- --------------------------------------------------------------------------------
SCHEDULE 14A
(Rule 14A-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ ] Filed by a Party other than the Registrant [X] Check
the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use
of the Commission Only [ ] Definitive Proxy Statement (as permitted by Rule
14a-6(e)(2)) [ ] Definitive Additional Materials [X] Soliciting Material
Pursuant to Rule 14a-11 (c)
or Rule 14a-12
IES INDUSTRIES INC.
(Name of Registrant as Specified in Its Charter)
MIDAMERICAN ENERGY COMPANY
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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-1-
<PAGE>
[The following is the slide presentation from an analyst presentation given by
Stanley J. Bright, President and Chief Executive Officer of MidAmerican Energy
Company in New York, New York on August 13, 1996.]
[Slide #1]
MIDAMERICAN ENERGY COMPANY
PRESENTATION TO ANALYSTS
AUGUST 1996
<PAGE>
[Slide #2]
Forward-Looking Statements
From time to time during this
presentation, we will make
forward-looking statements.
* These statements may include:
- Cost reduction strategies and anticipated outcomes
- Pricing strategies
- Changes in utility industry
- Planned capital expenditures
- Financing needs and availability
- Future plans and strategies
- Anticipated events
* These statements are subject to risks and uncertainties
- Results could differ from those expressed in statements
* Some of these risks and uncertainties include:
- General economic conditions
- Competition factors
- Regulatory actions
- Potential weather effects on sales and revenue
- Others
<PAGE>
[Slide #3]
MidAmerican Energy Company
* Gas and electric utility with unregulated subsidiaries
* Result of 1995 merger of IIGE and Midwest Resources
* Largest utility in Iowa
* Strategic intent is to be a regional energy and communications provider
<PAGE>
[Slide #4]
Merger Experience
1990 Midwest Energy and Iowa Resources
Midwest Resources
- First Iowa utility merger, completed without FERC approval
- Community presence model developed
- Exceeded modest savings targets
<PAGE>
[Slide #5]
Merger Experience
(continued)
1995 Midwest Resources and IIGE
MidAmerican Energy Company
- Fastest modern utility merger to date - 11 months
- First multi-state ICC merger approval
- First market based pricing plan in Iowa or Illinois
- Exceeded significant savings targets
<PAGE>
[Slide #6]
MEC Strategic Development
Mid 1994 Merge for size, low cost, financial strength
Mid 1995 Achieve merger savings and utility operational success
Enhance unregulated performance
Late 1995 Enhance utility performance
Restructure unregulated unit
Develop market centered competitive company
Mid 1996 Maximize utility cash flow and optimize earnings
Align unregulated business to market strategy
Assess mergers based on competitive advantage
<PAGE>
[Slide #7]
Pre-Offer Communication
August 1993 IES - IIGE discussion
August 1995 Verbal contact
October 1995 Written correspondence including
request to make proposal
November 1995 Wisconsin deal announced
<PAGE>
[Slide #8]
Company Comparisons - 1995
MidAmerican IES Combined
Headquarters Des Moines, IA Cedar Rapids, IA Des Moines, IA
Assets $4.50 B $2.00 B $6.50 B
Revenue $1.72 B $0.85 B $2.57 B
Earnings $123 M $64 M $187 M
Equity Market $1,612 M $997 M $2,609 M
Value*
MW Capacity 4,311 MW 2,080 MW 6,391 MW
Customers
Electric 631,000 332,000 963,000
Gas 595,000 173,000 768,000
*August 9, 1996
<PAGE>
[Slide #9]
MEC - IES Merger Transaction
* Unique strategic and operational fit
* Substantial opportunity for synergies
* Financially compelling offer for shareholders
* Ability to quickly consummate a combination
* Creates powerful regional provider of energy and
communications products and services
* Everybody wins: shareholders, customers
and employees
<PAGE>
[Slide #10]
Strategic Elements of Combination
* Natural Fit
- System integration relatively seamless
- Joint ownership of 1,078 megawatts of generation
- No new regulatory jurisdictions
- Similar production costs and rates
- Contiguous and overlapping territory spans most of Iowa
<PAGE>
[Slide #11]
Strategic Elements of Combination
(continued)
[GRAPHIC]
Geographical map of State of Iowa depicting MidAmerican Energy Service Area, IES
Industries Service Area and Service Area Overlaps.
