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ILLINOVA CORPORATION ILLINOIS POWER COMPANY
OFFER TO PURCHASE FOR CASH ANY AND CONSENT SOLICITATION WITH RESPECT
ALL SHARES OF PREFERRED STOCK OF TO ITS PREFERRED STOCK
ILLINOIS POWER COMPANY
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SERIES CUSIP NO.
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4.08% Cumulative Preferred Stock............................ 452092-20-8
4.20% Cumulative Preferred Stock............................ 452092-30-7
4.26% Cumulative Preferred Stock............................ 452092-40-6
4.42% Cumulative Preferred Stock............................ 452092-50-5
4.70% Cumulative Preferred Stock............................ 452092-60-4
7.75% Cumulative Preferred Stock............................ 452092-79-4
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THE TENDER OFFER, THE CONSENT SOLICITATION AND YOUR WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2001 (THE "EXPIRATION
DATE"), UNLESS EXTENDED.
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, 2001
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
In our capacity as Dealer Manager/Solicitation Agent, we are enclosing the
materials listed below relating to the invitation of Illinova Corporation
("Illinova"), an Illinois corporation, to the holders of each series of
cumulative preferred stock of Illinois Power Company ("IPC") listed above (each
a "Series of Preferred," and the holder thereof, a "Preferred Shareholder") to
tender any and all of their shares (the "Shares") for purchase at the purchase
price per Share listed on the front cover of the Offer to Purchase and Consent
Statement, dated , 2001, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase and Consent
Statement and in the applicable Letter of Transmittal and Consent (which
together constitute the "tender offer"). Illinova will purchase any and all
Shares validly tendered and not withdrawn, upon the terms and subject to the
conditions set forth in the tender offer. In conjunction with the tender offer,
IPC is soliciting consents from holders of each Series of Preferred with respect
to a proposal to amend (the "Proposed Amendment") its articles of incorporation
to eliminate a provision that restricts IPC's ability to issue or assume
unsecured debt.
If a Preferred Shareholder's Shares are not tendered pursuant to the tender
offer but the Preferred Shareholder does validly grant a consent to the Proposed
Amendment with respect to such Shares, IPC will make a special cash payment of
$ for each such Share (the "Special Cash Payment"), provided that the
Proposed Amendment is approved by the Preferred Shareholders. To receive the
Special Cash Payment, consents must be returned by the Expiration Date for the
applicable Series of Preferred. Those Preferred Shareholders who validly tender
their Shares will be entitled only to the applicable purchase price per Share
listed on the front cover of the Offer to Purchase and Consent Statement and
will not be entitled to the Special Cash Payment.
Preferred Shareholders who wish to tender their Shares pursuant to the
tender offer must grant a valid consent to the Proposed Amendment.
To tender such Shares pursuant to the tender offer validly, Preferred
Shareholders who become holders of record of Shares after , 2001,
the record date for the consent solicitation (the "Record Date"), must obtain
and submit with their tender an irrevocable proxy from the holder of record of
such Shares as of the Record Date to validly grant their consent to the Proposed
Amendment. Preferred Shareholders who acquire Shares after the Record Date will
be unable to tender those Shares if they cannot obtain an irrevocable proxy from
the holder of record as of the Record Date.
The tender offer is conditioned upon, among other things, the approval of
the Proposed Amendment by holders of at least a two-thirds of the shares of
IPC's outstanding preferred stock,
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voting together as one class. The tender offer for any one Series of Preferred
is not conditioned upon any minimum number of Shares of such Series of Preferred
being tendered and is independent of the tender offer for any other Series of
Preferred. It is not necessary to tender Shares to consent to the Proposed
Amendment.
In connection with any tender of Shares via the Automated Tender Offer
Program of The Depository Trust Company, a properly completed and duly executed
Letter of Transmittal and Consent, together with any other required documents,
must be received by the Depositary (by facsimile transmission or otherwise) on
or prior to the Expiration Date.
We are asking you to contact your clients for whom you hold Shares. Please
bring the tender offer and the Consent Solicitation to their attention as
promptly as possible.
