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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
SOUTHEASTERN MICHIGAN GAS COMPANY
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $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:
________________________________________________________________________
[ ] 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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SOUTHEASTERN
MICHIGAN GAS COMPANY
NOTICE OF SPECIAL MEETING OF PREFERRED SHAREHOLDERS
TO BE HELD ON January 30, 1997
A Special Meeting of Preferred Shareholders of Southeastern Michigan Gas
Company (the Company) will be held at 405 Water Street, Port Huron, Michigan,
on Thursday, January 30, 1997 at 2:00 p.m., for the following purposes:
I. To approve a merger of Battle Creek Gas Company (BCGas) and
Michigan Gas Company (MiGas) into the Company. BCGas, MiGas and
the Company are all subsidiaries of Southeastern Michigan Gas
Enterprises, Inc.
II. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Preferred Shareholders of record at the close of business on December 13,
1996, may vote at the meeting or at any adjournment thereof.
Whether or not you expect to attend the meeting, please sign, date and
return the accompanying proxy in the enclosed envelope, which requires no
postage if mailed in the United States. If you should attend, you may vote in
person, if you wish, whether or not you have sent in your proxy. Thank you for
your continuing support.
By order of the Board of Directors
Kurt A. Angermeier, Secretary
2915 Lapeer Road P.O. Box 5004
Port Huron, Michigan 48061-5004
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SOUTHEASTERN
MICHIGAN GAS COMPANY
2915 Lapeer Road, Port Huron, MI 48060
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
Southeastern Michigan Gas Company (the Company) for use at a Special Meeting of
Preferred Shareholders of the Company on Thursday, January 30, 1997, at
2:00 p.m., and any adjournments thereof, to be held at 405 Water Street, Port
Huron, Michigan.
This Proxy Statement relates to the proposed merger (the Merger) of Battle
Creek Gas Company (BCGas) and Michigan Gas Company (MiGas) into the Company.
The Company, BCGas and MiGas are all subsidiaries of Southeastern Michigan Gas
Enterprises, Inc. (Enterprises). The Company, BCGas and MiGas are all gas
distribution companies serving customers in Michigan.
After the Merger: (1) Enterprises will continue to own all of the Common
Shares of the Company; (2) each Common Share of BCGas and MiGas will be
cancelled; and (3) each Common Share and Preferred Share of the Company will
remain unchanged, except for Preferred Shares owned by Dissenting Shareholders
who receive cash for their shares as discussed below.
The Merger will not take place unless approved by the holders of
two-thirds of the outstanding Preferred Shares of the Company. See "STOCK
OUTSTANDING, VOTING RIGHTS AND VOTES REQUIRED." The Company's Board believes
the proposed Merger will provide benefits to the Company and its
shareholders, including Preferred Shareholders, by facilitating more
cost-effective and efficient operations. The Board recommends approval of
the Merger.
A Preferred Shareholder giving the enclosed proxy (or his authorized
representative) may revoke it any time before it is exercised by executing a
subsequent proxy, by oral or written notice to the Company or by voting in
person at the meeting. Preferred Shareholders have Dissenters' Rights. See
"DISSENTING SHAREHOLDERS' RIGHTS." A Preferred Shareholder revoking the
enclosed proxy may then exercise his right to dissent. So, even if you
think that you may want to dissent (but are not sure), the Company requests
that you sign, date and return the accompanying proxy in the enclosed envelope.
The Company will bear the cost of soliciting proxies, including charges
and expenses of brokerage firms and others for forwarding solicitation
material to beneficial owners of Preferred Shares. In addition to mailings,
proxies may be solicited by personal interview, telephone or telegraph by
certain of the Company's employees without compensation. The Company may
also retain and compensate one or more outside organizations to assist in
soliciting proxies.
It is expected that the proxy materials will be mailed to Preferred
Shareholders on or about December 20, 1996.
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STOCK OUTSTANDING, VOTING RIGHTS AND VOTES REQUIRED
Only Preferred Shareholders of record on the Company's stock transfer
books at the close of business on December 13, 1996 (the record date) may
vote at the meeting.
