SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
the Commission Only
[ ] Definitive Proxy Statement (as permitted by Rule
14a-6(e)(2))
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
WPL HOLDINGS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid: $453,367
2) Form, Schedule or Registration Statement No.: Preliminary proxy
materials of WPL Holdings, Inc., IES Industries Inc. and
Interstate Power Company and Joint Registration Statement on
Form S-4 of WPL Holdings, Inc. and Interstate Power Company
(Registration No. 333-07931).
3) Filing Party: WPL Holdings, Inc., IES Industries Inc. and
Interstate Power Company.
4) Date Filed: January 18, 1996 and July 11, 1996.
[The following press release was distributed to state, regional and
national financial and business media by WPL Holdings, Inc. on August 16,
1996]
WPL Holdings, Inc. NEWS
222 W. Washington Avenue -- P.O. Box 2568
Madison, WI 53701-2568 608/252-4888
FYI: THE FOLLOWING NEWS RELEASE IS BEING DISTRIBUTED THIS MORINING TO
STATE, REGIONAL AND NATIONAL FINANCIAL AND BUSINESS MEDIA. SHOULD YOU
HAVE QUESTIONS REGARDING THIS ANNOUNCEMENT, PLEASE CALL BOB RUSCH,
ASSISTANT TREASURER, AT WISCONSIN POWER AND LIGHT AT (608) 252-3470
For more information, contact
WPL Holdings: Pat McMahan @ (608) 252-3186
WPL HOLDINGS, IES INDUSTRIES AND INTERSTATE POWER CO. ANNOUNCE NEW
EXCHANGE RATIO FOR IES COMMON STOCK
MADISON, Wis. -- Aug.16, 1996 -- WPL Holdings, Inc., IES Industries
Inc. and Interstate Power Co., today announced that they have agreed on a
new exchange ratio for IES, given the strategic value of their
unprecedented three-way merger to customers, shareowners and employees.
If approved, the three utility companies would combine as Interstate
Energy Corp.
The agreement on a new exchange ratio for IES, which all three boards
of directors are recommending that shareowners approve, was announced
following a decision by the IES Board of Directors to reject a recent
unsolicited offer for IES by
MidAmerican Energy Co.
Under terms of the agreement, holders of IES Industries common stock
will receive 1.14 shares of Interstate Energy Corp. common stock for each
share of IES stock they own. Under the previous terms of the merger
agreement, holders of IES common stock would have received 1.01 shares of
Interstate Energy Corp. common stock for each share of IES stock.
Holders of Interstate Power common stock will continue to receive
1.11 shares of Interstate Energy Corp. common stock for each share of
Interstate Power stock they own. WPL shares, meanwhile, will remain
outstanding as an identical number of shares in Interstate Energy Corp.
Erroll B. Davis Jr., president and CEO of WPL Holdings, said all
three Interstate Energy partners believe the strategic value of the three-
way combination justifies the new exchange ratio.
"Unequivocally, the strategic value of our three-way merger for our
customers, shareowners and employees is even stronger today than it was
when we announced the merger agreement nine months ago," he said. "The
new exchange ratio reflects a commitment to the strategic value of this
unprecedented three-way alliance."
According to Davis, the continuing proliferation of merger agreements
in the electric-utility industry only confirms the inevitability of a more
competitive energy marketplace.
"Utility companies are not looking for strategic partners merely to
get bigger," Davis said. "Strategic alliances such as ours are merely a
means, not an end, toward developing and marketing the array of energy
products and services customers will demand once competition is injected
into the electric-utility industry."
Davis also cited the benefits to customers and shareowners that are
projected to accrue from approximately $749 million in operational savings
over 10 years as a result of the three-way merger. Most of the savings
will be achieved through greater economies of scale and the elimination of
duplicated functions.
"As a more cost-effective business, Interstate Energy Corp. will
enable us to maintain low energy rates and high-quality customer service
for more than 1 million energy customers in a four-state region," Davis
said.
