and revenue enhancement. This statement should not be interpreted
to mean that PacifiCorp's total reported earnings per share will necessarily
be greater than those for the year ended 31 December 1997.
7 REGULATION
Prior to the referral of the Original Offer to the Monopolies and
Mergers Commission, PacifiCorp agreed to give certain assurances in respect of
Eastern Electricity plc to the DGES and the Monopolies and Mergers Commission,
in clearing the Original Offer, assumed that these would still apply if
PacifiCorp renewed its Original Offer. PacifiCorp confirms that these
assurances will be formally given by PacifiCorp to the DGES to take effect
from completion of the Acquisition.
In the course of complying with the US Hart-Scott-Rodino Antitrust
Improvements Act in connection with the Original Offer, the US Federal Trade
Commission (the "FTC") requested additional information from PacifiCorp.
Following receipt of such information, FTC staff requested that PacifiCorp and
The Energy Group take certain actions. PacifiCorp and The Energy Group have
agreed with FTC staff on the form of a consent order by the FTC that would,
among other things, require divestiture of two mines in Arizona owned by a
subsidiary of The Energy Group. The consent order is awaiting acceptance by
the FTC. Following such acceptance, the consent order will be subjected to a
60-day public comment period after which the consent order will become final
unless the FTC determines otherwise.
Following the acceptance of the consent order for public comment by the
FTC (expected to occur by 19 February 1998), the Offer will cease to be
subject to the United States Hart-Scott-Rodino Antitrust
<PAGE>8
Improvements Act. Furthermore, PacifiCorp confirms that it will not invoke
either Condition (d) or (e) even if the FTC amends the terms of the form of
the consent order agreed with FTC Staff.
The Offer is, however, subject to certain other regulatory consents and
confirmations which PacifiCorp is confident will be obtained. The full text of
the Conditions of the Offer is set out in Appendix I.
8 THE ENERGY GROUP SHARE SCHEMES
The Offer will extend to any fully paid Energy Group Shares which are
unconditionally allotted or issued while the Offer is open for acceptance,
including those unconditionally allotted or issued pursuant to the exercise of
options under the Energy Group Share Schemes.
Appropriate proposals will be made to the participants in the Energy
Group Share Schemes.
In relation to the Energy Group Sharesave Scheme, it is anticipated
that, as an additional alternative to the rights provided under the rules of
that scheme, participants will be offered an opportunity to surrender their
existing options in consideration for a cash sum, calculated by reference to
the difference between 765 pence and the exercise price of their options
multiplied by the number of Energy Group Shares that they could have acquired
with their total savings contributions (together with any interest payable
thereon) under the Energy Group Sharesave Scheme up to the date the Offer
becomes or is declared unconditional in all respects plus a further six
months' savings contributions.
9 DIRECTORS, MANAGEMENT AND EMPLOYEES
PacifiCorp Acquisitions has given assurances to the board of The Energy
Group that the existing employment rights, including pension rights, of all
Energy Group directors, management and employees will be fully safeguarded.
PacifiCorp looks forward to working with Energy Group employees.
PacificCorp has stated that, subject to the Offer becoming or being
declared unconditional in all respects, it intends to invite Mr Derek Bonham
and Mr John Devaney to join the board of directors of PacifiCorp. Mr Frederick
Buckman will remain as a director and President and Chief Executive Officer of
the Combined Group.
In addition, PacifiCorp intends, subject to approval of the PacifiCorp
board of directors, to invite Mr Bonham, Mr Devaney, Mr Eric Anstee and Mr Irl
Engelhardt to join PacifiCorp senior executives, Mr Frederick Buckman, Mr Verl
Topham, Mr Dennis Steinberg and Mr Richard O'Brien to form part of a
management committee to coordinate the activities of the Combined Group and,
except in the case of Mr Bonham, to take up certain executive positions within
the Combined Group.
Although these intentions have been discussed in general terms, no
specific terms or conditions have yet been agreed and no understanding exists
between PacificCorp (or any person acting in concert with it) and any of the
directors of The Energy Group in relation to any such position or otherwise
having any connection with or dependence upon the Offer. None of Messrs
Bonham, Devaney, Anstee or Engelhardt will enter into any further discussions
with PacifiCorp (or any person acting in concert with it) concerning their
personal positions unless and until, at the earliest, the Offer becomes or is
declared unconditional in all respects.
10 HOLDINGS IN THE ENERGY GROUP
Neither PacifiCorp Acquisitions, nor any of the directors of PacifiCorp
Acquisitions, nor, so far as PacifiCorp Acquisitions is aware, any party
acting in concert with PacifiCorp Acquisitions, owns or controls any Energy
Group Securities or holds any options to purchase Energy Group Shares or holds
any derivatives referenced to Energy Group Securities, other than as set out
below:
(a) PacifiCorp Master Retirement Trust, an independently managed
pension fund of the PacifiCorp Group, beneficially owns 241,589
Energy Group Shares;
<PAGE>9
(b) CIN Management, a subsidiary of Goldman Sachs International owns
6,517,433 Energy Group Shares;
(c) Goldman Sachs & Co. Discretionary Customer accounts hold 72,000
Energy Group Shares; and
(d) Goldman Sachs International Discretionary Customer accounts hold
175,581 Energy Group ADSs.
