Filed by: NiSource Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Columbia Energy Group
Registration Statement File No: 333-33896
On October 10, 2000, NiSource made a presentation to analysts.
The text of slides which were displayed as part of the analyst
presentation is set forth below.
TEXT OF SLIDES PRESENTED AT ANALYSTS PRESENTATION
OCTOBER 10, 2000
[NiSource logo] [Columbia Energy Group logo]
BUILDING VALUE IN OUR ENERGY CORRIDOR
OCTOBER 2000
These materials contain forward-looking statements as defined in
Section 21E of the Securities Exchange Act of 1934, including
statements about future business operations and financial performance.
These statements involve risks and uncertainties inherent in business
forecasts, and actual results could differ materially from those
indicated in these statements. A number of these risks and
uncertainties are discussed in NiSource's Form 10-Q Quarterly Report
filed with the Securities and Exchange Commission on August 14, 2000.
WE ARE DELIVERING.... 1
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OUR MERGER WITH COLUMBIA ENERGY GROUP CREATES THE PREMIER COMPETITOR
IN OUR ENERGY CORRIDOR
* The merger is expected to close on or about November 1st
-- Fastest approval process for a registered holding
company (eight months)
-- Positive response from state regulators
* Stock has outperformed the other diversified gas
distribution companies and the broader market since
announcement
-- Expect full stock subscription due to superior
economics
* Successful asset sale program
-- Approximately $745 MM of asset sales have been
completed or announced YTD
-- Additional asset sales up to $725 MM expected to be
completed by Q1 2001
* Smooth integration process - Project Compass
-- Existing management team has become stronger
-- Confident in synergy estimates
* Positive interest rate/financing environment
**********************************************************************
* NiSource presents a compelling valuation opportunity *
* at the current level *
**********************************************************************
TO BUILD THE PREMIER ENERGY COMPETITOR... 2
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* Largest natural gas company in our high growth Energy Corridor
-- 3.2 MM customers in 9 states
* Superior knowledge base
-- Skill set spans the full energy value chain
* Positioned for superior financial performance
-- 10%+ EPS growth
[Map of Eastern United States showing high growth Energy Corridor]
BY TAKING THE BEST OF BOTH WORLDS... 3
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*****************************
* Gary L. Neale *
* Chairman, President & CEO *
*****************************
*
***************************
* *
* ***********************
* * Stephen P. Adik *
* * Vice Chairman *
* ***********************
* *
* **************************************
* * *
* *********************** *
* * Michael W. O'Donnell* *
* * Executive V.P. & CFO* *
* *********************** *
* *
* *
************************************************************************************ *
* * * * * *
****************** ********************* ******************** ******************* ******************* ********************
*Jeffrey W. Yundt* *Catherine G. Abbott* *Patrick J. Mulchay* * Joseph L. Turner* * Mark D. Wyckoff * * Stephen P. Smith *
* President * * President * * President * * President * * President * * President *
* Energy * Pipeline * * Merchant * * Primary * * New Energy * * Business *
* Distribution * * Operations * * Energy * * Energy, Inc. * * Businesses * * Services *
****************** ********************* ******************** ******************* ******************* ********************
*Gas and electric *Gas transmission *Gas supply and *Industrial power *Distributed *Administrative and
distribution *Telecom storage generation generation shared services
*E&P *E-commerce
*Electric
generation
*Wholesale energy
trading
MAXIMIZING EFFICIENCY OF THE NEW COMPANY... 4
======================================================================
(Dollars in Millions)
Revenue Cost
Year Enhancements Synergies Total
---- ------------ --------- -----
2001 $1.5 $96.1 $98
2002 $7.7 $133.3 $141
2003 $11.5 $144.5 $156
2004 $15.8 $158.2 $174
2001 2002 2003 2004
---- ---- ---- ----
Cost Savings % of Pro Forma
Combined Non-Fuel O&M 5.8% 8.1% 8.6% 9.4%
Cost Savings % of Columbia
Non-Fuel O&M 9.6% 13.2% 14.2% 15.6%
SUCCESSFULLY DIVESTING NON-CORE ASSETS... 5
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PRE-TAX PROCEEDS ($MM) TIMING
SALES ANNOUNCED:
Market Hub Partners $250 Completed
Columbia LNG 150 Completed
Columbia Retail 44 Completed
Columbia Electric 300 Q4 2000
----
$744
Sales in Progress(1): Up to $725 Q4 2000 - Q1 2001
(1) Sales in progress includes Columbia Propane, Columbia Petroleum,
IWCR, Miller Pipeline and other unregulated businesses.
