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 INDIANAPOLIS, Aug. 5 /PRNewswire/ -- IPALCO Enterprises, Inc. (NYSE: IPL) announced today that it will raise the price of its exchange offer to purchase all outstanding shares of PSI Resources (NYSE: PIN) common stock from $26.50 per share to $28.00 per share, a $1.50 per share increase. The $1.50 per share increase will be paid in cash.
 In addition, the company today filed with the Indiana Utility Regulatory Commission (IURC) a petition requesting approval of IPALCO's combination with PSI. The petition also outlines a regulatory plan for the fair allocation of between $1.48 billion and $1.67 billion in estimated total cost savings between Indiana customers and shareholders of the combined companies.
 The regulatory plan contains a guarantee that customers will not pay a penny for the acquisition of PSI and can only benefit from it.
 "The actions we have taken today make it absolutely clear that our transaction is superior to the proposed Cincinnati Gas & Electric/PSI combination in every respect," said John R. Hodowal, Chairman, President and Chief Executive Officer of IPALCO.
 "We are committed to combining IPALCO and PSI. Exhaustive analysis only reinforced our conviction that an IPALCO and PSI combination made such strategic and financial sense that we should raise our offer. We will give PSI shareholders greater value now, and an investment in a stronger company going forward.
 "We also listened very carefully, considered the many viewpoints that have been expressed since we announced our offer, and developed a regulatory plan that reflects those views and benefits both customers and shareholders," Hodowal said.
 "Our plan stands in stark contrast to CG&E/PSI, who offer customers less cost savings and rates that are likely to be higher. Worse yet, they must divide up those savings among customers in three states -- which makes receiving regulatory approval from three state regulators extremely difficult. IPALCO requires regulatory approval from only one state regulator and all of its superior cost savings will stay in Indiana," Hodowal said.
 "Our filing today puts us ahead of PSI in the regulatory process. PSI's IURC proceeding has been dismissed by the IURC. PSI is appealing that decision and may not obtain its required IURC approval for years," Hodowal said.
 Regulatory Plan Treats Customers and Shareholders Fairly
 "The plan we filed today with the IURC treats everyone fairly, allowing customers and shareholders to participate in the benefits that would flow from the strategic logic of combining IPALCO and PSI," Hodowal said.
 IPALCO's plan has three central elements:
 -- A guarantee that customers will not pay for the merger and can only benefit from it.
 -- An equal sharing between customers and shareholders, beginning immediately after the merger, of non-fuel, non-capacity savings, and of savings related to deferral of certain capacity planned for the period prior to 1998. All fuel savings and the remaining capacity savings will flow to customers.
 -- IPALCO, and not customers, will assume the risk of achieving the merger savings.
 IPALCO has modified its plan so that the so-called acquisition adjustment will not be included in rate base. IPALCO will not earn a return on the acquisition adjustment. Amortization of the acquisition adjustment will be conditioned upon IPALCO's demonstrating the shared savings to the satisfaction of the IURC and will be limited to one-half of those shared savings.
 "In essence, we have proposed a plan that provides enormous net benefits to Indiana customers -- about $925 million of savings in the first 10 years alone assuming the low end of our cost savings estimate. At the same time, shareholders will be compensated fairly for making the substantial investment necessary to generate these cost savings.
 "I want to emphasize that we have changed key features of our plan to reinforce the assurance that IPALCO and its shareholders, and not customers, will bear the risk of achieving cost savings. IPALCO will not recover one penny of the so-called acquisition adjustment unless cost savings are demonstrated to the satisfaction of the IURC. And any recovery of the acquisition adjustment will be limited to one half of the shared cost savings.
 "In addition, we believe the combination of IPALCO and PSI would result in rates for Indiana customers as low or lower than they would pay under a combined CG&E and PSI.
 "We are absolutely convinced that the IURC will approve our proposed regulatory plan. Our regulatory experts agree.
 "According to Paul L. Gioia and Karl O'Lessker, two renowned regulatory experts who have been advising IPALCO: 'The regulatory plan which Ipalco filed with the Indiana Utility Regulatory Commission today provides substantial benefits to customers. The revised plan should be well received by regulators and should facilitate review and approval of the IPALCO plan.'" (full text of statement by Messrs. Gioia and O'Lessker attached).
 Hodowal continued: "The basis of our plan is the $1.48 to $1.67 billion in total savings we will generate. We are very comfortable with our savings estimates, since we have had time to scrutinize PSI's numbers and listen to the criticisms of their plan."
 Specifically, IPALCO estimates that the combined company will realize about $901 million of non-fuel, non-capacity related savings in the first ten years after the combination. This will come from:
 -- Integrating corporate management and administrative functions;
 -- Consolidating distribution operations;
 -- Concentrating corporate programs and expenditures; and
 -- Streamlining inventories and implementing purchasing economies.
