e425
Filed by FirstEnergy Corp.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934, as amended
Subject Company: Allegheny Energy, Inc.
Commission File No: 333-165640
On June 7, 2010, FirstEnergy Corp. issued the following newsletter to its employees relating
to the proposed merger with Allegheny Energy, Inc.
Merger Applications Filed with States and FERC
FirstEnergy and Allegheny Energy recently filed
applications with the appropriate regulatory agencies,
providing information about our proposed merger.
Our recent joint filings are significant steps in
this merger process, says FirstEnergy President and
CEO Tony Alexander. The applications enable regulators
and other interested parties to understand our
commitments in each state and the benefits this merger
will provide customers and communities if the regulators
approve our application and the merger is completed.
Regulatory bodies responsible for approving the proposed
merger have specific requirements that needed to be
addressed in our filings. We filed merger applications
on May 11 with the Federal Energy Regulatory Commission
(FERC), with the Commonwealth of Pennsylvania on May
14, with the state of West Virginia on May 18 and with
Maryland on May 27. We completed our state filings with
our application to the Commonwealth of Virginia on June
4. Each company also filed Hart-Scott-Rodino
applications with the Federal Trade Commission and
Department of Justice on May 25.
Continued on page 2
Integration Teams BEGIN WORK
Integration teams began their work at the end
of April, after a kickoff that included remarks by
Tony Alexander and Allegheny Energy Chairman,
President and CEO Paul Evanson.
Understand that you are representing more than
17,000 employees of both companies and that as you
perform your integration work, they are focusing on the
equally important task of running the day-to-day
business to make sure we have a solid base to start our
new company. Your primary task is to determine how we
can improve the performance of the new FirstEnergy,
Tony said.
Continued on page 4
Tony Alexander (above) and
Paul Evanson (right) during
the Integration Teams
kickoff. |
In this issue
F i r s t E n e r g y A l l e g h e n y
BUILDING A Better COMPANY |
Merger Applications Filed (Continued from cover page)
FERC Application for Merger Authorization
In the FERC filing, a primary focus is on ensuring
that our merger will not adversely affect competition. To
address this, our FERC filing included a market power
study performed by an outside consultant. The market
power study determines whether our combined company would
have so much product to sell into PJM Interconnection,
L.L.C. Alleghenys Regional Transmission Organization
(RTO) and the RTO into which FirstEnergys ATSI*
transmission affiliate is in the process of integrating
that it would have certain advantages, such as influence
on setting prices, which in turn can impact competition.
The analysis of the new FirstEnergys competitive
generation fleet concluded that the proposed merger will
not have an adverse effect on competition in the PJM
wholesale markets.
State Merger Approval Applications
Although specific requirements vary by state, our
merger filings addressed common topics such as general
reliability, community support and employee matters.
Its important to note that state merger filings
address only utility topics, since the utilities are
regulated by the state commissions; competitive
generating plant operations are not addressed.
For example, our Pennsylvania state filing includes a
commitment to utilities jobs. It states there will be no
net job reductions for two years due to involuntary
attrition through the merger process for either FirstEnergy Utilities or Allegheny Energy Service Company
employees assigned to positions in West Penn Power
Company Alleghenys Pennsylvania utility comparable
to their FirstEnergy counterparts.
We also committed to applying FirstEnergys utility
regional model an important consideration for local
decision making
to West Penn Power. Additionally, West Penn Powers
regional headquarters will be in Greensburg, Pa. Other
commitments include maintaining service reliability
standards, supporting economic development and community
initiatives and establishing an additional Power Systems
Institute (PSI) school to train the next generation of
utility workers. State information sheets are available
that provide additional details on our commitments in
each state if our proposed merger is approved and
completed.
