NEWS RELEASE -- November 11, 1995
Cedar Rapids, IA, Dubuque, IA and Madison, WI
The joint combination of IES Industries Inc., Interstate Power Company
and WPL Holdings, Inc., resulting in the holding company to be known as
Interstate Energy Corporation, will become the first three-way
combination in the utility industry.
IES Industries Inc., Interstate Power Company and WPL Holdings, Inc. today
announced the signing of a merger agreement providing for the combination
of the three companies. The resulting holding company will be known as
Interstate Energy Corporation.
The strategic combination has been approved by the respective companies'
boards of directors and will result in a corporation with a market
capitalization of approximately $2 billion and assets of nearly $4
billion. Interstate Energy Corporation will rank 34th in the nation among
utility holding companies, based on 1994 revenues.
The transaction will be structured as a tax-free, stock-for-stock merger.
In the merger, holders of IES Industries Inc. common stock will receive
.98 shares of WPL Holdings common stock for each share of IES Industries
Inc. common stock they own on the effective date of the merger. Holders
of Interstate Power Company common stock will receive 1.11 shares of WPL
Holdings common stock for each share of Interstate Power Company stock
they own, and owners of WPL Holdings common stock will retain the number
of shares of common stock they own on the effective date. All shares of
common stock are listed on the New York Stock Exchange.
The dividend at the effective date of the merger will be the dividend then
being paid by WPL Holdings. Subsequent dividend policy will be developed
by the board of directors of Interstate Energy Corporation.
After the combination, Wisconsin Power and Light Company, IES Utilities,
and Interstate Power Company will continue to operate under those names as
the principal subsidiaries of Interstate Energy Corporation. WPL Holdings
will change its name to Interstate Energy Corporation. IES Diversified
and Heartland Development Corporation will be combined under one entity to
manage the diversified operations at Interstate Energy Corporation.
Initially, facility headquarters will be as follows: IES Utilities in
Cedar Rapids; Interstate Power Company in Dubuque; Wisconsin Power and
Light and Interstate Energy Corporation in Madison.
The combination of these three quality utilities with similar service
territory characteristics will provide substantial competitive and
operational advantages within the region in the face of utility
deregulation. The combination will enable the operating companies to
maintain low rates and a high level of customer service, and enhance
future shareowner value as well. Estimated savings from the combination
are projected to be approximately $700 million over the next 10 years.
The majority of these savings will come through economies of scale and
elimination of redundancies among the three companies.
The strategic and financial benefits produced by this merger are
compelling. This transaction provides shareowners ownership in a company
with earnings and dividend growth superior to that which each can achieve
on a stand-alone basis. Shareowners will participate in a balanced,
larger company that is better prepared to face competitive pressures.
After the combination, Lee Liu, presently chairman, president and chief
executive officer of IES Industries, will serve as chairman of the board
of Interstate Energy Corporation. Wayne H. Stoppelmoor, chairman,
president and chief executive officer of Interstate Power Company, will be
the vice chairman. Erroll B. Davis Jr., chairman, president and chief
executive officer of WPL Holdings will become president and chief
executive officer of Interstate Energy Corporation. Two years after the
combination, Liu and Stoppelmoor will step down and Davis will succeed
Liu as chairman.
The new, combined organization will serve more than 850,000 electric and
360,000 natural gas customers in Iowa, Illinois, Minnesota and Wisconsin.
In addition WPL Holdings, through its Heartland Development Corporation
subsidiaries, has offices in 25 states and two foreign countries. IES
Diversified has non-regulated energy businesses with eight offices in six
states and interests in a utility in New Zealand. The new holding company
will consist of utility and non-utility operations.
"The combination of these companies will create significant long-term
benefits for our employees, customers and shareholders," Liu said.
"Interstate Energy Corporation will be well-positioned to build on its
strengths as a low-cost energy provider and committed community partner.
That strategy should generate opportunities for our employees and
shareholders."
"The electric utility world is changing around us and we must be ready for
the new competition era. This strategic combination will ensure our
position in a competitive regional market, as well as offer us
opportunities for better customer service and continued low rates,"
stated Stoppelmoor.
"I have said for some time that alliances would be a significant part of
WPL Holdings ' strategy for the future," commented Davis. "We intend to
provide better customer service at competitive rates, while increasing
shareowner value. This combination will move us well along toward
becoming a regionally and nationally competitive energy company."
