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ILLINOIS POWER COMPANY
500 S. 27th Street
Decatur, IL 62525
January 14, 1994
By Electronic Submission
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Illinois Power Company
Dear Sir or Madam:
On behalf of Illinois Power Company, an Illinois corporation (the "Company"),
transmitted herewith for filing pursuant to Rule 14a-6(b) under the Securities
Exchange Act of 1934, as amended, and Regulation S-T, are soliciting materials
relating to the definitive Prospectus and Proxy Statement filed as part of the
Registration Statement on Form S-4 (Reg. No. 33-51053) of IP Holding Company
with respect to a special meeting of stockholders of the Company to be held on
February 9, 1994. Such materials are anticipated to be sent or given to
stockholders no sooner than the date hereof. No additional fee is required in
connection with this filing because a fee was paid upon filing of the
preliminary proxy materials.
One copy of a conforming paper format version of the materials, legended as
required, will be submitted to the Securities and Exchange Commission at the
address indicated below in accordance with Item 901(d) of Regulation S-T. In
addition, in accordance with Rule 14a-6 conforming paper format versions of
the attached materials will be filed with each national securities exchange
upon which any class of securities of Illinois Power is listed and registered.
We appreciate your attention to this filing. Please call the undersigned at
(217/424-6850), or Gary J. Kocher, Sidley & Austin, (312)853-6095, if you have
any questions.
Very truly yours,
/s/ Leah Manning Stetzner
Leah Manning Stetzner
Enclosures
cc: OFICS Filer Support
SEC Operations Center
6432 General Green Way
Alexandria, Virginia 22312-2413
New York Stock Exchange, Inc. (5 copies)
Chicago Stock Exchange (3 copies)
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January 14, 1994
To: Decatur Headquarters and Clinton Department Heads,
Area Managers, Fossil Station Managers and District Managers
Employee Communication on Proposed Holding Company
Our communication plan for employees leading to the special
stockholders meeting Feb. 9 includes:
Briefing materials you can use to discuss the proposal with
your employees,
Grapevine articles explaining the proposed
restructuring,
An employee bulletin on Feb. 9 giving a synopsis of the
stockholders meeting and results of the vote, and
Videotape of the Feb. 9 meeting that you may show your
employees.
We are providing several reference materials for your use in
discussions with employees. Attached are talking points summarizing
basic information from the proxy, a proxy statement, and proposed
Grapevine articles.
Jesse W. Price
cc: all officers
attachments (3)
3 Talking Points on
Illinois Power's Proposed Restructuring
WHAT IP's directors have proposed restructuring the corporation. The change
would:
Form a holding company.
Make Illinois Power the current electric and gas utility a
subsidiary of the holding company.
Eventually make IP Group a subsidiary of the holding company,
independent of the regulated utility.
WHY IP's directors believe the holding company system would be in the best
interest of shareholders. It would:
Let IP Group and other future subsidiaries operate outside ICC
regulation, so they can take advantage of competitive opportunities
without delay.
Make subsidiaries accountable as separate business activities.
Protect the utility business and its customers from business risks
of the non-regulated companies.
Give system employees additional expertise in energy-related
businesses.
WHEN The restructuring would be effective upon approval of shareholders and
the necessary regulatory bodies.
Stockholders vote Feb. 9, 1994; proxies can be returned anytime
before the special Feb. 9 meeting.
Two-thirds of stockholders must approve.
Applications for approval have been filed with
+ Securities and Exchange Commission (SEC) under the Public
Utility Holding Company Act
+ Federal Energy Regulatory Commission (FERC)
+ Nuclear Regulatory Commission (NRC).
The SEC and FERC are expected to act on IP's request by the end of
March. NRC action could come as early as the end of January.
Illinois Commerce Commission approval is not required.
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Talking Points
page 2
HOW If the new structure is approved:
Shares of common stock in Illinois Power would become common
shares in the holding company. Owners of IP common stock would
automatically own the same number of shares in the holding company.
