<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
----------------
PP&L RESOURCES, INC.
(NAME OF ISSUER)
PP&L RESOURCES, INC.
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
693499105
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
JOHN R. BIGGAR
SENIOR VICE PRESIDENT--FINANCIAL
PP&L RESOURCES, INC.
TWO NORTH NINTH STREET
ALLENTOWN, PENNSYLVANIA 18101
(TEL. NO. 610-774-5151)
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
AUGUST 14, 1998
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- ---------------------- --------------------
<S> <C>
$459,000,000 $91,800
</TABLE>
- --------
* Calculated solely for purposes of determining the filing fee, based upon
the purchase of 17,000,000 shares at the maximum tender offer price per
share of $27.00.
[_]CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE, AND THE DATE OF ITS FILING.
<TABLE>
<S> <C>
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
</TABLE>
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<PAGE>
EXPLANATORY NOTE
Copies of the Offer to Purchase (the "Offer to Purchase") and the Letter of
Transmittal, among other documents, have been filed by PP&L Resources, Inc., a
Pennsylvania corporation (the "Company"), as Exhibits to this Issuer Tender
Offer Statement on Schedule 13E-4 (the "Statement"). Unless otherwise
indicated, all material incorporated by reference in this Statement in
response to items or sub-items of this Statement is incorporated by reference
to the corresponding caption in the Offer to Purchase, including the
information stated under such captions as being incorporated in response
thereto.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is PP&L Resources, Inc. (the "Company"), a
Pennsylvania corporation that has its principal executive offices at
Two North Ninth Street, Allentown, Pennsylvania 18101.
(b) The information set forth in the front cover page; the "Introduction";
Section 2--"Purpose of the Offer; Certain Effects of the Offer"; and
Section 11--"Interest of Directors and Officers; Transactions and
Arrangements Concerning Shares" in the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 8--"Price Range of Shares;
Dividends" in the Offer to Purchase is incorporated herein by
reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS.
(a)-(b) The information set forth in Section 9--"Source and Amount of Funds"
in the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The information set forth in Section 2--"Purpose of the Offer; Certain
Effects of the Offer" in the Offer to Purchase is incorporated herein
by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in Section 11--"Interest of Directors and
Officers; Transactions and Arrangements Concerning Shares" in the Offer
to Purchase is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
Not applicable.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 15--"Fees and Expenses" in the
Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) The information set forth in Section 10--"Certain Information
Concerning the Company" in the Offer to Purchase and Exhibits (g)(1)
and (g)(2) hereto is incorporated herein by reference.
(b) The information set forth in Section 10--"Certain Information
Concerning the Company" in the Offer to Purchase is incorporated herein
by reference.
2
<PAGE>
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) There are no applicable regulatory requirements which must be complied
with or approvals which must be obtained in connection with the offer
in the Offer to Purchase, which information contained therein is
incorporated herein by reference, other than as described in Section
13--"Certain Legal Matters; Regulatory Approvals" in the Offer to
Purchase and other than compliance with the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder
including, without limitation, Rule 13e-4, and the requirements of the
state securities or "Blue Sky" laws.
(c) Not applicable.
(d) Not applicable.
(e) Reference is hereby made to the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, and each of which are incorporated herein by
reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
(a)(1) Offer to Purchase dated August 14, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) Letter to Shareowners dated August 14, 1998.
(a)(7) Press Release dated August 14, 1998.
(a)(8) Summary Advertisement dated August 14, 1998.
(a)(9) Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1997.
(g)(2) The Company's Quarterly Report on Form 10-Q for the six month period
ended June 30, 1998.
</TABLE>
3
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: August 14, 1998 PP&L Resources, Inc.
/s/ John R. Biggar
By: _________________________________
Name: John R. Biggar
Title:Senior Vice President--
Financial
4
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
99.(a)(l) Offer to Purchase dated August 14, 1998.
99.(a)(2) Letter of Transmittal.
99.(a)(3) Notice of Guaranteed Delivery.
Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
99.(a)(4) Other Nominees.
99.(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
99.(a)(6) Letter to Shareowners dated August 14, 1998.
99.(a)(7) Press Release dated August 14, 1998.
99.(a)(8) Summary Advertisement dated August 14, 1998.
99.(a)(9) Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
99.(b) Not applicable.
99.(c) Not applicable.
99.(d) Not applicable.
99.(e) Not applicable.
99.(f) Not applicable.
The Company's Annual Report on Form 10-K for the year ended December
99.(g)(1) 31, 1997.
The Company's Quarterly Report on Form 10-Q for the six month period
99.(g)(2) ended June 30, 1998.
</TABLE>
5
<PAGE>
PP&L RESOURCES, INC.
[LOGO OF PPL APPEARS HERE]
OFFER TO PURCHASE FOR CASH UP TO
17,000,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT IN EXCESS OF $27.00
NOR LESS THAN $24.50 PER SHARE
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT. NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER
IS EXTENDED.
- --------------------------------------------------------------------------------
PP&L Resources, Inc., a Pennsylvania corporation ("Resources" or the
"Company"), hereby invites its shareowners to tender shares (the "Shares") of
its Common Stock (the "Common Stock") to the Company at a price not in excess
of $27.00 nor less than $24.50 per Share in cash, as specified by shareowners
tendering their Shares, upon the terms and subject to the conditions set forth
herein and in the related Letter of Transmittal which together constitute the
"Offer." The Company will determine a single price per Share, not in excess of
$27.00 nor less than $24.50 per Share, net to the seller in cash (the
"Purchase Price"), that it will pay for Shares properly tendered and not
withdrawn pursuant to the Offer, taking into account the number of Shares so
tendered and the prices specified by tendering shareowners. The Company will
select the lowest Purchase Price that will allow it to purchase up to
17,000,000 Shares (or such lesser number of Shares as are properly tendered
and not withdrawn) at a price not in excess of $27.00 nor less than $24.50 per
Share. All Shares properly tendered at prices at or below the Purchase Price
and not withdrawn will be purchased at the Purchase Price, upon the terms and
subject to the conditions of the Offer, including the proration and odd lot
tender provisions. All Shares acquired in the Offer will be acquired at the
Purchase Price. The Company reserves the right, in its sole discretion, to
purchase more than 17,000,000 Shares pursuant to the Offer. See Section 6.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
The Shares are listed and traded on the New York Stock Exchange (the "NYSE")
and the Philadelphia Stock Exchange (the "PhSE"), under the symbol "PPL." On
August 13, 1998, the last trading day on the NYSE prior to the announcement of
the terms of the Offer, the reported closing sales price per Share on the NYSE
was $24.50. SHAREOWNERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES. See Section 8.
THE BOARD OF DIRECTORS OF THE COMPANY HAS AUTHORIZED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
SHAREOWNERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES OR
AS TO THE PURCHASE PRICE OF ANY TENDER. EACH SHAREOWNER MUST MAKE SUCH
SHAREOWNER'S OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES
AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN
ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTEND TO TENDER ANY
SHARES PURSUANT TO THE OFFER.
---------------
IMPORTANT
Any shareowner desiring to tender all or any part of such shareowner's
Shares should either (a) complete and sign a Letter of Transmittal in
accordance with the instructions in the Letter of Transmittal and either mail
or deliver the Letter of Transmittal, the stock certificates for such Shares
with any required signature guarantee and any other required documents, to
Norwest Bank Minnesota, N.A. (the "Depositary"), or tender such Shares
pursuant to the procedures for book-entry transfer set forth in Section 3, or
(b) request such shareowner's broker, dealer, commercial bank, trust company
or other nominee (each of the foregoing, a "Custodian") to effect the
transaction for such shareowner. Owners of Shares registered in the name of a
Custodian should contact such Custodian if they desire to tender their Shares.
Any shareowner who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedures for book-entry transfer by the expiration of the Offer
must tender such Shares pursuant to the guaranteed delivery procedure set
forth in Section 3. SHAREOWNERS MUST PROPERLY COMPLETE THE LETTER OF
TRANSMITTAL INCLUDING THE SECTION OF THE LETTER OF TRANSMITTAL RELATING TO THE
PURCHASE PRICE AT WHICH SUCH SHAREOWNERS ARE TENDERING SHARES IN ORDER TO
EFFECT A VALID TENDER OF THEIR SHARES.
---------------
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at the telephone numbers and addresses set forth
on the back cover of this Offer to Purchase. Additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery
may be obtained from the Information Agent at its address and telephone number
set forth on the back cover of this Offer to Purchase.
THE DEALER MANAGER FOR THE OFFER IS:
MERRILL LYNCH & CO.
August 14, 1998
<PAGE>
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER SHAREOWNERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER OR AS TO THE PURCHASE PRICE OF ANY
TENDER. THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE
CONTAINED HEREIN OR IN THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE,
ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
SUMMARY................................................................... ii
INTRODUCTION.............................................................. 1
THE OFFER................................................................. 2
1. Number of Shares; Proration.......................................... 2
2. Purpose of the Offer; Certain Effects of the Offer................... 4
3. Procedures for Tendering Shares...................................... 6
4. Withdrawal Rights.................................................... 10
5. Purchase of Shares and Payment of Purchase Price..................... 10
6. Extension of Offer; Termination; Amendment........................... 11
7. Certain Conditions of the Offer...................................... 12
8. Price Range of Shares; Dividends..................................... 14
9. Source and Amount of Funds........................................... 14
10. Certain Information Concerning the Company........................... 15
11. Interest of Directors and Officers; Transactions and Arrangements
Concerning Shares....................................................... 19
12. Effects of the Offer on the Market for Shares; Registration under the
Exchange Act............................................................ 19
13. Certain Legal Matters; Regulatory Approvals.......................... 20
14. Certain Federal Income Tax Consequences.............................. 20
15. Fees and Expenses.................................................... 23
16. Miscellaneous........................................................ 23
</TABLE>
FORWARD LOOKING STATEMENTS
Certain statements contained in this Offer to Purchase concerning
expectations, beliefs, plans, objectives, goals, strategies, future events or
performance and underlying assumptions and other statements which are other
than statements of historical facts, are "forward-looking statements" within
the meaning of the federal securities laws. Although the Company believes that
the expectations reflected in these statements are reasonable, there can be no
assurance that these expectations will prove to have been correct. These
forward-looking statements involve a number of risks and uncertainties, and
actual results may differ materially from the results discussed in the
forward-looking statements. The following are among the important factors that
could cause actual results to differ materially from the forward-looking
statements: state and federal regulatory developments; new state or federal
legislation; national or regional economic conditions; weather variations
affecting customer usage; competition in retail and wholesale power markets;
the need for and effect of any business or industry restructuring; the
Company's profitability and liquidity; new accounting requirements or new
interpretations or applications of existing requirements; system conditions
and operating costs; performance of new ventures; political, regulatory or
economic conditions in foreign countries; foreign exchange rates, and the
Company's commitments and liabilities. Any such forward-looking statements
should be considered in light of such important factors and in conjunction
with the Company's other documents on file with the Securities and Exchange
Commission.
i
<PAGE>
SUMMARY
The following summary is solely for the convenience of the Company's
shareowners and is qualified in its entirety by reference to the full text of,
and more specific details contained in, this Offer to Purchase and the Letter
of Transmittal and any amendments hereto and thereto. Each of the capitalized
terms used in this Summary and not defined herein has the meaning set forth
elsewhere in this Offer to Purchase.
The Company................. PP&L Resources, Inc. ("Resources" or the
"Company"), a Pennsylvania holding company with
headquarters in Allentown, Pennsylvania. Its
primary subsidiary is PP&L, Inc.
The Shares.................. Shares of the Company's Common Stock, par value
$.01 per share.
Purchase Price.............. The Company will determine a single Purchase
Price not in excess of $27.00 nor less than
$24.50 per Share, net to the seller in cash, that
it will pay for Shares properly tendered and not
withdrawn pursuant to the Offer, taking into
account the number of Shares so tendered and the
prices specified by tendering shareowners. All
Shares properly tendered at prices at or below
the Purchase Price and not withdrawn will be
purchased at the Purchase Price, upon the terms
and subject to the conditions of the Offer,
including the proration and odd lot provisions.
Each shareowner desiring to tender Shares must
either (i) specify in the Letter of Transmittal
the price (not in excess of $27.00 nor less than
$24.50 per Share) at which such shareowner is
willing to have such shareowner's Shares
purchased by the Company, which could result in
no Shares being purchased at that price, or (ii)
elect to have such shareowner's Shares purchased
at a price determined by the Company in
accordance with the terms of the Offer, which
could result in such Shares being purchased at a
minimum price of $24.50 per Share.
Number of Shares to be
Purchased................... Up to 17,000,000 Shares (or such lesser number of
Shares as are properly tendered and not
withdrawn). The Company reserves the right, in
its sole discretion, to purchase pursuant to the
Offer additional Shares up to 2% of the
outstanding Shares without prior notice and
without extending the Expiration Date. See
Section 6. The Offer is not conditioned on any
minimum number of Shares being tendered but is
subject to certain other conditions. See Section
7.
Proration................... If more than 17,000,000 Shares or such increased
amount of shares that the Company elects to
purchase have been properly tendered at prices at
or below the Purchase Price and not withdrawn
prior to the Expiration Date, the Company will
purchase properly tendered Shares on a pro rata
basis, after the purchase of odd lot Shares. See
Section 1.
How to Tender Shares........ Shares can be tendered by following the
instructions in the enclosed "Letter of
Transmittal" and returning it in accordance with
those instructions. See Section 3 for further
details or, for additional
ii
<PAGE>
information, call the Company's Information Agent
at (888) 750-5835.
Purpose of Tender........... The Company has developed a financial strategy
that is intended to position the Company for the
new competitive environment in the electric
utility industry. Two key components of the
Company's strategy include a reduction in the
Company's Common Stock dividend level and a
reduction in the Company's permanent
capitalization. See Section 2.
Effective with the quarterly dividend payable
October 1, 1998 to owners of record on September
10, 1998, the Company's quarterly Common Stock
dividend will be reduced to $.25 per share ($1.00
annualized rate) from the previous level of
$.4175 per share ($1.67 annualized rate). This
dividend action better positions the Company to
more effectively compete in the energy markets by
increasing the Company's future financing
flexibility. Additionally, it positions the
Company's Common Stock for potential increased
growth in market value by retaining a
proportionately higher level of earnings in the
business for reinvestment.
The Offer is a method by which the Company will
reduce its permanent capitalization. The price
range established for the tender allows those
shareowners seeking a more income-oriented
investment the opportunity to exit their
investment in the Company on potentially more
favorable terms than would otherwise be
available. However, shareowners who choose not to
tender their Shares are also in a position to
potentially benefit from this transaction. Non-
tendering shareowners will own a greater interest
in a company with a potentially stronger earnings
per share growth rate.
Brokerage Commissions....... None. However, a tendering shareowner who holds
Shares with such shareowner's Custodian may be
required by such Custodian to pay a service
charge or other fee.
Stock Transfer Tax.......... None, if payment is made to the registered
shareowner.
Expiration Date............. 12:00 Midnight, New York City time, on Friday,
September 11, 1998, unless extended by the
Company.
Payment Date................ As soon as practicable after the termination of
the Offer.
Position of the Company and
its Directors............... Neither the Company nor its Board of Directors
makes any recommendation to any shareowner as to
whether to tender or refrain from tendering
Shares or as to the purchase price of any tender.
The Company has been advised that none of its
directors or executive officers intends to tender
any Shares pursuant to the Offer.
iii
<PAGE>
Withdrawal Rights........... Tendered Shares may be withdrawn at any time
until 12:00 Midnight, New York City time, on
Friday, September 11, 1998, unless the Offer is
extended by the Company, and, unless accepted for
payment by the Company, after 12:00 Midnight, New
York City time, on Friday, October 9, 1998. See
Section 4.
Odd Lots.................... There will be no proration of Shares tendered by
any shareowner owning beneficially less than an
aggregate of 100 Shares who tenders all such
Shares at or below the Purchase Price prior to
the Expiration Date and who completes the "Odd
Lots" box in the Letter of Transmittal. See
Section 1.
Dividend Reinvestment
Plan........................ Participants in the Company's Dividend
Reinvestment Plan may instruct the administrator
of such plan to tender all or part of the Shares
credited to such participant's account in the
Dividend Reinvestment Plan by following the
instructions in the enclosed Letter of
Transmittal and returning it in accordance with
those instructions.
Employee Stock Ownership
Plan ("ESOP")............... Participants in the Company's ESOP may instruct
the Trustee of the ESOP to tender all or part of
the Shares credited to such participant's account
in the ESOP by following the instructions
contained in the material provided by the Trustee
and submitting to the Trustee on or prior to
September 8, 1998 the Direction Form provided by
the Trustee.
Dividends................... The Company has announced that the quarterly
Common Stock dividend payable on October 1, 1998
will be reduced to $.25 per share ($1.00
annualized rate) from its previous level of
$.4175 per share ($1.67 annualized rate). Shares
purchased pursuant to the Offer will receive the
October 1 dividend.
Lost or Destroyed
Certificates................ Contact the Depositary at (800) 468-9716
immediately for assistance. Also, see Section 3
for instructions for tendering Shares for which
certificates have been lost, stolen, misplaced or
destroyed.
iv
<PAGE>
INTRODUCTION
To the Shareowners of PP&L Resources, Inc.:
The Company invites its shareowners to tender Shares, at a price not in
excess of $27.00 nor less than $24.50 per Share, as specified by shareowners
tendering their Shares, upon the terms and subject to the conditions set forth
in the Offer. The Company will determine a single Purchase Price, not in
excess of $27.00 nor less than $24.50 per Share, net to the seller in cash,
that it will pay for Shares properly tendered and not withdrawn pursuant to
the Offer, taking into account the number of Shares so tendered and the prices
specified by tendering shareowners. The Company will select the lowest
Purchase Price that will allow it to purchase up to 17,000,000 Shares (or such
lesser number of Shares as are properly tendered and not withdrawn) at a price
not in excess of $27.00 nor less than $24.50 per Share. All Shares acquired in
the Offer will be acquired at the Purchase Price. All Shares properly tendered
at prices at or below the Purchase Price and not withdrawn will be purchased
at the Purchase Price, upon the terms and subject to the conditions of the
Offer, including the proration and odd lot tender provisions. Shares tendered
at prices in excess of the Purchase Price and Shares not purchased because of
proration will be returned to the tendering shareowners. The Company reserves
the right, in its sole discretion, to purchase more than 17,000,000 Shares
pursuant to the Offer. See Section 6.
THIS OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM NUMBER OF
SHARES BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
THE BOARD OF DIRECTORS OF THE COMPANY HAS AUTHORIZED THE MAKING OF THE
OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO SHAREOWNERS AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING THEIR SHARES OR AS TO THE PURCHASE PRICE OF ANY TENDER. EACH
SHAREOWNER MUST MAKE THEIR OWN DECISION WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED. THE
COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS
INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 17,000,000 Shares are properly tendered and
not withdrawn at or below the Purchase Price, the Company will accept Shares
for purchase first from all Odd Lot Owners (as defined in Section 1) who
properly tendered all of their Shares at or below the Purchase Price and then
on a pro rata basis from all other shareowners whose Shares are properly
tendered at or below the Purchase Price and not withdrawn. See Section 1. All
Shares not purchased pursuant to the Offer, including Shares tendered at
prices greater than the Purchase Price and Shares not purchased because of
proration, will be returned at the Company's expense promptly after the
Expiration Date.
The Purchase Price will be paid net to the tendering shareowner in cash for
all Shares purchased. Tendering shareowners will not be obligated to pay
brokerage commissions, solicitation fees or, subject to Instruction 7 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Company. A tendering shareowner who holds Shares with such shareowner's
Custodian may be required by such Custodian to pay a service charge or other
fee. HOWEVER, ANY TENDERING SHAREOWNER OR OTHER PAYEE WHO FAILS TO COMPLETE,
SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN
THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH SHAREOWNER OR OTHER
PAYEE PURSUANT TO THE OFFER. SEE SECTION 3. The Company will pay all fees and
expenses of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch" or the "Dealer Manager"), the Depositary and Innisfree M&A Incorporated
(the "Information Agent") incurred in connection with the Offer. See Section
15.
Participants in the Company's Dividend Reinvestment Plan (the "Dividend
Reinvestment Plan") may instruct the administrator of such plan to tender all
or part of the Shares credited to such participant's account in the Dividend
Reinvestment Plan by following the instructions in the enclosed Letter of
Transmittal and returning it in accordance with those instructions.
Participants in PP&L, Inc.'s Employee Stock Ownership Plan (the "ESOP") may
instruct the trustee (the "Trustee") of the ESOP to tender all or part of the
Shares credited to such participant's account in the ESOP by
1
<PAGE>
following the instructions contained in the material provided by the Trustee
and submitting to the Trustee on or prior to September 8, 1998 the Direction
Form provided by the Trustee.
As of August 13, 1998, the Company had issued and outstanding 168,287,225
Shares. The 17,000,000 Shares that the Company is offering to purchase
pursuant to the Offer represent approximately 10% of the Shares outstanding as
of August 13, 1998. The Shares are listed and traded on the NYSE and the PhSE
under the symbol "PPL." On August 13, 1998, the last trading day on the NYSE
prior to the announcement of the terms of the Offer, the reported closing
sales price per Share on the NYSE was $24.50. SHAREOWNERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES. See Section 8.
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase up to 17,000,000 Shares or such lesser number of Shares as are
properly tendered (and not withdrawn in accordance with Section 4) prior to
the Expiration Date at a price (determined in the manner set forth below) not
in excess of $27.00 nor less than $24.50 per Share, net to the seller in cash.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, September 11, 1998, unless and until the Company, in its sole
discretion, shall have extended the time and date during which the Offer will
remain open, in which event the term "Expiration Date" shall refer to the
latest time and date at which the Offer, as so extended by the Company, shall
expire. For a description of the Company's right to extend, delay, terminate
or amend the Offer, see Section 6. The Company reserves the right to purchase
more than 17,000,000 Shares pursuant to the Offer. In accordance with
applicable regulations of the Securities and Exchange Commission (the
"Commission"), the Company may purchase pursuant to the Offer an additional
amount of Shares not to exceed 2% of the outstanding Shares without amending
or extending the Offer. See Section 6. If the Offer is oversubscribed, Shares
tendered at or below the Purchase Price prior to the Expiration Date will be
subject to proration, except for odd lots as described below.
