-------------------------------------------------------------------------------
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
[X] Definitive Additional Materials
[ ] 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:
-------------------------------------------------------------------------------
NEWS [LOGO - EL PASO]
For Immediate Release
EL PASO CORPORATION URGES SHAREHOLDERS TO FOCUS ON THE COMPANY'S RECENT
ACCOMPLISHMENTS AND VISION FOR THE FUTURE
CALLS ZILKHA/WYATT "BUSINESS PLAN" UNINFORMED AND UNWORKABLE; CRITICIZES
IMPLICIT THREAT TO DERAIL CALIFORNIA SETTLEMENT
HOUSTON, TEXAS, JUNE 5, 2003--El Paso Corporation (NYSE: EP) today said
that shareholders should look at the company's recent accomplishments and
vision for the future in deciding how to vote at El Paso's June 17 Annual
Meeting.
El Paso also said that the Zilkha/Wyatt group's new so-called "business
plan" is uninformed and unworkable and warned that the Zilkha/Wyatt
implicit threat to derail the company's California settlement is a cause of
special concern to all El Paso shareholders.
El Paso has achieved many of the important goals of its 2003 operational
and financial plan and is taking further actions to enhance the value of
the company. El Paso has:
o Committed to more than $400 million of cost savings and business
efficiencies to be met by the end of 2004;
o Outlined an aggressive $10-billion debt reduction plan; and
o Conducted a long-term strategic planning process to generate free
cash flow and improved earnings.
El Paso has made substantial changes in the company's leadership and
culture including:
o A reconstituted board of directors that is:
o Independent and highly experienced,
o Improved by addition of four new energy CEOs and CFOs,
o Knowledgeable about current operations of El Paso's businesses
o Has learned from past mistakes,
o Committed to maximizing value and a process of change;
o A new leaner executive management team with changes at the highest
levels, and
o An active search to recruit a world-class CEO
o In discussions with five highly qualified candidates
o Prompt decision after conclusion of proxy fight
o Candidates clearly superior to Zilkha/Wyatt hand-picked CEO
choice, Stephen Chesebro', based on current employment
experience as senior executives of major energy companies.
The progress we have made on the plan reflects our commitment and ability
to lead El Paso into the future. In our view, El Paso's share price, which
has almost tripled since February, reflects investors' recognition of the
company's progress.
We believe the Zilkha/Wyatt proxy contest poses a clear threat to that
progress. El Paso's concerns about the Zilkha/Wyatt slate include:
o Zilkha/Wyatt's implicit threat to derail El Paso's California
settlement;
o Zilkha/Wyatt's so-called "business plan," which El Paso believes is
uninformed, unworkable and value destructive;
o Their selection of Stephen Chesebro'--who has not been actively
employed since 1999--as CEO;
o The risks inherent in a complete change in the Board of Directors;
o The role of Oscar Wyatt and his selection of their entire slate; and
o The risk of significant management disruption.
Threat to derail the California settlement
------------------------------------------
As part of their presentation to analysts on June 4, 2003, the Zilkha/Wyatt
slate described El Paso's proposed settlement of claims relating to the
Western energy crisis as "unfathomable" and "unconscionable," implying
that, if elected, the Zilkha/Wyatt slate would seek to undo a settlement
that El Paso believes:
o Is in the best interests of its investors;
o Will eliminate the most significant risk and uncertainty affecting
the company's future; and
o Is broadly supported by its shareholders.
El Paso believes Zilkha/Wyatt's implicit threat to back away from the
settlement if their slate is elected is utterly opposed to the best
interests of El Paso shareholders and demonstrates a fundamental lack of
understanding of this critical issue.
Shareholders who agree with El Paso's decision to settle this litigation
should execute the WHITE proxy card to support El Paso's nominees.
Zilkha/Wyatt Alchemy
--------------------
After refusing to spell out a detailed plan for El Paso for almost four
months on the grounds that they lacked the information to do so,
Zilkha/Wyatt have belatedly decided to offer up their own so-called
"business plan." We believe they were right the first time: they do not
have enough knowledge about El Paso to develop a detailed plan. Even now,
many elements remain unclear, but a cornerstone of that "plan" is their
idea to reduce annual capital expenditures to less than $1 billion while
generating sufficient cash to pay down debt substantially. Zilkha/Wyatt
call this "math"; we call it alchemy.
