<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13e-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE
ACT OF 1934)
PENNSYLVANIA ELECTRIC COMPANY
(NAME OF THE ISSUER AND PERSON(S) FILING STATEMENT)
Cumulative Preferred Stock, 4.40% Series B
Cumulative Preferred Stock, 3.70% Series C
Cumulative Preferred Stock, 4.05% Series D
Cumulative Preferred Stock, 4.70% Series E
Cumulative Preferred Stock, 4.50% Series F, and
Cumulative Preferred Stock, 4.60% Series G
(TITLE OF CLASS OF SECURITIES)
708696-10-9 (Cumulative Preferred Stock, 4.40% Series B)
708696-20-8 (Cumulative Preferred Stock, 3.70% Series C)
708696-30-7 (Cumulative Preferred Stock, 4.05% Series D)
708696-40-6 (Cumulative Preferred Stock, 4.70% Series E)
708696-50-5 (Cumulative Preferred Stock, 4.50% Series F), and
708696-60-4 (Cumulative Preferred Stock, 4.60% Series G)
(CUSIP NUMBER OF CLASS OF SECURITIES)
T. G. HOWSON
Vice President
c/o GPU Service, Inc.
100 Interpace Parkway
Parsippany, New Jersey 07054
(Tel. No. 201-263-6500)
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information statement
subject to Regulation 14A [17 CFR 240.14a-1 to 240.14b-1], Regulation
14C [17 CFR 240.14c-1 to 240.14c-101] or Rule 13e-3(c) [Sec.
240.13e-3(c)] under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [X] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ]
Page 1 of 13
<PAGE> 2
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- ---------------------- --------------------
<S> <C>
$25,564,349.94 $5,112.87
</TABLE>
* Pursuant to Section 13(e)(3) of the Securities Exchange Act of 1934, as
amended, and Rule 0-11(b)(1) thereunder, the transaction value was
calculated by multiplying 56,810 shares of Cumulative Preferred Stock,
4.40% Series B, 97,054 shares of Cumulative Preferred Stock, 3.70% Series
C, 63,696 shares of Cumulative Preferred Stock, 4.05% Series D, 28,739
shares of Cumulative Preferred Stock, 4.70% Series E, 42,969 shares of
Cumulative Preferred Stock, 4.50% Series F, and 75,732 shares of Cumulative
Preferred Stock, 4.60% Series G, by $73.44, $59.64, $67.61, $78.45, $75.11,
and $76.79, the respective per share purchase prices.
/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 OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE, AND THE DATE OF ITS FILING.
<TABLE>
<S> <C>
Amount Previously Paid: Filing Party:
$5,112.87 Pennsylvania Electric Company
Form or Registration No.: Date Filed:
Schedule 13E-4 November 13, 1996
</TABLE>
Page 2 of 13 Pages
<PAGE> 3
This Rule 13e-3 Transaction Statement (the "Statement") relates to the
Offer by Pennsylvania Electric Company, a Pennsylvania corporation (the
"Company"), pursuant to its Offer to Purchase dated November 13, 1996 (the
"Offer to Purchase"), to purchase any and all of the outstanding shares of the
following Series of Preferred:
Cumulative Preferred Stock, 4.40% Series B, ($100 stated
value), at a purchase price of $73.44 per share, net to the
seller in cash.
Cumulative Preferred Stock, 3.70% Series C, ($100 stated
value), at a purchase price of $59.64 per share, net to the
seller in cash.
Cumulative Preferred Stock, 4.05% Series D, ($100 stated
value), at a purchase price of $67.61 per share, net to the
seller in cash.
Cumulative Preferred Stock, 4.70% Series E, ($100 stated
value), at a purchase price of $78.45 per share, net to the
seller in cash.
Cumulative Preferred Stock, 4.50% Series F, ($100 stated
value), at a purchase price of $75.11 per share, net to the
seller in cash.
Cumulative Preferred Stock, 4.60% Series G, ($100 stated
value), at a purchase price of $76.79 per share, net to the
seller in cash.
There is a separate Letter of Transmittal and Notice of Guaranteed Delivery
with respect to each Series of Preferred.
The cross reference sheet below is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Issuer Tender
Offer Statement on Schedule 13E-4 (the "Schedule 13E-4") filed by the Company
with the Securities and Exchange Commission (the "Commission") on the date
hereof of the information required to be included in response to the items of
this Statement. The information set forth in the Schedule 13E-4 is expressly
incorporated by reference and responses to each item herein are qualified in
their entirety by the corresponding responses in the Schedule 13E-4.
<TABLE>
<CAPTION>
Location in
Item in Schedule 13E-3 Schedule 13E-4
- ---------------------- --------------
<S> <C>
Item 1(a)...................................................... Item 1(a)
Item 1(b)...................................................... Item 1(b)
Item 1(c)...................................................... Item 1(c)
Item 1(d)...................................................... *
</TABLE>
Page 3 of 13 Pages
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<TABLE>
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Item 1(e)...................................................... *
Item 1(f)...................................................... *
Item 2(a)...................................................... *
Item 2(b)...................................................... *
Item 2(c)...................................................... *
Item 2(d)...................................................... *
Item 2(e)...................................................... *
Item 2(f)...................................................... *
Item 2(g)...................................................... *
Item 3(a)(1)................................................... *
Item 3(a)(2)................................................... *
Item 3(b)...................................................... *
Item 4(a)...................................................... *
Item 4(b)...................................................... *
Item 5(a)...................................................... Item 3(b)
Item 5(b)...................................................... Item 3(c)
Item 5(c)...................................................... Item 3(d)
Item 5(d)...................................................... Item 3(e)
Item 5(e)...................................................... Item 3(f)
Item 5(f)...................................................... Item 3(i)
Item 5(g)...................................................... Item 3(j)
Item 6(a)...................................................... Item 2(a)
Item 6(b)...................................................... *
Item 6(c)...................................................... Item 2(b)
Item 6(d)...................................................... *
Item 7(a)...................................................... Item 3
Item 7(b)...................................................... *
Item 7(c)...................................................... *
Item 7(d)...................................................... *
Item 8(a)...................................................... *
Item 8(b)...................................................... *
Item 8(c)...................................................... *
Item 8(d)...................................................... *
Item 8(e)...................................................... *
Item 8(f)...................................................... *
Item 9(a)...................................................... *
Item 9(b)...................................................... *
Item 9(c)...................................................... *
Item 10(a)..................................................... *
Item 10(b)..................................................... *
Item 11........................................................ Item 5
Item 12(a)..................................................... *
Item 12(b)..................................................... *
Item 13(a)..................................................... *
Item 13(b)..................................................... *
Item 13(c)..................................................... *
Item 14(a)..................................................... Item 7(a)
Item 14(b)..................................................... Item 7(b)
Item 15(a)..................................................... *
Item 15(b)..................................................... Item 6
Item 16........................................................ Item 8(e)
Item 17(a)..................................................... Item 9(b)
Item 17(b)..................................................... *
Item 17(c)..................................................... Item 9(c)
</TABLE>
Page 4 of 13 Pages
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<TABLE>
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Item 17(d)..................................................... Item 9(a)
Item 17(e)..................................................... *
Item 17(f)..................................................... Item 9(f)
</TABLE>
- ----------
* The Item is located in the Schedule 13E-3 only.
Item 1. Issuer and Class of Security Subject to the Transaction.
(a) The name of the issuer is Pennsylvania Electric
Company, a Pennsylvania corporation that has its
principal executive offices at 2800 Pottsville Pike,
Reading, Pennsylvania 19605.
(b) The information set forth in the front cover page,
the "Introduction" and Section 1--"Purpose of the
Offer; Certain Effects of the Offer; Plans of the
Company After the Offer" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
(c)-(d) The information set forth in the "Introduction" and
Section 8--"Price Ranges of the Shares; Dividends" in
the Offer to Purchase is incorporated herein by
reference pursuant to General Instruction D to
Schedule 13E-3.
(e) Not applicable.
(f) Not applicable.
Item 2. Identity and Background.
The issuer is the party filing this Statement.
(a)-(g) Not applicable.
Item 3. Past Contracts, Transactions or Negotiations.
(a) Not applicable.
(b) Not applicable.
Page 5 of 13 Pages
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Item 4. Terms of the Transaction.
(a) The information set forth in the "Introduction;"
Section 1--"Purpose of the Offer; Certain Effects of
the Offer; Plans of the Company After the Offer";
Section 3--"Number of Shares; Purchase Price;
Expiration Date; Receipt of Dividend; Extension of
the Offer;" Section 4--"Procedure for Tendering
Shares"; Section 5--"Withdrawal Rights"; Section
6--"Acceptance for Payment of Shares and Payment of
Purchase Price"; Section 7--"Certain Conditions of
the Offer"; and Section 12 - "Extension of Tender
Period; Termination; Amendments" in the Offer to
Purchase is incorporated herein by reference pursuant
to General Instruction D to Schedule 13E-3.
(b) Not applicable.
Item 5. Plans or Proposals of the Issuer or Affiliate.
(a)-(g) The information set forth in Section 1--"Purpose of
the Offer; Certain Effects of the Offer; Plans of the
Company After the Offer" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
Item 6. Source and Amounts of Funds or Other Consideration.
(a) The information set forth in Section 10--"Source and
Amount of Funds" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
(b) The information set forth in Section 14--"Fees and
Expenses" in the Offer to Purchase is incorporated
herein by reference pursuant to General Instruction D
to Schedule 13E-3.
(c) The information set forth in Section 10--"Source and
Amount of Funds" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Page 6 of 13 Pages
<PAGE> 7
Instruction D to Schedule 13E-3.
(d) Not applicable.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
(a) The information set forth in Section 1--"Purpose of
the Offer; Certain Effects of the Offer; Plans of the
Company After the Offer" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
(b) Not applicable.
(c) The information set forth in Section 1--"Purpose of
the Offer; Certain Effects of the Offer; Plans of the
Company After the Offer" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
(d) The information set forth in Section 1--"Purpose of
the Offer; Certain Effects of the Offer; Plans of the
Company After the Offer"; Section 13--"Certain
Federal Income Tax Consequences"; Section 8--"Price
Range of Shares; Dividends"; and Section 10--"Source
and Amount of Funds" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
Item 8. Fairness of the Transaction.
(a)-(b) The information set forth in Section 1--"Purpose of
the Offer; Certain Effects of the Offer; Plans of the
Company After the Offer" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
(c) The information set forth in Section 2--"Certain
Legal Matters; Regulatory and Foreign Approvals; No
Appraisal Rights" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
Page 7 of 13 Pages
<PAGE> 8
(d)-(e) The information set forth in Section 1--"Purpose of
the Offer; Certain Effects of the Offer; Plans of the
Company After the Offer" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
(f) Not applicable.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
(a) The Information set forth in Section 1--"Purpose of
the Offer; Certain Effects of the Offer; Plans of the
Company After the Offer" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
(b) Not applicable.
(c) Not applicable.
Item 10. Interest in Securities of the Issuer.
(a)-(b) The information set forth in Section
11--"Transactions and Agreements Concerning the
Shares" in the Offer to Purchase is incorporated
herein by reference pursuant to General Instruction D
to Schedule 13E-3.
Item 11. Contracts, Arrangements or Understandings with Respect to
the Issuer's Securities.
Not applicable.
Item 12. Present Intention and Recommendation of Certain Persons
with Regard to the Transaction.
(a) The information set forth in Section
11--"Transactions and Agreements Concerning the
Shares" in the Offer to Purchase hereto is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
(b) Not applicable.
Page 8 of 13 Pages
<PAGE> 9
Item 13. Other Provisions of the Transaction.
(a) The information set forth in Section 2--"Certain
Legal Matters; Regulatory and Foreign Approvals; No
Appraisal Rights" in the Offer to Purchase is
incorporated herein by reference pursuant to General
Instruction D to Section 13E-3.
(b) Not applicable.
(c) Not applicable.
Item 14. Financial Information.
(a) The information set forth in Section 9--"Certain
Information Concerning the Company" in the Offer to
Purchase and Exhibits (g)(2) and (g)(3) hereto is
incorporated herein by reference pursuant to General
Instruction D to Schedule 13E-3.
(b) The information set forth in Section 9--"Certain
Information Concerning the Company" in the Offer to
Purchase is incorporated herein by reference pursuant
to General Instruction D to Schedule 13E-3.
Item 15. Persons and Assets Employed, Retained or Utilized.
(a) The officers and employees of the Company and its
affiliate, GPU Service, Inc., will perform tasks
which would be expected to arise in connection with
the transaction.
(b) The information set forth in the front cover page and
Section 14 "Fees and Expenses" in the Offer to
Purchase is incorporated herein by reference pursuant
to General Instruction D to Schedule 13E-3.
Item 16. Additional Information.
Reference is hereby made to the Offer to Purchase and
the Form of Letter of Transmittal, copies of which
are attached hereto as Exhibits (d)(1) and (d)(2),
respectively, and incorporated
Page 9 of 13 Pages
<PAGE> 10
in their entirety herein by reference pursuant to
General Instruction D to Schedule 13E-3.
Item 17. Material to be Filed as Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d)(1) Offer to Purchase dated November 13, 1996.
(d)(2) Form of Letter of Transmittal.
(d)(3) Form of Notice of Guaranteed Delivery.
(d)(4) Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees dated November 13,
1996.
(d)(5) Form of Letter to Clients for use by Brokers,
Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(d)(6) Form of Letter to Holders of Shares dated November
13, 1996.
(d)(7) Press Release dated November 13, 1996.
(d)(8) Form of Summary Advertisement dated November 13,
1996.
(d)(9) Guidelines of the Internal Revenue Service for
Certification of Taxpayer Identification Number on
Substitute Form W-9.
(e) Not applicable.
(f) Not applicable.
(g)(1) Issuer Tender Offer Statement on Schedule 13E-4 dated
November 13, 1996, incorporated by reference to SEC
File No. 1-3522.
(g)(2) Annual Report on Form 10-K for the year ended
December 31, 1995, incorporated by reference to SEC
File No. 1-3522.
Page 10 of 13 Pages
<PAGE> 11
(g)(3) Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, incorporated by reference to SEC
File No. 1-3522.
Page 11 of 13 Pages
<PAGE> 12
SIGNATURE
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: November 13, 1996 PENNSYLVANIA ELECTRIC COMPANY
By: /s/ T.G. Howson
---------------------
Name: T.G. Howson
Title: Vice President
Page 12 of 13 Pages
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d)(1) Offer to Purchase dated November 13, 1996.
(d)(2) Form of Letter of Transmittal.
(d)(3) Form of Notice of Guaranteed Delivery.
(d)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees dated November 13, 1996.
(d)(5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(d)(6) Form of Letter to Holders of Shares dated November 13, 1996.
(d)(7) Press Release dated November 13, 1996.
(d)(8) Form of Summary Advertisement dated November 13, 1996.
(d)(9) Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
(e) Not applicable.
(f) Not applicable.
(g)(1) Issuer Tender Offer Statement on Schedule 13E-4 dated November
13, 1996, incorporated by reference to SEC File No. 1-3522.
(g)(2) Annual Report on Form 10-K for the year ended December 31, 1995,
incorporated by reference to SEC File No. 1-3522.
(g)(3) Quarterly Report on Form 10-Q for the quarter ended September 30,
1996, incorporated by reference to SEC File No. 1-3522.
</TABLE>
Page 13 of 13 Pages
<PAGE> 14
<PAGE> 1
OFFER TO PURCHASE FOR CASH
BY
PENNSYLVANIA ELECTRIC COMPANY
ANY AND ALL OF ITS
Cumulative Preferred Stock, 4.40% Series B ($100 Stated Value) at a
Purchase Price of $73.44 Per Share (CUSIP No. 708696-10-9)
Cumulative Preferred Stock, 3.70% Series C ($100 Stated Value) at a
Purchase Price of $59.64 Per Share (CUSIP No. 708696-20-8)
Cumulative Preferred Stock, 4.05% Series D ($100 Stated Value) at a
Purchase Price of $67.61 Per Share (CUSIP No. 708696-30-7)
Cumulative Preferred Stock, 4.70% Series E ($100 Stated Value) at a
Purchase Price of $78.45 Per Share (CUSIP No. 708696-40-6)
Cumulative Preferred Stock, 4.50% Series F ($100 Stated Value) at a
Purchase Price of $75.11 Per Share (CUSIP No. 708696-50-5)
Cumulative Preferred Stock, 4.60% Series G ($100 Stated Value) at a
Purchase Price of $76.79 Per Share (CUSIP No. 708696-60-4)
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 13, 1996, UNLESS THE
OFFER IS EXTENDED
- --------------------------------------------------------------------------------
Pennsylvania Electric Company, a Pennsylvania corporation (the "Company"),
invites the holders of its (i) Cumulative Preferred Stock, 4.40% Series B ($100
stated value) (the "4.40% Preferred") to tender their shares of such stock (the
"4.40% Shares") for a price of $73.44 per 4.40% Share, (ii) Cumulative Preferred
Stock, 3.70% Series C ($100 stated value) (the "3.70% Preferred") to tender
their shares of such stock (the "3.70% Shares") for a price of $59.64 per 3.70%
Share, (iii) Cumulative Preferred Stock, 4.05% Series D ($100 stated value) (the
"4.05% Preferred") to tender their shares of such stock (the "4.05% Shares") for
a price of $67.61 per 4.05% Share, (iv) Cumulative Preferred Stock, 4.70% Series
E ($100 stated value) (the "4.70% Preferred") to tender their shares of such
stock (the "4.70% Shares") for a price of $78.45 per 4.70% Share, (v) Cumulative
Preferred Stock, 4.50% Series F ($100 stated value) (the "4.50% Preferred") to
tender their shares of such stock (the "4.50% Shares") for a price of $75.11 per
4.50% Share, and (vi) Cumulative Preferred Stock, 4.60% Series G ($100 stated
value) (the "4.60% Preferred"), to tender their shares of such stock (the "4.60%
Shares") for a price of $76.79 per 4.60% Share, in each case net to the seller
in cash, upon the terms and subject to the conditions set forth in this Offer to
Purchase (the "Offer to Purchase") and in each applicable Letter of Transmittal
(which, together with the Offer to Purchase, constitutes the "Offer" with
respect to the applicable Series of Preferred (as hereinafter defined)). The
4.40% Shares, the 3.70% Shares, the 4.05% Shares, the 4.70% Shares, the 4.50%
Shares and the 4.60% Shares collectively constitute the "Shares." The Company
will purchase any and all Shares validly tendered and not withdrawn. Each Series
of Preferred has its own Letter of Transmittal and Notice of Guaranteed Delivery
and only the applicable Letter of Transmittal or Notice of Guaranteed Delivery
may be used to tender shares of that Series of Preferred.
--------------------------
THE OFFER FOR ONE SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES OF PREFERRED. THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER
OF SHARES OF THE APPLICABLE SERIES OF PREFERRED BEING TENDERED. THE OFFER,
HOWEVER, IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7--"CERTAIN
CONDITIONS OF THE OFFER."
--------------------------
The Shares are listed and traded on the Philadelphia Stock Exchange, Inc.
As of November 12, 1996, the last reported sales prices of the Shares so listed
were $56.75 per 4.40% Share, $48.13 per 3.70% Share, $52.25 per 4.05% Share,
$60.75 per 4.70% Share, $61.50 per 4.50% Share and $61.50 per 4.60% Share. For
information concerning the Shares, quarterly sales prices and bids, see Section
8--"Price Ranges of Shares; Dividends." Shareholders are urged to obtain current
market quotations for the Shares.
--------------------------
The Company will pay to a Soliciting Dealer (as defined herein) a
solicitation fee of $1.32 per share for any Shares tendered, accepted for
payment and paid for pursuant to the Offer, subject to certain conditions. See
Section 14--"Fees And Expenses."
---------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF THIS
TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN
THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
--------------------------
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL SHARES OF
ANY SERIES OF PREFERRED PURSUANT TO THE OFFER. SHAREHOLDERS MUST MAKE THEIR OWN
DECISIONS AS TO WHETHER TO TENDER SHARES OF ANY SERIES OF PREFERRED PURSUANT TO
THE OFFER AND, IF SO, HOW MANY SHARES TO TENDER.
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
November 13, 1996
<PAGE> 2
IMPORTANT
Any shareholder desiring to tender any or all of such shareholder's Shares
should either (1) complete and sign the applicable Letter of Transmittal or a
facsimile copy thereof, in accordance with the instructions in such Letter of
Transmittal, mail or deliver it by hand, together with any other required
documents, to ChaseMellon Shareholder Services, L.L.C., as Depositary (the
"Depositary"), and deliver the certificates for such Shares to the Depositary or
follow the procedure for book-entry transfer set forth in Section 4-- "Procedure
for Tendering Shares" or (2) request such shareholder's broker, dealer,
commercial bank, trust company or nominee to effect the transaction for such
shareholder. Shareholders whose Shares are registered in the name of a broker,
dealer, commercial bank, trust company or nominee must contact such broker,
dealer, commercial bank, trust company or nominee if they desire to tender such
Shares. Shareholders who desire to tender Shares and whose certificates for such
Shares are not available immediately, or who cannot comply in a timely manner
with the procedure for book-entry transfer, should tender such Shares by
following the procedures for guaranteed delivery set forth in Section
4--"Procedure for Tendering Shares."
