Exhibit 99.1
March 14, 2002 CONTACT: Danny Gibbs
Phone: 713/627-4060
24-Hour: 704/382-8333
Bob Foulkes
Phone: 604/488-8093
DUKE ENERGY COMPLETES $8 BILLION ACQUISITION
OF WESTCOAST ENERGY
o Combined Assets Create Significant Access to North America's
Major Natural Gas Supply Basins and Markets
o Way Paved for Development of New Natural Gas
Transportation Infrastructure
CHARLOTTE, N.C. - Duke Energy (NYSE:DUK) significantly enhanced an already
strong position in the North American energy market today with the closing of
the previously announced acquisition of Vancouver, British Columbia-based
Westcoast Energy Inc. The transaction, valued at approximately US$8 billion
based on cash, stock consideration and debt assumed, is expected to be accretive
to Duke Energy's earnings.
"This acquisition is an excellent strategic fit for Duke Energy and provides a
platform for significant growth and asset optimization," said Richard B. Priory,
chairman, president and chief executive officer of the company. "We recognize
that today's energy investor appreciates a company with multiple sources of
earnings, and that's certainly what we offer. The acquisition of Westcoast
Energy reflects our strategy of owning and operating a portfolio of energy
assets, trading around those assets and sticking with what we do best - energy."
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Under the terms of the transaction, a subsidiary of Duke Energy acquired all of
the outstanding common shares of Westcoast Energy in exchange for approximately
49.9 million shares of Duke Energy common stock (including for this purpose the
exchangeable shares of a Canadian subsidiary of Duke Energy that are
substantially equivalent to and exchangeable on a one-for-one basis for Duke
Energy common stock), and approximately US$ 1.8 billion in cash. Subject to
proration provisions that ensure that approximately 50 percent of the total
consideration will be paid in cash and approximately 50 percent will be paid in
stock, each common share of Westcoast Energy entitled the holder to elect to
receive CDN$43.80 in cash, .7711 of a share of Duke Energy common stock or of an
exchangeable share of a Duke Energy Canadian subsidiary, or a combination
thereof. The cash portion of the consideration will be funded through a
combination of the proceeds from the issuance of $750 million in mandatory
convertible equity issued in November 2001 along with incremental commercial
paper. The commercial paper will be retired later this year and replaced by a
permanent layer of capital in the form of mandatory convertible equity.
The transaction adds a network of mostly Canadian-based natural gas assets,
featuring 6,900 miles of transmission pipeline, 141 billion cubic feet of
storage capacity, major processing plants and more than 1 million gas
distribution customers to Duke Energy's growing portfolio.
"With Westcoast Energy's assets, we strengthen our natural gas pipeline,
storage, gathering and processing positions; gain significant access to North
America's major natural gas supply basins and markets; and better position
ourselves for the coming expansion of North America's natural gas
infrastructure," said Fred Fowler, Duke Energy's group president for energy
transmission.
"This is an important investment in our competitive energy businesses in that it
is expected to provide the opportunity for increased earnings growth from our
gas transmission business while providing additional opportunities for our other
businesses," Fowler said. Duke Energy continues
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to expect earnings per share growth of 10 percent to 15 percent per year from a
base of $2.10 earnings per share in 2000.
With the acquisition, Duke Energy's natural gas-related assets now include about
18,900 miles of transmission pipeline; 241 billion cubic feet of natural gas
storage; 58,700 miles of gathering pipeline; 84 processing facilities; and
16,500 miles of distribution pipe.
Houston-based Duke Energy Gas Transmission will operate the former Westcoast
transmission, storage and distribution systems.
In addition to the wholly owned transmission pipeline systems of DEGT (Texas
Eastern Transmission, Algonquin Gas Transmission and East Tennessee Natural Gas)
and the wholly owned transmission systems of the former Westcoast Energy (BC
Pipeline, Empire State Pipeline and Union Gas Transmission), the combined
company has ownership interests in the Maritimes & Northeast Pipeline (75
percent); the soon-to-be-completed Gulfstream Natural Gas System (50 percent);
Foothills Pipe Lines (50 percent); Vector Pipeline (30 percent); and Alliance
Pipeline (23.6 percent).
