July 24, 2006
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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KeySpan Corporation
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The following communication is being distributed to all KeySpan Corporation and
National Grid employees:
Integration Update National Grid KeySpan
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Volume 1 Issue XII July 2006
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July 24, 2006
National Grid and KeySpan File with New York State Public Service Commission
In a joint filing with the New York State Public Service Commission, National
Grid and KeySpan proposed a plan under which the merged company will provide
customer savings and will be better positioned to serve customers by operating
efficiently, managing energy supply costs and expanding programs to help reduce
energy use. The filing highlights customer benefits achieved because of what
National Grid and KeySpan can offer jointly, versus what either company could do
alone.
Permanent savings of more than $500 million are anticipated for New York State
customers during the10-year proposal, possible only through the cost-reductions
generated from combining the companies. Additional benefits coming to KeySpan
customers include low-income and supplier choice programs, and accelerated
infrastructure improvements.
The NYPSC will be reviewing the proposal over an approximately nine month
period. For more details of the rate filing, employees can access the press
release on the corporate intranet or call Media Relations for a copy at
516-545-4547.
Additional Frequently Asked Questions
Has it been determined how many jobs will be lost as a result of combining
National Grid and KeySpan?
While we don't know where specific reductions may occur or which reductions will
come from current National Grid positions or KeySpan positions, to achieve the
estimated $200 million in synergy savings we expect a reduction of approximately
10 percent of the combined number of jobs between the two companies. These would
mainly be in support positions where duplication exists, rather than in field or
customer service positions. Both National Grid and KeySpan have historically
achieved merger reductions through attrition and voluntary programs, and plan to
continue this practice. The Integration Team will be developing the detailed
plans during the coming months and will communicate the information to employees
once it's determined.
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We're always told how customers will benefit from the mergers. How will
employees benefit?
Employees stand to benefit from several aspects of the mergers, including
opportunities to grow their careers as part of an international and much larger
organization. The addition of KeySpan and New England Gas to National Grid will
help the new company build upon its gas and electricity industry expertise
through the sharing of best practices. As part of a growing international
company, employees will also have the opportunity to work in different
locations, expand their knowledge and skills of the gas and electricity
business, and interact with employees from companies that may have a different
culture, which we can combine to make a more productive culture for one company.
Will pensions or benefits be affected?
Vested pension benefits will not be affected. Part of the joint integration
process, however, does include a thorough review of National Grid, KeySpan and
New England Gas pay and benefit programs. Our goal is to provide compensation
and benefit plans that are not only competitive, but help us attract and retain
the talent we need to support our business growth. Employees will be informed of
any changes stemming from the review after decisions are made.
With the two new acquisitions, what is the total number of customers for
National Grid, both combined with the U.K. and the U.S. alone?
The company will have 4.4 million electric customers (including 1.1 million
electric customers KeySpan services for the Long Island Power Authority) and 3.4
million gas customers throughout New York, Massachusetts, Rhode Island and New
Hampshire.
Is there any future probability of purchasing either National Fuel Gas or New
York State Electric and Gas (NYSEG)? What about the rumor that National Grid may
be acquired by the Spanish company Endesa?
We do not comment on rumors or speculation about mergers and acquisitions. At
this time we are concentrating our efforts on ensuring a seamless integration
with KeySpan and New England Gas.
Will people who hold shares of KeySpan stock be paid in cash or will they have
the option of receiving the same value in National Grid stock?
Once the merger occurs, all outstanding shares of KeySpan common stock will be
converted to the right to receive $42 per share in cash (the transaction price).
At that time, KeySpan shareholders will receive a cash payment, which will have
tax consequences. KeySpan common stock cannot be exchanged for shares of
National Grid. The transaction only provides for a cash consideration for each
share.
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Additional Information and Where to Find It
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In connection with the proposed merger, the Company has filed a definitive proxy
statement with the Securities and Exchange Commission. BEFORE MAKING ANY VOTING
OR INVESTMENT DECISION, THE COMPANY STOCKHOLDERS ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE
PROPOSED MERGER. The definitive proxy statement is also available free of charge
at the Securities and Exchange Commission's website, www.sec.gov, and
stockholders of the Company are also able to obtain additional copies of the
definitive proxy statement free of charge by directing their requests to KeySpan
Corporation One MetroTech Center, Brooklyn, New York 1120-3850.
The Company and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from its stockholders in connection
with the proposed merger. Information concerning the interests of the Company's
participants in the solicitation is set forth in the Company's proxy statements
and Annual Reports on Form 10-K, previously filed with the Securities and
Exchange Commission, and in the definitive proxy statement relating to the
merger.
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