Holders who wish to tender Shares for more than one Series of Preferred
must use the applicable Letter of Transmittal or Notice of Guaranteed Delivery
for each Series of Preferred.
Questions or requests for assistance or for additional copies of this Offer
to Purchase, the applicable Letter of Transmittal or the applicable Notice of
Guaranteed Delivery or other tender offer materials may be directed to Georgeson
& Company Inc. (the "Information Agent") or Merrill Lynch & Co. (the "Dealer
Manager") at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING
SHARES OF ANY SERIES OF PREFERRED PURSUANT TO THE OFFER. NO PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE APPLICABLE LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
<PAGE> 3
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TABLE OF CONTENTS
PAGE
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SUMMARY...........................................................................................................I
INTRODUCTION......................................................................................................1
SPECIAL FACTORS...................................................................................................2
SECTION 1. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER; PLANS OF THE
COMPANY AFTER THE OFFER................................................................2
SECTION 2. CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS; NO APPRAISAL
RIGHTS.................................................................................4
THE OFFER.........................................................................................................5
SECTION 3. NUMBER OF SHARES; PURCHASE PRICE; EXPIRATION DATE; RECEIPT OF
DIVIDENDS; EXTENSION OF THE OFFER......................................................5
SECTION 4. PROCEDURE FOR TENDERING SHARES.........................................................6
SECTION 5. WITHDRAWAL RIGHTS......................................................................7
SECTION 6. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE.........................8
SECTION 7. CERTAIN CONDITIONS OF THE OFFER........................................................9
SECTION 8. PRICE RANGES OF SHARES; DIVIDENDS.....................................................10
SECTION 9. CERTAIN INFORMATION CONCERNING THE COMPANY............................................14
SECTION 10. SOURCE AND AMOUNT OF FUNDS............................................................16
SECTION 11. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.....................................17
SECTION 12. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS...................................17
SECTION 13. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES..........................................18
SECTION 14. FEES AND EXPENSES.....................................................................21
SECTION 15. MISCELLANEOUS.........................................................................22
</TABLE>
<PAGE> 4
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SUMMARY
This general summary is provided solely for the convenience of holders of
Shares and is qualified in its entirety by reference to the full text and more
specific details contained in this Offer to Purchase and the applicable Letter
of Transmittal and any amendments hereto and thereto. Each of the capitalized
terms used in this Summary and not defined herein has the meaning set forth
elsewhere in this Offer to Purchase.
The Company ........................ Pennsylvania Electric Company
The Shares ......................... Any and all of the:
4.40% Series B ($100 stated value)
3.70% Series C ($100 stated value)
4.05% Series D ($100 stated value)
4.70% Series E ($100 stated value)
4.50% Series F ($100 stated value)
4.60% Series G ($100 stated value)
Purchase Price ..................... $73.44 per 4.40% Share,
$59.64 per 3.70% Share,
$67.61 per 4.05% Share,
$78.45 per 4.70% Share,
$75.11 per 4.50% Share,
$76.79 per 4.60% Share,
in each case net to the seller in cash.
See Section 8--"Price Ranges of Shares;
Dividends."
Independent Offer .................. The Offer for one Series of Preferred is
independent of the Offer for any other
Series of Preferred. The Offer is not
conditioned upon any minimum number of
Shares of the applicable Series of
Preferred being tendered. The Offer,
however, is subject to certain other
conditions. See Section 7--"Certain
Conditions of the Offer."
Expiration Date of the Offer ....... The Offer expires on Friday, December
13, 1996 at 12:00 midnight, New York
City time, unless the Offer is extended
with respect to any Series of Preferred.
How to Tender Shares ............... See Section 4--"Procedure for Tendering
Shares." For further information, call
the Information Agent or the Dealer
Manager or consult your broker for
assistance.
Withdrawal Rights .................. Tendered Shares of any Series of
Preferred may be withdrawn at any time
until the expiration of the Offer with
respect to such Series of Preferred and,
unless theretofore accepted for payment,
also may be withdrawn after 12:00
midnight, New York City time, on January
13, 1997. See Section 5--"Withdrawal
Rights."
Purpose of the Offer ............... The Company is making the Offer because
it believes that, given the market
prices of the Shares (as represented by
the last reported sales prices for the
Shares) and the current cost of
available financing options, the
purchase of Shares is economically
attractive to the Company. In addition,
the
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<PAGE> 5
- --------------------------------------------------------------------------------
Offer gives shareholders the opportunity
to sell their Shares at a premium over
the respective last reported sales
prices of the Shares and without the
usual transaction costs associated with
a market sale. See Section 1--"Purpose
of the Offer; Certain Effects of the
Offer; Plans of the Company After the
Offer."
Dividends .......................... The Board of Directors of the Company
declared dividends on each Series of
Preferred at its meeting on October 22,
1996. The regular quarterly dividend for
each Series of Preferred will be paid on
December 1, 1996, to holders of record
as of the close of business on November
12, 1996. A holder of record of Shares
on November 12, 1996, who tenders Shares
will be entitled to the regular
quarterly dividend, regardless of when
such tender is made. Holders of Shares
purchased pursuant to the Offer will not
be entitled to any dividends in respect
of any later dividend periods. See
Section 8--"Price Ranges of Shares;
Dividends."
Brokerage Commissions .............. Not payable by shareholders.
Solicitation Fee ................... The Company will pay to a Soliciting
Dealer a solicitation fee of $1.32 per
Share for any Shares tendered, accepted
for payment and paid for pursuant to the
Offer. See Section 14-- "Fees and
Expenses."
Stock Transfer Tax ................. None, except as provided in Instruction
6 of the applicable Letter of
Transmittal. See Section 6--"Acceptance
for Payment of Shares and Payment of
Purchase Price."
Payment Date ....................... Promptly after the applicable Expiration
Date of the Offer.
Further Information ................ Additional copies of this Offer to
Purchase, the applicable Letter of
Transmittal and the applicable Notice of
Guaranteed Delivery may be obtained by
contacting Georgeson & Company Inc.,
Wall Street Plaza, New York, New York
10005, telephone (800) 223-2064
(toll-free); Banks and Brokers call
collect (212) 440-9800. Questions about
the Offer should be directed to Merrill
Lynch & Co. at 1-888-ML4-TNDR
(toll-free) (1-888-654-8637 (toll-free))
or (212) 449-4914.
- --------------------------------------------------------------------------------
<PAGE> 6
INTRODUCTION
To the Holders of 4.40% Preferred,
3.70% Preferred,
4.05% Preferred,
4.70% Preferred,
4.50% Preferred, and
4.60% Preferred,
Pennsylvania Electric Company, a Pennsylvania corporation (the "Company"),
invites the holders of its (i) Cumulative Preferred Stock, 4.40% Series B ($100
stated value) (the "4.40% Preferred") to tender their shares of such stock (the
"4.40% Shares") for a price of $73.44 per 4.40% Share, (ii) Cumulative Preferred
Stock, 3.70% Series C ($100 stated value) (the "3.70% Preferred") to tender
their shares of such stock (the "3.70% Shares") for a price of $59.64 per 3.70%
Share, (iii) Cumulative Preferred Stock, 4.05% Series D ($100 stated value) (the
"4.05% Preferred") to tender their shares of such stock (the "4.05% Shares") for
a price of $67.61 per 4.05% Share, (iv) Cumulative Preferred Stock, 4.70% Series
E ($100 stated value) (the "4.70% Preferred") to tender their shares of such
stock (the "4.70% Shares") for a price of $78.45 per 4.70% Share, (v) Cumulative
Preferred Stock, 4.50% Series F ($100 stated value) (the "4.50% Preferred") to
tender their shares of such stock (the "4.50% Shares") for a price of $75.11 per
4.50% Share, and (vi) Cumulative Preferred Stock, 4.50% Series G ($100 stated
value) (the "4.60% Preferred") to tender their shares of such stock (the "4.60%
Shares") for a price of $76.79 per 4.60% Share, in each case net to the seller
in cash, upon the terms and subject to the conditions set forth in this Offer to
Purchase (the "Offer to Purchase") and in the applicable Letter of Transmittal
(which, together with the Offer to Purchase, constitutes the "Offer" with
respect to the applicable Series of Preferred). Each series of the Company's
preferred stock subject to the Offer is referred to herein as a "Series of
Preferred" and the shares of all Series of Preferred subject to the Offer are
collectively referred to as the "Shares." The Company will purchase all Shares
validly tendered and not withdrawn, upon the terms and subject to the conditions
of the Offer.
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL SHARES OF
ANY SERIES OF PREFERRED PURSUANT TO THE OFFER. SHAREHOLDERS MUST MAKE THEIR OWN
DECISIONS AS TO WHETHER TO TENDER SHARES OF ANY SERIES OF PREFERRED PURSUANT TO
THE OFFER AND, IF SO, HOW MANY SHARES TO TENDER.
The Board of Directors of the Company (the "Board") declared dividends on
each Series of Preferred at its meeting on October 22, 1996. A regular quarterly
dividend on each Series of Preferred will be paid on December 1, 1996, to
holders of record as of the close of business on November 12, 1996. A holder of
record of Shares on November 12, 1996, who tenders Shares will be entitled to
the regular quarterly dividend, regardless of when such tender is made. Holders
of Shares purchased pursuant to the Offer will not be entitled to any dividends
in respect of any later dividend periods.
THE OFFER FOR ONE SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES OF PREFERRED. THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER
OF SHARES BEING TENDERED. THE OFFER, HOWEVER, IS SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 7--"CERTAIN CONDITIONS OF THE OFFER."
Tendering shareholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to the Instructions to the applicable Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Company. The
Company will pay all charges and expenses of the Depositary, the Information
Agent and the Dealer Manager incurred in connection with the Offer.
<PAGE> 7
As of November 12, 1996, there were issued and outstanding 56,810 Shares of
the 4.40% Preferred; 97,054 Shares of the 3.70% Preferred; 63,696 Shares of the
4.05% Preferred; 28,739 Shares of the 4.70% Preferred; 42,969 Shares of 4.50%
Preferred; and 75,732 Shares of 4.60% Preferred. The Company is offering to
purchase any and all Shares of each Series of Preferred.
Each Series of Preferred is listed and traded on the Philadelphia Stock
Exchange, Inc. ("Philadelphia Stock Exchange") under the following respective
symbols: 4.40% Preferred under "PEELN"; 3.70% Preferred under "PEELM;" 4.05%
Preferred under "PAELN;" 4.70% Preferred under "PEELL;" 4.50% Preferred under
"PNELP;" and 4.60% Preferred under "PAELL." As of November 12, 1996, the last
reported sales prices of the Shares so listed were $56.75 per 4.40% Share,
$48.13 per 3.70% Share, $52.25 per 4.05% Share, $60.75 per 4.70% Share, $61.50
per 4.50% Share and $61.50 per 4.60% Share. Shareholders are urged to obtain
current market quotations for the Shares. The information concerning recent
quarterly trading history of the Shares of each Series of Preferred is set forth
in Section 8--"Price Ranges of Shares; Dividends."
SPECIAL FACTORS
SECTION 1. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER; PLANS OF THE
COMPANY AFTER THE OFFER.
The Company is making the Offer because it believes that, given the current
market prices of the Shares (as represented by the last reported sales prices
for the Shares) and the current cost of available financing options, the
purchase of the Shares pursuant to the Offer is economically attractive to the
Company. See Section 9--"Certain Information Concerning the Company." The Board
authorized the Offer by a unanimous vote. The Company has no non-employee
directors.
The Company believes the Offer is fair to unaffiliated holders of Shares.
In making this determination, the Company considered that (a) the Offer provides
shareholders the opportunity to sell their Shares at a premium over the
respective last reported sales prices for the Shares and (b) the Offer provides
shareholders who are considering a sale of all or a portion of the Shares the
opportunity to sell those Shares for cash without the usual transaction costs
associated with open-market sales. The Company did not find it practicable to,
and did not, quantify or otherwise assign relative weights to these factors.
Although the Company anticipates that, if successful, the Offer will provide the
Company with a lower after-tax cost of capital, the Company does not believe
that the Offer will result in a material change to its net book value, going
concern value or future prospects and, accordingly, the Company did not take
these factors into account in assessing the fairness of the Offer to
unaffiliated holders of Shares. Trading of the Shares of each Series of
Preferred has been limited and sporadic. Therefore, the Company determined the
Offer price for each Series of Preferred with reference to certain objective
factors, including, but not limited to, yields on U.S. Treasury and municipal
securities, yields on comparable preferred securities and the prior trading
characteristics of each Series of Preferred, as well as certain subjective
factors, including, but not limited to, general industry outlook, general market
supply of securities of similar type and supply and demand factors in the
securities markets generally. Although the weighting of these factors is
subjective, the Company gave relatively more weight to objective factors, such
as yields on U.S. Treasury and municipal securities and yields on comparable
preferred securities.
Neither the Company nor the Board received any report, opinion or appraisal
from an outside party which is materially related to the Offer, including, but
not limited to, any report, opinion or appraisal relating to the consideration
or the fairness of the consideration to be offered to the holders of the Shares
or the fairness of such Offer to the Company or the unaffiliated holders of
Shares. Neither the Board nor any director has retained an unaffiliated
representative to act solely on behalf of unaffiliated holders of Shares for the
purposes of negotiating the terms of the Offer or preparing a report concerning
the fairness of the Offer. Neither the Company nor the Board believed these
measures were necessary to ensure fairness in light of the fact that the Offer
will not result in a liquidation or change in control in the Company.
Following the consummation of the Offer, the business and operations of the
Company will be continued by the Company substantially as they are currently
being conducted. The Company and its affiliates are engaged
2
<PAGE> 8
in on-going reviews of potential structural and organizational realignments
(which, if implemented, could require the consent of the holders of preferred
stock, give rise to statutory appraisal rights or cause the Company to redeem
all or a portion of the Company's preferred stock) in order to respond to
regulatory and other requirements as the electric utility industry becomes
deregulated and more competitive. However, the Company has no current plans or
proposals which relate to or would result in (a) the acquisition by any person
of additional securities of the Company or the disposition of securities of the
Company, other than in the ordinary course of business; (b) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company; (c) a sale or transfer of a material amount of assets of the
Company; (d) any change in the present Board or management of the Company; (e)
any material change in the present dividend rate or policy or indebtedness or
capitalization of the Company (other than as described in this Offer to
Purchase); (f) any other material change in the Company's corporate structure or
business; (g) a change in the Company's Restated Articles of Incorporation or
By-laws, as amended; (h) except as otherwise described in this Offer to
Purchase, a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); or (i) except as
otherwise described in this Offer to Purchase, the suspension of the Company's
obligation to file reports pursuant to Section 15(d) of the Exchange Act.
Following the expiration of the Offer, the Company may, in its sole
discretion, determine to redeem Shares then subject to redemption at the
applicable redemption prices, or to purchase any outstanding Shares through
privately-negotiated transactions, open-market purchases, another tender offer
or otherwise, on such terms and at such prices as the Company may determine from
time to time. The terms of any such subsequent purchases or offers could differ
from those of the Offer, and may be at a higher price than the related price per
Share offered hereby, except that the Company will not make any such purchases
of Shares until the expiration of ten business days after the termination of the
Offer. Any possible future purchases of Shares by the Company will depend on a
number of factors, including the market prices of the Shares, the Company's
business and financial position, alternative investment opportunities available
to the Company, the results of the Offer and general economic and market
conditions.
As of November 12, 1996, the ratings of the Company's preferred stock,
including each Series of Preferred, by Standard & Poor's Ratings Group ("S&P")
and Moody's Investors Service, Inc. ("Moody's") were "BBB+" and "baa1,"
respectively.
The purchase of Shares of a Series of Preferred pursuant to the Offer will
reduce the number of holders of Shares of that Series of Preferred and the
number of such Shares that might otherwise trade publicly and, depending upon
the number of Shares so purchased, such reduction could adversely affect the
liquidity and market value of the remaining Shares of that Series of Preferred
held by the public. Depending upon the number of Shares of a Series of Preferred
purchased pursuant to the Offer, the Shares of that Series of Preferred may no
longer meet the requirements of the Philadelphia Stock Exchange for continued
listing. According to its published guidelines, the Philadelphia Stock Exchange
would consider delisting a Series of Preferred if, among other things, (i) the
number of publicly-held Shares for such Series of Preferred should fall below
200,000 or the aggregate market value of such Series of Preferred should fall
below $1,000,000 or (ii) the number of public shareholders should fall below
400. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, any of the Series of Preferred currently listed on the Philadelphia
Stock Exchange no longer meets the requirements of the Philadelphia Stock
Exchange for continued listing and the listing of such Series of Preferred is
discontinued, the market for such Series of Preferred could be adversely
affected.
In the event of the delisting of any of the Series of Preferred currently
listed on the Philadelphia Stock Exchange, it is possible that such Series of
Preferred would continue to trade on another securities exchange or in the
over-the-counter market and that price quotations would be reported by such
exchange, by the National Association of Securities Dealers, Inc. ("NASD")
through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or by other sources. The extent of the public market for such
Series of Preferred and the availability of such quotations, however, would
depend upon such factors as the number of shareholders remaining at such time,
the interest in maintaining a market in such Series of Preferred on the part of
3
<PAGE> 9
securities firms, the possible termination of registration under the Exchange
Act as described below and other factors.
Each Series of Preferred currently listed on the Philadelphia Stock
Exchange are presently "margin securities" under the regulations of the Board of
Governors of the Federal Reserve System, which has the effect, among other
things, of allowing brokers to extend credit on the collateral of such
securities. If a Series of Preferred remains listed on the Philadelphia Stock
Exchange, the Shares of such Series of Preferred will continue to be "margin
securities." If a Series of Preferred were delisted, depending upon factors
similar to those described above, such Series of Preferred might no longer
constitute "margin securities" for purposes of the margin regulations of the
Board of Governors of the Federal Reserve System, in which case, Shares of such
Series of Preferred could no longer be used as collateral for loans made by
brokers.
Each Series of Preferred is currently registered under the Exchange Act.
Such registration may be terminated upon application of the Company to the
Securities and Exchange Commission (the "Commission") pursuant to Section
12(g)(4) of the Exchange Act if such Series of Preferred is neither held by 300
or more holders of record nor listed on a national securities exchange.
Termination of registration of any Series of Preferred under the Exchange Act
would reduce substantially the information required to be furnished by the
Company to holders of Shares of such Series of Preferred (although the Company
would, among other things, remain subject to the reporting obligations under the
Exchange Act as a result of other of its outstanding securities being registered
under the Exchange Act) and would make certain provisions of the Exchange Act,
such as the requirement of Rule 13e-3 thereunder with respect to "going private"
transactions, no longer applicable in respect of such Series of Preferred. If
registration of any Series of Preferred under the Exchange Act were terminated,
Shares of such Series of Preferred would no longer be "margin securities" or be
eligible for NASDAQ reporting. As of October 31, 1996, there were 348 holders of
record of the 4.40% Preferred, 401 holders of record of the 3.70% Preferred, 197
holders of record of the 4.05% Preferred, 153 holders of record of the 4.70%
Preferred, 160 holders of record of the 4.50% Preferred and 201 holders of
record of the 4.60% Preferred.
All Shares purchased by the Company pursuant to the Offer will be retired,
canceled and returned thereafter to the status of authorized but unissued shares
of the Company's preferred stock. All Shares remaining outstanding after the
Offer will continue to be redeemable at the option of the Company at the
applicable redemption price plus accumulated and unpaid dividends to the date of
redemption. Such price is greater than the applicable price per Share offered
hereby. Upon liquidation or dissolution of the Company, holders of each Series
of Preferred are entitled to receive a liquidation preference of $100 per Share,
plus all accumulated and unpaid dividends thereon to the date of payment, prior
to the payment of any amounts to holders of the Company's common stock.
THE COMPANY, ITS BOARD AND ITS EXECUTIVE OFFICERS MAKE NO RECOMMENDATION TO
ANY SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL SHARES OF ANY SERIES OF
PREFERRED PURSUANT TO THE OFFER. SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS AS
TO WHETHER TO TENDER SHARES OF ANY SERIES OF PREFERRED PURSUANT TO THE OFFER
AND, IF SO, HOW MANY SHARES TO TENDER.
SECTION 2. CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS; NO APPRAISAL
RIGHTS.
The Company is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its
acquisition of Shares as contemplated in the Offer or of any approval or other
action by any government or governmental, administrative or regulatory authority
or agency, domestic or foreign, that would be required for the Company's
acquisition or ownership of Shares pursuant to the Offer. Should any other
approval or other action be required, the Company currently contemplates that it
will seek such approval or other action. The Company cannot predict whether it
may determine that it is required to delay the acceptance for payment of, or
payment for, Shares tendered pursuant to the Offer pending the outcome of any
such matter. There can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial conditions
or that the failure to obtain any such approval or other action might not result
in adverse consequences to the Company's business. The Company intends to make
all required
4
<PAGE> 10
filings under the Exchange Act. The Company's obligation under the Offer to
accept for payment, or make payment for, Shares is subject to certain
conditions. See Section 7--"Certain Conditions of the Offer."