In accordance with Instruction 5 of the Letter of Transmittal, shareowners
desiring to tender Shares must either (i) specify the price, not in excess of
$27.00 nor less than $24.50 per Share, at which such shareowners are willing
to sell their Shares to the Company, which could result in no Shares being
purchased at that price, or (ii) elect to have such shareowner's Shares
purchased at a price determined by the Company in accordance with the terms of
the Offer, which could result in such Shares being purchased at a minimum
price of $24.50 per Share. The Company will, upon the terms and subject to the
conditions of the Offer, determine a single Purchase Price that it will pay
for Shares properly tendered and not withdrawn pursuant to the Offer, taking
into account the number of Shares tendered and the prices specified by
tendering shareowners. The Company will select the lowest Purchase Price, not
in excess of $27.00 nor less than $24.50 net per Share in cash, that will
allow it to purchase up to 17,000,000 Shares (or such lesser number of Shares
as are properly tendered and not withdrawn) pursuant to the Offer. Shares
properly tendered pursuant to the Offer at or below the Purchase Price and not
withdrawn will be purchased at the Purchase Price, upon the terms and subject
to the conditions of the Offer, including the proration and odd lot
provisions. All Shares tendered and not purchased pursuant to the Offer,
including Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration, will be returned to the tendering
shareowners at the Company's expense as promptly as practicable following the
Expiration Date.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record owners of Shares and will be furnished to Custodians whose names, or
the names of whose nominees, appear on the Company's shareowner list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
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Priority of Purchases. Upon the terms and subject to the conditions of the
Offer, if more than 17,000,000 Shares have been properly tendered at prices at
or below the Purchase Price and not withdrawn prior to the Expiration Date,
the Company will accept for purchase properly tendered Shares in the following
order of priority:
(a) First, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Owner who:
(1) tenders all Shares beneficially owned by such Odd Lot Owner at a
price at or below the Purchase Price (tenders of less than all Shares
owned by such shareowner will not qualify for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) Second, after purchase of all of the foregoing Shares, all Shares
tendered properly at prices at or below the Purchase Price and not
withdrawn prior to the Expiration Date, on a pro rata basis (with
adjustments to avoid purchases of fractional Shares) as described below.
Odd Lots. For purposes of the Offer, the term "odd lots" shall mean all
Shares properly tendered prior to the Expiration Date at prices at or below
the Purchase Price and not withdrawn by or on behalf of any shareowner who
owned, beneficially or of record, an aggregate of fewer than 100 Shares (an
"Odd Lot Owner"), including any Shares held in the Dividend Reinvestment Plan
and so certified in the appropriate place on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery. In order to qualify for this
preference, an Odd Lot Owner must properly tender all Shares beneficially
owned by such shareowner in accordance with the procedures described in
Section 3. As set forth above, odd lots will be accepted for payment before
proration, if any, of the purchase of other tendered Shares. This preference
is not available to partial tenders or to beneficial or record owners of an
aggregate of 100 or more Shares, even if such owners have separate accounts or
certificates representing fewer than 100 Shares. By accepting the Offer, an
Odd Lot Owner will not only avoid the payment of brokerage commissions but
also will avoid any applicable odd lot discounts in a sale of such owner's
Shares. However, a tendering shareowner who holds Shares with such
shareowner's Custodian may be required by such Custodian to pay a service
charge or other fee. Any shareowner wishing to tender all of such shareowner's
Shares pursuant to the odd lot provisions should complete the box captioned
"Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery and must either (i) properly indicate in the section
entitled "Price (In Dollars) Per Share At Which Shares Are Being Tendered" in
the Letter of Transmittal the price at which such Shares are being tendered or
(ii) elect to have all of such shareowner's Shares purchased at the Purchase
Price determined by the Company in accordance with the terms of the Offer by
so indicating in the section entitled "Shares Tendered at Price Determined
Pursuant to the Offer" in the Letter of Transmittal. See Section 3.
The Company also reserves the right, but will not be obligated, to purchase
all Shares duly tendered by any shareowner who tendered all Shares owned,
beneficially or of record, at or below the Purchase Price and who, as a result
of proration, would then own, beneficially or of record, an aggregate of fewer
than 100 Shares. If the Company exercises this right, it will increase the
number of Shares that it is offering to purchase by the number of Shares
purchased through the exercise of the right.
Proration. In the event that proration of tendered Shares is required, the
Company will determine the final proration factor promptly following the
Expiration Date. Proration for each shareowner tendering Shares, other than
Odd Lot Owners, shall be based on the ratio of the number of Shares tendered
by such shareowner to the total number of Shares tendered by all shareowners,
other than Odd Lot Owners, at or below the Purchase Price. Due to the
difficulty in determining the number of Shares properly tendered (including
Shares tendered by guaranteed delivery procedures, as described in Section 3)
and not withdrawn, and because of the odd lot provisions, the Company does not
expect that it will be able to announce the final proration factor or commence
payment for any Shares purchased pursuant to the Offer until approximately
five NYSE trading days after the Expiration Date. The preliminary results of
any proration will be announced by press release as promptly as
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practicable after the Expiration Date. Shareowners may obtain such preliminary
information from the Information Agent or the Dealer Manager and may be able
to obtain such information from their brokers.
As described in Section 14, the number of Shares that the Company will
purchase from a shareowner may affect the United States federal income tax
consequences to the shareowner of such purchase and therefore may be relevant
to a shareowner's decision whether to tender Shares. The Letter of Transmittal
affords each tendering shareowner the opportunity to designate the order of
priority in which Shares tendered are to be purchased in the event of
proration.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
Electric utility companies, including PP&L, Inc. ("PP&L"), the electric
utility subsidiary of Resources, have experienced and will continue to
experience a significant increase in the level of competition in the energy
supply market. Federal legislation has created a new class of independent
power producers and open access to electric transmission systems for wholesale
transactions. In addition, in December 1996 Pennsylvania enacted legislation
(the "Customer Choice Act") to restructure the state's electric utility
industry to create retail access to a competitive market for the generation of
electricity.
Under the Customer Choice Act, the Pennsylvania Public Utility Commission
(the "PUC") is authorized to determine the amount of PP&L's stranded costs to
be recovered through a Competitive Transition Charge ("CTC") to be paid by all
PUC-jurisdictional customers who receive transmission and distribution service
from PP&L. Stranded (or transition) costs are defined in the Customer Choice
Act as "generation-related costs which would have been recoverable under a
regulated environment but which may not be recoverable in a competitive
generation market and which the PUC determines will remain following
mitigation by the electric utility."
In accordance with the Customer Choice Act, PP&L filed its restructuring
plan with the PUC on April 1, 1997. PP&L's restructuring plan included a claim
of $4.5 billion (on a net present value basis as of January 1, 1999) for
transition costs.
On June 15, 1998, the PUC entered an order in the restructuring proceeding.
Under that order, PP&L estimated that it could recover about $2.5 billion in
transition costs over the 8 1/2 year transition period prescribed by the order
- --i.e., through June 30, 2007.
Numerous parties filed legal challenges to the PUC's June 15 order in state
and federal court. PP&L filed an appeal of the order to the Pennsylvania
Commonwealth Court, an action for Declaratory Judgment against the order to
the Commonwealth Court, and a civil complaint action against the order in the
U.S. District Court for the Eastern District of Pennsylvania.
In July 1998, the PUC offered all parties to the restructuring proceeding
the opportunity for substantive settlement discussions. On August 13, 1998,
the PUC entered a tentative order approving a "Joint Petition for Full
Settlement of PP&L, Inc.'s Restructuring Plan and Related Court Proceedings"
(the "Settlement"). The tentative order is subject to a public comment period,
and the final order of the PUC approving the Settlement is expected to be
received prior to the Expiration Date. The receipt of such final order is a
condition to the Offer. See Section 7. The terms and conditions of the
Settlement represent a comprehensive resolution of all issues before the
Pennsylvania Commonwealth Court and the U.S. District Court arising from
challenges by certain parties, including PP&L, to the PUC's June 15 order.
The Settlement contemplates that PP&L will be permitted to recover $2.97
billion (on a net present value basis) in transition costs over 11 years--i.e.
from January 1, 1999 through December 31, 2009 (the "Transition Period"). The
terms and conditions of the Settlement are described in more detail under
"Certain Information Concerning the Company--The Settlement" in Section 10.
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As a result of the Settlement, PP&L recorded a total after-tax write-off of
$948 million in the second quarter of 1998. This charge adjusts the value of
PP&L's assets to a level which the Company anticipates will more closely
reflect their value in the new competitive marketplace.
Simultaneously, a new regulatory asset has been established on PP&L's books
in the amount of $2.82 billion based on the amount of transition costs that
PP&L expects to recover in revenues through a CTC during the Transition
Period.
The Company has developed a financial strategy that is intended to position
the Company for the anticipated future competitive environment after giving
effect to the Settlement, the related restructuring charge on PP&L's books and
the collection of CTC revenues during the Transition Period. The Company's
financial strategy includes:
(a) a reduction in the Company's permanent capitalization to a level that
is consistent with PP&L's restated asset values and the earning power of
those assets;
(b) a level of Common Stock dividends based on a targeted payout ratio of
45%-55% which will increase the Company's future financing flexibility;
(c) the temporary use of a higher degree of leverage in the Company's
capital structure during the Transition Period; and
(d) maintenance of investment grade ratings on the senior debt securities
of the Company and PP&L.
As the electric utility industry transitions to a competitive environment,
the Company anticipates the potential to achieve long-term returns on
shareowner capital that exceed the returns that have been historically
permitted in a fully regulated business environment. At the same time, the
Company's business risks are expected to increase, resulting in an increase in
the potential volatility in revenue and income streams. As such, a dividend
payout ratio that is significantly lower than the 80%-90% payout ratio
previously experienced by the Company and the electric utility industry in
general is required to better position the Company to more effectively compete
in the energy markets by increasing the Company's future financing
flexibility. Accordingly, effective with the dividend payable October 1, 1998
to owners of record on September 10, 1998, the Company's quarterly Common
Stock dividend will be reduced to $.25 per share ($1.00 annualized rate) from
the previous level of $.4175 per share ($1.67 annualized rate). In addition to
providing an increase in the Company's future financing flexibility, this
dividend action positions the Company's Common Stock for potential increased
growth in market value by retaining a proportionately higher level of earnings
in the business for reinvestment. The Shares purchased pursuant to the Offer
will receive the October 1 dividend.
A reduction in the Company's permanent capitalization, as well as a
temporary increase in leverage, is being effected through this Offer, which
will be financed by Resources through the use of short-term debt. It is
anticipated that the short-term debt used by Resources will be made available
through the issuance of commercial paper by PP&L Capital Funding, Inc.
("Capital Funding"), the wholly-owned financing subsidiary of the Company.
The price range established for the tender offer allows those shareowners
seeking a more income-oriented investment the opportunity to exit their
investment in the Company on potentially more favorable terms than would
otherwise be available. However, shareowners who choose not to tender their
shares are also in a position to potentially benefit from this transaction.
Non-tendering shareowners will own a greater interest in a company with a
potentially stronger earnings per share growth rate, subject to the Company's
right to issue additional Shares and other equity securities in the future.
In consideration of the Offer, the Board of Directors also took into account
the expected financial impact of the Offer, including the Company's increased
debt as a result of the Offer and the resulting increased interest expense.
See the information under the caption "Summary Unaudited Consolidated Pro
Forma Financial Data" in Section 10. The Company believes that, following
completion of the Offer, its anticipated cash flow from
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operations, access to credit facilities, its cash and short-term investments
will, taken together, be adequate for its needs for the foreseeable future.
However, the Company's actual experience may differ from the expectations set
forth in the preceding sentence. Future events, such as regulatory
developments, adverse effects on operations, or levels of capital or other
expenditures, might have the effect of reducing the Company's available cash
balances or might reduce or eliminate the availability of external financial
resources.
Although the Company has no current plans to acquire additional Shares other
than through the Offer, the Company may in the future purchase additional
Shares in the open market, in privately-negotiated transactions, through
tender offers or otherwise. Any such purchase may be on the same terms or on
terms which are more or less favorable to shareowners than the terms of the
Offer. However, Rule 13e-4(f)(6) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), prohibits the Company and its affiliates from
purchasing any Shares, other than pursuant to the Offer, until at least ten
business days after the Expiration Date. Any possible future purchases by the
Company will depend on many factors, including the market price of the Shares,
the results of the Offer, the Company's business and financial position and
general economic and market conditions.
Shares the Company acquires pursuant to the Offer will be retained as
treasury shares or will be cancelled and returned to the status of authorized
but unissued shares and will be available for the Company to issue without
further shareowner action (except as required by applicable law or the rules
of the NYSE or any other securities exchange on which the Shares are listed)
for purposes including, but not limited to, the acquisition of other
businesses, the raising of additional capital for use in the Company's
business and the satisfaction of obligations under existing or future employee
or director benefit plans. Except for the issuance of Shares under the
Dividend Reinvestment Plan and current employee or director benefit plans and
pursuant to the Company's pending acquisition of Penn Fuel Gas Inc. (which is
described in Section 10), the Company has no current plans for the reissuance
of the Shares repurchased pursuant to the Offer or for the issuance of any
other authorized but unissued shares of Common Stock.
See Section 12 for information regarding certain effects of the Offer on the
market for the Shares and on their registration under the Exchange Act.
3. PROCEDURES FOR TENDERING SHARES.
Proper Tender of Shares. For Shares to be tendered properly pursuant to the
Offer, (a) the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedures for book-entry transfer set forth
below), together with a properly completed and duly executed Letter of
Transmittal including any required signature guarantees and any other
documents required by the Letter of Transmittal, must be received prior to the
Expiration Date by the Depositary at its address set forth on the back cover
of this Offer to Purchase or (b) the tendering shareowner must comply with the
guaranteed delivery procedure set forth below. IN ACCORDANCE WITH INSTRUCTION
5 OF THE LETTER OF TRANSMITTAL, SHAREOWNERS DESIRING TO TENDER SHARES PURSUANT
TO THE OFFER MUST EITHER (I) PROPERLY INDICATE, IN THE SECTION CAPTIONED
"PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED" IN THE
LETTER OF TRANSMITTAL, THE PRICE (IN MULTIPLES OF $0.25) AT WHICH THEIR SHARES
ARE BEING TENDERED OR (II) ELECT TO HAVE SUCH SHAREOWNER'S SHARES PURCHASED AT
A PRICE DETERMINED BY THE COMPANY IN ACCORDANCE WITH THE TERMS OF THE OFFER BY
CHECKING THE BOX UNDER THE SECTION CAPTIONED "SHARES TENDERED AT PRICE
DETERMINED PURSUANT TO THE OFFER" IN THE LETTER OF TRANSMITTAL. A SHAREOWNER
WHO WISHES TO MAXIMIZE THE CHANCE THAT SUCH SHAREOWNER'S SHARES WILL BE
PURCHASED AT THE RELEVANT PURCHASE PRICE SHOULD CHECK THE BOX ON THE LETTER OF
TRANSMITTAL MARKED "SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE
OFFER." NOTE THAT THIS ELECTION COULD RESULT IN SUCH SHAREOWNER'S SHARES BEING
PURCHASED AT THE MINIMUM PRICE OF $24.50 PER SHARE. A SHAREOWNER WHO WISHES TO
INDICATE A SPECIFIC PRICE (IN MULTIPLES OF $0.25) AT WHICH SUCH SHAREOWNER'S
SHARES ARE BEING TENDERED MUST CHECK A BOX UNDER THE SECTION IN THE LETTER OF
TRANSMITTAL CAPTIONED "SHARES TENDERED AT PRICE DETERMINED BY SHAREOWNER" IN
THE TABLE LABELED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING
TENDERED." NOTE THAT THIS ELECTION COULD RESULT IN NO SHARES BEING PURCHASED
AT THAT PRICE. Shareowners who desire to tender Shares at more than one price
must complete a separate Letter of Transmittal for each price at which Shares
are tendered,
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provided that the same Shares cannot be tendered (unless previously properly
withdrawn in accordance with the terms of the Offer) at more than one price.
IN ORDER TO PROPERLY TENDER SHARES, ONE AND ONLY ONE PRICE BOX MUST BE CHECKED
IN THE APPROPRIATE SECTION ON EACH LETTER OF TRANSMITTAL.
In order to qualify for the preferential treatment available to Odd Lot
Owners as set forth in Section 1, Odd Lot Owners who tender all of their
Shares must complete the box captioned "Odd Lots" on the Letter of Transmittal
and, if applicable, on the Notice of Guaranteed Delivery.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares for purposes of the Offer at The Depository Trust Company
("DTC") within two business days after the date of this Offer to Purchase, and
any financial institution that is a participant in DTC's system may make book-
entry delivery of the Shares by causing such facility to transfer Shares into
the Depositary's account in accordance with DTC's procedures for transfer.
Although delivery of Shares may be effected through a book-entry transfer into
the Depositary's account at DTC, either (i) a properly completed and duly
executed Letter of Transmittal with any required signature guarantees and any
other required documents must be transmitted to and received by the Depositary
at its address set forth on the back cover of this Offer to Purchase prior to
the Expiration Date, or (ii) the guaranteed delivery procedure described below
must be followed. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal (i) if the Letter of Transmittal is
signed by the registered owner of the Shares (which term, for purposes of this
Section 3, shall include any participant in DTC whose name appears on a
security position listing as the owner of the Shares) tendered therewith and
such owner has not completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the
Letter of Transmittal, or (ii) if Shares are tendered for the account of a
member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company (not a savings bank or a savings and loan association) having an
office, branch or agency in the United States (each such entity being
hereinafter referred to as an "Eligible Institution"). See Instruction 1 of
the Letter of Transmittal. If a certificate for Shares is registered in the
name of a person other than the person executing a Letter of Transmittal, or
if payment is to be made, or Shares not purchased or tendered are to be
issued, to a person other than the registered owner, then the certificate must
be endorsed or accompanied by an appropriate stock power, in either case,
signed exactly as the name of the registered owner appears on the certificate,
with the signature(s) on the certificate or stock power guaranteed by an
Eligible Institution.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or a timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at DTC as described
above), a properly completed and duly executed Letter of Transmittal and any
other documents required by the Letter of Transmittal. THE METHOD OF DELIVERY
OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL
AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING
SHAREOWNER. IF DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
If any Shares tendered and not withdrawn are not purchased, or if less than
all Shares evidenced by a shareowner's certificates are tendered, certificates
for unpurchased Shares will be returned as promptly as practicable after the
expiration or termination of the Offer or, in the case of Shares tendered by
book-entry transfer at DTC, such Shares will be credited to the appropriate
account maintained by the tendering shareowner at DTC, in each case without
expense to such shareowner.
Backup Federal Income Tax Withholding. Under the federal income tax backup
withholding rules, unless an exemption applies under the applicable law and
regulations, 31% of the gross proceeds payable to a U.S. Owner (as defined in
Section 14) pursuant to the Offer must be withheld and remitted to the United
States Treasury, unless the U.S. Owner provides such U.S. Owner's taxpayer
identification number (employer
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identification number or social security number) to the Depositary, certifies
as to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. Therefore, each
tendering U.S. Owner should complete and sign the Substitute Form W-9 included
as part of the Letter of Transmittal so as to provide the information and
certification necessary to avoid backup withholding, unless such U.S. Owner
otherwise establishes to the satisfaction of the Depositary that such U.S.
Owner is not subject to backup withholding. Certain U.S. Owners (including,
among others, all corporations) are not subject to these backup withholding
requirements. In addition, Non-U.S. Owners (as defined in Section 14) are not
subject to these backup withholding requirements. In order for a Non-U.S.
Owner to qualify as an exempt recipient, that Non-U.S. Owner must submit an
IRS Form W-8 or a Substitute Form W-8. Such statements can be obtained from
the Depositary. See Instruction 14 of the Letter of Transmittal.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE TO SHAREOWNERS FOR SHARES PURCHASED PURSUANT TO THE OFFER, EACH
SHAREOWNER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING
MUST PROVIDE THE DEPOSITARY WITH THE SHAREOWNER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY COMPLETING THE
SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL.
For a discussion of certain federal income tax consequences to tendering
U.S. Owners, see Section 14.
Withholding for Non-U.S. Owners. Even if a Non-U.S. Owner has provided the
required certification to avoid backup withholding, the Depositary will
withhold federal income taxes equal to 30% of the gross payments payable to a
Non-U.S. Owner or his or her agent unless the Depositary determines that a
reduced rate of withholding is available pursuant to a tax treaty or that an
exemption from withholding is applicable because such gross proceeds are
effectively connected with the conduct of a trade or business within the
United States. In order to obtain a reduced rate of withholding pursuant to a
tax treaty, a Non-U.S. Owner must deliver to the Depositary before the payment
a properly completed and executed IRS Form 1001. In order to obtain an
exemption from withholding on the grounds that the gross proceeds paid
pursuant to the Offer are effectively connected with the conduct of a trade or
business within the United States, a Non-U.S. Owner must deliver to the
Depositary a properly completed and executed IRS Form 4224. The Depositary
will determine a shareowner's status as a Non-U.S. Owner and eligibility for a
reduced rate of, or exemption from, withholding by reference to any
outstanding certificates or statements concerning eligibility for a reduced
rate of, or exemption from, withholding (e.g., IRS Form 1001 or IRS Form 4224)
unless facts and circumstances indicate that such reliance is not warranted. A
Non-U.S. Owner may be eligible to obtain a refund of all or a portion of any
tax withheld if such shareowner meets the "complete redemption,"
"substantially disproportionate" or "not essentially equivalent to a dividend"
test described in Section 14 or is otherwise able to establish that no tax or
a reduced amount of tax is due. Backup withholding generally will not apply to
amounts subject to the 30% or a treaty-reduced rate of withholding. Non-U.S.
Owners are urged to consult their own tax advisors regarding the application
of federal income tax withholding, including eligibility for a withholding tax
reduction or exemption, and the refund procedure. See Instruction 15 of the
Letter of Transmittal.
Guaranteed Delivery. If a shareowner desires to tender Shares pursuant to
the Offer and such shareowner cannot deliver certificates for such Shares to
the Depositary prior to the Expiration Date (or the procedures for book-entry
transfer cannot be completed on a timely basis) or time will not permit all
required documents to reach the Depositary prior to the Expiration Date, such
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand or mail, prior to the Expiration
Date, a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form the Company has provided with this Offer to
Purchase (specifying the price at which the Shares are being tendered),
including (where required) a signature guarantee by an Eligible
Institution; and
(c) the certificates for all tendered Shares, in proper form for transfer
(or confirmation of a book-entry transfer of such Shares into the
Depositary's account at DTC), together with a properly completed and duly
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executed Letter of Transmittal and any required signature guarantees or
other documents required by the Letter of Transmittal, are received by the
Depositary within three NYSE trading days after the date of receipt by the
Depositary of such Notice of Guaranteed Delivery.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the Purchase Price to be paid for Shares accepted and the
validity, form, eligibility (including time of receipt) and acceptance of any
tender of Shares will be determined by the Company, in its sole discretion,
and its determination shall be final and binding on all parties. The Company
reserves the absolute right to reject any or all tenders of any Shares that it
determines are not in proper form or the acceptance for payment of or payment
for which may be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer or any defect or irregularity in any
tender of Shares, and the Company's interpretation of the terms of the Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. No tender of Shares will be deemed to have been
properly made until all defects or irregularities have been cured by the
tendering shareowner or waived by the Company. None of the Company, the Dealer
Manager, the Depositary, the Information Agent or any other person shall be
obligated to give notice of any defects or irregularities in tenders, nor
shall any of them incur any liability for failure to give any such notice.
