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 (as
permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[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: $500,063
2) Form, Schedule or Registration Statement No.: Preliminary proxy
materials of WPL Holdings, Inc., IES Industries Inc. and
Interstate Power Company, Joint Registration Statement on
Form S-4 of WPL Holdings, Inc. and Interstate Power Company
(Registration No. 333-07931) and Joint Registration Statement on
Form S-4 of WPL Holdings, Inc. and Interstate Power Company
(Registration No. 333-10401).
3) Filing Party: WPL Holdings, Inc., IES Industries Inc. and
Interstate Power Company.
4) Date Filed: January 18, 1996, July 11, 1996 and August 19,
1996.
[The following is an advertisement published or to be published in
newspapers throughout the State of Wisconsin starting on August 27, 1996.]
A MESSAGE
TO ALL
WPL Holdings
shareowners
The Interstate Energy Corporation merger proposal "offers superior
long-term returns to shareholders."
-Robert W. Baird & Co.*
*Robert W. Baird & Co., Incorporated is one of the oldest and
largest regional investment banking firms in the United States.
Baird serves the investment community as investment banker, equity
research specialist, broker and asset manager. The firm has 59
offices in 10 states, concentrated in the Midwest.
As a WPL Holdings shareowner, you have the [Map]
opportunity to approve a merger agreement
involving WPL Holdings and two Iowa-based
utility companies - IES Industries Inc. and Proposed Interstate
Interstate Power Co. Energy Corporation
service area
The Board of Directors of WPL Holdings encourages you to vote
for the combination of these three quality utility companies as
Interstate Energy Corporation.
The Interstate Energy Corporation merger proposal "offers
superior long-term returns to shareholders," according to an Aug.
19 analysis issued by Robert W. Baird & Co., a Milwaukee-based
regional investment banking firm.
Please take the time to send in your WPL Holdings proxy card prior
to the WPL Holdings annual meeting on Thursday, Sept. 5.
If you have misplaced your proxy materials or have any
questions, please feel free to contact WPL Holdings Shareowner
Services at 1-800-356-5343.
[Logo]
WPL Holdings, Inc.
[The following letter from Erroll B. Davis, Jr., President and Chief
Executive Officer of WPL Holdings, Inc., is being distributed to all
shareowners of WPL Holdings, Inc. starting on August 27, 1996.]
[LOGO] WPL Holdings, Inc. 222 West
The parent of Wisconsin Power and Washington Avenue
Light Company PO Box 2568
and Heartland Development Madison, WI 53701-2568
Corporation 608/252-4888
August 27, 1996
Dear WPLH Shareowner:
I would appreciate a few moments of your time to share some thoughts
about the future of your company.
On August 15, your Board of Directors agreed to a new stock exchange
ratio for IES Industries. WPL Holdings made the offer to preserve the
strategic value of the three-way merger announced last November to create
Interstate Energy Corp. (IEC), involving WPL Holdings, Cedar Rapids-based
IES Industries and Dubuque-based Interstate Power Co.
As part of IES' actions on August 15, its Board of Directors rejected
an unsolicited proposal from MidAmerican Energy Co. (MEC). According to
Lee Liu, IES' Chairman of the Board, President and CEO, the IES Board felt
the MidAmerican offer was incapable of delivering all that it had
promised, nor was it focused on a long-term strategic plan for the future.
Unfortunately, MidAmerican is attempting to block IES -- and
therefore WPLH -- from taking a step toward a stronger future. Before the
September 5 Annual Meeting, you may be seeing a great deal of information
in the media and elsewhere. I apologize for the tremendous amount of
material and paper that these efforts generate. Laws and regulations
require that we provide you a significant amount of information as you
decide about the future of WPLH.
I can, however, sum up in a few words why your Board believes that
the merger with IES Industries and Interstate Power Co. is best for WPLH:
- The strategic three-way merger positions WPLH for regional growth
with access to high-growth markets.
- The merger will produce a company that is financially sound, ready to
build on our heritage of strong earnings.
- The merger is a good balance for shareowners, customers, employees
and the communities we serve.
And we are not the only ones who see the value of this unprecedented
three-way merger.
Last week, Robert W. Baird & Co., a regional investment banking firm
based in Wisconsin, wrote in a report directed at financial analysts
located throughout the Midwest:
"We recommend that IES shareholders pass up the potential near-term
benefits offered by MEC's team and join IEC, a team we believe offers
superior long-term returns to shareholders. ..."
Please Vote!
If you have already mailed back the proxy card that came with the
original proxy materials, and you are satisfied with your vote, you do not
need to send in another proxy card. If, on the other hand, you just
haven't gotten around to filling out the original (white) proxy card,
please return the lavender-colored proxy card you received earlier this
week. Please note that the lavender-colored card needs to reach us before
the September 5 WPLH Annual Meeting to count. Your vote will help
position Interstate Energy Corp. to maintain low energy rates and high-
quality customer service for more than 1 million energy customers in a
four-state region.
We are proud of our past success in enhancing long-term shareowner
value. And like our merger partners, we believe that our friendly
alliance will further enhance your investment.