No approval of the holders of any Shares or the holders of any of the
Company's other securities is required in connection with the Offer. No
appraisal rights are available to holders of Shares in connection with the
Offer.
THE OFFER
SECTION 3. NUMBER OF SHARES; PURCHASE PRICE; EXPIRATION DATE; RECEIPT OF
DIVIDENDS; EXTENSION OF THE OFFER.
NUMBER OF SHARES; PURCHASE PRICE; EXPIRATION DATE. Upon the terms and
subject to the conditions of the Offer, the Company will accept for payment (and
thereby purchase) any and all Shares of a Series of Preferred validly tendered
(and not withdrawn) on or prior to the Expiration Date (as defined below) with
respect to that Series of Preferred at a price of $73.44 per 4.40% Share, $59.64
per 3.70% Share, $67.61 per 4.05% Share, $78.45 per 4.70% Share, $75.11 per
4.50% Share and $76.79 per 4.60% Share. The term "Expiration Date" means 12:00
midnight, New York City time, on Friday, December 13, 1996, unless and until the
Company shall have extended the period of time during which the Offer with
respect to a Series of Preferred is open, in which event the term "Expiration
Date" with respect to such Series of Preferred shall refer to the latest time
and date to which the Offer with respect to such Series of Preferred is
extended. The Offer for one Series of Preferred is independent of the Offer for
any other Series of Preferred. The Offer is not conditioned on any minimum
number of Shares of the applicable Series of Preferred being tendered. The
Offer, however, is subject to certain other conditions. See Section 7--"Certain
Conditions of the Offer."
RECEIPT OF DIVIDEND. The Board declared dividends on the Company's
preferred stock at its meeting on October 22, 1996. A regular quarterly dividend
for each Series of Preferred will be paid on December 1, 1996, to holders of
record as of the close of business on November 12, 1996. Accordngly, a holder of
record of Shares on November 12, 1996 who tenders Shares will be entitled to
such regular quarterly dividend, regardless of when such tender is made. Holders
of Shares purchased pursuant to the Offer will not be entitled to any dividends
in respect of any later dividend periods. See Section 8--"Price Ranges of
Shares; Dividends."
EXTENSION OF THE OFFER. The Company expressly reserves the right, in its
sole discretion, at any time or from time to time to extend the period of time
during which the Offer is open with respect to a Series of Preferred by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. If the Company extends the Offer with respect to one
Series of Preferred, the Company is under no obligation to extend the Offer with
respect to any other Series of Preferred. See Section 12--"Extension of Tender
Period; Termination; Amendments." There can be no assurance, however, that the
Company will exercise its right to extend any Offer or, if the Offer for one
Series of Preferred is extended, that the Offer for any other Series of
Preferred will also be extended.
If (a) the Company (i) increases or decreases the price to be paid for the
Shares of a Series of Preferred hereunder or decreases the number of Shares of a
Series of Preferred being sought or (ii) increases or decreases the Soliciting
Dealers' fees, and (b) the applicable Offer is scheduled to expire at any time
earlier than the tenth business day from and including the date that notice of
such increase or decrease is first published, sent or given in the manner
specified in Section 12--"Extension of the Tender Period; Termination;
Amendments," the Offer for such Shares of that Series of Preferred will be
extended until the expiration of such ten business day period. For purposes of
the Offer, "business day" means any day other than a Saturday, Sunday or Federal
holiday and consists of the time period from 12:01 a.m. through 12:00 midnight,
New York City time.
All Shares of a Series of Preferred will be purchased at the applicable
purchase price, net to the seller in cash. All tendered Shares not purchased
pursuant to the Offer will be returned to the tendering shareholders at the
Company's expense promptly following the applicable Expiration Date.
5
<PAGE> 11
SECTION 4. PROCEDURE FOR TENDERING SHARES.
TENDER OF SHARES. For Shares to be validly tendered pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal and the
certificates for such Shares, together with any required signature guarantees
and any other documents required by the Letter of Transmittal or a confirmation
of book-entry transfer ("Book-Entry Confirmation"), including an Agent's Message
(as defined below), must be received by the Depositary at any one of its
addresses set forth on the back cover of this Offer to Purchase or (ii) the
tendering shareholder must comply with the guaranteed delivery procedure set
forth below on or prior to the applicable Expiration Date. The term "Agent's
Message" means a message transmitted by a Book-Entry Transfer Facility (as
defined below) to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the applicable Letter of Transmittal and that the Company may enforce
such agreement against such participant.
A tender of Shares made pursuant to any method of delivery set forth herein
or in the applicable Letter of Transmittal and the Company's acceptance thereof
for payment will constitute a binding agreement between the tendering holder and
the Company upon the terms and subject to the conditions of the Offer.
No alternative, conditional or contingent tenders of Shares will be
accepted.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company and The Philadelphia Depository
Trust Company (together referred to as the "Book-Entry Transfer Facilities") for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make delivery of Shares by causing such
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the procedures of such Book-Entry Transfer Facility.
Prior to the applicable Expiration Date, a Book-Entry Confirmation, including an
Agent's Message, in connection with any book-entry transfer must be transmitted
to, and received by, the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase or the guaranteed delivery procedure set
forth below must be complied with. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES AND METHOD OF DELIVERY. Except as otherwise provided
below, all signatures on a Letter of Transmittal must be guaranteed by a
financial institution (including most banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program or the Stock Exchange Medallion Program (each of the foregoing
being referred to as an "Eligible Institution"). Signatures on a Letter of
Transmittal need not be guaranteed if (a) such Letter of Transmittal is signed
by the registered holder of the Shares tendered therewith and such holder has
not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the applicable Letter of Transmittal
or (b) such Shares are tendered for the account of an Eligible Institution. If
Shares are registered in the name of a person other than the signatory on the
applicable Letter of Transmittal, or if unpurchased Shares are to be issued to a
person other than the registered holder(s), 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 Shares with the
signature(s) on the Shares or stock powers guaranteed as aforesaid. See
Instructions 1 and 5 to the applicable Letter of Transmittal.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
6
<PAGE> 12
GUARANTEED DELIVERY PROCEDURE. If a shareholder desires to tender Shares
pursuant to the Offer and cannot deliver certificates for such Shares and all
other required documents to the Depositary on or prior to the applicable
Expiration Date, or the procedure for book-entry transfer cannot be complied
with in a timely manner, such Shares nevertheless may be tendered if all of the
following conditions are met:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery in the form provided by the Company is received by the Depositary
as provided below on or prior to the applicable Expiration Date; and
(c) either (i) the certificates for such Shares, together with a
properly completed and duly executed Letter of Transmittal for the Series
of Preferred being tendered, and any other documents required by such
Letter of Transmittal or (ii) a Book-Entry Confirmation of transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities are received by the Depositary no later than 5:00 p.m., New York
City time, on the third New York Stock Exchange trading day after the
Expiration Date.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmittal, mail or through a Book-Entry Transfer Facility system
to the Depositary and must include a guarantee by an Eligible Institution in the
form set forth in such Notice.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the form of documents
and the validity, eligibility (including time of receipt) and acceptance for
payment of any tender of Shares will be determined by the Company, in its sole
discretion, and its determination shall be final and binding. The Company
reserves the absolute right to reject any or all tenders of Shares that it
determines are not in proper form or the acceptance for payment of or payment
for which may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the absolute right to waive any defect or irregularity in any
tender of Shares. No tender of Shares will be deemed to be properly made until
all defects or irregularities have been cured or waived. None of the Company,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under any duty to give notice of any defect or irregularity in tenders,
nor shall any of them incur any liability for failure to give any such notice.
SECTION 5. WITHDRAWAL RIGHTS.
Tenders of Shares of a Series of Preferred made pursuant to the Offer may
be withdrawn at any time on or prior to the Expiration Date with respect to such
Series of Preferred. Thereafter, such tenders are irrevocable, except that they
may be withdrawn after 12:00 midnight, New York City time, on Monday, January
13, 1997, unless theretofore accepted for payment as provided in this Offer to
Purchase.
To be effective, a written or facsimile transmission notice of withdrawal
must be received in a timely manner by the Depositary at one of its addresses or
facsimile numbers set forth on the back cover of this Offer to Purchase and must
specify the name of the person who tendered the Shares of the applicable Series
of Preferred to be withdrawn and the number of Shares to be withdrawn. If the
Shares of the applicable Series of Preferred to be withdrawn have been delivered
to the Depositary, a signed notice of withdrawal with signatures guaranteed by
an Eligible Institution (except in the case of Shares tendered by an Eligible
Institution) must be submitted prior to the release of such Shares. In addition,
such notice must specify, in the case of Shares tendered by delivery of
certificates, the name of the registered holder (if different from that of the
tendering shareholder) and the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at one of
the Book-Entry Transfer Facilities to be credited with the withdrawn Shares and
the name of the registered holder (if different from the name on such account).
Withdrawals may not be rescinded, and Shares withdrawn thereafter will be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered by following one of the procedures
7
<PAGE> 13
described in Section 4--"Procedure for Tendering Shares" at any time on or prior
to the applicable Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Company in its sole
discretion, and its determination shall be final and binding. None of the
Company, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defect or irregularity
in any notice of withdrawal or incur any liability for failure to give any such
notification.
SECTION 6. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer and promptly
after the Expiration Date with respect to a Series of Preferred, the Company
will accept for payment and pay for Shares of that Series of Preferred validly
tendered. See Section 3--"Number of Shares; Purchase Price; Expiration Date;
Receipt of Dividends; Extension of the Offer" and Section 7--"Certain Conditions
of the Offer." Thereafter, payment for all Shares of that Series of Preferred
validly tendered on or prior to the applicable Expiration Date and accepted for
payment pursuant to the Offer will be made by the Depositary by check promptly
after the Expiration Date. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates for Shares, a properly completed and duly executed Letter of
Transmittal for the Series of Preferred so tendered and any other required
documents or (ii) a Book-Entry Confirmation of transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities.
For purposes of the Offer, the Company will be deemed to have accepted for
payment (and thereby purchased) Shares that are validly tendered and not
withdrawn when, as and if it gives oral or written notice to the Depositary of
its acceptance for payment of such Shares pursuant to the Offer. The Company
will pay for Shares that it has purchased pursuant to the Offer by depositing
the purchase price therefor with the Depositary. The Depositary will act as
agent for tendering shareholders for the purpose of receiving payment from the
Company and transmitting payment to tendering shareholders. Under no
circumstances will interest be paid on amounts to be paid to tendering
shareholders, regardless of any delay in making such payment.
Certificates for all Shares not purchased will be returned (or, in the case
of Shares tendered by book-entry transfer, such Shares will be credited to an
account maintained with a Book-Entry Transfer Facility) promptly, without
expense to the tendering shareholder.
Payment for Shares may be delayed in the event of difficulty in determining
the number of Shares properly tendered. In addition, if certain events occur,
the Company may not be obligated to purchase Shares pursuant to the Offer. See
Section 7--"Certain Conditions of the Offer."
The Company will pay or cause to be paid any stock transfer taxes with
respect to the sale and transfer of any Shares to the Company or its order
pursuant to the Offer. However, if payment of the purchase price is to be made
to, or Shares not tendered or not purchased are to be registered in the name of,
any person other than the registered holder, or if tendered Shares are
registered in the name of any person other than the person signing the
applicable Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder, such other person or otherwise)
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. See Instruction 6 to the applicable Letter of
Transmittal.
BACKUP WITHHOLDING. To prevent backup U.S. federal income tax withholding
with respect to the purchase price of Shares purchased pursuant to the Offer, a
holder of Shares (except as set forth herein) must provide the Depositary with
the holder's correct taxpayer identification number and certify whether the
holder is subject to backup withholding of U.S. federal income tax by completing
the Substitute Form W-9 included in the applicable Letter of Transmittal.
Certain holders of Shares (including, among others, all corporations and certain
foreign shareholders) are not subject to these backup withholding and reporting
requirements (although foreign shareholders are subject to other withholding
requirements). See Section 13--"Certain U.S. Federal Income Tax
8
<PAGE> 14
Consequences." In order for a foreign shareholder to qualify as an exempt
recipient, the holder must submit a Form W-8, Certificate of Foreign Status,
signed under penalties of perjury, attesting to that shareholder's exempt
status. Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of U.S. federal income tax, the Depositary will
be required to withhold, and will withhold, 31% of the gross proceeds otherwise
payable to a holder of Shares or other payee unless the holder of such Shares or
other payee certifies that such person is not otherwise subject to backup
withholding, provides such person's tax identification number (social security
number or employer identification number) and certifies that such number is
correct. Each tendering holder of Shares should complete and sign the main
signature form and, other than foreign shareholders, the Substitute Form W-9
included as part of the applicable Letter of Transmittal, so as to provide the
information and certification necessary to avoid backup withholding, unless an
applicable exemption exists and is proved in a manner satisfactory to the
Company and the Depositary. Foreign shareholders generally should complete and
sign a Form W-8, a copy of which may be obtained from the Depositary, in order
to avoid backup withholding.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE AND SIGN THE
SUBSTITUTE FORM W-9 INCLUDED IN THE APPLICABLE LETTER OF TRANSMITTAL (OR, IN THE
CASE OF A FOREIGN SHAREHOLDER, FORM W-8 OBTAINABLE FROM THE DEPOSITARY) MAY BE
SUBJECT TO REQUIRED U.S. FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER.
SECTION 7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, or any extension of the
Offer with respect to one or more Series of Preferred, the Company will not be
required to accept for payment and pay for Shares of a Series of Preferred in
respect of any validly tendered Shares and may terminate the Offer with respect
to such Series of Preferred (by oral or written notice to the Depositary and
timely public announcement) or may modify or otherwise amend any such Offer with
respect to such Shares if any of the following conditions are not waived or
satisfied on or prior to the applicable Expiration Date:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, or before any court, authority, agency or tribunal that (i)
challenges the acquisition of Shares of that Series of Preferred pursuant
to the Offer or otherwise in any manner, directly or indirectly, relates to
or affects the Offer or (ii) in the reasonable judgment of the Company,
would or might affect materially and adversely the business, condition
(financial or other), income, operations or prospects of the Company and
its subsidiaries taken as a whole, or otherwise impair materially in any
way the contemplated future conduct of the business of the Company or any
of its subsidiaries or impair materially the Offer's contemplated benefits
to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any legislative body, court, authority, agency
or tribunal which, in the Company's reasonable judgment, would or might
directly or indirectly (i) make the acceptance for payment of, or payment
for, some or all of the Shares of that Series of Preferred illegal or
otherwise restrict or prohibit consummation of the Offer, (ii) delay or
restrict the ability of the Company, or render the Company unable, to
accept for payment or pay for some or all of the Shares of that Series of
Preferred, (iii) impair materially the contemplated benefits of the Offer
to the Company or (iv) affect materially the business, condition (financial
or other), income, operations or prospects of the Company and its
subsidiaries taken as a whole, or otherwise impair materially in any way
the contemplated future conduct of the business of the Company or any of
its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) any significant decline in
the market price of the Shares of that Series of Preferred, (iii) any
change in the general political market,
9
<PAGE> 15
economic or financial condition in the United States or abroad that, in the
reasonable judgment of the Company, would or might have a material adverse
effect on the Company's business, operations, prospects or ability to
obtain financing generally or the trading in the Shares of that Series of
Preferred or other equity securities of the Company or in the common stock
of the Company's parent, GPU, Inc. ("Parent"), (iv) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or any limitation on, or any event which, in the Company's
reasonable judgment, might affect the extension of credit by lending
institutions in the United States, (v) the commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States; (vi) in the case of any of the
foregoing existing at the time of the commencement of the Offer, in the
Company's reasonable judgment, a material acceleration or worsening
thereof; or (vii) there shall have been any decrease in the ratings
accorded any of the Company's securities by S&P or Moody's or that S&P or
Moody's has announced that it has placed any such rating under surveillance
or review with possible negative implications;
(d) a tender or exchange offer with respect to some or all of the
Shares of that Series of Preferred or other equity securities of the
Company or Parent, or a merger, acquisition or other business combination
for the Company or Parent, shall have been proposed, announced or made by
another person;
(e) there shall have occurred any event or events that have resulted,
or may result in the reasonable judgment of the Company, in an actual or
threatened change in the business, condition (financial or other), income,
operations, stock ownership or prospects of the Company and its
subsidiaries; or
(f) there shall have occurred any decline in the S&P's Composite 500
Stock Index (729.56 at the close of business on November 12, 1996) by an
amount in excess of 15% measured from the close of business on November 12,
1996.
and, in the reasonable judgment of the Company, such event or events make it
undesirable or inadvisable to proceed with the Offer with respect to such Series
of Preferred or with such payment or acceptance for payment. The consummation of
the Offer for any Series of Preferred is not conditioned on the consummation of
the Offer for any other Series of Preferred.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition with respect to any
or all Series of Preferred, and any such condition may be waived by the Company
with respect to any or all Series of Preferred at any time and from time to time
in its sole discretion. The Company's decision to terminate or otherwise amend
the Offer, following the occurrence of any of the foregoing, with respect to one
Series of Preferred will not create an obligation on behalf of the Company
similarly to terminate or otherwise amend the Offer with respect to any other
Series of Preferred. The failure by the Company at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time. Any determination by the Company concerning the events
described above will be final and binding on all parties.
section 8. PRICE RANGES OF SHARES; DIVIDENDS.
The Shares of each Series of Preferred trade on the Philadelphia Stock
Exchange, to the extent trading occurs. Trading of the Shares has been limited
and sporadic, and information concerning trading prices and volumes is difficult
to obtain. The information set forth below relating to the first quarter of 1994
has been obtained from the National Quotation Bureau. All other information set
forth below has been obtained from Bloomberg Exchange Inter-day Quotations. The
Company makes no representation as to the accuracy of this information. The
Company believes that the last reported sale price set forth below with respect
to each Series of Preferred may not be indicative of the market value of the
Shares of such Series of Preferred. Depending on the number of Shares of a
Series of Preferred outstanding after the Offer, the liquidity of such Shares
could be affected adversely.
10
<PAGE> 16
4.40 % SHARES
The 4.40% Shares are listed and traded on the Philadelphia Stock Exchange.
The following table sets forth the high and low sales prices of the 4.40% Shares
on the Philadelphia Stock Exchange and the cash dividends per 4.40% Share for
the fiscal quarters indicated.
<TABLE>
<CAPTION>
Cash
Dividends
High Low Per Share
---- --- ---------
<C> <C> <C> <C> <C>
1994: 1st Quarter...................................... $63.50 $56.75 $1.10
2nd Quarter...................................... $55.00 $53.38 $1.10
3rd Quarter...................................... $55.00 $52.00 $1.10
4th Quarter...................................... $52.63 $48.13 $1.10
1995: 1st Quarter...................................... $49.50 $47.50 $1.10
2nd Quarter...................................... $56.50 $51.75 $1.10
3rd Quarter...................................... $56.00 $56.00 $1.10
4th Quarter...................................... $60.25 $55.50 $1.10
1996: 1st Quarter...................................... $61.50 $59.00 $1.10
2nd Quarter...................................... $58.00 $56.00 $1.10
3rd Quarter ..................................... $58.10 $57.00 $1.10
4th Quarter (through November 12, 1996) ......... $56.75 $56.75 $1.10
</TABLE>
The last reported sale of 4.40% Shares on the Philadelphia Stock Exchange
prior to the date hereof occurred on November 12, 1996 at a price of $56.75 per
4.40% Share.
3.70% SHARES
The 3.70% Shares are listed and traded on the Philadelphia Stock Exchange.
The following table sets forth the high and low sales prices of the 3.70% Shares
on the Philadelphia Stock Exchange and the cash dividends per 3.70% Share for
the fiscal quarters indicated.
<TABLE>
<CAPTION>
Cash
Dividends
High Low Per Share
---- --- ---------
<C> <C> <C> <C> <C>
1994: 1st Quarter........................................... $53.00 $46.00 $0.925
2nd Quarter........................................... $47.50 $44.38 $0.925
3rd Quarter........................................... $56.00 $43.00 $0.925
4th Quarter........................................... $45.00 $44.00 $0.925
1995: 1st Quarter........................................... $43.75 $41.50 $0.925
2nd Quarter........................................... $48.00 $43.88 $0.925
3rd Quarter........................................... $47.88 $46.25 $0.925
4th Quarter........................................... $51.00 $48.50 $0.925
1996: 1st Quarter........................................... $52.25 $47.75 $0.925
2nd Quarter........................................... $50.00 $48.25 $0.925
3rd Quarter ......................................... $48.75 $47.00 $0.925
4th Quarter (through November 12, 1996) .............. $50.00 $47.13 $0.925
</TABLE>
The last reported sale of 3.70% Shares on the Philadelphia Stock Exchange
prior to the date hereof occurred on November 12, 1996 at a price of $48.13 per
3.70% Share.
