SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) April 29, 1998
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Nevada Power Company
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(Exact Name of Registrant as Specified in its Charter)
Nevada 1-4698 88-0045330
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
6226 West Sahara Avenue, Las Vegas, Nevada 89102
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (702) 367-5000
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NA
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
Merger Transaction. On April 30, 1998, Nevada Power Company, a Nevada
corporation ("Nevada Power"), announced that it entered into an Agreement and
Plan of Merger, dated as of April 29, 1998 (the "Merger Agreement"), with Sierra
Pacific Resources, a Nevada corporation ("Sierra Pacific"), LAKE Merger Sub,
Inc. and DESERT Merger Sub, Inc., each a Nevada corporation and a wholly-owned
subsidiary of Sierra Pacific. The Merger Agreement provides for the merger of
LAKE Merger Sub, Inc. with and into Sierra Pacific (the "First Merger"), with
Sierra Pacific as the surviving corporation, and the merger of Nevada Power with
and into DESERT Merger Sub, Inc. (the "Second Merger" and together with the
First Merger, the "Mergers"), with DESERT Merger Sub, Inc. as the surviving
corporation (the "Surviving Corporation"). Following the Mergers, Nevada Power
will become a wholly-owned subsidiary of Sierra Pacific. In the Mergers, the
outstanding common stock of Sierra Pacific and Nevada Power, other than common
stock held by Sierra Pacific and Nevada Power or any of their respective wholly-
owned subsidiaries, which will be canceled, will be converted into the right to
receive cash or stock of Sierra Pacific, as described below.
In the First Merger, holders of 4,037,809 shares of the common stock,
par value $1.00 per share, of Sierra Pacific ("Sierra Pacific Common Stock"),
representing approximately 13.1% of the outstanding shares of Sierra Pacific
Common Stock, will receive cash for their shares (the "Sierra Pacific Cash
Number"). In the Second Merger, holders of 11,715,084 shares of the common
stock, par value $1.00 per share, of Nevada Power ("Nevada Power Common Stock"),
representing approximately 23.1% of the outstanding shares of Nevada Power
Common Stock, will receive cash for their shares (the "Nevada Power Cash
Number"). The holders of the remaining outstanding shares of Sierra Pacific
Common Stock (the "Sierra Pacific Stock Number") and the remaining outstanding
shares of Nevada Power Common Stock (the "Nevada Power Stock Number") will
receive Sierra Pacific Common Stock for their shares. After the Mergers, Sierra
Pacific stockholders will own approximately 49.8% of the outstanding Sierra
Pacific Common Stock and Nevada Power stockholders will own approximately 50.2%
of the outstanding Sierra Pacific Common Stock.
In the First Merger, subject to the allocation procedures set forth in
the Merger Agreement and summarized below, each holder of Sierra Pacific Common
Stock will be entitled to elect to receive for each share of Sierra Pacific
Common Stock owned by such holder $37.55 in cash, 1.44 shares of Sierra Pacific
Common Stock (the "Sierra Pacific Exchange Ratio"), a combination of cash and
Sierra Pacific Common Stock or to indicate that such holder has no preference as
to the receipt of cash or Sierra Pacific Common Stock. Notwithstanding the
foregoing, if any Sierra Pacific stockholder owns less than 100 shares of Sierra
Pacific Common Stock at the time such election is made, such stockholder will be
deemed to have elected to receive cash for such stockholder's shares of Sierra
Pacific Common Stock, and such stockholder will cease to be a stockholder of
Sierra Pacific. If, however, on the day immediately preceding completion of the
First Merger, the per share value of the Sierra Pacific Common Stock to be
received in the First Merger, as determined by multiplying the 20-day average
per share closing price of the Sierra Pacific Common Stock as of such date by
the Sierra Pacific Exchange Ratio, exceeds $45.06, which is equal to 120% of the
per share cash consideration to be received in the
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First Merger, Nevada Power and Sierra Pacific have the option to mutually agree
to follow such stockholder's election.
In the Second Merger, subject to the allocation procedures set forth
in the Merger Agreement and summarized below, each holder of Nevada Power Common
Stock will be entitled to elect to receive for each share of Nevada Power Common
Stock owned by such holder $26 in cash, 1.00 shares of Sierra Pacific Common
Stock (the "Nevada Power Exchange Ratio"), a combination of cash and Sierra
Pacific Common Stock or to indicate that such holder has no preference as to the
receipt of cash or Sierra Pacific Common Stock. Notwithstanding the foregoing,
if any Nevada Power stockholder owns less than 100 shares of Nevada Power Common
Stock at the time such election is made, such stockholder will be deemed to have
elected to receive cash for such stockholder's shares of Nevada Power Common
Stock, and such stockholder will not become a stockholder of Sierra Pacific.
