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Gas News Release
May 11, 1999
CONSOLIDATED NATURAL GAS ANNOUNCES AMENDED MERGER AGREEMENT
WITH DOMINION RESOURCES
PITTSBURGH - Consolidated Natural Gas Company ("CNG")
[NYSE: CNG] today announced that its board of directors unanimously approved a
revised merger agreement with Dominion Resources, Inc. [NYSE: D] under which CNG
shareholders would receive a combination of Dominion common stock and cash with
a firm value of $66.60 per CNG share. Up to 60% of the consideration to CNG shareholders
will be in the form of Dominion common stock and the balance will be in cash.
The common stock portion of the transaction is expected to be tax-free to CNG
shareholders.
The CNG board today also announced that after careful consideration
it has rejected the unsolicited proposal from Columbia Energy Group [NYSE: CG].
The CNG board concluded that the revised Dominion transaction is better for
CNG shareholders due to its certainty and timing, the strategic benefits of
a gas and electric combination, and the upside potential to shareholders of
an investment in the combined CNG/Dominion.
The board, in reaching its decision, relied in part on the
advice of its financial and regulatory advisors. In studying a possible combination
with Columbia Energy, a thorough review of the regulatory situation in each
of the principal states in which the combined company would operate was conducted.
This review included the analyses and advice of several regulatory experts,
including former public utility commissioners.
CNG shareholders will receive the Dominion dividend in effect
at the time of the closing of the transaction. Dominion has said that it intends
to maintain its current dividend of $2.58 per share.
George A. Davidson, Jr., chairman and chief executive officer
of CNG, said, "We believe that a combination of CNG and Dominion best serves
our shareholders because it makes strategic sense and has a straightforward
roadmap to completion. Together, we will have the scale, scope and skills to
be successful in the competitive energy marketplace."
CNG noted that its regulatory filings for the CNG/Dominion
combination are largely completed. On April 5, 1999, filings were made with
the Securities and Exchange Commission and in North Carolina, Pennsylvania,
Virginia, and West Virginia. The Hart-Scott-Rodino filing was made on May 10,
1999 and CNG anticipates filing with the Federal Energy Regulatory Commission
shortly. It is anticipated that the CNG/Dominion transaction would close, at
the latest, in early 2000.
Mr. Davidson continued, "The combined company will be
able to offer a complete line of energy products as the $300 billion gas and
electric industries converge. The combined company will be able to offer energy,
gas and/or electricity, to both retail and wholesale customers, through the
combined company's generation and pipeline assets. We expect to cross-market
gas to electric customers and electricity to gas customers. In addition, the
combined company will benefit from the arbitrage available among fuel sources."
A CNG/Dominion combination will have an energy portfolio
of more than 20,000 megawatts of power generation, and nearly 3 trillion cubic
feet equivalent in natural gas and oil reserves producing more than 300 billion
cubic feet equivalent annually. It will operate a major interstate gas pipeline
system and the largest natural gas storage system in North America. The combined
company will rank as one of the largest independent oil and gas producers in
North America measured by reserves.
The combined CNG/Dominion will form one of the nation's largest
integrated energy companies, serving nearly 4 million retail customers in five
states. Market capitalization of the combined entity will be approximately $25
billion - consisting of approximately $14.4 billion in equity, $9.5 billion
in debt and minority interests, and $1.1 billion in preferred stock.
CNG shareholders will have the right to make an election,
subject to pro-ration, as to whether they would prefer to receive cash or stock.
Under the terms of the agreement, approximately 40% of the CNG shares will be
converted into $66.60 in cash. Each of the remaining CNG shares will be converted
into a number of shares of Dominion common stock, not to exceed 1.52, with a
value equal to $66.60. If the value of 1.52 Dominion shares is less than $66.60,
a cash "top-up" will be added to bring the total per share value to
$66.60. The amount of cash to be paid to CNG shareholders will be reduced, and
replaced by Dominion stock with an equivalent value, if necessary to ensure
that legal opinions can be delivered that the stock consideration received by
CNG shareholders will not result in the recognition of gain for tax purposes.
The transaction is conditioned, among other things, upon
the approvals of shareholders of both companies, opinions of counsel on the
tax-free nature of the stock portion of the transaction, approvals of various
federal regulatory agencies, and the completion of regulatory processes in the
states where the combined company will operate. The transaction is not conditioned
upon obtaining financing.
Merrill Lynch & Co. acted as financial advisor to CNG.
Cahill Gordon & Reindel and Buchanan, Ingersoll P.C. acted as legal counsel
to CNG.
Consolidated Natural Gas Company (CNG) is one of the nation's
largest producers, transporters, distributors and retail marketers of natural
gas. The company's natural gas transmission and distribution operations serve
customers in Ohio, Pennsylvania, Virginia, West Virginia, New York and other
states in the Northeast and Mid-Atlantic regions. CNG explores for and produces
oil and natural gas in the United States and Canada, and makes selective investments
abroad.
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934. The forward-looking
statements are subject to various risks and uncertainties. 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 and the behavior of other market participants. Other factors
include, but are not limited to, weather conditions, economic conditions in
the company's service territory, fluctuations in energy-related commodity prices,
conversion activity, other marketing efforts and other uncertainties. Other
risk factors are detailed from time to time in the company's SEC reports.
# # #
For further information contact:
Dan Donovan
412-690-1370
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