To maintain El Paso's current exploration and production levels, and to
fund pipeline maintenance capital expenditures and committed expansions,
almost $2 billion per year of capital is required. We believe that a
capital expenditure program of less than $1 billion is imprudent and value
destructive to the E&P and pipeline businesses, will reduce earnings and
cash flow, impede the company from pursuing attractive investment
opportunities and would not result in an ongoing debt reduction program.
Shareholders who want a detailed, achievable business plan and a realistic
approach to debt reduction, not Zilkha/Wyatt's alchemy, should execute the
WHITE proxy card to support El Paso's nominees.
Focus on Pet Projects
---------------------
The Zilkha/Wyatt slate cites particular examples of projects they believe
could perform better under Zilkha/Wyatt and Chesebro's management. The
examples they choose happen to be former pet projects of Mr. Chesebro' and
Mr. Wyatt.
o It was Mr. Chesebro' who got Tenneco Energy into an investment in an
Australian pipeline that generates unacceptable returns. El Paso will
not make incremental investments in areas that are clearly not core
to the company's future that will not provide acceptable returns.
o El Paso's Aruba refinery, inherited from Mr. Wyatt's Coastal Corp.,
has only generated in excess of $100 million of annual operating
income once over the past 13 years despite a cumulative investment of
approximately $1.3 billion. Clearly the Zilkha/Wyatt claim that they
can achieve $100 million of incremental quarterly operating profit on
an ongoing basis while simultaneously reducing capital expenditures
dramatically is not realistic.
The Type Of Plan You Would Expect From the Zilkha/Wyatt Slate--Uninformed
-------------------------------------------------------------------------
and Unachievable
----------------
We believe shareholders should not be surprised that Zilkha/Wyatt would
prefer to walk away from a beneficial settlement and have formulated an
unrealistic and unachievable business plan. As we believe the following
comparison chart shows, there are serious flaws in the Zilkha/Wyatt slate
and in their approach to critical issues for the future of El Paso.
El Paso and Zilkha/Wyatt--a side-by-side comparison:
----------------------------------------------------
-------------------------------------------------------------------------------
ISSUE EL PASO ZILKHA/WYATT
-------------------------------------------------------------------------------
Business plan Detailed plan developed Uninformed critique of
over months of business El Paso's plan: will not
planning generate improved
earnings or meaningfully
reduce debt
-------------------------------------------------------------------------------
Being implemented now Progress stops.
Requires significant
time to develop
-------------------------------------------------------------------------------
Achieving results now Results uncertain
-------------------------------------------------------------------------------
Vision for the future Continue current progress Start over
-------------------------------------------------------------------------------
California settlement Settle on terms that Implicit threat to
allow El Paso to derail settlement
eliminate major risk and
uncertainty
-------------------------------------------------------------------------------
CEO search Careful search process to No search process;
choose the best candidate settle for a former
from current active energy executive with
senior executives of less than eight months
major energy companies experience as a public
recommended by a leading company CEO who
search firm
o has not been actively
employed since 1999
o since 1999, has held
only one public company
directorship at a small
oil and gas company
where he is a
non-employee chairman
o has not been
recommended for an
executive position by
two major search firms
in more than eight years
o opposed $84/share
takeover bid for
Pennzoil, saying it
"doesn't adequately
value Pennzoil's
international oil and
gas properties"--Pennzoil
was later broken up and
sold for $38/share
-------------------------------------------------------------------------------
Director independence 11 directors are Nominees selected by
independent Oscar Wyatt
-------------------------------------------------------------------------------
Directors with detailed 12 None
current knowledge of
El Paso
------------------------------------------------------------------------------
El Paso believes that our nominees have the right plan for the company, the
right process to choose the company's next CEO and are far better equipped
to complete the company's turnaround effort.
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. Your vote is critical, no matter how many shares you own. Time is
short as the June 17 Annual Meeting is rapidly approaching.
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 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