EXHIBIT 99.1
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[ENERGY EAST LOGO] [RGS ENERGY GROUP, INC. LOGO]
ENERGY EAST AND RGS ENERGY GROUP ANNOUNCE
STRATEGIC COMBINATION
COMBINES COMPLEMENTARY STRENGTHS AND GEOGRAPHIES TO CREATE
A LEADING NORTHEAST ENERGY COMPANY
TRANSACTION VALUED AT $1.4 BILLION
Albany, NY and Rochester, NY (February 20, 2001) - Energy East Corporation
(NYSE: EAS) and RGS Energy Group, Inc. (NYSE: RGS) today announced that their
boards of directors have unanimously approved a definitive merger agreement,
under which all of the outstanding shares of RGS Energy will be exchanged for a
combination of cash and Energy East stock valued at $39.50 per RGS Energy share
or approximately $1.4 billion in the aggregate. Energy East will also assume
approximately $1.0 billion of RGS Energy debt. Energy East intends to finance
the cash portion of the transaction primarily through third party financing.
The transaction will be accounted for as a purchase and is expected to be
accretive to Energy East's earnings per share in the first full year after
closing. The companies anticipate that approval from the New York State Public
Service Commission can be obtained on an expedited basis, and all regulatory
approvals can be obtained in approximately 12 months.
The combined company will be one of the largest, most diversified energy
providers in the Northeast, serving nearly 3 million customers, including
approximately 1.8 million electric customers, almost one million natural gas
customers and approximately 200,000 other retail energy customers. The combined
company will have annual revenues of approximately $5 billion and nearly $10
billion in assets. Together, Energy East and RGS Energy, through their operating
subsidiaries, will serve half of upstate New York.
Wes von Schack, chairman, president and chief executive officer of Energy East,
said, "RGS Energy and Energy East share a common vision for upstate New York.
Simply put, we are focused on providing our customers a reliable supply of
electricity and stable prices during these challenging times in the energy
marketplace. RGS Energy's proven management and operational talent will fortify
our own, and we look forward to working with Tom Richards and the RGS Energy
team. RGS Energy is the right partner, at the right time.
"Over the last few years, Energy East has been working to become a
super-regional energy delivery and services company, building a presence in 5
northeastern states. By combining with RGS Energy, we are becoming the premier
upstate energy utility, while also strengthening our overall presence in the
Northeast, adding to our generation portfolio and offering attractive returns to
our shareholders. Rochester Gas & Electric's (RG&E) service territory is an
excellent fit with New York State Electric & Gas (NYSEG), with over 200 miles of
contiguous territory providing the opportunity for operational efficiencies.
Through NYSEG's long-term contracts and owned generation, NYSEG has supply
certainty through March 2003. RG&E supplies its customers' requirements
substantially through its own generation portfolio. Together, we will be able to
provide price stability for upstate New York," Mr. von Schack added.
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Tom Richards, chairman, president and chief executive officer of RGS Energy,
said, "RGS Energy and Energy East are committed to managing the transition to a
restructured industry in order to create both short and long-term benefits for
our customers and the upstate region. Already, we are working together to design
rate plans that provide reliable energy at stable prices, while continuing to
encourage competition by offering customers a choice in their energy provider.
Together, we will have a wide range of options for meeting customers' supply
requirements, including long-term contracts, owned generation and selective
generation build-out. I am convinced that combined, we have the scale and scope
to provide benefits for our shareholders, our customers, our employees and the
communities we serve.
"We intend to be a reason why upstate New York is successful. We are
particularly excited about the opportunities that our combination will bring to
this region. Providing service to half of upstate New York, we are committed to
the economic vitality of the region as a platform for growth for our combined
company. With approximately 5,000 employees in upstate New York, the combined
company has a track record of community involvement and corporate contributions.
These will remain priorities," concluded Mr. Richards.
