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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 10, 1994
ASSOCIATED NATURAL GAS CORPORATION
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(exact name of registrant as specified in its charter)
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Delaware 1-1008 84-1006841
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(State or other (Commission File (IRS Employer
jurisdiction of Number Identification No.)
incorporation)
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303 Seventeenth Street, Suite 900, Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (303) 595-3331
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N/A
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(Former name or former address, if changed since last report)
Page 1 of 6 pages.
Exhibit Index on Page 4.
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Item 5. Other Events.
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Associated Natural Gas Corporation (the "Company") issued a press release
on October 10, 1994, announcing that the Board of Directors of the Company had
approved, and the Company had entered into, an Agreement and Plan of Merger
dated as of October 9, 1994, with Panhandle Eastern Corporation, a Delaware
corporation and Panhandle Acquisition Two, Inc., a newly formed Delaware
corporation (collectively "PEC"), relating to the proposed merger of the Company
with and into PEC, as a result of which, the Company will become a wholly-owned
subsidiary of PEC. A copy of the press release is attached hereto as Exhibit 1
and is incorporated herein by reference.
Item 7(c). Exhibits.
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1. Press Release dated October 10, 1994 regarding the Agreement and Plan
of Merger among the Company and PEC.
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SIGNATURES
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASSOCIATED NATURAL GAS CORPORATION
By: /s/ HOWARD R. LOGAN, JR.
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Name: Harold R. Logan, Jr.
Title: Senior Vice President - Finance
Dated: October 10, 1994
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EXHIBIT INDEX
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EXHIBIT PAGE
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1. Press Release dated October 10, 1994 regarding the Agreement and 5
Plan of Merger among the Company and PEC.
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N E W S R E L E A S E
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BEFORE THE OPENING
Contact: Harold R. Logan, Jr., Sr. V.P. Finance
303-595-3331
October 10, 1994
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DENVER, COLORADO - Associated Natural Gas Corporation, (NYSE:NGA) and Panhandle
Eastern Corporation (NYSE:PEL) today announced an agreement for the combination
of Panhandle and Associated on a tax-free exchange of stock for stock to be
accounted for as a pooling of interest.
In the combination, which is structured as a merger of Associated and a wholly
owned subsidiary of Panhandle, each share of Associated's common stock will be
converted into the right to receive between 1.5725 and 1.8750 shares of
Panhandle common stock, depending on the average daily price of Panhandle's
common stock during a 15 day period prior to completion of the merger. (Based
on the average daily price of Panhandle common stock for the most recent 15 day
period of $22.80, the exchange ratio would be approximately 1.71 shares of
Panhandle common stock for each share of Associated common stock.) At a price
of $39 per share for Associated stock, the total value of the transaction,
inclusive of $239 million of Associated long-term debt, is approximately $830
million.
Donald H. Anderson, President of Associated, said, "Associated and all of its
operating subsidiaries will remain as a separate operating entity, and its
management and operating employees will remain in the combined organization.
The transaction will provide Associated's stockholders with a premium over the
current price of Associated's common stock, as well as the opportunity to
participate in the major growth potential of the combined companies."
Following completion of the merger, which is subject to certain conditions,
including Associated and Panhandle stockholder approval, Associated will become
a wholly-owned subsidiary of Panhandle.
Paul Anderson, President of Panhandle, said, "The merger of Panhandle and
Associated should enhance the value of the shares owned by the stockholders of
each company. The combined entities will comprise one of the nation's largest
natural gas transportation companies, will be the nation's third largest
independent natural gas marketing company, the fourth largest natural gas
gathering company, and one of the top 15 natural gas liquids producers in the
country."
Paul Anderson stated that if the transaction is completed by year-end as
planned, the impact of the merger, including all transaction costs, will be
reflected in Panhandle's 1994 results. "We continue to expect Panhandle's 1994
earnings, exclusive of the effect of the this merger, to be at the high end of
financial analyst estimates of $1.65 to $1.75 per share. Our preliminary third
quarter results, which are not final, are expected to be approximately 40 cents
per share. Although there will be minor dilution of 1995 earnings, the company
remains confident that our earlier stated goal of $2 per share in 1995 is still
achievable," he said.
"This action is a part of Panhandle's strategic plan to further expand its
activities beyond its core gas transmission services business. The merger with
Associated provides a major step in this direction," Paul Anderson continued.
"The combination of Panhandle and Associated will provide diversity of supply
and markets for both companies and will combine significant growth opportunities
with the necessary financial resources to fully develop them. Panhandle will be
able to broaden its service portfolio and access to western U.S. markets and
supply, and Associated will achieve improved access to new high-value markets in
the midwest and northeast, as well as to gulf coast, Canadian and Mexican gas
supplies, together with a portfolio of complementary market services.
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"Both companies have the management depth and flexibility to lead and respond to
change in the energy industry. An emphasis on customer service has been an
important focus for both companies and will continue to distinguish the combined
operation from its competitors," Paul Anderson added.
In connection with the merger agreement, Associated has granted Panhandle an
option to purchase up to 19.9 percent of newly issued shares of Associated
common stock at the price of $39 per share upon any termination of the merger
agreement under certain specific circumstances. In addition, Associated has
agreed to pay to Panhandle $20 million as a termination fee if the merger
agreement is similarly terminated. Also, holders of approximately 10 percent of
Associated's outstanding common stock, including substantially all of
Associated's executive officers and directors, have granted to Panhandle an
irrevocable proxy to vote in favor of the merger and against any matter that is
inconsistent with the proposed transaction.
The merger agreement was approved by Panhandle's Board of Directors at a meeting
on Saturday, October 8, 1994 and by Associated's Board of Directors at its
meeting on Sunday, October 9, 1994. The parties expect that the merger will be
completed in mid-December 1994.
Associated is one of the largest U.S. independent gatherers, processors,
transporters and marketers of natural gas, NGLs and crude oil. Its 870
employees operate 9,467 miles of pipelines connected to 7,853 wells and other
facilities in major natural gas and oil producing basins in 9 states. It
markets natural gas from coast to coast, Canada and the United Kingdom, and
markets and trades over 2.5 billion cubic feet of natural gas, 43,000 barrels of
NGLs and 77,000 barrels of crude oil on a daily basis.
Panhandle, America's natural gas transportation company, operates one of the
nation's largest interstate natural gas pipeline systems, providing natural gas
transportation and related services to the midwest and northeast markets.
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