The annual meetings of shareowners of WPL Holdings, IES and
Interstate Power remain scheduled for Thursday, Sept. 5, beginning at 10
a.m., with the WPL Holdings annual meeting to take place at the Dane
County Exposition Center in Madison. In the very near future, WPL
Holdings shareowners will receive supplemental proxy materials describing
the new stock exchange ratio.
WPL Holdings, IES Industries and Interstate Power announced the
three-way merger agreement on Nov. 11, 1995. If the merger is approved by
shareowners and regulatory authorities, Interstate Energy Corp. would
serve approximately 870,000 electric and 360,000 natural gas customers in
Wisconsin, Iowa, Minnesota and Illinois.
--30--
[The following is the statement of Erroll B. Davis, Jr., President and
Chief Executive Officer of WPL Holdings, Inc., at the August 16, 1996
financial analyst conference and/or press conference]
STATEMENT FOR ERROLL DAVIS AT AUGUST 16 FINANCIAL ANALYST CONFERENCE
AND/OR PRESS CONFERENCE
Thank you very much, Lee.
For the record, my name is Erroll Davis and I am president and CEO of WPL
Holdings, Inc.
(As Lee Liu and Mike Chase have said), we are announcing the new stock-
exchange ratio today because the strategic value of our three-way merger
is even more critical now than it was when we announced the original
merger agreement nine months ago.
The recent proliferation of utility-industry mergers during the last
several months only verifies the increasing appeal of strategic alliances.
In the face of an increasingly competitive energy marketplace, the
combination of our three companies will clearly position Interstate Energy
Corporation far ahead of where any one of us might emerge as a stand-alone
utility.
Clearly, Interstate Energy Corporation will operate more cost-effectively
because of the considerable operational savings we will capture through a
merger.
Over a ten-year period, it is projected that the three companies will save
about $749 million through greater economies of scale and the elimination
of duplicated functions.
At the same time, however, none of us believe we can cost-cut our way to
long-term success.
To emerge as a winning player over the long haul, we must meet our
customers needs -- needs they have today and needs they may not even know
they will have tomorrow.
From this perspective, the creation of Interstate Energy Corporation will
provide us with a customer base large enough to develop and market the
very energy products and services it will take to satisfy the ever-
changing demands of our customers.
###
[The following key talking points script was or will be used by Erroll B.
Davis, Jr., President and Chief Executive Officer of WPL Holdings, Inc.,
and other WPL Holdings, Inc. personnel]
KEY TALKING POINTS
--THIS IS A VERY GOOD DEAL FOR WPLH, IES AND IPC CUSTOMERS, SHAREOWNERS
AND EMPLOYEES. ALL STAKEHOLDERS BENEFIT FAR MORE BY COMBINING AS
INTERSTATE ENERGY CORP THAN BY REMAINING AS THREE STAND-ALONE COMPANIES.
--THIS DEAL REFLECTS A SOLID COMMITMENT BY ALL THREE COMPANIES TO THE
LONG-TERM STRATEGIC VALUE OF INTERSTATE ENERGY CORP. THAT STRATEGIC VALUE
IS EVEN MORE CRITICAL TODAY THAN WHEN THE MERGER WAS ANNOUNCED NINE MONTHS
AGO.
--THE RECENT PROLIFERATION OF UTILITY-INDUSTRY MERGERS ONLY VERIFIES THE
INCREASING APPEAL OF STRATEGIC ALLIANCES.
--WPL HOLDINGS IS NOT MORTGAGING AWAY ITS FUTURE TO PRESERVE THE
INTERSTATE ENERGY CORP. MERGER.
--WPL HOLDINGS APPROACHES THIS TRANSACTION FROM A POSITION OF FINANCIAL
STRENGTH. COMMON STOCK DIVIDENDS HAVE INCREASED EACH YEAR SINCE 1973.
