LEGG MASON WOOD WALKER
INCORPORATED
7 East Redwood Street, 6th Floor
Baltimore, MD 21202
PG ENERGY INC.
Offer to Purchase for Cash
Any and All of its Outstanding Depositary Preferred Shares
Each Representing a One-Fourth Interest in a Share
of its 9% Cumulative Preferred Stock
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON MONDAY, APRIL 8, 1996, UNLESS THE OFFER IS
EXTENDED.
March 11, 1996
To Brokers, Dealers, Commercial
Banks, Trust Companies and
Other Nominees:
In our capacity as Dealer Manager (the "Dealer Manager"), we are enclosing
the material listed below relating to the offer of PG Energy Inc., a
Pennsylvania corporation formerly known as Pennsylvania Gas and Water Company
(the "Company"), to purchase any and all of its outstanding Depositary Preferred
Shares (the "Shares"), each representing a one-fourth interest in a share of its
9% Cumulative Preferred Stock, par value $100.00 per share, liquidation
preference $100.00 per share (equivalent to $25.00 per Share), at $27.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated March 11, 1996 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together constitute
the "Offer").
The Purchase Price will be paid in cash, net to the seller, with respect to
all Shares purchased. Shares not purchased will be returned.
The Offer is not conditioned upon any minimum number of Shares being
tendered. The Offer is, however, subject to other conditions. See Section 9 of
the Offer to Purchase.
We are asking you to contact your clients for whom you hold Shares registered
in your name (or in the name of your nominee) or who hold Shares registered in
their own names. Please bring the Offer to their attention as promptly as
possible.
The Company will pay a solicitation fee of $0.50 per Share for any Shares
tendered and accepted for payment pursuant to the Offer covered by a Letter of
Transmittal which designates, as having solicited and obtained the tender, the
name of (i) any broker or dealer in securities, including the Dealer Manager in
its capacity as a broker or dealer, which is a member of any national securities
exchange or of the National Association of Securities Dealers, Inc. (the
"NASD"), (ii) any foreign broker or dealer not eligible for membership in the
NASD which agrees to conform to the NASD's Rules of Fair Practice in
soliciting tenders outside the United States to the same extent as though it
were an NASD member, or (iii) any bank or trust company (each of which is
referred to herein as a "Soliciting Dealer"). No such fee shall be payable to a
Soliciting Dealer with respect to the tender of Shares by a holder unless the
Letter of Transmittal accompanying such tender designates such Soliciting
Dealer. No such fee shall be payable to a Soliciting Dealer if such Soliciting
Dealer is required for any reason to transfer the amount of such fee to a
depositing holder (other than itself). No such fee shall be payable to a
Soliciting Dealer with respect to Shares tendered for such Soliciting Dealer's
own account. No broker, dealer, bank, trust company or fiduciary shall be deemed
to be the agent of the Company, the Depositary (as defined below), the Dealer
Manager or the Information Agent for purposes of the Offer.
The Company will also, upon request, reimburse Soliciting Dealers for
reasonable and customary handling and mailing expenses incurred by them in
forwarding materials relating to the Offer to their customers. The Company will
pay all stock transfer taxes applicable to its purchase of Shares pursuant to
the Offer, subject to Instruction 6 of the Letter of Transmittal.
In order for a Soliciting Dealer to receive a solicitation fee, Chemical
Mellon Shareholder Services, L.L.C., as Depositary (the "Depositary") must have
received from such Soliciting Dealer a properly completed and duly executed
Notice of Solicited Tenders in the form attached hereto (or facsimile thereof)
within five business days after the expiration of the Offer.
For your information and for forwarding to your clients, we are enclosing the
following documents:
1. The Offer to Purchase, dated March 11, 1996.
2. The Letter of Transmittal for your use and for the information of your
clients.
3. A letter to stockholders of the Company from the President and Chief
Executive Officer of the Company.
4. The Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to the Depositary
by the Expiration Date (as defined in the Offer to Purchase).
5. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space for
obtaining such clients' instructions with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding.
7. A return envelope addressed to the Depositary.
We urge you to contact your clients as promptly as possible. Please note that
the Offer and withdrawal rights expire at 5:00 p.m., New York City time, on
Monday, April 8, 1996, unless the Offer is extended.
Neither the Company nor any of its directors or executive officers makes any
recommendation to any stockholder as to whether to tender all or any Shares.
Each stockholder must make his or her own decision as to whether to tender
Shares and, if so, how many Shares to tender. The Company has been advised that
two directors and two executive officers of the Company (each of whom also
serves as a director or executive officer of Pennsylvania Enterprises, Inc., the
holder of all of the Company's common stock) intend to tender Shares pursuant to
the Offer and that no other director or executive officer of the Company or any
of its affiliates intends to tender Shares pursuant to the Offer as no such
person owns any Shares.
Any questions or requests for assistance or additional copies of the enclosed
materials may be directed to D.F. King & Co., Inc., the Information Agent, at
the address and telephone number set forth on the back cover of the enclosed
Offer to Purchase.
Very truly yours,
LEGG MASON WOOD WALKER, INCORPORATED
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE
DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
NOTICE OF SOLICITED TENDERS
List below the number of Shares tendered by each beneficial owner whose
tender you have solicited. All Shares beneficially owned by a beneficial owner,
whether in one account or several, and in however many capacities, must be
aggregated for purposes of completing the table below. Any questions as to what
constitutes beneficial ownership should be directed to the Depositary. If the
space below is inadequate, list the Shares in a separate signed schedule and
affix the list to this Notice of Solicited Tenders. Please do not complete the
sections of the table headed "TO BE COMPLETED ONLY BY DEPOSITARY."
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE DEPOSITARY. ALL
QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO
THE INFORMATION AGENT.
TO BE COMPLETED BY TO BE COMPLETED ONLY TO BE COMPLETED ONLY
THE SOLICITING DEALER BY DEPOSITARY BY DEPOSITARY
--------------------- -------------------- --------------------
Number of Shares Number of Shares Fee
Beneficial Owners Tendered Accepted ($0.50 per Share)
- - - - - ----------------- -------- -------- -----------------
Beneficial Owner
No. 1
Beneficial Owner
No. 2
Beneficial Owner
No. 3
Beneficial Owner
No. 4
Beneficial Owner
No. 5
Beneficial Owner
No. 6
Beneficial Owner
No. 7
Beneficial Owner
No. 8
Beneficial Owner
No. 9
Beneficial Owner
No. 10
Total
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Depositary,
in its sole discretion, which determination will be final and binding. Neither
the Depositary nor any other person will be under any duty to give notification
of any defects or irregularities in any Notice of Solicited Tenders or incur any
liability for failure to give such notification.
The undersigned hereby confirms that: (i) it has complied with the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder, in connection with such
solicitation; (ii) it is entitled to such compensation for such solicitation
under the terms and conditions of the Offer to Purchase; (iii) in soliciting
tenders of Shares, it has used no soliciting materials other than those
furnished by the Company; and (iv) if it is a foreign broker or dealer not
eligible for membership in the NASD, it has agreed to conform to the NASD's
Rules of Fair Practice in making solicitations.
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Printed Firm Name Address
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Authorized Signature Area Code and Telephone Number