11 FINANCING
PacifiCorp Acquisitions has arranged appropriate financing in connection
with the Offer. Other wholly-owned subsidiaries of PacifiCorp Group Holdings
Company have arranged their own funding to assist in PacifiCorp Acquisitions'
financing of the Offer.
12 GENERAL
(a) Goldman Sachs International, which is regulated in the United
Kingdom by The Securities and Futures Authority Limited, is acting
for PacifiCorp Acquisitions and PacifiCorp and for no one else in
connection with the Offer and will not be responsible to anyone
other than PacifiCorp Acquisitions and PacifiCorp for providing
the protections afforded to its customers or for giving advice in
relation to the Offer. Goldman Sachs International will be acting
through Goldman, Sachs & Co. for the purposes of making the Offer
in and into the United States.
(b) Lazard and Morgan Stanley & Co. Limited, which are regulated in
the United Kingdom by The Securities and Futures Authority
Limited, are acting for The Energy Group and for no one else in
connection with the Offer and will not be responsible to anyone
other than The Energy Group for providing the protections afforded
to their customers or for giving advice in relation to the Offer.
(c) The Offer Document will be posted shortly and will be available
for inspection at the offices of Linklaters & Paines, One Silk
Street, London EC2Y 8HQ. The Conditions are set out in Appendix I
to this announcement.
(d) Energy Group Securities will be acquired by PacifiCorp
Acquisitions fully paid and free from all liens, equities,
charges, encumbrances and other interests and, together with all
rights now or hereafter attaching thereto, including without
limitation the right to receive and retain all dividends and other
distributions declared, made or paid hereafter.
(e) The Initial Offer Period is expected to expire at 10.00 p.m.
(London time), 5.00 p.m. (New York City time) on the 20th Business
Day after the date of the Offer Document, unless extended. At the
conclusion of the Initial Offer Period, including any extension
thereof, the Offer, if wholly unconditional, will be extended for
a Subsequent Offer Period of at least 14 calendar days. Holders of
Energy Group Securities will have withdrawal rights during the
Initial Offer Period, including any extension thereof, but not
during the Subsequent Offer Period, including any extension
thereof.
(f) THE OFFER WILL NOT BE MADE, DIRECTLY OR INDIRECTLY, IN OR INTO
CANADA, AUSTRALIA OR JAPAN. ACCORDINGLY, COPIES OF THIS
ANNOUNCEMENT ARE NOT BEING, AND MUST NOT BE, MAILED OR OTHERWISE
DISTRIBUTED OR SENT IN OR INTO CANADA, AUSTRALIA OR JAPAN.
(g) The Loan Notes to be issued pursuant to the Offer have not been,
nor will be, registered under the United States Securities Act of
1933, as amended, or under any relevant securities laws of any
states or district of the United States, will not be the subject
of a prospectus under the securities laws of any province of
Canada and will not be registered under any relevant securities
laws of any other country. The Loan Notes are not being offered,
sold or delivered, directly or indirectly, in or into the United
States, Canada, Australia or Japan.
<PAGE>10
APPENDIX I
CONDITIONS OF THE OFFER
CONDITIONS OF THE OFFER
The Offer, which will be made by Goldman Sachs International on behalf
of PacifiCorp Acquisitions, will comply with the rules and regulations of the
City Code and with US federal securities laws (except to the extent that
exemptive relief has been granted by the SEC) and the rules and regulations
made thereunder, will be governed by English law and be subject to the
jurisdiction of the courts of England and the following Conditions:
(a)
(i) valid acceptances being received (and not, where permitted,
withdrawn) by not later than 10.00 p.m. (London time), 5.00 p.m.
(New York City time) on the 20th Business Day following the date
of the Offer Document (or such later time(s) and/or date(s) as
PacifiCorp Acquisitions may, subject to the rules and regulations
of the City Code, decide) in respect of not less than 90 per cent.