SHAREOWNERS HAVE RECEIVED DIVIDENDS FOR 202 CONSECUTIVE QUARTERS, DATING
BACK TO 1946. MOREOVER, WPLH HAS A DOUBLE-A (AA) DEBT RATING FROM
STANDARD AND POOR'S.
--STOCK-EXCHANGE RATIO WAS CHANGED FOR IES SHAREOWNERS, WHO WILL RECEIVE
1.14, RATHER THAN 1.01 SHARES OF INTERSTATE ENERGY CORP. STOCK.
--IMPACT OF NEW EXCHANGE RATIO ON IES SHARES:
--AMOUNTS TO APPROXIMATELY $36 INSTEAD OF $32 (OLD RATIO)
--IMPACT OF NEW EXCHANGE RATIO ON IES DIVIDENDS
--OWNER OF 100 IES SHARES WOULD EARN $224 IN ANNUAL
DIVIDEND INCOME INSTEAD OF $199 (OLD RATIO)
--ANNUAL MEETINGS REMAIN SCHEDULED FOR THURSDAY, SEPT. 5
--SHAREOWNERS WILL RECEIVE SUPPLEMENTAL PROXY MATERIALS SHORTLY
[The following document is being used by executive officers and other
personnel of WPL Holdings, Inc. to respond to financial analyst questions]
Proposed Financial Analyst Questions and Answers
In terms of value, how does the new agreed upon stock exchange ratio
compare with the previous exchange ratio offered to each shareholder of
IES Industries?
Under the terms of the new agreement reached among IES Industries Inc.
(IES), WPL Holdings, Inc. (WPH) and Interstate Power Company, holders of
IES would receive 1.14 shares of Interstate Energy Corporation (IEC) stock
for each share of IES. The terms of the merger agreement continue to
provide for WPH to be renamed Interstate Energy Corporation The previous
merger terms provided for 1.01 shares of IEC stock for each share of IES
held. Based upon WPL Holdings closing stock price of $31.625 on August
14, 1996, each share of IES would be worth $36 as compared to the previous
value of $32 based on the August 14, 1996 closing share price.
Will there be any changes in the regulatory approval process due to this
new exchange ratio offer?
No. We will continue to need the approvals of the four state commissions
in which we will do business, the three companies' shareholder groups,
FERC, NRC, and the SEC.
Why did IES reject the recent unsolicited offer for IES by MidAmerican
Energy Co.?
This was a decision of the IES Board of Directors based on the exercise of
the Board's fiduciary duties.
In the event MidAmerican increases its unsolicited offer for IES, what
will be the response of the three companies currently involved in the
proposed Interstate Energy Corporation transaction?
It is not possible to provide a precise response. We believe the
transaction currently proposed which reflects the new exchange ratio for
IES shares represents excellent long-term value for current IES
shareholders. In addition, we believe that MidAmerican's bid is
questionable given their current financial position, the additional debt
they will assume as well as asset sales they project to finance their
proposed unsolicited offer to purchase IES.
What will be the earnings per share impact on WPH of this new exchange
ratio?
We believe the impact will be slightly dilutive in the first year and
accretive in subsequent years for WPH.
[The following document is being used by executive officers and customer
service personnel of WPL Holdings, Inc. to respond to questions]
Q&A for Executive Group and Customer Service Center
Q: What's the news?
On August 5, MidAmerican Energy Company of Des Moines, Iowa announced an
unsolicited bid to acquire IES Industries, one of the two Iowa utility
companies WPL Holdings is planning to merge with under the new name of
Interstate Energy Corp.
Since then, the IES Board of Directors rejected MidAmerican's offer.
On August 16, WPL Holdings, IES Industries and Interstate Power Company
announced a new stock-exchange ratio for IES to enhance the likelihood
that the three-way merger will be completed.
Q: How is the stock-exchange ratio being changed?
Under the terms of the new agreement, holders of IES Industries common
stock would receive 1.14 shares of Interstate Energy Corp. common stock
for each share of IES Industries stock they own. Under the previous terms
of the merger agreement, holders of IES common stock would have received
1.01 shares of Interstate Energy Corp. common stock for each share of IES
stock.
