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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-12
EL PASO CORPORATION
-------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
-------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------
-------------------------------------------------------------------------------
EL PASO CORPORATION ASKS SHAREHOLDERS
TO REJECT ZILKHA PROXY FILING
BOARD COMMITTED TO CONTINUING THE SIGNIFICANT PROGRESS BEING MADE ON
EXECUTION OF BUSINESS PLAN
HOUSTON, TEXAS, MARCH 11, 2003--El Paso Corporation (NYSE: EP) urged its
shareholders to reject today's proxy filing by Selim Zilkha. The company's
board is committed to continuing the significant progress being made on the
implementation of the company's five-point operational and financial plan
while remaining flexible in optimizing its execution. The company expressed
its disappointment that Mr. Zilkha is continuing his counterproductive
proxy campaign despite the aggressive steps the company is taking and the
numerous planned and pending transactions now in process to reduce
expenses, strengthen the balance sheet, enhance liquidity and focus on core
businesses.
The company stated, "We are making very good progress on our 2003 plan and
will not allow a counterproductive proxy fight to keep us from focusing on
our core businesses, selling non-core assets, strengthening and simplifying
our balance sheet while maximizing liquidity and reducing our expenses. El
Paso has already taken a number of decisive actions that are helping to
increase the company's financial flexibility and meet the challenges facing
our business and our industry."
In addition to focusing on executing its plan, the El Paso board is working
diligently to select a new chief executive officer and is committed to
appointing the best-qualified CEO candidate as soon as possible. The board
has established an internal CEO search committee consisting of Ronald L.
Kuehn, Jr., its lead director, and three independent members of its board
(John M. Bissell, Joe B. Wyatt, and Juan C. Braniff) and has engaged
Spencer Stuart, a major executive search firm, to facilitate the process.
Also, the board recently appointed Robert W. Goldman, former senior vice
president, finance, and chief financial officer of Conoco Inc., as an
independent director and is continuing the process of adding high-quality,
independent directors to its existing strong board.
In recent weeks, the company has made steady and substantial progress
executing its 2003 plan, which is based upon five key principles:
o PRESERVING AND ENHANCING THE VALUE OF THE COMPANY'S CORE BUSINESSES.
- El Paso continues to invest in its core businesses--natural gas
pipelines, natural gas production, midstream and non-merchant
power--to maintain its leadership positions. The company's
capital expenditure plan reflects that commitment with 87 percent
of 2003 capital devoted to the pipeline and production
businesses. At the same time, the company is reviewing all
proposed capital expenditures to ensure that the objective of
enhancing and preserving the value of core businesses is balanced
with near- and intermediate-term capital needs.
o EXITING NON-CORE BUSINESSES QUICKLY, BUT PRUDENTLY.
- The company recently entered into an agreement with Chesapeake
Energy Corporation for the sale of its Mid-Continent natural gas
and oil reserves for $500 million, subject to customary closing
conditions. Expected to close in March 2003, this sale expands El
Paso's 2003 non-core asset sale program from $2.9 billion to $3.4
billion.
- The company recently completed sales of its Corpus Christi
refinery and South Texas refined petroleum product pipeline
system, and its Florida petroleum terminals and tug and barge
operations for a total of approximately $444 million.
- The company completed the sale of its European natural gas
trading book and will realize approximately $80 million for this
transaction, including the recovery of cash collateral.
- In total, El Paso has signed agreements for or closed
approximately 45 percent, or $1.5 billion, of the $3.4 billion of
asset sales the company expects in 2003. Proceeds from these
sales will help El Paso maximize its liquidity and improve its
financial flexibility.
o STRENGTHENING AND SIMPLIFYING THE COMPANY'S BALANCE SHEET WHILE
MAXIMIZING LIQUIDITY.
- The company obtained a new $1-billion fully underwritten
financing commitment arranged by Salomon Smith Barney and Credit
Suisse First Boston. The proceeds of this new financing will be
used to retire the net balance of the Trinity River financing in
March 2003. The retirement of the Trinity River financing will
simplify the company's balance sheet and provide it with
significant additional flexibility and liquidity.
- Two El Paso interstate pipelines, Southern Natural Gas and ANR
Pipeline, have completed two offerings of seven-year notes
totaling $700 million: $400 million by Southern Natural Gas and
$300 million by ANR Pipeline, each at a fixed rate of 8 7/8
percent with a yield to maturity of 9 1/8 percent. Approximately
$560 million of the proceeds from the two offerings will be
available for general corporate purposes.
o AGGRESSIVELY PURSUING ADDITIONAL COST REDUCTIONS.
