1
EXHIBIT 99.2
Sept. 20, 2001 CONTACTS: Danny Gibbs, Duke Energy
Phone: 713/627-4060
24-Hour: 704/382-8333
Bob Foulkes, Westcoast Energy
Phone: 604/488-8093
DUKE ENERGY ANNOUNCES US$8.5 BILLION ACQUISITION OF WESTCOAST ENERGY
MOVE STRENGTHENS ENERGY PORTFOLIO AND PAVES THE WAY FOR EXPANSION
OF NORTH AMERICAN NATURAL GAS INFRASTRUCTURE
CHARLOTTE, N.C. AND VANCOUVER, B.C. - Duke Energy (NYSE:DUK) today announced
plans to greatly expand its position in the North American natural gas
marketplace by acquiring Westcoast Energy (TSE:W; NYSE:WE), a leading energy
company with a significant network of Canadian-based assets, in a cash and stock
transaction valued at approximately US$8.5 billion, including debt assumed.
The transaction provides for the acquisition of all outstanding common shares of
Westcoast Energy in exchange for a combination of cash, Duke Energy common
shares and exchangeable shares of a Canadian subsidiary of Duke Energy such that
50 percent of the consideration will be paid in cash and 50 percent will be paid
in stock. The transaction is intended to provide Westcoast Energy shareholders
with approximately Cdn$43.80 per share in value, subject to a collar. Duke
Energy believes that the acquisition can be completed during first quarter 2002.
"This acquisition greatly enhances the balance and diversity of our portfolio of
energy assets and provides us with additional growth opportunities to serve
North America's expanding energy needs," said Richard B. Priory, president,
chairman and chief executive officer of Duke Energy. "The combination of
Westcoast Energy's strategically placed assets in growing supply regions with
our merchant skills and desire to be a leader in the development of new
transportation infrastructure will strengthen our ability to connect energy
supply and energy markets in Canada and the United States.
- more -
2
- 2 -
"This is an opportunity-based transaction that will be immediately accretive
upon closing," Priory continued. "It is an important investment in our
competitive energy businesses, expected to provide the opportunity for increased
earnings growth from our gas transmission business, while also providing new
growth opportunities for our other businesses. Duke Energy continues to expect
earnings per share (EPS) growth of 10-15 percent per year from a base of $2.10
EPS in 2000."
"The Westcoast Energy board of directors fully supports this combination and
will recommend it to shareholders," said Michael E. J. Phelps, chairman and
chief executive officer of Westcoast. "The bid represents a significant premium
to our recent share price at a time when Westcoast Energy shares are trading at
record highs, and it offers current Westcoast shareholders an opportunity to
participate in the future growth prospects of Duke Energy, a leading
multinational energy powerhouse.
"This acquisition also represents an opportunity for our employees to join
forces with a large, growth-oriented and well-managed industry partner,
enhancing their personal careers while pursuing the opportunities represented by
the Westcoast Energy assets in Canada. I am pleased that we are able to join
forces with the people of Duke Energy," Phelps said.
When the transaction is completed, Westcoast Energy's natural gas assets - its
primary business - will be operated by Houston-based Duke Energy Gas
Transmission (DEGT). Westcoast Energy's energy services and international
businesses will be operated by Duke Energy's Energy Services' business units.
"Increasingly, Canada is a key source for incremental natural gas supply and
this acquisition will enhance Duke Energy's ability to connect rapidly expanding
supply with fast-growing markets in both Canada and the United States," said
Fred J. Fowler, group president, energy transmission, which includes DEGT. "This
acquisition will increase DEGT's projected annual growth earnings before
interest and taxes (EBIT) from 5-7 percent to 7-9 percent," said Fowler.
- more -
3
- 3 -
At closing, Michael Phelps will become a member of Duke Energy's board of
directors and chairman of an advisory board for DEGT's Canadian operations.
DEGT's Canadian operations will be headquartered in Vancouver. "Westcoast Energy
has been a leading corporate citizen in Canada and we expect to continue that
tradition," said Fowler.
The combined natural gas-related assets will include about 18,900 miles of
transmission pipeline; 241 billion cubic feet of natural gas storage; 58,700
miles of gathering pipeline; 84 processing facilities; and 16,500 miles of
distribution pipeline.
In addition to the wholly owned pipeline systems of DEGT (Texas Eastern
Transmission, Algonquin Gas Transmission and East Tennessee Natural Gas) and of
Westcoast Energy (BC Pipeline, Empire State Pipeline and Union Gas
Transmission), the combined company will have ownership interests in the
Maritimes & Northeast Pipeline (75 percent), Gulfstream Natural Gas System (50
percent), Foothills Pipe Lines (50 percent), Vector Pipeline (30 percent) and
Alliance Pipeline/Aux Sable (23.6 percent).
Duke Energy plans to finance the cash portion of this transaction largely with
equity-linked securities, which would result in a credit profile for the
combination that is consistent with our current ratings.
