View:
As filed with the Securities and Exchange Commission on December 18, 1995
Registration No. 33-64743
- -------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
to
FORM S-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
ENOVA CORPORATION
(Exact name of registrant as specified in its charter)
(formerly known as SDO Parent Co., Inc.)
California 6719 33-0643023
(State or other (Primary Standard (I.R.S. Employer
jurisdiction Industrial Identification No.)
of incorporation or Classification Code
organization) Number)
101 Ash Street
San Diego, California 92101
(619) 696-2000
(Address, including ZIP Code, and telephone number,
including area code, of registrant's principal executive offices)
David R. Clark
101 Ash Street
San Diego, California 92101
(619) 696-2000
(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
It is requested that copies of communications be sent to:
David R. Snyder
Pillsbury Madison & Sutro LLP
101 W. Broadway, Suite 1800
San Diego, California 92101
(619) 544-3369
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the effective date of this
Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
--------------------------------
This registration statement shall hereafter become effective in
accordance with the provisions of Section 8(a) of the Securities Act of
1933.
ENOVA CORPORATION
CROSS-REFERENCE SHEET
(Pursuant to Item 501(b) of Regulation S-K)
Form S-4 Location in
Item No. Caption Prospectus
- --------- ------- -----------
A. Information About the Transaction
1. Forepart of Registration Statement Outside Front Cover Page
and Outside Front Cover Page
of Prospectus
2. Inside Front and Outside Back Available Information;
Cover Pages of Prospectus Incorporation of Certain
Documents by Reference;
Table of Contents
3. Risk Factors, Ratio of Earnings Summary; Holding Company
to Fixed Charges and Other Information Formation
4. Terms of the Transaction Summary; Holding Company
Formation
5. Pro Forma Financial Information *
6. Material Contacts with the Company
Being Acquired *
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters *
8. Interests of Named Experts and Counsel *
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities *
B. Information About the Registrant
10. Information With Respect to S-3 Registrants Incorporation of Certain
Documents by Reference;
Summary
11. Incorporation of Certain Information Incorporation of Certain
by Reference Documents by Reference
12. Information With Respect to S-2 or
S-3 Registrants *
13. Incorporation of Certain Information
by Reference *
14. Information With Respect to Registrants
Other Than S-2 or S-3 Registrants *
C. Information About the Company Being Acquired
15. Information With Respect
to S-3 Companies Incorporation of Certain
Documents by Reference;
Summary
16. Information With Respect to S-2
or S-3 Companies *
17. Information With Respect to Companies
Other Than S-3 or S-2 Companies *
2
D. Voting and Management Information
18. Information if Proxies, Consents or
Authorizations are to be Solicited *
19. Information if Proxies, Consents or
Authorizations are not to be Solicited
or in an Exchange Offer *
- -----------------------------------
* Not Applicable.
3
ENOVA CORPORATION
P.O. Box 1831, 101 Ash Street
San Diego, California 92112-4150
PROSPECTUS
This Prospectus relates to the implementation of a holding company
structure for San Diego Gas & Electric Company ("SDG&E") and a related
agreement of merger (the "Merger Agreement") among SDG&E, Enova Corporation,
a California corporation formed by SDG&E ("ParentCo"), and San Diego Merger
Company, a California corporation formed by ParentCo ("MergeCo"). ParentCo
is a wholly owned subsidiary of SDG&E and MergeCo is a wholly owned
subsidiary of ParentCo. Pursuant to the Merger Agreement, MergeCo will
merge with and into SDG&E (the "Merger") and each outstanding share of the
common stock of SDG&E, without par value ("SDG&E Common Stock"), will be
automatically converted into one share of the common stock of ParentCo,
without par value ("ParentCo Common Stock"). As a result, SDG&E will become
a subsidiary of ParentCo and the holders of SDG&E Common Stock will become
holders of ParentCo Common Stock. The outstanding shares of SDG&E's
cumulative preferred stock, $20 par value per share ("SDG&E Cumulative
Preferred Stock"), and SDG&E's preference stock (cumulative), without par
value ("SDG&E Preference Stock (Cumulative)"), will be unchanged and will
continue to be outstanding shares of SDG&E. See "Holding Company Formation"
under the heading "Plan of Implementation."
This Prospectus (with respect to 100,000 shares), together with the
Prospectus portion of ParentCo's Registration Statement No. 33-57007 (with
respect to 116,541,000 shares), relate to the issuance of up to 116,641,000
shares of ParentCo Common Stock in connection with the Merger. Further
information concerning the stock offered hereby is contained in "Holding
Company Formation" under the heading "Articles of Incorporation and Bylaws
of ParentCo."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is December __, 1995.
Available Information
A Registration Statement under the Securities Act of 1933, as amended
(the "Securities Act"), has been filed (No. 33-64743) with the Securities
and Exchange Commission (the "SEC"), Washington, D.C., with respect to the
securities offered in the Prospectus (the "Registration Statement"). As
permitted by the rules and regulations of the SEC, this Prospectus omits
certain information contained in the Registration Statement. For further
information pertaining to the securities being offered, reference is made to
the Registration Statement, including exhibits filed as a part thereof. In
addition, another Registration Statement under the Securities Act (No. 33-
57007) was filed with the SEC by the registrant (then known as SDO Parent
Co., Inc.) which became effective on March 1, 1995. Registration Statement
No. 33-57007 pertains to securities being offered in the same transaction to
which Registration Statement No. 33-64743 relates.
SDG&E and ParentCo are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance with the Exchange Act, file reports, proxy statements and other
information with the SEC. These reports, proxy statements and other
information, as well as the above-referenced Registration Statements, can be
inspected and copied at the public reference facilities maintained by the
SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
SEC's regional offices in Chicago (Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511) and in New York
(Seven World Trade Center, 13th Floor, New York, New York 10048), and copies
of such material can be obtained from the public reference section of the
SEC at prescribed rates by writing to the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. SDG&E Common Stock is listed on the New York Stock
Exchange (the "NYSE") and on the Pacific Stock Exchange (the "PSE").
Reports, proxy material and other information concerning SDG&E may also be
inspected at the offices of the NYSE and the PSE.
ParentCo was formed to effectuate the transactions described under
"Holding Company Formation," and there is currently no public market for its
stock. ParentCo has applied to have ParentCo Common Stock listed on the
NYSE and the PSE as of (or promptly following) the effective date of the
Merger described under "Holding Company Formation," and if such applications
are accepted (and ParentCo has been informed that such applications will be
accepted), then Exchange Act reports, proxy statements and other information
concerning ParentCo will be available for inspection and copying at such
exchanges.
No person is authorized to give any information or to make any
representations with respect to the matters described in this Prospectus
other than those contained herein or in the documents incorporated herein by
reference. Any information or representations with respect to such matters
not contained herein or therein must not be relied upon as having been
authorized by SDG&E or ParentCo.
This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any securities (i) other than the registered securities
to which it relates or (ii) in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of SDG&E or ParentCo since the date hereof or that the information
in this Prospectus or in the documents incorporated by reference herein is
correct as of any time subsequent to the dates hereof and thereof,
respectively.
ii
Incorporation of Certain Documents by Reference
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents are available upon
request from the Office of the Secretary, Enova Corporation, P.O. Box 1831,
San Diego, California 92112-4150 (telephone: in California, (800) 826-5942;
and from elsewhere, (800) 243-5454).
The following documents filed by SDG&E and/or ParentCo with the SEC are
incorporated in this Prospectus by reference:
1. SDG&E's Annual Report on Form 10-K for the year ended December 31, 1994;
2. SDG&E's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1995,June 30, 1995 and September 30, 1995;
3. SDG&E's Current Reports on Form 8-K filed on April 3, 1995, May 30, 1995
and December 8, 1995;
4. ParentCo's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995, June 30, 1995 and September 30, 1995; and
5. ParentCo's Current Report on Form 8-K filed on December 8, 1995.
Upon written or oral request, a copy of any and all of the information
that has been incorporated by reference in this Prospectus will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered. This will not include exhibits to the information
unless the exhibits are specifically incorporated by reference in the
information. Requests for copies should be made to the Office of the
Secretary of SDG&E at the address and telephone numbers set forth above.
iii
TABLE OF CONTENTS
Page
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .v
HOLDING COMPANY FORMATION . . . . . . . . . . . . . . . . . . . . . . . v
SDG&E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
ParentCo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Reasons for the Restructuring. . . . . . . . . . . . . . . . . . . . v
Accomplishing the Restructuring. . . . . . . . . . . . . . . . . . .vi
Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . .vii
Dividend Policy. . . . . . . . . . . . . . . . . . . . . . . . . . vii
Federal Income Tax Consequences. . . . . . . . . . . . . . . . . . vii
Vote Required to Approve the Restructuring . . . . . . . . . . . . vii
Financial Information. . . . . . . . . . . .. . . . . . . . . . . .viii
HOLDING COMPANY FORMATION. . . . . . . . . . . . . . . . . . . . . . .1
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Plan of Implementation. . . . . . . . . . . . . . . . . . . . . .2
Reasons for the Restructuring . . . . . . . . . . . . . . . . . .2
Merger Agreement. . . . . . . . . . . . . . . . . . . . . . . . .4
Amendment or Termination. . . . . . . . . . . . . . . . . . . . .4
Treatment of Preferred Stock. . . . . . . . . . . . . . . . . . .5
Dividend Policy. . . . . . . . . . . . . . . . . . . . . . . . . 6
Directors and Management of ParentCo and SDG&E . . . . . . . . . 7
Articles of Incorporation and Bylaws of ParentCo . . . . . . . . 7
Listing of ParentCo Common Stock. . . . . . . . . . . . . . . . 11
Transfer Agent and Registrar. . . . . . . . . . . . . . . . . . 11
Common Stock Investment and Employee Benefit Plans.. . . . . . . 11
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Conditions Precedent to the Merger . . . . . . . . . . . . . . .13
Effective Date of the Merger . . . . . . . . . . . . . . . . . .13
Required Vote . . . . . . . . . . . . . . . . . . .. . . . . . . 13
Market Values of Stock. . . . . . . . . . . . . . .. . . . . . . 14
Exchange of Stock Certificates Not Required . . . .. . . . . . . 14
Federal Income Tax Consequences of the Merger . . .. . . . . . . 15
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . .15
Exhibit A - Agreement of Merger . . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Restated Articles of Incorporation for ParentCo . . . . . B-1
iv
SUMMARY
The following summary is qualified in its entirety by reference to the
more detailed information set forth elsewhere herein, including the exhibits
hereto and the documents incorporated herein by reference.
