‘Some Adverse Effect’ Conceded by Utilities in Merger Filing With SEC

San Diego Gas & Electric Co. and Southern California Edison have acknowledged that their proposed merger will have “some adverse effects” on San Diego County, according to a lengthy joint filing made Friday with the federal Securities and Exchange Commission.

But, during a Nov. 30 vote to accept a $2.4-billion stock-swap merger with Edison, SDG&E;’s board placed “primary emphasis on the financial benefits” to be accrued by SDG&E;’s shareholders, according to the proxy statement that will be distributed to the utilities’ shareholders.

According to that document, SDG&E;’s board at first considered “a corporate restructuring, reorganization, leveraged buyout or similar transactions” that would keep SDG&E; independent. Those options proved to be unavailable, according to the document.

SDG&E; also determined that giving shareholders cash generated by a “special or extraordinary dividend, a spin-off of assets or a sale of a significant portion of SDG&E;’s assets” would not be as attractive as Edison’s $2.4-billion stock-swap merger offer.

The complex proxy statement did note intense opposition to the merger from Charles R. Scott and O. Morris Sievert, two longtime San Diego businessmen who resigned their SDG&E; board memberships after the board accepted Edison’s offer.

Concerns Expressed

The proxy noted that Scott did not believe that “selling out today for a premium is in the best interest of SDG&E; or its shareholders.” The document repeated Sievert’s concerns that the proposed merger “is not in the interest of the shareholders, employees or the community, and is not likely to have any significant beneficial impact on SDG&E; ratepayers.”

The SEC filing details salary and benefit agreements that Edison parent SCEcorp created for SDG&E; Chairman Thomas A. Page, Senior Vice President Stephen L. Baum, Vice President R. Lee Haney and Vice President Margot A. Kyd.

Page would serve as vice chairman of SCEcorp and president of its San Diego Division “at a salary and bonus rate not less than his salary at SDG&E; immediately prior” to the merger’s completion.

Equal Benefits, Bonuses

Page would also enjoy “benefits and bonuses” equal to those received by SCEcorp’s other senior officers. The agreement “in general is similar to Page’s current employment agreement with SDG&E;,” according to Edison spokesman Lewis Phelps.

Page would receive a “multiple of his salary” should he leave before the contract ends. Similar arrangements would be offered to Baum, Haney and Kyd if the merger is completed.

The employment contracts would become effective if the merger is approved during upcoming shareholder meetings. SDG&E; shareholders will vote on the proposed merger at April 18 meeting. Shareholders of SCEcorp, Edison’s Rosemead-based parent company, will vote April 20.