INDIANA ENGERGY SIGCORP
FOR IMMEDIATE RELEASE
INDIANA ENERGY AND SIGCORP AGREE
TO $1.9 BILLION MERGER OF EQUALS
TO FORM VECTREN CORPORATION
INDIANAPOLIS and EVANSVILLE, Ind.--(BUSINESS WIRE)-- June 14,
1999--Indiana Energy Inc. (NYSE:IEI - news) and SIGCORP Inc.
(NYSE:SIG - news) today announced that they have signed a
definitive agreement to combine into a new holding company, to be
named Vectren Corp. Under the agreement, SIGCORP shareholders will
receive one and one-third shares of the new
company's common stock for each share of SIGCORP they currently
hold. Indiana Energy
shareholders will receive one share of the new company's common
stock for each share of Indiana
Energy they currently hold.
The tax-free stock-for-stock transaction would create a
combined company with a total enterprise value of approximately
$1.9 billion ($1.4 billion in equity; $0.5 billion in debt and
subsidiary preferred stock) based upon Indiana Energy's closing
stock price of $22.563 and SIGCORP's closing stock price of $29.50
per share on Friday, June 11, 1999. The transaction, which has been
approved by the boards of directors of both companies, is expected
to be accounted for as a pooling of interests and is anticipated to
be immediately accretive excluding one-time charges related to
combining the companies.
The merger combines two Indiana companies with strong balance
sheets, low-cost operations, growing service areas, diversified
product portfolios, and track records of delivering superior
shareholder value. Through its utility subsidiaries, Vectren will
offer gas and/or electricity to more than 650,000 customers in
adjoining service areas that cover nearly two-thirds of Indiana.
Vectren's non-utility subsidiaries will offer energy-related
products and services, fiber-optic based telecommunication
services, materials management, locating and trenching services and
energy marketing to customers throughout the surrounding region.
Niel C. Ellerbrook, Indiana Energy's president and chief
executive officer, said, "The energy industry is converging and
successful participants will be able to offer a broad array of
products and services to customers. With this combination, our
asset mix will be split evenly between gas and electric, balancing
our earnings while positioning the combined company to deliver
energy in whatever form our customers need.
"We have a lot in common,'' Ellerbrook continued. "We are a
combination of already strong companies, with histories of
delivering superior shareholder value. Our combined goal is to grow
earnings per share on average by 10% a year and for earnings from
non-regulated operations to contribute over 25% of the consolidated
total by 2003. We also expect each company's long track record of
increasing dividends to continue. SIGCORP and Indiana Energy each
boast an entrepreneurial culture, an outstanding work force, firm
Indiana roots, and a drive to aggressively pursue the opportunities
presented by the changing energy industry. Together, we can capture
those opportunities, thereby creating enhanced value for our
shareholders.''
Andrew E. Goebel, SIGCORP's president and chief operating
officer, said, "Simply put, this
combination makes sense. It's a marriage of strengths. SIGCORP has
the lowest average retail electric rate in the state and each
company has among the lowest gas rates. Furthermore, over the last
several years, our customer growth rates have exceeded the national
average.
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"We have known Indiana Energy for years and, in fact, are
partners in Energy Systems Group, LLC, a joint venture formed in
1997 that provides energy-related performance contracting services.
As one company, we will serve 650,000 Indiana customers, providing
superior customer service and some of the most competitive energy
prices in the country. This combination will enable us to
cross-sell a greater array of products and services to our existing
and future customer base and to make the necessary investment in
technology to continue delivering first-class customer service and
other business applications in an increasingly competitive
environment. We believe that the combination of these two Indiana
companies will strengthen our commitment to our communities and
provide customer benefits that further enhance Indiana's economic
development efforts. We intend to be a focused, high-quality,
high-service regional player in our regulated businesses and to
seek and develop new revenue opportunities in non-regulated
businesses,'' Goebel concluded.
The companies expect to realize net merger savings of nearly
$200 million over 10 years from the elimination of duplicate
corporate and administrative programs and greater efficiencies in
operations, business processes and purchasing. Position reductions
due to the merger are expected to be less than 7 percent of the
consolidated workforce, or about 120 positions out of a total
workforce of approximately 1,850. Both companies will seek
alternatives to minimize the impact on current personnel. Available
options would include a combination of normal attrition, retraining
and retirements, as well as selective hiring and the addition of
positions in growing business areas. All union contracts will be
honored.
Following the merger, Niel Ellerbrook will be chairman and
chief executive officer of the new company and Andrew Goebel will
be president and chief operating officer. Indiana Energy's
chairman, L.A. Ferger, and SIGCORP's chairman and CEO, Ronald G.
Reherman, both will retire upon completion of the merger but will
serve on the board of directors of the new company. Vectren's board
will consist of 16 directors; in addition to Ferger, Ellerbrook,
Reherman and Goebel, Indiana Energy and SIGCORP each will designate
six directors.
Indiana Energy's and SIGCORP's utility companies will remain
separate subsidiaries of Vectren and will continue to operate under
the names Indiana Gas Company Inc. and Southern Indiana Gas and
Electric Company (SIGECO), respectively. The companies will retain
and build upon their existing brand identities and customer
loyalties in their respective service territories. Under the merger
agreement, the corporate headquarters of Vectren and of SIGECO will
be in Evansville. Indiana Gas Co. will continue to be headquartered
in Indianapolis, where it has been for over 50 years.
Vectren's board of directors will set the company's dividend
policy. However, the companies anticipate that the dividend, on an
equivalent share basis, on the combined company's stock would be
set at or above the current dividend levels at both companies.
The merger is conditioned, among other things, upon the
approvals of the shareholders of each company and customary
regulatory approvals. The companies anticipate that the regulatory
processes can be completed in six to nine months.
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Merrill Lynch & Co. and Credit Suisse First Boston acted as
financial advisors to Indiana Energy. Goldman, Sachs & Co. acted
as financial advisor to SIGCORP.
Indiana Energy Inc. is the holding company of Indiana Gas Co.
Inc., IEI Services, LLC and IEI Investments Inc. Indiana Gas
provides natural gas distribution to nearly 500,000 customers in
central Indiana. Information about Indiana Energy Inc. is located
on the World Wide Web at
http://indiana-energy.com.
SIGCORP Inc. is an investor-owned energy and
telecommunications company that provides electric and gas service
to southwest Indiana and energy and telecommunication products and
services throughout the Midwest and elsewhere. SIGCORP companies
operate in four business segments: Utility Group, Energy Services
Group, Telecommunications Group and Complementary Ventures Group.
Information about SIGCORP Inc. is located on the World Wide Web at
http://sigcorpinc.com.
This press release contains certain statements about future
business operations, financial performance
and other issues which are forward looking. Actual results could
differ materially from those that have been projected. Additional
detailed information concerning a number of factors that could
cause actual results to differ materially from the information that
has been provided will be readily available on the forms 8K to be
filed by Indiana Energy Inc. and SIGCORP Inc. with the SEC.
Contacts for Indiana Energy Contacts for
SIGCORP:
Media & Investors Media
Jeffrey W. Whiteside Mary Beth Reese
Director of Investor Relations and Manager,
Public Information
Corporate Communications (812) 464-4525
(317) 321-0588
Investors:
Timothy L. Burke
Secretary and Treasurer
(812) 465-4136