in nominal value of Energy Group Securities to which the Offer
relates (the "90 per cent. threshold"), or such lesser percentage
as PacifiCorp Acquisitions may decide, provided that this
Condition shall not be satisfied unless PacifiCorp Acquisitions
and its wholly-owned subsidiaries shall have acquired or agreed to
acquire, whether pursuant to the Offer or otherwise, Energy Group
Securities carrying in aggregate more than 50 per cent. of the
voting rights then exercisable at general meetings of The Energy
Group. For the purposes of this Condition: (i) any Energy Group
Securities which have been unconditionally allotted shall be
deemed to carry the voting rights they will carry upon being
entered in the register of members of The Energy Group; (ii) the
expression "Energy Group Securities to which the Offer relates"
shall be construed in accordance with sections 428 to 430F of the
Companies Act; and (iii) valid acceptances shall be treated as
having been received in respect of any Energy Group Shares which
PacifiCorp Acquisitions shall, pursuant to section 429(8) of the
Companies Act, be treated as having acquired or contracted to
acquire by virtue of acceptances of the Offer; and
(ii) if the 90 per cent. threshold shall have been satisfied before the
Offer becomes or is declared unconditional in all respects,
Condition (a)(i) remaining satisfied as at the time when the Offer
becomes or is declared unconditional in all other respects, by
reference to the facts then subsisting;
(b) PacifiCorp Acquisitions being reasonably satisfied that the acquisition
of Energy Group Securities pursuant to the Offer will not subject
PacifiCorp Acquisitions to regulation, or PacifiCorp Acquisitions will
be exempt from regulation, under the US Public Utility Holding Company
Act of 1935;
(c) FERC shall have issued an order on terms reasonably acceptable to
PacifiCorp Acquisitions approving the sale of the FERC-jurisdictional
assets of Citizens Power and Peabody Investments, Inc. to a third party;
(d) no relevant authority having intervened in a way which would be likely,
or having failed to institute or implement any action the failure of
which would be likely (to an extent which is, in the case of (i) to (iv)
below, material in the context of the PacifiCorp Acquisitions Group or
of the TEG Group or of the financing of the Offer):
(i) to require, prevent or delay the divestiture or materially alter
the terms of any proposed divestiture by PacifiCorp Acquisitions
or The Energy Group or any member of the PacifiCorp Acquisitions
Group or the wider TEG Group of all or any portion of their
respective businesses,
<PAGE>11
assets or properties or impose any limitation on the ability of
any of them to conduct any of their respective businesses or to
own any of their respective assets or property or any part
thereof;
(ii) to impose any limitation on the ability of any member of the
PacifiCorp Acquisitions Group or the wider TEG Group to acquire,
or to hold or to exercise effectively, directly or indirectly, any
rights of ownership in respect of shares in, or management control
over, any member of the wider TEG Group;
(iii) otherwise adversely to affect the financial or trading position of
any member of the PacifiCorp Acquisitions Group or the wider TEG
Group;
(iv) to make the Offer or its implementation or the acquisition or the
proposed acquisition of any Energy Group Shares or Energy Group
ADSs or control of The Energy Group by any member of the
PacifiCorp Acquisitions Group void, illegal and/or unenforceable,
or otherwise, directly or indirectly, to restrain, restrict,
prohibit, delay or otherwise interfere with the implementation
thereof, or impose additional conditions or obligations with
respect thereto, or otherwise challenge or hinder any thereof;
(v) to result in a delay in the ability of any member of the
PacifiCorp Acquisitions Group, or render any such person unable,
to acquire some or all of the Energy Group Shares or Energy Group
ADSs or require or prevent or materially delay divestiture by any
such person of any such securities; or
(vi) to require any member of the PacifiCorp Acquisitions Group or the
wider TEG Group to offer to acquire any shares or other securities
(or the equivalent) in any member of the wider TEG Group owned by
any third party;
and all applicable waiting and other time periods during which any
relevant authority could, in respect of the Offer or the acquisition or
proposed acquisition of any Energy Group Shares or Energy Group ADSs or
control of The Energy Group by PacifiCorp Acquisitions, intervene having
expired, lapsed or terminated;
(e) all necessary filings having been made, all regulatory and statutory
obligations having been complied with, all appropriate waiting periods
under any applicable legislation or regulations of any jurisdiction
having expired, lapsed or terminated in each case in respect of the
Offer or the acquisition of any shares or other securities in, or
control of, The Energy Group by any member of the PacifiCorp
Acquisitions Group and all authorisations and determinations necessary
or appropriate in any jurisdiction for or in respect of the Offer
(including, without limitation, its implementation and financing) or
proposed acquisition of any shares or other securities in, or control
of, The Energy Group by any member of the PacifiCorp Acquisitions Group
or in relation to the affairs of any member of the PacifiCorp
Acquisitions Group or the wider TEG Group having been obtained in terms
and in a form reasonably satisfactory to PacifiCorp Acquisitions from
all relevant authorities or (without prejudice to the generality of the
foregoing) from any persons or bodies with whom any member of the
PacifiCorp Acquisitions Group or the wider TEG Group, as the case may
be, has entered into contractual arrangements and such authorisations
and determinations together with all material authorisations and
determinations necessary or appropriate for any member of the PacifiCorp
Acquisitions Group or the wider TEG Group to carry on a business which
is material in the context of the PacifiCorp Acquisitions Group or the
TEG Group as a whole or of the financing of the Offer remaining in full
force and effect and all filings necessary for such purpose having been
made and there being no notice or intimation of any intention to revoke
or not to renew any of the same and all necessary statutory or
regulatory obligations in all relevant jurisdictions having been
complied with;
(f) PacifiCorp Acquisitions not having discovered (other than by virtue of