The Company had 31,000 Preferred Shares, $100 Par Value (Preferred
Shares), outstanding on the record date. A majority of the Preferred Shares
entitled to vote constitutes a quorum. Two-thirds of the outstanding
Preferred Shares (20,667) must be voted in favor of the Merger in order for
the Merger to be approved. Therefore, if you do not vote your Preferred
Shares, you will be treated as having voted against the Merger.
In total, the Company's management owns less than one percent of the
Company's Preferred Shares and less than one percent of Enterprises' Common
Shares. Enterprises owns 470 of the Company's Preferred Shares (1.5%) and, of
course, all of the Company's Common Shares. Mr. Douglas Bridges is the record
holder of 3,543 shares (about 11.4%) of the Preferred Shares. Mr. Bridges
holds these shares as a trustee. He resides at 50 Bishop Avenue, Coldwater,
Michigan 49036.
AGREEMENT AND PLAN OF MERGER
A. BACKGROUND AND REASONS FOR MERGER. In 1977, Enterprises was organized for
the purpose of becoming the parent of the Company. Effective November 1,
1977, the Company's common shares was converted on a share-for-share basis
into common shares of Enterprises. The Company's Preferred Shares were
not changed.
Subsequently, Enterprises became the sole shareholder of BCGas and MiGas.
Each of the three subsidiaries have implemented procedures to make
operations more efficient and cost-effective, for the benefit of
shareholders, employees and customers. Merging the three subsidiaries
into one company is another step toward improving efficiency and
quality of service.
B. IMPROVING OPERATIONS AND EFFICIENCIES. Among other things, the Merger
should reduce administrative costs by: (i) facilitating consolidation
(e.g. reducing three boards of directors to one); (ii) reducing record
keeping and reporting requirements; (iii) allowing fuller utilization of
capital assets and resources; and (iv) facilitating the flexibility
necessary to respond to changing conditions.
C. BENEFITS FOR PREFERRED SHAREHOLDERS. The Merger will make the combined
net earnings from all three subsidiaries available for dividends and
redemptions of the Company's Preferred Shares.
In 1995, the Company earned $5,400,000 while BCGas earned $2,000,000 and
MiGas earned $4,200,000.
The annual dividend requirement for the Company's Preferred Shares is
$178,000. The Company has the right to redeem Preferred Shares at $105
per share ($3,255,000 for all Preferred Shares). The Company does not
currently contemplate any redemptions.
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Neither BCGas nor MiGas have any preferred shares outstanding. Currently,
because Enterprises owns all of the common shares of BCGas and MiGas, it
has priority over the Company's Preferred Shareholders with respect to the
earnings of BCGas and MiGas. After the Merger, the opposite will be true;
all dividends, and any other payments, due the Company's Preferred
Shareholders will have to be fully paid before the Company's common
shareholder (Enterprises) can share in the earnings of BCGas and MiGas.
D. TAX CONSEQUENCES. The Merger will have no tax consequences for any
shareholders except for Preferred Shareholders who dissent and receive
cash for their Preferred Shares (Dissenting Shareholders).
A Dissenting Shareholder will be treated as if his Preferred Shares were
sold for the cash he receives. A Dissenting Shareholder will recognize a
taxable gain to the extent that the cash he receives is greater than his
tax basis for those Preferred Shares. If the cash received by a
Dissenting Shareholder is less than his tax basis, then he will
recognize a loss for tax purposes equal to the difference.
Generally, any gain or loss will be a capital gain or capital loss.
However, a Preferred Shareholder who is a stock broker, and holds the
Preferred Shares as part of his inventory, would be treated as having
realized an ordinary gain or ordinary loss.
If a Dissenting Shareholder bought his Preferred Shares, then his tax
basis is equal to what he paid. If a Dissenting Shareholder received his
Preferred Shares as a gift, then his tax basis is the same as the tax
basis of the person giving him the shares.
The above discussion is included for general information and is based on
current federal tax law. Dissenting Shareholders having any questions
regarding state tax law or needing other tax guidance should consult with
their own tax advisor.
E. MERGER'S EFFECT. The Merger will not affect the Company's Preferred
Shares; Preferred Shareholders of the Company (other than Dissenting
Shareholders) will continue to be Preferred Shareholders of the Company.
Similarly, Enterprises will continue to be the only Common Shareholder of
the Company. The common shares of BCGas and MiGas, which are all owned by
Enterprises, will be cancelled. BCGas and MiGas will no longer exist as
separate companies.
