Printer Friendly

IPALCO ENTERPRISES, INC., ANNOUNCES OFFER TO PURCHASE PSI RESOURCES, INC. FOR $26.50 PER SHARE IN CASH AND STOCK

 IPALCO Estimates Cost Savings of $1.6 Billion Over 10 Years
 Company to be Headquartered in Indiana
 Price Represents a $2.64 Premium Over
 Proposed Cincinnati Gas & Electric/PSI Resources Merger
 INDIANAPOLIS, March 15 /PRNewswire/ -- IPALCO Enterprises, Inc. (NYSE: IPL), the holding company of Indianapolis Power & Light Company (IPL), announced plans today to make an offer to purchase PSI Resources, Inc. (PSI), the holding company of PSI Energy, through an exchange offer of cash and stock.
 John R. Hodowal, chairman, president and chief executive officer of IPALCO, said today, "The combination of IPALCO and PSI will bring together two of the nation's lowest-cost energy producers to create an Indiana-based company that can make a significant contribution to its customers and shareholders, and the long-term economic growth of Indiana."
 The combination of IPALCO and PSI would result in a company with total assets in excess of $5 billion, serving almost 1 million customers throughout Indiana.
 "Such a combination will benefit current and future generations of Hoosiers by creating the low-cost energy infrastructure necessary to attract quality jobs and businesses to our communities," Hodowal said.
 "We believe that the transaction we are offering will best position us -- operationally and financially -- to meet the challenges of an increasingly competitive industry," he added.
 Hodowal outlined several other reasons why an IPALCO/PSI combination is compelling:
 -- IPALCO estimates that a combined IPALCO/PSI could achieve cost savings in excess of $1.6 billion over 10 years by integrating corporate management and administrative functions, deferring additional production capacity, consolidating certain dispatching and distribution operations and reducing inventory levels and overhead costs. These cost savings will benefit shareholders and customers.
 "We believe that the combined companies' future retail electric rates would be lower, overall, than either IPL or PSI Energy could provide as stand-alone companies," Hodowal said.
 In December 1992, Cincinnati Gas and Electric Company (CG&E) and PSI Resources announced that they had entered into a merger agreement under which CG&E and PSI would merge into CINergy Corp (an Ohio company). The estimated IPALCO/PSI savings are more than twice the $750 million of savings CG&E/PSI have estimated will result from their proposed combination. Furthermore, the portion of the savings from an IPALCO/PSI combination to be shared by customers will benefit solely Indiana communities. By contrast, the customer portion of savings resulting from the proposed CG&E/PSI merger will have to be shared among customers in Ohio, Kentucky and Indiana. Although CG&E/PSI have not publicly said how they propose to allocate their estimated savings, IPALCO believes the overall benefits of an IPALCO/PSI transaction to Indiana customers will exceed those available under the proposed CG&E/PSI merger.
 -- The geographic locations of the respective service areas of PSI Energy and IPL, the operating utilities of PSI and IPALCO -- both of which are completely within Indiana -- provide an opportunity to efficiently integrate all aspects of their utility operations. The combined system will benefit because it can be operated as part of a single, larger cohesive system. By contrast, the proposed CG&E/PSI merger, encompassing service territories in three separate states, would not provide such benefits.
 -- The company believes that by enabling the combined companies to concentrate their economic development programs and activities, this combination would enhance their ability to attract potential customers or industry groups to Indiana.
 -- IPALCO has an excellent long-term record of maintaining high environmental standards in Indiana. IPL has installed scrubbers on two of its newest generating units, and a request to add scrubbers to two units is currently before state regulators. This commitment to the environment will be carried over to a larger IPALCO/PSI combination.
 -- The price per share to be offered to PSI shareholders is higher than the price being offered in the proposed CG&E/PSI merger. IPALCO's offer represents a premium of $8.00 over the market price of PSI's shares on the trading day prior to the announcement of the proposed CG&E/PSI merger, and a premium of $2.64 over the price to be paid for the PSI shares in connection with the proposed CG&E/PSI merger, based on the closing sales prices of IPALCO common stock and CG&E common stock on the NYSE on March 12, 1993.
 Under the expected terms of the offer, IPALCO will offer to exchange either .6839 shares of IPALCO common stock or $26.50 net in cash for each share of PSI common stock. PSI shareholders may elect to receive either shares of IPALCO common stock or cash, but IPALCO will not be required to pay more than approximately 20 percent of the aggregate consideration in cash or more than approximately 80 percent of the aggregate consideration in IPALCO common stock.
 The offer will contain provisions intended, with certain limits, to maintain the value of the IPALCO common stock portion of the offer consideration against changes in the market price of IPALCO common stock. The closing price of IPALCO common stock on the NYSE on March 12, 1993, was $38.75. Based on such closing price, the value of the offer is $26.50 per share of PSI common stock. The number of shares of IPALCO common stock to be included in the offer consideration will vary so that the value of the stock is maintained at $26.50 per share if the market price of IPALCO common stock is between $35-7/8 and $41-5/8 per share. If the market price of IPALCO common stock is above or below those amounts, the IPALCO common stock portion of the offer consideration would become fixed and would have a value of more or less than $26.50 per share.
 -- Regulatory requirements of effecting an IPALCO/PSI combination will be less cumbersome than those of a CG&E/PSI combination. A combination of IPALCO and PSI would be subject to, among other approvals, regulatory approval from the Indiana Utility Regulatory Commission (IURC). By contrast, the proposed CG&E/PSI merger would require, among other approvals, approval from three separate state regulatory bodies, namely the Kentucky Public Service Commission and the Public Utilities Commission of Ohio, in addition to the IURC.
 Hodowal added, "Under our proposal, there will be no layoffs. Our proposal will likely result in position reductions of about 660 from both companies. However, we are fully committed to achieving these reductions solely through voluntary means, including a combination of normal attrition, hiring controls, work management programs, and early retirement and voluntary severance programs. Normal attrition will also provide the potential for some hirings as early as 1994."
 IPALCO's plan does not call for an immediate merger of IPL and PSI Energy, which will continue to serve their current customers as separate subsidiaries of IPALCO Enterprises.
 The IPALCO offer will be conditioned upon, among other things:
 -- a majority of the outstanding shares of PSI common stock on a fully diluted basis being tendered to IPALCO;
 -- the elimination of certain of PSI's anti-takeover provisions (including its "Poison Pill" rights plan);
 -- IPALCO obtaining certain approvals by IPALCO's shareholders;
 -- IPALCO's receipt of certain regulatory approvals;
 -- certain anti-takeover provisions of Indiana law not restricting the consummation by IPALCO of the offer and the subsequent merger;
 -- PSI's shareholders not having approved the proposed CG&E/PSI merger.
 The conditions of the offer will be set forth in full in the formal offer documents to be sent to PSI's shareholders when the offer commences.
 The offer will be made under a registration statement, which IPALCO has filed today with the Securities and Exchange Commission. The offer will be commenced when the registration statement is declared effective by the Securities and Exchange Commission and will be consummated when state and federal regulatory approvals have been received and the other conditions of the offer are satisfied.
 IPALCO said that it intends to nominate a slate of five Indiana community leaders for election to PSI's board of directors at PSI's annual meeting of shareholders, which is currently scheduled for May 14, 1993.
 IPL filed a Petition to Intervene for purposes of opposing and challenging PSI Energy's petition seeking IURC approval of the CG&E/PSI merger.
 IPALCO also commenced a lawsuit in U.S. District Court in Indiana today seeking declaratory judgment and injunctive relief in connection with its offer. Among other things, IPALCO alleges that PSI and CG&E have made false and misleading statements in connection with their merger agreement; that the merger agreement, including the termination fee provisions, a related stock option agreement and PSI's "poison pill" are invalid; that PSI should be required to negotiate with IPALCO; that the proposed CG&E/PSI merger violates an Indiana statute that prohibits transfer of a utility's franchise to a non-Indiana company; that IPALCO's offer, and conduct in connection with its offer, does not constitute tortious interference; and that the Indiana Control Share Acquisitions Statute does not apply to IPALCO's solicitation or voting of revocable proxies from PSI's shareholders. The outcome of that action is uncertain.
 Hodowal said, "We were disappointed that PSI agreed to the CG&E/PSI merger without giving us an opportunity to submit a competing offer. After the announcement by CG&E and PSI of their proposed merger, our board carefully reviewed PSI's proposal and determined that IPALCO could make an offer that would be more beneficial to PSI's shareholders, as well as to our respective employees, suppliers, customers and the communities we serve.
 "Based on this review, we concluded that, under the circumstances, the appropriate course of action was to make an offer directly to PSI's shareholders," he added.
 IPALCO is the holding company of Indianapolis Power & Light Company, an electric and steam utility with almost 400,000 retail customers located principally in or near the city of Indianapolis and Marion County, Ind., and in portions of 10 Indiana counties.
 PSI is the holding company of PSI Energy, an electric utility with more than 600,000 retail customers located in portions of 69 counties in the central, north central and southern parts of Indiana.
 A registration statement relating to the IPALCO securities referred to in this news release has been filed with the Securities and Exchange Commission but has not yet become effective. Such securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
 -0- 3/15/93
 /CONTACT: Susan Hanafee, 317-261-8763, or Marni Lemons, 317-261-8219, both for IPALCO Enterprises/
 (IPL)


