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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): AUGUST 11, 1996
___________________________________________
HOUSTON INDUSTRIES INCORPORATED
(Exact name of registrant as specified in its charter)
TEXAS 1-7629 74-1885573
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 713/207-3000
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HOUSTON LIGHTING & POWER COMPANY
(Exact name of registrant as specified in its charter)
TEXAS 1-3187 74-0694415
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 713/207-1111
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ITEM 5. OTHER EVENTS
On August 11, 1996, Houston Industries Incorporated (the Company),
Houston Lighting & Power Company (HL&P) and a new Delaware subsidiary of the
Company (HI Merger, Inc.) entered into an Agreement and Plan of Merger (the
Merger Agreement) with NorAm Energy Corp. (NorAm), a Delaware corporation.
Under the Merger Agreement, the Company would merge with and into HL&P and the
currently outstanding common stock of the Company would become the common stock
of HL&P, which would be renamed "Houston Industries Incorporated" (HII). NorAm
would merge with and into HI Merger, Inc., which would be renamed "NorAm Energy
Corp." and would be a wholly owned subsidiary of HII following the merger
(collectively the mergers are referred to herein as the Merger). The
outstanding HL&P preferred stock would remain unchanged.
The transaction is valued at $3.8 billion, consisting of $2.4 billion
for NorAm's common stock and equivalents and $1.4 billion of NorAm debt. Under
the Merger Agreement, holders of NorAm common stock would receive at their
election (at any time up to the trading day immediately prior to the closing
date): (i) cash in the amount of $16 per share or (ii) HII voting common stock.
The shareholders' election would, however, be subject to the right of the
Company to prorate share and cash purchases to hold the percentage of cash and
stock at or near 50-50. The value of the stock component would be held
generally equal to the cash component within the range described below, with
the number of HII shares to be issued in exchange for each share of NorAm
common stock being that number of shares of HII common stock equal to the
quotient obtained by dividing $16.00 by the average NYSE closing sales price of
a share of Company common stock over a 20 consecutive trading day period
commencing 25 trading days prior to the closing date of the Merger (the Average
Price) provided that the Average Price will be deemed to be not less than
$21.25 and not more than $26.00. In addition, if the closing does not occur by
May 11, 1997, the cash (but not stock) consideration increases thereafter by
two percent (simple interest) per quarter until closing.
NorAm operates as Entex, the local gas distribution company in
Houston, Texas, and in other areas in Texas, Louisiana and Mississippi. NorAm
also operates as Arkla, which distributes natural gas at retail in Arkansas,
Louisiana, Oklahoma and Texas, and as Minnegasco in Minnesota. NorAm operates
interstate gas pipeline facilities through NorAm Gas Transmission and
Mississippi River Transmission, natural gas gathering assets in Oklahoma,
Louisiana, Arkansas and Texas and is engaged in various other energy-related
businesses, including natural gas and electric wholesale trading, gas storage,
wholesale electric services and providing unregulated retail energy services to
industrial and large commercial customers.
The Merger Agreement has been approved by the Boards of Directors of
the Company, HL&P and NorAm. Consummation of the Merger is subject to
customary closing conditions, including approval by shareholders of the Company
and NorAm. The parties presently contemplate that shareholder meetings to
consider approval of the transactions will be held prior to the end of 1996.
Consummation of the Merger is also subject to receipt of favorable opinions of
counsel that the Merger will qualify as a tax free reorganization and certain
regulatory filings or approvals, including notice to or approvals from certain
state regulatory agencies and municipal franchise authorities and the filing of
the requisite notifications with the Federal Trade Commission and the
Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the expiration of applicable waiting periods thereunder.
The parties have agreed to certain undertakings and limitations regarding the
conduct of their businesses prior to the closing.
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Under the merger structure HII would be both a public utility company
and a public utility holding company under the Public Utility Holding Company
Act of 1935 (PUHCA). The Merger Agreement contemplates that the merged
companies will continue to be exempt from registration under PUHCA pursuant to
Section 3(a)(2) of PUHCA and regulations promulgated thereunder since the
merged holding company would be "predominantly a public-utility company whose
operations as such do not extend beyond the State in which it is organized and
States contiguous thereto." Alternative structures are provided should
existing administrative positions or legislative changes adversely affect the
structure described above or permit structures not presently authorized by
PUHCA. One of the alternative structures contemplates a non-holding company
structure in which all domestic utility operations would be conducted within
one publicly-held company.
The Merger Agreement provides for termination by either party if the
transactions have not been consummated by August 11, 1997, which date may be
extended until December 31, 1997, in the event that the only unsatisfied
condition to closing is receipt of regulatory approvals. The agreement may be
terminated by the Company or NorAm in the event that (i) the other party fails
to hold its shareholders meeting by February 15, 1997, (ii) the other party
fails to cure noncompliance with its covenants in the agreement, (iii) the
other party's representations are or become materially incorrect, (iv) there is
a material adverse change in the other party (other than general economic
changes or changes affecting the parties' industries generally), (v) the other
party's board of directors withdraws or modifies, in an adverse manner, its
recommendation for approval of the transactions or (vi) NorAm accepts a
superior, unsolicited offer. The Merger Agreement provides for a termination
fee to be paid by a party terminating the Merger Agreement in certain
circumstances, which fee ranges from $10 million to $75 million depending on
the circumstances of termination. Such termination fee is required at the $75
million level if NorAm terminates the Merger Agreement to accept a superior,
unsolicited offer or if the agreement is terminated under certain other
circumstances and such an offer is accepted within twelve months of termination
of the Merger Agreement.
The descriptions of the Merger Agreement set forth herein do not
purport to be complete and are qualified in their entirety by the provisions of
the Merger Agreement, which are attached hereto and are incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibit is filed herewith:
2(a) -- Agreement and Plan of Merger dated as of August 11,
1996 among Houston Industries Incorporated,
Houston Lighting & Power Company, HI Merger, Inc.
and NorAm Energy Corp.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HOUSTON INDUSTRIES INCORPORATED
Date: August 12, 1996 By: /s/ MARY P. RICCIARDELLO
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Mary P. Ricciardello
Vice President and Comptroller
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HOUSTON LIGHTING & POWER COMPANY
Date: August 12, 1996 By: /s/ MARY P. RICCIARDELLO
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Mary P. Ricciardello
Vice President and Comptroller
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
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2(a) Agreement and Plan of Merger dated as of August 11, 1996
among Houston Industries Incorporated, Houston Lighting &
Power Company, HI Merger, Inc. and NorAm Energy Corp.