1
For Immediate Release CONTACTS:
October 24, 1999 Columbia Energy Group
---------------------
Thomas L. Hughes (Financial Community)
703/561-6001
R. A. Rankin, Jr. (News Media)
703/561-6044
Kekst and Company
-----------------
Michael Freitag (News Media)
212/521-4800
COLUMBIA ENERGY GROUP REJECTS INADEQUATE NISOURCE PROPOSAL;
WILL EXPLORE STRATEGIC ALTERNATIVES TO ENHANCE VALUE
HERNDON, Va., Oct. 24 -- Columbia Energy Group announced today that its
board of directors has unanimously rejected the latest unsolicited offer from
NiSource Inc. and authorized Columbia's management to explore strategic
alternatives.
The board determined that the revised cash tender offer by NiSource for
all of Columbia's outstanding common stock for $74 per share is inadequate and
not in the best interests of the company or its shareholders. Accordingly, the
board strongly recommends that Columbia's shareholders not tender their shares
to NiSource. The tender offer is currently scheduled to expire on Nov. 12, 1999.
The Columbia board's determination that NiSource's latest unsolicited
offer is inadequate is based, in part, on written opinions from Morgan Stanley
Dean Witter and Salomon Smith Barney Inc. In addition to the financial
inadequacy of the offer, the board continues to be concerned about the
significant conditions and serious regulatory hurdles associated with the
NiSource proposal.
In recognition of the current business environment and many opportunities
available in the rapidly evolving energy industry, the board has authorized
management and its advisors to explore and evaluate a number of strategic
alternatives to generate value in excess of that which the company's business
plan or the NiSource proposal could create. As part of this process, Columbia
will initiate discussions with third parties regarding possible transactions,
including a merger, reorganization, or the disposition of a material amount of
assets. The company noted there can be no assurance that these discussions will
result in a transaction or any other action.
Oliver G. Richard III, Columbia's chairman, president and chief executive
officer, said: "This is a time of tremendous change in the energy services
industry. For creative, forward-looking companies like Columbia, it is a time of
promising opportunities, but also of challenges. Consequently, our board and
management are firmly committed to exploring thoroughly the opportunities
available to us and considering all possible alternatives for enhancing
shareholder value."
Richard today sent the following letter to Gary Neale, chairman, president
and chief executive officer of NiSource Inc.:
- more -
2
Dear Gary:
This letter is in response to NiSource's tender offer for all of
Columbia's outstanding shares at a revised cash price per share of $74 (the
"Revised Offer"). Columbia's Board carefully considered the Revised Offer with
the assistance of its financial and legal advisors. After careful deliberation,
Columbia's Board has unanimously determined that the Revised Offer is inadequate
and not in the best interests of Columbia or its shareholders. Accordingly, the
Columbia Board is strongly recommending to Columbia shareholders that they not
tender their shares into the Revised Offer.
In making its determination, Columbia's Board took into account several
factors. These factors include the written opinions of Morgan Stanley Dean
Witter and Salomon Smith Barney Inc. that the Revised Offer was inadequate from
a financial point of view to the company's shareholders and the significant
conditions and serious regulatory hurdles associated with the Revised Offer.
Notwithstanding this determination, the Board recognizes the rapid change
taking place in the energy industry and the resulting need for a timely
evaluation of all strategic alternatives available to Columbia. The Board has
therefore determined that it is in the best interests of Columbia and its
shareholders to authorize management -- with the advice and assistance of
Columbia's financial and legal advisors -- to explore and evaluate a number of
strategic alternatives to generate shareholder value greater than that which
Columbia's business plan or the Revised Offer can create.
As part of this process, we will initiate discussions with third parties
- -- including NiSource, if it is interested -- regarding possible transactions
designed to significantly enhance value for our shareholders. We intend to
consider a variety of strategic alternatives, including an extraordinary
transaction, such as a merger, reorganization or the disposition by Columbia of
a material amount of assets. Of course, there can be no assurance that this
process will result in any such transaction.
We continue to have serious questions about the strategic and financial
merits of a combination of our two companies, as well as about NiSource's
ability to satisfy the conditions of its financing commitments and successfully
complete a transaction of the magnitude required. Nonetheless, be assured that
we will attempt to accommodate NiSource's participation in this process.
This is a time of tremendous change and exciting opportunities in the
rapidly deregulating energy industry. I believe the action taken by Columbia's
Board will enable both of our companies to move beyond the litigation and other
disruptive and counterproductive activities of the past four months, and to
pursue initiatives that are in the best interests of our shareholders,
employees, customers and the communities we serve.
Sincerely,
Oliver G. Richard III
Columbia Energy Group, based in Herndon, Va., is one of the nation's
leading energy services companies, with assets of approximately $7 billion. Its
operating companies engage in all phases of the natural gas business, including
exploration and production, transmission, storage and distribution, as well as
retail energy marketing, propane and petroleum product sales, and electric power
generation. Information about Columbia Energy Group (NYSE:CG) is available on
the Internet at www.columbiaenergygroup.com.
# # #