UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 23, 1997
(December 19, 1997)
BALTIMORE GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Maryland 1-1910 52-0280210
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(State of incorporation) (Commission (IRS Employer
File Number) Identification No.)
39 W. Lexington Street Baltimore,Maryland 21201
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(Address of principal executive offices) (Zip Code)
410-783-5920
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
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ITEM 5. Other Events
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As previously disclosed, in September 1995 we agreed with a neighboring
utility, Potomac Electric Power Company, to merge together into a new company,
Constellation Energy Corporation, after all necessary regulatory approvals were
received.
On December 22, 1997, both companies announced they were terminating the
merger agreement. Please refer to the press release that is attached to this
Report on Form 8-K as Exhibit 99 for details about the decision to terminate the
merger agreement. The Termination Agreement, dated December 19, 1997, is also
attached to this report as Exhibit 2(a).
ITEM 7. Financial Statements and Exhibits
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(c) Exhibit No. 2* Registration Statement on Form S-4 of
Constellation Energy Corporation, as
amended, which became effective
February 9, 1996, Registration No.
33-64799.
Exhibit No. 2(a) Termination Agreement by and among
Baltimore Gas and Electric Company,
Potomac Electric Power Company, and
Constellation Energy Corporation dated
December 19, 1997.
Exhibit No. 99 News Release of Baltimore Gas and
Electric Company and Potomac Electric
Power Company dated December 22, 1997.
*Incorporated by Reference.
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 thereunto duly authorized.
BALTIMORE GAS AND ELECTRIC COMPANY
(Registrant)
Date December 23, 1997 /s/ D. A. Brune
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D. A. Brune, Vice President
on behalf of the Registrant and
as Principal Financial Officer
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EXHIBIT INDEX
Exhibit
Number
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2* Registration Statement on Form S-4 of
Constellation Energy Corporation, as amended,
which became effective February 9, 1996,
Registration No. 33-64799.
2(a) Termination Agreement by and among Baltimore
Gas and Electric Company, Potomac Electric
Power Company, and Constellation Energy
Corporation dated December 19, 1997.
99 News Release of Baltimore Gas and Electric
Company and Potomac Electric Power Company
dated December 22, 1997.
*Incorporated by Reference.
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EXHIBIT 2(a)
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TERMINATION AGREEMENT
TERMINATION AGREEMENT by and among BALTIMORE GAS AND ELECTRIC COMPANY, a
corporation formed under the laws of the state of Maryland ("BGE"), POTOMAC
ELECTRIC POWER COMPANY, a corporation formed under the laws of the District of
Columbia and the Commonwealth of Virginia ("Pepco"), and CONSTELLATION ENERGY
CORPORATION (formerly RH Acquisition Corp.), a corporation formed under the laws
of the State of Maryland and the Commonwealth of Virginia, 50% of whose
outstanding capital stock is owned by BGE and 50% of whose outstanding capital
stock is owned by Pepco (the "Company," and together with BGE and Pepco, the
"Parties").
WHEREAS, the Parties are parties to that certain Agreement and Plan of
Merger, dated as of September 22, 1995 (the "Merger Agreement"); and
WHEREAS, the Parties have been authorized by their respective boards of
directors to terminate the Merger Agreement and the transactions contemplated
thereby.
NOW THEREFORE, in consideration of the mutual promises set forth herein,
the Parties agree as follows:
Pursuant to and in accordance with the provisions of Section 9.1(a) of the
Merger Agreement, the Merger Agreement and the transactions contemplated thereby
are terminated effective as of the date hereof and each of the Parties shall
take such action as is reasonably necessary to effect such termination,
including, but not limited to, withdrawing or otherwise concluding all pending
regulatory proceedings pertaining to the proposed transactions and dissolving
the Company.
This Termination Agreement shall be governed and construed in accordance
with the laws of the State of Maryland applicable to contracts executed in and
to be fully performed in such State, without giving effect to its conflicts of
laws, statutes, rules or principles.