[MidAmerican Logo]
<PAGE>
[Slide #12]
Strategic Elements of Combination
(continued)
* Synergy opportunities would benefit customers and
shareholders alike
- Preliminary savings estimate exceeds $500 million
over 10 years
- Lower rates for customers, with proposed regulatory plan
- Higher potential returns to shareholders through retention
of portion of synergies
- Stronger regional competitive position
<PAGE>
[Slide #13]
Strategic Elements of Combination
(continued)
* Merged entity would have resources to focus on
core business
- Redeployment of non-strategic, unregulated assets which
do not meet performance criteria
- Provides financial flexibility required in a competitive
environment
- Proceeds to be used for non-utility investment, debt
repayment or stock buy-back
<PAGE>
[Slide #14]
Strategic Elements of Combination
(continued)
* Combined company could more aggressively pursue
strategy in a competitive environment
- Natural linkage of telecommunication with electric products
and services
- Financial ability to develop and invest in products and
services which complement the core business
- Low cost production status reduces competitive risks
<PAGE>
[Slide #15]
Strategic Elements of Combination
(continued)
* Creates low cost regional service provider based in Iowa
- Committed to communities and economic development
- Committed to successful partnership with other providers
of related products and services
<PAGE>
[Slide #16]
MidAmerican's Proposal
* $39 per IES share
* IES shareholders can elect cash or common stock - Cash component up to
40%, or approximately $467 Million - Common stock component tax-free -
Exchange ratio for common stock component of 2.346
MidAmerican shares for each IES share
* Purchase accounting
- Allows flexibility in deal structure and pre-merger actions
- Reduces common stock issuance
<PAGE>
[Slide #17]
Financial Consideration
* MidAmerican's proposal is compelling and
demonstrably superior
- 31% premium to market (before announcement)
- 21% premium to Wisconsin transaction
- 42% higher dividend than the Wisconsin Transaction
which proposes a 5% decrease
- Election to receive stock or cash
- More than 25% increase in earnings per IES share equivalent
for those holders receiving common stock
<PAGE>
[Slide #18]
Regulatory Realities
* Strong MEC track record of rapid merger approval
* Easier application process
- No Wisconsin or Minnesota approvals required
- Merger climate good in Iowa
- Avoid Registered Holding Company issue
<PAGE>
[Slide #19]
MidAmerican Merger Time Line
[CHART]
Time line bar chart representing the time (in months) it took MidAmerican
to obtain approval of shareholders, IUB, ICC, FERC, and NRC from
date of announcement of the merger until date of completion (less than 12 months
later).
Detail of time required:
Entity Months
Shareholders 4-5
IUB 4-6
ICC 4-10
FERC 7-11
NRC 7-11
<PAGE>
[Slide #20]
MidAmerican Merger Time Line
With the "Wisconsin" Time Line
Time line bar chart representing the time (in months) it took MidAmerican
to obtain approval of shareholders, IUB, ICC, FERC and NRC from
date of announcement of the merger until date of completion for the MidAmerican
merger as compared to the WPL, IES and Interstate merger.
MidAmerican Time Line "Wisconsin" Time Line
Shareholders 4-5 9-16
IUB 4-6 4-14
ICC 4-10 4-16
FERC 7-11 4-16+
NRC 7-11 4-16+
<PAGE>
[Slide #21]
Regulatory Realities
(continued)
* Fully integrated system
- Contiguous and overlapping service territory
- Jointly owned and operated coal-fired generation
- Interconnections already in place
<PAGE>
[Slide #22]
345 kV Transmission System
[GRAPHIC]
Geographical map of Iowa and parts of neighboring States showing MidAmerican's
345 kV transmission system in comparison with IES', Interstate's and other
transmission systems within Iowa and such States.