11
<PAGE> 17
4.05% SHARES
The 4.05% Shares are listed and traded on the Philadelphia Stock Exchange.
The following table sets forth the high and low sales prices of the 4.05% Shares
on the Philadelphia Stock Exchange and the cash dividends per 4.05% Share for
the fiscal quarters indicated.
<TABLE>
<CAPTION>
Cash
Dividends
High Low Per Share
---- --- ---------
<C> <C> <C> <C> <C>
1994: 1st Quarter..................................... $60.60 $54.40 $1.0125
2nd Quarter..................................... $52.50 $49.00 $1.0125
3rd Quarter..................................... $50.88 $50.88 $1.0125
4th Quarter..................................... $47.58 $44.00 $1.0125
1995: 1st Quarter..................................... * * $1.0125
2nd Quarter..................................... $51.50 $47.00 $1.0125
3rd Quarter..................................... $55.20 $49.50 $1.0125
4th Quarter..................................... $57.13 $53.25 $1.0125
1996: 1st Quarter..................................... $57.50 $55.38 $1.0125
2nd Quarter..................................... $56.00 $53.00 $1.0125
3rd Quarter .................................... $55.50 $52.50 $1.0125
4th Quarter (through November 12, 1996) ........ $53.25 $52.25 $1.0125
</TABLE>
- ----------
* No trading activity.
The last reported sale of 4.05% Shares on the Philadelphia Stock Exchange
prior to the date hereof occurred on October 31, 1996 at a price of $52.25 per
4.05% Share.
4.70% SHARES
The 4.70% Shares are listed and traded on the Philadelphia Stock Exchange.
The following table sets forth the high and low sales prices of the 4.70% Shares
on the Philadelphia Stock Exchange and the cash dividends per 4.70% Share for
the fiscal quarters indicated.
<TABLE>
<CAPTION>
Cash
Dividends
High Low Per Share
---- --- ---------
<S> <C> <C> <C> <C>
1994 1st Quarter..................................... $64.00 $58.75 $1.175
2nd Quarter..................................... $57.00 $57.00 $1.175
3rd Quarter..................................... $59.25 $55.50 $1.175
4th Quarter..................................... $54.65 $53.35 $1.175
1995 1st Quarter..................................... $55.20 $53.35 $1.175
2nd Quarter..................................... $56.25 $55.00 $1.175
3rd Quarter..................................... * * $1.175
4th Quarter..................................... $65.75 $58.00 $1.175
1996 1st Quarter..................................... * * $1.175
2nd Quarter..................................... $63.75 $62.25 $1.175
3rd Quarter..................................... $60.75 $60.75 $1.175
4th Quarter (through November 12, 1996) ........ $64.00 $60.75 $1.175
</TABLE>
- ----------
* No trading activity.
The last reported sale of 4.70% Shares on the Philadelphia Stock Exchange
prior to the date hereof occurred on October 15, 1996 at a price of $60.75 per
4.70% Share.
12
<PAGE> 18
4.50% SHARES
The 4.50% Shares are listed and traded on the Philadelphia Stock Exchange.
The following table sets forth the high and low sales prices of the 4.50% Shares
on the Philadelphia Stock Exchange and the cash dividends per 4.50% Share for
the fiscal quarters indicated.
<TABLE>
<CAPTION>
Cash
Dividends
High Low Per Share
---- --- ---------
<C> <C> <C> <C> <C>
1994 1st Quarter............................................. $64.50 $63.75 $1.125
2nd Quarter............................................. $59.50 $52.75 $1.125
3rd Quarter............................................. $56.00 $53.25 $1.125
4th Quarter............................................. $54.00 $50.30 $1.125
1995 1st Quarter............................................. $55.63 $52.30 $1.125
2nd Quarter............................................. $56.50 $53.75 $1.125
3rd Quarter............................................. $58.88 $56.63 $1.125
4th Quarter............................................. $64.38 $64.38 $1.125
1996 1st Quarter............................................. $63.63 $59.00 $1.125
2nd Quarter............................................. $60.50 $59.50 $1.125
3rd Quarter ............................................ $58.00 $58.00 $1.125
4th Quarter (through November 12, 1996) ................ $61.50 $60.00 $1.125
</TABLE>
The last reported sale of 4.50% Shares on the Philadelphia Stock Exchange
prior to the date hereof occurred on October 4, 1996 at a price of $61.50 per
4.50% Share.
4.60% SHARES
The 4.60% Shares are listed and traded on the Philadelphia Stock Exchange.
The following table sets forth the high and low sales prices of the 4.60% Shares
on the Philadelphia Stock Exchange and the cash dividends per 4.60% Share for
the fiscal quarters indicated.
<TABLE>
<CAPTION>
Cash
Dividends
High Low Per Share
---- --- ---------
<C> <C> <C> <C> <C>
1994 1st Quarter.............................................. $67.50 $58.525 $1.15
2nd Quarter.............................................. * * $1.15
3rd Quarter.............................................. $58.50 $53.75 $1.15
4th Quarter.............................................. $53.75 $51.40 $1.15
1995 5th Quarter.............................................. $54.95 $54.13 $1.15
2nd Quarter.............................................. $57.50 $53.50 $1.15
3rd Quarter.............................................. $62.00 $56.25 $1.15
4th Quarter.............................................. $67.72 $61.38 $1.15
1996 1st Quarter.............................................. $64.38 $58.50 $1.15
2nd Quarter.............................................. $62.75 $59.38 $1.15
3rd Quarter.............................................. $61.50 $59.50 $1.15
4th Quarter (through November12, 1996) .................. $61.50 $61.50 $1.15
</TABLE>
- ------------
* No trading activity.
The last reported sale of 4.60% Shares on the Philadelphia Stock Exchange
prior to the date hereof occurred on October 30, 1996 at a price of $61.50 per
4.60% Share.
13
<PAGE> 19
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
DIVIDENDS. The holders of each Series of Preferred are entitled to receive,
when and as declared by the Board out of funds legally available for the payment
of dividends, and in preference to any dividends or distributions on the common
stock of the Company, cash dividends at the annual rate specified for that
Series of Preferred, and no more, cumulative and payable quarterly with respect
to each calendar quarterly period, on or before the first day of each March,
June, September and December. Under the Public Utility Holding Company Act of
1935, the Company may not declare or pay dividends on any Shares from capital or
unearned surplus, unless authorized by an order of the Commission.
To date, the Company has made in a timely manner all quarterly dividend
payments on each Series of Preferred.
The Board declared dividends on each Series of Preferred at its meeting on
October 22, 1996. A regular quarterly dividend on each Series of Preferred will
be paid on December 1, 1996, to holders of record as of the close of business on
November 12, 1996. Accordingly, a holder of record of Shares on November 12,
1996, who tenders Shares will be entitled to the regular quarterly dividend,
regardless of when such tender is made. Holders of Shares purchased pursuant to
the Offer will not be entitled to any dividends in respect of any later dividend
periods.
SECTION 9. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company, a public utility furnishing electric service within
Pennsylvania and a small portion of New York, is a subsidiary of Parent. The
Company provides retail and wholesale electric service within a territory
located in western, northern and south central Pennsylvania extending from the
Maryland state line northerly to the New York state line, with a population of
about 1.5 million, approximately 24% of which is concentrated in ten cities and
twelve boroughs, all with populations over 5,000. The Company also provides
wholesale service to five municipalities in New Jersey, and, as lessee of the
property of Waverly Electric Light & Power Company also serves a population of
about 13,700 in Waverly, New York and vicinity.
SELECTED FINANCIAL DATA OF THE COMPANY. Set forth below is certain
financial data for the Company. The historical financial information as of and
for the twelve months ended September 30, 1996 (unaudited) and the years ended
December 31, 1995, December 31, 1994, and December 31, 1993 has been summarized
from the Company's audited consolidated financial statements contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
the unaudited consolidated financial statements contained in the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996. The following
selected historical financial data should be read in conjunction with, and is
qualified in its entirety by reference to, such audited consolidated financial
statements and the notes thereto and Management's Discussion and Analysis
therein.
14
<PAGE> 20
CERTAIN CONSOLIDATED FINANCIAL INFORMATION
(Dollars in Thousands)
<TABLE>
<CAPTION>
Twelve
Months Ended
Years Ended December 31, September 30,
---------------------------------------------------- 1996
Income Summary: 1993 1994 1995 (Unaudited)
---- ---- ---- -----------
<S> <C> <C> <C> <C>
Operating Revenues ............................. $ 908,280 $ 944,744 $ 981,329 $1,012,492
Net Income ..................................... $ 95,728 $ 31,799 $ 111,010 $ 65,142
Earnings Available to
Common Stock ................................. $ 90,741 $ 28,862 $ 109,466 $ 63,598
</TABLE>
<TABLE>
<CAPTION>
Pro-forma
As of September 30, 1996 As of September 30, 1996
(Unaudited) (Unaudited)(1)
------------------------------- ----------------------------------
Amount Percentage Amount Percentage
------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Capital Structure:
Long-term debt (including
unamortized net discount)(2) ................... $ 692,472 44% $ 692,472 45%
Company-obligated mandatorily
redeemable Preferred
Securities ..................................... $ 105,000 7% $ 105,000 7%
Cumulative Preferred Stock
(including premium) ............................ $ 36,777 2% -- --
Common Equity .................................... $ 743,444 47% $ 743,444 48%
---------- ---------- ---------- ----------
Total Capitalization ............................. $1,577,693 100% $1,540,916 100%
========== ==========
</TABLE>
- ------------
(1) Assuming the purchase by the Company of any and all Shares of each Series
of Preferred, such purchase to be initially funded by proceeds from the
issuance of short-term debt.
(2) Includes obligations due within one year.
COVERAGE RATIOS
The Company's Ratio of Earnings to Fixed Charges for each of the periods
indicated was as follows:
<TABLE>
<CAPTION>
Twelve Months Ended
September 30, 1996
Years Ended December 31, (Unaudited)
------------------------ -----------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
4.09 1.69 3.51 2.48
---- ----
</TABLE>
The Ratio of Earnings to Fixed Charges represents, on a pre-tax basis, the
number of times earnings cover fixed charges. Earnings consist of income, to
which has been added fixed charges and taxes based on income. Fixed charges
consist of interest on funded indebtedness, other interest, amortization of net
discount on debt and the interest portion of all rentals charged to income.
15
<PAGE> 21
The Company's Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends for each of the periods indicated was as follows:
<TABLE>
<CAPTION>
Twelve Months Ended
September 30, 1996
Years Ended December 31, (Unaudited)
------------------------ -----------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
3.52 1.59 3.39 2.40
</TABLE>
The Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends represents, on a pre-tax basis, the number of times earnings cover
fixed charges and preferred stock dividends. Earnings consist of Income Before
Cumulative Effect of Accounting Change, to which has been added fixed charges
and taxes based on income of the Company. Combined fixed charges and preferred
stock dividends consist of interest on funded indebtedness, other interest,
amortization of net discount on debt, preferred stock dividends (increased to
reflect the pre-tax earnings required to cover such dividend requirements) and
the interest portion of all rentals charged to income.
ADDITIONAL INFORMATION. The Company is subject to the informational
requirements of the Exchange Act, and, in accordance therewith, files reports
and other information with the Commission. The Company also has filed a Rule
13e-3 Transaction Statement on Schedule 13E-3 and an Issuer Tender Offer
Statement on Schedule 13E-4 with the Commission, which includes certain
additional information relating to the Offer.
Such reports and other information can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. and at its regional offices at 500 West Madison Street,
Chicago, Illinois and 7 World Trade Center, New York, New York. Copies of such
reports and other information also may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549-1004
at prescribed rates. Such reports and other information also may be inspected at
the New York and Philadelphia Stock Exchanges, where certain of the Company's
securities are listed. The Company's Schedules 13E-3 and 13E-4 will not be
available at the Commission's Regional Offices. The Commission maintains a Web
site (http:\\www.sec.com) that contains reports and other information filed
electronically by the Company with the Commission.
The Company undertakes to provide without charge to each person, including
any beneficial owner, to whom this Offer to Purchase is delivered, upon written
or oral request of such person, a copy of the Company's Annual Report on Form
10-K for the year ended December 31, 1995, and Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996,
other than exhibits to such documents. Such requests should be directed to
Secretary, Pennsylvania Electric Company, 2800 Pottsville Pike, Reading,
Pennsylvania 19605.
SECTION 10. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Company purchases all of the Shares of each Series of
Preferred, the total amount required by the Company to purchase all Shares
subject to the Offer will be $25,564,350.00, exclusive of fees and other
expenses.
The Company expects that all or a portion of the proceeds of borrowings in
the ordinary course of business through informal short-term lines of credit or
competitive lines (collectively, "Lines of Credit") with one or more commercial
banks and/or the issuance of unsecured commercial paper ("Commercial Paper")
will be the source of funds for the purchase of Shares in the transaction. The
Company's parent, GPU, Inc. and its affiliates have an aggregate of
approximately $255 million available to them through Lines of Credit. Of such
amount, as of November 11, 1996, the Company has outstanding approximately $49
million and under its charter the Company may borrow an additional $98 million.
Lines of Credit would have maturities of not more than 270
16
<PAGE> 22
days and may be renewed at the expiration of such period. Borrowings under Lines
of Credit would be effected from commercial banks to be designated by the
Company. Additionally, the Company has the capacity to issue up to $100 million
aggregate face amount of Commercial Paper under current commercial paper
programs. The Company may issue Commercial Paper through dealers in
denominations of $100,000 or multiples thereof with maturities of up to 270 days
for reoffering to institutional investors. The purchasers of the Commercial
Paper are determined at the time of sale.
In addition, the Company may, in the future, use all or a portion of the
proceeds of an offering of securities or use other sources to repay all or a
portion of the borrowings under Lines of Credit or payments made with respect to
Commercial Paper. However, no such plans or arrangements have been made to make
such repayment.
SECTION 11. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.
Based upon the Company's records and upon information provided to the
Company by its directors and executive officers, neither the Company nor, to the
Company's knowledge, any director or executive officer of the Company, or
associate of the foregoing, or any subsidiary or affiliate of the Company has
engaged in any transactions involving Shares during the 60 days preceding the
date hereof. Neither the Company nor, to the best of the Company's knowledge,
any director or executive officer of Company, or associate of the foregoing, or,
any subsidiary or affiliate of the Company is a party to any contract,
arrangement, understanding or relationship relating directly or indirectly to
the Offer with any other person with respect to any securities of the Company.
As of November 12, 1996 none of the Company or, to the best of the Company's
knowledge, any director or executive officer of Company, or associate of the
foregoing, or any subsidiary or affiliate of the Company, or any pension, profit
sharing or similar plan of the Company or its affiliates, owns any Shares, and
therefore such persons do not intend to tender or sell any Shares pursuant to
the Offer.
Except as set forth in this Offer to Purchase, neither the Company nor, to
the best of the Company's knowledge, any director or executive officer of the
Company, or any associate of the foregoing, or any subsidiary or affiliate of
the Company, is a party to any contract, understanding or relationship with any
other person relating, directly or indirectly, to, or in connection with, the
Offer with respect to any securities of the Company (including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any of such securities, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding of proxies, consents or authorizations).
SECTION 12. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS.
The Company expressly reserves the right, in its sole discretion and at any
time or from time to time prior to the Expiration Date, to extend the period of
time during which the Offer is open or otherwise amend or terminate the Offer
for any reason with respect to any Series of Preferred by giving oral or written
notice to the Depositary and making a public announcement thereof. There can be
no assurance, however, that the Company will exercise such right to extend the
Offer or, if the Offer with respect to one Series of Preferred is extended, that
the Offer with respect to any other Series of Preferred also will be extended.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, with respect to a Series of Preferred (including an increase or decrease
in the consideration offered or change in the solicitation fee), the Company
will extend the Offer with respect to such Series of Preferred to the extent
required by Rules 13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act. Under
these rules, the minimum period for which the Offer must remain open following a
material change or waiver, other than an increase or decrease in the
consideration offered or change in the solicitation fee, will depend upon the
facts and circumstances, including the relative materiality of the change or
waiver. With respect to an increase or decrease in the consideration offered or
change in the solicitation fee, the Offer will be extended such that the Offer
remains open for a minimum of ten business days following the public
announcement of such change. During any such extension, all Shares of that
Series of Preferred previously tendered will remain subject
17
<PAGE> 23
to the Offer, except to the extent that such Shares may be withdrawn as set
forth in Section 5--"Withdrawal Rights."
If, with respect to a Series of Preferred, the Company extends the period
of time during which the Offer is open, is delayed in accepting for payment or
paying for Shares of that Series of Preferred or is unable to accept for payment
or pay for Shares pursuant to the Offer for any reason, then, without prejudice
to the Company's rights under the Offer, the Depositary may, on behalf of the
Company, retain all Shares of that Series of Preferred tendered, and such Shares
may not be withdrawn except as otherwise provided in this Section 12, subject to
Rule 13e-4(f)(5) under the Exchange Act, which provides that an issuer making a
tender offer either shall pay the consideration offered or return the tendered
securities promptly after the termination or withdrawal of the tender offer.
THE OFFER FOR ONE SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES OF PREFERRED. IF THE COMPANY EXTENDS, AMENDS OR TERMINATES THE
OFFER WITH RESPECT TO ONE SERIES OF PREFERRED FOR ANY REASON, THE COMPANY WILL
HAVE NO OBLIGATION TO EXTEND, AMEND OR TERMINATE THE OFFER FOR ANY OTHER SERIES
OF PREFERRED.
The Company also expressly reserves the right, with respect to any Series
of Preferred, in its sole discretion, upon the occurrence of any of the
conditions specified in Section 7--"Certain Conditions of the Offer," to, among
other things, terminate the Offer and not accept for payment or pay for any
Shares tendered or, subject to Rule 13e-4(f)(5) under the Exchange Act, which
requires the Company either to pay the consideration offered or to return the
Shares tendered promptly after the termination or withdrawal of the Offer, to
postpone acceptance for payment of or payment for Shares by, in the case of any
termination, giving oral or written notice of such termination to the Depositary
and making a public announcement thereof.
Extensions and terminations of and amendments to the Offer may be effected
by public announcement. Without limiting the manner in which the Company may
choose to make public announcement of any extension, termination or amendment,
the Company shall have no obligation (except as otherwise required by applicable
law) to publish, advertise or otherwise communicate any such public
announcement, other than by making a release to the Dow Jones News Service,
except in the case of an announcement of an extension of the Offer with respect
to any Series of Preferred, in which case the Company shall have no obligation
to publish, advertise or otherwise communicate such announcement other than by
issuing a notice of such extension by press release or other public
announcement, which notice shall be issued no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date with respect to that Series of Preferred. Material changes to information
previously provided to holders of the Shares in this Offer to Purchase or in
documents furnished subsequent thereto will be disseminated to holders of Shares
in compliance with Rule 13e-4(e)(2) promulgated by the Commission under the
Exchange Act.
SECTION 13. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
EACH HOLDER OF SHARES SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO
THE TAX CONSEQUENCES TO THE HOLDER OF TENDERING SHARES PURSUANT TO THE OFFER.
GENERAL. The following summary describes certain Federal income tax
consequences relating to the Offer. The summary deals only with Shares held as
capital assets within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code"), and does not address tax consequences that may
be relevant to investors in special tax situations, such as certain financial
institutions, tax-exempt organizations, life insurance companies, dealers in
securities or currencies, or shareholders holding the Shares as part of a
conversion transaction, as part of a hedge or hedging transaction, or as a
position in a straddle for tax purposes. Each shareholder should consult its own
tax advisor with regard to the Offer and the application of Federal income tax
laws, as well as the laws of any state, local or foreign taxing jurisdiction, to
its particular situation.
18
<PAGE> 24
CHARACTERIZATION OF THE SALE. The sale of Shares by a shareholder to the
Company pursuant to the Offer will be a taxable transaction for Federal income
tax purposes. Under Section 302 of the Code, a sale of Shares by a shareholder
to the Company pursuant to the Offer will be treated as a "sale or exchange" of
such Shares for Federal income tax purposes (rather than as a distribution by
the Company with respect to the Shares held by the tendering shareholder) if the
sale (a) results in a "complete redemption" (i.e. a complete termination of the
shareholder's interest) of the Shares and any other stock in the Company owned,
directly or indirectly, by the shareholder, or (b) is "not essentially
equivalent to a dividend" with respect to the shareholder.
If either test is satisfied, the tendering shareholder will recognize gain
or loss equal to the difference between the amount of cash received by the
shareholder pursuant to the Offer and the shareholder's tax basis in the Shares
sold pursuant to the Offer. Any such gain or loss will be capital gain or loss,
and will be long-term capital gain or loss if the Shares have been held for more
than one year.
