El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
Independent Proxy Voting and Corporate Governance Advisory Firm Recognizes Progress Made By El Paso's Board in Positioning Company for the Future
Questions Zilkha/Wyatt's So-Called Business Plan and Raises Concern About
Oscar Wyatt's Influence on Dissidents' Slate
HOUSTON, June 9 /PRNewswire-FirstCall/ -- El Paso Corporation (NYSE: EP)
today noted a report issued by Glass, Lewis & Co., LLC recognized the
substantial progress made by the incumbent Board of Directors and the
compelling reasons not to support the Zilkha/Wyatt slate. Glass Lewis is an
analytical research firm that uses proprietary research and extensive analysis
to objectively evaluate the corporate governance, financial transparency and
shareholder safeguards of public companies and advise shareholders on the
exercise of their voting rights.
The independent report recognizes the substantial progress El Paso has
made and the limited benefits and substantial risks arising from the
Zilkha/Wyatt so called business plan and expresses concerns about Oscar
Wyatt's influence on the Zilkha/Wyatt slate.
El Paso's Significant Progress
Specifically, the report, issued June 9, stated:
"[T]he incumbent Board of Directors has substantially improved its batting
average. ... It has made significant progress in selling non-core
businesses and de-levering the balance sheet. It has added experienced
new members to the Board, including an executive with substantial
accounting and financial experience and several with deep industry
knowledge. And, it has enhanced the corporate governance profile of the
Flaws In The Zilkha/Wyatt So-Called Business Plan
"In our view, Mr. Zilkha and the dissidents have not offered a very
detailed plan for operating the business." Specific areas of concern
- Capital Expenditures
"Mr. Zilkha and his team have proposed reducing capital expenditures from
more than $2 billion to approximately $1 billion annually. We fail to
understand how this is possible. In particular, the incumbent Board has
already substantially reduced capital expenditures and has focused more
than 87% of them on the core business. We understand that much of the
planned capital spending is necessary to maintain the existing pipeline
assets in working order and in compliance with environmental laws. Mr.
Zilkha and his team have not offered a very detailed plan for cutting
capital expenditures and we find it hard to believe that there is still
more than one billion dollars of unnecessary spending planned by the
incumbent team." (emphasis added)
- California Settlement
"From our standpoint, the Company's progress in settling with FERC has
been an extremely positive development. Similarly, a review of the
transcript of the Company's March 21, 2003 conference call regarding the
settlement suggests that the analyst community feels the same way."
"Recent comments from Stephen Chesebro', the dissidents' proposed CEO,
suggest that the dissidents may not feel compelled to adhere to the terms
of the recent settlement of the FERC charges stemming from the Western
States energy crisis."
"Since the litigation settlement is only an agreement in principle,
comments such as [Chesebro's] risk undermining the Company's ability to
complete the final agreements. Reintroducing any uncertainty concerning
the liability associated with the settlement only harms shareholders and
dampens their ability to value the Company and the stock accurately."
- Asset Sales
"The incumbents have been executing on their asset sale plan for some
months, yet the dissidents' plan would suspend the existing sales
activity. We fail to see the advantage to the dissident's approach."
- Reducing Expenses
"The dissidents have stated that they do not plan massive layoffs and have
failed to explain their plan for reducing expenses." (emphasis added)
- Oscar Wyatt's Role
"Mr. Zilkha's camp rightly comes under serious fire from the incumbents
for the presence of Oscar Wyatt in this proxy contest."
"[W]e are concerned about the role, if any, he might play if the
dissidents are in fact successful."
"We worry that investors may not be best served by a Board that might feel
beholden to Mr. Wyatt when and if it negotiates the sale of Company assets
to him or seeks to settle the Company's claim for his debt obligation."
- No Change of Control Premium By Zilkha/Wyatt
"Mr. Zilkha has not quite put his money where his mouth is: he does not
seek to acquire the Company nor pay shareholders a premium for the right
to control its destiny. Rather, on the basis of a substantial complaint
but relatively vague going-forward plan, he seeks what is effectively a
change-of-control but without actually paying any consideration to
- Substantial Risks, Without Benefit, of Changing the Board
"The swapping-out of an entire board comes with certain costs ... "
"[G]iven the similarity in strategy and lack of specificity provided by
the dissidents, introducing an entirely new board to "re-start" the
existing initiatives seems unwise; it adds substantial risk ... without
El Paso noted that, notwithstanding its criticism of certain of the
company's past actions, the Glass Lewis report recognizes El Paso's
substantial progress as referred to above and recommends voting for nine of
the Company's twelve director nominees.
