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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule
240.14a-12
KANSAS CITY POWER & LIGHT COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
####
KANSAS CITY POWER & LIGHT
AND WESTERN RESOURCES
create.
[logo] Westar (TM) Energy
LEADING THE ELECTRIC ENERGY INDUSTRY
INCREASING SHAREOWNER VALUE
BUILDING GROWTH OPPORTUNITIES
ENHANCING CUSTOMER SERVICE
Vote "FOR" the KCPL/Western Resources proposal today!
[tab]
BROCHURE
KANSAS CITY POWER & LIGHT
AND WESTERN RESOURCES
create.
[logo] Westar (TM) Energy
LEADING THE ELECTRIC ENERGY INDUSTRY
INCREASING SHAREOWNER VALUE
BUILDING GROWTH OPPORTUNITIES
ENHANCING CUSTOMER SERVICE
Vote "FOR" the KCPL/Western Resources proposal today!
WESTAR ENERGY
is committed to delivering value to customers and increasing the value
of your investment.
FEATURES
- - Over 1 million customers
- - More than $8 billion in assets
- - Over 8,000 megawatts of electric generation resources
- - Innovative value-added products and services
[graph/transaction chart showing Western Resources, KPL and KGE and
KCPL electric operations joining into Westar Energy, and KLT Inc.
going to Western Resources]
Western Resources, Inc.
[dotted arrow up]
Western Resources KLT, KCPL
Electric operations Inc. electric
operations
KGE, KPL
[solid down arrow] [solid down arrow]
[logo] Westar (TM) Energy
[end of graph/chart]
You and your fellow shareowners are being asked to vote on a proposal:
to combine the proven and established electric utility operations of
Kansas City Power & Light and Western Resources into a new company. The
new company, Westar Energy, will be a larger electric utility positioned
to compete in a changing marketplace.
In addition, you will become an owner of Western Resources, a
diversified consumer services company with a strong growth profile.
In the following pages, we will attempt to answer frequently asked
questions about this transaction and its benefits.
Q. What happens to my stock when the combination takes place?
A. You will exchange each share of your KCPL common stock for
common share ownership in two companies:
[in circle] KCPL COMMON STOCK
[down arrow]
1. WESTERN RESOURCES COMMON STOCK
a fractional share of Western Resources common stock worth
between $21.50 and $26.50(1)
PLUS
2. WESTAR ENERGY COMMON STOCK
one share of Westar Energy common stock, estimated by
KCPL and Western Resources to be worth approximately $10 to
$12(2).
(1) Based on the closing price of Western Resources common stock as
reported on the NYSE Composite Tape on June 11, 1998, each share of
KCPL common stock would have been converted into a fractional share
of Western Resources common stock worth $23.50.
(2) Based on current market conditions and comparable publicly traded
electric utilities' dividend yields and price-to-earnings ratios.
There can be no assurance as to the actual prices at which Westar
Energy stock will trade once listed on the NYSE. Actual prices could
be significantly higher or lower than the estimated range.
YOU CAN DETERMINE APPROXIMATELY HOW MUCH STOCK YOU WILL RECEIVE WHEN
THE COMBINATION IS COMPLETED:
[calculation workchart]
KCPL shares you currently own [right arrow] ____________
multiplied by the assumed exchange
ratio (for this example only)(1) x.59873
____________
=approximate number of Western
Resources shares you will receive [right arrow] ____________
____________
PLUS
KCPL shares you currently own [right arrow] ____________
multiplied by exchange ratio of 1 to 1 x1
____________
=number of Westar Energy shares you
will receive [right arrow] ____________
____________
(1) This number assumes a Western Resources common stock price of
$39.25, which was its closing price on June 11, 1998, as reported on
the NYSE Composite Tape. As of this date, each share of KCPL common
stock would have been converted into a fractional share of Western
Resources common stock worth $23.50. KCPL shareholders may call 800-
621-0518 for the exact number of shares to be issued to them based on
the most recent Western Resources Index Price.
[end of workchart]
Q. What happens to my dividend?
A. KCPL and Western Resources have projected an initial annual
dividend for Westar Energy for the first full year of operation of
$0.72 per share. The actual dividend policy of Westar Energy will be
dependent on numerous factors including current economic conditions,
earnings and profitability. Western Resources currently pays an
annual dividend of $2.14 per share of Western Resources common stock.
