CEO Brad Beecher will remain in charge of the company, and the company will retain the name Empire District Electric Company for at least the next five years and "to maintain Empires historic levels of community involvement and charitable contributions and support in Empires existing service territories."
The information below is taken from the SEC filing:
As previously announced, on February9, 2016, The Empire District Electric Company, a Kansas corporation (Empire), Liberty Utilities (Central) Co., a Delaware corporation (Parent), and Liberty Sub Corp., a Kansas corporation (Merger Sub), entered in to an Agreement and Plan of Merger (the Merger Agreement). The following description of the Merger Agreement is not a complete description thereof and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit2.1 and is incorporated herein by reference.
Upon the terms and subject to the conditions set forth in the Merger Agreement, which has been unanimously approved and adopted by the board of directors of Empire, at the effective time, Merger Sub will merge with and into Empire (the Merger) with Empire continuing as the surviving corporation (the Surviving Corporation).
Pursuant to the Merger Agreement, upon the closing of the Merger:
-each issued and outstanding share of Empire common stock (other than any shares owned by Empire or the Guarantor (as defined below) or any of their respective subsidiaries or any shares for which appraisal rights have been perfected) will be cancelled and converted automatically into the right to receive $34.00 in cash, without interest (the Merger Consideration);
-each outstanding time-vested restricted stock award will be cancelled and converted into the right to receive a lump-sum cash payment equal to the product of (i) the Merger Consideration, without interest, multiplied by (ii)the product of (1)the total number of shares of Empires common stock underlying such time-vested restricted stock award, multiplied by (2)the ratio equal to (x)the number of months through the closing date of the Merger (rounding a fraction of a month to the next higher number of whole months) in the restricted period under such time-vested restricted stock award, divided by (y)the total number of months in the restricted period under such time-vested restricted stock award;
-each outstanding performance based restricted stock award will be cancelled and converted into the right to receive a lump-sum cash payment equal to the product of (i )the Merger Consideration, without interest, multiplied by (ii)the total number of shares of Empires common stock that would be earned for performance at target over the performance period under such performance based restricted stock award; and
=each outstanding common stock units granted under Empire's director stock unit plan will be cancelled and converted into the right to receive an amount in cash equal to the Merger Consideration, payment of which amount shall be made at the time elected or provided pursuant to the terms and conditions of such director stock unit, together with interest at the U.S. Prime Rate as quoted by the Wall Street Journal from the effective time until the date of payment of such amount.
The closing of the Merger is subject to certain conditions, including, among others, (i)approval of Empire shareholders representing a majority of the outstanding shares of Empire common stock, (ii)expiration or termination of the applicable Hart-Scott-Rodino Act waiting period, (iii)receipt of all required regulatory approvals and consents, including from the Federal Energy Regulatory Commission, the Federal Communications Commission, the Arkansas Public Service Commission, the Kansas Corporation Commission, the Missouri Public Service Commission, the Oklahoma Corporation Commission and the Committee on Foreign Investment in the United States, which approvals and consents shall not, individually or in the aggregate, have or be reasonably likely to have a material adverse effect on the business, properties, financial condition or results of operations of Parent and its Subsidiaries (including for such purpose, Empire and its Subsidiaries), taken as a whole (a Burdensome Effect), (iv)the absence of any law or judgment that prevents, makes illegal or prohibits the closing of the Merger, (v)the absence of any material adverse effect with respect to Empire and (vi)subject to certain exceptions, the accuracy of the represent ations and warranties of, and compliance with covenants by, each of the parties to the Merger Agreement.
The Merger Agreement contains customary representations, warranties and covenants of Empire, Parent and Merger Sub. The Merger Agreement contains covenants by Empire, among others, that (i)Empire will conduct its business in the ordinary course during the interim period between the execution of the Merger Agreement and the closing of the Merger and (ii)Empire will not engage in certain transactions during such interim period. The Merger Agreement contains covenants by Parent, among others, that Parent will take, all actions, and to do, or cause to be done, all things necessary to consummate the financing of the Merger or to obtain substitute financing sufficient to enable Parent to consummate the Merger.
With respect to regulatory matters, the Merger Agreement contains a covenant by Parent, that Parent will use its reasonable best efforts to take all actions necessary to obtain all governmental and regulatory approvals (including those described above).
In addition, the Merger Agreement requires Parent, (i)to maintain Empire's headquarters in Joplin, Missouri, (ii)to make Joplin, Missouri the headquarters for all of Parent and its affiliates operations in the surrounding geographic region, (iii)to appoint the current members of the board of directors of Empire to the board of directors of Parent at closing, (iv)to appoint the current chief executive officer of Empire as chief executive officer of Parent, (v)to cause the governance and nominating committees of the board of directors of the Guarantor to consider current members of the board of directors of Empire for vacancies on Guarantors board of directors, (vi)to operate under the Empire District brand for a period of at least five years and (vii)to maintain Empires historic levels of community involvement and charitable contributions and support in Empires existing service territories.