TERMS
Under the terms of the agreement, RGS Energy shareholders would receive the
equivalent of $39.50 for each share of RGS Energy common stock they own, payable
in cash or in Energy East common stock, so long as Energy East's common stock
price is between $16.57 and $22.41. Each RGS Energy shareholder would be able to
elect the form of consideration they wish to receive, subject to proration so
that 55 percent of the RGS Energy shares would be exchanged for cash, and 45
percent would be exchanged for Energy East common stock. The stock portion of
the consideration is expected to be tax free to RGS Energy shareholders.
Each RGS Energy share, converted into Energy East common stock, would receive
not less than 1.7626 and not more than 2.3838 shares of Energy East common
stock, depending on the average closing price of Energy East stock during a
20-day trading period prior to the merger closing. For example, based on Energy
East's closing price of $19.14 on February 16, 2001, RGS Energy shareholders who
choose to receive common stock would receive 2.0637 Energy East shares for each
RGS Energy share.
The combined company expects to maintain Energy East's dividend policy. The
Energy East dividend has been increased 5 percent in each of the last three
years. Energy East's current annual common stock dividend is $0.92 per share.
Based on Energy East's closing stock price on February 16, 2001, RGS Energy
shareholders who choose to receive Energy East common stock would receive 2.0637
Energy East shares for each RGS Energy share. This would represent a converted
dividend equivalent of $1.90 per share, an increase over the $1.80 per share
dividend that RGS Energy shareholders currently receive.
SYNERGIES
The merger is expected to generate annual cost savings of approximately $50
million. Savings are expected to come largely from the joint management of
Energy East and RGS Energy subsidiaries in areas such as procurement,
information systems, and other administrative and general areas.
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No layoffs are planned as a result of the combination. Both companies have
on-going cost reduction programs and, historically, have used reduced hiring and
attrition to minimize any workforce effects.
MANAGEMENT, BOARD AND HEADQUARTERS
RGS Energy will become a wholly owned subsidiary of Energy East. RG&E will
remain a subsidiary of RGS Energy, and it is expected that NYSEG will be a
wholly owned subsidiary of RGS Energy. Wes von Schack will continue to serve as
chairman, president and chief executive officer of Energy East. Tom Richards
will be chairman, president and chief executive officer of RGS Energy, chairman
and chief executive officer of RG&E and NYSEG, as well as an executive vice
president of Energy East. Ralph Tedesco will remain president and chief
operating officer of NYSEG. Two outside RGS Energy directors and Tom Richards
will be added to Energy East's board of directors, increasing it to 16 members.
The headquarters of RGS Energy, RG&E and NYSEG will be located in Rochester, NY.
The operating headquarters for NYSEG will remain in Binghamton, NY. Headquarters
for other Energy East utility subsidiaries are Augusta, ME for Central Maine
Power Company; Hartford, CT for Connecticut Natural Gas; Bridgeport, CT for
Southern Connecticut Gas; and Pittsfield, MA for Berkshire Gas Company.
APPROVALS
The transaction is conditioned upon, among other things, the approval of each
company's shareholders and the approval of various regulatory agencies.
ADVISORS
UBS Warburg LLC acted as financial advisor and Wachtell, Lipton, Rosen & Katz
acted as legal counsel to Energy East. Morgan Stanley Dean Witter acted as
financial advisor and Shearman & Sterling acted as legal counsel to RGS Energy.
ABOUT RGS ENERGY
RGS Energy is a holding company with its regulated energy business conducted
through Rochester Gas & Electric (RG&E), and its unregulated business through
Energetix. RG&E supplies regulated electric and gas service within a 2,700
square-mile service territory with a population of one million people, centered
around the city of Rochester, NY. Energetix and its subsidiary, Griffith Energy
are unregulated companies offering a full line of energy products including
electricity, natural gas, home heating oil, propane and a variety of energy
services throughout upstate New York. This allows RGS Energy to be a successful
competitor in the emerging energy marketplace that is driven by consumer energy
supplier choice and an expanded array of energy services. For more information
about RGS Energy, please visit the Company's home page on the Internet at
http://www.rge.com.