If neither test is satisfied, the tendering shareholder would be treated as
having received a dividend to the extent of the shareholder's allocable portion
of the Company's earnings and profits for Federal income tax purposes. In this
case, the amount of such dividend would be treated as ordinary income to the
shareholder (without any offset or the tax basis of the Shares sold pursuant to
the Offer), the shareholder would not be allowed to recognize any loss, and the
tendering shareholder's basis in the Shares sold pursuant to the Offer would be
added to such shareholder's basis in its remaining Shares or other stock that it
owns in the Company, if any. If the cash received by the shareholder pursuant to
the Offer exceeded the amount treated as a dividend for tax purposes, such
excess first will reduce the shareholder's basis in its remaining Shares to
zero; any additional amounts would be treated as gain from the sale or exchange
of property.
SECTION 302 TESTS. The receipt of cash by a shareholder will be a "complete
redemption" of all the Shares owned by the shareholder if either (a) all of the
Shares and any other stock of the Company actually and constructively owned by
the shareholder are sold pursuant to the Offer, or (b) all of the Shares and any
other stock of the Company actually owned by the shareholder are sold pursuant
to the Offer and, with respect to Shares and other stock of the Company
constructively owned by the shareholder which are not sold pursuant to the
Offer, the shareholder waives constructive ownership of all such Shares under
procedures described in Section 302(c) of the Code. However, Section 302(c) only
permits the waiver of the constructive ownership rules in limited circumstances.
Accordingly, shareholders expecting to waive constructive ownership should
consult their own tax advisors regarding eligibility and procedural rules
applicable to their particular situations.
The receipt of cash by a shareholder will be "not essentially equivalent to
a dividend" if the shareholder's sale of Shares pursuant to the Offer results in
a "meaningful reduction" in the shareholder's interest in the Company. The sale,
pursuant to the Offer, of less than all of the Shares actually or constructively
owned by a tendering shareholder that does not own, either directly or
indirectly under the attribution rules, any common stock of Parent likely will
qualify as "not essentially equivalent to a dividend". Also, a shareholder who
owns only a small amount of common stock of Parent should probably satisfy the
"not essentially equivalent to a dividend" test. However, because what
constitutes a "meaningful reduction" depends upon a variety of factors,
shareholders expecting to rely upon the "not essentially equivalent to a
dividend" test should consult their own tax advisors as to its application in
their particular situations.
CONSTRUCTIVE OWNERSHIP. In determining whether any of the tests under
Section 302 of the Code are satisfied, shareholders must take into account not
only the Shares and other stock of the Company or the Parent which are actually
owned by the shareholder, but also such Shares or stock which is constructively
owned by the shareholder under Section 318 of the Code. Under Section 318 of the
Code, a shareholder may constructively own Shares or stock actually owned, and
in some cases constructively owned, by certain related individuals or entities
and Shares or stock which the shareholder has the right to acquire by exercise
of an option or by conversion. Contemporaneous dispositions or acquisitions of
such Share or stock by a shareholder or related individuals or entities may be
deemed to be part of a single integrated transaction which will be taken into
account in determining whether any of the tests under Section 302 of the Code
have been satisfied.
19
<PAGE> 25
CORPORATE SHAREHOLDER DIVIDEND TREATMENT. If a sale of Shares by a
corporate shareholder is treated as a dividend, the corporate shareholder may be
entitled to claim a deduction equal to 70% of the dividend under Section 243 of
the Code, subject to applicable limitations. Corporate shareholders must,
however, consider Section 246(c) of the Code which disallows the 70%
dividends-received deduction with respect to stock that is held for 45 days or
less or at a time when the corporate shareholder is under an obligation to make
related payments with respect to substantially similar or related property. For
this purpose, the length of time a taxpayer is deemed to have held stock may be
reduced by periods during which the taxpayer's risk of loss with respect to the
stock is diminished by reason of the existence of certain options, short sales
or other transactions. Moreover, Section 246A of the Code may reduce the 70%
dividend received deduction if a corporate shareholder incurred indebtedness
directly attributable to its investment in Shares.
Any amount received by a corporate shareholder pursuant to the Offer that
is treated as a dividend would likely constitute an "extraordinary dividend"
under Section 1059 of the Code. For this purpose, dividends on preferred stock
(other than qualified preferred dividends payable annually at a fixed rate of
return) equal or greater than 5% of the corporation's adjusted basis in the
Shares and received by a shareholder within, and having their ex-dividend date
within, an 85-day period are treated as an extraordinary dividend. (The
measuring period for aggregating dividends is extended to 365 days if the total
dividends received in such period exceed 20% of the shareholder's adjusted tax
basis in the Shares.)
If the sale of the Shares were treated as an extraordinary dividend, a
corporate shareholder would be required under Section 1059(a) of the Code to
reduce its basis (but not below zero) in its Shares by the non-taxed portion of
the aggregate dividend (i.e., the portion of the dividend for which the 70%
dividend-received deduction is allowed). If such portion exceeds the
shareholder's tax basis for its Shares (and its tax basis in any other stock of
the Company that it owns), the shareholder would be required to treat the excess
as gain from the sale of its remaining Shares or other stock that it owns in the
Company. Corporate shareholders should consult their own tax advisors concerning
the potential application of Section 1059 of the Code to the Offer.
FOREIGN SHAREHOLDERS. The Company will withhold Federal income tax at a
rate of 30% from gross proceeds paid pursuant to the Offer to a foreign
shareholder or his agent, unless the Company determines that a reduced rate of
withholding is applicable pursuant to a tax treaty or that an exemption from
withholding is applicable because such gross proceeds are effectively connected
with the conduct of a trade or business by the foreign shareholder within the
United States. For this purpose, a foreign shareholder is any shareholder that
is not (a) a citizen or resident of the United States, (b) a corporation,
partnership or other entity created or organized in or under the laws of the
United States, or (c) any estate or trust the income of which is subject to
Federal income taxation regardless of its source. Without definite knowledge to
the contrary, the Company will determine whether a shareholder is a foreign
shareholder by reference to the shareholder's address. A foreign shareholder may
be eligible to obtain a refund of such tax or a portion of such tax if such
shareholder (a) meets the "complete redemption," or "not essentially equivalent
to a dividend" tests described above, (b) is entitled to a reduced rate of
withholding pursuant to a treaty and the Company withheld at a higher rate, or
(c) is otherwise able to establish that no tax or a reduced amount of tax was
due with respect to the tender of the Shares to the Company. In order to claim
an exemption from withholding on the ground that gross proceeds paid pursuant to
the Offer are effectively connected with the conduct of a trade or business by a
foreign shareholder within the United States or that the foreign shareholder is
entitled to the benefits of a tax treaty, the foreign shareholder must deliver
to the Depositary (or other person who is otherwise required to withhold Federal
income tax) a properly executed statement claiming such exemption or benefits on
Treasury Form 4224 ("Exemption from Withholding on Tax on Income Effectively
Connected with the conduct of a Trade or Business in the United States") or on
Treasury Form 1001 ("Ownership, Exemption, or Reduced Rate Certificate"). Such
statements may be obtained from the Depositary. Foreign shareholders are urged
to consult their own tax advisors regarding the application of Federal income
tax withholding, including eligibility for a withholding tax reduction or
exemption and the refund procedures.
BACKUP WITHHOLDING. ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO
COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE APPLICABLE
LETTER OF TRANSMITTAL (OR, IN THE CASE OF A FOREIGN SHAREHOLDER, FORM W-8
20
<PAGE> 26
OBTAINABLE FROM THE DEPOSITARY) MAY BE SUBJECT TO A REQUIRED FEDERAL INCOME TAX
BACKUP WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR
OTHER PAYEE PURSUANT TO THE OFFER. See Section 6--"Acceptance for Payment of
Shares and Payment of Purchase Price" with respect to the application of the
Federal income tax backup withholding.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. THE TAX CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY DEPENDING
UPON, AMONG OTHER THINGS, THE PARTICULAR CIRCUMSTANCES OF THE TENDERING
SHAREHOLDER. NO INFORMATION IS PROVIDED HEREIN AS TO THE STATE, LOCAL OR FOREIGN
TAX CONSEQUENCES OF THE TRANSACTION CONTEMPLATED BY THE OFFER. SHAREHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SALES MADE BY THEM PURSUANT TO THE
OFFER AND THE EFFECT OF THE STOCK OWNERSHIP ATTRIBUTION RULES MENTIONED ABOVE.
SECTION 14. FEES AND EXPENSES.
The Company has retained ChaseMellon Shareholder Services, L.L.C. as
Depositary, Georgeson & Company Inc. as Information Agent, and Merrill Lynch &
Co. as Dealer Manager, in connection with the Offer. The Information Agent and
Dealer Manager will assist shareholders who request assistance in connection
with the Offer and may request brokers, dealers and other nominee shareholders
to forward materials relating to the Offer to beneficial owners. The Company has
agreed to pay the Dealer Manager, upon acceptance for payment of Shares pursuant
to the Offer, a fee of $.50 per Share paid for in the Offer. The Dealer Manager
also will be reimbursed by the Company for its reasonable out-of-pocket
expenses, including attorneys' fees. The Dealer Manager has rendered, is
currently rendering and is expected to continue to render various investment
banking and other advisory services to the Company. It has received, and will
continue to receive, customary compensation from the Company for such services.
The Depositary and the Information Agent will receive reasonable and customary
compensation for their services in connection with the Offer and also will be
reimbursed for reasonable out-of-pocket expenses, including attorneys' fees. The
Company has agreed to indemnify the Depositary, the Information Agent and the
Dealer Manager against certain liabilities in connection with the Offer,
including certain liabilities under the federal securities laws. Neither the
Depositary nor the Information Agent has been retained to make solicitations,
and none of the Depositary, the Information Agent or the Dealer Manager has been
retained to make recommendations with respect to the Offer, in their respective
roles as Depositary, Information Agent and Dealer Manager.
The Company will pay to a Soliciting Dealer a solicitation fee of $1.32 per
Share for Shares tendered, accepted for payment and paid for pursuant to the
Offer. For purposes of this Offer, "Soliciting Dealer" includes (a) any broker
or dealer in securities, including the Dealer Manager in its capacity as a
broker or dealer, which is a member of any national securities exchange or of
the NASD, (b) any foreign broker or dealer not eligible for membership in the
NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting
tenders outside the United States to the same extent as if it were an NASD
member, or (c) any bank or trust company. No such fee shall be payable to a
Soliciting Dealer in respect of Shares (i) beneficially owned by such Soliciting
Dealer or (ii) registered in the name of such Soliciting Dealer unless such
Shares are held by such Soliciting Dealer as nominee and such Shares are being
tendered for the benefit of one or more beneficial owners identified in the
applicable Letter of Transmittal or in the applicable Notice of Solicited
Tenders (included in the materials provided to brokers and dealers). No such fee
shall be payable to a Soliciting Dealer with respect to the tender of Shares by
a holder unless the applicable Letter of Transmittal accompanying such tender
designates such Soliciting Dealer. No such fee shall be payable to the
Soliciting Dealer unless the Soliciting Dealer returns a Notice of Solicited
Tenders to the Depositary within three business days after the applicable
Expiration Date. No such fee shall be payable to a Soliciting Dealer to the
extent such Soliciting Dealer is required for any reason to transfer the amount
of such fee to any person (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of the Company, the
Depositary, the Information Agent or the Dealer Manager for purposes of the
Offer.
21 <PAGE>
The Company will pay (or cause to be paid) any stock transfer taxes on its
purchase of Shares, except as otherwise provided in Instruction 6 of the
applicable Letter of Transmittal.
Assuming that all Shares of each Series of Preferred pursuant to the
Offer are tendered and purchased by the Company, it is estimated that the
expenses incurred by the Company in connection with the Offer will be
approximately as set forth below. The Company will be responsible for paying all
such expenses.
<TABLE>
<S> <C>
Dealer Manager fees $183,000
Solicitation fees 575,000
Printing and mailing fees 15,000
Filing fees 5,113
Legal and miscellaneous 91,887
--------
Total $870,000
========
</TABLE>
SECTION 15. MISCELLANEOUS.
The Offer is not being made to, nor will the Company accept tenders from,
owners of Shares in any jurisdiction in which the Offer or its acceptance would
not be in compliance with the laws of such jurisdiction. The Company is not
aware of any jurisdiction where the making of the Offer or the tender of Shares
would not be in compliance with applicable law. If the Company becomes aware of
any jurisdiction where the making of the Offer or the tender of Shares is not in
compliance with any applicable law, the Company will make a good faith effort to
comply with such law. If, after such good faith effort, the Company cannot
comply with such law, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares residing in such
jurisdiction. In any jurisdiction in which the securities, Blue Sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer will
be deemed to be made on the Company's behalf by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
22
<PAGE> 27
<TABLE>
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
<S> <C> <C>
By Mail: Facsimile By Hand or By Overnight Courier:
Transmission:
ChaseMellon Shareholder Services, (201) 329-8936 ChaseMellon Shareholder Services,
L.L.C. L.L.C.
P.O. Box 798 Confirm Receipt Reorganization Department
Midtown Station of Notice of 120 Broadway, 13th Floor
New York, New York 10018 Guaranteed Delivery New York, New York 10271
by Telephone:
(201) 296-4209
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at the respective telephone numbers and addresses
listed below. Requests for additional copies of this Offer to Purchase, the
applicable Letter of Transmittal, the applicable Notice of Guaranteed Delivery,
or other tender offer materials may be directed to the Information Agent, and
such copies will be furnished promptly at the Company's expense. Each
shareholder may also contact its local broker, dealer, commercial bank or trust
company for assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
==========================
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
250 Vesey Street
New York, New York 10281
(212) 449-4914
1-888-ML4-TNDR (toll-free)
(1-888-654-8637 (toll-free))
<PAGE> 1
LETTER OF TRANSMITTAL
TO ACCOMPANY
SHARES OF CUMULATIVE PREFERRED STOCK, ____% SERIES __
($100 STATED VALUE)
CUSIP NO. _________
OF
PENNSYLVANIA ELECTRIC COMPANY
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 13, 1996
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, DECEMBER 13, 1996, UNLESS THE OFFER IS EXTENDED.
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To: CHASEMELLON SHAREHOLDER SERVICES, L.L.C., DEPOSITARY
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By Mail: By Hand or Overnight Courier:
ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
P.O. Box 798 Reorganization Department
Midtown Station 120 Broadway, 13th Floor
New York, NY 10018 New York, NY 10271
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THIS LETTER OF TRANSMITTAL IS TO BE USED FOR THE TENDER OF SHARES OF
CUMULATIVE PREFERRED STOCK, ____% SERIES ____ ONLY. ANY PERSON DESIRING TO
TENDER SHARES OF ANY OTHER SERIES OF PREFERRED STOCK FOR WHICH THE COMPANY IS
MAKING A TENDER OFFER MUST SUBMIT THE LETTER OF TRANSMITTAL RELATING TO THAT
SPECIFIC SERIES.
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DESCRIPTION OF SHARES OF CUMULATIVE PREFERRED STOCK, ____% SERIES ____ TENDERED
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NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) (IF BLANK, FILL IN EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
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TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S) TENDERED*
--------------- ----------------- ---------------
--------------- ----------------- ---------------
--------------- ----------------- ---------------
--------------- ----------------- ---------------
TOTAL
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* Unless otherwise indicated, the holder will be deemed to have tendered the full number of Shares represented by the tendered
certificate(s). See Instruction 4.
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DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
DO NOT SEND ANY CERTIFICATES TO THE DEALER MANAGER, THE INFORMATION
AGENT OR TO PENNSYLVANIA ELECTRIC COMPANY.
<PAGE> 2
The instructions accompanying this Letter of Transmittal should be read
carefully before the Letter of Transmittal is completed. Questions and requests
for assistance or for additional copies of the Offer to Purchase, this Letter of
Transmittal and the applicable Notice of Guaranteed Delivery or other tender
offer materials may be directed to Georgeson & Company Inc., the Information
Agent, at Wall Street Plaza, New York, NY 10005, telephone (800) 223-2064 (toll
free) or (212) 440-9800 (collect).
This Letter of Transmittal is to be used only if certificates are to be
forwarded herewith. It is furnished for information only to holders whose Shares
(as defined below) are to be delivered by book-entry transfer to the
Depositary's account at The Depository Trust Company ("DTC") or The Philadelphia
Depository Trust Company ("PDTC") (hereinafter together referred to as the
"Book-Entry Transfer Facilities") pursuant to the procedures set forth under
Section 4--"Procedure for Tendering Shares" in the Offer to Purchase (as defined
below).
Shareholders who cannot deliver certificates for their Shares and all other
documents required hereby to the Depositary or for whose Shares a confirmation
of delivery pursuant to the procedures for book-entry transfer cannot be
received by the Depositary by the Expiration Date (as defined in the Offer to
Purchase) must tender their Shares pursuant to the guaranteed delivery procedure
set forth under Section 4--"Procedure for Tendering Shares" in the Offer to
Purchase. See Instruction 2. Delivery of documents to the Company or to a
Book-Entry Transfer Facility does not constitute a valid delivery.
(BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
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|_| 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 tendering shareholder(s) _______________________________________
Date of execution of Notice of Guaranteed Delivery ________________________
Name of institution that guaranteed delivery ______________________________
If delivery is by book-entry transfer:
Name of tendering institution _____________________________________________
Check applicable box:
|_| DTC
|_| PDTC
Account No. _______________________________________________________________
Transaction Code No. ______________________________________________________
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NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Pennsylvania Electric Company, a
Pennsylvania corporation (the "Company"), the above-described shares (together,
the "Shares") pursuant to the Company's offer to purchase any and all Shares of
the Cumulative Preferrred Stock, ____% Series ____ ($100 stated value) (the
"____% Preferred") at a price of $____ per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated November 13, 1996 (the "Offer to Purchase"), receipt of which hereby is
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer").
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended with
respect to the ____% Preferred, the terms and conditions of any such extension
or amendment), the undersigned hereby sells, assigns and transfers to, or upon
the order of, the Company all right, title and interest in and to all the Shares
that are being tendered hereby and constitutes and appoints ChaseMellon
Shareholder Services, L.L.C., as Depositary, the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares, with full power
of substitution (such power of attorney, being deemed to be an irrevocable power
coupled with an interest), to (a) deliver certificates of such Shares and to
accept such Shares together with all accompanying evidences of transfer and
authenticity, for deposit with the Depositary, (b) present such Shares for
transfer on the books of the Company, (c) issue payment for such Shares and/or
certificates for unpurchased Shares or deliver unpurchased Shares to the account
of the undersigned, and (d) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares, all in accordance with the terms
of the Offer. The Depositary will act as agent for tendering shareholders for
the purpose of receiving payment from the Company and transmitting payment to
tendering shareholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and that, when and to the extent the same are accepted for
payment by the Company, the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Depositary or the Company to
be necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby.
All authority herein conferred or agreed to be conferred shall survive the
death, bankruptcy or incapacity of the undersigned, and every obligation of the
undersigned hereunder shall be binding upon the heirs, legal representatives,
successors, assigns, executors and administrators of the undersigned. Except as
stated in the Offer, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described under Section 4--"Procedure for Tendering Shares" in
the Offer to Purchase and in the instructions hereto will constitute the
undersigned's acceptance of the terms and conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions," the check
for the purchase price of any Shares purchased, and/or the return of any
certificates for Shares not tendered or not purchased, will be issued in the
name(s) of the undersigned (and, in the case of Shares tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility
designated above). Similarly, unless otherwise indicated under "Special Delivery
Instructions," the check for the purchase price of any Shares purchased and/or
the return of any certificates for Shares not tendered or not purchased (and
accompanying documents, as appropriate) will be mailed to the undersigned at the
address shown below the undersigned's signature(s). In the event that both
"Special Payment Instructions" and "Special Delivery Instructions" are
completed, the check for the purchase price of any Shares purchased and/or the
return of any certificates for Shares not tendered or not purchased will be
issued in the name(s) of, and such check and/or any certificates will be mailed
to, the person(s) so indicated. The undersigned recognizes that the Company has
no obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder(s) thereof if the Company does not
accept for payment any of the Shares so tendered.
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<PAGE> 4
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SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 4, 5, 6 and 7) (See Instructions 1, 4 and 7)
To be completed ONLY if the check for the purchase price of To be completed ONLY if the check for the purchase price of
Shares purchased and/or certificates for Shares not tendered Shares purchased and/or certificates for Shares not
or not purchased are to be issued in the name of someone tendered or not purchased is to be mailed to someone other
other than the undersigned. than the undersigned or to the undersigned at an address
other than that shown below the undersigned's signature(s).
Issue |_| check and/or |_| certificate(s) to:
Mail |_| check and/or |_| certificate(s) to:
Name __________________________________________________
(Please Print) Name __________________________________________________
(Please Print)
Address ______________________________________________
Address _______________________________________________
_______________________________________________________
(Include Zip Code) ________________________________________________________
(Include Zip Code)
_______________________________________________________
(Taxpayer Identification or Social Security No.)
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SOLICITED TENDERS
(See Instruction 10)
The Company will pay to any Soliciting Dealer, as defined in Instruction
10, a solicitation fee of $1.32 Share for each Share tendered, accepted for
payment and purchased pursuant to the Offer.
