[Letterhead of Energy East / CMP group]
FOR IMMEDIATE RELEASE
ENERGY EAST AND CMP GROUP COMBINE
IN $957 MILLION TRANSACTION
Energy East Continues To Redeploy Cash From Asset Sales
To Expand In Northeast And Repurchase Shares
ALBANY, N.Y., STAMFORD, CT, and AUGUSTA, Maine (June 15, 1999) - The
boards of directors of Energy East Corporation [NYSE: NEG] and CMP Group, Inc.
[NYSE: CTP] today announced that the companies have signed a definitive merger
agreement under which Energy East will acquire all of the common stock of CMP
Group for $29.50 per share in cash. The transaction has an equity market value
of approximately $957 million based upon the approximately 32.4 million CMP
Group common shares currently outstanding. Energy East will also assume
approximately $271 million of CMP Group preferred stock and long-term debt. Upon
completion of the transaction, CMP Group will become a wholly owned subsidiary
of Energy East. 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.
CMP Group's principal subsidiary, Central Maine Power Company (CMP),
serves more than 530,000 electric customers in an 11,000 square-mile service
territory in central and southern Maine. This area contains more than
three-quarters of the state's population, in addition to major commercial,
manufacturing and recreational areas, including the cities of Portland, Maine's
largest city, and Augusta, the state capital. Energy East, through its
subsidiary, New York State Electric & Gas Corporation (NYSEG), provides energy
services to nearly 820,000 electric customers and 240,000 natural gas customers
in upstate New York.
Wes von Schack, chairman, president and chief executive officer of
Energy East, said, "This transaction is an important step for both companies. We
will use our combined balance sheets and proceeds from the sales of generation
assets to selectively grow our distribution businesses in the Northeast.
"Energy East and CMP Group have a common vision for the future of
our industry. We have chosen to focus on our core competencies -- the
distribution of electricity
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and natural gas -- and we will leverage our combined skills and resources to
grow our distribution businesses and improve efficiencies," continued Mr. von
Schack.
David T. Flanagan, president and chief executive officer of CMP
Group, said, "We are pleased to announce this strategic merger with Energy East.
Our partnership with a strong, dynamic company in our own region creates an
entity of increased size and stature that is necessary for success in the new
competitive marketplace. We are joining a company whose values and vision we
share. Energy East has a service territory with similar characteristics to ours,
as well as a record of providing outstanding customer service. We are delighted
that our customers will continue to receive the same great service from the same
Maine people at all hours in any weather. This merger provides benefits to all
our stakeholders -- shareholders, customers and employees -- that were simply
not attainable on a stand-alone basis."
"Today is a defining moment for Energy East," said Mr. von
Schack. "With this transaction and our previously announced combination with
Connecticut Energy, Energy East is strategically positioned to be a leading
energy distribution company in the Northeast."
The transformation began in 1998 with an electric restructuring plan
that lowered prices for NYSEG customers, aggressively promoted competition by
allowing all of its customers to choose their electricity suppliers by August 1,
1999, and created the holding company, Energy East. Energy East determined that
its future would be best served by focusing on the distribution of energy. The
sale of coal-fired generation assets, which resulted in after-tax proceeds of
$1.3 billion, eliminated all generation stranded costs, including nuclear
stranded costs. With the cash proceeds from the sale of generation, the company
stated that it would selectively grow its electric and natural gas distribution
businesses.
Energy East intends to finance the CMP Group transaction through a
combination of debt and cash, which provides the company with significant
financial flexibility. The transaction will have no effect on the company's
previously announced share repurchase program. Energy East has repurchased
nearly 10 million shares of common stock this year, bringing its total share
repurchase since 1996 to approximately 27 million shares. Energy East currently
has approximately 116 million shares outstanding.
