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EXHIBIT 2(a)
Carolina Power & Light 24-Hour Media Line
Corporate Communications Tel 919 546-6189
PO Box 1551 Fax 919 546-6615
Raleigh NC 27602 Internet: www.cplc.com
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CP&L Contacts: NCNG Contacts:
Media: Mike Hughes Media: Calvin Wells
(919) 546-6189 (910) 323-6201
Investors: Bob Drennan Investors: Gerald Teele
(919) 546-7474 (910) 323-6203
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CP&L announces plan to acquire NCNG
RALEIGH, N.C. (Nov. 11, 1998) - As part of its strategy to become a total
energy provider for customers while growing earnings and securing gas
supplies for planned electric power plants, Carolina Power & Light (NYSE:
CPL) announced today that it has entered into a definitive agreement to
acquire North Carolina Natural Gas Corp. (NYSE: NCG) through a
stock-for-stock transaction and will add NCNG's natural gas and propane
products into CP&L's portfolio of electricity, energy services and
technology products and services.
Under the agreement, each common share of NCNG will be converted into
common shares of CP&L, based on an exchange ratio to be determined by
dividing $35 by the average price of CP&L stock during a 20-day period
before the closing of the transaction. The exchange ratio will not exceed
0.8594 nor be less than 0.7032. Based on CP&L's closing price of $47.56
Tuesday, Nov. 10, the exchange ratio would be 0.7359, which would represent
a premium of 48 percent to NCNG shareholders. CP&L will issue approximately
$354 million in stock to NCNG shareholders to complete the transaction. The
transaction is expected to be accretive to CP&L's earnings after
transaction expenses and consolidation costs; it will be accounted for as a
pooling of interests.
CP&L President and Chief Executive Officer William Cavanaugh III said the
acquisition of NCNG fits logically into CP&L's plan to become a total
energy provider.
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Carolina Power & Light
Page 2
"We have plans for significant additions of gas-fired power plants over the
next 10 years to meet our customers' needs. Access to a competitively
priced gas supply is integral to our long-term strategy," Cavanaugh said.
"To better serve our customers, we plan to create a larger regional
platform from which to expand our energy-related products and services
throughout the Carolinas and beyond. The ability to offer reasonably priced
natural gas to our customers has been a strategic priority for CP&L, and
our acquisition of NCNG advances that strategy.
"NCNG has enjoyed an extraordinary customer growth rate over the last few
years - about three times the national industry average - and we believe
there is even more opportunity to increase the penetration of gas to
customers in our service area. NCNG's low-cost structure and strong balance
sheet make it a perfect fit for CP&L, and our overlapping service areas
will provide increased growth opportunities between the two operations.
"For many years, NCNG has shared CP&L's commitment to economic development
in the region," Cavanaugh said. "Our goal is to help stimulate development
even further by enhancing the energy infrastructure in eastern North
Carolina.
"Today's announcement is another step in CP&L's focused strategy to become
a total energy provider in our region, which continues to enjoy strong
growth. Our objective is to provide a full array of energy-related services
to all of our current customers and to expand our market reach. Our
strategy and our employees are squarely focused on creating shareholder
value. As we have said before, we will pursue a disciplined strategy and
acquire only those companies, like NCNG, that offer profitable synergies
with our own."
CP&L's generation expansion plans include more than 600 megawatts in Wayne
County on the site of the existing Lee Steam Electric Plant. That planned
facility is in the current NCNG service area. It will include four
gas-fired combustion-turbine generators, and is scheduled to be on line in
mid-2000. The additional generation in Wayne County and elsewhere in North
Carolina is needed to accommodate the area's ongoing growth in population
and usage, to increase reserve capacity in the Southeast and to support
CP&L's strategy for additional sales in the wholesale energy market.
NCNG Chairman and Chief Executive Officer Calvin Wells said he believes the
combination is a great opportunity for customers, employees and
shareholders of both companies.
"CP&L and NCNG are not only neighbors, but we also share a similar
corporate culture," Wells said. "NCNG's gas expertise and growing customer
base will benefit CP&L, and NCNG will benefit by being part of a larger
organization in a consolidating industry. NCNG, like CP&L, has a history of
providing excellent service to its customers, and we will continue to
provide the same safe, reliable service our customers have come to expect."
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Carolina Power & Light
Page 3
NCNG will be operated as a wholly owned subsidiary of CP&L. Wells will
remain CEO of the subsidiary and will report directly to Cavanaugh and
participate on the CP&L senior management committee.
A transition plan is currently being developed to guide the integration of
NCNG employees, facilities and customer services into CP&L. The change is
not expected to have an immediate effect on the way customers currently do
business with either company, although the integration is expected to
provide opportunities for some consolidation of customer service functions
in the future.
Both companies' retail rates are regulated by the N.C. Utilities Commission
and would not be affected by the acquisition.
CP&L currently pays an annual dividend of $1.94 per share. Based on the
exchange ratio of 0.7359, NCNG's shareholders will receive an increase of
$0.4276 (or 43 percent) in dividends per share.
The acquisition is conditioned upon the approval of the N.C. Utilities
Commission and S.C. Public Service Commission, NCNG's shareholders, the
Securities and Exchange Commission and other customary conditions. CP&L
anticipates regulatory approvals can be obtained by mid-1999.
Headquartered in Fayetteville, NCNG provides natural gas, propane and
related services to more than 173,000 customers located in 86 towns and
cities and on four municipal gas distribution systems in south-central and
eastern North Carolina. The company has about 515 employees. NCNG's fiscal
1998 (ended Sept. 30, 1998) operating revenues totaled $232 million.
Headquartered in Raleigh, CP&L observed the 90th anniversary of its charter
in July. Today CP&L maintains 16 power plants and more than 60,000 miles of
power lines in providing service to nearly 1.2 million customers in central
and eastern North Carolina, the Asheville area and the Pee Dee Region of
South Carolina. Including subsidiaries, CP&L has about 6,900 full-time
employees.
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Note to Editors: Today's news release, along with other news about CP&L and
NCNG, is available on the Internet at http://www.cplc.com and
http://www.ncng.com.