RICHMOND, Va., Sept. 7, 2004 - Dominion (NYSE:D) announced
today that 10,000,000 shares of its common stock have been sold in a block trade
to J.P. Morgan Securities Inc. The shares were sold in connection with a forward
sale agreement between Dominion and Merrill Lynch International.
Under the forward sale agreement, Merrill Lynch International
agreed to borrow and sell 10,000,000 shares of Dominion's common stock, plus
up to 1,000,000 additional shares of common stock if J.P. Morgan exercises its
over-allotment option. The forward sale agreement will settle by May 17, 2005.
Dominion has the option to physically settle the forward sale agreement by delivering
all or a portion of the shares to Merrill Lynch International for cash proceeds
of approximately $644 million, based on agreed maturity settlement prices, which
includes an adjustment for anticipated dividends. The actual proceeds received
by Dominion will vary depending on the settlement date. If Dominion decides
it does not need any or all of the proceeds, it has the option to cash settle
or net stock settle the forward sale. Dominion will not receive any proceeds
from the sale of its common stock until settlement of all or a portion of the
forward sale agreement.
Thomas N. Chewning, executive vice president and chief financial
officer, said:
"The use of a forward sale agreement gives Dominion what
some have called 'equity on demand' while minimizing share dilution until the
equity capital is needed.
"In this instance, we expect to use this equity capital
to complete the purchase of the Kewaunee nuclear plant in Wisconsin. We also
expect to use it to fund the acquisition of three electric generating stations
from USGen New England that we announced earlier today. And we intend to use
it to continue our program to buy out additional over-market power supply contracts
at our Dominion Virginia Power subsidiary.
"The use of a forward-sale agreement provides security
that the equity need created by each investment is funded, and that proceeds
are applied only when closing occurs. It enables us to match the need for proceeds
with actual stock issuance. This shows the company's continuing commitment to
a strong balance sheet. At the same time, it protects Dominion's shareholders
in two important ways. First, we mitigate share dilution that would result if
we issued new shares prior to the actual closing on these investments. On the
other hand, by executing a forward sale now, we avoid equity market uncertainty."
A copy of the written prospectus relating to the offering
of common stock may be obtained from J.P. Morgan Securities Inc., Chase Distribution
& Support Service, 1 Chase Manhattan Plaza, Floor 5B, New York, N.Y. 10081.
This press release shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
This release contains forward-looking statements including
our expected use of proceeds, planned acquisitions and expectations for dilution.
Discussion of factors that could cause actual results to differ materially from
management's projections, forecasts, estimates and expectations may include
factors that are beyond the company's ability to control or estimate precisely,
such as estimates of future market conditions, the behavior of other market
participants and government regulations. Other factors are detailed from time
to time in Dominion's most recent quarterly report on Form 10-Q or annual report
on Form 10-K filed with the Securities & Exchange Commission.
