SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SC TO-I/A
SC 13E3/A
(Amendment No. 2)
SC TO-T
SC 13E3
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR
13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934.
NIAGARA MOHAWK POWER CORPORATION
(Name of Subject Company (Issuer))
NIAGARA MOHAWK POWER CORPORATION
NATIONAL GRID GROUP PLC
(Name of Filing Persons)
Fixed/AdjustableRate Cumulative Preferred Stock, Series D
Cumulative Preferred Stock, 3.40% Series
Cumulative Preferred Stock, 3.60% Series
Cumulative Preferred Stock, 3.90% Series
Cumulative Preferred Stock, 4.10% Series
Cumulative Preferred Stock, 4.85% Series
Cumulative Preferred Stock, 5.25% Series
(Title of Class of Securities)
653522771
653522201
653522300
653522409
653522508
653522607
653522706
(CUSIP Number of Class of Securities)
Gregory Barone John Cochrane
Niagara Mohawk Power Corporation National Grid USA
300 Erie Boulevard West 25 Research Drive
Syracuse, NY 13202 Westborough, MA 01582
(Names and addresses of persons authorized to
receive notices and communications on behalf of the persons filing statement)
Copy to:
Keith F. Higgins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
[_] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to Rule 13e-4.
[X] going-private transaction subject to Rule 13e-3.
[_] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [_]
This Amendment No. 2 to Schedule TO/13E-3 amends and supplements the
Schedule TO/13E-3 originally filed by Niagara Mohawk Power Corporation, a New
York corporation ("Niagara Mohawk"), on February 27, 2002 (the "Schedule TO"),
as amended by Amendment No. 1 to Schedule TO /13E-3 filed on March 14, 2002
("Amendment No. 1"). National Grid Group plc hereby incorporates by reference
the Schedule TO and Amendment No. 1. This Amendment No. 2 to Schedule TO/13E-3
relates to the tender offers by Niagara Mohawk to purchase all of its
outstanding shares of the following series of cumulative preferred stock (the
"Preferred Stock") at the following applicable cash purchase prices per share:
PURCHASE PRICE
SERIES CUSIP NO. PER SHARE
Fixed/Adjustable Rate Cumulative
Preferred Stock, Series D 653522771 $53.76
Cumulative Preferred Stock, 3.40% Series 653522201 $63.43
Cumulative Preferred Stock, 3.60% Series 653522300 $67.16
Cumulative Preferred Stock, 3.90% Series 653522409 $72.76
Cumulative Preferred Stock, 4.10% Series 653522508 $76.49
Cumulative Preferred Stock, 4.85% Series 653522607 $90.49
Cumulative Preferred Stock, 5.25% Series 653522706 $93.58
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The offers are subject to the terms and conditions set forth in the
Offer to Purchase dated February 27, 2002 (the "Offer to Purchase") and in the
related Letters of Transmittal (the "Letters of Transmittal"), as amended or
supplemented from time to time. Except as amended and supplemented hereby and by
Amendment No. 1, the Schedule TO/13E-3 filed by Niagara Mohawk on February 27,
2002 remains in effect.
The Schedule TO/13E-3 is hereby amended and supplemented as follows:
ITEM 1. SUMMARY TERM SHEET.
The Summary Term Sheet of the Offer to Purchase is hereby amended by
adding the following sentence to the end of the last paragraph of the answer to
Question 1:
"Because National Grid has played a significant role in connection
with the offers, under the securities laws, it may also be considered
to be making the offers to purchase the preferred shares. National
Grid's principal business is the ownership and operation of the
high-voltage transmission network in England and Wales and electricity
transmission and distribution networks in the northeastern United
States."
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ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
Schedule I of the Offer to Purchase is hereby amended by amending the
second paragraph to read as follows:
"Unless otherwise noted below, none of Niagara Mohawk Holdings, Inc.,
National Grid Group plc, National Grid Group USA or any of the following persons
have been convicted in a criminal proceeding during the past five years
(excluding traffic violations or similar misdemeanors) or been a party to any
judicial or administrative proceeding (except for matters that were dismissed
without sanction or settlement) that resulted in a judgment, decree or final
order enjoining any of them from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws."
