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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))
[ ] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to Rule 14a-12
EL PASO CORPORATION
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(Name of Registrant as Specified in its Charter)
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[EL PASO LOGO]
June 6, 2003
Dear Fellow El Paso Shareholder:
The Board and management of El Paso have made substantial
progress implementing our plan to restore and enhance the value of the
company. We believe the great strides we have made are proof positive of
your current Board's commitment and ability to position El Paso for the
future. Do not let the dissidents take control of your company and stop the
progress El Paso has enjoyed.
WITH THE ANNUAL MEETING OF SHAREHOLDERS LESS THAN TWO WEEKS AWAY, IT
IS IMPORTANT THAT YOU ACT NOW TO PROTECT YOUR INTERESTS. WE URGE YOU TO
SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD. A POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. TIME IS GROWING SHORT -- PLEASE
ACT TODAY.
LOOKING FORWARD TO THE FUTURE
The company has achieved many of the important goals of our 2003
operational and financial plan and we are taking further actions to enhance
the value of the company. El Paso has:
o Announced a target of more than $400 million of costs savings and
business efficiencies to be met by end of 2004
o Laid out an aggressive $10 billion debt reduction plan
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 independent and highly experienced
- Has been strengthened by the addition of four highly
qualified energy industry CEOs and CFOs
- Is knowledgeable about current operations of El Paso's
businesses
- Has learned from past mistakes
- Is 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
- In discussions with five highly qualified candidates
- Prompt decision after conclusion of proxy fight
- 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.
Concerns about Oscar Wyatt's influence over the Zilkha/Wyatt Slate
El Paso has been seeking to collect a debt of $2.5 million plus interest
from Oscar Wyatt for a number of months. Mr. Wyatt has refused to pay,
compelling El Paso to commence litigation, and even sought to delay that
litigation, asserting that, if the Zilkha/Wyatt slate is elected, "the new
board will need sufficient time to review all the facts and circumstances,
including whether to change counsel or otherwise resolve this matter." The
Zilkha/Wyatt slate has repeatedly refused to clarify whether, if elected,
it intends to collect this debt. At the Zilkha/Wyatt slate's June 4 analyst
meeting, the slate deferred questions regarding the litigation to Mr.
Wyatt. Mr. Wyatt told analysts "I'm collectible, so we will try [the case]
if they keep coming."
We continue to question the extent of Mr. Wyatt's influence over the
members of the Zilkha/Wyatt slate and whether this group will act in an
independent manner towards Mr. Wyatt in connection with the many conflicts
that exist between El Paso and Mr. Wyatt and his Nucoastal energy company.
SHAREHOLDERS WHO WANT A BOARD OF DIRECTORS THAT IS UNQUESTIONABLY
INDEPENDENT OF OSCAR WYATT SHOULD EXECUTE THE WHITE PROXY CARD TO SUPPORT
EL PASO'S NOMINEES.
TAKE A LOOK AND COMPARE THE EL PASO NOMINEES TO THE ZILKHA/WYATT SLATE.
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Issue El Paso Zilkha/Wyatt
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Business Plan Detailed business plan developed Uninformed critique of El Paso's
over months of business planning plan: will not generate improved
earnings or meaningfully reduce
debt
Being implemented now Progress stops. Requires
significant time to develop
Achieving results now Results uncertain
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Vision for the future Continue current progress Start over
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California settlement Settle on terms that allow El Implicit threat to derail
Paso to eliminate major risk and settlement
uncertainty
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CEO Search Careful search process to choose No search process; settle for a
the best candidate from current former energy executive with less
active senior executives of major than 8 months' experience as a
energy companies recommended by a public company CEO who
leading 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
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Director Independence 11 directors are independent Nominees selected by Oscar Wyatt
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Directors with Twelve None
detailed current
knowledge of El Paso
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El Paso believes that its shareholders should have serious concerns about
replacing El Paso's entire board in light of the company's substantial
progress with its turnaround effort and the significant questions
surrounding the Zilkha/Wyatt slate.
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 your 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
website at www.elpaso.com.
Sincerely,
/s/
Ronald L. Kuehn, Jr.
Chairman and Chief Executive Officer
If you have any questions about the proxy solicitation or need additional
information about the El Paso stockholders' meeting, please contact
MacKenzie Partners, Inc. as set forth below:
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[MACKENZIE LOGO]
105 Madison Avenue
New York, New York 10016
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
E-mail: proxy@mackenziepartners.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.