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UNITED STATES 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 6, 1997
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HOUSTON INDUSTRIES INCORPORATED*
(Exact name of registrant as specified in its charter)
TEXAS 1-7629 74-1885573
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) 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 (I.R.S. Employer
of incorporation) File Number) 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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*On August 6, 1997, Houston Industries Incorporated merged with and into
Houston Lighting & Power Company, which was renamed "Houston Industries
Incorporated."
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The combined Form 8-K is separately filed by Houston Industries Incorporated
(Company) and Houston Lighting & Power Company (HL&P).
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 6, 1997, the Company merged with and into HL&P, and
NorAm Energy Corp. (NorAm) merged with and into HI Merger, Inc., a subsidiary
of the Company. Upon consummation of the mergers (collectively, the Merger),
HL&P, the surviving corporation of the Company/HL&P merger, was renamed
"Houston Industries Incorporated" (Houston) and HI Merger, Inc., the surviving
corporation of the NorAm/HI Merger, Inc. merger, was renamed "NorAm Energy
Corp." and became a wholly owned subsidiary of Houston.
NorAm is principally engaged in the distribution and
transmission of natural gas, including the gathering, storage and marketing of
natural gas. Through its Entex, Arkla and Minnegasco distribution divisions,
NorAm is the nation's third-largest natural gas utility in terms of customers
served, with over 2.7 million customers in six states. NorAm operates
interstate gas pipeline facilities through NorAm Gas Transmission Company and
Mississippi River Transmission Corporation. It also owns 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.
Based on an order of the Securities and Exchange Commission
(SEC) issued on July 24, 1997, Houston will continue to be exempt from
regulation under Section 3(a)(2) of the Public Utility Holding Company Act of
1935 (1935 Act), except with respect to the (i) acquisition of certain voting
securities of other domestic public utility companies and utility holding
companies and (ii) the provisions of Section 33 of the 1935 Act regarding the
acquisition, ownership and financing of foreign utility companies. On July 30,
1997, the Federal Energy Regulatory Commission (FERC) issued an order approving
the Merger without conditions and authorizing NorAm Energy Services, Inc., a
subsidiary of NorAm engaged in the power marketing business, to continue its
market-based rate schedules in effect. For additional information regarding
the FERC and SEC orders, reference is made to Exhibits 99.2 and 99.3 filed
with this Report on Form 8-K, which exhibits are incorporated herein by
reference.
Merger Consideration. Under the terms of the Agreement and
Plan of Merger dated as of August 11, 1996, as amended (Merger Agreement),
among the Company, HL&P, HI Merger, Inc. and NorAm, each share of NorAm common
stock outstanding immediately prior to the effective time of the Merger was
converted, upon consummation of the Merger, into the right to receive (i)
0.74963 shares of the common stock, without par value, of Houston (including
associated preference stock purchase rights, Houston Common Stock) or (ii) cash
consideration of $16.3051, representing cash consideration of $16.00 plus simple
interest of two percent per quarter from May 11, 1997 to August 6, 1997 (Cash
Consideration). Under the terms of the Merger Agreement, the exchange ratio for
the stock consideration (Stock Consideration) was based on $16.00 per share
without interest and the average daily closing price on the New York Stock
Exchange of $21.3438 for the common stock of the Company during the 20
consecutive trading days commencing on July 1, 1997. The Merger Agreement also
provides that each holder of an unexpired employee stock option to purchase
NorAm common stock, along with any tandem stock appreciation rights, outstanding
at the effective time of the Merger was entitled to elect either to have, upon
consummation of the Merger, all or any portion of his or her NorAm stock
options canceled in exchange for cash or to have all or any portion of such
options assumed by Houston at a conversion rate specified in the Merger
Agreement.
Based upon preliminary information regarding cash and stock
elections made by NorAm shareholders and after giving effect to preliminary
proration adjustments, the aggregate
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consideration for the Merger consisted of (i) approximately 47.8 million shares
of Houston Common Stock and (ii) approximately $1.4 billion in Cash
Consideration. In addition, Houston has issued to NorAm employees options to
purchase up to 887,804 shares of Houston Common Stock and paid approximately
$4.9 million in exchange for cancelled NorAm options.
After the Merger, NorAm's existing debentures and convertible
securities will remain outstanding as the securities of NorAm, a wholly owned
subsidiary of Houston (and will not be assumed by Houston except with respect
to the conversion of certain NorAm debt securities into Houston common stock as
described below), and NorAm will continue to be a reporting company under the
Securities Exchange Act of 1934 (Exchange Act).