Section 8 of the Offer to Purchase ("Certain Information about Niagara
Mohawk") is hereby amended by changing the title to read "Certain Information
about Niagara Mohawk and National Grid" and by adding the following sentence to
the end of the first paragraph under the heading "General":
"National Grid`s principal business is the ownership and operation of
the high-voltage transmission network in England and Wales and electricity
transmission and distribution networks in the northeastern United States."
ITEM 10. FINANCIAL STATEMENTS.
Section 8 of the Offer to Purchase ("Certain Information about Niagara
Mohawk") is hereby amended by adding the following sentence after the table
found under the heading "Summary Financial Information":
"Our Net Book Value Per Share as of December 31, 2001 was $12.74."
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
SCHEDULE 13E-3, ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
Section 6 of the Offer to Purchase ("Special Factors") is hereby amended
by deleting the second paragraph under the heading "Purpose of the Transaction"
and replacing it with the following:
"As part of the general corporate planning in connection with the
proposed merger between National Grid and Holdings, National Grid employees
analyzed our capital structure. Due to our financial condition and bond ratings,
we had been paying comparatively high interest rates and preferred dividend
rates in recent years. It was anticipated that, upon completion of the merger,
our bond ratings would improve and we would have access to additional funds
through the
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National Grid system. These factors were expected to facilitate some
recapitalization of Niagara Mohawk and reduce our cost of capital, but we had
not decided upon a particular plan. In December 2001, two holders of preferred
stock, Delta Dividend Group, Inc. and Bradd Gold, expressed concerns about the
effect of the proposed merger on the preferred shareholders. Specifically, they
were concerned that the merger with a foreign entity would significantly
disenfranchise and damage the holders of preferred stock, though they did not
set forth any specific measures to address their concerns. The discussions
between our treasurer and officers of National Grid subsidiaries about the
appropriate response to these concerns focused our attention on the preferred
shares. National Grid, in consultation with officers of Niagara Mohawk, decided
that the retirement of the preferred stock and its replacement with debt would
produce immediate savings to Niagara Mohawk. Although National Grid believed
that the merger was in the best interests of our preferred shareholders, it
entered into a written agreement with the two preferred shareholders who had
expressed concern about the merger to cause Niagara Mohawk or an affiliate to
make an offer to purchase all of our outstanding preferred stock within one year
of the merger. The agreement provided that National Grid would either call the
shares for redemption in accordance with the terms of the particular series of
preferred stock or make a tender offer on terms that were customary for tender
offers for similar preferred stock. National Grid agreed to engage a nationally
recognized investment banking firm to provide advice in determining the terms of
the offers. The two preferred stockholders agreed to withdraw a request for a
hearing they had made to the SEC and to state that they no longer objected to
the merger. On February 1, 2002, we made a call for the redemption of all shares
of our Cumulative Preferred Stock, 6.10% Series at $101.00 per share, our
Cumulative Preferred Stock, 7.45% Series at $100.73 per share, our Cumulative
Preferred Stock, 7.72% Series at $102.36 per share, our Adjustable Rate
Preferred Stock, Series A at $25 per share, our Adjustable Rate Preferred Stock,
Series B at $25 per share, and our Adjustable Rate Preferred Stock, Series C at
$25 per share. Our board of directors decided to call these shares in accordance
with their redemption provisions, rather than make a tender offer for them,
because in each case the redemption price was at a level that the board believed
was less than the price at which a tender offer that met the conditions of the
agreement with the two preferred stockholders could be made. Prior to making
these offers, our board of directors considered whether to redeem shares of the
3.40% Series, 3.60% Series, 3.90% Series, 4.10% Series, 4.85% Series and 5.25%
Series. However, given the then current market conditions, the redemption prices
for the shares were higher than the prices at which it believed it could make a
tender offer in compliance with the provisions of the agreement with the
preferred stockholders. See Section 7, "Certain Information about the Preferred
Shares" for the market prices for such shares as of recent dates and the
redemption prices for such shares. Shares of the Series D are not redeemable
until on or after December 31, 2004 and thus our board did not consider any
alternatives to the tender offer for shares of the Series D. We are now making
these offers for the remaining series of our preferred stock. We are not
obligated to purchase all, or any particular number of, the preferred shares
and, at this time, we do not intend to call for redemption the series of
preferred shares subject to these tender offers."
