The merger of Utah Power & Light Co. and PacifiCorp, promising to make money for UP&L shareholders and reduce rates for UP&L customers, will take place early next month, both utilities said Friday.
Directors of both companies met separately Friday afternoon to approve final details and dates to set the merger transaction in motion. Officials expect the deal to close the first week in January - more than 16 months after the two companies announced the $2 billion merger."We are anxious to have the merger consummated because of the benefits that will flow to UP&L customers in the form of lower rates," UP&L spokesman Dave Mead said.
UP&L and PacifiCorp, a diversified utility company based in Portland, Ore., and serving five states through its electric utility Pacific Power & Light, have guaranteed a 5 percent rate reduction for UP&L customers within five years after the merger. Two percent of that rate cut will take place within 60 days of the merger's closing, the companies said.
Both companies justified the rate reductions and future stable rates based on the savings and revenues gained from merging the two interstate transmission and generation facilities.
For UP&L's 85,175 shareholders, the merger will mean an increase in quarterly dividends from 58 cents to 66 cents a share, in addition to holding stock with a higher value.
Under terms of the agreement, UP&L shareholders will have their stock converted to Pacifi-Corp shares, based on the average price of Pacifi-Corp stock during a 10-day trading period.
Directors said the trading period will begin Monday and run through Jan. 3. The value to UP&L shareholders will range from a minimum of $32.25 a share, if PacifiCorp's stock averages more than $33.70 a share, to a maximum of $38, if the average price of PacifiCorp stock is more than $41.804 a share.
At Friday's stock market closing, PacifiCorp stock was unchanged at $35.375 a share while UP&L was up 25 cents to $31.75.
If PacifiCorp's stock falls to a point where UP&L shareholders can't receive the minimum $32.25 a share, UP&L can terminate the agreement.
In terms of shares, UP&L holders should receive between .957 and .909 shares of PacifiCorp stock for each share of UP&L. Preferred stock will be swapped on a share-for-share basis. To accomplish the conversion, PacifiCorp will have to issue between 53 million and 56 million new shares to UP&L holders, the utility said.
Shortly after the closing date, shareholders will receive mailings detailing the process of exchanging stock certificates, the company said.
It took more than a year to get regulatory approval of the merger, the largest in the industry in about 50 years. The marriage would create one of the largest utilities in the West with $8 billion in assets, $2 billion in annual revenues and serving more than 1 million customers in seven states.
Approvals have been received from regulators in Utah, Wyoming, Idaho, Montana, Washington, Oregon, California and the Federal Energy Regulatory Commission. PacifiCorp had said a final approval from the Nuclear Regulatory Commission is pending, but directors decided Friday that final word from the NRC wasn't necessary for the deal to close.
Several utilities around the country have filed protests over the FERC's conditional approval of the merger. But UP&L said FERC approval has been given and clarifications of the ruling have no bearing on the merger.
Boards of both companies extended the merger's final closing date from Dec. 15, 1988 to Jan. 15, 1988.