Joint News Release
[GRAPHIC OMITTED]
For NCE: For NSP:
Media Relations: Media Relations:
(303) 294-8900 (612) 337-2167
Investors: Investors:
Mike Pritchard Richard Kolkman
(303) 294-2588 (612) 330-6622
www.ncenergies.com www.nspco.com
For Immediate Release
NEW CENTURY ENERGIES AND NORTHERN STATES POWER
TO MERGE
MERGED COMPANY WELL POSITIONED IN RAPIDLY CHANGING
UTILITIES INDUSTRY
DENVER and MINNEAPOLIS , March 25, 1999 - New Century Energies (NYSE:NCE) and
Northern States Power Co. (NYSE:NSP) today announced that they have entered into
a definitive merger agreement.
"This merger combines two well-managed, mid-continent electric and gas
companies in order to provide a strong platform for assuring low-cost, quality
service to the region during a time of rapid change in the utility industry,"
said James J. Howard, president, chairman and CEO of Northern States Power Co.
The merged company will stretch from Mexico to the Canadian border, and
also will
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have a strong global presence, with operations in the United Kingdom, Central
Europe, Australia and South America. It will be headquartered in Minneapolis and
certain key business units or operations will be based in Wisconsin, Denver and
Amarillo, Texas. The company will be named later.
The merger is expected to be a tax-free, stock-for-stock exchange for
shareholders of both companies, and to be accounted for as a pooling of
interests. NCE and NSP anticipate that the merger will be accretive in the first
full year and thereafter to both sets of shareholders assuming realization of
anticipated net cost savings. Upon completion, holders of New Century Energies
stock will receive 1.55 shares of the merged company stock for each share of NCE
stock. Each share of Northern States Power stock will continue as one share of
the combined company.
Howard said, "The merger prepares the combined company for where the
industry will be - an environment of customer choice - rather than where the
industry is today. The merger is predicated on providing our customers continued
low-cost, reliable energy while maintaining high levels of customer service.
This will be extremely important to customers as the utility environment
continues to change."
In addition, Howard said the combined companies are committed to meeting
and exceeding environmental standards.
Bill D. Helton, chairman and CEO of Denver-based New Century Energies said,
"The merger provides both the combined company and its operating units with the
scale necessary to remain competitive in a changing industry marketplace."
Helton added that NSP and New Century are an excellent fit. "Our philosophies of
focusing on excellence in customer service are the same; we both have succeeded
in keeping our costs among the lowest in the industry; and our strategies,
customer base and utility operations are very similar." He said the combined
company will "integrate two strong companies with similar customer demographics
within a single region, creating more growth in shareholder value than would the
stand-alone companies." The companies said they expect the merger to result in
net cost savings of
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approximately $1.1 billion in the first 10 years of operations.
Wayne H. Brunetti, vice chairman, president and COO of New Century, said,
"We expect significant cost savings from the elimination of duplicate programs,
greater purchasing efficiencies and streamlined business processes."
"The company intends to honor all existing union contracts," he said.
"And we can achieve our target merger savings while still supporting our local
communities and continuing to offer the same excellent prices and service."
Howard, 63, will serve as chairman of the holding company for the first
full year of operations. Brunetti, 56, will be president and CEO upon closing
and will assume the responsibilities as chairman upon Howard's retirement. New
Century Energies' Helton, 60, will retire at the completion of the merger. The
board will consist of an equal number of members from Northern States Power and
New Century Energies. In the United States, the merged company will serve 3
million electricity customers and approximately 1.5 million natural gas
customers in 12 states including Arizona, Colorado, Kansas, Michigan, Minnesota,
New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin, and Wyoming.
Internationally, the company will serve about 2 million electric customers and
400,000 natural gas customers in the United Kingdom. Based on year-end 1998
capacity, as a combined entity, the company will have total generating capacity
of 21,720 megawatts, of which 15,133 is regulated in the United States. It also
will have 6,587 megawatts of non-regulated generation in the United States and
internationally, including operations in the United Kingdom, Central Europe,
Australia and South America. Based on 1998 results, the combined company would
have revenues of $6.4 billion, earnings of $618.8 million and assets totaling
approximately $15.1 billion. The merger requires the approval by the
shareholders of the two existing holding companies, as well as approval or
regulatory review by the Securities and Exchange Commission, the Federal Energy
Regulatory Commission, the Federal Trade Commission, the Department of Justice,
the Federal Communications Commission, the Nuclear Regulatory
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Commission, and state regulators in nine of the states currently served by the
two companies. The merger is expected to take from 12 to 18 months to complete.