DEGT President Robert (Bobby) Evans adds the chief executive officer title in
leading the expanded gas transmission unit. He reports to Fred Fowler.
Evans' five-member senior leadership team consists of: Robert (Bob) Reid,
president of DEGT's Canadian operations; Tom O'Connor, president of DEGT's U.S.
operations; Dorothy Ables, senior vice president, finance and administration and
chief financial officer, DEGT; Alan Harris,
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senior vice president, strategic development and planning, DEGT; and David
Unruh, senior vice president and general counsel, DEGT.
O'Connor, Ables and Harris are long-time DEGT leaders, while Reid and Unruh join
DEGT from Westcoast Energy.
"There are efficiencies to be gained by having management representation in
Canada and the United States," said Evans. "With Westcoast's tremendous assets
and our leadership team's
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invaluable experience operating in Canada, we're positioned to maximize our
investment from the outset."
"We're excited about being a part of a company that can facilitate the growth of
our Canadian assets," said Reid, formerly executive vice president and chief
operating officer of Westcoast. "Duke Energy has a proven track record for
building infrastructure and the financial ability to capitalize on
opportunities. This is a powerful combination."
Since the acquisition announcement on Sept. 20, 2001, the companies have
received all required regulatory approvals to complete the transaction.
Approvals were received from or were related to: The Supreme Court of British
Columbia, British Columbia Utilities Commission, Federal Competition Commission
of Mexico, Competition Act (Canada), North Carolina Utilities Commission, South
Carolina Public Service Commission, New York Public Service Commission and the
Federal Energy Regulatory Commission. On Feb. 28, the company was permitted to
proceed with the transaction under the Hart Scott Rodino Antitrust Improvements
Act of 1976. Earlier this month, the acquisition gained the approval of Industry
Canada as it relates to the Investment Canada Act. Lastly, the companies were
notified that the public utility subsidiaries of Westcoast Energy would be
exempted from the Public Utility Holding Company Act, as amended, by the U.S.
Securities and Exchange Commission following closing of the transaction.
Westcoast shareholders overwhelmingly approved the terms of the acquisition last
December.
"Our appreciation goes to all the regulators and oversight bodies for their
timely processing of this significant transaction," said Evans.
Duke Energy's energy services' business units will operate Westcoast's energy
services and international businesses.
Duke Energy, a diversified multinational energy company, creates value for
customers and shareholders through an integrated network of energy assets and
expertise. Duke Energy
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manages a dynamic portfolio of natural gas and electric supply, delivery and
trading businesses -- generating revenues of more than $59 billion in 2001. Duke
Energy, headquartered in Charlotte, N.C., is a Fortune 100 company traded on the
New York Stock Exchange under the symbol DUK. More information about the company
is available on the Internet at: www.duke-energy.com.
Additional information about the transaction, including a combined-asset system
map, is available on Duke Energy's Internet site.
This document includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Such statements include those concerning the effect of the transaction,
strategic plans, expectations and objectives. Although Duke Energy believes that
its expectations are based on reasonable assumptions, it can give no assurance
that its goals and expectations will be achieved. Important factors that could
cause actual results to differ materially from those in the forward-looking
statements herein include integration of the two companies, future regulatory
approvals and developments, realization of expected synergies from the
transaction, changes in competition, the timing and extent of changes in
commodity prices for oil, gas, coal, electricity and interest rates, the extent
of success in connecting natural gas supplies to gathering and processing
systems and in connecting and expanding gas and electric markets, the
performance of electric generation, pipeline and gas processing facilities, the
timing and success of efforts to develop domestic and international power,
pipeline, gathering, processing and other infrastructure projects and conditions
of the capital markets and equity markets during the periods covered by the
forward-looking statements.
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