 These savings will be shared equally between customers and shareholders.
 In addition, capacity savings from deferred capacity projects planned for the years before 1998 will total approximately $219 million in the first ten years after the combination is completed. These savings will also be shared equally between customers and shareholders.
 IPALCO also expects to realize $365 million of additional cost savings in the production related areas of joint dispatch and other capacity deferrals or eliminations. All these savings will flow directly to customers.
 "Our regulatory plan is superior to the PSI plan," Hodowal said. "PSI has said it would generate only about $600 million of savings, total, for Indiana customers. The remainder of any savings go to Ohio and Kentucky. Contrast this with our plan, under which $925 million of savings will flow to Indiana customers only," Hodowal said.
 "Our plan is also better for shareholders. PSI has said that only about 10 percent of the CG&E/PSI merger savings will flow to shareholders. Under our plan, about 38 percent of the total $1.48 to $1.67 billion in merger savings flow to shareholders," Hodowal said.
 IPALCO said it has requested a pre-hearing conference with the IURC to set a schedule for consideration of its plan.
 Revised Offer Terms
 The offer price increase will be payable in cash. Under the revised terms of the offer, IPALCO will offer to exchange either .7492 shares of IPALCO common stock (subject to adjustment) or $28.00 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 23 percent of the aggregate consideration in cash or more than approximately 77 percent of the aggregate consideration in IPALCO common stock.
 The revised offer terms retain the "collar" which is 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 Aug. 4, 1993 was $37-3/8. Based on that closing price, the value of the revised offer will be $28.00 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 $28.00 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 $28.00 per share.
 The revised offer expires at 12:00 midnight on Aug. 31, 1993, unless extended by IPALCO.
 "We agree with PSI that the August 23 PSI annual meeting is a critical referendum on the two competing offers for PSI. A shareholder vote for IPALCO's five nominees to PSI's Board of Directors would send an important signal to PSI and its Board that PSI shareholders want to receive our superior offer," Hodowal said.
 IPALCO will promptly file a post-effective amendment to its registration statement with respect to the amended exchange offer terms. The offer price increase will become effective when the amendment is declared effective by the Securities and Exchange Commission.
 Statement Follows:
 The regulatory plan which IPALCO filed with the Indiana Utility Regulatory Commission today provides substantial benefits to customers. The revised plan should be well received by regulators and should facilitate review and approval of the IPALCO plan.
 As originally proposed the IPALCO regulatory plan was consistent with sound regulatory principles and well-established policies of the Indiana Utility Regulatory Commission. It provided for a regulatory mechanism to ensure that customers would not bear any of the costs related to the IPALCO/PSI merger and would have a fair opportunity to benefit substantially from the cost savings resulting from the combination. It also provided the company with a fair opportunity to recover the investment necessary to allow the combination to take place.
 The regulatory plan which IPALCO filed with the Indiana Utility Regulatory Commission today provides assurance to customers that they will not have to assume even the slightest risk, or bear the smallest cost, arising out of the proposed merger of IPL and PSI Energy. The IPALCO plan for a sharing of the cost savings as projected as flowing from the combination seems reasonable and prudent. Any concern there may have been before that consumers would be forced to pay for or finance IPL's offer to PSI has now been eliminated under the regulatory plan IPL filed today with the Indiana Commission. Under the revised plan, IPALCO's investment in the combination, referred to as an "acquisition adjustment" would not be included in the company's rate base, upon which rates are set, but recovered only to the extent of IPALCO's authorized share of the shared savings.
 The plan revisions indicate strong confidence on the part of IPALCO in the amount and certainty of its projected cost savings from the combination and a willingness to assume a greater risk with respect to the recovery of its investment solely from those savings. The revised proposal should lay to rest concerns expressed by some with respect to the size of the acquisition adjustment under the IPALCO plan, since, not only will customers not have to pay for the acquisition adjustment, they will be assured of receiving very substantial benefits from the combination whether or not the acquisition adjustment is fully recovered.
 Former Indiana Commissioner Karl O'Lessker went on to say: "All in all, this plan is the very model of how an acquisition should be handled in the combination of two Indiana utilities such as IPL and PSI. It will be regarded as such by the Indiana Commission given the fact that under the plan as filed by IPL, Indiana customers receive at the low end of IPALCO's estimated cost savings $925 million in savings in the first ten years after the combination."
 NOTE TO EDITORS: Full text of regulatory filing is available by calling, 317-261-5651.
 Contact: Susan Hanafee, 317-261-8763, or Marni Lemons, 317-261-8219, both of IPALCO Enterprises, Inc., or Tom Davies of Kekst and Company, 317-261-8259, for IPALCO Enterprises, Inc.
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-- NY104 -- X449 08/05/93
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Date:Aug 5, 1993

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