CO: IPALCO Enterprises, Inc.; PSI Resources, Inc. ST: Indiana IN: UTI SU:

CK -- NY100 -- 6300 03/15/93 18:28 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Mar 15, 1993
Words:1812
Previous Article:TEXACO INC. ANNOUNCES EARLY REDEMPTION OF 5-3/4 PERCENT DEBENTURES DUE 1997
Next Article:NEW YORK STOCK EXCHANGE CLOSING, MONDAY, MARCH 15 /PRN/
Topics:


Related Articles
IPALCO ENTERPRISES ISSUES STATEMENT ON OFFER TO PURCHASE PSI RESOURCES
IPALCO TO COMMENCE EXCHANGE OFFER FOR PSI RESOURCES AT $26.50 PER SHARE IN CASH AND STOCK
IPALCO ASKS COURT TO ORDER PSI TO HOLD SHAREHOLDERS MEETING
IPALCO EXTENDS TENDER OFFER TO JULY 30
IPALCO ENTERPRISES ISSUES STATEMENT ON PSI MANAGEMENT
IPALCO RESPONDS TO PUBLIC UTILITIES COMMISSION OF OHIO PROTEST FILING IN PSI AND CG&E FEDERAL ENERGY REGULATORY COMMISSION PROCEEDING
IPALCO EXTENDS TENDER OFFER TO AUGUST 31
IPALCO ISSUES STATEMENT REGARDING CITIZENS ACTION COALITION OF INDIANA'S PROTEST FILING IN CG&E/PSI FERC PROCEEDING
IPALCO ENTERPRISES INCREASES OFFER TO PURCHASE PSI RESOURCES TO $30.50 PER SHARE
CG&E SAYS CINERGY IS THE ONLY REAL OFFER FOR PSI

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters