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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) DECEMBER 18, 1997
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BAY STATE GAS COMPANY
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 1-7479 04-2548120
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
300 FRIBERG PARKWAY, WESTBOROUGH, MA 01581-5039
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (508) 836-7000
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
On December 18, 1997, Bay State Gas Company, a Massachusetts corporation
(the "Company") and NIPSCO Industries, Inc., an Indiana corporation ("Nipsco")
entered into an Agreement and Plan of Merger (the "Merger Agreement") providing
for a strategic business combination of the Company and Nipsco. Pursuant to the
Merger Agreement, the Company will be merged with and into a newly formed merger
subsidiary of Nipsco, which would be renamed "Bay State Gas Company" and would
be a wholly owned subsidiary of Nipsco (the "Merger"). The transaction is valued
at $780 million, consisting of $540 million in equity and $240 million in debt
and preferred stock. Under the Merger Agreement, the holders of common stock,
par value $3.33 1/3 of the Company (the "Company Common Stock") would receive at
their election (at any time up to the trading day immediately prior to the
closing date of the Merger): (i) cash in the amount of $40 per share (the "Cash
Price"), (ii) such number or fraction thereof of shares of common stock, without
par value, of Nipsco (the "Nipsco Common Stock") equal to the Cash Price divided
by the Nipsco Share Price. The "Nipsco Share Price" shall be equal to the
average closing price of Nipsco Common Stock on the New York State Exchange
Composite Transactions Reporting System for the 20 trading days preceding the
second trading day prior to the effective time of the Merger or (iii) a
combination of cash and Nipsco common stock; provided that the aggregate amount
of cash consideration paid by Nipsco may not exceed 50% of the total
consideration, as may be adjusted (the "Cash Election Number"). In the event
that the Company's shareholders elect to receive cash consideration in excess of
the Cash Election Number, each shareholder will receive a prorated amount of
cash based on the Cash Election Number.
The Merger Agreement has been approved by the Boards of Directors of the
Company and Nipsco. Consummation of the Merger is subject to certain closing
conditions, including approval by the shareholders of the Company which
presently intends that the shareholders' meeting to consider such approval will
be held as early as practicable in 1998. Consummation of the Merger is also
subject to receipt of a favorable opinion of counsel that the Merger will
qualify as a tax-free reorganization, the effectiveness of a Registration
Statement to be filed by Nipsco in respect of its Common Stock to be issued in
the Merger and certain regulatory approvals or filings, including approvals by
or filings with the Massachusetts Department of Telecommunications and Energy,
the New Hampshire Public Utilities Commission, the Maine Public Utilities
Commission, the Securities and Exchange Commission, the Federal Energy
Regulatory Commission 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.
Under this Merger structure, Nipsco will retain its exemption from
registration under the Public Utility Holding Company Act of 1935, as amended
(the "1935 Act"). An alternative structure (the "Alternative Merger"), involving
the combination of the Company and its wholly owned utility subsidiary, Northern
Utilities, with Nipsco's wholly owned utility subsidiary, Northern Indiana
Public Service Company, is required in the event that such Alternative Merger is
able to be consummated under applicable corporate and public utility law before
approval of the Merger structure under the 1935 Act appears likely to be
obtained; provided that the parties may continue to pursue approval for the
Merger structure under the 1935 Act through December 31, 1998. The Merger
Agreement provides that either party may terminate the Merger Agreement if
neither the
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Merger nor the Alternative Merger appears to be a legally permissible structure
by December 31, 1998. In the event that the 1935 Act is repealed or amended in
relevant fashion prior to consummation of the Merger to permit the Merger
structure, such structure will be effected.
In addition, the Merger Agreement provides for termination by either the
Company or Nipsco (i) by mutual written consent, (ii) if the Company's
shareholders fail to approve the Merger, (iii) if the Merger is not consummated
by December 31, 1998, subject to automatic extension to June 30, 1999, if the
only remaining open item is receipt of regulatory approvals, (iv) if a final,
nonappealable order, decree, ruling or other action permanently enjoins,
restrains or prohibits the Merger or (v) if the Company's Board of Directors
withdraws or modifies its recommendation for approval of the Merger in the face
of an unsolicited third party offer or the Company's Board of Directors accepts
an unsolicited third party offer. Moreover, the Merger Agreement may be
terminated by either party if the other is in material breach of the Merger
Agreement. The Merger Agreement provides for a termination fee to be paid by one
party if the Merger Agreement is terminated in certain circumstances. Either
party must pay the other $10 million if the Merger Agreement is terminated as a
result of a material breach by that party. Moreover, if the Merger Agreement is
terminated in certain circumstances when an unsolicited third party offer for
the Company has been made, the Company must pay Nipsco a termination fee of $10
million, followed by an additional $15 million if that unsolicited offer, or
another offer accepted in lieu of that offer, is consummated within 2 1/2 years
of termination of the Merger Agreement.
The description of the Merger Agreement set forth herein does not purport
to be complete and is qualified in its entirety by the provisions of the Merger
Agreement, which is attached hereto as Exhibit 2(b) and is incorporated herein
by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS
The following exhibits are filed herewith:
2(a) Press release dated December 18, 1997.
2(b) Agreement and Plan of Merger dated as of December 18, 1997, by and
between NIPSCO Industries, Inc. and Bay State Gas Company.
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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.
BAY STATE GAS COMPANY
Dated: December 30, 1997 By: /s/ Thomas W. Sherman
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Name: Thomas W. Sherman
Title: Executive Vice-President, Chief
Financial Officer and Treasurer
By: /s/ Stephen J. Curran
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Name: Stephen J. Curran
Title: Controller
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
2(a) Press release dated December 18, 1997
2(b) Agreement and Plan of Merger dated as of December 18,
1997, by and between NIPSCO Industries, Inc. and Bay
State Gas Company