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CURRENT REPORT
ON FORM 8-K
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 11, 1999
Conectiv
(Exact Name of Registrant as Specified in Charter)
Delaware 1-13895 51-0377417
(State of Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
800 King Street, P.O. Box 231
Wilmington, Delaware 19899
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (302) 429-3114
None
(Former Name or Former Address, if Changed since Last Report)
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FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the "Litigation
Reform Act") provides a "safe harbor" for forward-looking statements to
encourage such disclosures without the threat of litigation, provided those
statements are identified as forward-looking and are accompanied by meaningful,
cautionary statements identifying important factors that could cause the actual
results to differ materially from those projected in the statement.
Forward-looking statements have been made in this Report. Such statements are
based on beliefs of Conectiv's (the "Company") management ("Management") as well
as assumptions made by and information currently available to Management. When
used herein, the words "will," "anticipate," "estimate," "expect," "believe,"
"objective," and similar expressions are intended to identify forward-looking
statements. In addition to any assumptions and other factors referred to
specifically in connection with such forward-looking statements, factors that
could cause actual results to differ materially from those contemplated in any
forward-looking statements include, among others, the following: deregulation of
energy supply and the unbundling of delivery services; an increasingly
competitive marketplace; results of any asset dispositions; sales retention and
growth; federal and state regulatory actions; future litigation results; costs
of construction; operating restrictions; increased costs and construction delays
attributable to environmental regulations; nuclear decommissioning and the
availability of reprocessing and storage facilities for spent nuclear fuel; and
credit market concerns. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. The foregoing list of factors pursuant
to the Litigation Reform Act should not be construed as exhaustive or as an
admission regarding the adequacy of disclosures made prior to the effective date
of the Litigation Reform Act.
Item 5. Other Events
Conectiv announced today that, due to changes in the regulatory
environment in the electric utility industry, it is undertaking several
strategic initiatives designed to maximize stockholder value and position
Conectiv for future growth. These initiatives include: (1) a recapitalization of
Conectiv through a share buyback in order to employ a more efficient capital
structure appropriate for a competitive environment; (2) a reduction in the
quarterly dividend on the Company's Common Stock, par value $0.01 per share (the
"Shares"), designed to balance total shareholder return between stock
appreciation and dividend yield (the "Dividend Policy Change"); (3) a
realignment of Conectiv's generation business by pursuing the potential sale of
approximately 2,200 megawatts of nuclear and non-strategic baseload fossil
generation, with safeguards to assure continued energy reliability; (4) a focus
on value creation through growth of Conectiv's regulated electric and gas
delivery business, the energy business and the telecommunications business; and
(5) the implementation of a new productivity improvement and cost reduction
program aimed at positioning the Company to have a more competitive cost
structure without any reduction in quality and service.
Conectiv is offering to purchase up to 14 million Shares (including the
associated preferred stock purchase rights (the "Rights") issued pursuant to the
Rights Agreement, dated as
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of April 23, 1998 (the "Rights Agreement"), between the Company and Conectiv
Resource Partners, Inc., as the Rights Agent), at a price not greater than
$25.50 nor less than $23.50 per Share in cash, as specified by tendering
stockholders, upon the terms and subject to the conditions set forth in the
Offer to Purchase and the related Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer"). The Offer to Purchase and
related Letter of Transmittal have been included as Exhibits (a)(1) and (a)(2),
respectively, to the Issuer Tender Offer Statement on Schedule 13E-4 to be filed
on May 11, 1999 by the Company with the Securities and Exchange Commission
("SEC") in connection with the Offer.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not greater than $25.50 nor less than
$23.50 per Share), net to the seller in cash (the "Purchase Price"), that it
will pay for Shares validly tendered and not withdrawn pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to purchase 14 million Shares (or such lesser number of Shares as
are validly tendered and not withdrawn) at a price not greater than $25.50 nor
less than $23.50 per Share. The Company reserves the right, in its sole
discretion, to purchase more than 14 million Shares pursuant to the Offer. The
Offer, the proration period and withdrawal rights expire at 12:00 Midnight, New
York City time, on Tuesday, June 8, 1999, unless the Company extends the Offer.
