OFFER TO PURCHASE FOR CASH
ANY AND ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
TRIGEN ENERGY CORPORATION
AT
$23.50 NET PER SHARE
BY
T ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
ELYO
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SUEZ LYONNAISE DES EAUX
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MARCH 24, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON SATISFACTION OF CERTAIN TERMS AND CONDITIONS
DESCRIBED IN "THE TENDER OFFER--CONDITIONS OF THE OFFER."
THE BOARD OF DIRECTORS OF TRIGEN ENERGY CORPORATION BY UNANIMOUS VOTE OF ALL
DIRECTORS, BASED ON, AMONG OTHER THINGS, THE UNANIMOUS RECOMMENDATION OF A
SPECIAL COMMITTEE COMPRISED OF INDEPENDENT DIRECTORS, (I) DETERMINED THAT THE
MERGER IS ADVISABLE AND THAT THE TERMS OF THE OFFER AND THE MERGER, THE MERGER
AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS,
(II) APPROVED THE OFFER AND THE MERGER AND APPROVED AND ADOPTED THE MERGER
AGREEMENT, AND (III) RECOMMENDED THE OFFER TO, AND THE APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY BY, THE
STOCKHOLDERS OF THE COMPANY.
------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------
The Dealer Manager for the Offer is:
LAZARD FRERES & CO. LLC
----------------
The date of this Offer to Purchase is February 28, 2000.
QUESTIONS AND ANSWERS ABOUT THE OFFER AND THE MERGER
Q: WHO IS OFFERING TO BUY MY SECURITIES?
A: The offer is being made by T Acquisition Corp., a newly formed Delaware
corporation. We are a subsidiary of Elyo, a French company. Elyo is part of
the energy division of Suez Lyonnaise des Eaux, a French publicly held
company and a major worldwide provider of private infrastructure services.
Elyo is already a major stockholder of Trigen. It currently owns
approximately 53% of Trigen's outstanding common stock. Elyo has also agreed
to buy, at $23.50 per share, an additional 1,012,402 shares of Trigen common
stock, or approximately 8% of Trigen's outstanding common stock, from Thomas
Casten, the former president and chief executive officer of Trigen.
TO READ MORE ABOUT T ACQUISITION CORP., ELYO AND SUEZ LYONNAISE DES EAUX,
SEE PAGES 47 THROUGH 49.
Q: WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
A: We are making the offer for any and all shares of common stock of Trigen.
There are no other outstanding equity securities of Trigen.
Q: HOW MUCH IS THE BIDDER OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
A: We are offering to pay $23.50 per share in cash, without interest.
Q: DOES THE BIDDER HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
A: Yes. Elyo will provide T Acquisition Corp. with sufficient funds to purchase
tendered shares. Elyo will provide those funds from existing credit lines
and financial support of Suez Lyonnaise des Eaux's other affiliates.
Q: IS THE BIDDER'S FINANCIAL CONDITION RELEVANT TO MY DECISION ON WHETHER TO
TENDER IN THE OFFER?
A: No. We do not believe that the financial condition of Elyo is important to
your decision. We base this conclusion on several factors. We are paying you
cash for your shares. The offer is not subject to any financing condition.
The offer is for any and all outstanding securities of Trigen. In addition,
we will purchase your shares without any requirement that any other shares
be tendered.
Q: HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
A: You have until the expiration date of March 24, 2000 to tender your shares.
We will purchase all properly tendered shares on the expiration date if the
conditions to our offer are then met. After making these purchases, we will
continue for a limited period of time to purchase shares submitted to us. On
the other hand, if the conditions to our offer are not met on the expiration
date, we may extend the offer.
FOR MORE INFORMATION ON WHEN YOU CAN TENDER YOUR SHARES IN THE OFFER, SEE
PAGES 38 THROUGH 41.
Q: HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
A: If the offer is extended past March 24, 2000, we will make a public
announcement of the new expiration date.
Q: WHAT ARE THE MOST SIGNIFICANT CONDITIONS OF THE OFFER?
A: The most significant condition of the offer is the absence of litigation that
is reasonably likely to delay the offer or to make the offer materially more
expensive for the bidder.
FOR A COMPLETE DISCUSSION OF THE CONDITIONS TO THE OFFER, SEE PAGES 50
THROUGH 52.
Q: HOW DO I TENDER MY SHARES?
A: If you hold your shares "of record," you can tender your shares by sending
the enclosed letter of transmittal to the depositary, Harris Trust Company
of New York, at the address listed on the enclosed letter of transmittal.
If your broker holds your shares in "street name" for you, you must direct
your broker to tender. Please contact your broker.
FOR A COMPLETE DISCUSSION OF HOW TO TENDER YOUR SHARES, SEE PAGES 41 THROUGH
43.
Q: UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
A: You can withdraw tendered shares at any time prior to the expiration date of
March 24, 2000. If the expiration date is extended, you can withdraw
tendered shares at any time prior to the new expiration date.
Q: HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
A: You can withdraw shares that you have already tendered by sending a notice of
withdrawal to the depositary.
FOR A COMPLETE DISCUSSION OF HOW TO WITHDRAW PREVIOUSLY TENDERED SHARES, SEE
PAGES 43 THROUGH 44.
i
Q: WHAT DOES MY BOARD OF DIRECTORS THINK OF THE OFFER?
A: Your board of directors recommends the offer.
FOR A MORE DETAILED DESCRIPTION OF THE BOARD OF DIRECTORS' RECOMMENDATION,
SEE PAGE 8.
Q: WHY IS MY BOARD OF DIRECTORS RECOMMENDING THE OFFER?
A: A special committee of independent directors evaluated the fairness of the
offer. The special committee negotiated the terms of the offer and
recommended that the full board approve the offer.
FOR A COMPLETE DISCUSSION OF THE FACTORS THE SPECIAL COMMITTEE CONSIDERED IN
RECOMMENDING THE OFFER, SEE PAGES 6 THROUGH 7.
Q: DID THE DIRECTORS WHO ARE NOT EMPLOYEES OF THE BIDDER, ELYO OR SUEZ RECEIVE
ANY OPINIONS, APPRAISALS, OR REPORTS REGARDING THE FAIRNESS OF THE OFFER?
A: Yes. The special committee of independent directors received a written
opinion, dated January 19, 2000, from Credit Suisse First Boston Corporation
to the effect that, as of that date and based on and subject to the matters
described in the opinion, the price per share of $23.50 to be received in
the offer and the merger, taken together, by the holders of shares of Trigen
common stock was fair, from a financial point of view, to the holders of
shares of Trigen common stock, other than Elyo and its affiliates.
FOR A MORE COMPLETE DESCRIPTION OF THE OPINION OF CREDIT SUISSE FIRST
BOSTON, SEE PAGES 11 THROUGH 14.
Q: IS THIS THE FIRST STEP IN A GOING-PRIVATE TRANSACTION?
A: Yes. Because Elyo already owns over 50% of Trigen's common stock, this offer
is considered a going-private transaction.
Q: WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL TRIGEN'S SHARES ARE NOT
TENDERED IN THE OFFER?
A: Yes. If we purchase any shares in the offer, the offer will likely be
followed by a merger that will result in Elyo owning 100% of Trigen. If we
complete the merger, the public stockholders of Trigen will receive $23.50
in cash in exchange for each of their shares of Trigen common stock. Elyo
has sufficient voting power to approve the merger without the vote of any
other stockholder of Trigen.
Q: IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
A: If a significant number of shares are purchased in the offer, the Trigen
shares are not likely to continue to trade on the New York Stock Exchange.
FOR A MORE COMPLETE DESCRIPTION OF HOW THE OFFER WILL AFFECT TRIGEN'S
SHARES, SEE PAGES 49 THROUGH 50.
Q: WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
A: On February 24, 2000, the last practicable trading day before the start of
the offer, the reported closing sale price of the Trigen shares was $23.00.
FOR MORE INFORMATION ON THE PRICE RANGE OF SHARES OF TRIGEN'S COMMON STOCK,
SEE PAGE 44.
Q: IF I OBJECT TO THE PRICE BEING OFFERED, WILL I HAVE APPRAISAL RIGHTS?
A: Yes. You may elect not to tender your shares, dissent from the merger, and
have the fair value of your shares paid to you in cash.
FOR INFORMATION ON HOW TO EXERCISE APPRAISAL RIGHTS, SEE PAGES 19 THROUGH
21.
Q: WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
A: If you have more questions about the tender offer, you should contact:
MORROW & CO., INC.
Banks and Brokers Call Toll-Free:
(800) 662-5200
All Others Please Call Toll-Free:
(800) 566-9061
or
LAZARD FRERES & CO. LLC
(212) 632-6717
ii
IMPORTANT
Any holder of shares of common stock of Trigen Energy Corporation desiring
to tender all or any portion of the shares owned by such holder should either
(i) complete and sign the Letter of Transmittal (as defined below) or a copy
thereof in accordance with the instructions in the enclosed Letter of
Transmittal and mail or deliver it, together with the certificate(s) evidencing
tendered shares, and any other required documents, to the Depositary (as defined
below), (ii) where applicable, cause the holder's broker, dealer, commercial
bank, trust company or custodian to tender the shares pursuant to the procedures
for book-entry transfer of shares or (iii) comply with the guaranteed delivery
procedures, in each case upon the terms set forth in "THE TENDER
OFFER--Procedures for Tendering Shares." Any holder whose shares are registered
in the name of a broker, dealer, commercial bank, trust company or custodian
must contact the holder's broker, dealer, commercial bank, trust company or
custodian if such holder desires to tender the shares. See "THE TENDER
OFFER--Procedures for Tendering Shares."
Any holder who desires to tender shares of common stock of Trigen Energy
Corporation and whose certificate(s) evidencing the shares are not immediately
available, or who cannot comply with the procedures for book-entry transfer
described in this Offer to Purchase on a timely basis, may tender such shares by
following the procedures for guaranteed delivery set forth in "THE TENDER
OFFER--Procedures for Tendering Shares."
Questions and requests for assistance may be directed to the Information
Agent (as defined below) or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of this Offer to Purchase.
Additional copies of this Offer to Purchase, the Letter of Transmittal or other
related tender offer materials may be obtained from the Information Agent or
from brokers, dealers, commercial banks or trust companies.
iii
TABLE OF CONTENTS
PAGE
--------
QUESTIONS AND ANSWERS ABOUT THE OFFER AND THE MERGER............. i
INTRODUCTION..................................................... 1
SPECIAL FACTORS.................................................. 2
1. Background of the Offer and the Merger; Contacts with the
Company..................................................... 2
2. Recommendation of the Special Committee and the Board of
Directors of the Company; Fairness of the Offer and the
Merger...................................................... 6
3. Position of Suez, Parent and Purchaser Regarding Fairness of
the Offer and the Merger.................................... 8
4. Analysis of Financial Advisor to Parent..................... 9
5. Opinion of the Special Committee's Financial Advisor........ 11
6. Company Financial Projections............................... 14
7. Forward Looking Statements.................................. 17
8. Purpose and Structure of the Offer and the Merger; Plans for
the Company................................................. 18
9. Rights of Stockholders in the Offer and the Merger.......... 19
10. The Transaction Documents................................... 21
11. Interests of Certain Persons in the Offer and the Merger.... 33
12. Beneficial Ownership of Shares.............................. 34
13. Related Party Transactions.................................. 35
14. Certain United States Federal Income Tax Consequences....... 36
15. Fees and Expenses........................................... 37
THE TENDER OFFER................................................. 38
1. Terms of the Offer.......................................... 38
2. Acceptance for Payment and Payment for Shares............... 40
3. Procedures for Tendering Shares............................. 41
4. Withdrawal Rights........................................... 43
5. Price Range of Shares....................................... 44
6. Dividends and Distributions................................. 45
7. Certain Information Concerning the Company.................. 45
8. Certain Information Concerning Purchaser, Parent, Suez, CAC
and Societe Generale........................................ 47
9. Source and Amount of Funds.................................. 49
10. Effect of the Offer on the Market for the Common Stock;
Exchange Act Registration................................... 49
11. Conditions of the Offer..................................... 50
12. Certain Legal Matters; Regulatory Approvals................. 52
13. Fees and Expenses........................................... 54
14. Miscellaneous............................................... 54
SCHEDULE I Information Concerning the Directors and Executive
Officers of Suez Lyonnaise des Eaux, Elyo and T
Acquisition Corp.................................... I-1
SCHEDULE II Section 262 of the General Corporation Law of the
State of Delaware................................... II-1
SCHEDULE III Certain Projections relating to Trigen Energy
Corporation........................................ III-1
iv
To the Holders of Common Stock of
Trigen Energy Corporation:
INTRODUCTION
T Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect
wholly owned subsidiary of Elyo, a SOCIETE ANONYME organized and existing under
the laws of the Republic of France ("Parent"), hereby offers to purchase any and
all of the issued and outstanding shares of common stock, par value $0.01 per
share (the "Shares" or "Common Stock"), of Trigen Energy Corporation, a Delaware
corporation (the "Company"), at a price of $23.50 per Share, net to the seller
in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, as they may be amended and supplemented from time
to time, together constitute the "Offer"). Parent is an indirect wholly owned
subsidiary of Suez Lyonnaise des Eaux, a SOCIETE ANONYME organized and existing
under the laws of the Republic of France ("Suez").
Holders of Shares whose Shares are registered in their own name and who
tender directly to Harris Trust Company of New York, as Depositary (the
"Depositary"), will not be obligated to pay brokerage fees or commissions or,
except as set forth in Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer.
Purchaser will pay all charges and expenses incurred in connection with the
Offer by Lazard Freres & Co. LLC, as Dealer Manager (the "Dealer Manager" or
"Lazard Freres"), the Depositary, and Morrow & Co., Inc., as Information Agent
(the "Information Agent"). See "SPECIAL FACTORS--Fees and Expenses" and "THE
TENDER OFFER--Fees and Expenses."
As of February 24, 2000, there were 12,401,808 Shares outstanding. Parent
currently beneficially owns 6,507,944 Shares, constituting approximately 52.5%
of the outstanding Shares. Nominees of Parent currently constitute a majority of
the members of the Board of Directors of the Company (the "Board of Directors").
In addition, on March 29, 2000, Parent will purchase the 1,012,402 Shares
(approximately 8% of the outstanding Shares) beneficially owned by Mr. Thomas R.
Casten, the former President and Chief Executive Officer of the Company, at
$23.50 per Share. This purchase will be made under the terms of a purchase
agreement, dated January 19, 2000 (the "Casten Stock Purchase Agreement"),
between Parent and Mr. Casten. The Shares being purchased pursuant to the Casten
Stock Purchase Agreement do not include the Options (as defined below) and
Restricted Stock (as defined below) held by Mr. Casten. Also on January 19,
2000, Messrs. George Keane and Charles Bayless, the independent directors of the
Company who are the members of the special committee formed to consider Parent's
proposal to acquire 100% of the equity of the Company (the "Special Committee"),
entered into a Tender and Voting Agreement with Purchaser and Parent. Under the
terms of the Tender and Voting Agreement, Messrs. Keane and Bayless have agreed,
among other things, to tender their Shares (representing in the aggregate less
than 1% of the outstanding Shares) into the Offer (the "Tender and Voting
Agreement"). See "SPECIAL FACTORS--The Transaction Documents--The Tender and
Voting Agreements" and "--Arrangements with Thomas R. Casten."
The Offer is being made pursuant to the terms of the Agreement and Plan of
Merger, dated as of January 19, 2000 (the "Merger Agreement"), among Parent,
Purchaser and the Company. The Merger Agreement provides that, among other
things, as promptly as practicable after consummation of the Offer and the
satisfaction of the other conditions contained in the Merger Agreement,
Purchaser will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation (the "Surviving Corporation").
At the effective time of the Merger (the "Effective Time"), except for Shares
held by holders exercising their rights to dissent in accordance with the
Delaware General Corporation Law (the "DGCL") and Shares held, directly or
indirectly, by Parent, each then outstanding Share will, by virtue of the Merger
and without any action on the part of the holder thereof, be canceled and be
converted into the right to receive an amount per Share (the "Merger
Consideration") equal to the Offer Price, without interest. The terms and
conditions of the Merger Agreement are more fully described in "SPECIAL
FACTORS--The Transaction Documents--The Merger Agreement."
AS THE INDIRECT BENEFICIAL OWNER OF MORE THAN 50% OF THE OUTSTANDING SHARES,
PARENT CURRENTLY POSSESSES SUFFICIENT VOTING POWER TO CAUSE THE COMPANY TO
CONSUMMATE THE MERGER WITHOUT THE VOTE OF ANY
OTHER STOCKHOLDERS OF THE COMPANY. Such ownership, however, does not compel any
stockholder to accept the Offer or tender such stockholder's Shares. Subject to
dissenters' rights under the DGCL, Shares not tendered in the Offer shall be
cancelled in the Merger and converted into the right to receive the Merger
Consideration, without interest. Stockholders who hold their Shares at the time
of the Merger and who fully comply with the statutory dissenters' procedures set
forth in the DGCL, the relevant provisions of which are attached as Schedule II
of the Offer to Purchase, will be entitled to dissent from the Merger and have
the fair value of their Shares (which may be more than, equal to, or less than
the Merger Consideration) judicially determined and paid to them in cash
pursuant to the procedures prescribed by the DGCL. NO DISSENTERS RIGHTS ARE
AVAILABLE TO STOCKHOLDERS IN CONNECTION WITH THE OFFER. See "SPECIAL
FACTORS--Rights of Stockholders in the Offer and the Merger."
The Offer is conditioned upon the satisfaction of certain conditions
described in "THE TENDER OFFER--Conditions of the Offer."
The Board of Directors, by unanimous vote of all directors, based on, among
other things, the unanimous recommendation of the Special Committee,
(i) determined that the Merger is advisable and that the terms of the Offer and
the Merger, the Merger Agreement and the consummation of the transactions
contemplated thereby are fair to, and in the best interests of, the Company and
its stockholders, (ii) approved the Offer and the Merger and approved and
adopted the Merger Agreement, and (iii) recommended the Offer to, and the
approval and adoption of the Merger Agreement and the transactions contemplated
thereby by, the stockholders of the Company.
The Company has advised Purchaser that Credit Suisse First Boston
Corporation ("CSFB"), financial advisor to the Special Committee, has delivered
to the Special Committee its written opinion, dated January 19, 2000, to the
effect that, as of that date and based on and subject to the matters described
in the opinion, the $23.50 per Share cash consideration to be received in the
Offer and the Merger, taken together, by the holders of Shares was fair, from a
financial point of view, to such holders (other than Parent and its affiliates).
A copy of CSFB's opinion, which sets forth the assumptions made, procedures
followed, matters considered and limitations on the review undertaken by CSFB,
is contained in the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") filed with the Securities and Exchange
Commission (the "Commission"). The Schedule 14D-9 is being mailed to the
stockholders concurrently with the mailing of this Offer to Purchase. The
Schedule 14D-9 may be inspected at, and copies may be obtained from, the same
places and in the manner set forth in "THE TENDER OFFER--Certain Information
Concerning the Company--Additional Information." Holders of Shares are urged to
read the opinion carefully in its entirety.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
SPECIAL FACTORS
1. BACKGROUND OF THE OFFER AND THE MERGER; CONTACTS WITH THE COMPANY
Parent and its affiliates (the "Parent Group") initially acquired an
interest in the Company in 1986. Since that time, Parent has beneficially owned
a majority of the outstanding Shares and representatives of the Parent Group
have constituted a majority of the Board of Directors.
For a number of years, the Parent Group has periodically reviewed the nature
of its investment in the Company and has had numerous discussions with senior
management and members of the Board of Directors. These discussions included,
from time to time, a variety of potential transactions including transactions
that would increase either Parent's or the public's ownership of the equity of
the Company.
On September 20, 1999, Parent made a written proposal to the Board of
Directors to acquire all of the Shares not owned by the Parent Group for a cash
purchase price of $22 per share (the "$22 Offer").
2
On September 21, 1999, as a result of the $22 Offer, the Board of Directors
appointed the Special Committee. The Special Committee was authorized, among
other things, to retain legal and financial advisors and to exercise all of the
powers and authority of the Board of Directors as the Special Committee deemed
appropriate in the best interests of the Company in connection with or in
response to the $22 Offer. The Board of Directors also agreed that because of
the time and energy involved in reviewing the transaction, the members of the
Special Committee should be entitled to receive a per diem fee of $2,500 each,
up to a maximum of $75,000 each. The Special Committee appointed CSFB as
financial advisor to the Special Committee and Troutman Sanders LLP as legal
counsel to the Special Committee. On the same day, Mr. Thomas Casten, then the
President and the Chief Executive Officer and a director of the Company,
circulated a memorandum to the members of the Board of Directors expressing
significant concerns about Parent's proposal and how it would affect the Company
and requesting that Parent meet with the Company, as soon as possible, to
discuss, among other things, Parent's plans for the Company following the
proposed acquisition.
On October 1, 1999, the members of the Special Committee and representatives
of CSFB met with representatives of Parent and its financial advisor, Lazard
Freres, to organize a procedure for reviewing the $22 Offer. The Special
Committee also indicated that it had requested that the Company's management
prepare appropriate business and financial projections and that it would need at
least several weeks for those projections to be prepared.
On October 15, 1999, the members of the Special Committee, together with
representatives of CSFB and members of management, including Mr. Casten, met
with representatives of Parent as well as with Lazard Freres. The primary
purpose of the meeting, which had been called by the Special Committee, was to
provide Parent the opportunity to describe its plans for the Company to the
Company's management, and to answer any questions it might have, in order to
allay any concerns management had. At the meeting, Parent read a prepared
statement reiterating its long-term commitment to the Company. Parent elected
not to respond to any specific questions regarding its future intentions
concerning management and the operations of the Company because Parent believed
it was an inappropriate time to do so. Following the departure of the financial
advisors and management, the Special Committee indicated that it wished to be
able to provide incentives to management of the Company in order that they would
continue to focus on the Company's business and be assured that adequate
arrangements would be put into place if and when a going private transaction
were completed. Parent agreed that it would be appropriate to retain a third
party compensation expert to make recommendations in this regard and preferred
to defer discussing any specific proposals for these incentives and arrangements
at that time.
Following the October 15, 1999 meeting, the Special Committee asked the
Company's regular compensation consultants to propose a "key manager" retention
program, and the consultants recommended enhanced "change in control" benefits
in order to reassure and retain key executives of the Company. Copies of the
recommendations were also sent to Parent and its advisors. Upon receipt of these
recommendations, Parent advised the Special Committee and its legal counsel that
it believed that the Special Committee did not have authority to enter into new
or enhanced employment or severance contracts with employees of the Company
without the prior specific approval of a majority of the full Board of
Directors. The Special Committee was also advised that Parent's nominees on the
Board of Directors, which comprised a majority, were opposed at that time to
entering into enhanced employment or severance contracts. The Special Committee
advised Parent of its disagreement with these positions.
Between October 15, 1999 and November 16, 1999, there were several
conversations between Parent and the Special Committee and their respective
legal and financial advisors regarding timetables and procedures for responding
to the $22 Offer. During this period, the Special Committee advised Parent that
management was in the process of preparing the projections that had been
requested, and that the Special Committee would be unable to meet with Parent
and its financial advisors until these projections were completed by management.
The Special Committee requested that Parent and its advisors defer conducting
further due diligence of the Company until that time.
3
On November 4, 1999, copies of the projections (the "November 1999
Projections") were delivered to Parent and Lazard Freres. Following receipt of
the November 1999 Projections, representatives of Lazard Freres advised
representatives of CSFB that Parent believed that the November 1999 Projections
were aggressive and unrealistic for a number of reasons, including the fact that
it was unclear to Parent how the Company would be able to generate sufficient
capital to fund the capital expenditures needed to support the proposed revenue
growth. At the direction of the Special Committee, CSFB relayed to Lazard Freres
the Special Committee's disagreement with Parent's concerns regarding the
November 1999 Projections and the Special Committee's belief that appropriate
financing would be available.
On November 16, 1999, the members of the Special Committee, together with
the Special Committee's legal and financial advisors, met with representatives
of Parent and its legal and financial advisors. At this meeting, representatives
of Parent and Lazard Freres reiterated that Parent believed that the
November 1999 Projections should not be the basis for valuing the Company
because there was no explanation satisfactory to Parent as to how the Company's
projected growth could be financed. The Special Committee indicated that it
believed that the November 1999 Projections reasonably provided a basis for
negotiation of a purchase price to be offered to the Public Stockholders. The
Special Committee also indicated that, based on the projections, it believed
that a proper price to commence negotiations would be substantially in excess of
$22 per Share. The Special Committee asked that Parent meet with the Company's
management to review the November 1999 Projections in order to identify aspects
of the November 1999 Projections that Parent thought were incorrect. Since
Parent withdrew the $22 Offer (as described below), no such meeting was held.
In the course of the November 16 meeting, and in response to questions from
Parent, the Special Committee indicated that it had solicited, and had
authorized management of the Company to solicit, third party indications of
interest for providing equity capital to the Company or for making an offer to
purchase the entire Company at a higher price. In that regard, the Special
Committee had authorized the distribution, pursuant to customary confidentiality
agreements, of certain confidential information concerning the Company. The
Special Committee did not receive any formal offers as a result of this process;
it did, however, identify one party that was interested in making a substantial
equity investment, but not under circumstances that might involve litigation or
other disputes with Parent. The representatives of Parent advised the Special
Committee that Parent had previously indicated that its interest in the Company
was not for sale. Parent also indicated that it was unacceptable for either
management or the Special Committee to disseminate confidential information
concerning the Company to third parties since its majority interest in the
equity of the Company was not for sale. The Parent's representatives therefore
requested that the members of the Special Committee agree that they would
instruct management of the Company and other representatives of the Company to
cease soliciting third party offers and distributing confidential information.
The Special Committee indicated that it was not prepared to make such a
commitment.
At the conclusion of these discussions, Parent advised the Special Committee
that it was withdrawing the $22 Offer because Parent disagreed with the
November 1999 Projections, and because the Special Committee had indicated that,
based on those November 1999 Projections, the Special Committee believed that a
proper price to commence negotiations would be substantially in excess of $22
per Share. On November 16, 1999, Parent issued a press release publicly
announcing such withdrawal, which Parent attributed to its fundamental
disagreement with the Company over the November 1999 Projections.
Over the last several years, management and the Board of Directors have
periodically held discussions concerning long-term financing for the Company.
During the month of December, there were a series of meetings of the Board of
Directors at which management proposed several interim and long-term financing
plans to fund the proposed existing and future capital needs of the Company,
including certain immediate funding requirements. Parent's representatives on
the Board of Directors took the position that approval of these financing
proposals should be deferred until management prepared a multi-year business
plan which reflected the then contemplated capital needs of the Company.
Parent's representatives also indicated that they were not aware, before these
financial proposals were presented to them, of the
4
Company's immediate need for interim financing. The Special Committee indicated
that the November 1999 Projections, which had been previously delivered to the
directors, had reflected the Company's ongoing capital needs and believed that
these projections were sufficient for the Board of Directors to make a decision.
In any event, Parent agreed to provide interim bridge financing pending review,
at a meeting of the Board of Directors to be held on January 19, 2000, of a
comprehensive funding program.