Dividend Reinvestment Plan. The participants in the Dividend Reinvestment
Plan will receive all documents furnished to shareowners generally in
connection with the Offer. Participants in the Dividend Reinvestment Plan may
use the Letter of Transmittal to instruct the administrator regarding the
Offer by completing the box entitled "Dividend Reinvestment Plan Shares." Each
participant may direct that all, some or none of the Shares credited to the
participant's account under the Dividend Reinvestment Plan be tendered and the
price at which such participant's Shares are to be tendered. Participants in
the Dividend Reinvestment Plan are urged to read the Letter of Transmittal and
related materials carefully.
Employee Stock Ownership Plan Participants. If a participant in the ESOP
desires to tender any of such participant's ESOP Shares credited to the
participant's account under the ESOP pursuant to the Offer, such participant
must instruct the Trustee of the ESOP to tender such Shares by properly
completing, duly executing and returning to the Trustee the Direction Form
sent to such participant by the Trustee. The Trustee will aggregate all such
tenders and execute the requisite number of Letters of Transmittal on behalf
of all participants desiring to tender Shares. DELIVERY OF A LETTER OF
TRANSMITTAL BY A PARTICIPANT OF ESOP SHARES DOES NOT CONSTITUTE PROPER TENDER
OF SUCH SHARES. PROPER TENDER OF ESOP SHARES CAN ONLY BE MADE BY THE TRUSTEE,
WHO IS THE RECORD OWNER OF SUCH SHARES. THE DEADLINE FOR SUBMITTING DIRECTION
FORMS TO THE TRUSTEE IS SET BY THE TRUSTEE AND IS EARLIER THAN THE EXPIRATION
DATE.
If a shareowner desires to tender non-ESOP Shares, as well as ESOP Shares,
such shareowner must properly complete and duly execute a Letter of
Transmittal for the non-ESOP Shares and deliver such Letter of Transmittal
directly to the Depositary as well as following the directions provided by the
Trustee for tendering ESOP Shares.
Tendering Shareowner's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering shareowner's acceptance of the
terms and conditions of the Offer, as well as the tendering shareowner's
representation and warranty to the Company that (a) such shareowner has a net
long position in the Shares being tendered within the meaning of Rule 14e-4
promulgated by the Commission under the Exchange Act and (b) the tender of
such Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a
person, directly or indirectly, to tender Shares for such person's own account
unless, at the time of tender and at the end of the proration period or period
during which Shares are accepted by lot (including any extensions thereof),
the person so tendering (i) has a net long position equal to or greater than
the amount of (x) Shares tendered or (y) other securities convertible into or
exchangeable or exercisable for the Shares tendered and will acquire such
Shares for tender by conversion, exchange or exercise, and (ii) will deliver
or cause to be delivered such Shares in accordance with the terms of the
Offer. Rule 14e-4 provides a similar restriction applicable to the tender or
guarantee of a
9
<PAGE>
tender on behalf of another person. The Company's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering shareowner and the Company upon the terms and subject to
the conditions of the Offer.
Lost or Destroyed Certificates. Shareowners whose certificates for part or
all of their Shares have been lost, stolen, misplaced or destroyed must so
indicate in the box entitled "Description of Shares Tendered" in the Letter of
Transmittal. Alternatively, such shareowners may contact the Depositary at
(800) 468-9716 for instructions as to the documents which will be required to
be submitted together with the Letter of Transmittal in order to receive the
stock certificate(s) representing the Shares. SUCH SHAREOWNERS ARE REQUESTED
TO CONTACT THE DEPOSITARY IMMEDIATELY IN ORDER TO PERMIT TIMELY PROCESSING OF
SUCH DOCUMENTATION.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may also be
withdrawn at any time after 12:00 Midnight, New York City time, on Friday,
October 9, 1998.
For a withdrawal to be effective, a notice of withdrawal must be in written
form and must be received in a timely manner by the Depositary at its address
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the tendering shareowner, the name of the
registered owner, if different from that of the person who tendered such
Shares, the number of Shares tendered and the number of Shares to be
withdrawn. If the certificates for Shares to be withdrawn have been delivered
or otherwise identified to the Depositary, then, prior to the release of such
certificates, the tendering shareowner must also submit the serial numbers
shown on the particular certificates for Shares to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedure for book-
entry transfer set forth in Section 3, the notice of withdrawal also must
specify the name and the number of the account at DTC to be credited with the
withdrawn Shares and otherwise comply with the procedures of such facility.
None of the Company, the Dealer Manager, the Depositary, the Information Agent
or any other person shall be obligated to give notice of any defects or
irregularities in any notice of withdrawal nor shall any of them incur
liability for failure to give any such notice. All questions as to the form
and validity (including time of receipt) of notices of withdrawal will be
determined by the Company, in its sole discretion, which determination shall
be final and binding.
Withdrawals may not be rescinded and any Shares withdrawn will thereafter be
deemed not properly tendered for purposes of the Offer unless such withdrawn
Shares are properly re-tendered prior to the Expiration Date by again
following one of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or is
unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain tendered Shares on behalf of the Company, and such
Shares may not be withdrawn except to the extent tendering shareowners are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company will (i) determine a
single Purchase Price it will pay for the Shares properly tendered and not
withdrawn prior to the Expiration Date, taking into account the number of
Shares so tendered and the prices specified by tendering shareowners, and (ii)
accept for payment and pay for (and thereby purchase) Shares properly tendered
at prices at or below the Purchase Price and not withdrawn prior to the
Expiration Date (subject to the proration and odd lot provisions of the
Offer). For purposes of the Offer, the Company will be deemed to have accepted
for payment (and therefore purchased) Shares that are tendered at or below the
Purchase
10
<PAGE>
Price and not withdrawn (subject to the proration, odd lot provisions and
conditional tender provisions of the Offer) only when, as and if it gives oral
or written notice to the Depositary of its acceptance of such Shares for
payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, promptly
following the Expiration Date the Company will accept for payment and pay a
single Purchase Price per Share for up to 17,000,000 Shares (subject to
increase or decrease as provided in Section 6) or such lesser number of Shares
as are properly tendered at prices not in excess of $27.00 nor less than
$24.50 per Share and not withdrawn as permitted in Section 4.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which
will act as agent for tendering shareowners for the purpose of receiving
payment from the Company and transmitting payment to the tendering
shareowners.
In the event of proration, the Company will determine the final proration
factor and pay for those Shares tendered and accepted for payment as soon as
practicable after the Expiration Date; however, the Company does not expect to
be able to announce the final results of any proration and commence the
payment for Shares purchased until approximately five NYSE trading days after
the Expiration Date. Certificates for all Shares tendered and not purchased,
including all Shares tendered at prices in excess of the Purchase Price and
Shares not purchased due to proration, will be returned (or, in the case of
Shares tendered by book-entry transfer, such Shares will be credited to the
account maintained with DTC by the participant therein who so delivered such
Shares) to the tendering shareowner at the Company's expense as promptly as
practicable after the Expiration Date. Under no circumstances will interest on
the Purchase Price be paid by the Company by reason of any delay in making
payment. In addition, if certain events occur, the Company may not be
obligated to purchase Shares pursuant to the Offer. See Section 7.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of, any
person other than the registered owner, or if tendered certificates are
registered in the name of any person other than the person signing the Letter
of Transmittal, the amount of all stock transfer taxes, if any (whether
imposed on the registered owner or such other person), payable on account of
the transfer to such person will be deducted from the Purchase Price unless
satisfactory evidence of the payment of the stock transfer taxes, or exemption
therefrom, is submitted. See Instruction 7 of the Letter of Transmittal.
ANY TENDERING SHAREOWNER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING
OF 31% OF THE GROSS PROCEEDS PAID TO SUCH SHAREOWNER OR OTHER PAYEE PURSUANT
TO THE OFFER. SEE SECTION 3. ALSO SEE SECTION 3 REGARDING FEDERAL INCOME TAX
CONSEQUENCES FOR FOREIGN SHAREOWNERS.
6. EXTENSION OF OFFER; TERMINATION; AMENDMENT.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 7 shall have occurred or shall be deemed by the Company
to have occurred, to extend the period of time during which the Offer is open
and thereby delay acceptance for payment of, and payment for, any Shares by
giving oral or written notice of such extension to the Depositary and making a
public announcement thereof. The Company also expressly reserves the right, in
its sole discretion, to terminate the Offer and not accept for payment or pay
for any Shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for Shares upon the occurrence of any of
the conditions specified in Section 7 by giving oral or written notice of such
termination or postponement to the Depositary and making a public announcement
thereof. The Company's reservation of the right to delay payment for Shares
which it has accepted for payment is limited by rules promulgated under the
Exchange Act,
11
<PAGE>
which require that the Company must pay the consideration offered or return
the Shares tendered promptly after termination or withdrawal of a tender
offer. Subject to compliance with applicable law, the Company further reserves
the right, in its sole discretion, and regardless of whether any of the events
set forth in Section 7 shall have occurred or shall be deemed by the Company
to have occurred, to amend the Offer in any respect (including, without
limitation, by decreasing or increasing the consideration offered in the Offer
to owners of Shares or by decreasing or increasing the number of Shares being
sought in the Offer). Amendments to the Offer may be made at any time and from
time to time effected by public announcement thereof, such announcement, in
the case of an extension, to be issued no later than 9:00 a.m., New York City
time, on the next business day after the last previously scheduled or
announced Expiration Date. Any public announcement made pursuant to the Offer
will be disseminated promptly to shareowners in a manner reasonably designed
to inform shareowners of such change. Without limiting the manner in which the
Company may choose to make a public announcement, except as required by
applicable law, the Company shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by rules promulgated
under the Exchange Act. These rules require that the minimum period during
which an offer must remain open following material changes in the terms of the
offer or information concerning the offer (other than a change in price or a
change in percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or
information. If (i) the Company increases or decreases the price range
provided in this Offer or the number of Shares being sought in the Offer and,
in the event of an increase in the number of Shares being sought, such
increase exceeds 2% of the outstanding Shares, and (ii) the Offer is scheduled
to expire at any time earlier than the expiration of a period ending on the
tenth business day from, and including, the date that such notice of an
increase or decrease is first published, sent or given in the manner specified
in this Section 6, then in each case the Offer will be extended until the
expiration of such period of ten business days.
7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered, and
may terminate or amend the Offer or may postpone the acceptance for payment
of, or the purchase of and the payment for Shares tendered, subject to the
rules under the Exchange Act, if at any time on or after August 14, 1998 and
prior to the Expiration Date any of the following events shall have occurred
(or shall have been determined by the Company to have occurred) that, in the
Company's reasonable judgment in any such case and regardless of the
circumstances giving rise thereto (including any action or omission to act by
the Company), makes it inadvisable to proceed with the Offer or with such
acceptance for payment or payment:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency, authority or tribunal or any other person, domestic or foreign,
before any court, authority, agency or tribunal that directly or indirectly
(i) challenges the making of the Offer, the acquisition of some or all of
the Shares pursuant to the Offer or otherwise relates in any manner to the
Offer, or (ii) in the Company's reasonable judgment, could materially and
adversely affect the business, condition (financial or other), income,
operations or prospects of the Company and its subsidiaries, taken as a
whole, or otherwise materially impair in any way the contemplated future
conduct of the business of the Company or any of its subsidiaries or
materially impair the contemplated benefits of the Offer to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any authority, agency or tribunal
that, in the Company's reasonable judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment for, some or
all of the Shares
12
<PAGE>
illegal or otherwise restrict or prohibit consummation of the Offer; (ii)
delay or restrict the ability of the Company, or render the Company unable,
to accept for payment or pay for some or all of the Shares; (iii)
materially impair the contemplated benefits of the Offer to the Company; or
(iv) materially and adversely affect the business, condition (financial or
other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company or any of
its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market; (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States; (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States; (iv) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority on, or any
event that, in the Company's reasonable judgment, might affect, the
extension of credit by banks or other lending institutions in the United
States; (v) any significant decrease in the market price of the Shares or
any change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the sole judgment
of the Company, have a material adverse effect on the Company's business,
operations or prospects or the trading in the Shares; (vi) in the case of
any of the foregoing existing at the time of the commencement of the Offer,
a material acceleration or worsening thereof; or (vii) any decline in
either the Dow Jones Industrial Average or the Standard and Poor's Index of
500 Industrial Companies by an amount in excess of 10% measured from the
close of business on August 13, 1998;
(d) a tender or exchange offer with respect to some or all of the Shares
(other than the Offer), or a merger or acquisition proposal for the
Company, shall have been proposed, announced or made by another person or
shall have been publicly disclosed, or the Company shall have learned after
the date of this Offer that any person or "group" (within the meaning of
Section 13(d) (3) of the Exchange Act) shall have acquired or proposed to
acquire beneficial ownership of more than 5% of the outstanding Shares, or
any new group shall have been formed that beneficially owns more than 5% of
the outstanding Shares;
(e) any change or changes shall have occurred in the business, financial
condition, assets, income, operations, prospects or stock ownership of the
Company or its subsidiaries that, in the Company's reasonable judgment, is
or may be material to the Company or its subsidiaries; or
(f) The final order of the PUC approving the Settlement shall not have
been received.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action
or inaction by the Company) giving rise to any such condition, and may be
waived by the Company, in whole or in part, at any time and from time to time
in its reasonable discretion. The Company's failure at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time. Any determination by the Company concerning the
events described above will be final and binding.
13
<PAGE>
8. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and traded on the NYSE and on the PhSE under the
symbol "PPL." The following table sets forth, for the periods indicated, the
high and low per Share sales prices as reported by The Wall Street Journal and
the cash dividends paid per Share in each such fiscal quarter:
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
---- ---- ---------
<S> <C> <C> <C>
1996:
1st Quarter..................................... $ 26 $23 1/2 $0.4175
2nd Quarter..................................... 24 1/2 22 0.4175
3rd Quarter..................................... 24 21 5/8 0.4175
4th Quarter..................................... 24 1/2 21 7/8 0.4175
1997:
1st Quarter..................................... $ 24 $ 20 $0.4175
2nd Quarter..................................... 20 7/8 19 0.4175
3rd Quarter..................................... 23 1/16 19 7/16 0.4175
4th Quarter..................................... 24 1/4 20 0.4175
1998:
1st Quarter..................................... $23 3/4 $23 1/4 $0.4175
2nd Quarter..................................... 22 7/8 22 1/2 0.4175
3rd Quarter (through August 13, 1998)........... 24 1/2 22 0.25*
</TABLE>
- --------
* On August 13, 1998, the Company announced that the Common Stock dividend
payable on October 1, 1998 to shareowners of record as of the close of
business on September 10, 1998 will be at the reduced level of $.25 per
Share. The Shares that are purchased in the Offer will be entitled to the
October 1, 1998 dividend.
On August 13, 1998, the last trading day on the NYSE prior to the
announcement of the terms of the Offer, the reported closing sales price per
Share on the NYSE was $24.50. SHAREOWNERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
9. SOURCE AND AMOUNT OF FUNDS.
Assuming the Company purchases 17,000,000 Shares pursuant to the Offer at a
purchase price of $27.00 per Share, the Company expects the maximum aggregate
cost to be approximately $461.0 million (including estimated fees and
expenses). It is anticipated that the Company will fund the purchase of Shares
pursuant to the Offer and the payment of related fees and expenses with
borrowings from the Company's subsidiary, Capital Funding. Capital Funding
plans to issue commercial paper under its commercial paper program to finance
the Offer. A portion of this commercial paper may be refinanced through the
issuance of unsecured fixed rate debt under Capital Funding's Medium Term Note
Program.
14
<PAGE>
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a holding company with headquarters in Allentown,
Pennsylvania. Its subsidiaries include PP&L, which provides electricity
delivery service in eastern and central Pennsylvania, sells retail electricity
throughout Pennsylvania and markets wholesale electricity throughout the
eastern United States; PP&L Global, Inc., an international independent power
company; PP&L Spectrum, Inc., which markets energy-related services and
products; Capital Funding, which engages in financing for the Company and its
subsidiaries; H.T. Lyons, Inc., a heating, ventilating and air-conditioning
firm; and McClure Company, a heating, ventilating and air-conditioning firm
which the Company acquired on July 27, 1998.
The Company's principal subsidiary, PP&L, was incorporated under the laws of
the Commonwealth of Pennsylvania in 1920 and is an operating public utility
providing electric service in central eastern Pennsylvania. PP&L serves
approximately 1.2 million customers in a 10,000 square mile territory in 29
counties of central eastern Pennsylvania with a population of approximately
2.6 million persons. This service area has 129 communities with populations
over 5,000, the largest cities of which are Allentown, Bethlehem, Harrisburg,
Hazleton, Lancaster, Scranton, Wilkes-Barre and Williamsport. PP&L also offers
electricity and other services to retail and wholesale customers throughout
Pennsylvania and neighboring states.
Both the Company and PP&L are exempt holding companies under the Public
Utility Holding Company Act of 1935.
PP&L Global, the Company's principal unregulated subsidiary, has investments
and commitments of approximately $638 million in distribution, transmission
and generation facilities in the United Kingdom, Bolivia, Peru, Argentina,
Spain, Portugal, Chile and El Salvador. PP&L Global's major investments to
date are South Western Electricity plc, a British regional electric utility
company, Empresas Emel, S.A., a Chilean electric distribution holding company
and DelSur, an El Salvadorian electric distribution company.
In June 1997, the Company entered into an agreement with Penn Fuel Gas Inc.
("PFG"), a Pennsylvania corporation, pursuant to which the Company would
acquire PFG in a stock-for-stock transaction. PFG, with nearly 100,000
customers in Pennsylvania and a few hundred customers in Maryland, distributes
and stores natural gas and sells propane. The Company expects to issue Shares
valued at about $121 million to complete the transaction. The exact number of
Shares to be issued will be based on the market value of the Shares at the
time of the closing of the acquisition. Such closing is expected to occur by
August 31, 1998.
THE SETTLEMENT.
PP&L and the other parties to the Settlement have requested that the PUC (i)
approve the Settlement; (ii) amend the June 15 order consistent with the
Settlement; (iii) approve the supplements to PP&L's tariff necessary to
implement the Settlement; (iv) issue a Qualified Rate Order authorizing PP&L
to securitize up to $2.85 billion of transition and related costs; and (v)
pre-approve future transfers of PP&L generation assets at PP&L's discretion.
The Customer Choice Act also permits the issuance of "transition bonds"
securitized by customer revenues from an Intangible Transition Charge ("ITC")
to finance the payment of transition costs. Proceeds of the transition bonds
are required to be used "principally to reduce qualified stranded costs and
related capitalization." The ITC is intended to recover the principal,
interest and issuance, refinance and servicing costs and fees related to the
transition bonds.
The following are the major elements of the Settlement:
1. PP&L is permitted to recover $2.97 billion (on a net present value basis)
in transition costs over 11 years--i.e., from January 1, 1999 through December
31, 2009. PP&L is permitted a return of 10.86% on the unamortized balance of
these transition costs.
2. PP&L will reduce rates to all retail customers by 4% effective January 1,
1999 through December 31, 1999.
15
<PAGE>
3. One-third of PP&L customers will be able to choose their electric
supplier on January 1, 1999, one-third on January 2, 1999, and the remainder
on January 2, 2000. Beginning on January 1, 1999, PP&L will unbundle its
retail electric rates to reflect separate prices for the transmission and
distribution charges, the CTC (and, if applicable, the ITC), and a "shopping
credit" for customers choosing an alternate electric supplier. PP&L's system
average shopping credits for 1999 and 2000 will be 3.81 cents per kWh and 4.13
cents per kWh, respectively. These shopping credits vary among customer
classes and will increase over the transition period to reflect decreases in
the CTC.
4. The cap on the generation component of rates is extended from December
31, 2005 until December 31, 2009. The cap on the transmission and distribution
component of rates is extended from June 30, 2001 until December 31, 2004.
5. PP&L will recover its nuclear plant decomissioning costs through the CTC.
PP&L may seek an exception to the rate cap for increases in these
decomissioning costs, but agrees not to recover more than 96% of such
increased amount.
6. PP&L will seek to securitize up to $2.85 billion in transition and
related costs, and a proposed PUC Qualified Rate Order authorizing this
securitization is included in the Settlement. The Settlement would require 75%
of the savings from securitization to be passed back to customers, while 25%
would be retained by PP&L. The costs of issuing the transition bonds and
refinancing outstanding debt and equity will be reflected in the ITC to be
charged to all customers. As with the CTC, the ITC must terminate by the end
of the transition period; also, the ITC will offset the CTC on customer bills.
7. On January 1, 2002, 20% of all PP&L's residential customers will be
assigned to a provider of last resort other than PP&L or an affiliate of PP&L.
These customers will be selected at random, and the supplier will be selected
on the basis of a PUC-approved bidding process.
8. Effective on January 1, 1999, alternate electric generation suppliers can
provide metering and billing service to PP&L's commercial and industrial
customers; effective on January 1, 1999, such alternate suppliers can provide
certain metering service to PP&L's residential customers; and effective on
January 1, 2000, PP&L's residential customers can choose their billing service
as well from such alternate suppliers.
9. PP&L will transfer its retail marketing function to a separate affiliated
corporation by September 15, 1998.
10. PP&L is permitted, but not required, to transfer ownership and operation
of its generating facilities to a separate corporate entity at book value.
11. PP&L will spend approximately $16 million annually on assistance and
energy conservation for low-income customers.
