SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 16, 1997
WISCONSIN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
1-9057
(Commission file number)
Wisconsin 39-1391525
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
231 West Michigan Street, P.O. Box 2949, Milwaukee, Wisconsin 53201
(Address of principal executive offices) (Zip Code)
(414) 221-2345
(Registrant's telephone number, including area code)
NOT APPLICABLE
-------------------------------------------------------------
(Former name or former address, if changed since last report)
FORM 8-K
WISCONSIN ENERGY CORPORATION
----------------------------
ITEM 5. OTHER EVENTS
TERMINATION OF MERGER AGREEMENT WITH NORTHERN STATES POWER COMPANY
On May 16, 1997, the Boards of Directors of Wisconsin Energy Corporation
("WEC") and Northern States Power Company ("NSP") agreed to terminate the
Amended and Restated Agreement and Plan of Merger, dated as of April 28, 1995,
as amended and restated as of July 26, 1995 (the "Merger Agreement"), by and
among NSP, WEC and their respective subsidiaries, Northern Power Wisconsin
Corp. and WEC Sub Corp., which provided for a business combination of WEC and
NSP to form Primergy Corporation (the "Transaction"). Accordingly, the
parties to the Merger Agreement entered into a Termination Agreement, dated as
of May 16, 1997, which terminated the Merger Agreement by mutual written
consent. The Termination Agreement also terminated the mutual Stock Option
Agreements, dated as of April 28, 1995, entered into between WEC and NSP in
connection with the Merger Agreement.
As previously reported, on May 14, 1997, the Federal Energy Regulatory
Commission ("FERC") issued an Opinion and Order in which FERC concluded that
it could not approve the Transaction at this time and reversed the earlier
decision of its own administrative law judge who had found that the proposed
Transaction, as conditioned, was consistent with the public interest. FERC
remanded the case to a settlement judge and directed the participants to
attempt to reach a resolution of the market power issues which formed the
basis of FERC's reversal of the administrative law judge's findings.
The Board of Directors of WEC concluded that continuing the proposed
Transaction, given the current regulatory climate, was not in the best
interest of WEC's shareholders, customers and employees. In reaching its
decision to terminate the Merger Agreement, the WEC Board considered many
factors, including: the May 14, 1997 FERC ruling; the fact that any
regulatory approvals that might be obtained appeared to involve conditions
which would significantly reduce the benefits of the Transaction; and the
impact on shareholders and other constituencies of further delays in the
regulatory approval process as a result of the FERC action.
The shareholders of WEC and NSP approved the Merger Agreement at their
respective special meetings of shareholders held on September 13, 1995. At
the September 13, 1995 special meeting of WEC shareholders (the "Special
Meeting"), in connection with the approval of the Merger Agreement, the
shareholders of WEC also approved an amendment to WEC's Restated Articles of
Incorporation so as to change the name of WEC to Primergy Corporation (the
"Name Change Amendment") and an amendment to WEC's Restated Articles of
Incorporation so as to increase the amount of authorized common stock of WEC
from 325,000,000 shares to 750,000,000 shares (the "Common Stock Amendment"
and, together with the Name Change Amendment, the "WEC Articles Amendments").
At the Special Meeting the shareholders of WEC also approved the Primergy
Stock Incentive Plan, a stock-based incentive compensation plan to replace
NSP's and WEC's existing stock-based incentive compensation plans at the
effective time of the Transaction, and the Primergy Management Incentive
Compensation Plan, a cash-based incentive compensation plan to replace the
separate cash-based incentive compensation plans of WEC and NSP at the
effective time of the Transaction. The effectiveness of the WEC Articles
Amendments and the implementation of the Primergy plans so approved was
conditioned upon the consummation of the transactions contemplated by the
Merger Agreement. Accordingly, as a result of the termination of the Merger
Agreement, the WEC Articles Amendments will not become effective and the
Primergy plans will not be implemented.
As reported in WEC's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, WEC has deferred approximately $29 million related to the
Transaction, including $12 million of transaction costs and approximately $17
million of costs to achieve the merger. Depending upon the extent to which
the costs to achieve the merger have a future benefit to the company, WEC
expects to charge to expense in the second quarter of 1997 most of the
Transaction related costs, representing approximately 16 cents per share on an
after tax basis.
The Termination Agreement and the press release issued in connection therewith
are filed as exhibits to this report and are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS. The following exhibits are filed herewith:
(2)-1 Termination Agreement, dated as of May 16, 1997, by and among
Northern States Power Company, Wisconsin Energy Corporation,
Northern Power Wisconsin Corp. and WEC Sub Corp.
(99)-1 Press Release, dated May 16, 1997, of Wisconsin Energy
Corporation.
FORM 8-K
WISCONSIN ENERGY CORPORATION
----------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WISCONSIN ENERGY CORPORATION
----------------------------
(Registrant)
/s/Calvin H. Baker
----------------------------
Calvin H. Baker, Treasurer
and Chief Financial Officer
Date: May 21, 1997
WISCONSIN ENERGY CORPORATION
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EXHIBIT INDEX
Current Report on Form 8-K
Report Dated May 16, 1997
Exhibit
Number
- --------
(2)-1 Termination Agreement, dated as of May 16, 1997, by and among
Northern States Power Company, Wisconsin Energy Corporation,
Northern Power Wisconsin Corp. and WEC Sub Corp.
(99)-1 Press Release, dated May 16, 1997, of Wisconsin Energy
Corporation.
