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Exhibit 20.1
Date: July 22, 1996 Atmos Media Contact: Margaret Watson
214/450-4050
For Release: Immediately Atmos Investor/Analyst
Contact: Jack Eversull
214/788-3729
United Cities Contact: Linda Kelley
615/373-0104, Ext. 224
ATMOS ENERGY CORPORATION, UNITED CITIES GAS COMPANY
ANNOUNCE DEFINITIVE AGREEMENT TO MERGE
Dallas, Texas -- Atmos Energy Corporation (NYSE: ATO) and United Cities Gas
Company (NASDAQ; UCIT) jointly announced today that the companies have reached
a definitive agreement for the acquisition by merger of United Cities by Atmos.
Atmos will be the surviving entity following the merger.
Under the terms of the definitive agreement, one share of Atmos stock will
be exchanged for each share of United Cities stock. No adjustment to the
exchange ratio will be made to reflect changes in Atmos' stock price. Atmos
has agreed to increase the indicated annual dividend to not less than $1.02 per
share at the first board meeting following the closing of the transaction. The
current annual dividend is $.96 per share. The transaction is expected to be
tax-free to United Cities shareholders and accounted for as a pooling of
interests. On June 30, 1996, there were 15,982,304 shares of Atmos common
stock outstanding and 13,102,913 common shares of United Cities outstanding.
Atmos' stock closed at $25.875 per share, and United Cities' stock closed at
$17.00 per share on Friday, July 19.
The Board of Directors of the combined company will consist of all 11
current members of the Atmos board and four current members from the 10-member
United Cities board. Charles K. Vaughan will remain chairman of the board of
Atmos and will be the chief executive officer of Atmos. Gene C. Koonce,
currently United Cities chairman of the board, president and chief executive
officer, will become vice chairman of the Atmos board. Robert F. Stephens will
remain president and chief operating officer of Atmos, and James F. Purser will
remain executive vice president and chief financial officer. James B. Ford,
currently senior vice president and treasurer of United Cities, will become
senior vice president of finance for Atmos. Thomas R. Blose, currently senior
vice president - operations and engineering of United Cities, will become
president of United Cities Gas Company, a division of Atmos Energy Corporation,
and vice president of Atmos.
The transaction is subject to approval by the shareholders of both
companies. Approval by appropriate regulatory bodies also will be required.
United Cities, based in Brentwood, Tenn., is primarily a distributor of
natural gas, serving approximately 310,000 natural gas customers in Tennessee,
Illinios, Missouri, Kansas, Iowa, Georgia, South Carolina, and Virginia, and
has gas storage facilities in
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Kentucky and Kansas. United Cities also serves about 25,000 propane customers
in Tennessee, North Carolina and Virginia.
The combined entity would serve approximately 1 million customers in 13
states, making it one of the largest natural gas utilities in the U.S. based on
number of customers.
"We welcome United Cities to the Atmos family of companies. This is a
good fit -- both companies have strong track records of internal growth and
growth through acquisitions, as well as similar management philosophies," said
Charles K. Vaughan, Atmos chairman of the board.
"This transaction is consistent with Atmos' continuing long-term corporate
development strategy of increasing the value of the company through external
growth," said Robert F. Stephens, president and chief operating officer of
Atmos. "We believe the transaction will be additive to earnings per share
after the initial one-time cost and assimilation are completed. We believe
this merger will further position the company to be successful in the
increasingly competitive environment for utilities because of our larger size
and geographic diversity. United Cities' unregulated businesses also
complement Atmos' unregulated businesses."
"We are pleased to be joining the Atmos family of companies, and feel the
combination of Atmos and United Cities will result in a very strong company
that will continue to be successful in the future," said Gene C. Koonce, United
Cities chairman of the board, president and chief executive officer.
Atmos acquired Trans Louisiana Gas Company in 1986, Western Kentucky Gas
Company in 1987, Greeley Gas Company in 1993, as well as several smaller gas
systems in Louisiana. The company has continued to aggressively search for
additional natural gas distribution properties. Since 1985, United Cities has
added approximately 180,000 new customers in its natural gas distribution
system through acquisitions and internal growth.
Atmos Energy Corporation, based in Dallas, Texas, currently provides
natural gas service to approximately 673,000 customers in Texas, Colorado,
Kansas, Missouri, Louisana and Kentucky through its operating companies --
Energas Company, Greeley Gas Company, Trans Louisiana Gas Company and Western
Kentucky Gas Company.
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ATMOS AND UNITED CITIES COMBINED STATISTICS
From public documents as of March 31, 1996
(Unaudited)
OPERATIONAL ATMOS UNITED CITIES COMBINED
No. of customers 673,000 335,000* 1,008,000
No. of employees 1,650 1,300 2,950
No. of states served 6 10 13
FINANCIAL
12 mos. ending 3/31/96
(000's except per share)
Utility operating revenues $482,250 $309,701 $791,951
Net plant in service $387,379 $341,454 $728,833
COMMON STOCK
12 mos. ending 3/31/96
Earnings $ 26,068 $ 13,982 $ 40,050
Earnings per share $1.67 $1.14
Cash flow $ 56,353 $ 36,067 $ 92,420
Cash flow per share $3.60 $2.93
Av. shares outstanding 15,638 12,306 27,944
% Total
Capital
Shareholders equity $181,505 $161,283 $342,788 54%
Long term debt $125,303 $162,998 $288,301 46%
Total capitalization $306,808 $324,281 $631,089 100%
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* includes propane customers
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