However, there can be no assurances that the boards of directors of
Western Resources and Westar Energy will declare dividends or the
amounts of such dividends.
You will have the option of placing the Western Resources shares
you receive in the stock exchange directly into Western Resources
direct stock purchase plan and the shares of Westar Energy received
into a dividend reinvestment plan intended to be established by Westar
Energy.
YOU CAN DETERMINE APPROXIMATELY HOW MUCH YOU WILL RECEIVE IN DIVIDENDS
FROM EACH COMPANY:
[calculation workchart]
Western Resources shares received [right arrow] ____________
(calculated on previous page)
____________
multiplied by Western Resources current
annual dividend per share of $2.14 x2.14
____________
=approximate Western Resources annual
dividends in dollars you will
initially receive(1) [right arrow] ____________
____________
PLUS
Westar Energy shares received
(calculated on previous page) [right arrow] ____________
multiplied by estimated Westar Energy
annual dividend per share of $0.72 x0.72
____________
=approximate Westar Energy annual dividends
in dollars you will initially receive(1) ____________
____________
(1) There can be no assurances that the boards of directors of Westar
Energy and Western Resources will declare dividends in the future, or
if declared, the amount of such dividends.
[end of workchart]
Q. Why should I vote "FOR" this combination?
A. The benefits of this transaction are four-fold:
- - Westar Energy unites three well-known, successful electric
utilities into one larger utility better positioned to grow and
prosper in a deregulating marketplace.
- - Shareowners will gain the predictable earnings of Westar Energy, a
regulated electric utility, and will become owners in Western
Resources, a diversified consumer services company with a strong
growth profile.
- - The combination of Westar Energy and Western Resources stock
received will provide a consistent stream of dividends from
diversified sources.
- - The creation of Westar Energy is a strategic step toward becoming
a leading national provider of electric energy and energy-related
products and services.
Q. Why are we joining with Western Resources?
A. Western Resources brings to this combination its history and
commitment to growth and shareholder value:
- - Total return for Western Resources shareowners exceeded 48% in
1997.(1)
- - Investments in monitored security businesses in 1997 and 1998
created the second largest security business in America, with more
than 1 million monitored security customers in 48 states.(1)
- - A strategic alliance with ONEOK gives Western Resources 45%
ownership in the nation's eighth largest natural gas distribution
company.(1)
- - Western Resources diversified properties helped increase its
revenues in 1997 from the previous year.(1)
- - Western Resources solid financial management reduced short-term
debt in 1997.(1)
(1) As reported in Western Resources 1997 annual report
Q. Who will manage Westar Energy?
A. John Hayes, Western Resources' current chairman and CEO, will
hold the position of chairman of Westar Energy. Drue Jennings, KCPL's
current chairman, president and CEO, will assume CEO responsibilities
of Westar Energy. Both have used their expertise and management
insight to achieve success in the electric utility industry.
A ten-member board of directors will govern Westar Energy. Initially,
six positions will be appointed by Western Resources and four by KCPL.
Westar Energy will be headquartered in Kansas City, Missouri, with
significant electric operations located in Wichita and Topeka,
Kansas.
Q. What is the timetable for closing the transaction?
A. The combination is expected to be completed by mid-year 1999.
Assuming KCPL and Western Resources shareowners grant approval of the
combination and certain other matters at meetings scheduled on July
30, 1998, it must receive approval from the Kansas Corporation
Commission, the Missouri Public Service Commission, the Federal Energy
Regulatory Commission, the Nuclear Regulatory Commission and other
governmental agencies.
WE NEED YOUR VOTE!
Begin delivering value by voting "FOR" this proposal.
KCPL's Board of Directors approved this combination and encourages you
to vote "FOR" the KCPL/Western Resources proposal on the proxy card
enclosed if you have not already done so.
If you have any questions about the proxy information you received,
you may contact a KCPL representative at the number below.
MORROW & COMPANY
1-800-566-9061
[tab]
FACT SHEET
FACT SHEET
WESTERN RESOURCES/KCPL AGREEMENT
TERMS OF AGREEMENT
Under the agreement signed March 18, 1998, KCPL shareowners
receive both Western Resources stock and Westar Energy stock upon
completion of a merger transaction between KCPL and Western
Resources. Upon completion of the transaction, KCPL shareowners will
receive shares of Western Resources common stock, with a value between
$21.50 and $26.50 per share. Based on the closing price of Western
Resources common stock as reported on the NYSE Composite Tape on
June 11, 1998, each share of KCPL common stock would have been
converted into a fractional share of Western Resources common stock
worth $23.50. Western Resources shareowners will continue to hold the
common stock they currently own.
