Northeast Utilities sets Friday deadline for Con Edison response

Hartford, Conn.-based Northeast Utilities warned it will sue proposed merger partner Consolidated Edison Inc., New York, if it does not receive assurances by Friday Con Edison intends to proceed with its acquisition of Northeast. Con Edison Wednesday said it is reviewing the prospects for the merger agreement reached with Northeast Utilities in light of changes in the New England utility's businesses.

March 1, 2001

2 min read

By the OGJ Online Staff

HOUSTON, Mar. 1�Hartford, Conn.-based Northeast Utilities warned it will sue proposed merger partner Consolidated Edison Inc., New York, if it does not receive assurances by Friday Con Edison intends to proceed with its acquisition of Northeast.

Con Edison Wednesday said it is reviewing the prospects for the merger agreement reached with Northeast Utilities in light of changes in the New England utility's businesses. Con Edison did not outline the nature of the changes it had in mind, but last October the company said it was reviewing its options after Connecticut imposed a series of stiff restrictions on the proposed acquisition.

Connecticut Attorney General Richard Blumenthal, who is seeking to overturn state approval of the deal, is asking a state court to delay the merger until it rules on an appeal.

In a short statement released as stock trading ended Wednesday, Con Edison said it "views the agreement as continuing in effect'' pending completion of a review and receipt of the remaining approvals from the US Securities and Exchange Commission. The deal already has been approved by three federal regulatory agencies and seven state agencies.

Early Wednesday, Northeast Utilities said its board asked Con Edison for assurance in writing by 9 a.m. EST Friday that it was proceeding with the merger. The Con Edison statement made no reference to the Northeast Utilities request.

Northeast said if it does not receive the requested assurances the company will treat the failure "as a breach of the merger agreement" and will pursue "all" legal remedies to compel Consolidated Edison to comply with its obligations.

Con Ed agreed to acquire New England's largest electric utility last year in exchange for $3.29 billion in cash and stock. Including gas distribution operations of both companies, it would create the nation's largest utility holding company serving 6 million customers.

Northeast Utilities Chairman Michael Morris said the company is "puzzled" by Con Edison's reluctance to commit to fulfill its contractual obligations, because Northeast "is a substantially more valuable company today than when we entered into the merger agreement more than 16 months ago."

He noted Northeast's unsecured credit is now rated at investment grade for the first time in 5 years and senior unsecured debt at its operating companies is up as many as five notches since 1998 to BBB-plus by Standard & Poor.