If, however, on the day immediately preceding completion of the Second Merger,
the per share value of the Sierra Pacific Common Stock to be received in the
Second Merger, as determined by multiplying the 20-day average per share closing
price of the Sierra Pacific Common Stock as of such date by the Nevada Power
Exchange Ratio, exceeds $31.44, which is equal to 120% of the per share cash
consideration to be received in the Second Merger, Nevada Power and Sierra
Pacific have the option to mutually agree to follow such stockholder's election.
The Mergers are expected to be tax-free to stockholders of Nevada
Power and Sierra Pacific to the extent that they receive shares of Sierra
Pacific Common Stock, and any cash received is expected to be taxed as capital
gain.
If the number of shares of Sierra Pacific Common Stock or Nevada Power
Common Stock for which cash was elected exceeds the Sierra Pacific Cash Number
or the Nevada Power Cash Number, respectively, then (i) those stockholders who
elected stock or who made no election will receive stock, (ii) those
stockholders who hold less than 100 shares of Sierra Pacific Common Stock or
Nevada Power Common Stock, as the case may be, will receive all cash for their
shares, unless Sierra Pacific and Nevada Power mutually agree to follow such
stockholders' elections as described above, and (iii) the remaining cash will be
prorated among the remaining stockholders who elected cash; provided that those
remaining stockholders who, after such proration, would receive less than 100
shares of Sierra Pacific Common Stock, will receive cash and any remaining cash
will be allocated pro rata among those holders who will hold 100 or more shares
of Sierra Pacific Common Stock after such pro rations. Those shares not
converted into cas or stock as described above will be converted into stock.
If the number of shares of Sierra Pacific Common Stock or Nevada Power
Common Stock for which stock was elected exceeds the Sierra Pacific Stock Number
or the Nevada Power Stock Number, respectively, then (i) those stockholders who
elected cash or who made no election will receive cash, (ii) those stockholders
who hold less than 100 shares of Sierra Pacific Common Stock or Nevada Power
Common Stock, as the case may be, will receive all cash for their shares, unless
Sierra Pacific and Nevada Power mutually agree to follow such stockholders'
elections as described above, and (iii) the remaining cash will be prorated
among those stockholders who elected stock. Those shares not converted into cas
or stock as described above will be converted into stock.
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If neither the number of shares of Sierra Pacific Common Stock or
Nevada Power Common Stock for which cash was elected exceeds the Sierra Pacific
Cash Number or Nevada Power Cash Number, respectively, nor the number of shares
of Sierra Pacific Common Stock or Nevada Power Common Stock for which stock was
elected exceeds the Sierra Pacific Stock Number or Nevada Power Stock Number,
respectively, then (i) those stockholders who hold less than 100 shares of
Sierra Pacific Common Stock or Nevada Power Common Stock, as the case may be,
will receive all cash for their shares, unless Sierra Pacific and Nevada Power
mutually agree to follow such stockholders' elections as described above, (ii)
all stockholders who elected cash will receive cash, (iii) all stockholders who
elected stock will receive stock and (iv) all stockholders who made no election
will receive cash, stock or a combination of cash and stock, as mutually
determined by Sierra Pacific and Nevada Power.
The Merger Agreement contains customary representations and warranties
for transactions of this kind, including representations regarding corporate
matters, capitalization, corporate authority, financial statements, absence of
material changes, litigation, tax matters, employee benefits, environmental
compliance and regulatory matters.
The Merger Agreement provides that between the time of signing the
Merger Agreement and completing the Mergers, each of the parties will be
required to conduct its business only in the ordinary course and will be
prohibited from taking certain actions (subject to ordinary course exceptions,
certain negotiated dollar caps and, where appropriate, previously budgeted
amounts or planned actions) without the consent of the other party. Among the
more significant restrictions or limitations are those relating to paying
dividends on common stock; issuing new securities; making acquisitions,
dispositions, investments or capital expenditures; amending charter documents;
incurring debt; and increasing compensation or benefit commitments. The Merger
Agreement also provides for Nevada Power and Sierra Pacific to create a plan to
examine the manner in which to best organize and manage the combined companies.
The Board of Directors of Nevada Power has received an opinion from
its investment banker, PaineWebber Incorporated, to the effect that, based on
the procedures described in its opinion and such other matters as it considers
relevant, as of the date of the Merger Agreement, the consideration to be
received by Nevada Power stockholders in connection with the Mergers is fair,
from a financial point of view, to the holders of Nevada Power Common Stock.