HOLDING COMPANY FORMATION
SDG&E
SDG&E is an operating public utility primarily engaged in the business
of providing (i) electric service to customers in San Diego County and the
southern portion of Orange County and (ii) gas to customers in San Diego
County. SDG&E's principal executive offices are located at 101 Ash Street,
San Diego, California 92101 (telephone number: (619) 696-2000) (mailing
address: P.O. Box 1831, San Diego, California 92112-4150).
ParentCo
ParentCo, the proposed holding company for SDG&E, was organized by
SDG&E for the purpose of becoming the new parent holding company. Its
principal executive offices are at the same location as SDG&E's offices
referred to above (it also shares the same telephone number and mailing
address).
Reasons for the Restructuring
The SDG&E Board of Directors considers it to be in the best interests
of SDG&E and its shareholders to change the corporate structure of SDG&E and
its subsidiaries. The objective of such a restructuring is to have SDG&E
and its direct subsidiaries become separate, directly-owned subsidiaries of
a new parent company (ParentCo), with the present holders of SDG&E Common
Stock becoming holders of ParentCo Common Stock. The Board of Directors
believes the proposed restructuring will provide the means for a more
clearly defined separation of utility and non-utility operations and permit
greater financial and organizational flexibility to meet the changing
operational, regulatory and economic environment for utilities.
The proposed restructuring will lead to a change for holders of SDG&E
Common Stock in the nature of their investment: from shares of stock in a
regulated utility with some diversified operations in separate subsidiaries
to shares of stock in a holding company which is not directly regulated in
the same manner as a utility. SDG&E will constitute the predominant part of
ParentCo's earning power and assets for the foreseeable future. However,
both regulation of utilities and the markets which SDG&E has traditionally
served are changing. As facets of the traditional utility business which
were once regulated, such as electric generation, have become less regulated
and more competitive, the energy options for customers, particularly large
industrial users of energy, are expanding.
v
Management believes that the corporate separation afforded by a holding
company structure will permit the holding company, ParentCo, to respond
effectively to increasing competition in the energy business. Where a facet
of the business becomes unregulated, that facet can be separated from the
core utility business of SDG&E, although remaining under the common
ownership of ParentCo. Separation of such facets of the energy business, as
well as the diversified operations of SDG&E's present non-utility
subsidiaries, from the core utility business of SDG&E will help to protect
SDG&E's stability as viewed by sources of financing. Such stability is
vital to avoid increased capital costs for SDG&E, and thus higher utility
rates. Accordingly, the holding company structure will support SDG&E's
ability to continue efficiently meeting its customers needs while permitting
ParentCo to respond to a changing business environment. See "Holding
Company Formation--Reasons for the Restructuring."
Accomplishing the Restructuring
Pursuant to the Merger Agreement in the form attached to this
Prospectus as Exhibit A, a subsidiary of ParentCo (MergeCo) will be merged
with and into SDG&E. In the Merger, the outstanding shares of SDG&E Common
Stock will be converted into new shares of ParentCo Common Stock on a share-
for-share basis, and SDG&E will become a subsidiary of ParentCo. SDG&E
Cumulative Preferred Stock and SDG&E Preference Stock (Cumulative) will
remain outstanding, and be unaffected by the Merger.
It is contemplated that the Merger will become effective at 12:01 a.m.
(Pacific Standard Time) on January 1, 1996. All required regulatory
approvals have been received, including the approval by the California
Public Utilities Commission (the "CPUC") which was received on December 6,
1995.
Following the Merger, SDG&E's interest in its direct subsidiaries will
be transferred to ParentCo (the transfer and the Merger are sometimes
referred to as the "restructuring"). The restructuring will be accounted
for in a manner similar to a pooling of interests.
If the restructuring is completed, it will not be necessary to exchange
certificates representing SDG&E Common Stock for certificates representing
ParentCo Common Stock. Rather, certificates for SDG&E Common Stock will
automatically be deemed to represent certificates for a like number of
shares of ParentCo Common Stock.
Application has been made to list ParentCo Common Stock on the New York
Stock Exchange (the "NYSE") and on the Pacific Stock Exchange (and ParentCo
has been informed that such applications will be accepted) . In the absence
of such listing on the NYSE, the Board of Directors may elect not to
consummate the transactions contemplated by the Merger Agreement (including
the Merger).
vi
Regulatory Approvals
SDG&E has obtained all required authorizations from the CPUC, the
Federal Energy Regulatory Commission and the Nuclear Regulatory Commission
to implement various aspects of the restructuring. See "Holding Company
Formation--Regulation."
Dividend Policy
It is expected that ParentCo initially will make quarterly dividend
payments on ParentCo Common Stock equal to the rate currently paid by SDG&E
on SDG&E Common Stock and on approximately the same schedule of dates as
that now followed by SDG&E. Future dividend payments initially will depend
primarily on the earnings, financial condition and capital requirements of
SDG&E. See "Holding Company Formation--Dividend Policy."
Federal Income Tax Consequences
The proposed restructuring should not affect the position of present
SDG&E shareholders for federal income tax purposes. See "Holding Company
Formation--Federal Income Tax Consequences of the Merger."
Vote Required to Approve the Restructuring
Shareholder approval of the restructuring required the favorable vote
of:
1. A majority of the outstanding shares of SDG&E Common Stock;
2. A majority of the outstanding shares of SDG&E Common Stock and SDG&E
Cumulative Preferred Stock, voting together, with each share of SDG&E
Common Stock having one vote and each share of SDG&E Cumulative Preferred
Stock having two votes; and
3. Two-thirds of the outstanding shares of SDG&E Cumulative Preferred Stock
and SDG&E Preference Stock (Cumulative), voting together, with each share
having one vote.
Such shareholder approval was received at the 1995 Annual Meeting of SDG&E
(held on April 25, 1995). See "Holding Company Formation--Required Vote."
SDG&E's Directors and executive officers and their affiliates own less
than one percent (1%) of the voting securities of SDG&E. After the
restructuring, they will continue to own less than one percent (1%) of the
voting securities of ParentCo.
vii
Financial Information
SDG&E's 1994 Annual Report to Shareholders (comprising a portion of
SDG&E's Annual Report on Form 10-K for the year ended December 31, 1994,
which is incorporated herein by reference) contains audited financial
statements of SDG&E as of December 31, 1994 and for the year ended on that
date. SDG&E's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1995, June 30, 1995 and September 30, 1995 (which are incorporated
herein by reference) contain unaudited financial statements of SDG&E as of
such dates and for the interim periods ended on those dates. Copies of
these Reports may be obtained without charge upon request as provided under
"Incorporation of Certain Documents by Reference" above.
viii
ENOVA CORPORATION
101 Ash Street
San Diego, California 92101
Prospectus
HOLDING COMPANY FORMATION
General
The Board of Directors of San Diego Gas & Electric ("SDG&E") has
authorized a plan to change the corporate structure of SDG&E and its
subsidiaries, and the shareholders of SDG&E have approved such change. The
result of the restructuring will be to have SDG&E and all of its direct
subsidiaries become separate subsidiaries of a parent holding company, Enova
Corporation ("ParentCo"), with the present holders of the common stock of
SDG&E, without par value ("SDG&E Common Stock"), becoming holders of the
common stock of ParentCo, without par value ("ParentCo Common Stock"). The
direct subsidiaries of SDG&E that, in addition to SDG&E, would become direct
subsidiaries of ParentCo are Pacific Diversified Capital Company, Enova
Financial, Enova Technologies, Califia Company and Enova Energy Management,
Inc.
Management and the Board of Directors consider the proposed change in
corporate structure to be in the best interests of SDG&E and its
shareholders, believing that a parent holding company, with SDG&E as its
principal subsidiary, will result in benefits for SDG&E, its shareholders
and other constituents.
Plan of Implementation
To carry out the restructuring, SDG&E has formed ParentCo which has, in
turn, formed San Diego Merger Company ("MergeCo"). MergeCo is presently the
wholly-owned subsidiary of ParentCo and ParentCo is presently the wholly-
owned subsidiary of SDG&E. Neither ParentCo nor MergeCo presently has any
business or properties of its own.
SDG&E, ParentCo and MergeCo have approved an agreement of merger (the
"Merger Agreement"). The Merger Agreement is subject to certain conditions,
including shareholder approval as required by California law (which was
obtained at the 1995 Annual Meeting of SDG&E shareholders). If the
transactions contemplated by the Merger Agreement occur, SDG&E will become a
subsidiary of ParentCo through the merger of MergeCo into SDG&E (the
"Merger"). A copy of the Merger Agreement is attached to this Prospectus as
Exhibit A, and is incorporated herein by reference.
1
In the Merger, each share of SDG&E Common Stock will be converted into
one share of ParentCo Common Stock. Following the Merger, SDG&E will
transfer to ParentCo the capital stock of SDG&E's present direct
subsidiaries so that these companies also will become direct subsidiaries of
ParentCo (the transfer, the Merger and related activity are sometimes
referred to in this Prospectus as the "restructuring").
It is anticipated that the restructuring will not affect the position
of present shareholders of SDG&E for federal income tax purposes. See
"Federal Income Tax Consequences of the Merger" below.
Except for SDG&E Common Stock, none of the securities of SDG&E,
including SDG&E's cumulative preferred stock, $20 par value ("SDG&E
Cumulative Preferred Stock"), SDG&E's preference stock (cumulative), without
par value ("SDG&E Preference Stock (Cumulative)"), and SDG&E's debt
securities, will be changed by the Merger. The outstanding shares of SDG&E
Cumulative Preferred Stock and SDG&E Preference Stock (Cumulative) will
continue to be outstanding shares of SDG&E. See "Treatment of Preferred
Stock" below.