AND EXECUTING A BALANCED FINANCING PLAN... 6
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----------------------------------------------------------------------
SOURCES AND USES(1)
----------------------------------------------------------------------
$MM %
------- ------
Sources
Debt $2,574 45%
SAILS[SM](2) 106 2%
Asset Sales/Cash 1,363 23%
Common Equity 1,762 30%
---------------------- ------ ----
Total $5,805 100%
Uses
Purchase Consideration
Cash $3,887 67%
Stock 1,762 30%
SAILS[SM](2) 106 2%
Transaction Costs 50 1%
---------------------- ------ ----
Total $5,805 100%
(1) Assumes 30% stock election and asset sales applied to reduction
of debt.
(2) Reflects fair market value assumption of $1.90 per SAILS.
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STRUCTURE
----------------------------------------------------------------------
NiSource
*
*
*
***********************************************
* * *
* * *
* * *
Columbia
Energy NIPSCO Bay State Gas
Group
DIVERSIFY OUR EARNINGS AND GROWTH PROFILE... 7
======================================================================
[Graphs displaying the following data:]
NiSource Stand-Alone NiSource Pro Forma
LTM EBIT LTM EBIT
June 30, 2000(1) June 30, 2000(1)(2)
------------------------- -------------------------
Electric - 70% Gas Distribution - 32%
Gas Distribution - 25% Electric - 32%
Other - 5% Gas Transmission - 30%
E&P - 6%
(1) Excludes corporate overhead and synergies.
(2) Reflects disposition of non-core assets.
**********************************************************************
* A Full Service Energy Company *
**********************************************************************
MAXIMIZE SHAREHOLDER VALUE... 8
======================================================================
**********************************************************************
* ... With a Low Risk / High Growth Strategy *
**********************************************************************
* Regulated Businesses
-- Positive regulatory relationships
-- Aggressive cost efficiencies
-- Pursue incentive opportunities
* Related Diversification
-- Leverage existing asset base into knowledge-based businesses
with high returns
-- Integrating existing businesses into growth markets
* Creating New Business Opportunities in Growth Markets
-- Asset optionality
-- Distributed generation
* Maintain strong financial profile: Solid investment grade
ratings
...CREATES A COMPELLING VALUATION OPPORTUNITY 9
======================================================================
[Graph depicting the following data:]
El Paso Gas Diversified KeySpan Dominion
Energy Distribution(2) Energy Resources Electrics(3) NiSource
------- --------------- ------- --------- ------------ --------
2001E P/E(1) 18.7x 15.2x 15.2x 14.1x 13.4x 12.7x
EPS Growth
Rate(1) 15.0 10.0 8.0 8.8 6.6 10.0+
(1) I/B/E/S Consensus 2001 P/E and I/B/E/S Consensus LTG rate, as of October 6, 2000
(2) Questar, Equitable Resources, National Fuel Gas, Keyspan Energy
(3) Philadelphia Electric Utility Index
* * * * *
These slides contain certain forward-looking statements
within the meaning of the federal securities laws; these
forward-looking statements are subject to various risks and
uncertainties. The factors that could cause actual results to
differ materially from the projections, forecasts, estimates and
expectations discussed herein may include factors that are beyond
the companies' ability to control or estimate precisely, such as
estimates of future market conditions, the behavior of other
market participants and the actions of the Federal and State
regulators. Other factors include, but are not limited to,
actions in the financial markets, weather conditions, economic
conditions in the two companies' service territories,
fluctuations in energy-related commodity prices, conversion
activity, other marketing efforts and other uncertainties. Other
risk factors are detailed from time to time in the two companies'
SEC reports. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the
date of these slides. The companies do not undertake any
obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances
after the date of these stories.
In addition to other documents filed with the Securities and
Exchange Commission by the two companies, NiSource and the new
holding company have filed a registration statement, which
contains a joint proxy statement/prospectus for NiSource Inc. and
Columbia Energy Group. The final joint proxy
statement/prospectus, dated April 24, 2000, is available and has
been distributed to the companies' shareholders. Investors and
security holders are urged to read the joint proxy
statement/prospectus and any other relevant documents filed with
the SEC when they become available because they will contain
important information. Investors and security holders can receive
the joint proxy statement/prospectus and other documents free of
charge at the SEC's web site, www.sec.gov, from NiSource Investor
Relations at 801 East 86th Avenue, Merrillville, Indiana 46410 or
at its web site, www.nisource.com, or from Columbia Investor
Relations at 13880 Dulles Corner Lane, Herndon, Virginia 20171 or
at its web site, www.columbiaenergygroup.com.