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Neale: Columbia Misleading Shareholders

July 20, 1999
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Neale: Columbia Misleading Shareholders

NiSource Chairman Gary Neale yesterday called on Columbia officials to provide detailed information to shareholders regarding increased "golden parachutes" approved last week for 30 Columbia officials. In a letter to Columbia CEO Oliver G. (Rick) Richard III, Neale also said he was "distressed to hear that you and your chief financial officer, Mike O'Donnell, repeatedly mischaracterized the financing" of NiSource's $68/share hostile takeover offer ($5.7 billion) to Columbia shareholders during an earnings teleconference last week (see Daily GPI July 16, July 15, June25, June 11 and June 8).

In response to direct questions from two of Columbia's largest investors, "you and your CFO avoided the truth, saying you refused to meet with us because of the so-called risk that Columbia shareholders will not get the cash due to the 'huge equity takeout required to do the financing.' This explanation is absurd." Columbia shareholders will be paid $68/share at the time of closing, he said. "You know full well that any requirement for equity would occur as part of a refinancing after the merger," said Neale. "Therefore, I expect you to publicly correct this false statement."

Neale also said Richard failed to inform Columbia's shareholders that the day prior to the conference call Columbia's board substantially increased the "golden parachutes" for Richard; Peter M. Schwolsky, senior vice president and chief legal officer; Catherine G. Abbott, president and CEO of Columbia Gas Transmission and Columbia Gulf; and 27 other officers and managers. At a special meeting on July 14, Columbia's board considered the "potentially destabilizing effects" of the NiSource tender offer on the "morale and retention" of it employees and decided to amend employment agreements with those officials, increasing their monetary compensation in the event of lost employment due to a takeover by another company. On Columbia shareholders' "behalf, we call on you to provide the necessary information to enable shareholders to calculate the true cost of these increases," said Neale.

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