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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 13, 1996
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ENSERCH EXPLORATION, INC.
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(Exact name of registrant as specified in its charter)
Texas 1-11413 75-255697
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) file number) Identification No.)
4849 Greenville Avenue
Suite 1500
Dallas, Texas 75206
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(Address of principal (Zip code)
executive office)
Registrant's telephone number, including area code (214) 369-7893
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
ENSERCH Corporation, a Texas corporation ("ENSERCH"), which
owns approximately 83.4% of the stock of Enserch Exploration,
Inc. ("EEX"), has announced a merger transaction with Texas
Utilities Company, a Texas corporation ("TUC"), in which ENSERCH
will become a wholly owned subsidiary of TUC (the "Parent Company
Merger"). Immediately prior and as a condition to the Parent
Company Merger, EEX will be merged into Lone Star Energy Company,
a Texas corporation wholly owned by ENSERCH ("LSEC"), and the
shares of capital stock of LSEC held by ENSERCH will then be
distributed (the "Distribution") to the shareholders of ENSERCH.
The consummation of the Parent Company Merger and the
Distribution is expected to occur in late 1996 or early 1997.
The Parent Company Merger is subject to customary closing
conditions, including the receipt from the Internal Revenue
Service of a ruling that the Distribution will qualify as a tax-free
distribution. The conditions to the closing of the Parent
Company Merger further include, without limitation, the approval
by the shareholders of ENSERCH, the receipt of all necessary
governmental approvals and the making of all required
governmental filings (including the approval of the Securities
and Exchange Commission under the Public Utilities Holding
Companies Act of 1935, and the filing of the requisite
notifications with the Federal Trade Commission and the
Department of Justice under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the expiration of
applicable waiting periods thereunder), and any one of several
specified actions by the Texas Railroad Commission.
The Agreement and Plan of Merger executed by ENSERCH and TUC
in respect of the Parent Company Merger (the "Parent Company
Merger Agreement") may be terminated prior to closing (1) by
mutual consent, (2) by either ENSERCH or TUC, if the Merger is
not consummated by March 31, 1997, provided that such termination
date will be extended to September 30, 1997 if all conditions to
closing of the Parent Company Merger, other than the receipt of
certain regulatory approvals, are capable of being satisfied on
March 31, 1997, (3) by either ENSERCH or TUC, if the shareholders
of ENSERCH fail to approve the transaction, (4) by either ENSERCH
or TUC, if any federal or state law or court order prohibits the
transaction, (5) by either ENSERCH or TUC, as a result of a
third-party tender offer or business combination proposal which
the Board of Directors of such party in good faith and based upon
the advice of counsel determines to accept after negotiations
with the other party to make adjustments in the terms of the
Parent Company Merger Agreement as would enable the Parent
Company Merger to proceed, (6) by the non-breaching party in the
event of a material breach of representation, warranty or
covenant and such breach is not remedied within 20 days after
notice from the other party, or (7) if the Board of Directors of
either ENSERCH or TUC withdraws or adversely modifies its
recommendation in respect of the Parent Company Merger, or (8) if
either ENSERCH of TUC, during a 21-day due diligence period,
uncovers information amounting to a material adverse change in
the other party's business or prospects as compared to
information disclosed prior to the execution of the Parent
Company Merger Agreement.
The Press Release, dated April 15, 1996, issued by ENSERCH
Corporation in connection with the announcement of the Parent
Company Merger is filed as an exhibit to this report and is
incorporated herein by reference.
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Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No. Description of Exhibit Reference
99.1 News Release of ENSERCH
Corporation dated
April 15, 1996 . . . . . . . .Filed herewith.
99.2 News Release of Enserch
Exploration, Inc. dated
April 15, 1996. . . . . . . . Filed herewith.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
Enserch Exploration, Inc.