Q: Who does the new stock-exchange ratio apply to?
The new exchange ratio only applies to IES shareowners. Shareowners of
Interstate Power Co. will still receive 1.11 shares of Interstate Energy
Corp. common stock for each share of Interstate Power stock, while WPL
Holdings shares will remain outstanding as an identical number of
Interstate Energy Corp. shares.
Q: What is the value of the new exchange ratio to IES shareowners?
The new exchange ratio translates into a value of approximately $36.05 per
IES share, based on the Aug. 14 WPL Holdings closing price of $31 5/8.
The value to IES shareowners is affected by the WPL Holdings stock price
because the merger agreement calls for WPL Holdings shares to be issued in
the merger. WPL Holdings will be renamed as Interstate Energy Corporation
at the time of the merger.
Q: Why was the stock-exchange ratio changed?
WPL Holdings, Inc., IES Industries Inc. and Interstate Power Co. are
committed to achieving the strategic value that would be gained by
combining as Interstate Energy Corp. As a result of a decision by the IES
Industries Board of Directors to reject a recent unsolicited offer of IES
by MidAmerican Energy, WPL Holdings, IES Industries and Interstate Power
then agreed to the new exchange ratio.
Q: Is WPL Holdings approaching this matter from a position of strength?
WPL Holdings is bolstered by a long history of financial strength. Common
stock dividends have been increased each year since 1973, while
shareowners have experienced an uninterrupted stream of dividends over the
past 202 consecutive quarters, dating back to 1946. Moreover, WPLH has
received a debt rating of AA each year since 1990 from Standard & Poor's.
Q: What impact will the new exchange ratio have on dividends for IES
shareowners?
IES common stock currently pays an annual dividend rate of $2.10 a share.
Accordingly, a holder of 100 IES shares currently earns $210 in dividend
income each year. Under the terms of the new exchange ratio, IES
shareowners would earn $224.58 in annual dividends from Interstate Energy
Corp. Under the terms of the previous merger agreement, IES shareowners
would have earned $198.97 in dividend income from Interstate Energy Corp.
Q: Will the 1996 WPL Holdings annual meeting still take place as
scheduled on September 5?
The 1996 WPL Holdings annual meeting will be held as scheduled on
Thursday, Sept. 5 at the Dane County Exposition Center in Madison. All
WPL Holdings shareowners will soon receive supplemental proxy materials
reflecting the new stock-change ratio.
Q: Who can customers call with further questions?
Bob Rusch, assistant treasurer, at extension 3470 or Shareowner Services
at extension 3110.
[The following is the voice-mail message Erroll B. Davis, Jr., President
and Chief Executive Officer of WPL Holdings, Inc., broadcast to all WPL
Holdings, Inc. employees on August 16, 1996]
VOICE-MAIL MESSAGE FROM ERROLL DAVIS -- AUG. 16, 1996
TRANSMITTED TO ALL WPLH EMPLOYEES
This is Erroll Davis with a message to all WPL Holdings employees.
You will also receive a News Bulletin later today that explains in greater
detail the information I am about to share with you.
As follow-up to the voice-mail I left you a few days ago, I am pleased to
report that WPL Holdings, IES Industries and Interstate Power Company are
announcing this morning what we believe to be a very positive step with
respect to our three-way merger agreement.
Given the strategic value of our unprecedented three-way alliance to our
customers, shareowners and employees, a new stock-exchange ratio for IES
has been agreed upon by the three utility companies and ratified by the
three boards of directors.
This agreement, which must be approved by all three sets of shareowners,
follows a decision by the IES Industries Board of Directors to reject the
recent unsolicited offer for IES by MidAmerican Energy Company.
Under the terms of our new agreement, shareowners of IES Industries will
receive 1.14, rather than 1.01 shares of Interstate Energy Corp. common
stock for every share they currently own of IES Industries.