On January 7, 2000, Mr. Keane, in a memorandum sent to the Board of
Directors, expressed concern over the uncertainty created by the $22 Offer and
its abrupt withdrawal and also advised the directors of his view that there were
serious issues of strategic vision, governance and long term financing that
needed to be resolved by the Board of Directors and that resolution of these
issues centered around whether the Company remained a public company or would be
taken private. Subsequently, in a memorandum dated January 12, 2000,
Mr. Bleitrach responded in writing to Mr. Keane's January 7, 2000 memorandum,
contesting statements made by Mr. Keane in such memorandum, including
Mr. Keane's statement that the withdrawal of the $22 Offer was abrupt.
Mr. Bleitrach also reiterated Parent's concerns about the reasonableness of the
November 1999 Projections.
During 1998 and 1999, Parent and Mr. Casten had several meetings in which
they attempted to arrive at a shared view regarding strategic and governance
issues relating to the Company. Such meetings did not result in general
agreement over such issues, and Parent came to believe that the Company required
new leadership. Because of this decision, and as a result of Parent's belief
that its designees on the Board of Directors had not been kept adequately
informed of the immediate capital requirements of the Company, Parent determined
in early January 2000 to request that Mr. Casten resign as President, Chief
Executive Officer and as a director of the Company. Parent also decided to ask
Mr. Keane to resign as Chairman of the Board of Directors, but to remain as a
director. Accordingly, at a meeting in Paris on January 10, 1999 that had been
scheduled to review the Company's multi-year business plan, a representative of
Parent requested that Mr. Casten immediately resign from his positions with the
Company. Parent indicated that in light of Mr. Casten's many years of service to
the Company, it was prepared to recommend to the Board of Directors a severance
package that would include continued compensation for a two year period,
continued vesting of Mr. Casten's Options and Restricted Stock, and continuation
of certain other employee benefits. Parent told Mr. Casten and subsequently the
Special Committee that Mr. Casten would be replaced if he did not resign. Parent
called a special meeting of the Board of Directors on Thursday, January 13, 2000
at which it was expected that Mr. Casten would resign or be replaced.
On January 12, 2000, Mr. Keane, on behalf of the Special Committee, wrote a
memorandum to Parent indicating that the Special Committee had serious
reservations concerning the actions proposed by Parent to be taken at a special
meeting of the Board of Directors scheduled for January 13, 2000, particularly
the resignation or removal of Mr. Casten. Mr. Keane proposed that Parent
re-initiate its going private proposal by offering to purchase the remainder of
the Shares and informed Parent that if the going private transaction was
re-initiated at a fair price, it would be fully supported by the Special
Committee. The Special Committee asked for a response the following day.
Following receipt of that memorandum, at the Special Committee's direction,
CSFB contacted Lazard Freres by telephone to suggest that the parties resume
discussions concerning the $22 Offer. On January 12, 2000, CSFB indicated that
the Special Committee had requested that CSFB inform Lazard Freres that the
members of the Special Committee might view an offer at $26 per Share favorably.
On January 12, 2000, Fried, Frank, Harris, Shriver & Jacobson, Parent's legal
counsel ("Fried Frank"), provided an initial draft of the Merger Agreement to
the Special Committee through its representatives. On January 13, 2000, Lazard
Freres communicated to CSFB that Parent would consider increasing its Offer to
$22.75. That proposal was rejected by the Special Committee, which indicated
that it was seeking an amount in excess of $24 per Share. Also on January 13,
2000, the Board of Directors met and formally reappointed the Special Committee.
Action with respect to Mr. Casten's resignation was deferred until January 19,
2000.
5
On January 16, 2000, representatives from Fried Frank negotiated the draft
Merger Agreement with Troutman Sanders, and Fried Frank circulated a revised
draft of the Merger Agreement later that day.
On January 17, 2000, Lazard Freres indicated to CSFB that Parent would be
prepared to increase its offer to $23.25. Lazard Freres was advised that the
Special Committee was still seeking at least $24 per Share. On January 18, 2000,
Lazard Freres indicated that, subject to the preparation of acceptable
documents, including agreements from the members of the Special Committee and
Mr. Casten in their individual capacities to accept the proposal and vote and/or
tender their Shares to support the transaction, Parent would be prepared to
increase its offer to $23.50. The Special Committee also contacted Parent
directly in order to attempt to negotiate a higher price. At the same time,
Fried Frank and Troutman Sanders continued to negotiate the remaining issues in
the draft Merger Agreement.
On January 19, 2000, at the request of the Special Committee, CSFB advised
Lazard Freres that the Special Committee was likely to respond favorably to
Parent's proposed offer of $23.50. The Special Committee then met to review the
offer and the terms of the draft Merger Agreement with CSFB and Troutman
Sanders. Also at this meeting, CSFB delivered to the Special Committee an oral
opinion (which opinion was confirmed by delivery of a written opinion dated
January 19, 2000) to the effect that, as of that date and based on and subject
to the matters described in the opinion, the $23.50 per Share cash consideration
to be received in the Offer and the Merger, taken together, by the holders of
Shares was fair, from a financial point of view, to such holders (other than
Parent and its affiliates). After full discussion, the Special Committee
unanimously determined to recommend that the Board of Directors approve the
Offer and the Merger and approve and authorize the Merger Agreement and the
other transactions contemplated thereby. Later that day, the Board of Directors
met to consider the recommendation of the Special Committee. After receiving the
recommendation of the Special Committee, the members of the Board of Directors
unanimously approved the Offer and the Merger, approved and adopted the Merger
Agreement and the transactions contemplated thereby, and recommended the Offer
to the stockholders of the Company. The Board of Directors also approved the
separation arrangements with Mr. Casten, and the terms of a $16 million
short-term loan from Elyo.
Over the course of that day, Fried Frank and Troutman Sanders finalized the
Merger Agreement and the related documentation, including the Tender and Voting
Agreement. Fried Frank and Mr. Casten's attorney also finalized the severance
arrangements with Mr. Casten. By the end of the day, the parties had agreed to
the definitive terms of the Merger Agreement and the tender and voting
agreement, and those agreements were executed by the various parties.
Mr. Casten also executed a separation agreement with the Company and the Casten
Stock Purchase Agreement. For a description of the separation arrangements with
Mr. Casten, see "--The Transaction Documents; Arrangements with Thomas R.
Casten."
2. RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF
THE COMPANY; FAIRNESS OF THE OFFER AND THE MERGER
THE SPECIAL COMMITTEE.
In reaching its decision to recommend that the Board of Directors approve
the Offer and the Merger and authorize the Merger Agreement, the Special
Committee considered a number of factors, including the following, which
generally supported a recommendation in favor of the Offer:
(i) The Company's uncertain financial prospects as a result of (a) the
current rate at which the Company is utilizing its available funds and
(b) uncertainty as to whether the Company would be able to raise additional
capital which would be adequate for its ongoing needs (particularly in light
of Parent's requirement that it would first need to consider meaningful
long-term business plans before it could respond to a request for approval
of a long-term financing plan).
(ii) The fact that the Company's projections reflected unprecedented
growth, and that there can be no assurances that these projections can be
realized since unprecedented growth by its nature contains certain risks.
6
(iii) The historical market prices and recent trading activity of the
Shares, including the fact that the $23.50 per Share cash consideration to
be paid in the Offer and the Merger represented a substantial premium over
the recent trading price of the Shares.
(iv) The history of negotiations between the Special Committee and its
representatives and the Parent and its representatives, including the facts
that (a) the negotiations resulted in an increase in the price at which
Parent and Purchaser were prepared to acquire the Company's outstanding
Shares from $22.00 per Share to $23.50 per Share, and (b) the Special
Committee's belief that the Parent and Purchaser would not further increase
the Offer.
(v) The express unwillingness of the Parent to consider a sale of its
interest in the Company which made pursuit of other potential business
combinations impracticable.
(vi) The structure of the transaction which is designed, among other
things, to result in the receipt by stockholders at the earliest practicable
time of the consideration to be paid in the Offer and the fact that the per
Share consideration to be paid in the Offer and the Merger is the same.
(vii) The volatility in the energy industry during the current
deregulation of the electric industry and the impracticability of accurately
predicting the future results of the Company.
(viii) The opinion of CSFB dated January 19, 2000 to the effect that, as
of that date and based on and subject to the matters described in the
opinion, the $23.50 per Share cash consideration to be received in the Offer
and the Merger, taken together, by the holders of Shares was fair, from a
financial point of view, to such holders (other than Parent and its
affiliates). The full text of CSFB's written opinion dated January 19, 2000,
which sets forth the assumptions made, procedures followed, matters
considered and limitations on the review undertaken by CSFB, is attached to
the Schedule 14D-9 as Annex A and is incorporated herein by reference.
CSFB's opinion is directed only to the fairness, from a financial point of
view, of the $23.50 per Share cash consideration to be received in the Offer
and the Merger, taken together, by the holders of Shares (other than Parent
and its affiliates) and is not intended to constitute, and does not
constitute, a recommendation as to whether any stockholder should tender
Shares pursuant to the Offer or as to any other matter relating to the Offer
or the Merger. Holders of Shares are urged to read the opinion carefully in
its entirety.
(ix) The availability of dissenters' rights with respect to the Merger
under Delaware law.
(x) The absence of any "minimum condition" or other requirement that a
particular number of Shares be tendered in the Offer or that dissenters'
rights be exercised with respect to only a limited number of Shares.
(xi) The impact of the departure of Mr. Casten from the Company's
management team.
(xii) The likelihood that the proposed acquisition would be consummated
based in part on the financial resources of the Parent.
(xiii) The terms and conditions of the Merger Agreement, including the
absence of any financing condition.
(xiv) The expectation that, in the absence of Mr. Casten's leadership,
the trading price of the Shares might decline in the future.
In addition to the factors listed above, the Special Committee considered
the fact that the consummation of the Offer and the Merger would eliminate the
opportunity of the stockholders of the Company other than Parent and its
affiliates (the "Public Stockholders") to participate in any potential future
growth of the value of the Company, but believed that this loss of opportunity
was appropriately reflected by the price of $23.50 per Share to be paid in the
Offer and Merger. The Special Committee also observed the potential future
values for the Company that had been suggested in publicly released analytical
reports produced by various investment banking firms.
In light of the number and variety of factors the Special Committee
considered in connection with its evaluation of the Offer and the Merger, the
Special Committee did not find it practicable to quantify or
7
otherwise assign relative weights to any of the foregoing factors and,
accordingly, the Special Committee did not do so.
THE BOARD OF DIRECTORS OF THE COMPANY.
All of the directors of the Company other than the members of the Special
Committee (Messrs. Keane and Bayless) may be considered to have an interest in
the Offer and the Merger. Accordingly, the Board of Directors based its
determination that the terms of the Offer are fair to the Public Stockholders
primarily upon the conclusion of the Special Committee described above and the
other factors described above under the caption "The Special Committee."
3. POSITION OF SUEZ, PARENT AND PURCHASER REGARDING FAIRNESS OF THE OFFER
AND THE MERGER
Because Parent currently beneficially owns a majority of the outstanding
Shares, Purchaser, Parent and their affiliates are deemed "affiliates" of the
Company engaging in a Rule 13e-3 transaction under Rule 13e-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, Suez, Parent
and Purchaser are required to consider the fairness of the Offer to the holders
of the Shares (other than Parent and its affiliates).
Suez, Parent and Purchaser believe the Offer and the Merger to be
substantially and procedurally fair to the Public Stockholders. Although Lazard
Freres did not deliver and was not requested to deliver an opinion as to the
fairness of the transaction, Suez, Parent and Purchaser have considered the
analysis of Lazard Freres as set forth below (see "--Analysis of Financial
Advisor to Parent"), in addition to the following factors:
(i) The Board of Directors and the Special Committee concluded that the
Offer and the Merger are fair to, and in the best interests of, the Public
Stockholders.
(ii) The historical and projected financial performance of the Company.
(iii) The Offer Price represents a 22.08% premium over the closing price
for the Shares on September 17, 1999, the last full trading day prior to
announcement of the $22 Offer.
(iv) The Offer Price represents a 38.24% premium over the closing price
for the Shares on January 18, 2000, the last full trading day prior to the
announcement of the execution of the Merger Agreement.
(v) The Offer is not subject to a financing condition.
(vi) The Offer provides the Public Stockholders who are considering
selling their Shares with the opportunity to sell their Shares at the Offer
Price without incurring the transaction costs typically associated with
market sales.
(vii) The ability of Public Stockholders who object to the Merger to
obtain "fair value" for their Shares if they exercise and perfect their
appraisal rights under the DGCL.
(viii) The terms of the Merger Agreement were determined through
arm's-length negotiations between the Special Committee and its legal and
financial advisors, on the one hand, and representatives of Parent, on the
other hand, and provide for the Offer in order to allow Public Stockholders
to receive payment for their Shares on an accelerated basis.
(ix) The Parent Group has sufficient stock ownership to control a
disposition of the Company and informed the Special Committee that it would
not be interested in a third-party sale of the Company.
(x) The Company's request for Parent to provide the short-term financing
to the Company to meet certain capital expenditures.
8
(xi) The pendancy of the Class Action Litigation (as defined in "The
Tender Offer--Certain Legal Matters; Regulatory Approvals") asserting that
the per share price in the $22 Offer was inadequate.
(xii) Notwithstanding that CSFB's opinion, dated January 19, 2000, was
provided solely for the information and assistance of the Special Committee
and that Suez, Parent and Purchaser are not entitled to rely on such
opinion, the fact that the Special Committee received an opinion from CSFB
to the effect that, as of that date and based on and subject to the matters
described in the opinion, the $23.50 per Share cash consideration to be
received in the Offer and the Merger, taken together, by the holders of
Shares was fair, from a financial point of view, to such holders (other than
Parent and its affiliates).
Suez, Parent and Purchaser have reviewed the factors considered by the Board
of Directors in support of its decision, as described above, and have no basis
to question their consideration of or reliance on these factors. Suez, Parent
and Purchaser did not find it practicable to assign, nor did any of them assign,
specific relative weights to the foregoing factors in reaching their opinion as
to the fairness of the Offer and the Merger to the Public Stockholders.
Affiliates of Parent and Suez (other than the Company) are in the process of
engaging CSFB to provide certain financial services unrelated to the Offer and
the Merger. These services consist of an engagement of CSFB by an affiliate of
Suez regarding the monetization of water assets of a large paper company and a
potential privatization of a water distribution facility in Brazil.
4. ANALYSIS OF FINANCIAL ADVISOR TO PARENT
LAZARD FRERES ENGAGEMENT.
On October 21, 1998, Parent engaged Lazard Freres to act as its financial
advisor to advise it of its strategic alternatives with respect to its majority
interest in the Company.
In connection with its engagement as Parent's financial advisor, Lazard
Freres:
- reviewed the publicly available business and financial information
relating to the Company that Lazard Freres deemed relevant;
- reviewed selected information, including financial forecasts, relating to
the business, earnings, cash flow, assets, liabilities and prospects of
the Company, furnished to Lazard Freres by the Company and Parent;
- conducted discussions with members of senior management and
representatives of the Company and Parent concerning the matters described
above, as well as their respective businesses and prospects;
- reviewed the market prices and valuation multiples for the Common Stock
and compared them with those of selected publicly traded companies that
Lazard Freres deemed to be relevant;
- reviewed the results of operations of the Company and compared them with
those of selected publicly traded companies that Lazard Freres deemed to
be relevant;
- compared the proposed financial terms of the Offer and Merger with the
financial terms of other transactions that Lazard Freres deemed to be
relevant;
- participated in discussions and negotiations among representatives of the
Company and its financial and legal advisors and Parent and its legal
advisors;
- reviewed the executed Merger Agreement; and
- reviewed such other financial studies and analyses and took into account
such other matters as Lazard Freres deemed necessary, including an
assessment of general economic, market, and monetary conditions.
9
Lazard Freres made available to the Board of Directors of Parent a summary
presentation of the significant analyses performed by Lazard Freres (the "Lazard
Freres Presentation"). The Lazard Freres Presentation was based on the
"Committed Case" projections provided by Company management. See "--Company
Financial Projections." The data contained in the Lazard Freres Presentation
were intended solely to provide additional information for the use and benefit
of the Board of Directors of Parent, and were not prepared for the purpose of
providing an opinion as to the fairness of the consideration to be paid by
Purchaser or for the purpose of addressing the merits of the underlying business
decision by Parent to engage in the Offer and Merger. A copy of the Lazard
Freres Presentation has been filed as an exhibit to the Schedule TO (the
"Schedule TO") filed with the Commission with respect to the Offer and may be
inspected and copied from the Commission in the manner specified in "THE TENDER
OFFER--Certain Information Concerning the Company--Available Information."
The following is a summary of the various types of analyses presented to the
Board of Directors of Parent in the Lazard Freres Presentation:
DISCOUNTED CASH FLOW ANALYSIS. Lazard Freres performed a discounted cash
flow analysis, based upon selected operating and financial assumptions, the
"Committed Case" forecasts and other information provided by the management of
Parent and the Company. Lazard Freres used a range of discount rates of 8.0% to
9.0% and a range of perpetuity growth rates for cash flow from .30% to 1.80% to
arrive at an enterprise value range of $710 to $775 million. Lazard Freres
subtracted from the enterprise value range aggregate estimated net debt (which
equaled short- and long-term debt PLUS minority interest PLUS preferred stock
MINUS cash) of $472 million to determine a range of estimated aggregate equity
values. Lazard Freres selected a representative range of $18.71 to $23.82 per
Share implied by this analysis for the Shares to be acquired.
ANALYSIS OF SELECTED MINORITY BUY-OUTS. Lazard Freres also analyzed
selected minority buy-out transactions, which involved repurchases of remaining
interests over $50 million from December 1991 to the present.
Lazard Freres analyzed the premium paid in these transactions to the price
of the stock one day prior to, and one month prior to, the announcement of the
proposed merger. The median premium of initial bid to one day and one month
prior to announcement was approximately 12.3% and 20.0%, respectively. The
median premium of final bid to one day and one month prior to announcement was
approximately 20.0% and 27.5%, respectively.
Lazard Freres selected a representative range of $19.08 to $21.99 per Share
implied by this analysis for the Shares to be acquired.
OTHER ANALYSES. Lazard Freres analyzed actual and estimated financial
information for five publicly-traded independent power producers, which Lazard
Freres considered to some extent similar to the Company, although not
necessarily representative of truly comparable companies. Based on this
analysis, Lazard Freres selected representative ranges of $15.17 to $20.28 per
Share implied by EBITDA multiples analysis for the Shares to be acquired. Lazard
Freres also reviewed publicly-available information for five recent acquisitions
Lazard Freres considered to some extent similar to the Merger, although not
necessarily representative of truly comparable transactions. Lazard Freres
selected representative ranges of $17.53 to $23.03 per Share implied by this
analysis for the Shares to be acquired.
The foregoing summary is not a complete description of the analysis
performed by Lazard Freres in connection with the Lazard Freres Presentation.
Lazard Freres believes that its analysis and the summary set forth above must be
considered as a whole and that selecting portions of its analysis, without
considering all factors and analyses, could create an incomplete view of the
process underlying the analyses set forth in the Lazard Freres Presentation. The
Lazard Freres Presentation was prepared solely for the purposes discussed above
and is not an appraisal or reflection of the prices at which businesses or
securities actually may be sold. Analyses based upon projected future results
are not necessarily indicative of actual future results, which may be
significantly more or less favorable than suggested by such analyses. Because
such analyses are inherently subject to uncertainty, as they are based upon
numerous factors or
10
events beyond the control of the parties or their respective advisors, none of
Parent's personnel or any other person assumes responsibility if the future
results are materially different from those projected.
In preparing the Lazard Freres Presentation, Lazard Freres assumed and
relied on the accuracy and completeness of all information supplied or otherwise
made available to it, discussed with or reviewed by or for it, or
publicly-available, and did not independently verify the information or
independently evaluate or appraise any of the assets or liabilities of the
Company. In addition, Lazard Freres was not furnished with such evaluation or
appraisal and did not assume any obligation to conduct any physical inspection
of the properties or facilities of the Company.
The Lazard Freres Presentation is necessarily based upon market, economic
and other conditions as they exist and can be based on the information made
available to it as of the date of the Lazard Freres Presentation. Lazard Freres
assumed that in the course of obtaining any necessary regulatory or other
consents or approvals (contractual or otherwise) for the Offer and the Merger,
no restrictions, including any divestiture requirements or amendments or
modifications, will be imposed that will have a material adverse effect on the
contemplated benefits of the Offer and the Merger.
Lazard Freres is acting as a financial advisor to Parent in connection with
the Offer and the Merger and will receive a fee from Parent for its services, a
significant portion of which is contingent upon the consummation of the Offer
and the Merger. In addition, Parent has agreed to indemnify Lazard Freres for
certain liabilities arising out of its engagement. Lazard Freres is currently
engaged by Parent to act as its financial advisor and has, in the past, provided
financial advisory services to Parent and its affiliates and may continue to do
so and has received, and may receive, fees for the rendering of such services.
Lazard Freres's engagement with Parent was formalized in an engagement
letter ("Engagement Letter"), originally dated October 21, 1998 and amended and
renewed on August 25, 1999. Under the terms of the Engagement Letter, Parent
agreed to pay Lazard Freres for its services a cash fee of $1,400,000, which is
payable as follows: $400,000 upon delivery of the Lazard Freres Presentation and
$1,000,000 upon the closing of a transaction like the Offer and Merger during
the period of Lazard Freres's retention. Parent also agreed to reimburse Lazard
Freres for reasonable out-of-pocket expenses and reasonable fees and
disbursements of its legal counsel. Under the terms of the Engagement Letter,
Lazard Freres is to act as financial adviser to Parent in connection with the
Merger. In addition, Parent has agreed to indemnify Lazard Freres against
certain liabilities.
5. OPINION OF THE SPECIAL COMMITTEE'S FINANCIAL ADVISOR
CSFB has acted as exclusive financial advisor to the Special Committee in
connection with the Offer and the Merger. The Special Committee selected CSFB
based on CSFB's experience, expertise and familiarity with the Company and its
business. CSFB is an internationally recognized investment banking firm and is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, leveraged buyouts, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes.
In connection with CSFB's engagement, the Special Committee requested that
CSFB evaluate the fairness, from a financial point of view, to the holders of
Shares (other than Parent and its affiliates) of the consideration to be
received by such holders pursuant to the Offer and the Merger, taken together.
On January 19, 2000, at a meeting of the Special Committee held to evaluate the
proposed Offer and the Merger, CSFB rendered to the Special Committee an oral
opinion (which opinion was confirmed by delivery of a written opinion dated
January 19, 2000) to the effect that, as of that date and based on and subject
to the matters described in the opinion, the $23.50 per Share cash consideration
to be received in the Offer and the Merger, taken together, by the holders of
Shares, was fair, from a financial point of view, to such holders (other than
Parent and its affiliates).
THE FULL TEXT OF CSFB'S WRITTEN OPINION, DATED JANUARY 19, 2000, TO THE
SPECIAL COMMITTEE, WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY CSFB, IS ATTACHED
TO THE SCHEDULE 14D-9 AS ANNEX A AND IS INCORPORATED HEREIN BY REFERENCE.
11
HOLDERS OF SHARES ARE URGED TO READ THIS OPINION CAREFULLY IN ITS ENTIRETY.
CSFB'S OPINION IS ADDRESSED TO THE SPECIAL COMMITTEE, RELATES ONLY TO THE
FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE $23.50 PER SHARE CASH
CONSIDERATION TO BE RECEIVED IN THE OFFER AND THE MERGER, TAKEN TOGETHER, BY THE
HOLDERS OF SHARES (OTHER THAN PARENT AND ITS AFFILIATES), DOES NOT ADDRESS ANY
OTHER ASPECT OF THE PROPOSED OFFER OR MERGER OR ANY RELATED TRANSACTION AND DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER SUCH
STOCKHOLDER SHOULD TENDER SHARES IN THE OFFER OR AS TO ANY OTHER MATTER RELATING
TO THE OFFER OR THE MERGER.
In arriving at its opinion, CSFB reviewed the Merger Agreement and publicly
available business and financial information relating to the Company. CSFB also
reviewed other information relating to the Company, including financial
forecasts, that the Company provided to or discussed with CSFB, and met with the
management of the Company to discuss the business and prospects of the Company.
CSFB also considered financial and stock market data of the Company and
compared those data with similar data for other publicly held companies in
businesses similar to the Company and considered, to the extent publicly
available, the financial terms of other business combinations and other
transactions recently effected. CSFB also considered other information,
financial studies, analyses and investigations and financial, economic and
market criteria which CSFB deemed relevant.
In connection with its review, CSFB did not assume any responsibility for
independent verification of any of the information provided to or otherwise
reviewed by it and relied on that information being complete and accurate in all
material respects. With respect to the financial forecasts, CSFB was advised,
and assumed, that such forecasts were reasonably prepared on bases reflecting
the best currently available estimates and judgments of the management of the
Company as to the future financial performance of the Company.
CSFB was not requested to, and did not, make an independent evaluation or
appraisal of the assets or liabilities, contingent or otherwise, of the Company,
and was not furnished with any evaluations or appraisals. CSFB's opinion was
necessarily based on information available to it, and financial, economic,
market and other conditions as they existed and could be evaluated, on the date
of its opinion. Although CSFB evaluated, from a financial point of view, the
$23.50 per Share cash consideration to be received in the Offer and Merger,
taken together, by the holders of Shares (other than Parent and its affiliates),
CSFB was not requested to, and did not, recommend the specific consideration to
be received in the Offer and the Merger, which consideration was determined
between the Special Committee and Parent. In connection with its engagement,
CSFB was not requested to, and did not, solicit third party indications of
interest in the possible acquisition of all or part of the Company. No other
limitations were imposed on CSFB with respect to the investigations made or
procedures followed by CSFB in rendering its opinion.
In preparing its opinion to the Special Committee, CSFB performed a variety
of financial and comparative analyses, including those described below. The
summary of CSFB's analyses described below is not a complete description of the
analyses underlying its opinion. The preparation of a fairness opinion is a
complex analytical process involving various determinations as to the most
appropriate and relevant methods of financial analyses and the application of
those methods to the particular circumstances and, therefore, a fairness opinion
is not readily susceptible to summary description. In arriving at its opinion,
CSFB made qualitative judgments as to the significance and relevance of each
analysis and factor considered by it. Accordingly, CSFB believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and factors, without considering all analyses and factors, could create
a misleading or incomplete view of the processes underlying its analyses and
opinion.
In its analyses, CSFB considered industry performance, regulatory, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of the Company. No company, transaction or business
used in CSFB's analyses as a comparison is identical to the Company or the
proposed Offer and Merger, and an evaluation of the results of those analyses is
not entirely mathematical. Rather, the analyses involve complex considerations
and judgments concerning financial and operating characteristics and other
factors that could affect the acquisition, public trading or other values of the
companies, business segments or transactions analyzed.
12
The estimates contained in CSFB's analyses and the ranges of valuations
resulting from any particular analysis are not necessarily indicative of actual
values or predictive of future results or values, which may be significantly
more or less favorable than those suggested by the analyses. In addition,
analyses relating to the value of businesses or securities do not purport to be
appraisals or to reflect the prices at which businesses or securities actually
may be sold. Accordingly, CSFB's analyses and estimates are inherently subject
to substantial uncertainty.
CSFB's opinion and financial analyses were only one of many factors
considered by the Special Committee in its evaluation of the Offer and the
Merger and should not be viewed as determinative of the views of the Special
Committee, the Board of Directors or management of the Company with respect to
the Offer and the Merger or the consideration to be received in the Offer and
the Merger.