Reasons for the Restructuring
The principal reason for the proposed restructuring, including the
formation of ParentCo, is to respond to the changing business environment in
the electric and gas utility industries in a manner which management
believes is in the best interests of the shareholders and customers. The
proposed restructuring will allow SDG&E to operate its regulated utility
business efficiently while providing, through the structure of a holding
company with other direct subsidiaries, an organization which permits
separation of the other facets of the Company from such regulated utility
business.
For over a century, SDG&E has operated predominantly as a traditional
utility, responsible for constructing and operating the generation,
transmission and distribution facilities needed to serve its customers.
However, both regulation of utilities and the markets which SDG&E has
traditionally served are changing. As facets of the traditional utility
business which were once regulated, such as electric generation, have become
less regulated and more competitive, the energy options for customers,
particularly large industrial users of energy, are expanding.
Management believes that the corporate separation afforded by a holding
company structure will permit the holding company, ParentCo, to respond
effectively to increasing competition in the energy business. Where a facet
of the business, such as electric generation, becomes unregulated, that
business can be separated from the core utility business of SDG&E, although
remaining under the common ownership of ParentCo. Separation will
facilitate the development of such unregulated businesses while insulating
SDG&E from the risks associated with their activities. Following the
restructuring, any liabilities of the direct subsidiaries of ParentCo other
than SDG&E will not constitute liabilities of SDG&E. Accordingly, any
benefits or detriments of these subsidiaries will flow to the security
holders of ParentCo and not to the security holders of SDG&E (i.e., holders
of SDG&E Cumulative Preferred Stock, SDG&E Preference Stock (Cumulative) and
SDG&E's debt securities).
2
In 1994, the California Public Utilities Commission (the "CPUC") issued
a proposal to restructure the California utility industry to allow for
increased competition in certain facets of the utility business. In
response to such proposal, SDG&E suggested consideration of the separation
of its electric generation assets. SDG&E is currently evaluating such a
separation and making preparations should the CPUC order it. Absent CPUC
direction, a separation may nevertheless become expedient in view of
evolving regulatory and market circumstances. Other facets of SDG&E's
present business also may become future candidates for separation. Any
separation of SDG&E assets and resources will be effected in compliance with
applicable regulatory and security holder approval requirements, and the
terms of any such separation will depend upon future conditions and the
scope of involved assets and resources.
Separation of the competitive, unregulated facets of the energy
business, as well as the diversified operations of SDG&E's present
subsidiaries (Pacific Diversified Capital Company, Enova Financial, Inc.,
Enova Technologies, Califia Company and Enova Energy Management, Inc.), from
the core utility business of SDG&E will help to protect SDG&E's stability as
viewed by sources of financing. Such stability is vital to avoid increased
capital costs for SDG&E which would lead to higher utility rates.
Accordingly, the holding company structure will support SDG&E's ability to
continue efficiently meeting its customers needs while permitting the
Company to respond to a changing business environment.
Management also believes that the holding company structure will permit
the use of financing techniques that are more directly suited to the
particular requirements, characteristics and risks of non-utility operations
without any impact on the capital structure or credit of SDG&E. Management
anticipates that (i) ParentCo, in addition to receiving dividends from SDG&E
(and other direct subsidiaries of ParentCo), may obtain funds through debt
or equity financings, (ii) SDG&E may obtain funds through its own financings
(which may include the issuance of first mortgage bonds or preferred stock,
as well as the issuance of additional shares of SDG&E Common Stock to
ParentCo), and (iii) the non-utility businesses may obtain funds from
ParentCo, from other non-utility affiliates or from their own outside
financings. Any financings will depend upon the financial and other
conditions of the entities involved and on market conditions.
The proposed restructuring provides for a holding company that will not
be a utility. Neither ParentCo nor any securities it issues will be subject
to the jurisdiction of the CPUC, the Federal Energy Regulatory Commission
(the "FERC") or the Nuclear Regulatory Commission (the "NRC"); provided,
however, that (i) as the sole owner of SDG&E Common Stock, ParentCo may be
indirectly subject to such jurisdiction with respect to certain matters due
to the application to SDG&E of laws, orders and rules which can affect and
regulate utilities, and (ii) rules or orders of these commissions may impose
restrictions on ParentCo's relationship with SDG&E that are designed to
protect utility customers, to promote the common defense and security, or to
protect the health and safety of the public. See "Regulation" below. The
utility business of SDG&E will constitute the predominant part of ParentCo's
earning power for the foreseeable future after the restructuring.
Following the restructuring, SDG&E will continue to operate as a public
utility subject to the jurisdiction of the CPUC, the FERC and the NRC. The
operations of SDG&E will
3
continue to be conducted as they are at the present time, with substantially
the same assets and management. Management and the SDG&E Board of Directors
believe that the restructuring will have no adverse effect on SDG&E, its
continuing security holders or its customers.
Merger Agreement
The Merger Agreement has been approved by the Boards of Directors and the
shareholders, respectively, of SDG&E, ParentCo and MergeCo. Pursuant to the
Merger Agreement, the following events will occur upon the effectiveness of
the Merger:
Each outstanding share of SDG&E Common Stock will be automatically
converted into one share of ParentCo Common Stock.
Each outstanding share of SDG&E Cumulative Preferred Stock and SDG&E
Preference Stock (Cumulative) will continue as one such issued and
outstanding share, with the same voting powers, designations, preferences,
rights, qualifications, limitations and restrictions, just as prior to the
Merger.
The outstanding shares of the common stock of MergeCo will be automatically
converted into all of the issued and outstanding shares of SDG&E Common
Stock, all of which will then be owned by ParentCo (with the effect that
the number of issued and outstanding shares of SDG&E Common Stock
immediately after the Merger will be the same as the number of issued and
outstanding shares of SDG&E Common Stock immediately prior to the Merger).
The shares of ParentCo Common Stock presently held by SDG&E will be
canceled.
As a result, SDG&E, which will be the surviving corporation in the Merger,
will become a subsidiary of ParentCo, and all of the ParentCo Common Stock
outstanding immediately after the Merger will be owned by the holders of
SDG&E Common Stock outstanding immediately prior to the Merger.
Following the Merger, SDG&E will complete the restructuring by transferring
the capital stock of SDG&E's present direct subsidiaries (Pacific
Diversified Capital Company, Enova Financial, Enova Technologies, Califia
Company and Enova Energy Management, Inc.) to ParentCo.
Amendment or Termination
By mutual consent of their respective boards of directors, SDG&E, ParentCo
and MergeCo may abandon the Merger or amend, modify or supplement the terms
of the Merger Agreement in such manner as may be agreed upon by them in
writing at any time; however, no such amendment, modification or supplement
shall change any of the principal terms of the Merger Agreement unless
approval of the shareholders of SDG&E is obtained. SDG&E will notify the
shareholders in the event of any material amendment, modification or
supplement.
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The Merger Agreement provides that it may be terminated, and the Merger
abandoned, at any time by action of the SDG&E Board of Directors if such
Board determines that the completion of the restructuring would for any
reason be inadvisable or not in the best interests of SDG&E or its
shareholders.
Treatment of Preferred Stock
The proposed Merger and restructuring will not result in any change in
SDG&E's two outstanding classes of preferred stock (SDG&E Cumulative
Preferred Stock and SDG&E Preference Stock (Cumulative)). The decision of
the SDG&E Board of Directors to have SDG&E Cumulative Preferred Stock and
SDG&E Preference Stock (Cumulative) continue as securities of SDG&E is based
upon, among other things, a desire to avoid changing the nature of the
investment represented by such stock, as well as the desire of SDG&E not to
foreclose future issuances of preferred stock to help meet its capital
requirements. SDG&E's debt securities also will not be altered in the
Merger; rather, these securities will remain outstanding and will continue
as obligations of SDG&E as the survivor of the Merger (in the case of
SDG&E's first mortgage bonds, continuing to be secured by a first mortgage
lien on the properties of SDG&E that are subject to such lien).
The utility operations of SDG&E presently constitute, and are expected
to continue to constitute for the foreseeable future, the substantial
majority of the affiliated group's consolidated assets and earning power.
Accordingly, it is believed that SDG&E Cumulative Preferred Stock and SDG&E
Preference Stock (Cumulative) will retain their investment rating, as well
as their qualification for legal investment, by remaining outstanding
securities of SDG&E.
SDG&E Cumulative Preferred Stock and SDG&E Preference Stock
(Cumulative) will continue to rank senior to SDG&E Common Stock (all of
which, after the Merger, will be held by ParentCo) as to dividends and as to
the distribution of assets of SDG&E in the event of any liquidation of
SDG&E. SDG&E Cumulative Preferred Stock and SDG&E Preference Stock
(Cumulative) are and will be unrelated in rank to ParentCo Common Stock or
the common stock of other direct subsidiaries to be held by ParentCo
(initially, Pacific Diversified Capital Company, Enova Financial, Enova
Technologies, Califia Company and Enova Energy Management, Inc.). Payment
of dividends on ParentCo Common Stock will in large part depend on the
earnings of SDG&E and payment of dividends on SDG&E Common Stock. SDG&E's
Restated Articles of Incorporation will continue to provide that no
dividends may be paid on SDG&E Common Stock unless dividends are current on
SDG&E Cumulative Preferred Stock and SDG&E Preference Stock (Cumulative).
Payment of any dividends on the common stock of any other direct
subsidiaries held by ParentCo will be unaffected by any dividend payment or
nonpayment on either SDG&E Cumulative Preferred Stock, SDG&E Preference
Stock (Cumulative) or SDG&E Common Stock.
Separation from SDG&E of the assets and earnings of its non-utility
subsidiaries will decrease the assets and may decrease the earnings of
SDG&E, and will result in SDG&E's investment in these subsidiaries being no
longer of potential benefit to holders of SDG&E Cumulative Preferred Stock,
SDG&E Preference Stock (Cumulative) or SDG&E's debt securities (i.e., any
earnings of these subsidiaries will not be available to pay dividends,
interest or principal
5
with respect to such securities). However, the SDG&E Board of Directors
believes that such holders will not be materially affected by the
separation.