This new exchange ratio only applies to IES shareowners. As has been the
case all along, each share of WPL Holdings common stock will remain
outstanding as one share of Interstate Energy Corporation stock after the
merger.
While the new exchange ratio reflects an increased contribution to the
deal on the part of WPL Holdings, please rest assured that we did not
mortgage away the future of this company to preserve our merger with IES
and Interstate Power.
We did, however, take this action because the strategic value of our
three-way merger is even more critical today than it was when we announced
the original merger agreement nine months ago. The recent proliferation
of utility-industry mergers during the last few months only verifies the
increasing appeal of strategic alliances
In the face of an increasingly competitive energy marketplace, the
combination of our three companies will clearly position Interstate Energy
Corporation far ahead of where any one of us might emerge as a stand-alone
utility.
Clearly, Interstate Energy Corporation will operate more cost-effectively
because of the considerable operational savings we will capture through a
merger.
Over a ten-year period, it is projected that the three companies will save
about $749 million through greater economies of scale and the elimination
of duplicated functions.
At the same time, however, we cannot cost-cut our way to long-term
success.
To emerge as a winning player over the long haul, we must meet our
customers needs -- needs they have today and needs they may not even know
they will have tomorrow.
From this perspective, the creation of Interstate Energy Corporation will
provide us with a customer base large enough to develop and market the
very energy products and services it will take to satisfy the ever-
changing demands of our customers.
Again, let me be the first to acknowledge the occasional discomfort that
comes with the constant beat of change.
Despite a few bumps we may encounter along the ride, please be assured
that your board of directors and senior management are taking every step
to ensure the long-term viability and competitive position of WPL
Holdings.
As more information becomes available, we will be sharing it with you. In
the meantime, please feel free to call the Interstate Energy Corporation
Merger Hotline at 1-800-818-2041 with any questions you may have.
Thank you very much and have a good day.
###
[The following announcement is being used on the WPL Holdings, Inc.
customer service center recording]
ANNOUNCEMENT FOR CUSTOMER SERVICE CENTER RECORDING
On Friday, August 16, an announcement was made regarding the proposed
merger between WPL Holdings and two Iowa utility companies, IES Industries
of Cedar Rapids and Interstate Power Company of Dubuque.
To capture the strategic value that will be achieved through this three-
way merger, the three companies made a change to the IES stock-exchange
ratio that would be used for the issuance of stock in the combined holding
company to be known as Interstate Energy Corporation.
As a result of the August 16 announcement, holders of IES Industries
common stock would receive 1.14, rather than 1.01 shares of Interstate
Energy Corporation once the merger is completed.
This new stock-exchange ratio would not apply to shareowners of WPL
Holdings or Interstate Power Company.
As provided by the original merger agreement, each share of WPL Holdings
common stock would remain outstanding as one share of Interstate Energy
Corporation common stock following the merger.
Erroll Davis, president and CEO of WPL Holdings, said the new stock-
exchange ratio reflects a commitment to the strategic value of the three-
way alliance with IES Industries and Interstate Power Company.
"Unequivocally," said Mr. Davis, "the strategic value of merger for our
customers, shareowners and employees is even more critical today than it
was when we announced the merger agreement nine months ago. The recent
proliferation of utility-industry mergers over the last few months alone
only verifies the increasing appeal of strategic alliances."
Mr. Davis also said that the three-way merger will result in a more cost-
effective company that will provide customers will high-quality service at
low rates.
Shareowners of WPL Holdings will be sent more information about the new
stock-exchange ratio. This information will help shareowners cast their
proxy card ballots in a timely manner before the September 5 annual
meeting scheduled to begin at 10 a.m. at the Dane County Exposition Center
in Madison.
If you have specific questions about this announcement or other shareowner
concerns, please call the toll-free WPL Holdings Shareowner Services line
at 1-800-356-5343. If you have other customer service issues, please
press __. You may repeat this message by pressing ___. If you are using
a rotary dial phone, please stay on the line for more assistance.