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. The Offer to Purchase and Consent Statement, dated , 2001.
2. A separate Letter of Transmittal and Consent for each Series of
Preferred.
3. A letter to Preferred Shareholders from IPC.
4. A form of letter which may be sent to your clients for obtaining the
clients' instructions with regard to the tender offer and the consent
solicitation.
5. A form of irrevocable proxy that may be used to obtain the proxy of
holders of record of Shares as of the Record Date.
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
THE SAME LETTER OF TRANSMITTAL AND CONSENT MAY NOT BE USED TO TENDER SHARES
AND TO GRANT CONSENT WITH RESPECT TO OTHER SHARES THAT ARE NOT BEING TENDERED. A
PREFERRED SHAREHOLDER TENDERING A PORTION OF HIS OR HER SHARES AND GRANTING A
CONSENT WITH RESPECT TO OTHER SHARES WITHOUT TENDERING SUCH SHARES MUST SUBMIT
TWO SEPARATE LETTERS OF TRANSMITTAL AND CONSENT, ONE WITH RESPECT TO THE
TENDERED SHARES AND ONE WITH RESPECT TO THE SHARES FOR WHICH A CONSENT IS
GRANTED BUT WHICH ARE NOT TENDERED.
A LETTER OF TRANSMITTAL AND CONSENT MAY RELATE ONLY TO ONE DELIVERY BY
BOOK-ENTRY TRANSFER, AND THUS ONLY ONE VOI NUMBER MAY BE SUPPLIED ON A LETTER OF
TRANSMITTAL AND CONSENT. SEPARATE LETTERS OF TRANSMITTAL AND CONSENT MUST BE
USED FOR EACH DELIVERY BY BOOK-ENTRY TRANSFER.
EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND CONSENT, AND
ONLY THE APPLICABLE LETTER OF TRANSMITTAL AND CONSENT FOR A PARTICULAR SERIES
MAY BE USED FOR SUCH SERIES OF PREFERRED.
THE TENDER OFFER DOES NOT PROVIDE FOR GUARANTEED DELIVERY OF SHARES.
ACCORDINGLY, TO TENDER SHARES, PREFERRED SHAREHOLDERS MUST DELIVER THEIR STOCK
CERTIFICATES TO THE DEPOSITARY OR TENDER THEIR SHARES BY BOOK-ENTRY TRANSFER
PRIOR TO THE EXPIRATION DATE.
SOLICITING DEALER FEES
Illinova will pay a fee to soliciting dealers of an amount equal to $
per share for shares that are tendered, accepted for payment and paid for
pursuant to the tender offer (except for transactions for beneficial owners
whose ownership equals or exceeds 5,000 shares, in which case Illinova will pay
a soliciting dealer fee equal to $ per share). If the proposed amendment is
approved, IPC will pay
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a soliciting dealer fee to soliciting dealers of $ per share for shares
that are not tendered pursuant to the tender offer but in respect of which a
consent to the proposed amendment is validly granted. With respect to fees
payable under this paragraph involving transactions for beneficial owners whose
ownership is less than 5,000 shares, any fees payable pursuant to this
paragraph shall be paid in full to the dealer manager/solicitation agent unless
a soliciting dealer is designated in which case such fees shall be payable in
full to that soliciting dealer (which designated soliciting dealer may be the
dealer manager/solicitation agent). With respect to fees payable pursuant to
this paragraph involving transactions for beneficial owners whose ownership
equals or exceeds 5,000 shares, any fees payable pursuant to this
paragraph shall be paid in full to the dealer manager/solicitation agent unless
a soliciting dealer is designated, in which case % of such fee shall be paid
to the dealer manager/ solicitation agent and % of such fee shall be paid to
the designated soliciting dealer (which designated soliciting dealer may be the
dealer manager/solicitation agent).