The SDG&E Board of Directors believes that the separation will have no
material adverse effect on SDG&E's utility operations or on its financial
position or results of operations. Following the Merger, SDG&E will
continue to be a reporting company under the Securities Exchange Act of
1934, as amended. While annual meetings of SDG&E shareholders are expected
to continue to be held after the Merger, SDG&E may decide not to solicit
proxies from holders of SDG&E Cumulative Preferred Stock or SDG&E Preference
Stock (Cumulative) in connection with the election of directors and in
connection with other matters requiring the approval of shareholders but not
requiring a class vote of holders of SDG&E Cumulative Preferred Stock or
SDG&E Preference Stock (Cumulative), since the shares of SDG&E Common Stock
owned by ParentCo will have sufficient voting power to take action without
the vote of SDG&E Cumulative Preferred Stock or SDG&E Preference Stock
(Cumulative).
Dividend Policy
It is anticipated that quarterly dividends on ParentCo Common Stock
will commence at a rate equal to that currently being paid on SDG&E Common
Stock, and will be paid on approximately the same dates in each year as
dividends on SDG&E Common Stock have been paid. The quarterly dividend most
recently declared by the SDG&E Board of Directors was $0.39 per share of
SDG&E Common Stock payable on January 15, 1996 to holders of record on
December 10, 1995 (which dividend will be paid by ParentCo presuming the
Merger is effected January 1, 1996). The rate and timing of dividends of
ParentCo will depend upon the earnings, financial condition and dividend
restrictions of ParentCo and its subsidiaries, including SDG&E, and upon
other factors affecting dividend policy which are not presently
determinable.
Initially, the funds required by ParentCo to enable it to pay dividends
on ParentCo Common Stock are expected to be derived primarily from dividends
paid by SDG&E on SDG&E Common Stock. It is anticipated that such cash
dividends paid by SDG&E to ParentCo will be sufficient, together with any
amounts provided by other subsidiaries of ParentCo, to enable ParentCo to
pay cash dividends on ParentCo Common Stock and to meet operating and other
expenses. However, the dividend policy of SDG&E will be established by
SDG&E's Board of Directors as though SDG&E were a stand-alone utility, and
the amounts of dividends declared and paid by SDG&E will be subject to the
availability of earnings and the needs of the utility business, as well as
CPUC requirements. In addition, the ability of SDG&E to pay dividends on
SDG&E Common Stock to ParentCo will be subject to the prior dividend rights
of SDG&E Cumulative Preferred Stock and SDG&E Preference Stock (Cumulative),
to restrictions contained in the indenture supporting SDG&E's first mortgage
bonds and other agreements to which SDG&E is or may become a party, and to
requirements of California law.
Payment of dividends on SDG&E Cumulative Preferred Stock and SDG&E
Preference Stock (Cumulative) is anticipated to continue at the specified
rates without interruption or change; however, the payment of these
dividends is also dependent upon the earnings and financial condition of,
and other factors affecting, SDG&E.
6
Directors and Management of ParentCo and SDG&E
The Directors of SDG&E are also presently the Directors of ParentCo.
At annual meetings of ParentCo subsequent to the Merger, persons may be
nominated for election as Directors of ParentCo who will not be members of
the SDG&E Board of Directors.
The following persons, each of whom is currently an executive officer
(or chairman) of SDG&E, will hold, at least initially, in addition to the
office or offices held with SDG&E, the offices of ParentCo indicated below:
Name Office
Thomas A. Page Chairman of the Board
Stephen L. Baum President and Chief Executive
Officer
David R. Kuzma Chief Financial Officer
Frank H. Ault Vice President and Controller
Initially, ParentCo will not have full-time officers and employees of
its own, other than Mr. Baum. To the extent, however, that the activities
of ParentCo expand, ParentCo may employ full-time salaried officers and
employees. ParentCo and SDG&E each expect, from time to time, to render to
the other certain services and to make available the use of certain
facilities and equipment. The corporation receiving such services or using
such facilities and equipment will reimburse the other corporation for the
cost or fair market value thereof, as appropriate.
Articles of Incorporation and Bylaws of ParentCo
The articles of incorporation of ParentCo (the "ParentCo Articles")
have been prepared in accordance with the California General Corporation Law
(the "California GCL") and give ParentCo broad corporate powers to engage in
any lawful activity for which a corporation may be formed under the laws of
the State of California. The following statements summarize certain
relevant provisions of the ParentCo Articles. This summary should be read
in the context of, and is qualified by reference to, (i) the full ParentCo
Articles, a copy of which is attached to this Prospectus as Exhibit B, and
(ii) the laws of the State of California.
The ParentCo Articles contain certain provisions which are similar to
the SDG&E Restated Articles; however, aside from the deletion of certain
provisions which are obsolete or unnecessary or which specifically concern
SDG&E Cumulative Preferred Stock and SDG&E Preference Stock (Cumulative),
there are certain distinctions which are noted below. shareholders should
be aware that one effect of these distinct provisions of the ParentCo
Articles may be to delay and thus make more difficult a change in the
composition of the ParentCo Board of Directors as compared with the SDG&E
Board of Directors, or the removal of existing management, even in
7
circumstances where a majority of the shareholders of ParentCo may be
dissatisfied with the performance of the incumbent Directors or otherwise
desire to make changes.
Analysis of distinctions in the ParentCo Articles should be tempered,
however, by reference to SDG&E's status as a substantially regulated entity
(see "Regulation" below). For example, changes in control of SDG&E
typically would be subject to CPUC review and approval. Accordingly, while
certain provisions of the ParentCo Articles may have the effect of making
changes in Board composition and management subject to delay and thus more
difficult, the transition from holding stock in a regulated utility to
holding stock in ParentCo may have the effect of lessening other
restrictions (e.g., certain regulatory reviews of a change in control)
affecting a shareholder's ability to influence corporate policy and control.
Capital Stock
The ParentCo Articles authorize the issuance of 300 million shares of
ParentCo Common Stock and 30 million shares of preferred stock of ParentCo
(the "ParentCo Preferred Stock"). Immediately after the Merger, ParentCo
will have approximately 116,641,000 shares of ParentCo Common Stock and no
shares of ParentCo Preferred Stock outstanding. Under California law,
shares of ParentCo Common Stock and ParentCo Preferred Stock may be issued
by ParentCo from time to time upon such terms and for such consideration
(and, as to Preferred Stock, having such rights, preferences, privileges and
restrictions) as may be determined by the ParentCo Board of Directors. Such
further issuances, up to the aggregate amounts authorized by the ParentCo
Articles, will not require authorization from the CPUC or approval by the
shareholders. ParentCo may issue ParentCo Common Stock from time to time
pursuant to common stock investment and employee benefit plans (see "Common
Stock Investment and Employee Benefit Plans" below). Aside from these
plans, there presently are no intentions to offer or sell shares of ParentCo
Preferred Stock or additional shares of ParentCo Common Stock. Under
current provisions of the Public Utility Holding Company Act of 1935, as
amended (the "Holding Company Act"), and the rules and regulations
thereunder, issuance of ParentCo Preferred Stock may be restricted.
Holders of ParentCo Common Stock, subject to any prior rights or
preferences of ParentCo Preferred Stock outstanding, (i) have equal rights
to receive dividends if and when declared by the ParentCo Board of Directors
out of funds legally available therefor and (ii) will receive any
distribution made to shareholders upon liquidation. ParentCo Common Stock
has no preemptive rights to subscribe for additional shares of ParentCo
Common Stock or other securities of ParentCo, nor does it have any
redemption or conversion rights. ParentCo Common Stock has voting rights on
the basis of one vote per share. Any series of ParentCo Preferred Stock
issued by ParentCo will have such voting rights as may be determined by the
ParentCo Board of Directors at the time of issuance; however, the present
policies of the national stock exchanges against issuances of stock with
disparate voting rights may serve to limit ParentCo's issuances of any
ParentCo Preferred Stock with enhanced voting rights.
Number of Directors
The California GCL allows the number of persons constituting the board
of directors of a corporation to be fixed by the bylaws or the articles of
incorporation, or permits the bylaws to
8
provide that the number of directors may vary within a specified range, the
exact number to be determined by the board of directors. The California GCL
further provides that, in the case of a variable board, the maximum number
of directors may not exceed two times the minimum number minus one. The
bylaws of SDG&E (the "SDG&E Bylaws") provide for a Board of Directors that
may vary between seven (7) and thirteen (13) members, inclusive, and the
SDG&E Board of Directors has presently fixed the exact number of directors
at ten (10). The SDG&E Bylaws permit the range of directors, and the
precise number within such range, to be modified by a majority of the
outstanding SDG&E shares entitled to vote.
The ParentCo Articles provide that the number of directors of ParentCo
shall not be fewer than nine (9) nor more than thirteen (13), with the exact
number to be determined by the ParentCo Board of Directors or by a bylaw or
an amendment thereof adopted by a vote of the holders of shares representing
at least 66-2/3% of the outstanding shares of ParentCo entitled to vote.
The ParentCo Board is presently fixed at ten (10), and its membership is
identical to the SDG&E Board of Directors. The ParentCo Articles also
provide that the range of directors, and the precise number within such
range, may be modified by a vote of the holders of at least 66-2/3% of the
outstanding ParentCo shares. ParentCo has no current intention of changing
the number of directors of ParentCo if the Merger is consummated.
As of January 1, 1996, the Boards of Directors for each of SDG&E and
ParentCo will be increased to twelve (12) directors and eleven (11)
directors, respectively, with Mr. Stephen Baum joining the Boards of
ParentCo and SDG&E and Mr. Donald Felsinger joining the Board of SDG&E.
Cumulative Voting
Under cumulative voting, each share of stock entitled to vote in an
election of directors has such number of votes as is equal to the number of
directors to be elected. A shareholder may then cast all of his or her
votes for a single candidate or may allocate them among as many candidates
as the shareholder may choose. As a result, shareholders holding a
significant minority percentage of the outstanding shares entitled to vote
in an election of directors may be able to effect the election of one or
more directors. If cumulative voting is available, then it is mandatory
upon timely notice given by any shareholder at a meeting at which directors
are to be elected.
The SDG&E Bylaws provide for the elimination of cumulative voting, as
do the ParentCo Articles. Thus, the holder or holders of shares
representing a majority of the votes entitled to be cast in an election of
directors for ParentCo will be able to elect all directors then being
elected. The absence of cumulative voting could have the effect of
preventing representation of minority shareholders on the ParentCo Board of
Directors.