16
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
Set forth below is certain summary historical consolidated financial
information of the Company and its subsidiaries. The historical financial
information for the twelve months ended June 30, 1998 was derived from the
unaudited financial statements of the Company filed as part of the Company's
Quarterly Report on Form 10-Q for such period, which is incorporated herein by
reference. The historical financial information for the fiscal year ended
December 31, 1997 and December 31, 1996 was derived from the audited
consolidated financial statements of the Company filed as part of the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 (the
"Company's 1997 Annual Report"), which is incorporated herein by reference,
and other information and data contained in such report. More comprehensive
financial information is included or incorporated by reference in the
Company's reports on Form 10-Q and Form 10-K referred to above and the
financial information which follows is qualified in its entirety by reference
to such reports, and all of the financial statements and related notes
contained or incorporated by reference therein, copies of which may be
obtained as set forth below under the caption "--Additional Information."
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED FISCAL YEAR ENDED
JUNE 30, 1998 ----------------------------
(UNAUDITED) DEC. 31, 1997 DEC. 31, 1996
------------- ------------- -------------
(IN MILLIONS, EXCEPT COMMON STOCK DATA)
<S> <C> <C> <C>
INCOME ITEMS(a)
Operating revenues............. $ 3,308 $ 3,078(b) $ 2,926(b)
Operating income............... 775 801(b) 809(b)
Extraordinary items (net of
taxes)........................ (948)
Net Income..................... (679) 296 329
BALANCE SHEET ITEMS(a)(c)
Property, plant and equipment,
net........................... 4,325 6,820 6,960
Total assets................... 9,199 9,485 9,670
Long-term debt................. 2,730 2,735 2,832
Short-term debt................ 397 135 144
Company-obligated mandatorily
redeemable preferred
securities of subsidiary
trusts holding solely company
debentures.................... 250 250
Preferred stock
With sinking fund
requirements................. 47 47 295
Without sinking fund
requirements................. 50 50 171
Common equity.................. 1,907 2,809 2,745
COMMON STOCK DATA(a)
Number of shares outstanding--
thousands(c).................. 167,641 166,248 162,665
Earnings per share............. $ (4.08) $ 1.80 $ 2.05
Earnings per share excluding
extraordinary items........... 1.62
Dividend payout ratio--%....... 103 (d) 93 82
Price earnings ratio(e)........ 13.59 (d) 13.30 11.22
</TABLE>
- --------
(a) 1998 earnings were affected by the financial impacts of the Settlement
(shown as extraordinary items). 1997 earnings were affected by several
one-time adjustments. These extraordinary items and adjustments affected
net income, certain balance sheet items and certain items under Common
Stock Data.
(b) These amounts have been restated to conform to the presentation in the
Company's June 30, 1998 financial statements. The presentation has been
modified to better reflect the changing nature of the business from a
regulated electric utility to a full-service provider of retail and
wholesale energy and related products and services. The revenues and
expenses of PP&L Global, PP&L Spectrum and H.T. Lyons are now reflected in
"Operating Income." Previously, the results of these non-regulated
affiliates were included in "Other Income and (Deductions)."
(c) At period-end.
(d) Excluding extraordinary items.
(e) Based on period-end market prices.
17
<PAGE>
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL DATA
The following summary unaudited consolidated pro forma financial data gives
effect to the purchase of Shares pursuant to the Offer and the reduction in
the dividend on the Shares, based on certain assumptions described in the
Notes to Summary Unaudited Consolidated Pro Forma Financial Data, and gives
effect to the purchase of Shares pursuant to the Offer as if it had occurred
at the beginning of the period presented, with respect to Income Items and
Common Stock Data, and on June 30, 1998, with respect to Balance Sheet Items.
The summary unaudited consolidated pro forma financial data should be read in
conjunction with the summary consolidated historical financial information and
do not purport to be indicative of the results that would actually have been
obtained, or results that may be obtained in the future, or the financial
condition that would have resulted had the purchase of the Shares pursuant to
the Offer and the reduction in the dividend on the Shares been completed at
the dates indicated.
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
JUNE 30, 1998
(UNAUDITED)
-------------------------------
ACTUAL PRO FORMA(A)
------------ ---------------
(IN MILLIONS,
EXCEPT COMMON STOCK DATA)
<S> <C> <C>
INCOME ITEMS (B)
Operating revenues.......................... $ 3,308 $ 3,308
Operating income............................ 775 775
Extraordinary items (net of taxes).......... (948) (948)
Net Income.................................. (679) (695)
BALANCE SHEET ITEMS (B) (C)
Property, plant and equipment, net.......... 4,325 4,325
Total assets................................ 9,199 9,311
Long-term debt.............................. 2,730 2,730
Short-term debt............................. 397 858
Company-obligated mandatorily redeemable
preferred
securities of subsidiary trusts holding
solely company debentures.................. 250 250
Preferred stock
With sinking fund requirements............. 47 47
Without sinking fund requirements.......... 50 50
Common equity............................... 1,907 1,558
COMMON STOCK DATA (B)
Number of shares outstanding--thousands(c).. 167,641 150,641
Earnings per share.......................... $ (4.08) $ (4.66)
Earnings per share excluding extraordinary
items...................................... 1.62 1.70
Dividend payout ratio--%.................... 103(d) 59(d)
Price earnings ratio (e).................... 13.59(d) 13.27(d)
</TABLE>
- --------
(a) The following assumptions were made in developing the summary unaudited
consolidated pro forma financial data presented above:
(i) a reduction of the quarterly dividend to $.25 per Share;
(ii) a total of 17,000,000 Shares are purchased at the maximum offer price
of $27.00 per Share;
(iii) expenses related to the Offer total $2,000,000.
(iv) the aggregate Purchase Price and Offer expenses are financed through
additional borrowings at an average interest rate of 5.75% per annum;
and
(v) marginal tax rates of 41.5%.
The summary unaudited consolidated pro forma financial data does not give
effect to the Company's pending acquisition of PFG.
(b) Earnings for this period were affected by the financial impacts of the
Settlement (shown as extraordinary items) and several unrelated one-time
adjustments. These extraordinary items and adjustments affected net
income, certain balance sheet items and certain items under Common Stock
Data.
(c) At period-end.
(d) Excluding extraordinary items.
(e) Based on period-end market prices.
18
<PAGE>
ADDITIONAL INFORMATION.
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports and other information with the
Commission. The Company also has filed an Issuer Tender Offer Statement on
Schedule 13E-4 with the Commission, which includes certain additional
information relating to the Offer.
Such reports and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, Suite 1400, Citicorp Center, 14th Floor, 500 West Madison
Street, Chicago, Illinois 60661; and New York Regional Office, 7 World Trade
Center, 13th Floor, Suite 1300, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. The Company's Schedule 13E-4 will not be available at the Commission's
Regional Offices. The Commission maintains a Web site (http://www.sec.com)
that contains reports and other information regarding the Company. In
addition, reports and other information concerning the Company may be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005 and the PhSE, 1900 Market Street, Philadelphia, Pennsylvania 19103.
The Company undertakes to provide without charge to each person, including
any beneficial owner, to whom this Offer to Purchase is delivered, upon
written or oral request of such person, copies of its Annual Report on Form
10-K for the year ended December 31, 1997 and Quarterly Report on Form 10-Q
for the period ended June 30, 1998, other than exhibits thereto. Such requests
should be directed to PP&L, Two North Ninth Street, Allentown, PA 18101,
Attention: Investor Services Department (800/345-3085).
11. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING SHARES.
As of August 13, 1998, the Company had issued and outstanding 168,287,225
Shares. The 17,000,000 Shares that the Company is offering to purchase
represent approximately 10% of the Shares then outstanding. As of August 13,
1998, the Company's directors and executive officers as a group (15 persons)
beneficially owned an aggregate of 151,957 Shares, representing less than 1%
of the outstanding Shares. Each of the Company's executive officers and
directors has advised the Company that he or she does not intend to tender any
Shares pursuant to the Offer. If the Company purchases 17,000,000 Shares
pursuant to the Offer, then after the purchase of Shares pursuant to the
Offer, the Company's executive officers and directors as a group would own
beneficially less than 1% of the outstanding Shares immediately after the
Offer.
Neither the Company, nor any subsidiary of the Company nor, to the best of
the Company's knowledge, any of the Company's directors or executive officers,
nor any associate or subsidiary of any of the foregoing, had any transactions
involving the Shares during the 40 business days prior to the date hereof
except for issuances of new Shares pursuant to the Dividend Reinvestment Plan.
Except as otherwise described herein, neither the Company nor, to the best
of the Company's knowledge, any of its affiliates, directors (including a
nominee) or executive officers, is a party to any contract, arrangement,
understanding or relationship with any other person relating, directly or
indirectly, to the Offer with respect to any securities of the Company
including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such securities,
joint ventures, loan or option arrangements, puts or calls, guaranties of
loans, guaranties against loss or the giving or withholding of proxies,
consents or authorizations.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and may reduce the
number of shareowners. Nonetheless, the Company anticipates
19
<PAGE>
that there will be a sufficient number of Shares outstanding and publicly
traded following consummation of the Offer to ensure a continued trading
market for the Shares. Based upon published guidelines of the NYSE and the
PhSE, the Company does not believe that its purchase of Shares pursuant to the
Offer will cause the Company's remaining Shares to be delisted from the NYSE
or the PhSE.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using such Shares as collateral. The Company
believes that, following the purchase of Shares pursuant to the Offer, the
Shares will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its shareowners
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's shareowners. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares
becoming eligible for deregistration under the Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit that appears to
be material to the Company's business that might be adversely affected by the
Company's acquisition of Shares as contemplated herein or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Company as contemplated herein.
Should any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of or payment for Shares tendered pursuant to the Offer
pending the outcome of any such matter. There can be no assurance that any
such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that the failure to obtain any such
approval or other action might not result in adverse consequences to the
Company's business. The Company's obligations under the Offer to accept for
payment and pay for Shares are subject to certain conditions. See Section 7.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following discussion describes certain United States federal income tax
consequences relevant to the Offer. Except where noted, it deals only with
Shares held as capital assets and does not deal with special situations, such
as those of dealers in securities or commodities, traders in securities that
elect to mark to market, financial institutions, tax-exempt entities, life
insurance companies, persons holding Shares as a part of a hedging, conversion
or constructive sale transaction or a straddle or shareowners whose
"functional currency" is not the U.S. dollar. Furthermore, the discussion
below is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations, rulings and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed,
revoked or modified so as to result in United States federal income tax
consequences different from those discussed below. EACH SHAREOWNER SHOULD
CONSULT HIS OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF PARTICIPATING IN THE OFFER IN LIGHT OF THEIR PARTICULAR
SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER
TAXING JURISDICTION.
As used herein, a "U.S. Owner" of Shares means a shareowner that is (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or any
political subdivision thereof, (iii) an estate the income of which is subject
to United States federal income taxation regardless of its source or (iv) a
trust which is subject to the supervision of a court within the United States
and the control of a United States person as described in section 7701(a)(30)
of the Code. A "Non-U.S. Owner" is a shareowner that is not a U.S. Owner.
20
<PAGE>
Consequences to Tendering Shareowners of Exchange of Shares for Cash
Pursuant to the Offer. An exchange of Shares for cash in the Offer by a U.S.
Owner will be a taxable transaction for United States federal income tax
purposes. As a consequence of the exchange, the U.S. Owner will, depending on
such U.S. Owner's particular circumstances, be treated either as recognizing
gain or loss from the disposition of the Shares or as receiving a dividend
distribution from the Company.
Under Section 302 of the Code, a U.S. Owner will recognize gain or loss from
the disposition of Shares exchanged for cash if the exchange (i) results in a
"complete termination" of all such U.S. Owner's equity interest in the
Company, (ii) results in a "substantially disproportionate" redemption with
respect to such U.S. Owner, or (iii) is "not essentially equivalent to a
dividend" with respect to such U.S. Owner. In applying each of the Section 302
tests, a U.S. Owner in general is deemed to own the Shares actually or
constructively owned by certain related individuals and entities. For example,
an individual U.S. Owner is generally considered to own the Shares owned
directly or indirectly by or for his or her spouse, his or her children,
grandchildren and parents. In addition, a U.S. Owner is considered to own a
proportionate number of the Shares owned by trusts or estates in which the
U.S. Owner has a beneficial interest, by partnerships in which the U.S. Owner
is a partner, and by corporations in which the U.S. Owner owns, directly or
indirectly, 50% or more in value of the stock. Similarly, Shares directly or
indirectly owned by beneficiaries of estates or trusts, by partners of
partnerships and, under certain circumstances, by shareowners of corporations
may be considered owned by these entities. A U.S. Owner, generally, also will
be deemed to own Shares which the U.S. Owner has the right to acquire by
exercise of an option.
A U.S. Owner who exchanges all Shares actually or constructively owned by
such U.S. Owner for cash pursuant to the Offer will be regarded as having
completely terminated such U.S. Owner's equity interest in the Company. A U.S.
Owner who exchanges all Shares actually owned for cash pursuant to the Offer,
but is not treated as having disposed of all Shares constructively owned
pursuant to the Offer because of the application of the family attribution
rules described above, may nevertheless be able to qualify his or her exchange
as a "complete termination" of his or her interest in the Company if certain
technical requirements are met. Among other requirements, a U.S. Owner must
include a statement with his or her 1998 federal income tax return notifying
the Internal Revenue Service (the "IRS") that he or she has elected to waive
the family attribution rules and agreeing to provide certain information in
the future, and must not have any interest in the Company immediately after
the disposition (including an interest as an officer, director or employee),
other than an interest as a creditor. A U.S. Owner wishing to satisfy the
"complete termination" test through waiver of the family attribution rules
should consult his or her tax advisor.
An exchange of Shares for cash will be a "substantially disproportionate"
redemption with respect to a U.S. Owner if the percentage of the then
outstanding Shares actually or constructively owned by such U.S. Owner
immediately after the exchange is less than 80% of the percentage of the
Shares owned by such U.S. Owner immediately before the exchange. If an
exchange of Shares for cash fails to satisfy the "substantially
disproportionate" test, the U.S. Owner may nonetheless satisfy the "not
essentially equivalent to a dividend" test.
A U.S. Owner who wishes to satisfy (or avoid) the "not essentially
equivalent to a dividend" test is urged to consult such U.S. Owner's tax
advisor because this test will be met only if the reduction in such U.S.
Owner's proportionate interest in the Company constitutes a "meaningful
reduction" given such U.S. Owner's particular facts and circumstances. The IRS
has indicated in published rulings that any reduction in the percentage
interest of a shareowner whose relative stock interest in a publicly held
corporation is minimal (an interest of less than 1% should satisfy this
requirement) and who exercises no control over corporate affairs should
constitute such a "meaningful reduction."
If a U.S. Owner sells Shares to persons other than the Company at or about
the time such U.S. Owner also sells shares to the Company pursuant to the
Offer, and the various sales effected by the U.S. Owner are part of an overall
plan to reduce or terminate such U.S. Owner's proportionate interest in the
Company, then the sales to persons other than the Company may, for federal
income tax purposes, be integrated with the U.S. Owner's
21
<PAGE>
sale of Shares pursuant to the Offer and, if integrated, may be taken into
account in determining whether the U.S. Owner satisfies any of the three tests
described above. A U.S. Owner should consult his or her tax advisor regarding
the treatment of other exchanges of Shares for cash which may be integrated
with such U.S. Owner's sale of Shares to the Company pursuant to the Offer.
If a U.S. Owner is treated as recognizing gain or loss from the disposition
of Shares for cash, such gain or loss will be equal to the difference between
the amount of cash received and such U.S. Owner's tax basis in the Shares
exchanged therefor. Any such gain or loss will be capital gain or loss.
Capital gains of individuals derived in respect of capital assets held for
more than one year are eligible for reduced rates of taxation. The
deductibility of capital losses is subject to limitations.
Gain or loss must be determined separately for each block of Shares (that
is, Shares acquired at the same cost in a single transaction) that is
exchanged for cash. A U.S. Owner may be able to designate (generally through
such U.S. Owner's broker) which blocks of Shares are tendered pursuant to the
Offer if less than all of such U.S. Owner's Shares are tendered, and the order
in which different blocks would be exchanged for cash, in the event of
proration pursuant to the Offer. Each U.S. Owner should consult such U.S.
Owner's tax advisor concerning the mechanics and desirability of such a
designation.
If a U.S. Owner is not treated under the Section 302 tests as recognizing
gain or loss from the disposition of Shares exchanged for cash, the entire
amount of cash received by such U.S. Owner in such exchange will be treated as
a dividend to the extent of the Company's current and accumulated earnings and
profits (which the Company believes it has). Such a dividend will be
includible in the U.S. Owner's gross income as ordinary income in its
entirety, without reduction for the tax basis of the Shares exchanged, and no
loss will be recognized. The U.S. Owner's tax basis in the Shares exchanged,
however, will be added to such U.S. Owner's tax basis in the remaining Shares
that such U.S. Owner owns. To the extent that cash received in exchange for
Shares is treated as a dividend to a corporate U.S. Owner, it will be eligible
for a dividends-received deduction equal to 70% of the dividend (subject to
applicable limitations under the Code). If a dividends-received deduction is
available, it is expected that the dividend will constitute an "extraordinary
dividend" under Section 1059 of the Code. As a result, a corporate U.S. Owner
generally will be required to reduce its tax basis in its Shares (but not
below zero) by the extent of the non-taxed portion of the dividend (i.e. the
dividends-received deduction). If the non-taxed portion of the dividend
exceeds the corporate U.S. Owner's tax basis in the Shares, the excess will be
treated as gain resulting from the sale of the Shares. A corporate U.S. Owner
should consult its tax advisor concerning the availability of the dividends-
received deduction and the application of the "extraordinary dividend"
provisions of the Code.
The Company cannot predict whether or the extent to which the Offer will be
oversubscribed. If the Offer is oversubscribed, proration of tenders pursuant
to the Offer will cause the Company to accept fewer Shares than are tendered.
Therefore, a U.S. Owner can be given no assurance that a sufficient number of
such U.S. Owner's Shares will be purchased pursuant to the Offer to ensure
that such purchase will be treated as a sale or exchange, rather than as a
dividend, for federal income tax purposes pursuant to the rules discussed
above.
Consequences to Shareowners Who do not Tender Pursuant to the
Offer. Shareowners who do not accept the Company's Offer to tender their
Shares will not incur any tax liability as a result of the consummation of the
Offer.
See Section 3 with respect to the application of backup withholding on
payments made to all shareowners and federal income tax withholding to
payments made to Non-U.S. Owners.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
EACH SHAREOWNER IS URGED TO CONSULT SUCH OWNER'S OWN TAX ADVISOR TO DETERMINE
THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE OFFER, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
22
<PAGE>
15. FEES AND EXPENSES.
The Company has retained Merrill Lynch to act as financial advisor and
Dealer Manager in connection with the Offer. Merrill Lynch will receive an
advisory fee for its services of $150,000 plus $.07 for each Share purchased
by the Company pursuant to the Offer. The Company also has agreed to reimburse
Merrill Lynch for certain out-of-pocket expenses incurred in connection with
the Offer, and to indemnify Merrill Lynch against certain liabilities in
connection with the Offer, including liabilities under the federal securities
laws. Merrill Lynch has been retained by the Company to render, and in the
past has rendered, various investment banking and other advisory services to
the Company, for which it has received compensation, and may render similar
services to the Company in the future.
The Company has retained Innisfree M&A Incorporated to act as Information
Agent and Norwest Bank Minnesota, N.A. to act as Depositary in connection with
the Offer. The Information Agent may contact shareowners by mail, telephone,
telegraph and personal interviews and may request brokers, dealers and other
nominee shareowners to forward materials relating to the Offer to beneficial
owners. The Information Agent and the Depositary will each receive reasonable
and customary compensation for their respective services, will be reimbursed
by the Company for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities in connection with the Offer,
including certain liabilities under the federal securities laws.
No fees or commissions will be payable to brokers, dealers or other persons
(other than fees to the Dealer Manager, the Information Agent and the
Depositary as described above) for soliciting tenders of Shares pursuant to
the Offer. The Company, however, upon request, will reimburse brokers, dealers
and commercial banks for customary mailing and handling expenses incurred by
such persons in forwarding the Offer and related materials to the beneficial
owners of Shares held by any such person as a nominee or in a fiduciary
capacity. No broker, dealer, commercial bank or trust company has been
authorized to act as the agent of the Company, the Dealer Manager, the
Information Agent or the Depositary for purposes of the Offer. The Company
will pay or cause to be paid all stock transfer taxes, if any, on its purchase
of Shares except as otherwise provided in Instruction 7 in the Letter of
Transmittal.
16. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such
law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the owners of Shares residing in such jurisdiction. In any
jurisdiction the securities or blue sky laws of which require the Offer to be
made by a licensed broker or dealer, the Offer is being made on the Company's
behalf by the Dealer Manager or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender Offer
Statement on Schedule 13E-4 which contains additional information with respect
to the Offer. Such Schedule 13E-4, including the exhibits and any amendments
thereto, may be examined, and copies may be obtained, at the same places and
in the same manner as is set forth in Section 10 with respect to information
concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION
WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE
RELATED LETTER OF TRANSMITTAL IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE DEALER MANAGER.
PP&L RESOURCES, INC.
23
<PAGE>
The Letter of Transmittal and certificates for Shares and any other required
documents should be sent or delivered by each shareowner or such shareowner's
broker, dealer, commercial bank, trust company or other nominee to the
Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS
NORWEST BANK MINNESOTA, N.A.
By Mail: By Hand or By Overnight By Hand New York Drop:
Courier:
Norwest Bank Minnesota, The Depository Trust
N.A. Norwest Bank Minnesota, Company
P.O. Box 64858 N.A. 55 Water Street, 1st
St. Paul, Minnesota 161 North Concord Exchange Floor
55164-0858 South St. Paul, Minnesota New York, New York
Attention: 55075-1139 10041-0099
Reorganization
Department
Attention: Reorganization
Department
Facsimile Transmission: Confirm Receipt of Notice of
Guaranteed Delivery by Telephone
(612) 450-4163
(612) 450-4110
Questions or Requests for Assistance (612) 450-4108
(800) 468-9716
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at the
telephone numbers and locations listed below. Shareowners may also contact
their local broker, dealer, commercial bank, trust company or nominee for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
INNISFREE M&A INCORPORATED
501 Madison Avenue
New York, New York 10022
Call Toll Free:(888) 750-5835
Banks and Brokerage Firms,
Please Call:(212) 750-5833
THE DEALER MANAGER FOR THE OFFER IS:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281
(212) 449-8971 (call collect)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
PP&L RESOURCES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED AUGUST 14, 1998
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER IS
EXTENDED.