A designated Soliciting Dealer shall be named under the heading "Solicited
Tenders and/or Consents" in the applicable letter of transmittal and consent and
shall have obtained the tender and/or consent, and shall also be (a) a broker or
dealer in securities, including the dealer manager/solicitation agent in its
capacity as a dealer or broker, which is a member of any national securities
exchange or of the National Association of Securities Dealers, Inc., or NASD,
(b) a foreign broker or dealer not eligible for membership in the NASD which
agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders
outside the United States to the same extent as though it were a NASD member, or
(c) a bank or trust company (each of which is here referred to as a soliciting
dealer).
No such soliciting dealer fee shall be payable to a soliciting dealer with
respect to the tender and/ or consent of shares by a holder unless the
applicable letter of transmittal and consent accompanying such tender and/or
consent designates such soliciting dealer. No such fee shall be paid to a
soliciting dealer with respect to shares tendered or shares for which a consent
has been granted for such soliciting dealer's own account. If tendered shares or
shares for which a consent has been granted are registered in the name of such
soliciting dealer, no such fee shall be payable unless such shares are held by
such soliciting dealer as nominee and such shares are being tendered and/or a
consent is being granted for the benefit of one or more beneficial owners
identified on the applicable letter of transmittal and consent. Preferred
shareholders should complete the "Solicited Tenders and/or Consents" box in the
accompanying letter of transmittal and consent to designate a soliciting dealer.
No such fee shall be payable to a soliciting dealer if such soliciting dealer is
required for any reason to transfer the amount of such fee to a beneficial
owner. No broker, dealer, bank, trust company or fiduciary shall be deemed to be
the agent of Illinova, IPC, the depositary/information agent or the dealer
manager/solicitation agent for purposes of the tender offer and consent
solicitation.
Soliciting dealers will include any of the organizations described in
clauses (a), (b) and (c) above even when the activities of such organization in
connection with the tender offer and consent solicitation consist solely of
forwarding to clients materials relating to the tender offer and consent
solicitation, including the applicable letter of transmittal and consent, and
tendering shares or granting consents as directed by beneficial owners thereof.
No soliciting dealer is required to make any recommendation to holders of shares
as to whether to tender or refrain from tendering in the tender offer or whether
to grant or refrain from granting a consent. No assumption is made, in making
payment to any soliciting dealer, that its activities in connection with the
tender offer included any activities other than those described in this
paragraph. For all purposes noted in all materials relating to the tender offer
and consent solicitation, the term "solicit" shall be deemed to mean no more
than "processing shares tendered or consents" or "forwarding to customers
materials regarding the tender offer and consent solicitation."
By accepting any soliciting dealer fee, a person shall be deemed to have
represented that: (i) it has complied with the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (ii) it is
entitled to
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such compensation for such solicitation under the terms and conditions of the
tender offer; (iii) in soliciting tenders and/or consents, it has used no
soliciting materials other than those furnished by IPC; and (iv) if it is a
foreign broker or dealer not eligible for membership in the NASD, it has agreed
to conform to the NASD's Rules of Fair Practice in making solicitations.
FOR A SOLICITING DEALER TO RECEIVE A SOLICITING DEALER FEE, SUCH SOLICITING
DEALER MUST BE DESIGNATED AS SUCH ON THE APPLICABLE LETTER OF TRANSMITTAL AND
CONSENT.
All questions as to the validity, form and eligibility (including time of
receipt) of any designation of a soliciting dealer will be determined by
Illinova or IPC, in their sole discretion, which determination will be final and
binding. Neither Illinova, IPC nor any other person will be under any duty to
give notification of any defects or irregularities in any designation of a
soliciting dealer or incur any liability for failure to give such notification.
Illinova and IPC will, upon request, reimburse you for reasonable and
customary handling and mailing expenses incurred by you in forwarding materials
relating to the tender offer to your customers. Illinova will pay all stock
transfer taxes applicable to its purchase of shares pursuant to the tender
offer, subject to Instruction 6 of the applicable letter of transmittal and
consent.
Very truly yours,
Merrill Lynch & Co.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS THE AGENT OF ILLINOVA, IPC, THE DEALER MANAGER/SOLICITATION
AGENT, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
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