The following is a summary of the material financial analyses underlying
CSFB's opinion dated January 19, 2000 delivered to the Special Committee in
connection with the Offer and the Merger:
DISCOUNTED CASH FLOW ANALYSES. CSFB estimated the present value of the
unlevered after-tax free cash flows that the Company could produce on a
stand-alone basis. CSFB evaluated the Company's projected free cash flows for
the years 2000 through 2009 under three scenarios based on internal estimates of
the management of the Company. The first scenario, the management case (which is
substantially similar to the "Committed Case" in "--Company Financial
Projections" below), was based on management's forecast of cash flows derived
from current operational contracts and signed development contracts. The second
scenario, the adjusted case, was based on the management case and adjusted to
reflect additional cash flows that may result from the Company's identified but
unsigned contracts and limited merchant electric power plant development at
existing Company facilities. The third scenario, the limited development case,
was based on the management case and adjusted to reflect lower cash flows from
certain of the Company's backlog of signed development contracts than was
forecasted under the management case.
Ranges of terminal values for the discounted cash flow analyses were
estimated using multiples of terminal year 2009 earnings before interest, taxes,
depreciation and amortization, commonly known as EBITDA, of 8.0x to 9.0x in the
case of the Company's operations other than its merchant power operations, and
6.5x to 7.0x in the case of the Company's merchant power operations. CSFB then
discounted to present value the free cash flow streams and terminal values using
discount rates of 8.5% to 9.0% in the case of the Company's operations other
than its merchant power operations, and 14.0% to 15.0% in the case of the
Company's merchant power operations. This analysis indicated an implied
enterprise reference range for the Company of approximately $716 million to
$798 million for the management case, approximately $742 million to
$843 million for the adjusted case and approximately $630 million to
$703 million for the limited development case, each as compared to the
enterprise value implied by the consideration payable in the Offer and the
Merger of approximately $763 million.
SELECTED COMPANIES ANALYSES. CSFB compared financial and operating data of
the Company with corresponding data of the following selected publicly traded
companies in the independent power production industry:
- The AES Corporation
- Calpine Corporation
- Cogeneration Corporation of America
CSFB reviewed enterprise values, calculated as equity market value, plus
total debt, preferred stock and minority interests, less cash and cash
equivalents, of the selected companies as multiples of, among other things,
estimated years 1999 and 2000 EBITDA and earnings before interest and taxes,
commonly known as EBIT, and equity values of the selected companies as multiples
of estimated years 1999 and 2000 net income. Estimated financial data for the
selected companies were based on publicly available research analysts'
estimates. All multiples were based on closing stock prices on January 14, 2000,
except for Cogeneration Corporation of America, the multiples of which were
based on its closing stock price on
13
August 26, 1999 (the last trading day prior to Calpine Corporation's acquisition
of Cogeneration Corporation of America). CSFB then applied a range of selected
multiples derived from the selected companies data to estimated years 1999 and
2000 EBITDA, EBIT and net income of the Company based on the adjusted case
estimates. This analysis indicated an implied enterprise reference range for the
Company of approximately $670 million to $770 million, as compared to the
enterprise value implied by the consideration payable in the Offer and the
Merger of approximately $763 million.
SELECTED MERGERS AND ACQUISITIONS ANALYSES. Using publicly available
information, CSFB analyzed the purchase prices and implied transaction multiples
paid in the following selected merger and acquisition transactions in the
independent power production industry:
ACQUIROR TARGET
- -------- ------
- - Calpine Corporation - Cogeneration Corporation of America
- - El Paso Natural Gas Company - CE Generation LLC
- - Enron Corporation - Cogen Technologies
- - Cogentrix Energy, Inc. - Bechtel/USGen
- - NGC Corporation/The AES Corporation - Destec Energy, Inc.
- - CalEnergy Company, Inc. - Falcon Seaboard Resources, Inc.
CSFB reviewed enterprise values of the selected transactions as multiples of
latest 12 months and estimated forward year EBITDA. All multiples for the
selected transactions were based on financial information available at the time
of the announcement of the relevant transaction. CSFB then applied a range of
selected multiples derived from the selected transactions data to the latest
12 months and estimated year 2000 EBITDA of the Company based on the adjusted
case estimates. This analysis indicated an implied enterprise reference range
for the Company of approximately $650 million to $780 million, as compared to
the enterprise value implied by the consideration payable in the Offer and the
Merger of approximately $763 million.
OTHER FACTORS. In the course of preparing its opinion, CSFB considered
other information and data, including the premiums implied by the consideration
payable in the Offer and the Merger relative to historical stock prices for the
Shares.
MISCELLANEOUS. Pursuant to the terms of CSFB's engagement, the Company has
agreed to pay CSFB an aggregate fee of $1.3 million for its financial advisory
services in connection with the Offer and the Merger. The Company also has
agreed to reimburse CSFB for its out-of-pocket expenses, including the fees and
expenses of its legal counsel, and to indemnify CSFB and related parties against
liabilities, including liabilities under the federal securities laws, arising
out of CSFB's engagement. CSFB and its affiliates have in the past provided
financial services to the Company and Suez, and currently are providing
financial services to the Company, unrelated to the Offer and Merger, for which
CSFB has received and may receive compensation. In the ordinary course of
business, CSFB and its affiliates may actively trade the debt and equity
securities of the Company and Suez for their own accounts and for the accounts
of customers and, accordingly, may at any time hold long or short positions in
such securities.
A copy of CSFB's written presentation to the Special Committee, dated
January 19, 2000, has been included as an exhibit to the Schedule TO and may be
inspected, copied and obtained in the manner specified in "THE TENDER
OFFER--Certain Information Concerning the Company--Available Information."
6. COMPANY FINANCIAL PROJECTIONS
The Company does not, as a matter of course, make public forecasts or
projections as to future sales, earnings or other income statement data.
However, management of the Company does prepare internal financial projections
prior to the start of each year. Such projections represent what management of
the Company believes to be a reasonable estimate of the Company's future
financial performance and reflect significant assumptions and subjective
judgments by the Company's management regarding industry
14
performance and general business and economic conditions, including assumptions
regarding the Company's future development projects.
The projections set forth below were not prepared with a view to public
disclosure and are included herein for the limited purpose of giving the
Company's stockholders access to financial projections prepared by the Company's
management in January 2000 in the ordinary course of business as part of the
Company's budgeting and planning process and that were made available to Parent
and Purchaser in connection with the Offer. The January 2000 projections reflect
developments which were finalized after the preparation of the November 1999
Projections and different assumptions from such earlier projections as described
below.
The "Committed Case" scenario reflects management's forecasts based on
facilities which were either under operation, under construction or pending
construction and the addition of new customers to the Company's existing
facilities. In addition, the Committed Case assumes that the Company's existing
credit facility could be increased to support the Company's additional capital
requirements for the periods presented. The "No New Development Beyond 2000
Case" scenario was based on the Committed Case, was adjusted to reflect
management's assumptions regarding identified but unsigned development contracts
(based on management's assessment of probability) with startup dates ranging
from 2000 to 2002 and assumes the issuance in 2000 of $240 million in public
debt (and a related increase in interest cost as a result thereof) and the
continuation of the Company's existing credit facilities to support the
Company's additional capital requirements for the periods presented. The "Target
With $50 Million Additional Equity Case" scenario was based on the Committed
Case and was adjusted to reflect management's assumptions that projected growth
for 2000 as set forth in the No New Development Beyond 2000 Case will continue
at the same level in each year from 2001 through 2005 and assumes the issuance
in 2000 of $240 million in public debt (and a related increase in interest cost
as a result thereof), the issuance in 2001 of $50 million in equity and the
continuation of the Company's existing credit facilities to support the
Company's additional capital requirements for the periods presented. No analysis
beyond 2001 was made regarding the need for additional equity to support the
Company's additional capital requirements. The November 1999 Projections did not
include a scenario analogous to the Committed Case scenario. More detailed
financial projections relating to the "Committed Case" scenario described above,
which contain business segment information, is attached as Schedule III to this
Offer to Purchase.
In addition to the three scenario's set forth below, management of the
Company also prepared in January 2000 two variations of the "Target With $50
Million Additional Equity Case" scenario, one of which assumed no issuance of
additional equity and was entitled "Target With No Additional Equity Case" and
the other of which assumed the issuance of $100 million of equity and was
entitled "Target With $100 Million Additional Equity Case." The principal impact
of these two scenarios from the Target With $50 Million Additional Equity Case,
which was the case endorsed by management, are changes in the Company's total
interest costs (i.e., higher in the Target With No Additional Equity Case and
lower in the Target With $100 Million Additional Equity Case) and level of
indebtedness.
The following assumptions were not considered by management in the
preparation of the projections in January 2000 although they were reflected in
the November 1999 Projections, including the projections set forth in the
Development Growth Case scenario described in the paragraph following the
tables: (i) the sale (which had been reviewed from time to time by management
but never recommended by management or the Board of Directors) in 2000 of one of
the Company's district energy systems and an associated write-off (which
together would represent an aggregate pre-tax loss of $40 million), (ii) a
pre-tax gain in 2000 in the amount of $20 million representing the receipt of
proceeds in connection with the Company's judgment in its antitrust suit against
Oklahoma Gas & Electric Company and (iii) the vesting of all outstanding shares
of Restricted Stock granted under the Trigen Energy Corporation 1994 Stock
Incentive Plan. The November 1999 Projections also assumed that the Company's
existing credit facilities could be increased to support the Company's
additional capital requirements for the periods presented. In addition, the
January 2000 projections and the November 1999 Projections reflect the
settlement in May 1999 of the Company's litigation with PECO Energy Company and
Adwin (Schuylkill) Cogeneration, Inc. concerning
15
the Company's Grays Ferry project (the "PECO Litigation"). The January 2000
projections included updated financial information and revisions relating to
several development projects for which development contracts were finalized
between the date of preparation of the November 1999 Projections and the
January 2000 projections. The updated financial information and revisions
reflected in the January 2000 projections did not result in materially different
projections from any comparable projections prepared as part of the
November 1999 Projections.
JANUARY PROJECTIONS
COMMITTED CASE 2000 2001 2002 2003 2004 2005
- -------------- -------- -------- -------- ---------- ---------- ----------
($ IN THOUSANDS)
Total Revenues....... $375,474 $403,371 $421,575 $436,927 $446,405 $453,035
Operating Income..... 66,319 63,241 67,853 70,800 71,530 71,218
Net Income........... 16,076 11,488 13,547 16,733 18,797 20,017
EBITDA............... 98,996 99,982 107,439 111,160 112,622 112,899
Indebtedness......... 507,926 525,407 479,745 441,582 390,177 342,346
Debt to Capital...... 71.7% 71.0% 67.3% 63.8% 59.1% 54.0%
NO NEW DEVELOPMENT
BEYOND 2000 CASE 2000 2001 2002 2003 2004 2005
- ------------------ -------- -------- -------- ---------- ---------- ----------
($ IN THOUSANDS)
Total Revenues....... $404,483 $470,585 $542,083 $574,146 $586,662 $596,328
Operating Income..... 73,491 75,768 88,752 95,829 97,211 97,562
Net Income........... 16,755 12,973 16,785 20,758 23,294 24,986
EBITDA............... 107,619 116,580 136,632 145,996 148,151 149,091
Indebtedness......... 605,639 688,775 689,948 644,733 578,008 513,998
Debt to Capital...... 71.6% 71.8% 71.8% 69.4% 65.3% 60.7%
TARGET WITH $50 MILLION
ADDITIONAL EQUITY CASE 2000 2001 2002 2003 2004 2005
- ----------------------- -------- -------- -------- ---------- ---------- ----------
($ IN THOUSANDS)
Total Revenues........ $425,644 $545,106 $716,485 $ 896,002 $1,074,587 $1,251,596
Operating Income...... 74,510 86,660 116,964 150,207 182,968 214,104
Net Income............ 16,261 15,414 22,196 29,726 37,075 43,997
EBITDA................ 109,447 130,208 173,004 218,181 262,874 305,799
Indebtedness.......... 633,060 788,009 984,284 1,177,061 1,336,994 1,464,309
Debt to Capital....... 72.5% 68.7% 70.0% 71.1% 71.1% 70.4%
As part of the November 1999 Projections, management of the Company included
a "Development Growth Case" scenario. The projections set forth in this scenario
reflected management's forecasts based on facilities which were either under
operation, under construction or pending construction and the addition of new
customers to the Company's existing facilities. In addition, the Development
Growth Case reflected management's assumptions that projected growth for 2000,
based on management's assumptions (including an assessment of probability)
regarding identified but unsigned development contracts with startup dates
ranging from 2000 to 2002, will increase at a compounded annual growth rate of
20% per year from 2001 through 2005, which resulted in revenues increasing from
$401 million in 2000 to $1,233 million in 2005, operating income increasing from
$67 million in 2000 to $268 million in 2005 and EBITDA increasing from
$105 million in 2000 to $376 million in 2005. The projections made available to
Parent in January 2000 did not include a scenario analogous to the Development
Growth Case scenario.
THE COMPANY HAS ADVISED SUEZ, PARENT AND PURCHASER THAT IT DOES NOT, AS A
MATTER OF COURSE, DISCLOSE PROJECTIONS AS TO FUTURE REVENUES, EARNINGS OR OTHER
INCOME STATEMENT DATA AND THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO
PUBLIC DISCLOSURE. IN ADDITION, THE PROJECTIONS WERE NOT
16
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, OR WITH A
VIEW TO COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS, WHICH
WOULD REQUIRE A MORE COMPLETE PRESENTATION OF THE DATA THAN AS SHOWN ABOVE. THE
PROJECTIONS HAVE NOT BEEN EXAMINED, REVIEWED OR COMPILED BY THE COMPANY'S
INDEPENDENT AUDITORS, AND ACCORDINGLY THEY HAVE NOT EXPRESSED AN OPINION OR ANY
OTHER ASSURANCE ON SUCH PROJECTIONS. THE FORECASTED INFORMATION IS INCLUDED
HEREIN SOLELY BECAUSE SUCH INFORMATION WAS FURNISHED TO PARENT AND PURCHASER
PRIOR TO THE OFFER. ACCORDINGLY, NONE OF SUEZ, PARENT, PURCHASER OR THE COMPANY
OR ANY OTHER PERSON IS MAKING ANY REPRESENTATION AS TO THE PROJECTIONS INCLUDED
IN THIS OFFER TO PURCHASE, AND NONE OF SUEZ, PARENT, PURCHASER, THE COMPANY OR
ANY OTHER PERSON ASSUMES ANY RESPONSIBILITY AS TO THE ACCURACY THEREOF. IN
ADDITION, BECAUSE THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE
INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND
CONTINGENCIES, WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND ARE
BEYOND THE CONTROL OF THE COMPANY, SUEZ, PARENT AND PURCHASER, THERE CAN BE NO
ASSURANCE THAT RESULTS SET FORTH IN THE ABOVE PROJECTIONS WILL BE REALIZED AND
IT IS EXPECTED THAT THERE WILL BE DIFFERENCES BETWEEN ACTUAL AND PROJECTED
RESULTS, AND ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR LOWER THAN THOSE SET
FORTH ABOVE.
7. FORWARD LOOKING STATEMENTS
THE MATTERS DISCUSSED UNDER THE HEADINGS "--BACKGROUND OF THE OFFER AND THE
MERGER; CONTACTS WITH THE COMPANY," "--RECOMMENDATION OF THE SPECIAL COMMITTEE
AND THE BOARD OF DIRECTORS OF THE COMPANY; FAIRNESS OF THE OFFER AND THE
MERGER," "--ANALYSIS OF FINANCIAL ADVISOR TO PARENT," "--OPINION OF THE SPECIAL
COMMITTEE'S FINANCIAL ADVISOR," "--COMPANY FINANCIAL PROJECTIONS" AND "THE
TENDER OFFER--CERTAIN INFORMATION CONCERNING THE COMPANY" CONTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. STOCKHOLDERS
ARE CAUTIONED THAT, IN ADDITION TO THE OTHER FACTORS SET FORTH UNDER THE
HEADINGS "--BACKGROUND OF THE OFFER AND THE MERGER; CONTACTS WITH THE COMPANY,"
"--RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE BOARD OF DIRECTORS OF THE
COMPANY; FAIRNESS OF THE OFFER AND THE MERGER," "--POSITION OF SUEZ, PARENT AND
PURCHASER REGARDING FAIRNESS OF THE OFFER AND THE MERGER," "--ANALYSIS OF
FINANCIAL ADVISOR TO PARENT," AND "--OPINION OF THE SPECIAL COMMITTEE'S
FINANCIAL ADVISOR," THE FOLLOWING FACTORS MAY CAUSE THE COMPANY'S ACTUAL
FINANCIAL PERFORMANCE TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH
FORWARD-LOOKING STATEMENTS:
- supply and demand for the Company's products;
- competitive pricing pressures;
- weather patterns;
- changes in industry laws and regulations;
- failure to sign up new development projects on the terms, conditions and
timing projected by management;
- competitive technology; and
- failure to achieve the Company's cost reduction targets or complete
construction on schedule.
17
8. PURPOSE AND STRUCTURE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY
PURPOSE AND STRUCTURE OF THE OFFER AND THE MERGER. The purpose of the Offer
and the Merger is to enable Parent, through Purchaser, to acquire the entire
equity interest in the Company. Parent desires to own the entire equity interest
in the Company at this time to integrate certain of the Company's operations
into Parent's existing energy business. This integration will allow Parent to
achieve additional operating efficiencies and will provide the flexibility to
respond quickly to an increasingly competitive industry. This will be
accomplished by Parent, through Purchaser, making the Offer, which will enable
Parent to acquire as many outstanding Shares not beneficially owned by Parent as
possible as a first step in acquiring the entire equity interest in the Company.
Through the Merger, Parent will acquire all Shares not purchased pursuant to the
Offer. Upon consummation of the Merger, the Company will become an indirect
wholly owned subsidiary of Parent.
Under the DGCL, the approval of the Board of Directors and the affirmative
vote of the holders of a majority of the outstanding Common Stock is required to
approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger. While the approval and adoption of the Merger
Agreement and the transactions contemplated thereby requires the affirmative
vote of a majority of the votes cast by all stockholders of the Company entitled
to vote thereon, Parent already has voting power in excess of that amount.
Furthermore, if Purchaser acquires at least 90% of the outstanding Shares
pursuant to the Offer or otherwise, Purchaser would be able to effect the Merger
pursuant to the "short-form" merger ("Short-Form Merger") provisions of
Section 253 of the DGCL, without any action by any other stockholder of the
Company or the Board of Directors. In such event, Purchaser intends to effect a
Short-Form Merger as promptly as practicable following the purchase of Shares in
the Offer.
The Offer is structured so that no approval of the holders of the Shares
held by the Public Stockholders is required. The Purchaser will, subject to the
conditions of the Offer, accept for payment any and all Shares validly tendered
in accordance with the terms of the Offer.
PLANS FOR THE COMPANY AFTER THE OFFER AND THE MERGER. Pursuant to the
Merger Agreement, upon completion of the Offer, Parent and Purchaser intend to
effect the Merger in accordance with the Merger Agreement. See "SPECIAL
FACTORS--The Transaction Documents; The Merger Agreement."
After consummation of the Merger, Parent intends to explore ways in which
the Company's new position as an indirect wholly owned subsidiary of Parent
might allow the Company to lower its cost of capital and administrative costs
and respond quickly to opportunities and changes in the energy market. Parent
intends that U.S. citizens continue to play a very significant role in the
management of the Company. Parent will continue to evaluate all aspects of the
business, operations, capitalization and management of the Company during the
pendency of the Offer and after the consummation of the Offer and the Merger and
will take such further actions as it deems appropriate under the circumstances
then existing.
As a result of the Offer, the interest of Parent in the Company's net book
value and net earnings will be increased in proportion to the number of Shares
acquired in the Offer. If the Merger is consummated, Parent's interest in the
net book value, net earnings and equity of the Company will equal 100% and
Parent will be entitled to all benefits resulting from such interest, including
all income generated by the Company's operations and any future increase in the
Company's value. Similarly, Parent will also bear the risk of losses generated
by the Company's operations and any future decrease in the value of the Company
after the Merger. Subsequent to the Merger, the Public Stockholders will cease
to have any equity interest in the Company, will not have the opportunity to
participate in the earnings and growth of the Company after the Merger and will
not have any right to vote on corporate matters. Similarly, the Public
Stockholders will not face the risk of losses generated by the Company's
operations or decline in the value of the Company after the Merger.
18
The Shares are currently traded on the New York Stock Exchange. However, as
a result of the Merger, Parent will be the sole stockholder of the Company and
there will be no public market for the Shares. Following the consummation of the
Merger, Shares will no longer be quoted on the New York Stock Exchange and the
registration of the Shares under the Exchange Act will be terminated.
Accordingly, after the Merger there will be no publicly traded equity securities
of the Company. Moreover, the Company will no longer be required to file
periodic reports with the Commission under the Exchange Act, and will no longer
be required to comply with the proxy rules of Regulation 14A under Section 14
under the Exchange Act. In addition, the Company's officers, directors and 10%
stockholders will be relieved of the reporting requirements and restrictions on
"short-swing" trading contained in Section 16 of the Exchange Act with respect
to the Shares. See "THE TENDER OFFER--Effect of the Offer on the Market for the
Common Stock; Exchange Act Registration." It is expected that, if Shares are not
accepted for payment by Purchaser pursuant to the Offer and the Merger is not
consummated, the Company's current management, under the general direction of
the Board of Directors, will continue to manage the Company as an ongoing
business.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time, and the officers of the Company immediately prior
to the Effective Time, will be the directors and the officers, respectively, of
the Surviving Corporation after the Merger, until their respective successors
are elected or appointed and qualified in accordance with applicable law. The
directors of Purchaser are Michel Bleitrach and Olivier Degos, each of whom is
an employee of Parent. See Schedule I to this Offer to Purchase for more
information concerning these persons.
After consummation of the Merger, Parent plans to cause the Company to
fulfill its existing contractual commitments and to exploit the business
opportunities that are available to the Company in order to maximize the
Company's opportunities for revenues and profit. Parent believes that a full
integration of the Company into Parent will enable the combined entity to
realize efficiencies and economies of scale. See "--Background of the Offer and
the Merger; Contacts with the Company."
Other than by virtue of the Merger and the other transactions contemplated
by the Merger Agreement and except as otherwise described above or elsewhere in
this Offer to Purchase, Suez, Parent and Purchaser have no current plans or
proposals that relate to or would result in: (i) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries; (ii) a sale or transfer of a material amount
of assets of the Company or any of its subsidiaries; (iii) any material change
in the Company's capitalization or dividend policy or indebtedness; (iv) any
change in the management of the Company, the composition of the Board of
Directors or any change in any material term of the employment contract of any
executive officer; or (v) any other material change in the Company's corporate
structure or business.
9. RIGHTS OF STOCKHOLDERS IN THE OFFER AND THE MERGER
No dissenter's or appraisal rights are available to stockholders in
connection with the Offer. If the Merger is consummated, however, record
stockholders of the Company who have not validly tendered their Shares or voted
in favor of the Merger (if a vote is required) will have certain rights under
the DGCL to an appraisal of, and to receive payment in cash of the fair value
of, their Shares (the "Appraisal Shares"). Stockholders who perfect appraisal
rights by complying with the procedures set forth in Section 262 of the DGCL
("Section 262"), a copy of which is attached as Schedule II to this Offer to
Purchase, will have the fair value of their Appraisal Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
determined by the Delaware Court of Chancery and will be entitled to receive a
cash payment equal to such fair value from the Surviving Corporation. Any such
judicial determination of the fair value of Shares could be based upon any
valuation method or combination of methods the court deems appropriate to use.
The value so determined could be more or less than the Offer Price or Merger
Consideration. In addition, such stockholders may be entitled to receive payment
of a fair rate of interest from the Effective Time on the amount determined to
be the fair
19
value of their Appraisal Shares. THE PRESERVATION AND EXERCISE OF APPRAISAL
RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
Under Section 262, if the Merger is submitted to a vote of the stockholders
of the Company at a meeting thereof, the Company must, not less than 20 days
prior to the meeting held for the purpose of obtaining stockholder approval of
the Merger, notify each of the Company's stockholders entitled to appraisal
rights that such rights are available. If the Merger is accomplished by a
Short-Form Merger, the Company, either before the Effective Time or within ten
days thereafter, must notify each of the stockholders entitled to appraisal
rights of the Effective Time and that appraisal rights are available. In either
case, the notice must include a copy of Section 262.
If the Merger is not a Short-Form Merger, a holder of Appraisal Shares
wishing to exercise appraisal rights will be required to deliver to the Company
before the taking of the vote on the Merger or within 20 days after the date of
mailing the notice described in the preceding paragraph, a written demand for
appraisal of such holder's Appraisal Shares. A holder of Appraisal Shares
wishing to exercise such holder's appraisal rights must be the record holder of
such Appraisal Shares on the date the written demand for appraisal is made and
must continue to hold of record such Appraisal Shares through the Effective
Time. Accordingly, a holder of Appraisal Shares who is the record holder of
Appraisal Shares on the date the written demand for appraisal is made, but who
thereafter transfers such Appraisal Shares prior to the Effective Time, will
lose any right to appraisal in respect of such Appraisal Shares.
If the Merger is a Short-Form Merger, a holder of Appraisal Shares wishing
to exercise appraisal rights will be required to deliver to the Company, within
20 days after the date of mailing the notice by the Company described above, a
written demand for appraisal of such holder's Appraisal Shares.
A demand for appraisal must be executed by or on behalf of the stockholder
of record and must reasonably inform the Company of the identity of the
stockholder of record and that such stockholder intends thereby to demand an
appraisal of such Appraisal Shares.
A person having a beneficial interest in Appraisal Shares that are held of
record in the name of another person, such as a broker, fiduciary, depository or
other nominee, will have to act to cause the record holder to execute the demand
for appraisal and to follow the requisite steps properly and in a timely manner
to perfect appraisal rights. If Appraisal Shares are owned of record by more
than one person, as in joint tenancy or tenancy in common, the demand will have
to be executed by or for all joint owners. An authorized agent, including an
agent for two or more joint owners, may execute a demand for appraisal for a
stockholder of record, provided that the agent identifies the record owner and
expressly discloses, when the demand is made, that the agent is acting as agent
for the record owner. If a stockholder owns Appraisal Shares through a broker
who in turn holds the Appraisal Shares through a central securities depository
nominee such as CEDE & Co., a demand for appraisal of such Appraisal Shares will
have to be made by or on behalf of the depository nominee and must identify the
depository nominee as Appraisal Shares' record holder.
A record holder, such as a broker, fiduciary, depository or other nominee,
who holds Appraisal Shares as a nominee for others, will be able to exercise
appraisal rights with respect to the Appraisal Shares held for all or less than
all of the beneficial owners of those Appraisal Shares as to which such person
is the record owner. In such case, the written demand must set forth the number
of Shares covered by the demand. Where the number of Shares is not expressly
stated, the demand will be presumed to cover all Appraisal Shares standing in
the name of such record owner.
Within 120 days after the Effective Time, but not thereafter, the Company or
any stockholder who has complied with the statutory requirements summarized
above and who is otherwise entitled to appraisal rights may file a petition in
the Delaware Court of Chancery demanding a determination of the fair value of
such holders' Appraisal Shares. There is no present intention on the part of
Purchaser to file an appraisal petition on behalf of the Company, and
stockholders who seek to exercise appraisal rights should
20
not assume that the Company will file such a petition or that the Company will
initiate any negotiations with respect to the fair value of Appraisal Shares.