At closing, for every one share of KCPL common stock they
currently own, KCPL shareowners will also receive one share of Westar
Energy with a value estimated by KCPL and Western Resources to be
between $10.00 and $12.00 per share based on current market conditions
and comparable publicly traded electric utilities' dividend yields and
price-to-earnings ratios. This estimate assumes that the dividend for
the first year of operation is $0.72 and assumes a normal electric
utility payout ratio. The actual dividend policy of Westar Energy will
be dependent upon numerous factors including current economic
conditions, earnings and profitability. Since Western Energy will be
a newly-formed entity with no trading history, there can be no
assurances that Westar Energy will trade at such levels. Actual
prices could be significantly higher or lower than the estimated
range.
Western Resources will own 80.1% of Westar Energy's total common
equity and KCPL shareowners will own approximately 19.9% of Westar
Energy. KCPL shareowners will own approximately 35% of Western
Resources and Western Resources' existing shareowners will own
approximately 65% of Western Resources based on current Western
Resources stock price. It is anticipated that the transaction will be
tax-free to both Western Resources and KCPL shareowners and accounted
for as a purchase.
On a proforma basis for the year ended December 31, 1997, Westar
Energy's revenues would have been approximately $2.1 billion and its
debt $2.7 billion ($1.9 billion from Western Resources and $800
million from KCPL). With over $8 billion in combined assets, Westar
Energy will serve more than 1 million electric customers in Kansas and
Missouri. The combined entity will have more than 8,000 megawatts of
electric generation resources.
DIVIDEND POLICY
KCPL currently pays an annual dividend of $1.62 per KCPL share.
Western Resources currently has an indicated annual dividend of $2.14
per Western Resources share. KCPL and Western Resources have
projected an initial annual dividend for Westar Energy for the first
full year of operation of $0.72 per share. The actual dividend policy
of Westar Energy will be dependent upon numerous factors including
current economic conditions, earnings and profitability. It is
anticipated that after completion of the transaction, KCPL shareowners
will receive dividends on both the Western Resources shares and the
Westar Energy shares exchanged for their KCPL shares.
Of course, there can be no assurance that the boards of
directors of either Western Resources or Westar Energy will declare
dividends in the future or, if declared, the amount of such dividends.
MANAGEMENT AND BOARD
John E. Hayes, Jr., will become chairman of the board of Westar
Energy and Drue Jennings will become chief executive officer.
Initially, the board of directors of Westar Energy will consist of 10
members, including six directors appointed by Western Resources and
four directors from KCPL. In addition, three KCPL directors will join
Western Resources' board.
HEADQUARTERS
Westar Energy will do business in its various service areas under
the names KCPL, KGE, and KPL. The corporate headquarters of Westar
Energy will be in Kansas City, Missouri. Its customer service
operations will be headquartered in Wichita, Kansas, and its field
operations will be located in Topeka, Kansas.
COLLAR
Western Resources shares to be received by KCPL shareowners in
the exchange will be worth between $21.50 and $26.50. Based on the
closing price of Western Resources common stock as reported on the
NYSE Composite Tape on June 11, 1998, each share of KCPL common stock
would have been converted into a fractional share of Western Resources
common stock worth $23.50.
APPROVALS AND TIMING
The transaction is conditioned, among other things, upon the
approval of each company's shareowners at meetings scheduled for
July 30, 1998. Other approvals include various state and federal
regulatory agencies, including the Kansas Corporation Commission, the
Missouri Public Service Commission, the Federal Energy Regulatory
Commission, the Nuclear Regulatory Commission and other governmental
agencies. The companies are hopeful that regulatory approvals can be
obtained by mid-1999.
Salomon Smith Barney is serving as financial advisor and Sullivan
& Cromwell is serving as legal advisor to Western Resources. Merrill
Lynch & Co. is serving as financial advisor and Skadden, Arps, Slate,
Meagher & Flom LLP is serving as legal advisor to KCPL.