The undersigned represents that the Soliciting Dealer that solicited and
obtained this tender is:
Name of Firm: __________________________________________________________________
(Please Print)
Name of Individual Broker or Financial Consultant: _____________________________
Identification Number (if known): ______________________________________________
Address: _______________________________________________________________________
(Include Zip Code)
The following to be completed ONLY if customer's Shares held in nominee
name are tendered.
Name of Beneficial Owner Number of Shares Tendered
(Attach additional list if necessary)
___________________________________ ______________________________________
___________________________________ ______________________________________
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that: (a) it has complied with the applicable requirements
of the Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (b) it is entitled
to such compensation for such solicitation under the terms and conditions of the
Offer to Purchase; (c) in soliciting tenders of Shares, it has used no
solicitation materials other than those furnished by the Company; and (d) if it
is a foreign broker or dealer not eligible for membership in the National
Association of Securities Dealers, Inc. (the "NASD"), it has agreed to conform
to the NASD's Rules of Fair Practice in making solicitations.
The payment of compensation to any Soliciting Dealer is dependent on such
Soliciting Dealer returning a Notice of Solicited Tenders to the Depositary.
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<PAGE> 5
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SIGN HERE
(Please complete Substitute Form W-9 below)
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificate(s) or 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 a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 5.)
___________________________________________________________________________
___________________________________________________________________________
Signature(s) of Owner(s)
Dated _______________________________________________________________, 1996
Name(s) ___________________________________________________________________
___________________________________________________________________________
(Please Print)
Capacity (full title)______________________________________________________
Address ___________________________________________________________________
___________________________________________________________________________
(include Zip Code)
Area Code and Telephone No. _______________________________________________
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Name of Firm ______________________________________________________________
Authorized Signature ______________________________________________________
Name ______________________________________________________________________
Title _____________________________________________________________________
Address of Firm ___________________________________________________________
___________________________________________________________________________
Area Code and Telephone No. _______________________________________________
Dated ______________________________________________________________ , 1996
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<PAGE> 6
THIS LETTER OF TRANSMITTAL IS TO BE USED FOR THE TENDER OF SHARES OF ____%
PREFERRED ONLY. ANY PERSON DESIRING TO TENDER SHARES OF ANY OTHER SERIES OF
PREFERRED STOCK FOR WHICH THE COMPANY IS MAKING A TENDER OFFER MUST SUBMIT THE
LETTER OF TRANSMITTAL RELATING TO THAT SPECIFIC SERIES.
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program
or the Stock Exchange Medallion Program (any of the foregoing, an "Eligible
Institution"). Signatures on this Letter of Transmittal need not be guaranteed
(a) if this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered herewith and such holder(s) has not completed the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (b) if such Shares are tendered
for the account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES. This Letter of Transmittal
is to be used only if certificates are to be forwarded herewith pursuant to the
procedures set forth under Section 4--"Procedure for Tendering Shares" in the
Offer to Purchase. Either (a) certificates for all physically delivered Shares,
as well as a properly completed and duly executed Letter of Transmittal and any
other documents required by this Letter of Transmittal, or (b) a confirmation of
a book-entry transfer into the Depositary's account at one of the Book-Entry
Transfer Facilities of all Shares delivered electronically must be received by
the Depositary at one of its addresses set forth on the front page of this
Letter of Transmittal on or prior to the Expiration Date (as defined in the
Offer to Purchase) with respect to the ____% Preferred. Shareholders who cannot
deliver their Shares and all other required documents to the Depositary on or
prior to the applicable Expiration Date must tender their Shares pursuant to the
guaranteed delivery procedure set forth under Section 4--"Procedure for
Tendering Shares" in the Offer to Purchase. Pursuant to such procedure: (a) such
tender is made by or through an Eligible Institution, (b) a properly completed
and duly executed Notice of Guaranteed Delivery in the form provided by the
Company is received by the Depositary on or prior to the applicable Expiration
Date and (c) either (i) the certificates for such Shares, together with a
properly completed and duly executed Letter of Transmittal for the ____%
Preferred and any other documents required by such Letter of Transmittal, or
(ii) a confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities are received
by the Depositary no later than 5:00 p.m., New York City time, on the third New
York Stock Exchange trading day after the Expiration Date, all as provided under
Section 4--"Procedure for Tendering Shares" in the Offer to Purchase.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF CERTIFICATES FOR SHARES ARE
SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted. See
Section 3--"Number of Shares; Purchase Price; Expiration Date; Receipt of
Dividend; Extension of the Offer" in the Offer to Purchase. By executing this
Letter of Transmittal, the tendering shareholder waives any right to receive any
notice of the acceptance for payment of the Shares.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS. If fewer than all the Shares represented by any
certificate delivered to the Depositary are to be tendered, fill in the number
of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In such case a new certificate for the remainder of the Shares
represented by the old certificate will be sent in the name of and to the
person(s) signing this Letter of Transmittal, unless otherwise provided in the
"Special Payment Instructions" or "Special Delivery Instructions" boxes on this
Letter of Transmittal, as promptly as practicable following the expiration or
termination of the Offer. All Shares 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. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
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If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the purchase price is to be made to, or Shares
not tendered or not purchased are to be registered in the name of, any person
other than the registered holder(s). Signatures of any such certificates or
stock powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal or any certificate or stock power is 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 Company of the authority of such person so to act must be submitted.
6. STOCK TRANSFER TAXES. The Company will pay or cause to be paid any stock
transfer taxes with respect to the sale and transfer of any Shares to it or its
order pursuant to the Offer. If, however, payment of the purchase price is to be
made to, or Shares not tendered or not purchased are to be registered in the
name of, any person other than the registered holder(s), or if tendered Shares
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(s), such other person or otherwise) 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. See Section 6--"Acceptance for Payment of Shares and Payment of
Purchase Price" in the Offer to Purchase. EXCEPT AS PROVIDED IN THIS INSTRUCTION
6, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES
REPRESENTING SHARES TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase
price of any Shares purchased is to be issued in the name of, and/or any
certificates for Shares not tendered or not purchased are to be returned to, a
person other than the person(s) signing this Letter of Transmittal or if the
check and/or any certificate for Shares not tendered or not purchased is to be
mailed to someone other than the person(s) signing this Letter of Transmittal or
to an address other than that shown above in the box captioned "Description of
Shares Tendered," then the boxes captioned "Special Payment Instructions" and/or
"Special Delivery Instructions" on this Letter of Transmittal should be
completed. A shareholder tendering Shares by book-entry transfer will have any
Shares not accepted for payment returned by crediting the account maintained by
such shareholder at the Book-Entry Transfer Facility from which such transfer
was made.
8. SUBSTITUTE FORM W-9 AND FORM W-8. The tendering shareholder is required
to provide the Depositary with either a correct Taxpayer Identification Number
("TIN") on Substitute Form W-9, which is provided under "Important Tax
Information" below, or a properly completed Form W-8. Failure to provide the
information on either Substitute Form W-9 or Form W-8 may subject the tendering
shareholder to 31% Federal income tax backup withholding on the payment of the
purchase price. The box in Part 2 of Substitute Form W-9 may be checked if the
tendering shareholder has not been issued a TIN and has applied for a number or
intends to apply for a number in the near future. If the box in Part 2 is
checked and the Depositary is not provided with a TIN by the time of payment,
the Depositary will withhold 31% on all payments of the purchase price
thereafter until a TIN is provided to the Depositary.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to Georgeson & Company Inc., as Information
Agent, or Merrill Lynch & Co., as Dealer Manager, at the telephone number and
address listed below. Requests for additional copies of the Offer to Purchase,
this Letter of Transmittal, the applicable Notice of Guaranteed Delivery or
other tender offer materials may be directed to the Information Agent, and such
copies will be furnished promptly at the Company's expense. Shareholders also
may contact their local brokers, dealers, commercial banks or trust companies
for assistance concerning this Offer.
10. SOLICITED TENDERS. The Company will pay a solicitation fee of $1.32 per
Share for any Shares tendered, accepted for payment and paid for pursuant to the
Offer, covered by the Letter of Transmittal which designates, in the box
captioned "Solicited Tenders," as having solicited and obtained the tender, the
name of (a) any broker or dealer in securities, including a Dealer Manager in
its capacity as a dealer or broker, which is a member of any national securities
exchange or of the National Association of Securities Dealers, Inc. ("NASD"),
(b) any foreign broker or dealer not eligible for membership in the NASD which
agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders
outside the United States to the same extent as though it were an
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<PAGE> 8
NASD member, or (c) any bank or trust company (each of which is referred to
herein as a "Soliciting Dealer"). No such fee shall be payable to a Soliciting
Dealer with respect to the tender of Shares by a holder unless the Letter of
Transmittal accompanying such tender designates such Soliciting Dealer. No such
fee shall be payable to a Soliciting Dealer in respect of Shares (i)
beneficially owned by such Soliciting Dealer or (ii) registered in the name of
such Soliciting Dealer unless such Shares are held by such Soliciting Dealer as
nominee and such Shares are being tendered for the benefit of one or more
beneficial owners identified on the Letter of Transmittal or on the Notice of
Solicited Tenders (included in the materials provided to brokers and dealers).
No such fee shall be payable to a Soliciting Dealer with respect to the tender
of Shares by the holder of record, for the benefit of the beneficial owner,
unless the beneficial owner has designated such Soliciting Dealer. If tendered
Shares are being delivered by book-entry transfer, the Soliciting Dealer must
return a Notice of Solicited Tenders to the Depositary within three New York
Stock Exchange trading days after expiration of the Offer to receive a
solicitation fee. NO SUCH FEE SHALL BE PAYABLE TO A SOLICITING DEALER IF SUCH
SOLICITING DEALER IS REQUIRED FOR ANY REASON TO TRANSFER THE AMOUNT OF SUCH FEE
TO ANY PERSON (OTHER THAN ITSELF). No broker, dealer, bank, trust company or
fiduciary shall be deemed to be the agent of the Company, the Depositary, the
Information Agent or the Dealer Manager for purposes of the Offer.
11. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance of any tender
of Shares will be determined by the Company, in its sole discretion, and its
determination shall be final and binding. The Company reserves the absolute
right to reject any and all tenders of Shares that it determines are not in
proper form or the acceptance for payment of or payment for Shares that may, in
the opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any of the conditions to the Offer or any defect or
irregularity in any tender of Shares, and the Company's interpretation of the
terms and conditions of the Offer (including these instructions) shall be final
and binding. Unless waived, any defects or irregularities in connection with
tenders must be cured within such time as the Company shall determine. None of
the Company, the Dealer Manager, the Depositary, the Information Agent or any
other person shall be under any duty to give notice of any defect or
irregularity in tenders, nor shall any of them incur any liability for failure
to give any such notice. Tenders will not be deemed to have been made until all
defects and irregularities have been cured or waived.
IMPORTANT: THIS LETTER OF TRANSMITTAL, DULY EXECUTED, TOGETHER WITH
CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS OR CONFIRMATION OF BOOK-ENTRY
TRANSFER MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE APPLICABLE
EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under Federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
either such shareholder's correct TIN on Substitute Form W-9 below or a properly
completed Form W-8. If such shareholder is an individual, the TIN is his or her
social security number. For businesses and other entities, the TIN is the
employer identification number. If the Depositary is not provided with the
correct TIN or properly completed Form W-8, the shareholder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, payments that
are made to such shareholder with respect to Shares purchased pursuant to the
Offer may be subject to backup withholding. The 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 additional instructions.
If Federal income tax backup withholding applies, the Depositary is
required to withhold 31% of any payments made to the shareholder. Backup
withholding is not an additional tax. Rather, the Federal income tax liability
of persons subject to backup withholding will be reduced by the amount of the
tax withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on payments that are made to a shareholder with
respect to Shares purchased pursuant to the Offer, the shareholder is required
to notify the Depositary of his or her correct TIN by completing the Substitute
Form W-9 attached hereto certifying that the TIN provided on Substitute Form W-9
is correct and that (a) the shareholder has not been notified by the Internal
Revenue Service that he or she is subject to Federal income tax backup
withholding as a result of failure to report all interest or dividends or (b)
the Internal Revenue Service has notified the shareholder that he or she is no
longer subject to Federal income tax backup withholding. Foreign shareholders
must submit a properly completed Form W-8 in order to avoid the applicable
backup withholding; provided, however, that backup withholding will not apply to
foreign shareholders subject to 30% (or lower treaty rate) withholding on gross
payments received pursuant to the Offer.
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<PAGE> 9
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the registered owner of the Shares.
If the Shares 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.
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PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C._____________________________
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SUBSTITUTE | |
| PART 1--PLEASE PROVIDE YOUR TIN IN THE | Social security number OR
FORM W-9 | BOX AT RIGHT AND CERTIFY BY SIGNING | Employee Identification Number
| AND DATING BELOW. |
| | TIN _________________________________
| |
| ---------------------------------------------------------------------------------------------------------
| Name (Please Print)___________________________ | PART 2
| |
| | Awaiting TIN |_|
| Address ______________________________________ |
| |
| |
| City _____________ State ___ Zip Code ________ |
| |
| ---------------------------------------------------------------------------------------------------------
| PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
|
Department of the | (1) The number shown on this form is my correct taxpayer identification number (or a TIN has not
Treasury | been issued to me but I have mailed or delivered an application to receive a TIN or intend to
Internal Revenue Service | do so in the near future).
|
| (2) I am not subject to backup withholding either because I have not been notified by the Internal
PAYER'S REQUEST FOR | Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to
TAXPAYER IDENTIFICATION | report all interest or dividends or the IRS has notified me that I am no longer subject to
NUMBER (TIN) | backup withholding.
AND CERTIFICATION |
| (3) All other information provided on this form is true, correct and complete.
|
| ---------------------------------------------------------------------------------------------------------
|
| SIGNATURE: _____________________________________________ DATE: __________________
|
| You must cross out item (2) above if you have been notified by the IRS that you are
| currently subject to backup withholding because of underreporting interest or dividends
| on your tax return.
- ------------------------------------------------------------------------------------------------------------------------------------
</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. YOU MUST COMPLETE THE FOLLOWING
CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF THE 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 (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administrative Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all payments of the purchase price made to me will be withheld until I
provide a number.
SIGNATURE: ________________________________________________ DATE: __________
- --------------------------------------------------------------------------------
- 10 -
<PAGE> 11
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
==========================
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
250 Vesey Street
New York, New York 10281
(212) 449-4914
1-888-ML4-TNDR (toll-free)
(1-888-654-8637 (toll-free))
- 11 -
<PAGE> 1
___% PREFERRED
PENNSYLVANIA ELECTRIC COMPANY
Notice of Guaranteed Delivery of
Shares of Cumulative Preferred Stock, ___% Series __ ($100 stated value)
This form, or a form substantially equivalent to this form, must be used to
accept the Offer (as defined below) if certificates for the shares of Cumulative
Preferred Stock, ____% Series __ ($100 stated value) (the "Shares") are not
immediately available, if the procedure for book-entry transfer cannot be
completed on a timely basis, or if time will not permit all other documents
required by the applicable Letter of Transmittal to be delivered to ChaseMellon
Shareholder Services, L.L.C., as Depositary, on or prior to the expiration of
the Offer. Such form may be delivered by hand or transmitted by mail, or by
facsimile transmission, to the Depositary. See Section 4--"Procedure for
Tendering Shares" in the Offer to Purchase (as defined below). THE ELIGIBLE
INSTITUTION (AS DEFINED BELOW) WHICH COMPLETES THIS FORM MUST COMMUNICATE THE
GUARANTEE TO THE DEPOSITARY AND EITHER THE APPLICABLE LETTER OF TRANSMITTAL AND
CERTIFICATES FOR SHARES MUST BE DELIVERED TO THE DEPOSITARY OR THE DEPOSITARY
MUST RECEIVE CONFIRMATION OF BOOK-ENTRY TRANSFER OF THE SHARES TO THE
DEPOSITARY'S ACCOUNT AT THE DEPOSITORY TRUST COMPANY OR THE PHILADELPHIA
DEPOSITORY TRUST COMPANY WITHIN THREE NEW YORK STOCK EXCHANGE TRADING DAYS AFTER
THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE). Failure to do so
could result in a financial loss to such Eligible Institution.
To: CHASEMELLON SHAREHOLDER SERVICES, L.L.C., DEPOSITARY
<TABLE>
<CAPTION>
By Mail: Facsimile Transmission: By Hand or Overnight Courier:
<S> <C> <C>
ChaseMellon Shareholder Services, L.L.C. (201) 329-8936 ChaseMellon Shareholder Services, L.L.C.
P.O. Box 798 Reogranization Department
Midtown Station Confirm Receipt 120 Broadway, 13th Floor
New York, NY 10018 of Notice New York, NY 10271
of Guaranteed
Delivery by
Telephone:
(201) 296-4209
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS TO BE USED FOR THE TENDER OF SHARES
OF CUMULATIVE PREFERRED STOCK, ____% SERIES __ ($100 STATED VALUE) ONLY. ANY
PERSON DESIRING TO TENDER SHARES OF ANY OTHER SERIES OF PREFERRED FOR WHICH THE
COMPANY IS MAKING A TENDER OFFER MUST SUBMIT THE NOTICE OF GUARANTEED DELIVERY
RELATING TO THAT SPECIFIC SERIES.
This form 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, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Pennsyvlania Electric Company, a
Pennsylvania corporation (the "Company"), upon the terms and subject to the
conditions set forth in the Offer to Purchase dated November 13, 1996 (the
"Offer to Purchase"), and the applicable Letter of Transmittal (which, together
with the Offer to Purchase, constitutes the "Offer"), receipt of which hereby is
acknowledged, the number of Shares of the Cumulative Preferred Stock, ____%
Series __ ($100 stated value) of the Company listed below, pursuant to the
guaranteed delivery procedure set forth in Section 4--"Procedure for Tendering
Shares" in the Offer to Purchase.
<TABLE>
<S> <C>
- --------------------------------------------------------- --------------------------------------------------------
Number of ___% Shares: Signature
- --------------------------------------------------------- --------------------------------------------------------
Certificate Nos. (if available): Name(s) of Record Holder(s)
(Please Print)
- --------------------------------------------------------- --------------------------------------------------------
If ____% Shares will be tendered by book-entry Address
transfer: Name of Tendering Institution:
========================================================= ========================================================
Account No. at (check one) Area Code and Telephone Number
o The Depository Trust Company
o The Philadelphia Depository Trust Company
- --------------------------------------------------------- --------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program or the Stock Exchange Medallion Program (each,
an "Eligible Institution") guarantees to deliver to the Depositary at one of its
addresses set forth above (i) certificate(s) for the Shares tendered hereby, in
proper form for transfer, together with a properly completed and duly executed
Letter(s) of Transmittal, with any required signature guarantee(s) and any other
required documents, or (ii) a confirmation of the book-entry transfer of the
Shares tendered hereby into the Depositary's account at The Depository Trust
Company or The Philadelphia Depository Trust Company, all within three New York
Stock Exchange trading days after the Expiration Date.
<TABLE>
<S> <C>
- --------------------------------------------------------- --------------------------------------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
- --------------------------------------------------------- --------------------------------------------------------
ADDRESS NAME
- --------------------------------------------------------- --------------------------------------------------------
CITY, STATE, ZIP CODE TITLE
</TABLE>
- ---------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
DATED: ______________________, 1996
DO NOT SEND CERTIFICATES WITH THIS FORM. YOUR CERTIFICATES MUST BE SENT WITH THE
APPLICABLE LETTER OF TRANSMITTAL.
- --------------------------------------------------------------------------------
- 2 -
<PAGE> 1
MERRILL LYNCH & CO.
World Financial Center
250 Vesey Street
New York, New York 10281
PENNSYLVANIA ELECTRIC COMPANY
OFFER TO PURCHASE ANY OR ALL SHARES OF ITS
CUMULATIVE PREFERRED STOCK, 4.40% SERIES B ($100 STATED VALUE),
CUMULATIVE PREFERRED STOCK, 3.70% SERIES C ($100 STATED VALUE),
CUMULATIVE PREFERRED STOCK, 4.05% SERIES D ($100 STATED VALUE),
CUMULATIVE PREFERRED STOCK, 4.70% SERIES E ($100 STATED VALUE),
CUMULATIVE PREFERRED STOCK, 4.50% SERIES F ($100 STATED VALUE), AND
CUMULATIVE PREFERRED STOCK, 4.60% SERIES G ($100 STATED VALUE)
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 13, 1996, UNLESS THE OFFER IS EXTENDED
- --------------------------------------------------------------------------------
November 13, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
We have been appointed Dealer Manager by Pennsylvania Electric Company (the
"Company") in connection with the offer by the Company to purchase, upon the
terms and subject to the conditions set forth in the Offer to Purchase referred
to below and the applicable Letter of Transmittal, any and all shares of its
Cumulative Preferred Stock, 4.40% Series B ($100 stated value) (the "4.40%
Preferred") at a price of $73.44 per 4.40% Preferred, its Cumulative Preferred
Stock, 3.70% Series C ($100 stated value) (the "3.70% Preferred") at a price of
$59.64 per 3.70% Preferred, its Cumulative Preferred Stock, 4.05% Series D ($100
stated value) (the "4.05% Preferred") at a price of $67.61 per 4.05% Preferred,
its Cumulative Preferred Stock, 4.70% Series E ($100 stated value) (the "4.70%
Preferred") at a price of $78.45 per 4.70% Preferred, its Cumulative Preferred
Stock, 4.50% Series F ($100 stated value) (the "4.50% Preferred") at a price of
$75.11 per 4.50% Preferred, and its Cumulative Preferred Stock, 4.60% Series G
($100 stated value) (the "4.60% Preferred") at a price of $76.79 per 4.60%
Preferred (together, the "Shares" and each series of Shares, a "Series of
Preferred") that are validly tendered and not withdrawn, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated November 13,
1996 (the "Offer to Purchase"), and in the applicable Letter of Transmittal
(which, together with the Offer to Purchase, constitutes the "Offer").
