<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE TO/A
TENDER OFFER STATEMENT
UNDER SECTION 14(d)(1) OR SECTION 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
------------------------
DPL INC.
(Name of Subject Company (issuer) and Filing Person (offeror))
------------------------
COMMON SHARES, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
233 293 109
(CUSIP Number of Class of Securities)
------------------------
STEPHEN F. KOZIAR, JR.
GROUP VICE PRESIDENT AND GENERAL COUNSEL
DPL INC.
COURTHOUSE PLAZA SOUTHWEST
DAYTON, OH 45402
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of the Filing Person)
FEBRUARY 22, 2000
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Amount Previously Paid: $115,000 Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
</TABLE>
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/ / Check box if filing relates solely to preliminary communications made
before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
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<S> <C>
/ / third-party tender offer subject to /X/ issuer tender offer subject to
Rule 14d-1. Rule 13e-4.
/ / going-private transaction subject to / / amendment to Schedule 13D under
Rule 13e-3. Rule 13d-2.
</TABLE>
Check the following box if the filing is a final amendment reporting the
results of the tender offer: / /
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- --------------------------------------------------------------------------------
<PAGE>
This Amendment No. 2 to Tender Offer Statement on Schedule TO amends and
supplements the statement originally filed on February 4, 2000, as amended
February 10, 2000, by DPL Inc., an Ohio corporation, in connection with its
offer to purchase common shares, par value $.01 per share. DPL is offering to
purchase up to 25,000,000 shares at a price not in excess of $23.00 nor less
than $20.00 per share, net to the seller in cash, without interest, as specified
by shareholders tendering their shares. DPL's offer is being made upon the terms
and subject to the conditions set forth in the Offer to Purchase dated
February 4, 2000 and in the related Letter of Transmittal, which, as amended or
supplemented from time to time, together constitute the offer. All shares
tendered and purchased will include preferred share purchase rights issued
pursuant to a Shareholder Rights Agreement, dated as of December 3, 1991,
between DPL and The First National Bank of Boston, as rights agent, and, unless
the context otherwise requires, all references to shares include the associated
preferred share purchase rights. This Tender Offer Statement on Schedule TO is
intended to satisfy the reporting requirements of Section 13(e) of the
Securities Exchange Act of 1934, as amended.
The information in the Offer to Purchase, a copy of which is filed with this
Schedule TO as Exhibit (a)(1)(i) hereto, and the related Letter of Transmittal,
a copy of which was previously filed with this Schedule TO as Exhibit
(a)(1)(ii), is incorporated herein by reference in answer to Items 1 through 11
in this Tender Offer Statement on Schedule TO.
ITEM 12. EXHIBITS.
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<S> <C>
(a)(1)(i) Offer to Purchase.
(a)(1)(ii) Letter of Transmittal.**
(a)(1)(iii) Notice of Guaranteed Delivery.**
(a)(1)(iv) Letter to Shareholders from Peter H. Forster, Chairman, and
Allen M. Hill, President and CEO of DPL, dated February 4,
2000.**
(a)(1)(v) Letter to Participants in the DPL Inc. Employee Stock
Ownership Plan from Peter H. Forster, Chairman, and Allen M.
Hill, President and CEO of DPL, dated February 4, 2000.**
(a)(2) Not applicable.
(a)(3) Not applicable.
(a)(4) Not applicable.
(a)(5)(i) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.**
(a)(5)(ii) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.**
(a)(5)(iii) Letter to Participants in the DPL Inc. Employee Stock
Ownership Plan for use by the trustee of such plan.**
(a)(5)(iv) Letter to Participants in The Dayton Power and Light Company
Savings Plans for use by the trustee of such plans.**
(a)(5)(v) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.**
(a)(5)(vi) Press Release dated February 2, 2000.**
(a)(5)(vii) Summary Advertisement dated February 4, 2000.**
(a)(5)(viii) Pages I-14 and I-15 and Exhibit 13 of DPL's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998
(incorporated by reference to DPL's Annual Report on Form
10-K filed with the Commission on March 30, 1999).*
(a)(5)(ix) Pages 1 through 7, inclusive, of DPL's Quarterly Report on
Form 10-Q for the period ended September 30, 1999
(incorporated by reference to DPL's Quarterly Report on Form
10-Q filed with the Commission on November 15, 1999).*
(b) Securities Purchase Agreement, by and among DPL, DPL Capital
Trust I, Dayton Ventures LLC and Dayton Ventures, Inc.,
dated as of February 1, 2000 and certain exhibits thereto.**
(c) Not required.
(d) See exhibit (b) above.
(e) Not required.
</TABLE>
<PAGE>
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(f) Not required.
(g) Not applicable.
(h) Not applicable.
</TABLE>
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* Information incorporated by reference is available to the public at the
website maintained by the Commission at http://www.sec.gov.
** Previously filed.
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.
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<S> <C> <C>
Dated: February 22, 2000 DPL INC.
By: /s/ STEPHEN F. KOZIAR, JR.
-----------------------------------------
Name: Stephen F. Koziar, Jr.
TITLE: GROUP VICE PRESIDENT AND GENERAL
COUNSEL
</TABLE>
2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<S> <C>
(a)(1)(i) Offer to Purchase.
(a)(1)(ii) Letter of Transmittal.**
(a)(1)(iii) Notice of Guaranteed Delivery.**
(a)(1)(iv) Letter to Shareholders from Peter H. Forster, Chairman, and
Allen M. Hill, President and CEO of DPL, dated February 4,
2000.**
(a)(1)(v) Letter to Participants in the DPL Inc. Employee Stock
Ownership Plan from Peter H. Forster, Chairman, and Allen M.
Hill, President and CEO of DPL, dated February 4, 2000.**
(a)(2) Not applicable.
(a)(3) Not applicable.
(a)(4) Not applicable.
(a)(5)(i) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.**
(a)(5)(ii) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.**
(a)(5)(iii) Letter to Participants in the DPL Inc. Employee Stock
Ownership Plan for use by the trustee of such plan.**
(a)(5)(iv) Letter to the Participants in The Dayton Power and Light
Company Savings Plans for use by the trustee of such
plans.**
(a)(5)(v) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.**
(a)(5)(vi) Press Release dated February 2, 2000.**
(a)(5)(vii) Summary Advertisement dated February 4, 2000.**
(a)(5)(viii) Pages I-14 and I-15 and Exhibit 13 of DPL's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998
(incorporated by reference to DPL's Annual Report on Form
10-K filed with the Commission on March 30, 1999).*
(a)(5)(ix) Pages 1 through 7, inclusive, of DPL's Quarterly Report on
Form 10-Q for the period ended September 30, 1999
(incorporated by reference to DPL's Quarterly Report on Form
10-Q filed with the Commission on November 15, 1999).*
(b) Securities Purchase Agreement, by and among DPL, DPL Capital
Trust I, Dayton Ventures LLC and Dayton Ventures, Inc.,
dated as of February 1, 2000 and certain exhibits thereto.**
(c) Not required.
(d) See exhibit (b) above.
(e) Not required.
(f) Not required.
(g) Not applicable.
(h) Not applicable.
</TABLE>
- ------------------------
* Information incorporated by reference is available to the public at the
website maintained by the Commission at http://www.sec.gov.
** Previously filed
3
<PAGE>
[DPL LOGO]
OFFER TO PURCHASE FOR CASH
UP TO 25,000,000 COMMON SHARES
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF DPL INC.
AT A PURCHASE PRICE NOT IN EXCESS
OF $23.00 NOR LESS THAN $20.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 3, 2000,
UNLESS THE OFFER IS EXTENDED.
DPL Inc., an Ohio corporation, invites its shareholders to tender up to
25,000,000 of its common shares, par value $.01 per share, for purchase by DPL
at a price not in excess of $23.00 nor less than $20.00 per share, net to the
seller in cash, without interest thereon, as specified by shareholders tendering
their shares. DPL will determine a single per share price that it will pay for
shares properly tendered, taking into account the number of shares tendered and
the prices specified by tendering shareholders. All shares acquired in the offer
will be acquired at the same purchase price. DPL will select the lowest purchase
price that will allow it to buy 25,000,000 shares or, if a lesser number of
shares are properly tendered, all shares that are properly tendered and not
properly withdrawn.
DPL's offer is being made upon the terms and subject to the conditions
described in this Offer to Purchase and in the related Letter of Transmittal
which, as amended or supplemented from time to time, together constitute the
offer. All shares tendered and purchased will include the associated preferred
share purchase rights issued pursuant to a Shareholder Rights Agreement between
DPL and The First National Bank of Boston, as rights agent, and, unless the
context otherwise requires, all references to shares include the associated
preferred share purchase rights.
Only shares properly tendered at prices at or below the purchase price
selected by DPL and not properly withdrawn will be purchased. However, because
of the "odd lot" priority, proration and conditional tender provisions described
in this Offer to Purchase, all of the shares tendered at or below the purchase
price will not be purchased if the offer is oversubscribed. Shares not purchased
in the offer will be returned as promptly as practicable following the
Expiration Date. See Section 3.
DPL reserves the right, in its sole discretion, to purchase more than
25,000,000 shares pursuant to the offer.
THIS OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. HOWEVER, THIS OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS, INCLUDING
DPL HAVING OBTAINED SUFFICIENT FINANCING FOR THE OFFER. SEE SECTIONS 7 AND 9.
The shares are listed and traded on the New York Stock Exchange under the
symbol "DPL." On February 1, 2000, the last full trading day before the
announcement of the offer, the last reported sale price of the shares on the
NYSE Composite Tape was $19 1/16. On February 3, 2000, the last reported sale
price was $21 11/16. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES. SEE SECTION 8.
THE BOARD OF DIRECTORS OF DPL HAS APPROVED THE OFFER. HOWEVER, NEITHER DPL
NOR DPL'S BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO YOU AS TO WHETHER TO
TENDER OR REFRAIN FROM TENDERING YOUR SHARES OR AS TO THE PURCHASE PRICE AT
WHICH YOU MAY CHOOSE TO TENDER YOUR SHARES. YOU MUST MAKE YOUR OWN DECISION AS
TO WHETHER TO TENDER YOUR SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH YOU WILL TENDER THEM. IN DOING SO, YOU SHOULD CONSIDER
OUR REASONS FOR MAKING THIS OFFER, INCLUDING OUR INCREASED USE OF FINANCIAL
LEVERAGE AND OUR INCREASED BUSINESS EMPHASIS ON PROVIDING UNREGULATED ENERGY
SERVICES. SEE SECTION 2. OUR DIRECTORS AND EXECUTIVE OFFICERS HAVE ADVISED US
THAT THEY WILL NOT TENDER ANY SHARES IN THE OFFER.
The Dealer Manager for this offer is:
[Credit Suisse First Boston
Corporation Logo]
February 4, 2000
<PAGE>
IMPORTANT
If you wish to tender all or any part of the shares registered in your name,
you should follow the instructions described in Section 3 carefully, including
completing a Letter of Transmittal in accordance with the instructions and
delivering it, along with your share certificates and any other required items,
to EquiServe, the Depositary. If your shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee, you should
contact the nominee if you desire to tender your shares and request that the
nominee tender them for you. Participants in The Dayton Power and Light Company
Employee Savings Plan and The Dayton Power and Light Company Savings Plan for
Collective Bargaining Employees (collectively, the "DPL Savings Plans") and the
DPL Inc. Employee Stock Ownership Plan (the "ESOP"), who wish to tender any of
their shares held in these plans must follow the separate instructions and
procedures described in Section 3 of this offer to purchase.
Any shareholder who desires to tender shares and whose certificates for the
shares are not immediately available or cannot be delivered to the Depositary or
who cannot comply with the procedure for book-entry transfer or whose other
required documents cannot be delivered to the Depositary by the expiration of
the offer must tender the shares pursuant to the guaranteed delivery procedure
set forth in Section 3.
To properly tender shares, you must validly complete the Letter of
Transmittal, including the section relating to the price at which you are
tendering shares. If you wish to maximize the chance that your shares will be
purchased at the purchase price determined by DPL, you should check the box in
the section on the Letter of Transmittal captioned "Shares Tendered at Price
Determined Pursuant to the Offer." Note that this election could result in your
shares being purchased at the minimum price of $20.00 per share.
You may request additional copies of this Offer to Purchase, the Letter of
Transmittal or the Notice of Guaranteed Delivery from Georgeson Shareholder
Communications Inc., which is acting as the Information Agent, or Credit Suisse
First Boston Corporation ("Credit Suisse First Boston"), which is acting as
Dealer Manager, at their respective addresses and telephone numbers set forth on
the back cover of this Offer to Purchase.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF
AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR SHARES IN THIS
OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFER OTHER
THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER OF
TRANSMITTAL. IF ANYONE MAKES ANY RECOMMENDATION OR GIVES ANY INFORMATION OR
REPRESENTATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, INFORMATION OR
AUTHORIZATION AS HAVING BEEN AUTHORIZED BY DPL.
<PAGE>
SUMMARY TERM SHEET
THIS SUMMARY HIGHLIGHTS CERTAIN INFORMATION FROM THIS OFFER TO PURCHASE. TO
UNDERSTAND THE OFFER FULLY AND FOR A MORE COMPLETE DESCRIPTION OF THE TERMS OF
THE OFFER, YOU SHOULD READ CAREFULLY THIS ENTIRE OFFER TO PURCHASE AND THE
RELATED LETTER OF TRANSMITTAL. WE HAVE INCLUDED PAGE REFERENCES PARENTHETICALLY
TO DIRECT YOU TO A MORE COMPLETE DESCRIPTION OF THE TOPICS IN THIS SUMMARY.
WHAT SECURITIES IS DPL OFFERING TO PURCHASE? (PAGE 1)
DPL is offering to purchase up to 25,000,000 of its common shares, including
the associated preferred share purchase rights, or any lesser number of shares
that shareholders properly tender in the offer. If more than 25,000,000 shares
are tendered, all shares tendered and not properly withdrawn at or below the
purchase price will be purchased on a pro rata basis, except for "odd lots"
which will be purchased on a priority basis.
HOW MUCH WILL DPL PAY ME FOR MY SHARES AND IN WHAT FORM OF PAYMENT? (PAGE 15)
DPL is conducting the offer through a procedure commonly referred to as a
modified "Dutch Auction."
- This procedure allows you to select the price within a specified price
range at which you are willing to sell your shares. The price range for
this offer is $20.00 to $23.00.
- DPL will determine the lowest single per share price within the price
range that will allow it to purchase 25,000,000 shares, or if fewer shares
are tendered, all shares tendered.
- All shares purchased will be purchased at the same price, even if you have
selected a lower price, but no shares will be purchased above the purchase
price determined by DPL.
- If you wish to maximize the chance that your shares will be purchased in
the offer, you should check the box in the section on the Letter of
Transmittal indicating that you will accept the purchase price determined
by DPL under the terms of the offer. Note that this election could result
in your shares being purchased at the minimum price of $20.00 per share.
- Shareholders whose shares are purchased in the offer will be paid the
purchase price, net in cash, without interest, as soon as practicable
after the expiration of the offer period. Under no circumstances will DPL
pay interest on the purchase price, including but not limited to, by
reason of any delay in making payment.