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* |
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ATSI is American Transmission Systems, Inc., FirstEnergys transmission affiliate. ATSI has signed an
agreement to join the PJM Interconnection, L.L.C., an
RTO. An RTO, among other duties, operates and plans the
transmission system. |
Regulatory Calendar
March June 2010
May 11 May 18 May 27 June 4
Filing with the Federal Public Service Maryland Public Virginia State Energy Regulatory Commission of Service
Commission Corporation Commission West Virginia filing filing Commission filing
March April May June
March 23 May 14 May 25
Form S-4 filed Pennsylvania Public Hart-Scott-Rodino filings with the SEC Utility
Commission filing with the Federal Trade
Commission and Department of Justice
Merger News 2 June 7, |
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Merger News
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June 7, 2010 |
Map of Combined Companies Illustrates Strategic Fit
FirstEnergy Power Plants
Allegheny Power Plants
Toledo Edison Ohio
Edison
The Illuminating Company
Penelec Penn Power Met-Ed
Jersey Central Power & Light
West Penn Power Potomac Edison
Monongahela Power |
Keeping You Updated with Merger News
The Merger News is designed to keep FirstEnergy and Allegheny Energy employees aware of
merger-related activities and progress.
Hearing from you will help us answer your questions in future Merger News editions, within the
legal restrictions we have on sharing certain information and as it becomes available. If you have
questions or comments related to the proposed merger, send them to: merger@firstenergycorp.com or
merger@alleghenyenergy.com.
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Merger News
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June 7, 2010 |
Teams Begin Work (Continued from cover page)
Teamwork will be an essential ingredient as you
capture the best practices from each company. It will
take everyone working together to find ways to reduce
costs and improve quality the hallmarks of a
high-performance organization, remarked Paul.
During the full team kickoff meeting, Chair of the
Merger Steering Committee and Executive Vice President
and President, FirstEnergy Generation Gary Leidich said,
We dont know what all the answers are yet. But we do
know this is quite an opportunity to create a better,
stronger company.
Itll be rewarding for all of us to be able to step back
when the merger is completed and we start off as the new
FirstEnergy and say, We did a pretty good job of putting
these companies together.
Allegheny lead for the
Merger Steering Committee and Chief Operating Officer,
Generation Curtis Davis said,
Although all of us have a long history of experience and
biases, youll need to accept others ideas and make sure
were making decisions based on data, fact and analysis.
We have many stakeholders our employees, communities
and shareholders who are relying on all of you to
improve the performance of these companies and create a
better company.
Additional speakers discussed the process the teams
would follow to document preliminary recommendations
and reminded the attendees that during this process,
information must remain confidential and we must continue
to operate as separate companies.
Since the kickoff meeting, the teams have been working at
Summit Park Square in Akron to validate base case
information and begin their analyses. Legal rules of the
road have been provided to every employee working on the
integration project.
Curtis Davis, second from the r., talks to kickoff
attendees (l. to r.): Ray Bummer, Finance Team; George
Farah, Fossil Generation/Environmental Team; and Mark
Mader, Finance Team. Pete Kotsenas, Fossil
Generation/Environmental Team is in the background.
Team members await the next presentation.
Front: Kaye Jendrisak, Utility Operations
Team; back:
Marty Hall, Program Management Office
Manager; Rick OCallaghan and Mike Ferncez of the
Utility Operations Integration Team.
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Merger News
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June 7, 2010 |
Questions and Answers
Q One of the FAQs in the last Merger News stated that Allegheny Energy employees would be
fully vested in their accrued defined pension benefit when the merger is completed. In which plan
will we be fully vested? Alleghenys plan, FirstEnergys plan, or a combination of both and how
will it work? One of my employees will turn 55 next January and is concerned that he will not have
the same retirement options after the merger is complete.
A
If an Allegheny Energy employee is vested in the Allegheny plan when the merger is completed,
he or she will remain vested in the Allegheny plan. Allegheny employees who are not vested when the
merger is completed will retain the service they have earned toward vesting and will become vested
once they have five years of Allegheny and FirstEnergy combined service. Recommendations regarding
the coordination of the Allegheny pension plan and FirstEnergy pension plans after the merger will
be determined through the Integration Teams and communicated once finalized.