The Merger will not change the Company's Articles of Incorporation.
F. THE BOARD'S RECOMMENDATION. The Company's Board of Directors has
unanimously determined that the Merger is in the best interests of the
Common and Preferred Shareholders of the Company and has approved the Plan
of Merger.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS OF THE
PREFERRED SHARES IS REQUIRED FOR APPROVAL OF THE PLAN OF MERGER.
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THE MERGER WILL NOT TAKE PLACE UNLESS SUCH APPROVAL IS OBTAINED.
ABSTENTIONS WILL HAVE THE SAME EFFECT AS VOTES AGAINST THE PLAN.
THE BOARD RECOMMENDS APPROVAL OF THE PLAN AND URGES EACH PREFERRED
SHAREHOLDER TO VOTE "FOR" APPROVAL. PROXIES WHICH ARE EXECUTED BUT DO NOT
INDICATE HOW THE PROXIES ARE TO BE VOTED WILL BE VOTED "FOR" APPROVAL OF
THE PLAN.
G. WHEN EFFECTIVE. If Preferred Shareholders approve the Merger, a
certificate of merger will have to be filed with the Michigan
Department of Commerce in order for the Merger to occur. The Merger
will become effective within 90 days of the filing of that certificate.
The Company has reserved the right to unilaterally abandon the Merger
at any time before it is effective, in case unforeseen circumstances
arise which make the Merger not in the best interests of the Company's
Preferred Shareholders and Common Shareholder.
DISSENTING SHAREHOLDERS' RIGHTS
Each Preferred Shareholder has the right to dissent from the Merger and
receive the fair value (discussed below) of his Preferred Shares in cash if the
Shareholder follows the procedures required under the Michigan Business
Corporation Act (MBCA), the material provisions of which are summarized below.
A. PROCEDURE TO DISSENT AND RECEIVE CASH IN RETURN FOR PREFERRED SHARES. To
receive cash in exchange for his shares, a Preferred Shareholder must
object to the Merger by:
1. Delivering to the Company a written objection to the Merger, prior to
the Special Meeting, including a statement of the Shareholder's
intent to demand payment for his shares if the Merger is
consummated; and
2. Not voting his Preferred Shares in favor of the Merger.
Written objections must be signed by the Shareholder of record and include
the Shareholder's address to which notice of approval of the Merger
will be delivered. A Shareholder may not dissent as to less than all
of his beneficially owned shares and a nominee or fiduciary may not
dissent on behalf of a beneficial owner as to less than all of the
Preferred Shares held for such beneficial owner.
If the Merger is approved, the Company will send a form of payment demand
to each Preferred Shareholder who objected to the Merger.
To receive cash, a Preferred Shareholder must complete the payment demand
form and send it with his Preferred Share certificates to the Company.
<PAGE>
After the Merger is completed, the Company will send payment in
response to each payment demand. The amount of the payment will equal
the Company's estimate of the fair market value of the Preferred Shares
received, plus certain interest accrued. The payment will be
accompanied by an explanation of how it was calculated and how a
shareholder can demand payment of the amount that the shareholder
believes is equal to the fair market value of his shares, plus accrued
interest.
The Company will determine the fair value of Preferred Shares based on the
bid price of those Shares in the over-the-counter market. As of
November 30, 1996, the bid price per share of the Preferred Shares was as
follows:
Series A $62.63
Series B $57.25
Series C $57.25
Series D $57.25
B. POSSIBLE COURT PROCEEDINGS. If the Company and the Preferred Shareholder
cannot agree on the amount to be paid, after 60 days the Company must
start a proceeding in St. Clair County Circuit Court located in Port
Huron, Michigan, in order for the Court to settle the disagreement.
Generally, the Company will pay the expenses of the proceeding, which
may include compensation to experts and attorneys. However, the Court
may require the Preferred Shareholder to pay these expenses if the
Court believes that the Shareholder has not acted in good faith.
C. OTHER CONSIDERATIONS. The MBCA provides that, in the absence of fraud or
illegality, the right to dissent is the only remedy provided to a
Shareholder objecting to the Merger.