(Registrant)
Date: April 17, 1996 By: /s/ J. W. Pinkerton
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J. W. Pinkerton
Vice President and Controller
EXHIBIT 99.1
ENSERCH Corporation News Release
300 South St. Paul
Dallas, Texas 75201-5598
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ENSERCH CORPORATION AND TEXAS UTILITIES
REACH AGREEMENT TO COMBINE COMPANIES
DALLAS, TEXAS (April 15, 1996)--ENSERCH Corporation (NYSE--ENS) and
Texas Utilities (NYSE--TXU) have entered into a definitive agreement to
combine the two companies. Under the terms of the agreement approved by
both companies' Boards of Directors, Lone Star Gas and Lone Star Pipeline,
the local distribution and pipeline companies of ENSERCH, and other
businesses, will be merged into Texas Utilities. Texas Utilities will
acquire the ENSERCH companies for $1.7 billion, composed of approximately
$550 million of TXU common stock and approximately $1.15 billion of net
debt and preferred stock.
The 83%-owned subsidiary of ENSERCH, Enserch Exploration, Inc. (NYSE--EEX),
will be spun off to shareholders of ENS prior to the merger. Based
on shares of ENS and EEX presently outstanding, each share of ENS will
receive approximately 1.5 shares of EEX in the spin-off.
Within a range of a 10% variation above or below the April 12 closing
price of TXU common stock, the ENSERCH shareholder will receive sufficient
shares of TXU common stock to provide $8.00 of value. Above or below the
10% threshold, the value received will move up or down with the price of
TXU common stock. The value of EEX shares to be received, estimated based
on EEX's Friday's closing price to be approximately $15.68 per ENS share,
and the value of the TXU shares to be received represent a total estimated
value of $23.68 per share, a gain of 45% over the Friday closing price of
ENS. The final value can not be determined until closing.
"This transaction is the culmination of a strategic plan to enhance
shareholder value which the Corporation's Board of Directors has been
actively pursuing for some time. The value today of EEX and TXU shares to
be received by ENS shareholders represents a substantial premium above the
market's prior perception of ENSERCH value. The important aspects of this
transaction are that the full upside potential of ENSERCH's ownership
interest in EEX is preserved for our shareholders and the value previously
unrecognized by the stock market is unlocked," said David W. Biegler,
chairman, president and chief executive officer of ENSERCH. "Deregulation
of the natural gas industry and the convergence of energy markets make the
combination of our two firms a natural fit," he added.
The agreement is subject to approval by shareholders and the
Securities and Exchange Commission, a filing with the Railroad Commission
of Texas and Hart-Scott-Rodino clearance. Approvals by the Public Utility
Commission of Texas and the Federal Energy Regulatory Commission are not
required. The agreement is subject to a favorable ruling as to the tax-free
nature of the spin-off of EEX shares.
Each party has a 21-day period to complete its due diligence review.
In connection with entering into the merger agreement, ENS has granted TXU
an option to purchase 4.9% of its outstanding common stock at an exercise
price of $16.375 per share exercisable under certain circumstances in the
event the transaction does not proceed as agreed.
ENSERCH Corporation is an integrated natural gas company. Enserch
Exploration, Inc. is a natural gas and oil exploration and production
company with activities focused in Texas and the Gulf of Mexico.
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EXHIBIT 99.2
ENSERCH Exploration, Inc. News Release
300 South St. Paul
Dallas, Texas 75201-5598
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ENSERCH EXPLORATION SHARES TO BE DISTRIBUTED
TO ENSERCH CORPORATION SHAREHOLDERS
DALLAS, TEXAS (April 15, 1996)--Earlier today, ENSERCH Corporation
(NYSE-ENS) announced that a definitive agreement has been executed with
Texas Utilities (NYSE--TXU) to combine the two companies and requires ENS
to distribute to its shareholders all its shares of Enserch Exploration
(NYSE--EEX) prior to the combination. The agreement is subject to various
approvals and notifications. Following the distribution, which is subject
to a favorable ruling regarding the tax-free nature of the spin-off of EEX
shares, all 125.9 million shares of EEX presently outstanding will be held
by public investors.
"The broadened distribution of EEX shares is expected to enhance our
stock's liquidity and encourage a larger following in the financial
community," said Gary Junco, president and chief operating officer of
Enserch Exploration. "Due to our strong financial position, EEX, as a fully
independent exploration and production company, will be able to exploit its
many growth opportunities," he added.
Enserch Exploration is a natural gas and oil exploration and
production company with activities focused in Texas and the Gulf of Mexico.