In the Merger Agreement, each of Nevada Power and Sierra Pacific has
agreed to convene a special meeting of its stockholders to approve the
transactions contemplated by the Merger Agreement. In the that regard, Nevada
Power and Sierra Pacific will prepare a joint proxy statement/prospectus to be
filed with the Securities and Exchange Commission to be used to solicit the vote
of their respective common stockholders and to register under the Securities Act
of 1933, as amended, the shares of Sierra Pacific Common Stock to be issued in
the Mergers. Obtaining such stockholder approvals is a condition to completion
of the Mergers. Nevada Power currently anticipates that it will hold its
special stockholders' meeting in the third quarter of 1998.
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Nevada Power and Sierra Pacific will be required to obtain certain
state and federal regulatory approvals, including, the Public Utilities
Commission of Nevada, the Federal Energy Regulatory Commission, and the
Securities and Exchange Commission, and the filing of the requisite notification
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 the applicable waiting period thereunder. Obtaining such approvals is a
condition to completion of the Mergers. Other conditions to completion of the
Mergers include no court or regulatory orders prohibiting completion of the
Mergers; the continuing accuracy of each party's representations and warranties
in the Merger Agreement; the absence of any material adverse change in either
party's financial condition; the performance by each party of its obligations
under the Merger Agreement; and receipt of certain tax opinions.
In the Merger Agreement, Nevada Power and Sierra Pacific have each
made certain covenants, including with respect to indemnification of directors
and officers, publicity, and employee benefits matters. In addition, each of
Nevada Power and Sierra Pacific has agreed not to authorize or permit any of its
respective representatives to, directly or indirectly, initiate, solicit,
encourage, or take any action to facilitate knowingly any inquiries or the
making of any offer or proposal that constitutes a business combination
transaction with any third party, except that, prior to the time at which
stockholder approval is obtained from Nevada Power stockholders or Sierra
Pacific stockholders, as the case may be, each party may engage in discussions
or negotiations with a third party who seeks to initiate such discussions or
negotiations, furnish such third party information concerning its business and
accept an unsolicited business combination proposal from such third party if (i)
its board of directors reasonably believes in good faith, after consultation
with its financial advisors, that such proposal may be more favorable to its
stockholders than the Mergers and its board of directors determines in good
faith, after consultation with its financial advisors and outside counsel, that
failure to take such action could reasonably be expected to be a breach of its
fiduciary duties under applicable law and (ii) certain other conditions of the
Merger Agreement are satisfied.
The Merger Agreement provides that after the effectiveness of the
Mergers (the "Effective Time"), the corporate headquarters of Sierra Pacific
will be located in Reno, Nevada. The headquarters of Sierra Pacific Power
Company and of Nevada Power will be located in Las Vegas, Nevada, with gas and
water operations in Reno. The Sierra Pacific Board of Directors, which will be
classified into three separate classes, will consist of 14 members, one-half of
whom will be designated by Nevada Power and one-half of whom will be designated
by Sierra Pacific. Michael R. Niggli, Nevada Power's current President and COO
will be entitled to serve as Chairman and CEO of Sierra Pacific and Chairman of
each of Sierra Pacific's subsidiaries for such time as provided in his
employment agreement dated the Effective Time. Malyn K. Malquist, Sierra
Pacific's current Chairman, President and CEO, will be entitled to serve as
President and COO of Sierra Pacific and President and CEO of each of Sierra
Pacific's subsidiaries for such time as provided in his employment agreement
dated the Effective Time.
The Merger Agreement provides that the parties may terminate the
Merger Agreement under certain circumstances, including:
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. By mutual consent of the parties;
. By either party if the Mergers have not been completed on or before 18
months from signing of the Merger Agreement, unless all conditions to
the Mergers have been satisfied except the receipt of required
regulatory approvals, in which case the Merger Agreement may not be
terminated under this provision until the second anniversary of the
signing of the Merger Agreement;
. By either party if the stockholders of either party do not approve the
transactions contemplated by the Merger Agreement or if legal
requirements prohibit the Mergers;
. By either party if it becomes the target of a third-party takeover
proposal and such party's directors determine in good faith, based on
the advice of outside counsel, that failure to accept such proposal
could reasonably be expected to be a breach of its fiduciary duties
under applicable law and such party is unable to negotiate adjustments
to the Merger Agreement such that the target company's directors are
able to proceed with the Merger Agreement as adjusted;
. By either party if there exists any inaccuracies in the other party's
representations that would result in a material adverse effect on such
party, or such party fails to perform its obligations under the Merger
Agreement in any material respect, and, in each case, such party fails
to remedy such inaccuracy or failure within 20 days of notice thereof
by the other party;
. By either party if the other party's directors withdraw or adversely
modify their recommendation of the transaction or approve any
alternative transaction; or
. By either party if a change in control of the other party occurs or a
majority of the members of the other party's board of directors
changes.