As a result of the Merger, NorAm's 6% Convertible Subordinated
Debentures due 2012 and NorAm's 6 1/4% Convertible Junior Subordinated
Debentures (collectively, Convertible Securities) will be convertible into (in
lieu of NorAm common stock) the amount of Stock Consideration and Cash
Consideration that the holder of such Convertible Securities would have had the
right to receive (i) if such Convertible Securities had been converted into
NorAm common stock immediately prior to the Merger and (ii) if, following
conversion, the holder had received Stock Consideration with respect to 50
percent of his or her shares of NorAm common stock and Cash Consideration with
respect to the remaining 50 percent of such holder's shares of NorAm common
stock.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Financial Statements:
The following documents, previously filed with the SEC pursuant to the
Securities Exchange Act of 1934, as amended, are hereby incorporated by
reference:
1. The Company's and HL&P's Combined Annual Report on
Form 10-K for the year ended December 31, 1996 (File
Nos. 1-7629 and 1-3187)
2. The Company's and HL&P's Combined Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997 (File
Nos. 1-7629 and 1-3187)
3. NorAm's Annual Report on Form 10-K for the year ended
December 31, 1996 (File No. 1-3751)
4. NorAm's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 (File No. 1-3751)
Unaudited Pro Forma Combined Financial Statements:
The unaudited pro forma combined condensed financial
statements included as Exhibit 99.1 give effect to the Merger. The unaudited
pro forma condensed balance sheet as of March 31, 1997 is presented as if the
Merger had occurred on that date. The unaudited pro forma condensed statements
of income for the year ended December 31, 1996 and the three months ended March
31, 1997 assume that the Merger occurred at the beginning of each of the
periods presented. The acquisition of NorAm will be treated as a purchase for
accounting purposes. The assets acquired and liabilities assumed will be
recorded at their fair values.
The unaudited pro forma financial statements included as
Exhibit 99.1 should be read in conjunction with the historical financial
statements and related notes of the Company and NorAm and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of
the Company and NorAm incorporated by reference herein. The unaudited pro
forma condensed statements of income are not necessarily indicative of the
financial results that would have occurred had the Merger been completed on the
indicated dates, nor are they necessarily indicative of future financial
results. Results for interim periods do not necessarily indicate results for
the full year.
The pro forma adjustments are based on assumptions and
estimates made by the Company's management and do not reflect adjustments for
anticipated operating efficiencies and cost savings the Company expects to
achieve as a result of the Merger. The actual allocation of the consideration
paid for NorAm may differ from that reflected in the unaudited pro forma
combined condensed financial statements after a more extensive review of the
fair value of the assets acquired and liabilities assumed has been completed.
Amounts allocated will be based upon the estimated fair values at the effective
time of the Merger, which could vary significantly from the amounts as of March
31, 1997.
As described in Item 2 above, the ratio of shares of Houston
Common Stock issued to Cash Consideration paid differed from that reflected in
these unaudited pro forma combined condensed financial statements. If the actual
ratio was reflected in the unaudited pro forma financial statements, pro forma
common stock equity would decrease by approximately 4% and pro forma long-term
debt would increase by approximately 3%. Pro forma earnings per common share
would increase by no more than 2% for the year ended December 31, 1996.
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EXHIBITS
Exhibit No. Exhibits (Exhibits designated by an asterisk
(*) are incorporated herein by reference to a
separate filing as indicated.)
*2(a) Agreement and Plan of Merger dated as of
August 11, 1996, by and among Houston
Industries Incorporated, Houston Lighting &
Power Company, HI Merger, Inc. and NorAm
Energy Corp. (Incorporated by reference to
Exhibit 2(a) to Form 8-K Combined Current
Report of Houston Industries Incorporated and
Houston Lighting & Power Company dated August
11, 1996).
*2(b) Amendment to Agreement and Plan of Merger
(incorporated by reference to Exhibit 2(c) to
Registration Statement on Form S-4 of Houston
Industries Incorporated and Houston Lighting &
Power Company (Reg. No. 333-11329).
2(c) Agreement dated August 5, 1997, amending
Agreement and Plan of Merger.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Coopers & Lybrand L.L.P.
99.1 Unaudited Pro Forma Combined Financial
Statements
99.2 Memorandum and Opinion and Order Granting
Exemption to Holding Company dated July 24,
1997, and issued by the Securities and
Exchange Commission.
99.3 Order of the FERC dated July 30, 1997.
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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 thereunto duly authorized.
HOUSTON INDUSTRIES INCORPORATED
(Registrant)
/s/ Mary P. Ricciardello
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Mary P. Ricciardello
Vice President and Comptroller
Date: August 7, 1997
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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 thereunto duly authorized.
HOUSTON LIGHTING & POWER COMPANY
(Registrant)
/s/ Mary P. Ricciardello
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Mary P. Ricciardello
Vice President and Comptroller
Date: August 7, 1997
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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Exhibits (Exhibits designated by an asterisk (*) are incorporated herein by reference
to a separate filing as indicated.)
*2(a) Agreement and Plan of Merger dated as of August 11, 1996, by and among Houston
Industries Incorporated, Houston Lighting & Power Company, HI Merger, Inc. and NorAm
Energy Corp. (Incorporated by reference to Exhibit 2(a) to Form 8-K Combined Current
Report of Houston Industries Incorporated and Houston Lighting & Power Company dated
August 11, 1996).
*2(b) Amendment to Agreement and Plan of Merger (incorporated by reference to Exhibit 2(c)
to Registration Statement on Form S-4 of Houston Industries Incorporated and Houston
Lighting & Power Company (Reg. No. 333-11329)).
2(c) Amendment dated August 5, 1997, amending Agreement and Plan of Merger.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Coopers & Lybrand LLP
99.1 Unaudited Pro Forma Combined Financial Statements
99.2 Memorandum and Opinion and Order Granting Exemption to Holding Company dated July 24,
1997, and issued by the Securities and Exchange Commission.
99.3 Order of the FERC dated July 30, 1997.