DOES DPL HAVE THE FINANCIAL RESOURCES TO PAY ME FOR MY SHARES? (PAGE 20)
Assuming DPL purchases 25,000,000 shares pursuant to the offer at the
maximum specified purchase price of $23.00 per share, DPL expects the maximum
aggregate cost, not including all fees and expenses applicable to the offer,
will be approximately $575 million. In addition, DPL expects to incur
approximately $30 million in fees and expenses related to this offer and the
financing of the offer as described below. DPL intends to finance this offer
from the aggregate net proceeds of (i) the sale to affiliates of Kohlberg Kravis
Roberts & Co. ("KKR"), for an aggregate purchase price of approximately
$550 million, of trust preferred securities issued by a trust established by
DPL, voting preferred shares of DPL with voting power equal to 4.9% of the
outstanding voting power of DPL's securities and warrants to purchase DPL common
shares and (ii) the issuance by DPL of additional short- or long-term debt
securities in a public or private offering. In the event such amounts are not
available to DPL by the expiration date of the offer, DPL will extend the offer
period, seek additional financing or terminate the offer. The trust preferred
securities to be sold to KKR will have an aggregate face amount of
$550 million, will be issued at an initial discounted aggregate price of
approximately $500 million, will have a maturity of 30 years (subject to
acceleration to six months after the exercise of the warrants) and will pay
distributions at a rate of 8.5% of the aggregate face amount per year. The
warrants will be for an aggregate of 31,600,000 DPL common shares, will have a
term of 12 years, will have
i
<PAGE>
an exercise price of $21.00 per share and will be sold for an aggregate purchase
price of $50 million. The voting preferred shares will be sold for an aggregate
purchase price of $68,000. The KKR investment is subject to customary closing
conditions, including KKR obtaining $230 million of financing.
WHEN DOES THE TENDER OFFER EXPIRE? CAN DPL EXTEND THE OFFER, AND IF SO, HOW WILL
I BE NOTIFIED? (PAGE 31)
- The offer expires Friday, March 3, 2000, at 12:00 Midnight, New York City
time, unless it is extended by DPL.
- Yes, DPL may extend the offer at any time.
- DPL cannot assure you that the offer will be extended or, if extended, for
how long.
- If the offer is extended, DPL will make a public announcement of the
extension no later than 9:00 a.m. on the next business day following the
previously scheduled expiration of the offer period.
WHAT IS THE PURPOSE OF THE OFFER? (PAGE 5)
On February 2, 2000, DPL announced that it had signed a definitive agreement
with affiliates of KKR under which KKR will make a strategic investment of
$550 million in DPL. DPL intends to use the proceeds from this investment,
combined with up to $425 million of new debt capital, to continue its planned
generation strategy, make capital expenditures, retire short-term debt and fund
the repurchase of shares. DPL currently intends to purchase an additional
6,600,000 shares after this offer is completed. The method, timing and financing
of such purchases have not yet been decided.
This offer provides shareholders with an opportunity to sell all or part of
their investment in DPL shares on potentially more favorable terms than would
otherwise be available. However, shareholders who choose not to tender their
shares may also benefit from these transactions. Non-tendering shareholders will
own a greater interest in a company with a potentially stronger earnings per
share growth rate.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER? (PAGE 16)
DPL's obligation to accept for payment, purchase or pay for any shares
tendered depends upon a number of conditions, including:
- No significant decrease in the price of DPL's common shares or in the
price of equity securities generally, or any adverse changes in the U.S.
stock markets or credit markets, shall have occurred during this offer.
- DPL must not have concluded that it will be unable to obtain approximately
$605 million of long-term financing on terms and conditions satisfactory
to DPL, in its reasonable judgment.
- No legal action shall have been threatened, pending or taken, that might
adversely affect the offer.
- No one shall have proposed, announced or made a tender or exchange offer,
other than this offer, merger, business combination or other similar
transaction involving DPL.
- No material change in the business, condition (financial or otherwise),
assets, income, operations, prospects or stock ownership of DPL shall have
occurred during this offer.
HOW DO I TENDER MY SHARES? (PAGE 8)
If you decide to tender your shares, you must either:
- Deliver your shares by mail, physical delivery or book-entry transfer and
deliver a completed and signed Letter of Transmittal or an Agent's Message
to the Depositary before 12:00 Midnight, New York City time, on Friday,
March 3, 2000; or
ii
<PAGE>
- If your share certificates are not immediately available for delivery to
the Depositary, comply with the guaranteed delivery procedure before
12:00 Midnight, New York City time, on Friday, March 3, 2000.
Contact the Information Agent, the Dealer Manager or your broker for
assistance.
Participants in The Dayton Power and Light Company Employee Savings Plan,
The Dayton Power and Light Company Savings Plan for Collective Bargaining
Employees or the DPL Inc. Employee Stock Ownership Plan who wish to tender any
of their shares held in those plans must instruct the respective plan trustee to
tender their shares at least five business days before the expiration of the
offer by following the separate instructions and procedures described in
Section 3.
On February 1, 2000, DPL's Board of Directors declared a dividend of $0.235
per share payable on March 1, 2000. Participants in DPL's dividend reinvestment
program may tender shares received in respect of such dividend in this offer.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES? (PAGE 14)
You may withdraw your tendered shares at any time before 12:00 Midnight, New
York City time, on Friday, March 3, 2000 and, unless already accepted for
payment by DPL, at any time after 12:00 Midnight, New York City time, on Friday,
March 31, 2000.
IN WHAT ORDER WILL TENDERED SHARES BE PURCHASED? WILL TENDERED SHARES BE
PRORATED? (PAGE 3)
- First, DPL will purchase shares from all holders of "odd lots" of less
than 100 shares (not including any shares held in either of the DPL
Savings Plans or the ESOP) who properly tender all of their shares at or
below the selected purchase price; and
- Second, after purchasing all shares from the "odd lot holders," DPL will
then purchase shares from all other shareholders who properly tender
shares at or below the selected purchase price, on a pro rata basis,
subject to the conditional tender provisions described in Section 6.
- Consequently, all of the shares that you tender in the offer may not be
purchased even if they are tendered at or below the purchase price.
WHAT DO DPL AND ITS BOARD OF DIRECTORS THINK OF THE OFFER? (PAGE 1)
The Board of Directors of DPL has approved the offer. However, neither DPL
nor DPL's Board of Directors makes any recommendation to you as to whether to
tender or refrain from tendering your shares or as to the purchase price at
which you may choose to tender your shares.
You must decide whether to tender your shares and, if so, how many shares to
tender and the price or prices at which you will tender them.
Our directors and executive officers have advised us that they will not
tender any shares in the offer.
WHAT IS THE RECENT MARKET PRICE OF MY SHARES? (PAGE 19)
On February 1, 2000, the last full trading day before the announcement of
the offer, the last reported sale price of the shares on the NYSE Composite Tape
was $19 1/16. On February 3, 2000, the last reported sale price was $21 11/16.
Shareholders are urged to obtain current market quotations for their shares.
iii
<PAGE>
WILL I HAVE TO PAY ANY FEES OR COMMISSIONS? (PAGE 2)
If you hold your shares in certificate form and tender your shares directly
to the Depositary you will not have to pay any fees or commissions. If you hold
your shares through a broker, bank or other fiduciary you should consult with
them to determine whether you will be charged any transaction cost for tendering
through them.
WHO DO I CONTACT IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
For additional information or assistance, you may contact the Information
Agent or the Dealer Manager at the toll free numbers set forth on the back cover
of this Offer to Purchase.
iv
<PAGE>
TABLE OF CONTENTS
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SECTION PAGE
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Summary Term Sheet.................................................................. i
Introduction........................................................................ 1
The Offer........................................................................... 3
1. Number of Shares; Proration................................. 3
2. Purpose of the Offer; Certain Effects of the Offer.......... 5
3. Procedures for Tendering Shares............................. 8
4. Withdrawal Rights........................................... 14
5. Purchase of Shares and Payment of Purchase Price............ 14
6. Conditional Tender of Shares................................ 15
7. Conditions of the Offer..................................... 16
8. Price Range of Shares; Dividends............................ 18
9. Source and Amount of Funds.................................. 19
10. Certain Information Concerning DPL.......................... 19
11. Interests of Directors and Officers; Transactions and 26
Arrangements Concerning Shares..............................
12. Effects of the Offer on the Market for Shares; Registration 27
Under the Exchange Act......................................
13. Certain Legal Matters; Regulatory Approvals................. 27
14. Certain United States Federal Income Tax Consequences....... 27
15. Extension of the Offer; Termination; Amendment.............. 29
16. Fees and Expenses........................................... 30
17. Miscellaneous............................................... 31
</TABLE>
FORWARD LOOKING STATEMENTS
This Offer to Purchase, including the Summary, the Introduction and
Sections 2, 9 and 10, contains statements that are not historical facts and
constitute projections, forecasts or forward-looking statements. When we use
words like "believes," "expects," "anticipates," "intends," "plans,"
"estimates," "may," "should" or similar expressions, or when we discuss our
strategy or plans, we are making projections, forecasts or forward-looking
statements. These statements are not guarantees of performance. They involve
risks, uncertainties and assumptions that could cause our future results and
shareholder value to differ materially from those expressed in these statements.
Many of the factors that will determine these results and value are beyond our
ability to control or predict. These statements are necessarily based upon
various assumptions involving judgments with respect to the future. These risks
and uncertainties include, among others:
- national, international, regional and local economic, competitive and
regulatory conditions and developments;
- capital market conditions, inflation rates and interest rates;
- energy markets, including the timing and extent of changes in commodity
prices;
- weather conditions;
- business, regulatory and legal decisions;
- the pace of deregulation of retail natural gas and electricity delivery;
- technological developments;
- the timing and success of business development efforts; and
- other uncertainties, all of which are difficult to predict and many of
which are beyond our control.
These risks and uncertainties are further discussed in more detail in DPL's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and its
Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and
September 30, 1999, respectively.
v
<PAGE>
To the Holders of Common Shares of DPL Inc.:
INTRODUCTION
DPL Inc., an Ohio corporation, invites its shareholders to tender their DPL
common shares, par value $.01 per share, for purchase by DPL. DPL is offering to
purchase up to 25,000,000 common shares at a price not in excess of $23.00 nor
less than $20.00 per share, net to the seller in cash, without interest, as
specified by shareholders tendering their shares.
DPL will determine a single per share price that it will pay for shares
properly tendered and not properly withdrawn, taking into account the number of
shares tendered and the prices specified by tendering shareholders. All shares
acquired in the offer will be acquired at the same purchase price. DPL will
select the lowest purchase price that will allow it to buy 25,000,000 shares or,
if a lesser number of shares are properly tendered and not properly withdrawn,
all shares that are properly tendered and not properly withdrawn.
DPL's offer is being made upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal which,
as amended or supplemented from time to time, together constitute this offer.
All shares tendered and purchased will include the associated preferred share
purchase rights issued pursuant to a Shareholder Rights Agreement dated as of
December 3, 1991, as amended, between DPL and The First National Bank of Boston,
as rights agent, and, unless the context otherwise requires, all references to
shares include the associated preferred share purchase rights.
Only shares properly tendered at prices at or below the purchase price
selected by DPL and not properly withdrawn will be purchased. However, because
of the "odd lot" priority, proration and conditional tender provisions described
in this Offer to Purchase, all of the shares tendered at or below the purchase
price will not be purchased if the offer is oversubscribed. Shares tendered at
prices in excess of the purchase price that is determined by DPL and shares not
purchased because of proration or conditional tenders will be returned as
promptly as practicable following the Expiration Date. See Section 3.
DPL reserves the right, in its sole discretion, to purchase more than
25,000,000 shares pursuant to the offer.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
HOWEVER, THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS, INCLUDING DPL HAVING
OBTAINED SUFFICIENT FINANCING FOR THE OFFER. SEE SECTIONS 7 AND 9.
THE BOARD OF DIRECTORS OF DPL HAS AUTHORIZED THIS OFFER. HOWEVER, NEITHER
DPL NOR DPL'S BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO YOU AS TO WHETHER
TO TENDER OR REFRAIN FROM TENDERING YOUR SHARES OR AS TO THE PURCHASE PRICE AT
WHICH YOU MAY CHOOSE TO TENDER YOUR SHARES. YOU MUST MAKE YOUR OWN DECISION
WHETHER TO TENDER YOUR SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH YOU WILL TENDER THEM. IN DOING SO, YOU SHOULD CONSIDER
OUR REASONS FOR MAKING THIS OFFER, INCLUDING OUR INCREASED USE OF FINANCIAL
LEVERAGE AND OUR INCREASED BUSINESS EMPHASIS ON PROVIDING UNREGULATED ENERGY
SERVICES. SEE SECTION 2. OUR DIRECTORS AND EXECUTIVE OFFICERS HAVE ADVISED US
THAT THEY WILL NOT TENDER ANY SHARES IN THE OFFER. SEE SECTION 11.
If at the expiration of the offer more than 25,000,000 shares, or a greater
number of shares as DPL may elect to purchase, are properly tendered at or below
the purchase price and not properly withdrawn, DPL will buy shares first from
all Odd Lot Holders, as defined in Section 1, who properly tender all their
shares at or below the purchase price, and second, on a pro rata basis from all
other shareholders who properly tender shares at prices at or below the purchase
price. See Section 1.
If you tender shares in the offer, your tender will include a tender of the
preferred share purchase rights associated with your tendered shares. No
separate consideration will be paid for the rights. See Section 8.
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The purchase price will be paid net to the tendering shareholder in cash,
without interest thereon, for all shares purchased. Tendering shareholders who
hold shares registered in their own name and who tender their shares directly to
the Depositary will not be obligated to pay brokerage commissions, solicitation
fees or, subject to Instruction 7 of the Letter of Transmittal, stock transfer
taxes on the purchase of shares by DPL in the offer. Shareholders holding shares
through brokers or banks are urged to consult the brokers or banks to determine
whether transaction costs may apply if shareholders tender shares through the
brokers or banks and not directly to the Depositary. HOWEVER, ANY TENDERING
SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN AND RETURN TO THE
DEPOSITARY THE SUBSTITUTE FORM W-9 THAT IS INCLUDED AS PART OF THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED UNITED STATES FEDERAL INCOME TAX BACKUP
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO THE TENDERING SHAREHOLDER OR
OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 3.
DPL will pay all fees and expenses incurred in connection with the offer by
Credit Suisse First Boston, the Dealer Manager for this offer, EquiServe, the
Depositary for this offer, Georgeson Shareholder Communications Inc., the
Information Agent for this offer, T. Rowe Price Trust Company, the trustee of
each of the DPL Savings Plans, and Bank One Dayton, N.A., trustee of the ESOP.
See Section 16.
Participants in The Dayton Power and Light Company Employee Savings Plan and
The Dayton Power and Light Company Savings Plan for Collective Bargaining
Employees may instruct the trustee of those plans, T. Rowe Price Trust Company,
to tender some or all of the shares held for the participant's account by
following the instructions in the separate "Letter to Participants in the DPL
Savings Plans" and returning it to the trustee's agent in accordance with those
instructions. If the trustee has not received a participant's instructions at
least five business days prior to the Expiration Date, the trustee will not
tender any shares held on behalf of the participant in the plan. Proceeds
received from any tender of shares held for the participant's account in one of
the DPL Savings Plans will be initially invested under the terms of the plans
for the participant in a short-term government securities fund, and subsequently
may be transferred by the participant to other investment funds as permitted by
the plan. See Section 3.