A PROXY OR VOTE AGAINST THE MERGER WILL NOT, BY ITSELF, BE REGARDED AS A
WRITTEN OBJECTION FOR PURPOSES OF ASSERTING DISSENTERS' RIGHTS.
THE ABOVE SUMMARY OF THE PROVISIONS REGARDING DISSENTERS' RIGHTS UNDER THE
MBCA IS QUALIFIED IN ITS ENTIRETY BY THE TEXT OF SECTIONS 450.761-450.774
OF THE MBCA. THE TEXT OF THESE SECTIONS IS ATTACHED HERETO AS APPENDIX A.
PREFERRED SHAREHOLDERS OF THE COMPANY INTENDING TO EXERCISE DISSENTERS'
RIGHTS ARE URGED TO SEEK THE ADVISE OF COUNSEL. FAILURE TO COMPLY WITH
ALL REQUIREMENTS OF THE MBCA WILL RESULT IN THE LOSS OF DISSENTERS' RIGHTS.
COPY OF FORMAL PLAN AVAILABLE
The Company undertakes to provide without charge to each person, including
any beneficial owner to whom a copy of this Proxy Statement has been delivered,
on the written or oral request of any such person, a copy of the Agreement And
Plan of Merger. Requests for such copies should be directed to Secretary,
Southeastern Michigan Gas Company, 2915 Lapeer Road, P.O. Box 5004, Port Huron,
Michigan 48061-5004, telephone number (810) 987-7900, extension 4723.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP have been the auditors for the Company for over thirty
(30) years and have been appointed by the Board of Directors to continue in
that capacity during 1996. No representative of Arthur Andersen is expected to
attend the Preferred Shareholders Meeting.
OTHER BUSINESS
The management of the Company knows of no matters other than those above
stated which are to be brought before the meeting. However, if any other such
matters should be presented for action, it is the intention of the persons
named in the enclosed form of proxy to vote in accordance with their
judgment on such matters.
It is important that proxies be returned promptly to avoid unnecessary
expenses. Therefore, all Preferred Shareholders (even those planning to attend
the meeting) are urged, regardless of the number of shares of stock owned, to
sign, date and return the enclosed proxy in the business-reply envelope, also
enclosed. Shareholders attending in person may withdraw their proxies and vote
in person.
By order of the Board of Directors
Kurt A. Angermeier, Secretary
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[Logo]
SOUTHEASTERN
MICHIGAN GAS COMPANY
Special Preferred Shareholders Meeting to be held at
405 Water Street
Port Huron, Michigan 48060
January 30, 1997, at 2:00 p.m.
YOUR VOTE IS IMPORTANT.
Whether or not you plan to attend, you can be sure your
preferred shares are represented at the meeting by promptly
returning your completed proxy in the enclosed postage-paid envelope.
[arrow symbol] Detach Proxy Card Here [arrow symbol]
SOUTHEASTERN
MICHIGAN GAS COMPANY
2915 Lapeer Road, Port Huron, MI 48060
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints _______________ and _______________, or either
one of them, with power of substitution in each, proxies to vote, as designated
on the reverse side, all of the undersigned's shares of Preferred Stock of
SOUTHEASTERN MICHIGAN GAS COMPANY at the Special Meeting of Preferred
Shareholders to be held on January 30, 1997, and any and all adjournments
thereof.
Please date, sign exactly as name appears hereon, and mail promptly in the
enclosed envelope which requires no postage if mailed in the United States.
When signing as attorney, executor, administrator, trustee, guardian, etc.,
give full title as such. If shares are held jointly, both owners must sign.
Dated ________________________________, ____
Signature ___________________________________
Signature ___________________________________
(Continued on the other side)
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[arrow symbol] Detach Proxy Card Here [arrow symbol]
PROPERLY EXECUTED PROXIES WILL BE VOTED AS MARKED AND,
IF NOT MARKED, WILL BE VOTED FOR THE PLAN OF MERGER.
Please Mark Your Choice Like This. [X]
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1. Plan of Merger -- The Board of Directors recommends a vote FOR the Plan of
Merger.
(Check Only One Box)
A. For the Plan of Merger [ ]
B. Against the Plan of Merger [ ]
C. Abstain (same effect as vote against) [ ]
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2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY
ADJOURNMENTS THEREOF.
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(To be Dated and Signed on Other Side)
