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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
FOR
ILLINOVA CORPORATION
an Illinois corporation
IRS Employer Identification No. 37-1319890
SEC File Number 1-11327
500 SOUTH 27TH STREET
DECATUR, ILLINOIS 62521
(217) 424-6600
June 14, 1999
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ITEM 5. OTHER EVENTS.
On June 14, 1999, Illinova Corporation, an Illinois
corporation ("Illinova"), and Dynegy Inc., a Delaware corporation ("Dynegy"),
agreed to combine in a transaction in which each of Illinova and Dynegy will
become wholly owned subsidiaries of Energy Convergence Holding Company, a newly
formed Illinois corporation ("Newco"). Energy Convergence Acquisition
Corporation, an Illinois corporation and a wholly owned subsidiary of Newco,
will be merged with and into Illinova, and Dynegy Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of Newco, will be merged with
and into Dynegy. The terms of the Merger are set forth in an Agreement and Plan
of Merger (the "Merger Agreement") dated as of June 14, 1999 among Newco,
Illinova, Energy Convergence Acquisition Corporation, Dynegy and Dynegy
Acquisition Corporation.
In the combination, each share of Illinova common stock, no
par value per share, will be converted into one share of Newco common stock, no
par value per share (the "Newco Common Stock"), and each share of Dynegy common
stock, par value $.01 per share, and Dynegy Series A Participating Preferred
Stock, par value $.01 per share (collectively, the "Dynegy Stock"), will be
converted into the right to receive either $16.50 in cash or 0.69 of a share of
Newco Common Stock pursuant to an election process and the pro ration of
approximately $1.1 billion among Dynegy shareholders electing to receive cash.
The cash portion of the consideration received by Dynegy's shareholders will be
approximately 40% of the total consideration. The combination is intended to
constitute a tax-free contribution under the Internal Revenue Code of 1986, as
amended.
Dynegy has three large shareholders, Nova Gas Services (U.S.)
Inc., an affiliate of BG plc and Chevron U.S.A. Inc., which collectively own
approximately 76% of Dynegy's outstanding equity securities. Of these
shareholders, Nova and BG will be electing to receive the maximum amount of cash
possible and Chevron will be electing to receive the maximum amount of Newco
Common Stock possible. Because of the size of Nova's and BG's ownership
positions, some pro ration of the cash portion of the consideration will occur.
To the extent that Nova and BG would receive Newco Common
Stock in the combination they instead will receive Newco Series A Convertible
Preferred Stock. Newco's Series A Convertible Preferred Stock is convertible
into Newco Common Stock at the election of the holder and is subject to
redemption at the election of Newco after three years. Holders generally are
entitled to vote together with holders of Newco Common Stock in proportion to
the economic interest of such shares. Similarly, to the extent that Chevron
would receive Newco Common Stock, it will receive Newco Class B Common Stock. In
general, the terms of the Newco Class B Common Stock provide Chevron board
representation, certain rights and limitations with respect to purchases and
sales of Newco securities and certain "blocking rights" with respect to large
transactions by Newco. In addition, the terms require that Chevron, should its
ownership interest ever exceed 40% of Newco's equity securities, offer to
purchase the remaining equity securities of Newco in accordance with established
procedures.
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Consummation of the combination is subject to various
conditions, including: (i) receipt of necessary approvals by the stockholders of
each of Illinova and Dynegy; (ii) the expiration or termination of applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended; (iii) the exemption of the acquisition by Chevron of Newco's Class B
Common Stock under the Public Utility Holding Company Act and the receipt of
necessary Federal Energy Regulatory Commission and Illinois Commerce Commission
approvals; (iv) the consummation by Illinova of its previously announced sale of
its Clinton nuclear facility; (v) registration of the shares of Newco Common
Stock to be issued in the merger under the Securities Act of 1933, as amended;
and (vi) satisfaction of certain other conditions.
The foregoing summary of the combination is qualified in its
entirety by reference to the texts of the Merger Agreement, Shareholder
Agreement and other documents that are filed as exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
2.1 Agreement and Plan of Merger.
10.1 Subscription Agreement between Energy
Convergence Holding Company and Chevron
U.S.A. Inc.
10.2 Stock Purchase Agreement between Energy
Convergence Holding Company and British Gas
Atlantic Holdings BV and related Guaranty by
British Gas Overseas Holdings Limited.
10.3 Voting Agreement between Illinova and BG
Holdings, Inc.
10.4 Voting Agreement between Illinova and NOVA
Gas Services (U.S.) Inc.
10.5 Voting Agreement between Illinova and
Chevron U.S.A. Inc.
10.6 Shareholder Agreement of Energy Convergence
Holding Company with Chevron U.S.A. Inc.
10.7 Registration Rights Agreement (NOVA Gas
Services (U.S.) Inc. and British Gas
Atlantic Holdings BV).
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10.8 Registration Rights Agreement (Chevron
U.S.A. Inc.).
99.1 Bylaws of Energy Convergence Holding
Company.
99.2 Text of joint press release dated June 14,
1999, issued by Illinova and Dynegy.
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SIGNATURES
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.
ILLINOVA CORPORATION
Date: June 14, 1999 By: /s/ Larry Altenbaumer
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Larry Altenbaumer
Chief Financial Officer
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Exhibit Index
2.1 Agreement and Plan of Merger.
10.1 Subscription Agreement between Energy
Convergence Holding Company and Chevron
U.S.A. Inc.
10.2 Stock Purchase Agreement between Energy
Convergence Holding Company and British Gas
Atlantic Holdings BV and related Guaranty by
British Gas Overseas Holdings Limited.
10.3 Voting Agreement between Illinova and BG
Holdings, Inc.
10.4 Voting Agreement between Illinova and NOVA
Gas Services (U.S.) Inc.
10.5 Voting Agreement between Illinova and
Chevron U.S.A. Inc.
10.6 Shareholder Agreement of Energy Convergence
Holding Company with Chevron U.S.A. Inc.
10.7 Registration Rights Agreement (NOVA Gas
Services (U.S.) Inc. and British Gas
Atlantic Holdings BV).
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10.8 Registration Rights Agreement (Chevron
U.S.A. Inc.).
99.1 Bylaws of Energy Convergence Holding
Company.
99.2 Text of joint press release dated June 14,
1999, issued by Illinova and Dynegy.