Should you have any questions, please call our Shareowner Services
toll free at 1-800-356-5343.
Regards,
Erroll B. Davis, Jr.
President and CEO
[The following is an article appearing in the Interstate Energy
Corporation Merger Update dated August 27, 1996, which is distributed to
employees of WPL Holdings, Inc., IES Industries Inc. and Interstate Power
Company.]
IES BOARD OF
DIRECTORS REJECTS
UNSOLICITED OFFER
FROM MIDAMERICAN
As IES, IPC and WPLH employees have learned through their individual
companies' internal communications, MidAmerican Energy Co. of Des Moines
made an unsolicited offer on Aug. 4 to acquire IES.
On Aug. 16, IES Chairman, President and CEO Lee Liu, IPC Executive
Vice President Mike Chase and WPLH President and CEO Erroll B. Davis Jr.
convened in Cedar Rapids for a press conference and a teleconference for
financial analysts. The topic, of course, was the merger partners'
reaction to the unsolicited MidAmerican offer.
Lee Liu announced that, after careful consideration, the IES Board of
Directors unanimously voted to reject MidAmerican's unsolicited offer.
Further, the three executives announced that IES, IPC and WPLH have
agreed on a new stock exchange ratio for IES. This agreement reflects a
commitment to the strategic value of the unprecedented three way merger to
customers, shareowners and employees.
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. Previously, the agreement provided 1.01
shares of IEC common stock for each share of IES common stock.
[The following is the slide presentation given, or to be given, by certain
executive officers of WPL Holdings, Inc., IES Industries Inc. and
Interstate Power Company to retail brokerage firms starting on August 27,
1996.]
[Four state map of Minnesota, Wisconsin, Interstate Energy
Iowa and Illinois with Interstate Energy Corporation
Corporation ("IEC") service area
highlighted]
[ ] WP&L
[ ] IES Utilities Inc.
[ ] Interstate Power Co.
INTERSTATE ENERGY CORPORATION
[Four state map of
Minnesota, Wisconsin, Iowa
and Illinois with IEC
service area highlighted]
- A growing and diversified
regional customer base
- Assets - $4.5 Billion
- Over 850,000 electric
customers
- Over 360,000 gas customers
- Service territory in Iowa,
Illinois, Minnesota and
Wisconsin
[ ] WP&L
[ ] IES Utilities Inc.
[ ] Interstate Power Co.
IEC WILL MARKET TO DIVERSE AND GROWING INDUSTRIES
Customers-Major Industries
Food Products Machinery & Metals
Chemicals Transportation
Paper Construction Equip.
IEC'S INVESTMENT IN COMMUNITIES IS
REFLECTED IN RETAIL SALES GROWTH
[Bar graph showing annual growth rate for 1991 through 1995 of IES (4.4%),
WP&L (3.5%), IPC (3.0%) and MidAm (1.1%).]
Represents Annual Growth Rate for 1991-1995
INTERSTATE ENERGY CORPORATION
[Four state map of Minnesota,
Wisconsin, Iowa and Illinois - A low cost provider of
with IEC service area electric power
highlighted]
- Continued strong support
of economic development
- Low customer rates
[ ] WP&L
[ ] IES Utilities Inc. - Investments in
[ ] Interstate Power Co. communities we serve
AVERAGE INDUSTRIAL CUSTOMER
CHARGE PER Kwh
[Bar graph showing average industrial customer charge per Kwh for WP&L
(3.63 cents per Kwh), IPC (3.72 cents per Kwh), IES (3.88 cents per Kwh)
and MidAm (4.04 cents per Kwh).]
Source: EEI Rankings, 1995
AVERAGE RESIDENTIAL CUSTOMER
CHARGE PER Kwh
[Bar graph showing average residential customer charge per Kwh for WP&L
(6.82 cents per Kwh), IPC (7.45 cents per Kwh), IES (8.15 cents per Kwh)
and MidAm (9.17 cents per Kwh).]
Source: EEI Rankings, 1995
IEC CORE BUSINESSES
IEC
Madison Wisconsin
Energy Energy Diversified
Production Marketing Businesses
& Delivery
Madison Cedar Rapids Cedar Rapids
Wisconsin Iowa Iowa
Administrative
Services
Dubuque, Iowa
INVESTMENT RETURN
COMPARISON
[Bar graph showing total cumulative investment return from August 2, 1991
through August 2, 1996 for MEC (21%) and WPH (60%).]
Total Cumulative Investment Return
8/2/91 - 8/2/96
DIVIDEND COMPARISON
[Bar graph showing the five year (1991-1995) dividend growth of MEC
(-4.5%) and WPH (7.8%).]
5 Year Dividend Growth Rate
1991 - 1995
[PLEASE NOTE -- The word "Rate" in this graph's title was inserted in
error and has been deleted. If this slide is used in any future
presentations, such word will not appear in the title.]