[The following News Bulletin was sent to all WPL Holdings, Inc. employees
on August 16, 1996]
WPLH NEWS BULLETIN
PRINT ON GRAY LETTERHEAD
AND DISTRIBUTE TO EVERY EMPLOYEE ASAP
Any Questions Contact: Renee Braun
Corporate Communications Dept.
Ext. 3182
August 16, 1996
WPL HOLDINGS, IES INDUSTRIES AND INTERSTATE POWER CO. ANNOUNCE NEW
EXCHANGE RATIO FOR IES COMMON STOCK
WPL Holdings, Inc., IES Industries Inc. and Interstate Power Co.,
today announced that they have agreed on a new exchange ratio for IES,
given the strategic value of their unprecedented three-way merger to
customers, shareowners and employees. If approved, the three utility
companies would combine as Interstate Energy Corp.
The agreement on a new exchange ratio for IES, which all three boards
of directors are recommending that shareowners approve, was announced
following a decision by the IES Board of Directors to reject a recent
unsolicited offer for IES by MidAmerican Energy Co.
Under terms of the agreement, holders of IES Industries common stock
will receive 1.14 shares of Interstate Energy Corp. common stock for each
share of IES stock they own. Under the previous terms of the merger
agreement, holders of IES common stock would have received 1.01 shares of
Interstate Energy Corp. common stock for each share of IES stock. Holders
of Interstate Power common stock will continue to receive 1.11 shares of
Interstate Energy Corp. common stock for each share of Interstate Power
stock they own. WPL shares, meanwhile, will remain outstanding as an
identical number of shares in Interstate Energy Corp.
Erroll B. Davis Jr., president and CEO of WPL Holdings, said all
three Interstate Energy partners believe the strategic value of the three-
way combination justifies the new exchange ratio.
"Unequivocally, the strategic value of our three-way merger for our
customers, shareowners and employees is even stronger today than it was
when we announced the merger agreement nine months ago," he said. "The
new exchange ratio reflects a commitment to the strategic value of this
unprecedented three-way alliance."
According to Davis, the continuing proliferation of merger agreements
in the electric-utility industry only confirms the inevitability of a more
competitive energy marketplace.
"Utility companies are not looking for strategic partners merely to
get bigger," Davis said. "Strategic alliances such as ours are merely a
means, not an end, toward developing and marketing the array of energy
products and services customers will demand once competition is injected
into the electric-utility industry."
(over)
Davis also cited the benefits to customers and shareowners that are
projected to accrue from approximately $749 million in operational savings
over 10 years as a result of the three-way merger. Most of the savings
will be achieved through greater economies of scale and the elimination of
duplicated functions.
"As a more cost-effective business, Interstate Energy Corp. will
enable us to maintain low energy rates and high-quality customer service
for more than 1 million energy customers in a four-state region," Davis
said.
The annual meetings of shareowners of WPL Holdings, IES and
Interstate Power remain scheduled for Thursday, Sept. 5, beginning at 10
a.m., with the WPL Holdings annual meeting to take place at the Dane
County Exposition Center in Madison. In the very near future, WPL
Holdings shareowners will receive supplemental proxy materials describing
the new stock exchange ratio.
WPL Holdings, IES Industries and Interstate Power announced the
three-way merger agreement on Nov. 11, 1995. If the merger is approved by
shareowners and regulatory authorities, Interstate Energy Corp. would
serve approximately 870,000 electric and 360,000 natural gas customers in
Wisconsin, Iowa, Minnesota and Illinois.
ATTACHMENT (2): Fact sheet on new exchange ratio
IES Press Release
WPL HOLDINGS, INC., IES INDUSTRIES INC. AND INTERSTATE POWER CO. ANNOUNCE
NEW EXCHANGE RATIO FOR IES COMMON STOCK
KEY FACTS
HOW THE RATIO IS CHANGED
Under the terms of the revised agreement, holders of IES Industries common
stock would receive 1.14 shares of Interstate Energy Corp. common stock
for each share of IES Industries stock they own. Under the previous terms
of the merger agreement, holders of IES common stock would have received
1.01 shares of Interstate Energy Corp. common stock for each share of IES
stock.
