SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 8-K
Current Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report March 5, 1998
Registrant;
Commission State of Incorporation IRS Employer
File No. Address and Telephone No. Identification No.
1-9760 Atlantic Energy, Inc. 22-2871471
(New Jersey)
6801 Black Horse Pike
Egg Harbor Township, NJ 08234
(609) 645-4500
1-3559 Atlantic City Electric Company 21-0398280
(New Jersey)
6801 Black Horse Pike
Egg Harbor Township, NJ 08234
(609) 645-4100
PAGE
Item 1. Changes in Control of Company
On August 12, 1996, Delmarva Power & Light Company (DP&L) and
Atlantic Energy, Inc. (Atlantic) announced plans to merge. All
required regulatory approvals were obtained on, or prior to
February 26, 1998 and the merger became effective March 1, 1998.
Atlantic is an investor-owned holding company which owns Atlantic
City Electric Company (ACE), an electric utility, and
subsidiaries engaged in nonutility businesses. ACE serves
approximately 481,000 customers in a 2,700 square mile area in
southern New Jersey. Atlantic's 1997 operating revenues and net
income were $1,102.4 million and $74.4 million, respectively, and
its total assets were $2,723.9 million as of December 31, 1997.
Atlantic's assets consist principally of electric generating,
transmission, and distribution plant and its assets will continue
to be used in the electric business.
Conectiv, a corporation formed to accomplish the merger, holds
the stock of DP&L and ACE under the Public Utility Holding
Company Act of 1935 as of March 1, 1998. Each outstanding share
of DP&L's common stock, par value $2.25 per share, is being
exchanged for one share of Conectiv's common stock, par value
$0.01 per share. Each share of Atlantic's common stock, no par
value per share, is being exchange for 0.75 shares of Conectiv's
common stock and 0.125 shares of Conectiv's Class A common stock,
par value $0.01 per share. Class A common stock gives holders of
Atlantic common stock a proportionately greater opportunity to
share in the growth prospects of, and a proportionately greater
exposure to the uncertainties associated with deregulation of,
the regulated electric utility business of ACE. Earnings
applicable to Class A common stock will be equal to 30% of the
net of (1) earnings attributable to ACE's regulated electric
utility business, as the business existed on August 9, 1996, less
(2) $40 million per year. Earnings applicable to Conectiv common
stock will be the consolidated earnings of Conectiv less earnings
applicable to Class A common stock.
The merger will be accounted for under the purchase method of
accounting, with DP&L as the acquirer. The total consideration
being paid to Atlantic's common stockholders (in the form of
Conectiv common stock and Class A common stock), as measured by
the average daily closing market price of Atlantic's common stock
for the three trading days immediately preceding and the three
trading days immediately following the public announcement of the
merger, is $921.0 million. The consideration paid plus estimated
acquisition costs and liabilities assumed in connection with the
merger are expected to exceed the net book value of Atlantic's
net assets by approximately $200 million, which will be recorded
as goodwill. The goodwill will be amortized over 40 years.
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Item 4. Change of Registrant's Independent Accountants
(1) As of March 1, 1998, the date of the aforementioned merger,
Atlantic City Electric Company (ACE) is now a subsidiary of
Conectiv. Pursuant to this change in control the following
hereby applies:
(i) The accounting firm of Deloitte & Touche LLP, Two Hilton
Court, P.O. Box 319, Parsippany, NJ, is hereby dismissed as
independent accountants to ACE.
(ii) For the past two years Deloitte & Touche LLP has not
issued an adverse opinion or a disclaimer of opinion, nor was an
opinion qualified or modified as to uncertainty, audit scope, or
accounting principles on ACE's reports on the financial
statements.
(iii) This decision to change accountants was approved by
the Audit Committee of the Board of Directors of Conectiv acting
on behalf of its subsidiary, ACE.
(iv) Also in the past two years, prior to this dismissal,
there have been no disagreements with Deloitte & Touche LLP on
any matters of accounting principles or practices, financial
statement disclosures, auditing scope or procedures.
(v) During the past two years the accountants have not
advised ACE that (A) the internal controls necessary for the
registrant to develop reliable financial statements did not
exist; (B) that information had come to the accountant's
attention that led them to no longer be able to rely on
management's representations, or that has made the accountant's
unwilling to be associated with the financial statements prepared
by management; (C) the accountant's have not advised ACE of the
need to expand significantly the scope of its audit, or that any
information has come to the accountant's attention that if
further investigated may materially impact the fairness or
reliability of the audit report or the underlying financial
statements or would cause the accountants to be unwilling to rely
on managements representations or to be unwilling to be
associated with the financial statements.
(2) As of March 1, 1998, the date of the change in control, the
accountants hereby appointed by the Audit Committee of the Board
of Directors of Conectiv acting on behalf its subsidiary, ACE,
are Coopers & Lybrand L.L.P., 2400 Eleven Penn Center,
Philadelphia, Pennsylvania.
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Item 5. Other Events
Pursuant to the Merger and Reorganization of Delmarva Power &
Light Company and Atlantic Energy, Inc. which was completed on
March 1, 1998, the Board of Directors of Atlantic City Electric
Company (ACE) has been changed. The following individuals have
been elected as directors to serve until his or her successor is
appointed or his or her earlier resignation or removal.
Atlantic City Electric Company
Howard E. Cosgrove Director/Chairman
Meredith I. Harlacher, Jr. Director
Thomas S. Shaw Director
Barry R. Elson Director
Barbara S. Graham Director
The following individuals have been appointed by the Directors of
ACE to the office opposite their name.
Atlantic City Electric Company
Howard E. Cosgrove Chief Executive Officer
Meredith I. Harlacher, Jr. President and Chief Operating
Officer
Barbara S. Graham Senior Vice President and
Chief Financial Officer
Barry R. Elson Executive Vice President
Thomas S. Shaw Executive Vice President
Louis M. Walters Treasurer and Assistant
Secretary
James E. Franklin II Chief Legal Officer and
Secretary
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Item 7 Financial Statements and Exhibits
See Exhibit Index Attached
PAGE
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SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
Atlantic Energy, Inc.
Atlantic City Electric Company
(Registrant)
By: /s/ J. E. Franklin II
J. E. Franklin II
Vice President, Secretary and
General Counsel of Atlantic Energy, Inc.
Senior Vice President, Secretary and
General Counsel of Atlantic City
Electric Company
Date: March 4, 1998
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Exhibit Index
16 Letter re change in certifying accountant
99 Letter to Members of the Financial Community