UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x | |||
| |||
Filed by a Party other than the Registrant o | |||
| |||
Check the appropriate box: | |||
o | Preliminary Proxy Statement | ||
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
o | Definitive Proxy Statement | ||
x | Definitive Additional Materials | ||
o | Soliciting Material under §240.14a-12 | ||
| |||
THE EMPIRE DISTRICT ELECTRIC COMPANY | |||
(Name of Registrant as Specified In Its Charter) | |||
| |||
| |||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | |||
| |||
Payment of Filing Fee (Check the appropriate box): | |||
x | No fee required. | ||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||
| (1) | Title of each class of securities to which transaction applies: | |
|
|
| |
| (2) | Aggregate number of securities to which transaction applies: | |
|
|
| |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |
|
|
| |
| (4) | Proposed maximum aggregate value of transaction: | |
|
|
| |
| (5) | Total fee paid: | |
|
|
| |
o | Fee paid previously with preliminary materials. | ||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||
| (1) | Amount Previously Paid: | |
|
|
| |
| (2) | Form, Schedule or Registration Statement No.: | |
|
|
| |
| (3) | Filing Party: | |
|
|
| |
| (4) | Date Filed: | |
|
|
| |
Filed by The Empire District Electric Company
Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: The Empire District Electric Company
Commission File No.: 1-3368
On May 17, 2016, the following presentation was provided to the parties involved in merger Docket No. EM-2016-0213 before the Missouri Public Service Commission by The Empire District Electric Company:
Missouri Technical Session I Liberty Utilities The Empire District Electric Company David Pasieka, Peter Eichler, Chris Krygier, Sarah Knowlton, Kelly Walters and Scott Keith May 16-17, 2016 1
Introductions Christopher Krygier Director, Regulatory & Government Affairs Liberty Utilities (Midstates) David Pasieka President, Liberty Utilities Peter Eichler Vice President, Strategic Planning Liberty Utilities Scott Keith Director, Regulatory Empire District Sarah Knowlton Sr. Director, Legal Kelly Walters COO, Empire District 2
Safety Moment 3
Objectives Safety Moment Overview - APUC, LU and EDE Transaction Overview and Benefits Transition Update Wrap up 4
Overview: Algonquin Power &Utilities Liberty Utilities Corp. TheEmpire DistrictElectric Company 5
Our Values Quality Efficiency Care “Safety is not a value, it’s the price of admission” 6
Local, Responsive, Caring Local • • • Walk in service centers providing local ‘touch’ De-centralized operations creating local jobs Building notable presence in our communities, including through “Liberty Days” Responsive • Empowered local management rewarding superior service and support State-wide implementation of standardized Liberty Utilities systems / processes Local sales functions to increase availability of utility services • • Caring • • • Customer centricity reinforced through survey Support for low income residents Locally administered Energy Efficiency programs Disciplined safety and training standards • 7
Algonquin Power & Utilities Corp. Overview r...ALGONQUIN Power & Utilities Corp. I UThe utility company most admired by customers, communities and investors for our people, passion and performance" Natura/Gas --------Transmission and and Pipelines Distribution Distribution Focused business development team Experienced developer of large projects Transmission 8 Water Supply and Natural G as Distribution Electric Generation,
Liberty Utilities – A growing utility operator • • • Started in utility business over 15 years ago Long term owner of electric, natural gas, water and wastewater utilities 7 acquisitions in the last 5 years 9
Liberty Utilities Distribution Map 10
Empire District Overview • • Established in 1909 Operations in four states: MO, KS, OK, AR and FERC 170,000 Electric customers • • 8,100 miles of line (transmission & distribution) 1,377 megawatts generating capacity • • • • • Service center in Joplin and Ozark 44,000 Natural Gas customers Fiber Optic & Water Service 750 employees Kansas, 4.6% Missouri, 85.9% Arkansas, 2.6% Oklahoma, 2.7% FERC, 4.2% 2014 On-System Electric Revenues by Jurisdiction 11
Transition Overview and Benefits 12
Acquisition Rationale and Benefits • Efficacy of Scale • Increased Management Capability • Enhanced regional senior leadership support • Regional Board of Directors • Enhanced financial capabilities • Maintains jobs • Seamless transition 13
Key Commitments 1. Customers: 1. No impact to customer rates resulting from the acquisition Forgo recovery of acquisition premium and transaction costs in rates Maintain or enhance EDE service and reliability levels 2. 3. 2. Employees: 1. 2. 3. Retain Management Team Retain Employees Expand responsibilities for EDE Management Team in new Central Region 14