The new exchange ratio only applies to IES shareowners. Shareowners of
Interstate Power Co. will still receive 1.11 shares of Interstate Energy
Corp. common stock for each share of Interstate Power stock, while WPL
Holdings shares will remain outstanding as an identical number of
Interstate Energy Corp. shares.
IMPACT ON IES SHAREOWNERS
Under the terms of the revised Interstate Energy Corp. merger agreement,
IES shareowners will receive 1.14 shares of Interstate Energy Corp. common
stock for each share of IES common stock. The new exchange ratio
translates into a value of approximately $36.05 per IES share, based on
the Aug. 14 WPL Holdings closing price of $31 5/8.
WHY THE RATIO WAS CHANGED
WPL Holdings, Inc., IES Industries Inc. and Interstate Power Co. are
committed to achieving the strategic value that would be gained by
combining as Interstate Energy Corp. As a result of a decision by the IES
Industries Board of Directors to reject a recent unsolicited offer of IES
by MidAmerican Energy, WPL Holdings, IES Industries and Interstate Power
then agreed to the new exchange ratio.
DIVIDEND IMPACT
IES common stock currently pays an annual dividend rate of $2.10 a share.
Accordingly, a holder of 100 IES shares currently earns $210 in dividend
income each year. Under the terms of the new exchange ratio, IES
shareowners would earn $224.58 in annual dividends from Interstate Energy
Corp. Under the terms of the prior IES exchange ratio, IES shareowners
would have earned $198.97 in dividend income from Interstate Energy Corp.
WPLH's FINANCIAL STRENGTH
WPL Holdings is bolstered by a long history of financial strength. Common
stock dividends have been increased each year since 1973, while
shareowners have experienced an uninterrupted stream of dividends over the
past 202 consecutive quarters, dating back to 1946. Moreover, WPLH has
received a debt rating of AA each year since 1990 from Standard & Poor's.
WPLH, IES AND IPC ANNUAL MEETINGS STILL ON FOR SEPT. 5
The 1996 annual shareowners meetings for WPL Holdings, IES Industries and
Interstate Power Co. will be held as scheduled on Thursday, Sept. 5
beginning at 10 a.m. The WPL Holdings annual meeting will take place at
the Dane County Exposition Center in Madison. Shareowners will receive
supplemental proxy materials reflecting the new stock-change ratio in the
near future. Shareowners will have enough time to vote on the
restructured merger agreement before the Sept. 5 annual meetings.
For Release: August 16, 1996
Contact: Diane Ramsey (Media) Denny Vass (Financial)
(319) 398-7288 (319) 398-4475
IES INDUSTRIES BOARD APPROVES REVISED MERGER
AGREEMENT WITH WPL HOLDINGS AND INTERSTATE POWER
Rejects MidAmerican's Hostile Takeover Proposal;
Calls Unsolicited Bid "Inferior"
CEDAR RAPIDS, IOWA - IES Industries Inc. (NYSE: IES) announced today
that its Board of Directors unanimously approved revised terms of a merger
agreement with WPL Holdings, Inc. (WPLH) of Madison, Wisconsin, and
Interstate Power Company (IPC) of Dubuque, Iowa, to form a new regional
powerhouse, Interstate Energy Corporation. Under the terms of the revised
agreement, which was also unanimously approved by the directors present at
the Board meetings of WPLH and IPC, each share of IES common stock will be
converted into 1.14 shares of Interstate Energy common stock. Based on
the closing price of WPLH common stock on August 15, 1996, each share of
IES common stock is valued at $36.20 per share, under the new terms. In
addition, based on WPL's current dividend rate, it is anticipated that,
under the new terms, IES shareholders will receive an initial annual cash
dividend of at least $2.25 for each share of IES common stock now held.
