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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MAGMA POWER COMPANY
(Name of Registrant as Specified in its Charter)
CALIFORNIA ENERGY COMPANY, INC.
CE ACQUISITION COMPANY, INC.
(Name of Person Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(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 Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange
Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
/ / 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 number, or the form or schedule and the date of its
filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
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PRELIMINARY COPY - OCTOBER 13, 1994
CALIFORNIA ENERGY COMPANY, INC.
CE ACQUISITION COMPANY, INC.
REQUEST SOLICITATION STATEMENT TO STOCKHOLDERS
OF
MAGMA POWER COMPANY
This Request Solicitation Statement is being furnished to holders of the
common stock, par value $0.10 per share ("Shares"), of Magma Power Company, a
Nevada corporation (the "Company"), who were holders of record as of the close
of business on October __, 1994 (the "Record Date").
This Request Solicitation Statement and the enclosed GREEN request card
are first being furnished by California Energy Company, Inc., a Delaware
corporation ("CECI"), and CE Acquisition Company, Inc., a Delaware corporation
and a wholly owned subsidiary of CECI (the "Purchaser"), to holders of Shares
as of the Record Date (the "Record Holders") on or about October __, 1994 in
connection with CECI's solicitation (the "Request Solicitation") of written
requests ("Requests") from the Record Holders to require the President
("President") or the Secretary ("Secretary") of the Company to call a special
meeting (the "Special Meeting") of the stockholders of the Company pursuant to
Article I, Section 2, of the Company's Restated Bylaws, as amended (the
"Bylaws"), to consider and vote on the proposals described below under the
heading "THE SPECIAL MEETING PROPOSALS" (the "Special Meeting Proposals").
IMPORTANT
THE PURPOSE OF THE REQUEST SOLICITATION IS TO FACILITATE CONSUMMATION OF
CECI'S PENDING TENDER OFFER FOR 12,400,000 SHARES AT $35 NET PER SHARE IN
CASH. THE TENDER OFFER IS THE FIRST STEP IN THE PROPOSED ACQUISITION OF THE
COMPANY BY CECI. SEE "THE OFFER AND THE PROPOSED MERGER".
DURING THE PAST SEVERAL WEEKS, THE COMPANY'S BOARD OF DIRECTORS HAS
UNILATERALLY TAKEN ACTION TO FRUSTRATE THE STOCKHOLDERS' ABILITY TO ACT IN
THEIR OWN INTERESTS IN CONNECTION WITH THE OFFER AND THE PROPOSED MERGER (AS
SUCH TERMS ARE DEFINED BELOW). SEE "BACKGROUND OF THE OFFER, THE PROPOSED
MERGER AND THE REQUEST SOLICITATION".
BY RETURNING THE GREEN REQUEST CARDS, A MAJORITY OF THE RECORD HOLDERS WILL BE
ABLE TO REQUIRE THE PRESIDENT OR SECRETARY TO CALL THE SPECIAL MEETING AT
WHICH THE COMPANY'S STOCKHOLDERS MAY TAKE ACTIONS THAT WILL EXPRESS TO THE
COMPANY'S BOARD OF DIRECTORS THE STOCKHOLDERS' DESIRE TO ACCEPT THE OFFER AND
APPROVE THE PROPOSED MERGER. SEE "THE SPECIAL MEETING PROPOSALS".
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In order for the Record Holders to require the President or Secretary to
call the Special Meeting, valid, unrevoked GREEN Request cards must be
executed by Record Holders holding at least a majority of the Shares issued
and outstanding and entitled to vote as of the Record Date. Requests in
connection with this Request Solicitation must be delivered to CECI, for
delivery to the Company, on or before November , 1994, or such later date as
CECI may from time to time establish in accordance with the procedures set
forth below under "REQUEST PROCEDURE--Request Due Date" (November __, 1994 or
such later date being referred to herein as the "Request Due Date").
The primary purpose of this Request Solicitation is to obtain Requests
from the requisite number of Record Holders to require the President or
Secretary to call the Special Meeting to provide the stockholders of the
Company the opportunity to consider and vote on the Special Meeting Proposals,
which, if approved, would result in, among other things, placement on the
Company's Board of Directors (the "Company's Board") of four nominees of CECI
and the Purchaser. Although neither the call of the Special Meeting nor the
approval of the Special Meeting Proposals is a condition to the Offer (as
defined below under the heading "THE OFFER AND THE PROPOSED MERGER"), CECI
believes that requiring the President or Secretary to call the Special Meeting
and approving the Special Meeting Proposals will facilitate consummation of
the Offer and will increase the likelihood that the Company and the Purchaser
will enter into the Proposed Merger (as defined below under the heading "THE
OFFER AND THE PROPOSED MERGER"). See "THE OFFER AND THE PROPOSED MERGER".
BY REQUIRING THE PRESIDENT OR SECRETARY TO CALL THE SPECIAL MEETING AND
BY APPROVING THE SPECIAL MEETING PROPOSALS AT THE SPECIAL MEETING, THE
COMPANY'S STOCKHOLDERS WILL EXPRESS TO THE COMPANY'S BOARD THEIR VIEWS ON THE
OFFER AND THE PROPOSED MERGER. CECI BELIEVES THAT THIS IS PARTICULARLY
IMPORTANT IN LIGHT OF RECENT ACTIONS TAKEN BY THE COMPANY'S BOARD WHICH CECI
BELIEVE ARE NOT IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND ARE
INTENDED ONLY TO ENTRENCH FURTHER THE CURRENT MANAGEMENT OF THE COMPANY AND TO
DEPRIVE THE COMPANY'S STOCKHOLDERS OF THE OPPORTUNITY TO EVALUATE AND ACT ON
THE OFFER AND THE PROPOSED MERGER. SEE "BACKGROUND OF THE OFFER, THE
PROPOSED MERGER AND THE REQUEST SOLICITATION".
CECI STRONGLY URGES YOU TO SIGN, DATE AND RETURN TO CECI, IN CARE OF
MACKENZIE PARTNERS, INC., AT THE ADDRESS INDICATED BELOW, THE ENCLOSED GREEN
REQUEST CARD IN ORDER TO REQUIRE THE PRESIDENT OR SECRETARY TO CALL THE
SPECIAL MEETING. RECORD HOLDERS SHOULD NOT DELIVER REQUESTS DIRECTLY TO THE
COMPANY.
THE FAILURE TO EXECUTE A GREEN REQUEST CARD HAS THE SAME EFFECT AS
OPPOSING THE CALL OF THE SPECIAL MEETING AND MAY IMPEDE CONSUMMATION OF THE
OFFER.
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Questions and requests for assistance in completing or delivering Request
cards may be directed to MacKenzie Partners, Inc. at the following address and
telephone numbers:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 959-5500 (call collect)
or
Call Toll Free (800) 322-2885
THE OFFER AND THE PROPOSED MERGER
On September 19, 1994, CECI delivered a letter to the Company proposing
to acquire all of the outstanding Shares of the Company for $35 per share,
comprised of $25 in cash and $10 in market value of CECI's common stock, par
value $0.0675 per share (the "CECI Common Stock"). In the letter, CECI
reiterated its preference that any combination of the Company and CECI be
effected on a friendly, consensual basis, and it notified the Company's Board
that, if the Company's Board failed to respond promptly or acted to prevent
the Company's stockholders being given an opportunity to take advantage of
CECI's proposal, CECI reserved the right to approach the Company's
stockholders directly with a tender offer and/or a consent solicitation to
call a special meeting of stockholders for purposes of acting on CECI's
proposal and electing directors.
Subsequently, on October 3, 1994, CECI's financial advisors were informed
that the Company's Board had authorized the Company to adopt what is commonly
referred to as a "Poison Pill", and CECI also learned, through press reports,
that the Company had, among other things, amended its Bylaws to require that
stockholder action occur only at a regular or special meeting of stockholders
(rather than by way of a written consent solicitation). In addition, CECI
learned on October 11, 1994 that the Company had entered into "Golden
Parachute" severance agreements with 15 of the most highly compensated members
of the Company's management and indemnification agreements with the members of
the Company's Board. CECI BELIEVES SUCH ACTIONS ARE INTENDED TO ENTRENCH
FURTHER THE CURRENT OFFICERS AND DIRECTORS OF THE COMPANY AND ARE MERELY A
DEVICE BEING USED BY THE COMPANY'S BOARD TO ATTEMPT TO DENY THE COMPANY'S
STOCKHOLDERS THE RIGHT TO PARTICIPATE IN THE OFFER AND THE PROPOSED MERGER.
As CECI believes such actions are not in the stockholders' best interests,
CECI will take all appropriate actions to seek to have such Poison Pill,
Golden Parachutes and other impediments to the Offer set aside. See
"BACKGROUND OF THE OFFER, THE PROPOSED MERGER AND THE REQUEST SOLICITATION"
and "CERTAIN LITIGATION".