DIVIDEND COMPARISON
[Line graph labeled "Dividend [Line graph labeled "Dividend
Cut" showing dividends declared Growth" showing dividends
per share (in dollars) for MEC declared per share (in dollars)
from 1991 through 1995 as for WPH, IES and IPC from 1991
follows: 1991 ($1.38), 1992 through 1995 as follows: WPH -
($1.28), 1993 ($1.17), 1994 - 1991 ($1.80), 1992 ($1.86),
($1.17) and 1995 ($1.18).] 1993 ($1.90), 1994 ($1.92) and
1995 ($1.94); IES -- 1991
($2.03) and 1992-1995 ($2.10);
and IPC -- 1991 ($2.04) and
1992-1995 ($2.08).]
MidAm Takeover IEC Merger
MIDAM HURDLES
- Potential antitrust issues could block MidAm takeover
- To finance the merger MidAm shareowners face either:
- High debt levels (59 percent based on SEC filed information)
- Or divestiture of growth businesses
DEBT LEVELS
[Bar graph showing pro forma debt ratios of IEC Merger (49%) and MidAm
takeover (59%).]
Proforma Debt Ratio
IEC GROWTH
POTENTIAL
[Pie chart showing the following]
Energy Generation
- GENCO
- Railroads
- Oil & Gas
Other Core Energy
Businesses Marketing
- McLeod & Delivery
- RMT - Utilities
- IEA/HEG
MidAm DIVESTITURE
OPTIONS
[Pie chart showing the following]
Energy Generation
- GENCO
- Railroads[stricken out]
- Oil & Gas[stricken out]
Other Core Energy
Businesses Marketing
- McLeod & Delivery
- Utilities
- IEA [stricken out]
HIGH DIVIDEND PAYOUT RATIOS
PRESENT CONCERNS
[Line graph showing historical MidAm dividend payout ratios from 1991
through 1995 as follows: 1991 (104.5%), 1992 (152.4%), 1993 (84.2%), 1994
(95.9%) and 1995 (96.7%).]
Historical MidAm Payout Ratios
MIDAMERICAN DIVIDEND AT
RISK?
- 1995 consolidated proforma dividend payout ratios (109% to 119%,
assuming no synergies)
- Potential further rate reduction in current filing (OCA has filed for
$100 million reduction)
- Possible inability to recover purchase premium in rates
(approximately $12 million per year at risk)
- Possible divestiture of growth companies to repay debt
MIDAM IMPLIED VALUE
$26 - $30 ???
We believe they should have . . .
Included Excluded
- Discount for time lag and - High multiple of 5-6 times
probability of transaction operating cash flow
closure - Historically WPL has had
- Effect of rate decrease (OCA higher P/E ratios than
$100 million?) MidAM
- Cost of current hostile effort - Shareholders retaining 50% of
- Impact of higher debt service synergies
- Tax impact on McLeod gains - Cash flows of non-regulated
subsidiaries which may be
divested
We believe the implied value to MidAm and IES shareholders is much less
than advertised.
THE IEC ADVANTAGE
- IEC's cost structure better positions IEC for the competitive market
- Long term growth and diversification
- IEC financially stronger - lower leverage
- IEC is further along in regulatory review process
- IES Merger/Acquisition history without dividend cuts:
e.g., 1991 Iowa Southern Merger, 1992 Whiting Petroleum Merger
and 1992 Union Electric Asset Acquisition
- IEC balanced for shareowners, customers, employees and communities
[The following statement will be used on the Interstate Energy Corporation
Merger Hotline recording starting on August 27, 1996.]
THIS IS THE IEC MERGER HOTLINE FOR THE WEEK OF AUGUST 26.
WITH ONLY ABOUT ONE WEEK REMAINING BEFORE THE THREE MERGER PARTNERS HOLD
THEIR ANNUAL SHAREOWNER MEETINGS ON SEPTEMBER 5, IES, INTERSTATE POWER AND
WPL HOLDINGS ARE AGGRESSIVELY MOVING FORWARD TO MAKE INTERSTATE ENERGY
CORPORATION A REALITY.
DURING THIS TIME OF RAPID CHANGE, WE WANT TO THANK EMPLOYEES FOR THEIR
COMMENTS, QUESTIONS AND, MOST OF ALL, THEIR SUPPORT FOR THE THREE-WAY
STRATEGIC COMBINATION.
IN THE MEANTIME, WE WANT TO ENCOURAGE ALL EMPLOYEES WHO OWN SHARES IN
THEIR COMPANY TO RETURN THEIR PROXY CARDS.
IF YOU ALREADY VOTED AND ARE SATISFIED WITH YOUR VOTE, YOU NEED NOT SEND
IN THE SUPPLEMENTAL PROXY CARD THAT WAS DELIVERED TO YOU THIS WEEK.
IF, HOWEVER, YOU SIMPLY DID NOT GET AROUND TO SENDING IN THE FIRST PROXY
CARD, PLEASE TAKE THE TIME TO SEND IN THE SUPPLEMENTAL CARD RIGHT AWAY SO
IT IS COUNTED BEFORE THE ANNUAL MEETINGS TAKE PLACE ON SEPTEMBER 5.
THANK YOU FOR CALLING THE IEC MERGER HOTLINE.
IF YOU CARE TO LEAVE A QUESTION OR COMMENT, PLEASE PUSH "2" NOW.