The combination is subject to approval by the shareowners of all three
companies, the utility commissions in Illinois, Iowa, Minnesota and
Wisconsin, the Securities and Exchange Commission, the Federal Energy
Regulatory Commission, and the Nuclear Regulatory Commission. The merger
is also subject to the expiration of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act. It is a condition of
closing that the parties receive an opinion of counsel to the effect that
the exchange of stock qualifies as a tax-free transaction, and obtain
appropriate accountant assurances that the transaction will be accounted
for as a pooling of interests. Preliminary proxy materials will be filed
with the Securities and Exchange Commission in the near future. Based on
optimal times for the required regulatory approvals, the merger is
expected to be completed by early 1997.
OWNERSHIP INFORMATION
As of the close of business on November 10, 1995, WPL Holdings, Inc. had
30.8 million shares outstanding, IES Industries Inc. had 29.3 million
shares outstanding and Interstate Power Company had 9.6 million shares
outstanding. Accordingly, 43.9 percent of the common equity of Interstate
Energy Corporation will be held by existing WPL Holdings shareholders,
40.9 percent by existing IES Industries shareholders and 15.2 percent by
Interstate Power Company common shareholders. The preferred stock of
Interstate Power Company will remain outstanding after the transaction.
The Board of Directors of Interstate Energy Corporation will be composed
of six directors to be nominated by WPL Holdings, six directors to be
nominated by IES Industries and three directors to be nominated by
Interstate Power Company.
CORPORATE PROFILES
IES Industries Inc.
IES Industries Inc. was created in July, 1991 by the merger of two
utility holding companies - I.E. Industries Inc. and Iowa Southern Inc.
The subsidiary utility of IES Industries Inc. - IES Utility - was created
following the December 31, 1993, merger of Iowa Electric Light and Power
Co. and Iowa Southern Utilities Co. IES Industries is a diversified
holding company with two wholly-owned subsidiaries, IES Utilities and IES
Diversified. IES Utilities serves 330,000 electric customers and 173,000
natural gas customers in more than 500 communities across 23,000 square
miles of Iowa. It also provides wholesale electrical service to 30
municipal utilities. IES Diversified has interests in energy,
telecommunications and transportation businesses.
IES Utilities has a peak generating capacity of 1,875 megawatts. Fifty
percent comes from fossil fuel, 26 percent from the nuclear powered Duane
Arnold Energy Center and 24 percent from purchased power. The company's
combined operating revenues for 1994 were $785,864,000 with net income of
$66,818,000 and assets of more than $1.8 billion. IES Industries is
headquartered in Cedar Rapids.
Interstate Power Company
Interstate Power Company is a combined gas and electric utility which
serves approximately 10,000 square miles of territory in northwest
Illinois, northeast Iowa and southern Minnesota. It has 162,000 retail
electric and 48,600 natural gas customers in 242 communities. The company
also serves 19 wholesale municipal utilities throughout the region and is
headquartered in Dubuque, Iowa.
Interstate Power has a peak generating capability of approximately 1,300
megawatts. Sixty-two percent of its energy comes from fossil fuels, with
the remainder coming from purchased sources. The company's 1994 operating
revenues were $307,650,612 with net income of $20,666,612 and assets of
more than $600 million.
WPL Holdings, Inc.
WPL Holdings, Inc., with headquarters in Madison is the parent company of
Wisconsin Power and Light and Heartland Development Corporation. Under
its utility subsidiary, the company serves 370,000 electric retail and
140,000 natural gas customers in more than 600 communities over 16,000
square miles of territory in south central Wisconsin. It also serves 30
municipal and cooperative utilities with wholesale power. Wisconsin Power
and Light has a generating capacity of 2,200 megawatts. Approximately 65
percent of its energy comes from fossil fuel sources, 14 percent from the
Kewaunee Energy Center nuclear facility, 2 percent from hydro and about 19
percent from purchased sources.
The company's non-regulated subsidiary, Heartland Development Corporation
has investments in energy, affordable housing and environmental
businesses, with offices in 25 states and in two foreign countries.
WPL Holdings' combined operating revenues for 1994 was $816,159,000 with
net income of $65,250,000 The company had combined assets of $1.6
billion.
MEDIA CONTACTS
Diane Ramsey @ IES Industries Inc. 319-398-7288 (319-375-0651- pager)
Terry Harrmann @ Interstate Power Company 319-557-2215 (no pager)
Linda Brei @ WPL Holdings, Inc. 608-252-3081 (608-277-7120 - pager)
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