- --------------------------------------------------------------------------------
TO: NORWEST BANK MINNESOTA, N.A., DEPOSITARY
<TABLE>
<CAPTION>
By Mail: By Hand or Overnight Courier: By Hand New York Drop:
<S> <C> <C>
Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A. The Depository Trust Company
P.O. Box 64858 161 North Concord Exchange 55 Water Street, 1st Floor
St. Paul, Minnesota 55164-0858 South St. Paul, Minnesota 55075-1139 New York, New York 10041-0099
Attention: Reorganization Department Attention: Reorganization Department
</TABLE>
DELIVERY OF THIS INSTRUMENT AND ALL OTHER DOCUMENTS TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING THE ACCOMPANYING
INSTRUCTIONS, CAREFULLY BEFORE CHECKING ANY BOX BELOW.
This Letter of Transmittal is to be used only if (a) certificates for Shares
(as defined below) are to be forwarded herewith or (b) a tender of Shares is
being made concurrently by book-entry transfer to the account maintained by
Norwest Bank Minnesota, N.A. (the "Depositary") at The Depository Trust
Company ("DTC") pursuant to Section 3 of the Offer to Purchase. See
Instruction 2.
DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES)
OF REGISTERED OWNER(S)
(PLEASE USE PRE-
ADDRESSED LABEL OR FILL
IN EXACTLY AS NAME(S)
APPEAR(S) ON TENDERED CERTIFICATES
CERTIFICATE(S)) (ATTACH SIGNED ADDITIONAL LIST IF NECESSARY)
- ---------------------------------------------------------------------------
NUMBER
CERTIFICATE OF SHARES
NUMBER(S)* NUMBER OF SHARES TENDERED**
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
[_]PLEASE CHECK HERE IF
CERTIFICATE(S) FOR
PART OR ALL OF YOUR
SHARES HAVE BEEN
LOST, STOLEN, MIS-
PLACED OR DESTROYED. TOTAL SHARES
SEE INSTRUCTION 2. TENDERED
</TABLE>
- -------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which Shares are
to be purchased in event of proration. (Attach signed additional list if
necessary.)*** See Instruction 9.
1st: 2nd: 3rd: 4th:
- -------------------------------------------------------------------------------
* DOES NOT need to be completed if Shares are tendered by book-entry
transfer.
** If you desire to tender fewer than all Shares evidenced by any
certificates listed above, please indicate in this column the number of
shares you wish to tender. Otherwise, all Shares evidenced by such
certificates will be deemed to have been tendered. See Instruction 4.
*** In the event less than all Shares tendered are purchased due to
proration, Shares will be selected for purchase by the Depositary
(unless you otherwise designate).
FOR OFFICE USE ONLY
Debit shares ______ Partial _____ SBL/LT _____ Alt Payee _____ Spec Del ____
_________ Approved ______ Input _______ Audit _______ Mailed __________
<PAGE>
NOTE: SIGNATURE MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to PP&L Resources, Inc., a Pennslyvania
corporation (the "Company"), the above described shares of the Company's
common stock (the "Shares"), at the price per Share indicated in this Letter
of Transmittal, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Company's Offer to Purchase, dated August 14, 1998
(the "Offer to Purchase"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which together constitute the "Offer").
Subject to and effective upon acceptance for payment of the Shares tendered
hereby in accordance with the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Company all right, title and interest
in and to all the Shares that are being tendered hereby under the registration
of all such Shares if tendered by book-entry transfer and hereby irrevocably
constitutes and appoints the Depositary as the true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that said Depositary
also acts as the agent of the Company) with respect to such Shares with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to:
(a) deliver certificate(s) for such Shares or transfer ownership of such
Shares on the account books maintained by DTC, together in either such case
with all accompanying evidences of transfer and authenticity, to, or upon
the order of, the Company upon receipt by the Depositary, as the
undersigned's agent, of the aggregate Purchase Price (as defined below)
with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer on
the Company's books; and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares, subject to the next paragraph, all in accordance
with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that:
(i) The undersigned has a net long position in Shares or equivalent
securities at least equal to the Shares tendered within the meaning of
Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and
(ii) such tender of Shares complies with Rule 14e-4;
(b) then and to the extent the Company accepts such Shares for purchase,
the Company will acquire good, marketable and unencumbered title to them,
free and clear of all security interests, liens, charges, encumbrances,
conditional sales agreements or other obligations relating to their sale or
transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any additional
documents the Depositary or the Company deems necessary or desirable to
complete the assignment, transfer and purchase of the Shares tendered
hereby; and
(d) the undersigned has read and agrees to all of the terms of the Offer.
All authorities conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors, assigns,
trustees in bankruptcy, and legal representatives of the undersigned. Except
as stated in the Offer to Purchase, this tender is irrevocable.
The name(s) and address(es) of the registered owner(s) should be printed
above, if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
number of Shares represented by such certificates and the number of Shares
that the undersigned wishes to tender, should be set forth in the appropriate
boxes above. The price at which such Shares are being tendered should be
indicated below by either (i) checking
<PAGE>
ONE of the boxes listed under the item "Shares Tendered at Price Determined by
Shareowner" or (ii) checking the box under the item "Shares Tendered at Price
Determined Pursuant to the Offer."
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single price per Share
(not in excess of $27.00 nor less than $24.50 per Share) net to the seller in
cash (the "Purchase Price") that it will pay for Shares properly tendered and
not withdrawn prior to the Expiration Date pursuant to the Offer, taking into
account the number of Shares so tendered and the prices (in multiples of
$0.25) specified by tendering shareowners. The undersigned understands that
the Company will select the lowest Purchase Price that will allow it to
purchase up to 17,000,000 shares (or such lesser number of Shares as are
properly tendered and not withdrawn) at a price not in excess of $27.00 nor
less than $24.50 per Share. The undersigned understands that all Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
prior to the Expiration Date will be purchased at the Purchase Price, upon the
terms and subject to the conditions of the Offer, including the proration and
odd lot provisions. The Company will return all Shares not purchased pursuant
to the Offer, including Shares tendered at prices greater than the Purchase
Price and not withdrawn prior to the Expiration Date and Shares not purchased
because of proration.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any
such event, the undersigned understands that certificate(s) for any Shares
delivered herewith but not tendered or not purchased will be returned to the
undersigned at the address indicated above, unless otherwise indicated under
the "Special Payment Instructions" or "Special Delivery Instructions" below.
The undersigned recognizes that the Company has no obligation, pursuant to the
Special Payment Instructions, to transfer any certificate for Shares from the
name of its registered owner, or to order the registration or transfer of
Shares tendered by book-entry transfer, if the Company purchases none of the
Shares represented by such certificate or tendered by such book-entry
transfer.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the aggregate Purchase Price for such of the Shares tendered
hereby as are purchased will be issued to the order of the undersigned and
mailed to the address indicated above, unless otherwise indicated under the
Special Payment Instructions or the Special Delivery Instructions below.
<PAGE>
IF YOU ARE A PARTICIPANT IN THE DIVIDEND REINVESTMENT PLAN, THE NUMBER OF
SHARES ON THE LABEL AFFIXED TO THIS LETTER OF TRANSMITTAL INCLUDES SHARES HELD
BY YOU IN THE DIVIDEND REINVESTMENT PLAN, IF ANY. IN ORDER TO TENDER ANY
SHARES IN THE DIVIDEND REINVESTMENT PLAN, YOU MUST FILL OUT THE BOX BELOW.
DIVIDEND REINVESTMENT PLAN SHARES
(SEE INSTRUCTION 15)
This section is to be completed ONLY by participants in the Dividend
Reinvestment Plan who wish to tender Shares held in the Dividend
Reinvestment Plan.
[_]Check here to instruct the Depositary to tender on behalf of the
undersigned ALL the Shares credited to the Dividend Reinvestment Plan
account of the undersigned (including any Shares purchased after August
14, 1998 and credited to such account, which are not reflected on the
Pre-addressed Label).
[_]Check here to instruct the Depositary to tender on behalf of the
undersigned the following number of Shares credited to the Dividend
Reinvestment Plan account of the undersigned:
Shares: ______________________________
Shareowners who desire to tender Shares pursuant to the Offer (as defined
below) and who cannot deliver their certificates for their Shares (or who are
unable to comply with the procedures for book-entry transfer on a timely
basis) and all other documents required by this Letter of Transmittal to the
Depositary at or before the Expiration Date (as defined in the Offer to
Purchase) may tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2.
Delivery of documents to DTC does not constitute delivery to the Depositary.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution: __________________________________________
DTC Account Number: _____________________________________________________
Transaction Code Number: ________________________________________________
[_]CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): _________________________________________
Date of Execution of Notice of Guaranteed Delivery: _____________________
Name of Institution that Guaranteed Delivery: ___________________________
Give DTC Account Number if Delivered by Book-Entry Transfer: ____________
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
ODD LOTS
(SEE INSTRUCTION 8)
- --------------------------------------------------------------------------------
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning beneficially or of record an aggregate of fewer than 100
Shares, including any Shares held in the Dividend Reinvestment Plan. The
undersigned either (check one box):
[_]is the beneficial or record owner of an aggregate of fewer than 100
Shares, all of which are being tendered;
OR
[_]is a broker dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s) thereof, Shares with respect
to which it is the record owner and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person is the beneficial owner of an aggregate of fewer than 100 Shares
and is tendering all of such Shares.
CHECK ONLY ONE BOX BELOW.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
SHARES TENDERED AT PRICE DETERMINED BY SHAREOWNER
(SEE INSTRUCTION 5)
- --------------------------------------------------------------------------------
By checking ONE of the following boxes below INSTEAD OF THE BOX UNDER
"SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE OFFER", the undersigned
hereby tenders Shares at the price checked. This action could result in none
of the Shares being purchased if the Purchase Price for the Shares is less
than the price checked. A shareowner who desires to tender Shares at more
than one price must complete a separate Letter of Transmittal for each price
at which Shares are tendered. The same Shares cannot be tendered at more than
one price.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
[_] $24.50 [_] $24.75 [_] $25.00 [_] $25.25 [_] $25.50 [_] $25.75 [_] $26.00
- --------------------------------------------------------------------------------
[_] $26.25 [_] $26.50 [_] $26.75 [_] $27.00
OR
SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE OFFER
(SEE INSTRUCTION 5)
- --------------------------------------------------------------------------------
[_]The undersigned wants to maximize the chance of having the Company
purchase all the Shares the undersigned is tendering (subject to the
possibility of proration). Accordingly, by checking this ONE BOX INSTEAD
OF ONE OF THE PRICE BOXES ABOVE, the undersigned hereby tenders Shares and
is willing to accept the Purchase Price determined by the Company in
accordance with the terms of the Offer. This action could result in
receiving a price per Share of as low as $24.50 or as high as $27.00.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS (SEE SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS 1, 4, 6, 7 AND 10) (SEE INSTRUCTIONS 1, 4, 6 AND 10)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for Shares not tendered or cates for Shares not tendered or
not purchased and/or any check not purchased and/or any check
for the aggregate Purchase Price for the Purchase Price of Shares
of Shares purchased are to be is- purchased, issued in the name of
sued in the name of someone other the undersigned, are to be mailed
than the undersigned. to someone other than the under-
signed, or to the undersigned at
Issue [_] Check to: an address other than that shown
[_] Certificates to: above.
Names ____________________________ Mail [_] Check to:
PLEASE TYPE OR PRINT [_] Certificates to:
Address __________________________ Name______________________________
PLEASE TYPE OR PRINT
__________________________________
(INCLUDE ZIP CODE) Address __________________________
__________________________________ __________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER) __________________________________
(INCLUDE ZIP CODE)
<PAGE>
IMPORTANT
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL SHAREOWNERS)
(PLEASE COMPLETE AND RETURN THE SUBSTITUTE FORM W-9)
(Must be signed by the registered owner(s) exactly as name(s) appear(s)
on certificate(s) or on a security position listing or by person(s)
authorized to become registered owner(s) by certificate(s) and documents
transmitted with this Letter of Transmittal. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a
corporation or another person acting in a fiduciary or representative
capacity, please set forth full title and see Instruction 6.)
Signature(s) of Registered Owner(s): _______________________________________
Dated: _________________________, 1998
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code(s) and Daytime Telephone Number(s): ______________________________
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6; TO BE COMPLETED ONLY IF REQUIRED BY SUCH
INSTRUCTIONS)
Name of Firm: ______________________________________________________________
(PLEASE TYPE OR PRINT)
Authorized Signature: ______________________________________________________
Title: _____________________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code(s) and Daytime Telephone Number(s): ______________________________
Dated: _________________________, 1998
<PAGE>
PAYER'S NAME: NORWEST BANK MINNESOTA
PART 1--PLEASE PROVIDE YOUR Social Security Number
TIN IN THE BOX AT RIGHT AND or Employer
CERTIFY BY SIGNING AND Identification Number
DATING BELOW:
SUBSTITUTE ----------------------
FORM W-9
----------------------------------- PART 3 --
PAYER'S REQUEST FOR NAME (PLEASE PRINT)
TAXPAYER IDENTIFICATION Awaiting TIN [_]
NUMBER (TIN) -----------------------------------
ADDRESS
-----------------------------------
CITY STATE ZIP CODE
--------------------------------------------------------
PART 2: For payees exempt from backup withholding,
see the enclosed Guidelines Certification of Taxpayer
Identification Number on Substitute IRS Form W-9
complete as instructed therein.
--------------------------------------------------------
PART 3: CERTIFICATION--Under the penalties of
perjury, I certify that (1) the number shown on this
form is my correct taxpayer identification number (or
I am waiting for a number to be issued to me) and
either (a) I have mailed an application to receive a
taxpayer identification number to the IRS center or
Social Security Administration office or (b) I intend
to mail or deliver an application in the near future)
and (2) I am not subject to backup withholding
because (a) I am exempt from backup withholding; or
(b) I have not been notified by the IRS that I am
subject to backup withholding as a result of a
failure to report all interest or; or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
Certification instruction--You must cross out Item
(2) if you have been notified by the IRS that you are
currently subject to withholding because of
underreporting interest or dividends or your tax.
Signature _________________________ Date ______, 1998
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
IMPORTANT: This Letter of Transmittal (together with certificates for the
Shares being tendered and all other required documents), or a Notice of
Guaranteed Delivery must be received prior to the Expiration Date. SHAREOWNERS
ARE ENCOURAGED TO COMPLETE THE SUBSTITUTE IRS FORM W-9 AS PART OF THEIR LETTER
OF TRANSMITTAL.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered
an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer
identification number within sixty (60) days, 31% of all reportable
payments made to me thereafter will be withheld until I provide a number.
_________________________________________________ ______________, 1998
SIGNATURE DATE
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Medallion Guarantee of Signatures. No signature guarantee is required if
either:
(a) This Letter of Transmittal is signed by the registered owner of the
Shares (which term, for purposes of this document, shall include any
participant in DTC whose name appears on a security position listing as the
owner of such Shares) exactly as the name of the registered owner appears
on the certificate tendered with this Letter of Transmittal and payment and
delivery are to be made directly to such owner unless such owner has
completed either the box entitled "Special Payment Instructions" or
"Special Delivery Instructions" above; or
(b) Such Shares are tendered for the account of a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust
company (not a savings bank or savings and loan association) having an
office, branch or agency in the United States, any of which is a
participant in an approved Signature Guarantee Medallion Program (each such
entity, an "Eligible Institution").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 6.
2. Delivery of Letter Of Transmittal And Certificates; Guaranteed Delivery
Procedures; Lost or Destroyed Certificates. This Letter of Transmittal is to
be used only if certificates for Shares are delivered with it to the
Depositary (or such certificates will be delivered pursuant to a Notice of
Guaranteed Delivery previously sent to the Depositary) or if a tender for
Shares is being made concurrently pursuant to the procedure for tender by
book-entry transfer set forth in Section 3 of the Offer to Purchase.
Certificates for all physically tendered Shares, confirmation of a book-entry
transfer into the Depositary's account at DTC of Shares tendered
electronically, together in each case with a properly completed and duly
executed Letter of Transmittal, and any other documents required by this
Letter of Transmittal, should be mailed or delivered to the Depositary at the
appropriate address set forth herein and must be delivered to the Depositary
on or before the Expiration Date (as defined in the Offer to Purchase).
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Shareowners whose certificates are not immediately available or who cannot
deliver certificates for their Shares and all other required documents to the
Depositary prior to the Expiration Date, or whose Shares cannot be delivered
on a timely basis pursuant to the procedures for book-entry transfer, must, in
any such case, tender their Shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery and by otherwise complying with the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase. Pursuant to such procedure,
certificates for all physically tendered Shares or book-entry confirmations,
as the case may be, as well as a properly completed and duly executed Letter
of Transmittal and all other documents required by this Letter of Transmittal,
must be received by the Depositary within three New York Stock Exchange
trading days after receipt by the Depositary of such Notice of Guaranteed
Delivery, all as provided in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
Medallion signature guarantee by an Eligible Institution in the form set forth
in such Notice. For Shares to be validly tendered pursuant to the guaranteed
delivery procedure, the Depositary must receive the Notice of Guaranteed
Delivery on or before the Expiration Date.
Shareowners whose certificates for part or all of their Shares have been
lost, stolen, misplaced or destroyed must so indicate in the box entitled
"Description of Shares Tendered." Such shareowners may alternatively make such
notification to Norwest Bank Minnesota, N.A. as transfer agent, at the
following address: 161 North Concord Exchange, South St. Paul, Minnesota
55075-1139; Attention: Reorganization Department (telephone number: (800) 468-
9716; fax number: (612) 450-4033) and you will be instructed as to the
documents which may be required to be submitted by you together with the
Letter of Transmittal in order to receive the stock certificate(s)
representing the Shares.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF TITLE OF THE TENDERING SHAREOWNER. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
DELIVERY.
<PAGE>
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering Shareowners, by execution of
this Letter of Transmittal, waive any right to receive any notice of the
acceptance of their tender.
3. Inadequate Space. If the space provided under the item "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares should be listed on a separate signed schedule and attached to this
Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to shareowners
who tender by book-entry transfer.) If fewer than all of the Shares evidenced
by any certificate are to be tendered, shareowners should fill in the number
of Shares that are to be tendered in the column entitled "Number of Shares
Tendered," under the item "Description of Shares Tendered." In such case, if
any tendered Shares are purchased, a new certificate for the remainder of the
Shares (including any Shares not purchased) evidenced by the old
certificate(s) will be issued and sent to the registered owner(s), unless
otherwise specified above under either "Special Payment Instructions" or
"Special Delivery Instructions," as soon as practicable after the Expiration
Date. Unless otherwise indicated, all Shares represented by the certificate(s)
listed and delivered to the Depositary will be deemed to have been tendered.
5. Indication of Price at Which Shares are Being Tendered. For Shares to be
validly tendered by this Letter of Transmittal, the shareowner must either:
(i) check the box indicating the price per Share at which such shareowner
is tendering Shares under "Shares Tendered at Price Determined by
Shareowner" or
(ii) check the box under "Shares Tendered at Price Determined Pursuant to
the Offer."
By checking a box under "Shares Tendered at Price Determined by Shareowner,"
the shareowner acknowledges that doing so could result in none of the Shares
being purchased if the Purchase Price for the Shares is less than the price
you check. By checking the box under "Shares Tendered at Price Determined
Pursuant to the Offer" the shareowner agrees to accept the Purchase Price
determined by the Company in accordance with the terms of the Offer, which may
be as low as $24.50 or as high as $27.00 per Share. ONLY ONE BOX MAY BE
CHECKED. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED, THERE IS NO
VALID TENDER OF SHARES. A shareowner wishing to tender portions of such
shareowner's Share holdings at different prices must complete a separate
Letter of Transmittal for each price at which such shareowner wishes to tender
each such portion of such shareowner's Shares. The same Shares cannot be
tendered (unless previously validly withdrawn as provided in Section 4 of the
Offer to Purchase) at more than one price.
6. Signatures on Letter of Transmittal, Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered owner(s) of
the Shares tendered hereby, the signature(s) must correspond exactly with
the name(s) as written on the face of the certificate(s) without any change
whatsoever.
(b) If the Shares are registered in the name of two or more joint owners,
each such owner must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different certificates.
(d) When this Letter of Transmittal is signed by the registered owner(s)
of the Shares listed and transmitted hereby, no endorsement(s) of
certificate(s) representing such Shares or separate stock power(s) are
required unless payment is to be made or the certificate(s) for Shares not
tendered or not purchased are to be issued to a person other than the
registered owner(s). SIGNATURE(S) ON SUCH CERTIFICATE(S) MUST BE MEDALLION
GUARANTEED BY AN ELIGIBLE INSTITUTION. If this Letter of Transmittal is
signed by a person other than the registered owner(s) of the certificate(s)
listed, or if payment is to be made or the certificate(s) for Shares not
tendered or not purchased are to be issued to a person other than the
registered owner(s), the certificate(s) must be endorsed or accompanied by
appropriate stock power(s), in either case signed exactly as the name(s) of
the registered owner(s) appears on the certificate(s), and the signature(s)
on such certificate(s) or stock power(s) must be guaranteed by an Eligible
Institution. See Instruction 1.
<PAGE>
(e) If this Letter of Transmittal or any certificate(s) or stock power(s)
are signed by trustees, executors, administrators, guardians, attorneys-in-
fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and
must submit proper evidence satisfactory to the Company of their authority
so to act.
7. Stock Transfer Taxes. Except as provided in this Instruction 7, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter
of Transmittal. The Company will pay or cause to be paid any stock transfer
taxes payable on the transfer to it of Shares purchased pursuant to the Offer.
If, however:
(a) Payment of the aggregate Purchase Price for Shares tendered hereby
and accepted for purchase is to be made to any person other than the
registered owner(s);
(b) Shares not tendered or not accepted for purchase are to be registered
in the name(s) of any person(s) other than the registered owner(s); or
(c) Tendered certificates are registered in the name(s) of any person(s)
other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from such aggregate Purchase Price the amount
of any stock transfer taxes (whether imposed on the registered owner, such
other person or otherwise) payable on account of the transfer to such person,
unless satisfactory evidence of the payment of such taxes or any exemption
from them is submitted.
8. Odd Lots. As described in Section 1 of the Offer to Purchase, if the
Company is to purchase fewer than all Shares tendered before the Expiration
Date and not withdrawn, the Shares purchased first will consist of all Shares
tendered by any shareowner who owns of record or owns beneficially an
aggregate of fewer than 100 Shares, including any Shares held in the Dividend
Reinvestment Plan, and who tenders all of such shareowner's Shares at or below
the Purchase Price (an "Odd Lot Owner"). This preference will not be available
unless the box entitled "Odd Lots" is completed. IF ANY SHARES TENDERED BY AN
ODD LOT OWNER ARE HELD IN THE DIVIDEND REINVESTMENT PLAN, THE BOX ENTITLED
"DIVIDEND REINVESTMENT PLAN SHARES" MUST ALSO BE COMPLETED. SEE INSTRUCTION
15.