- In 2002, the company reduced annual expenses by approximately
$300 million. The company has targeted an additional $150 million
in annual cost reductions in 2003.
- The company has entered into an agreement for the sale of its G-5
corporate airplane for a price in excess of $30 million. This
transaction is expected to close in March 2003.
o WORKING DILIGENTLY TO RESOLVE LITIGATION AND REGULATORY MATTERS.
- El Paso has a history of resolving difficult regulatory and legal
issues through settlement in a matter consistent with the best
interests of its shareholders.
El Paso will continue to remain highly flexible as it responds to any
developments and works to optimize the execution of its 2003 business plan
to deliver the value inherent in the company. The company's 2003 business
plan is a continuation of the repositioning it commenced in December 2001.
El Paso was the first in its industry to respond aggressively to changing
industry conditions and take critical steps to strengthen its balance sheet
and maximize liquidity.
o Since December 2001, the company has issued approximately $2.5 billion
of equity securities (common stock and equity linked securities).
o The company also initiated the orderly exit of the energy trading
business.
El Paso has accomplished a considerable amount since December 2001, and
recognizes that there is still more to be achieved. El Paso is confident
that it will complete its operational and financial plan effectively
notwithstanding the Zilkha/Wyatt proxy contest.
The company noted that Oscar Wyatt, who is working with Mr. Zilkha and
sharing the costs of the proxy contest, is a plaintiff in a shareholder
suit against the company, and has defaulted on payment of a loan guarantee
in favor of the company in the amount of $2.5 million plus interest and
previously mounted a negative public letter-writing campaign against the
company. Based upon Mr. Wyatt's past history, his current adversarial
relationship with El Paso, and his ownership of a competing business, the
company believes that there are clear conflicts between Mr. Wyatt's
interests and those its of shareholders.
With respect to Mr. Zilkha, the company noted:
o El Paso has consistently sought to engage Mr. Zilkha as a shareholder
in a number of dialogues to address his concerns, including a number
of meetings with him and his advisors. The company offered Mr. Zilkha
the opportunity to submit candidates for nomination to the El Paso
board. Despite the numerous efforts to reach out to Mr. Zilkha, he has
rejected the company's proposals and chosen to launch this
counterproductive proxy campaign.
o As a former member of the El Paso board, and later as an advisory
director of the company, Mr. Zilkha supported the strategic decisions
he is now criticizing.
o Mr. Zilkha chose voluntarily to relinquish his role as an advisory
director, so as to be free from limitations on his personal sales of
company stock.
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 production, pipelines, midstream services, and power. El Paso
Corporation, rich in assets and fully integrated across the natural gas
value chain, is committed to developing new supplies and technologies to
deliver energy. 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 and senior management; 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 mergers and acquisitions on a timely
basis; difficulty in integration of the operations of previously acquired
companies, competition, the successful implementation of the 2003 business
plan, 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.
Additional Important Information
Prior to its 2003 annual meeting, El Paso will furnish to its shareholders
El Paso's definitive proxy statement relating to this meeting, together
with a WHITE proxy card. Shareholders are strongly advised to read this
proxy statement when it becomes available, as it will contain important
information.
Shareholders will be able to obtain El Paso's proxy statement, any
amendments or supplements to the proxy statement and any other documents
filed by El Paso with the Securities and Exchange Commission for free at
the Internet website maintained by the Securities and Exchange Commission
at www.sec.gov. Copies of the proxy statement and any amendments and
supplements to the proxy statement will also be available for free at El
Paso's Internet Web site at www.elpaso.com or by writing to El Paso
Corporation, Investor Relations, PO Box 2511, Houston, TX 77252. In
addition, copies of the proxy materials may be requested by contacting our
proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 Toll-Free or by
email at proxy@mackenziepartners.com.
To the extent that individual customers, independent industry researchers,
financial analysts, or El Paso commissioned research, are quoted herein, 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.
Information regarding the names, affiliation and interests of individuals
who may be deemed participants in the solicitation of proxies of El Paso's
shareholders is contained in a Schedule 14A filed by El Paso with the
Securities and Exchange Commission on February 18, 2003.
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
Joele Frank, Wilkinson Brimmer Katcher
Office: (212) 355-4449
Fax: (212) 355-4554