Accordingly, it will be the obligation of the stockholders seeking appraisal
rights to initiate all necessary action to perfect any appraisal rights within
the time prescribed in Section 262. Within 120 days after the Effective Time,
any stockholder who has theretofore complied with the provisions of Section 262
will be entitled, upon written request, to receive from the Company a statement
setting forth the aggregate number of Shares not voting in favor of the Merger
(if applicable) and with respect to which demands for appraisal were received as
well as the number of holders of such Shares. Such statement must be mailed
within ten days after the written request therefor has been received by the
Company.
If a petition for appraisal is timely filed, after a hearing on such
petition the Delaware Court of Chancery will determine the stockholders entitled
to appraisal rights and will appraise the fair value of their Appraisal Shares,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value from the Effective Time.
The costs of the proceeding may be determined by the Delaware Court of
Chancery and taxed upon the parties as the Delaware Court of Chancery deems
equitable under the circumstances. However, costs do not include attorneys' fees
or expert witness fees. Upon application of a stockholder, the Delaware Court of
Chancery may also order all or a portion of the expenses incurred by any
stockholder, including reasonable attorneys' fees and the fees and expenses of
experts, to be charged pro rata against the value of all of the Appraisal Shares
entitled to appraisal.
At any time within 60 days after the Effective Time, any stockholder shall
have the right to withdraw its demand for appraisal and to accept the Merger
Consideration. After this period, the stockholder may withdraw such holder's
demand for appraisal only with the consent of Purchaser. If any stockholder who
properly demands appraisal of such holder's Appraisal Shares under Section 262
fails to perfect, or effectively withdraws or loses, such holder's right to
appraisal as provided in the DGCL, the Appraisal Shares of such stockholder will
be converted into the right to receive the Merger Consideration. A stockholder
will fail to perfect, or effectively lose or withdraw, such stockholder's right
to appraisal if, among other things, no petition for appraisal is filed within
120 days after the Effective Time or if the stockholder delivers to the Company
a written withdrawal of such stockholder's demand for appraisal.
Except as otherwise disclosed in the Offer to Purchase, none of Purchaser,
Parent or Suez have made any provision in connection with the Offer or the
Merger to obtain counsel or appraisal services for unaffiliated security holders
at the expense of Purchaser, Parent or Suez.
10. THE TRANSACTION DOCUMENTS
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
The summary is qualified in its entirety by reference to the Merger Agreement,
which is incorporated herein by reference and a copy of which has been included
an exhibit to the Schedule TO. The Merger Agreement may be inspected at, and
copies may be obtained from, the same places and in the manner set forth in "THE
TENDER OFFER--Certain Information Concerning the Company--Additional
Information".
THE OFFER. The Merger Agreement provides for the commencement of the Offer.
The obligation of Purchaser, and of Parent to cause Purchaser, to commence the
Offer and to accept for payment, and to pay for, any shares of Common Stock
tendered pursuant to the Offer, is subject to the satisfaction of certain
conditions that are set forth below the caption "THE TENDER OFFER--Conditions of
the Offer" (such conditions, the "Offer Conditions"). Purchaser may waive any of
the Offer Conditions or make any other changes in the terms and conditions of
the Offer without the prior written consent of the Company or the Special
Committee. Notwithstanding the foregoing, Purchaser and Parent have agreed that,
without the
21
prior written consent of the Company, no changes may be made that (i) reduce the
maximum number of Shares subject to the Offer, (ii) decrease the Offer Price,
(iii) change the form of consideration payable in the Offer, or (iv) amend or
modify the Offer Conditions in any manner adverse to the holders of Shares.
Under the terms of the Merger Agreement, Purchaser may, without the consent of
the Company, extend the Offer: (i) if at the then scheduled expiration date of
the Offer any of the Offer Conditions shall not have been satisfied or waived,
until such time as all such conditions shall have been satisfied or waived;
(ii) for any period required by any statute or rule, regulation, interpretation
or position of the Commission applicable to the Offer; (iii) for any period
required by applicable law in connection with an increase in the consideration
to be paid pursuant to the Offer; and (iv) from time to time, for an aggregate
period of not more than ten business days (for all such extensions under this
clause (iv)) beyond the latest expiration date that would be permitted under
clause (i), (ii) or (iii) of this sentence. If at the scheduled Expiration Date
of the Offer, all of the Offer Conditions have been satisfied, Purchaser shall,
regardless of the number of Shares tendered, immediately accept and promptly pay
for all Shares tendered. Following announcement of the results of the Offer (and
notwithstanding the provision in the Merger Agreement permitting Purchaser to
extend the Offer for up to ten business days), Purchaser shall begin the
Subsequent Offering Period (as defined below) for a period of three days. If,
following the expiration of the initial offering period and the purchase of all
Shares tendered pursuant to the Offer during that period and the first three
days of the Subsequent Offering Period, Parent and Purchaser own less than 90%
of the outstanding Shares following consummation of the Offer, Purchaser will
extend the Subsequent Offering Period until the earlier of (i) twenty business
days from the Expiration Date and (ii) the time Parent and Purchaser become the
owners of at least 90% of the outstanding Shares so that a Short-Form Merger can
be effected. See "THE TENDER OFFER--Terms of the Offer."
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions set forth in the Merger Agreement and the applicable provisions of
the DGCL, Purchaser will be merged with and into the Company and the separate
existence of Purchaser will cease. The Company will be the Surviving Corporation
of the Merger and will be an indirect wholly owned subsidiary of Parent. In the
Merger, each share of common stock of Purchaser outstanding immediately prior to
the Effective Time will be converted into and exchanged for one validly issued,
fully paid and non-assessable share of Common Stock, $.01 par value per share,
of the Surviving Corporation. At the Effective Time, each Share issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
Parent or Purchaser or held by the Company, all of which shall be cancelled, and
Shares held by stockholders who perfect appraisal rights under the DGCL) will,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive the Merger Consideration. The
Merger Agreement provides that (subject to the provisions of the Merger
Agreement and the applicable provisions of the DGCL) the closing of the Merger
shall occur promptly following the satisfaction or, to the extent permitted
under the Merger Agreement, waiver of the conditions to the Merger set forth in
the Merger Agreement.
TREATMENT OF STOCK OPTIONS AND RESTRICTED STOCK. The Merger Agreement
provides that all options to acquire Shares (individually, an "Option" and
collectively, the "Options") outstanding immediately prior to the Effective Time
under any stock option plan or under any agreement, whether or not then
exercisable, shall be cancelled at the Effective Time. Promptly after the
Effective Time, each holder of an Option will receive from the Surviving
Corporation, for each Share subject to an Option, whether or not then
exercisable, an amount in cash equal to the excess, if any, of the Merger
Consideration over the per Share exercise price of such Option without interest,
in full settlement of the Company's (and the Surviving Corporation's)
obligations under each Option. To the extent that the per Share exercise price
of any Option equals or exceeds the Merger Consideration, at the Effective Time,
such Option will be cancelled and the holder of such Option will not receive or
be entitled to receive any consideration from Parent, Purchaser or the Surviving
Corporation. All amounts payable in respect of Options shall be subject to all
applicable withholding of taxes. Immediately prior to the filing of the
certificate of merger (the "Certificate of Merger") relating to the Merger with
the Secretary of State of the State of Delaware, all shares of Restricted Stock
(as defined in the Trigen Energy Corporation 1994 Stock Incentive Plan) granted
under
22
the Trigen Energy Corporation 1994 Stock Incentive Plan will be canceled and
each holder of shares of Restricted Stock will promptly after the Effective Time
receive from the Surviving Corporation, for each share of Restricted Stock, an
amount of cash equal to one-fourth of the Merger Consideration. Under the terms
of the Separation Agreement, if the Merger is consummated, on January 19, 2002,
Mr. Casten will also receive, in respect of each Share of Restricted Stock owned
by him, an amount of cash equal to three-fourths of the Merger Consideration.
See "--Arrangements with Thomas P. Casten." In connection with the foregoing,
the Surviving Corporation intends, in accordance with the Trigen Energy
Corporation 1994 Stock Incentive Plan, to implement an incentive plan following
the Effective Time.
BOARD REPRESENTATION. The Merger Agreement provides that, promptly upon the
purchase of Shares pursuant to the Offer, Parent shall be entitled to designate
such number of directors as will give Parent representation on the Board of
Directors equal to the product of (i) the number of directors on the Board of
Directors and (ii) the percentage that the number of Shares owned by Purchaser
or Parent bears to the number of Shares outstanding (the "Percentage"). The
Company has agreed, upon request by Parent, promptly to increase the size of the
Board of Directors and/or exercise its best efforts to secure the resignations
of such number of directors as is necessary to enable Parent's designees to be
elected to the Board of Directors and to cause Parent's designees to be so
elected. However, Parent has agreed that until the Effective Time the Board of
Directors will have at least one member who is not designated by Parent or
Purchaser. At the request of Parent, the Company will use its best efforts to
cause such individuals designated by Parent to constitute the same Percentage of
(i) each committee of the Board of Directors, (ii) the board of directors of
each subsidiary of the Company, and (iii) each committee of each such
subsidiary's board of directors. The Company's obligations to appoint designees
to the Board of Directors are subject to Section 14(f) of the Exchange Act.
Following the election or appointment of the designees of Parent to the Board of
Directors but prior to the Effective Time, any permitted termination of the
Merger Agreement by the Company, any amendment of the Merger Agreement requiring
action by the Board of Directors, any extension of time for the performance of
any of the obligations or other acts of Parent or Purchaser, and any waiver of
compliance with any of the agreements or conditions contained in the Merger
Agreement for the benefit of the Company must be authorized by a majority of the
Board of Directors not designated by Parent.
STOCKHOLDER MEETING. The Merger Agreement provides that, if required by
applicable law, the Company, acting through the Board of Directors, shall
(i) call a meeting of its stockholders (the "Stockholder Meeting") for the
purpose of voting on the Merger, (ii) hold the Stockholder Meeting as soon as
practicable after the purchase of Shares pursuant to the Offer and (iii) unless
taking such action would be inconsistent with the fiduciary duties of the Board
of Directors or the directors constituting the Special Committee, as determined
by such directors in good faith after consultation with independent legal
counsel, recommend to its stockholders the approval of the Merger and the
transactions contemplated thereby. If a Stockholder Meeting is called, the
Company will use its reasonable best efforts to solicit from the stockholders of
the Company proxies in favor of the approval and adoption of the Merger
Agreement and the transactions contemplated thereby, unless otherwise required
by applicable fiduciary duties, as determined by such directors in good faith
after consultation with independent legal counsel. At the Stockholder Meeting,
Parent will cause all the Shares then owned by Parent, Purchaser or any other
subsidiary or affiliate of Parent to be voted in favor of the Merger. The Merger
Agreement provides that, notwithstanding the foregoing, if Purchaser, or any
other direct or indirect subsidiary of Parent, acquires at least 90 percent of
the outstanding Shares, the parties to the Merger Agreement shall take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer, without a vote of stockholders
of the Company, in accordance with the "Short-Form Merger" provisions of the
DGCL. The Merger Agreement is required to be submitted to the stockholders of
the Company whether or not the Board of Directors determines at any time
subsequent to declaring its advisability that the Merger Agreement is no longer
advisable and recommends that the stockholders reject it.
23
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to (i) the due
organization, existence and, subject to certain limitations, the qualification,
good standing, corporate power and authority of the Company and its
subsidiaries; (ii) the due authorization, execution, and delivery of the Merger
Agreement and certain ancillary documents executed in connection therewith and
the consummation of the transactions contemplated thereby, and the validity and
enforceability thereof; (iii) subject to certain exceptions and limitations, the
compliance by the Company and its subsidiaries with all applicable foreign,
federal, state or local laws, statutes, ordinances, rules, regulations, orders,
judgments, rulings and decrees of any foreign, federal, state or local judicial,
legislative, executive, administrative or regulatory body or authority, or any
court, arbitration, board or tribunal; (iv) the capitalization of the Company,
including the number of shares of capital stock of the Company outstanding and
the number of Options outstanding; (v) subject to certain exceptions and
limitations, the absence of consents and approvals necessary for consummation by
the Company of the Merger and the absence of any violations, breaches or
defaults which would result from compliance by the Company with any provision of
the Merger Agreement; (vi) compliance with the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act, in connection with each
registration statement, report, proxy statement or information statement (as
defined under the Exchange Act) prepared by the Company since December 31, 1996,
the Schedule 14D-9, the information statement, if any, filed by the Company in
connection with the Offer pursuant to Rule 14f-1 under the Exchange Act and any
schedule required to be filed by the Company with the Commission or any
amendment or supplement thereto; (vii) subject to certain exceptions and
limitations, the absence of pending or (to the knowledge of the Company)
threatened claims, actions, suits, proceedings, arbitrations, investigations or
audits; (viii) the absence of certain changes or effects; (ix) certain tax
matters; (x) certain employee benefit and ERISA matters; (xi) certain labor and
employment matters; (xii) certain fees in connection with the transactions
contemplated by the Merger Agreement; (xiii) subject to certain limitations, the
possession by the Company and its subsidiaries of necessary franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders; (xiv) certain environmental matters;
(xv) certain insurance policy matters; (xvi) the opinion of CSFB; (xvii) state
takeover statutes; (xviii) the required vote of stockholders of the Company with
respect to the transactions contemplated by the Merger Agreement;
(xix) regulation as a utility and (xx) year 2000 compliance.
Parent and Purchaser have also made certain representations and warranties,
including with respect to (i) the due incorporation, existence, good standing
and, subject to certain limitations, corporate power and authority of Parent and
Purchaser; (ii) the due authorization, execution and delivery of the Merger
Agreement and certain ancillary documents executed in connection therewith and
the consummation of the transactions contemplated thereby, and the validity and
enforceability thereof; (iii) subject to certain exceptions and limitations, the
absence of consents and approvals necessary for consummation of the transactions
contemplated by the Merger Agreement by Parent and Purchaser and the absence of
any violations, breaches or defaults which would result from compliance by
Parent and Purchaser with any provision of the Merger Agreement; (iv) the
interim operations by Purchaser; (v) the sufficiency of funds available to
Parent and Purchaser for the consummation of the Offer and the Merger and
(vi) absence of any material misstatements or omissions in this Offer to
Purchase, the Schedule TO and the exhibits thereto.
CONDUCT UNTIL THE MERGER. The Company has agreed that from the date of the
Merger Agreement to the Effective Time, unless disclosed to Parent at the time
of the execution of the Merger Agreement or Parent has consented in writing
thereto, the Company will, and will cause each of its subsidiaries to:
(i) conduct its operations according to its ordinary course of business
consistent with past practice; (ii) use its reasonable best efforts to preserve
intact its business organizations and goodwill, keep available the services of
its officers and employees and maintain satisfactory relationships with those
persons having business relationships with them; (iii) promptly upon the
discovery thereof, notify Parent of the existence of any breach of any
representation or warranty contained in the Merger Agreement (or, in the case of
any
24
representation or warranty that makes no reference to Material Adverse Effect,
any breach of such representation or warranty in any material respect). The
Merger Agreement defines a Material Adverse Effect as a material adverse effect
on the business, operations, or financial condition of the Company and its
subsidiaries taken as a whole or the ability of the Company and its subsidiaries
to conduct their business after the Closing consistent in all material respects
with the manner conducted in the past; provided, however, that "Material Adverse
Effect" does not include any change, effect, condition, event or circumstance
arising out of or attributable to (i) any decrease in the market price of the
Shares (but not any change, effect, condition, event or circumstance underlying
such decrease to the extent that it would otherwise constitute a Material
Adverse Effect), (ii) changes, effects, conditions, events or circumstances that
generally affect the industries in which the Company or its subsidiaries operate
(including legal and regulatory changes), (iii) general economic conditions or
changes, effects, conditions or circumstances affecting the securities markets
generally or (iv) changes arising from the consummation of the transactions
contemplated by the Merger Agreement or the announcement of the execution of the
Merger Agreement.
The Company has also agreed that from the date of the Merger Agreement to
the Effective Time, unless disclosed to Parent at the time of the execution of
the Merger Agreement or Parent has consented in writing thereto, the Company
will not, and will not permit any of its subsidiaries to,
(i) amend its certificate of incorporation or by-laws;
(ii) issue, sell or pledge (A) any shares of its capital stock or other
ownership interest in the Company (other than issuances of Common Stock in
respect of any exercise of Options outstanding on the date of the Merger
Agreement and as disclosed to Parent at the time of the execution of the Merger
Agreement) or its subsidiaries, (B) any securities convertible into or
exchangeable for any such shares or other ownership interest, or (C) any rights,
warrants or options to acquire or with respect to any such shares of capital
stock, ownership interest, or convertible or exchangeable securities (or
derivative instruments in respect of the foregoing);
(iii) effect any stock split or otherwise change its capitalization as it
existed on the date of the Merger Agreement, or directly or indirectly redeem,
purchase or otherwise acquire any shares of its capital stock or capital stock
of its subsidiaries;
(iv) (A) grant, confer or award any option, warrant, convertible security or
other right to acquire any shares of its capital stock or take any action to
cause to be exercisable any otherwise unexercisable option under any existing
stock option plan (except as otherwise required by the terms of such
unexercisable options), (B) accelerate or waive any or all of the goals,
restrictions or conditions imposed under any award under the Trigen Energy
Corporation 1994 Performance Stock Incentive Plan, or (C) issue, sell, grant or
award any shares of capital stock or any right to acquire shares of capital
stock under any Company stock plan (except as otherwise required by such plan);
(v) declare, set aside or pay any dividend or make any other distribution or
payment with respect to any shares of its capital stock or other ownership
interests (other than such payments by the subsidiaries to the Company);
(vi) mortgage or otherwise encumber, subject to any encumbrance, or sell,
lease or otherwise dispose of any of its property or assets (including capital
stock of its subsidiaries), other than encumbrances that are incurred in the
ordinary course of business, consistent with past practice, the sale or
disposition of inventory in the ordinary course of business or the sale, lease,
encumbrance or other disposition of assets which, individually or in the
aggregate, are obsolete or not material to the Company and its subsidiaries
taken as a whole;
(vii) (A) acquire by merger, purchase or any other manner, any business or
entity or any division thereof for consideration in excess of $1,000,000 in the
aggregate; or (B) otherwise acquire any assets which would be material,
individually or in the aggregate, to the Company and its subsidiaries taken as a
25
whole, except for purchases of inventory, supplies or capital equipment in the
ordinary course of business consistent with past practice and the acquisition of
assets for consideration in excess of $1,000,000 in the aggregate;
(viii) except for borrowings under existing credit facilities and excepting
transactions between the Company and any subsidiary, incur or assume any
long-term or short-term debt or issue any debt securities or assume, guarantee
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the debt or other obligations of any other person, other than
obligations (other than debt) of its subsidiaries incurred in the ordinary
course of business;
(ix) (A) make any loans, advances or capital continuations to, or
investments in, any other person (other than to subsidiaries of the Company),
except with respect to commitments outstanding on the date of the Merger
Agreement, or (B) forgive any loans, advances or capital contributions to, or
investments in, any other person (other than with respect to subsidiaries of the
Company) for an amount in excess of $1,000,000 in the aggregate (as to clauses
(A) and (B) collectively);
(x) except as contemplated by the Merger Agreement or in the ordinary course
of business consistent with past practice (A) increase the compensation payable
or to become payable to its officers or employees, (B) other than in accordance
with existing policies and arrangements, grant any severance pay to the
Company's officers, directors or employees or (C) establish, adopt, enter into
or amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee, except to
the extent required by applicable law or the terms of a collective bargaining
agreement or a contractual obligation existing on the date of the Merger
Agreement;
(xi) change any of the accounting principles or practices used by the
Company, except as may be required by generally accepted accounting principles;
(xii) pay, discharge or satisfy any material claims, material liabilities or
material obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of (A) any such
material claims, material liabilities or material obligations in the ordinary
course of business and consistent with past practice or (B) material claims,
material liabilities or material obligations reflected or reserved against in,
or contemplated by, the consolidated financial statements (or the notes thereto)
contained in the Company's filings with the Commission;
(xiii) agree to the settlement of any claim or litigation, which settlement
would have a Material Adverse Effect;
(xiv) make, change or rescind any material tax election (other than
recurring elections that customarily are made in connection with the filing of
any tax return; provided that any such elections are consistent with the past
practices of the Company or its Subsidiaries, as the case may be); or settle or
compromise any material tax liability that is the subject of any audit, claim
for delinquent taxes, examination, action, suit, proceeding or investigation by
any taxing authority;
(xv) except to the extent required under existing employee and director
benefit plans, agreements or arrangements as in effect on the date of the Merger
Agreement or as contemplated by the Merger Agreement, accelerate the payment,
right to payment or vesting of any bonus, severance, profit sharing, retirement,
deferred compensation, stock option, insurance or other compensation or
benefits;
(xvi) enter into any agreement, understanding or commitment that restrains,
limits or impedes the ability of the Company or any of its subsidiaries to
compete with or conduct any business or line of business, including geographic
limitations on the activities of the Company or any of its subsidiaries;
(xvii) materially modify, amend or terminate any material contract, or
waive, relinquish, release or terminate any right or claim, in each case, except
in the ordinary course of business consistent with past practice;
(xviii) other than with respect to commitments outstanding as of the date of
the Merger Agreement, make any capital expenditures for the Company and its
subsidiaries in excess $1,000,000, in the aggregate;
26
(xix) take any action to cause the Common Stock to be delisted from the New
York Stock Exchange prior to the consummation of the Offer; or
(xx) agree in writing or otherwise to take any of the foregoing actions.
ACCESS TO INFORMATION. Under the Merger Agreement, from the date of the
Merger Agreement to the closing date of the Merger, the Company has agreed, and
has agreed to cause its subsidiaries to, (i) give Parent and its authorized
representatives reasonable access, upon reasonable notice and during reasonable
hours to all books, records, personnel, offices and other facilities and
properties of the Company and its subsidiaries and their accountants and
accountants' work papers, (ii) permit Parent to make such copies and inspections
thereof as Parent may reasonably request and (iii) furnish Parent with such
financial and operating data and other information with respect to the business
and properties of the Company and its subsidiaries as Parent may from time to
time reasonably request; provided that no investigation or information furnished
pursuant to the Merger Agreement shall affect any representations or warranties
made by the Company therein or the conditions to the obligations of Parent to
consummate the transactions contemplated thereby. Parent has agreed to hold all
information furnished on a confidential basis by or on behalf of the Company or
any of its subsidiaries in confidence.
NO SOLICITATION. The Company has agreed in the Merger Agreement (a) that
from the date of the Merger Agreement to the Effective Time, neither it nor any
of its subsidiaries will, and it will direct and use its best efforts to cause
its officers, directors, employees, agents and representatives (including,
without limitation, any investment banker, attorney or accountant retained by it
or any of its subsidiaries) not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its stockholders)
with respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, the Company or any of its subsidiaries (any such
proposal or offer being hereinafter referred to as an "Alternative Proposal") or
engage in any negotiations concerning, or provide any confidential information
or data to, afford access to the properties, books or records of the Company or
any of its subsidiaries to, or have any discussions with, any person relating to
an Alternative Proposal, or otherwise facilitate any effort or attempt to make
or implement an Alternative Proposal; (b) that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing, and it
will take the necessary steps to inform such parties of the obligations
undertaken under the no solicitation provision of the Merger Agreement; and
(c) that it will notify Parent immediately of the identity of the potential
acquiror and the terms of such person's or entity's proposal if any such
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated or continued
with, the Company; provided, however, that the no solicitation provision shall
not prohibit the Company or its subsidiaries, upon approval by the Special
Committee, from (i) prior to the acceptance for payment of Shares pursuant to
the Offer, furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited bona fide
proposal to acquire the Company pursuant to a merger, consolidation, share
exchange, purchase of substantially all of the assets of the Company, a business
combination or other similar transaction, if, and only to the extent that,
(A) such proposal was not initially solicited, encouraged or knowingly
facilitated by the Company, its subsidiaries or their agents in violation of the
no solicitation provision of the Merger Agreement, (B) such proposal is not
subject to a financing condition and involves consideration that provides a
higher value per share than the Merger Consideration, (C) the Board of
Directors, or the Special Committee, determines in good faith based on the
advice of outside counsel that the failure to take such action would be
inconsistent with its fiduciary duties to stockholders imposed by law, and
(D) prior to furnishing information to, or entering into discussions or
negotiations with, such person or entity, the Company provides written notice to
Parent to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or entity; and (ii) to the extent
applicable, complying with Rule 14e-2(a) promulgated under the Exchange Act with
regard to an Alternative Proposal. Nothing in the no solicitation provision of
the
27
Merger Agreement (x) permits the Company to terminate the Merger Agreement
(except as specifically provided in the termination provisions of the Merger
Agreement), (y) permits the Company to enter into any agreement with respect to
an Alternative Proposal during the term of the Merger Agreement, or (z) affects
any other obligation of the Company under the Merger Agreement.
FEES AND EXPENSES. Except as set forth below or as otherwise provided in
the Merger Agreement, whether or not the Offer or the Merger is consummated, all
fees, costs and expenses incurred in connection with the Merger Agreement and
the transactions contemplated by the Merger Agreement will be paid by the party
incurring such fees, costs and expenses.
In the Merger Agreement, the Company has agreed that, under certain
circumstances, it will reimburse Parent and its affiliates for their
out-of-pocket expenses incurred in connection with the Offer, the Merger and the
other transactions contemplated by the Merger Agreement. The Company is
obligated to pay Parent's out-of-pocket expenses under the following
circumstances: (i) Parent terminates the Merger Agreement because of the failure
of the condition to the Offer that the representations and warranties made by
the Company in the Merger Agreement that are qualified by materiality or
Material Adverse Effect are true and correct in all respects when made or
thereafter have ceased to be true and correct in all respects as if made at the
scheduled or extended expiration of the Offer (except to the extent that any
such representation or warranty refers specifically to another date, in which
case such representation or warranty shall be true and correct in all respects
as of such other date), the other representations and warranties made by the
Company in the Merger Agreement are true and correct in all material respects
when made or thereafter have ceased to be true and correct in all respects as if
made at the scheduled or extended expiration of the Offer (except to the extent
that any such representation or warranty refers specifically to another date, in
which case such representation or warranty shall be true and correct in all
material respects as of such other date) or because the Company has breached and
failed to have complied in all material respects with any of its obligations
under the Merger Agreement; (ii) the Special Committee terminates the Merger
Agreement in accordance with its terms because of an Alternative Proposal which
the Special Committee in good faith determines is more favorable from a
financial point of view to the stockholders of the Company as compared to the
Offer and the Merger and the Special Committee determines in good faith based on
advice of outside counsel that the failure to take such action would be
inconsistent with its fiduciary duties to stockholders imposed by law; or
(iii) if prior to purchasing any Shares pursuant to the Offer, Parent terminates
the Merger Agreement because the Special Committee shall have withdrawn or
modified in a manner that is materially adverse to Parent or Purchaser its
approval or recommendation of the Merger Agreement, the Offer, the Merger or any
other transaction contemplated by the Merger Agreement or shall have recommended
another merger, consolidation or business combination involving, or acquisition
of, the Company or its assets or another tender offer for the Shares or the
Special Committee shall have resolved to do any of the foregoing.
