Exhibit 99
FOR IMMEDIATE RELEASE
Contact for Delmarva Power: Contact for Atlantic Energy:
Media: Michael Ratchford Media: Neely Crowley
302-429-3410 609-645-4328
Investors: Edric R. Mason Investors: Robert Marshall
302-429-3525 609-645-4655
Joele Frank/Judy Wilkinson
Abernathy MacGregor Group
212-371-5999
ATLANTIC ENERGY, INC. AND DELMARVA POWER & LIGHT COMPANY
ANNOUNCE MERGER VALUED AT $2.2 BILLION
CREATES REGIONAL PLATFORM FOR ACCELERATED GROWTH
Egg Harbor Township, NJ and Wilmington, DE, August 12, 1996 --
Atlantic Energy, Inc. (NYSE:ATE) and Delmarva Power & Light
Company (NYSE:DEW) today announced they have signed a definitive
agreement to merge in a tax-free, stock-for-stock transaction
resulting in a new holding company with an equity value of
approximately $2.2 billion based upon the closing stock prices on
Friday, August 9, 1996 of $17.125 per Atlantic Energy share and
$20.625 per Delmarva Power share. This merger of equals, which
will be accounted for as a purchase, is expected to be accretive
to the new company beginning with the first year after completion
of the merger. The transaction, which has been unanimously
approved by both companies' boards of directors, would create a
diversified energy company with over one million customers and
more than 5,500 megawatts of electric generation resources.
Under the terms of the transaction, Atlantic Energy and
Delmarva Power will be merged into a new holding company.
Delmarva Power shareholders will receive one share of the new
company's Common Stock for each share of Delmarva Power they
currently hold. Atlantic Energy shareholders will receive .75
shares of the new company's Common Stock and 0.125 shares of the
new company's Class A common stock for each share of Atlantic
Energy common stock they currently hold.
Howard E. Cosgrove, chairman, president, and chief executive
officer of Delmarva Power, said, "By joining forces, we become a
stronger company that is better positioned to thrive in an
increasingly competitive energy industry. Together, we create a
larger regional platform from which to launch new energy-related
products and services throughout the Mid-Atlantic region. Our
new combined company will provide more value to our customers and
shareholders than either company could have on a stand-alone
basis."
Jerrold L. Jacobs, chairman and chief executive officer of
Atlantic Energy, said, "This is a natural fit. Electric utilities
throughout the country are preparing for an even more competitive
future through operating and strategic initiatives. By
combining, we are proactively confronting this reality. This
merger clearly demonstrates that our new company intends to be an
effective and successful competitor in the future world of retail
competition in which customers will be able to choose their
energy providers based on price, products, and service quality."
"Our combined territory sits in the center of a large market
that is growing bigger all the time," Jacobs continued. "In
fact, approximately one-third of the U.S. population lives within
350 miles of our territory. The Atlantic City region is
promising significant growth led by the unprecedented expansion
of the city's hotel casino industry. Delaware is enjoying
continued growth of its financial services industry. This
economic vitality creates expanded opportunities in the core
utility business and other new product areas. Through our
merger, we will unlock substantial synergies and realize merger
savings that will benefit our shareholders and our customers."
"We believe that shareholders win when customers win. We
expect the effect on rates to be favorable for our customers,"
Cosgrove added. "As synergies occur and certain costs are
reduced, customers will benefit. Over the long-term we believe
that rates will be lower than they would have been if this
strategic combination had not occurred. We intend to maintain
overall base rates for Atlantic Energy and Delmarva Power
customers at least through the close of the merger. Atlantic
Energy and Delmarva Power together will continue our strong
traditions of active community involvement. We have clearly
demonstrated our commitment to economic development and community
service in the territories we serve."
Class A common stock
The Class A common stock will reflect the growth prospects and
regulatory environment of Atlantic Energy's regulated electric
utility business. The shares of Class A common stock received by
Atlantic Energy shareholders will represent in aggregate a 30
percent interest in earnings of Atlantic Energy's regulated
electric utility business in excess of $40 million per year. The
first $40 million of earnings of Atlantic Energy's regulated
electric utility business and the remaining 70 percent of the
earnings above this amount will be attributable to the holders of
Common Stock of the new holding company, together with all
earnings of the Delmarva Power businesses and the businesses of
Atlantic Energy other than Atlantic Energy's regulated electric
utility business.
Dividend Policy
It is anticipated that the initial annual dividend for the new
holding company's Common Stock would be $1.54 per share, the same
annual dividend both companies currently pay. The new company
intends to pay an annual dividend of $3.20 per share on the Class
A common stock ($0.40 per 0.125) for the first three years after
closing. Accordingly, after the close of the merger, Delmarva
Power shareholders will receive an annual per share dividend of
$1.54 and Atlantic Energy shareholders will receive an aggregate
annual per share dividend payment of $1.555. Subsequent to the
three-year time period, it is the intention of the new company,
after giving consideration to the financial condition, regulatory
environment and the results of operations, to pay annual
dividends on the Class A common stock at a rate equal to 90% of
the net income, in excess of $40 million, attributable to
Atlantic Energy's regulated electric utility business.