The Company will accept any and all Shares validly tendered and not
withdrawn, upon the terms and subject to the conditions of the Offer.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated November 13, 1996;
<PAGE> 2
2. A Letter of Transmittal relating to each Series of Preferred for your
use and for the information of your clients, together with Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 providing
information relating to backup federal income tax withholding;
3. A Notice of Guaranteed Delivery relating to each Series of Preferred to
be used to accept the Offer if certificates for the Shares of any series and all
other required documents cannot be delivered to the Depositary on or prior to
the Expiration Date (as defined in the Offer to Purchase) for such series, or
the book-entry transfer of the Shares cannot be completed on or prior to the
Expiration Date for such series;
4. A form of letter that may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions and designation of Soliciting
Dealer with regard to the Offer;
5. A letter from the Chairman of Pennsylvania Electric Company that may be
provided to your clients; and
6. Return envelope addressed to ChaseMellon Shareholder Services, L.L.C.,
the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 13, 1996, UNLESS THE OFFER IS EXTENDED.
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL SHARES OF
ANY SERIES OF PREFERRED PURSUANT TO THE OFFER. SHAREHOLDERS MUST MAKE THEIR OWN
DECISIONS AS TO WHETHER TO TENDER SHARES OF ANY SERIES OF PREFERRED PURSUANT TO
THE OFFER AND, IF SO, HOW MANY SHARES TO TENDER.
The Company will pay to a Soliciting Dealer a solicitation fee of $1.32 per
Share for Shares tendered, accepted for payment and paid for pursuant to the
Offer. For purposes of this Offer, "Soliciting Dealer" includes (a) any broker
or dealer in securities, including the Dealer Manager in its capacity as a
broker or dealer, which is a member of any national securities exchange or of
the National Association of Securities Dealers, Inc. ("NASD"), (b) any foreign
broker or dealer not eligible for membership in the NASD which agrees to conform
to the NASD's Rules of Fair Practice in soliciting tenders outside the United
States to the same extent as if it were an NASD member, or (c) any bank or trust
company. No such fee shall be payable to a Soliciting Dealer in respect of
Shares (i) beneficially owned by such Soliciting Dealer or (ii) registered in
the name of such Soliciting Dealer unless such Shares are held by such
Soliciting Dealer as nominee and such Shares are being tendered for the benefit
of one or more beneficial owners identified in the applicable Letter of
Transmittal or in the applicable Notice of Solicited Tenders (included in the
materials provided to brokers and dealers). No such fee shall be payable to a
Soliciting Dealer with respect to the tender of Shares by a holder unless the
applicable Letter of Transmittal accompanying such tender designates such
Soliciting Dealer. No such fee shall be payable to the Soliciting Dealer unless
the Soliciting Dealer returns a Notice of Solicited Tenders to the Depositary
within three business days after the applicable Expiration Date. No broker,
dealer, bank, trust company or fiduciary shall be deemed to be the agent of the
Company, the Depositary, the Information Agent or the Dealer Manager for
purposes of the Offer.
If tendered Shares are being delivered by book-entry transfer made to an
account maintained by the Depositary with The Depository Trust Company or The
Philadelphia Depository Trust Company, the Soliciting Dealer must return a
Notice of Solicited Tenders to the Depositary within three New York Stock
Exchange trading days after the applicable Expiration Date in order to receive a
solicitation fee. At the time of tendering Shares in book-entry form, please
indicate your request for solicitation fees in the comments field. NO
SOLICITATION FEE SHALL BE PAYABLE TO A SOLICITING DEALER IF SUCH SOLICITING
DEALER IS REQUIRED FOR ANY REASON TO TRANSFER ANY PORTION OF SUCH FEE TO ANY
PERSON (OTHER THAN ITSELF).
2
<PAGE> 3
The Company, upon request, will reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding materials to their customers. The Company will
pay all stock transfer taxes applicable to the acceptance of Shares pursuant to
the Offer, subject to Instruction 6 of the Letter of Transmittal.
Soliciting Dealers should take care to ensure proper record-keeping to
document their entitlement to any solicitation fee.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers set
forth on the back cover of the Offer to Purchase.
Very truly yours,
Merrill Lynch & Co.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL
CONSTITUTE YOU THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE
INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF
OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 4
NOTICE OF SOLICITED TENDERS
List below the number of Shares tendered by each beneficial owner whose
tender you have solicited. All Shares beneficially owned by a beneficial owner,
whether in one account or several, and in however many capacities, must be
aggregated for purposes of completing the tables below. Any questions as to what
constitutes beneficial ownership should be directed to the Information Agent. If
the space below is inadequate, list the Shares on a separate signed schedule and
affix the list to this Notice of Solicited Tenders. PLEASE DO NOT COMPLETE THE
SECTIONS OF THE TABLE HEADED "TO BE COMPLETED ONLY BY DEPOSITARY."
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE
DEPOSITARY AT THE ADDRESS SET FORTH ON THE BACK COVER OF THE
OFFER TO PURCHASE WITHIN THREE NEW YORK STOCK EXCHANGE TRADING
DAYS AFTER THE EXPIRATION OF THE OFFER. ALL QUESTIONS CONCERNING
THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE
INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON THE BACK
COVER OF THE OFFER TO PURCHASE.
<TABLE>
SOLICITED TENDERS OF 4.40% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
<CAPTION>
TO BE COMPLETED BY TO BE COMPLETED BY TO BE COMPLETED TO BE COMPLETED ONLY
THE SOLICITING THE SOLICITING ONLY BY DEPOSITARY BY DEPOSITARY
DEALER DEALER
Beneficial Owners Number of Shares VOI Ticket Number of Shares Fee $1.32 per
----------------- Tendered Number* Accepted Share
-------- ------- -------- -----
<S> <C> <C> <C> <C>
Beneficial Owner No. 1
---------- ---------- ---------- ----------
Beneficial Owner No. 2
---------- ---------- ---------- ----------
Beneficial Owner No. 3
---------- ---------- ---------- ----------
Beneficial Owner No. 4
---------- ---------- ---------- ----------
Beneficial Owner No. 5
---------- ---------- ---------- ----------
Total
========== ========== ========== ==========
</TABLE>
- -----
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer. At the time of tendering Shares in book-entry form,
please indicate your request for solicitation fees in the comments field.
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Depositary,
in its sole discretion, which determination will be final and binding. Neither
the Depositary nor any other person will be under any duty to give notification
of any defects or irregularities in any Notice of Solicited Tenders or incur any
liability for failure to give such notification.
4
<PAGE> 5
NOTICE OF SOLICITED TENDERS
List below the number of Shares tendered by each beneficial owner whose
tender you have solicited. All Shares beneficially owned by a beneficial owner,
whether in one account or several, and in however many capacities, must be
aggregated for purposes of completing the tables below. Any questions as to what
constitutes beneficial ownership should be directed to the Information Agent. If
the space below is inadequate, list the Shares on a separate signed schedule and
affix the list to this Notice of Solicited Tenders. PLEASE DO NOT COMPLETE THE
SECTIONS OF THE TABLE HEADED "TO BE COMPLETED ONLY BY DEPOSITARY."
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE
DEPOSITARY AT THE ADDRESS SET FORTH ON THE BACK COVER OF THE
OFFER TO PURCHASE WITHIN THREE NEW YORK STOCK EXCHANGE TRADING
DAYS AFTER THE EXPIRATION OF THE OFFER. ALL QUESTIONS CONCERNING
THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE
INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON THE BACK
COVER OF THE OFFER TO PURCHASE.
<TABLE>
SOLICITED TENDERS OF 3.70% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
<CAPTION>
TO BE COMPLETED BY TO BE COMPLETED BY TO BE COMPLETED TO BE COMPLETED ONLY
THE SOLICITING THE SOLICITING ONLY BY DEPOSITARY BY DEPOSITARY
DEALER DEALER
Beneficial Owners Number of Shares VOI Ticket Number of Shares Fee $1.32 per
----------------- Tendered Number* Accepted Share
-------- ------- -------- -----
<S> <C> <C> <C> <C>
Beneficial Owner No. 1
---------- ---------- ---------- ----------
Beneficial Owner No. 2
---------- ---------- ---------- ----------
Beneficial Owner No. 3
---------- ---------- ---------- ----------
Beneficial Owner No. 4
---------- ---------- ---------- ----------
Beneficial Owner No. 5
---------- ---------- ---------- ----------
Total
========== ========== ========== ==========
</TABLE>
- -----
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer. At the time of tendering Shares in book-entry form,
please indicate your request for solicitation fees in the comments field.
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Depositary,
in its sole discretion, which determination will be final and binding. Neither
the Depositary nor any other person will be under any duty to give notification
of any defects or irregularities in any Notice of Solicited Tenders or incur any
liability for failure to give such notification.
5
<PAGE> 6
NOTICE OF SOLICITED TENDERS
List below the number of Shares tendered by each beneficial owner whose
tender you have solicited. All Shares beneficially owned by a beneficial owner,
whether in one account or several, and in however many capacities, must be
aggregated for purposes of completing the tables below. Any questions as to what
constitutes beneficial ownership should be directed to the Information Agent. If
the space below is inadequate, list the Shares on a separate signed schedule and
affix the list to this Notice of Solicited Tenders. PLEASE DO NOT COMPLETE THE
SECTIONS OF THE TABLE HEADED "TO BE COMPLETED ONLY BY DEPOSITARY."
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE
DEPOSITARY AT THE ADDRESS SET FORTH ON THE BACK COVER OF THE
OFFER TO PURCHASE WITHIN THREE NEW YORK STOCK EXCHANGE TRADING
DAYS AFTER THE EXPIRATION OF THE OFFER. ALL QUESTIONS CONCERNING
THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE
INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON THE BACK
COVER OF THE OFFER TO PURCHASE.
<TABLE>
SOLICITED TENDERS OF 4.05% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
<CAPTION>
TO BE COMPLETED BY TO BE COMPLETED BY TO BE COMPLETED TO BE COMPLETED ONLY
THE SOLICITING THE SOLICITING ONLY BY DEPOSITARY BY DEPOSITARY
DEALER DEALER
Beneficial Owners Number of Shares VOI Ticket Number of Shares Fee $1.32 per
----------------- Tendered Number* Accepted Share
-------- ------- -------- -----
<S> <C> <C> <C> <C>
Beneficial Owner No. 1
---------- ---------- ---------- ----------
Beneficial Owner No. 2
---------- ---------- ---------- ----------
Beneficial Owner No. 3
---------- ---------- ---------- ----------
Beneficial Owner No. 4
---------- ---------- ---------- ----------
Beneficial Owner No. 5
---------- ---------- ---------- ----------
Total
========== ========== ========== ==========
</TABLE>
- -----
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer. At the time of tendering Shares in book-entry form,
please indicate your request for solicitation fees in the comments field.
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Depositary,
in its sole discretion, which determination will be final and binding. Neither
the Depositary nor any other person will be under any duty to give notification
of any defects or irregularities in any Notice of Solicited Tenders or incur any
liability for failure to give such notification.
6
<PAGE> 7
NOTICE OF SOLICITED TENDERS
List below the number of Shares tendered by each beneficial owner whose
tender you have solicited. All Shares beneficially owned by a beneficial owner,
whether in one account or several, and in however many capacities, must be
aggregated for purposes of completing the tables below. Any questions as to what
constitutes beneficial ownership should be directed to the Information Agent. If
the space below is inadequate, list the Shares on a separate signed schedule and
affix the list to this Notice of Solicited Tenders. PLEASE DO NOT COMPLETE THE
SECTIONS OF THE TABLE HEADED "TO BE COMPLETED ONLY BY DEPOSITARY."
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE
DEPOSITARY AT THE ADDRESS SET FORTH ON THE BACK COVER OF THE
OFFER TO PURCHASE WITHIN THREE NEW YORK STOCK EXCHANGE TRADING
DAYS AFTER THE EXPIRATION OF THE OFFER. ALL QUESTIONS CONCERNING
THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE
INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON THE BACK
COVER OF THE OFFER TO PURCHASE.
<TABLE>
SOLICITED TENDERS OF 4.70% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
<CAPTION>
TO BE COMPLETED BY TO BE COMPLETED BY TO BE COMPLETED TO BE COMPLETED ONLY
THE SOLICITING THE SOLICITING ONLY BY DEPOSITARY BY DEPOSITARY
DEALER DEALER
Beneficial Owners Number of Shares VOI Ticket Number of Shares Fee $1.32 per
----------------- Tendered Number* Accepted Share
-------- ------- -------- -----
<S> <C> <C> <C> <C>
Beneficial Owner No. 1
---------- ---------- ---------- ----------
Beneficial Owner No. 2
---------- ---------- ---------- ----------
Beneficial Owner No. 3
---------- ---------- ---------- ----------
Beneficial Owner No. 4
---------- ---------- ---------- ----------
Beneficial Owner No. 5
---------- ---------- ---------- ----------
Total
========== ========== ========== ==========
</TABLE>
- -----
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer. At the time of tendering Shares in book-entry form,
please indicate your request for solicitation fees in the comments field.
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Depositary,
in its sole discretion, which determination will be final and binding. Neither
the Depositary nor any other person will be under any duty to give notification
of any defects or irregularities in any Notice of Solicited Tenders or incur any
liability for failure to give such notification.
7
<PAGE> 8
NOTICE OF SOLICITED TENDERS
List below the number of Shares tendered by each beneficial owner whose
tender you have solicited. All Shares beneficially owned by a beneficial owner,
whether in one account or several, and in however many capacities, must be
aggregated for purposes of completing the tables below. Any questions as to what
constitutes beneficial ownership should be directed to the Information Agent. If
the space below is inadequate, list the Shares on a separate signed schedule and
affix the list to this Notice of Solicited Tenders. PLEASE DO NOT COMPLETE THE
SECTIONS OF THE TABLE HEADED "TO BE COMPLETED ONLY BY DEPOSITARY."
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE
DEPOSITARY AT THE ADDRESS SET FORTH ON THE BACK COVER OF THE
OFFER TO PURCHASE WITHIN THREE NEW YORK STOCK EXCHANGE TRADING
DAYS AFTER THE EXPIRATION OF THE OFFER. ALL QUESTIONS CONCERNING
THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE
INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON THE BACK
COVER OF THE OFFER TO PURCHASE.
<TABLE>
SOLICITED TENDERS OF 4.50% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
<CAPTION>
TO BE COMPLETED BY TO BE COMPLETED BY TO BE COMPLETED TO BE COMPLETED ONLY
THE SOLICITING THE SOLICITING ONLY BY DEPOSITARY BY DEPOSITARY
DEALER DEALER
Beneficial Owners Number of Shares VOI Ticket Number of Shares Fee $1.32 per
----------------- Tendered Number* Accepted Share
-------- ------- -------- -----
<S> <C> <C> <C> <C>
Beneficial Owner No. 1
---------- ---------- ---------- ----------
Beneficial Owner No. 2
---------- ---------- ---------- ----------
Beneficial Owner No. 3
---------- ---------- ---------- ----------
Beneficial Owner No. 4
---------- ---------- ---------- ----------
Beneficial Owner No. 5
---------- ---------- ---------- ----------
Total
========== ========== ========== ==========
</TABLE>
- ------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer. At the time of tendering Shares in book-entry form,
please indicate your request for solicitation fees in the comments field.
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Depositary,
in its sole discretion, which determination will be final and binding. Neither
the Depositary nor any other person will be under any duty to give notification
of any defects or irregularities in any Notice of Solicited Tenders or incur any
liability for failure to give such notification.
8
<PAGE> 9
NOTICE OF SOLICITED TENDERS
List below the number of Shares tendered by each beneficial owner whose
tender you have solicited. All Shares beneficially owned by a beneficial owner,
whether in one account or several, and in however many capacities, must be
aggregated for purposes of completing the tables below. Any questions as to what
constitutes beneficial ownership should be directed to the Information Agent. If
the space below is inadequate, list the Shares on a separate signed schedule and
affix the list to this Notice of Solicited Tenders. PLEASE DO NOT COMPLETE THE
SECTIONS OF THE TABLE HEADED "TO BE COMPLETED ONLY BY DEPOSITARY."
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE
DEPOSITARY AT THE ADDRESS SET FORTH ON THE BACK COVER OF THE
OFFER TO PURCHASE WITHIN THREE NEW YORK STOCK EXCHANGE TRADING
DAYS AFTER THE EXPIRATION OF THE OFFER. ALL QUESTIONS CONCERNING
THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE
INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON THE BACK
COVER OF THE OFFER TO PURCHASE.
<TABLE>
SOLICITED TENDERS OF 4.60% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
<CAPTION>
TO BE COMPLETED BY TO BE COMPLETED BY TO BE COMPLETED TO BE COMPLETED ONLY
THE SOLICITING THE SOLICITING ONLY BY DEPOSITARY BY DEPOSITARY
DEALER DEALER
Beneficial Owners Number of Shares VOI Ticket Number of Shares Fee $1.32 per
----------------- Tendered Number* Accepted Share
-------- ------- -------- -----
<S> <C> <C> <C> <C>
Beneficial Owner No. 1
---------- ---------- ---------- ----------
Beneficial Owner No. 2
---------- ---------- ---------- ----------
Beneficial Owner No. 3
---------- ---------- ---------- ----------
Beneficial Owner No. 4
---------- ---------- ---------- ----------
Beneficial Owner No. 5
---------- ---------- ---------- ----------
Total
========== ========== ========== ==========
</TABLE>
- ------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer. At the time of tendering Shares in book-entry form,
please indicate your request for solicitation fees in the comments field.
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Depositary,
in its sole discretion, which determination will be final and binding. Neither
the Depositary nor any other person will be under any duty to give notification
of any defects or irregularities in any Notice of Solicited Tenders or incur any
liability for failure to give such notification.
9
<PAGE> 10
The undersigned hereby confirms that: (i) it has complied with the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder, in connection with such
solicitation; (ii) it is entitled to such compensation for such solicitation
under the terms and conditions of the Offer to Purchase (unless the undersigned
is not being compensated for such solicitation); (iii) in soliciting tenders of
Shares, it has used no soliciting materials other than those furnished by the
Company; and (iv) if it is a foreign broker or dealer not eligible for
membership in the NASD, it has agreed to conform to the NASD's Rules of Fair
Practice in making solicitations outside the United States to the same extent as
though it were an NASD member.
- -----------------------------------
(Name of Firm)
- -----------------------------------
(Authorized Signature)
- -----------------------------------
(Area Code and Telephone Number)
- -----------------------------------
(Address)
- -----------------------------------
(City, State, Zip Code)
- -----------------------------------
(Attention)
Date:
-----------------------------
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM.
YOUR STOCK CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL.
10
<PAGE> 1
PENNSYLVANIA ELECTRIC COMPANY
OFFER TO PURCHASE FOR CASH
ANY AND ALL
Shares of its Cumulative Preferred Stock, 4.40% Series B ($100 stated value),
Shares of its Cumulative Preferred Stock, 3.70% Series C ($100 stated value),
Shares of its Cumulative Preferred Stock, 4.05% Series D ($100 stated value),
Shares of its Cumulative Preferred Stock, 4.70% Series E ($100 stated value),
Shares of its Cumulative Preferred Stock, 4.50% Series F ($100 stated value),
and
Shares of its Cumulative Preferred Stock, 4.60% Series G ($100 stated value),
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 13, 1996, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated November
13, 1996 (the "Offer to Purchase"), and applicable Letter of Transmittal (which
together constitute the "Offer") setting forth an offer by Pennsylvania Electric
Company, a Pennsylvania corporation (the "Company"), to purchase any and all of
its Cumulative Preferred Stock, 4.40% Series B ($100 stated value) (the "4.40%
Preferred") at a price of $73.44 per 4.40% Preferred, its Cumulative Preferred
Stock, 3.70% Series C ($100 stated value) (the "3.70% Preferred") at a price of
$59.64 per 3.70% Preferred, its Cumulative Preferred Stock, 4.05% Series D ($100
stated value) (the "4.05% Preferred") at a price of $67.61 per 4.05% Preferred,
its Cumulative Preferred Stock, 4.70% Series E ($100 stated value) (the "4.70%
Preferred") at a price of $78.45 per 4.70% Preferred, its Cumulative Preferred
Stock, 4.50% Series F ($100 stated value) (the "4.50% Preferred") at a price of
$75.11 per 4.50% Preferred, and its Cumulative Preferred Stock, 4.60% Series G
($100 stated value) (the "4.60% Preferred") at a price of $76.79 per 4.60%
Preferred, (collectively, the "Shares" and each series of Shares, a "Series of
Preferred"), net to the seller in cash, upon the terms and subject to the
conditions of the Offer. The Company will purchase any and all Shares of each
Series of Preferred validly tendered and not withdrawn, upon the terms and
subject to the conditions of the Offer (as described in the Offer to Purchase).