9. Order of Purchase in Event of Proration. As described in Section 1 of the
Offer to Purchase, shareowners may designate the order in which their Shares
are to be purchased in the event of proration. The order of purchase may have
an effect on the federal income tax treatment of the Purchase Price for the
Shares purchased. See Sections 1 and 14 of the Offer to Purchase.
10. Special Payment and Delivery Instructions. If certificate(s) for Shares
not tendered or not purchased and/or check(s) are to be issued in the name of
a person other than the signer of the Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the person
signing the Letter of Transmittal or to the signer at a different address, the
above items "Special Payment Instructions" and/or "Special Delivery
Instructions" should be completed as applicable and signatures must be
guaranteed as described in Instruction 1.
11. Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the Purchase Price to be paid for Shares accepted and the
validity, form, eligibility (including time of receipt) and acceptance of any
tender of Shares will be determined by the Company, in its sole discretion,
and its determination shall be final and binding on all parties. The Company
reserves the absolute right to reject any or all tenders of any Shares that it
determines are not in proper form or the acceptance for payment of or payment
for which may be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer or any defect or irregularity in any
tender of Shares, and the Company's interpretation of the terms of the Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. No tender of Shares will be deemed to have been
properly made until all defects or irregularities have been cured by the
tendering shareowner or waived by the Company. None of the Company, the Dealer
Manager, the Depositary, the Information Agent or any other person shall be
obligated to give notice of any defects or irregularities in tenders, nor
shall any of them incur any liability for failure to give any such notice.
<PAGE>
12. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of
Transmittal may be obtained from, the Information Agent or the Dealer Manager
at their addresses and telephone numbers set forth at the end of this Letter
of Transmittal or from your broker, dealer, commercial bank or trust company.
13. IRS Form W-9 and IRS Form W-8. Under the federal income tax backup
withholding rules, unless an exemption applies under the applicable law and
regulations, 31% of the gross proceeds payable to a U.S. Owner (as defined in
Section 14 of the Offer to Purchase) pursuant to the Offer must be withheld
and remitted to the United States Treasury, unless the U.S. Owner provides
such U.S. Owner's taxpayer identification number (employer identification
number or social security number) to the Depositary, certifies as to no loss
of exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. Therefore, each tendering U.S.
Owner should complete and sign the Substitute Form W-9 included as part of
this Letter of Transmittal so as to provide the information and certification
necessary to avoid backup withholding, unless such U.S. Owner otherwise
establishes to the satisfaction of the Depositary that it is not subject to
backup withholding. Certain U.S. Owners (including, among others, all
corporations) are not subject to these backup withholding requirements. In
addition, Non-U.S. Owners (as defined in Section 14 of the Offer to Purchase)
are not subject to these backup witholding requirements. In order for a Non-
U.S. Owner to qualify as an exempt recipient, that No-U.S. Owner must submit
an IRS Form W-8 or a Substitute Form W-8. Such statements can be obtained from
the Depositary.
14. Withholding for Foreign Shareowners. Even if a Non-U.S. Owner has
provided the required certification to avoid backup withholding, the
Depositary will withhold federal income taxes equal to 30% of the gross
payments payable to a Non-U.S. Owner or his or her agent unless the Depositary
determines that a reduced rate of withholding is available pursuant to a tax
treaty or that an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business
within the United States. In order to obtain a reduced rate of withholding
pursuant to a tax treaty, a Non-U.S. Owner must deliver to the Depositary
before the payment a properly completed and executed IRS Form 1001. In order
to obtain an exemption from withholding on the grounds that the gross proceeds
paid pursuant to the Offer are effectively connected with the conduct of a
trade or business within the United States, a Non-U.S. Owner must deliver to
the Depositary a properly completed and executed IRS Form 4224. The Depositary
will determine a shareowner's status as a Non-U.S. Owner and eligibility for a
reduced rate of, or exemption from, withholding by reference to any
outstanding certificates or statements concerning eligibility for a reduced
rate of, or exemption from, withholding (e.g., IRS Form 1001 or IRS Form 4224)
unless facts and circumstances indicate that such reliance is not warranted. A
Non-U.S. Owner may be eligible to obtain a refund of all or a portion of any
tax withheld if such shareowner meets the "complete redemption,"
"substantially disproportionate" or "not essentially equivalent to a dividend"
test described in Section 14 of the Offer to Purchase is otherwise able to
establish that no tax or a reduced amount of tax is due. Backup withholding
generally will not apply to amounts subject to the 30% or a treaty-reduced
rate of withholding. Non-U.S. Owners are urged to consult their own tax
advisors regarding the application of federal income tax withholding,
including eligibility for a withholding tax reduction or exemption, and the
refund procedure.
15. Dividend Reinvestment Plan. If a shareowner desires to tender Shares
credited to the shareowner's account under the Dividend Reinvestment Plan, the
box entitled "Dividend Reinvestment Plan Shares" should be completed. A
participant in the Dividend Reinvestment Plan may complete such box on only
one Letter of Transmittal submitted by such participant. If a participant
submits more than one Letter of Transmittal and completes such box on more
than one Letter of Transmittal, the participant will be deemed to have elected
to tender all Shares credited to the shareowner's account under the Dividend
Reinvestment Plan at the lowest price specified in such Letters of
Transmittal. IF SUCH SHAREOWNER IS AN ODD LOT OWNER AND DESIRES TO HAVE ALL OF
SUCH SHAREOWNER'S SHARES PURCHASED, THE BOX ENTITLED "ODD LOTS" MUST ALSO BE
COMPLETED. SEE INSTRUCTION 8.
If a shareowner tenders Shares held in the Dividend Reinvestment Plan, all
such Shares credited to such shareowner's account(s) (including any Shares
purchased after August 14, 1998 and credited to such account(s), which are not
reflected on the Pre-addressed Label included herewith) will be tendered,
unless otherwise specified above in the box entitled "Dividend Reinvestment
Plan Shares." In the event that the item "Dividend Reinvestment Plan Shares"
is not completed, no Shares held in the tendering shareowner's account will be
tendered.
<PAGE>
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 Madison Avenue
New York, New York 10022
Call Toll Free: (888) 750-5835
Banks and Brokerage Firms,
Please Call: (212) 750-5833
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
North Tower
New York, New York 10281
(212) 449-8971 (call collect)
<PAGE>
PP&L RESOURCES, INC.
NOTICE OF GUARANTEED DELIVERY OF SHARES OF COMMON STOCK
This form or a facsimile hereof must be used to accept the Offer (as defined
below) if:
(a) certificates for shares (the "Shares") of common stock of PP&L
Resources, Inc., a Pennsylvania corporation (the "Company"), cannot be
delivered to the Depositary prior to the Expiration Date (as defined in the
Company's Offer to Purchase dated August 14, 1998 (the "Offer to
Purchase")); or
(b) the procedure for book-entry transfer (set forth in Section 3 of the
Offer to Purchase) cannot be completed on a timely basis; or
(c) the Letter of Transmittal and all other required documents cannot be
delivered to the Depositary prior to the Expiration Date.
IF NONE OF THE ABOVE ARE APPLICABLE, THIS FORM NEED NOT BE COMPLETED.
This form, properly completed and duly executed, may be delivered by hand,
mail or facsimile transmission to the Depositary. See Section 3 of the Offer
to Purchase.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH BELOW OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
BELOW DOES NOT CONSTITUTE A VALID DELIVERY.
DEPOSITARY: NORWEST BANK MINNESOTA, N.A.
By Mail: By Hand or OvernightCourier: By Hand New York Drop:
Norwest Bank Minnesota, Norwest Bank Minnesota, The Depository Trust
N.A. N.A. Company
P.O. Box 64858 161 North Concord Exchange 55 Water Street, 1st
St. Paul, Minnesota 55164- South St. Paul, Minnesota Floor
0858 55075-1139 New York, New York 10041-
Attention: Reorganization Attention: Reorganization 0099
Department Department
By Facsimile Transmission:
(612) 450-4163
Confirm by Telephone:
(612) 450-4110
(612) 450-4108
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE
INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST
APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF
TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company at the price per Share
indicated in this Notice of Guaranteed Delivery, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of both of which
is hereby acknowledged, Shares pursuant to the guaranteed delivery procedure
set forth in Section 3 of the Offer to Purchase.
- -------------------------------------------------------------------------------
ODD LOTS
- -------------------------------------------------------------------------------
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning beneficially or of record an aggregate of fewer than 100
Shares. The undersigned either (check one box):
[_] is the beneficial or record owner of an aggregate of fewer than 100
Shares, all of which are being tendered;
OR
[_] is a broker dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s) thereof, Shares with respect
to which it is the record owner and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person is the beneficial owner of an aggregate of fewer than 100 Shares
and is tendering all of such Shares.
- -------------------------------------------------------------------------------
CHECK ONLY ONE BOX BELOW.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
- -------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED BY SHAREOWNER
- -------------------------------------------------------------------------------
By checking ONE of the following boxes below INSTEAD OF THE BOX UNDER
"SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE OFFER", the undersigned
hereby tenders Shares at the price checked. This action could result in none
of the Shares being purchased if the Purchase Price for the Shares is less
than the price checked. A shareowner who desires to tender Shares at more
than one price must complete a separate Notice of Guaranteed Delivery for
each price at which Shares are tendered. The same Shares cannot be tendered
at more than one price.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
- -------------------------------------------------------------------------------
[_] $24.50 [_] $24.75 [_] $25.00 [_] $25.25 [_] $25.50 [_] $25.75 [_] $26.00
- -------------------------------------------------------------------------------
[_] $26.25 [_] $26.50 [_] $26.75 [_] $27.00
- -------------------------------------------------------------------------------
OR
- -------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE OFFER
- -------------------------------------------------------------------------------
[_] The undersigned wants to maximize the chance of having the Company
purchase all the Shares the undersigned is tendering (subject to the
possibility of proration). Accordingly, by checking this ONE BOX INSTEAD
OF ONE OF THE PRICE BOXES ABOVE, the undersigned hereby tenders Shares and
is willing to accept the Purchase Price determined by the Company in
accordance with the terms of the Offer. This action could result in
receiving a price per Share of as low as $24.50 or as high as $27.00.
- --------------------------------------------------------------------------------
2
<PAGE>
(PLEASE TYPE OR PRINT) SIGN HERE
CERTIFICATE NOS. (IF AVAILABLE)
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
NAME(S) SIGNATURE(S)
DATED: , 1998
- ------------------------------------- ------------------------
ADDRESS(ES)
- ------------------------------------- IF SHARES WILL BE TENDERED BY BOOK-
ENTRY TRANSFER:
- ------------------------------------- DTC ACCOUNT NUMBER:
------------------
- -------------------------------------
AREA CODE(S) AND TELEPHONE NUMBER(S)
3
<PAGE>
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned is a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office, branch, or
agency in the United States and represents that: (a) the above-named
person(s) "own(s)" the Shares tendered hereby within the meaning of Rule
14e-4 promulgated under the Securities Exchange Act of 1934, as amended,
and (b) such tender of Shares complies with such Rule 14e-4, and
guarantees that the Depositary will receive (i) certificates representing
the Shares tendered hereby in proper form for transfer, or (ii)
confirmation that the Shares tendered hereby have been delivered pursuant
to the procedure for book-entry transfer (set forth in Section 3 of the
Offer to Purchase) into the Depositary's account at The Depository Trust
Company together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by the
Letter of Transmittal, all within three New York Stock Exchange trading
days after the date the Depositary receives this Notice of Guaranteed
Delivery.
----------------------------------- -----------------------------------
AUTHORIZED SIGNATURE ADDRESS
----------------------------------- -----------------------------------
(NAME PLEASE PRINT)
----------------------------------- -----------------------------------
(TITLE) (INCLUDING ZIP CODE)
----------------------------------- -----------------------------------
NAME OF FIRM AREA CODE AND TELEPHONE NUMBER
DATE: , 1998
----------------------
DO NOT SEND CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES
MUST BE SENT WITH THE LETTER OF TRANSMITTAL.
- --------------------------------------------------------------------------------
4
<PAGE>
PP&L RESOURCES, INC.
OFFER TO PURCHASE FOR CASH
UP TO 17,000,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT IN EXCESS OF
$27.00 NOR LESS THAN $24.50 PER SHARE
August 14, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
PP&L Resources, Inc., a Pennsylvania corporation (the "Company"), is making
an offer to purchase for cash up to 17,000,000 shares of its common stock, par
value $.01 per share (the "Shares"), at prices not in excess of $27.00 nor
less than $24.50 per Share and upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated August 14, 1998, and in the related
Letter of Transmittal (which together constitute the "Offer"). We enclose the
materials listed below relating to the Offer.
The Company will determine a single per Share price (not in excess of $27.00
nor less than $24.50 per Share) (the "Purchase Price"), that it will pay for
Shares validly tendered pursuant to the Offer taking into account the number
of Shares so tendered and the prices specified by tendering shareowners. The
Company will select the lowest Purchase Price that will allow it to purchase
up to 17,000,000 Shares (or such lesser number of Shares as are validly
tendered and not withdrawn) at prices not in excess of $27.00 nor less than
$24.50 per Share pursuant to the Offer. All Shares validly tendered at prices
at or below the Purchase Price and not withdrawn will be purchased at the
Purchase Price, net to the seller in cash, upon the terms and subject to the
conditions of the Offer, including the proration and odd lot terms thereof.
See Section 1 of the Offer to Purchase.
If, prior to the Expiration Date, more than 17,000,000 Shares (or such
greater number of Shares as the Company may elect to purchase) are validly
tendered and not withdrawn, the Company will, upon the terms and subject to
the conditions of the Offer, accept Shares for purchase first from Odd Lot
Owners (as defined in Section 1 of the Offer to Purchase) who validly tender
all of their Shares at or below the Purchase Price and then on a pro rata
basis, if necessary, from all other shareowners whose Shares are validly
tendered at or below the Purchase Price and not withdrawn.
The Company has announced that the quarterly common stock dividend payable
on October 1, 1998 will be reduced to $.25 per share ($1.00 annualized rate)
from its previous level of $.4175 per share ($1.67 annualized rate). Shares
purchased pursuant to the Offer will receive the October 1 dividend.
The Offer is not conditioned upon any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set forth
in the Offer. See Section 7 of the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase, dated August 14, 1998.
2. Letter to Clients which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to
the Offer.
3. Letter, dated August 14, 1998, from William F. Hecht, Chairman of the
Board, President and Chief Executive Officer of the Company, to shareowners
of the Company.
4. Letter of Transmittal for your use and for the information of your
clients (together with accompanying Substitute Form W-9 Guidelines).
5. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis.
6. Return envelope addressed to Norwest Bank Minnesota, N.A., the
Depositary.
<PAGE>
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON SEPTEMBER 11, 1998, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any other
persons for soliciting tenders of Shares pursuant to the Offer. The Company
will, however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to the
beneficial owners of Shares held by you as a nominee or in a fiduciary
capacity. The Company will pay or cause to be paid any stock transfer taxes on
its purchase of Shares, except as otherwise provided in Instruction 7 of the
Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be
sent to the Depositary with either certificate(s) representing the tendered
Shares, or confirmation of their book-entry transfer, all in accordance with
the instructions set forth in the Letter of Transmittal and the Offer to
Purchase.
As described in Section 3 of the Offer to Purchase, tenders may be made
without the concurrent deposit of stock certificates or concurrent compliance
with the procedure for book-entry transfer; if such tenders are made by or
through a broker or dealer which is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc. or
a commercial bank or trust company having an office, branch or agency in the
United States which is a member of one of the Stock Transfer Association's
approved medallion programs (such as Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchange Medallion Program), Certificates for Shares so tendered (or a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company), together with a properly completed
and duly executed Letter of Transmittal and any other documents required by
the Letter of Transmittal, must be received by the Depositary within three New
York Stock Exchange, Inc. trading days after timely receipt by the Depositary
of a properly completed and duly executed Notice of Guaranteed Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent at its address and telephone number set forth on the
back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent, Innisfree M&A Incorporated, Telephone (888) 750-5835 (Toll
Free).
Very truly yours,
PP&L RESOURCES, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT FOR THE COMPANY, THE INFORMATION AGENT OR THE DEPOSITARY, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
PP&L RESOURCES, INC.
OFFER TO PURCHASE FOR CASH UP TO 17,000,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT IN EXCESS OF $27.00
NOR LESS THAN $24.50 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER IS
EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated August 14,
1998, and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the Offer by PP&L Resources, Inc., a Pennsylvania
corporation (the "Company"), to purchase up to 17,000,000 shares (or such
lesser number of shares as are properly tendered) of its Common Stock (the
"Shares"), at a price not in excess of $27.00 nor less than $24.50 per Share,
specified by tendering shareowners, upon the terms and subject to the
conditions set forth in the Offer.
The Company will determine a single price per Share, not in excess of $27.00
nor less than $24.50 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered and not withdrawn
pursuant to the Offer, taking into account the number of Shares so tendered
and the prices specified by tendering shareowners. The Company will select the
lowest Purchase Price that will allow it to purchase up to 17,000,000 Shares
(or such lesser number of Shares as are properly tendered and not withdrawn)
at a price not in excess of $27.00 nor less than $24.50 per Share. All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including the proration and odd lot provisions.
Shares tendered at prices in excess of the Purchase Price and Shares not
purchased because of proration will be returned. All Shares acquired in the
Offer will be acquired at the Purchase Price. The Company reserves the right,
in its sole discretion, to purchase more than 17,000,000 Shares pursuant to
the Offer. See Sections 1 and 6 of the Offer to Purchase.
If, prior to the Expiration Date (as defined in the Offer to Purchase), more
than 17,000,000 Shares (or such greater number of Shares as the Company may
elect to purchase) are properly tendered and not withdrawn, the Company will,
upon the terms and subject to the conditions of the Offer, accept Shares for
purchase first from Odd Lot Owners (as defined in the Offer to Purchase) who
properly tender their Shares at or below the Purchase Price and then on a pro
rata basis from all other shareowners whose Shares are properly tendered at or
below the Purchase Price and not withdrawn. See Sections 1 and 3 of the Offer
to Purchase.
We are the owner of record of Shares held for your account. As such, we are
the only ones who can tender your Shares, and then only pursuant to your
instructions. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR
INFORMATION ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
We call your attention to the following:
1. You may tender Shares either (i) at prices determined by you not in
excess of $27.00 nor less than $24.50 per Share or (ii) the price
determined by the Company in accordance with the terms of the Offer, as
indicated in the attached Instruction Form, net to you in cash.
2. You may designate the priority in which your Shares shall be purchased
in the event of proration.
3. The Offer is not conditioned upon any minimum number of Shares being
tendered.
4. The Offer, proration period and withdrawal rights will expire at 12:00
Midnight, New York City time, on Friday, September 11, 1998, unless the
Company extends the Offer.
5. The Offer is for up to 17,000,000 Shares, constituting approximately
10% of the outstanding Shares.
<PAGE>
6. Tendering shareowners will not be obligated to pay any brokerage
commissions, solicitation fees, or, subject to Instruction 7 of the Letter
of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer. However, a tendering shareowner who holds Shares
with such shareowner's Custodian (as defined in the Offer to Purchase) may
be required by such Custodian to pay a service charge or other fee.
7. If you beneficially own an aggregate of fewer than 100 Shares, and you
instruct us to tender on your behalf all such Shares at or below the
Purchase Price prior to the Expiration Date (as defined in the Offer to
Purchase) and complete the item captioned "Odd Lots" in the attached
Instruction Form, the Company, upon the terms and subject to the conditions
of the Offer, will accept all such Shares for purchase before proration, if
any, of the purchase of other Shares properly tendered at or below the
Purchase Price.
8. If you wish to tender portions of your Shares at different prices, you
must complete a separate Instruction Form for each price at which you wish
to tender each such portion of your Shares. We must submit separate Letters
of Transmittal on your behalf for each price you will accept.
9. The Company has announced that the quarterly common stock dividend
payable on October 1, 1998 will be reduced to $.25 per share ($1.00
annualized rate) from its previous level of $.4175 per share ($1.67
annualized rate). Shares purchased pursuant to the Offer will receive the
October 1 dividend.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the attached Instruction Form.
An envelope to return your Instruction Form to us is enclosed. If you
authorize us to tender your Shares, we will tender all such Shares unless you
specify otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE
OFFER. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE
COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if more than 17,000,000
Shares have been properly tendered at prices at or below the Purchase Price
and not withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase), the Company will purchase properly tendered Shares in the following
order of priority:
(a) First, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Owner who:
(1) tenders all Shares beneficially owned by such Odd Lot Owner at a
price at or below the Purchase Price (tenders of less than all Shares
owned by such shareowner will not qualify for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) Second, after purchase of all of the foregoing Shares, all Shares
tendered properly at prices at or below the Purchase Price and not
withdrawn prior to the Expiration Date, on a pro rata basis (with
adjustments to avoid purchases of fractional Shares) as described below.
The Offer is being made to all owners of Shares. The Company is not aware of
any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes
aware of any valid state statute prohibiting the making of the Offer, the
Company will make a good faith effort to comply with such statute. If, after
such good faith effort, the Company cannot comply with such statute, the Offer
will not be made to, nor will tenders be accepted from or on behalf of, owners
of Shares in such state. In those jurisdictions whose securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Company by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws
of such jurisdictions.
<PAGE>
INSTRUCTION FORM
FOR TENDER OF SHARES OF
PP&L RESOURCES, INC.
Please tender to PP&L Resources, Inc. (the "Company"), on (our) (my) behalf,
the number of Shares indicated below, which are beneficially owned by (us) (me)
and registered in your name, upon the terms and subject to the conditions
contained in the Offer to Purchase of the Company dated August 14, 1998, and
the related Letter of Transmittal, the receipt of both of which is
acknowledged.
