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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
(AMENDMENT NO. 5)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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MAGMA POWER COMPANY
(Name of Subject Company)
MAGMA POWER COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
0005591941
(CUSIP number of Class of Securities)
JON R. PEELE, ESQ.
Executive Vice President, Secretary and General Counsel
MAGMA POWER COMPANY
4365 EXECUTIVE DRIVE, SUITE 900
SAN DIEGO, CALIFORNIA 92121
(619) 622-7800
(Name, address and telephone number of person authorized to receive notice and
communications on behalf of the person(s) filing statement)
Copies to:
Michael J. Kennedy, Esq. David W. Heleniak, Esq.
SHEARMAN & STERLING SHEARMAN & STERLING
555 California Street 599 Lexington Avenue
San Francisco, California 94104 New York, New York 10022
(415) 616-1100 (212) 848-4000
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This Amendment No. 5 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9, dated October 11, 1994, as amended (the "Schedule
14D-9"), filed by Magma Power Company, a Nevada corporation ("Magma" or the
"Company"), relating to the tender offer disclosed in a Tender Offer Statement
on Schedule 14D-1, dated October 6, 1994, as amended and supplemented through
the date hereof, of CE Acquisition Company, Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of California Energy Company, Inc.,
a Delaware corporation ("California Energy"), to purchase 12,400,000 Shares at
a price of $38.50 per Share net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated October 6,
1994, as supplemented on October 26, 1994, and as amended through the date
hereof, and the related Letter of Transmittal as amended and supplemented
through the date hereof (the "Revised Offer"). Capitalized terms used and not
defined herein shall have the meanings sets forth in the Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4 is hereby amended and supplemented by adding thereto the following:
(a) THE MAGMA BOARD HAS UNANIMOUSLY DETERMINED THAT THE REVISED OFFER IS NOT
IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY. THE MAGMA BOARD
UNANIMOUSLY RECOMMENDS THAT ALL HOLDERS OF SHARES REJECT THE REVISED OFFER AND
NOT TENDER THEIR SHARES PURSUANT TO THE REVISED OFFER.
A copy of a letter to stockholders communicating the Magma Board's
recommendation and a form of press release announcing such recommendation are
filed as Exhibits 23 and 24 hereto, respectively, and are incorporated herein
by reference.
(b) At a meeting of the Magma Board held on October 28, 1994, the Company's
management and Goldman Sachs each reviewed and updated the presentations they
had made to the Magma Board at the October 2 and 3, 1994 and October 10, 1994
board meetings. In addition, Goldman Sachs opined to the Magma Board that the
consideration provided in the Revised Offer was inadequate.
At the October 28, 1994 board meeting the Magma Board, after careful
consideration, unanimously voted to reject the Revised Offer. Accordingly, the
Magma Board unanimously recommends that the Company's stockholders reject the
Revised Offer and not tender their Shares pursuant to the Revised Offer.
In reaching its determinations and recommendations with respect to the
Revised Offer, as indicated above, the Magma Board took into account numerous
factors discussed at its October 28, 1994 board meeting, including, among other
things, the following:
(i) The Magma Board's determination that the consideration reflected in
the Revised Offer is inadequate and does not reflect the intrinsic value of
Magma. In reaching this conclusion, the Magma Board relied on its
familiarity with the Company's business, financial condition, geothermal
resources, technologies and future prospects and the opportunities that the
Company has to reap substantial benefits in the future from the various
strategic initiatives which the Company has implemented over the past
several years.
(ii) Inquiries from various third parties expressing interest in pursuing
a possible business combination with the Company.
(iii) The fact that the CE Proposal, as revised, remains a two-tiered,
front-end loaded, highly leveraged and coercive transaction, in that the CE
Proposal is intended to intimidate stockholders to tender their Shares to
the Revised Offer so as to avoid receiving in the Back-End Merger primarily
common stock of California Energy, which would (A) be nominally valued at
approximately $20 per share, (B) be issued by an even more highly leveraged
California Energy, and (C) not provide any ongoing protections for holders
of those shares.
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(iv) The Board's understanding, based on publicly available information,
of California Energy's business, financial condition and prospects,
including, without limitation, the degree of California Energy's leverage,
California Energy's existing projects, California Energy's geothermal
resources and California Energy's announced future projects.