Under the agreement, David T. Flanagan will be chairman, president
and chief executive officer of CMP Group and will become president of Energy
East. Arthur W. Adelberg, executive vice president of CMP Group, will become
senior vice president and chief financial officer of Energy East. Sara J. Burns
will continue as president of Central Maine Power Company. Mr. Flanagan plus two
other CMP Group directors to be mutually agreed upon will be named to the Energy
East board of directors. As operating utilities -- CMP, as well as NYSEG and The
Southern Connecticut Gas Company -- will continue to be headquartered in their
respective locations and operate under their respective names. Energy East will
also establish a corporate office in Portland, Maine.
"This combination is about growth and competition," said Mr. von
Schack. "CMP Group employees will benefit from being part of a company with the
size and capabilities necessary to compete in the increasingly competitive
energy industry. Together, we are now
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working with a greater pool of talent. The combination with CMP Group builds
upon a successful working relationship through our natural gas joint venture in
Maine. We know and respect CMP Group's management and look forward to working
together to build a major new energy services company in the Northeast," Mr. von
Schack concluded.
The companies will seek to minimize workforce effects of the merger,
primarily through a combination of program, including reduced hiring and
attrition. All union contracts will be honored. In the future, the combined
company will be seeking opportunities to create new jobs in the Northeast as the
corporation expands its products and services to respond to customer needs.
Central Maine Power Company has already proposed a rate reduction
that will go into effect in March 2000, coincident with the implementation of
retail competition in Maine. Following the merger, CMP anticipates being able to
extend its commitment to rate stability beyond the year 2000.
The merger is conditioned, among other things, upon the approvals of
CMP Group shareholders and various regulatory agencies, including the Maine
Public Utilities Commission, the Securities and Exchange Commission (SEC), the
Federal Energy Regulatory Commission and the Nuclear Regulatory Commission.
Energy East intends to register as a holding company with the SEC under the
Public Utility Holding Company Act (PUHCA) of 1935. The companies anticipate
that regulatory approvals can be obtained within a year.
Goldman, Sachs & Co. acted as financial advisor to Energy East and
Warburg Dillon Read LLC acted as financial advisor to CMP Group. Wachtell,
Lipton, Rosen & Katz acted as legal counsel to Energy East and Thelen Reid &
Priest LLP acted as legal counsel to CMP Group.
CMP Group is a Maine holding company formed on September 1, 1998,
with general offices in Augusta, Maine. Its principal holding, Central Maine
Power Company (CMP), is a century-old electric utility that serves more than
530,000 retail customers in an 11,000 square-mile service territory in central
and southern Maine. Besides its principal holding, CMP Group subsidiaries
include Union Water-Power, property management, real estate, utility services,
and energy-efficiency contracting; MaineCom, fiber-optic infrastructure; CNEX,
consulting; and TeleSmart, accounts-receivable services. CMP Group's Internet
address is www.cmpgroup.com.
Energy East is an energy delivery, products and services company
doing business in New York, Massachusetts, Maine and New Hampshire. New York
State Electric & Gas Corporation (NYSEG), a subsidiary, supplies, markets and
delivers electricity and natural gas to over one million customers across more
than 40% of upstate New York. On April 23, 1999, Energy East and Connecticut
Energy Corporation announced their merger agreement. Connecticut Energy, through
its wholly owned subsidiary, The Southern Connecticut Gas Company, delivers
natural gas to 160,000 customers in 22 communities in southern Connecticut,
including the cities of Bridgeport and New Haven.
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# # #
This press release contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. The forward-looking
statements are subject to various risks and uncertainties. Discussion of factors
that could cause actual results to differ materially from management's
projections, forecasts, estimates and expectations may include factors that are
beyond the company's ability to control or estimate precisely, such as estimates
of future market conditions, the ability to realize cost savings and the terms
associated with obtaining regulatory approvals. Other factors include, but are
not limited to, weather conditions, economic conditions in the company's service
territory, fluctuations in energy-related commodity prices, marketing efforts
and other uncertainties. Other risk factors are detailed from time to time in
the two companies' SEC reports.
Contacts for Energy East: Contacts for CMP Group:
Media: Dan Farley Media: Mark Ishkanian
(203) 325-0690 (207) 626-9534
Investors: Thorn Dickinson Investors: Clark Irwin
(607) 347-2561 (207) 622-6397