On October 6, 1994, as a result of what CECI viewed as an unproductive
and disappointing meeting between the Company's financial advisors and CECI's
financial advisors regarding CECI's
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initial acquisition proposal, the Purchaser commenced a tender offer for
12,400,000 Shares and the associated Preferred Share Purchase Rights (the
"Poison Pill Rights") at $35 per Share (and associated Poison Pill Right), net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal, each dated October 6, 1994 (which together constitute the
"Offer"). The Offer is scheduled to expire at 12:00 Midnight, New York City
time, on Thursday, November 3, 1994, unless and until the Purchaser, in its
sole discretion, extends the period of time for which the Offer is open. The
Purchaser currently intends to extend the Offer beyond its scheduled November
3, 1994 expiration date. Copies of the Offer to Purchase and the related
Letter of Transmittal have already been mailed to stockholders of the Company
and may also be obtained from MacKenzie Partners, Inc. at its address and
toll-free telephone number set forth above. Unless the context otherwise
requires, all references to Shares in this Request Solicitation Statement
include the associated Poison Pill Rights. All references to Poison Pill
Rights include all terms and conditions of the Poison Pill applicable to
Poison Pill Rights.
On October 10, 1994, CECI learned through press reports that the
Company's Board had recommended that the Offer be rejected. CECI believes
that the rejection of the Offer represents yet another attempt to entrench
further the Company's current management without offering the stockholders of
the Company anything of value in response to CECI's $35 per Share cash offer.
CECI believes that the Company's Board is telling its stockholders, in effect,
to ignore a $7.50 premium being offered by CECI over the $27.50 closing price
for Shares on September 19, 1994, the day of CECI's issuance of the press
release announcing the initial acquisition proposal.
The purpose of the Offer is to acquire majority control of the Company as
the first step in the acquisition of the entire equity interest in the
Company. CECI is seeking to negotiate with the Company a definitive
acquisition agreement pursuant to which the Company would, as soon as
practicable following consummation of the Offer, consummate a merger or other
business combination (the "Proposed Merger") with the Purchaser or another
direct or indirect wholly owned subsidiary of CECI. In the Proposed Merger,
each outstanding Share (other than Shares held by CECI, the Purchaser or any
other direct or indirect wholly owned subsidiary of CECI, Shares held in the
treasury of the Company and Shares held by stockholders who properly exercise
dissenters' rights under the Nevada General Corporation Law (the "NGCL"))
would be converted into the right to receive cash and shares of CECI Common
Stock having a combined cash and market value of $35 per Share. The per Share
amount of cash and CECI Common Stock to be distributed in the Proposed Merger
would be determined such that the blended purchase price for all Shares
acquired by the Purchaser and its affiliates in the Offer and the Proposed
Merger would be $25 in cash, without interest thereon,
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and $10 in market value of CECI Common Stock, as established within a range of
certain maximum and minimum prices for the CECI Common Stock, which will be
determined shortly prior to entering into the agreement for the Proposed
Merger.
The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn before the expiration of the Offer that
number of Shares which, together with Shares beneficially owned by the
Purchaser, represents at least a majority of the Shares outstanding on a fully
diluted basis, (2) the Company having entered into a definitive merger
agreement with the Purchaser to provide for the acquisition of the Company
pursuant to the Offer and the Proposed Merger, (3) the Purchaser being
satisfied, in its sole judgment, that the Purchaser has obtained financing
sufficient to enable it to consummate the Offer and the Proposed Merger and
(4) authorization by CECI's stockholders of the issuance of CECI Common Stock
sufficient to complete the Proposed Merger. The Offer is also subject to
certain other conditions which are set forth in the Offer to Purchase and the
related Letter of Transmittal, copies of which may be obtained from MacKenzie
Partners, Inc.
Consummation of the Proposed Merger will require approval by the
Company's Board and the affirmative vote of the holders of a majority of the
outstanding Shares. The Purchaser intends to vote all Shares acquired by it
in favor of the Proposed Merger, and, if the Purchaser were to purchase a
majority of the Shares pursuant to the Offer and to obtain full voting power
for such Shares pursuant to the Control Share Statute (as defined below under
"THE SPECIAL MEETING PROPOSALS"), the Purchaser would have a sufficient number
of Shares to approve the Proposed Merger and to elect directors as described
below without the affirmative vote of any other holder of Shares. Although
the Purchaser will seek consummation of the Proposed Merger as soon as
practicable following the purchase of Shares pursuant to the Offer, the exact
timing and details of the Proposed Merger will depend on a variety of factors
and legal requirements, including, among other things, whether the conditions
to the Offer have been satisfied or waived.
CECI BELIEVES THAT ADOPTION OF THE SPECIAL MEETING PROPOSALS WILL
FACILITATE CONSUMMATION OF THE OFFER AND WILL INCREASE THE LIKELIHOOD THAT THE
COMPANY AND THE PURCHASER WILL ENTER INTO THE PROPOSED MERGER.
THE SPECIAL MEETING
CECI is seeking Requests from Record Holders owning at least a majority
of the Shares issued and outstanding and entitled to vote in order to require
the President or Secretary to call the Special Meeting pursuant to the Bylaws
for the purpose of considering and voting on the Special Meeting Proposals
described below under "THE SPECIAL MEETING PROPOSALS". The Requests
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solicited hereby expressly include a further request that the record date for
the Special Meeting (the "Special Meeting Record Date") and the date of the
Special Meeting (the "Special Meeting Date") be designated by CECI on behalf
of the Record Holders executing such Requests. CECI currently intends (i) to
set as the Special Meeting Record Date the 11th calendar day following the
date on which the requisite number of valid, unrevoked Requests are delivered
by CECI to the Company and (ii) to set as the Special Meeting Date the 30th
calendar day following the Special Meeting Record Date. In the event that
either such date does not fall on a business day, then such date shall be the
first business day thereafter.
THE PURPOSE OF THE SPECIAL MEETING IS TO PROVIDE STOCKHOLDERS OF THE
COMPANY THE OPPORTUNITY TO CONSIDER AND VOTE ON THE SPECIAL MEETING PROPOSALS.
CECI BELIEVES THAT THE RECENT ACTIONS TAKEN BY THE COMPANY'S BOARD ARE NOT IN
THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND ARE INTENDED TO ENTRENCH
FURTHER THE CURRENT MANAGEMENT OF THE COMPANY AND TO DEPRIVE THE COMPANY'S
STOCKHOLDERS OF THE OPPORTUNITY TO EVALUATE AND ACT ON THE OFFER AND THE
PROPOSED MERGER. IN ADDITION, CECI BELIEVES THAT SUCH ACTIONS IMPOSE
ARTIFICIAL IMPEDIMENTS WHICH ONLY ADD COST, TIME, NEEDLESS AND UNPRODUCTIVE
LITIGATION AND DISTRACTION OF MANAGEMENT TO AN ISSUE WHICH THE MAJORITY OF THE
COMPANY'S STOCKHOLDERS WILL EVENTUALLY DECIDE ON ITS MERITS. THEREFORE, BY
REQUIRING THE COMPANY TO CALL THE SPECIAL MEETING AND BY VOTING ON THE SPECIAL
MEETING PROPOSALS AT THE SPECIAL MEETING, THE COMPANY'S STOCKHOLDERS WILL BE
ABLE TO EXPRESS THEIR VIEWS ON THE OFFER AND THE PROPOSED MERGER DIRECTLY TO
THE COMPANY'S BOARD AND TO PROTECT THEIR INTERESTS IN THE COMPANY.
In light of recent actions taken by the Company's Board in response to
the Offer, CECI believes that the Company's Board may take actions designed to
impede the calling of the Special Meeting, including attempting to establish
different record or meeting dates than those contemplated herein. In the
event the Company's Board takes such actions, CECI will take such steps as it
deems necessary to reaffirm the right of the stockholders to set such dates
and otherwise act in accordance with the procedures described herein.
THE SPECIAL MEETING PROPOSALS
At the Special Meeting, CECI intends to ask the stockholders of the
Company to consider and vote on the following proposals (the "Special Meeting
Proposals"):
a. that the number of directors on the Company's Board be increased
from 11 to 15;
b. that the nominees of CECI identified in CECI's proxy materials to be
distributed in connection with the Special Meeting be elected as
directors to fill the
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four newly created directorships on the Company's Board;
c. that the Bylaws be amended (the "First Bylaw Amendment") to require
the affirmative vote of at least 80% of the entire Board of
Directors of the Company (irrespective of vacancies) with respect to
certain actions outside the ordinary course of business taken or
committed to be taken prior to the Company's 1995 Annual Meeting of
Stockholders, including issuances of securities, dispositions of
assets, taking certain compensation, benefit and employment action,
entering into material commitments or contracts, and certain
incurrences of debt or liens; and
d. that the Bylaws be amended (the "Second Bylaw Amendment") to render
the provisions of the "Control Share Statute", Sections 78.378
through 78.3793, inclusive, of the NGCL, inapplicable to the Offer.
The details regarding the Special Meeting Proposals, including the
specific text thereof, will be set forth in CECI's proxy materials to be
distributed in connection with the Special Meeting. Although CECI does not
presently expect to include any other proposed matters in the Special Meeting
Notice, CECI specifically reserves the right to require inclusion in the
Special Meeting Notice of such other matters as CECI may deem necessary,
advisable or appropriate in connection with facilitating consummation of the
Offer and the Proposed Merger.
