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KeySpan Acquires Eastern Enterprises and EnergyNorth - Nation's Fifth Largest Natural-Gas Company Created -.



NEW YORK New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of
, Nov. 9 /PRNewswire/ --

KeySpan Corporation (NYSE NYSE

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) yesterday created the largest natural gas-distribution company in the Northeast with the acquisition of Eastern Enterprises (NYSE: EFU EFU Exclusive Farm Use (zoning) ) of Weston, MA, and EnergyNorth (NYSE: EI) of Manchester, NH. The last day of trading for Eastern or EnergyNorth common stock was yesterday, November 8, 2000. All former Eastern utilities (Boston Gas, Colonial Gas and Essex Gas) and the EnergyNorth utility (EnergyNorth Natural Gas) are now identified as KeySpan Energy Delivery.

(Logo: http://www.newscom.com/cgi-bin/prnh/20000426/NYW009 )

"Today we celebrate the culmination of an ambitious effort that has forged great companies into the largest gas-distribution company in the Northeast and the fifth largest in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ," said Robert B. Catell, chairman and chief executive officer of KeySpan. "This expansion is a milestone in our company's history, and is a major step in implementing our strategy of growth and our vision of becoming the premier energy and services company in the Northeast. KeySpan anticipates tremendous growth for regulated and unregulated sales of natural gas and energy-related products and services throughout the region."

This acquisition increases the customer base of KeySpan's regulated utilities from 1.6 to 2.4 million natural gas customers, and creates the market potential for KeySpan to expand to more than 5 million customers for energy and services. With market saturation In economics, "market saturation" is a term used to describe a situation in which a product has become diffused (distributed) within a market; the actual level of saturation can depend on consumer purchasing power; as well as competition, prices, and technology.  for natural gas in the Northeast averaging only 35%, the area provides opportunities for significant growth in KeySpan's regulated gas business.

The purchase is valued at approximately $2.5 billion -- $1.96 billion in equity and the assumption of $550 million in debt. KeySpan will ultimately finance the purchase of the equity of Eastern and EnergyNorth by issuing $1.65 billion in long-term debt and the balance with commercial paper. Following a review of the transaction, S&P has upgraded its rating of KeySpan to "A" and Moody's has affirmed its "A3" rating.

KeySpan now has assets of more than $10 billion and projected annual revenues of $5 billion, resulting primarily from the consolidation of six utilities in New York and New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. . With the closing, KeySpan becomes a registered holding company subject to regulation by the Securities and Exchange Commission under the Public Utility Holding Company Act Public Utility Holding Company Act

The 1935 act that gives the SEC authority over the security issues, the accounting systems, the corporate structures, and the intercompany transactions of public utilities.
 of 1935.

KeySpan expects the acquisition to yield pre-tax annual savings of approximately $40 million. These savings will result primarily from the elimination of duplicate corporate and administrative programs, greater efficiencies in operations and business processes, increased purchasing efficiencies, and consolidation of information systems. KeySpan expects to achieve personnel reductions through a variety of programs, including hiring freezes, attrition, and voluntary separation programs, including early retirement. All union contracts will be honored.

The Change of Command

"The sale of Eastern to KeySpan is the result of our efforts to maximize shareholder value," said J. Atwood Ives, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board.  of Eastern Enterprises. "On behalf of management, I would like to thank all of our employees for their hard work and professionalism in our efforts to integrate our operations with KeySpan. Together, we have created an organization that is well positioned to capitalize on Cap´i`tal`ize on`   

v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>.
 the tremendous opportunities ahead of us."

His sentiments were echoed by Robert R. Giordano, recently retired president and CEO of EnergyNorth. "The acquisition is exciting news for EnergyNorth," he said. "KeySpan's size and strength will provide unprecedented services to energy customers in New England."

Catell remains chairman and CEO of the combined company. Ives and Giordano have retired from active management, and Ives has been appointed to KeySpan's board of directors. KeySpan's corporate headquarters will remain in New York, while Boston will serve as headquarters for the company's New England operations.

"We have great respect for the excellent service Eastern and EnergyNorth employees have always provided their customers, and we welcome them to the KeySpan family of nearly 14,000 employees," said Catell. "We each have a proud history of more than 100 years of active community involvement -- a tradition we intend to continue."

Shareholder Transactions

Eastern Enterprises Shareholders.

-- Eastern Enterprises shareholders will receive an acquisition price of

$64.558 per share, paid in cash. This acquisition price reflects the

original $64.00 price, plus a "ticking fee" of $0.558 per share

($0.006 per day for 93 days, August 7 through November 7, 2000).

-- In addition, Eastern Enterprises shareholders will receive a portion of

the fourth quarter dividend equal to $0.1692 per share. It will be

paid on November 22 to shareholders of record as of November 8, 2000.

The dividend calculation reflects the 36-day period from

October 4 through November 8, 2000, at a rate of $0.0047 per day.

-- Eastern Enterprises shareholders will receive instructions from the

exchange agent, EquiServe Trust Company, shortly after

November 8, 2000. Those holding shares with a broker (or "street

name") should contact the broker about receiving payment directly from

that broker.

EnergyNorth Shareholders.

-- EnergyNorth shareholders will receive an acquisition price of

$61.4587 per share, paid in cash. This acquisition price reflects the

original $61.13 price, plus a "ticking fee" of $0.3287 per share (the

Eastern Enterprises "ticking fee" of $0.558 multiplied by a

pre-determined factor of .589).