Key Commitments (cont) 1. Community: 1. 2. 3. Retain Joplin Headquarters Retain Empire Brand Maintain community giving levels 2. Regulator 1. Proven utility owner with 10+ years Missouri operating experience Smooth transition by retaining workforce Access to books and records 2. 3. 15
Financial Analysis and Auditing 16
Company Structure Business Groups 17 Distribution Transmission Generation
Transaction Financing / Capital Markets Financing designed to maintain strong BBB investment grade credit rating • Purchase Price - $2.4 billion • Assumed Debt - $0.9 billion • Equity - $0.8 billion APUC / LU have robust capital markets access • Already raised via mandatorily convertible debentures Repeats similar financing successes of prior acquisitions • Remaining financing closer to acquisition close Utilizing LU Co’s successful debt financing platform • EDE will have access to short-term credit facility through LU Co $365 million raised since 2012 18
Transaction Accounting Day 1 entries will include “1 for 1” import of EDE’s financial statements a Wholly owned subsidiary of LU Central Goodwill to be recorded LU Central books on ADIT will come over EDE’s books as is on 19
Possible Empire Personnel Allocations Example of Allocation IT Billing Senior Leadership Operations Supervision Operating Staff Specific Utility Business Line Allocation State Operations State Allocation Central Region Regional Allocation EDE Distribution Business Group Business Group Allocation APUC/LABS
Transition “Same Planning ProcessOverview: as it ever was…but together” better 21
Transition Objectives • A timely, successful closing that will enable a smooth seamless transition and continue reliable and safe service for our all customers • Identify opportunities to join Empire and Liberty so as to bring about efficacies of scale through the state, regional and central shared services model • Utilize a collaborative process that enables a cross-functional and cross-company team to identify and deliver on all key actions 22
Guiding Principles for the Transition • Commitment to delivering customer, regulator and employee facing functions locally remains unchanged • “Same as it ever was” • Joplin, MO to be the head office of Distribution Central region • No job losses in Empire result of the acquisition; as a • Empire brand will co-exist with Liberty brand the 23
Transition Governance Approach • Cross Company Teams formed (Leads for each Function) • Each team develops a Transition Plan for their function with guidance and support from the Project Management Office (PMO) templates will be provided – • Reporting • • • Teams submit progress updates bi-weekly to the PMO ‘Red, Yellow, Green’ reporting approach Checkpoint meetings progress and resolve between issues PMO and each team to track 24
Lessons Learned from Previous Transitions Communication: • • Collaborative approach works best Pay special attention to employee and customer impacts Management of people issues: • • • Don’t leave employees wondering Be clear on compensation and benefits Recognize, understand and address cultural gaps Managementand execution of transition: • • • • 25 Develop clear plans Status reporting matters Pay attention to ‘boundary issues’ Allow enough time to avoid last minute issues
Transition Project Structure Transition Steering Committee Monthly progress update PMO Bi-Weekly Reports Bi-Weekly Reports Legal Engineering & HR/Payroll Finance IT Customer Regulatory EHS&S Procurement Operations 26 Transition Leads Project Managers George TrisicJennifer Watson Ron GatzBlake Mertens John Lowson PMO • Collects bi-weekly reports • Meets with individual teams • Produces report to Steering Committee • Develops agenda for monthly meeting Transition Steering Committee • receives monthly status report • meets monthly • Resolves conflicts, resources, priorities Ian Robertson Brad Beecher David Bronicheski Laurie Delano David Pasieka Kelly Walters Brent Baker
Transition Team Leads 27 Function APUC Empire Distribution Business Group Regional Structure David Pasieka Brad Beecher Finance Todd Mooney Rob Sager Financial Reporting & Consolidation Luisa Read Laurie Delano Treasury Arthur Kacprzak Mark Timpe Human Resources Greg Rooney Pete Babb Enviromental Health and Safety Scott Blackwood Tim Wilson/Pete Babb IT John Lowson/Ed Mohacsy Lance Adams Board and Governance Matters Linda Beairsto Dale Harrington Electric Distribution Operations Kurt Demmer Sam McGarrah Gas Operations Mike Beatty Steve Teter Water Operations Pete Lucas Kyle Slagle Generation Operations Mike Snow John Woods Regulatory Peter Eichler Kelly Walters Marketing communications & branding Katy Cook Julie Maus Sales Scott Owen Shawn Pingleton Customer Service Katy Cook Brent Baker Billing & Collections Gerald Tremblay Brent Baker Procurement and Fleet Stephen McCrodan Randy Penn Legal Linda Beairsto Sharrock Dermott Risk and Insurance Lisa Jeffray Mark Timpe Internal Audit Dan Gilpin Carol Spriggs Communications and IR Ian Tharp Dale Harrington Electric Energy Marketing Laura Jehn Blake Mertens /Aaron Doll Fuel Procurement Chico DaFonte Blake Mertens /Terry Wright Electric Generation & Transmission Dispatch Laura Jehn Fred Meyer Gas Control & Dispatch (EDG centric) Norm Gallagher Connie Carlile