The Special Meeting Proposals are intended to facilitate consummation of
the Offer and to increase the likelihood that the Company and the Purchaser
will enter into the Proposed Merger. The purpose of expanding the size of the
Company's Board from 11 to 15 directors and filling the four new directorships
created thereby with nominees of CECI is to place on the Company's Board
directors who are committed to removing any impediments to stockholders being
able to freely choose whether to accept the Offer and approve the Proposed
Merger, thereby ensuring that the Offer and the Proposed Merger get a full and
fair hearing. Assuming all four of CECI's nominees are elected at the Special
Meeting to serve on the Company's Board, CECI believes it would be able to
obtain majority representation on the Company's Board (eight seats out of 15)
if the Purchaser subsequently elected all directors standing for election at
the 1995 Annual Meeting of Stockholders (the "1995 Annual Meeting"). The
Purchaser would be able to elect all such directors and obtain majority
representation on the Company's Board at the 1995 Annual Meeting if it were to
purchase a majority of the Shares pursuant to the Offer and if the Second
Bylaw Amendment rendering the Control Share Statute inapplicable to the Offer
has been approved at the Special Meeting or the Control Share Statute has
otherwise been complied with such that all Shares purchased pursuant to the
Offer will have full voting power.
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The purpose of the First Bylaw Amendment is to require the approval of at
least one of CECI's nominees (if all four of CECI's nominees were to be seated
on the Company's Board) of certain actions that could adversely affect CECI's
ability to consummate the Offer and the Proposed Merger.
The purpose of the Second Bylaw Amendment is to amend the Bylaws to state
expressly that the provisions of the Control Share Statute do not apply to the
Offer. The Control Share Statute purports to deny voting rights to shares of
an Issuing Corporation (as defined below) that are acquired by a person and
persons acting in association with such person (together, an "Acquiring
Person") the total number of which is sufficient to enable the Acquiring
Person to exercise voting power at or above any of three thresholds (20%,
33-1/3% or a majority of the outstanding voting power of the Issuing
Corporation), and any shares acquired by the Acquiring Person within 90 days
before such acquisition ("Control Shares"), unless, among other exceptions,
(i) the articles of incorporation or bylaws of the corporation in effect on
the tenth day following such acquisition provide that the provisions of the
Control Share Statute do not apply or (ii) voting rights for such Control
Shares have been approved at a meeting of certain disinterested stockholders
called in accordance with the provisions of the Control Share Statute (the
"Control Share Special Meeting"). Although, as noted below, CECI is unable to
ascertain whether the Control Share Statute would apply to Shares purchased
pursuant to the Offer, approval of the Second Bylaw Amendment would expressly
render the provisions of the Control Share Statute inapplicable to the Offer.
The Control Share Statute provides that it applies to certain
acquisitions of shares of a corporation (an "Issuing Corporation")
incorporated in Nevada that has 200 or more stockholders, at least 100 of whom
are stockholders of record and residents of Nevada and that does business in
Nevada directly or through an affiliated corporation. However, based on
publicly available information, CECI cannot determine whether the requisite
number of record stockholders of the Company are Nevada residents and whether
the Company does business in Nevada such that the Control Share Statute would
apply to Shares purchased pursuant to the Offer.
This Request Solicitation Statement is not being delivered pursuant to
the provisions of the Control Share Statute, and shall not, and is not
intended to, be construed as an offeror's statement or a request for a Control
Share Special Meeting. Notwithstanding the foregoing, CECI and the Purchaser
reserve the right to deliver at a future time an offeror's statement to the
Company in connection with the Offer and, contemporaneously therewith, to
request that the Company call the Control Share Special Meeting. CECI, in its
sole discretion, may also seek
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other means, including legal proceedings, to establish the voting rights of
Shares tendered pursuant to the Offer.
CECI STRONGLY URGES YOU TO SIGN, DATE AND RETURN TO CECI, IN CARE OF
MACKENZIE PARTNERS, INC., AT THE ADDRESS INDICATED BELOW, THE ENCLOSED GREEN
REQUEST CARD IN ORDER TO REQUIRE THE PRESIDENT OR SECRETARY TO CALL THE
SPECIAL MEETING.
A REQUEST TO REQUIRE THE PRESIDENT OR SECRETARY TO CALL THE SPECIAL
MEETING IS ONLY EFFECTIVE IF EXPRESSED BY RECORD HOLDERS OWNING AT LEAST A
MAJORITY OF THE SHARES ISSUED AND OUTSTANDING AND ENTITLED TO VOTE. THE
FAILURE TO EXECUTE A GREEN REQUEST CARD HAS THE SAME EFFECT AS OPPOSING THE
CALL OF THE SPECIAL MEETING AND MAY IMPEDE CONSUMMATION OF THE OFFER.
BACKGROUND OF THE OFFER, THE PROPOSED MERGER
AND THE REQUEST SOLICITATION
Between May 1991 and June 1994, representatives of the Company and CECI
discussed, on various occasions, the possibility of the Companies cooperating
on certain matters, engaging in a joint venture or entering into a business
combination or other acquisition transaction. These discussions did not lead
to any agreements or understandings.
On or about June 20, 1994, David L. Sokol, Chairman, President, Chief
Executive Officer of CECI contacted Ralph W. Boeker, President and Chief
Executive Officer of the Company, and proposed a meeting in person between
members of management of the two companies to discuss the possible combination
of CECI and the Company. As a result of that conversation, an August 11, 1994
meeting was scheduled to be held between Mr. Sokol and Mr. Boeker and other
representatives of their companies.
On August 9, 1994, Mr. Sokol was advised that Mr. Boeker had cancelled
the scheduled August 11 meeting. On August 10, 1994, Mr. Sokol spoke to Mr.
Boeker by telephone, and was advised that the Company's decision to cancel was
principally due to the desire of the Company's management to dedicate their
full attention to the pending financing of the Company's Malitbog project in
the Philippines. Accordingly, Mr. Boeker suggested that he would schedule a
meeting with Mr. Sokol toward the end of September 1994, which is when the
Company expected to close the financing.
On September 15, 1994, Mr. Sokol contacted a member of the Company's
Board, in an effort to determine whether the Company had a serious interest in
discussing a negotiated combination of the companies within a time frame that
would recognize CECI's desire to make certain decisions regarding the
strategic direction it wished to pursue in the changing global marketplace.
The director stated that he was aware of certain of the past
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discussions between the companies, but would ask the Company's management to
respond directly to Mr. Sokol's inquiry.
Later that same day, Paul M. Pankratz, the Chairman of the Company, and
Mr. Boeker called Mr. Sokol and advised him that the closing of the financing
for the Company's Malitbog project had been delayed and was expected to occur
on or about November 18, 1994 and suggested that they would be available to
meet with Mr. Sokol shortly after the closing of such financing. Mr. Sokol
stated that CECI was considering a number of strategic alternatives, including
a possible combination with the Company, and that CECI's strategic planning
had reached a stage where a prompt decision concerning entering into
negotiations regarding any possible combination with the Company was required.
Mr. Sokol further stated his belief that it was unnecessary to wait until
after the closing of the Malitbog financing because CECI was prepared to
negotiate in good faith on a basis that would value the Company as though such
financing had closed. Messrs. Boeker and Pankratz reiterated that they would
agree to meet only after the Malitbog closing and Mr. Sokol concluded the call
by reiterating CECI's need to act upon certain of its strategic alternatives
on a prompt basis.
On September 19, 1994, Mr. Sokol sent the following letter to Messrs.
Pankratz and Boeker:
Dear Paul and Ralph:
We have discussed on several occasions during the past 12 months the
possible combination of California Energy Company, Inc. ("California
Energy") and Magma Power Company ("Magma"). As you know, California
Energy believes strongly that the strategic benefits which result
from merging our companies would enhance value for the shareholders
of both companies, while improving our shared competitive position
in an increasingly challenging business environment. While we have
been respectful of your desire to move slowly in this matter in the
past, the demands of a rapidly changing domestic and global
marketplace have led us to conclude that it is appropriate to make a
proposal to purchase Magma at this time.
Consequently, pursuant to the authority of its Board of Directors,
California Energy hereby proposes to acquire all outstanding shares
of Magma's common stock for $35 per share, comprised of $25.00 in
cash and $10.00 in market value of California Energy's common stock.
We understand from you that Magma will complete the financing of its
Malitbog geothermal project in the Philippines in mid-November and
we therefore established our proposal price to reflect fully the
value of this project although our proposal is not contingent on the
completion of such financing.
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We hope that our proposed transaction can be consummated amicably
and expect to hear from you promptly. I am available to meet with
you and Magma's Board to discuss this proposal, and to answer any
questions you may have. As you know, California Energy has
substantial cash on hand and our financial advisor has confirmed to
us that we can conclude any additional financing required to effect
the combination of our two companies on a timely basis.
As I have stressed in our past discussions, we would prefer that the
combination of Magma and California Energy be effected on a
friendly, consensual basis in which the interest of our respective
shareholders, employees, customers and business partners are fairly
served. We are, of course, prepared to negotiate in good faith all
aspects of our proposal and to work out the terms of a mutually
satisfactory merger agreement, containing terms and conditions
typical for a transaction of this type.
Under the circumstances, we believe that Magma's Board of Directors
has a fiduciary responsibility to provide its shareholders with the
opportunity to take advantage of this proposal. While we hope that
it will not become necessary for us to approach your shareholders
directly, in the event that you do not respond to this proposal
promptly, we reserve the right to approach your shareholders
directly with a tender offer and/or a consent solicitation to call a
special meeting of shareholders for purposes of acting on this
proposal and electing directors.