- --------------------------------------------------------------------------------
NUMBER OF SHARES TO BE TENDERED: SHARES
(UNLESS INDICATED OTHERWISE ABOVE, ALL SHARES
HELD BY US FOR YOUR ACCOUNT WILL BE TENDERED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 8 OF LETTER OF TRANSMITTAL)
By checking this box the undersigned represents that the undersigned
owns, beneficially or of record, an aggregate of fewer than 100 Shares
and is tendering all of such Shares: [_]
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX BELOW.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED BY SHAREOWNER
(SEE INSTRUCTION 5 OF LETTER OF TRANSMITTAL)
- --------------------------------------------------------------------------------
BY CHECKING ONE OF THE FOLLOWING BOXES BELOW INSTEAD OF THE BOX UNDER
"SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE OFFER", THE
UNDERSIGNED HEREBY TENDERS SHARES AT THE PRICE CHECKED. THIS ACTION COULD
RESULT IN NONE OF THE SHARES BEING PURCHASED IF THE PURCHASE PRICE FOR THE
SHARES IS LESS THAN THE PRICE CHECKED. A SHAREOWNER WHO DESIRES TO TENDER
SHARES AT MORE THAN ONE PRICE MUST COMPLETE A SEPARATE INSTRUCTION FORM
FOR EACH PRICE AT WHICH SHARES ARE TENDERED. THE SAME SHARES CANNOT BE
TENDERED AT MORE THAN ONE PRICE.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
[_] $24.50 [_] $24.75 [_] $25.00 [_] $25.25 [_] $25.50 [_] $25.75 [_] $26.00
- --------------------------------------------------------------------------------
[_] $26.25 [_] $26.50 [_] $26.75 [_] $27.00
- --------------------------------------------------------------------------------
OR
- --------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE OFFER
(SEE INSTRUCTION 5 OF LETTER OF TRANSMITTAL)
- --------------------------------------------------------------------------------
[_]The undersigned wants to maximize the chance of having the Company
purchase all the Shares the undersigned is tendering (subject to the
possibility of proration). Accordingly, by checking this ONE BOX
INSTEAD OF ONE OF THE PRICE BOXES ABOVE, the undersigned hereby tenders
Shares and is willing to accept the Purchase Price determined by the
Company in accordance with the terms of the Offer. This action could
result in receiving a price per Share of as low as $24.50 or as high as
$27.00.
- --------------------------------------------------------------------------------
<PAGE>
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREOWNER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS AUTHORIZED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
SHAREOWNERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES OR
AS TO THE PURCHASE PRICE OF ANY TENDER. EACH SHAREOWNER MUST MAKE HIS OR HER
OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES AND AT WHAT
PRICE OR PRICES SHARES SHOULD BE TENDERED.
- ------------------------------------- -------------------------------------
SIGNATURE(S)
ADDRESS
- ------------------------------------- -------------------------------------
PLEASE TYPE OR PRINT NAME(S) (INCLUDING ZIP CODE)
- ------------------------------------- -------------------------------------
AREA CODE AND TELEPHONE NUMBER
DATE: , 1998
- ------------------------------------- -------------------------------------
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
<PAGE>
William F. Hecht PP&L Resources, Inc.
Chairman, President Two North Ninth Street
and Chief Executive Officer Allentown, PA 18101-1179
[LOGO OF PENNSYLVANIA POWER & LIGHT APPEARS HERE]
August 14, 1998
To our Shareowners:
PP&L Resources, Inc. ("Resources" or "Company") is offering to purchase up
to 17,000,000 shares of its common stock (the "Shares"), or approximately 10%
of the currently outstanding Shares, from existing shareowners. The price paid
for the shares will not be in excess of $27.00 nor less than $24.50 per Share.
On August 13, 1998, the last trading day prior to the announcement of the
terms of this offer, the closing sales price per Share on the New York Stock
Exchange was reported to have been $24.50.
Resources is making this offer through the use of a procedure commonly
referred to as a "Dutch Auction." This procedure allows you to select a
specific price within the price range at which you are willing to sell your
shares and submit ("Tender") these Shares to Resources for possible sale at
your designated price.
At midnight on September 11, 1998 (unless the offer is extended to a later
date), Resources will evaluate all Tenders received up until that date and
determine the lowest price within the price range that will enable the Company
to purchase up to 17,000,000 shares (the "Purchase Price"). This Purchase
Price will then be paid for all Shares purchased pursuant to this offer, even
for those shares that were Tendered at a lower designated price. Shares that
have been Tendered at a designated price that is above the Purchase Price will
not be purchased and will be returned to the shareowners.
If more than 17,000,000 Shares (or such increased number of Shares that the
Company elects to purchase) have been properly tendered at or below the
Purchase Price, the Company will purchase Tendered Shares on a pro rata basis,
after the purchase of "odd" lot Shares. There will be no proration of Shares
tendered by any shareowner owning beneficially an aggregate of less than 100
Shares ("odd lot") who Tenders all such Shares at or below the Purchase Price
and completes the "Odd Lots" box on the enclosed Letter of Transmittal.
Any shareowner whose Shares are purchased in the offer will receive the
total purchase price in cash and will not incur the usual transaction costs
associated with open market sales. Any shareowner owning an aggregate of less
than 100 shares whose Shares are purchased will avoid any applicable odd lot
fees payable on sales of odd lots on the securities exchanges.
IN ORDER TO TENDER SHARES UNDER THIS OFFER, SHAREOWNERS WITH SHARES
REGISTERED IN THEIR OWN NAMES OR HELD IN THEIR ACCOUNTS IN THE COMPANY'S
DIVIDEND REINVESTMENT PLAN MUST COMPLETE AND RETURN THE ENCLOSED LETTER OF
TRANSMITTAL AND FOLLOW THE INSTRUCTIONS CONTAINED THEREIN. SHAREOWNERS WHO
HOLD SHARES THROUGH A BROKERAGE FIRM OR BANK MUST INSTRUCT THEIR BROKER OR
BANK TO TENDER ON THEIR BEHALF.
Purpose of the Offer
Electric utility companies, including PP&L, Inc. ("PP&L"), the electric
utility subsidiary of Resources, have experienced and will continue to
experience a significant increase in the level of competition in the energy
supply market. Federal legislation has created a new class of independent
power producers and open access to electric transmission systems for wholesale
transactions. In addition, in December 1996 Pennsylvania enacted legislation
(the "Customer Choice Act") to restructure the state's electric utility
industry to create retail access to a competitive market for the generation of
electricity.
On June 15, 1998, the Pennsylvania Public Utility Commission (the "PUC")
entered its order in PP&L's restructuring proceedings pursuant to the Customer
Choice Act. Under the PUC order, PP&L estimated that it could recover about
$2.5 billion in transition costs over 8 1/2 years--i.e., through June 30,
2007, which amount is
<PAGE>
significantly less than PP&L's request of over $4.0 billion in transition
costs recoverable over 7 years. PP&L and numerous other parties filed legal
challenges to the PUC order in state and federal courts.
In July 1998, the PUC offered all parties to the restructuring proceeding
the opportunity for substantive settlement discussions. On August 13, 1998,
the PUC entered a tentative order approving a "Joint Petition for Full
Settlement of PP&L, Inc.'s Restructuring Plan and Related Court Proceedings"
(the "Settlement"). The terms and conditions of the Settlement represent a
comprehensive resolution of all issues before the state and federal courts
arising from challenges by certain parties, including PP&L, to the PUC order.
The Settlement contemplates that PP&L will be permitted to recover $2.97
billion in transition costs over 11 years--i.e. from January 1, 1999 through
December 31, 2009 (the "Transition Period"). The terms and conditions of the
Settlement are described in more detail in the accompanying materials.
As a result of the Settlement, PP&L recorded a total after-tax write-off of
$948 million in the second quarter of 1998. This charge adjusts the value of
PP&L's assets to a level which the Company anticipates will more closely
reflect their value in the new competitive marketplace.
The Company has developed a financial strategy, as described in more detail
in Section 2 of the enclosed Order to Purchase, which is intended to position
the Company for the new competitive environment in the electric utility
industry. Two key components of the Company's strategy include a reduction in
the Company's common stock dividend level and a reduction in the Company's
permanent capitalization.
Effective with the quarterly dividend payable October 1, 1998 to owners of
record on September 10, 1998, the Company's quarterly common stock dividend
will be reduced to $.25 per share ($1.00 annualized rate) from the previous
level of $.4175 per share ($1.67 annualized rate). This dividend action better
positions the Company to more effectively compete in the energy markets by
increasing the Company's future financing flexibility. Additionally, it
positions the Company's common stock for potential increased growth in market
value by retaining a proportionately higher level of earnings in the business
for reinvestment.
The Tender for Shares is a method by which the Company will reduce its
permanent capitalization. The price range established for the Tender allows
those shareowners seeking a more income-oriented investment the opportunity to
exit their investment in the Company on potentially more favorable terms than
would otherwise be available. However, shareowners who choose not to Tender
their shares are also in a position to potentially benefit from this
transaction. Non-tendering shareowners will own a greater interest in a
company with a potentially stronger earnings per share growth rate. Shares
purchased pursuant to the Tender will receive the October 1 dividend.
A number of specific aspects of the Tender are explained in the "Questions
and Answers" found on the following pages, and a full description of the
Tender is contained in the enclosed Offer to Purchase and Letter of
Transmittal. I encourage you to read these materials carefully before making
any decision with respect to the offer. If you desire to Tender your Shares,
detailed instructions are contained in the accompanying materials. Questions
and requests for assistance may be directed to the Company's Information Agent
at (888) 750-5835.
Neither the Company nor its Board of Directors makes any recommendation to
any shareowner as to whether to Tender or refrain from Tendering Shares or as
to the Purchase Price of any Tender. You must make your own decision whether
to Tender Shares and, if so, how many Shares and at what price or prices
Shares should be Tendered. The Company has been advised that none of its
directors or executive officers intends to Tender any Shares pursuant to the
offer.
Sincerely,
/s/ William F. Hecht
William F. Hecht
Chairman, President and
Chief Executive Officer
Enclosures
2
<PAGE>
QUESTIONS AND ANSWERS
ABOUT THE TENDER OFFER
FOR THE COMMON STOCK OF PP&L RESOURCES, INC.
Q. WHY IS THE COMPANY CONDUCTING THIS TENDER OFFER?
A. As discussed in more detail in the enclosed Offer to Purchase, the tender
offer is part of an overall financial strategy to position the Company for
the anticipated future competitive environment in the electric utility
industry. Two key components of the Company's strategy include a reduction
in the Company's common stock dividend level and a reduction in the
Company's permanent capitalization.
Effective with the quarterly dividend payable October 1, 1998 to owners of
record on September 10, 1998, the Company's quarterly common stock dividend
will be reduced to $.25 per share ($1.00 annualized rate) from the previous
level of $.4175 per share ($1.67 annualized rate). This dividend action
better positions the Company to more effectively compete in the new energy
market by increasing the Company's future financing flexibility.
Additionally, it positions the Company's common stock for potential increased
growth in market value by retaining a proportionately higher level of
earnings in the business for reinvestment.
The tender for shares is a method by which the Company will reduce its
permanent capitalization. The price range established for the tender offer
allows those shareowners seeking a more income-oriented investment the
opportunity to exit their investment in the Company on potentially more
favorable terms than would otherwise be available. However, shareowners who
choose not to tender their shares are also in a position to potentially
benefit from this transaction. Non-tendering shareowners will own a greater
interest in a company with a potentially stronger earnings per share growth
rate.
Q. HOW DOES THE TENDER OFFER WORK?
A. The tender offer will be conducted through the use of a procedure commonly
referred to as a "Dutch Auction." This procedure allows you to either (i)
select a specific price within the price range established by the Company at
which you are willing to sell your shares and submit, or "tender," these
shares to the Company for possible sale at your designated price or (ii)
elect to accept the per share purchase price determined by the Company in
accordance with the terms of the tender offer. At the end of the tender
period, the Company will evaluate all tenders received up until that date
and determine the lowest price within the price range that will enable the
Company to purchase up to 17,000,000 shares (or such increased number of
shares that the Company elects to purchase). This "purchase price" will then
be paid for all shares purchased in the tender offer, even for those shares
that were tendered at a lower designated price. Any shareowner whose shares
are purchased in the offer will receive the total purchase price in cash and
will not incur the usual transaction costs associated with open market
sales. Also, any shareowner owning an aggregate of less than 100 shares
whose shares are purchased will avoid any applicable odd lot fees payable on
sales of such odd lots on the securities exchanges.
Q. WHAT IF MY DESIGNATED PRICE IS ABOVE THE COMPANY'S PURCHASE PRICE?
A. Shares that have been tendered at a designated price that is above the
purchase price will not be purchased and will be returned to the
shareowners.
Q. WHAT IF MORE THAN 17,000,000 SHARES ARE TENDERED?
A. If more than 17,000,000 shares or such increased number of shares that the
Company elects to purchase have been properly tendered at prices at or below
the purchase price and not withdrawn prior to 12:00 Midnight, New York City
time, on Friday, September 11, 1998, the Company will purchase these shares
on a pro rata basis, after the purchase of odd lot shares. There will be no
proration of shares tendered by any shareowner owning beneficially an
aggregate of less than 100 shares ("odd lot") who tenders all such shares at
or below the Purchase Price and completes the "Odd Lots" box on the enclosed
Letter of Transmittal.
1
<PAGE>
Q. HOW DO I TENDER MY SHARES?
A. Shareowners with shares registered in their own names or held in their
accounts in the Company's Dividend Reinvestment Plan must complete and
return the enclosed Letter of Transmittal and follow the instructions
contained therein. Shareowners who hold shares through a brokerage firm or
bank must instruct their broker or bank to complete and return a Letter of
Transmittal on their behalf. In either case, the Letter of Transmittal must
be returned to the Depositary by September 11, 1998.
Q. WILL I RECEIVE THE OCTOBER DIVIDEND IF I TENDER MY SHARES?
A. Yes. Any shares tendered pursuant to the tender offer will be outstanding on
September 10, 1998, the record date for the October 1, 1998 dividend. As a
result, the shareowner in whose name such shares are registered on September
10, 1998 will receive the October 1, 1998 dividend even if such shares are
purchased by the Company pursuant to the tender offer.
Q. CAN I WITHDRAW MY TENDER OR CAN THE COMPANY WITHDRAW THE TENDER OFFER?
A. Tendered shares may be withdrawn at any time until 12:00 Midnight, New York
City time, on Friday, September 11, 1998, unless the tender offer is
extended by the Company. Under certain circumstances discussed in the Offer
to Purchase, the Company may withdraw the tender offer until 12:00 Midnight,
New York City time, on Friday, September 11, 1998.
Q. WHAT IF I HAVE LOST OR MISPLACED MY SHARE CERTIFICATES, HOW DO I PARTICIPATE
IN THE OFFER?
A. Contact Norwest Bank Minnesota at (800) 468-9716 immediately for assistance.
Q. IF I DON'T WANT TO PARTICIPATE IN THE OFFER, MUST I TAKE ANY ACTION?
A. No.
Q. WHAT IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
A. Contact Innisfree M&A Incorporated, the Information Agent for the tender
offer, at (888) 750-5835 with any questions on the terms and conditions of
the tender offer.
2
<PAGE>
EXHIBIT 99(A)(7)
----------------
Following is a news release from PP&L, Inc.
If there are problems with the transmission of
the news release, call (610) 774-5068.
August 13, 1998
Note to Editors: This news release is followed by a fact sheet on the
restructuring settlement tentatively approved by the Public Utility Commission
today and a news release on the company's decision to close a portion of one
power plant and sell another.
Contact: Dan McCarthy, (610) 774-5758
PP&L Resources Announces Financial Initiatives
----------------------------------------------
Following Restructuring Settlement
----------------------------------
. Dividend Reduction, Writedown of Assets, Stock Buyback Highlight Plan
. Second Quarter Earnings, Before Extraordinary Charges, are 35 Cents per Share
. Company Also Closing One Plant, Seeking to Sell Another
ALLENTOWN, Pa.---With the regulatory uncertainty of the past 16 months
behind it, PP&L Resources (NYSE: PPL) Thursday (8/13) announced major financial
and operational initiatives that will better position the company to take
advantage of new opportunities in the restructured electricity business.
William F. Hecht, PP&L Resources chairman, president and chief
executive officer, said Thursday the company's new strategies emphasize growth
in shareowner value through expansion into new markets and the offering of new
energy-related products and services.
more---
<PAGE>
-2-
"The electricity business has fundamentally changed over the
past several years," said Hecht. "Now that we understand the financial
implications of Pennsylvania's approach to industry restructuring and how it
will affect the company, we can move ahead by taking bold steps that will allow
PP&L Resources to solidify its position as one of the East Coast's predominant
energy companies."
Hecht said the company's initiatives include:
. Changing its dividend policy to allow for more reinvestment in growth
opportunities.
. Initiating a buyback plan under which it will purchase up to 10 percent of
its common stock.
. Writing off assets that are impaired by the transition to a competitive
electricity generation marketplace.
"The financial and operational initiatives that we are
announcing today, in many ways, mark the end of an era for the company and our
strong entry into a new, more competitive environment. While some of these
actions are painful at the moment, they position the company for a future that
is less constrained by regulatory action and holds much promise for growth," he
said.
Hecht said that the state Public Utility Commission's
tentative approval of a settlement in the PP&L, Inc. restructuring case provides
the company with the information that it needs to undertake the initiatives.
(For more details on the settlement, see the related
background material released today.)
Dividend action
- ---------------
Hecht said the company will reduce its quarterly common stock
dividend from 41.75 cents per share to 25 cents per share, effective with the
Oct. 1, 1998, dividend payment. He said the reduction will permit the company to
retain more of its earnings for investment in business expansion, both in the
United States and overseas.
"This dividend reduction is not a decision that the company
takes lightly and was made only after examining all our options," said Hecht.
"However, as competition increases in our industry, we expect to experience an
increase in the volatility of both revenues and earnings that does not permit a
continuation of the company's practice of paying out 80 percent to 90 percent of
annual
more---
<PAGE>
-3-
earnings as dividends. Such a ratio is very high, even by traditional
utility standards, and would severely restrict the company's future financing
flexibility.
"Our new dividend policy is to target a payout ratio in the 45
percent to 55 percent range," said Hecht.
Stock buyback
- -------------
The company also plans to buy back up to 17 million shares of
its common stock. Under the buyback program, which commences Friday (8/14),
shareowners will have the opportunity to tender their shares within a price
range established by the company. The range, set Thursday after the close of the
New York Stock Exchange, is $24.50 to $27 per share. The closing price of PP&L
Resources stock on Thursday was $24.50.
At midnight on Sept. 11, the company will evaluate all tender
offers received to that point and determine the lowest price within the range of
offers that will allow the company to purchase up to 17 million shares. This
price then will be paid for all shares purchased, even for shares that were
tendered at a lower price.
"This stock buyback will allow the company to reduce its
permanent capitalization and provide shareowners who do not tender their shares
with an increased ownership interest in the company," said Hecht. "The buyback
program also will allow our current shareowners who are seeking a more
income-oriented investment the opportunity to sell their interest in PP&L
Resources on more favorable terms than may otherwise be available," said Hecht.
"While we certainly don't want to lose shareowners, many of
whom have been very loyal to the company over the years, we understand that some
of our investors are very dividend-oriented and may want to change their
investment strategy with regard to PP&L Resources," said Hecht.
He said that shareowners will begin receiving detailed
information about the buyback early next week.
more---
<PAGE>
-4-
Write-down of assets
- --------------------
The write-off was the result of the state Public Utility
Commission tentative approval of a settlement in the company's restructuring
case and a settlement in a case that was pending before the Federal Energy
Regulatory Commission. As a result of those two items, the company took a $1.6
billion pre-tax write-off in the second quarter.
"We are taking this action now to ensure that our assets are
appropriately valued for the new competitive marketplace," said Hecht.
Operational actions
- -------------------
Hecht said the company also is making operational
improvements.
PP&L, Inc. told employees Thursday that it will close its
Holtwood coal-fired power plant in May of next year and that it will attempt to
sell its Sunbury power plant.
(See related news release for more on the plant closings.)
Hecht said the company also is closely examining all its
spending, especially costs not directly related to serving customers. "While we
have always been focused on providing high-quality service to customers at a low
cost, we are intensifying our efforts in this area. The competitive marketplace
demands that we recommit ourselves to exceeding customer expectations - both in
terms of high quality and low prices," said Hecht.
As a result of the plant closings and other previously
announced reductions, the company expects the size of its work force to decrease
by about 250 over the next year. PP&L, Inc. currently has 6,300 employees.
The initiatives announced today, Hecht said, will create
opportunities for earnings and dividend growth. "We believe that, in the long
run, shareowner value will be enhanced by the actions we are taking," said
Hecht.
He said that the Allentown, Pa.-based company already has set
a clear course for success in the rapidly changing energy business.
"The PP&L Resources of the future is here today. We are a
major wholesale supplier of electricity and other forms of energy in an area
east of the Mississippi River; we have a significant worldwide presence; we
provide premier electricity and natural gas delivery services to a large portion
of Pennsylvania; we are an important supplier of retail electricity in the
mid-Atlantic
more---
<PAGE>
-5-
region; and we offer a portfolio of energy management and construction services
to commercial and industrial customers," said Hecht.
Second quarter results
- ----------------------
As a result of the write-off, PP&L Resources reported a net
loss of $894 million, or $5.34 per share, for the three-month period ended June
30, 1998, compared to net income of $65 million, or 39 cents per share, for the
same period last year. After taxes, the write-off totaled $948 million.
Excluding the effects of the write-off and weather, net income was $58 million
for the second quarter, or 35 cents per share.
Second quarter results reflect an adjustment in the company's
inventory levels and an increase in the reserve needed for the company's
uncollectible accounts.
The company also reported on Thursday a net loss of $679
million, or $4.08 per share, for the 12 months ended June 30, 1998. Net income
for the same period of 1997 was $333 million or $2.05 per share. Excluding the
effects of the write-off, weather and one-time 1997 charges stemming from tax
issues related to the company's investments in the United Kingdom, net income
for the 12 months ended June 30, 1998, was $322 million or $1.94 per share,
compared to net income of $340 million or $2.10 per share for the same period
last year.
The 12-month earnings also were reduced by an undercollection
of fuel costs due to changes in the rate structure in Pennsylvania, the
inventory and uncollectible changes that affected second-quarter earnings and
startup costs related to the competitive marketplace in Pennsylvania.
There was a 2.5 percent decrease in electricity sold to retail
customers during the second quarter compared to the same period in 1997. And,
sales for the 12 months ended June 30, 1998, were down about 2.9 percent
compared to the same period a year ago. Both figures reflect the loss of sales
due to the advent of competition in the retail electricity market.
Despite the large fluctuations in wholesale power prices
during the second quarter, PP&L, Inc.'s Energy Marketing Center was successful
in generating sufficient revenues to offset losses related to the phase-out of
power-purchase agreements with two other utilities.
Electricity delivered to retail customers by PP&L, Inc. in the
second quarter of 1998 decreased by about 2 percent compared to the same period
last year and by 1.8 percent for the 12 months ended June 30, 1998, compared to
the previous 12 months. The decrease results primarily
more---
<PAGE>
-6-
from lower deliveries to industrial customers because of the shutdown of a large
steel-producing facility. Mild weather also contributed to the decrease. When
adjusted to remove the effects of weather, electricity deliveries were
essentially unchanged from a year ago.
