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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-12
EL PASO CORPORATION
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(Name of Registrant as Specified in its Charter)
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EL PASO CORPORATION REACHES AGREEMENT IN PRINCIPLE TO RESOLVE CLAIMS RELATING
TO WESTERN ENERGY CRISIS
Summary
o Settlement will resolve the principal litigation and claims against El
Paso relating to the sale or delivery of natural gas and/or
electricity to or in the Western United States from September 1996 to
present.
o Parties to the settlement include private class action litigants in
California, the Governor and Lieutenant Governor of California, the
attorneys general of California, Washington, Oregon and Nevada, the
California Public Utilities Commission, the California Electricity
Oversight Board, the California Department of Water Resources, Pacific
Gas and Electric Company and Southern California Edison Company.
o The settlement, which was crafted to minimize current demands on El
Paso's liquidity, will result in an estimated after-tax charge of
approximately $650 million in the fourth quarter of 2002, and
includes:
o No admission of wrongdoing;
o An up-front cash payment of $100 million;
o A $2-million payment from the company's officer bonus pool;
o A payment of $125 million in El Paso common stock;
o Natural gas delivered to the California border valued at $45
million per year for 20 years;
o A $125-million price reduction on power contracts with the
California Department of Water Resources over the period through
2005;
o Additional payments of $22 million per year over a 20-year
period.
o The settlement is subject to the negotiation of definitive settlement
documents and review and approval of the settlement by the courts and
the Federal Energy Regulatory Commission (FERC).
o Final execution of the agreement and necessary approvals by the courts
and the FERC are anticipated by year-end 2003.
HOUSTON, Texas, March 21, 2003--El Paso Corporation (NYSE:EP) today
announced that it has reached an agreement in principle with the state of
California and other parties including the states of Washington, Oregon and
Nevada to resolve claims relating to the sale and delivery of natural gas
and electricity from September 1996 to present. The settlement has been
structured to minimize current demands on El Paso's liquidity and to
utilize El Paso's existing assets to reduce cash outlays.
"This agreement in principle is positive news for all stakeholders in El
Paso--our employees, customers, shareholders, bondholders, vendors and all
those with whom we do business," said Ronald L. Kuehn, Jr., chairman and
chief executive officer of El Paso Corporation. "This settlement will help
resolve the uncertainties that have surrounded El Paso in the market over
the past few years relating to the energy crisis in the Western United
States. While I am convinced that all of El Paso's actions have been
consistent with both the letter and the spirit of the law, this settlement
allows us to put these issues behind us and devote our full energies to
executing the company's operational and financial plan."
The following parties have been actively involved in the settlement
discussions and will be working to implement the agreement as quickly as
possible: representatives of private litigants that have brought lawsuits
against El Paso currently pending in San Diego Superior Court; the Governor
and Lieutenant Governor of the state of California; the attorneys general
of California, Washington, Oregon and Nevada; the California Public
Utilities Commission (CPUC); the California Electricity Oversight Board
(EOB); the California Department of Water Resources (DWR); Pacific Gas and
Electric Company and Southern California Edison Company.
Highlights of the settlement agreement in principle are as follows:
Up-Front Payments of Cash and Stock
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o El Paso agrees to pay $100 million in cash. The payment will be made
into an escrow account with interest, upon execution of the
definitive settlement agreement. El Paso will make a separate
$2-million payment from the company's officer bonus pool.
o El Paso agrees to pay $125 million in common stock. An estimated
26.4 million shares will be issued, based on the average price for
the 30 trading days prior to the announcement of the settlement. The
stock will be issued once the settlement is effective.
Non-Cash Consideration
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o El Paso agrees to deliver natural gas at the California border
valued at $45 million per year over 20 years commencing in 2004.
o El Paso will reduce the sales price of its long-term power contracts
with the California Department of Water Resources by $125 million
through 2005.
Additional Company Payments
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o El Paso agrees to make additional payments of $22 million per year
for 20 years. The first payment will be made 12 months after the
effective date of the settlement.
o At its option, El Paso may pay up to 50 percent of these payments in
stock.
Other
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o For a period of five years, the El Paso Natural Gas pipeline system
will maintain its existing physical delivery capacity at the
California border of 3,290 million cubic feet per day. El Paso will
seek FERC authorization to assure that its shippers have the
contractual right to utilize that capacity on a primary delivery
point basis.
o El Paso, the CPUC, Pacific Gas & Electric and Southern California
Edison will submit this portion of the agreement to the FERC in
final resolution of the CPUC's pending complaint.