Elections: Classified Board of Directors
The California GCL generally requires that directors be elected
annually but does permit a "classified" board of directors if a corporation
either (i) has outstanding securities listed on the New York Stock Exchange
(the "NYSE") or the American Stock Exchange (the "AMEX") or (ii)
9
has securities designated for trading as a National Market System security
on the National Association of Security Dealers Automatic Quotation
("Nasdaq") and at least 800 shareholders (including record and beneficial
owners) (collectively, "Listed Corporations"). SDG&E is a Listed
Corporation and ParentCo will, upon the effectiveness of the Merger or
promptly thereafter, be a Listed Corporation. SDG&E's Restated Articles
currently do not provide for a classified board.
The ParentCo Articles provide that, upon ParentCo's attainment of
status as a Listed Corporation (i.e., upon the effectiveness of the Merger
or promptly thereafter), the ParentCo Board of Directors will become a
classified board with three classes of directors, with members of one class
to be elected each year for a maximum term of three years. With a
classified board, unless adequate cause for removal of directors exists, at
least two annual meetings of shareholders would be required for a majority
of the shareholders comprising less than a 66-2/3% majority to make a change
in control of the ParentCo Board of Directors, since only a minority of the
directors will be elected at each meeting.
Actions by Written Consent
The California GCL permits shareholders, unless specifically prohibited
by the articles of incorporation, to take action without a meeting by the
written consent of the holders of at least the number of shares necessary to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. SDG&E's Restated Articles do not
restrict shareholder action by written consent. Action by written consent
may, in some circumstances, permit the taking of shareholder action opposed
by the Board of Directors more rapidly than would be possible if a meeting
of shareholders were required.
In connection with its evaluation of the restructuring, the Board has
determined that it is important that it be able to give advance notice of
and consideration to any action to be voted on by shareholders, and that all
shareholders be able to discuss at a meeting matters which may affect their
rights. Accordingly, the ParentCo Articles eliminate actions by written
consent of shareholders unless either (i) the Board waives the prohibition
in a particular circumstance or (ii) the action is by the unanimous written
consent of all shareholders.
Fair Price Provisions
The ParentCo Articles contain "fair price" provisions which are
substantially similar to those contained in SDG&E's Restated Articles.
These provisions are intended to reduce the possibility of unfair treatment
of shareholders in takeover situations.
Indemnification Provisions
The ParentCo Articles contain provisions regarding the indemnification
of directors, officers and other agents of ParentCo which are substantially
similar to provisions contained in SDG&E's Restated Articles.
10
Amendment of Articles
Except for the fair price provisions contained in SDG&E's Restated
Articles (for which amendment requires a 66-2/3% shareholder vote), the
SDG&E Restated Articles may be amended by the approval of the holders of
shares having a majority of the votes entitled to be cast for such
amendment. The ParentCo Articles provide that the provisions relating to
(i) indemnification of officers and directors, (ii) the number of directors,
classification of the board and the election of directors (including the
limitation on cumulative voting), (iii) the limitation on action of
shareholders by written consent, (iv) the fair price provisions and (v)
amendment of the bylaws of ParentCo (the "ParentCo Bylaws") can only be
amended by a vote of the holders of shares representing at least 66-2/3% of
the outstanding shares of ParentCo entitled to vote.
Amendment of Bylaws
The SDG&E Bylaws may be amended or repealed either by the SDG&E Board
of Directors or by the holders of shares having a majority of the votes
entitled to be cast for such amendment. The ParentCo Articles provide that
(1) upon a vote of at least 66-2/3% of the authorized number of directors,
the ParentCo Board of Directors will be able to adopt, amend or repeal any
of the ParentCo Bylaws, and (2) the ParentCo Bylaws may also be adopted,
amended or repealed by a vote of the holders of shares representing at least
66-2/3% of the outstanding shares of ParentCo entitled to vote.
The ParentCo Bylaws initially will be substantially similar to the
SDG&E Bylaws.
Listing of ParentCo Common Stock
ParentCo has applied to list ParentCo Common Stock on the NYSE and on
the Pacific Stock Exchange (the "PSE"). It is expected that such listings
will occur on, or promptly after, the effective date of the Merger. At the
time of the listing of ParentCo Common Stock, SDG&E Common Stock will then
be delisted from trading on these stock exchanges (all outstanding shares
will then be held by ParentCo). Shares of SDG&E Cumulative Preferred Stock
and SDG&E Preference Stock (Cumulative) that are listed on the AMEX and the
PSE will continue to be so listed.
Transfer Agent and Registrar
It is expected that the transfer agent for and the registrar of
ParentCo Common Stock will be the same as is presently serving in such
capacities for SDG&E Common Stock: First Interstate Bank of California.
Common Stock Investment and Employee Benefit Plans
If the Merger is completed, SDG&E's Common Stock Investment Plan will
be assumed and continued by ParentCo on and after the effective date of the
Merger, so that shares of ParentCo Common Stock thereafter will be available
to the holders of ParentCo Common Stock and the
11
customers of SDG&E on the same terms as provided in SDG&E's Common Stock
Investment Plan.
If the Merger is completed, SDG&E's Savings Plan and 1986 Long-Term
Incentive Plan will be amended, as and when appropriate, to provide for the
acquisition of ParentCo Common Stock rather than SDG&E Common Stock. Such
plans, as well as the Pension Plan and other employee benefit plans of SDG&E
(collectively, the "Employee Benefit Plans"), also will be amended, as and
when appropriate, to include eligible employees of ParentCo and the
subsidiaries of ParentCo other than SDG&E and to make any other changes
necessary or appropriate as a result of the formation of a holding company
structure for SDG&E and the related restructuring.
By approving the Merger Agreement and the proposed formation of a
holding company structure for SDG&E, the shareholders were deemed to have
approved the actions to be taken in connection therewith and with the
Employee Benefit Plans, including any amendments to the Employee Benefit
Plans necessary to accomplish those actions.
Regulation
As a utility, SDG&E is subject to the jurisdiction of the CPUC with
respect to rates for retail sales, standards of service, issuances of
securities and certain other matters. SDG&E is also subject to the
jurisdiction of (i) the FERC, with respect to certain phases of its electric
business, including rates for sales at wholesale, rates for transmission,
interconnections with other electric utilities and accounting, and (ii) the
NRC, with respect to SDG&E's partial ownership of and co-licensee status as
to the San Onofre nuclear generating facilities. The formation of a holding
company structure for SDG&E, the Merger and the related restructuring will
not change the applicability of such regulatory jurisdiction to SDG&E.
SDG&E was required to, and has obtained, certain authorizations from the
CPUC, the FERC and the NRC to implement various aspects of the
restructuring.
So long as ParentCo is not a public utility or the owner or licensee of
nuclear generating facilities, it will not be directly subject to regulation
by the CPUC, the FERC or the NRC, except to the extent that rules or orders
of these commissions may impose restrictions on ParentCo's relationship with
SDG&E that are designed to protect utility customers, to promote the common
defense and security or to protect the health and safety of the public.
CPUC rules are, for example, designed to (i) ensure that all costs incurred
by SDG&E which result from the activities undertaken by SDG&E's affiliates
will be fully recovered from such affiliates, (ii) provide the CPUC with
access to all information necessary to analyze SDG&E's costs and monitor the
relationships between SDG&E and its non-utility affiliates, (iii) ensure
that SDG&E's customers will be insulated from effects of non-utility
activities, and (iv) protect the financial health of SDG&E's utility
operations. SDG&E will continue to be subject to CPUC regulation of its
operations, including its dealings with ParentCo.
ParentCo believes that it will be entitled to an exemption from all
provisions of the Holding Company Act except Section 9(a)(2), which requires
prior approval of the Securities and Exchange Commission (the "SEC") for
certain utility acquisitions. The exemption will take effect upon
completion of the Merger and related restructuring and the filing with the
SEC of an
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appropriate exemption statement pursuant to the provisions of the Holding
Company Act. It will be necessary to file an annual exemption statement
each year after that. The basis of this exemption is that both ParentCo and
SDG&E, as ParentCo's only public utility subsidiary, are incorporated in the
same state, are predominantly intrastate in character and carry on their
business substantially in the state of incorporation. The exemption is
available only so long as the utility business of SDG&E, and of any other
public utility subsidiary from which ParentCo derives a material portion of
its income, is predominantly intrastate in nature. The exemption may also
be revoked on a finding by the SEC that such exemption may be detrimental to
the public interest or the interest of investors or consumers. The prior
approval of the SEC under Section 9(a)(2) of the Holding Company Act would
be required, however, if ParentCo proposed the acquisition, directly or
indirectly, of additional utility subsidiaries. ParentCo has no present
intention of becoming a registered holding company subject to regulation by
the SEC under the Holding Company Act.
Conditions Precedent to the Merger
The Merger Agreement provides that consummation of the Merger is
subject to approval of the principal terms of the Merger Agreement by the
shareholders of SDG&E, ParentCo and MergeCo, as more fully set forth below
under "Required Vote." The required vote of the shareholders of SDG&E has
been obtained, and SDG&E has caused the shares of ParentCo and MergeCo to be
voted in favor of the Merger.
In addition, the Merger is also subject to approval by the NYSE of
ParentCo Common Stock for listing upon official notice of issuance (SDG&E
has been advised that such approval will be given).
Effective Date of the Merger
The Merger is expected to become effective at 12:01 a.m. (Pacific
Standard Time) on January 1, 1996.
Required Vote
Under California law and SDG&E's Restated Articles, approval of the
Merger Agreement and the proposed formation of a holding company structure
for SDG&E required the favorable vote of (1) a majority of the outstanding
shares of SDG&E Common Stock and (2) a majority of the outstanding shares of
the combined classes of SDG&E Common Stock and SDG&E Cumulative Preferred
Stock, with each share of SDG&E Common Stock being entitled to one vote and
each share of SDG&E Cumulative Preferred Stock being entitled to two votes.
