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):
November 21, 1996
TAMPA ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
FLORIDA 1-5007 59-0475140
(State or other jurisdiction (Commission file (IRS Employer
of incorporation) Number) Identification No.)
702 North Franklin Street, Tampa Florida 33602
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (813) 228-4111
Page 1<PAGE>
Item 5. Other Events
On Nov. 21, 1996, TECO Energy, Inc. ("TECO Energy"), parent of Tampa
Electric Company, and Lykes Energy, Inc. ("LEI") entered into an Agreement and
Plan of Merger (the "Merger Agreement") pursuant to which TECO Energy will
acquire LEI through the merger of LEI with and into TECO Energy or, subject to
certain conditions, with a wholly-owned subsidiary of TECO Energy (the
"Merger"). A copy of the Merger Agreement is included herewith as Exhibit 2.1
and incorporated herein by reference, and the press release announcing the
transaction is included as Exhibit 99.1.
LEI is a privately-held holding company whose two largest subsidiaries
are Peoples Gas System, Inc. ("PGS") and Peoples Gas Company ("PGC"). PGS is
a natural gas utility that serves approximately 200,000 customers wholly
within peninsular Florida. PGC sells liquified petroleum gas, or propane, to
more than 35,000 customers, primarily within peninsular Florida.
Contemporaneously with the Merger, TECO Energy plans to merge PGS into Tampa
Electric Company and operate PGS as a separate division.
Subject to conditions relating to the trading price of TECO Energy
Common Stock described below, on the closing date of the Merger all of the
outstanding shares of Common Stock of LEI will be converted into a number of
shares of Common Stock of TECO Energy having a market value of $300,000,000
based upon the average closing price of TECO Common Stock on the New York
Stock Exchange during the twenty trading days ending on the third trading day
prior to the closing (the "Market Value"). Based on the number of shares of
TECO Common Stock outstanding on Nov. 22, 1996, an aggregate of between
11,009,174 and 13,483,146 shares of TECO Common Stock will be issuable in the
Merger, representing between approximately 8.6 percent and 10.3 percent of the
total number of shares of TECO Common Stock to be outstanding after such
issuance. The Merger is intended to be a tax-free reorganization and to be
accounted for as a pooling of interests.
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Item 5. Other Events (continued)
Completion of the acquisition, currently expected to occur by mid-1997,
is subject to certain conditions, including approval of the holders of a
majority of the outstanding shares of LEI Common Stock, the approval of
r e g ulatory authorities, and other closing conditions customary in a
transaction of this type. The Merger Agreement is subject to termination in
certain circumstances, including if the Merger is not consummated by Dec. 31,
1997. In addition, LEI may terminate the Merger Agreement if the Market Value
per share of TECO Common Stock is less than $20.50 unless TECO Energy agrees
to increase the number of shares of TECO Common Stock to be issued in the
Merger as provided in the Merger Agreement. TECO Energy may terminate the
Merger Agreement if the Market Value per share of TECO Common Stock is greater
than $29.00 unless LEI agrees to accept a lesser number of shares of TECO
Common Stock in the Merger as provided in the Merger Agreement.
Concurrently with execution of the Merger Agreement, the parties entered
into a stock option agreement (the "Option Agreement") under which LEI granted
to TECO Energy an option to purchase 212,664 shares of LEI Common Stock,
representing 19.9 percent of the outstanding LEI shares, at a price of $280.72
per share. A copy of the Option Agreement is Exhibit A to the Merger
Agreement included as Exhibit 2.1 hereto and is incorporated herein by
reference. TECO Energy's right to exercise such option is subject to the
occurrence of certain termination events under the Merger Agreement which
require LEI to pay a specified termination fee to TECO Energy. The aggregate
amount payable to TECO Energy pursuant to the Option Agreement and such
termination fee is limited to $15,000,000.
The foregoing summary of the Merger Agreement and the Option Agreement
is qualified in its entirety by reference to Exhibit 2.1 hereto.
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Item 7. Financial Statements and Exhibits
(C) Exhibits
*2.1 Agreement and Plan of Merger dated Nov. 21, 1996
between TECO Energy and Lykes Energy, Inc. (Exhibit
2.1 to Registration Statement on Form S-4 of
TECO Energy, Inc. filed on Nov. 22, 1996, Registration
No. 333-16683).
99.1 Press Release dated Nov. 22, 1996.
* Indicates exhibit previously filed with the Securities and
Exchange Commission and incorporated herein by reference.
Page 4<PAGE>
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.
Dated: Nov. 25, 1996 Tampa Electric Company
By:
W. L. Griffin
Vice President - Conroller
(Principal Accounting Officer)
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INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
2.1 Agreement and Plan of Merger dated *
Nov. 21, 1996 between TECO Energy and
Lykes Energy, Inc. (Exhibit 2.1 to
Registration Statement on Form S-4 of
TECO Energy, Inc. filed on Nov. 22, 1996,
Registration No. 333-16683).
99.1 Press Release dated Nov. 22, 1996 7
* Indicates exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference.