This Termination Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
IN WITNESS WHEREOF BGE, Pepco and the Company have caused this agreement
to be executed by their respective officers thereunto duly authorized as of this
19th day of December, 1997.
BALTIMORE GAS AND ELECTRIC COMPANY
By: /s/C. H. Poindexter
Name: C. H. Poindexter
Title: Chairman and Chief Executive
Officer
POTOMAC ELECTRIC POWER COMPANY
By: /s/John M. Derrick, Jr.
Name: John M. Derrick, Jr.
Title: President and Chief Executive
Officer
CONSTELLATION ENERGY CORPORATION
By: /s/David A. Brune
Name: David A. Brune
Title: Vice-President
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EHHIBIT 99
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[BGE and Pepco Letterhead]
NEWS RELEASE
December 22, 1997 Contact: Art Slusark (BGE) 410-234-7433
For Immediate Release Nancy Moses (PEPCO) 202-872-2680
BGE AND PEPCO ANNOUNCE CANCELLATION OF PROPOSED MERGER
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Today Baltimore Gas and Electric Company (BGE) and Potomac Electric Power
Company (Pepco) announced they have decided to cancel their proposed merger to
create one of the nation's ten largest utilities, Constellation Energy
Corporation. A $15 billion electric and gas company, Constellation Energy would
have served the needs of nearly 2 million energy customers in the combined
Baltimore-Washington area.
In a joint statement, BGE's Chairman and Chief Executive Officer Christian
H. Poindexter and Pepco's President and Chief Executive Officer John M. Derrick,
Jr., expressed their deep disappointment in having to terminate the merger
agreement, which was signed September 22, 1995.
As proposed, Constellation Energy would have been a strong, successful
competitor in the emerging energy market," said the two CEOs. "The benefits of
such a company to the Baltimore-Washington region cannot be overstated in terms
of lower
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costs, innovative products and services, proactive economic development, and
continued commitment to the community."
Poindexter explained that although BGE and Pepco had been successful in
securing the regulatory approvals needed to merge, "the orders issued by both
the Maryland and District of Columbia Public Service Commissions contain
financial conditions that make it impossible for the two companies' investors to
share in the benefits of the proposed merger."
BGE and Pepco's proposed regulatory plan called for an equal sharing of
the savings between customers and shareholders. Both the Maryland and D.C. PSC
orders returned more than the estimated total merger savings to customers. "We
have tried unsuccessfully to obtain reconsideration of these conditions," said
Derrick and Poindexter, "but now conclude that a favorable outcome cannot be
expected within a reasonable period, if at all."
"BGE and Pepco shareholders overwhelmingly supported the proposed merger
because it appeared to be a fair deal for everyone involved," added Poindexter.
"To sacrifice shareholders' interests by proceeding with the merger under
detrimental financial terms and conditions would represent a major breach of
faith."
Poindexter and Derrick also cited efforts underway in Maryland to
restructure the electric industry as a contributing factor in their decision to
end the merger at this time. "The Maryland Public Service Commission and the
Maryland legislature are working toward reshaping the state's electric industry
to allow for full customer choice in the near future. BGE and Pepco must commit
their full attention to addressing the many complex
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and controversial aspects of restructuring because it is imperative that
Maryland gets electric industry restructuring right the first time."
Both Derrick and Poindexter emphasized that the two companies will
continue to work closely together to ensure the region's successful transition
to a competitive energy market.
The companies have spent approximately $100 million to date on the merger,
including various computer system modifications. These costs were to be shared
equally, and the merger costs will be written off by Pepco and BGE in 1997. The
companies will take appropriate steps to terminate regulatory and court
proceedings shortly.
Both CEOs said that it is a testimony to the caliber of employees at BGE
and Pepco that, despite recent frustrating events, the merger ends with mutual
respect and positive regard.
"We came together in a spirit of partnership and cooperation," said
Poindexter and Derrick. "Both companies acted with integrity and put the best
interests of Constellation Energy before those of the individual companies. We
can't thank our employees enough for the hard work and excitement they
contributed to this effort. Despite the outcome, it has provided a valuable
learning experience for all of us, both personally and professionally."
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