the same having been disclosed to it prior to the date of this
announcement by any member of the TEG Group) any
<PAGE>12
provision of any agreement, arrangement, licence or other instrument to
which any member of the wider TEG Group is a party or by or to which any
member of the wider TEG Group or any part of its assets may be bound,
entitled or subject which would be likely, as a result of the Offer, the
proposed acquisition by PacifiCorp Acquisitions of any shares in, or
change in the control or management of, The Energy Group or otherwise,
to result in (to an extent which is material in the context of the
PacifiCorp Acquisitions Group or the wider TEG Group as a whole or of
the financing of the Offer):
(i) any moneys borrowed by or any other indebtedness, actual or
contingent, of any member of the wider TEG Group being or becoming
repayable or capable of being declared repayable immediately or
prior to its stated maturity, or the ability of any such member to
borrow moneys or incur any indebtedness being withdrawn or
inhibited;
(ii) any such agreement, arrangement, licence or instrument being
terminated or adversely modified or any obligation or liability
arising or any action being taken or arising thereunder;
(iii) the rights, liabilities, obligations or interests of any member of
the wider TEG Group under any such arrangement, agreement, licence
or instrument or the interests or business of any such member in
or with any other person, firm, company or body (or any
arrangements relating to any such interests or business) being
terminated or adversely modified or affected;
(iv) any assets or interests of any such member being or becoming
liable to be disposed of or charged, or any right arising under
which any such asset or interest is required or is likely to be
required to be disposed of or charged, in each case other than in
the ordinary course of business;
(v) the creation of any mortgage, charge or other security interest
over the whole or any part of the business, property or assets of
any member of the wider TEG Group or any such security interest,
whenever arising or having arisen, becoming enforceable;
(vi) the creation of liabilities for any member of the wider TEG Group
other than in the ordinary course of business; or
(vii) the financial or trading position of any member of the wider TEG
Group being prejudiced or adversely affected;
(g) PacifiCorp Acquisitions not having discovered, save as publicly
announced in accordance with the Listing Rules prior to the date of this
announcement or as otherwise disclosed to it prior to that date by any
member of the TEG Group, that any member of the wider TEG Group has,
since 30 September 1997 to an extent which is material in the context of
the TEG Group as a whole or of the financing of the Offer:
(i) save to any member of the TEG Group and, save for the issue of
Energy Group Securities on the exercise of options granted under
any of the Energy Group Share Schemes prior to the date of this
announcement, issued or agreed to issue or authorised or proposed
the issue of additional shares of any class, or of securities
convertible into, or rights, warrants or options to subscribe for
or acquire, any such shares or convertible securities or redeemed,
purchased or reduced any part of its share capital;
(ii) recommended, declared, paid or made or proposed to recommend,
declare, pay or make any bonus, dividend or other distribution in
respect of the share capital of The Energy Group;
(iii) merged with any body corporate or acquired or disposed of or
transferred, mortgaged or charged or created any security interest
over any assets or any right, title or interest in any assets
(including shares and trade investments) or authorised or proposed
or announced any intention to propose a merger, demerger,
acquisition, disposal, transfer, mortgage, charge or security
interest (in each case, other than in the ordinary course of
business);
<PAGE>13
(iv) made or authorised or proposed or announced an intention to
propose any change in its share or loan capital save for options
granted under any of the Energy Group Share Schemes prior to the
date of this announcement and for any Energy Group Securities
allotted upon exercise of such options;
(v) issued, authorised or proposed or announced an intention to
propose the issue of any debentures or (save in the ordinary
course of business) incurred or increased any indebtedness or
contingent liability;
(vi) otherwise than in the ordinary course of business, entered into
any contract, reconstruction, amalgamation, commitment or other
transaction or arrangement or (save for changes in remuneration
notified to PacifiCorp Acquisitions prior to the date of this
announcement) changed the terms of any contract with any director
of The Energy Group;
(vii) save in the ordinary course of business, entered into or varied
any contract, transaction or commitment (whether in respect of
capital expenditure or otherwise) which is of a long-term, onerous
or unusual nature or magnitude or which involves or could involve
an obligation of such a nature or magnitude;
(viii) waived or compromised any claim otherwise than in the ordinary
course of business;
(ix) taken any corporate action or had any order made for its
winding-up, dissolution or reorganisation or for the appointment
of a receiver, administrator, administrative receiver, trustee or
similar officer of all or any of its assets or revenues; or
(x) entered into any contract, commitment, agreement or arrangement or
passed any resolution with respect to, or announced an intention
to, or to propose to effect, any of the transactions, matters or
events referred to in this Condition;
(h) since 30 September 1997, save as publicly announced in accordance with
the Listing Rules prior to the date of this announcement or as otherwise
disclosed to PacifiCorp Acquisitions prior to that date by any member of
the TEG Group, none of the following having occurred to an extent which
is material in the context of the wider TEG Group as a whole or of the
financing of the Offer:
(i) adverse change or deterioration in the business, assets, financial
or trading position of any member of the wider TEG Group;
(ii) litigation or arbitration proceedings, prosecution or other legal
proceedings having been instituted or threatened in writing by or
against or remaining outstanding against any member of the wider
TEG Group or to which any member of the wider TEG Group is a party
(whether as plaintiff, defendant or otherwise) and any
investigation by any relevant authority against, or in respect of