Page 6<PAGE>
Exhibit 99.1
TECO ENERGY LETTERHEAD FOR IMMEDIATE RELEASE
Contact: Mike Mahoney
Office: 813/228-4271
Internet: http://www.teco.net
Home: 813/991-6229
TECO ENERGY AND LYKES ENERGY ANNOUNCE MERGER VALUED AT $300 MILLION
TAMPA, Nov. 22, 1996 -- TECO Energy, Inc. (NYSE:TE) and Lykes Energy,
Inc. today announced they have signed a definitive agreement to merge in a
tax-free, stock-for-stock transaction with an equity value of $300 million.
The number of TECO shares to be issued will depend on the average market price
during a specified period prior to the closing, subject to a collar. Based on
yesterday s closing price of $24.75, the number of shares would be
approximately 12.1 million.
This merger, to be accounted for as a pooling of interest, has been
approved by both companies boards of directors. TECO Energy anticipates that
the transaction will initially be slightly dilutive to earnings with favorable
future growth prospects.
The principal subsidiary of Lykes Energy is Peoples Gas System, Inc., a
regulated, retail gas distributor in Florida. It will retain its identity and
operate as a separate division within the TECO group of companies.
Lykes Energy also owns Peoples Gas Company, a propane business, as well
as a unit involved in natural gas marketing.
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Lykes Energy shareholders will receive shares of TECO Energy common
stock for shares of Lykes Energy common stock they currently hold. The
current TECO Energy quarterly dividend of 28 cents per share remains in effect
and will not be affected by the transaction.
According to TECO Energy Chairman and Chief Executive Officer Timothy L.
Guzzle, This merger represents a logical move for both companies. For us, it
is another important step in the growth of our family of businesses in the
energy sector, where we have had good success.
Said Guzzle, We already have important investments in natural gas
exploration and production, and this combination will allow us to expand our
participation in the nation s natural gas industry. We re fully committed to
growing these new businesses.
Tom Rankin, Lykes Energy chairman and chief executive officer, said,
"With this merger, two strong Tampa-based companies with proud traditions and
proven track records are joining together, and that s great news for
shareholders, employees and the customers of both companies.
John Brabson, current president of Lykes Energy, said, We re combining
because we want to continue to grow our businesses, as does TECO Energy, and
we see this as an excellent fit.
The combination of our two companies will enhance the value of the
service we provide our customers, said Guzzle. It will enable us to expand
the range and types of services we offer, while capitalizing on the resources
that exist within all our businesses.
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Brabson has agreed to continue to serve as chairman of the Peoples Gas
businesses for a period of six months following the closing to assist with the
transition. He will report to Guzzle.
William N. Cantrell, currently vice president-Energy Supply at Tampa
Electric, will lead a transition team put in place to direct merger
activities. In this capacity, he will report to Girard F. Anderson, president
and chief operating officer of TECO Energy.
Peoples Gas System is Florida s largest natural gas distribution company
with retail operations in all of the state s major metropolitan communities.
As of Sept. 30, the company served over 200,000 customers and recorded annual
sales of 86 BCF of natural gas.
The companies expect some cost savings and efficiencies as a result of
the merger. Savings mainly will be derived from the elimination of
duplicative overhead and administrative activities, as well as improved
operating efficiencies and lower interest costs.
Said Brabson, At the gas company, we already had begun a productivity
review and restructuring which could result in changes in job responsibility
and possible reductions in the workforce. That process is intended to allow us
to become more competitive and to continue to grow our company. It is not
anticipated that the merger itself will lead to any major layoffs or
downsizing.
Guzzle said, We look forward to building on the excellent work done by
John Brabson and his team at Peoples as well as their strong tradition of
service to customers throughout Florida. We will commit resources and major
effort to continue that growth.
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The merger is conditioned, among other things, upon the approval of
Lykes Energy s shareholders and necessary regulatory approvals. Closing is
expected by mid-year 1997.
TECO Energy is a diversified, energy-related utility holding company
based in Tampa. Its principal subsidiary is Tampa Electric, a regulated
electric utility covering a 2,000 square-mile service area in west central
Florida. Other businesses include TECO Transport & Trade, TECO Coal, TECO
Coalbed Methane, TECO Gas & Oil, TECO Power Services and TeCom, which is
marketing an advanced, interactive energy management and communications
system.
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Financial Highlights
(all amounts except customers 000 s)
Lykes Energy Consolidated
(Fiscal Year-end 9/30) 1996 1995 1994
Revenues $299,585 $254,001 $267,071
Net Income $ 15,950 $ 12,754 $ 11,779
Total Assets $327,839 $312,172 $300,803
Equity $106,634 $ 95,244 $ 86,766
Natural gas sold &
transported - therms 859,799 980,992 819,634
Natural gas customers 200,755 196,342 190,809
TECO Energy Consolidated
1996 1995 1994
12 months ended 9/30 12 months ended 12/31
Revenues $1,437,812 $1,392,285 $1,350,853
Net Income $ 195,153 $ 186,127 $ 153,177
Total Assets $3,584,292 $3,473,367 $3,312,162
Equity $1,314,195 $1,240,887 $1,163,371
Total megawatt 17,832 17,306 16,034
hours sold
Electric customers 505,691 501,938 491,136
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