In addition, the Merger Agreement provides that consummation of the Merger
is conditioned upon approval by a two-thirds majority of the outstanding
shares of the combined classes of SDG&E Cumulative Preferred Stock and SDG&E
Preference Stock (Cumulative), with each share being entitled to one vote.
All required votes of SDG&E's shareholders, as required by California law
and the Merger Agreement, were obtained at the 1995 Annual Meeting of
SDG&E's shareholders.
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Market Values of Stock
The market values of the various classes and series of capital stock of
SDG&E on November 4, 1994 (the business day immediately preceding public
announcement of the terms of the proposed Merger) were:
Market Value
Title of Class/Series Per Share
--------------------- ------------
Common Stock $19.625
Cumulative Preferred Stock:
5% Series 11.25
4 1/2% Series 10.25
4.40% Series 10.125
4.60% Series(1) --
Preference Stock (Cumulative):
$7.20 Series 85.00
$1.70 Series(1) --
$1.82 Series 22.50
$1.7625 Series(1) --
(1) Not listed or publicly traded. No market value is available.
There is no public market as yet for ParentCo Common Stock.
Exchange of Stock Certificates Not Required
If the proposed restructuring is carried out, it will not be necessary
for holders of SDG&E Common Stock to exchange their existing stock
certificates for stock certificates of ParentCo. Holders of SDG&E Common
Stock will automatically become holders of ParentCo Common Stock on a share-
for-share basis, and the present stock certificates for SDG&E Common Stock
will automatically represent shares of ParentCo Common Stock.
After the restructuring, as presently outstanding certificates are
presented for transfer, new certificates bearing the name of Enova
Corporation will be issued. New certificates of ParentCo will also be
issued in exchange for old certificates of SDG&E upon the request of any
shareholder. Certificates presented for transfer to a name other than that
in which the surrendered certificate is registered must be properly
endorsed, with the signature guaranteed, and accompanied by evidence of
payment of any applicable stock transfer taxes.
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Federal Income Tax Consequences of the Merger
SDG&E and ParentCo have been advised by their counsel, Pillsbury
Madison & Sutro LLP, that:
(1) No gain or loss will be recognized by the holders of shares of
SDG&E Common Stock on the receipt of shares of ParentCo Common Stock solely
in exchange for shares of SDG&E Common Stock.
(2) The basis of shares of ParentCo Common Stock received by the
holders of shares of SDG&E Common Stock will be the same as the basis of the
shares of SDG&E Common Stock exchanged for them.
(3) As to each holder of shares of SDG&E Common Stock who held his
or her shares as a capital asset, the holding period of shares of ParentCo
Common Stock will include the holding period of the shares of SDG&E Common
Stock exchanged for them.
(4) No gain or loss will be recognized by ParentCo upon the
issuance of shares of ParentCo Common Stock in exchange for shares of SDG&E
Common Stock.
The advice of Pillsbury Madison & Sutro LLP summarized above is
conditioned on the receipt by SDG&E of a private letter ruling from the
Internal Revenue Service to the effect that (i) the formation of MergeCo and
the Merger will be disregarded for federal income tax purposes, and (ii) the
transaction will be treated as a transfer by the holders of SDG&E Common
Stock of such SDG&E Common Stock to ParentCo solely in exchange for an equal
number of shares of ParentCo Common Stock. SDG&E has received such a
ruling.
The United States federal income tax discussion set forth above is
based upon current law and is intended for general information only. The
foregoing is not intended to be a comprehensive discussion of all possible
federal income tax consequences of the Merger. Furthermore, the
registration statement of which this Prospectus is a part does not provide
information regarding the tax consequences of the Merger under the tax laws
of any state or of any local or foreign jurisdiction. Holders of SDG&E
Common Stock are urged to consult their own tax advisors with respect to
specific tax consequences of the Merger.
Legal Opinions
David R. Clark, Assistant General Counsel for SDG&E and ParentCo, has
rendered an opinion (filed as an exhibit to the Registration Statement of
which this Prospectus is a part) to the effect that the ParentCo Common
Stock to which this Prospectus pertains (100,000 shares of ParentCo Common
Stock) will be validly issued, fully paid and nonassessable. Pillsbury
Madison & Sutro LLP, counsel to SDG&E and ParentCo, has rendered an opinion
(filed as an exhibit to Registration Statement No. 33-57007) to the effect
that up to an additional 116,541,000 shares of ParentCo Common Stock to be
issued in connection with the Merger will be validly issued, fully paid and
nonassessable.
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EXHIBIT A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Agreement") is made as of December 12, 1995,
by and among SAN DIEGO GAS & ELECTRIC COMPANY, a California corporation
("SDG&E"), SAN DIEGO MERGER COMPANY, a California corporation ("MergeCo"),
and ENOVA CORPORATION, a California corporation ("ParentCo"), with reference
to the following facts:
A. SDG&E has authorized capital consisting of (i) 255 million shares of
Common Stock, without par value ("SDG&E Common Stock"), of which
approximately 116,525,418 shares are issued and outstanding; (ii) 1,375,000
shares of Cumulative Preferred Stock, $20 par value ("Cumulative Preferred
Stock"), of which 1,373,770 shares (consisting of four separate series) are
issued and outstanding; and (iii) 10 million shares of Preference Stock
(Cumulative), without par value ("Preference Stock"), of which 3,190,000
shares (consisting of four separate series) are issued and outstanding.
B. MergeCo has authorized capital consisting of 1000 shares of Common
Stock ("MergeCo Common Stock"), of which 100 shares are issued and
outstanding and owned beneficially and of record by ParentCo.
C. ParentCo has authorized capital consisting of 300 million shares of
Common Stock ("ParentCo Common Stock"), of which 100 shares are issued and
outstanding and owned beneficially and of record by SDG&E, and 30 million
shares of Preferred Stock, none of which have been issued.
D. The Boards of Directors of the respective parties hereto deem it
advisable to merge MergeCo with and into SDG&E (the "Merger") in accordance
with the California General Corporation Law ("California GCL") and this
Agreement for the purpose of establishing ParentCo as the parent corporation
for SDG&E in a transaction intended to qualify for tax-free treatment.
NOW, THEREFORE, in consideration of the premises and agreements
contained herein, the parties agree that (i) MergeCo shall be merged with
and into SDG&E (the "Merger"), (ii) SDG&E shall be the corporation surviving
the Merger, and (iii) the terms and conditions of the Merger, the mode of
carrying it into effect, and the manner of converting and exchanging shares
of capital stock shall be as follows:
ARTICLE 1
The Merger
1.1 Officers' Certificates. Subject to and in accordance with the
provisions of this Agreement, officers' certificates of SDG&E and MergeCo
(the "Officers' Certificates") shall be signed and verified and thereafter
delivered, together with a copy of this Agreement, to the office
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of the Secretary of State of California for filing, all as provided in
Section 1103 of the California GCL.
1.2 Effective Time. The Merger shall become effective at 12:01 a.m. on
January 1, 1996 (the "Effective Time"). At the Effective Time, the separate
existence of MergeCo shall cease and MergeCo shall be merged with and into
SDG&E, which shall continue its corporate existence as the surviving
corporation (SDG&E and MergeCo being sometimes referred to herein as the
"Constituent Corporations" and SDG&E, as the surviving corporation, being
sometimes referred to herein as the "Surviving Corporation"). SDG&E shall
succeed, without other transfer, to all the rights and property of MergeCo
and shall be subject to all the debts and liabilities of MergeCo in the same
manner as if SDG&E had itself incurred them. All rights of creditors and
all liens upon the property of each of SDG&E and MergeCo shall be preserved
unimpaired.
1.3 Appropriate Actions. Prior to and after the Effective Time,
ParentCo, SDG&E and MergeCo, respectively, shall take all such actions as
may be necessary or appropriate in order to effectuate the Merger. In this
connection, ParentCo shall issue the shares of ParentCo Common Stock into
which outstanding shares of SDG&E Common Stock will be converted on a share-
for-share basis to the extent provided in Article 2 of this Agreement. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full title to all properties, assets, privileges,
rights, immunities and franchises of either of the Constituent Corporations,
the officers and directors of each of the Constituent Corporations as of the
Effective Time shall take all such further action.
ARTICLE 2
Terms of Conversion and Exchange of Shares
At the Effective Time:
2.1 SDG&E Common Stock. Each share of SDG&E Common Stock issued and
outstanding immediately prior to the Merger shall be automatically changed
and converted into one share of ParentCo Common Stock, which shall thereupon
be issued and fully-paid and non-assessable; provided, however, that such
conversion shall not affect shares of holders, if any, who perfect their
rights as dissenting shareholders under Chapter 13 of the California GCL.
2.2 SDG&E Preferred Stock. Shares of the Cumulative Preferred Stock
and Preference Stock of SDG&E issued and outstanding immediately prior to
the Merger shall not be converted or otherwise affected by the Merger. Each
such share shall continue to be (i) issued and outstanding and (ii) a fully-
paid and nonassessable share (of Cumulative Preferred Stock or Preference
Stock, as the case may be) of the Surviving Corporation.
2.3 MergeCo Shares. The shares of MergeCo Common Stock issued and
outstanding immediately prior to the Merger shall be automatically changed
and converted into all of the issued and outstanding shares of Common Stock
of the Surviving Corporation, which shall thereupon be issued and fully-paid
and nonassessable, with the effect that the number of issued
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and outstanding shares of Common Stock of the Surviving Corporation shall be
the same as the number of issued and outstanding shares of SDG&E Common
Stock immediately prior to the Effective Time.
2.4 ParentCo Shares. Each share of ParentCo Common Stock issued and
outstanding immediately prior to the Merger shall be canceled.
ARTICLE 3
Articles of Incorporation and Bylaws
3.1 SDG&E's Restated Articles. From and after the Effective Time, and
until thereafter amended as provided by law, the Restated Articles of
Incorporation, as amended, of SDG&E as in effect immediately prior to the
Merger shall be and continue to be the Restated Articles of Incorporation,
as amended, of the Surviving Corporation.
3.2 SDG&E's Bylaws. From and after the Effective Time, and until
thereafter amended as provided by law, the Bylaws of SDG&E as in effect
immediately prior to the Merger shall be and continue to be the Bylaws of
the Surviving Corporation.