Our companies, and the three of us personally, have enjoyed cordial
relations for some time. While I have consistently expressed to you
our belief that a business combination of California Energy and
Magma has strong commercial advantages, my colleagues and I have
also expressed our regard for the quality of Magma's projects and
the professionalism of its management. As we are all keenly aware,
the independent power industry is undergoing fundamental change as a
result of the accelerating deregulation in the U.S. electric utility
industry. Simultaneously, our greatest growth opportunities have
shifted from the domestic market to the international arena. While
our growth prospects internationally are extremely favorable, they
also require dramatically expanded developmental, financial,
construction and operational resources and talents. We are confident
that the combination of our companies will advance us to the
forefront of the global competition and will greatly enhance our
probability of successful growth with diligent risk management. We
also believe that the combined company would obtain a
13
powerful strategic advantage on international projects by being able
to draw upon the engineering talents of The Dow Chemical Company and
the construction expertise and capabilities of Peter Kiewit Sons'
Inc., California Energy's largest shareholder.
California Energy continues to experience strong growth and remains
committed to rapid international expansion. We have this year
successfully financed and placed over 300 MW of geothermal power in
construction in the Philippines and believe that Magma's experienced
management team and dedicated employees will be an important
addition to California Energy as it pursues its aggressive
development strategy.
Paul, as you, Ralph and I discussed on our phone call last Thursday,
the combination of our two companies is fundamentally an economic
decision and should additionally provide for the proper and fair
treatment of both companies' employees. I can assure you that in any
such transaction, we would work together to ensure a high level of
opportunity and satisfaction for our combined employee group. It is
my personal hope that you and your advisors will share our
enthusiasm for the combination we have proposed and that we can
promptly provide for our respective shareholders the enhanced value
which it will create.
I encourage you to contact me at your earliest convenience;
additionally, your advisors may contact directly Mr. James Goodwin
of Gleacher & Co. (212) 418-4218, California Energy Company's
financial advisor.
Sincerely yours,
/s/ David L. Sokol
David L. Sokol
Chairman, President and
Chief Executive Officer
cc: Board of Directors of Magma Power Company
c/o Magma Power Company
On September 20, 1994, Mr. Pankratz sent the following letter to Mr.
Sokol:
Dear David:
We have received your letter of September 19, 1994 regarding your
unsolicited proposal to purchase Magma Power Company for a
combination of cash and securities. The purpose of this letter is to
advise you that the Magma Board of Directors will consider your
proposal in
14
due course and inform you of its decision after completion of its
evaluation.
Very truly yours,
/s/ Paul M. Pankratz
Paul M. Pankratz
Chairman of the Board
During the week of September 19, 1994, representatives of CECI contacted
management of The Dow Chemical Company ("Dow"), the beneficial owner of
approximately 21% of the Shares, to determine Dow's reaction to CECI's
proposal of September 19, 1994. The CECI representatives were told Dow was
evaluating the Offer. During the week of September 26, 1994, CECI's financial
representatives contacted management of Dow to inquire as to the circumstances
surrounding a recent sale by Dow of 857,143 Shares for $28.25 per Share and an
associated option agreement (the "Dow Option") to acquire such Shares at the
same price, which Dow had reported in filings with the Securities and Exchange
Commission (the "Commission"), and in particular whether any impediments
existed to Dow's ability to freely dispose of such Shares and whether any
structural changes to CECI's merger proposal would be helpful in this regard.
Dow reported that it was considering such issues in the context of CECI's
proposal.
On September 26, 1994, Mr. Sokol sent the following letter to Messrs.
Boeker and Pankratz:
Dear Ralph and Paul:
As I stated in my letter of September 19, 1994, we believe that the
combination of California Energy and Magma Power is in the best
interest of the shareholders of both companies and the favorable
market reaction to our proposal would appear to validate this
belief.
Not having heard from you since Paul's letter of the 20th, I am
writing to reiterate our desire that the proposed transaction be
consummated on an amicable and consensual basis. In this spirit, I
am available to meet with you, Magma's directors or any appropriate
committee of the Board and its independent financial and legal
advisors to discuss our proposal and to answer any questions you may
have.
However, in order to be in a position to satisfy certain legal time
periods which I understand are applicable to our proposal, and as an
expression of our strong commitment to this transaction, we intend
to take this matter directly to Magma's shareholders. Please
understand that our decision to move forward in this fashion is not
intended to preclude the direct, friendly negotiation we seek.
Accordingly, if you do
15
wish to arrange a meeting, please contact me today directly at (402)
334-3710 or our advisors, Gleacher & Co. at (212) 418-4200.
Sincerely yours,
/s/ David L. Sokol
David L. Sokol
Chairman, President and
Chief Executive Officer
On September 28, 1994, after telephone discussions between CECI's
financial advisors and the Company's financial advisors regarding CECI's
request to arrange a meeting between the parties, Mr. Sokol and Steven A.
McArthur, Senior Vice President, General Counsel and Secretary of CECI,
together with representatives from CECI's financial advisors, met with
representatives from the Company's financial advisor in order to introduce
CECI and to further elaborate and answer questions with respect to the details
of CECI's proposal. CECI provided the representatives from the Company's
financial advisors with copies of a draft merger agreement for review by the
Company's Board. At the end of the meeting, Mr. Sokol delivered the following
letter to Messrs. Boeker and Pankratz:
Dear Ralph and Paul:
I had hoped that we would meet directly this week to discuss the
combination of California Energy and Magma. While I am personally
disappointed that neither of you nor a representative of your Board
will be present, we have nevertheless agreed to meet with Goldman
Sachs, on Wednesday, September 28, 1994, to discuss any questions
your advisors may have regarding our proposal and deliver a draft
merger agreement for review by your Board.
As a condition to the meeting with Goldman Sachs, you have requested
that we refrain from commencing a tender offer or making any press
release about this matter until Tuesday, October 4, 1994, the day
subsequent to the completion of Magma's Board of Directors meeting
scheduled for October 2nd and 3rd. We have accepted this condition
and understand that Magma's Board will fully consider our proposal
at this extended meeting.
The decision we have made to await the outcome of the deliberations
of Magma's Board before taking further action should not be
interpreted as any willingness on our part to delay a process which,
from our perspective, has moved too slowly in the past. Although we
have acceded to your request for more time, I want to be clear about
our intentions after Monday so that there are no surprises between
us. Accordingly, if your
16
Board does not authorize meaningful merger negotiations between us
by the close of business on Monday, October 3, 1994, we will
commence a tender offer for Magma's common shares promptly on
October 4, 1994.
Sincerely yours,
/s/ David L. Sokol
David L. Sokol
Chairman, President and
Chief Executive Officer
cc: Mr. Mac Heller
Goldman, Sachs & Co.
On October 3, 1994, the Company's financial advisors informed CECI's
financial advisors that the Company's Board had authorized the Company to
adopt the Poison Pill at its Board meeting which concluded on such date, but
that the Company's Board had also authorized the Company's financial advisors
to meet with CECI's financial advisors as soon as possible and, accordingly, a
meeting was scheduled for the morning of October 4, 1994. CECI subsequently
learned through press reports that the Company had amended its Bylaws to
require that stockholder action occur only at a regular or special meeting of
stockholders rather than by way of a written consent solicitation and that the
Company also had filed a complaint against CECI seeking a declaratory judgment
that (i) the Company's Board had properly discharged its fiduciary duties in
adopting the Poison Pill and an amendment to the Company's Bylaws and,
accordingly, such agreement and amendment were valid and binding, and (ii) the
Merger Moratorium Statute, as set forth in Sections 78.411 through 78.444,
inclusive, of the NGCL (the "Merger Moratorium Statute"), is valid and not in
violation of the Commerce Clause and Supremacy Clause of the United States
Constitution.
On October 4, 1994, at the meeting between CECI's financial advisors and
the Company's financial advisors, the Company's financial advisors summarized
the actions taken at the Company's Board meeting held on October 2, 1994 and
October 3, 1994, and indicated that although the Company's Board had not
rejected CECI's proposal, the Company's Board would prefer that CECI withdraw
its merger proposal. The Company's financial advisors then indicated that the
Company's Board believed that CECI's proposed price was too low and referenced
the Company's future opportunities but declined to provide any specific
information or financial analysis indicating what price the Company's Board
would consider favorably with respect to a sale of the Company or as to why
CECI's proposed price did not correctly value the Company's businesses.
Subsequently, CECI announced that the Offer would commence on October 6,
1994 and issued the following press release:
17
CALIFORNIA ENERGY TO MAKE CASH TENDER OFFER FOR
51% OF MAGMA POWER AT $35 PER SHARE
OMAHA, NE, October 4, 1994--California Energy Company, Inc.
(NYSE, PSE, LSE:CE) announced today that a wholly owned subsidiary
of California Energy will commence on Thursday a cash tender offer
for 12,400,000 shares, or approximately 51%, of the common stock of
Magma Power Company (NASDAQ:MGMA) at a price of $35 net per share as
a first step in implementing its September 19 proposal to acquire
all Magma's shares for a combination of $25 in cash and $10 in
market value of California Energy common stock. The tender offer is
conditioned upon, among other things, entering into a merger
agreement with Magma Power providing for a second-step merger,
although, under certain circumstances California Energy could waive
the merger agreement condition, in which case it would seek to
obtain majority representation on Magma's Board.
