SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_]Preliminary proxy statement
[_]Definitive proxy statement
[_]Definitive additional materials
[X]Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MAGMA POWER COMPANY
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MAGMA POWER COMPANY
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(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
[_]$125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_]Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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[_]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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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[LETTERHEAD OF MAGMA POWER COMPANY]
November 16, 1994
Dear Fellow Magma Stockholder:
As you know, California Energy Company has made a tender offer for 51% of
Magma's outstanding shares and is soliciting your consent to a special meeting
of Magma stockholders. If this special meeting is called, California Energy
will seek election of its hand-picked slate of four new directors to an
enlarged Magma Board and approval of by-law amendments that would attempt to
give California Energy's nominees, if elected, the right to block various
fundamental corporate actions by Magma.
You should know that through the consent solicitation and proxy process,
CALIFORNIA ENERGY HAS INDICATED THAT IT INTENDS, FOLLOWING THE NEXT ANNUAL
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MEETING OF MAGMA'S STOCKHOLDERS, TO GAIN CONTROL OF YOUR COMPANY WITHOUT BUYING
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A SINGLE SHARE OF MAGMA STOCK. Your Board has unanimously recommended that you
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reject California Energy's coercive and highly conditional tender offer for the
reasons set forth in the Schedule 14D-9 previously delivered to you. These
reasons included the opinion of Magma's financial advisor, Goldman Sachs, that
the consideration offered pursuant to the California Energy offer is inadequate
and the fact that California Energy's financing is subject to numerous
conditions, including the satisfactory completion by California Energy's
financing sources of due diligence on both Magma and California Energy.
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Apparently, the three week period since the delivery of financing commitment
letters has not been long enough for California Energy's lenders to become
comfortable with California Energy.
Currently, your Board, with the assistance of Goldman Sachs, is actively
exploring all alternatives in an effort to ensure the best possible result for
Magma's stockholders. These efforts have included requesting due diligence on
California Energy and to meet with California Energy regarding California
Energy. California Energy has declined these requests. In the meantime, it is
not in your interest to participate in California Energy's consent
solicitation, which will only further California Energy's plan to acquire Magma
at the lowest possible price. Although California Energy would have you believe
that merely calling a special meeting can do no harm, the prospect of
California Energy gaining control of Magma through the proxy process may have a
CHILLING EFFECT ON OTHER PROSPECTIVE PARTNERS OF OR BIDDERS FOR MAGMA.
Furthermore, if California Energy believes that it can gain control of the
Magma Board through the proxy process, it will have NO INCENTIVE TO INCREASE
ITS TENDER OFFER.
WHETHER OR NOT YOU ARE ENTICED BY CALIFORNIA ENERGY'S TENDER OFFER, YOU
SHOULD NOT SEND IN THE GREEN CARDS YOU HAVE RECEIVED OR MAY RECEIVE FROM
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CALIFORNIA ENERGY. If California Energy gets into Magma's Boardroom, it will
only serve its interests, not yours. Your Board is in the process of seeking
out and evaluating alternatives that would be in the best interests of ALL
MAGMA STOCKHOLDERS rather than in the best interests of California Energy.
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Your interests and California Energy's are diametrically opposed: CALIFORNIA
ENERGY IS SEEKING TO BUY MAGMA AT THE LOWEST POSSIBLE PRICE THROUGH PRESSURE
TACTICS SUCH AS THE CALL SOLICITATION. You should not sign any solicitation
card sent by California Energy nor should you tender your shares to California
Energy's hostile, highly conditional offer.
We will be mailing an opposition solicitation statement and GOLD opposition
card to you shortly. THE GOLD CARDS TO BE FURNISHED TO YOU BY YOUR BOARD WILL
ENSURE THAT CALIFORNIA ENERGY NEVER GETS INTO MAGMA'S BOARDROOM AND THE
COLLECTIVE BEST INTERESTS OF MAGMA'S STOCKHOLDERS ARE SERVED. IF YOU HAVE
ALREADY SIGNED AND RETURNED A GREEN CARD, WE URGE YOU TO SIGN AND RETURN THE
GOLD CARD YOU WILL RECEIVE TO REVOKE YOUR REQUEST OF A SPECIAL MEETING.
We appreciate your continued support and patience throughout this difficult
and complex process.
Sincerely,
Paul M. Pankratz Ralph W. Boeker
Chairman President and Chief Executive
Officer
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If you have any questions, or need assistance in voting your shares, please
contact the firm assisting us in the solicitation of opposition cards:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
TOLL FREE: 1-800-223-2064
If your shares of Common Stock are held in the name of a bank or brokerage
firm, only that firm can execute a GOLD CARD on your behalf. Please contact the
person responsible for your account and give instructions for a GOLD CARD to be
voted for you.
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# # #
The following information is provided pursuant to Section 14(a) of the
Securities Exchange Act of 1934, as amended, and Rule 14a-11(b)(2) thereto. The
participants in the solicitation are Magma Power Company, the following
directors and others, who in the aggregate are deemed to beneficially own
approximately 2.1% of the outstanding common shares of Magma common stock:
James D. Shepard, Paul M. Pankratz, Thomas C. Hinrichs, Ralph W. Boeker, Louis
A. Simpson, John D. Roach, Roger L. Kesseler, Lester L. Coleman, Williams R.
Knee, Bent Petersen, and J. Pedro Reinhard, and Jon R. Peele, Wallace C.
Dieckmann, Kenneth J. Kerr, and Trond Aschehoug. No participant individually
owns more than 1% of the outstanding shares of Magma's common stock. Messrs.
Kesseler, Knee and Reinhard are employees of The Dow Chemical Company ("Dow").
Dow is the beneficial owner of 5,032,430 shares of Magma's common stock of
which 4,000,005 shares are held in escrow to satisfy certain exchange rights
under an existing Dow note indenture. Dow retains the right to vote the shares
placed in escrow. In addition, the Company is a party to a technical services
agreement with Dow pursuant to which the Company has made payments for
technical services in the amounts of $575,000 for 1993 and has agreed to make
payments of $550,000 for 1994 and thereafter in annual amounts reduced by
$50,000 each year to $300,000 for 1999. The Company is also a party to an
engineering and construction management services agreement with Dow Engineering
Company. The Company believes that the technical services agreement and the
engineering and construction management services agreement are on terms at
least as favorable to the Company as would be available from an unaffiliated
third party. Mr. Shepard is a co-trustee of the B.C. McCabe Foundation, which
beneficially owns 2,752,641 shares of Magma's common stock. Mr. Shepard
disclaims beneficial ownership of such shares.