Under the terms of the Merger Agreement, Parent has agreed that, under
certain circumstances, it will reimburse the Company for its out-of-pocket
expenses incurred in connection with the Offer, the Merger and the other
transactions contemplated by the Merger Agreement. Parent will be obligated to
pay the Company's out-of-pocket expenses if the Special Committee terminates the
Merger Agreement because Parent or Purchaser has breached in any material
respect any of their respective representations, warranties or covenants
contained in the Merger Agreement.
FILINGS; OTHER ACTIONS. The Merger Agreement provides that, subject to the
terms and conditions provided in the Merger Agreement, the Company, Parent and
Purchaser have agreed to: (a) use their reasonable best efforts to cooperate
with one another in (i) determining which filings are required to be made prior
to the expiration of the Offer or the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained prior to the
Effective Time from, governmental entities or other third parties in connection
with the execution and delivery of the Merger Agreement and other ancillary
documents and the consummation of the transactions contemplated thereby and
(ii) timely make all such filings and timely seek all such consents, approvals,
permits, authorizations and waivers; and
28
(b) use their reasonable best efforts to take, or cause to be taken, all other
action and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
the Merger Agreement. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purpose of the Merger
Agreement, the proper officers and directors of Parent and the Surviving
Corporation are required to take all such necessary action.
CONDITIONS TO THE MERGER. The obligations of Parent and the Company to
effect the Merger are subject to the satisfaction or waiver, where permissible,
prior to the Effective Time, of the following conditions: (i) if approval of the
Merger Agreement and the Merger by the holders of Shares is required by
applicable law, the Merger Agreement and the Merger shall have been approved by
the requisite vote of such holders; (ii) any review or approval required by
governmental authorities in countries in which the Company or its subsidiaries
have operations material to the Company and its subsidiaries, taken as a whole,
shall have been completed or obtained; and (iii) no United States federal or
state or Republic of France governmental authority or other agency or commission
or court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order decree,
injunction or other order which is in effect and prohibits or has the effect of
prohibiting the consummation of the Merger or makes the consummation of the
Merger illegal.
TERMINATION. The Merger Agreement, notwithstanding approval thereof by the
stockholders of the Company, may be terminated at any time prior to the
Effective Time:
(a) by mutual written consent of the board of directors of Parent and the
Special Committee;
(b) by Parent or the Special Committee,
(i) if either the purchase of Shares pursuant to the Offer has not been
consummated on or before March 15, 2000 or the Effective Time shall not have
occurred on or before June 30, 2000 (provided that the right to terminate
the Merger Agreement pursuant to this clause (i) shall not be available to
any party whose failure to fulfill any obligation under the Merger Agreement
has been the cause of or resulted in the failure of the Effective Time to
occur on or before such date);
(ii) if there shall be any law that makes consummation of the Offer or
the Merger illegal or prohibited, or if any court of competent jurisdiction
in the United States or the Republic of France shall have issued an order,
judgment, decree or ruling, or taken any other action restraining, enjoining
or otherwise prohibiting the Merger and such order, judgment, decree, ruling
or other action shall have become final and non-appealable;
(c) by the Special Committee,
(i) if there is an Alternative Proposal which the Special Committee in
good faith determines is more favorable from a financial point of view to
the stockholders of the Company as compared to the Offer and the Merger, and
the Special Committee determines in good faith, based upon advice of outside
counsel, that the failure to take such action would be inconsistent with its
fiduciary duties to stockholders imposed by law; provided, however, that
this right to terminate shall not be available in certain circumstances; or
(ii) if Parent or Purchaser shall have breached in any material respect
any of their respective representations, warranties or covenants contained
in the Merger Agreement; or
(d) by Parent,
(i) prior to the acceptance of any Shares under the Offer, if due to an
occurrence or circumstance that would result in the failure of any of the
Offer Conditions, Parent shall have terminated the Offer without having
accepted any Shares for payment thereunder, unless such failure to accept
Shares for payment or to pay for Shares shall have been caused by or
resulted from the failure of Parent or Purchaser to perform any obligation
of either of them contained in the Merger Agreement;
29
(ii) prior to the purchase of any Shares validly tendered pursuant to
the Offer, if the Special Committee shall have withdrawn or modified in a
manner that is materially adverse to Parent or Purchaser its approval or
recommendation of the Merger Agreement, the Offer, the Merger or any other
transaction contemplated by the Merger Agreement or if the Special Committee
shall have recommended another merger, consolidation or business combination
involving, or acquisition of, the Company or its assets or another tender
offer for the Shares, or the Special Committee shall have resolved to do any
of the foregoing.
INDEMNIFICATION. The Merger Agreement provides that the Surviving
Corporation will maintain in effect for not less than six years after the
Effective Time the Company's current directors and officers insurance policies,
if such insurance is obtainable (or policies of at least the same coverage
containing terms and conditions no less advantageous to the current and all
former directors and officers of the Company), with respect to acts or failures
to act prior to the Effective Time, including acts relating to the transactions
contemplated by the Merger Agreement; provided, however, that in order to
maintain or procure such coverage, the Surviving Corporation shall not be
required to maintain or obtain policies providing such coverage except to the
extent such coverage can be provided at an annual cost of no greater than two
times the most recent annual premium paid by the Company prior to the date of
the Merger Agreement (the "Cap"); and provided, further, that if equivalent
coverage cannot be obtained, or can be obtained only by paying an annual premium
in excess of the Cap, the Purchaser or the Surviving Corporation will only be
required to obtain only as much coverage as can be obtained by paying an annual
premium equal to the Cap.
The Merger Agreement also provides that to the extent, if any, not provided
by an existing right of indemnification or the agreement or policy, from and
after the Effective Time, the Surviving Corporation is required to indemnify and
hold harmless each person who is, or has been at any time prior to the date of
the Merger Agreement or who becomes prior to the Effective Time, an officer or
director of the Company or any of its subsidiaries (each, an "Indemnified
Party"), against all losses, expenses, claims, damages or liabilities or,
subject to the last sentence of this paragraph, amounts paid in settlement,
arising in connection with any claim, action, suit, proceeding or investigation
(an "Action") arising out of or pertaining to acts or omissions by such person
in his or her capacity as such, which acts or omissions occurred prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time to the fullest extent permitted by law. In the event of any such Action,
the Company as the Surviving Corporation will control the defense of such Action
with counsel selected by the Company as the Surviving Corporation, which counsel
shall be reasonably acceptable to the Indemnified Party; provided, however, that
the Indemnified Party shall be permitted to participate in the defense of such
Action through counsel selected by the Indemnified Party, which counsel shall be
reasonably acceptable to the Company as the Surviving Corporation, at the
Indemnified Party's expense. Notwithstanding the foregoing, if there is any
conflict between the Company as the Surviving Corporation and any Indemnified
Parties or there are additional defenses available to any Indemnified Parties,
the Indemnified Parties shall be permitted to participate in the defense of such
Action with counsel selected by the Indemnified Parties, which counsel shall be
reasonably acceptable to the Company as the Surviving Corporation, and the
Company as the Surviving Corporation will be required to pay the reasonable fees
and expenses of such counsel, as accrued and in advance of the final disposition
of such Action to the fullest extent permitted by applicable law; provided,
however, that the Company as the Surviving Corporation will not be obligated to
pay the reasonable fees and expenses of more than one counsel for all
Indemnified Parties in any single Action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such Action. The members of
the Special Committee are entitled to select their own counsel pursuant to the
preceding sentence with respect to any litigation relating to the transactions
contemplated by the Merger Agreement; provided, however, that such counsel must
be reasonably acceptable to Parent. The Surviving Corporation shall not be
liable for any settlement effected without its written consent, which consent
shall not unreasonably be withheld.
30
Purchaser has also agreed to cause the Company as the Surviving Corporation
to keep in effect all provisions in the Surviving Corporation's certificate of
incorporation and by-laws that provide for exculpation of director and officer
liability and indemnification (and advancement of expenses related thereto) of
the past and present officers and directors of the Company at least to the
extent they are presently indemnified by the Company and such provisions may not
be amended except as either required by applicable law or to make changes
permitted by law that would enhance the rights of past or present officers and
directors to indemnification or advancement of expenses. These provisions
provide that a director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing does not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which
the director derived an improper personal benefit.
AMENDMENT. To the extent permitted by applicable law, the Merger Agreement
may be amended by action taken by or on behalf of the boards of directors of the
Company and Parent and, in the case of the Company, with the approval of the
Special Committee at any time before or after adoption of the Merger Agreement
by the stockholders of the Company (if required); provided, however, that after
any such stockholder approval, no amendment shall be made which decreases the
Merger Consideration or which adversely affects the rights of, or the income tax
consequences to, the Public Stockholders thereunder without the approval of such
stockholders. The Merger Agreement may not be amended except by an instrument in
writing signed on behalf of Parent, Purchaser and the Company.
TIMING. The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Purchaser has agreed to
cause the Merger to be consummated on the terms, and subject to the conditions,
contained in the Merger Agreement, there can be no assurance as to the timing of
the Merger.
THE TENDER AND VOTING AGREEMENT
The following is a summary of the material provisions of the Tender and
Voting Agreement, a copy of which has been included as an exhibit to the
Schedule TO. The Tender and Voting Agreement may be inspected at, and copies may
be obtained from, the same places and in the same manner set forth in "THE
TENDER OFFER--Certain Information Concerning the Company--Available
Information." The summary is qualified in its entirety by reference to the text
of such agreement.
Concurrently with the execution and delivery of the Merger Agreement, each
of the members of the Special Committee (Messrs. Keane and Bayless) as well as
the Bayless Family Trust, of which Mr. Bayless is the trustee, have entered into
the Tender and Voting Agreement with Purchaser and Parent. Pursuant to the
Tender and Voting Agreement, Messrs. Keane and Bayless have agreed, among other
things, to tender promptly pursuant to the Offer the Shares held by them, and
not to withdraw any such Shares, and to various other provisions described
below.
TRANSFER OF THE SHARES. Each of Messrs. Keane and Bayless agreed that
during the term of the Tender and Voting Agreement, except as otherwise
expressly provided therein, he will not (a) tender into any tender or exchange
offer or otherwise sell, transfer, pledge, assign, hypothecate or otherwise
dispose of, or encumber with any lien, any of the Shares, (b) acquire any Shares
or other securities of the Company (other than in connection with a transaction
in connection with certain anti-dilution adjustments provided for in the Tender
and Voting Agreement or by exercising any options held by him), (c) deposit the
Shares into a voting trust, enter into a voting agreement or arrangement with
respect to the Shares or grant any proxy or power of attorney with respect to
the Shares, (d) enter into any contract, option or other arrangement (including
any profit sharing arrangement) or undertaking with respect to the direct or
indirect acquisition or sale, transfer, pledge, assignment, hypothecation or
other disposition of any interest
31
in or the voting of any Shares or any other securities of the Company,
(e) exercise any rights (including, without limitation, under Section 262 of the
DGCL) to demand appraisal of any Shares which may arise with respect to the
Merger, or (f) take any other action that would in any way restrict, limit or
interfere with the performance of his obligations under the Tender and Voting
Agreement or the transactions contemplated by the Tender and Voting Agreement or
which would otherwise diminish the benefits of the Tender and Voting Agreement
to Parent or Purchaser.
TENDER OF SHARES. Each of Messrs. Keane and Bayless agreed that he will
validly tender (or cause the record owner of such Shares to validly tender) and
sell (and not withdraw) pursuant to and in accordance with the terms of the
Offer not later than the fifth business day after commencement of the Offer (or
the earlier of the expiration date of the Offer and the fifth business day after
such Shares are acquired by him if he acquires Shares after the date of the
Merger Agreement), or, if he has not received this Offer to Purchase and related
documents by such time, within two business days following receipt of such
documents, all of the then outstanding Shares beneficially owned by him
(including the Shares outstanding as of the date of the Merger Agreement and
Shares issued following the exercise (if any) of his Options).
VOTING AGREEMENT. The Tender and Voting Agreement also provides that each
of Messrs. Keane and Bayless (a) agrees to appear (or not appear, if requested
by Parent or Purchaser) at any annual, special, postponed or adjourned meeting
of the stockholders of the Company or otherwise cause the Shares he beneficially
owns to be counted as present (or absent, if requested by Parent or Purchaser)
thereat for purposes of establishing a quorum and to vote or consent, and
(b) constitutes and appoints Parent and Purchaser, or any nominee thereof, with
full power of substitution, during and for the term of the Tender and Voting
Agreement as his true and lawful attorney and proxy for and in his name, place
and stead, to vote all the Shares he beneficially owns at the time of such vote,
at any annual, special, postponed or adjourned meeting of the stockholders of
the Company (and this appointment will include the right to sign his name (as
stockholder) to any consent, certificate or other document relating to the
Company that the laws of the State of Delaware may require or permit), in the
case of both (a) and (b) above, in favor of approval and adoption of the Merger
Agreement and approval and adoption of the Merger and the other transactions
contemplated thereby.
REPRESENTATIONS AND WARRANTIES. Messrs. Keane and Bayless made customary
representations and warranties to Parent and Purchaser, including with respect
to their beneficial ownership of Shares, their authority to enter into and
perform their obligations under the Tender and Voting Agreement, the due
execution and delivery by them of the Tender and Voting Agreement, the absence
of any financial advisor or other intermediary and the acknowledgement of
Parent's reliance on the Tender and Voting Agreement in executing the Merger
Agreement.
Each of Parent and Purchaser has also made customary representations and
warranties under the Tender and Voting Agreement, including with respect to
Parent's and Purchaser's authority to enter into and perform its obligations
under the Tender and Voting Agreement and the due execution and delivery by
Parent and Purchaser of the Tender and Voting Agreement.
TERMINATION. The Tender and Voting Agreement will terminate upon the
earliest of: (a) as to any of Messrs. Keane and Bayless and the Bayless Family
Trust, upon the purchase of all the Shares beneficially owned by such
stockholder pursuant to the Offer in accordance with the Tender and Voting
Agreement, or (b) the earlier to occur of (i) the Effective Time and
(ii) termination of the Merger Agreement in accordance with its terms.
ARRANGEMENTS WITH THOMAS R. CASTEN
The following is a summary of the material provisions of the Separation
Agreement (as defined below) and the Casten Stock Purchase Agreement, copies of
which have been included as exhibits to the Schedule TO. The Separation
Agreement and the Casten Stock Purchase Agreement may be inspected at,
32
and copies may be obtained from, the same places and in the same manner set
forth in "THE TENDER OFFER--Certain Information Concerning the
Company--Available Information." The summary is qualified in its entirety by
reference to the text of such agreement.
THE SEPARATION AGREEMENT AND RELEASE. Pursuant to a separation agreement
and release (the "Separation Agreement"), dated January 19, 2000, between
Thomas R. Casten and the Company, Mr. Casten resigned from his positions as
President, Chief Executive Officer and a director of the Company. Under the
terms of the Separation Agreement, Mr. Casten is eligible for salary and
benefits continuation until the earlier of (a) January 19, 2002, or (b) the date
on which Mr. Casten breaches any of his obligations under the Separation
Agreement. Mr. Casten's obligations include non-disparagement, non-competition,
cooperation, non-solicitation and confidentiality covenants. If Mr. Casten
breaches any of these covenants, his right to payments under the terms of the
Separation Agreement will be extinguished. Restricted Stock and unvested Options
held by Mr. Casten will continue to vest in accordance with their terms as if
Mr. Casten remained employed by the Company and to the extent not vested on
January 19, 2002 will become fully vested on that date to the extent not
previously canceled by reason of a breach of this Agreement. Alternatively,
immediately prior to the Effective Time if the Merger occurs, (i) Mr. Casten's
Options will be canceled and he will receive for each Share subject thereto the
excess of the Merger Consideration over the exercise price, and
(ii) Mr. Casten's shares of Restricted Stock will be canceled and he will
receive an amount per share equal to the Merger Consideration in respect of
one-fourth of such shares and will be eligible to receive on January 19, 2002 an
amount per share equal to the Merger Consideration in respect of three-fourths
of such shares. Under the terms of the Separation Agreement, Mr. Casten is
entitled to remain a general partner of the Trenton District Energy Company
("TDEC"), but may not interfere with or participate in the day-to-day operations
of TDEC. The Company has agreed that if TDEC refinances, the Company will,
subject to certain exceptions, use its good faith efforts so that Mr. Casten
does not recognize income as a result of such refinancing as long as such
efforts do not adversely impact TDEC, the Company or its affiliates.
CASTEN STOCK PURCHASE AGREEMENT. In addition, on January 19, 2000, pursuant
to the Casten Stock Purchase Agreement, Mr. Casten agreed to sell to Parent on
March 29, 2000, the 1,012,402 Shares beneficially owned by him (which excludes
options and Restricted Stock held by Mr. Casten) at $23.50 per Share. If Parent
is legally barred at that time from purchasing these Shares by reason of court
order or otherwise, Parent will buy these Shares on the date two business days
following the date that such legal prohibition ceases.
11. INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER
In considering the recommendations of the Board of Directors and the Special
Committee, stockholders should be aware that certain officers and directors of
Suez, Parent, Purchaser and the Company have interests in the Offer and the
Merger which are described below and which may present them with certain
potential conflicts of interest. As a result of Parent's current ownership of
approximately 52.5% of the outstanding Shares and five of the Company's nine
directors being officers or directors of Parent or one of its affiliates, Parent
may be deemed to control the Company.
Mr. Patrick Buffet, a director of the Company, is a director of Parent and
executive vice president of Suez. Mr. Philippe Brongniart, a director of the
Company, is a director of Parent and a member of the executive board of Suez.
Mr. Olivier Degos, a director of the Company, is Parent's corporate vice
president in charge of international affairs. Mr. Michel Bleitrach, a director
of the Company, is chairman and chief executive officer of Parent.
Mr. Dominique Mangin d'Ouince, a director of the Company, is director of the
international development of the water division of Suez and was a managing
director of Lyonnaise des Eaux from 1990 to 1997. In addition, Mr. Jean M.
Malahieude is an executive vice president, engineering of the Company and is an
executive vice president of Cofreth American Corporation, a direct, wholly owned
subsidiary of Parent ("CAC").
33
Messrs. Bayless and Keane are the directors of the Company who constitute
the Special Committee. These directors have each been compensated in the amount
of $2,500 per day up to an aggregate amount of $75,000, for serving as members
of the Special Committee. This compensation was authorized by the Board of
Directors in order to compensate the members thereof for the significant
additional time commitment that was required of them in connection with
fulfilling their duties and responsibilities as members of the Special Committee
and was paid without regard to whether the Special Committee approved the Offer
and the Merger or whether the Offer or the Merger was consummated. As of
January 31, 2000, Messrs. Bayless and Keane have earned $39,620 and $73,500,
respectively, as compensation for their service on the Special Committee.
Mr. Keane is a director of United Water Resources Inc. Parent and United Water
Resources Inc. signed a merger agreement in August of 1999 pursuant to which
Parent intends to acquire the approximately 70% of United Water Resources Inc.
it does not already own. Consummation of that transaction is pending certain
regulatory approvals.
As of January 27, 2000, the directors and executive officers of the Company,
as a group, beneficially owned an aggregate of 547,794 Shares (representing 5.7%
of the then outstanding Shares), excluding Shares subject to Options and shares
of Restricted Stock. As of January 27, 2000, the members of the Special
Committee, as a group, beneficially owned an aggregate of approximately 38,697
Shares (representing less than 1% of the then outstanding Shares), excluding
Shares subject to Options. All such Shares held by directors and executive
officers will be treated in the Offer and the Merger in the same manner as
Shares held by the Public Stockholders. In the aggregate, the directors and
executive officers of the Company will be entitled to receive approximately
$12,873,182.50 for their Shares upon consummation of the Offer and the Merger
(based upon the number of Shares (other than shares of Restricted Stock) owned
as of January 27, 2000) and the members of the Special Committee will be
entitled to receive an aggregate of approximately $909,380 for their Shares upon
consummation of the Offer and the Merger (based upon the number of Shares owned
as of January 27, 2000). For a description of certain arrangements with
Thomas R. Casten, the former President and Chief Executive Officer of the
Company and a former member of the Board of Directors, see "--The Transaction
Documents; Arrangements with Thomas R. Casten."
As of January 27, 2000, the directors and executive officers of the Company,
as a group, had (i) Options to acquire an aggregate of 350,000 Shares at an
average exercise price of $16.20 per Share and (ii) 162,143 shares of Restricted
Stock. As of January 27, 2000, the members of the Special Committee, as a group,
had (i) Options to acquire an aggregate of 40,000 Shares, and no shares of
Restricted Stock. All such Options held by such directors and executive officers
of the Company will be treated in the Offer and the Merger in the same manner as
Options held by other Option holders. All such shares of Restricted Stock held
by such directors and executive officers of the Company will be treated in the
Merger in the same manner as shares of Restricted Stock held by the other
holders of Restricted Stock (except for the arrangements with Mr. Casten; see
"--The Transaction Documents; Arrangements with Thomas R. Casten"). See "--The
Transaction Documents--The Merger Agreement." Based upon the average exercise
price of Options held by directors and executive officers of the Company and the
Offer Price, the directors and executive officers of the Company, as a group,
will receive total consideration of $3,507,590 (before applicable taxes) for
their Options and shares of Restricted Stock.
The Special Committee and the Board of Directors were aware of these actual
and potential conflicts of interest and considered them along with the other
matters described under "--Recommendation of the Special Committee and the Board
of Directors; Fairness of the Offer and the Merger."
12. BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information, as of January 27, 2000,
regarding the ownership of Common Stock by Purchaser, Parent, Suez and any
director or executive officer of Purchaser, Parent or Suez. To the best of the
knowledge of Purchaser, Parent and Suez after making reasonable inquiry, all
such directors and executive officers and all directors of the Company who are
representatives of Parent
34
currently intend to tender their Shares into the Offer, except to the extent
that the tendering would subject that person to the "short-swing profit" rules
of Section 16(b) of the Exchange Act. In addition, based upon disclosures made
by the Company in the Schedule 14D-9, Purchaser, Parent and Suez understand that
all executive officers, other directors, affiliates and subsidiaries of the
Company intend to tender the Shares held of record or beneficially owned by them
(other than Restricted Stock or Options). Except as indicated below, the
executive officers and directors of Suez, Parent and Purchaser do not own any
Shares.
PERCENTAGE
NUMBER OF SHARES OF COMMON STOCK
NUMBER OF SUBJECT TO BENEFICIALLY
NAME OF BENEFICIAL OWNER SHARES OWNED OPTIONS OWNED(1)
- ------------------------ ------------ ---------------- ---------------
Suez(2).......................................... 6,507,944 -- 52.5%
Parent........................................... 6,507,944 -- 52.5%
Purchaser........................................ -- -- --
Olivier Degos(3)................................. 764 10,000 *
Michel Bleitrach(3).............................. 4,485 10,000 *
Dominique Mangin d'Ouince(3)..................... 4,856 10,000 *
Philippe Brongniart(3)........................... 2,933 10,000 *
Patrick Buffet(3)................................ 1,822 10,000 *
- ------------------------
* Less than 1% of Shares
(1) Based upon 12,401,808 Shares outstanding as of January 27, 2000.
(2) All Shares are owned indirectly by Suez through its direct wholly owned
subsidiary, Societe Generale de Belgique ("Societe Generale"). Societe
Generale owns all Shares indirectly through its direct wholly owned
subsidiary, Parent. Parent owns all Shares indirectly through its
subsidiaries, CAC and Compagnie Parisenne de Chauffage Urbain ("CPCU"). CAC
holds 4,870,670 Shares, or 39.3% of the outstanding Shares. The principal
address of CAC is c/o Trigen Energy Corporation, One Water Street, White
Plains, New York 10601. CPCU holds 1,637,274 Shares, or 13.2% of the
outstanding Shares. The principal address of CPCU is 185, Rue de Bercy,
Paris 75561 France. CPCU currently intends to tender the Shares held by it
into the Offer. CAC currently intends to transfer the Shares held by it to
Purchaser after the expiration of the Offer.
(3) On January 7, 2000, the following members of the Board of Directors received
Shares from the Company as payment of their directors' fees, based on a
price of $17.375 per Share: Michel Bleitrach (241 Shares), Philippe
Brongniart (201 Shares), Olivier Degos (282 Shares), Dominique Mangin
d'Ouince (241 Shares) and Patrick Buffet (241 Shares). These Shares are
included in the above table.
13. RELATED PARTY TRANSACTIONS
LICENSE AGREEMENT. Parent and the Company have entered into an Intercompany
Services and License Agreement (the "License Agreement"), dated August 10, 1994.
Under the License Agreement, Parent has the right to use such technical
knowledge to construct, operate and maintain community energy systems within
North America as well as the right to use patents and licenses of Parent and its
subsidiaries in connection with the generation and distribution of electricity,
chilled water and waste incineration. Parent may also make available to the
Company, upon request, new support letters or other similar credit support, at
mutually agreed rates. Pursuant to the License Agreement, the Company has the
first right to develop any corporate opportunities relating to the application
of the licensed technologies in North America that are presented to Parent or
its subsidiaries. Neither the Company nor its subsidiaries may engage in
activities that may cause the Company to become or be regulated as a public
utility holding company or a subsidiary of a public utility holding company
under federal, state or local laws or regulations. The initial term of the
License Agreement was for three years with automatic two year renewals, unless
terminated sooner as a result of a default or bankruptcy or related event or a
change of
35
control with respect to the Company. The Company reimbursed Parent and its
affiliates and/or paid third party providers on behalf of Parent $318,786 for
salary, bonus, and expenses paid to Jean Malahieude, an executive officer of the
Company, and an additional $178,448 for benefits of Mr. Malahieude and other
professionals in 1998.
CERTAIN INDEBTEDNESS. On December 30, 1998, CAC, a wholly owned subsidiary
of Parent, loaned the Company $50 million at a 7.38% interest rate pursuant to
an unsecured subordinated redeemable term note (the "Note"), which requires
repayment on December 31, 2010. The Note calls for interest payments that are
not made by the Company when due to be capitalized, up to an amount equivalent
to eight interest payments. Further past due interest or any past due portion of
the loan principal is to accrue interest at a rate of 9.38%. A change in control
of the Company is not an event of default under the terms of the Note, as long
as the change involves transfer of securities of the Company to a majority-owned
affiliate of Suez. The indebtedness evidenced by the Note is expressly
subordinate to all senior debt of the Company. The Note may be redeemed at the
option of CAC from the proceeds of any public or private offering of equity by
the Company.
In addition, on January 19, 2000, Parent loaned the Company $16 million at
an interest rate of LIBOR plus 2.25% pursuant to an unsecured senior promissory
note. The note is due and payable on March 31, 2000. See "--Background of the
Offer and Merger; Contacts with the Company."
14. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO HOLDERS WHOSE SHARES ARE PURCHASED PURSUANT TO THE OFFER
OR WHOSE SHARES ARE CONVERTED INTO THE RIGHT TO RECEIVE CASH IN THE MERGER. THE
SUMMARY IS BASED ON THE PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), APPLICABLE CURRENT AND PROPOSED UNITED STATES TREASURY
REGULATIONS ISSUED THEREUNDER, JUDICIAL AUTHORITY AND ADMINISTRATIVE RULINGS AND
PRACTICE, ALL OF WHICH ARE SUBJECT TO CHANGE, POSSIBLY WITH RETROACTIVE EFFECT,
AT ANY TIME AND, THEREFORE, THE FOLLOWING STATEMENTS AND CONCLUSIONS COULD BE
ALTERED OR MODIFIED. THE DISCUSSION DOES NOT ADDRESS HOLDERS OF SHARES IN WHOSE
HANDS SHARES ARE NOT CAPITAL ASSETS, NOR DOES IT ADDRESS HOLDERS WHO HOLD SHARES
AS PART OF A HEDGING, "STRADDLE," CONVERSION OR OTHER INTEGRATED TRANSACTION, OR
WHO RECEIVED SHARES UPON CONVERSION OF SECURITIES OR EXERCISE OF WARRANTS OR
OTHER RIGHTS TO ACQUIRE SHARES OR PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK
OPTIONS OR OTHERWISE AS COMPENSATION, OR TO HOLDERS OF SHARES WHO ARE IN SPECIAL
TAX SITUATIONS (SUCH AS INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, FINANCIAL
INSTITUTIONS, UNITED STATES EXPATRIATES OR NON-U.S. PERSONS). FURTHERMORE, THE
DISCUSSION DOES NOT ADDRESS THE TAX TREATMENT OF HOLDERS WHO EXERCISE
DISSENTERS' RIGHTS IN THE MERGER, NOR DOES IT ADDRESS ANY ASPECT OF FOREIGN,
STATE OR LOCAL TAXATION OR ESTATE AND GIFT TAXATION.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR GENERAL
INFORMATIONAL PURPOSES ONLY. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH
HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE THE
APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH STOCKHOLDER AND THE
PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION
AND EFFECT OF STATE, LOCAL AND OTHER INCOME TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for federal income tax purposes under the Code (and also may
be a taxable transaction under applicable state, local, foreign and other income
tax laws). In general, for federal income tax purposes, a holder of Shares will
recognize gain or loss in an amount equal to the difference between its adjusted
tax basis in the Shares sold pursuant to the Offer or converted into the right
to receive cash in the Merger and the amount of cash received therefor. Gain or
loss must be determined separately for each block of Shares (i.e., Shares
acquired at the same cost in a single transaction) sold pursuant to the Offer or
converted to cash in the Merger. Such gain or loss will be capital gain or loss
and will be long-term gain or loss if, on the date of sale (or, if applicable,
the Effective Time), the Shares were held for more than one year.
36
Under the United States federal income tax backup withholding rules,
payments in connection with the Offer or the Merger may be subject to "backup
withholding" at a rate of 31%. In order to avoid backup withholding, each
tendering stockholder, unless an exemption applies, must provide the Depositary
with such stockholder's correct taxpayer identification number and certify that
such stockholder is not subject to such backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. Backup withholding is
not an additional tax but merely an advance payment, which may be refunded to
the extent it results in an overpayment of tax. Certain persons generally are
entitled to exemption from backup withholding, including corporations, financial
institutions and certain foreign individuals. Each stockholder should consult
with such holder's own tax advisor as to such holder's qualification for
exemption from backup withholding and the procedure for obtaining such
exemption.
All stockholders surrendering Shares pursuant to the Offer should complete
and sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to Purchaser and the Depositary). Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
15. FEES AND EXPENSES
The following is an estimate of expenses to be incurred in connection with
the Offer and the Merger. The fees and expenses of CSFB are also discussed in
"--Opinion of the Special Committee's Financial Advisor," and the fees and
expenses of Lazard Freres are also discussed in "--Analysis of Financial Advisor
to Parent." The Merger Agreement provides that all costs and expenses incurred
in connection with the Offer and the Merger will be paid by the party incurring
such costs and expenses, except in certain circumstances where Parent or the
Company is required to reimburse the other party for its out-of-pocket expenses.
See "--The Transaction Documents; The Merger Agreement--Fees and Expenses."
The following table presents the estimated fees and expenses to be incurred
in connection with the Offer and the Merger:
Financial Advisors Fees..................................... $2,850,000
Legal Fees and Expenses..................................... 1,000,000
Printing and Mailing........................................ 125,000
Filing Fees................................................. 34,000
Depositary Fees............................................. 20,000
Information Agent Fees...................................... 16,000
Special Committee Fees and Expenses......................... 125,000
Miscellaneous............................................... 200,000
----------
Total................................................. $4,370,000
==========
37
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for any and all Shares
validly tendered prior to the Expiration Date and not withdrawn in accordance
with the procedures set forth below in "--Withdrawal Rights" as soon as
practicable after the Expiration Date. The term "Expiration Date" means 12:00
Midnight, New York City time, on March 24, 2000 unless and until Purchaser, in
its sole discretion (but subject to the terms of the Merger Agreement), shall
have extended the period of time during which the Offer is open, in which event
the term "Expiration Date" shall mean the latest time and date at which the
Offer, as so extended by Purchaser, shall expire.
The Offer is subject to certain conditions set forth in "--Conditions of the
Offer." If the Offer Conditions are not satisfied or any of the events specified
in "--Conditions of the Offer" have occurred or are determined by Purchaser to
have occurred prior to the Expiration Date, Purchaser, subject to the terms of
the Merger Agreement, expressly reserves the right (but is not obligated) to
(i) terminate the Offer and not accept for payment any Shares and return all
tendered Shares to tendering stockholders, (ii) waive all the unsatisfied
conditions and, subject to complying with the terms of the Merger Agreement and
the applicable rules and regulations of the Commission, accept for payment and
pay for all Shares validly tendered prior to the Expiration Date and not
theretofore withdrawn, (iii) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (iv) amend the Offer.
Subject to the terms of the Merger Agreement, the applicable rules and
regulations of the Commission and applicable law, Purchaser expressly reserves
the right, in its sole discretion, at any time and from time to time, to waive
any Offer Condition or otherwise amend the Offer in any respect by giving oral
or written notice of such waiver or amendment to the Depositary.
In the Merger Agreement, Purchaser has agreed that it will not, without the
prior consent of the Company, extend the Offer if all of the Offer Conditions
are satisfied or waived, except that Purchaser may, without the consent of the
Company, extend the Offer: (i) if at the then scheduled Expiration Date of the
Offer any of the Offer Conditions shall not have been satisfied or waived, until
such time as all such conditions shall have been satisfied or waived; (ii) for
any period required by any statute or rule, regulation, interpretation or
position of the Commission applicable to the Offer; (iii) for any period
required by applicable law in connection with an increase in the consideration
to be paid pursuant to the Offer; and (iv) from time to time, for an aggregate
period of not more than ten business days (for all such extensions under this
clause (iv)) beyond the latest expiration date that would be permitted under
clause (i), (ii) or (iii) of this sentence. However, Parent will not extend the
Offer if at the then scheduled Expiration Date all of the Offer Conditions have
been satisfied, regardless of the number of Shares tendered (and notwithstanding
the provision in the Merger Agreement permitting Purchaser to extend the Offer
for up to 10 business days). In addition, Purchaser and Parent have agreed that,
without the prior written consent of the Company, no changes may be made that
(i) reduce the maximum number of Shares subject to the Offer, (ii) decrease the
Offer Price, (iii) change the form of consideration payable in the Offer, or
(iv) amend or modify the Offer Conditions in any manner adverse to the holders
of Shares. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer. Tendering stockholders will continue
to have the right to withdraw any tendered Shares during such extension. See
"--Withdrawal Rights." Under no circumstances will interest be paid on the
purchase price for tendered Shares, whether or not the Offer is extended.
Any such extension, delay, termination, waiver or amendment will be
followed, as promptly as practicable, by public announcement thereof, with such
announcement in the case of an extension to be made no later than 9:00 a.m.,
Eastern time, on the next business day after the previously scheduled Expiration
Date in accordance with the public announcement requirements of Rule 14e-1 of
the Exchange
38
Act. Subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1
under the Exchange Act, which require that material changes be promptly
disseminated to stockholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which Purchaser may choose to
make any public announcement, Purchaser will have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Jones News Service or as otherwise may be
required by applicable law.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material Offer Condition,
Purchaser will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following material changes in the terms of the offer or
information concerning the Offer, other than a change in price or a change in
the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in price or a change in the
percentage of securities sought, a minimum period of ten business days is
generally required to allow for adequate dissemination to stockholders and
investor response.
Pursuant to Rule 14d-11 under the Exchange Act, Purchaser may, subject to
certain conditions, provide a subsequent offering period of from three business
days to twenty business days in length following the purchase of Shares on the
Expiration Date (the "Subsequent Offering Period"). Purchaser currently intends
to provide a Subsequent Offering Period of at least three days and, if Parent
and Purchaser own less than 90% of the outstanding Shares following expiration
of the initial offering period and the purchase of all Shares tendered pursuant
to the Offer during that period and the first three days of the subsequent
Offering Period, Purchaser will extend the Subsequent Offering Period until the
earlier of (i) twenty business days from the Expiration Date and (ii) the time
at which Parent and Purchaser become the owner of at least 90% of the
outstanding Shares so that a Short-Form Merger can be effected. A Subsequent
Offering Period is an additional period of time, following the expiration of the
Offer and the purchase of Shares in the Offer, during which stockholders may
tender Shares that had not been purchased in the Offer. A Subsequent Offering
Period is not an extension of the Offer which already will have been completed.
During a Subsequent Offering Period, tendering stockholders will not have
withdrawal rights and Purchaser will promptly purchase and pay for any Shares
tendered at the same price paid in the Offer. Rule 14d-11 provides that
Purchaser may provide a Subsequent Offering Period so long as, among other
things, (i) the initial twenty business days period of the Offer has expired;
(ii) the Purchaser offers the same form and amount of consideration for Shares
in the Subsequent Offering Period as in the Offer; (iii) Purchaser accepts and
promptly pays for all Shares tendered during the Offer prior to the Expiration
Date; (iv) Purchaser announces the results of the Offer, including the
approximate number and percentage of Shares deposited in the Offer, no later
than 9:00 a.m. Eastern time on the next business day after the Expiration Date
and immediately begins the Subsequent Offering Period; and (v) Purchaser
immediately accepts and promptly pays for Shares as they are tendered during the
Subsequent Offering Period. In the event Purchaser elects to extend the
Subsequent Offering Period, it will notify stockholders of the Company
consistent with the requirements of the Commission.
IF SHARES ARE PURCHASED ON THE EXPIRATION DATE, PURCHASER WILL INCLUDE A
SUBSEQUENT OFFERING PERIOD FOR A PERIOD OF THREE DAYS. PURCHASER WILL EXTEND THE
SUBSEQUENT OFFERING PERIOD UNTIL THE EARLIER OF (i) THAT TIME AT WHICH PARENT
AND PURCHASER OWN AT LEAST 90% OF THE OUTSTANDING SHARES AND (ii) TWENTY
BUSINESS DAYS FROM THE EXPIRATION DATE. PURSUANT TO RULE 14D-7 UNDER THE
EXCHANGE ACT, NO WITHDRAWAL RIGHTS APPLY TO SHARES TENDERED DURING THE
SUBSEQUENT OFFERING PERIOD. THE OFFER PRICE WILL BE PAID TO SHAREHOLDERS
TENDERING SHARES IN THE SUBSEQUENT OFFERING PERIOD.
39
The Company has provided Purchaser with the Company's stockholder lists and
security position listings in respect of the Shares for the purpose of
disseminating this Offer to Purchase, the Letter of Transmittal and other
relevant materials to stockholders. This Offer to Purchase, the Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares whose names appear on the Company's list of stockholders and will be
furnished, for subsequent transmittal to beneficial owners of Shares, to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's list of
stockholders or, where applicable, who are listed as participants in the
security position listing of The Depository Trust Company.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of the Offer as so
extended or amended), Purchaser will purchase, by accepting for payment, and
will pay for, all Shares validly tendered prior to the Expiration Date (and not
properly withdrawn in accordance with "--Withdrawal Rights") as promptly as
practicable after the Expiration Date. Subject to applicable rules of the
Commission and the terms of the Merger Agreement, Purchaser expressly reserves
the right, in its discretion, to delay acceptance for payment of, or payment
for, Shares in order to comply, in whole or in part, with any applicable law.
See "--Terms of the Offer," and "--Certain Legal Matters--Regulatory Approvals."
The reservation by Purchaser of the right to delay the acceptance or
purchase of, or payment for, the Shares is subject to the provisions of Rule
14e-1(c) under the Exchange Act, which requires the Purchaser to pay the
consideration offered or to return the Shares deposited by, or on behalf of,
stockholders, promptly after the termination or withdrawal of the Offer.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the certificates
evidencing such Shares (the "Certificates") or timely confirmation of a book-
entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at The Depositary Trust Company (the "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in "--Procedures for Tendering
Shares", (ii) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed with any required signature
guarantees, or an Agent's Message (as defined below) in connection with a
book-entry transfer and (iii) any other documents required to be included with
the Letter of Transmittal under the terms and subject to the conditions thereof
and of this Offer to Purchase.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from a participant in the Book-Entry Transfer
Facility tendering the Shares that such participant has received and agrees to
be bound by the terms of the Letter of Transmittal and that Purchaser may
enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Upon the terms
and subject to the conditions of the Offer, payment for Shares accepted pursuant
to the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payments from Purchaser and transmitting payments to such tendering
stockholders whose Shares have been accepted for payment.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID BY PARENT OR PURCHASER, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT OR
EXTENSION OF THE EXPIRATION DATE.
If any validly tendered Shares are not accepted for payment for any reason
pursuant to the terms and conditions of the Offer, or if Certificates are
submitted evidencing more Shares than are tendered,
40
certificates evidencing Shares not purchased will be returned, without expense,
to the tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure set forth in "--Procedures for Tendering Shares", such
Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable following the expiration or termination of
the Offer.
IF, PRIOR TO THE EXPIRATION DATE, PURCHASER INCREASES THE CONSIDERATION TO
BE PAID PER SHARE PURSUANT TO THE OFFER, PURCHASER WILL PAY SUCH INCREASED
CONSIDERATION FOR ALL SUCH SHARES PURCHASED PURSUANT TO THE OFFER, WHETHER OR
NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN CONSIDERATION.
Purchaser reserves the right to assign to Parent, or to any other direct or
indirect wholly owned subsidiary of Suez, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but any such assignment
will not relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES
VALID TENDER OF SHARES. In order for Shares to be validly tendered pursuant
to the Offer, a stockholder must, prior to the Expiration Date, either
(i) deliver to the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase (a) a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees, (b) the Certificates representing Shares to be tendered
and (c) any other documents required to be included with the Letter of
Transmittal under the terms and subject to the conditions thereof and of this
Offer to Purchase, (ii) cause such stockholder's broker, dealer, commercial bank
or trust company to tender applicable Shares pursuant to the procedures for
book-entry transfer described below or (iii) comply with the guaranteed delivery
procedures described below.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make book-entry delivery of Shares by (i) causing such securities to be
transferred in accordance with the Book-Entry Transfer Facility's procedures
into the Depositary's account and (ii) causing the Letter of Transmittal to be
delivered to the Depositary by means of an Agent's Message. Although delivery of
Shares may be effected through book-entry transfer, either the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, together with any required signature guarantees, or an Agent's
Message in lieu of the Letter of Transmittal, and any other required documents,
must, in any case, be transmitted to and received by the Depositary prior to the
Expiration Date at one of its addresses set forth on the back cover of this
Offer to Purchase, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. Delivery of documents or instructions to
the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures does not constitute delivery to the Depositary.
SIGNATURE GUARANTEE. All signatures on a Letter of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agents
Medallion Program, or by any other firm which is a bank, broker, dealer, credit
union or savings association (each of the foregoing being referred to as an
"Eligible Institution" and collectively as "Eligible Institutions"), unless the
Shares tendered thereby are tendered
41
(i) by the registered holder of Shares who has not completed the box labeled
"Special Delivery Instructions" or the box labeled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 to the Letter of Transmittal.
If a Certificate is registered in the name of a person other than the signer
of the Letter of Transmittal, or if payment is to be made, or a Certificate not
accepted for payment or not tendered is to be returned to, a person other than
the registered holder(s), then the Certificate must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Certificate, with the signature(s) on such
certificate or stock powers guaranteed as described above. See Instructions 1, 5
and 7 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Certificates are not immediately available or
time will not permit all required documents to reach the Depositary on or prior
to the Expiration Date or the procedures for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all the
following guaranteed delivery procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary as provided below prior to the Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer, together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required
signature guarantee (or, in the case of a book-entry transfer, a Book-Entry
Confirmation along with an Agent's Message) and any other documents required
by such Letter of Transmittal, are received by the Depositary within three
Trading Days after the date of execution of the Notice of Guaranteed
Delivery. A "Trading Day" is any day on which the New York Stock Exchange is
open for business.
Any Notice of Guaranteed Delivery may be delivered by hand, transmitted by
facsimile transmission or mailed to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
OTHER REQUIREMENTS. Notwithstanding any other provision hereof, payment for
Shares accepted for payment pursuant to the Offer will, in all cases, be made
only after timely receipt by the Depositary of (i) certificates evidencing such
Shares or a Book-Entry Confirmation of the delivery of such Shares (unless
Purchaser elects, in its sole discretion, to make payment for such Shares
pending receipt of the Certificates or a Book-Entry Confirmation, if available,
with respect to such Certificates), (ii) a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES
TO BE PAID BY PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
TENDER CONSTITUTES AN AGREEMENT. The valid tender of Shares pursuant to one
of the procedures described above will constitute a binding agreement between
the tendering stockholder and Purchaser on the terms and subject to the
conditions of the Offer.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including, but not limited to, time of receipt) and acceptance for
payment of any tendered Shares pursuant to any of the procedures described above
will be determined by Purchaser, in its sole discretion, whose determination
will be final and binding on all parties. Purchaser reserves the absolute right
to reject any or all tenders of any Shares determined by it not to be in proper
form or if the acceptance for payment of, or payment for, such Shares may, in
the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the
absolute right, in its
42
sole discretion, to waive any of the Offer Conditions (subject to the terms of
the Merger Agreement) or any defect or irregularity in any tender with respect
to Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of Suez, Parent, Purchaser or any of their
respective affiliates, the Depositary, the Information Agent or any other person
or entity will be under any duty to give any notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal (or delivering
an Agent's Message) as set forth above, a tendering stockholder irrevocably
appoints each designee of Purchaser as such stockholder's attorney-in-fact and
proxy, with full power of substitution, to vote in such manner as such
attorney-in-fact and proxy (or any substitute thereof) shall deem proper in its
sole discretion, and to otherwise act (including pursuant to written consent) to
the full extent of such stockholder's rights with respect to the Shares tendered
by such stockholder and accepted for payment by Purchaser (and any and all
dividends, distributions, rights or other securities issued or issuable in
respect of such Shares on or after January 1, 2000). All such proxies shall be
considered coupled with an interest in the tendered Shares and shall be
irrevocable. This appointment will be effective if, when, and only to the extent
that, Purchaser accepts such Shares for payment pursuant to the Offer. Upon such
acceptance for payment, all prior proxies given by such stockholder with respect
to such Shares and other securities will, without further action, be revoked,
and no subsequent proxies may be given (and, if given, will not be deemed
effective). The designees of Purchaser will, with respect to the Shares and
other securities for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual, special, adjourned or postponed
meeting of the Company's stockholders, by written consent in lieu of any such
meeting or otherwise. Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon Purchaser's acceptance
for payment of such Shares, Purchaser must be able to exercise all rights
(including, without limitation, all voting rights) with respect to such Shares
and receive all dividends and distributions.
BACKUP WITHHOLDING. Under United States federal income tax law, the amount
of any payments made by the Depositary to stockholders (other than corporate and
certain other exempt stockholders) pursuant to the Offer may be subject to
backup withholding tax at a rate of 31%. To avoid such backup withholding tax
with respect to payments made pursuant to the Offer, a non-exempt, tendering
stockholder must provide the Depositary with such stockholder's correct taxpayer
identification number and certify under penalties of perjury that such
stockholder is not subject to backup withholding tax by completing the
Substitute Form W-9 included as part of the Letter of Transmittal. If backup
withholding applies with respect to a stockholder or if a stockholder fails to
deliver a completed Substitute Form W-9 to the Depositary or otherwise establish
an exemption, the Depositary is required to withhold 31% of any payments made to
such stockholder. See "SPECIAL FACTORS--Certain United States Federal Income Tax
Consequences" of this Offer to Purchase and the information set forth under the
heading "Important Tax Information" contained in the Letter of Transmittal.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer, may
also be withdrawn at any time after April 27, 2000, or at such later time as may
apply if the Offer is extended.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares or is unable to accept Shares for payment pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
43
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described below. Any such
delay will be an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn, and the name of the registered
holder of such Shares, if different from that of the person who tendered such
Shares. If Certificates evidencing Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such Certificates, the serial numbers shown on such Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such Shares have been
tendered for the account of an Eligible Institution. Shares tendered pursuant to
the procedure for book-entry transfer as set forth in "--Procedures for
Tendering Shares" may be withdrawn only by means of the withdrawal procedures
made available by the Book-Entry Transfer Facility, must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares and must otherwise comply with the Book-Entry Transfer
Facility's procedures.
Withdrawals of tendered Shares may not be rescinded without Purchaser's
consent and any Shares properly withdrawn will thereafter be deemed not validly
tendered for purposes of the Offer. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by
Purchaser in its sole discretion, which determination will be final and binding.
None of Suez, Parent, Purchaser or any of their affiliates, the Depositary, the
Information Agent, the Dealer Manager or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Any Shares properly withdrawn may be re-tendered at any time prior to the
Expiration Date by following any of the procedures described in "--Procedures
for Tendering Shares."
5. PRICE RANGE OF SHARES
The primary market for the Shares is the New York Stock Exchange. The ticker
symbol for the Shares is "TGN." The following table sets forth, for the periods
indicated, the high and low sales prices per share of Common Stock on the New
York Stock Exchange as reported by the Bloomberg Professional Service and the
amount of dividends paid on the Common Stock:
HIGH LOW DIVIDEND AMOUNT
-------- -------- ---------------
1998:
First Quarter............................................. $19 15/16 $14 13/16 $0.035
Second Quarter............................................ 15 1/8 12 1/8 $0.035
Third Quarter............................................. 13 15/16 9 3/4 $0.035
Fourth Quarter............................................ 15 5/16 11 5/16 $0.035
1999:
First Quarter............................................. $16 13/16 $11 3/8 $0.035
Second Quarter............................................ 19 7/16 13 5/8 $0.035
Third Quarter............................................. 24 3/16 17 1/8 $0.035
Fourth Quarter............................................ 24 16 $0.035
2000:
First Quarter (through February 24, 2000)................. $23 7/16 $16 1/4 --
On September 17, 1999, the last full trading day prior to the public
announcement of the $22 Offer, the reported closing sales prices of the Common
Stock on the New York Stock Exchange was $19.25 per Share. On January 18, 2000,
the last full trading day prior to the public announcement of the execution of
the Merger Agreement, the closing sales price of the Common Stock reported on
the New York Stock
44
Exchange was $17.00 per Share. On February 24, 2000, the last practicable
trading day prior to the date of this Offer to Purchase, the last reported sales
price of the Common Stock on the New York Stock Exchange was $23.00 per share.
Stockholders are urged to obtain current market quotations for the Common Stock.
6. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the Merger Agreement, without Parent's written consent, the
Company will not, and will cause each of its subsidiaries not to, (i) with
certain exceptions, issue, sell or pledge any shares of its capital stock or
other ownership interest in the Company or any subsidiary, or any securities
convertible into or exchangeable for any such shares or ownership interest, or
any rights, warrants or options to acquire or with respect to any such shares of
capital stock, ownership interest, or convertible or exchangeable securities (or
derivative instruments in respect of the foregoing); (ii) effect any stock split
or otherwise change its capitalization as it exists on the date hereof, or
directly or indirectly redeem, purchase or otherwise acquire any shares of its
capital stock or capital stock of any subsidiary of the Company; or
(iii) declare, set aside or pay any dividend or make any other distribution or
payment with respect to any shares of its capital stock or other ownership
interests (other than any such payments to the Company by any of its
subsidiaries).
7. CERTAIN INFORMATION CONCERNING THE COMPANY
THE COMPANY. The information concerning the Company contained in this Offer
to Purchase, including financial information, has been taken from or is based
upon publicly available documents and records on file with the Commission and
other public sources. None of Suez, Parent, Purchaser or any of their affiliates
assumes any responsibility for the accuracy or completeness of the information
concerning the Company contained in such documents and records or for any
failure by the Company to disclose events which may have occurred or may affect
the significance or accuracy of any such information but which are unknown to
them.
The Company develops, owns and operates community energy systems and
cogeneration facilities. The Company currently operates fourteen district energy
systems serving urban customers and sixteen single customer
industrial/commercial sites. The Company's major customers include industrial
plants, electric utilities, commercial and office buildings, government
buildings, colleges and universities, hospitals, residential complexes, hotels,
sports arenas and convention centers. The Company is a Delaware corporation. The
address of the Company's principal executive offices is One Water Street, White
Plains, New York 10601. The telephone number of the Company at such offices is
(914) 286-6600.
FINANCIAL INFORMATION. Certain financial information relating to the
Company is hereby incorporated by reference to the audited financial statements
for the Company's 1998 and 1997 fiscal years set forth in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 (the "1998
10-K"), beginning on page F-1 of such reports; and (ii) the sections of the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999
(the "September 1999 10-Q") set forth under the following captions: (a) "The
Consolidated Statements of Operations for the Three Months and Nine Months Ended
September 30, 1999 and 1998 (Unaudited)", (b) "Consolidated Balance Sheets as of
September 30, 1999 (Unaudited) and December 31, 1998", (c) "Consolidated
Statements of Cash Flows for the Nine Months Ended September 30, 1999 and 1998
(Unaudited)" and (d) "Notes to Consolidated Financial Statements (Unaudited)."
These reports may be inspected at, and copies may be obtained from, the same
places and in the manner set forth below under "--Available Information," below.
Set forth below is certain selected consolidated financial information
relating to the Company and its subsidiaries which has been derived from the
financial statements contained in the 1998 10-K and the September 1999 10-Q.
More comprehensive financial information is included in these reports and other
documents filed by the Company with the Commission. The financial information
that follows is qualified in its entirety by reference to these reports and
other documents, including the financial statements and related notes contained
therein.
