MidAmerican Outlines Benefits of Proposed Merger With Constellation Energy
October 17 2008 - 4:59PM
Business Wire
MidAmerican Energy Holdings Company and Constellation Energy (NYSE:
CEG) announced that MidAmerican today filed an application with the
Maryland Public Service Commission requesting approval to acquire
Baltimore Gas and Electric Company. �This transaction will bring
financial stability to Constellation Energy and BGE, and comes with
our proposal to reduce and delay planned BGE rate requests for the
benefit of BGE customers,� said Gregory E. Abel, president and
chief executive officer of MidAmerican. �Our application identifies
the significant commitments we are making to BGE customers,
communities and employees regarding rates, community involvement,
job opportunities and investment in energy infrastructure in the
state of Maryland,� added Abel. �We strongly support the efforts of
UniStar Nuclear Energy, LLC to develop advanced nuclear generation
in the United States, and we affirm our support for the proposed
new nuclear plant at Calvert Cliffs.� �The application filed today
underscores the conviction of MidAmerican�s commitment to
successfully closing this transaction, and to Constellation Energy
and BGE remaining integral members of the local community,� said
Mayo A. Shattuck III, chairman, president and chief executive
officer of Constellation Energy. �This merger will deliver
significant long-term benefits to our customers, employees and the
communities we serve by allowing BGE and Constellation Energy to
operate autonomously and providing the strong financial backing of
Berkshire Hathaway.� BGE Benefits MidAmerican has identified two
significant rate benefits for BGE customers as part of its
application. MidAmerican has proposed to cut in half the 5 percent
cap that was to apply to any increase in an electric distribution
rate case filed by BGE in 2009. The rate cap on the 2009 electric
distribution rate increase was negotiated between BGE and various
state interests in March of this year. In addition, MidAmerican
commits to not file the next BGE electric distribution and natural
gas distribution rate cases until January 2011. As a result, there
will be no increase in BGE�s gas and electric base distribution
rates in 2010 and the first half of 2011. The value to BGE
customers from these actions depends upon the amount of BGE gas and
electric rate increases granted by the Maryland Public Service
Commission. Based upon assumptions identified in testimony filed by
MidAmerican as part of its application, the combined potential
benefit from these two commitments could be as much as $70 million
for BGE electric and natural gas customers. MidAmerican�s
application pledges that BGE�s charitable and community-related
contributions will be maintained at no less than the past
three-year average level of approximately $2.9 million annually
through Dec. 31, 2013. In addition, the application states BGE�s
headquarters will remain in Baltimore and no reduction in force at
BGE is planned as a result of the proposed merger. MidAmerican has
committed that BGE will be protected from any adverse financial
results at Constellation Energy or MidAmerican or any of their
affiliates through a procedure called ring-fencing. MidAmerican
also promised that no costs related to the transaction or any
severance or change-in-control payments to Constellation Energy
staff would be included in BGE rates. Constellation Energy Benefits
MidAmerican affirmed its support for Constellation Energy�s
involvement in the UniStar Nuclear Energy, LLC joint venture and
the commitment to prioritize the development of a new nuclear unit
at the company�s Calvert Cliffs Nuclear Power Plant over the
development of a nuclear facility at any other site it controls.
