SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
February 1, 1999
Date of Report (Date of Earliest Event Reported)
Eastern Utilities Associates
(Exact Name of Registrant as Specified in Charter)
Massachusetts 1-5366 04-1271872
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
One Liberty Square, Boston, MA 02109
(Address of Principal Executive Offices and Zip Code)
(617) 357-9590
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On February 1, 1999, Eastern Utilities Associates, a Massachusetts
business trust (the "Company"), New England Electric System, a Massachusetts
business trust ("NEES"), and Research Drive LLC ("Research"), a Massachusetts
limited liability company which is directly and indirectly wholly owned by
NEES, entered into an Agreement and Plan of Merger, dated as of February 1,
1999 (the "Merger Agreement"), providing for a merger transaction among the
Company, NEES and Research. The Merger Agreement a nd the press release issued
in connection therewith are filed herewith as Exhibits 10 and 99, respectively,
and are incorporated herein by reference. The description of the Merger
Agreement set forth herein does not purport to be complete and is qualified in
its entirety by the provisions of the Merger Agreement.
Pursuant to the Merger Agreement, Research will merge with and into the
Company (the "Merger"), with the Company being the surviving entity and
becoming a wholly-owned subsidiary of NEES (the "Surviving Entity"). The
Merger, which was unanimously approved by the boards of the Company and NEES,
and the Members of Research, is expected to occur shortly after all of the
conditions to the consummation of the Merger, including the receipt of certain
regulatory approvals, are met or waived. The Comp any anticipates that the
Merger can be consummated in early 2000.
Under the terms of the Merger Agreement, each outstanding common share of
the Company, $5.00 par value per share (the "Company Common Shares"), other
than shares, if any, owned by the Company as treasury shares, or by NEES,
Research or any other wholly-owned subsidiary of NEES, will be converted into
the right to receive $31.00 in cash, as may be adjusted (the "Merger
Consideration"). Such adjustment will occur if the Closing Date does not occur
on or prior to the date that is the six month anniversary of the date on which
the Company shareholders' approval is attained (the "Adjustment Date"), in
which event the per share amount shall be increased by $.003 for each day after
the Adjustment Date up to and including the day which is one day prior to the
earlier of the Closing Date and the Extended Termination Date (as defined
below).
The Merger is subject to certain customary closing conditions, including,
without limitation, the receipt of the required approval of the Company's
shareholders by an affirmative vote of two-thirds of the outstanding Company
Common Shares, and the receipt of all necessary governmental approvals and the
making of all necessary governmental filings, including, to the extent
necessary, the consent or approval of certain state utility regulators, the
approval of the Federal Energy Regulatory Commission, the approval of the
Federal Communications Commission, the approval of the Securities and Exchange
Commission under the Public Utility Holding Company Act of 1935, as amended,
the approval of the Nuclear Regulatory Commission, the filing of the requisite
notification with the Federal Trade Commission and the Department of Justice
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the expiration of the applicable waiting period thereunder. A meeting of the
Company's shareholders to vote upon the Merger will be convened as soon as
practicable. The Merger is also subject to the receipt of final orders of the
Massachusetts and Rhode Island utility regulatory commissions pertaining to the
recovery of costs asssociated with the Merger that are materially consistent
with existing policy and previous orders of such agencies.
The Merger Agreement contains certain covenants of the parties pending
the consummation of the Merger. Generally, the Company must carry on its
business in the ordinary course consistent with past practice, comply with all
laws and preserve intact its goodwill. The Company is permitted to declare and
pay its regular quarterly dividends. The Merger Agreement contains certain
restrictions on the Company including limitations on, or procedures for
issuance of securities, modification, termination or failure to renew material
contracts, amendments to the Company's Declaration of Trust or similar
governing documents of the Company's Subsidiaries, capital expenditures,
acquisitions, dispositions, incurrence or guarantees of any indebtedness,
modification of employee compensation and benefits, regulatory matters, changes
in accounting policies and discharge of liabilities. (See Article VI of the
Merger Agreement).
The Merger Agreement prevents the Company and its Subsidiaries from
knowingly initiating, soliciting or encouraging, directly or indirectly, any
inquiry or proposal or offer, or engaging in negotiations with, or providing
confidential information to, any third party relating to a business combination
proposal, and requires the Company to terminate immediately any existing
discussions or negotiations and notify NEES of any such inquiries relating to a
business combination proposal, unless prior t o the Company's shareholder
approval: (i) the Company's Board determines, in good faith based upon the
advice of its outside legal counsel with respect to the Board's fiduciary
duties, that taking such action is necessary for the Board to act in a manner
consistent with its fiduciary duties under applicable law; (ii) the Company's
Board reasonably concludes, in good faith after consultation with its financial
advisors, that (A) the party making such proposal has adequate financing
sources and (B ) such proposal is likely to be more favorable to shareholders
of the Company than the Merger (an "Alternative Proposal"); (iii) prior to
furnishing nonpublic information or entering into negotiations, the Company
notifies NEES in writing of such furnishing of information or negotiations
(identifying the party making the proposal and the material terms of such
proposal) and enters into a confidentiality agreement with such third party;
and (iv) the Company keeps NEES promptly informed of the status and all
material information with respect to such discussions or negotiations. The
Company may terminate the Merger Agreement to accept an Alternative Proposal
(in which case, the termination fee provision described below would be
applicable). However, before so terminating, the Company must negotiate with
NEES to adjust the Merger Agreement so as to enable the parties to proceed with
the adjusted Merger Agreement, and the Company's Board must determine that,
based on advice of counsel wit h respect to the Board's fiduciary duties and
notwithstanding a binding commitment to consummate the Merger Agreement and
notwithstanding all concessions that may be offered by NEES in further
negotiations with the Company, the Alternative Proposal i s more favorable to
the Company's shareholders than the Merger. (See Section 7.08 and Article IX
of the Merger Agreement).