Under the former agreement, each IES common share was to be
converted into 1.01 shares of Interstate Energy common stock.
Under the revised agreement, each share of IPC common stock will be
exchanged for 1.11 shares of Interstate Energy common stock and owners of
WPL Holdings common stock will retain the same number of shares of common
stock they currently own, and those shares will be converted into
Interstate Energy common stock.
The IES Board also unanimously rejected the hostile takeover
proposal from MidAmerican Energy Co. of Des Moines, Iowa, concluding that
it is inferior to the terms of the revised Interstate Energy merger
agreement and is not in the best interests of IES shareholders. The Board
also viewed with concern the impact of the proposed MidAmerican
transaction on customers, employees and the communities IES has served for
more than 100 years. In addition, the Board received an opinion from its
financial advisor, Morgan Stanley & Company, that the revised exchange
ratio is fair to the shareholders of IES common stock from a financial
point of view.
Lee Liu, IES Industries Chairman of the Board, President & Chief
Executive Officer, said: "Under the revised agreement, the Interstate
Energy transaction provides enhanced value to IES shareholders, giving
them an even larger stake in a regional utility with excellent growth
potential. By contrast, analysis of the MidAmerican proposal makes clear
that, contrary to their public statements, the value of the MidAmerican
proposal is substantially less than they represent. The Board's analysis
considered, among other things, the recent trading history of MidAmerican
stock; the fact that for most IES shareholders the exercise of the cash
option would entail adverse tax consequences; the fact that even with the
most rapid regulatory approval process for the MidAmerican transaction - a
scenario we believe unlikely - the MidAmerican transaction could take
significantly longer to complete than the Interstate Energy transaction;
MidAmerican's ability to sustain its dividend, given its high payout ratio
and the significant additional indebtedness it would incur under its
proposal; and the fact that the MidAmerican transaction contemplates
significant sales of assets to finance the transaction."
"By MidAmerican's own admission, its expected cost savings of $500
million over 10 years are significantly below the $749 million in cost
savings we anticipate over the same period under the Interstate Energy
merger. Given that, and the $400 million in goodwill amortization that
would reduce reported earnings, we must question how MidAmerican could
possibly afford the ambitious promises it is making to customers and
shareholders. Clearly, the financial burden stemming from the acquisition
premium and the goodwill amortization will have to be borne by ratepaying
customers and shareholders."
"Finally, given the greater overlap of service territories between
MidAmerican and IES, a MidAmerican takeover of IES would result in the
loss of more Iowa jobs and, in our view, significant economic hardship for
Cedar Rapids. In the case of Interstate Energy, it will have 60 percent
of its assets and a commensurate number of its total employees in Iowa.
We believe these issues will not go unnoticed by Iowa regulators and
public officials."
Mr. Liu noted that IES Industries shareholders will own a
significant share - more than 44% - of a powerful regional company - well-
positioned to provide customers with competitively-priced electricity and
to do it in a way that will enable the new company to generate enhanced
value to IES' shareholders over the long term, as well. "The ability to
market electricity from our efficient, low-cost power plants to
attractive, higher-growth areas in neighboring states and the financial
resources to pursue these opportunities, will catapult Interstate Energy
into new markets. Altogether, the Interstate Energy combination offers
strategic advantages far superior to the MidAmerican alternative," he
said.
"Under the Interstate Energy combination, there will be four major
business units in three locations. Both the Energy Delivery headquarters
and the unregulated business unit will be in Cedar Rapids. The
Administrative Support business will be in Dubuque. This will
significantly increase the business activities in the Iowa cities. The
Generation business unit will be in Madison. The Interstate Energy
holding company will be in Madison," Liu concluded.
IES further said that supplemental proxy material will be sent to
its shareholders promptly so that they can vote on the new merger plan at
the Annual Meeting, which remains scheduled for Thursday, September 5,
starting at 10 a.m. in Cedar Rapids.
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