Q What happens if I sell my Allegheny Energy stock prior to the merger? Will I still receive the
FirstEnergy stock based on what I owned on Feb. 10, 2010, or do I need to keep the Allegheny Energy
stock until the merger process and exchange of shares is completed to receive the FirstEnergy
stock?
A
FirstEnergy and Allegheny Energy will function as separate companies until the merger closes,
including the ownership of shares. If you sell your Allegheny stock before the effective time of
the merger that is, when the merger officially closes you will not be entitled to receive
FirstEnergy stock in connection with the merger. At the effective time of the merger, each share of
Allegheny common stock issued and outstanding immediately prior to the effective time will be
converted into the right to receive 0.667 of a share of FirstEnergys common stock. Additional
details are provided in the Registration Statement on Form S-4 filed with the Securities and
Exchange Commission.
Q Several Allegheny Energy locations are OSHA Voluntary Protection Programs (VPP) star-certified
worksites that participate actively in the program. Will the OSHA VPP in place at Allegheny Energy
locations continue after the mergers completion?
A
The Integration Teams will be evaluating the process and plan for VPP, including the currently
certified locations. The teams will evaluate the effectiveness of all safety programs, including
VPP.
Q Are there plans to develop a Safety Integration Team?
A
The Human Resources Integration Team has the lead role, but each team that has safety as an
integral part of operations also will address safety as part of the integration planning.
Q Ive been in the union and now am transitioning into management. I have a bachelors as well as a
technical degree and plan on pursuing my masters in August, which brings me to my two questions:
Will the combined company continue to offer education benefits? Will chances to advance ones
career be more attainable through this merger, or will it diminish these chances?
A
The new companys larger size and scope will provide increased opportunities for employees.
Currently, both companies offer education benefits, and the Human Resources Integration Team will
make recommendations concerning the education benefits that will be offered following completion of
the merger.
Q Does FirstEnergy have a Political Action Committee (PAC)?
A
Yes. Like Allegheny Energy, FirstEnergy has an employee-supported PAC. The Corporate Services
Integration Team is charged with reviewing our processes related to the PAC.
Continued on page 6
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Merger News
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June 7, 2010 |
Questions and Answers (Continued from page 5)
Q Would there be possibilities of transferring from my station to the station in Erie, Pa.?
A
For union employees, the ability to transfer is governed by the applicable collective
bargaining contract, so employees should review their contracts to understand the transfer
requirements. For other employees, the ability to transfer is governed by the available positions
and the candidates available to fill those positions.
As noted above, expect many opportunities to develop in our larger company.
Q I am uncertain of the status of the Allegheny Ridge I and Allegheny Ridge II Wind Power Projects
(part of the FirstEnergy SmartWind Initiative). If they are active, how will the merger affect
them?
A
Both projects are operating: Allegheny 1 (80 megawatts, or MW) since 2007 and Allegheny 2 (70 MW)
came online in 2009. While we will continue our commitments and strategy for renewable energy, it
is too early to know how the merger might affect those projects.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
In addition to historical information, this newsletter may contain a number of forward-looking
statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as
anticipate, expect, project, intend, plan, believe, and words and terms of similar substance used
in connection with any discussion of future plans, actions, or events identify forward-looking
statements. Forward-looking statements relating to the proposed merger include, but are not limited
to: statements about the benefits of the proposed merger involving FirstEnergy and Allegheny
Energy, including future financial and operating results; FirstEnergys and Allegheny Energys
plans, objectives, expectations and intentions; the expected timing of completion of the
transaction; and other statements relating to the merger that are not historical facts.