Today's announcement follows unsuccessful discussions between
representatives of the companies that occurred today following
yesterday's decision by Magma's Board of Directors to adopt a poison
pill and take certain other defensive actions in response to
California Energy's September 19 proposal. California Energy intends
to take any action necessary to have attempted impediments to its
offer set aside. David L. Sokol, California Energy's Chairman and
Chief Executive Officer, stated:
"We have attempted in every reasonable way possible to commence
merger negotiations with Magma in order to allow their
shareholders to achieve value from our proposal. At Magma's
request last week, we delayed commencement of a tender offer to
permit Magma's Board to fully consider our proposal. Following
this morning's disappointing meeting with Magma's advisors, we
have concluded that allowing the shareholders to vote through a
tender offer and consent solicitation is the only way to move
forward in an efficient manner." Sokol further stated that "We
believe that the price which we have offered is fair and
represents full value for Magma. We believe that this
transaction represents a unique fit for us and as such allows
us to value Magma at a higher value than other potential
bidders." Sokol further noted that "Our price represents a
27.3% premium to the value of Magma's stock the day we
initially made the proposal.''
California Energy also intends to take appropriate action to
ensure its right to call a special meeting of
18
Magma's shareholders to elect directors to Magma's Board and to take
other actions that it believes will facilitate consummation of its
tender offer and the proposed second-step merger with Magma. The
tender offer and consent solicitations will be made only pursuant to
definitive offering and solicitation documents, which will be filed
with the Securities and Exchange Commission and mailed to Magma
stockholders. Gleacher & Co. Inc. is acting as Financial Advisor to
California Energy and Dealer Manager in connection with the tender
offer and MacKenzie Partners, Inc. is acting as the Information
Agent for the tender offer.
California Energy Company is an international developer, owner
and operator of geothermal and other environmentally responsible
power generation facilities. Its six existing facilities currently
produce in excess of 325MW of power with an additional 300MW under
construction.
On October 5, 1994, Mr. Sokol sent the following letter to Messrs.
Pankratz and Boeker:
Dear Paul and Ralph:
At your request, we delayed taking any formal action to implement
our acquisition proposal dated September 19th. We did so in the hope
that you or your advisors would be willing to have good faith
discussions about our proposal.
Unfortunately, the October 3rd meeting between Gleacher & Co. and
Goldman Sachs was entirely unproductive. Goldman Sachs was unwilling
to discuss our $35 per share proposal or to share information which
would demonstrate that Magma might be worth more than $35 per share.
It now appears that your request that we delay commencing a tender
offer last week was simply a device to buy the time necessary to
adopt a poison pill in response to our offer, as well as other
by-law amendments designed to impede majority shareholder action and
to file lawsuits against us which your advisors did not even have
the courtesy to inform us of before we read about them in the
newspaper, notwithstanding the courtesies we had formerly extended
to you and to them.
We now find it necessary to make our proposal directly to
shareholders. As a first step, California Energy will be commencing
a cash tender offer on Thursday to acquire 51% of Magma's common
shares for $35 net per share, to be followed by a merger in which
all shareholders will receive $35 per Magma share, consisting of a
combination of cash and California Energy common stock. The steps
which you have taken, to
19
litigate rather than to negotiate, leave us no choice but to respond
accordingly. Such litigation and other steps which you have chosen
to take are wasteful of corporate assets and are in no way in your
shareholders' interest. We would clearly prefer not to engage in
proxy contests and litigation in various forums; however, you have
left us no alternative.
We note your unfortunate attempt to discredit our offer by calling
it "coercive". Apparently this is a continuation of your ongoing
strategy of delay, litigation and otherwise working to keep our
offer from receiving fair consideration by Magma's shareholders.
Further, in response to a press release today from The Dow Chemical
Company, we want to once again emphasize that our merger agreement
would provide all Magma shareholders the same total consideration of
$35 per share. We also note that our proposed price of $35 per share
is substantially in excess of the price that Dow recently received
from the sale of the majority of its Magma holdings.
Moreover, as we have no assurance that your Board has had the
benefit of a fair presentation of our views, I will restate some of
the more salient points we made to your advisors:
For those of your Directors who have had only a brief introduction
to California Energy, our company operates independent power
facilities aggregating over 300MW and has over 325MW under
construction. For the year ended December 31, 1993 and the six
months ended June 30, 1994, California Energy had revenues of $149.3
million and $80.7 million, respectively, and a net income of $47.2
million and $15.0 million, respectively. As of June 30, 1994,
California Energy had cash and short-term investments of $379.5
million.
Kiewit Energy Company, a wholly owned subsidiary of Peter Kiewit
Sons' Inc. ("PKS"), is an approximate 43% stockholder (on a
fully-diluted basis) in California Energy. PKS, a Delaware
corporation, is a large employee-owned company which had
approximately $2.2 billion in revenues in 1993 from its interests in
construction, mining, energy and telecommunications. PKS is one of
the largest construction companies in North America and has been in
the construction business since 1884. PKS is a joint venture
participant in a number of California Energy's international private
power projects.
20
In addition, I provide the following summary of recent developments
reported by California Energy in the first nine months of 1994:
- In January 1994, California Energy signed an International
Joint Venture agreement with PKS.
- In February 1994, California Energy established a Singapore
office to oversee its Asian project development activities.
- In March 1994, California Energy closed its $400 million Senior
Note offering to fund, among other things, international
projects and corporate or project acquisitions.
- In April 1994, California Energy closed a $162 million
construction and term project financing for, and commenced
construction of, its 128MW Upper Mahiao geothermal project in
the Philippines.
- In May 1994, California Energy's wholly-owned engineering
subsidiary, The Ben Holt Co., became a 20% partner in a
construction joint venture with a subsidiary of PKS which will
construct the Mahanagdong project under a $201 million turnkey
contract.
- In June 1994, California Energy completed construction of a
50MW gas turbine cogeneration project in Yuma, Arizona and
commenced commercial operation under a 30-year power sales
contract with San Diego Gas & Electric Company.
- In August 1994, California Energy closed a $240 million
construction and term project financing for, and commenced
construction of, the 180MW Mahanagdong geothermal project in
the Philippines.
- In September 1994, California Energy submitted a definitive
proposal for the Casecnan 100MW hydroelectric and irrigation
(water sales) project in the Philippines.
- In September 1994, California Energy signed power sales
contracts for the 30MW of output from its Newberry geothermal
project in Oregon, after the final environmental impact
statement record of decision was published by the U.S. Forest
Service.
- In September 1994, California Energy opened its Manila office
to oversee its over 300MW of current
21
Philippine power project construction activities and new
project development activities.
We believe it would also be useful for your Board to understand the
clear benefits we see from our proposal.
California Energy believes that combining the businesses of the two
companies would provide an excellent strategic fit and that the
synergies and other benefits which would result from combining the
operations of Magma and California Energy pursuant to the proposed
merger would enhance value for the stockholders of both companies,
and would strengthen the combined companies' competitive position in
the increasingly challenging business environment and global markets
in which they presently operate.
Each of Magma and California Energy have separately indicated their
respective beliefs that, in the next several years, the greatest
opportunities for financially attractive development projects will
be found in the international markets and each company is engaged
in, or otherwise pursuing, geothermal power and other power
development projects in the Philippines and Indonesia, and elsewhere
overseas where competition is strong and involves much larger
entities than either company.
California Energy believes that the combined companies'
international growth prospects would be substantially enhanced by
the expanded development, financial, construction and operational
resources and capabilities resulting from the proposed merger and
that certain domestic and international synergies would also result
from such a transaction.
The expected operational and other synergies include the following:
- Competitive Cost Advantage--Competition among independent power
producers internationally, which California Energy believes holds
the majority of attractive investment opportunities over the next
several years, is primarily based on the cost to produce power and
accordingly, geothermal energy competes directly with oil, gas and
coal-fired plants (e.g., the Pagbilao and Paiton projects in the
Philippines and Indonesia, respectively). Thus, neither California
Energy nor Magma are competing internationally only against other
"renewables," such as solar or wind, and as you know, over the last
several years domestic competition has also increasingly focused on
the low cost provider as a result of increasing domestic
deregulation. California
22
Energy believes that a combination with Magma would create an
enterprise with the ability to reduce its average cost per KWh by
expanding its asset base, without materially expanding its cost
structure, and therefore allowing it to be more price competitive
with traditional fossil fuel power plants, which California Energy
believes will be its primary competition in the future. This benefit
of scale associated with a combination of California Energy and
Magma should provide the resulting entity with a competitive
advantage as it pursues both international and domestic power sales
opportunities with potential customers who consider both the price
of power and the provider's capabilities as the primary factors in
their evaluation of potential power suppliers.
- Operational Efficiencies--Combination of the businesses of
California Energy and Magma would provide an opportunity to
efficiently integrate all aspects of their respective domestic and
international operations resulting in significant expected cost
savings.
- Increased Size, Diversification And Stability--The combined
companies would be advantaged by their expanded asset base and
diversification in their resource production facilities and sources
of revenue, which the Company believes should result in an overall
long-term enhanced credit profile and an improved access to capital
at decreased costs. As a larger entity, we believe the combined
companies would have the critical mass with which to more
effectively compete against larger competitors in international
markets and an increasingly deregulated domestic market place.
- Development Opportunities--The combined companies should be able
to increase their development programs and activities, both
domestically and internationally, by pursuing additional development
opportunities rather than pursuing parallel paths with respect to
the same countries, thereby enhancing the ability of the combined
companies to obtain and successfully complete new power projects. In
addition, the expanded size and capabilities of the combined
companies is expected to enhance its reputation with sovereign
government and state utility customers and therefore enhance its
ability to successfully compete for new projects.
