Following are three additional proxy soliciting materials supplementing the
Notice of Special Meeting of Share Owners and Proxy Statement and proxy
which was filed with the Commission on February 12, 1997:
First Document:
Merger Summary
Talking Points Not For Distribution
__________________________________________________________________________
Merger Announced
On September 16, 1996, Ohio Edison and Centerior Energy announced an
agreement to merge under a new holding company called FirstEnergy Corp.
Both companies anticipate completing all steps required for the merger by
the end of 1997.
Rate Plan Approved
The proposed merger passed a significant milestone on January 30, 1997,
when the Public Utilities Commission of Ohio approved a new regulatory plan
that will reduce the electric bills of Cleveland Electric Illuminating and
Toledo Edison customers. The key components:
Base rate freeze through 2005, followed by an immediate $310 million
base rate reduction.
Interim rate reductions for certain commercial customers.
Interim residential rate reductions for residential customers--$3/month
beginning 6 months after the merger, increasing to $4/month on July 1,
2000 and to $5/month July 1, 2001 through the year 2005.
$75 million economic development loan/lease program.
Earnings caps that would enable customers to share in any additional
benefits of the merger.
$2 billion aggregate reduction in regulatory assets through 2005.
This plan goes into effect when the merger is completed.
Approvals to Date
Public Utilities Commission of Ohio approval of the regulatory plan.
Securities and Exchange Commission (SEC) approval of proxy materials for
special share owners meetings being held March 27, 1997.
Approvals Pending
The affirmative vote of 2/3 of Ohio Edison common shares and a majority
of Centerior common shares.
Federal Energy Regulatory Commission approval of the merger.
Nuclear Regulatory Commission approval of the transfer of control of
nuclear facility operators licenses.
Satisfaction of the informational and waiting period requirements of the
Hart-Scott-Rodino Antitrust Improvements Act.
SEC approval of the merger under the Public Utilities Holding Company
Act.
Benefit Summary
Both investors and customers will benefit from the merger. As a larger,
stronger company, FirstEnergy will be better positioned to compete under
any future industry structure.
Earnings and cash flow growth expected to start in the first year of
merger.
Increased size to better compete.
Savings of approximately $1 billion expected over 10 years.
Increased control of generating plant assets to maximize operating
efficiency.
Lower capital costs.
Natural alliance of contiguous service areas to enhance customer service
and prospects for off-system sales and future growth.
Operating companies to reduce their exposure to regulatory assets by an
additional $2 billion by 2006.
Profile: Ohio Edison System
The Ohio Edison System consists of Ohio Edison Company and its subsidiary,
Pennsylvania Power Company.
Headquarters: Akron, Ohio.
953,000 Ohio Edison customers over 7,500 square miles in northeastern
and central Ohio.
143,000 Penn Power customers within 1,500 square miles in western
Pennsylvania.
Profile: Centerior Energy
Centerior originated in 1986 with the affiliation of The Cleveland Electric
Illuminating Company and the Toledo Edison Company.
Combined service to more than 1 million customers over 4,200 square
miles in northern Ohio.
Headquarters: Independence, Ohio.
Profile: FirstEnergy
First Energy will be the nation's 11th largest investor-owned electric
system based on annual sales of 64 billion kilowatt-hours.
2.1 million customers.
13,200 square mile service territory in northern/central Ohio and
western Pennsylvania.
Headquarters: Akron, Ohio.
Additional Web Site Information Available
http://www.ohioedison.com
http://www.centerior.com
Second Document:
QUESTIONS AND ANSWERS
ABOUT THE OHIO EDISON/CENTERIOR MERGER
Q. What are shareowners being asked to vote on?
A. We are asking them to vote on a merger between Ohio Edison Company
and Centerior Energy Corporation which would result in the formation
of a new company called FirstEnergy Corp.
Q. Why should share owners vote for the merger?
A. Our merger means that share owners will have a stake in one of the
nation's largest electric utility systems under a new holding
company, FirstEnergy. They will own a larger company with more
resources to meet the challenges of a changing electric utility
industry. We believe that the alliance will enhance the long-term
value of their investment in ways that otherwise would not be
possible. Our two companies have adjoining service areas, and we
already share ownership in many of our major generating plants.
Together, we believe we can increase revenues and cash flow,
eliminate duplicative costs, maximize efficiencies, reduce debt and
capital expenditures and increase management flexibility. In
determining whether to vote for the merger, however, they should
also carefully consider the matters discussed in the "Risk Factors"
section of the Proxy Statement mailed in February.
Q. What is the position of the Ohio Edison and Centerior Boards of
Directors?
A. Our Boards of Directors have unanimously approved the plan to merge
and recommend that share owners also vote in favor of the merger.
Q. How many shares will share owners get?
A. Ohio Edison share owners will receive one share of FirstEnergy
common stock for each share of Ohio Edison common stock they own.
Example: If a share owner currently own 100 shares of Ohio Edison
common stock, he or she will receive 100 shares of FirstEnergy
common stock.
Centerior share owners will receive 0.525 of a share of FirstEnergy
common stock for each share of Centerior common stock they own.