MidAmerican further committed to keep Constellation Energy�s
headquarters in Baltimore, and that Constellation Energy would
continue to be a prominent contributor to charitable and
community-related activities. In addition, Mr. Shattuck
has�irrevocably�waived his right to receive payment of any cash
severance to which he would otherwise be entitled under his
change-in-control agreement as a result of the merger.�He has
requested�that Constellation Energy donate that amount to�the
Constellation Energy Group Foundation. At the time of closing,
MidAmerican has agreed to match any such contribution, resulting in
a total endowment increase of $36 million to support future
charitable endeavors for the long-term benefit of the Baltimore
community and the state of Maryland. On Sept. 19, MidAmerican and
Constellation Energy reached a definitive merger agreement in which
MidAmerican will purchase all of the outstanding shares of
Constellation Energy for a cash consideration of approximately $4.7
billion, or $26.50 per share. In addition, MidAmerican provided an
immediate $1 billion cash infusion to Constellation Energy through
the purchase of preferred equity. The definitive agreement has been
approved by both companies� boards of directors and is subject to,
among other things, shareholder and customary federal and state
regulatory approvals. Information about the transaction is
available at www.constellationmidamerican.com. About Constellation
Energy Constellation Energy (http://constellation.com), a FORTUNE
125 company with 2007 revenues of $21 billion, is the nation�s
largest competitive supplier of electricity to large commercial and
industrial customers and the nation�s largest wholesale power
seller. Constellation Energy also manages fuels and energy services
on behalf of energy intensive industries and utilities. It owns a
diversified fleet of 83 generating units located throughout the
United States, totaling approximately 9,000 megawatts of generating
capacity. The company delivers electricity and natural gas through
Baltimore Gas and Electric Company (BGE), its regulated utility in
Central Maryland. About MidAmerican Energy Holdings Company
MidAmerican Energy Holdings Company, based in Des Moines, Iowa, is
a global provider of energy services. Through its energy-related
business platforms, MidAmerican provides electric and natural gas
service to more than 6.9 million customers worldwide. These
business platforms are Pacific Power, Rocky Mountain Power and
PacifiCorp Energy, which comprise PacifiCorp; MidAmerican Energy
Company; CE Electric UK; Northern Natural Gas Company; Kern River
Gas Transmission Company; and CalEnergy. Information about
MidAmerican is available at www.midamerican.com. Forward-Looking
Statements and Additional Information This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including, but not
limited to, statements relating to the proposed transaction between
Constellation Energy and MidAmerican Energy Holdings Company and
the expected timing and completion of the transaction. Words such
as �anticipate,� �believe,� �plan,� �estimate,� �expect,� �intend,�
�will,� �should,� �may� and other similar expressions are intended
to identify forward-looking statements. Such statements are based
upon the current beliefs and expectations of our management and
involve a number of significant risks and uncertainties, many of
which are difficult to predict and generally beyond the control of
Constellation Energy and MidAmerican. Actual results may differ
materially from the results anticipated in these forward-looking
statements. The following factors, among others, could cause or
contribute to such material differences: the ability to obtain the
approval of the transaction by Constellation Energy�s shareholders;
the ability to obtain governmental approvals of the transaction or
to satisfy other conditions to the transaction on the terms and
expected time frame or at all; transaction costs; economic
conditions; and the effects of disruption from the transaction
making it more difficult to maintain relationships with employees,
customers, other business partners or government entities.
Additional factors that could cause our results to differ
materially from those described in the forward-looking statements
can be found in the 2007 Annual Report on Form 10-K for the year
ended December 31, 2007, filed with the Securities and Exchange
Commission and in the proxy statement Constellation Energy intends
to file with the Securities and Exchange Commission and mail to its
shareholders with respect to the proposed transaction, each of
which are or will be available at the Securities and Exchange
Commission�s Web site (http://www.sec.gov) at no charge. This
communication is being made in respect of the proposed merger
transaction involving Constellation Energy and MidAmerican Energy
Holdings Company. In connection with the proposed transaction,
Constellation Energy will file with the Securities and Exchange
Commission a proxy statement and will mail the proxy statement to
its shareholders. Shareholders are encouraged to read the proxy
statement regarding the proposed transaction when it becomes
available because it will contain important information.
Shareholders will be able to obtain a free copy of the proxy
statement, as well as other filings made by Constellation Energy
regarding Constellation Energy, MidAmerican Energy Holdings Company
and the proposed transaction, without charge, at the Securities and
Exchange Commission�s Web site (http://www.sec.gov). These
materials also can be obtained, when available, without charge, by
directing a request to Constellation Energy per the investor
relations contact information below. Constellation Energy,
MidAmerican Energy Holdings Company and their respective directors
and executive officers and other persons may be deemed to be
participants in the solicitation of proxies in respect of the
proposed transaction. Information regarding Constellation Energy�s
directors and executive officers is available in Constellation
Energy�s notice of annual meeting and proxy statement for its most
recent annual meeting and Constellation Energy�s Annual Report on
Form 10-K for the year ended December 31, 2007, which were filed
with the Securities and Exchange Commission February 27, 2008, and
April 29, 2008, respectively. Other information regarding the
participants in the solicitation and a description of their direct
and indirect interests, by security holdings or otherwise, will be
contained in the proxy statement and other relevant materials to be
filed with the Securities and Exchange Commission.
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