any member of the wider TEG Group having been threatened in
writing, announced or instituted or remaining outstanding by,
against or in respect of any member of the wider TEG Group; and
(iii) a contingent or other liability of any member of the wider TEG
Group having arisen which would be likely adversely to affect any
member of the wider TEG Group;
(i) PacifiCorp Acquisitions not having discovered:
(i) that any financial, business or other information which has been
publicly disclosed at any time by or on behalf of any member of
the wider TEG Group is materially misleading, contains a material
misrepresentation of fact or omits to state a fact necessary to
make the information contained therein not misleading and which in
any such case is material in the context of the wider TEG Group
taken as a whole or of the financing of the Offer; or
<PAGE>14
(ii) that any member of the wider TEG Group was, at the date of the
Energy Group Listing Particulars, or has, outside the ordinary
course of business since that date, become subject to any
liability (contingent or otherwise) which is not disclosed or
referred to in the Energy Group Listing Particulars and which is
material in the context of the wider TEG Group taken as a whole or
of the financing of the Offer; and
(j) save as publicly announced in accordance with the Listing Rules prior to
the date of this announcement or as otherwise disclosed to it prior to
that date by any member of the TEG Group, PacifiCorp Acquisitions not
having discovered:
(i) that any past or present member of the wider TEG Group has not
complied with all applicable legislation or regulations of any
jurisdiction with regard to the disposal, discharge, spillage,
leak or emission of any waste or hazardous substance or any
substance likely to impair the environment or harm human health,
which non-compliance or any other disposal, discharge, spillage,
leak or emission which has occurred would be likely to give rise
to any liability (whether actual or contingent) on the part of any
member of the wider TEG Group and which is material in the context
of the wider TEG Group taken as a whole or of the financing of the
Offer; or
(ii) that there is, or is likely to be, any liability (whether actual
or contingent) to make good, repair, reclaim, remediate, reinstate
or clean up property now or previously owned, occupied or made use
of by any past or present member of the wider TEG Group under any
legislation, regulation, notice, circular or order of any relevant
authority relating to the protection of or enhancement of the
environment and which is material in the context of the wider TEG
Group taken as a whole or of the financing of the Offer.
For the purposes of these Conditions: (a) "relevant authority" means any
government, government department or governmental, quasi-governmental,
supranational, statutory or regulatory body, court, trade agency, professional
association or institution or environmental body in any jurisdiction; (b) a
relevant authority shall be regarded as having "intervened" if it has
instituted, implemented or threatened to take any action, proceedings, suit,
investigation or enquiry or reference, or made, enacted or proposed any
statute, regulation, decision or order and "intervene" shall be construed
accordingly; (c) "authorisations" means authorisations, orders, grants,
recognitions, certifications, confirmations, consents, licences, clearances,
permissions and approvals; (d) the "wider TEG Group" means The Energy Group
and its subsidiary undertakings, associated undertakings and any other
undertakings in which The Energy Group and such undertakings (aggregating
their interests) have a substantial interest; and (e) the "PacifiCorp
Acquisitions Group" means PacifiCorp Group Holdings Company and its subsidiary
undertakings, associated undertakings and any other undertaking in which
PacifiCorp Group Holdings Company and such undertakings (aggregating their
interests) have a substantial interest and, for these purposes, "subsidiary
undertaking", "associated undertaking", "holding company" and "undertaking"
have the meanings given by the Companies Act (but for this purpose ignoring
paragraph 20(1)(b) of Schedule 4A of the Companies Act) and "substantial
interest" means a direct or indirect interest in 20 per cent. or more of the
equity capital of an undertaking.
PacifiCorp Acquisitions will not invoke either of Conditions (d) or (e)
in respect of:
(a) the DGES seeking or indicating that it is his intention to seek:
(i) modifications to any of Eastern's licences under the Electricity
Act 1989; or
(ii) undertakings or assurances from any member of the PacifiCorp
Acquisitions Group or the TEG Group,
in either case provided that such modifications, undertakings or
assurances substantially reflect the assurances proposed by the DGES to
PacifiCorp Acquisitions in connection with the referral of the
<PAGE>15
Original Offer to the Monopolies and Mergers Commission (as the same are
described in the Monopolies and Mergers Commission Report relating to
the Original Offer published on 19 December 1997) or are otherwise
reasonably satisfactory to PacifiCorp Acquisitions; or
(b) any action taken or order made by the FTC or the failure to obtain any
approval or order from the FTC.
PacifiCorp Acquisitions reserves the right to waive all or any of the
above Conditions, in whole or in part, except Condition (a). Conditions (b) to
(j) inclusive, if not, where applicable, waived, must be fulfilled or
satisfied by the Initial Closing Date. Subject thereto, if Condition (a)(i) is
satisfied prior to the Initial Closing Date, Conditions (b) to (j) inclusive
if not, where applicable, waived, must be fulfilled or satisfied, (i) if
Condition (a)(i) is satisfied at a level below the 90 per cent. threshold
described in Condition (a)(i), by the date on which Condition (a)(i) is so
satisfied, or (ii) if Condition (a)(i) is satisfied at a level at or above
such 90 per cent. threshold, by the end of the twenty-first day (or such later
day as the Panel may agree) after whichever is the later of the time of
satisfaction of Condition (a)(i) and the 20th Business Day following the date
of the Offer Document, but, subject thereto, PacifiCorp Acquisitions shall be
under no obligation to waive or treat as satisfied any Condition by a date
earlier than the latest date for the satisfaction thereof, notwithstanding
that the other Conditions may at such earlier date have been waived or
fulfilled and that there are at such earlier date no circumstances indicating
that any of such Conditions may not be capable of fulfilment.