Dividend Declaration
- --------------------
At a meeting on Thursday, the PP&L Resources, Inc. board of
directors officially declared a quarterly dividend on common stock of 25 cents
per share. In addition, the PP&L, Inc. board of directors declared the quarterly
dividend on various classes of preferred stock. Both dividends are payable Oct.
1, 1998, to shareowners of record Sept. 10, 1998.
Preferred Preferred (cont.)
4 1/2%........................$1.125 6.05% Series..........$1.5125
3.35% Series..................$.8375 6.125% Series........$1.53125
4.40% Series...................$1.10 6.15% Series..........$1.5375
4.60% Series...................$1.15 6.33% Series..........$1.5825
5.95% Series.................$1.4875 6.75% Series..........$1.6875
PP&L RESOURCES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
Consolidated Balance Sheet
(Millions of Dollars)
June 30, 1998 Dec. 31, 1997(a)
------------- ----------------
Assets
Property, plant and equipment
Transmission and distribution - net $2,171 $2,160
Generation - net 1,632 4,022
General and intangible - net 216 232
Construction work in progress 97 185
Nuclear fuel and other leased property 156 167
-------- --------
Electric utility plant - net 4,272 6,766
Other property - net 53 54
-------- --------
4,325 6,820
Investments and current assets 1,676 1,300
more---
<PAGE>
-7-
Recoverable transition costs 2,819 --
Regulatory and other assets 379 1,365
------ ------
Total assets $9,199 $9,485
====== ======
Capitalization and liabilities
Earnings reinvested $231 $1,164
Other common equity 1,676 1,645
Preferred stock 97 97
Company-obligated mandatorily redeemable securities 250 250
Long-term debt (less current portion) 2,730 2,585
------ ------
Total capitalization 4,984 5,741
Current liabilities 1,038 769
Deferred income taxes and ITC 1,556 2,221
Liability for above market NUG purchases 775 --
Other deferred credits 846 754
------ ------
Total capitalization and liabilities $9,199 $9,485
====== ======
(a) Certain amounts from 1997 have been reclassified to conform to the current
year presentation.
Consolidated Income Statement
(Millions of Dollars)
<TABLE>
<CAPTION>
3 Months Ended June 30 6 Months Ended June 30 12 Months Ended June 30
---------------------- ---------------------- -----------------------
1998 1997(b) 1998(b) 1997(b) 1998(b) 1997(b)
-------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Electric operations $558 $550 $1,175 $1,204 $2,367 $2,409
Wholesale energy and trading
activities 259 136 504 267 888 514
Energy-related businesses 21 7 40 17 53 31
-------- -------- -------- -------- -------- ---------
838 693 1,719 1,488 3,308 2,954
-------- -------- -------- -------- -------- ---------
Operating Expenses
Fuel and purchased power 336 209 663 436 1,197 844
Other operation and maintenance 196 170 351 322 738 713
Depreciation and amortization 94 93 189 185 377 368
Other 64 55 131 115 241 221
-------- -------- -------- -------- -------- ---------
690 527 1,334 1,058 2,553 2,146
-------- -------- -------- -------- -------- ---------
Operating income 148 166 385 430 755 808
-------- -------- -------- -------- -------- ---------
Other income and (deductions) 4 3 11 5 (22) 18
-------- -------- -------- -------- -------- ---------
Income before interest and
income taxes 152 169 396 435 733 826
Interest expense 54 55 106 110 211 223
Income taxes 38 45 122 133 227 245
-------- -------- -------- -------- -------- ---------
Income before extraordinary items 60 69 168 192 295 358
Extraordinary items (net of taxes) (948) 0 (948) 0 (948) 0
-------- -------- -------- -------- -------- ---------
Income before dividends on
preferred stock (888) 69 (780) 192 (653) 358
Preferred stock dividend
requirements 6 4 13 11 26 25
-------- -------- -------- -------- -------- ---------
Net income (loss) ($894) $65 ($793) $181 ($679) $333
======== ======== ======== ======== ======== =========
Earnings per share of common stock -
basic and diluted (a)
Excluding weather and one-time
adjustments $0.35 $0.39 $1.06 $1.15 $1.94 $2.10
Weather impact (0.03) -- (0.14) (0.04) (0.12) (0.05)
One-time adjustments (5.66) -- (5.67) -- (5.90) --
-------- -------- -------- -------- -------- ---------
As reported ($5.34) $0.39 ($4.75) $1.11 ($4.08) $2.05
======== ======== ======== ======== ======== =========
Average number of shares outstanding
(thousands) 167,436 164,068 167,106 163,660 166,260 162,744
</TABLE>
(a) Based on average number of shares outstanding.
(b) Certain amounts from 1997 have been reclassified to conform to the current
year presentation.
more---
<PAGE>
-8-
Key Indicators
Financial
12 Months Ended 12 Months Ended
June 30, 1998 June 30, 1997
------------- -------------
Dividends declared per share $1.67 $1.67
Book value per share (a) $11.47 $17.24
Market price per share (a) $22.6875 $19.875
Dividend yield 7.36% 8.40%
Dividend payout ratio (b) 91.76% 81.46%
Price/earnings ratio (b) 12.47 9.70
Return on average common equity (b) 9.84% 12.06%
(a) End of period
(b) Excluding extraordinary items and other one-time adjustments
Operating
<TABLE>
<CAPTION>
3 Months Ended June 30, 1998 6 Months Ended June 30, 1998 12 Months Ended June 30, 1998
---------------------------- ----------------------------- ------------------------------
Percent Percent Percent
1998 1997 Change 1998 1997 Change 1998 1997 Change
-------- -------- --------- -------- ------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(millions of kwh)
Electricity delivered to
retail customers (a) 7,319 7,465 -2.0 15,775 16,307 -3.3 31,432 31,992 -1.8
Electricity supplied to
retail customers (a) 7,276 7,465 -2.5 15,472 16,307 -5.1 31,063 31,992 -2.9
Wholesale energy sales 8,214 4,365 88.2 17,045 8,237 106.9 30,262 15,448 95.9
</TABLE>
(a) Electricity delivered to retail customers represents the kwh delivered to
customers within PP&L, Inc.'s service territory. Electricity supplied represents
the kwh supplied to customers within and outside PP&L, Inc.'s service territory
(including sales of PP&L EnergyPlus). A customer within PP&L, Inc.'s service
territory participating in the pilot program will have its energy delivered by
PP&L, Inc., however they have a choice as to their electricity supplier.
PP&L Resources' largest subsidiary is PP&L, Inc, which
provides electricity delivery service to 1.2 million customers in Pennsylvania
through its PP&L Access(TM) brand; generates electricity; sells retail
electricity throughout Pennsylvania through its PP&L EnergyPlus(TM) brand; and
markets wholesale energy.
Other PP&L Resources subsidiaries include PP&L Global, Inc., a
worldwide independent power company; PP&L Spectrum, Inc., which markets energy-
related services and products; and two energy management and heating,
ventilating and air-conditioning firms: H.T. Lyons, Inc. and McClure Co.
more---
<PAGE>
-9-
For recent news releases and other information about PP&L
Resources, see our Internet home page: www.papl.com.
08Z1398A1
FINANCIAL
more---
<PAGE>
Following is a news release from PP&L, Inc.
If there are problems with the transmission of
the news release, call (610) 774-5068.
August 13, 1998
Contact: Dan McCarthy, (610) 774-5758
PP&L, Inc. Announces Changes to Strengthen Generation Portfolio:
Company Will Close One Plant, Seek Buyer for Another
----------------------------------------------------
ALLENTOWN, Pa.---As part of its effort to enhance the company's
leadership position in the evolving electricity generation marketplace in the
Northeast, PP&L, Inc. said Thursday (8/13) that it would close part of a power
plant in Lancaster County and that it would seek a buyer for another plant in
Snyder County.
"Today, we are one of the leading suppliers of competitively
priced electricity from New England to the mid-Atlantic region," said Robert G.
Byram, senior vice president-Generation and chief nuclear officer. "To further
strengthen this leadership position, we must continue to reduce our costs and to
devote our resources to facilities that hold promise for the long term."
As part of the company's continual examination of its
operations, Byram said the company recently completed an extensive assessment of
the cost effectiveness of all its power plants. The company announced the
conclusions of that effort on Thursday.
The company told employees at its coal-fired Holtwood 17 plant
that the facility would close on May 1, 1999. The adjacent hydroelectric plant,
located on the lower Susquehanna River, will continue to operate.
Also, the company told employees at its coal-fired Sunbury
plant that it plans to explore selling that facility.
"These units, which are among the oldest in our system, are
costly to maintain and they generate a relatively small amount of electricity -
less than 8 percent of the company's annual total. Also, it is very costly to
achieve our high environmental objectives at such facilities," said Byram.
Holtwood began operation in 1954, Sunbury in 1949.
Byram said employees at Holtwood and Sunbury have done an
"outstanding job of improving productivity and operating these facilities in the
best manner possible.
more ---
<PAGE>
-2-
Unfortunately, we now have reached a point where it is no longer effective for
PP&L, Inc. to operate these units.
"The actions we are announcing will help PP&L, Inc. better
focus its financial resources - and its people - on power plants that will
successfully compete in the competitive marketplace and will help the company
improve its environmental performance," said Byram.
The company will continue to operate coal-fired plants in
Washingtonville, Montour County; at Brunner Island in York County; and at
Martins Creek in Northampton County. PP&L, Inc. also will continue to operate
two oil-fired and natural gas generating units at Martins Creek and two nuclear
generating units in Salem Township, Luzerne County.
"We have an outstanding mix of high-performance generating
plants - facilities that are the backbone of the electricity supply system in
Pennsylvania and the mid-Atlantic region," said Byram.
But the Holtwood facility is no longer cost effective to
operate, Byram said. In the competitive electricity marketplace, wholesale
electricity prices are, on most days, lower than Holtwood 17's costs to produce
electricity, Byram said.
He said that the closing would affect about 30 positions
directly related to the operation of the plant. The employees may have job
opportunities elsewhere in the PP&L, Inc. system, he said. Some employees also
may have the opportunity to take early retirement. Further discussions are under
way on how the closing may affect other positions that support operation of the
plant.
Byram said the outlook for the company's Sunbury plant is
somewhat different. "Because Sunbury is a little larger than Holtwood and its
production costs are slightly lower, we think this plant may be attractive to a
potential buyer," said Byram. He noted that independent generation suppliers are
particularly interested in owning assets in this area because it is one of the
largest electricity marketplaces in the nation.
There are 167 employees at the Sunbury plant. "If we sell the
plant, we anticipate that the purchaser would offer positions to many of the
plant employees," said Byram.
Byram said that Holtwood 17 produces about 2 percent of PP&L,
Inc.'s annual electricity generation; Sunbury about 6 percent.
He said PP&L, Inc. representatives are planning to meet with
community leaders in the areas surrounding the plants this week.
PP&L, Inc. is PP&L Resources' largest subsidiary. It provides
electricity delivery service to 1.2 million customers in Pennsylvania; generates
electricity; sells retail electricity throughout Pennsylvania through its PP&L
EnergyPlus(TM) brand; and markets wholesale energy.
Other PP&L Resources subsidiaries include PP&L Global, Inc., a
worldwide independent power company; PP&L Spectrum, Inc., which markets
energy-related services and products; and two energy management and heating,
ventilating and air-conditioning firms: H. T. Lyons, Inc. and McClure Co.
For recent news releases and other information about PP&L
Resources, see our Internet home page: www.papl.com
08Z1398A1
FINANCIAL
more ---
<PAGE>
-3-
Plant Facts:
-----------
Holtwood Steam Electric Station (Unit 17)
Located on a 30-acre site in Martic Township, Lancaster County, Pa., on the east
bank of the Susquehanna River, about 17 miles downstream from Columbia, Pa., at
the village of Holtwood.
Capacity: 79,000 kilowatts
Began Commercial Operation: May 1954
Fuel: anthracite, anthracite silt, and petroleum coke mix
Owner and Operator: PP&L, Inc.
* * * * * * * * *
Sunbury Steam Electric Station
Located on a 259-acre site 3.5 miles downstream from where the west and north
branches of the Susquehanna River meet at Sunbury in Snyder County, Borough of
Shamokin Dam.
Capacity: Unit 1 Unit 2 Unit 3 Unit 4
------ ------ ------ ------
85,000 kw 85,000 kw 110,000 kw 145,000 kw
Fuel: Units 1 & 2 (anthracite, anthracite silt, petroleum coke
and bituminous mix)
Units 3 & 4 (predominately bituminous coal)
Began Commercial Operation:
Unit 1 - August 1949
Unit 2 - October 1949
Unit 3 - April 1951
Unit 4 - August 1953
Owner and Operator: PP&L, Inc.
more ---
<PAGE>
PP&L, Inc. Fact Sheet
- ---------------------
(August 13, 1998)
Restructuring Settlement Fact Sheet
-----------------------------------
The Pennsylvania Public Utility Commission adopted a tentative
order approving a settlement in PP&L, Inc.'s restructuring case Thursday (8/13).
PP&L, Inc. said the agreement provides for a balanced transition to a
competitive electricity generation marketplace that holds the promise of
benefits for consumers, businesses and the state's economic development efforts.
Key elements of the settlement include:
. A 4 percent rate decrease for all PP&L, Inc. customers in 1999.
. A cap on the prices that PP&L, Inc. customers pay for electricity delivery
service through 2004.
. A cap on the prices that customers would pay for electricity purchased
from PP&L, Inc. through 2009.
. Permission for PP&L, Inc. to recover $2.97 billion in transition costs
over an 11-year period.
. An average first-year shopping credit of 3.81 cents per kilowatt-hour. The
shopping credit can be used by customers for comparison as they shop for a
generation supplier. (Customers also have the option of continuing to buy
electricity from PP&L, Inc.)
<PAGE>
2
. Establishment of a $3.2 million per year fund for the "development and use
of renewable energy and clean energy technologies, energy conservation and
efficiency." An independent seven-member board of directors will manage
this fund.
. $16 million per year in assistance and energy conservation programs for
low-income customers.
. Permission for two-thirds of PP&L, Inc. customers to shop for electricity
supply on Jan. 2, 1999.
. An option for PP&L, Inc. customers to choose another licensed supplier to
provide some metering and billing services.
. Permission for PP&L, Inc. to issue bonds to "securitize" up to $2.85
billion in transition costs and provide 75 percent of the associated
savings to customers.
. A requirement that PP&L, Inc. transfer its retail marketing function to a
separate, affiliated corporation.
. Competitive bidding, beginning in 2002, for the right to serve 20 percent
of PP&L, Inc. customers who choose not to shop for electricity.
A final PUC vote on the settlement is expected Aug. 27. If the
settlement receives final approval from the PUC, PP&L, Inc. will withdraw all
its legal challenges to PUC actions in its restructuring case. On July 15, the
company appealed the order to Commonwealth Court and filed suits regarding the
PUC action in state and federal courts.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell shares. The offer is made solely by the Offer to Purchase and the
related Letter of Transmittal which are being mailed to shareowners of PP&L
Resources, Inc. on or about August 14, 1998. While the offer is being made to
all shareowners of the company, tenders will not be accepted from or on behalf
of the shareowners in any jurisdiction in which the acceptance thereof would not
be in compliance with the laws of such jurisdiction. In those jurisdictions
whose laws require the offer to be made by a licensed broker or dealer, the
offer shall be deemed to be made on behalf of the company by Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
by
PP&L Resources, Inc.
up to 17,000,000 shares of its Common Stock
at a Purchase Price Not in Excess of
$27.00 Nor Less than $24.50 Per Share
PP&L Resources, Inc., a Pennsylvania corporation (the "Company"), invites
its shareowners to tender up to 17,000,000 shares (or such lesser number of
Shares as are properly tendered) of its Common Stock (the "Shares") to the
Company at a price not in excess of $27.00 nor less than $24.50 per Share in
cash, as specified by shareowners tendering their Shares upon the terms and
subject to the conditions set forth in the Offer to Purchase dated August 14,
1998 and in the related Letter of Transmittal (which together constitute the
"Offer").
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer, however, is subject to certain other conditions set forth
in the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS AUTHORIZED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
SHAREOWNERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES OR AS
TO THE PURCHASE PRICE OF ANY TENDER. EACH SHAREOWNER MUST MAKE THEIR OWN
DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES AND AT WHAT PRICE
OR PRICES SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN ADVISED THAT NONE OF
ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE
OFFER.
As promptly as practicable following the Expiration Date (as defined
below), the Company will purchase up to 17,000,000 Shares or such lesser number
of Shares as are properly tendered (and not withdrawn in accordance with Section
4 of the Offer to Purchase) prior to the Expiration Date at a price (determined
in the manner set forth below) not in excess of $27.00 nor less than $24.50 per
Share net to the seller in cash. The term "Expiration Date" means 12:00
Midnight, New York City time, on Friday, September 11, 1998, unless and until
the Company, in its sole discretion, shall have extended the time and date
during which the Offer will remain open, in which event the term "Expiration
Date" shall refer to the latest time and date at which the Offer, as so extended
by the Company, shall expire.
The Company will select the lowest purchase price (the "Purchase Price")
that will allow it to purchase up to 17,000,000 Shares (or such lesser number of
Shares as are properly tendered and not withdrawn) at a price not in excess of
$27.00 nor less than $24.50 per Share. All Shares properly tendered at prices at
or below the Purchase Price and not withdrawn will be purchased at the Purchase
Price, upon the terms and subject to the conditions of the Offer, including the
proration and odd lot provisions. For purposes of the Offer, the Company will be
deemed to have accepted for payment (and thereby purchased) Shares properly
tendered at or below the Purchase Price and not withdrawn (subject only to
proration and odd lot provisions of the Offer) only when, as and if the Company
gives oral or written notice to the Depositary of its acceptance of such Shares
for payment pursuant to the Offer. Payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such shares (or a timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company ("DTC")), a properly completed and duly executed Letter
of Transmittal and any other documents required by the Letter of Transmittal.
<PAGE>
The Offer is being made concurrently with (i) the settlement of the
Company's restructuring proceedings before the Pennsylvania Utility Commission,
(ii) a related charge against the Company's second quarter earnings of $948
million and (iii) a reduction in the quarterly dividend on the Shares to $.25
from $.4175. The Offer and the expected reduction in the Company's
capitalization, together with the dividend reduction, are elements of a
financial strategy which is intended to position the Company for the new
competitive environment in the electric utility industry.
Upon the terms and subject to the conditions of the Offer, if more than
17,000,000 Shares have been properly tendered at prices at or below the Purchase
Price and not withdrawn prior to the Expiration Date, the Company will accept
for purchase properly tendered Shares in the following order of priority: (a)
first, all Shares properly tendered and not withdrawn prior to the Expiration
Date by any Odd Lot Owner (as defined in the Offer to Purchase) who: (1) tenders
all Shares beneficially owned by such Odd Lot Owner at a price at or below the
Purchase Price (tenders of less than all Shares will not qualify for this
preference); and (2) completes the item captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery; and (b)
second, after purchase of all of the foregoing Shares, all other Shares tendered
properly at prices at or below the Purchase Price and not withdrawn prior to the
Expiration Date, on a pro rata basis (with adjustments to avoid purchases of
fractional Shares) as described below. The Company also reserves the right, but
will not be obligated, to purchase all Shares duly tendered by any shareowner
who tendered all Shares owned, beneficially or of record, at or below the
Purchase Price and who, as a result of proration, would then own, beneficially
or of record, an aggregate of fewer than 100 Shares. If the Company exercises
this right, it will increase the number of Shares that it is offering to
purchase by the number of Shares purchased through the exercise of the right.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend the period of time during which the Offer
is open and thereby delay acceptance for payment of, and payment for, any Shares
by giving oral or written notice of such extension to Norwest Bank Minnesota,
N.A. (the "Depositary") and making a public announcement thereof.
Shares tendered pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date and, unless theretofore accepted for payment by the
Company pursuant to the Offer, may also be withdrawn at any time after 12:00
Midnight, New York City time, on Friday, October 9, 1998. See Section 4 of the
Offer to Purchase.
The Offer to Purchase and the Letter of Transmittal contain important
information which should be read carefully before any tenders are made. The
information required to be disclosed by Rule 13e-4(d)(1) under the Securities
Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference. The Offer to Purchase and the related Letter
of Transmittal are being mailed to record owners of Shares and are being
furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the Company's shareowner list or, if applicable, who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
Additional copies of the Offer to Purchase and the Letter of Transmittal
may be obtained from the Information Agent or the Dealer Manager and will be
furnished promptly at the Company's expense.
The Information Agent for the Offer is:
[LOGO OF INNISFREE APPEARS HERE]
501 Madison Avenue
New York, New York 10022
Call Toll Free: (888) 750-5835
Banks and Brokerage Firms, Please Call: (212) 750-5833
The Dealer Manager for the Offer is:
Merrill Lynch & Co.
World Financial Center
North Tower
New York, New York 10281
(212) 449-8971 (call collect)
August 14, 1998
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER--
Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-
0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine the number to give
the payer.
- --------------------------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- --------------------------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the account or, if
(joint account) combined funds, the first individual on the
account(1)
3. Husband and wife (joint The actual owner of the account or, if
account) joint funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the minor is the only
account) contributor, the minor(1)
6. Account in the name of The ward, minor or incompetent person(3)
guardian or committee for a
designated ward, minor or
incompetent person(3)
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under State law
8. Sole proprietorship account The owner(4)
- --------------------------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
- --------------------------------------------------------------------------------
9. A valid trust, estate, or The legal entity (Do not furnish the
pension trust identifying number of the personal
representative or trustee unless the legal
entity itself is not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
12. Partnership account held The partnership
in the name of the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district or prison) that
receives agricultural
program payments
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use your Social Security number or employee identification number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
- -------------------------------------------------------------------------------
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number (for business and
all other entities), at the local office of the Social Security Administration
or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a) of the Internal Reve-
nue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a)
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
. A futures commission merchant registered with the Commodity Futures Trad-
ing Commission
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to an appropriate nominee.
. Section 404(k) payments made by ESOP.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments of mortgage interest to you.
. Payments made to an appropriate nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup with-
holding. For details, see the regulations under sections 6041, 6041A(a), 6045,
and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, inter-
est, or other payments to give correct taxpayer identification numbers to pay-
ers who must report the payments to IRS. IRS uses the numbers for identifica-
tion purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or pat-
ronage dividends in gross income, such failure will be treated as being due to
negligence and will be subject to a penalty of 20% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