Timeline April 2016 July 2016 Sept 2016 Q1 2017 output discovery Day 1 Plan: “Same as it ever was…but better together” Transition is planned in two phases prior to closing date: - First phase: Mutual discovery between functional teams Develop blueprint for Liberty Central Region and for the merged shared services teams - Second phase: Develop plans for work to be done at or shortly after closing Focused on support functions eg financial statement preparation, budgeting, chain of approval, banking, IT networks & email. Not focused on operational activities – that will occur post-close, 28 Present from Draft Day One plans Execute Day One plans Develop Day One plans “Day 1” Assumed Close Transition Teams Organize Mutual discovery
Empire Transition Highlights Empire represents opportunity to carry on with business as usual without significant IT transition Empire is a stand alone company that already has people and processes Atmos was building from the ground up The drive to “Day 1” is simplified by keeping all employees, Joplin headquarters and brand 29 Transition Function Empire Prior Transitions Leadership Team In place, already running utility None, had to hire Accounting, HR, Regulatory, IT Employees In place, staying as part of transition None, had to hire IT In place and functioning No systems, had to stand up numerous systems. TSA’s Walk-in centers Already open, may open further centers in future Closed Office / service centers Joplin HQ in place Had to build office
Transition Update 30
Activity completed since announcement March 16, 2016 – Acquisition applications in MO, AR, KS, OK and FERC Transition Team named and planning activities under way filed Proxy approved for filing by SEC April 11, 2016 – EDE Employee townhall Sent to shareholders April 20, 2016 – APUC / EDE leadership meeting Joplin Continued outreach and in discussion with stakeholders May 6, 2016 – FERC Order received approving transaction May 12, 2016 – Oklahoma Order received approving transaction 31
Customer Care “Same as it ever was…but better together” Maintain current customer service reporting metrics Keep all walk-in open with same centers availability Maintain current payment methods of Retain all customer service employees Maintain current locations pay station Retain all billing employees Continue customer satisfaction surveys Continue current customer information and billing system 32
Information Technology “Same as it ever was…but better together” Continue utilizing same customer information and accounting systems Continue utilizing same SCADA systems Continue utilizing same email systems 33
Employees Honor pre-merger payment obligations Non-union employees Same wages Substantially comparable benefits, incentive opportunities Honor existing contracts, etc. No termination to company benefit plans that are materially adverse to participants (i.e. health, welfare, retirement, SERP, etc) 34
Transition Next Steps • June 2-3 – Transition Team meets in Joplin • June 16, 2016 – Shareholder vote • Active dockets in Arkansas, Kansas, and Missouri 35
Wrap up Strong progress since acquisition announcement Approvals received from FERC and Oklahoma Shareholder vote scheduled Transition Planning on schedule and moving forward Same as it ever was…but better together! 36
Additional Information and Where to Find It
The proposed transaction will be submitted to shareholders of Empire for their consideration at a special meeting to be held on June 16, 2016. In connection with the proposed transaction, on May 3, 2016, Empire filed a definitive proxy statement and a form of proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the solicitation of proxies for the special meeting. The definitive proxy statement was mailed to Empire shareholders of record as of May 2, 2016, the record date fixed for the special meeting. This communication is not a substitute for the definitive proxy statement. EMPIRE SHAREHOLDERS ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT CAREFULLY AND IN ITS ENTIRETY BECAUSE THE DEFINITIVE PROXY STATEMENT CONTAINS IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The definitive proxy statement and other relevant documents filed by Empire with the SEC, when filed, are available free of charge at the SEC’s website at www.sec.gov, at Empire’s website at www.empiredistrict.com or by sending a written request to Corporate Secretary, The Empire District Electric Company, 602 S. Joplin Avenue, Joplin, Missouri 64801. Information regarding the names, affiliations and interests of individuals who are participants in the solicitation of proxies of Empire shareholders is available in the definitive proxy statement.