Section 6 of the Offer to Purchase ("Special Factors") is hereby amended by
adding the following new paragraph at the end of the disclosure under the
heading "Purpose of the Transaction":
"The successful completion of the offers will have no effect on National
Grid's percentage interest in the net book value and net earnings of
Niagara Mohawk. If all shares of preferred stock are purchased in the
offers, the aggregate net book value of Niagara Mohawk would increase by
approximately $18 million."
SCHEDULE 13E-3, ITEM 8. FAIRNESS OF THE TRANSACTION.
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Section 6 of the Offer to Purchase ("Special Factors") is hereby amended
by adding a new paragraph as the last paragraph under the heading "Fairness of
the Offers":
"A committee of the board of directors of National Grid, having been
delegated the authority to act on behalf of National Grid with respect to the
offers, considered the offers and believes that each offer is fair to
unaffiliated holders of each series of preferred shares and has unanimously
approved the offers. In evaluating the offers, the committee relied upon the
same factors as were relied upon by the board of directors of Niagara Mohawk.
The committee also reviewed the presentation of Merrill Lynch. The committee
employed the same analysis as the Niagara Mohawk board of directors employed in
evaluating both the substantive and procedural fairness of the offers."
Section 6 of the Offer to Purchase ("Special Factors") is hereby amended
by adding a new paragraph immediately following the existing fourth paragraph
under the heading "Fairness of the Offers":
"The board did not consider our net book value, our going concern value
or our liquidation value in making its determination that the offers are fair to
unaffiliated shareholders. Because preferred shareholders are only entitled to
receive dividends at the stated rate and the stated liquidation value upon a
liquidation of Niagara Mohawk, the board did not believe that factors relating
to the equity value of Niagara Mohawk were relevant in determining the value of
the preferred shares. The board also did not consider purchase prices paid in
previous purchases of the preferred shares within the past two years because
there were no such purchases within the past two years. Finally, the board did
not consider firm offers made by unaffiliated persons during the past two years
for a merger, consolidation, sale of all or substantially all of our assets or
purchase of Niagara Mohawk's securities in a transaction that would give the
purchaser control because it believed that these factors are relevant only to a
change of control and the premium that might be paid to stockholders to acquire
control. The preferred shares have no voting power and do not participate in the
growth in equity value of Niagara Mohawk."
Section 6 of the Offer to Purchase ("Special Factors") is hereby
amended by replacing the fourth paragraph under the heading "Fairness of the
Offers" in its entirety as follows:
"The board considered these procedural factors as a whole and did not
find it practicable to, and did not, quantify or otherwise assign relative
weight to these factors. The board considered that the offers were procedurally
fair because they followed the procedures agreed to with the two unaffiliated
preferred shareholders who had objected to the merger and because the board had
retained Merrill Lynch to render a fairness opinion. Niagara Mohawk did not
place any restrictions or limitations on Merrill Lynch in performing its
analysis."
Section 6 of the Offer to Purchase ("Special Factors") is hereby amended
by replacing the second paragraph under the heading "Fairness of the Offers" in
its entirety as follows:
"The board considered these factors as a whole and did not find it
practicable to, and did not, quantify, or otherwise assign relative weights to
these factors. The principal negative factor
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from Niagara Mohawk's perspective was the use of cash, but the board of
directors believed that the cost savings in retiring the preferred stock
outweighed that negative factor and had no bearing on the fairness of the offers
to the unaffiliated shareholders. The principal negative factor from the
standpoint of the preferred shareholders was the possible absence of a trading
market following the completion of the offers. The board of directors did not
believe that fact was relevant in its determination of the fairness of the
offers because a preferred shareholder could either decide to accept the offer
or to retain the preferred stock on the same terms relating to dividends,
liquidation value and redemption and thus did not consider it in concluding that
the offers are fair to the unaffiliated shareholders from a financial point of
view."
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Date: March 22, 2002
NIAGARA MOHAWK POWER CORPORATION
By: /s/ Arthur W. Roos
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Name: Arthur W. Roos
Title: Assistant Treasurer
NATIONAL GRID GROUP PLC
BY: /s/ Richard P. Sergel
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Name: Richard P. Sergel
Title: Group Director, North America