If PacifiCorp Acquisitions is required by the Panel to make an offer for
Energy Group Securities under the provisions of Rule 9 of the City Code,
PacifiCorp Acquisitions may make such alterations to the above Conditions,
including Condition (a), as are necessary to comply with the provisions of
Rule 9.
The Offer will lapse if the Acquisition is referred to the Monopolies
and Mergers Commission before the Initial Closing Date.
<PAGE>16
APPENDIX II
SUMMARY OF THE TERMS OF THE LOAN NOTES
The Floating Rate Unsecured Loan Notes 2004 of PacifiCorp Acquisitions
will be created by a resolution of the Board or a duly authorised committee
thereof and will be constituted by a Loan Note Instrument (the "Loan Note
Instrument") executed as a deed by PacifiCorp Acquisitions. The Loan Notes
will not be guaranteed. The issue of the Loan Notes is conditional on all
Conditions being, where applicable, waived, fulfilled or satisfied. Loan Notes
will be issued only if the aggregate valid elections for the Loan Note
Alternative received on or before the date on which all Conditions are so
waived, fulfilled or satisfied, as applicable, will result in PacifiCorp
Acquisitions issuing in excess of pound sterling 1 million nominal value of
Loan Notes. The Loan Note Alternative is not available to any person who is a
citizen or resident of the United States and certain other jurisdictions. The
Loan Note Instrument will contain provisions, inter alia, substantially to the
_____ ____
effect set out below.
1 The Loan Notes will be issued by PacifiCorp Acquisitions in amounts and
integral multiples of pound sterling 1 in nominal amount only and will
constitute unsecured obligations of PacifiCorp Acquisitions. No payment
will be made in respect of any amount payable of less than pound
sterling 1. The Loan Note Instrument will not contain any restrictions
on borrowing, disposals or charging of assets by PacifiCorp
Acquisitions.
2 Interest on the Loan Notes will be payable (subject to any requirement
to deduct income tax therefrom) semi-annually in arrear on 30 June and
31 December in each year or, if such a day is not a Business Day, on the
immediately preceding Business Day ("interest payment dates") except
that the first payment of interest on the Loan Notes will be made on
31 December 1998 in respect of the period from and including the date of
issue of the relevant Loan Note up to but excluding 31 December 1998.
The period from and including the date of issue of the relevant Loan
Note up to but excluding 31 December 1998 and the period from and
including that date or any subsequent interest payment date up to but
excluding the next following interest payment date is herein called an
"interest period".
3(a) The rate of interest on the Loan Notes for each interest period will be
the rate per annum which is 0.5 per cent. below LIBOR. "LIBOR" means the
arithmetic mean (rounded down, if necessary, to four decimal places) of
the respective rates which are quoted as of 11.00 a.m. (London time) on
the first Business Day of the interest period on the "LIBP" page on the
Reuter Monitor Money Rate Service (or such other page or service as may
replace it for the purpose of displaying London inter-bank sterling
offered rates of leading reference banks) as being the interest rates
offered in the London inter-bank market for six month sterling deposits
but:
(i) if only two or three such offered quotations appear, the relevant
arithmetic mean (rounded as mentioned above) shall be determined
on the bases of those offered quotations; and
(ii) if no, or only one, such offered quotation appears, the relevant
arithmetic mean (rounded as mentioned above) shall be determined
instead on the basis of the respective rates (as quoted to
PacifiCorp Acquisitions at its request) at which each of Barclays
Bank PLC and National Westminster Bank plc is offering six month
sterling deposits to prime banks in the London inter-bank market
at or about 11.00 a.m. (London time) on the first Business Day of
the relevant interest period.
(b) If LIBOR cannot be established in accordance with the provisions of
paragraph 3(a) above for any interest period, the rate of interest on
the Loan Notes for such interest period shall be the same as that
applicable to the Loan Notes during the previous interest period, unless
in such case such other prime bank in the London inter-bank market as
PacifiCorp Acquisitions shall reasonably select for
<PAGE>17
the purpose shall have been prepared to offer a rate as aforesaid, in
which case the rate of interest in respect of the relevant interest
period shall be the rate so offered.
(c) Each instalment of interest shall be calculated on the basis of a 365
day year (or a 366 day year in the case of a leap year) and the number
of days elapsed in the relevant interest period.
4 A holder of Loan Notes (a "Noteholder") shall be entitled to require
PacifiCorp Acquisitions to repay the whole (whatever the amount) or any
part (being any integral amount of pound sterling 1) of the principal
amount of his holding of Loan Notes at par, together with accrued
interest (subject to any requirement to deduct income tax therefrom) up
to but excluding the date of repayment, on any interest payment date,
from and including 31 December 1998 and thereafter on any interest
payment date falling prior to 31 December 2004 by giving not less than
30 days' prior notice in writing to the registrars of PacifiCorp
Acquisitions accompanied by the certificate(s) for all the Loan Notes to
be repaid and notice of redemption (duly completed) in the prescribed
form on the Loan Notes to be repaid.