Participants in the DPL Inc. Employee Stock Ownership Plan may instruct the
trustee, Bank One Dayton, N.A., to tender some or all of the DPL common shares
allocated to the participant's account in that plan by following the
instructions in the separate "Letter to Participants in the DPL Inc. Employee
Stock Ownership Plan" and returning it to the trustee's agent in accordance with
those instructions. If the trustee has not received a participant's instructions
at least five business days prior to the Expiration Date, the trustee will not
tender any shares held on behalf of the participant in the plan. Proceeds
received from any tender of shares from a participant's account will be
reinvested under the terms of the plan in DPL common shares following the tender
offer. Participants should be aware that the proceeds will be reinvested in DPL
common shares under the terms of the plan at the prevailing market price at the
time of the reinvestment, which price may be higher or lower than the purchase
price paid by DPL for shares in the tender offer.
On February 1, 2000, DPL's Board of Directors declared a dividend of $0.235
per share payable on March 1, 2000. Participants in DPL's dividend reinvestment
program may tender shares received in respect of such dividend in this offer.
As of February 3, 2000, DPL had 158,682,304 issued and outstanding common
shares, 31,600,000 shares reserved for issuance pursuant to the KKR warrants and
6,650,000 shares reserved for issuance upon exercise of outstanding stock
options under DPL's new stock option plan. The 25,000,000 shares that DPL is
offering to purchase pursuant to the offer represent approximately 15.8% of
DPL's shares outstanding on February 3, 2000. The shares are listed and traded
on the New York Stock Exchange under the symbol "DPL." On February 1, 2000, the
last full trading day before the announcement of the offer, the last reported
sale price of the shares as reported on the NYSE Composite Tape was $19 1/16.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. See
Section 8.
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THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the offer, DPL will purchase
25,000,000 shares, or the lesser number of shares that are properly tendered and
not properly withdrawn in accordance with Section 4 before the Expiration Date,
as defined below, at prices not in excess of $23.00 nor less than $20.00 per
share, net to the seller in cash, without interest.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, March 3, 2000. DPL may, in its sole discretion, extend the period of
time during which the offer will remain open. In the event of an extension, the
term "Expiration Date" will refer to the latest time and date at which the
offer, as extended by DPL, will expire. See Section 15 for a description of
DPL's right to extend, delay, terminate or amend the offer.
In accordance with Instruction 5 of the Letter of Transmittal, shareholders
desiring to tender shares must either (1) specify that they are willing to sell
their shares to DPL at the price determined in the offer, or (2) specify the
price, not in excess of $23.00 nor less than $20.00 per share, at which they are
willing to sell their shares to DPL in the offer. As promptly as practicable
following the Expiration Date, DPL will, upon the terms and subject to the
conditions of the offer, determine a single per share purchase price that it
will pay for shares properly tendered and not properly withdrawn pursuant to the
offer, taking into account the number of shares tendered and the prices
specified by tendering shareholders. All shares purchased in the offer will be
purchased at the same purchase price. DPL will select the lowest purchase price
that will allow it to buy 25,000,000 shares, or the lesser number of shares that
are properly tendered at prices not in excess of $23.00 nor less than $20.00 per
share.
Only shares properly tendered at prices at or below the purchase price
determined by DPL and not properly withdrawn will be purchased. However, because
of the "odd lot" priority, proration and conditional tender provisions, all of
the shares tendered at or below the purchase price will not be purchased if the
offer is oversubscribed. All shares tendered and not purchased pursuant to the
offer, including shares tendered at prices in excess of the purchase price
determined by DPL and shares not purchased because of proration or conditional
tenders, will be returned to the tendering shareholders at DPL's expense as
promptly as practicable following the Expiration Date.
DPL reserves the right to purchase more than 25,000,000 shares pursuant to
the offer. In accordance with applicable regulations of the Securities and
Exchange Commission, DPL may purchase pursuant to the offer an additional amount
of shares not to exceed 2% of the outstanding shares without amending or
extending the offer. See Section 15.
In the event of an over-subscription of the offer, shares tendered at or
below the purchase price before the Expiration Date will be subject to
proration, except for Odd Lots (as defined below). The proration period also
expires on the Expiration Date.
If DPL (1) increases the price that may be paid for shares above $23.00 per
share or decreases the price that may be paid for shares below $20.00 per share,
(2) materially increases the Dealer Manager fee, (3) increases the number of
shares that it may purchase in the offer by more than 2% of the outstanding
shares, or (4) decreases the number of shares that it may purchase in the offer,
then the offer must remain open for at least ten business days following the
date that notice of the increase or decrease is first published, sent or given
in the manner specified in Section 15.
The offer is not conditioned on any minimum number of shares being tendered.
The offer is, however, subject to other conditions. See Sections 5, 7 and 9.
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PRIORITY OF PURCHASES. If more than 25,000,000 shares (or a greater number
of shares as DPL may elect to purchase) have been properly tendered at prices at
or below the selected purchase price and not properly withdrawn before the
Expiration Date, DPL will purchase properly tendered shares on the basis set
forth below:
First, DPL will purchase all shares tendered by any Odd Lot Holder (as
defined below) who:
(1) tenders all shares owned beneficially or of record by the Odd Lot Holder
at a price at or below the selected purchase price (tenders of less than
all of the shares owned by the Odd Lot Holder will not qualify for this
preference); and
(2) completes the section entitled "Odd Lots" in the Letter of Transmittal
and, if applicable, in the Notice of Guaranteed Delivery.
Second, after the purchase of all of the shares properly tendered and not
properly withdrawn by Odd Lot Holders, subject to the conditional tender
provisions described in Section 6, DPL will purchase all other shares tendered
at prices at or below the purchase price, on a pro rata basis with appropriate
adjustments to avoid purchases of fractional shares, as described below.
Consequently, all of the shares that a shareholder tenders in the offer may
not be purchased even if they are tendered at prices at or below the purchase
price.
ODD LOTS. The term "Odd Lots" means all shares tendered at prices at or
below the selected purchase price by any person (an "Odd Lot Holder") who owned
beneficially or of record as of the close of business on February 3, 2000, and
continues to own beneficially and of record as of the Expiration Date, an
aggregate of fewer than 100 shares (not including any shares held in one of DPL
Savings Plans or the ESOP) and so certified in the appropriate place on the
Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery.
To qualify for this preference, an Odd Lot Holder must tender all shares owned
by the Odd Lot Holder in accordance with the procedures described in Section 3.
Odd Lots will be accepted for payment before any proration of the purchase of
other tendered shares. This preference is not available to partial tenders or to
beneficial or record holders of an aggregate of 100 or more shares, even if
these holders have separate accounts or certificates representing fewer than 100
shares, or with respect to any shares held in one of the DPL Savings Plans or
the ESOP. By tendering in the offer, an Odd Lot Holder who holds shares in its
name and tenders its shares directly to the Depositary would not only avoid the
payment of brokerage commissions, but also would avoid any applicable odd lot
discounts in a sale of the holder's shares. Any Odd Lot Holder wishing to tender
all of the shareholder's shares pursuant to the offer should complete the
section entitled "Odd Lots" in the Letter of Transmittal and, if applicable, in
the Notice of Guaranteed Delivery.
DPL also reserves the right, but will not be obligated, to purchase all
shares properly tendered by any shareholder who tenders any shares owned
beneficially or of record, at or below the selected purchase price and who, as a
result of proration, would then own beneficially or of record, an aggregate of
fewer than 100 shares. If DPL exercises this right, it will increase the number
of shares that it is offering to purchase in the offer by the number of shares
purchased through the exercise of the right.
PRORATION. If proration of tendered shares is required, DPL will determine
the proration factor as promptly as practicable following the Expiration Date.
Proration for each shareholder tendering shares, other than Odd Lot Holders,
will be based on the ratio of the number of shares tendered by the shareholder
to the total number of shares tendered by all shareholders, other than Odd Lot
Holders, at or below the selected purchase price. Because of the difficulty in
determining the number of shares properly tendered and not properly withdrawn,
and because of the Odd Lot procedure described above and the conditional tender
procedure described in Section 6, DPL does not expect that it will be able to
announce the final proration factor or commence payment for any shares purchased
pursuant to the offer until approximately seven business days after the
Expiration Date. The preliminary results of any proration will be announced by
press release as promptly as practicable after the Expiration Date. Shareholders
may obtain preliminary proration information from the Information Agent and also
may be able to obtain the information from their brokers.
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As described in Section 14, the number of shares that DPL will purchase from
a shareholder pursuant to the offer may affect the United States federal income
tax consequences to the shareholder of the purchase and, therefore, may be
relevant to a shareholder's decision whether or not to tender shares. The Letter
of Transmittal affords each tendering shareholder the opportunity to designate
the order of priority in which shares tendered are to be purchased in the event
of proration.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of the shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on DPL's
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of shares.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
Diversified utility companies, including DPL, have experienced and will
continue to experience a significant increase in the level of competition in the
utility and energy services markets over time. A steady move away from a
regulated monopoly energy supply structure toward a more competitive structure
has affected the utility industry for nearly two decades. During the past
decade, various state and federal regulatory changes have occurred and a
significant number of states have begun to implement legislative initiatives to
permit retail customers to choose their energy supply provider.
Ohio enacted deregulation legislation in July 1999. As a result, customers
of DPL's utility subsidiary, The Dayton Power and Light Company ("DP&L"), will
be able to purchase power from other sources commencing January 1, 2001. DP&L's
rates for power which it provides to customers within its service territory will
be frozen for a period of time (ending not later than December 31, 2005). During
this period, DP&L has asked the Public Utilities Commission of Ohio to allow it
to recover stranded costs through collection of a transition charge. That case
is pending.
As required by the new legislation, DPL and DP&L are reorganizing their
corporate and business structure to separate non-competitive (i.e., regulated)
and competitive businesses. DP&L will maintain its focus on its core electric
transmission and distribution business and DPL will operate its generation
business through a separate business unit. Reliability, efficiency and cost
control programs continue to contribute to DPL's expected earnings growth. DPL's
generation business unit, an industry leader in efficiency and availability, set
a new peak record in the summer of 1999 increasing its all-time peak high by 4%.
DPL continues its ongoing productivity and efficiency initiatives within its
business units including electric transmission and distribution, electric
generation, electric wholesale sales, gas distribution and retail gas and
electric energy services.
DPL Energy Inc., a DPL subsidiary with Federal Energy Regulatory Commission
permission to sell wholesale electric energy, has announced three phases of its
plans to expand peaking generation capacity. New peak electricity utilization
records were set throughout the Midwest in the summer of 1999. The three phases
represent an investment of $205 million, increasing peaking capacity by 20% or
635 megawatts.
DPL announced in December that it had reached an agreement with Indiana
Energy Inc. to sell its natural gas retail distribution business unit for
$425 million in cash. The sale will allow DPL to focus on growing the electric
business. The sale is expected to be completed by the second quarter of 2000,
subject to regulatory approval, and after-tax proceeds will be used for general
corporate purposes.
DPL maintains a portfolio of financial assets with a book value of
approximately $1.1 billion at December 31, 1999. The portfolio is made up of a
combination of equity and debt investments designed to provide the financial
flexibility, liquidity and stability to continue DPL's strong record of earnings
growth. The portfolio contributed $55 million to income in 1999.
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Based upon the above initiatives, DPL will seek to achieve long-term returns
that meet or exceed that of other industry participants. At the same time, DPL's
business environment is expected to change which may increase the volatility in
revenue and income streams.
As a complement to its business strategy, DPL has employed various financial
initiatives intended to increase DPL's financial and operating flexibility and
to further position DPL for the increasingly competitive utility and energy
market. In 1999, DPL repurchased 3.5 million common shares at a cost of
$61 million.
DPL intends to repurchase up to 25,000,000 common shares in this offer,
representing approximately 15.8% of its outstanding common shares as of
February 3, 2000. DPL currently intends to purchase an additional 6,600,000
shares after this offer is completed. The method, timing and financing of such
purchases have not yet been decided.
DPL is seeking the consent of the participating lenders in its revolving
credit facilities to amend such facilities' financial covenants in a manner
consistent with this offer.
Assuming DPL purchases 25,000,000 shares pursuant to the offer at the
maximum specified purchase price of $23.00 per share, DPL expects the maximum
aggregate cost, not including all fees and expenses applicable to the offer,
will be approximately $575 million. In addition, DPL expects to incur
approximately $30 million in fees and expenses related to this offer and the
financing thereof as described below. DPL intends to finance this offer from the
aggregate net proceeds of (i) the sale to affiliates of KKR, for an aggregate
purchase price of $550 million, of trust preferred securities issued by a trust
established by DPL, voting preferred shares of DPL with voting power equal to
4.9% of the outstanding voting power of DPL's securities and warrants to
purchase DPL common shares and (ii) the issuance by DPL of additional short- or
long-term debt securities in a public or private offering. In the event such
amounts are not available to DPL by the expiration date of this offer, DPL will
extend the offer period, seek alternative financing or terminate the offer. The
trust preferred securities to be sold to KKR will have an aggregate face amount
of $550 million, will be issued at an initial discounted aggregate price of
approximately $500 million, will have a maturity of 30 years (subject to
acceleration to six months after the exercise of the warrants) and will pay
distributions at a rate of 8.5% of the aggregate face amount per year. The
warrants will be for an aggregate of 31,600,000 DPL common shares, will have a
term of 12 years, will have an exercise price of $21.00 per share and will be
sold for an aggregate purchase price of $50 million. The voting preferred shares
will be sold for an aggregate purchase price of $68,000. The KKR investment is
subject to customary closing conditions, including KKR obtaining $230 million in
financing. The KKR investment was structured in this manner for a variety of
reasons, including DPL's and KKR's tax planning, avoiding potential regulation
of KKR and DPL under the Public Utility Holding Company Act of 1934 and
achieving the trust preferred security accounting shown in the pro forma
financial statements contained in this Offer to Purchase.
DPL intends to use the proceeds from the KKR investment, combined with up to
$425 million of new debt capital, to continue its planned generation strategy,
retire short-term debt and fund the repurchase of shares. These transactions are
designed to increase the financial leverage employed by DPL in its capital
structure in an effort to increase the earnings per share for DPL's
non-tendering shareholders if DPL can earn more on its capital than the interest
on the new debt. DPL expects to maintain a credit rating of at least BBB on its
debt and preferred securities. However, these ratings are subject to periodic
review by the rating agencies and may change from time to time.
This offer allows shareholders an opportunity to exit, subject to proration
in the offer, their investment in DPL on potentially more favorable terms than
would otherwise be available. The offer provides shareholders who are
considering a sale of all or a portion of their shares with the opportunity to:
- sell a portion of their shares while retaining a continuing equity
interest in DPL;
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- determine the price or prices, not in excess of $23.00 nor less than
$20.00 per share, at which they are willing to sell their shares and,
subject to the terms and conditions of the offer (including proration) and
if shares are tendered by their registered owner directly to the
Depositary, to sell shares for cash without the usual transaction costs
associated with open market sales; and
- for Odd Lot Holders who hold shares in their names and tender their shares
directly to the Depositary and whose shares are purchased pursuant to the
offer, avoid the payment of brokerage commissions and any applicable odd
lot discounts payable on a sale of their shares in a New York Stock
Exchange transaction.
Non-tendering shareholders will own a greater interest in a company with a
potentially stronger earnings per share growth rate. Shareholders who determine
not to accept the offer will realize a proportionate increase in their relative
ownership interest in DPL, and thus in DPL's future earnings and assets, subject
to DPL's right to issue additional shares and other equity securities in the
future. Shareholders may be able to sell non-tendered shares in the future on
the NYSE or otherwise, at a net price higher than the purchase price in the
offer. DPL can give no assurance, however, as to the price at which a
shareholder may be able to sell his or her shares in the future, which may be
higher or lower than the purchase price paid by DPL in the offer.