[MidAmerican Logo]
<PAGE>
[Slide #23]
Regulatory Realities
(continued)
* MidAmerican's pricing proposal could easily be
applied to IES customers
- Moves away from rate-based regulation and towards market
based pricing
- Provides opportunity for shareholders to benefit from
synergies and effective cash flow management
- Positive public reaction (political leaders, community leaders
and co-ops)
<PAGE>
[Slide #24]
Preliminary Cost Savings
1998 - 2007 Time Frame
[PIE CHART*] * Virtually all operating cost savings
* Based entirely on public information
* MidAmerican projected approximately $30
million annual O&M savings in its 1994
merger announcement. Has actually
achieved $50 million.
* Estimated 10 year savings over $500 million:
Energy supply and dispatch $57M
Procurement $74M
Avoided capital cost $29M
Labor $278M
Other $82M
[MidAmerican Logo]
<PAGE>
[Slide #25]
Earnings Impact
* Objective of neutral impact in first year (1998)
- Requires aggressive pursuit of cost savings
- Incorporates unregulated asset redeployment
* Confident break-even earnings impact can be achieved
second year after merger (1999)
* Target dividend payout ratio of approximately 80% in 2000
<PAGE>
[Slide #26]
Earnings / Issues
* Earnings enhancement strategies
- Exceed synergy goals
- Cash generation from underperforming unregulated
businesses
- Cash generated from reduced utility construction
and via pricing plan
- Additional cash utilized to:
* Invest in core business
* Reduce debt
* Buy back stock
- Revenue enhancement via new and additional products
and services
<PAGE>
[Slide #27]
Pro Forma Cash Flow Impact
($ millions, except per share)
IES cash flow (latest twelve months 3/31/96) $201.4
Interest expense on new debt (22.2)
Acquired cash flow 179.2
MEC cash flow (latest 12 twelve months 3/31/96) 424.4
After-tax synergies to shareholders 14.8
Combined cash flow 618.4
Combined shares outstanding (million) 142
Pro forma cash flow per share $4.35 per share
Notes: Assumes 40% of total consideration is cash.
Assumes $50 million synergies are split 50/50 between
ratepayers and shareholders.
<PAGE>
[Slide #28]
McLeod Inc.
* Iowa based full service regional telecommunications company * Management team
from prior Telecom USA company.
Sold to MCI in 1990 for $1.25 billion.
* McLeod IPO @$20/share in May, 1996. Current price $26/share
* Market capitalization of approximately $1.1 billion
* Merged company will hold approximately 41% of total shares
* Carrying value for MidAmerican is approximately $36M
<PAGE>
[Slide #29]
Unrecognized Value
Pro forma cash flow per share $4.35
Typical midwest utility multiple* 5-6 times
$21.75-$26.10
Pro forma McLeod holdings $451 million
Pro forma shares outstanding (million) 142
Pro forma McLeod holdings per share $3.18
Total implied value per share $24.93 - $29.28
*Examples: Illinova 5.1x
Western Resources 5.0x
NIPSCO 5.8x
<PAGE>
[Slide #30]
Strategic Transition
Combination is a logical step in MidAmerican's strategy
for a competitive future
* Evaluation and possible redeployment of non-strategic,
unregulated assets
- InterCoast Energy
- Preferred stock portfolio
- Other existing non-regulated investments
- IES has significant investments that MidAmerican would
evaluate closely (Whiting Petroleum, railroad operation,
international and other investments)
* Focus on core businesses and strengths, including
communications
<PAGE>
[Slide #31]
This is a unique strategic
opportunity for MidAmerican.
Our resolve is absolute.
