Filed by: Dominion Resources Inc.
Pursuant to Rule 425 under the
Securities Act of 1933 and deemed
filed under Rule 14a-6 under the
Securities Exchange Act of 1934
Subject Company: Louis Dreyfus Natural
Gas Corp.
Commission File: 1-12480
The date of this Supplement is October 17, 2001
[LOUIS DREYFUS NATURAL GAS CORP. LOGO]
SUPPLEMENT TO PROXY STATEMENT/
PROSPECTUS DATED SEPTEMBER 27, 2001
This supplement provides additional information relating to the Special
Meeting of Shareholders of Louis Dreyfus Natural Gas Corp., to be held October
30, 2001 at the principal corporate office of Louis Dreyfus, 14000 Quail
Springs Parkway, Suite 600, Oklahoma City, Oklahoma at 10:00 a.m., central
time, to consider the proposed merger with a subsidiary of Dominion Resources,
Inc.
This supplement should be read in conjunction with the Louis Dreyfus and
Dominion Proxy Statement/Prospectus dated September 27, 2001 previously
provided to you, referred to in this supplement as the "proxy
statement/prospectus."
Additional Information Concerning "The Merger -- Background to the Merger"
(proxy statement /prospectus, p. 23)
The proxy statement/prospectus discloses that representatives of Louis
Dreyfus expressed disappointment with Dominion's proposed merger consideration
of $42.00 on August 14, 2001, which resulted in Dominion increasing the
proposed consideration to $44.00 on August 16, 2001. This expression of
disappointment was intended to cause Dominion to increase the proposed
consideration in the context of negotiations and did not necessarily reflect
the opinion of the Louis Dreyfus representatives as to the fairness of the
proposed consideration to the shareholders of Louis Dreyfus. On September 9,
2001, the Louis Dreyfus board of directors approved the merger, which at that
date was valued at $40.24 per share of Louis Dreyfus. As disclosed in the
proxy statement/prospectus, natural gas prices declined during this period
which was the principal reason the board of directors concluded to recommend a
merger at a lower price than was originally proposed by Dominion. The average
12 month forward price of natural gas declined by approximately 19% between
August 16, 2001 and September 7, 2001.
When it approved the proposed merger at its meeting on September 9, 2001,
the Louis Dreyfus board of directors also considered certain background and
due diligence information concerning Dominion provided by its financial
advisor Lehman Brothers. Among other things, the board of directors reviewed
the portion of Lehman Brothers' financial analysis relating to the valuation
of Dominion's common stock. See "The Merger-- Opinion of Financial Advisor --
Valuation Analysis: Dominion," at page 40 of the proxy statement/prospectus.
Additional Information Concerning "The Merger -- Opinion of Financial
Advisor -- About Lehman Brothers" (proxy statement/prospectus, p. 44)
As disclosed in the proxy statement/prospectus, Louis Dreyfus has paid an
advisory fee of $1 million to Lehman Brothers, which included a $750,000 fee
for delivery of its fairness opinion to the board of directors on September 9,
2001. Under the terms of the engagement letter with Lehman Brothers, the
obligation of Louis Dreyfus to pay the fairness opinion fee was not contingent
upon Lehman Brothers' opinion being favorable. Upon closing of the merger with
Dominion, Louis Dreyfus is obligated to pay Lehman Brothers an additional $7
million. Lehman Brothers' aggregate fee of $8 million represented
approximately 0.4% of the total consideration offered by Dominion to the Louis
Dreyfus shareholders based on Dominion's stock price on the day preceding
announcement of the merger. If Louis Dreyfus were to accept a superior
proposal, should one be made, Lehman Brothers would be entitled to receive a
fee of 0.50% of the total consideration offered to the Louis Dreyfus
shareholders.
As disclosed in the proxy statement/prospectus, Lehman Brothers has performed
various investment banking services for Dominion in the past and has received
customary fees for these services. Lehman Brothers also expects to continue to
provide such investment banking services to Dominion in the future. Lehman
Brothers advised the board of directors of Louis Dreyfus of its prior
representation of Dominion prior to the board's authorizing the engagement of
Lehman Brothers as its financial advisor. The directors of Louis Dreyfus
determined that the services performed by Lehman Brothers for Dominion did not
constitute a material conflict of interest which would preclude Lehman Brothers
from providing an independent opinion concerning the fairness of the proposed
merger consideration to the shareholders of Louis Dreyfus. Such services within
the past three years include having advised Dominion in connection with its
acquisition of Consolidated Natural Gas Company and various financings in the
capital markets. With respect to these services, Dominion has paid Lehman
Brothers an aggregate amount of approximately $25 million over the past three
years.
Additional Information Concerning "The Merger -- Interests of Certain Persons
in the Merger" (proxy statement/prospectus, p. 51)
The proxy statement/prospectus discloses that the executive officers of Louis
Dreyfus will receive change in control payments payable under pre-existing
change in control agreements when the merger is consummated. These change in
control agreements were originally put in place in 1998 and provide for
severance payments in the event an executive officer is terminated or resigns
following a substantial reduction in responsibilities after a change in
control. Dominion and Louis Dreyfus agreed as a part of the merger agreement
that the payments would be made at the closing of the merger because it was
understood that the executive officers would either be terminated after the
merger or their duties and titles would be substantially reduced, which in
either case, would entitle them to payment under the change in control
agreements. None of the Louis Dreyfus executive officers have been offered
employment by Dominion after the merger, other than Ronnie K. Irani who will be
employed on an "at will" basis as Senior Vice President--Oklahoma City Division
of the surviving corporation.
Additional Information Concerning "The Merger -- Louis Dreyfus Shareholder
Lawsuit Regarding the Merger" (proxy statement/prospectus, p. 53)
Louis Dreyfus and the plaintiff in the purported class action lawsuit filed
in Oklahoma County, Oklahoma disclosed in the proxy statement/prospectus have
reached an agreement to settle such action. The settlement agreement required
Louis Dreyfus to issue this supplement. The settlement is subject to approval
of the court.
Proxies
You are encouraged to submit your proxy for the Special Meeting of
Shareholders if you have not already done so. A shareholder may revoke a proxy
at any time prior to its exercise by submitting to the corporate secretary of
Louis Dreyfus at 14000 Quail Springs Parkway, Suite 600, Oklahoma City,
Oklahoma a written notice of revocation or a completed later-dated proxy card,
or by attending the special meeting and voting in person.
You may obtain copies of the proxy statement/prospectus dated September 27,
2001 and the information incorporated by reference in it without charge from
Dominion or Louis Dreyfus upon written or oral request to contacts shown below.
To obtain timely delivery of this information, please make your request by
October 23, 2001.
Corporate Secretary Corporate Secretary
Dominion Resources, Inc. Louis Dreyfus Natural Gas Corp.
120 Tredegar Street 14000 Quail Springs Parkway, Suite 600
Richmond, Virginia 23219 Oklahoma City, Oklahoma 73134
(804) 819-20000 (405) 749-1300
Copies of the proxy statement/prospectus are also available at the SEC's web
site at http://www.sec.gov.