[tab]
TRANSACTION CHART
[flow chart]
HOW THE TRANSACTION LOOKS
PRE-TRANSACTION:
[square]
[square] KCPL
WR (Regulated)
(KPL) Utility)
[connecting line] [connecting line] [connecting line]
[square] [square] [square]
Unregulated KGE KLT Inc.
Businesses
POST-TRANSACTION:
[dotted circle] [dotted circle]
WR Shareholders KCPL Shareholders
65.5% 34.5%(a) 19.9%
[line connecting down [line connecting down [line down to
to WR square] to WR square] Westar Energy
KCPL
KGE
KPL square]
[square]
WR
100% 80.1%
[line down from [line down from [line down from
WR square to WR square to WR square to
Monitoreed Security KLT Inc. Westar Energy
Gas square] KCPL
Other Businesses KGE
square] KPL square]
[square] [square] [square]
Monitored Security KLT Inc. Westar Energy
Gas KCPL
Other Businesses KGE
KPL
(a) Based on 65.4mm WR Shares, 61.9mm KCPL shares, a 0.555 exchange
ratio, and a $42.31 WR 03/13/98 closing stock price.
[tab]
COLLAR
[This page taken from page 11, the "Conversion of KCPL Common Stock",
of the Joint Proxy Statement of Western Resources, Inc. and Westar
Energy, Inc. filed with Securities and Exchange Commission on behalf
of KCPL on June 10, 1998]
[tab]
Q&A
STOCK-RELATED
QUESTIONS & ANSWERS
- - What will happen to my KCPL shares when Westar Energy is formed?
Shareholders will receive a fractional share of Western Resources
common stock worth between $21.50 and $26.50 for each one share of
KCPL stock exchanged. Based on the closing price of Western
Resources common stock as reported on the NYSE Composite Tape on
June 11, 1998, each share of KCPL common stock would have been
converted into a fractional share of Western Resources common stock
worth $23.50.
Shareholders will also receive one share of Westar Energy stock
for each KCPL share exchanged, with a value estimated by KCPL and
Western Resources to be approximately $10 to $12, based on market
conditions and comparable publicly traded electric utilities'
dividend yields and price-to-earnings ratios. However, since
Westar Energy will be a newly formed entity with no trading
history, there can be no assurance that Westar Energy will trade at
such levels. Actual prices could be significantly higher or lower
than the estimated range.
- - What will my dividend be when the transaction is complete?
It is anticipated that after the transaction is complete, KCPL
shareholders will receive dividends on both the Western Resources
shares and the Westar Energy shares exchanged for their KCPL
shares. KCPL and Western Resources have projected an initial annual
dividend for Westar Energy for the first full year of operation of
$0.72 per share. The actual dividend policy of Westar Energy will
be dependent upon numerous factors including current economic
conditions, earnings and profitability.
For each fractional share of Western Resources stock received,
shareholders will receive the same fraction of a full dividend from
Western Resources. So there will actually be two dividends paid,
with a total of the initial annual combined dividends estimated to
be approximately $1.90 for the combined exchanged shares of Westar
Energy and Western Resources stock.
Of course, there can be no assurance that the boards of the
directors of either Western Resources or Westar Energy will declare
dividends in the future or, if declared, the amount of such
dividends.
- - I would like details about the collar.
The number of shares to be received by KCPL shareholders in the
exchange will be equal to between $21.50 and $26.50 per share in
value. Based on the closing price of Western Resources common
stock as reported on the NYSE Composite Tape on June 11, 1998, each
share of KCPL common stock would have been converted into a
fractional share of Western Resources common stock worth $23.50.
STOCK-RELATED
QUESTIONS & ANSWERS
Continued
- - During negotiations and transition activities with Western
Resources over the last year, it seems our stock price has
remained flat compared to other electric utilities. Will we be
"handcuffing" KCPL's ability to grow its stock price for year
while we complete this restructured transaction?
The fact of the matter is, KCPL has increased value to shareholders
and the numbers can prove it.
As of March 31, 1998, the end of the first quarter of this year,
KCPL had delivered a cumulative total return of about 8% to its
shareholders, compared with an industry average cumulative total
return of around 6%. For the five-year period ending March 31,
1998, KCPL's cumulative total return to shareholders was about 75%,
compared with an industry average of 59%.
To put this in perspective, KCPL's total returns are consistently
above the industry average for these same periods. These numbers
include stock price appreciation and dividend reinvestment.