Shares tendered pursuant to the Offer may also be withdrawn, unless accepted for
payment by the Company pursuant to the Offer, after 12:00 Midnight, New York
City time, on Wednesday, July 7, 1999.
Although the Company is not offering to purchase shares of its Class A
Common Stock, par value $0.01 per share ("Class A Common Stock"), as a result of
the Offer, holders of Class A Common Stock may elect, in accordance with the
terms of the Restated Certificate of Incorporation of the Company and the Rights
Agreement, to convert each share of Class A Common Stock (and associated
preferred stock purchase rights issued pursuant to the Rights Agreement) into
1.59997 Shares (and 1.59997 associated Rights) and to tender such Shares (and
associated Rights) pursuant to the Offer, provided, however, that any such
election and conversion will be effective only with respect to such Shares (and
associated Rights) as are actually accepted for purchase by the Company pursuant
to the Offer.
Assuming that the Company purchases 14 million Shares pursuant to the
Offer at the maximum specified purchase price of $25.50 per Share, the Company
expects the maximum aggregate cost, including all fees and expenses applicable
to the Offer, to be approximately $360 million. The Company anticipates that
substantially all of the funds necessary to pay such amounts will be financed
with proceeds of the issuance of $250 million of medium term notes (the "Note
Offering") and the balance through the issuance of commercial paper borrowings
supported by the Credit Agreement dated as of February 4, 1998 and the Credit
Agreement dated as of February 19, 1999, in each case, among the Company and the
several lenders party to each such agreement. The Company intends to file
Amendment No. 1 to its Registration Statement on Form S-3 (file No. 33-72251)
with respect to the Note Offering with the SEC on May 11, 1999.
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Conectiv's Board of Directors intends to reduce per share dividends on
the Shares to an amount equal to 40% to 60% of the Company's earnings per Share,
which is expected to result in a quarterly dividend of $0.22 per Share as
compared to the previous quarterly dividend level of $0.385 per Share, subject
to declaration by the Company's Board of Directors and evaluation from time to
time based on the results of operations, financial condition, capital
requirements and other relevant considerations. The Company's Board of Directors
intends that the quarterly dividend on shares of Class A Common Stock will
remain $0.80 per share ($3.20 annualized rate) until March 31, 2001, subject to,
among other things, declaration by Conectiv's Board of Directors and the
obligations of the Board of Directors to consider the financial condition and
regulatory environment of the Company and the results of its operations.
The summary unaudited consolidated pro forma financial information,
included as Exhibit 99.1 hereto, and incorporated by reference herein, gives
effect to the purchase of Shares pursuant to the Offer, including the related
incurrence of indebtedness, and the Dividend Policy Change, based on certain
assumptions described therein and in the related notes. Such summary unaudited
consolidated pro forma financial information does not purport to be indicative
of the operating results that would actually have been obtained, or operating
results that may be obtained in the future, or the financial position that would
have resulted had the purchase of the Shares pursuant to the Offer, including
the related incurrence of indebtedness, and the Dividend Policy Change been
completed at the dates indicated therein.
On May 11, 1999, Conectiv issued a press release regarding, among other
things, the Offer and the Dividend Policy Change. A copy of Conectiv's press
release dated May 11, 1999 has been filed with this Current Report on Form 8-K
as Exhibit 99.2 and is incorporated by reference herein.
Item 7. Pro Forma Financial Statements and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits
99.1 Summary Unaudited Consolidated Pro Forma Financial
Statements.
99.2 Press Release issued by the Company dated May 11, 1999.
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SIGNATURES
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.
CONECTIV
Date: May 11, 1999 By: /s/ John C. van Roden
________________________
John C. van Roden
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
99.1 Summary Unaudited Consolidated Pro Forma
Financial Statements.
99.2 Press Release issued by the Company dated May 11, 1999.