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 CINCINNATI, AND PLAINFIELD, Ind., Aug. 16 /PRNewswire/ -- The Cincinnati Gas & Electric Co. (NYSE: CIN) and PSI Resources, Inc. (NYSE: PIN) announced today that CG&E, under a letter agreement approved by both boards, will increase the exchange ratio of CINergy common stock for PSI common stock in the proposed CG&E-PSI merger to form CINergy Corp. The new exchange ratio creates a value of $28 per share based on the closing price of CG&E's stock on Friday, Aug. 13, 1993, and will be effective only if PSI's nominees for directors are elected at the upcoming Aug. 23, 1993 annual meeting of PSI shareholders.
 "We are not interested in dealing with obstructive strangers proposed by IPALCO with the intent of seeking a different combination than the CINergy merger. Our conditional increase indicates our willingness to add value only if we are supported by the PSI shareholders," Jackson H. Randolph, chairman, president and chief executive officer of CG&E, declared. "It indicates our strong commitment to bring this to a prompt conclusion. If the PSI shareholders don't want to risk losing the value of CINergy, they have to vote the goal card to support the current PSI board. If they wish to support IPALCO and wait for approval of its so-called regulatory plan, there may be nobody there when it fails."
 Randolph added, "Our action preserves the significant benefits of the CINergy merger for CG&E's shareholders, and we are confident they will support it."
 The transaction will remain tax-free for shareholders. Under the letter agreement:
 -- Each share of PSI common stock will be converted into 1.023 shares of CINergy common stock for an equivalent value of $28, based on Friday's close of 27-3/8 for CG&E common stock.
 -- The exchange ratio will remain at 1.023 for CG&E market prices up to $30 for an equivalent value of up to $30.69.
 -- For CG&E market prices between $30 and $33.76, the new exchange ratio would change so that the equivalent dollar value would remain at $30.69 per share.
 -- If the CG&E market price is greater than $33.76, the new exchange ratio would remain constant at 0.909 for an equivalent value of not less than $30.69.
 -- If an IPALCO nominee for the PSI board is elected, the exchange ratio will remain at .909 under all CG&E market prices for a value of $24.88 per share at Friday's close of 27-3/8.
 Under the terms of the letter agreement, CG&E will have the right to determine the timing and sequencing of the CG&E and PSI special shareholder meetings to approve the CINergy merger. By Aug. 22, 1993, PSI will also provide CG&E a $70 million letter of credit to secure termination fees, option repurchase obligations and expenses provided for in the original merger and related stock option agreements.
 Under the new exchange ratio, the dividend to PSI shareholders would be $1.70 per equivalent share, based on the current CG&E dividend. This is 14 cents, or approximately 9 percent, greater than the dividend PSI holders would receive under IPALCO's so-called offer (based upon the closing price of IPALCO common stock on Aug. 13, 1993. Dividend would range from $1.37 per share to $1.59 per share under the exchange ratio formula of the Revised IPALCO Offer, depending upon the market price of IPALCO's common stock.)
 "The CINergy merger indisputably gives PSI shareholders superior value over the IPALCO proposal," said James E. Rogers Jr., chairman, president and chief executive officer of PSI. "Shareholders can see the value of CINergy now in current dollars and, over the long term, PSI shareholders have the opportunity to benefit from the significant upside in value available under the agreement. We urge all PSI shareholders to send a strong message of support for CINergy by voting for the PSI slate of directors on Aug. 23. IPALCO's nominees, if elected, destroy value for PSI shareholders. If IPALCO's nominees stop CINergy, PSI shareholders will be left with nothing by IPALCO's empty promises."
 "The revised IPALCO plan for acquiring PSI has serious flaws that make regulatory approval unlikely," Randolph and Rogers said. "Chief among these is an acquisition adjustment that has now grown to more than $1 billion. We have every reason to believe that IPALCO's scheme to recover the acquisition adjustment will never be approved."
 CINergy will be the 13th largest investor-owned electric utility in the nation, based on generated capability. It will provide interconnections with 14 other utilities, result in cost savings of approximately $1.5 billion and lower rate increases than otherwise would be necessary. It also offers opportunity for improved earnings and dividend growth for both CG&E and PSI shareholders.
 -0- 8/16/93
 /CONTACT: Steven L. Brash (media), 513-287-2226 (office) or 513-231-6895 (after 6 p.m.); James R. Mosley (investors), 513-287-2367 or William L. Sheafer (investors), 513-287-3852, all of CG&E; Angeline Protogere (media), 317-838-1338 or 317-298-3090 (after 6 p.m.); Renae Conley (investors), 317-838-1157, both of PSI; or Joele Frank, 212-880-5265, or Peter Stack, 212-880-5274, both of Ogilvy Adams & Rinehart/

CO: Cincinnati Gas & Electric Co.; PSI Resources, Inc. ST: Ohio, Indiana IN: UTI SU: OFR

SH -- NY021 -- 2885 08/16/93 08:42 EDT
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Publication:PR Newswire
Date:Aug 16, 1993

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