SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
IES INDUSTRIES INC.
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[X] 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:
$453,367
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(2) Form, Schedule or Registration Statement No.:
PRELIMINARY PROXY MATERIALS of WPL HOLDINGS, INC., IES INDUSTRIES INC.
and INTERSTATE POWER COMPANY and JOINT PROXY STATEMENT of WPL HOLDINGS,
INC., IES INDUSTRIES INC. and INTERSTATE POWER COMPANY AND PROSPECTUS
of WPL HOLDINGS, INC. and INTERSTATE POWER COMPANY, ALL ON FORM S-4
FILE NO. 333-07931
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(3) Filing Party:
IES INDUSTRIES INC, WPL HOLDINGS, INC and INTERSTATE POWER COMPANY
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(4) Date Filed:
JANUARY 18, 1996 and JULY 11, 1996
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<PAGE>
Key Manager Talking Points
Good morning. I've asked you to gather here this morning so I
could share with you some exciting news.
As you all know, MidAmerican made a proposal to purchase our
company in an attempt to interfere with our three-way merger with WPL and
Interstate. Our Board of Directors, after careful consideration, rejected the
MidAmerican proposal and unanimously approved revised terms of a merger
agreement with WPL Holdings, Inc. (WPLH) of Madison, Wisconsin, and Interstate
Power Company (IPC) of Dubuque, Iowa, to form a new regional powerhouse,
Interstate Energy Corporation.
Under the terms of the revised agreement, which was also
unanimously approved by the directors present at the Board meetings of WPLH and
IPC, each share of IES common stock will be converted into 1.14 shares of
Interstate Energy common stock.
Based on the closing price of WPLH common stock on August 15,
1996, each share of IES common stock is valued at $36.20 per share, under the
new terms.
It is anticipated that, under the new terms, IES shareholders
will receive an initial annual cash dividend valued at $2.25 for each share of
IES common stock now held.
Under the former agreement, each IES common share was to be
converted into 1.01 shares of Interstate Energy common stock.
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Under the revised agreement, each share of IPC common stock
will be exchanged for 1.11 shares of Interstate Energy common stock and owners
of WPL Holdings common stock will retain the same number of shares of common
stock they currently own, and those shares will be converted into Interstate
Energy common stock.
The Board's unanimous rejection of the hostile takeover
proposal from MidAmerican Energy Company of Des Moines, Iowa, resulted from the
Board's conclusion that it is inferior to the terms of the revised Interstate
Energy merger agreement and is not in the best interests of IES shareholders.
The Board was also very concerned by the impact of the
proposed MidAmerican transaction on customers, employees and the communities IES
has served for more than 100 years. In addition, the Board received an opinion
from our financial advisor, Morgan Stanley & Company, that the revised exchange
ratio is fair to the shareholders of IES common stock from a financial point of
view.
Under the revised agreement, the Interstate Energy transaction
provides enhanced value to IES shareholders, giving them an even larger stake in
a regional utility with excellent growth potential.
By contrast, analysis of the MidAmerican proposal makes clear
that, contrary to their public statements, the value of the MidAmerican proposal
is substantially less than they represent. The Board's analysis considered,
among other things:
o the recent trading history of MidAmerican stock;
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o the fact that for most IES shareholders the exercise of the
cash option would entail adverse tax consequences;
o the fact that even with the most rapid regulatory approval
process for the MidAmerican transaction--a scenario we believe
unlikely--the MidAmerican transaction could take significantly
longer to complete than the Interstate Energy transaction;
o MidAmerican's ability to sustain its dividend, given its high
payout ratio and the significant additional indebtedness it
would incur under its proposal;
o and the fact that the MidAmerican transaction contemplates
significant sales of assets to finance the transaction.
By MidAmerican's own admission, its expected cost savings of
$500 million over ten years are significantly below the $749 million in cost
savings we anticipate over the same period under the Interstate Energy merger.
Given that, and the $400 million in goodwill amortization that would reduce
reported earnings, we questioned how MidAmerican could possibly afford the
ambitious promises it is making to customers and stockholders.
Clearly, the financial burden stemming from the acquisition
premium and the goodwill amortization will have to be borne by ratepaying
customers and stockholders.
Also, given the greater overlap of service territories between
MidAmerican and IES, a MidAmerican takeover of IES would result in the loss of
more Iowa jobs and, in our view, significant economic hardship for Cedar Rapids.
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<PAGE>
In the case of Interstate Energy, it will have 60% of its
assets and a commensurate number of its total employees in Iowa.
We believe these issues will not go unnoticed by Iowa
regulators and public officials, and hope they will assist us in our defense
against MidAmerican.
IES shareholders will own a significant share -- more than 44%
- -- of a powerful regional company - well-positioned to provide customers with
competitively-priced electricity and to do it in a way that will enable the new
company to generate enhanced value to IES' stockholders over the long term, as
well.
The ability to market electricity from our efficient, low-cost
power plants to attractive, higher-growth areas in neighboring states and the
financial resources to pursue these opportunities, will catapult Interstate
Energy into new markets.
Altogether, the Interstate Energy combination offers strategic
advantages far superior to the MidAmerican alternative.
Under the Interstate Energy combination, there will be four
major business units in three locations.
Both the Energy Delivery headquarters and the unregulated
business unit will be in Cedar Rapids.
This will significantly increase the business activities in
the Iowa cities. The Generation business unit will be in Madison.
Administrative Support business will be in Dubuque.
The Interstate Energy holding company will be in Madison.
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<PAGE>
We are sending supplemental proxy material to our shareholders
promptly so that they can vote on the new merger plan at the Annual Meeting,
which remains scheduled for Thursday, September 5, starting at 10:00 a.m. in
Cedar Rapids.
This has been a turbulent time for all of us at IES. As our
key managers, many of our employees look to you for guidance, and I am grateful
to all of you for your ongoing support and persistence. We are absolutely
convinced that this three-way merger is the best thing for all of us--IES, our
employees and our shareholders. We are not going to give in to MidAmerican.
Thank you for all you've done, we will continue to fight for
this transaction and your interests until the deal is consummated. Meanwhile,
I'd like to ask you all to continue focusing on your jobs and our long-term
goals. I know it is difficult, but we must not allow MidAmerican to undermine
our enthusiasm and dedication. We have built a wonderful company in IES, and we
will defend it with all we've got.
We will be available to take your questions now, and the
employee hotline will continue to answer questions that might surface later.
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