As filed with the Securities and Exchange Commission on September 17, 1996.
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: September 13, 1996
(Date of earliest event reported)
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification No.
1-9130 CENTERIOR ENERGY CORPORATION 34-1479083
(An Ohio Corporation)
6200 Oak Tree Boulevard
Independence, Ohio 44131
Telephone (216) 447-3100
1-2323 THE CLEVELAND ELECTRIC 34-0150020
ILLUMINATING COMPANY
(An Ohio Corporation)
55 Public Square
Cleveland, Ohio 44113
Telephone (216) 622-9800
1-3583 THE TOLEDO EDISON COMPANY 34-4375005
(An Ohio Corporation)
300 Madison Avenue
Toledo, Ohio 43652
Telephone (419) 249-5000
This combined Form 8-K is separately filed by Centerior Energy Corporation
("Centerior"), The Cleveland Electric Illuminating Company ("Cleveland
Electric") and The Toledo Edison Company ("Toledo Edison"). Centerior,
Cleveland Electric and Toledo Edison are sometimes referred to collectively
as the "Companies". Cleveland Electric and Toledo Edison are sometimes
referred to collectively as the "Operating Companies". Information
contained herein relating to any individual registrant is filed by such
registrant on its behalf. No registrant makes any representation as to
information relating to any other registrant, except that information
relating to either or both of the Operating Companies is also attributed to
Centerior.
Item 5. Other Events
Merger with Ohio Edison Company
On September 13, 1996, Centerior and Ohio Edison Company, an Ohio
corporation ("Ohio Edison"), entered into an Agreement and Plan of Merger,
dated as of September 13, 1996 ("Merger Agreement").
Pursuant to the Merger Agreement, Centerior and Ohio Edison will
form FirstEnergy Corp., a holding company which will be an Ohio
corporation, ("FirstEnergy"), which, in turn, will form two wholly owned
subsidiaries. Also pursuant to the Merger Agreement, one of such
subsidiaries will merge with and into Centerior ("Centerior Merger"), with
Centerior continuing as the surviving corporation and the other will merge
with and into Ohio Edison ("Ohio Edison Merger"), with Ohio Edison
continuing as the surviving corporation. In connection with such mergers,
each issued and outstanding share of Centerior common stock ("Centerior
Common Stock"), and any Centerior Right (as defined in the Merger
Agreement), and each issued and outstanding share of Ohio Edison common
stock, par value $9 per share ("Ohio Edison Common Stock"), and any Ohio
Edison Right (as defined in the Merger Agreement), will be converted into
the right to receive common stock, par value $0.10 per share, of
FirstEnergy ("FirstEnergy Common Stock"), except for shares or rights owned
directly by, or through a wholly owned subsidiary of, Centerior or Ohio
Edison, which will be canceled. Immediately after the Centerior Merger,
Centerior will merge with and into FirstEnergy, with FirstEnergy continuing
as the surviving corporation. The mergers described above are collectively
referred to herein as the "Merger".
Following the Merger, FirstEnergy will be a holding company which will
directly hold all of the issued and outstanding common stock of Centerior's
direct subsidiaries, which include (among others) Cleveland Electric and
Toledo Edison, and all of the issued and outstanding Ohio Edison Common
Stock. As a result of the Merger, the common stock share owners of
Centerior and Ohio Edison will own all of the issued and outstanding shares
of FirstEnergy Common Stock. All other classes of capital stock of
Centerior's subsidiaries and of Ohio Edison and its subsidiaries will be
unaffected by the Merger and will remain outstanding.
Under the Merger Agreement, each outstanding share of Centerior Common
Stock, including any Centerior Right, will be converted into a right to
receive 0.525 share of FirstEnergy Common Stock. Each outstanding share of
Ohio Edison Common Stock, including any Ohio Edison Right, will be
converted into a right to receive one share of FirstEnergy Common Stock.
As of July 31, 1996, there were approximately 148 million shares of
Centerior Common Stock outstanding and approximately 152.6 million shares
of Ohio Edison Common Stock outstanding. Based on such capitalization, the
Merger will result in approximately 33.75% of the common stock equity of
FirstEnergy being owned by Centerior common stock share owners and
approximately 66.25% by Ohio Edison share owners.
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The Merger has been approved by the Boards of Directors of Centerior
and Ohio Edison and is expected to close promptly after all of the
conditions to the consummation of the Merger, including the receipt of
certain regulatory approvals, are fulfilled or waived. Share owner
meetings to vote on the Merger are expected to be held in early 1997. The
regulatory approval process is expected to take approximately 12 to 18
months.
Ohio Edison currently has an indicated annual dividend of $1.50 per
share of Ohio Edison Common Stock and Centerior currently has an indicated
annual dividend of $0.80 per share of Centerior Common Stock. The parties
expect that the dividend at the time of consummation of the Merger (the
"Effective Time") will be at least equivalent to an indicated annual
dividend of $1.50 per share of Ohio Edison Common Stock and $0.7875 per
share of Centerior Common Stock. Dividend action by Centerior prior to the
Effective Time and dividend action by FirstEnergy after such time will be
determined by their respective Boards of Directors. The Merger Agreement
limits the indicated annual dividend prior to the Effective Date to $0.80
per share of Centerior Common Stock and $1.60 per share of Ohio Edison
Common Stock.