Forward-looking statements involve estimates, expectations and projections and, as a result, are
subject to risks and uncertainties. There can be no assurance that actual results will not
materially differ from expectations. Important factors could cause actual results to differ
materially from those indicated by such forward-looking statements. With respect to the proposed
merger, these factors include, but are not limited to: risks and uncertainties relating to the
ability to obtain the requisite FirstEnergy and Allegheny Energy shareholder approvals; the risk
that FirstEnergy or Allegheny Energy may be unable to obtain governmental and regulatory approvals
required for the merger, or required governmental and regulatory approvals may delay the merger or
result in the imposition of conditions that could reduce the anticipated benefits from the merger
or cause the parties to abandon the merger; the risk that a condition to closing of the merger may
not be satisfied; the length of time necessary to consummate the proposed merger; the risk that the
businesses will not be integrated successfully; the risk that the cost savings and any other
synergies from the transaction may not be fully realized or may take longer to realize than
expected; disruption from the transaction making it more difficult to maintain relationships with
customers, employees or suppliers; the diversion of management time on merger-related issues; the
effect of future regulatory or legislative actions on the companies; and the risk that the credit
ratings of the combined company or its subsidiaries may be different from what the companies
expect. These risks, as well as other risks associated with the merger, are more fully discussed in
the preliminary joint proxy statement/prospectus that is included in the amended Registration
Statement on Form S-4 (Registration No. 333-165640) that was filed by FirstEnergy with the SEC in
connection with the merger. Additional risks and uncertainties are identified and discussed in
FirstEnergys and Allegheny Energys reports filed with the SEC and available at the SECs website
at www.sec.gov. Forward-looking statements included in this document speak only as of the
date of this document. Neither FirstEnergy nor Allegheny Energy undertakes any obligation to update
its forward-looking statements to reflect events or circumstances after the date of this document.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, FirstEnergy filed an amended Registration Statement on Form
S-4 (Registration No. 333-165640) with the SEC that includes a preliminary joint proxy statement of
FirstEnergy and Allegheny Energy and that also constitutes a preliminary prospectus of FirstEnergy.
FirstEnergy and Allegheny Energy will mail the definitive joint proxy statement/prospectus to their
respective shareholders. FirstEnergy and Allegheny Energy urge investors and shareholders to read
the definitive joint proxy statement/prospectus regarding the proposed merger when it becomes
available, as well as other documents filed with the SEC, because they will contain important
information. You may obtain copies of all documents filed with the SEC regarding this proposed
transaction, free of charge, at the SECs website (www.sec.gov). You may also obtain these
documents, free of charge, from FirstEnergys website (www.firstenergycorp.com) under the
tab Investors and then under the heading Financial Information and then under the item SEC
Filings. You may also obtain these documents, free of charge, from Allegheny Energys website
(www.alleghenyenergy.com) under the tab Investors and then under the heading SEC
Filings.
PARTICIPANTS IN THE MERGER SOLICITATION
FirstEnergy, Allegheny Energy and their respective directors, executive officers and certain other
members of management and employees may be soliciting proxies from FirstEnergy and Allegheny Energy
shareholders in favor of the merger and related matters. Information regarding the persons who may,
under the rules of the SEC, be deemed participants in the solicitation of FirstEnergy and Allegheny
Energy shareholders in connection with the proposed merger is set forth in the preliminary joint
proxy statement/prospectus contained in the above-referenced amended Registration Statement on Form
S-4. You can find information about FirstEnergys executive officers and directors in its
definitive proxy statement filed with the SEC on April 1, 2010 and Annual Report on Form 10-K filed
with the SEC on February 19, 2010. You can find information about Allegheny Energys executive
officers and directors in its definitive proxy statement filed with the SEC on March 19, 2010 and
Annual Report on Form 10-K filed with the SEC on March 1, 2010. Additional information about
FirstEnergys executive officers and directors and Allegheny Energys executive officers and
directors can be found in the above-referenced amended Registration Statement on Form S-4. You can
obtain free copies of these documents from FirstEnergy and Allegheny Energy using the website
information
above.
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June 7, 2010 |