As your advisors know, the price we have offered is based on a
detailed financial analysis of publicly available information which
we believe fully values all projects which Magma has publicly
reported it is currently operating, constructing, financing or
developing. Moreover, as your Board is no doubt aware
23
from its review of the proposed merger agreement we provided to you
last week, we believe that in the context of a negotiated
transaction we had attempted to more than fairly provide for the
interests of employees in that agreement. Lastly, in response to
your advisors' questions regarding the response of Magma's and
California Energy's foreign customers to our proposal, we are
pleased to report that the response to our inquiry from such
customers, like that of the stock market, was highly favorable and
we can obtain any further assurances in this regard that your Board
desires.
In short, we believe the proposed transaction makes eminent good
sense, and we urge your Board to either (i) authorize merger
discussions with us, (ii) auction the company to the highest bidder,
or (iii) let the shareholders decide freely whether to accept our
proposal without attempting to impose artificial impediments which
will simply add additional costs, time, needless and unproductive
litigation and distraction of management to a process in which the
majority of Magma's owners will eventually decide the issue on the
merits. Let me once more extend to you my willingness, now or in the
future, to meet with you at any time in order to negotiate a
successful merger of our companies which will best serve our
shareholders, customers and employees.
Sincerely,
/s/ David L. Sokol
David L. Sokol
Chairman, President and
Chief Executive Officer
cc: Board of Directors of Magma Power Company
c/o Magma Power Company
On October 6, the Purchaser commenced the Offer by filing with the
Commission a Tender Offer Statement on Schedule 14D-1 pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
On October 10, 1994, CECI learned through press reports that the
Company's Board had recommended to its stockholders that the Offer be rejected
and that CECI's $35 net per Share cash offer was less attractive than
remaining independent. CECI believes that the rejection of the Offer
represents yet another attempt to entrench further the Company's current
management without offering the stockholders of the Company anything of value
in response to CECI's $35 net per Share cash offer. CECI believes that the
Company's Board is telling its stockholders, in effect, to ignore a $7.50
premium being offered by CECI over the $27.50
24
closing price for Shares on September 19, 1994, the day of CECI's issuance of
a press release announcing its initial acquisition proposal. At the same
time, the Company's Board has adopted a "Poison Pill" defense and various
other impediments to the Offer intended to prevent stockholders from freely
selling their Shares pursuant to the Offer. CECI believes that the recent
actions taken by the Company's Board, which consists of a majority of
directors who are current Dow employees or Dow retirees, must be evaluated in
light of Dow's sale in 1993 of 3,635,000 Shares (representing a substantial
portion of Dow's holdings), or approximately 16% of the total Shares
outstanding at such time, at a price $3.00 per share less than price per Share
being offered to stockholders by CECI pursuant to the Offer.
On October 11, 1994, the Company filed with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9 pursuant to the
Exchange Act formally rejecting the Offer and disclosing, among other things,
that the Company's Board had authorized the Company to enter into Golden
Parachutes with 15 members of management and indemnity agreements with the
members of the Company's Board.
On October 13, 1994, CECI and the Purchaser filed with the Commission
this preliminary Request Solicitation Statement pursuant to the Exchange Act.
REQUEST PROCEDURE
In order to request the call of the Special Meeting, a Record Holder
should (1) mark the "REQUEST" box on the enclosed GREEN Request card, (2) sign
and date the GREEN Request card and (3) mail it to CECI c/o MacKenzie
Partners, Inc. in the enclosed postage-prepaid envelope. To be effective, the
GREEN Request card must bear the signature of the Record Holder. RECORD
HOLDERS SHOULD NOT DELIVER REQUESTS DIRECTLY TO THE COMPANY.
RECORD HOLDERS SHOULD BE AWARE THAT FAILURE TO EXECUTE A GREEN REQUEST
CARD HAS THE SAME EFFECT AS OPPOSING THE CALL OF THE SPECIAL MEETING AND MAY
IMPEDE CONSUMMATION OF THE OFFER.
Only Record Holders are eligible to execute a GREEN Request card.
Persons owning Shares "beneficially" (i.e., deriving the economic benefits of
ownership thereof or having the power to vote or dispose of shares), but not
"of record" (i.e., having one's name recorded on the stock transfer records of
the Company), such as persons whose ownership of Shares is through a broker,
bank or other financial institution, should contact their broker, bank,
financial institution or other record holder and instruct such person or
entity to execute the GREEN Request card on their behalf.
IF A GREEN REQUEST CARD IS EXECUTED AND RETURNED BUT NO INDICATION IS
MADE AS TO WHAT ACTION IS TO BE TAKEN, IT WILL BE
25
DEEMED TO CONSTITUTE A REQUEST TO REQUIRE THE PRESIDENT OR SECRETARY TO CALL
THE SPECIAL MEETING.
Failure to provide your Request to require the President or Secretary to
call the Special Meeting will not prevent you from tendering your Shares in
the Offer, and a Request to require the President or Secretary to call the
Special Meeting will not obligate you to tender your Shares in the Offer.
However, CECI believes that requiring the President or Secretary to call the
Special Meeting and approving the Special Meeting Proposals will facilitate
consummation of the Offer and will increase the likelihood that the Company
and the Purchaser will enter into the Proposed Merger.
Requests Required
Pursuant to Article I, Section 2, of the Bylaws, the President or
Secretary is required to call a special meeting of stockholders upon the
request in writing of stockholders owning a majority of the capital stock of
the Company issued and outstanding and entitled to vote. According to the
Bylaws, each stockholder is entitled to cast one vote for each Share held by
such person. Therefore, in order for the Record Holders to require the
President or Secretary to call the Special Meeting, valid, unrevoked GREEN
Request cards must be executed by Record Holders owning at least a majority of
the outstanding Shares as of the Record Date.
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994 (the "June 1994 10-Q"), filed with the Commission pursuant
to the Exchange Act, as of June 30, 1994, there were 24,027,080 Shares
outstanding. According to the Company's Proxy Statement for the 1994 Annual
Meeting of Stockholders, dated May 11, 1994 (the "1994 Proxy Statement"),
filed with the Commission pursuant to the Exchange Act, as of December 31,
1993, there were 598,250 Shares subject to outstanding options and, according
to the Company's 1993 Annual Report to Shareholders, there were 19,925 Shares
subject to a deferred stock incentive award program.
On the Record Date, CECI beneficially owned 200,000 Shares, representing,
based on information in the June 1994 10-Q, approximately 1% of the
outstanding Shares.
CECI intends to execute a Request requiring the President or Secretary to
call the Special Meeting with respect to all Shares which it beneficially
owns. Therefore, assuming no additional Shares have been issued since June
30, 1994 and no options or deferred stock incentive awards outstanding as of
December 31, 1993 or issued thereafter have been exercised or vested (by
acceleration or otherwise), as the case may be, Requests representing
approximately 11,813,541 additional Shares will constitute the requisite
number of Requests to require the President or Secretary to call the Special
Meeting.
26
Record Date
In order to determine the stockholders entitled to request the call of
the Special Meeting, the Record Date for the purposes of this Request
Solicitation is October __, 1994.
Only Record Holders are entitled to require the President or Secretary to
call a Special Meeting. If you acquired Shares after the Record Date without
a proxy, you may not execute a Request to require the President or Secretary
to call the Special Meeting with respect to such Shares. A Record Holder will
retain the right to execute a Request card in connection with this Request
Solicitation even if such Record Holder sells such Shares after the Record
Date or tenders such Shares pursuant to the Offer. The tender of Shares
pursuant to the Offer does not constitute a Request to require the President
or Secretary to call the Special Meeting or a grant to CECI or the Purchaser
of any voting rights with respect to the tendered Shares until such time as
such Shares are accepted for payment pursuant to the Offer.
Request Due Date
Requests in connection with this Request Solicitation must be delivered
to CECI, for delivery to the Company, on or before November __, 1994, which
date may from time to time be extended, without notice, in the sole discretion
of CECI.
The President or Secretary shall be required to call the Special Meeting
at any time prior to the Request Due Date, upon delivery by CECI to the
Company of valid, unrevoked GREEN Request cards from the Record Holders
holding at least a majority of the Shares issued and outstanding and entitled
to vote. If upon inquiry, inspection or tabulation it is determined that CECI
does not have a number of valid, unrevoked Requests from Record Holders
representing at least a majority of the Shares issued and outstanding and
entitled to vote, CECI may continue to solicit Requests from the Record
Holders until such time as a sufficient number of Requests to require the
President or Secretary to call the Special Meeting have been delivered by CECI
to the Company. A Request shall not be valid beyond six months from the date
on which such Request was executed by the Record Holder.
Revocation of Request
A Request executed and delivered by a Record Holder may subsequently be
revoked by written notice of revocation to the Company or CECI. A revocation
may be in any written form validly signed and dated by the Record Holder as
long as it clearly states that such Record Holder's Request previously given
is no longer effective. Any valid revocation delivered to the Company or CECI
shall supersede any previously dated or undated GREEN Request card. To be
effective, a Record Holder's written notice of revocation of his or her
previously executed and delivered
27
Request must be signed, dated and delivered prior to the time that the
requisite number of valid, unrevoked GREEN Request cards by Record Holders
holding at least a majority of the outstanding capital stock of the Company
entitled to vote have been delivered by CECI to the Company.