Jacobs said, "We believe that the transaction will provide
Atlantic Energy shareholders with a modest premium compared to
recent trading levels, greater certainty of an attractive
dividend into the future, enhanced prospects of long-term capital
appreciation, and a continuous direct economic interest in the
southern New Jersey electric utility business."
Merger Related Savings
The companies anticipate savings related to the merger in
excess $500 million over a ten-year period from the elimination
of duplication in corporate and administrative programs, greater
efficiencies in operations and business processes, increased
purchasing efficiencies and the combination of the two
workforces. Employee reductions because of the merger are
expected to be approximately 10 percent of the consolidated
workforce equaling about 400 positions out of a total workforce
of approximately 4,000. Both companies will seek to minimize
workforce effects through a combination of reduced hiring,
attrition, and separation programs. All union contracts will be
honored.
Management and Business Structure
The companies intend to manage according to three strategic
business units applying the best practices of each company as
appropriate. This structure will best align the company's
organization with the changing needs of its customers and
markets. The strategic business units will serve the competitive
regional market place. This will include:
Energy Supply Unit which supplies energy to the regulated
retail, competitive wholesale and increasingly competitive
unregulated retail regional market.
Energy Services Unit which packages and sells unregulated
energy-related premium products and services such as power
quality audits, thermal energy services and energy
management consulting.
Regulated Delivery Unit which provides high value utility
delivery services to customers.
The new company will be a registered public utility holding
company which will be the parent for both Atlantic Energy and
Delmarva Power. The corporate headquarters of the holding
company will be in Wilmington, Delaware with significant
executive presence in Atlantic City, New Jersey. The board of
the new holding company will consist of the current directors of
each company at the time of the merger.
Howard E. Cosgrove, currently chairman, president, and chief
executive officer of Delmarva Power, will become chairman of the
board and chief executive officer of the new company. Jerrold L.
Jacobs, currently chairman and chief executive officer of
Atlantic Energy, will retire as an active Atlantic Energy
employee upon the completion of the merger and will serve the new
company as vice-chairman of the board. Michael J. Chesser,
currently president and chief operating officer of Atlantic
Energy, will become president and chief operating officer of the
new company.
Approvals and Timing
The merger is conditioned, among other things, upon the
approvals of each company's shareholders and the necessary
approvals of various regulatory agencies, principally Delaware,
New Jersey, and Virginia public utility commissions, the Federal
Energy Regulatory Commission (FERC), the Nuclear Regulatory
Commission (NRC) and the Securities and Exchange Commission
(SEC). The companies are hopeful that regulatory approvals can
be obtained in 12 to 18 months.
Morgan Stanley & Co. Incorporated is serving as financial
advisor and provided a fairness opinion to Atlantic Energy.
Merrill Lynch & Co. is serving as financial advisor and provided
a fairness opinion to Delmarva Power.
Atlantic Energy, Inc., is headquartered in Egg Harbor Township,
New Jersey, is an investor-owned holding company for Atlantic
Electric and several non-regulated affiliates. Atlantic
Electric, a regulated electric utility, is Atlantic Energy's
primary subsidiary and makes up 94% of the Company's total
assets. Atlantic Electric serves over 473,000 customers in a
2,700 square mile area in southern New Jersey. Together the
Atlantic Energy companies provide a wide variety of energy-
related products and services including home energy management,
commercial utility services, energy system design and
construction, fuel management services, thermal energy services,
bulk power marketing, and other energy services.
Delmarva Power & Light Company is an investor-owned utility
providing service to 436,000 electric customers and 98,000 gas
customers in Delaware and on the Eastern Shore of Maryland and
Virginia. Headquartered in Wilmington, Delaware, Delmarva
Power's 6,000 square mile diverse service territory includes
urban areas, agricultural areas in the central and southern parts
of the Delmarva Peninsula, the beaches of Delaware and Maryland
as well as the Chesapeake Bay. During the past five years the
Company has experienced steady annual growth in electric and
natural gas sales. Delmarva Power's rates are among the lowest
in the region while its customer favorability ratings are among
the highest in the country.
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The press release includes forward looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements reflect numerous assumptions,
and involve a number of risks and uncertainties. Among the
factors that could cause actual results to differ materially are:
electric load and customer growth; abnormal weather conditions;
available sources and cost of fuel and generating capacity; the
speed and degree to which competition enters the power
generation, wholesale and retail sectors of the electric utility
industry; state and federal regulatory initiatives that increase
competition, threaten cost and investment recovery, and impact
rate structures; the ability of the combined company to
successfully reduce its cost structure; operating performance of
nuclear generating facilities, decommissioning costs associated
with such facilities and impact on future operational and
financial condition associated with the uncertain status of the
Salem Nuclear Station; the degree to which the combined company
develops non-regulated business ventures; the economic climate
and growth in the service territories of the two companies;
economies generated by the merger; inflationary trends and
interest rates and the other risks detailed from time to time in
the two companies' SEC reports.
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