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ABOUT ENERGY EAST
Energy East is a super-regional energy services and delivery company in the
Northeast. A leader in promoting competition, Energy East serves 2 million
customers (1.4 million electricity and 600,000 natural gas) in upstate New York
and New England over a 32,000 square-mile service area. The strength of the
company is underscored by its commitment to financial discipline, state of the
art technology and the operational talent to be among the best at what it does.
For more information about Energy East, please visit the Company's home page on
the Internet at http://www.energyeast.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statements within the meaning of the
"safe harbor" provisions of the United States Private Securities Litigation
Reform Act of 1995. Investors are cautioned that such forward-looking statements
with respect to revenues, earnings, performance, strategies, prospects and other
aspects of the businesses of Energy East and RGS Energy are based on current
expectations that are subject to risks and uncertainties. A number of factors
could cause actual results or outcomes to differ materially from those indicated
by such forward-looking statements. These factors include, but are not limited
to, risks and uncertainties set forth in Energy East's and RGS Energy's filings
with the SEC, including risks and uncertainties relating to: failure to obtain
and retain expected synergies from this merger and prior Energy East mergers,
delays in obtaining or adverse conditions contained in any required regulatory
approvals, changes in laws or regulations, economic or weather conditions
affecting future sales and margins, changes in markets for electricity and
natural gas, availability and pricing of fuel and other energy commodities,
legislative and regulatory changes (including revised environmental and safety
requirements), availability and cost of capital and other similar factors.
Readers are referred to Energy East's and RGS Energy's most recent reports filed
with the SEC.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, Energy East Corporation and RGS Energy
Group, Inc. will file a joint proxy statement / prospectus with the Securities
and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE
JOINT PROXY STATEMENT / PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free
copy of the joint proxy statement / prospectus (when available) and other
documents filed by Energy East and RGS Energy with the Commission at the
Commission's web site at http://www.sec.gov. Free copies of the joint proxy
statement / prospectus, once available, and each company's other filings with
the Commission may also be obtained from the respective companies. Free copies
of Energy East's filings may be obtained by directing a request to Energy East
Corporation, P.O. Box 3200, Ithaca, NY 14852-3200, Telephone: (800) 225-5643.
Free copies of RGS Energy's filings may be obtained by directing a request to
RGS Energy Group, Inc., 89 East Avenue, Rochester, NY 14649, Telephone: (800)
724-8833.
PARTICIPANTS IN SOLICITATION
Energy East Corporation, RGS Energy Group, Inc. and their respective directors,
executive officers and other members of their management and employees may be
soliciting proxies from their respective stockholders in connection with the
merger. Information concerning Energy East's participants in the solicitation is
set forth in Energy East's Current Report on Form 8-K filed with the Commission
on February 20, 2001, and information concerning RGS Energy's participants in
the solicitation is set forth in RGS Energy's Current Report on Form 8-K filed
with the Commission on February 20, 2001.
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FINANCIAL ANALYST CONFERENCE
Energy East and RGS Energy will host a financial analyst meeting today at 10:00
am EST to discuss the transaction. A live Internet audio broadcast of the
meeting may be accessed at www.dealinfo.com/easrgs by clicking on an available
link. Real Network's RealPlayer or Microsoft Windows Media Player is required to
access the Webcast. They can be downloaded from www.real.com or
www.microsoft.com/windows/mediaplayer.
MEDIA TELECONFERENCE
There will be a media teleconference call today at 11:15 am EST to discuss the
transaction. To participate in the teleconference please call (888) 489-9489.
For individuals outside of the US, please call (212) 676-5087. Due to the
expected number of participants, please call at least 15 minutes before the
conference is to begin. Ask to be connected to the Energy East/RGS Energy
teleconference.
CONTACTS FOR ENERGY EAST CONTACTS FOR RGS ENERGY
INVESTORS: INVESTORS:
Thorn Dickinson Mark Graham
607-347-2561 716-724-8176
MEDIA: MEDIA:
Angela Sparks Mike Power
518-434-6002 716-724-8828