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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE TO
TENDER OFFER STATEMENT
UNDER SECTION 14(D)(1) OR SECTION 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
DPL INC.
(Name of Subject Company (issuer) and Filing Person (offeror))
COMMON SHARES, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
233 293 109
(CUSIP Number of Class of Securities)
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STEPHEN F. KOZIAR, JR.
GROUP VICE PRESIDENT AND GENERAL COUNSEL
DPL INC.
COURTHOUSE PLAZA SOUTHWEST
DAYTON, OH 45402
(937) 224-6000
(Name, Address and Telephone Number of Persons Authorized
to Receive Notices and Communications on Behalf of the Filing Person)
FEBRUARY 2, 2000
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Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
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/X/ 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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/ / third-party tender offer subject to Rule /X/ issuer tender offer subject to Rule 13e-4.
14d-1.
/ / going-private transaction subject to Rule / / amendment to Schedule 13D under Rule 13d-2.
13e-3.
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Check the following box if the filing is a final amendment reporting the
results of the tender offer: / /
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CONTACT:
FOR DPL: FOR KKR:
Arthur Meyer Jeremy Fielding / Molly Morse
DPL Inc. Kekst and Company
(937) 224-5940 (212) 521-4800
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--DPL INC. TO RECEIVE $550 MILLION INVESTMENT FROM KKR--
INVESTMENT PROCEEDS USED TO ACCELERATE STRATEGIC PLAN AND REPURCHASE
SHARES
KKR TO TAKE 19% STAKE
DAYTON, OHIO, FEBRUARY 2, 2000--DPL Inc. (NYSE--DPL), the parent company of
The Dayton Power and Light Company, today announced that it had signed a
definitive agreement with affiliates of Kohlberg Kravis Roberts & Co. (KKR)
under which KKR will make a strategic investment of $550 million in the Company.
DPL intends to use the proceeds from this investment, combined with up to
$425 million of new capital, to continue its planned generation strategy, retire
short term debt, and to repurchase up to 31.6 million shares.
Under the terms of the agreement, which has been unanimously approved by
DPL's Board of Directors, the investment includes a combination of voting
preferred and trust preferred securities and warrants. The 31.6 million
warrants, with an exercise price of $21, represent approximately 19.9% of DPL
shares currently outstanding. The voting preferred securities will carry voting
rights for up to 4.9% of DPL's total voting rights. The trust preferred
securities will have a term of 30 years and carry a dividend rate of 8.5%
payable in cash.
"Today's agreement with KKR is a strong endorsement of our core transmission
and distribution business, our baseload and peaking generation strategy as well
as our investment performance," said Peter H. Forster, Chairman of DPL. "With
this strong anchor shareholder relationship in place, we intend to take
advantage of KKR's expertise to unlock value and enhance our competitive
position. We believe that KKR's long-term commitment and significant investment
will help to accelerate earnings growth and deliver even greater value to all
shareholders."
The KKR investment validates the Company's growth strategy, and the planned
repurchase of shares will be accretive to earnings while maintaining financial
flexibility.
DPL is continuing to focus on the development of its peaking generation
business. The Company's recently announced $205 million Phase Three expansion
will increase peaking capacity by 20%, or 635 megawatts.
"DPL's peaking generation program is well underway, with our third phase
announced last month. We have the experience, the sites, and the access to
low-cost natural gas to capitalize on the capacity need in the energy
marketplace," said Mr. Forster. "This expansion, combined with our existing
low-cost coal generation, positions us to take advantage of the profitable
Midwest energy markets."
Upon the closing of KKR's investment, George Roberts and Scott Stuart, KKR
partners, will join DPL's Board of Directors.
"After spending a great deal of time with DPL's management team, and
reviewing its strategy and position in the industry, we concluded that DPL has
all the attributes that we seek in our long-term strategic investments," said
Scott Stuart, a KKR partner. "DPL is an excellent low cost operator, with a
high-quality management team, and a sound plan for growing its generating and
distribution businesses."
"We believe DPL has an exciting future ahead as the regional market for
electricity is opened up to competition next year and we look forward to
partnering with DPL's management team to help the Company achieve its goals,"
said Mr. Stuart.
Allen M. Hill, President and Chief Executive Officer of DPL said,
"Electricity deregulation favors flexible companies that are equipped for
electric power generation and independent power production
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and hold excellent core distribution assets. With these additional resources, we
can invest further in our core businesses as we build the Company into an
industry leader in terms of growth, earnings and shareholder value while
continuing to provide quality reliable service."
"This investment by KKR and the share repurchase plan returns capital to our
shareholders, maintains our solid balance sheet, and provides for
investment-grade credit ratings," concluded Mr. Hill.
The transaction, which is subject to customary closing conditions, is
expected to close in early March.
DPL was advised by Credit Suisse First Boston.
KKR was advised by Goldman, Sachs & Co. and CIBC World Markets Corp.
DETAILS OF THE SHARE REPURCHASE
The initial buyback will be through a "Dutch Auction" self-tender offer for
up to 25 million shares, or approximately 16% of outstanding shares, at a price
of $20-$23. The tender will begin February 4, 2000.
Under the Dutch Auction tender offer, shareholders will have the opportunity
to tender all--or a portion of--their shares at a price within this specified
price range. The closing price of DPL's common stock on February 1, 2000 was
$19 1/16 per share. Based on the number of shares tendered and the prices
specified by the tendering shareholders, the Company will determine the single,
per-share price within the range that will allow it to buy 25 million shares (or
the lesser number of shares that are properly tendered at a price within the
range.) Shareholders whose shares are purchased in the offer will be paid the
set purchase price net in cash, without interest, after the expiration of the
offer period.
Neither DPL nor its board of directors makes any recommendation to
shareholders as to whether to tender or refrain from tendering their shares in
the Dutch Auction. Shareholders must decide how many shares they will tender, if
any, and the price within the stated range at which they will offer their shares
for purchase.
The offer is subject to various conditions detailed more fully in the
material announcing the offer to purchase. Shareholders will receive more
detailed information about the repurchase plan through the tender offer mailing.
The dealer manager for the offer is Credit Suisse First Boston. The information
agent is Georgeson. Copies of the offer to purchase and related materials will
be mailed to all shareholders and filed with the Securities and Exchange
Commission by DPL. Investors and shareholders may obtain a free copy (when
available) of the purchase and other documents which will be filed by DPL with
the SEC at the SEC website, WWW.SEC.GOV. The terms of the offer and procedures
for tendering are explained in detail in these materials. Shareholders are urged
to carefully read these materials prior to making any decision with respect to
the offer.
ABOUT DPL
DPL is a diversified energy company supplying energy services to customers
in the Midwest through its subsidiaries, The Dayton Power and Light Company and
DPL Energy. Dayton Power and Light Company is a diversified energy company,
generating electricity for over 500,000 retail customers and distributing
natural gas to more than 300,000 customers in Ohio.
ABOUT KKR
KKR is a private investment firm with offices in New York City, London, and
Menlo Park, California.
DPL Inc. will host a conference call to discuss this transaction at 9:00 am
(EST) on Wednesday, February 2, 2000. Access to the call is available by dialing
1-719-457-2645.
This release contains certain forward-looking statements regarding plans and
expectations for the future. Investors are cautioned that actual outcomes and
reports may vary materially from those projected due to various factors beyond
DPL's control.
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