<PAGE>
[Slide #32]
QUESTIONS
<PAGE>
[The following is a newspaper advertisement by MidAmerican Energy Company]
An Important Message For
IES Industries Shareholders
MidAmerican Energy's Merger Proposal Means More Value For You.
On August 4, 1996, MidAmerican Energy Company proposed a merger to the IES
Industries Board of Directors that would give you a substantial premium over the
consideration you would receive in a merger with WPL Holdings, Inc. And
Interstate Power Company (the "Wisconsin deal"). In addition, the MidAmerican
merger proposal provides you with a significant dividend increase, as opposed to
the dividend decrease you would receive in the Wisconsin deal. The MidAmerican
proposal also provides IES shareholders with the opportunity to receive $39 per
share in cash for up to 40% of all outstanding IES shares.
The MidAmerican numbers speak for themselves:
Better Value Higher Dividend
IES Stock Price on 8/2/96 $29.75 Current IES Dividend: $2.10
Value of IES stock in the Proposed IES Dividend
Wisconsin deal:* $32.19 the Wisconsin deal: $1.99
(no cash offered)
Value of IES stock in Proposed IES Dividend
MidAmerican's proposal:* $39.00 in MidAmerican's proposal: $2.82
(up to 40% in cash)
Added value of Added dividend value of
MidAmerican's proposal +21% MidAmerican's proposal +42%
over the Wisconsin deal:* Over the Wisconsin deal:*
*based on August 2, 1996 closing stock prices
In addition, a merger if IES and MidAmerican would create a stronger Iowa-based
company, better positioned to succeed in the competitive utility environment.
The service territories of the two companies are contiguous and overlapping,
offering opportunities for cost savings that would not be available in the
Wisconsin deal.
We will soon be mailing you MidAmerican's proxy materials containing further
information about our proposed merger. We urge you not to return any green or
white proxy card sent to you by IES regarding the Wisconsin deal. If you have
already returned your proxy card to IES, you will have every chance to change
your vote simply by signing, dating and returning MidAmerican's BLUE proxy
card.
<PAGE>
The MidAmerican Proposal:
Higher Price, Higher Dividend, Greater Value:
Important
For more information about the MidAmerican
Energy merger proposal, please call this
toll-free phone number
1-888-776-4692
<PAGE>
SHARES OF IES INDUSTRIES INC. ("IES")
COMMON STOCK HELD BY MIDAMERICAN ENERGY COMPANY ("MIDAMERICAN"),
ITS DIRECTORS AND EXECUTIVE OFFICERS AND CERTAIN EMPLOYEES, OTHER
REPRESENTATIVES OF MIDAMERICAN AND
CERTAIN OTHER PERSONS WHO MAY SOLICIT PROXIES, AND
CERTAIN TRANSACTIONS BETWEEN ANY OF THEM AND IES
MidAmerican may solicit proxies against the IES/WPL Holdings,
Inc./Interstate Power Company merger. The participants in this solicitation may
include MidAmerican, the directors of MidAmerican (John W. Aalfs, Stanley J.
Bright, Robert A. Burnett, Ross D. Christensen, Russell E. Christiansen, John W.
Colloton, Frank S. Cottrell, Jack W. Eugster, Mel Foster, Jr., Nolden Gentry,
James M. Hoak, Jr., Richard L. Lawson, Robert L. Peterson, Nancy L. Seifert, W.
Scott Tinsman, Leonard L. Woodruff), and the following executive officers and
employees of MidAmerican or its subsidiaries: Philip G. Lindner (Group VP and
Chief Financial Officer), John A. Rasmussen (Group VP and General Counsel),
Ronald W. Stepien (Group VP), Larry M. Smith (Controller), Paul J. Leighton (VP
& Corporate Secretary), J. Sue Rozema (VP Investor Relations and Treasurer),
Keith D. Hartje (Mgr. Corp. Communications), Alan L. Wells (Mgr. Corp. Dev. &
Strategy), Jack L. Alexander (Manager Human Resources), Beverly A. Wharton
(President Gas Division), Lynn K. Vorbrich (President Electric Division), David
J. Levy (VP & Chief Information Officer), Charlene A. Osier (Mgr. Shareholder
Services), Paul A. Bjork (Shareholder Admin.), Jackie A. Fulhart (Senior
Shareholder Analyst), Marv E. Kingery (Shareholder Analyst), L. Jene Spurgin (IR
Coordinator), Tom C. Foster (Finance & Investment Admin.), James C. Galt (Mgr.
Financial Planning), Richard T. Tunning (Mgr. Corp. Acctg.), John P. Palmolea
(Sr. Accountant), Merlyn F. Wiese (Senior Financial Analyst), James C. Parker
(Senior Bulk Power Engineer), James J. Howard (VP Gas Admin. Services), Patrick
A. Kirchner (Attorney), Maureen E. Sammon (Mgr. Benefits), David C. Caris
(Manager Governmental Affairs), Garry W. Osborne (Strategic Planner), George L.
Phillips (Mgr. Corp. Performance), Thomas C. Watt (Mgr. Waterloo District),
Virginia A. Dasso (Mgr. Mississippi Valley), Greg B. Elden (Mgr. Siouxland
District), Robert L. Lester (Mgr. Des Moines District), Lester A. Juon (Mgr.
Sioux City District), John A. Harvey (Mgr. Distribution Operations Support),
Annette J. Johnston (Mgr. Customer Support), Christian M. Swanson (Mgr. Cedar
Valley District), Ron E. Unser (Mgr. Quad Cities District), Jeanette I. Lose
(Mgr. Credit), Barb J. Anderson (Executive Assistant), William G. Stowe (Mgr.
Electric Operations), David L. Graham (Mgr. Electric Energy Services), James E.
Wilson (Mgr. Regulatory Affairs), Chuck H. Golliher (Mgr. Purchasing), Sally A.
Robinson (Supv. Office Services), John F. McCarroll (Media and IR Coordinator),
Kim K. Koster (Regional Communications Coordinator), Kelly I. Sankey (Customer
Communications Coordinator), Tim D. Grabinski (Regional Communications
Coordinator), Jodi E. Bacon (Manager HR Communications), Suzan M. Stewart (Mgr.
Attorney Gas Law Dept.), Charles R. Montgomery (Sr. Attorney), Steven R. Weiss
(Sr. Attorney), Terry R. Fox (Attorney), J. Christopher Cook (Attorney), Barb A.
Pollastrini (Employee Communications Coordinator), Karen P. Johnson
(Communications Specialist), Mary C. Nelson (Labor Relations Attorney), Janet H.
Trentmann (Corporate HR Consultant), Tom Sweeney (Supv. Employment &
Development), Gary Richardson (Mgr. Electric Operations), John J. Cappello (VP
Marketing), Stephen E. Hollonbeck (Sr. VP Gas Operations), Stephen E. Shelton
(Sr. VP Electric Distribution), James R. Bull (VP Generation), Mark W. Roberts
(Mgr. Elec. Admin. Services), O. Dale Stevens (Mgr. Resource Planning), James
Averweg (Mgr. Transmission), William D. Leech (Mgr. Generation), Brent E. Gale
(VP Law & Reg. Affairs), Gregory C. Schaefer (Mgr. Elec. Rates & Regulation),
Taylor S. Davis (Attorney), Karen M. Huizenga (Attorney), Robert P. Jared
(Attorney), Randall B. Palmer (Attorney), Jean F. Stier (Shareholder
Representative), L.T. Smith (Mgr. Loess Hills District), John H. Wetzel
(Economic Development Consultant), Martha A. Matthews (MIS Analyst), David C.