45
TRIGEN ENERGY CORPORATION
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
($ IN THOUSANDS EXCEPT PER SHARE DATA)
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------- -------------------
1998 1997 1999 1998
-------- -------- -------- --------
(UNAUDITED)
STATEMENT OF OPERATIONS:
Revenues.......................................... $242,394 $240,651 $204,052 $176,545
Operating expenses
Fuel and consumables............................ 95,957 114,168 84,860 74,012
Production and operating costs.................. 53,840 47,086 39,783 36,068
Depreciation.................................... 19,780 16,021 18,312 17,401
General and administrative...................... 40,994 34,633 30,588 27,785
-------- -------- -------- --------
Total operating expenses.......................... 210,571 211,908 173,543 155,266
-------- -------- -------- --------
Operating income.................................. 31,823 28,743 30,509 21,279
Other income (expense)
Interest expense................................ (23,742) (18,976) (18,829) (17,613)
Other income, net............................... 5,570 2,448 15,397 4,931
Earnings before minority interests, income taxes
and extraordinary item and cumulative effect of
a change in an accounting principle............. 13,651 12,215 27,077 8,597
Minority interests in earnings of subsidiaries.... (2,519) (3,699) 2,390 2,374
Earnings before income taxes and extraordinary
item and cumulative effect of a change in an
accounting principle............................ 11,132 8,516 24,687 6,223
Income taxes...................................... 4,575 3,491 10,220 2,676
-------- -------- -------- --------
Earnings before extraordinary item and cumulative
effect of a change in an accounting principle... 6,557 5,025 14,467 3,547
Extraordinary loss from extinguishment of debt,
net of income tax benefit....................... (299) -- -- (299)
-------- -------- -------- --------
Cumulative Effect of a Change in an Accounting
Principle....................................... -- -- (4,903) --
Net Earnings...................................... $ 6,258 $ 5,025 $ 9,564 $ 3,248
======== ======== ======== ========
PER SHARE:
BASIC EARNINGS PER COMMON SHARE
Before extraordinary item and cumulative effect of
a change in an accounting principle............. $ .55 $ .42 $ 1.20 $ .30
Extraordinary loss................................ (.03) -- -- (.03)
Cumulative effect of a change in an accounting
principle....................................... -- -- (.41) --
-------- -------- -------- --------
Net Earnings...................................... $ .52 $ .42 $ .79 $ .27
======== ======== ======== ========
DILUTED EARNINGS PER COMMON SHARE
Before extraordinary item and cumulative effect of
a change in an accounting principle............. $ .55 $ .41 $ 1.20 $ .30
Extraordinary loss................................ (.03) -- -- (.03)
Cumulative effect of a change in an accounting
principle....................................... -- -- (.41) --
-------- -------- -------- --------
Net earnings...................................... $ .52 $ .41 $ .79 $ .27
======== ======== ======== ========
Dividends paid.................................... .14 .14 .105 .105
46
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------- -------------------
1998 1997 1999 1998
-------- -------- -------- --------
(UNAUDITED)
BALANCE SHEET DATA:
Working capital (deficit)......................... $ (9,543) $ (2,095) $ 4,236 $ (3,915)
Property, plant and equipment, net................ 442,755 388,448 484,768 433,389
Current assets.................................... 66,086 69,687 81,891 60,969
Noncurrent assets................................. 109,315 67,834 128,698 103,167
Total assets...................................... 618,156 525,969 695,357 597,525
Current liabilities............................... 75,629 71,782 77,655 64,884
Noncurrent liabilities............................ 394,599 308,705 459,132 385,192
Stockholders' equity.............................. 147,928 145,482 158,570 147,449
OTHER DATA
Ratio of earnings to fixed charges................ 1.2x 1.4x 1.7x 1.1x
Book value per share.............................. $ 12.32 $ 11.99 $ 13.12 $ 12.28
AVAILABLE INFORMATION. The Company is subject to the information and
reporting requirements of the Exchange Act and is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities, any material interests
of such persons in transactions with the Company and other matters is required
to be disclosed in reports filed with the Commission. These reports and other
information should be available for inspection at the public reference
facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and also should be available for inspection and copying
at prescribed rates at regional offices of the Commission located at Seven World
Trade Center, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of this material may also be obtained by mail,
upon payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. Electronic filings
filed through the Commission's Electronic Data Gathering, Analysis and
Retrieval, or EDGAR, system, including those made by or in respect of the
Company, are publicly available through the Commission's home page on the
Internet at http://www.sec.gov.
On February 10, 2000, the Company announced its results for the fourth
quarter of 1999 and for the year ended December 31, 1999. According to the
announcement, the Company had the following results:
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
------------------- -------------------
1999 1998* 1999 1998
-------- -------- -------- --------
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenues.............................................. $76,368 $65,849 $280,420 $242,394
Operating Income...................................... 9,042 10,544 39,551 31,823
Net Earnings.......................................... 1,641 3,010 11,205 6,258
Net Earnings per Share (basic)........................ 0.14 0.25 0.93 0.52
Net Earnings per Share (diluted)...................... 0.13 0.25 0.92 0.52
- ------------------------
* Restated to reflect a change in accounting policy for interim reporting for
certain operating costs from an average costing method to an actual costing
method as of January 1, 1998.
8. CERTAIN INFORMATION CONCERNING PURCHASER, PARENT, SUEZ, CAC AND SOCIETE
GENERALE
PURCHASER. Purchaser, a newly incorporated Delaware corporation, has not
conducted any business other than in connection with the Offer and the Merger
Agreement. All of the issued and outstanding shares of capital stock of
Purchaser are held by CAC. The principal address of Purchaser is c/o Elyo, 235
47
Avenue Georges Clemenceau BP 4601 92746 Nanterre Cedex, France. The telephone
number is 011-331-41-20-10-10.
PARENT. Parent, a SOCIETE ANONYME organized and existing under the laws of
the Republic of France, is a direct, wholly owned subsidiary of Societe
Generale. The principal business of Parent is producing power and services,
including cogeneration, district heating and cooling systems, waste-to-energy,
electricity distribution and associated production, and operation and
maintenance. The principal executive offices of Parent are located at 235 Avenue
Georges Clemenceau BP 4601 92746 Nanterre Cedex, France. The telephone number is
011-331-41-20-10-10.
SUEZ. Suez Lyonnaise des Eaux is a publicly-held SOCIETE ANONYME organized
and existing under the laws of the Republic of France. The principal business of
Suez is operating private infrastructure services in more than 120 countries,
providing electricity and natural gas, waste treatment, communications services,
and water services and maintains interests in construction, and capital
investments. Suez was formed as a result of the 1997 merger of Compagnie de Suez
(builder of the Suez Canal) and Lyonnaise des Eaux. The principal executive
offices of Suez are located at 1, rue d'Astorg, 75008 Paris, France. The
telephone number is 011-33-1-40-06-64-00.
CAC. Cofreth American Corporation, a Delaware corporation, is a direct,
wholly owned subsidiary of Parent which, as of the date of this Offer to
Purchase, holds 4,870,670 Shares. The principal business of CAC is holding the
Shares on behalf of Parent. The principal address of CAC is c/o Trigen Energy
Corporation, One Water Street, White Plains, New York 10601.
SOCIETE GENERALE. Societe Generale de Belgique, a SOCIETE ANONYME A
DIRECTOIRE ET CONSEIL DE SURVEILLANCE organized and existing under the laws of
the Republic of Belgium, is a direct subsidiary of Suez. The principal business
of Societe Generale is to hold Suez's equity participation in financial and
energy-related businesses. The principal executive offices of Societe Generale
are located at Rue Royale 30, B-100 Brussels, Belgium.
The name, business address, citizenship, present principal occupation and
employment history for the past five years of each of the directors and
executive officers of Purchaser, Parent and Suez are set forth in Schedule I to
this Offer to Purchase.
During the last five years, none of Purchaser, Parent, Suez, CAC, Societe
Generale or, to the best of their knowledge, any of the persons listed in
Schedule I to this Offer to Purchase (i) has been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) or (ii) was a
party to any judicial or administrative proceeding that resulted in a judgment,
decree or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.
Except as described in this Offer to Purchase (i) none of Purchaser, Parent,
Suez, CAC, Societe Generale or, to the best of their knowledge, any of the
persons listed in Schedule I to this Offer to Purchase, or any associate or
majority-owned subsidiary of Suez, Parent, Purchaser or the Company,
beneficially owns or has any right to acquire, directly or indirectly, any
equity securities of the Company and (ii) none of Purchaser, Parent, Suez, CAC,
Societe Generale or to the best of their knowledge, any of the persons or
entities referred to above has effected any transaction in such equity
securities during the past 60 days. Suez, Parent and Purchaser disclaim
beneficial ownership of any Common Stock owned by any pension plans of Suez,
Parent, Purchaser or any affiliate of Suez, Parent or Purchaser.
Except as described in this Offer to Purchase, none of Purchaser, Parent,
Suez, CAC, Societe Generale or, to the best of their knowledge, any of the
persons listed in Schedule I to this Offer to Purchase has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option
48
arrangements, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding of proxies. Except as set forth in this Offer to Purchase,
since January 1, 1998, none of Purchaser, Parent, Suez, CAC, Societe Generale or
to the best of their knowledge, any of the persons listed on Schedule I to this
Offer to Purchase has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
January 1, 1998, there have been no contacts, negotiations or transactions
between any of Purchaser, Parent, Suez, CAC, Societe Generale or their
affiliates or, to the best of their knowledge, any of the persons listed in
Schedule I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
AVAILABLE INFORMATION. None of Purchaser, Parent, Suez, CAC or Societe
Generale is subject to the informational reporting requirements of the Exchange
Act, nor are any of them required to file reports and other information with the
Commission relating to its businesses, financial condition or other matters.
Except as otherwise disclosed in this Offer to Purchase, none of Purchaser,
Parent or Suez have made, or are making, any provision in connection with the
Offer or the Merger to grant unaffiliated security holders access to the files
of any of Purchaser, Parent or Suez.
9. SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon any financing arrangements. The amount of
funds required by Purchaser to purchase all of the outstanding Common Stock
pursuant to the Offer and to pay related fees and expenses is expected to be
approximately $178 million. Purchaser will obtain such funds from Parent. Parent
anticipates that it will obtain such funds from available credit lines and
financial support of the Parent Group.
The margin regulations promulgated by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") place restrictions on the amount of
credit that may be extended for the purposes of purchasing margin stock,
including if such credit is secured directly or indirectly by margin stock.
Purchaser believes that the financing of the acquisition of the Shares will be
in full compliance with the margin regulations.
10. EFFECT OF THE OFFER ON THE MARKET FOR THE COMMON STOCK; EXCHANGE ACT
REGISTRATION
MARKET FOR SHARES. The purchase of Shares pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and could adversely
affect the liquidity and market value of the remaining Shares held by the
public.
STOCK QUOTATION. Shares are traded primarily on the New York Stock
Exchange. According to published guidelines of the New York Stock Exchange, the
Shares might no longer be eligible for quotation on the New York Stock Exchange
if, among other things, the number of Shares publicly held was less than
1,100,000, there were fewer than 2,000 holders of round lots, the aggregate
market value of the publicly held Shares was less than $40,000,000, net tangible
assets were less than $40,000,000 and there were fewer than two registered and
active market makers for the Shares. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10 percent of the Shares
are not considered as being publicly held for this purpose. According to the
Company, as of January 27, 2000, there were 458 holders of record of Shares (not
including beneficial holders of Shares in street name), and as of January 27,
2000, there were 12,401,808 Shares outstanding.
If the Shares were to cease to be quoted on the New York Stock Exchange, the
market for the Shares could be adversely affected. It is possible that the
Shares would be traded or quoted on other securities exchanges or in the
over-the-counter market, and that price quotations would be reported by such
exchanges, or through Nasdaq or other sources. The extent of the public market
for the Shares and the
49
availability of such quotations would, however, depend upon the number of
stockholders and/or the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration under the Exchange Act may be terminated upon
application of the Company to the Commission if the Shares are neither listed on
a national securities exchange nor held by 300 or more holders of record.
Termination of registration under the Exchange Act would substantially reduce
the information required to be furnished by the Company to its stockholders and
to the Commission and would make certain provisions of the Exchange Act no
longer applicable to the Company, such as the short-swing profit recovery
provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a
proxy statement pursuant to Section 14(a) of the Exchange Act in connection with
stockholders' meetings, the related requirement of furnishing an annual report
to stockholders and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act may be impaired or eliminated. Parent intends to seek to cause
the Company to apply for termination of registration of the Common Stock under
the Exchange Act as soon after the consummation of the Offer as the requirements
for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities," as such
term is defined under the regulations of the Federal Reserve Board, which has
the effect, among other things, of allowing brokers to extend credit on the
collateral of the Shares. Depending upon factors similar to those described
above regarding listing and market quotations, it is possible that, following
the Offer, the Shares would no longer constitute "margin securities" for the
purposes of the margin regulations of the Federal Reserve Board and therefore
could no longer be used as collateral for loans made by brokers. In any event,
the Shares will cease to be "margin securities" if registration of the Shares
under the Exchange Act is terminated.
11. CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement,
Purchaser is not required to accept for payment or to pay for any shares of
Common Stock not theretofore accepted for payment or paid for, and may terminate
or amend the Offer if at any time on or after the date of the Merger Agreement
and before the acceptance of such Shares for payment or the payment therefor,
any of the following conditions exist or shall occur and remain in effect:
(a) there shall have been instituted, pending or threatened any
litigation by the Government of the United States or the Republic of France
or by any agency or instrumentality thereof or by any other third person
(including any individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization, entity or group
(as defined in the Exchange Act)) or nongovernmental entity that would be
reasonably likely to (i) restrict the acquisition by Parent or Purchaser (or
any of its affiliates) of Shares pursuant to the Offer or restrain, prohibit
or delay the making or consummation of the Offer or the Merger, (ii) make
the purchase of or payment for some or all of the Shares pursuant to the
Offer or the Merger illegal, (iii) impose limitations on the ability of
Parent or Purchaser (or any of their affiliates) effectively to acquire or
hold, or to require Parent, Purchaser or the Company or any of their
respective affiliates or subsidiaries to dispose of or hold separate, any
portion of their assets or the business of any one of them, (iv) impose
material limitations on the ability of Parent, Purchaser or their affiliates
to exercise full rights of ownership of
50
the shares of Common Stock purchased by it, including, without limitation,
the right to vote the shares purchased by it on all matters properly
presented to the stockholders of the Company, (v) limit or prohibit any
material business activity by Parent, Purchaser or any of their affiliates,
including, without limitation, requiring the prior consent of any person or
entity (including the Government of the United States of America and the
Republic of France, and any instrumentality thereof) to future transactions
by Parent, Purchaser or any of their affiliates (Parent and Purchaser
acknowledge that the regulatory nature of some of the Company's assets and
businesses may result in the limitation of Parent's and its affiliates in
certain utility-related areas) or (vi) make materially more costly (A) the
making of the Offer, (B) the acceptance for payment of, or payment for, some
or all of the Shares pursuant to the Offer, (C) the purchase of Shares
pursuant to the Offer or (D) the consummation of the Merger; or
(b) there shall have been a subsequent development in any action or
proceeding relating to the Company or any of its subsidiaries that would
(i) be reasonably likely to be materially adverse either to Parent and
Purchaser or to Company and its subsidiaries taken as a whole or (ii) make
materially more costly (A) the making of the Offer, (B) the acceptance for
payment of, or payment for, some or all of the Shares pursuant to the Offer,
(C) the purchase of Shares pursuant to the Offer or (D) the consummation of
the Merger; or
(c) there shall have been any action taken, or any law promulgated,
enacted, entered, enforced or deemed applicable to the Offer or the Merger
by any governmental entity that could directly or indirectly result in any
of the consequences referred to in subsection (a) above; or
(d) the Merger Agreement shall have been terminated in accordance with
its terms; or
(e) the Tender and Voting Agreement or the Casten Stock Purchase
Agreement shall not be in effect; or
(f) (i) any of the representations and warranties made by the Company in
the Merger Agreement that are qualified by materiality or Material Adverse
Effect shall not have been true and correct in all respects when made, or
shall thereafter have ceased to be true and correct in all respects as if
made at the scheduled or extended expiration of the Offer (except to the
extent that any such representation or warranty refers specifically to
another date, in which case such representation or warranty shall be true
and correct in all respects as of such other date), or the other
representations and warranties made by the Company in the Merger Agreement
shall not have been true and correct in all material respects when made, or
shall thereafter have ceased to be true and correct in all material respects
as if made at the scheduled or extended expiration of the Offer (except to
the extent that any such representation or warranty refers specifically to
another date, in which case such representation or warranty shall be true
and correct in all material respects as of such other date), or (ii) the
Company shall have breached or failed to comply in any material respect with
any of its obligations under the Merger Agreement; or
(g) Parent and the Special Committee shall have agreed that Parent will
terminate the Offer or postpone the acceptance for payment of or payment for
Shares thereunder; or
(h) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) a
declaration of any banking moratorium by federal or state authorities or any
suspension of payments in respect of banks or any limitation (whether or not
mandatory) imposed by federal or state authorities on the extension of
credit by lending institutions in the United States or the Republic of
France, (iii) any mandatory limitation by the federal government that has a
material adverse effect generally on the extension of credit by banks and
other financial institutions generally, (iv) a commencement of a war, armed
hostilities or any other international or national calamity directly or
indirectly involving the United States or the Republic of France, or (v) in
the case of any of the
51
foregoing existing at the time of the commencement of the Offer, in the sole
judgment of the Parent, a material acceleration or worsening thereof.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition and may be waived by Purchaser or Parent, in
whole or in part, at any time and from time to time in their discretion. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances, and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
12. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
GENERAL. Except as otherwise disclosed herein, neither Parent nor Purchaser
is aware of (i) any license or regulatory permit that appears to be material to
the business of the Company and its subsidiaries, taken as a whole, that might
be adversely affected by the acquisition of Shares by Purchaser pursuant to the
Offer or the Merger or otherwise or (ii) any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required for the acquisition or ownership of Shares by
Purchaser as contemplated herein. Should any such approval or other action be
required, Purchaser currently contemplates that it would seek such approval or
action. Purchaser's obligation under the Offer to accept for payment and pay for
Shares is subject to certain conditions. See "--Conditions of the Offer." While,
except as described in this Offer to Purchase, Purchaser does not currently
intend to delay the acceptance for payment of Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that any
such approval or action, if needed, would be obtained or would be obtained
without substantial conditions, that adverse consequences might not result to
the business of the Company, Suez, Parent or Purchaser or that certain parts of
the businesses of the Company, Suez, Parent or Purchaser might not have to be
disposed of in the event that such approvals were not obtained or any other
actions were not taken.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to the date the interested stockholder became
an interested stockholder, the board of directors of the corporation approved
either the business combination or the transaction in which the interested
stockholder became an interested stockholder. The Company has represented to
Parent and Purchaser in the Merger Agreement that the Board of Directors has
taken all necessary action so that the restrictions contained in Section 203 of
the DGCL applicable to a "business combination" will not apply to the execution,
delivery or performance of the Merger Agreement, the Offer, the Merger or the
transactions contemplated by the Merger Agreement or the Casten Stock Purchase
Agreement.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In EDGAR V. MITE CORP., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquirer from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme
52
Court was by its terms applicable only to corporations that had a substantial
number of holders in the state and were incorporated there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Purchaser does not believe that any state takeover statutes apply to the
Offer. Neither Parent nor Purchaser has currently complied with any state
takeover statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer or the Merger, Purchaser
might be required to file certain information with, or receive approvals from,
the relevant state authorities. In addition, if enjoined, Purchaser might be
unable to accept for payment any Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer and the Merger. In such case,
Purchaser may not be obligated to accept for payment any Shares tendered. See
"--Conditions of the Offer."
ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules that have been promulgated thereunder by the Federal
Trade Commission (the "FTC"), certain transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice and the FTC and certain waiting period requirements have
been satisfied. However, the acquisition of Shares by Purchaser pursuant to the
Offer is not subject to these requirements because Parent and its affiliates
currently owns in excess of 50% of the outstanding Shares.
OTHER MATTERS. In September, 1999, three individual stockholders of the
Company, namely Michael Fothergill, Rosa Cortez and Sarah Berkowitz, filed
complaints (the "Complaints") in the Court of Chancery for the State of Delaware
against the Company, Parent and certain officers and directors of the Company,
Suez and Parent, with respect to the Company's September 21, 1999 announcement
that it had received from Suez, through Parent, an offer to purchase all of the
outstanding shares it did not already hold at a price of $22 per Share. The
Complaints, which are substantively identical, purport to assert class action
claims on behalf of all persons, other than the defendants and their affiliates,
who own Shares. The essence of the Complaints is that the per share price of the
$22 Offer contained in the September 21, 1999 announcement is inadequate, and
that any agreement between Suez and the Company to consummate an offer at that
price would constitute a breach of the fiduciary duties owed by the defendants
to the minority stockholders of the Company. The Complaints seek injunctive
relief, recission, damages, costs (including attorneys' and experts' fees) and
other relief. The Complaints have been consolidated into a single class action
litigation (the "Class Action Litigation").
On January 20, 2000, one of the lead counsel for the purported class (the
"Class") contacted counsel for Parent to discuss the status of the transaction
in light of the announcement of the Merger Agreement, and to discuss the pending
Class Action Litigation. As a result, counsel for Parent and counsel for the
Class began to discuss means of settling the Class Action Litigation. Counsel
for Parent advised counsel for the Class that one of the factors that Parent
took into account in increasing its proposal from $22 per share to $23.50 was
the Class Action Litigation. Over the next several weeks, Parent and counsel for
the plaintiffs discussed the transaction.
On February 15, 2000, a draft of the Offer to Purchase (the "Draft") was
provided to counsel for the Class. On February 22, 2000, counsel for Parent and
counsel for the Class reached an agreement in principle, subject to court
approval, to settle the Class Action Litigation (the "Proposed Settlement") on
behalf of a class consisting of all persons (other than the defendants and their
affiliates) who own Shares or owned Shares after September 23, 1999, the date of
the announcement of the $22 Offer (except as provided below). The Proposed
Settlement is memorialized in a Memorandum of Understanding. The principal
elements of the Proposed Settlement are (1) the undertaking by Purchaser, under
certain
53
circumstances, to include a Subsequent Offering Period pursuant to Rule 14d-11
(described in "--Terms of the Offer"), and (2) the agreement to include as a
schedule to this Offer to Purchase more detailed financial projections,
containing business segment information, than the projections that had been
contained in the Draft (see "SPECIAL FACTORS--Company Financial Projections")
and (3) the agreement to include in the Offer to Purchase enhanced disclosure
regarding information concerning engagements between CSFB and Parent (see
"SPECIAL FACTORS--Position of Suez, Parent and Purchaser Regarding Fairness of
the Offer and the Merger"). The Proposed Settlement further contemplates that
the Class Action Litigation will be dismissed with prejudice, and that releases
will be given to the Company, Parent, their employees, officers and directors,
affiliates and agents, for all matters arising out of this transaction. The
Proposed Settlement is subject to the execution of definitive settlement
documents by all defendants and to court approval.
Parent believes that under existing Delaware precedents and law, an informed
stockholder who accepts the benefits of this transaction by having such
stockholder's Shares purchased pursuant to the Offer or by voting for the Merger
and accepting the consideration paid in connection therewith has accepted the
transaction and, accordingly, were the settlement not approved, should not be
included as a member of the purported class which participates in any subsequent
class action recovery. If the conditions to the Proposed Settlement are not
satisfied, Parent may under certain circumstances be entitled to terminate the
Offer and not purchase any tendered Shares. See "--Conditions of the Offer."
13. FEES AND EXPENSES
Except as set forth in this Offer to Purchase, neither Parent nor Purchaser
will pay any fees or expenses to any broker, dealer or other person for
soliciting tenders of Shares pursuant to the Offer.
Parent and Purchaser have engaged Lazard Freres as the Dealer Manager in
connection with the Offer, and as financial advisor in connection with Parent's
proposed acquisition of the Company. Parent has also agreed to indemnify Lazard
Freres and certain other persons against certain liabilities in connection with
the Offer, including certain liabilities under the federal securities laws. See
"--SPECIAL FACTORS--Analysis of Financial Advisor to Parent."
Purchaser and Parent have also retained Harris Trust Company of New York as
the Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive
reasonable and customary compensation for its services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the United States federal securities laws.
In addition, Purchaser and Parent have retained Morrow & Co., Inc. to act as
the Information Agent in connection with the Offer. The Information Agent will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the United States federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering material to their customers.
14. MISCELLANEOUS
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will
make a good faith effort to comply with such state statute or seek to have such
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with any such state statute, the Offer will not be made
to (and tenders will not be accepted from or on behalf of) the
54
stockholders in such state. In any jurisdiction where the securities, blue sky
or other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by the Dealer Manager or
one or more registered brokers or dealers which are licensed under the laws of
such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of Suez, Parent or Purchaser not contained in this
Offer to Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been authorized.
Suez, Parent and Purchaser have filed with the Commission the Schedule TO,
together with exhibits, pursuant to Sections 13(e) and 14(d)(1) of the Exchange
Act and Rules 13e-3 and 14d-3 promulgated thereunder, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. The Schedule TO and any amendments thereto, including exhibits, may be
inspected at, and copies may be obtained from, the same places and in the manner
set forth in "--Certain Information Concerning the Company--Additional
Information" (except that they will not be available at the regional offices of
the Commission).
February 28, 2000 T Acquisition Corp.
55
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
SUEZ LYONNAISE DES EAUX, ELYO AND T ACQUISITION CORP.
1. SUPERVISORY BOARD AND EXECUTIVE OFFICERS OF SUEZ LYONNAISE DES EAUX
Set forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employments for the past five years
of each member of the Supervisory Board and each executive officer of Suez. The
principal address of Suez Lyonnaise des Eaux and, unless indicated below, the
current business address for each individual listed below is c/o Suez Lyonnaise
des Eaux, 1, rue d'Astorg, 75008 Paris, France. Telephone: 011-33-1-40-06-64-00.
Each such person is, unless indicated below, a citizen of France.
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- -------- --------------------------------------------------------
Jerome Monod................ 68 Chairman of the Supervisory Board, Suez Lyonnaise des
Eaux (1997-present); Chairman of the Board, Lyonnaise
des Eaux (1980-1997).
Jean Guy Gandois............ 69 Vice Chairman of the Supervisory Board, Suez Lyonnaise
des Eaux (1997-present); Chairman and CEO, Cockerill
Sambre (1987-1999); President, French National Council
of Employers (1996-1997); Chairman and CEO, Pechiney
(1986-1996).
Gerhard Cromme.............. 56 Chairman of the Executive Board, Thyssen Krupp AG
(1999-present); Member of the Supervisory Board, Suez
Lyonnaise des Eaux (1997-present); Chairman of the
Executive Board, Fried. Krupp AG Hoesch-Krupp
(1989-1999). Mr. Cromme is a German citizen.
Etienne Davignon............ 67 Chairman, Societe Generale de Belgique (1985-present);
Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1997-present). Mr. Davignon is a Belgian citizen.
Paul Desmarais, Jr.......... 44 Chairman of the Board and Co-Chief Executive, Power
Corporation of Canada (1998-present); Chairman of the
Board, Power Financial Corporation (1990-present);
Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1998-present); Director, Tractebel S.A. (1990-present);
Director, Electrafina S.A. (1999-present); Director,
Investors Group Inc. (1983-present); Director, London
Insurance Group Inc. (1997-present); Director, London
Life Insurance Company (1997-present); Director, Pargesa
Holdings S.A. (1992-present); Director, Groupe Brux-
elles Lambert S.A. (1990-present); Director, Imerys
(1991-present); Director, Rhodia (1999-present);
Director, GWL&A Financial (1998-present); Director,
Great-West Life & Annuity Insurance Company
(1991-present); Director, The Great-West Life Assurance
Company (1994-present); Director, Great-West Lifeco Inc.
(1984-present); Director, Gesca Ltd. (1985-present);
Director, La Presse Ltd. (1981-present); Director, Les
Journaux Trans-Canada Inc. (1996-present); Director,
PetroFina S.A. (1992-1999); Director, Gold Circle
Insurance
I-1
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- -------- --------------------------------------------------------
Company (1990-1998); Director, ParFinance (1990-1998);
Director, Royale-Vendome S.A. (1991-1998); Director,
Fibelpar S.A. (1990-1998); Director, Les Publications
J.T.C. Inc. (1985-1996); Director and Member of the
International Council, INSEAD; Chairman, Canadian
Foundation for International Management for INSEAD;
Chairman, McGill University Faculty of Management
International Advisory Board; Chairman, HEC Interna-
tional Advisory Committee. Mr. Desmarais is a Canadian
citizen.
Reto Domeniconi............. 62 Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1997-present); Directeur General, Nestle SA
(1983-1996). Mr. Domeniconi is a Swiss citizen.