-- In addition, a prorated dividend of $0.2683 per share will be paid on

November 22 to shareholders of record as of November 8, 2000. The

prorated dividend calculation reflects the 69-day period from

September 1 through November 8, 2000, at a rate of $0.35 per quarter

($0.35 multiplied by 69/90).

-- EnergyNorth shareholders will receive instructions from the exchange

agent, EquiServe Trust Company, shortly after November 8, 2000. Those

holding shares with a broker (or "street name") should contact the

broker about receiving payment directly from that broker.

KeySpan Shareholders.

-- This transaction does not affect existing KeySpan shareholders.

Therefore, no action is required by KeySpan shareholders.

For more information, shareholders of Eastern Enterprises and EnergyNorth can contact EquiServe Trust Co., the exchange agent, at (800)736-3001, call the Eastern/EnergyNorth shareholder hotline at (781)647-2357, or visit the Investor Relations Investor relations

The process by which the corporation communicates with its investors.
 section of KeySpan's website: www.keyspanenergy.com.

KeySpan's Energy and Service Companies

KeySpan Energy Delivery New York (formerly Brooklyn Union) is a regulated utility that sells and delivers natural gas to homes and businesses in the New York City New York City: see New York, city.
New York City

City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S.
 boroughs of Brooklyn, Queens and Staten Island Staten Island (1990 pop. 378,977), 59 sq mi (160 sq km), SE N.Y., in New York Bay, SW of Manhattan, forming Richmond co. of New York state and the borough of Staten Island of New York City. .

KeySpan Energy Delivery Long Island (formerly Brooklyn Union of Long Island) is a regulated utility that sells and delivers natural gas to homes and businesses in Nassau and Suffolk Counties, as well as the Rockaway Peninsula of Queens County, NY.

KeySpan Energy Delivery New England (formerly Boston Gas, Essex Gas, Colonial Gas and EnergyNorth Natural Gas) is a regulated utility that sells and delivers natural gas to homes and businesses in Massachusetts and New Hampshire New Hampshire, one of the New England states of the NE United States. It is bordered by Massachusetts (S), Vermont, with the Connecticut R. forming the boundary (W), the Canadian province of Quebec (NW), and Maine and a short strip of the Atlantic Ocean (E). .

KeySpan Home Energy Services companies provide a full range of energy products and services for customers' homes, including heating, air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful.  and water heating Water heating is a thermodynamic process using an energy source to heat water above its initial temperature. Typical domestic uses of hot water are for cooking, cleaning, bathing, and space heating. In industry both hot water and water heated to steam have many uses.  equipment installation, service and repair. In addition, the company sells natural gas and electricity to residential customers through energy supply contracts. Eastern Enterprises' ServiceEdge, the largest unregulated provider of residential HVAC (Heating Ventilation Air Conditioning) In the home or small office with a handful of computers, HVAC is more for human comfort than the machines. In large datacenters, a humidity-free room with a steady, cool temperature is essential for the trouble-free  equipment installation and services in New England, will hereafter be identified as KeySpan Home Energy Services.

KeySpan Business Solutions companies provide a full range of energy products and services to businesses, ranging from the installation of HVAC systems to providing practical energy management solutions for commercial and industrial facilities. The company also offers integrated architectural, engineering, construction and O&M services, as well as financing. In addition, the company sells and manages the delivery of natural gas and electricity to its business customers through energy supply contracts. EnergyNorth's non-utility subsidiary, ENI Mechanicals (which provides mechanical contracting and HVAC services to commercial and industrial customers through its Northern Peabody and Granite State Plumbing and Heating subsidiaries), will hereafter be identified as KeySpan Business Solutions.

KeySpan Communications owns and operates a fiber optic telecommunications network that provides capacity for internet service providers (ISP's), carriers, competitive local exchange carriers (CLEC's), businesses and educational facilities. Cooperative arrangements extend the network throughout the New York City market, with fiber access to Europe through cable landing sites on Long Island.

KeySpan myHomeKey is an Internet-based home-management business that allows customers to manage home repairs and maintenance, shop online, tailor their energy use, and customize their home security systems, among other services. The myHomeKey.com site also keeps consumers abreast of community events by allowing the sharing of information.

In addition, EnergyNorth Propane and Eastern Enterprises' AMR (1) (Adaptive Multi-Rate) A variable rate speech codec selected by the 3GPP for the 3G evolution of the GSM cellphone system (WCDMA). Using the Algebraic CELP (ACELP) compression technology, AMR provides toll quality sound at transmission rates from 4.75 to 12.  Data Corporation and Midland Enterprises will be managed by KeySpan Energy Development Corporation.

A member of the S&P 500, KeySpan is the largest distributor of natural gas in the Northeast, with 2.4 million gas customers. KeySpan is also the largest investor-owned electric generator in New York State and operates Long Island's electric system. In addition, KeySpan markets energy and Internet services, processes gas in Canada, and has investments in fiber-optic cable, natural-gas exploration, production, pipeline transportation, distribution and storage. For more information, visit KeySpan's web site at http://www.keyspanenergy.com

Certain statements contained herein are forward-looking statements, which reflect numerous assumptions and involve a number of risks and uncertainties. Actual results may differ materially from those discussed in such statements. Among the factors that could cause actual results to differ materially are: general economic trends; fluctuations in gas and electric prices; available sources and cost of fuel; State and Federal regulatory initiatives that increase competition, threaten cost and investment recovery, and impact rate structures; the ability of the Company to successfully reduce its cost structure; the ability of the Company to successfully integrate acquired operations; the degree to which the Company develops non-regulated business ventures; the effect of inflationary trends and increases in interest rates; and risks detailed from time to time in reports and other documents filed by the Company with the Securities and Exchange Commission.
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