ARTICLE 4
Directors and Officers
The persons who are directors and officers of SDG&E immediately prior
to the Merger shall continue as directors and officers, respectively, of the
Surviving Corporation and shall continue to hold office as provided in the
Bylaws of the Surviving Corporation. If, at or following the Effective
Time, a vacancy shall exist in the Board of Directors or in the position of
any officer of the Surviving Corporation, such vacancy may be filled in the
manner provided in the Bylaws of the Surviving Corporation.
ARTICLE 5
Stock Certificates
5.1 Pre-Merger SDG&E Common. Following the Effective Time, each holder
of an outstanding certificate or certificates theretofore representing
shares of SDG&E Common Stock may, but shall not be required to, surrender
the same to ParentCo for cancellation or transfer, and each such holder or
transferee will be entitled to receive a certificate or certificates
representing the same number of shares of ParentCo Common Stock as the
shares of SDG&E Common Stock previously represented by the stock
certificate(s) surrendered.
5.2 Outstanding Certificates. Until surrendered or presented for
transfer in accordance with Section 5.1 above, each outstanding certificate
which, prior to the Effective Time,
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represented SDG&E Common Stock shall be deemed and treated for all corporate
purposes to represent the ownership of the same number of shares of ParentCo
Common Stock as though such surrender or transfer and exchange had taken
place.
5.3 SDG&E Stock Transfer Books. The stock transfer books for SDG&E
Common Stock shall be deemed to be closed at the Effective Time and no
transfer of shares of SDG&E Common Stock outstanding prior to the Effective
Time shall thereafter be made on such books.
5.4 Post-Merger Rights of Holders. Following the Effective Time, the
holders of certificates representing SDG&E Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to stock of the Surviving Corporation and their sole rights shall be
with respect to the ParentCo Common Stock into which their shares of SDG&E
Common Stock shall have been converted by the Merger.
ARTICLE 6
Conditions of the Merger
Completion of the Merger is subject to the satisfaction of the
following conditions:
6.1 Shareholder Approval. The principal terms of this Agreement shall
have been approved by such holders of capital stock of each of the
Constituent Corporations as is required by the California GCL.
6.2 SDG&E Preferred Vote. The principal terms of this Agreement shall
have been approved by the holders of at least two-thirds of the combined
outstanding shares of Cumulative Preferred Stock and Preference Stock.
6.3 ParentCo Common Stock Listed. The ParentCo Common Stock to be
issued and to be reserved for issuance pursuant to the Merger shall have
been approved for listing, upon official notice of issuance, by the New York
Stock Exchange.
ARTICLE 7
Amendment and Termination
7.1 Amendment. The parties to this Agreement, by mutual consent of
their respective boards of directors, may amend, modify or supplement this
Agreement in such manner as may be agreed upon by them in writing at any
time before or after approval of this Agreement by the pre-Merger
shareholders of SDG&E (as provided in Sections 6.1 and 6.2 above); provided,
however, that no such amendment, modification or supplement shall, if agreed
to after such approval by the pre-Merger shareholders of SDG&E, change any
of the principal terms of this Agreement.
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7.2 Termination. This Agreement may be terminated and the Merger and
other transactions provided for by this Agreement may be abandoned at any
time, whether before or after approval of this Agreement by the pre-Merger
shareholders of SDG&E, by action of the board of directors of SDG&E if such
board of directors determines for any reason that the completion of the
transactions provided for herein would for any reason be inadvisable or not
in the best interests of SDG&E or its shareholders.
ARTICLE 8
Miscellaneous
8.1 Approval of ParentCo Shares. By its execution and delivery of this
Agreement, SDG&E, as the sole pre-Merger shareholder of ParentCo, consents
to, approves and adopts this Agreement and approves the Merger, subject to
approval of this Agreement by the pre-Merger shareholders of SDG&E (as
provided in Sections 6.1 and 6.2 above).
8.2 Approval of MergeCo Shares. By its execution and delivery of this
Agreement, ParentCo, as the sole pre-Merger shareholder of MergeCo, consents
to, approves and adopts this Agreement and approves the Merger, subject to
approval of this Agreement by the pre-Merger shareholders of SDG&E (as
provided in Sections 6.1 and 6.2 above).
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8.3 No Counterparts. This agreement may not be executed in
counterparts.
IN WITNESS WHEREOF, SDG&E, ParentCo and MergeCo, pursuant to approval
and authorization duly given by resolutions adopted by their respective
boards of directors, have each caused this Agreement to be executed by its
chairman of the board or its president or one of its vice presidents and by
its secretary or one of its assistant secretaries.
SDG&E:
San Diego Gas & Electric Company,
a California corporation
By: /s/ Thomas A. Page
Its: Chairman and Chief Executive Officer
By: /s/ David R. Clark
Its: Assistant Secretary
ParentCo:
Enova Corporation,
a California corporation
By: /s/ Thomas A. Page
Its: Chairman and Chief Executive Officer
By: /s/ David R. Clark
Its: Assistant Secretary
MergeCo:
San Diego Merger Company,
a California corporation
By: /s/ Henry P. Morse, Jr.
Its: Chairman and Chief Executive Officer
By: /s/ Henry P. Morse, Jr.
Its: Secretary
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EXHIBIT B
RESTATED ARTICLES OF INCORPORATION
of
ENOVA CORPORATION
FIRST: The name of the Corporation is Enova Corporation.
SECOND: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business or the practice of a profession permitted to be
incorporated by the California Corporations Code.
THIRD: Stock.
A. The Corporation is authorized to issue two classes of shares, to be
designated respectively Preferred Stock ("Preferred Stock") and Common Stock
("Common Stock"). The total number of shares of capital stock that the
Corporation is authorized to issue is 330,000,000, of which 30,000,000 shall
be Preferred Stock and 300,000,000 shall be Common Stock.
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors of the Corporation (the "Board of
Directors") is expressly authorized to provide for the issue of all or any
of the shares of the Preferred Stock in one or more series, and to fix the
designation and number of shares and to determine or alter for each such
series, such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other
rights and such qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions adopted by
the Board of Directors providing for the issue of such shares and as may be
permitted by the General Corporation Law of California. The Board of
Directors is also expressly authorized to increase or decrease (but not
below the number of shares of such series then outstanding) the number of
shares of any series subsequent to the issue of shares of that series. If
the number of shares of any such series shall be so decreased, the shares
constituting such decrease shall resume the status that they had prior to
the adoption of the resolution originally fixing the number of shares of
such series.
FOURTH: Directors.
A. The authorized number of directors of the Corporation shall not be
fewer than nine (9) nor more than thirteen (13). The exact authorized
number of directors shall be fixed from time to time, within the limits
specified in this Article FOURTH, by resolution of the Board of Directors,
or by a bylaw or amendment thereof duly adopted by the Board of Directors or
the affirmative vote of the holders of shares representing at least 66-2/3%
of the outstanding shares of the Corporation entitled to vote.
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B. The Board of Directors shall be divided into three classes,
designated Class I, Class II and Class III, as nearly equal in number as
possible, and the term of office of directors of one class shall expire at
each annual meeting of shareholders, but in all cases continue as to each
director until his or her successor shall be elected and shall qualify or
until his or her earlier resignation, removal from office, death or
incapacity. Additional directorships resulting from an increase in number
of directors shall be apportioned among the classes as equally as possible.
The initial terms of office shall be determined by resolution duly adopted
by the Board of Directors. At each annual meeting of shareholders the
number of directors equal to the number of directors of the class whose term
expires at the time of such meeting (or, if fewer, the number of directors
properly nominated and qualified for election) shall be elected to hold
office until the third succeeding annual meeting of shareholders after their
election. This Paragraph B of this Article FOURTH shall become effective
only when the Corporation shall have become a "listed corporation" within
the meaning of section 301.5 of the California Corporations Code.
C. Vacancies in the Board of Directors, including, without limitation,
vacancies created by the removal of any director, may be filled by a
majority of the directors then in office, whether or not less than a quorum,
or by a sole remaining director.
FIFTH: No shareholder may cumulate votes in the election of directors.
This Article FIFTH shall become effective only when the Corporation shall
have become a "listed corporation" within the meaning of section 301.5 of
the California Corporations Code.
SIXTH: Unless the Board of Directors, by a resolution adopted by 66-2/3% of
the authorized number of directors, waives the provisions of this Article
SIXTH in any particular circumstance, any action required or permitted to be
taken by shareholders of the Corporation must be taken either (i) at a duly
called annual or special meeting of shareholders of the Corporation or (ii)
by the unanimous written consent of all of the shareholders.
SEVENTH: Fair Price.
A. REQUIRED SHAREHOLDER VOTE FOR CERTAIN TRANSACTIONS.
Unless all of the conditions set forth in either Subsection 1 or 2 of
Section B of this Article SEVENTH have been fulfilled, any agreement,
contract, transaction or other arrangement providing for or resulting in a
Business Combination must be approved by the affirmative vote of 66-2/3% of
the number of shares of Common Stock outstanding at the time voting as a
separate class. Such affirmative vote shall be required notwithstanding the
fact that no vote may be required by law or these Articles or that a lesser
percentage, different or additional vote may be specified by law, these
Articles, or in any agreement with any national securities exchange or
otherwise, in which case each vote requirement shall be satisfied
individually.
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B. EXCEPTIONS.
Section A of this Article SEVENTH shall not apply to any Business
Combination if the conditions specified in either Subsection 1 or 2 below
are met.
1. The Business Combination shall have been approved by a resolution
adopted by 66-2/3% of the authorized number of directors of the Corporation,
or
2. All of the following conditions have been met:
a. Any consideration to be received for any stock as a result of
the Business Combination shall be in cash or in the same form as a Dominant
Shareholder has previously paid for shares of that class. If varying forms
of consideration have been used, the form of consideration shall be the form
used to acquire the largest number of shares of the class receiving
consideration.
b. The aggregate amount of cash and the fair market value of any
other form of consideration shall, on a per share basis, be at least equal
to the Highest Purchase Price paid by a Dominant Shareholder for shares of
the same class.
c. After such Dominant Shareholder has become a Dominant
Shareholder and prior to the consummation of such Business Combination:
(1) There shall have been no failure to declare and pay in
full at the regular rate any periodic dividends on any outstanding preferred
stock unless such failure is approved by 66-2/3% of the authorized number of
directors of the Corporation;
(2) There shall have been no reduction in the quarterly rate
of dividends, if any, paid on common shares (such rate to be appropriately
adjusted to reflect the occurrence of any reclassification, reverse stock
split, recapitalization, reorganization or other similar transaction having
the effect of changing the number of outstanding common shares) unless such
reduction is approved by 66-2/3% of the authorized number of directors of
the Corporation; and
(3) Neither a Dominant Shareholder nor an Affiliate thereof
shall have acquired Beneficial Ownership of any additional shares of voting
stock of the Corporation except as part of a transaction which has been
approved by a resolution adopted by 66-2/3% of the authorized number of
directors.