Lucien Douroux.............. 65 Chairman of the Supervisory Board, Credit Agricole
Indosuez (1999-present); Member of the Supervisory
Board, Suez Lyonnaise des Eaux (1997-present); Chief
Executive Officer, Caisse Nationale de Credit Agricole
(1993-1999).
Pierre Faurre............... 57 Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1997-present); Chairman and Chief Executive Officer,
SAGEM (1987-present).
Ricardo Fornesa Ribo........ 68 Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1998-present); Chief Executive Officer, Sociedad
General de Aguas de Barcelona, S.A. (1979-present);
Board Secretary and Assistant to the President, Caixa
d'Estalvis i Pensions de Barcelona (1979-present); Vice
President, Inmobiliara Colonial (1992-present);
Director, E. Nacional Hidroelectrica del Ribagorzana
(ENHER) Electricity (1994-present); Director, Derivados
Forestales (1997-present); (Director, Cia de
Telecomunicaciones de Chile (1997-present). President,
Cia. de Seguros Adeslas, S.A. (1994-1998). Mr. Fornesa
Ribo is a Spanish citizen.
Albert Frere................ 73 Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1997-present); Chairman of the Board, Groupe Bruxelles
Lambert S.A. (1988-present); Chairman of the Board,
Petrofina S.A. (1990-present); Chairman of the Board,
Electrafina S.A. (1982-present); Chairman of the Board,
Frere-Bourgeois S.A. (1970-present); Chairman of the
Board, Erbe S.A. (1975-present); Deputy Chairman,
Managing Director, and Member of the Executive
Committee, Pargesa Holding S.A. (1981-present); Deputy
Chairman, Compagnie Benelux Paribas S.A. (1973-pre-
sent); Deputy Chairman, Total Fina S.A. (1999-present);
Director, Coparex S.A. (1978-present); Director,
Television Francaise 1, S.A. (1996-present); Director,
L.V.M.H. S.A. (1997-present); Director, Audiofina S.A.
(1992-present); Director, CLT/UFA (1987-present);
Honorary Member of the Council of Regents, Banque
Nationale de Belgique S.A. (1995-present). Mr. Frere is
a Belgian citizen.
I-2
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- -------- --------------------------------------------------------
Frederick Holliday.......... 64 Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1997-present); Chairman, Northumbrian Water Group
(1993-present); Chairman, The Go-Ahead Group Plc (as of
1997); Board Member, Brewin Dolphin Plc (as of 1996);
Chairman, Northern Venture Capital Fund (1985); Board
Member, Shell UK Limited (1980-1998); Board Member,
Union Railways (1993-1996); Board Member, British Rail
(1990-1993); Vice Chancellor, Durham University
(1980-1990); Chairman, Northern Regional Board, Lloyds
Bank (1986-1989); President of the Freshwater Biological
Association; President, British Trust for Ornithology;
former Council Member for WaterAid; former Chairman of
the Nature Conservancy Council; Past President of the
Scottish Marine Biological Association. Mr. Holliday is
a British citizen.
Philippe Jaffre............. 53 Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1997-present); Chairman and Chief Executive Officer,
Elf Aquitaine (1993-1999).
Jacques Lagarde............. 61 Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1997-present); Executive Vice President, the Gillette
Company (1993-1998). Mr. Lagarde is an American citizen.
Jean Peyrelevade............ 59 Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1997-present); Chairman, Credit Lyonnais
(1993-present).
Claude Pierre-Brossolette... 71 Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1997-present); Chairman, Caisse de Refinancement de
l'Habit (1995-present); Director, Credit Lyonnais
(1994-present); Chairman of the Supervisory Board,
Picelli Cables (1992-present); Director, Compagnie des
Signaux (1996-present); Chairman, Banque Eurofin
(1995-1996).
Jean Syrota................. 62 Member of the Supervisory Board, Suez Lyonnaise des Eaux
(1997-present); Advisor, CEA (1999-present); Chairman
and Chief Executive, Compagnie Generale des Matieres
Nucleaires (COGEMA) (1988-present); Director, TOTAL S.A.
(1993-present); Director, Framatome (1989-present);
Permanent Representative of COGEMA, Usinor
(1995-present); Director, SAGEM (1996-present); Board
Member, CFC (1989-present); Board Member, FBFC
(1989-present); Director, ERAP (1998-present); Director,
CEA-Industrie (1993-1999); Permanent representative of
COGEMA, EURODIF (1989-1997).
Gerard Mestrallet........... 50 President of the Executive Board and Chief Executive
Officer, Suez Lyonnaise des Eaux (1997-present);
Chairman and Chief Executive Officer, Compagnie de Suez
(1995-1997); Chief Executive Officer and Chairman of the
Management Committee, Societe Generale de Belgique
(1991-1995).
Philippe Brongniart......... 61 Member of the Executive Board, Suez Lyonnaise des Eaux
(1997-present); Director, Trigen Energy Corporation
(199[ ]-present) Executive Vice President, Lyonnaise des
Eaux (1993-1997).
I-3
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- -------- --------------------------------------------------------
Francois Jaclot............. 50 Executive Vice President and Member of the Executive
Board, Suez Lyonnaise des Eaux (1997-present); Director,
Paris Premiere (1999-present); Director, Societe
Generale de Belgique (1996-present); Director, GTM
(1998-present); Director, Sita (1998-present); Director,
Elyo (1998-present); Director, TPS (1998-present);
Director, Banque Sofinco (1996-present); Director, Suez
Industrie (1996-present); Director, M6 (1998-present);
Director, Lyonnaise Communications (1998-present);
Senior Executive Vice President; Compagnie de Suez
(1996-1997); Managing Partner, Demachy Worms & Compagnie
(1994-1995).
Patrick Buffet.............. 46 Executive Vice President, Suez Lyonnaise des Eaux
(1998-present); Director, Trigen Energy Corporation
(1998-present); Director of International Holdings,
Societe Generale de Belgique (1994-1998).
2. DIRECTORS AND EXECUTIVE OFFICERS OF ELYO
Set forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employment for the past five years
of each director and executive officer of Elyo. The principal address of Elyo
and, unless indicated below, the current business address for each individual
listed below is c/o Elyo, 235 Avenue Georges Clemenceau BP 4601 92746 Nanterre
Cedex, France. Telephone: 011-331-41-20-10-10. Each such person is, unless
indicated below, a citizen of France. Directors are identified by an asterisk.
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- -------- --------------------------------------------------------
Jean-Daniel Levy*........... 58 Managing Director, Elyo (1995-present).
Christine Morin-Postel*..... 53 Chief Executive Officer of Societe Generale de Belgique
(1997-present). Director and Chairman, Trigen Energy
Corporation (2000-present); Chairman and Chief Executive
Officer, Compagnie Hypothecaire (1995-1998); Chairman
and Chief Executive Officer, credisuez (1995-1997);
Managing Partner, Financiere Indosuez (1995-1996).
Klaus Wendel*............... 56 Directeur des Participations of Societe Generale de
Belgique (1998-present); Directeur des Systemes de
Gestion, Societe Generale de Belgique (1988-1998). Mr.
Wendel is a German citizen.
Philippe Brongniart*........ 61 Member of the Executive Board, Suez Lyonnaise des Eaux
(1997-present); Director, Trigen Energy Corporation
(1997-present); Executive Vice President, Lyonnaise des
Eaux (1993-1997).
Patrick Buffet*............. 46 Executive Vice President, Suez Lyonnaise des Eaux
(1998-present); Director, Trigen Energy Corporation
(1998-present); Director of International Holdings,
Societe Generale de Belgique (1994-1998).
Francois Jaclot*............ 50 Executive Vice President and Member of the Executive
Board, Suez Lyonnaise des Eaux (1997-present); Director,
Societe
I-4
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- -------- --------------------------------------------------------
Generale de Belgique (1996-present); Director, GTM
(1998-present); Director, Sita (1998-present); Director,
Elyo (1998-present); Director, TPS (1998-present);
Director, Banque Sofinco (1996-present); Director, Suez
Industrie (1996-present); Director, M6 (1998-present);
Director, Lyonnaise Communications (1998-present);
Senior Executive Vice President; Compagnie de Suez
(1996-1997); Managing Partner, Demachy Worms & Com-
pagnie (1994-1995).
Olivier Kreiss*............. 57 Vice Chairman, GTM Group (1999-Present); Chairman and
Chief Executive Officer, Degremont (1992-1999).
Jacques Petry*.............. 45 Chairman and Chief Executive Officer, SITA
(1996-present); President of the International Water
Division, Suez Lyonnaise des Eaux (1995-1996).
Bernard Kasriel*............ 53 Vice President and Chief Operating Officer, Lafarge S.A.
(1995-present).
Michel Bleitrach............ 54 Chairman and Chief Executive Officer, Elyo
(1993-present) Director, Trigen Energy Corporation
(1995-present); President and Director, T Acquisition
Corp. (2000-present).
3. DIRECTORS AND EXECUTIVE OFFICERS OF T ACQUISITION CORP.
Set forth below is the name, present principal occupation or employment and
material occupations, positions, offices or employment for the past five years
of each director and executive officer of T Acquisition Corp. Each person
identified below has held his position since the formation of T Acquisition
Corp. on January 14, 2000. The principal address of T Acquisition Corp. and,
unless indicated below, the current business address for each individual listed
below is c/o Cofreth American Corporation, 1 Water Street, White Plains, NY
10601. Telephone: (914) 948-9150. Each such person is, unless indicated below, a
citizen of France. Directors are identified by an asterisk.
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- -------- --------------------------------------------------------
Michel Bleitrach*........... 54 President, T. Acquisition Corp. (2000-present); Chairman
and Chief Executive Officer, Elyo (1993-present);
Director, Trigen Energy Corporation (1995-present).
Olivier Degos*.............. 37 Treasurer and Secretary, T Acquisition Corp.
(2000-present); International Director, Elyo
(1999-present); Director, Trigen Energy Corporation
(1999-present); Chief Financial Officer, Elyo
(1995-1998); Deputy Chief Financial Officer; The SITA
Group (1994-1995).
Michel Caillard............. 46 Vice President, T Acquisition Corp. (2000-present);
General Counsel, Elyo (1997-present); General Counsel,
F.C.R. (1995-1997).
I-5
SCHEDULE II
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
SECTION 262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to sec. 228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to
sec. 251(g) of this title), secs. 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of stock
of a constituent corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to secs. 251, 252, 254, 257,
258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b., of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in
lieu of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party
to a merger effected under sec. 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
II-1
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections
(d) and (e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsection (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of
such stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to sec. 228 or
sec. 253 of this title, each constitutent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constitutent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constitutent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constitutent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within
10 days after such effective date; provided, however, that if such second notice
is sent more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constitutent corporation
may fix, in advance, a record date that shall be not more than 10 days prior to
the date the notice is given, provided, that if the notice is given on or after
the effective date of the merger or consolidation, the record date shall
II-2
be such effective date. If no record date is fixed and the notice is given prior
to the effective date, the record date shall be the close of business on the day
next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
II-3
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(1) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation. (Last amended by Ch. 339, L.
'98, eff. 7-1-98.)
II-4
SCHEDULE III
TRIGEN ENERGY CORPORATION
JANUARY 2000 "COMMITTED CASE" FINANCIAL PROJECTIONS
The Company has advised Suez, Parent and Purchaser that it does not, as a
matter of course, disclose projections as to future revenues, earnings or other
income statement data and the projections were not prepared with a view to
public disclosure. In addition, the projections set forth below were not
prepared in accordance with generally accepted accounting principles, or with a
view to compliance with the published guidelines of the Commission or the
American Institute of Certified Public Accountants regarding projections, which
would require a more complete presentation of the data than as shown above. The
projections have not been examined, reviewed or compiled by the Company's
independent auditors, and accordingly they have not expressed an opinion or any
other assurance on such projections. However, management of the Company does
prepare internal financial projections prior to the start of each year as a
matter of course. Such projections represent what management of the Company
believes to be a reasonable estimate of the Company's future financial
performance and reflect significant assumptions and subjective judgments by the
Company's management regarding industry performance and general business and
economic conditions, including assumptions regarding the Company's future
development projects. The projections are included herein solely because such
information was furnished to Parent and Purchaser prior to the Offer.
Accordingly, none of Suez, Parent, Purchaser, the Company, or any other person
assumes any responsibility as to the accuracy thereof. In addition, because the
estimates and assumptions underlying the projections are inherently subject to
significant economic and competitive uncertainties and contingencies, which are
difficult or impossible to predict accurately and are beyond the control of the
Company, Suez, Parent and Purchaser, there can be no assurance that results set
forth in the above projections will be realized and it is expected that there
will be differences between actual and projected results, and actual results may
be materially higher or lower than those set forth below. For a description of
certain assumptions relevant to these projections, see "SPECIAL FACTORS--Company
Financial Projections."
III-1
TRIGEN ENERGY CORPORATION
1 (A) COMMITTED CASE PROJECTIONS
REVISED: JANUARY 7, 2000
BUDGET MEDIUM TERM PLAN
---------- --------------------------------------------------------------
2000 2001 2002 2003 2004 2005
---------- ---------- ---------- ---------- ---------- ----------
PHYSICALS
Sales
Steam.............. Mlb/yr 23,521,289 25,403,352 26,478,751 27,021,759 27,225,172 27,334,902
Hot Water.......... MMbtu/yr 1,708,642 2,103,386 2,183,014 2,184,281 2,206,406 2,206,406
Chilled Water...... MtonH/yr 157,488 166,761 227,277 228,914 231,259 232,917
Electricity........ Mwh/yr 1,282,201 1,539,117 1,580,616 1,654,519 1,652,215 1,619,133
REVENUES:
Revenues from Sales
Heating................................. 232,566 260,768 273,897 284,374 289,413 294,837
Cooling................................. 21,929 25,406 28,324 29,198 31,751 32,373
Electricity............................. 64,111 70,126 72,861 75,078 74,670 74,831
---------- ---------- ---------- ---------- ---------- ----------
Total Revenues from Sales............... 318,605 356,300 375,082 388,650 395,833 402,042
% CHANGE FROM PRIOR YR................ 23.2% 11.8% 5.3% 3.6% 1.8% 1.6%
Fees Earned & Other Revenue............... 41,734 44,110 43,875 45,437 47,567 49,481
Equity in Earnings/(Losses) of Unconsol.
Entity.................................. 15,135 2,962 2,618 2,840 3,005 1,512
---------- ---------- ---------- ---------- ---------- ----------
TOTAL REVENUES.......................... 375,474 403,371 421,575 436,927 446,405 453,034
% CHANGE FROM PRIOR YR................ 31.3% 7.4% 4.5% 3.6% 2.2% 1.5%
EXPENSES
Fuel & Consumables........................ 136,463 154,367 164,706 171,773 176,370 180,668
% OF TOTAL REVENUES................... 36.3% 38.3% 39.1% 39.3% 39.5% 39.9%
Production & Operating Costs.............. 99,540 109,319 107,310 110,735 112,550 113,450
% OF TOTAL REVENUES................... 26.5% 27.1% 25.5% 25.3% 25.2% 25.0%
Depreciation Expense...................... 27,674 31,725 34,867 35,644 36,378 36,979
% OF TOTAL REVENUES................... 7.4% 7.9% 8.3% 8.2% 8.1% 8.2%
General & Admin. & Amortization........... 45,477 44,719 46,840 47,976 49,577 50,719
% OF TOTAL REVENUES................... 12.1% 11.1% 11.1% 11.0% 11.1% 11.2%
---------- ---------- ---------- ---------- ---------- ----------
Total Operating Expenses.................. 309,155 340,131 353,723 366,127 374,875 381,816
% OF TOTAL REVENUES................... 82.3% 84.3% 83.9% 83.8% 84.0% 84.3%
Operating Income.......................... 66,319 63,241 67,853 70,800 71,530 71,218
% OF TOTAL REVENUES................... 17.7% 15.7% 16.1% 16.2% 16.0% 15.7%
Interest Expense.......................... 34,377 35,410 37,208 34,340 31,970 28,599
Interest (Income)......................... (1,512) (1,530) (1,501) (1,910) (1,902) (1,893)
Other Expense/(Income).................... 485 1,388 1,184 1,157 956 752
Minority Interest in Earn/(Loss) of Cons.
Entity.................................. 5,536 8,367 7,843 8,659 8,429 9,602
---------- ---------- ---------- ---------- ---------- ----------
INCOME BEFORE TAX......................... 27,434 19,605 23,119 28,555 32,077 34,158
% OF TOTAL REVENUES................... 7.3% 4.9% 5.5% 6.5% 7.2% 7.5%
Income Tax Expense........................ 11,358 8,116 9,571 11,822 13,280 14,142
% OF INCOME BEFORE TAX................ 41.4% 41.4% 41.4% 41.4% 41.4% 41.4%
NET INCOME BEF. EXTRAORD. GAIN / (LOSS)...
16,076 11,488 13,547 16,733 18,797 20,017
% OF TOTAL REVENUES................... 4.3% 2.8% 3.2% 3.8% 4.2% 4.4%
Extraord. Gain / (Loss) Net of Tax........ -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME................................ 16,076 11,488 13,547 16,733 18,797 20,017
EARNINGS PER SHARE........................ $ 1.33 $ 0.94 $ 1.11 $ 1.37 $ 1.53 $ 1.63
---------- ---------- ---------- ---------- ---------- ----------
AVERAGE SHARES OUTSTANDING................ 12,122 12,157 12,194 12,226 12,252 12,269
III-2
TRIGEN ENERGY CORPORATION
1 (A) COMMITTED CASE PROJECTIONS
REVISED: JANUARY 7, 2000
BUDGET MEDIUM TERM PLAN
-------- ----------------------------------------------------
2000 2001 2002 2003 2004 2005
-------- -------- -------- -------- -------- --------
CASH FLOWS FROM OPERATIONS
Income BeforeTax & Minority Interest........... 32,970 27,972 30,962 37,214 40,506 43,761
Minority Interest in (Earnings)/Losses......... (5,536) (8,367) (7,843) (8,659) (8,429) (9,602)
Income Tax Expense............................. (11,358) (8,116) (9,571) (11,822) (13,280) (14,142)
------- ------- ------- ------- ------- -------
NET INCOME................................. 16,076 11,488 13,547 16,733 18,797 20,017
Depreciation Expense........................... 27,674 31,725 34,867 35,644 36,378 36,979
Amortization Expense........................... 6,322 6,216 5,611 5,586 5,413 5,190
Deferred Tax Expense (Benefit)................. 2,092 528 855 (5,595) (242) (404)
Minority Interest in Operations................ 5,536 8,367 7,843 8,659 8,429 9,602
Changes in Current Accounts:
Accounts Receivable........................ (4,945) (2,672) (2,944) (1,958) 148 363
Inventory.................................. (22) (85) 12 (41) (21) (37)
Prepaid Costs & Other Assets............... 1,117 (551) 1,511 1,522 972 (3,553)
Accounts Payable........................... 5,819 4,357 (2) (20) (1,726) (1,807)
Accrued Expenses........................... 4,435 (592) (449) (1,769) (2,117) (5,155)
------- ------- ------- ------- ------- -------
NET CASH PROVIDED BY OPERATIONS................ 64,104 58,781 60,852 58,761 66,031 61,196
CASH FLOW FROM INVESTING ACTIVITIES
Plant, Property, and Equipment................. (93,573) (69,043) (11,452) (10,917) (5,044) (4,091)
Investment in Subsidiaries..................... (6,398) (1,475) (1,801) (2,095) (2,260) (768)
------- ------- ------- ------- ------- -------
NET CASH (USED IN) INVESTING ACTIVITIES........ (99,971) (70,518) (13,254) (13,012) (7,304) (4,859)
CASH FLOW FROM FINANCING ACTIVITIES
Long Term Borrowings:.......................... 50,123 37,191 (23,785) (19,684) (30,598) (31,402)
Common Stock Sales / (Repurchases)............. 944 773 773 773 773 579
Short Term Bank Debt, Net...................... 8,739 477 70 1,797 (1,838) (3,150)
Change in Minority Interest.................... (5,388) (6,517) (2,709) (8,359) (8,094) (9,085)
Payments on Long Term Debt & Obligations....... (18,550) (20,187) (21,947) (20,276) (18,969) (13,279)
NET CASH PROVIDED BY FINANCING ACTIVITIES...... 35,868 11,737 (47,599) (45,749) (58,726) (56,337)
------- ------- ------- ------- ------- -------
NET INCREASE/(DECREASE) IN CASH................ 0 0 0 0 0 0
------- ------- ------- ------- ------- -------
Dividends Paid................................. (1,697) (1,702) (1,707) (1,712) (1,715) (1,718)
III-3
TRIGEN ENERGY CORPORATION
1 (A) COMMITTED CASE PROJECTIONS
REVISED: JANUARY 7, 2000
BUDGET MEDIUM TERM PLAN
-------- ----------------------------------------------------
2000 2001 2002 2003 2004 2005
-------- -------- -------- -------- -------- --------
ASSETS
Current Assets
Cash and Cash Equivalents.................. 15,000 15,000 15,000 15,000 15,000 15,000
Accounts Receivable, Net................... 55,973 58,645 61,589 63,547 63,399 63,036
Inventory, at Cost......................... 7,499 7,584 7,573 7,613 7,634 7,671
Prepaid Costs and other Current Assets..... 7,341 7,892 6,381 4,859 3,887 7,440
------- ------- ------- ------- ------- -------
Current Assets........................... 85,814 89,122 90,543 91,019 89,920 93,147
Investment in Nonconsolidated
Subsidiaries............................... 28,635 30,109 31,910 34,005 36,266 37,034
Non-Current Cash and Equivalents............. 4,581 4,581 4,581 4,581 4,581 4,581
Property, Plant, and Equipment, Net.......... 629,860 666,341 642,499 617,474 586,255 553,992
Other Deferred Costs and Intangible Assets... 66,633 61,666 56,939 52,347 48,176 44,533
------- ------- ------- ------- ------- -------
TOTAL ASSETS............................. 815,522 851,819 826,473 799,426 765,198 733,287
======= ======= ======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short Term Bank Debt....................... 41,286 41,763 41,833 43,630 41,792 38,642
Accounts Payable........................... 27,942 32,047 32,941 33,809 35,124 35,744
Accrued Expenses........................... 31,029 30,749 30,362 28,626 25,554 20,399
Current Portion of Long Term Debt.......... 11,942 5,619 22,044 15,039 8,001 7,245
------- ------- ------- ------- ------- -------
Current Liabilities...................... 112,199 110,178 127,179 121,105 110,471 102,031
Total Long Term Debt......................... 466,640 483,644 437,912 397,952 348,385 303,704
Of Which, Current Portion of Long Term
Debt....................................... (11,942) (5,619) (22,044) (15,039) (8,001) (7,245)
Deferred Tax Liability....................... 48,577 49,105 49,961 44,365 44,123 43,719
------- ------- ------- ------- ------- -------
TOTAL LIABILITIES........................ 615,474 637,308 593,007 548,383 494,978 442,209
Minority Interest in Consolidated Entities... 19,590 21,441 26,575 26,874 27,209 27,726
Stockholder's Equity
Common Stock............................... 124 124 124 124 124 124
Additional Paid-in Capital................. 120,668 120,668 120,668 120,668 120,668 120,668
Treasury Stock & Restricted, at Cost....... (3,132) (2,359) (1,586) (814) (41) 538
Retained Earnings.......................... 62,796 74,636 87,685 104,190 122,260 142,021
------- ------- ------- ------- ------- -------
TOTAL STOCKHOLDER'S EQUITY............... 180,457 193,070 206,891 224,169 243,011 263,352
------- ------- ------- ------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY... 815,521 851,819 826,473 799,427 765,198 733,287
======= ======= ======= ======= ======= =======
III-4
TRIGEN ENERGY CORPORATION
1 (A) COMMITTED CASE PROJECTIONS
REVISED: JANUARY 5, 2000
KEY DATA AND RATIOS 2000 2001 2002 2003 2004 2005
- ------------------- -------- -------- -------- -------- -------- --------
EBIT IN '000 $........................ 66,319 63,241 67,853 70,800 71,530 71,218
% OF REVENUES......................... 18% 16% 16% 16% 16% 16%
EBITDA IN '000 $...................... 98,996 99,982 107,439 111,160 112,622 112,899
% OF REVENUES......................... 26% 25% 25% 25% 25% 25%
------- ------- ------- ------- ------- -------
EBITDA/ASSETS IN %.................... 12.1% 11.7% 13.0% 13.9% 14.7% 15.4%
------- ------- ------- ------- ------- -------
AVERAGE INTEREST RATE................. 7.0% 6.9% 7.4% 7.5% 7.7% 7.8%
------- ------- ------- ------- ------- -------
Debt Coverage ratio before Tax (1).... 1.57 1.51 1.55 1.82 1.97 2.38
------- ------- ------- ------- ------- -------
DEBT TO CAPITAL IN %.................. 71.7% 71.0% 67.3% 63.8% 59.1% 54.0%
------- ------- ------- ------- ------- -------
Pretax Interest Coverage.............. 1.89 1.75 1.79 2.03 2.20 2.46
------- ------- ------- ------- ------- -------
Funds from Operations interest
coverage............................ 2.59 2.60 2.64 2.72 3.09 3.42
------- ------- ------- ------- ------- -------
Funds from Operations/Debt............ 0.18 0.18 0.21 0.21 0.25 0.29
------- ------- ------- ------- ------- -------
TOTAL DEBT IN '000 $.................. 507,926 525,407 479,745 441,582 390,177 342,346
------- ------- ------- ------- ------- -------
EBITDA/Interest expense............... 2.88 2.82 2.89 3.24 3.52 3.95
------- ------- ------- ------- ------- -------
EPS................................... 1.33 0.95 1.12 1.38 1.56 1.66
------- ------- ------- ------- ------- -------
INCOME BEFORE TAX..................... 27,434 19,605 23,119 28,555 32,077 34,158
------- ------- ------- ------- ------- -------
NET INCOME............................ 16,076 11,488 13,547 16,733 18,797 20,017
------- ------- ------- ------- ------- -------
ROE AFTER TAX--ON 1 YEAR (BASED ON
AVERAGE EQUITY)..................... 9.3% 6.2% 6.8% 7.8% 8.0% 7.9%
------- ------- ------- ------- ------- -------
ROA BEFORE TAX........................ 13.6% 12.4% 12.7% 12.9% 13.0% 13.0%
------- ------- ------- ------- ------- -------
ROCE (BASED ON NOPAT WITH 41.4%
TAXES).............................. 6.3% 5.8% 5.7% 6.1% 6.4% 6.7%
------- ------- ------- ------- ------- -------
III-5
Manually signed copies of the Letters of Transmittal, properly completed and
duly signed, will be accepted. The Letter of Transmittal, Certificates and any
other required documents should be sent by each stockholder or such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
the Depositary at one of the addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19(th) Floor
New York, NY 10005
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(212) 701-7636 or 7637
FOR INFORMATION TELEPHONE (CALL COLLECT):
(212) 701-7624
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
as set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal, or other related tender offer materials may be obtained from the
Information Agent or from brokers, dealers, commercial banks or trust companies.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
445 Park Avenue, 5(th) Floor
New York, New York 10022
Collect Call: (212) 754-8000
Banks and Brokerage Firms, Please Call: (800) 662-5200
Stockholders, Please Call: (800) 566-9061
THE DEALER MANAGER FOR THE OFFER IS:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, New York 10020
(212) 632-6717