The Merger is subject to customary closing conditions, including,
among other things, approvals by the share owners of Centerior and Ohio
Edison, the receipt of certain governmental approvals (which, subject to
certain exceptions, will not impose terms or conditions that would have, or
as reasonably could be foreseen could have, a material adverse effect on
FirstEnergy and its subsidiaries or would be inconsistent with the
agreements of the parties contained in the Merger Agreement) and the making
of certain governmental filings. Such approvals include the Federal Energy
Regulatory Commission, the Securities and Exchange Commission ("SEC") under
the Public Utility Holding Company Act of 1935 and the Nuclear Regulatory
Commission, and such filings include 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 or termination of the applicable waiting
periods thereunder. The Merger is also subject to receipt of opinions of
counsel that the Merger, as to Centerior, will qualify as a tax-free
reorganization and, as to Ohio Edison, will qualify as a tax-free transfer.
In addition, the Merger is conditioned upon the effectiveness of a
registration statement to be filed with the SEC with respect to the
FirstEnergy Common Stock to be issued in the Merger and the approval for
listing of such shares on the New York Stock Exchange. (See Article VIII of
the Merger Agreement.)
The Merger Agreement contains certain covenants regarding conduct of
the respective businesses of Centerior and Ohio Edison pending the
consummation of the Merger. Generally, the parties are required to conduct
their businesses in the ordinary course in substantially the same manner as
heretofore conducted. The Merger Agreement places limits on, among other
things, the declaration and payment of dividends, the issuance of
securities, amendments to articles of incorporation and regulations,
acquisitions, capital expenditures, dispositions, incurrence of
indebtedness, certain increases in employee compensation and benefits and
affiliate transactions. (See Article VI of the Merger Agreement.)
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FirstEnergy's Board of Directors will be designated by Ohio Edison's
Board of Directors. Willard R. Holland, currently President and Chief
Executive Officer of Ohio Edison, will serve as Chairman of the Board,
President and Chief Executive Officer of FirstEnergy from the Effective
Time until otherwise determined by FirstEnergy's Board of Directors.
Robert J. Farling, currently Chairman, President and Chief Executive
Officer of Centerior, will serve as Vice Chairman of FirstEnergy from the
Effective Time until otherwise determined by FirstEnergy's Board of
Directors. All other officers of FirstEnergy and directors and officers of
FirstEnergy's subsidiaries will be designated by FirstEnergy's Board of
Directors. (See Article VII of the Merger Agreement.)
The Merger Agreement may be terminated under certain circumstances, as
summarized below. Where indicated, termination results in the payment of
expenses and termination fees in the amounts listed below. Circumstances
under which the Merger Agreement may be terminated include (1) by mutual
written consent of the parties; (2) by either party if the Merger is not
consummated by June 30, 1998; (3) by either party if the share owners of
either Centerior or Ohio Edison fail to approve the Merger ($55 million
plus out-of-pocket expenses and fees if the vote follows a third-party
offer of the type described in clause (6) below that has not been rejected
by the target and its board of directors and withdrawn by the third party,
payable by such third party or its affiliate in connection with certain
business combinations effected within two and one-half years following such
termination); (4) by either party if any state or federal law, order, rule
or regulation is adopted or issued which has the effect, for such party, of
prohibiting the Merger; (5) by a non-breaching party if there exists a
material breach of any material representation, warranty, covenant or
agreement set forth in the Merger Agreement, and such breach is not cured
and adequate assurance of such cure has not been given within ten business
days after notice thereof ($10 million plus out-of-pocket expenses and fees
incurred by the non-breaching party, except if pursuant to a non-curable
breach of a representation or warranty, unless such breach was willful; and
$55 million plus out-of-pocket expenses and fees in the case of a material
breach of the non-solicitation covenant contained in the Merger Agreement,
if the breach follows a third-party offer of the type described in clause
(6) below that has not been rejected by the target and its board of
directors and withdrawn by the third party, payable by such third party or
its affiliate in connection with certain business combinations effected
within two and one-half years following such termination); and (6) by
either party as a result of a third-party tender offer or business
combination proposal that such party's board of directors determines in
good faith that its fiduciary duties require to be accepted, after the
other party has first been given an opportunity to make adjustments in the
terms of the Merger Agreement so as to enable the Merger to proceed ($55
million plus out-of-pocket expenses and fees incurred by such other party).
(See Article IX of the Merger Agreement.)
The Merger Agreement and the joint press release issued in connection
therewith are filed as exhibits to this Current Report on Form 8-K and are
incorporated herein by reference. The brief summaries of the material
provisions of the Merger Agreement set forth above do not purport to be
complete and are qualified in their entirety by reference to the Merger
Agreement filed as an exhibit hereto.
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7. Financial Statements and Exhibits
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits.
The following exhibits have previously been filed with the SEC, as
indicated in parenthesis following the description of each such exhibit,
and are incorporated herein by reference:
Exhibit Number Description
2a Agreement and Plan of Merger, dated as
of September 13, 1996, between
Centerior Energy Corporation and Ohio
Edison Company* (Exhibit 2.1, Ohio
Edison Company Form 8-K, dated
September 13, 1996, File No. 1-2578).
99a Joint Press Release dated September 16,
1996 of Centerior Energy Corporation
and Ohio Edison Company (Exhibit 99,
Ohio Edison Company Form 8-K, dated
September 13, 1996, File No. 1-2578).
* The schedules and exhibits to this document were not included with
this filing. The Registrants agree to furnish supplementally a copy of
any such omitted schedule or exhibit to the SEC upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTERIOR ENERGY CORPORATION
Registrant
THE CLEVELAND ELECTRIC ILLUMINATING
COMPANY
Registrant
THE TOLEDO EDISON COMPANY
Registrant
By: JANIS T. PERCIO
Janis T. Percio,
Secretary of each Registrant
September 17, 1996
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