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3. Definitions.
a. "Affiliate" means: a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, a specified Person.
b. "Beneficial Ownership" means: ownership; holding the right to
vote pursuant to any agreement, arrangement or understanding; having the
right to acquire pursuant to any agreement, arrangement, understanding,
option, right, warrant or right of conversion; having the right to dispose
of pursuant to any agreement, arrangement or understanding; having the right
to receive money (e.g., dividends, redemption proceeds or proceeds from any
sale) pursuant to any agreement, arrangement or understanding; and
Beneficial Ownership (pursuant to the foregoing provisions of this
definition) by an Affiliate or by an officer, director or employee of a
Dominant Shareholder or any Affiliate of such an officer, director or
employee.
c. "Business Combination" means: (1) a merger or consolidation of
the Corporation or any Subsidiary with a Dominant Shareholder or with any
other corporation or entity which is, or after such merger or consolidation
would be, an Affiliate of a Dominant Shareholder; (2) the sale, lease,
exchange, pledge, transfer or other disposition by the Corporation, or a
Subsidiary, of assets exceeding ten percent (10%) of the total assets of the
Corporation in a transaction or series of transactions in which a Dominant
Shareholder is either a party or has an interest; (3) the issuance, sale,
exchange, disposition or other transfer by the Corporation or any
Subsidiary, in one transaction or a series of transactions, of any
securities of the Corporation, or any Subsidiary, to any Dominant
Shareholder or any Affiliate of any Dominant Shareholder in exchange for
cash, securities or other property having an aggregate fair market value in
excess of ten percent (10%) of the fair market value of the issued and
outstanding capital stock of the Corporation prior to such transaction; (4)
any reclassification of securities, any reverse stock split, or any
recapitalization of the Corporation or any other transaction which has the
effect, directly or indirectly, of increasing the Beneficial Ownership of
the Corporation or any Subsidiary by the Dominant Shareholder or any
Affiliate thereof.
d. "Dominant Shareholder" means: any Person (except this
Corporation, any Subsidiary of this Corporation, and any Savings, Pension,
TRESOP or other benefit plan of this Corporation or any fiduciary, trustee
or custodian thereof acting in such a capacity) who is the Beneficial Owner,
directly or indirectly, of more than ten percent (10%) but less than 99
percent (99%) of the shares of the Corporation having the power to vote for
the Board of Directors. The relevant time for calculating this percentage
shall be each date on which any approval (board, shareholder, governmental
or any other) necessary to complete any agreement, contract, transaction or
other arrangement providing for or resulting in a Business Combination is
obtained.
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e. "Highest Purchase Price" shall mean the highest amount of
consideration paid by a Dominant Shareholder at any time within two years
prior to the date of becoming a Dominant Shareholder and during any time
while having the status of Dominant Shareholder; provided, however, that the
Highest Purchase Price shall be appropriately adjusted to reflect the
occurrence of any reclassification, recapitalization, stock split, reverse
stock split or other readjustment to the number of outstanding shares of
stock in a class, or the payment of a stock dividend thereon occurring
between the last date upon which such Dominant Shareholder paid the Highest
Purchase Price and the effective date of the Business Combination.
f. "Person" means: any individual, group, partnership,
association, firm, corporation or other entity.
g. "Subsidiary" means: any corporation in which this Corporation
has Beneficial Ownership of at least a majority of any class of stock having
the right to vote for directors.
4. The Board of Directors by a vote of 66-2/3% of the authorized number
of directors shall have the right to make any determinations required under
this Article SEVENTH.
EIGHTH: Indemnity.
A. LIMITATION OF DIRECTORS' LIABILITY.
The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
B. INDEMNIFICATION OF CORPORATE AGENTS.
The Corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through bylaw
provisions, agreements with agents, vote of shareholders or disinterested
directors, or otherwise, in excess of the indemnification otherwise
permitted by Section 317 of the California Corporations Code, subject only
to the applicable limits set forth in Section 204 of the California
Corporations Code.
NINTH: The Board of Directors is expressly authorized to make, amend or
repeal the bylaws of the Corporation, without any action on the part of the
shareholders, solely by the affirmative vote of at least 66-2/3% of the
authorized number of directors. The bylaws may also be amended or repealed
by the shareholders, but only by the affirmative vote of the holders of
shares representing at least 66-2/3% of the outstanding shares of the
Corporation entitled to vote.
B-5
TENTH: The amendment or repeal of Articles FOURTH, FIFTH, SIXTH, SEVENTH,
EIGHTH, NINTH and TENTH shall require the approval of the holders of shares
representing at least 66-2/3% of the outstanding shares of the Corporation
entitled to vote.
B-6
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Pursuant to the California Corporations Code, Article EIGHTH of
the Registrant's Articles of Incorporation and provisions of the
Registrant's Bylaws, directors, officers, employees and agents of the
Registrant may be indemnified by the Registrant in certain circumstances
against liabilities they incur while acting in such capacities. Upon the
effectiveness of the Merger (as contemplated in Part I of this Registration
Statement), the Registrant will have directors' and officers' liability
insurance policies in force insuring directors and officers of the
Registrant and its subsidiaries.
Item 21. Exhibits and Financial Statement Schedules.
See Exhibit Index.
Item 22. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
an annual report of the Registrant or San Diego Gas & Electric Company
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows:
(1) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of this
Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes that
such reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who may
be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
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(2) That every prospectus (i) that is filed pursuant to paragraph
(1) immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part
of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 20 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt
of such request, and to send the incorporated documents by first class mail
or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration
Statement through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Pre-Effective Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Diego, State of California, on
December 18, 1995.
ENOVA CORPORATION
By: */s/ Thomas A. Page
Thomas A. Page
Chairman of the Board,
Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No. 1 to Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ---------- ------
Principal Executive Officer:
*/s/ Thomas A. Page Chairman of the Board, December 18, 1995
- ---------------------- Chief Executive Officer,
Thomas A. Page President and Director
Principal Financial Officer:
*/s/ David R. Kuzma Senior Vice President and December 18, 1995
- --------------------- Chief Financial Officer
David R. Kuzma
Principal Accounting Officer:
*/s/ Frank H. Ault Vice President, December 18, 1995
- --------------------- Controller
Frank H. Ault
Directors (other than Mr. Page):
*/s/ Richard C. Atkinson Director December 18, 1995
- ---------------------------
Richard C. Atkinson
*/s/ Ann Burr Director December 18, 1995
- ---------------------------
Ann Burr
*/s/ Richard A. Collato Director December 18, 1995
- ---------------------------
Richard A. Collato
*/s/ Daniel W. Derbes Director December 18, 1995
- ---------------------------
Daniel W. Derbes
*/s/ Catherine T. Fitzgerald Director December 18, 1995
- ------------------------------
Catherine T. Fitzgerald
*/s/ Robert H. Goldsmith Director December 18, 1995
- -----------------------------
Robert H. Goldsmith
*/s/ William D. Jones Director December 18, 1995
- -----------------------------
William D. Jones
*/s/ Ralph R. Ocampo Director December 18, 1995
- ----------------------------
Ralph R. Ocampo
*/s/ Thomas C. Stickel Director December 18, 1995
- ----------------------------
Thomas C. Stickel
* By: /s/ David R. Clark
---------------------
Attorney-in-Fact
II-4
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item 601
of Regulation S-K.
Exhibit Description of Exhibit
2.0 Agreement of Merger (included as Exhibit A with the Prospectus portion
of this Registration Statement).
3.1 Restated Articles of Incorporation of the Registrant (included as
Exhibit B with the Prospectus portion of this Registration Statement).
3.2 By-Laws of the Registrant (incorporated by reference from the
Registration Statement on Form 8-B/A of the Registrant - No. 001-11439
(Exhibit 3.2)).
* 5.1 Opinion of David R. Clark, Assistant General Counsel for the Registrant.
5.2 Opinion of Pillsbury Madison & Sutro LLP (incorporated by reference
from the Registration Statement on Form S-4 of the Registrant - No.
33-57007 (Exhibit 5)).
8 Tax opinion of Pillsbury Madison & Sutro LLP (incorporated by reference
from the Registration Statement on Form S-4 of the Registrant - No.
33-57007 (Exhibit 8)).
23.1 Consent of David R. Clark (included as part of Exhibit 5.1).
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Pillsbury Madison & Sutro LLP.
* 24.1 Power of Attorney for Certain Officers of the Registrant.
* 24.2 Power of Attorney for the Directors of Registrant.
* Previously filed.
EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Pre- Effective Amendment No. 1 to Registration Statement No. 33- 64743 of Enova Corporation on Form S-4 of our reports dated February 27, 1995 (which reports contain an emphasis paragraph referring to the consideration by San Diego Gas & Electric Company of alternative strategies for Wahlco Environmental Systems, Inc.),appearing in and incorporated by reference in the Annual Report on Form 10-K of San Diego Gas & Electric Company for the year ended December 31, 1994. /s/ DELOITTE & TOUCHE LLP San Diego, California December 18, 1995
EXHIBIT 23.3 CONSENT OF PILLSBURY MADISON & SUTRO LLP We consent to the incorporation by reference in this Pre-Effective Amendment No. 1 to Registration Statement of Enova Corporation on Form S-4 of our opinions regarding certain federal tax consequences and the issuance of securities of the Registrant as identified in the Exhibit Index hereto (as exhibits 8 and 5.2, respectively). /s/ PILLSBURY MADISON & SUTRO LLP San Diego, California December 18, 1995