For Immediate Release
CalEnergy and MidAmerican Announce Merger and
600 MW Merchant Plant Opportunity
DES MOINES, IOWA, AUGUST 12, 1998 --- The Boards of CalEnergy
Company, Inc. ("CalEnergy") (NYSE: CE) and MidAmerican Energy
Holdings Company ("MidAmerican") (NYSE: MEC) today announced
that they have approved a definitive merger agreement, details of
which are as follows:
O CalEnergy will pay $27.15 in cash for each MidAmerican
common share outstanding, valuing MidAmerican at approximately
$4.0 billion, including $1.4 billion of debt and preferred stock
which will remain outstanding at MidAmerican as a result of this
transaction.
O MidAmerican will become a wholly owned subsidiary of
CalEnergy.
O The combined enterprise will have total assets of $11.8
billion, total annual revenues of approximately $5 billion and
will serve over 3.3 million retail customers. CalEnergy expects
the transaction to be accretive to its earnings in the first full
year of combined operations.
O CalEnergy will reincorporate in the State of Iowa and be
renamed MidAmerican Energy Holdings Company. The company's
corporate headquarters will be located in Des Moines, Iowa;
however, the office of the Chairman will remain in Omaha,
Nebraska to focus on strategic planning, mergers and
acquisitions, and global development.
O David Sokol, the current Chairman and Chief Executive
Officer of CalEnergy, will continue in this role in the combined
enterprise. Stanley Bright, the current Chairman, President and
Chief Executive Officer of MidAmerican will become Vice Chairman
of the Board and a member of its Executive Committee.
O Heading the parent company from the Des Moines headquarters
will be Greg Abel. He will serve as President and Chief
Operating Officer for the combined entity.
The proposed transaction combines MidAmerican, a leading regional
provider of low-cost energy and related services that serves
approximately 1.3 million electric and gas customers in Iowa and
three neighboring states, with CalEnergy, a global energy company
that manages and owns power generation facilities and other
energy assets in the United States, Asia and Europe and supplies
and distributes electricity and gas to 2.0 million customers in
the United Kingdom.
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CalEnergy/MidAmerican Energy
August 12, 1998
Page -2-
Commenting on the transaction, David Sokol said: "In merging our
companies, we are combining two leaders in complementary markets
to create a balanced and powerful company. MidAmerican brings a
management team with U.S. utility market knowledge and expertise
in coal-fired generation, call center operations, customer
service and distribution processes, as well as a portfolio of low-
cost and efficient operating assets. When combined with
CalEnergy's successful track record in operating a regional gas
and electric utility in the U.K.'s deregulated environment, and
its history of aggressive growth in energy markets throughout the
world, we have created a formidable competitor in the
deregulating energy markets of the U.S. and beyond.
"I am delighted that we have reached an agreement with a company
that is not only our neighbor geographically, but also shares
similar beliefs in the value of excellent and innovative service
for our customers and manages an extraordinary team of employees.
I am also personally very excited about having the talented and
dedicated group of employees at MidAmerican join our team."
Stan Bright said: "This partnership preserves the character of
MidAmerican to the benefit of our employees, our customers and
our communities. We are combining two excellent management teams
and expect no significant personnel changes because there are few
duplicative positions between our companies, and we are not
merging utility operations. Our personnel and facilities in
Sioux City, Davenport and Des Moines will remain integral to our
success in the future."
Bright added: "This adds the scale and expertise that will make
us significantly stronger and even more capable of delivering on
our promises to our customers to provide them with excellent
service at the best possible value. Through this transaction we
will move closer to our goal of regional leadership, while we are
part of a fast-growing global energy enterprise. It is a great
deal for our customers, our employees and for our midwest
region."
The merger agreement is subject to approval by the shareholders
of both companies and the following regulatory agencies: the
Federal Energy Regulatory Commission, the Nuclear Regulatory
Commission and the Iowa Utilities Board. A filing will also be
made with the Federal Trade Commission and Department of Justice
under the Hart-Scott Rodino Antitrust Improvements Act.
Completion of the merger is expected to occur the first quarter
of 1999.
In a related development, the companies announced they had signed
a letter of intent to pursue development of a 600 megawatt gas-
fired power plant, which would sell power on a merchant basis
into Illinois and other markets. David Sokol stated: "This
provides an excellent concrete example of the benefits of
bringing these two companies together. We can immediately
combine MidAmerican's local permitting and regional energy
trading expertise with CalEnergy's generation development and
construction expertise, to pursue opportunities from existing
available sites as the midwest power market deregulates."
CalEnergy was advised by Credit Suisse First Boston Corp. and
Lehman Brothers Inc. and MidAmerican was advised by Warburg
Dillon Read LLC.
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CalEnergy/MidAmerican Energy
August 12, 1998
Page -3-
CalEnergy is a global energy company that manages and owns
interests in over 5,000 net megawatts of power generation
facilities in operation, construction and development worldwide.
Through its U.K. subsidiary, CalEnergy supplies and distributes
electricity and gas to 2.0 million customers in the United
Kingdom. CalEnergy produces energy from diversified fuel sources
including geothermal, natural gas and hydroelectric. CalEnergy
conducts business in the U.S., U.K., Philippines, Indonesia,
Poland and Australia, and employs more than 4,200 people
worldwide. In the year ended December 31, 1997, CalEnergy
generated revenues of over $2.2 billion and had assets of
approximately $7.5 billion. CalEnergy's headquarters are based
in Omaha, Nebraska. Information about CalEnergy is available on
the Internet at http://www.calenergy.com.
MidAmerican, Iowa's largest energy company, provides electric
service to 648,000 customers and natural gas service to 619,000
customers in Iowa, Illinois, Nebraska and South Dakota. Company
headquarters are in Des Moines, Iowa. Information about
MidAmerican is available on the Internet at
http://www.midamerican.com.
Press Contacts:
MidAmerican Energy Holdings Company
Kevin Waetke, Media Relations Manager (515) 281-2785
Ron Giaier, Vice President and Treasurer (515) 242-4303
CalEnergy Company, Inc.
Patti McAtee, Director, Corporate Communications (402)231-1519
Craig Allen, Manager, Investor Relations (402)231-1673
Lucas van Praag, Brunswick - London Office 011-44-171-404-5959
Tiffany Markofsky, Brunswick - New York Office (212)333-3810
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