Weiss (Customer Coordinator), Jeffrey J. Gust (Sr. Bulk Power Engineer), Richard
J. Singer (Mgr. Nuclear), James M. Howard (Customer Coordinator), Marcia L. Vest
(Acct. Assist.), John T. Holmes (IT Training Coord.), Deb L. Calvert (Economic
Development Consultant), Thomas H. Hutchins (Gas Engineer), Mark K. Etchen
(Supervisor Customer Coordination), Mary J. Brown (HR Analyst), Brian E. Johnson
(Mgr. State Gov't Relations), LeAnne
8-13-96(2)
<PAGE>
S. Turner (Customer Service), Robert M. Ockerman (Customer Coordinator),
Connie L. Schwab (Customer Service), Juanita F. Mosher (Customer Coordinator
Asst.), Robin B. Fortney (Sr. Environmental Coordinator), Deb J. Kraft
(Secretary), Dian E. Nowell (Records Mgmt. Assist.), Joel D. Krusemark (Gas
Technician), Mickey G. Sieren (Customer Service), Linda W. Ruble (Employee
Communications Coordinator), John L. Mehalovich, Rodney L. Schroeder (Customer
Coordinator), Dawn M. Martino (Customer Coordinator), Jane M. Bushbaum (HR
Consultant), William G. Nowell (Mgr. Electric Operations), and Eric C. Heikes
(Customer Coordinator).
As of the date of this communication, MidAmerican had no security
holdings in IES. Regina Rae Huggins, a person who will solicit proxies, is the
beneficial owner of four (4) shares of common stock, no par value, of IES (the
"IES" Common Stock"). John W. Colloton's wife is the beneficial owner of 250
shares of IES Common Stock with respect to which Mr. Colloton disclaims any
beneficial ownership. Leonard L. Woodruff is the beneficial owner of 100 shares
of IES Common Stock. Jackie A. Fulhart is the beneficial owner of 305 shares of
IES Common Stock. Christian M. Swanson's wife is the beneficial owner of 12
shares of IES Common Stock.
Other than as set forth herein, as of the date of this communication,
neither MidAmerican nor any of its directors, executive officers or other
representatives or employees of MidAmerican, or other persons known to
MidAmerican who may solicit proxies, has any security holdings in IES except
that MidAmerican has not yet been able to obtain any information with respect to
the security holdings of IES, if any, of Steve R. Weiss, John J. Cappello,
Stephen E. Hollonbeck, Gregory C. Schaefer, Taylor S. Davis, Karen M. Huizenga,
Robert P. Jared, L.T. Smith, Deb L. Calvert, Thomas H. Hutchins, Brian E.
Johnson, Robin B. Fortney, Mickey G. Sieren, Rodney L. Schroeder or Dawn M.
Martino. MidAmerican disclaims beneficial ownership of any securities of IES
held by any pension plan of MidAmerican or by any affiliate of MidAmerican.
Although Dillon Read & Co. Inc. ("Dillon Read"), financial advisors to
MidAmerican, do not admit that they or any of their directors, officers,
employees or affiliates are a "participant," as defined in Schedule 14A
promulgated under the Securities Exchange Act of 1934 by the Securities and
Exchange Commission, or that such Schedule 14A requires the disclosure of
certain information concerning Dillon Read, Ken Crews (Managing Director), James
Hunt (Managing Director), Jeff Miller (Vice President), Jason Sweet (Managing
Director), Forest Williams (Analyst), Jim Brandi (Managing Director), and Elliot
Merrill (Analyst), in each case of Dillon Read, who may assist MidAmerican in
such a solicitation. Dillon Read engages in a full range of investment banking,
securities trading, market-making and brokerage services for institutional and
individual clients. In the normal course of their business, Dillon Read may
trade securities of IES for their own account and the account of their customers
and, accordingly, may at any time hold a long or short position in such
securities. As of the most recent practicable date prior to the date hereof as
such information was available, Dillon Read did not hold any securities of IES.
Except as disclosed above, to the knowledge of MidAmerican, none of
MidAmerican, the directors or executive officers of MidAmerican or the employees
or other representatives of MidAmerican named above has any interest, direct or
indirect, by security holdings or otherwise, in IES.
8-13-96(2)
<PAGE>