Ronald L. Kuehn, Jr., chairman and chief executive officer of El Paso,
urged shareholders "to vote their WHITE proxy card for El Paso's nominees so
that we can finish repositioning the company." He added, "Your vote is
critical, no matter how many shares you own. Time is short as the June 17
Annual Meeting is rapidly approaching."
Shareholders who support the Board's detailed business plan, which is
working, and want to avoid the risks without benefits from the Zilkha/Wyatt so
called business plan should execute the WHITE proxy card to support El Paso's
Shareholders who agree with El Paso's decision to settle the California
litigation and want to avoid reintroducing the uncertainty created by the
Zilkha/Wyatt slate's implied threat to derail the California settlement should
execute the WHITE proxy card to support El Paso's nominees.
Shareholders who are concerned about any role for Oscar Wyatt should
execute the WHITE proxy card to support El Paso's nominees.
The Board of Directors urges El Paso shareholders to vote FOR the election
of El Paso's slate of 12 highly qualified directors on El Paso's WHITE proxy
card, NOT to sign the blue proxy card sent to you by Messrs. Zilkha and Wyatt
and to DISCARD any blue proxy card they may send to you in the future.
El Paso shareholders who have any questions about voting their proxy or
need additional information about El Paso or the stockholders meeting, please
contact MacKenzie Partners, Inc. at (800) 322-2885 or visit El Paso's Web site
at www.elpaso.com .
El Paso is not affiliated with Glass, Lewis & Co., LLC.
El Paso Corporation is the leading provider of natural gas services and
the largest pipeline company in North America. The company has core
businesses in pipelines, production, and midstream services. Rich in assets,
El Paso is committed to developing and delivering new energy supplies and to
meeting the growing demand for new energy infrastructure. For more
information, visit www.elpaso.com .
Cautionary Statement Regarding Forward-Looking Statements
This release includes forward-looking statements and projections, made in
reliance on the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The company has made every reasonable effort to ensure
that the information and assumptions on which these statements and projections
are based are current, reasonable, and complete. However, a variety of
factors could cause actual results to differ materially from the projections,
anticipated results or other expectations expressed in this release,
including, without limitation, our ability to attract and retain qualified
members of the Board of Directors; the successful recruitment and retention of
a qualified CEO; the successful implementation of the 2003 operational and
financial plan; the successful implementation of the settlement related to the
Western Energy Crisis; material and adverse impacts from our proxy contest
with Selim Zilkha/Oscar Wyatt; actions by the credit rating agencies; the
successful close of financing transactions; our ability to successfully exit
the energy trading business; our ability to divest of certain non-core assets;
changes in commodity prices for oil, natural gas, and power; general economic
and weather conditions in geographic regions or markets served by El Paso
Corporation and its affiliates, or where operations of the company and its
affiliates are located; the uncertainties associated with governmental
regulation; political and currency risks associated with international
operations of the company and its affiliates; inability to realize anticipated
synergies and cost savings associated with restructurings and divestitures on
a timely basis; difficulty in integration of the operations of previously
acquired companies, competition, and other factors described in the company's
(and its affiliates') Securities and Exchange Commission filings. While the
company makes these statements and projections in good faith, neither the
company nor its management can guarantee that anticipated future results will
be achieved. Reference must be made to those filings for additional important
factors that may affect actual results. The company assumes no obligation to
publicly update or revise any forward-looking statements made herein or any
other forward-looking statements made by the company, whether as a result of
new information, future events, or otherwise.
Additional Important Information
To the extent that individual customers, independent industry researchers,
financial analysts, or El Paso commissioned research are quoted in this
document, it is El Paso's policy to use reasonable efforts to verify the
source and accuracy of the quote. El Paso has not, however, sought or
obtained the consent of the quoted source to the use of such quote as proxy
soliciting material. This document may contain expressions of opinion and
belief. Except as otherwise expressly attributed to another individual or
entity, these opinions and beliefs are the opinions and beliefs of El Paso.
SOURCE El Paso Corporation
/CONTACT: communications and government affairs, Norma F. Dunn, Senior
Vice President, +1-713-420-3750, or fax, +1-713-420-3632, or investor
relations, Bruce L. Connery, Vice President, +1-713-420-5855, or fax,
+1-713-420-4417; or alternate contacts, Joele Frank or Dan Katcher,
+1-212-355-4449, or fax, +1-212-355-4554/
/Web site: http://www.elpaso.com /
CO: El Paso Corporation; Glass, Lewis & Co., LLC
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1228 06/09/2003 15:49 EDT http://www.prnewswire.com