We are the holder of record of Shares held for your account. A tender of
such Shares can be made only by us as the holder of record and pursuant to your
instructions. The applicable Letter of Transmittal for each Series of Preferred
held by you is furnished to you for your information only and cannot be used by
you to tender Shares of each Series of Preferred held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares of each Series of Preferred held by us for your account, upon the
terms and subject to the conditions set forth in the Offer to Purchase and
applicable Letter (or Letters) of Transmittal.
Your attention is invited to the following:
(1) The Offer is for any and all of the series of each Series of
Preferred. The Offer is not conditioned upon any minimum number of Shares
of any Series of Preferred being tendered. The Offer for Shares of one
Series of Preferred is not conditioned on the Offer for Shares of any other
Series of Preferred, but the Offer is subject to certain other conditions.
(2) The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, December 13, 1996, unless the Offer is extended
with respect to a Series of Preferred. Your instructions to us should be
forwarded to us in ample time to permit us to submit a tender on your
behalf. If you would like to withdraw your Shares that we have tendered,
you can withdraw them so long as the Offer remains open or at any time
after the expiration of 40 business days from the commencement of the Offer
if such Shares have not been accepted for payment.
(3) Any stock transfer taxes applicable to the sale of Shares to the
Company pursuant to the Offer will be paid by the Company, except as
otherwise provided in Instruction 6 of each Letter of Transmittal.
<PAGE> 2
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL SHARES OF
ANY SERIES OF PREFERRED PURSUANT TO THE OFFER. SHAREHOLDERS MUST MAKE THEIR OWN
DECISIONS AS TO WHETHER TO TENDER SHARES OF ANY SERIES OF PREFERRED PURSUANT TO
THE OFFER AND, IF SO, HOW MANY SHARES TO TENDER.
If you wish to have us tender any or all of your Shares of any Series of
Preferred held by us for your account upon the terms and subject to the
conditions set forth in the Offer, please so instruct us by completing,
executing, detaching and returning to us the instruction form on the detachable
part hereof. If you hold Shares of more than one Series of Preferred, you must
specify the number of Shares tendered for each Series of Preferred. An envelope
to return your instructions to us is enclosed. If you authorize tender of your
Shares, all such Shares will be tendered unless otherwise specified on the
detachable part hereof. Your instructions should be forwarded to us in ample
time to permit us to submit a tender on your behalf by the expiration of the
Offer.
The Offer is being made to all holders of Shares. The Company is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes aware
of any valid state statute prohibiting the making of the Offer, the Company will
make a good faith effort to comply with such statute. If, after such good faith
effort, the Company cannot comply with such statute, the Offer will not be made
to, nor will tenders be accepted from or on behalf of, holders of Shares in such
state. In those jurisdictions where securities, "Blue Sky" or other laws require
the Offer to be made by a licensed broker or dealer, the Offer shall be deemed
to be made on behalf of the Company by Merrill Lynch & Co., as Dealer Manager,
or one or more registered brokers or dealers licensed under the laws of such
jurisdictions.
2
<PAGE> 3
INSTRUCTIONS
WITH RESPECT TO OFFER TO PURCHASE FOR CASH ANY AND ALL SHARES OF
CUMULATIVE PREFERRED STOCK, 4.40% SERIES B ($100 STATED VALUE),
CUMULATIVE PREFERRED STOCK, 3.70% SERIES C ($100 STATED VALUE),
CUMULATIVE PREFERRED STOCK, 4.05% SERIES D ($100 STATED VALUE),
CUMULATIVE PREFERRED STOCK, 4.70% SERIES E ($100 STATED VALUE),
CUMULATIVE PREFERRED STOCK, 4.50% SERIES F ($100 STATED VALUE), AND
CUMULATIVE PREFERRED STOCK, 4.60% SERIES G ($100 STATED VALUE),
OF
PENNSYLVANIA ELECTRIC COMPANY
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated November 13, 1996, and the applicable Letter of
Transmittal (which together constitute the "Offer") in connection with the Offer
by Pennsylvania Electric Company (the "Company") to purchase any and all of its
Cumulative Preferred Stock, 4.40% Series B ($100 stated value) (the "4.40%
Preferred") at a price of $73.44 per 4.40% Preferred, its Cumulative Preferred
Stock, 3.70% Series C ($100 stated value) (the "3.70% Preferred") at a price of
$59.64 per 3.70% Preferred, its Cumulative Preferred Stock, 4.05% Series D ($100
stated value) (the "4.05% Preferred") at a price of $67.61 per 4.05% Preferred,
its Cumulative Preferred Stock, 4.70% Series E ($100 stated value) (the "4.70%
Preferred") at a price of $78.45 per 4.70% Preferred, its Cumulative Preferred
Stock, 4.50% Series F ($100 stated value) (the "4.50% Preferred") at a price of
$75.11 per 4.50% Preferred, and its Cumulative Preferred Stock, 4.60% Series G
($100 stated value) (the "4.60% Preferred") at a price of $76.79 per 4.60%
Preferred, (together, the "Shares" and each series of Shares, a "Series of
Preferred"), net to the undersigned in cash.
This will instruct you to tender to the Company the number of shares of
each Series of Preferred indicated below (or, if no number is indicated below,
all shares of such Series of Preferred) which are held by you for the account of
the undersigned, upon the terms and subject to the conditions of the Offer.
- --------------------------------------------------------------------------------
(Check only one*)
<TABLE>
<S> <C>
|_| Number of _____ Preferred to be Tendered: ___________ Shares**
|_| Number of _____ Preferred to be Tendered: ___________ Shares**
|_| Number of _____ Preferred to be Tendered: ___________ Shares**
|_| Number of _____ Preferred to be Tendered: ___________ Shares**
|_| Number of _____ Preferred to be Tendered: ___________ Shares**
|_| Number of _____ Preferred to be Tendered: ___________ Shares**
</TABLE>
Dated: _____________________________, 1996
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s): ________________________________________________________________
Name(s): _____________________________________________________________________
Address ______________________________________________________________________
Social Security or Taxpayer ID No.: __________________________________________
- --------------------------------------------------------------------------------
- ------------
* A separate instruction must be completed for each Series of Preferred
tendered.
** Unless otherwise indicated, it will be assumed that all Shares of such
Series of Preferred held by us for your account are to be tendered.
3
<PAGE> 4
Please designate in the box below any Soliciting Dealer
who solicited your tender.
- --------------------------------------------------------------------------------
SOLICITED TENDERS
The undersigned represents that the Soliciting Dealer who solicited and
obtained this tender is:
Name of Firm: ________________________________________________________________
(Please Print)
Name of Individual Broker or Financial Consultant: ___________________________
Identification Number (if known) _____________________________________________
Address ______________________________________________________________________
_____________________________________________________________________________
(Include Zip Code)
- --------------------------------------------------------------------------------
4
<PAGE> 1
[LOGO] PENNSYLVANIA ELECTRIC COMPANY
c/o GPU Service, Inc.
100 Interpace Parkway
Parsippany, New Jersey 07054
November 13, 1996
Dear Shareholder:
Pennsylvania Electric Company (the "Company") is offering to purchase (the
"Offer") any and all shares of each of its Cumulative Preferred Stock, 4.40%
Series B ($100 stated value) (the "4.40% Preferred") at a price of $73.44 per
4.40% Preferred, its Cumulative Preferred Stock, 3.70% Series C ($100 stated
value) (the "3.70% Preferred") at a price of $59.64 per 3.70% Preferred, its
Cumulative Preferred Stock, 4.05% Series D ($100 stated value) (the "4.05%
Preferred") at a price of $67.61 per 4.05% Preferred, its Cumulative Preferred
Stock, 4.70% Series E ($100 stated value) (the "4.70% Preferred") at a price of
$78.45 per 4.70% Preferred, its Cumulative Preferred Stock, 4.50% Series F ($100
stated value) (the "4.50% Preferred") at a price of $75.11 per 4.50% Preferred,
and its Cumulative Preferred Stock, 4.60% Series G ($100 stated value) (the
"4.60% Preferred") at a price of $76.79 per 4.60% Preferred (together, the
"Shares" and each series of Shares, a "Series of Preferred").
All of the Shares that are properly tendered (and not withdrawn), subject
to the terms and conditions set forth in the enclosed Offer to Purchase and the
applicable Letter of Transmittal, will be purchased at the applicable price
therefor, net to the selling Shareholder in cash. All other Shares that have
been tendered and not purchased will be returned to the Shareholder.
If you do not wish to participate in the Offer, you do not need to take any
action.
The Offer is explained in detail in the enclosed Offer to Purchase and
applicable Letter of Transmittal. A separate Letter of Transmittal has been
prepared for each Series of Preferred and only the applicable Letter of
Transmittal may be used to tender Shares for that Series of Preferred. If you
want to tender your Shares, the instructions on how to tender Shares are in the
enclosed materials. I encourage you to read carefully these materials before
making any decision with respect to the Offer.
The Offer for Shares of one Series of Preferred is independent of the Offer
for Shares of any other Series of Preferred.
The Offer gives Shareholders the opportunity to sell their Shares at a
premium over the last reported sales price and without the usual transaction
costs associated with a market sale.
The Company, its Board of Directors and its executive officers make no
recommendation to any Shareholder as to whether to tender any or all Shares of
any Series of Preferred pursuant to the Offer. Shareholders must make their own
decisions as to whether to tender Shares of any Series of Preferred pursuant to
the Offer and, if so, how many Shares to tender.
Sincerely,
JAMES R. LEVA
Chairman of the Board
<PAGE> 1
DRAFT PRESS RELEASE
[Parsippany, N.J., November 13, 1996] Pennsylvania Electric Company
("Penelec") announced that it is commencing an offer to purchase any and all of
its
(i) 56,810 outstanding shares of Cumulative Preferred Stock, 4.40%
Series B (stated value $100 per share) at a purchase price of $73.44 per
share, net to the seller in cash;
(ii) 97,054 outstanding shares of Cumulative Preferred Stock, 3.70%
Series C (stated value $100 per share) at a purchase price of $ 59.64 per
share, net to the seller in cash;
(iii) 63,696 outstanding shares of Cumulative Preferred Stock, 4.05%
Series D (stated value $100 per share) at a purchase price of $ 67.61 per
share, net to the seller in cash;
(iv) 28,739 outstanding shares of Cumulative Preferred Stock, 4.70%
Series E (stated value $100 per share) at a purchase price of $ 78.45 per
share, net to the seller in cash;
(v) 42,969 outstanding shares of Cumulative Preferred Stock, 4.50%
Series F (stated value $100 per share) at a purchase price of $ 75.11 per
share, net to the seller in cash; and
(vi) 75,732 outstanding shares of Cumulative Preferred Stock, 4.60%
Series G (stated value $100 per share) at a purchase price of $ 76.79 per
share, net to the seller in cash.
The December 1996 dividend for each series of Preferred Stock has been
declared and is to be paid on December 1, 1996 to holders of record as of the
close of business on November 12, 1996. A holder of record of Shares on November
12, 1996, who tenders Shares will be entitled to the December 1996 dividend,
regardless of when such tender is made. Holders of Shares purchased pursuant to
the Offer will not be entitled to any dividends in respect of any later dividend
periods.
The Offer for one series of Preferred Stock is independent of the Offer for
any other series of Preferred Stock. The Offers are not conditioned upon any
minimum number of shares of the applicable series of Preferred Stock being
tendered. Each of the Offers is being made only by means of, and is subject to
certain other terms and conditions as set forth in the Offer to Purchase, dated
November 13, 1996. Each of the Offers and withdrawal rights will expire at 12:00
midnight, New York City Time, on December 13, 1996, unless any such Offer with
respect to any series of Preferred Stock is extended.
<PAGE> 2
This announcement is neither an offer to purchase nor a solicitation of any
offer to sell the Preferred Stock. The Offers are made solely by the Offer to
Purchase, dated November 13, 1996, and the related Letters of Transmittal and
are not being made to (nor will purchases be accepted from or on behalf of)
holders of Preferred Stock residing in any jurisdiction in which the making of
the Offers or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. In any jurisdiction, the securities laws of which require the
Offers to be made by a licensed broker or dealer, the Offers shall be deemed
made on behalf of Penelec by one or more brokers or dealers licensed under the
laws of such jurisdiction.
The dealer manager for the Offer is Merrill Lynch & Co. and the Depositary
for the tendered Shares will be ChaseMellon Shareholder Services, L.L.P.
Questions or requests for assistance may be directed to Georgeson & Company
Inc., the Information Agent, at Wall Street Plaza, New York, New York 10005
(telephone 800-223-2064) or Merrill Lynch & Co. at 212-449-4914 (call collect).
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated November
13, 1996, and the applicable Letter of Transmittal. The Offer is being made to
all holders of Shares; provided, that the Offer is not being made to, nor will
tenders be accepted from or on behalf of, holders of Shares in any jurisdiction
in which making or accepting the Offer would violate that jurisdiction's laws.
In those jurisdictions whose securities, BlueSky or other laws require the Offer
to be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of the Company by Merrill Lynch & Co. or one or more registered
brokers or dealers licensed under the laws of such jurisdictions.
<TABLE>
NOTICE OF OFFER TO PURCHASE FOR CASH BY
PENNSYLVANIA ELECTRIC COMPANY
ANY AND ALL OF ITS
<CAPTION>
DESCRIPTION CUSIP PURCHASE
OF SHARES NUMBER PRICE
--------- ------ -----
<S> <C> <C>
Cumulative Preferred Stock, 4.40% Series B 708696-10 $73.44 Per Share
($100 Stated Value)
Cumulative Preferred Stock, 3.70% Series C 708696-20 $59.64 Per Share
($100 Stated Value)
Cumulative Preferred Stock, 4.05% Series D 708696-30 $67.61 Per Share
($100 Stated Value)
Cumulative Preferred Stock, 4.70% Series E 708696-40 $78.45 Per Share
($100 Stated Value)
Cumulative Preferred Stock, 4.50% Series F 708696-50 $75.11 Per Share
($100 Stated Value)
Cumulative Preferred Stock, 4.60% Series G 708696-60 $76.79 Per Share
($100 Stated Value)
</TABLE>
Pennsylvania Electric Company, a Pennsylvania corporation (the
"Company"), invites the holders of the above-referenced Preferred Stock (each
such series a "Series of Preferred") to tender their shares of such stock (the
"Shares") at the respective prices set forth above, net to the seller in cash
and upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated November 13, 1996 (the "Offer to Purchase") and in the
applicable Letter of Transmittal (which, together with the Offer to Purchase,
constitutes the "Offer" with respect to the applicable Series of Preferred). The
Company will purchase all shares validly tendered and not withdrawn, upon the
terms and subject to the conditions of the Offer.
On October 22, 1996, the Board of Directors of the Company declared
dividends on the Company's Preferred Stock. A regular quarterly dividend for
each Series of Preferred will be paid on January 1, 1997, to holders of record
as of the close of business on December 13, 1996. Any holder that tenders Shares
pursuant to and at any time within the time period specified in this Offer will
be a holder of record on December 13, 1996 and accordingly will be entitled to
such regular quarterly dividend. Holders of Shares purchased pursuant to the
Offer will not be entitled to any dividends in respect of any later dividend
periods
EACH SERIES OF PREFERRED HAS ITS OWN SEPARATE LETTER OF TRANSMITTAL AND
NOTICE OF GUARANTEED DELIVERY AND ONLY THE APPLICABLE LETTER OF TRANSMITTAL OR
NOTICE OF GUARANTEED DELIVERY MAY BE USED TO TENDER SHARES OF THAT SERIES OF
PREFERRED. THE OFFER FOR ONE SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR
ANY OTHER SERIES OF PREFERRED. THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES OF THE APPLICABLE SERIES OF PREFERRED BEING TENDERED. THE
OFFER, HOWEVER, IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7 --
"CERTAIN CONDITIONS OF THE OFFER" IN THE OFFER TO PURCHASE.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, DECEMBER 13, 1996, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
Upon the terms and subject to the conditions described in the Offer to
Purchase and in the applicable Letter of Transmittal, the Company will purchase
Shares of a Series of Preferred validly tendered and not withdrawn on or prior
to the Expiration Date (as defined in the Offer to Purchase) with respect to
that Series of Preferred.
The Company is making the Offer because it believes that, given current
market prices for the shares and the current cost of available financing
options, the purchase of Shares is economically attractive to the Company. In
addition, the Offer gives stockholders the opportunity to sell their Shares at a
premium over the last reported sale of the Shares and without the usual
transaction costs associated with a market sale.
THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER ANY OR ALL SHARES OF
ANY SERIES OF PREFERRED PURSUANT TO THE OFFER. STOCKHOLDERS MUST MAKE THEIR OWN
DECISIONS AS TO WHETHER TO TENDER SHARES OF ANY SERIES OF PREFERRED PURSUANT TO
THE OFFER AND, IF SO, HOW MANY SHARES TO TENDER.
The Company reserves the right, at any time or from time to time prior to
the Expiration Date, to extend the period of time during which the Offer is open
or otherwise amended or terminate the Offer for any reason with respect to a
Series of Preferred by giving oral or written notice to ChaseMellon Shareholder
Services, L.L.C. as "Depositary" and making a public announcement thereof.
THE COMPANY WILL PAY TO A SOLICITING DEALER (AS DEFINED IN THE OFFER TO
PURCHASE) A SOLICITATION FEE OF $1.32 PER SHARE FOR ANY SHARES TENDERED,
ACCEPTED FOR PAYMENT AND PAID FOR PURSUANT TO THE OFFER, SUBJECT TO CERTAIN
CONDITIONS. SEE SECTION 14-- "FEES AND EXPENSES" IN THE OFFER TO PURCHASE.
Tenders of Shares of a Series of Preferred made pursuant to the Offer may
be withdrawn at any time on or prior to the Expiration Date with respect to such
Series of Preferred. Thereafter, such tenders are irrevocable, except that they
may be withdrawn after 12:00 midnight, New York City time on January 13, 1997,
unless theretofore accepted for payment by the Company as provided in the Offer
to Purchase. See Section 5-- "Withdrawal Rights" in the Offer to Purchase for
more detailed disclosures regarding the manner in which Shares may be withdrawn.
The Company will be deemed to have purchased tendered Shares validly
tendered and not withdrawn when, as and if it gives oral or written notice to
the Depositary of its acceptance for payment of Shares.
THE INFORMATION REQUIRED TO BE DISCLOSED BY RULE 13E-3(E)(1) AND RULE
13E-4(D)(1) OF THE GENERAL RULES AND REGULATIONS UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, IS CONTAINED IN THE OFFER TO PURCHASE AND IS
INCORPORATED HEREIN BY REFERENCE.
Copies of the Offer to Purchase and the applicable Letter of Transmittal
are being mailed to registered holders of Shares and will be furnished to
brokers, banks and similar persons whose names, or the names of whose nominees,
appear on the Company's stockholder list or, if applicable, who are listed as
participants in a Book-Entry Transfer Facility's security position listing for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE APPLICABLE LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and addresses
listed below. Requests for additional copies of the Offer to Purchase, the
applicable Letter of Transmittal or other tender offer materials may be directed
to the information Agent, and such copies will be furnished promptly at the
Company's expense. Holders of Shares also may contact their local broker,
dealer, commercial bank or trust company for assistance concerning the Offer.
Information on the Offer is available from "MCM Corporate Watch Services"
on Telerate pages 41958-41959.
The Information Agent for the Offer is:
<PAGE> 2
GEORGESON
& COMPANY INC.
=========================
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
November 13, 1996
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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>
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GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
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<S> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
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(1)
4. Custodian account of a minor (Uniform The minor(2)
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 trust The grantor-
account (grantor is also trustee) trustee(1)
b. So-called trust account that is not The actual owner(1)
a legal or valid trust under State
law
8. Sole proprietorship account The owner(4)
<CAPTION>
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GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
------------------------------------------------------------
<S> <C>
9. A valid trust, estate or pension trust The Legal entity (Do
not furnish 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 educational The organization
organization account
12. Partnership account held in the name The partnership
of the business
13. Association, club, or other tax-exempt The organization
organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
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 person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not 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 include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest generally subject to backup withholding include the
following:
- 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.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- 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 dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file a tax return. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 20% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) 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.
(4) 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