EXHIBIT (2)-1
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT is made as of this 16th day of May, 1997 by
and among NORTHERN STATES POWER COMPANY, a Minnesota corporation ("NSP"),
WISCONSIN ENERGY CORPORATION ("WEC"), a Wisconsin corporation, NORTHERN POWER
WISCONSIN CORP. ("New NSP"), a Wisconsin corporation and WEC SUB CORP., a
Wisconsin corporation ("WEC Sub").
RECITALS
WHEREAS, NSP, WEC, New NSP and WEC Sub are parties to an Amended and
Restated Agreement and Plan of Merger dated as of April 28, 1995 as amended
and restated as of July 26, 1995 (the "Merger Agreement");
WHEREAS, NSP and WEC are parties to: (a) the NSP Stock Option Agreement
dated as of April 28, 1995 (the "NSP Option Agreement"); and (b) the WEC Stock
Option Agreement dated as of April 28, 1995 (the "WEC Option Agreement");
WHEREAS, the respective Boards of Directors of NSP and WEC have
concluded that the termination of the Merger Agreement is in the best
interests of their respective stockholders, customers and employees; and
WHEREAS, the parties wish to set forth in this Termination Agreement
their agreements concerning the termination of the Merger Agreement pursuant
to Section 9.1(a) of the Merger Agreement and the termination of the NSP
Option Agreement and the WEC Option Agreement.
NOW THEREFORE, in consideration of the Recitals and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
1. Termination. Effective as of 5:00 p.m. Central Daylight Savings
Time on May 16, 1997, the Merger Agreement is terminated pursuant to Section
9.1(a) thereof by mutual written consent of the Boards of Directors of NSP and
WEC, with no liability on the part of any party to the Merger Agreement or
their respective officers or directors except as described in Section 9.2 of
the Merger Agreement, provided that each party agrees that it shall not assert
any claim that it is entitled to any fees or expenses of any kind pursuant to
Section 9.3 of the Merger Agreement. The NSP Option Agreement and the WEC
Option Agreement are also hereby terminated and are of no further force and
effect.
2. Cooperation. The parties will cooperate in effectuating and
documenting the terminations described in this Termination Agreement,
including executing such other and further documents and taking such other
actions as may be reasonably required.
IN WITNESS WHEREOF, the parties have executed this Termination Agreement
as of the day and year first above written.
NORTHERN STATES POWER COMPANY
By /s/James J. Howard
-------------------------------
James J. Howard
Chairman and Chief Executive
Officer
WISCONSIN ENERGY CORPORATION
By /s/Richard A. Abdoo
-------------------------------
Richard A. Abdoo
Chairman, President and Chief
Executive Officer
NORTHERN POWER WISCONSIN CORP.
By /s/Edward J. McIntyre
-------------------------------
Edward J. McIntyre
President
WEC SUB CORP.
By /s/Richard A. Abdoo
-------------------------------
Richard A. Abdoo
Chairman, President and Chief
Executive Officer
EXHIBIT (99)-1
WISCONSIN ENERGY CORPORATION
From: Rick James (414-221-4444)
May 16, 1997
Wisconsin Energy Corp., Northern States Power Co.
agree to terminate merger proceedings
MILWAUKEE and MINNEAPOLIS -- Richard A. Abdoo, chairman, president and chief
executive officer of Wisconsin Energy Corp., and James J. Howard, chairman,
president and chief executive officer of Northern States Power Co., today
announced that the boards of directors of both companies have agreed to
terminate plans to merge the two companies. The Merger Agreement would have
combined WEC and NSP into Primergy Corporation which would have resulted in $2
billion of cost reductions benefiting customers and stockholders.
"We filed applications two years ago to join the companies. Our purpose was
to form a combined enterprise that would create greater value for our
customers and shareholders," Howard said. "We anticipated a 12- to 18-month
approval process because we complied with the requirements for all previously
approved mergers.
"What we encountered were regulatory agencies that were changing their merger
policies as they were considering our filing," he said. "The Federal Energy
Regulatory Commission's decision and its analysis of the market power issues -
- - released earlier this week and remanding the discussion for further
negotiation among the parties -- confirm that its policies are still being
developed. Unfortunately, the regulators have chosen applications like this
one to resolve many of these issues. There is simply no end to this process
in sight."
"At this time," Abdoo said, "it's important for us to take advantage of other
opportunities. Continuing the Primergy transaction, given the current
regulatory climate, is not in the best interests of our stockholders,
customers and employees."
Abdoo said there were many factors in reaching the decision to terminate the
Merger Agreement, including: the FERC action; the fact that any regulatory
approvals that might be obtained appear to be heading in the direction of
significantly reducing the benefits of the Primergy transaction; and the
impact on stockholders, customers and employees of at least another six months
of delay as a result of the FERC action after almost a two year wait.
"After thorough consideration, we have mutually agreed to terminate our
plans," Abdoo stated. "The stockholders, customers and employees of both
companies have waited too long and there is no certainty the matter will ever
be decided by the regulatory authorities."
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Wisconsin Energy
Page 2
Abdoo and Howard have agreed to examine several potential collaborative
efforts identified during the internal merger planning process.
The companies announced their merger plans May 1, 1995, and filed applications
in July and August with state and federal regulatory bodies. To date,
approvals have been granted by the state regulatory commissions in Michigan
and North Dakota, but not by the commissions in Minnesota and Wisconsin.
Approvals from the Securities & Exchange Commission and U.S. Department of
Justice also are pending.
Both companies' boards of directors voted today to end the merger process.
NSP and Wisconsin Energy will jointly withdraw their merger applications from
state and federal agencies.
Wisconsin Energy Corp. is a holding company with subsidiaries in utility and
non-utility businesses. Its principal subsidiary is Wisconsin Electric.
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