5 If at any time the principal amount of all Loan Notes outstanding is 20
per cent. or less of the total nominal amount of Loan Notes issued in
connection with the Offer, PacifiCorp Acquisitions shall have the right,
on giving the remaining Noteholders not less than 30 days' notice in
writing expiring on 31 December 1998 or any subsequent interest payment
date, to redeem all (but not some only) of the outstanding Loan Notes at
par together with accrued interest thereon (subject to any requirement
to deduct income tax therefrom) up to but excluding the date of
redemption.
6 Any Loan Notes not previously repaid, redeemed or purchased will be
repaid in full at par on 31 December 2004, together with accrued
interest thereon (subject to any requirement to deduct income tax
therefrom) up to and excluding that date.
7 Any Loan Notes repaid, purchased or redeemed will be cancelled and shall
not be available for re-issue.
8 The Noteholders will have power by extraordinary resolution of the
Noteholders passed in accordance with the provisions of the Loan Note
Instrument or by resolution in writing signed by holders of not less
than 75 per cent. of the outstanding Loan Notes, inter alia, to sanction
_____ ____
any modification, abrogation or compromise of or arrangement in respect
of their rights against PacifiCorp Acquisitions and to assent to any
amendment in respect of their rights against PacifiCorp Acquisitions and
to assent to any amendment of the provisions of the Loan Note Instrument
(but in each case subject to the consent of PacifiCorp Acquisitions).
PacifiCorp Acquisitions may, with the consent of its financial advisers,
amend the provisions of the Loan Note Instrument, without such sanction
or consent, if such amendment is of a formal, minor or technical nature
or to correct a manifest error.
9 Each Noteholder will have the right to acquire (by subscription at a
nominal value of an amount up to or equal to such Noteholder's holding
of Notes) additional loan notes to be issued by a subsidiary of
PacifiCorp Acquisitions (the "Additional Notes") on terms and conditions
substantially the same as those applicable to the Loan Notes, except as
follows:
(a) the Additional Notes will not be issued before 31 December 2003;
(b) the rate of interest on the Additional Notes will be 1.5 per cent. below
the rate per annum described in paragraph 3(a) above; and
(c) the Additional Notes will not carry any right to acquire any additional
securities.
10 Each Noteholder shall be entitled to require all or part (being pound
sterling 1 nominal amount or any integral multiple thereof) of the Loan
Notes held by him to be repaid at par together with accrued interest
(subject to any requirement to deduct any income tax therefrom) if:
<PAGE>18
(a) any principal or interest on any of the Loan Notes held by that
Noteholder shall fail to be paid in full within 30 days after the due
date for payment thereof; or
(b) an order is made or an effective resolution is passed for the winding-up
or dissolution of PacifiCorp Acquisitions (other than for the purposes
of a solvent reconstruction or a solvent amalgamation or a members'
voluntary winding-up on terms previously approved by extraordinary
resolution of the Noteholders); or
(c) an encumbrancer takes possession of, or a trustee, receiver,
administrator or similar officer is appointed or an administration order
is made in respect of, the whole or substantially the whole of the
undertaking of PacifiCorp Acquisitions and such person has not been paid
out or discharged within 30 days.
11 PacifiCorp Acquisitions shall be entitled at any time to purchase any
Loan Notes at any price by tender (available to all Noteholders alike),
private treaty or otherwise by agreement with the relevant
Noteholder(s).
12 The Loan Notes will contain provisions entitling PacifiCorp
Acquisitions, without the consent of Noteholders, to substitute any of
its subsidiaries or any holding company or subsidiaries of such holding
company resident in the UK for tax purposes (other than Eastern or any
of its subsidiaries) as the principal debtor under the Loan Note
Instrument and the Loan Notes or to require all or any of the
Noteholders to exchange their Loan Notes for loan notes issued on the
same terms mutatis mutandis by any such company provided that (a)
_______ ________
PacifiCorp Acquisitions guarantees such company's obligations
thereunder; and (b) following such substitution or exchange, the Loan
Notes or (as the case may be) such loan notes shall not contain a
provision equivalent to this paragraph 12. References to PacifiCorp
Acquisitions in this summary shall be construed accordingly. PacifiCorp
Acquisitions' right to require substitution of such company as principal
debtor (but not the right to require exchange of the Loan Notes) will be
exercisable only if prior clearance has been obtained from the Inland
Revenue to the effect that the substitution will not be treated as a
disposal of the Loan Notes for the purposes of United Kingdom taxation
of chargeable gains and PacifiCorp Acquisitions' right to require such
an exchange will be exercisable only if the exchange will fall within
section 135 of the Taxation of Chargeable Gains Act 1992, and to the
extent relevant, clearance has been received from the Inland Revenue
under section 138 of that Act in respect of the exchange.
13 The Loan Notes will be evidenced by certificates, will be registered and
will be transferable in integral multiples of pound sterling 1 in excess
of that amount, provided that transfers of Loan Notes will not be
registered while the register of Noteholders is closed.
14 No application has been made or is intended to be made to any stock
exchange or other dealing service for the Loan Notes to be listed or
otherwise traded.
15 The Loan Notes and the Loan Note Instrument will be governed by and
construed in accordance with English law.
<PAGE>19
APPENDIX III
SOURCES AND BASES
1. The value of the fully diluted share capital of The Energy Group is
based upon 520,857,817 Energy Group Shares in issue on 2 February 1998 and
9,228,858 Energy Group 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.