OLD DEAL vs NEW DEAL-RELATED
QUESTIONS & ANSWERS
- - How does the shareholder value for this transaction compare with the
previous agreement with Western?
It is important to know that the so-called "old deal" with Western
Resources was essentially "no deal." Western's financial advisors
were unable to issue a fairness opinion, and we negotiated the
restructured agreement we announced on March 19, 1998.
- - Why didn't KCPL try to make Western hold to the higher value of its
previous offer?
It is important to know that the so-called "old deal" with Western
Resources was essentially "no deal." Western's financial advisors
were unable to issue a fairness opinion, and we negotiated the
restructured agreement we announced on March 19, 1998. Our
objective is to grow a strong company for the future.
- - Couldn't this new transaction correctly be termed a "refinement" of
the previous transaction?
The new transaction between KCPL and Western Resources is an
entirely different structure from that previously announced in
1997. The transaction has been restructured in order to achieve
the highest value for shareholders while allowing the transaction
to move forward.
[tab]
PRESS RELEASE
[WESTERN RESOURCES LOGO] [KCPL LOGO]
MEDIA CONTACTS: MEDIA CONTACTS:
Michel' J. Philipp (785) 575-1927 Phyllis Desbien (816) 556-2903
INVESTOR CONTACT: INVESTOR CONTACT:
Bruce Burns (785) 575-8227 David Myers (816) 556-2312
JOINT NEWS RELEASE
_____________________
MEETINGS SET FOR SHAREOWNER VOTE
TOPEKA, Kansas, and KANSAS CITY, Missouri, June 9, 1998 --
Western Resources (NYSE:WR) and Kansas City Power & Light Company
(NYSE:KLT) today announced that shareowner meetings to approve the
merger agreement are scheduled for July 30.
Proxy information is expected to be mailed to shareowners of both
companies within the next few days. The meetings will be at 10 a.m. at
Bradbury Thompson Alumni Center, Washburn University, Topeka, for
Western Resources shareowners and at 10 a.m. at the Gem Theater, 18th
& Vine, Kansas City, Missouri, for KCPL shareowners.
Under the agreement, the new company -- Westar Energy -- will be
created from the KGE and KPL electric operations of Western Resources
and the electric operations of KCPL. Each KCPL shareowner will receive
$23.50 worth of Western Resources common stock, based on yesterday's
closing price for Western Resources and subject to a collar mechanism.
Each KCPL shareowner also will receive one share of Westar Energy
common stock, for each share of KCPL common stock owned. The companies
estimate that each share of Westar Energy common stock will have an
approximate value of between $10 and $12 per share.*
-more-
p. 2 - MEETINGS SET
Approval of the transaction requires a majority (50% ) of Western
Resources common shares outstanding and 2/3rds of all outstanding KCPL
shares. Shareowners of record as of June 11 will be eligible to vote.
The merger will create a company with more than one million
electric customers in Kansas and Missouri, $8.2 billion in assets and
more than 8,000 megawatts of electric generation resources.
The boards of directors of Western Resources and KCPL approved
the restructured merger of the two companies in March.
The companies also expect to file their regulatory applications
with the Kansas Corporation Commission (KCC) and the Missouri Public
Service Commission (MPSC) within the next few weeks. In addition to
the approval of the KCC and the MPSC, the merger is conditioned upon
the approvals of the Federal Energy Regulatory Commission, the Nuclear
Regulatory Commission, and other governmental agencies.
-30-
Western Resources (NYSE:WR) is a consumer services company with
interests in monitored security and energy. The company has total
assets of more than $7 billion, including security company holdings
through ownership of Protection One (NASDAQ:ALRM), which has more than
1 million security customers in 48 states. Its utilities, KPL and KGE,
provide electric service to approximately 614,000 customers in Kansas.
Through its ownership in ONEOK Inc. (NYSE:OKE), a Tulsa-based natural
gas company, Western Resources has a 45 percent interest in the eighth
largest natural gas distribution company in the nation, serving more
than 1 million customers. Through its other subsidiaries, Westar
Capital and The Wing Group, the company participates in energy-related
investments in the continental United States and offshore.
For more information about Western Resources and its operating
companies, visit us on the Internet at http://www.wstnres.com.