In considering the offer, DPL's Board of Directors took into account the
expected financial impact of the offer, including the company's increased
long-term obligations as a result of the offer and the resulting increased
interest expense. The DPL Board of Directors believes that DPL's financial
condition and outlook and current market conditions, including recent trading
prices of DPL's common shares, make this an attractive time to repurchase a
portion of its outstanding shares. In the view of DPL's Board of Directors, the
offer is an attractive use of DPL's financial resources and will result in a
more appropriate capital structure for DPL.
Accordingly, the offer is consistent with DPL's long-term corporate goal of
increasing shareholder value. After the offer is completed, DPL believes that
its anticipated cash flow from operations, access to credit facilities and
capital markets, and financial condition will, taken together, be adequate for
its needs for the foreseeable future. However, actual experience may differ
significantly from DPL's expectations. Future events, such as regulatory
developments, adverse effects on operations, or levels of capital or other
expenditures, could have the effect of reducing DPL's available cash or might
reduce or adversely affect the availability or cost of external financial
resources.
Other than as disclosed in this Offer to Purchase, DPL may in the future
purchase additional shares in the open market, in private transactions, through
tender offers or otherwise, subject to the approval of the Board of Directors.
Future purchases may be on the same terms or on terms which are more or less
favorable to shareholders than the terms of the offer. However, Rule 13e-4 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), prohibits
DPL and its affiliates from purchasing any shares, other than pursuant to the
offer, until at least ten business days after the Expiration Date. Any future
purchases by DPL will depend on many factors, including:
- the market price of the shares;
- the results of this offer;
- DPL's business and financial position; and
- general economic and market conditions.
Shares that DPL acquires in the offer will be restored to the status of
authorized but unissued shares or held in treasury and will be available for DPL
to issue without further shareholder action (except as required by applicable
law or stock exchange rules) for all purposes including, but not limited to, the
acquisition of other businesses, the raising of additional capital for use in
DPL's business and the satisfaction of obligations under existing or future
employee benefit plans. DPL has no current plans for the issuance of shares
repurchased pursuant to the offer.
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Upon the closing of KKR's investment in DPL, George Roberts and Scott
Stuart, partners of KKR, will join DPL's Board of Directors. KKR will have the
right to nominate one person for election to the Board of Directors so long as
it maintains a specified minimum investment in DPL securities.
At its February 1, 2000 meeting, DPL's Board of Directors made several
changes to DPL's executive and director compensation programs. In order to
further motivate its executives, align their interests with those of DPL's
shareholders and encourage them to continue over the longer term with DPL, the
Board adopted, subject to shareholder approval, a new Stock Option Plan which
will replace the Management Stock Incentive Program. The Stock Option Plan will
also replace the Directors' Deferred Stock Compensation Plan. The Stock Option
Plan permits options covering up to 8,000,000 shares to be granted. A three-year
block grant of options for 6,150,000 shares was made to the executive group at
an exercise price of $21.00 per share (which was above the February 1 closing
price for DPL's shares) with five-year vesting. Each non-employee director was
also granted a three-year block grant for 50,000 options. Stock incentive units
earned under the prior stock incentive program were fixed and the payment was
deferred until 2005. The change of control severance agreements of senior
executives were also amended to increase the trigger threshold for acquisitions
approved by the Board from 15% to 50% of DPL's shares.
Except as disclosed in this Offer to Purchase, DPL currently has no plans,
proposals or negotiations underway that relate to or would result in:
- any extraordinary transaction, such as a merger, reorganization or
liquidation, involving DPL or any of its subsidiaries, which is material
to DPL and its subsidiaries, taken as a whole;
- any purchase, sale or transfer of a material amount of assets of DPL or
any of its subsidiaries, taken as a whole;
- any material change in the dividend rate or policy, or indebtedness or
capitalization of DPL;
- any change in the present board of directors or management of DPL,
including, but not limited to, any plans or proposals to change the number
or the term of directors or to fill any existing vacancies on the board or
to change any material term of the employment contract of any executive
officer;
- any other material change in DPL's corporate structure or business;
- any class of equity securities of DPL being delisted from a national
securities exchange;
- any class of equity securities of DPL becoming eligible for termination of
registration under section 12(g)(4) of the Exchange Act;
- the suspension of DPL's obligation to file reports under Section 15(d) of
the Exchange Act;
- the acquisition by any person of additional securities of DPL, or the
disposition of securities of DPL; or
- any changes in DPL's charter, bylaws or other governing instruments or
other actions that could impede the acquisition of control of DPL.
The Board of Directors of DPL has authorized the offer. However, neither DPL
nor its Board of Directors makes any recommendation to shareholders as to
whether to tender or refrain from tendering their shares or as to the purchase
price at which shareholders should tender their shares, and neither has
authorized any person to make any recommendation. Shareholders are urged to
evaluate carefully all information in the offer, consult with their own
investment and tax advisors and make their own decision whether to tender and,
if so, how many shares to tender and the price or prices at which to tender
them. DPL has been advised that none of its directors or executive officers
intends to tender any shares pursuant to the offer. See Section 11.
3. PROCEDURES FOR TENDERING SHARES.
PROPER TENDER OF SHARES. For shares to be tendered properly pursuant to the
offer:
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(1) the certificates for the shares, or confirmation of receipt of the
shares pursuant to the procedure for book-entry transfer set forth
below, together with a properly completed and duly executed Letter of
Transmittal, or a manually signed facsimile of the Letter of
Transmittal, including any required signature guarantees, or an Agent's
Message (as defined below) in the case of a book-entry transfer, and any
other documents required by the Letter of Transmittal, must be received
before 5:00 p.m., New York City time, on the Expiration Date by the
Depositary at its address set forth on the back cover of this Offer to
Purchase; or
(2) the tendering shareholder must comply with the guaranteed delivery
procedure set forth below.
In accordance with Instruction 5 of the Letter of Transmittal, each
shareholder desiring to tender shares pursuant to the offer must either
(1) check the box in the section of the Letter of Transmittal captioned "Shares
Tendered at Price Determined Pursuant to the Offer" or (2) check one of the
boxes in the section of the Letter of Transmittal captioned "Price (in dollars)
per Share at Which Shares Are Being Tendered" indicating the price at which
shares are being tendered. A tender of shares will be proper if and only if, one
of these boxes is checked on the Letter of Transmittal.
If you wish to maximize the chance that your shares will be purchased, you
should check the box in the section on the Letter of Transmittal captioned
"Shares Tendered at Price Determined Pursuant to the Offer." Note that this
election could result in your shares being purchased at the minimum price of
$20.00 per share.
If you wish to indicate a specific price (in multiples of $0.125) at which
your shares are being tendered, you must check a box under the section captioned
"Price (in dollars) per Share at Which Shares Are Being Tendered." Note that
this election could result in no shares being purchased if you check a box other
than the box representing the lowest price. A shareholder who wishes to tender
shares at more than one price must complete separate letters of transmittal for
each price at which shares are being tendered. The same shares cannot be
tendered (unless previously properly withdrawn in accordance with the terms of
the offer) at more than one price.
In addition, Odd Lot Holders who tender all shares must complete the section
captioned "Odd Lots" in the Letter of Transmittal and, if applicable, in the
Notice of Guaranteed Delivery, to qualify for the preferential treatment
available to Odd Lot Holders as set forth in Section 1.
Shareholders who hold shares through brokers or banks are urged to consult
the brokers or banks to determine whether transaction costs may apply if
shareholders tender shares through the brokers or banks and not directly to the
Depositary.
Participants in The Dayton Power and Light Company Employee Savings Plan and
The Dayton Power and Light Company Savings Plan for Collective Bargaining
Employees may instruct the trustee of those plans, T. Rowe Price Trust Company,
to tender some or all of the shares held for the participant's account by
following the instructions in the separate "Letter to Participants in the DPL
Savings Plans" and returning it to the trustee's agent in accordance with those
instructions. If the trustee has not received a participant's instructions at
least five business days prior to the Expiration Date, the trustee will not
tender any shares held on behalf of the participant in the plan. Proceeds
received from any tender of shares attributed to one of the DPL Savings Plans
will be initially invested under the terms of the plans for the participant in a
short-term government securities fund, and subsequently may be transferred by
the participant to other investment funds as permitted by the plan.
Participants in the DPL Inc. Employee Stock Ownership Plan who wish to
tender some or all of the shares allocated to their accounts must follow the
instructions in the "Letter to Participants in the DPL Inc. Employee Stock
Ownership Plan" furnished separately and return it to the plan trustee in
accordance with those instructions. The instructions must be received by the
trustee's agent no later than five business days prior to the Expiration Date,
or no shares attributed to the participant's account will be tendered.
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On February 1, 2000, DPL's Board of Directors declared a dividend of $0.235
per share payable on March 1, 2000. Participants in DPL's dividend reinvestment
program may tender shares received in respect of such dividend in this offer.
SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is
required if:
(1) the Letter of Transmittal is signed by the registered holder of the
shares (which term, for purposes of this Section 3, will include any
participant in The Depository Trust Company (the "Book-Entry Transfer
Facility") whose name appears on a security position listing as the
owner of the shares) tendered and the holder has not completed either
the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" on the Letter of Transmittal; or
(2) shares are tendered for the account of a bank, broker, dealer, credit
union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank,
broker, dealer, credit union, savings association or other entity which
is an "eligible guarantor institution," as the term is defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each
of the foregoing constituting an "Eligible Institution"). See
Instruction 1 of the Letter of Transmittal.
If a certificate for shares is registered in the name of a person other than
the person executing a Letter of Transmittal, or if payment is to be made, or
shares not purchased or tendered are to be issued, to a person other than the
registered holder, then the certificate must be endorsed or accompanied by an
appropriate stock power, in either case, signed exactly as the name of the
registered holder appears on the certificate, with the signature guaranteed by
an Eligible Institution.
In all cases, payment for shares tendered and accepted for payment pursuant
to the offer will be made only after timely receipt by the Depositary of
certificates for the shares (or a timely confirmation of the book-entry transfer
of the shares into the Depositary's account at the Book-Entry Transfer Facility
as described above), a properly completed and duly executed Letter of
Transmittal, or a manually signed facsimile of the Letter of Transmittal, and
any other documents required by the Letter of Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION
AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, THEN REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect
to the shares for purposes of the offer at the Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the shares by causing the
Book-Entry Transfer Facility to transfer shares into the Depositary's account in
accordance with the Book-Entry Transfer Facility's procedures for transfer.
Although delivery of shares may be effected through a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, either (1) a
properly completed and duly executed Letter of Transmittal, or a manually signed
facsimile of the Letter of Transmittal, with any required signature guarantees,
or an Agent's Message, and any other required documents 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 before the Expiration Date, or (2) the
guaranteed delivery procedure described below must be followed. DELIVERY OF THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry
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Transfer Facility has received an express acknowledgement from the participant
in the Book-Entry Transfer Facility tendering shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that DPL may enforce such agreement against the participant.
UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING. Under the United
States federal income tax backup withholding rules, unless an exemption applies
under the applicable law and regulations, 31% of the gross proceeds payable to a
shareholder or other payee pursuant to the offer must be withheld and remitted
to the United States Internal Revenue Service ("IRS"), unless the shareholder or
other payee provides his or her taxpayer identification number (employer
identification number or social security number) to the Depositary (as payor)
and certifies under penalties of perjury that the number is correct. Therefore,
each tendering shareholder should complete and sign the Substitute Form W-9
included as part of the Letter of Transmittal so as to provide the information
and certification necessary to avoid backup withholding unless the shareholder
otherwise establishes to the satisfaction of the Depositary that the shareholder
is not subject to backup withholding. If the Depositary is not provided with the
correct taxpayer identification number, the United States Holder (as defined in
Section 14) may be subject to penalties imposed by the IRS. If withholding
results in an overpayment of taxes, a refund may be obtained. Certain "exempt
recipients" (including, among others, all corporations and certain Non-United
States Holders (as defined in Section 14)) are not subject to these backup
withholding and information reporting requirements. In order for a Non-United
States Holder to qualify as an exempt recipient, that shareholder must submit an
IRS Form W-8 or a Substitute Form W- 8, signed under penalties of perjury,
attesting to that shareholder's exempt status. These statements can be obtained
from the Depositary. See Instruction 14 of the Letter of Transmittal.
TO PREVENT UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31%
OF THE GROSS PAYMENTS MADE TO SHAREHOLDERS FOR SHARES PURCHASED PURSUANT TO THE
OFFER, EACH SHAREHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM THE
BACKUP WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE SHAREHOLDER'S CORRECT
TAXPAYER IDENTIFICATION NUMBER AND PROVIDE OTHER INFORMATION BY COMPLETING THE
SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL.
WITHHOLDING FOR NON-UNITED STATES HOLDERS. Even if a Non-United States
Holder has provided the required certification to avoid backup withholding, the
Depositary will withhold United States federal income taxes equal to 30% of the
gross payments payable to a Non-United States Holder or his agent unless the
Depositary determines that a reduced rate of withholding is available pursuant
to a tax treaty or that an exemption from withholding is applicable because the
gross proceeds are effectively connected with the conduct of a trade or business
within the United States. To obtain a reduced rate of withholding pursuant to a
tax treaty, a Non-United States Holder must deliver to the Depositary before the
payment a properly completed and executed IRS Form W-8BEN (or successor form).
To obtain an exemption from withholding on the grounds that the gross proceeds
paid pursuant to the offer are effectively connected with the conduct of a trade
or business within the United States, a Non-United States Holder must deliver to
the Depositary a properly completed and executed IRS Form W-8ECI (or successor
form). The Depositary will determine a shareholder's status as a Non-United
States Holder and eligibility for a reduced rate of, or exemption from,
withholding by reference to any outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(e.g., IRS Form W-8BEN or IRS Form W-8ECI) unless facts and circumstances
indicate that reliance is not warranted. A Non-United States Holder may be
eligible to obtain a refund of all or a portion of any tax withheld if the
Non-United States Holder meets those tests described in Section 14 that would
characterize the exchange as a sale (as opposed to a dividend) or is otherwise
able to establish that no tax or a reduced amount of tax is due.
NON-UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING
THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING, INCLUDING
ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR EXEMPTION, AND THE REFUND
PROCEDURE.
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GUARANTEED DELIVERY. If a shareholder desires to tender shares pursuant to
the offer and the shareholder's share certificates are not immediately available
or cannot be delivered to the Depositary before the Expiration Date (or the
procedure for book-entry transfer cannot be completed on a timely basis), or if
time will not permit all required documents to reach the Depositary before the
Expiration Date, the shares still may be tendered, if all of the following
conditions are satisfied:
(1) the tender is made by or through an Eligible Institution;
(2) the Depositary receives by hand, mail, overnight courier, telegram or
facsimile transmission, on or before the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially
in the form DPL has provided with this Offer to Purchase, including
(where required) a signature guarantee by an Eligible Institution in the
form set forth in the Notice of Guaranteed Delivery; and
(3) the certificates for all tendered shares, in proper form for transfer
(or confirmation of book-entry transfer of the shares into the
Depositary's account at the Book-Entry Transfer Facility), together with
a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile of the Letter of Transmittal, or an Agent's
Message in the case of a book-entry transfer, and any required signature
guarantees and other documents required by the Letter of Transmittal,
are received by the Depositary within three NYSE trading days after the
date of receipt by the Depositary of the Notice of Guaranteed Delivery.