The proposed settlement will result in an estimated after-tax charge of
approximately $650 million, which will be taken in the fourth quarter of
2002.
The settlement is subject to the negotiation of definitive settlement
agreements and is subject to review and approval by the courts and the
FERC.
Conference Call
El Paso has scheduled a live webcast to discuss this litigation settlement
at 9:00 a.m. Central Standard Time today. This webcast may be accessed
online through our Web site at www.elpaso.com in the "For Investors"
section. A limited number of telephone lines will also be available to
participants by dialing (973) 935-8507 ten minutes prior to the start of
the webcast.
The webcast replay will be available online through our Web site in the
"For Investors" section. A telephone audio replay will also be available
through March 28, 2003 by dialing (973) 341-3080 (access code 3825318).
El Paso Corporation is the leading provider of natural gas services and the
largest pipeline company in North America. The company has core businesses
in production, pipelines, midstream services, and power. El Paso
Corporation, rich in assets and fully integrated across the natural gas
value chain, is committed to developing new supplies and technologies to
deliver energy. For more information, visit www.elpaso.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This release includes forward-looking statements and projections, made in
reliance on the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The company has made every reasonable effort to ensure
that the information and assumptions on which these statements and
projections are based are current, reasonable, and complete. However, a
variety of factors could cause actual results to differ materially from the
projections, anticipated results or other expectations expressed in this
release, including, without limitation, actions by credit rating agencies;
the successful implementation of the settlement announced in this release;
receipt of all necessary judicial and regulatory approvals of the settlement;
our ability to divest of certain non-core assets; changes in commodity prices
for oil, natural gas, and power; general economic and weather conditions in
geographic regions or markets served by El Paso Corporation and its
affiliates, or where operations of the company and its affiliates are
located; the uncertainties associated with governmental regulation;
competition; the successful implementation of the 2003 business plan; and
other factors described in the company's (and its affiliates') Securities and
Exchange Commission filings. While the company makes these statements and
projections in good faith, neither the company nor its management can
guarantee that anticipated future results will be achieved. Reference must
be made to those filings for additional important factors that may affect
actual results.
ADDITIONAL IMPORTANT INFORMATION
Prior to its 2003 annual meeting, El Paso will furnish to its shareholders
El Paso's definitive proxy statement relating to this meeting, together
with a WHITE proxy card. Shareholders are strongly advised to read this
proxy statement when it becomes available, as it will contain important
information.
Shareholders will be able to obtain El Paso's proxy statement, any
amendments or supplements to the proxy statement and any other documents
filed by El Paso with the Securities and Exchange Commission for free at
the Internet Web site maintained by the Securities and Exchange Commission
at www.sec.gov. Copies of the proxy statement and any amendments and
supplements to the proxy statement will also be available for free at El
Paso's Internet Web site at www.elpaso.com or by writing to El Paso
Corporation, Investor Relations, PO Box 2511, Houston, TX 77252. In
addition, copies of the proxy materials may be requested by contacting our
proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 toll-free or by
email at proxy@mackenziepartners.com.
To the extent that individual customers, independent industry researchers,
financial analysts, or El Paso commissioned research, are quoted, it is El
Paso's policy to use reasonable efforts to verify the source and accuracy
of the quote. El Paso has not, however, sought or obtained the consent of
the quoted source to the use of such quote as proxy soliciting material.
Also, El Paso may express opinions and beliefs. Except as otherwise
expressly attributed to another individual or entity, these opinions and
beliefs are the opinions and beliefs of El Paso.
Information regarding the names, affiliation and interests of individuals
who may be deemed participants in the solicitation of proxies of El Paso's
shareholders is contained in Schedule 14A filed by El Paso with the
Securities and Exchange Commission on February 18, 2003, as amended by a
Schedule 14A filed by El Paso on March 18, 2003.
CONTACTS
Communications and Government Affairs
Norma F. Dunn, Senior Vice President
Office: (713) 420-3750
Fax: (713) 420-3632
Investor Relations
Bruce L. Connery, Vice President
Office: (713) 420-5855
Fax: (713) 420-4417
Alternate Contacts
Joele Frank/Dan Katcher
Joele Frank, Wilkinson Brimmer Katcher
Office: (212) 355-4449
Fax: (212) 355-4554