Any revocation may be delivered to either CECI, c/o MacKenzie Partners,
Inc., 156 Fifth Avenue, New York, New York 10010 or any address provided by
the Company. CECI requests that, if a revocation is delivered to the Company,
a photostatic or other legible copy of the revocation also be delivered to
CECI, c/o MacKenzie Partners, Inc. at the above address. In this manner, CECI
will be aware of all revocations and can more accurately determine if and when
the requisite number of Requests have been received.
If a Record Holder signs, dates and delivers a GREEN Request card to CECI
and thereafter, on one or more occasions, dates, signs and delivers a later-
dated GREEN Request card, the latest-dated GREEN Request card will be
controlling as to the instructions indicated therein and supersedes such
holder's prior Request or Requests as embodied in any previously submitted
GREEN Request cards; provided, however, that any such later-dated GREEN
Request card will be inoperative and of no effect if it is delivered after the
Request Due Date or, if applicable, after the date during the solicitation
period on which Requests become effective.
If the Company's Board chooses to oppose CECI's Request Solicitation and
if, in such instance, a Record Holder signs a Request revocation card sent to
such Record Holder by the Company's Board, such Record Holder may override
that revocation by returning to CECI, c/o MacKenzie Partners, Inc., at the
address set forth on the back cover of this Request Solicitation, a
subsequently dated and signed GREEN Request card.
CERTAIN LITIGATION
On October 3, 1994, the Company filed a complaint entitled Magma Power
Company v. California Energy Company, Inc., Case No. CV94-06160, against CECI
in the Second Judicial District Court of the State of Nevada in and for the
County of Washoe. The complaint seeks a declaratory judgment that (i) the
Company's Board properly discharged its fiduciary obligations in adopting the
Poison Pill and amendments to the Bylaws and, accordingly, such documents were
valid and binding, and (ii) the Merger Moratorium Statute is valid and not in
violation of the Commerce Clause and Supremacy Clause of the United States
Constitution. CECI subsequently removed this action to the United States
District Court for the District of Nevada. CECI intends to take any action
necessary to have attempted impediments to the Offer and the Proposed Merger
set aside.
28
On September 20, 1994, William Steiner, a stockholder of the Company,
filed a class action complaint entitled William Steiner, et al. v. Paul M.
Pankratz, et al., Case No. 680986, against the Company and its directors in
the Superior Court of the State of California in and for the County of San
Diego, alleging, among other things, that the Company's stockholders have
been, and continue to be, deprived of the opportunity to fully realize the
benefits of their investment in the Company as a result of the directors'
refusal to properly consider CECI's offer for the Company, which actions are
alleged to constitute unfair dealing and a breach of fiduciary duty. As
relief, the complaint seeks an order directing the Company's directors to
carry out their fiduciary duties to the Company's stockholders by cooperating
fully with CECI or any other entity making a bona fide offer for the Company,
as well as damages and costs.
On October 4, 1994, Charles Miller, a stockholder of the Company, filed a
class action complaint entitled Charles Miller, et al. v. Magma Power Company,
et al., Case No. CV94-06187, against the Company, its directors and The Dow
Chemical Company in the Second Judicial District Court of the State of Nevada
in and for the County of Washoe, alleging, among other things, that the
defendants' unwillingness to seriously consider CECI's proposal to acquire the
Company and its implementation of defensive measures constitute breaches of
the fiduciary duty owed to the Company's stockholders. As relief, the
complaint seeks a declaration that defendants have breached their fiduciary
duties, an order directing the defendants to fairly evaluate alternatives
designed to maximize value for the Company's stockholders, and an injunction
with respect to the implementation of the Company's Poison Pill or other
defensive measures, as well as damages and costs.
SOLICITATION EXPENSES AND PROCEDURES
The entire expense of preparing, assembling, printing and mailing the
Request Solicitation and the accompanying form of Request, and the cost of
soliciting Requests, will be borne by CECI. CECI does not intend to seek
reimbursement from the Company for these expenses.
In addition to the use of the mails, Requests may be solicited by certain
officers, directors and other employees or affiliates of CECI by telephone,
facsimile, telegraph and personal interviews, for which no compensation will
be paid to such individuals. Banks, brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward the solicitation
material to the customers for whom they hold Shares, and CECI will reimburse
them for their reasonable out-of-pocket expenses.
CECI has retained MacKenzie Partners, Inc. ("MacKenzie") for advisory,
information agent and Request solicitation services, for which MacKenzie will
be paid reasonable and customary
29
compensation and will be reimbursed for certain reasonable out-of-pocket
expenses. CECI has also agreed to indemnify MacKenzie against certain
liabilities and expenses in connection with its engagement, including certain
liabilities under the federal securities laws. MacKenzie will solicit
Requests from individuals, brokers, bank nominees and other institutional
holders. CECI estimates that the total amount of fees and expenses payable to
MacKenzie in connection with the Request Solicitation will be approximately
$75,000.
In addition, Gleacher & Co. Inc. ("Gleacher") may also solicit Requests
in connection with this Request Solicitation. Gleacher is acting as financial
advisor to CECI and the Purchaser in connection with the transactions
described in the Offer to Purchase, as Dealer Manager for the Offer and as co-
arranger of the debt financing described in the Offer to Purchase.
CECI has agreed to pay Gleacher a fee of (a) $250,000 payable upon the
public announcement of an offer to acquire at least 50.1% of the Shares; (b)
$500,000 payable 45 calendar days after the commencement of a tender or
exchange offer, assuming the offer is outstanding at such time; and (c)
$4,000,000 payable upon completion of the direct or indirect acquisition by
CECI, whether alone or in partnership with another company, by merger,
acquisition of securities, or otherwise, of 50.1% or more of the equity
securities of the Company. Any fees payable in (a) or (b) above will be
credited against the fee described in (c). CECI has also agreed to pay
Gleacher a fee equal to .25% of the principal amount of debt financing
arranged in connection with such acquisition. Gleacher will also be
reimbursed for its out-of-pocket expenses in connection with its engagement in
connection with the Offer, including the reasonable fees and expenses of its
counsel. CECI has also agreed to indemnify Gleacher and certain related
persons against certain losses, claims, damages or liabilities and expenses in
connection with the Offer, including certain liabilities under the federal
securities laws.
Neither CECI nor the Purchaser will pay any fees or commissions to any
broker or dealer or other person (other than Gleacher and MacKenzie) for
soliciting tenders of Shares pursuant to the Offer or for soliciting Requests
pursuant to the Request Solicitation. Brokers, dealers, commercial banks and
trust companies will be reimbursed by CECI for customary mailing and handling
expenses incurred by them in forwarding offering materials to their customers.
Except for CECI and the Purchaser, there are no other persons who would
be considered participants in the Request Solicitation pursuant to the rules
and regulations of the Commission.
30
ADDITIONAL INFORMATION
The principal executive offices of the Company are at 4365 Executive
Drive, Suite 900, San Diego, California 92121. Except as otherwise noted
herein, the information concerning the Company has been taken from or is based
upon documents and records on file with the Commission and other publicly
available information. Although CECI does not have any knowledge that would
indicate that any statement contained herein based upon such documents and
records is untrue, CECI does not take any responsibility for the accuracy or
completeness of the information contained in such documents and records, or
for any failure by the Company to disclose events that may affect the
significance or accuracy of such information.
For information regarding the security ownership of certain beneficial
owners and the management of the Company, see Schedule I.
NO MATTER HOW MANY SHARES YOU OWN, YOUR REQUEST TO REQUIRE THE PRESIDENT
OR SECRETARY TO CALL THE SPECIAL MEETING. PLEASE SIGN AND DATE THE ENCLOSED
GREEN REQUEST CARD AND PROMPTLY RETURN IT IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
31
SCHEDULE I
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AS A GROUP
The following table sets forth, as of April 15, 1994 (except as otherwise
noted below), the name and address of, and the total number of Shares of the
Company beneficially owned (as defined in Rule 13d-3 under the Exchange Act)
and the percentage of outstanding Shares beneficially owned by, (i) each
person who is known to the Company to own beneficially five percent or more of
the outstanding Shares, (ii) each director of the Company, (iii) the Company's
Chief Executive Officer and each of its executive officers and (iv) all
directors and executive officers as a group. The information presented below
has been taken from or is based upon documents and records on file with the
Commission and other publicly available information. Although CECI does not
have any knowledge that would indicate that any statement contained herein
based upon such documents and records is untrue, CECI does not take any
responsibility for the accuracy or completeness of the information contained
in such documents and records, or for any failure by the Company to disclose
events that may affect the significance or accuracy of such information.
AMOUNT AND NATURE OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNERS(1) OWNERSHIP (#)(2) PERCENTAGE OF CLASS (3)
________________________________________ _______________________________ _______________________
The Dow Chemical Company
2030 Dow Center
Midland, Michigan 48674 5,032,430(4) 21.0%
B.C. McCabe Foundation
7624 S. Painter Ave.,
Suite A
Wittier, CA 90602-2313 2,752,641(5) 11.5%
Firstar Investment Research
& Management Company
777 E. Wisconsin Ave.
Milwaukee, WI 53202 2,280,800 9.5%
James D. Shepard 221,134(6) *
Paul M. Pankratz 66,100(7) *
Jon R. Peele 19,500(8) *
Wallace C. Dieckmann 17,159(9) *
Kenneth J. Kerr 16,000(10) *
Thomas C. Hinrichs 15,951(11) *
Ralph W. Boeker 15,000(12) *
Trond Aschehoug 12,450(13) *
32
Louis A. Simpson 10,000 *
John D. Roach 1,000 *
Roger L. Kesseler 200 *
Directors and executive
officers as a group
(15 persons) 394,494(14) 1.6%(15)
* Represents less than one percent.