Illinois Power preferred stock would continue to be preferred
shares of the Illinois Power utility.
Directors of IP would become directors of the holding company.
When the restructuring takes effect, they would serve as directors of
both companies.
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GRAPEVINE
January 20, 1994
HOLDING.GRP
HEADLINE: x
CALLOUT: x
ART: x
CAPTION: x
Illinois Power's directors have proposed restructuring the corporation
into a holding company under which IP affiliates could for the first time
operate without ICC regulation, allowing them to compete on an even footing
with other businesses to provide unregulated energy and other services and
products.
If approved, the holding company would own both Illinois Power and IP
Group, Inc., which is presently a subsidiary of Illinois Power.
IP Group would then be independent of the regulated utility, free to
make decisions based on business risks -- not because of ICC rules.
IP's board of directors would become directors of the holding company as
well. After the restructuring takes effect, they would serve as directors of
both companies.
The holding company has two employees, each of whom serves Illinois
Power in similar capacities. Larry D. Haab is the holding company's chairman,
president and chief executive officer, and Leah Manning Stetzner is secretary
and treasurer. The holding company may also provide some stock registration
services.
For customers, the change should be transparent: Illinois
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Power will continue to concentrate on its responsibility as a public utility
- -- serving customers.
The proxy statement recently mailed to all shareholders explained
several advantages of the restructuring. It would enable IP Group to act
quickly without waiting for approval from regulators, make the subsidiary
accountable as a separate business, and protect the utility business and its
customers from risks of the non-regulated part of the business.
Potential benefits of the restructuring are explained in greater detail
on pages 11-12 of the proxy statement.
Two-thirds of stockholders must approve the restructuring. Stockholders
will vote in a special meeting at IP headquarters on Feb. 9. Shareholders who
will not attend the meeting can vote by proxy. Cards can be returned any time
before the Feb. 9 meeting.
Shareholders who do not approve of the transaction have the right to
obtain the fair value of their shares if the restructuring is completed. To
maintain this prerogative, dissenting shareholders must express their
opposition in writing before the vote and must not vote their shares in favor
of the proposal.
Rights of dissenting shareholders are explained on pages 16-17 of the
proxy statement.
In addition to consent of shareholders, the proposal must gain approval
from three regulatory agencies. Applications were filed in November with the
Securities and Exchange Commission (SEC) under the Public Utility Holding
Company Act, the Federal Energy Regulatory Commission (FERC) and the Nuclear
Regulatory Commission (NRC).
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The SEC and FERC are expected to act on IP's request by the end of
March. NRC action could come as soon as late January.
The restructuring does not require approval from the Illinois Commerce
Commission.
However, the ICC has endorsed the concept of a holding company
structure. In its November 1993 ruling approving IP's investment in IP Group,
the commission said IP should proceed promptly with forming a holding company
and put IP Group under it within two years.
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sidebar: address stock ownership questions
Upon learning of the proposed formation of a holding company, most
shareholders are apt to ask an obvious question: "What will I need to do
about my IP stock?"
The answer is equally straightforward: "Nothing."
If the new structure is approved, shares of common stock in Illinois
Power would become common shares in the holding company. Thus, if you own IP
common stock as most employees do, you would automatically own the same number
of shares in the holding company.
Illinois Power preferred stock would continue to be preferred shares of
the Illinois Power utility, which will be a subsidiary of the holding company.
Stock plans under which employees purchase or are given shares of IP
stock would instead provide shares of holding company stock. Plans include the
employee stock ownership and dividend reinvestment plans, 401(k), and the
incentive compensation plan.
The holding company would initially expect to pay quarterly dividends at
the rate most recently paid on IP stock, and on approximately the same
schedule.
The holding company will apply to have its common stock listed on the
New York and Chicago stock exchanges. New listings would begin when the merger
takes effect.
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