The Merger Agreement may be terminated under certain circumstances,
including: (i) by mutual written agreement of the boards of the parties; (ii)
by either party if the Merger has not been effected by December 31, 1999 (the
"Initial Termination Date" ), provided that if the parties are otherwise ready
to close, but certain statutory approvals are not yet obtained, the Initial
Termination Date will be extended four months (the "Extended Termination
Date"); and (iii) by either party if any law, rule or regulation is adopted
which makes the Merger illegal or any final order or injunction permanently
prohibits the Merger. In addition, the Company may terminate the Merger
Agreement: (i) under certain circumstances, in order to accept an Alternative
Proposal (subject to the limitations and procedures described above and to
payment of the termination fee described below); (ii) if there has been a
material breach of certain of NEES' representations and warranties or a failure
by NEES to perform and comply with its covenants under the Merger Agreement and
such breach or failure has not been cured; (iii) if NEES fails to deliver the
merger consideration at a time when all conditions to NEES' obligation to close
have been satisfied or waived . NEES may terminate the Merger Agreement if:
(i) the Board of the Company withdraws or modifies its approval of the merger
or its recommendation to its shareholders or if shareholders' approval shall
not have been obtained at a duly held meeting; ( ii) the Board of the Company
shall approve or recommend or take no position with respect to an Alternative
Proposal; or (iii) there has been a material breach of the Company's
representations and warranties or a failure by the Company to perform and
comply with its covenants under the Merger Agreement and such breach or failure
has not been cured. (See Articles VIII and IX of the Merger Agreement).
The Company will pay NEES a termination fee of $20 million plus up to $5
million for documented out-of-pocket expenses: (i) if the Company terminates
the Merger Agreement because the Company became the target of a third party
Alternative Proposal, and the Company's Board determined in good faith based
upon the advice of outside counsel with respect to the Board's fiduciary
duties, that termination was necessary for the Board to act consistently with
its fiduciary duties under applicable law; or (ii) if, at a time when an
Alternative Proposal is pending the Merger Agreement is terminated because (A)
the Company shareholder approval was not obtained, (B) the Company has
materially breached its representations and warranties or has failed to
materially perform and comply with its covenants under the Merger Agreement, or
(C) the Closing has not occurred by the termination date, provided, that in the
case of (A), (B) or (C), the Company enters into a merger or acquisition
agreement with the party offering such Alternative Proposal within two years of
such termination. (See Article IX of the Merger Agreement).
NEES will pay the Company a termination fee of $10 million plus up to $5
million for documented out-of-pocket expenses if either NEES or the Company
terminates because the Closing Date has not occurred on or before the Initial
Termination Date, or if the Initial Termination Date is extended, the Extended
Termination Date, and on the date of such termination: (i) all conditions to
closing other than the condition requiring that certain statutory and
regulatory consents and approvals be obtained has not been fulfilled, provided,
that such Closing Date has not failed to occur due to a failure on the part of
the terminating party to fulfill any obligation under the Merger Agreement;
(ii) if the date of termination is any date other than the Extended Termination
Date or a date thereafter, all conditions of each party other than the
conditions concerning (A) statutory and regulatory consents and approvals and
(B) the certification of performance of obligations on the part of NEES and LLC
have been fulfilled or are capable of being fulfilled; and (iii) the merger
contemplated by a agreement and Plan of Merger, dated December 11, 1998, by and
among National Grid Group plc, New England Electric System and NGG Holdings LLC
has not been consummated. (See Article s VIII and IX of the Merger Agreement).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(C) Exhibits.
10 Agreement and Plan of Merger, dated as of February 1, 1999, by and
among Eastern Utilities Associates, New England Electric System and
Research Drive LLC.
99 Press Release issued jointly by New England Electric System and Eastern
Utilities Associates on February 1, 1999.
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.
Date: February 5, 1999
EASTERN UTILITIES ASSOCIATES
By: /s/ Donald G. Pardus
Donald G. Pardus Chairman and
Chief Executive Officer
Exhibit Index
Exhibit Description
10 Agreement and Plan of Merger, dated as of February 1, 1999,
among Eastern Utilities Associates, New England Electric System and
Research Drive LLC.
99 Press Release issued jointly by New England Electric System and Eastern
Utilities Associates on February 1, 1999.