(1) Except as otherwise indicated, the address of each of the persons named
below is c/o Magma Power Company, 4365 Executive Drive, Suite 900, San
Diego, California 92121.
(2) For purposes of this table, a person is deemed to have "beneficial
ownership" of (i) any security which such person has the right to
acquire within 60 days after April 15, 1994, (ii) any security which is
held by such person's spouse or other immediate family member sharing
such person's household, (iii) securities held in certain trusts,
partnerships and other legal entities affiliated with such person, and
(iv) individual retirement accounts of such person. Beneficial
ownership has been disclaimed by certain of the named persons with
respect to certain of such shareholdings. The amounts set forth under
this column exclude Shares held for the benefit of the named person in
the Company's 401(k) Plan. All information with respect to the
beneficial ownership of the Shares referred to in this table is based
upon filings made by the respective beneficial owners with the
Commission or information provided to the Company by such beneficial
owners.
(3) Unless otherwise noted, the number of Shares outstanding for this
purpose is 24,011,379.
(4) Includes 4,000,005 Shares which were placed in escrow, pursuant to an
escrow agreement dated April 1, 1991 between Dow and Morgan Guaranty
Trust Company of New York, as Escrow Agent, for delivery upon exchanges
of $150,000,000 aggregate principal amount of 5 3/4% Subordinated
Exchangeable Notes Due 2001 of Dow (the "Notes"). The Notes are
exchangeable at any time into Shares at an exchange rate of 26.6667
Shares per $1,000 principal amount of Notes. Dow retains the right to
vote the Shares placed in escrow.
33
(5) Does not include Shares held by Mr. James D. Shepard, a director of the
Company, who is a co-trustee of the B.C. McCabe Foundation.
(6) Does not include Shares owned by B.C. McCabe Foundation for which Mr.
Shepard is a co-trustee, and with regard to which beneficial ownership
is disclaimed. Includes 5,000 Shares initially promised to Mr. Shepard
by the Company's Board in 1987 in connection with his resignation as an
employee of the Company; such Shares vested and were issued to Mr.
Shepard on his 55th birthday in August 1993.
(7) Includes Mr. Pankratz's options to purchase 66,000 Shares.
(8) Includes 4,500 shares of Deferred Stock ("Deferred Shares") which the
Company expected to be granted following the 1994 Annual Stockholders
Meeting if and to the extent that the stockholders approved the 1994
Equity Participation Plan (the "Plan"). Such Deferred Shares will be
subject to vesting requirements based on continuing employment, and the
holder is not entitled to vote such Shares or receive dividends until
vested. Also includes Mr. Peele's options to purchase 15,000 Shares.
(9) Includes 6,000 Deferred Shares which the Company expected to be granted
following the 1994 Annual Stockholders Meeting if and to the extent
that the stockholders approved the Plan. Such Deferred Shares will be
subject to vesting requirements based on continuing employment, and the
holder is not entitled to vote such Deferred Shares or receive
dividends until vested. Also includes Mr. Dieckmann's options to
purchase 11,159 Shares.
(10) Includes 9,000 Deferred Shares which the Company expected to be granted
following the 1994 Annual Stockholders Meeting if and to the extent
that the stockholders approved the Plan. Such Deferred Shares shall be
subject to vesting requirements based on continuing employment. Also
includes 1,000 Deferred Shares which are subject to vesting
requirements based on continuing employment. The holder of such
Deferred Shares is not entitled to vote such Shares or receive
dividends until vested. Also includes Mr. Kerr's options to purchase
5,000 Shares.
(11) Includes 6,000 Deferred Shares which the Company expected to be granted
following the 1994 Annual Stockholders Meeting if and to the extent
that the stockholders approved the Plan. Such Deferred Shares shall be
subject to vesting requirements based on continuing employment, and the
holder is not entitled to vote such Deferred Shares or receive
dividends until vested. Also includes Mr. Hinrichs's options to
purchase 4,084 Shares.
34
(12) Includes 3,000 Deferred Shares which the Company expected to be granted
following the 1994 Annual Stockholders Meeting if and to the extent
that the stockholders approved the Plan. Such Deferred Shares shall be
subject to vesting requirements based on continuing employment and the
holder is not entitled to vote such Deferred Shares or receive
dividends until vested. Also includes Mr. Boeker's options to purchase
10,000 Shares.
(13) Includes 7,200 Deferred Shares which the Company expected to be granted
following the 1994 Annual Stockholders Meeting if and to the extent
that the stockholders approved the Plan. Such Deferred Shares will be
subject to vesting requirements based on continuing employment. Also
includes 2,100 Deferred Shares which are subject to vesting
requirements. The holder of such Deferred Shares is not entitled to
vote or receive dividends until vested. Also includes Mr. Aschehoug's
options to purchase 3,000 Shares.
(14) Includes 32,700 Deferred Shares held by all directors and executive
officers as a group, which are expected to be granted following the
1994 Annual Stockholders Meeting if and to the extent that the
stockholders approved the Plan. Also includes 6,100 outstanding
Deferred Shares. Also includes 114,243 Shares held by all directors
and executive officers as a group. Does not include Shares held by
Dow, which is the employer of directors Knee, Kesseler and Reinhard.
(15) Includes the 39,800 Deferred Shares and the options to purchase 114,243
Shares referred to in Note 14 above. The number of outstanding Shares
for this purpose is 24,164,422.
35
If your Shares are held in the name of a brokerage firm, bank or bank
nominee, only it can execute a Request with respect to your Shares and only
upon your specific instructions. Accordingly, please contact the persons
responsible for your account and instruct them to execute the GREEN Request
card.
CECI STRONGLY URGES YOU TO SIGN, DATE AND RETURN TO CECI, IN CARE OF
MACKENZIE PARTNERS, INC., AT THE ADDRESS INDICATED BELOW, THE ENCLOSED GREEN
REQUEST CARD IN ORDER TO REQUIRE THE PRESIDENT OR SECRETARY TO CALL THE
SPECIAL MEETING.
A REQUEST TO REQUIRE THE PRESIDENT OR SECRETARY TO CALL THE SPECIAL
MEETING IS ONLY EFFECTIVE IF EXPRESSED BY RECORD HOLDERS OWNING AT LEAST A
MAJORITY OF SHARES ISSUED AND OUTSTANDING AND ENTITLED TO VOTE. THE FAILURE
TO EXECUTE A GREEN REQUEST CARD HAS THE SAME EFFECT AS OPPOSING THE CALL OF
THE SPECIAL MEETING AND MAY IMPEDE CONSUMMATION OF THE OFFER.
Questions and requests for assistance in completing or delivering Request
cards may be directed to MacKenzie Partners, Inc. at the following address and
telephone numbers:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 959-5500 (call collect)
or
Call Toll Free (800) 322-2885
1
[FRONT OF REQUEST CARD]
REQUEST SOLICITATION
MAGMA POWER COMPANY
THIS REVOCABLE REQUEST IS SOLICITED BY
CALIFORNIA ENERGY COMPANY, INC.
CE ACQUISITION COMPANY, INC.
The undersigned, acting with regard to all shares of common stock, par
value $0.10 per share ("Shares"), of Magma Power Company, a Nevada corporation
(the "Company"), which the undersigned is entitled to vote as of October __,
1994, hereby requests the taking of the action described below.
The undersigned hereby requests:
That the President ("President") or the Secretary ("Secretary") of
the Company be required to call a special meeting (the "Special
Meeting") of the stockholders of the Company pursuant to Article I,
Section 2, of the Company's Restated Bylaws, as amended, to consider
and vote on the "Special Meeting Proposals" described in the Request
Solicitation Statement of California Energy Company, Inc. and CE
Acquisition Company, Inc., dated October __, 1994 under the heading
"THE SPECIAL MEETING PROPOSALS". The foregoing includes a request
that the record date for the Special Meeting and the date of the
Special Meeting be designated by CECI on behalf of the person
executing this Request Card.
/ / Request / / Withhold Request / / Abstain
California Energy Company, Inc. strongly recommends that you REQUEST the
preceding action.
2
[BACK OF REQUEST CARD]
IF A GREEN REQUEST CARD IS EXECUTED AND RETURNED BUT NO INDICATION IS
MADE AS TO WHAT ACTION IS TO BE TAKEN, IT WILL BE DEEMED TO CONSTITUTE A
REQUEST TO REQUIRE THE PRESIDENT OR SECRETARY TO CALL THE SPECIAL MEETING.
Unless otherwise indicated, a validly executed request will be deemed to
constitute a "REQUEST" for the purposes expressed on the front of this Request
Card.
Dated: _____________________ _____, 1994
___________________________________
Signature
___________________________________
Signature (if jointly held)
Title:__________________________________
Please sign exactly as your name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as an attorney,
executor, administrator, trustee or guardian,
give full title as such. If a corporation, sign
in full corporate name by president or other
authorized officer. If a partnership, sign in
partnership name by authorized person.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE POSTAGE-PAID ENVELOPE ENCLOSED.