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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Rule14a-6(e)(2))
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EL PASO CORPORATION
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(Name of Registrant as Specified in its Charter)
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NEWS [LOGO - EL PASO]
For Immediate 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, TEXAS, JUNE 9, 2003--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
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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 Company."
FLAWS IN THE ZILKHA/WYATT SO-CALLED BUSINESS PLAN
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"In our view, Mr. Zilkha and the dissidents have not offered a very
detailed plan for operating the business." Specific areas of concern
mentioned:
- 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."
(emphasis added)
- 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 existing shareholders."
- 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 obvious benefit."
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 nominees.
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.
CONTACTS
Communications and Government Affairs
Norma F. Dunn, Senior Vice President
Office: (713) 420-3750
Fax: (713) 420-3632
Investor Relations
Bruce L. Connery, Vice President
Office: (713) 420-5855
Fax: (713) 420-4417
Alternate Contacts
Joele Frank/Dan Katcher
Office: (212) 355-4449
Fax: (212) 355-4554