Kansas City Power & Light Company (NYSE:KLT) provides electric
power to a growing and diversified service territory encompassing
metropolitan Kansas City, parts of eastern Kansas and western
Missouri. KCPL is a low-cost producer and leader in fuel procurement
and plant technology. KLT Inc., a wholly owned subsidiary of KCPL,
pursues opportunities in nonregulated, primarily energy-related
ventures.
For more information about KCPL, visit http://www.kcpl.com.
*There can be no assurance as to the actual price at which Westar
Energy common stock will trade once listed on the NYSE.
Forward-Looking Statements: Certain matters discussed in this
news release are "forward-looking statements." The Private Securities
Litigation Reform Act of 1995 has established that these statements
qualify for safe harbors from liability. Forward-looking statements
may include words like we "believe", "anticipate," "expect" or words
of similar meaning. Forward-looking statements describe our future
plans, objectives, expectations, or goals. Such statements address
future events and conditions concerning capital expenditures,
earnings, litigation, rate and other regulatory matters, possible
corporate restructurings, mergers, acquisitions, dispositions,
liquidity and capital resources, interest and dividend rates,
environmental matters, changing weather, nuclear operations, and
accounting matters. What happens in each case could vary materially
from what we expect because of such things as electric utility
deregulation, including ongoing state and federal activities; future
economic conditions; legislative developments; our regulatory and
competitive markets; and other circumstances affecting anticipated
operations, revenues and costs.
[WESTERN RESOURCES LOGO] [KCPL LOGO]
MEDIA CONTACTS: MEDIA CONTACTS:
Michel' J. Philipp (785) 575-1927 Phyllis Desbien (816) 556-2903
INVESTOR CONTACT: INVESTOR CONTACT:
Bruce Burns (785) 575-8227 Andrea Bielsker (816) 556-2312
JOINT NEWS RELEASE
______________________
NEW AGREEMENT REACHED,
RESULTS IN FORMATION OF WESTAR ENERGY
SHAREOWNER MEETINGS SET FOR SUMMER
TOPEKA, Kansas, and KANSAS CITY, Missouri, March 19, 1998 (6:30
a.m. CST) -- Western Resources (NYSE:WR) and Kansas City Power & Light
Company (NYSE:KLT) today announced a restructuring of their merger
agreement, resulting in the formation of a new electric company. Both
companies will ask shareowners to approve the transaction around June
30.
The new company -- to be named Westar Energy -- will be
headquartered in Kansas City, Missouri, and traded on the New York
Stock Exchange. Under the new agreement, each KCPL shareowner will
receive $23.50 worth of Western Resources common stock, subject to a
collar mechanism, for each share of KCPL common stock owned. In
addition, for each KCPL common share owned, each KCPL shareowner will
receive one share of the new company -- Westar Energy -- with an
estimated value of between approximately $10.00 and $12.00 per share
based on current market conditions. This estimate is based on an
analysis by KCPL and Western Resources assuming that the dividend for
the first year of operation is $0.72 and assuming a
-more-
p. 2 - WESTAR ENERGY
normal electric utility payout ratio. Since Westar Energy will be a
newly formed entity with no trading history, there can be no assurance
that Westar Energy will trade at such levels.
"This unique and creative approach will give the electric
operations of both companies a foundation for success in the new
competitive environment," said John E. Hayes, Jr., Western Resources
chairman of the board and chief executive officer. "Shareowners will
reap the benefits of the regulated utility assets of Western Resources
and KCPL and the upside potential of ownership in Western Resources, a
consumer services company with diversified holdings in monitored
security and energy companies.
"This transaction provides significant tangible benefits for all
involved," said Hayes. "Our mutual commitment to no employee layoffs
and long-range cost savings exemplifies what our two companies can do
together. We are delighted to build on each other's strengths to
create a company poised for the future." Western Resources and KCPL
will contribute their respective electric operations to form Westar
Energy, which will be 80.1 percent owned by Western Resources and 19.9
percent by KCPL shareowners.
"By combining the electric utility businesses of both companies,
we are creating a larger regional platform from which to provide
customers with the same reliable competitive energy services to which
they are accustomed," said Drue Jennings, KCPL's chairman of the
board, president and chief executive officer.
"In addition, KCPL shareowners' ownership in Western Resources,
one of the most dynamic companies in the nation, has the potential for
growth," said Jennings. "Western Resources' management team has a
demonstrated track record for growth, having delivered to its
-more-
p. 3 - WESTAR ENERGY
shareowners a total return on their investment of approximately 48%
during the last year. We are extremely pleased with this agreement and
look forward to making it happen."