The Merger Agreement provides that if the Merger Agreement is
terminated because of a party's breach of its representations or failure to
perform its obligations, the defaulting party will be required to pay up to $10
million of the other party's expenses incurred in connection with the
transaction. If such breach or failure is willful, there is no limit on such
reimbursement, and, if there is a pending third-party takeover proposal that is
not rejected and withdrawn and that is consummated within 2-1/2 years of
termination, the defaulting party will be required to pay a cash termination fee
of $52.5 million, less any amounts that may have been previously paid as
reimbursement for expenses.
The Merger Agreement further provides that if (a) the Merger Agreement
is terminated by either party because (i) it or the other party accepts a third-
party takeover proposal or the other party withdraws or adversely modifies its
recommendation of the transaction, (ii) either party fails to obtain its
stockholders' approval or (iii) the other party fails to call a special
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stockholders' meeting and recommend approval of the transactions contemplated by
the Merger Agreement and (b) at the time of such event there is pending a third-
party takeover proposal that is not rejected by the target directors and
withdrawn by the bidder and (c) such takeover proposal is ultimately consummated
within 2-1/2 years of termination, the defaulting party will be required to pay
a cash termination fee of $52.5 million, less any amounts that may have been
previously paid as reimbursement for expenses. In no event, will either party
be required to pay both the fee described in this paragraph and the fee
described in the preceding paragraph.
In connection with approving the Merger Agreement and the transactions
contemplated thereby, the Nevada Power Board of Directors approved an amendment
to Nevada Power's Rights Agreement, to render it inapplicable to the Second
Merger and the other transactions contemplated by the Merger Agreement. In
addition, the Rights Agreement will now expire on the earlier to occur of
October 14, 2000, or the time that is immediately prior to completion of the
Second Merger. Nevada Power currently anticipates the Second Merger will be
completed in about one year.
In connection with entering into the Merger Agreement, Nevada Power
will discontinue issuing new shares of Nevada Power Common Stock under the
Nevada Power dividend reinvestment plan and employee benefit plans. Until
completion of the Mergers, Nevada Power will continue to meet its obligations
under such plan by purchasing shares of Nevada Power Common Stock in the open
market.
The Merger Agreement, the Amendment to Rights Agreement and the press
release issued by Nevada Power in connection therewith are filed herewith as
Exhibits 2.1, 10.1 and 99.1, respectively, and are incorporated herein by
reference. The description of the Merger Agreement and the Amendment to Rights
Agreement set forth above does not purport to be complete and is qualified in
its entirety by reference to the provisions of such agreement.
Related Dividend Action. At the time it approved the Merger Agreement
and the transactions contemplated thereby, the Nevada Power Board of Directors
stated that, after it considers its August 1998 dividend at the current rate of
$0.40 per share per quarter ($1.60 per share annually), it intends to adopt the
expected initial annual dividend rate of Sierra Pacific subsequent to
consummation of the Mergers. This would result in an indicated quarterly
dividend rate of $0.25 per share ($1.00 per share annually) for periods
following the August 1998 dividend payment. Nevada Power's 1997 dividend payout
ratio was 97% of net income. Nevada Power believes that the new dividend rate
would be more closely in line with industry trends and would provide equity
capital to fund Nevada Power's significant growth. The declaration of future
dividends is subject to the discretion of the appropriate Board of Directors (of
Nevada Power prior to the Mergers and of Sierra Pacific after the Mergers) which
will consider, among other things, the company's financial condition and results
of operations, as well as regulatory issues.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
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(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of April 29, 1998, by and among
Nevada Power Company, a Nevada corporation, Sierra Pacific Resources, a
Nevada corporation, LAKE Merger Sub, Inc., a Nevada corporation, and DESERT
Merger Sub, Inc., a Nevada corporation
10.1 Amendment, dated as of April 29, 1998, to the Rights Agreement, dated as of
October 15, 1990, between Nevada Power Company, a Nevada corporation, and
Chase Manhattan Bank, N.A., as Rights Agent.
99.1 Press Release, dated April 30, 1998
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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.
Dated: April 30, 1998 Nevada Power Company
By: /s/ Charles A. Lenzie
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Charles A. Lenzie
Chairman of the Board and Chief Executive Officer
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EXHIBIT INDEX
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Exhibit No.
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2.1 Agreement and Plan of Merger, dated as of April 29, 1998, by and among
Nevada Power Company, a Nevada corporation, Sierra Pacific Resources, a
Nevada corporation, LAKE Merger Sub, Inc., a Nevada corporation, and DESERT
Merger Sub, Inc., a Nevada corporation. Nevada Power agrees to furnish
supplementally a copy of any omitted schedule to the Securities and
Exchange Commission upon request.
10.1 Amendment, dated as of April 29, 1998, to the Rights Agreement, dated
as of October 15, 1990, between Nevada Power Company, a Nevada corporation,
and Chase Manhattan Bank, N.A., as Rights Agent.
99.1 Press Release, dated April 30, 1998
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