RETURN OF UNPURCHASED SHARES. If any tendered shares are not purchased, or
if less than all shares evidenced by a shareholder's certificates are tendered,
certificates for unpurchased shares will be returned as promptly as practicable
after the expiration or termination of the offer or, in the case of shares
tendered by book-entry transfer at the Book-Entry Transfer Facility, the shares
will be credited to the appropriate account maintained by the tendering
shareholder at the Book-Entry Transfer Facility, in each case without expense to
the shareholder.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of shares
to be accepted, the purchase price to be paid for shares to be accepted and the
validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of shares will be determined by DPL, in its sole
discretion, and its determination will be final and binding on all parties. DPL
reserves the absolute right to reject any or all tenders of any shares that it
determines are not in proper form or the acceptance for payment of or payment
for which may, in the opinion of DPL's counsel, be unlawful. DPL also reserves
the absolute right to waive any of the conditions of the offer or any defect or
irregularity in any tender with respect to any particular shares or any
particular shareholder, and DPL's interpretation of the terms of the offer will
be final and binding on all parties. No tender of shares will be deemed to have
been properly made until all defects or irregularities have been cured by the
tendering shareholder or waived by DPL. None of DPL, the Dealer Manager, the
Depositary, the Information Agent or any other person will be obligated to give
notice of any defects or irregularities in tenders, nor will any of them incur
any liability for failure to give any notice.
SAVINGS PLANS. Participants in The Dayton Power and Light Company Employee
Savings Plan or The Dayton Power and Light Company Savings Plan for Collective
Bargaining Employees may instruct the trustee of those plans, T. Rowe Price
Trust Company, to tender some or all of the shares held for a participant's
account by following the instructions in the separate "Letter to Participants in
the DPL Savings Plans" furnished separately and returning it to the trustee's
agent in accordance with those instructions. All documents furnished to
shareholders generally in connection with the offer will be made available to
participants whose individual accounts are credited with shares. Participants in
the DPL Savings Plans cannot use the Letter of Transmittal to direct the tender
of shares, but must use the separate instruction letter sent to them. The DPL
Savings Plans are prohibited from selling shares to DPL for a price that is less
than the prevailing market price. Accordingly, if a participant in the DPL
Savings Plans elects to tender shares at a price that is
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less than the prevailing market price of DPL's common shares at the expiration
of the offer, the tender price elected by the participant will be deemed to have
been increased to the closest tender price that is not less than the closing
price on the New York Stock Exchange at the Expiration Date.
Delivery of the Letter of Transmittal by a participant does not constitute
proper tender of his or her DPL Savings Plan shares. Proper tender can only be
made by the trustee who is the record owner of the shares. Please note that the
deadline for submitting instruction letters to the trustee's agent is earlier
than the Expiration Date. If the trustee has not received a participant's
instructions at least five business days prior to the Expiration Date, the
trustee will not tender any shares held on behalf of the participant in the
plan.
The proceeds received by the DPL Savings Plan trustee from any shares
tendered by a DPL Savings Plan participant will be invested following the tender
offer initially in a short-term government securities fund. After any
successfully tendered shares are processed and the proceeds are credited to a
participant's DPL Savings Plan account, participants may contact T. Rowe Price
Trust Company by the normal manner of communication (e.g., voice response or
on-line access) to exchange any proceeds held in the short-term government
securities fund for any other investment option available under the terms of the
DPL Savings Plan. Participants in the DPL Savings Plans are urged to read the
separate instruction letter and related materials carefully.
DPL INC. EMPLOYEE STOCK OWNERSHIP PLAN. Participants in the DPL Inc.
Employee Stock Ownership Plan may instruct the trustee of that Plan, Bank One
Dayton, N.A., to tender some or all of the shares allocated to a participant's
account by following the instructions in the separate "Letter to Participants in
the DPL Inc., Employee Stock Ownership Plan" furnished separately and returning
it to the trustee's agent in accordance with those instructions. All documents
furnished to shareholders generally in connection with the offer will be made
available to participants whose individual accounts are credited with shares.
Participants in the ESOP cannot use the Letter of Transmittal to direct the
tender of shares, but must use the separate instruction letter sent to them. The
ESOP is prohibited from selling shares to DPL for a price that is less than the
prevailing market price. Accordingly, if a participant in the ESOP elects to
tender shares at a price that is lower than the prevailing market price of DPL's
common shares at the expiration of the offer, the tender price elected by the
participant will be deemed to have been increased to the closest tender price
that is not less than the closing price on the New York Stock Exchange at the
Expiration Date.
Delivery of a Letter of Transmittal by a participant does not constitute
proper tender of his or her ESOP shares. Proper tender can only be made by the
trustee who is the record owner of the shares. Please note that the deadline for
submitting instruction letters to the trustee's agent is earlier than the
Expiration Date. If the trustee has not received a participant's instructions at
least five business days prior to the Expiration Date, the trustee will not
tender any shares held on behalf of the participant in the ESOP.
Under the terms of the ESOP funds contributed by DPL or its subsidiaries and
earnings on those funds must be invested in DPL common shares. Thus, the
proceeds received by the ESOP trustee from DPL common shares tendered by ESOP
participants will be treated differently under the terms of the ESOP than the
proceeds received by the Savings Plans trustee from DPL common shares tendered
by Savings Plan participants. The proceeds received by the ESOP trustee from any
shares tendered by an ESOP participant will be reinvested under the terms of the
ESOP in DPL common shares following the tender offer. Participants should be
aware that the proceeds reinvested under the terms of the ESOP in DPL common
shares will be reinvested at the prevailing market price at the time of
reinvestment, which may be higher or lower than the purchase price paid by DPL
for shares in the tender offer. Participants in the ESOP are urged to read the
separate instruction letter and related materials carefully.
TENDERING SHAREHOLDER'S REPRESENTATION AND WARRANTY; DPL'S ACCEPTANCE
CONSTITUTES AN AGREEMENT. A tender of shares pursuant to any of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the offer, as well as the tendering shareholder's
representation and warranty to DPL that (1) the shareholder has a "net long
position," within the meaning of Rule 14e-4 promulgated by the SEC under the
Exchange Act, in the shares or equivalent securities at least equal to the
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shares being tendered, and (2) the tender of shares complies with Rule 14e-4. It
is a violation of Rule 14e-4 for a person, directly or indirectly, to tender
shares for that person's own account unless, at the time of tender and at the
end of the proration period or period during which shares are accepted by lot
(including any extensions thereof), the person so tendering (1) has a net long
position equal to or greater than the amount of (a) shares tendered or
(b) other securities convertible into or exchangeable or exercisable for the
shares tendered and will acquire the shares for tender by conversion, exchange
or exercise and (2) will deliver or cause to be delivered the shares in
accordance with the terms of the offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. DPL's acceptance for payment of shares tendered pursuant to the
offer will constitute a binding agreement between the tendering shareholder and
DPL upon the terms and conditions of the offer.
LOST OR DESTROYED CERTIFICATES. Shareholders whose certificates for part or
all of their shares have been lost, stolen, misplaced or destroyed may contact
the Depositary at (800) 736-3001 for instructions as to the documents which will
be required to be submitted together with the Letter of Transmittal in order to
receive certificate(s) representing the shares. Shareholders are requested to
contact the Depositary immediately in order to permit timely processing of this
documentation.
Certificates for shares, together with a properly completed Letter of
Transmittal and any other documents required by the Letter of Transmittal, must
be delivered to the Depositary and not to DPL. Any documents delivered to DPL
will not be forwarded to the Depositary and will not be deemed to be properly
tendered.
4. WITHDRAWAL RIGHTS.
Shares tendered pursuant to the offer may be withdrawn at any time before
the Expiration Date and, unless already accepted for payment by DPL pursuant to
the offer, may also be withdrawn at any time after 12:00 Midnight, New York City
time, on Friday, March 31, 2000. Except as otherwise provided in this
Section 4, tenders of shares pursuant to the offer are irrevocable.
For a withdrawal to be effective, a notice of withdrawal must be in written,
telegraphic, telex or facsimile transmission form and must be received in a
timely manner by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase. Any notice of withdrawal must specify the name
of the tendering shareholder, the number of shares to be withdrawn and the name
of the registered holder of the shares. If the certificates for shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
before the release of the certificates, the tendering shareholder must also
submit the serial numbers shown on the particular certificates for shares to be
withdrawn and the signature(s) on the notice of withdrawal must be guaranteed by
an Eligible Institution (except in the case of shares tendered for the account
of an Eligible Institution). If shares have been tendered pursuant to the
procedure for book-entry transfer described in Section 3, the notice of
withdrawal also must specify the name and the number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn shares and must
otherwise comply with the Book-Entry Transfer Facility's procedures. All
questions as to the form and validity, including the time of receipt, of any
notice of withdrawal will be determined by DPL, in its sole discretion, which
determination will be final and binding on all parties. None of DPL, the Dealer
Manager, the Depositary, the Information Agent or any other person will be
obligated to give notice of any defects or irregularities in any notice of
withdrawal, nor will any of them incur liability for failure to give any notice.
Participants in either of the DPL Savings Plans or the ESOP who wish to
withdraw their shares must follow the instructions found in the separate"Letter
to Participants in the DPL Savings Plans" or the "Letter to Participant's in the
DPL Inc. Employee Stock Ownership Plan" sent to them separately.
Withdrawals may not be rescinded, and any shares properly withdrawn will be
deemed not properly tendered for purposes of the offer. However, withdrawn
shares may be re-tendered before the Expiration Date by again following one of
the procedures described in Section 3.
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If DPL extends the offer, is delayed in its purchase of shares or is unable
to purchase shares pursuant to the offer for any reason, then, without prejudice
to DPL's rights under the offer, the Depositary may, subject to applicable law,
retain tendered shares on behalf of DPL, and the shares may not be withdrawn
except to the extent tendering shareholders are entitled to withdrawal rights as
described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
As promptly as practicable following the Expiration Date, DPL (1) will
determine a single per share purchase price it will pay for the shares properly
tendered and not properly withdrawn before the Expiration Date, taking into
account the number of shares tendered and the prices specified by tendering
shareholders, and (2) will accept for payment and pay for (and thereby purchase)
up to 25,000,000 shares properly tendered at prices at or below the purchase
price and not properly withdrawn before the Expiration Date. For purposes of the
offer, DPL will be deemed to have accepted for payment (and therefore
purchased), subject to the "odd lot" priority, proration and conditional tender
provisions of this offer, shares that are properly tendered at or below the
selected purchase price and not properly withdrawn only when, as and if it gives
oral or written notice to the Depositary of its acceptance of the shares for
payment pursuant to the offer.
DPL will accept for payment and pay the per share purchase price for all of
the shares accepted for payment pursuant to the offer as soon as practicable
after the Expiration Date. In all cases, payment for shares tendered and
accepted for payment pursuant to the offer will be made promptly, subject to
possible delay in the event of proration, but only after timely receipt by the
Depositary of certificates for shares, or of a timely Book-Entry Confirmation of
shares into the Depositary's account at the Book-Entry Transfer Facility, and a
properly completed and duly executed Letter of Transmittal, or manually signed
facsimile of the Letter of Transmittal, and any other required documents.
DPL will pay for shares purchased pursuant to the offer by depositing the
aggregate purchase price for the shares with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from DPL
and transmitting payment to the tendering shareholders.
In the event of proration, DPL will determine the proration factor and pay
for those tendered shares accepted for payment as soon as practicable after the
Expiration Date. However, DPL does not expect to be able to announce the final
results of any proration and commence payment for shares purchased until
approximately seven business days after the Expiration Date. Certificates for
all shares tendered and not purchased, including all shares tendered at prices
in excess of the purchase price and shares not purchased due to proration or
conditional tenders, will be returned or, in the case of shares tendered by
book-entry transfer, will be credited to the account maintained with the
Book-Entry Transfer Facility by the participant who delivered the shares, to the
tendering shareholder at DPL's expense as promptly as practicable after the
Expiration Date or termination of the offer without expense to the tendering
shareholders. Under no circumstances will DPL pay interest on the purchase
price, including but not limited to, by reason of any delay in making payment.
In addition, if certain events occur, DPL may not be obligated to purchase
shares pursuant to the offer. See Section 7.
DPL will pay all stock transfer taxes, if any, payable on the transfer to it
of shares purchased pursuant to the offer. If, however, payment of the purchase
price is to be made to, or (in the circumstances permitted by the offer) if
unpurchased shares are to be registered in the name of, any person other than
the registered holder, or if tendered certificates are registered in the name of
any person other than the person signing the Letter of Transmittal, the amount
of all stock transfer taxes, if any (whether imposed on the registered holder or
the other person), payable on account of the transfer to the person will be
deducted from the purchase price unless satisfactory evidence of the payment of
the stock transfer taxes, or exemption from payment of the stock transfer taxes,
is submitted. See Instruction 7 of the Letter of Transmittal.
Any tendering shareholder or other payee who fails to complete fully, sign
and return to the Depositary the Substitute Form W-9 included with the Letter of
Transmittal may be subject to required United States federal
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income tax backup withholding of 31% of the gross proceeds paid to the
shareholder or other payee pursuant to the offer. See Section 3 regarding United
States federal income tax consequences for Non-United States shareholders.
6. CONDITIONAL TENDER OF SHARES.
Under certain circumstances and subject to the exceptions for Odd Lot
Holders described in Section 1, DPL may prorate the number of shares purchased
pursuant to the offer. As discussed in Section 14, the number of shares to be
purchased from a particular shareholder may affect the tax treatment of the
purchase to the shareholder and the shareholder's decision whether to tender.
Accordingly, a shareholder may tender shares subject to the condition that a
specified minimum number of the shareholder's shares tendered pursuant to a
Letter of Transmittal or Notice of Guaranteed Delivery must be purchased if any
shares tendered are purchased. Any shareholder desiring to make a conditional
tender must so indicate in the box captioned "Conditional Tender" in the Letter
of Transmittal or, if applicable, the Notice of Guaranteed Delivery. Each
shareholder is urged to consult with his or her own tax advisor.
Any tendering shareholder wishing to make a conditional tender must
calculate and appropriately indicate the minimum number of shares that must be
purchased if any are purchased. If the effect of accepting tenders on a pro rata
basis would be to reduce the number of shares to be purchased from any
shareholder (tendered pursuant to a Letter of Transmittal or Notice of
Guaranteed Delivery) below the minimum number specified, the tender will
automatically be regarded as withdrawn (except as provided in the next
paragraph). All shares tendered by a shareholder subject to a conditional tender
pursuant to the Letter of Transmittal or Notice of Guaranteed Delivery and
regarded as withdrawn as a result of proration will be returned as promptly as
practicable after the Expiration Date.
If conditional tenders would otherwise be regarded as withdrawn and would
cause the total number of shares to be purchased to fall below 25,000,000 then,
to the extent feasible, DPL will select enough of the conditional tenders that
would otherwise have been withdrawn to permit DPL to purchase 25,000,000 shares.
In selecting among the conditional tenders, DPL will select by lot and will
limit its purchase in each case to the designated minimum of shares to be
purchased.
7. CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the offer, DPL will not be required
to accept for payment, purchase or pay for any shares tendered, and may
terminate or amend the offer or may postpone the acceptance for payment of, or
the purchase of and the payment for shares tendered, subject to the rules under
the Exchange Act, if at any time on or after February 4, 2000 and before the
Expiration Date any of the following events have occurred (or have been
determined by DPL to have occurred) that, in DPL's reasonable judgment and
regardless of the circumstances giving rise to the event or events (including
any action or omission to act by DPL), makes it inadvisable to proceed with the
offer or with acceptance for payment:
- there has been threatened, instituted or pending any action, suit or
proceeding by any government or governmental, regulatory or administrative
agency, authority or tribunal or by any other person, domestic, foreign or
supranational, before any court, authority, agency or other tribunal that
directly or indirectly:
(1) challenges or seeks to make illegal, or to delay or otherwise directly
or indirectly to restrain, prohibit or otherwise affect the making of
the offer, the acquisition of some or all of the shares pursuant to the
offer or otherwise relates in any manner to the offer; or
(2) in DPL's reasonable judgment, could materially and adversely affect the
business, condition (financial or otherwise), income, operations or
prospects of DPL and its subsidiaries, taken as a whole, or otherwise
materially impair in any way the contemplated future conduct of the
business of DPL or any of its subsidiaries or materially impair the
contemplated benefits of the offer to DPL;
16
<PAGE>
- there has been any action threatened, pending or taken, including any
settlement, or any approval withheld, or any statute, rule, regulation,
judgment, order or injunction threatened, invoked, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the offer or DPL or any of its subsidiaries, including any
settlement, by any court, government or governmental, regulatory or
administrative authority, agency or tribunal domestic, foreign or
supranational, that, in DPL's reasonable judgment, could directly or
indirectly:
(1) make the acceptance for payment of, or payment for, some or all of the
shares illegal or otherwise restrict or prohibit consummation of the
offer;
(2) delay or restrict the ability of DPL, or render DPL unable, to accept
for payment or pay for some or all of the shares;
(3) materially impair the contemplated benefits of the offer to DPL; or
(4) materially and adversely affect the business, condition (financial or
otherwise), income, operations or prospects of DPL and its subsidiaries,
taken as a whole, or otherwise materially impair in any way the
contemplated future conduct of the business of DPL or any of its
subsidiaries;
- there has occurred any of the following:
(1) any general suspension of trading in, or limitation on prices for,
securities on any United States national securities exchange or in the
over-the-counter market;
(2) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States, whether or not mandatory;
(3) the commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States;
(4) any limitation, whether or not mandatory, by any governmental,
regulatory or administrative agency or authority on, or any event that,
in DPL's reasonable judgment, could materially affect, the extension of
credit by banks or other lending institutions in the United States;
(5) any significant decrease in the market price of the shares or in the
market prices of equity securities generally in the United States, any
significant increase in the interest rate, distribution rate or other
significant change in the terms for debt securities offerings in the
United States, or any changes in the general political, market, economic
or financial conditions in the United States or abroad that could have,
in the reasonable judgment of DPL, a material adverse effect on the
business, condition (financial or otherwise), income, operations or
prospects of DPL and its subsidiaries, taken as a whole, or on the
trading in DPL common shares, or on the proposed financing of the offer;
(6) in the case of any of the foregoing existing at the time of the
commencement of the offer, a material acceleration or worsening thereof;
or
(7) any decline in the Dow Jones Industrial Average or the Standard and
Poor's 500 Composite Index by an amount in excess of 10% measured from
the close of business on February 4, 2000;
- DPL concludes in its reasonable judgment that it is or will be unable
prior to the Expiration Date to obtain approximately $605 million of
long-term financing on terms and conditions satisfactory to DPL;
- a tender or exchange offer for any or all of the shares (other than this
offer), or any merger, acquisition proposal, business combination or other
similar transaction with or involving DPL or any subsidiary, has been
proposed, announced or made by any person or has been publicly disclosed;
17
<PAGE>
- DPL learns that:
(1) any entity, "group" (as that term is used in Section 13(d)(3) of the
Exchange Act) or person has acquired or proposes to acquire beneficial
ownership of more than 5% of the outstanding shares, whether through the
acquisition of stock, the formation of a group, the grant of any option
or right, or otherwise (other than as disclosed in a Schedule 13D or
Schedule 13G filed with the SEC on or before February 3, 2000 and other
than the investment by KKR described herein); or
(2) any entity, group or person who has filed a Schedule 13D or
Schedule 13G with the SEC on or before February 3, 2000 has acquired or
proposes to acquire, whether through the acquisition of stock, the
formation of a group, the grant of any option or right, or otherwise,
beneficial ownership of an additional 2% or more of the outstanding
shares;
- any person, entity or group has filed a Notification and Report Form under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
reflecting an intent to acquire DPL or any of its common shares, or has
made a public announcement reflecting an intent to acquire DPL or any of
its subsidiaries or any of their respective assets or securities other
than in connection with a transaction authorized by the Board of Directors
of DPL (other than KKR in connection with its investment described
herein);
- any change or changes have occurred or are threatened in the business,
condition (financial or otherwise), assets, income, operations, prospects
or share ownership of DPL or its subsidiaries that, in DPL's reasonable
judgment, is or may be material to DPL or its subsidiaries; or
- DPL determines that the consummation of the offer and the purchase of the
shares may cause its common shares to be delisted from the NYSE or to be
eligible for deregistration under the Exchange Act.
The conditions referred to above are for the sole benefit of DPL and may be
asserted by DPL regardless of the circumstances, including any action or
omission to act by DPL, giving rise to any condition, and may be waived by DPL,
in whole or in part, at any time and from time to time in its reasonable
discretion. DPL's failure at any time to exercise any of the foregoing rights
will not be deemed a waiver of any right, and each such right will be deemed an
ongoing right that may be asserted at any time and from time to time. In certain
circumstances, if DPL waives any of the conditions described above, it may be
required to extend the Expiration Date. Any determination by DPL concerning the
events described above will be final and binding on all parties.
18
<PAGE>
8. PRICE RANGE OF SHARES; DIVIDENDS.
DPL common shares are listed for trading on the New York Stock Exchange
under the symbol "DPL." The following table sets forth, for the fiscal quarters
indicated, the high and low sales prices per share as reported on the NYSE
Composite Tape and the cash dividends paid per share in each fiscal quarter:
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------------- ------------- ---------
<S> <C> <C> <C>
1998
Second quarter.............................................. $ 19 7/16 $ 16 15/16 $0.235
Third quarter............................................... 19 5/8 16 15/16 0.235
Fourth quarter.............................................. 21 5/8 18 11/16 0.235
1999
First quarter............................................... 21 11/16 16 1/2 0.235
Second quarter.............................................. 19 7/8 16 3/8 0.235
Third quarter............................................... 19 5/8 16 15/16 0.235
Fourth quarter.............................................. 20 5/16 16 5/8 0.235
2000
First quarter (through February 3, 2000).................... 21 15/16 16 5/8 0.235
</TABLE>
On February 1, 2000, the last full trading day before the announcement of
the offer, the last reported sale price of the shares as reported on the NYSE
Composite Tape was $19 1/16. On February 3, 2000 the last reported sale price
was $21 11/16. DPL URGES SHAREHOLDERS TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE SHARES.
SHAREHOLDER RIGHTS AGREEMENT. Holders of common shares have a contingent
right to purchase four-ninths of one preferred share purchase (a "Right") for
each DPL common share held by them. Each Right, evidenced by and traded with the
common shares, when it becomes exercisable, entitles the registered holder to
purchase from DPL one one-hundredth of a Preferred Share, Series A, no par
value, at an exercise price of $66 per one one-hundredth of a share (the
"Purchase Price").
The Rights will separate from the common shares and become exercisable
following the earlier to occur of (i) ten days following the date of public
disclosure that a person or group (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the outstanding common shares or
(ii) ten business days following the commencement of a tender offer or exchange
offer by a person other than DPL to acquire beneficial ownership of 15% or more
of the outstanding common shares (the earlier of such dates being called the
"Distribution Date").
In the event a person becomes an Acquiring Person, the Rights would entitle
each holder of a Right to purchase at the Purchase Price, that number of common
shares having a market value equal to two times the Purchase Price. In the event
that, following the acquisition of 15% of the common shares, DPL is acquired in
a merger or other business combination or more than 50% of its consolidated
assets, earning power or cash flow is sold or otherwise transferred or disposed
of, the Rights would entitle each holder of a Right, except for Rights held by
an Acquiring Person, to purchase, at the Purchase Price, that number of common
shares of the acquiring company having a market value of two times the Purchase
Price. DPL is entitled to redeem or amend the Rights, subject to certain
conditions, prior to the Distribution Date. In connection with KKR's investment
described herein, the Shareholder Rights Agreement was amended to permit such
investment and to allow KKR to increase its investment up to 25% of the
outstanding common shares.
The Rights will expire on December 13, 2001 unless earlier redeemed or
exchanged by DPL.
The foregoing description of the preferred share purchase rights is
qualified in its entirety by reference to the Shareholder Rights Agreement, a
copy of which has been filed as an exhibit to a Form 8-A filed by DPL on
December 4, 1991. This exhibit may be obtained from the SEC in the manner
provided in Section 10.
19
<PAGE>
9. SOURCE AND AMOUNT OF FUNDS.
Assuming DPL purchases 25,000,000 shares pursuant to the offer at the
maximum specified purchase price of $23.00 per share, DPL expects the maximum
aggregate cost, not including all fees and expenses applicable to the offer,
will be approximately $575 million. In addition, DPL expects to incur
approximately $30 million in fees and expenses related to this offer and the
financing thereof as described below. DPL intends to finance this offer from the
aggregate net proceeds of (i) the sale to affiliates of KKR, for an aggregate
purchase price of $550 million, of trust preferred securities issued by a trust
established by DPL, voting preferred shares of DPL with voting power equal to
4.9% of the outstanding voting power of DPL's securities and warrants to
purchase DPL common shares and (ii) the issuance by DPL of additional short-or
long-term securities in a public or private offering. In the event such amounts
are not available to DPL by the expiration date of this offer, DPL will extend
the offer period, seek alternative financing or terminate the offer. The trust
preferred securities to be sold to KKR will have an aggregate face amount of
$550 million, will be issued at an initial discounted aggregate price of
$500 million, will have a maturity of 30 years (subject to acceleration to six
months after the exercise of the warrants) and will pay distributions at a rate
of 8.5% of the aggregate face amount per year. The warrants will be for an
aggregate of 31,600,000 DPL common shares, will have a term of 12 years, will
have an exercise price of $21.00 per share and will be sold for an aggregate
purchase price of $50 million. The voting preferred shares will be sold for an
aggregate purchase price of $68,000. The KKR investment is subject to customary
closing conditions, including KKR obtaining $230 million in financing.
The voting preferred shares will bear cumulative dividends at the rate of
8.5% per year on their purchase price and rank as to dividends and in
liquidation senior to the common shares and other classes of DPL equity
securities, with the exception of DPL's currently authorized Series A Preferred
Shares. The voting preferred shares are not redeemable, except that they may be
redeemed at the option of KKR to the extent it would own shares representing
more than 4.9% of DPL's voting power and must be redeemed in connection with
certain warrant exercises. The trust preferred securities will be issued by a
trust established by DPL. In exchange for the proceeds from the sale of the
trust preferred securities and the trust common securities issued to DPL, DPL
will issue to the trust $567 million in principal amount of DPL's 8.5% junior
subordinated deferrable interest 30-year debentures. The trust preferred
securities are not guaranteed by DPL, except for (1) unpaid distributions and
redemption payments to the extent the trust has funds on hand and (2) upon
liquidation, unless the trust distributes the junior debentures to the holders
of the trust preferred securities, the face amount of the trust preferred
securities to the extent the trust has available assets.
The indenture for the junior debentures prohibits DPL from incurring
indebtedness that would result in DPL's existing or new debt, including the
trust preferred securities, being rated below investment grade by either Moody's
or Standard & Poors and prohibits DPL from granting liens to holders of any debt
that does not rank senior to the debentures. In connection with the KKR
investment, DPL will agree with KKR and its affiliates, among other things, to
allow KKR to designate one person for election to DPL's board of directors, not
to take any action that would result in KKR holding more than 4.9% of DPL's
voting securities, not to engage in any business combination, spin-off or
similar transaction or to incur debt that would result in DPL's debt being rated
below investment grade by either Moody's or Standard & Poors and to register
with the SEC the warrants, the DPL common shares underlying the warrants and the
trust preferred securities for public resale.
In connection with KKR's investment in DPL, DPL has agreed to pay to KKR or
its affiliates $16.5 million upon completion of KKR's investment, reflecting a
transaction fee and reimbursement of KKR's expenses, including consulting,
investment banking, accounting and legal expenses, incurred in connection with
its investment. This payment is in consideration of KKR making its investment in
DPL and for services provided by KKR to DPL in connection with the investment,
including business strategy, financial and investment banking advisory services.
20
<PAGE>
10. CERTAIN INFORMATION CONCERNING DPL.
GENERAL. DPL Inc., based in Dayton, Ohio, is an energy services holding
company with approximately 2,500 employees and annual revenues in 1998 of
$1.38 billion.
DPL Inc.'s principal subsidiary is DP&L. DP&L sells electricity and natural
gas to residential, commercial and governmental customers in a 6,000 square mile
area of West Central Ohio. Other subsidiaries of DPL include Miami Valley
Resources, Inc., a natural gas supply management company; Miami Valley
Leasing, Inc., which leases communications equipment and other miscellaneous
equipment, owns real estate and has, for financial investment purposes, acquired
limited partnership interests in wholesale electric generation; Miami Valley
Lighting, Inc., a street lighting business; Miami Valley CTC, Inc., which
provides transportation services; Miami Valley Insurance Company, an insurance
company for DPL and its subsidiaries; Miami Valley Development Company, which
has acquired real estate for DP&L and is engaged in the business of technology
research and development; MVE Inc., which provides support services to DPL; DPL
Energy, Inc., which has been granted authority to engage in the business of
brokering wholesale electric energy; and Plaza Building Inc., which owns and
leases an office building.
The executive offices of DPL Inc. are located at Courthouse Plaza Southwest,
Dayton, Ohio 45402--telephone (937) 224-6000.
RECENTLY ANNOUNCED RESULTS OF OPERATIONS FOR FISCAL 1999. On January 25,
2000, DPL reported 1999 earnings growth of 9%. Earnings for the fourth quarter
were $0.27 per share, up 12.5% from a year ago. 1999 earnings per share were
$1.35, compared to the $1.24 per share earned in 1998. For the full year 1999
and the fourth quarter, operating revenues were $1.34 billion and
$333.7 million, respectively, net income was $204.2 million and $40.7 million,
respectively, and average number of common shares outstanding was 151.4 million
and 150.5 million.
SUMMARY HISTORICAL CONDENSED CONSOLIDATED FINANCIAL INFORMATION. The
following table contains summary historical condensed consolidated financial
information of DPL and its subsidiaries. The summary historical condensed
consolidated financial information for the years ended December 31, 1998 and
1997 and as of December 31, 1998 and 1997 has been derived from the audited
consolidated financial statements of DPL. The summary historical condensed
consolidated financial information for the nine months ended September 30, 1999
and 1998 and as of September 30, 1999 and 1998 has been derived from the
unaudited consolidated financial statements of DPL. In the opinion of
management, the interim condensed consolidated financial information reflects
all adjustments necessary for a fair presentation. These adjustments are only of
a normal recurring nature. The summary historical condensed consolidated
financial information should be read in conjunction with and is qualified in its
entirety by reference to the audited and unaudited consolidated financial
statements and the related notes thereto from which it has been derived. More
comprehensive financial information is included in the consolidated financial
statements and related notes contained in DPL's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, which it files with the SEC.
21
<PAGE>
DPL INC.
