DPL Sells Natural Gas Business.

DAYTON, Ohio--(BUSINESS WIRE)--Dec. 15, 1999--

DPL Inc.(NYSE: DPL) today announced that it has reached an agreement with Indiana Energy, Inc. (NYSE: IEI) to sell its natural gas retail distribution business unit for $425 million in cash. "With the passage of new Ohio electric restructuring legislation in July of this year, DPL was required to separate its various electric business units," said Mr. Peter H. Forster, Chairman of DPL. "In separating and evaluating all of our business segments, we announced that we would explore the sale of our natural gas retail distribution business unit. This sale will allow DPL to focus on growing the electric business. We will invest the after-tax proceeds from this sale to continue expansion of our electric combustion turbine business, to finance in part other business unit capital needs, to continue our stock buyback program and to reduce any then outstanding short-term debt," added Mr. Forster.

DPL is expanding its natural gas-fired electric combustion turbine generation business with the addition of 475 MWs through Phases One and Two. Phases Three and Four will increase that capacity by 320 MWs, the details of which will be released shortly. These expansions are occurring in both Ohio and Indiana and will be immediately accretive to earnings as these units come online starting in the summer of 2000.

Under its existing stock buyback program, DPL continues to purchase shares when market conditions are favorable and has purchased shares in excess of $60 million in 1999. This program will continue in 2000.

The natural gas retail distribution business unit has 305,000 residential, commercial, industrial and governmental customers and 5,000 miles of pipeline in 16 counties in West Central Ohio.

"West Central Ohio consumers are accustomed to receiving the highest quality of energy service. For this reason, we looked for a buyer that maintains the same high standards as DPL. Indiana Energy is that type of company," stated Mr. Allen M. Hill, President and Chief Executive Officer of DPL. "They have a strong history and commitment to customer satisfaction and the communities they serve and fair treatment of their employees. We are confident that they will bring this same commitment to West Central Ohio as they nurture and grow this natural gas retail distribution business," added Mr. Hill.

Both companies said they expect the transaction to be transparent to the customer, with the same dedicated workforce providing service. In addition, DPL will provide services to Indiana Energy to facilitate a smooth transition, including meter reading and billing for the natural gas system. "The mutual goal is to make this transaction a win for all parties - our customers, employees, communities and organizations," stated Mr. Niel C. Ellerbrook, Indiana Energy's President and Chief Executive Officer. Indiana Energy currently provides natural gas to nearly 508,000 customers in central Indiana.

DPL will continue to market the gas commodity to customers in West Central Ohio and the region through DPL Energy.

The all cash transaction will be structured as a sale of "Assets" and will be accounted for under the Purchase method of accounting. The companies will seek all required regulatory approvals including Public Utilities Commission of Ohio, Securities and Exchange Commission, and Hart Scott Rodino approvals.

Credit Suisse First Boston acted as financial advisor, and Kirkland & Ellis and Chernesky, Heyman & Kress were legal advisors to DPL on the transaction.

DPL Inc. is a diversified energy company supplying energy services to customers in the Midwest through its subsidiaries, The Dayton Power and Light Company and DPL Energy.

Indiana Energy, Inc. is the holding company of Indiana Gas Company, Inc., IEI Services, LLC and IEI Investments, Inc., supplying energy services to customers in central Indiana.