It is anticipated the holding company will adopt the NCE dividend payment
level, adjusted for the exchange ratio. Based on the exchange ratio of 1.55, the
pro forma dividend for the merged company will be $1.50 per share on an annual
basis, following completion of the merger. This maintains the dividend level for
NCE shareholders and provides a slight increase for NSP shareholders.
Based on the number of common shares currently outstanding, New Century
Energies shareholders will own 54 percent of the common equity of the combined
company and Northern States Power shareholders will own 46 percent. As of March
15, New Century Energies had approximately 114.9 million common shares
outstanding, and NSP had 153.1 million common shares outstanding. Debt holders
and preferred stockholders will continue with their present holdings under
existing terms.
SG Barr Devlin served as financial advisor to New Century Energies, and
Northern States Power was advised by The Blackstone Group.
New Century Energies serves approximately 1.5 million electricity customers
and more than a million natural gas customers in Colorado, Texas, New Mexico,
Wyoming, Kansas and Oklahoma. Its operating companies include Public Service Co.
of Colorado, Southwestern Public Service Co. and Cheyenne Light, Fuel & Power.
Wholly owned subsidiaries include: New Century International, which owns a 50
percent interest in Yorkshire Electricity in the United Kingdom; Utility
Engineering, which provides engineering, design, construction, management and
other related services to utilities; Quixx, which invests in and develops
cogeneration and other energy-related projects; Planergy, which provides energy
services to commercial and industrial customers; eprime, which is an unregulated
commodity marketing affiliate currently engaged in gas and electricity marketing
and trading. Northern States Power provides electricity to about 1.5 million
customers in portions of Minnesota, Wisconsin, North Dakota, Michigan, South
Dakota. It distributes natural gas to more than 475,000 customers in Minnesota,
Wisconsin, North Dakota, Michigan and Arizona. Wholly owned subsidiaries include
NRG Energy, Inc., which operates and has ownership
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interests in non-regulated energy businesses around the world, with major
projects in the United States, Germany and Australia. Other subsidiaries include
Viking Gas Transmission Company, a natural gas transmission company; Energy
Masters International, an energy service company; Seren Innovations, which is
building communication networks to deliver telephone, cable TV and high-speed
Internet and data services ; and Eloigne Company, which has interests in
affordable housing projects.
This press release includes forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements reflect numerous assumptions, and involve a number of risks and
uncertainties. Among the factors that could cause actual results to differ
materially are: electric load and customer growth; abnormal weather conditions;
economic conditions in the company's service territory; fluctuations in
energy-related commodity prices, realization of net cost savings in a timely
manner, and other uncertainties. Other risk factors are detailed from time to
time in the two companies' SEC reports.
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Merger Facts at a Glance
New Century Northern States Combined
Energies Power Co.
Market value $4.446 billion $4.175 billion $8.621 billion
(as of Mar. 24)
Long-term debt $2.206 billion $1.851 billion $4.057 billion
Trust/Preferred $294 million $305.3 million $599.3 million
Revenue from electricity $2.697 billion $2.352 billion $5.049 billion
Revenue from gas $841 million $457 million $1.298 billion
Total revenues $3.611 billion $2.819 billion $6.43 billion
Total earnings $341,957,000 $276,825,000 $618,782,000
Earnings per share - basic $3.06 $1.84 N/A
Earnings per share - $3.05
diluted
Total assets $7.7 billion $7.4 billion $15.1 billion
Electricity customers 1,601,000 1,459,000 3,060,000
(United States-current)
Electricity customers 2,080,000 2,080,000
(International)
Electricity capacity 7,984 megawatts 7,149 megawatts 15,133 megawatts
(U.S. regulated)
Electricity capacity 247 megawatts 6,340 megawatts* 6,587 megawatts*
(non-regulated)
Miles of electric 10,236 6,843 17,079
transmission lines
Natural gas customers 1,057,000 475,000 1,532,000
Miles of gas pipelines 16,063 10,573 26,636
Employees 6,305 7,455 13,760
Avg. retail electricity rates 5.4 cents/ kwh 5.9 cents/kwh
States served Colorado, Kansas, Arizona, Michigan,
New Mexico, Minnesota, South Dakota,
Oklahoma, Texas, North Dakota, Wisconsin
Wyoming
(Based on 1998 year-end information, except where noted)
*Includes projects operating, under construction, or under contract, expected
to close by 7/1/99
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