SUMMARY HISTORICAL CONDENSED CONSOLIDATED FINANCIAL INFORMATION
BALANCE SHEET
(IN MILLIONS)
<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, DECEMBER 31,
1999 1998
-------------- -------------
<S> <C> <C>
ASSETS
Net Property................................................ $2,220.1 $2,238.7
Current assets.............................................. 416.6 493.4
Investments and Other Assets................................ 1,335.1 1,123.8
-------- --------
Total Assets................................................ $3,971.8 $3,855.9
======== ========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Shareholder's Equity................................. $1,375.4 $1,383.7
Preferred Stock............................................. 22.9 22.9
Long-Term Debt.............................................. 1,336.5 1,065.9
-------- --------
Total Capitalization........................................ 2,734.8 2,472.5
Current Liabilities......................................... 406.4 548.8
Deferred Credits and Other.................................. 830.6 834.6
-------- --------
Total Capitalization and Liabilities........................ $3,971.8 $3,855.9
======== ========
</TABLE>
22
<PAGE>
DPL INC.
SUMMARY HISTORICAL CONDENSED CONSOLIDATED FINANCIAL INFORMATION
STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS TWELVE MONTHS
ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
------------------- -------------------
1999 1998 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues.......................................... $1,005.2 $1,015.5 $1,352.2 $1,333.6
Expenses.......................................... 684.8 705.9 970.2 978.0
-------- -------- -------- --------
Operating Income.................................. 320.4 309.6 382.0 355.6
-------- -------- -------- --------
Investment Income................................. 35.8 20.2 33.4 27.2
Interest Expense.................................. (82.1) (69.6) (93.8) (87.3)
Other Income (Deductions)......................... (6.5) (8.4) (12.1) (8.7)
-------- -------- -------- --------
Income Before Taxes............................... 267.6 251.8 309.5 286.8
Income Taxes...................................... 104.0 98.8 120.4 105.4
-------- -------- -------- --------
Net Income........................................ $ 163.6 $ 153.0 $ 189.1 $ 181.4
Average Number of Common Shares
Outstanding (millions).......................... 151.7 152.7 152.8 151.4
Earnings Per Share of Common Stock--Basic and
Diluted......................................... $1.08 $1.00 $1.24 $1.20
Dividends Paid Per Share of Common Stock.......... $0.705 $0.705 $0.94 $0.91
Book Value Per Common Share....................... $9.10 $8.67 $9.01 $8.45
Common Shares Outstanding (millions).............. $158.6 $161.0 $161.3 $160.2
Ratio of earnings to fixed charges................ 4.26 4.62 4.33 4.32
</TABLE>
SUMMARY UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL
STATEMENTS. The following summary unaudited condensed consolidated pro forma
financial statements give effect to the purchase of DPL common shares pursuant
to this Offer to Purchase, including the related financing transactions, based
on certain assumptions described below and in the related Notes below.
The Summary Unaudited Condensed Consolidated Pro Forma Balance Sheet as of
September 30, 1999 gives effect to the purchase of common shares pursuant to the
offer, including the related financing transactions, as though such events
occurred as of the date of such balance sheet. The Summary Unaudited Condensed
Consolidated Pro Forma Statements of Income for the nine months ended
September 30, 1999 and for the year ended December 31, 1998 give effect to the
purchase of common shares pursuant to the offer, including the related financing
transactions, as though such events occurred on January 1, 1998.
The summary unaudited condensed consolidated pro forma financial statements
should be read in conjunction with the summary historical condensed consolidated
financial information included in this Offer to Purchase and the historical
consolidated financial information incorporated by reference herein. The summary
unaudited condensed consolidated pro forma financial statements are subject to a
number of uncertainties and assumptions and do not purport to be indicative of
the operating results that would actually have been obtained, or operating
results that may be obtained in the future, or the financial position that would
have resulted had the purchase of the common shares pursuant to this offer,
including the related financing transactions, been completed at the dates
indicated.
23
<PAGE>
DPL INC.
SUMMARY OF UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA BALANCE SHEET
FOR NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Property, plant and equipment......................... $2,220.1 $ -- $2,220.1
Current assets........................................ 416.6 (55.0)(1) 361.6
Financial assets...................................... 931.1 931.1
Other assets.......................................... 404.0 25.0 (4a) 429.0
-------- -------- --------
Total Assets...................................... $3,971.8 $ (30.0) $3,941.8
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY
Common stock.......................................... $ 1.6 $ (0.3)(2a) $ 1.3
Other Paid in Capital................................. 753.7 (577.2)(2b) 176.5
Warrants.............................................. -- 47.5 (3) 47.5
Earnings reinvested in the business................... 651.3 651.3
Other................................................. (31.2) (31.2)
-------- -------- --------
Total common shareholders' equity................. 1,375.4 (530.0) 845.4
Preferred stock....................................... 22.9 22.9
Preferred stock subject to mandatory redemption....... 0.7 (4c) 0.7
Company obligated mandatorily redeemable trust
preferred securities of subsidiary holding solely
parent debentures................................... 499.3 (4b) 499.3
Long-term debt........................................ 1,336.5 1,336.5
-------- -------- --------
Total capitalization.............................. 2,734.8 (30.0) 2,704.8
LIABILITIES
Current Liabilities................................... 406.4 406.4
Deferred taxes........................................ 457.0 457.0
Other credits......................................... 373.6 373.6
-------- -------- --------
-------- -------- --------
Total liabilities and capitalization.............. $3,971.8 $ (30.0) $3,941.8
======== ======== ========
</TABLE>
24
<PAGE>
DPL INC.
SUMMARY OF UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENT OF INCOME
FOR NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Revenues............................................. $1,005.2 $ -- $1,005.2
Expenses............................................. 684.8 684.80
-------- -------- --------
Operating Income..................................... 320.4 -- 320.4
Investment Income.................................... 35.8 35.8
Interest Expense..................................... (82.1) (82.1)
Trust preferred distributions by subsidiary.......... (35.1)(5) (35.1)
Other income and deductions.......................... (6.5) (6.5)
-------- -------- --------
Income before income taxes........................... 267.6 (35.1) 232.5
Income taxes......................................... 104.0 (12.3)(6) 91.7
-------- -------- --------
Net income....................................... $ 163.6 $ (22.8) $ 140.8
Preferred Stock Dividend............................. 0.0 (5) 0.0
-------- -------- --------
Net Income applicable to common stock................ $ 163.6 $ (22.8) $ 140.8
======== ======== ========
Average common shares outstanding (thousands)
Basic.............................................. 151,700 (25,000)(7) 126,700
Diluted............................................ 151,700 (25,000)(7) 126,700
Earnings per common share:
Basic.............................................. $ 1.08 $ 1.11
Diluted............................................ $ 1.08 $ 1.11
Book value per common share.......................... $ 9.10 $ 6.70
Ratio of earnings to fixed charges................... 4.26 2.98
</TABLE>
25
<PAGE>
DPL INC.
SUMMARY OF UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENT OF INCOME
FOR TWELVE MONTHS ENDED DECEMBER 31, 1998
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
<S> <C> <C> <C>
Revenues............................................ $1,352.2 $ -- $ 1,352.2
Expenses............................................ 970.2 970.20
-------- --------- ---------
Operating Income.................................... 382.0 -- 382.0
Investment Income................................... 33.4 33.4
Interest Expense.................................... (93.8) (93.8)
Trust preferred distributions by subsidiaries....... (122.5 )(5) (122.5)
Other income and deductions......................... (12.1) (12.1)
-------- --------- ---------
Income before income taxes.......................... 309.5 (122.5) 187.0
Income taxes........................................ 120.4 (42.9)(6) 77.5
-------- --------- ---------
Net income...................................... $ 189.1 $ (79.6) $ 109.5
Preferred Stock Dividend............................ 0.1 (5) 0.1
-------- --------- ---------
Net Income applicable to common stock............... $ 189.1 $ (79.7) $ 109.4
======== ========= =========
Average common shares outstanding (thousands)
Basic............................................. 152,800 (25,000)(7) 127,800
Diluted........................................... 152,800 (25,000)(7) 127,800
Earnings per common share:
Basic............................................. $ 1.24 $ 0.86
Diluted........................................... $ 1.24 $ 0.86
Book value per common share......................... $ 9.01 $ 6.64
Ratio of earnings to fixed charges.................. 4.33 1.87
</TABLE>
26
<PAGE>
NOTES TO SUMMARY UNAUDITED
CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
($ IN MILLIONS)
1) Represents reduction to current assets (cash) for the excess of transaction
consideration over sources of funds
<TABLE>
<S> <C>
Transaction consideration
Common stock buyback........................................ $ 575.0
Transaction fees for stock buyback.......................... 2.5
-------
Total transaction consideration............................. 577.5
Sources of funds
Issuance of 8.5% trust preferred securities................. $ 499.3
Issuance of warrants........................................ 50.0
Issuance of 8.5% voting preferred securities................ 0.7
Issuance costs.............................................. (27.5)
-------
Total funds................................................. 522.5
Reduction to current assets (cash).......................... $ 55.0
</TABLE>
2) Represents the reacquisition for cash of 25,000,000 shares of DPL common
stock at the assumed purchase price of $23 per share, the maximum price in
this offer. There can be no assurance that DPL will repurchase 25,000,000
shares or that the shares will be repurchased at a price of $23.
<TABLE>
<S> <C>
25,000,000 common shares redeemed at $23 per share
2a Allocated to reduce par value of common.................. $ (0.3)
2b Allocated to reduce other paid in capital................ (574.7)
2b Represents assumed costs of shares buyback............... (2.5)
</TABLE>
3) Represents the issuance of warrants for $50 million for an aggregate of 31.6
million DPL common shares, expiring on February 1, 2012, and with an
exercise price of $21 per share.
<TABLE>
<S> <C>
Issuance of warrants for 31.6 million common shares......... $ 50.0
Represents assumed costs of issuance of warrants............ (2.5)
-------
$ 47.5
</TABLE>
4) Represents the issuance of mandatorily redeemable trust preferred securities
(aggregate face amount of $550 million) for an initial discounted aggregate
amount of $499.3 million (due in 30 years with an assumed distribution rate
of 8.5%), and 8.5% mandatorily redeemable voting preferred stock for $0.7
million.
<TABLE>
<S> <C>
4a Issuance costs........................................... $ 25.0
4b Issuance of 8.5% trust preferred securities.............. $ 499.3
(net of original issuance discount of $50 million)
4c Issuance of 8.5% voting preferred securities............. $ 0.7
</TABLE>
5) Represents the pro forma distributions on the trust preferred securities
($46.8 million annually and $35.1 million for the nine months ended
September 30, 1999) and the pro forma dividend on the 8.5% voting preferred
($58 thousand annually and $43 thousand for the nine months ended
September 30, 1999).
Also represents for the year ended December 31, 1998, the amortization of
$50.7 million of original issuance discount and $25 million of issuance
costs from issuance of 8.5% trust preferred securities. No amortization is
required for the nine months ended September 30, 1999.
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<PAGE>
6) Represents the tax benefit of the pro forma distributions on the trust
preferred securities, which are deductible as interest expenses for tax
purposes and the amortization of the original issuance discount and costs of
issuance of the trust preferred securities, based on DPL's statutory income
tax rate of 35%.
7) Represents the pro forma reduction in weighted average common shares
outstanding due to share buyback. Warrants exercisable into 31.6 million DPL
common shares are not included in the average common shares outstanding for
diluted earnings per share because the average market price of DPL common
shares is less than the exercise price of the warrants ($21).
ADDITIONAL INFORMATION. DPL is subject to the informational filing
requirements of the Exchange Act, and, accordingly, is obligated to file
reports, statements and other information with the SEC relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning DPL's directors and officers, their remuneration, the principal
holders of DPL's securities and any material interest of these persons in
transactions with DPL is required to be disclosed in proxy statements
distributed to DPL's shareholders and filed with the SEC. DPL also has filed an
Issuer Tender Offer Statement on Schedule TO with the SEC which includes certain
additional information relating to the offer. These reports, statements and
other information can be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549; and at its regional offices located at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of this material may also be obtained by mail, upon
payment of the SEC's customary charges, from the Public Reference Section of the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC
also maintains a web site on the Internet at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. These reports, statements and
other information concerning DPL also can be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York, 10005, on which the
shares are listed.
INCORPORATION BY REFERENCE
The rules of the SEC allow us to "incorporate by reference" information into
this document, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. This offer
incorporates by reference the financial statements and the notes related thereto
contained in the documents listed below that have been previously filed with the
SEC. These documents contain important information about DPL Inc.
<TABLE>
<CAPTION>
SEC FILINGS (FILE NO. 1-9052) PERIOD
- ----------------------------- -------------------------------------
<S> <C>
Annual Report on Form 10-K........... Year ended December 31, 1998
Quarterly Report on Form 10-Q........ Quarter ended March 31, 1999
Quarterly Report on Form 10-Q........ Quarter ended June 30, 1999
Quarterly Report on Form 10-Q........ Quarter ended September 30, 1999
</TABLE>
11. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE SHARES.
As of February 3, 2000, DPL had 158,682,304 issued and outstanding common
shares 36,100,000 shares reserved for issuance upon exercise of the KKR warrant
and 6,500,000 shares reserved for issuance upon exercise of outstanding options
under DPL's new stock option plan. The 25,000,000 shares that DPL is offering to
purchase represent approximately 15.8% of the shares outstanding on February 3,
2000.
As of February 1, 2000, DPL's directors and executive officers as a group
(16 persons) beneficially owned less than 1% of the outstanding shares on that
date. This amount does not include shares which may be attributed to
representatives of KKR. Each of DPL's executive officers and directors has
advised DPL that he or she will not tender any shares pursuant to the offer. If
DPL purchases 25,000,000 shares pursuant to the
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<PAGE>
offer, and none of the executive officers or directors tender shares pursuant to
the offer, then after the purchase of shares pursuant to the offer, DPL's
executive officers and directors as a group would continue to beneficially own
less than 1% of the shares outstanding immediately after the offer.
Based on DPL's records and on information provided to DPL by its directors,
executive officers, affiliates and subsidiaries, neither DPL nor any of its
affiliates or subsidiaries nor, to the best of DPL's knowledge, any of the
directors or executive officers of DPL or any of its subsidiaries, nor any
associates or subsidiaries of any of the foregoing, has effected any
transactions involving the shares during the 60 days prior to February 3, 2000,
other than purchases for the accounts of executive officers under either of the
DPL Savings Plans or the ESOP. DPL expects that the DPL Savings Plans and the
ESOP will, in accordance with the terms of the plans, elections in effect and
present patterns of contribution, continue to purchase shares prior to the
expiration of the offer.
Except as otherwise described in this Offer to Purchase, neither DPL nor, to
the best of DPL's knowledge, any of its affiliates, directors or executive
officers, is a party to any contract, arrangement, understanding or relationship
with any other person relating, directly or indirectly, to the offer or with
respect to any securities of DPL, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of the securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies, consents or authorizations.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
DPL's purchase of shares pursuant to the offer will reduce the number of
shares that might otherwise trade publicly and is likely to reduce the number of
shareholders. Nonetheless, DPL anticipates that there will be a sufficient
number of shares outstanding and publicly traded following consummation of the
offer to ensure a continued trading market for the shares. Based upon published
guidelines of the NYSE, DPL does not believe that its purchase of shares
pursuant to the offer will cause DPL's remaining shares to be delisted from the
NYSE.
The shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using the shares as collateral. DPL believes
that, following the purchase of shares pursuant to the offer, the shares will
continue to be "margin securities" for purposes of the Federal Reserve Board's
margin regulations.
The shares are registered under the Exchange Act, which requires, among
other things, that DPL furnish information to its shareholders and to the SEC
and comply with the SEC's proxy rules in connection with meetings of DPL's
shareholders. DPL believes that its purchase of shares pursuant to the offer
will not result in the shares becoming eligible for deregistration under the
Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
DPL is not aware of any license or regulatory permit that appears to be
material to DPL's business that might be adversely affected by DPL's acquisition
of shares as contemplated in this offer or of any approval or other action by
any government or governmental, administrative or regulatory authority or
agency, domestic, foreign or supranational, that would be required for DPL's
acquisition or ownership of shares as contemplated by this offer. Should any
approval or other action be required, DPL presently contemplates that it will
seek that approval or other action. DPL cannot predict whether it will be
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 approval or other action, if needed, would be obtained or
would be obtained without substantial conditions or that the failure to obtain
the approval or other action might not result in adverse consequences to DPL's
business. DPL's obligations under the offer to accept for payment and pay for
shares are subject to conditions. See Section 7.
14. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following summary describes the principal United States federal income
tax consequences to United States Holders (as defined below) of an exchange of
shares for cash pursuant to the offer. Those shareholders
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<PAGE>
who do not participate in the exchange should not incur any United States
federal income tax liability from the exchange. This summary is based upon the
Internal Revenue Code of 1986, as amended to the date of this offer (the
"Code"), existing and proposed United States Treasury Regulations promulgated
under the Code, published rulings, administrative pronouncements and judicial
decisions, changes to which could affect the tax consequences described in this
offer (possibly on a retroactive basis).
This summary addresses only shares held as capital assets. It does not
address all of the tax consequences that may be relevant to particular
shareholders because of their personal circumstances, or to other types of
shareholders (such as certain financial institutions, dealers or traders in
securities or commodities, insurance companies, "S" corporations, expatriates,
tax-exempt organizations, Non-United States Holders (as defined below), persons
who are subject to alternative minimum tax, or persons who hold shares as a
position in a "straddle" or as part of a "hedging" or "conversion" transaction
or that have a functional currency other than the United States dollar). This
summary may not be applicable with respect to shares acquired as compensation
(including shares acquired upon the exercise of options or which were or are
subject to forfeiture restrictions). This summary also does not address the
state, local or foreign tax consequences of participating in the offer.
You should consult your tax advisor as to the particular consequences to you
of participation in this offer.
A "United States Holder" is a holder of shares that for United States
federal income tax purposes is:
- a citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or any State or the District of
Columbia;
- an estate the income of which is subject to United States federal income
taxation regardless of its source; or
- a trust (a) the administration over which a United States court can
exercise primary supervision and (b) all of the substantial decisions of
which one or more United States persons have the authority to control and
certain other trusts considered United States Holders for federal income
tax purposes.
A "Non-United States Holder" is a holder of shares other than a United
States Holder.
An exchange of shares for cash pursuant to the offer will be a taxable
event. A United States Holder participating in the exchange will be treated
either as having sold shares or as having received a dividend distribution from
DPL. A United States Holder's exchange of shares for cash pursuant to the offer
will be treated as a dividend to the extent of DPL's current or accumulated
earnings and profits as determined under federal income tax principles, unless
the exchange:
- results in a "complete termination" of the holder's stock interest in DPL
under section 302(b)(3) of the Code;
- is a "substantially disproportionate" redemption with respect to the
holder under section 302(b)(2) of the Code; or
- is "not essentially equivalent to a dividend" with respect to the holder
under section 302(b)(1) of the Code.
In determining whether any of these tests have been met, a United States
Holder must take into account not only shares it actually owns, but also shares
it constructively owns within the meaning of section 318 of the Code.
A distribution to a shareholder is "not essentially equivalent to a
dividend" if it results in a "meaningful reduction" in the shareholder's stock
interest in DPL. If, as a result of an exchange of shares for cash pursuant to
the offer, a United States Holder of shares whose relative stock interest in DPL
is minimal and who exercises no control over corporate affairs suffers a
reduction in its proportionate interest in DPL (including any ownership of
preferred shares and any shares constructively owned), that United States Holder
should generally be regarded as having suffered a meaningful reduction in its
interest in DPL. Satisfaction of the "complete termination" and "substantially
disproportionate" exceptions is dependent upon compliance with
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<PAGE>
the respective objective tests set forth in section 302(b)(3) and
section 302(b)(2) of the Code. A distribution to a shareholder will result in a
"complete termination" if either (1) all of the shares actually and
constructively owned by the shareholder are exchanged pursuant to the offer or
(2) all of the shares actually owned by the shareholder are exchanged pursuant
to the offer and the shareholder is eligible to waive, and effectively waives,
the attribution of shares constructively owned by the shareholder in accordance
with the procedures described in section 302(c)(2) of the Code. A distribution
to a shareholder will be "substantially disproportionate" if the percentage of
the outstanding shares actually and constructively owned by the shareholder
immediately following the exchange of shares pursuant to the offer (treating
shares exchanged pursuant to the offer as outstanding) is less than 80% of the
percentage of the outstanding shares actually and constructively owned by the
shareholder immediately before the exchange (treating shares exchanged pursuant
to the offer as outstanding).
If an exchange of shares for cash by a United States Holder pursuant to the
offer is not treated as a distribution taxable as a dividend, the holder will
recognize capital gain or loss equal to the difference between the amount of
cash received and the holder's adjusted tax basis in the shares and in the
associated preferred share purchase rights, if any, tendered to DPL, except to
the extent that the amount of cash received includes dividends that have been
declared by the Board of Directors of DPL before the exchange. The gain or loss
would be long-term capital gain or loss if the holding period for the shares
exceeded one year.
If the amount received by a United States Holder in the offer is treated as
a distribution that is taxable as a dividend (as opposed to consideration
received in a sale or exchange), the amount of the distribution will be the
amount of cash received by the holder. The amount will be treated as a dividend,
taxable as ordinary income to the United States Holder, to the extent of DPL's
current or accumulated earnings and profits as determined under Federal income
tax principles. To the extent that the amount of the distribution exceeds DPL's
current and accumulated earnings and profits, the excess first will be treated
as a return of capital that will reduce the holder's tax basis in the shares
exchanged in the offer. Any remaining amount after the United States Holder's
basis has been reduced in the shares exchanged in the offer and in the shares
retained by the United States Holder to zero will be taxable as capital gain.
The United States Holder's unrecovered adjusted tax basis in its shares
exchanged in the offer generally will be transferred to its remaining
shareholdings in DPL, subject to, in the case of corporate shareholders,
reduction or possible gain recognition under section 1059 of the Code in an
amount equal to the non-taxed portion of the dividend. If the United States
Holder does not retain any actual stock ownership in DPL (having a stock
interest only constructively), the holder may lose the benefit of the holder's
adjusted tax basis in its shares. A dividend received by a corporate United
States Holder may be (1) eligible for a dividends-received deduction (subject to
applicable exceptions and limitations) and (2) subject to the "extraordinary
dividend" provisions of section 1059 of the Code. Corporate shareholders should
consult their own tax advisors regarding (1) whether a dividends-received
deduction will be available to them, and (2) the possible application of
section 1059 to the ownership and disposition of their shares.
See Section 3 with respect to the application of United States federal
income tax withholding to payments made to Non-United States Holders and the
backup withholding tax requirements.
The trusts under each of the DPL Savings Plans and the ESOP maintained by
DPL and its affiliates are exempt from federal income taxation. Accordingly,
such trusts will not be taxable upon the receipt of any cash proceeds pursuant
to the offer.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO YOU OF THE OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF
STATE, LOCAL AND FOREIGN TAX LAWS.
15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENT.
DPL expressly reserves the right, in its sole discretion, at any time and
from time to time, and regardless of whether or not any of the events set forth
in Section 7 have occurred or are deemed by DPL to have occurred, to extend the
period of time the offer is open and delay acceptance for payment of, and
payment for, any shares by giving oral or written notice of the extension to the
Depositary and making a public announcement of
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the extension. DPL also expressly reserves the right, in its sole discretion, to
terminate the offer and reject for payment and not pay for any shares not
theretofore accepted for payment or paid for or, subject to applicable law, to
postpone payment for shares upon the occurrence of any of the conditions
specified in Section 7 by giving oral or written notice of the termination or
postponement to the Depositary and making a public announcement of the
termination or postponement. DPL's reservation of the right to delay payment for
shares which it has accepted for payment is limited by Rule 13e-4(f)(5) under
the Exchange Act, which requires that DPL must pay the consideration offered or
return the shares tendered promptly after termination or withdrawal of a tender
offer. Subject to compliance with applicable law, DPL further reserves the
right, in its sole discretion, and regardless of whether any of the events set
forth in Section 7 have occurred or are deemed by DPL to have occurred, to amend
the offer in any respect (including, without limitation, by decreasing or
increasing the consideration offered in the offer to holders of shares or by
decreasing or increasing the number of shares being sought in the offer).
Amendments to the offer may be made at any time and from time to time by public
announcement of the amendment. In the case of an extension, the amendment must
be issued no later than 9:00 a.m., New York City time, on the next business day
after the last previously scheduled or announced Expiration Date. Any public
announcement made pursuant to the offer will be disseminated promptly to
shareholders in a manner reasonably designed to inform shareholders of the
change. Without limiting the manner in which DPL may choose to make a public
announcement, except as required by applicable law, DPL will have no obligation
to publish, advertise or otherwise communicate any public announcement other
than by issuing a press release to the Dow Jones News Service.
If DPL materially changes the terms of the offer or the information
concerning the offer, or if it waives a material condition of the offer, DPL
will extend the offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Exchange Act. These rules provide that the
minimum period during which an offer must remain open following material changes
in the terms of the offer or information concerning the offer (other than a
change in price or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of the terms or
information. If:
(1) DPL increases or decreases the price to be paid for shares, materially
increases the Dealer Manager fee or increases or decreases the number of
shares being sought in the offer and, in the event of an increase in the
number of shares being sought, the increase exceeds 2% of the
outstanding shares, and
(2) the offer is scheduled to expire at any time earlier than the expiration
of a period ending on the tenth business day from, and including, the
date that notice of an increase or decrease is first published, sent or
given in the manner specified in this Section 15,
then in each case the offer will be extended until the expiration of the period
of ten business days. For purposes of the offer, a "business day" means any day
other than a Saturday, Sunday or Federal holiday and consists of the time period
from 12:01 am through 12:00 Midnight, New York City time.
16. FEES AND EXPENSES.
Credit Suisse First Boston is acting as Dealer Manager in connection with
the offer, for which services Credit Suisse First Boston will receive customary
compensation. DPL also has agreed to reimburse Credit Suisse First Boston for
reasonable out-of-pocket expenses incurred in connection with the offer,
including reasonable fees and expenses of counsel and other advisors, and to
indemnify Credit Suisse First Boston and certain related persons against
liabilities and expenses incurred in connection with its engagement, including
liabilities under the federal securities laws. Credit Suisse First Boston and
its affiliates may actively trade the debt and equity securities of DPL for
their own account and for the accounts of customers and, accordingly, may at any
time hold a long or short position in such securities.
DPL has retained Georgeson Shareholder Communications Inc. to act as
Information Agent and Equiserve to act as Depositary in connection with the
offer. The Information Agent may contact holders of shares by mail, telephone,
telegraph and personal interviews and may request brokers, dealers and other
nominee shareholders to forward materials relating to the offer to beneficial
owners. The Information Agent
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<PAGE>
and the Depositary will each receive reasonable and customary compensation for
their respective services, will be reimbursed by DPL for reasonable
out-of-pocket expenses and will be indemnified against certain liabilities in
connection with the offer, including liabilities under the federal securities
laws.
T. Rowe Price Trust Company acts as directed trustee of each of the DPL
Savings Plans and will carry out the instructions of participants in the plans
as more fully described in Section 3. T. Rowe Price Trust Company will be
reimbursed for certain out-of-pocket costs in connection with the offer. Bank
One Dayton, N.A. acts as trustee of the ESOP and will carry out the instructions
of participants in the plan as more fully described in Section 3. Bank One
Dayton, N.A. will be reimbursed for certain out-of-pocket costs in connection
with the offer.
DPL will not pay any fees or commissions to brokers, dealers or other
persons (other than fees to the Dealer Manager and the Information Agent as
described above) for soliciting tenders of shares pursuant to the offer.
Shareholders holding shares through brokers or banks are urged to consult the
brokers or banks to determine whether transaction costs may apply if
shareholders tender shares through the brokers or banks and not directly to the
Depositary. DPL will, however, upon request, reimburse brokers, dealers and
commercial banks for customary mailing and handling expenses incurred by them in
forwarding the offer and related materials to the beneficial owners of shares
held by them as a nominee or in a fiduciary capacity. No broker, dealer,
commercial bank or trust company has been authorized to act as the agent of DPL,
the Dealer Manager, the Information Agent or the Depositary for purposes of the
offer. DPL will pay or cause to be paid all stock transfer taxes, if any, on its
purchase of shares except as otherwise provided in Instruction 7 in the Letter
of Transmittal.
17. MISCELLANEOUS.
DPL is not aware of any jurisdiction where the making of the offer is not in
compliance with applicable law. If DPL becomes aware of any jurisdiction where
the making of the offer or the acceptance of shares pursuant to the offer is not
in compliance with any valid applicable law, DPL will make a good faith effort
to comply with the applicable law. If, after a good faith effort, DPL cannot
comply with the applicable law, the offer will not be made to, nor will tenders
be accepted from or on behalf of, the holders of shares residing in that
jurisdiction. In any jurisdiction where 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 DPL's behalf by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of the jurisdiction.
Pursuant to Rule 13e-4 promulgated under the Exchange Act, DPL has filed
with the SEC an Issuer Tender Offer Statement on Schedule TO, which contains
additional information relating to the offer. The Schedule TO, including the
exhibits and any amendments thereto, may be examined, and copies may be
obtained, at the same places and in the same manner set forth in Section 10 with
respect to information concerning DPL.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF DPL IN CONNECTION WITH THIS
OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, YOU SHOULD NOT RELY ON THAT INFORMATION
OR REPRESENTATION AS HAVING BEEN AUTHORIZED BY DPL.
DPL Inc.
February 4, 2000
33
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Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for shares and any other
required documents should be sent or delivered by each shareholder or the
shareholder's broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below. To confirm delivery of
shares, shareholders are directed to contact the Depositary.
THE DEPOSITARY FOR THE OFFER IS:
EQUISERVE
(800) 736-3001
<TABLE>
<S> <C> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER: BY FACSIMILE (FOR ELIGIBLE
EquiServe Securities Transfer & EquiServe INSTITUTIONS ONLY):
Attn: Corporate Actions Reporting Sources, Inc. Attn: Corporate Actions (781) 575-4826
P.O.Box 9573 c/o EquiServe 40 Campenelli Drive
Boston, MA 02205-9573 100 Williams Street, Braintree, MA 02184
Galleria
New York, NY 10038
</TABLE>
Confirm by Telephone: (781) 575-4816
You may request additional copies of this offer, the Letter of Transmittal
or the Notice of Guaranteed Delivery and direct questions and requests for
assistance to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth below.
THE INFORMATION AGENT FOR THE OFFER IS:
[Georgeson Logo]
17 State Street, 10(th) Floor
New York, NY 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll-Free: (800) 646-4543