2. The pro forma financial information in respect of The Energy Group
for the year ended 31 March 1997 is taken from the unaudited pro forma
combined financial information set out in The Energy Group's report and
accounts for the six months ended 31 March 1997.
3. References in this announcement to "tons" are to short tons equal to
2,000 pounds.
<PAGE>20
APPENDIX IV
DEFINITIONS
"Acquisition" the proposed acquisition of The
Energy Group pursuant to the Offer
"Board" or "Directors" the directors of PacifiCorp
Acquisitions
"Business Day" has the meaning given to it in Rule
14d-1 under the US Securities
Exchange Act of 1934
"Canada" Canada, its provinces, territories
and all areas subject to its
jurisdiction and any political sub-
division thereof
"City Code" the City Code on Takeovers and
Mergers of the UK
"Closing Price" the mid-price quotation of an Energy
Group Share as derived from the
London Stock Exchange Daily Official
List
"Combined Group" PacifiCorp and its subsidiaries, as
enlarged by the acquisition of The
Energy Group
"Companies Act" the Companies Act 1985 (as amended)
of England and Wales
"Conditions" the conditions of the Offer
described in Appendix I and
"Condition" means any one of them
"DGES" The Director General of Electricity
Supply of the UK
"Energy Group ADRs" American Depositary Receipts
evidencing Energy Group ADSs
"Energy Group ADSs" American Depositary Shares issued in
respect of Energy Group Shares, each
representing four Energy Group
Shares
"Energy Group Listing Particulars" the listing particulars relating to
Energy Group dated 27 January 1997
published in accordance with the
Listing Rules
"Energy Group Securities" Energy Group Shares and Energy Group
ADSs
"Energy Group Share Schemes" The Energy Group Executive Share
Option Scheme, The Energy Group
Sharesave Scheme, The Energy Group
Long-term Incentive Plan and The
Energy Group Special Bonus Scheme
"Energy Group Shares" shares of 10p each in the share
capital of The Energy Group in issue
or allotted or issued prior to the
date on which the Offer closes (or
such earlier date, not being earlier
than the Initial Closing Date (as it
may be extended), as PacifiCorp
Acquisitions may determine)
<PAGE>21
"FERC" the US Federal Energy Regulatory
Commission
"Initial Closing Date" 10.00 p.m. (London time), 5.00 p.m.
(New York City time) 20 Business
Days after the date of the Offer
Document, unless and until
PacifiCorp Acquisitions, in its
discretion, shall have extended the
Offer, in which case the term
"Initial Closing Date" shall mean
the latest time and date at which
the Offer, as so extended by
PacifiCorp Acquisitions, will expire
or, if earlier, the date on which
the Offer becomes or is declared
wholly unconditional
"Initial Offer Period" the period from the date of the
Offer Document to and including the
Initial Closing Date
"Lazard" Lazard Brothers & Co., Limited and
Lazard Freres & Co. Limited
"LIBOR" the London Inter-Bank Offered Rate,
determined in accordance with the
Terms of the Loan Notes, a summary
of which is set out in Appendix II
"Listing Rules" the Listing Rules of the London
Stock Exchange
"Loan Note Alternative" the alternative under which holders
of Energy Group Shares who validly
accept the Offer will be entitled to
elect to receive Loan Notes instead
of cash consideration otherwise
payable to them
"Loan Notes" the Floating Rate Unsecured Loan
Notes 2004 of PacifiCorp
Acquisitions to be issued pursuant
to the Loan Note Alternative
"London Stock Exchange" London Stock Exchange Limited
"Morgan Stanley" Morgan Stanley & Co. Limited
"NYSE" the New York Stock Exchange
"Offer" the offer to be made by Goldman
Sachs International on behalf of
PacifiCorp Acquisitions to acquire
the Energy Group Shares (including
those represented by Energy Group
ADSs) and Energy Group ADSs as
described in this document
including, where the context permits
and/or requires, the Loan Note
Alternative and any subsequent
revision, variation, extension, or
renewal of such offer or the Loan
Note Alternative
"Offer Document" the document containing the Offer to
be sent to holders of Energy Group
Shares and Energy Group ADSs
"Original Offer" the offer made by Goldman Sachs
International on behalf of
PacifiCorp Acquisitions to acquire
all the issued and to be issued
Energy Group shares as announced on
13 June 1997
<PAGE>22
"Panel" the Panel on Takeovers and Mergers
of the UK
"SEC" the US Securities and Exchange
Commission
"Subsequent Offer Period" the period following the Initial
Closing Date during which the Offer
remains open for acceptance
"TEG Group" The Energy Group and its
subsidiaries and subsidiary
undertakings and, where the context
permits, each of them
"The Energy Group" The Energy Group PLC
"UK" or "United Kingdom" the United Kingdom of Great Britain
and Northern Ireland
"United States" or "US" the United States of America, its
territories and possessions, any
State of the United States and the
District of Columbia, and all other
areas subject to its jurisdiction
"Pound Sterling" pound sterling, the lawful currency
of the United Kingdom
"$" United States dollar, the lawful
currency of the United States