FirstEnergy will not issue fractional shares, although share owners
may still own fractional shares in FirstEnergy's dividend
reinvestment plan, which will replace our existing plans. Each
Centerior share owner who would otherwise receive a fractional share
of FirstEnergy common stock will instead receive cash based on the
market value of the fractional share after trading in FirstEnergy
common stock begins on the New York Stock Exchange.
Example: If a share owner currently owns 100 shares of Centerior
common stock, after the merger the share owner will be entitled to
receive 52 shares of FirstEnergy common stock and a check for the
market value of the .5 fractional share in exchange for his or her
Centerior common stock.
Q. What happens to share owners' future dividends?
A. Before the merger, we expect no changes in our dividend policies,
although the merger agreement permits Ohio Edison to increase its
annual dividend from the current level of $1.50 to a maximum of
$1.60 per share. Before the merger is completed, the Boards of
Directors of both companies will coordinate dividend payment dates
so that all shareholders receive dividends on the same day. Because
the Boards are changing their companies' usual dividend payment
dates, the amounts of the dividends will be prorated to reflect the
change.
After the merger, we expect the initial annual dividend of
FirstEnergy to be the same as Ohio Edison's annual dividend rate at
that time, although the actual dividend will be determined by the
FirstEnergy Board of Directors. An annual rate of $1.50 per share
of FirstEnergy common stock would provide former Ohio Edison share
owners with the same amount of cash as they are currently receiving
and former Centerior shareholders with almost the same amount of
cash that they are currently receiving.
Example: If a share owner currently holds 100 shares of Ohio Edison
common stock, he or she will hold 100 shares of FirstEnergy common
stock after the merger. This means that after the merger we
anticipate that the share owner will receive at least $150 (that is,
$1.50 x 100) of annual dividends, which is the same amount the share
owner is currently receiving on his or her Ohio Edison common stock.
Example: If a share owner currently holds 100 shares of Centerior
common stock, he or she will hold 52 shares of FirstEnergy common
stock after the merger. At the current Centerior annual dividend
rate of $.80 per share, the share owner is receiving $80 in
dividends annually. After the merger, we anticipate that the share
owner will receive $1.50 in annual dividends for each share of
FirstEnergy common stock that he or she holds. This equates to $78
annually (that is, $1.50 x 52).
Q. What will happen to the shares in Dividend Reinvestment Accounts?
A. Once the merger has been completed, whole and fractional shares
within the plan will be converted into FirstEnergy shares in the
FirstEnergy dividend reinvestment plan in the same ratios described
above.
Q. What are the federal tax consequences to share owners ?
A. For Ohio Edison share owners, we expect that the exchange of shares
will be tax-free for federal income tax purposes.
For Centerior share owners, we expect that the exchange of shares
will be tax-free, except for taxes on cash received for fractional
shares. Centerior share owners will recognize a gain or loss for
such cash equal to the difference between the amount of such cash
and the tax basis in such fractional share.
Q. What do share owners need to do now?
A. Just mail a signed, dated proxy card as soon as possible. That way,
their shares will be represented at the special meetings, which will
be held on March 27, 1997, for both Ohio Edison and Centerior. The
Boards of Directors of both Ohio Edison and Centerior unanimously
recommend voting in favor of the merger.
Q. If shares are in a share owner's broker's name, will the broker vote
the shares for the share owner?
A. A broker will vote the shares only if the share owner provides
written instructions on how to vote. Absent such instructions, the
shares held in what is called "street name" will not be voted.
Therefore, we urge share owners to instruct their brokers in writing
to vote their shares for the merger. To ensure that brokers receive
the instructions, we would suggest that share owners send them by
fax or by certified mail, return receipt requested, and that they
also call their brokers to make sure their instructions were
received.
Q. How many votes are needed to approve the merger?
A. To approve the merger:
Ohio Edison needs approval from the holders of at least two-
thirds of its outstanding shares of common stock; and
Centerior needs approval from the holders of at least a
majority of its outstanding shares of common stock.
Q. What will happen if a share owner doesn't vote?
A. If a share owner doesn't vote, it is, in effect, a vote against the
merger. Abstentions are also considered votes against the merger.
If a share owner signs and returns his or her proxy card without
marking his or her choice, the share owner's shares will be voted
for the merger.
Q. Should share owners send in their stock certificates now?
A. No. After the merger is completed, we will send them written
instructions for exchanging their stock certificates for
certificates representing FirstEnergy common stock.
Q. Will FirstEnergy shares be listed on a stock exchange?
A. Yes. We intend to apply for listing on the New York Stock Exchange
of the shares of FirstEnergy common stock to be issued in connection
with the merger.
Q. When do you expect the merger to be completed?
A. We are trying to complete the merger as quickly as possible.
However, circumstances over which we have no control, such as share
owner and regulatory approval, could affect the completion date.
Third Document:
EMPLOYEE BULLETIN BOARD POSTER
TEXT: A larger company gives us more control over our future.
GRAPHIC: Map of service territory of FirstEnergy Corp. utilizing an
outline of the State of Ohio and a portion of the
Commonwealth of Pennsylvania.
TEXT: Support the merger.