Westar Energy will continue to operate under the brand names of
KCPL, KGE, and KPL. The combined company will have more than one
million electric customers in Kansas and Missouri, $8.2 billion in
assets and more than 8,000 megawatts of electric generation resources.
Hayes will serve as chairman of the board; Jennings will assume chief
executive officer responsibilities of Westar Energy.
A 10-member board of directors will govern Westar Energy. Six
positions will be appointed by Western Resources and four positions
from KCPL.
Westar Energy's executive headquarters will be in Kansas City,
Missouri, customer service operations will be headquartered in
Wichita, and its field operations will be headquartered in Topeka.
Western Resources will continue to be headquartered in Topeka,
Kansas, and will include KLT, Inc., KCPL's unregulated operations;
80.1% of Westar Energy; Western Resources' existing investments of 45%
interest in ONEOK, Inc., the eighth largest natural gas distribution
company in the nation; an 80% interest in Protection One, the second
largest monitored security company with more than one million security
customers in 48 states; and the Wing Group, international power
project developers. Three members of the KCPL board will join the
Western Resources board.
p. 4 - WESTAR ENERGY
Western Resources will continue to trade on the New York Stock
Exchange under the symbol WR.
Salomon Smith Barney, Western Resources' investment banker, and
Merrill Lynch & Co., Inc., KCPL's investment banker, have presented
fairness opinions to the boards of directors of each company. The
agreement must receive approval from various regulatory agencies. The
approval process should take approximately 12 months. It is expected
the transaction will close by mid-year 1999.
-30-
Western Resources (NYSE:WR) is a consumer services company with
interests in monitored security and energy. The company has total
assets of approximately $7 billion, including security company
holdings through ownership of Protection One (NASDAQ:ALRM), which has
more than 1 million security customers in 48 states. Its utilities,
KPL and KGE, provide electric service to approximately 600,000
customers in Kansas. Through its ownership in ONEOK Inc. (NYSE:OKE), a
Tulsa-based natural gas company, Western Resources has a 45 percent
interest in the eighth largest natural gas distribution company in the
nation, serving more than 1 million customers. Through its other
subsidiaries, Westar Capital and The Wing Group, the company
participates in energy-related investments in the continental United
States and offshore.
For more information about Western Resources and its operating
companies, visit us on the Internet at http://www.wstnres.com.
Kansas City Power & Light Company (NYSE:KLT) provides electric
power to a growing and diversified service territory encompassing
metropolitan Kansas City, parts of eastern Kansas and western
Missouri. KCPL is a low-cost producer and leader in fuel procurement
and plant technology. KLT Inc., a wholly owned subsidiary of KCPL,
pursues opportunities in nonregulated, primarily energy-related
ventures.
For more information about KCPL, visit http://www.kcpl.com.
This press release includes forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements reflect numerous assumptions, and involve a
number of risks and uncertainties. Among the factors that could cause
actual results to differ materially are: electric load and customer
growth; abnormal weather conditions; available sources and cost of
fuel and generating capacity; the speed and degree to which
competition enters the power generation, wholesale and retail sectors
of the electric utility industry; state and federal regulatory
commission decisions; the ability of the combined company to achieve
synergies; the economic climate and growth in the service territories
of the two companies; economies generated by the merger; inflationary
trends and interest rates and the other risks detailed from time to
time in the two companies' SEC reports.
[tab]
SERVICE TERRITORY
[graph showing map of states of Kansas, Missouri and Oklahoma and with
certain cities pinpointed and service territories emphasized by shading]
WESTERN RESOURCES(R) / KCPL / ONEOK
COMBINED REGULATED SERVICE TERRITORY
[map]
KPL [service territory in portion of Kansas; Topeka, Kansas pinpointed]
KGE [service territory in portions of Kansas and Oklahoma; Wichita,
Kansas and Bartlesville, Oklahoma pinpointed]
KCPL [service territory in portion of Missouri; Kansas City, Missouri,
pinpointed]
ONEOK [service territory in portion of Oklahoma; Oklahoma City, Oklahoma
pinpointed]
[end of map]
With completion of KCPL and ONEOK transactions, the company will rank
33rd* nationally among electric companies and 8th nationally among
natural gas distribution companies.
*Based on retail electric revenues