In regards to the employees of Empire, the Merger Agreement requires Parent, among other things:
to provide each continuing non-union employee of Empire, for a period of two years following the closing of the Merger, with a base salary or wage rate no less favorable than, and incentive compensation and employee benefits, respectively, substantially comparable in the aggregate to those, that they received as of immediately prior to the closing;
to treat each continuing employee of Empire, for the three year period following the second anniversary of the closing of the Merger, no less favorably in the aggregate than similarly situated employees of Parent and its affiliates with respect to the payment of base salary or wage rate, incentive compensation opportunities, employee benefits and severance benefits;
to, for the three year period following the closing of the Merger, not, terminate or amend in any manner that is materially ad verse to the participants therein, certain benefit plans of Empire existing at closing;
to treat each retiree of Empire, for the three year period following the third anniversary of the closing of the Merger, no less favorably than similarly situated employees of Parent and its affiliates with respect to the provision of post-retirement welfare benefits; and
to, with respect to each employee of Empire who is covered by a union contract, continue to honor such union contracts in accordance with their terms.
Empire is also subject to a no shop restriction that limits its ability to solicit alternative acquisition proposals or provide non-public information to, and engage in discussion with, third parties, except under limited circumstances to permit Empires board of directors to comply with its fiduciary duties.
The Merger Agreement contains certain termination rights for both Empire and Parent. Either party may terminate the Merger Agreement, subje ct to certain conditions, if (i)the closing of the Merger has not occurred by February9, 2017 (subject to a 6-month extension if required to obtain required regulatory approvals or consents) (as may be extended, the End Date), (ii)a law or judgment (including a permanent (but not preliminary or temporary) injunction) preventing or prohibiting the closing of the Merger has become final and non-appealable, (iii)Empires shareholders do not approve the Merger, (iv)Empires board of directors changes its recommendation so that it is no longer in favor of the Merger, (v)the other party breaches any representations or covenants that would cause the applicable condition to not be satisfied and (vi)in the case of Empire only, if Parent fails to consummate the Merger after all closing conditions have been satisfied and a financing failure has occurred. If either party terminates the Merger Agreement because Empires board of directors changes its recommendation, or, if within nine month s after the termination of the Merger Agreement under certain circumstances, Empire shall have entered into a definitive
agreement with respect to, or consummated, an alternative transaction, Empire must pay Parent a termination fee of $53,000,000. If the Merger Agreement is terminated under certain other circumstances, including the failure to obtain required regulatory approvals, failure to consummate the Merger after all closing conditions have been satisfied and a financing failure has occurred or a breach by Parent of its regulatory cooperation covenants, Parent must pay Empire a termination fee of $65,000,000.
The Merger Agreement and the foregoing description has been included to provide Empires shareholders with information regarding its terms and is not intended to provide any other factual information about Empire, Parent or Merger Sub. The Merger Agreement contains representations and warranties by each of the parties to the Merger Agreement, which a re made solely for the benefit of the other parties to the Merger Agreement. The representations and warranties in the Merger Agreement (i)are not intended to be treated as categorical statements of fact but rather as a way of allocating risk to one of the parties if any such representation or warranty proves to be inaccurate, (ii)are in certain cases qualified by reference to the schedules to the Merger Agreement and/or reports filed by Empire with the SEC, (iii)may be subject to standards of materiality applicable to the parties to the Merger Agreement that differ from what might be viewed as material to shareholders of such party and (iv)were made only as of the date of the Merger Agreement or such other date or dates as may be specified in the Merger Agreement. Empires shareholders should not rely on the representations, warranties and covenants, or any descriptions thereof, as characterizations of the actual state of facts or condition of Empire, Parent or Merger Sub.
Simultaneously with the execution of the Merger Agreement, Parent has delivered to Empire a guarantee agreement (the Guarantee Agreement) executed by Algonquin Power& Utilities Corp. (the Guarantor), the parent of Parent. The Guarantee Agreement provides for an unconditional and irrevocable guarantee by the Guarantor
of the full and prompt payment and performance, when due, of all obligations of Parent and Merger Sub under the Merger Agreement. The foregoing description of the Guarantee Agreement is not a complete description thereof and is qualified in its entirety by reference to the full text of the Guarantee Agreement, which is attached hereto as Exhibit10.1 and is incorporated herein by reference.
Item5.03.
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On February 9, 2016, the Empire board of directors adopted a resolution to amend and restate Empires By-Laws (the Amended and Restated By-Laws), effective as of February9, 2016. The Amended and Restated By-Laws amend and restate the Companys by-laws to designate the state court located in Shawnee County, Kansas (or, if such state court does not have jurisdiction, the United States District Court for the District of Kansas located in Shawnee County) as the designated forum for (a)any derivative action or proceeding brought on behalf of Empire, (b)any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of Empire to Empire or Empires shareholders, (c)any action asserting a claim pursuant to any provision of the Kansas General Corporation Code or Empires certificate of incorporation or by-laws (as either may be amended from time to time) or (d)any action asserting a claim governed by the internal affairs doctrine.
The foregoing description is qualified in its entirety by the Amended and Restated By-Laws, a copy of which is filed as Exhibit3.1 hereto and is incorporated herei n by reference.
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