TERMS OF THE AGREEMENT
Under the terms of the agreement, each common share of Westcoast Energy would be
exchanged, at the election of each shareholder, for (i) Cdn$43.80 in cash or
(ii) a portion of a share, based on an exchange ratio, of Duke Energy common
stock or exchangeable shares of a Canadian subsidiary of Duke Energy that are
exchangeable for Duke Energy common stock or (iii) a combination of such
consideration. Elections to receive cash, stock or a combination will be subject
to proration so that the overall consideration will consist of approximately 50
percent cash and approximately 50 percent stock. For shares of Westcoast Energy
exchanged for stock,
- more -
4
- 4 -
the exchange ratio will be determined based on the 20-day weighted average
trading price of Duke Energy common stock during a trading period prior to the
closing of the acquisition, subject to a maximum exchange ratio of 0.7711 and a
minimum exchange ratio of 0.6119, within a Duke Energy common stock price range
of $36.88 to $46.48.
A Westcoast Energy shareholder who is a Canadian resident and desires stock
consideration can elect either Duke Energy common stock or exchangeable stock of
Duke Energy's Canadian subsidiary. The exchangeable shares are the economic and
voting equivalent of Duke Energy common stock and provide the opportunity for a
tax-deferred exchange for Canadian resident holders of Westcoast Energy common
stock. A Westcoast Energy shareholder who is not a Canadian resident and desires
stock consideration may only elect Duke Energy common stock.
The transaction will be effected through a court-approved plan of arrangement in
Canada and is subject to, among other things, approval by the holders of
Westcoast Energy common shares and options as well as obtaining regulatory
approvals. The agreement contains non-solicitation and termination fee
provisions.
Merrill Lynch & Co. acted as exclusive financial advisor and provided a fairness
opinion to Duke Energy. Credit Suisse First Boston Corporation and CIBC World
Markets Inc. were financial advisors and provided fairness opinions to Westcoast
Energy. Vinson & Elkins L.L.P. working with Duke Energy's in-house counsel
provided legal counsel to Duke Energy for this transaction. Stikeman Elliot
assisted Duke Energy on Canadian legal matters. Westcoast Energy received legal
counsel from Westcoast's in-house counsel together with Torys with respect to
Canadian and United States legal matters and Farris Vaughn with respect to
British Columbia legal and regulatory matters.
ADDITIONAL INFORMATION
Duke Energy, a diversified multinational energy company, creates value for
customers and shareholders through an integrated network of energy assets and
expertise. Duke Energy
- more -
5
- 5 -
manages a dynamic portfolio of natural gas and electric supply, delivery and
trading businesses - generating revenues of more than $49 billion in 2000. Duke
Energy, headquartered in Charlotte, N.C., is a Fortune 100 company traded on the
New York Stock Exchange under the symbol DUK. More information about the company
is available on the Internet at: WWW.DUKE-ENERGY.COM.
Westcoast Energy Inc. (TSE: W; NYSE: WE), headquartered in Vancouver, British
Columbia, is a leading North American energy company with assets of
approximately US$10 billion. The Company's interests include natural gas
gathering, processing, transmission, storage and distribution, as well as power
generation, international energy businesses, and financial, information
technology and energy services businesses. More information is available on the
Company's Web site at WWW.WESTCOASTENERGY.COM
Additional information about the transaction, including an asset map
highlighting combined operations, is available on the companies' Web sites.
ATTENTION: MEDIA REPRESENTATIVES. A conference call for members of the media is
scheduled for 6:30 p.m. EDT today. Only members of the media will be allowed to
ask questions. Richard Priory of Duke Energy and Michael Phelps of Westcoast
Energy will discuss the acquisition. The conference call can be accessed by
dialing 800/500-0177 in the United States or 719/457-2679 outside the United
States. The confirmation code is 677679. Please call in 5 to 10 minutes prior to
the scheduled start time. Beginning two hours after the call, a replay will be
available through Oct. 20, 2001, by dialing 888/203-1112. The international
replay number is 719/457-0820. The confirmation code is 677679.
CONFERENCE CALL AND INVESTOR PRESENTATION. A webcast and conference call for
analysts and investors will be held on Sept. 21, 2001, at 10 a.m. EDT. Internet
users can participate in the webcast by accessing the investor's section of Duke
Energy's Web site to view slides and listen to audio. You can also listen to the
conference by calling 1-888-857-6932 and using
- more -
6
- 6 -
confirmation code 565077. International callers should use 1-719-457-2604.
A replay of the conference call will be available through Oct. 20, 2001, by
calling 1-888-203-1112, code 565077. International replay is available at
1-719-457-0820, code 565077.
This document includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Such statements include those concerning the contemplated transaction,
strategic plans, expectations and objectives. Although Duke Energy believes that
its expectations are based on reasonable assumptions, it can give no assurance
that its goals and expectations will be achieved. Important factors that could
cause actual results to differ materially from those in the forward-looking
statements herein include completion of the proposed transaction, integration of
the two companies, regulatory approvals and developments, realization of
expected synergies from the transaction, the timing and extent of changes in
commodity prices for oil, gas, coal, electricity and interest rates, the extent
of success in connecting natural gas supplies to gathering and processing
systems and in connecting and expanding gas and electric markets, the
performance of electric generation, pipeline and gas processing facilities, the
timing and success of efforts to develop domestic and international power,
pipeline, gathering, processing and other infrastructure projects and conditions
of the capital markets and equity markets during the periods covered by the
forward-looking statements.
###