(v) The highly conditional nature of the Revised Offer, particularly the
conditions requiring (A) California Energy to obtain financing, given that,
according to the Offer to Purchase, the Credit Suisse financing commitment
that California Energy has received is subject to numerous conditions,
including execution of a merger agreement and Credit Suisse's satisfaction
with its due diligence review of both California Energy and Magma, (B)
California Energy stockholder approval, given that the Offer to Purchase
indicates such approval will not be obtained until mid-November at the
earliest, (C) the execution of a friendly merger agreement, given the
inadequate price offered, and (D) that no material contractual right of the
Company be impaired as a result of the CE Proposal.
(vi) The opinion of Goldman Sachs that the consideration provided for in
the Revised Offer is inadequate.
(vii) The adverse effect the Revised Offer, and a subsequent merger, has
had, and could continue to have, on the Company and on the Company's
employees, creditors, partners and customers and the communities in which
the Company operates.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
Item 7 is hereby amended and supplemented by adding thereto the following:
(a) Except as described below, the Company is not engaged in any negotiations
in response to the Revised Offer which relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of
a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company.
(b) Except as described below there are no transactions, board of directors
resolutions, agreements in principle or signed contracts in response to the
Revised Offer that relate to or would result in one or more of the events
referred to in Item 7(a) above.
At its meeting held on October 28, 1994, the Magma Board considered a variety
of alternatives to the Revised Offer. After considerable discussion, the Magma
Board resolved that it was desirable and in the best interests of the Company
and its stockholders to direct the Company's management and financial advisor
to explore all available alternatives to further the best interests of Magma
stockholders, including conducting discussions with interested parties,
including California Energy, concerning possible business combinations,
strategic partnerships or equity investments, recapitalizing or restructuring
the Company and similar transactions.
At the Magma Board's October 28, 1994 meeting, the Magma Board determined
that if, and when, any discussions or negotiations of the type referred to
above in this Item 7 (including, without limitation, the provision of
confidential information to interested third parties) are underway or
undertaken, disclosure with respect to any parties to, furnishing confidential
information in connection with, and the possible terms of, any such
transactions or proposals might jeopardize the continuation of any discussions
or negotiations. Accordingly, the Magma Board has adopted a resolution
instructing the members of the Magma Board and management not to disclose the
possible terms of any such transactions or proposals, or the parties thereto,
or the furnishing of confidential information in connection therewith, unless
and until a definitive agreement or an agreement in principle relating thereto
has been reached.
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ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 is hereby amended and supplemented by adding thereto the following:
On October 25, 1994, California Energy and CE Acquisition Company filed
their Answer to Amended Complaint and Second Amended Counterclaims against
Magma and its board of directors in the United States District Court for
the District of Nevada, in which they (i) repeated their denials of the
material allegations of the Amended Complaint and their denials that Magma
is entitled to declaratory or injunctive relief, (ii) reasserted factual
allegations and claims for declaratory and injunctive relief set forth in
their earlier Amended Counterclaims, and (iii) added further allegations
concerning (A) the increase in consideration offered by California Energy
to effect the acquisition, to $38.50 per share (consisting of $28.50 per
share in cash and $10.00 per share of California Energy stock), (B)
violations of federal securities laws and breaches of fiduciary duties
allegedly arising from Magma's October 21, 1994 announcement of the
termination of an energy development project in Indonesia caused by the
pendency of California Energy's offer and other alleged efforts by Magma to
permit unidentified international joint venture partners to withdraw from
unidentified projects in the event that California Energy's offer is
successful.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby amended and supplemented by adding thereto the following:
Exhibit 23 -- Letter to Stockholders of the Company.
Exhibit 24 -- Press Release of the Company, dated October 31, 1994.
Exhibit 25 -- Answer to Amended Complaint and Second Amended
Counterclaims.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
MAGMA POWER COMPANY
By: /s/ Jon R. Peele
___________________________________
Name: Jon R. Peele
Title: Executive Vice President,
Secretary and General
Counsel
Dated: October 31, 1994
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INDEX TO EXHIBITS
SEQUENTIAL
PAGE
EXHIBITS DESCRIPTION NUMBER
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Exhibit 23 --Letter to Stockholders of the Company
Exhibit 24 --Press Release of the Company, dated October 31, 1994
Exhibit 25 --Answer to Amended Complaint and Second Amended
Counterclaims