_____________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
Amendment No. 44 to
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
____________
KANSAS CITY POWER & LIGHT COMPANY
(Name of Subject Company)
KANSAS CITY POWER & LIGHT COMPANY
(Name of Person Filing Statement)
Common Stock, no par value
(Title of Class of Securities)
____________
485134100
(CUSIP Number of Class of Securities)
____________
Jeanie Sell Latz, Esq.
Senior Vice President-Corporate Services
Kansas City Power & Light Company
1201 Walnut
Kansas City, Missouri 64106-2124
(816) 556-2200
(Name, address and telephone number of person authorized
to receive notice and communications on behalf
of the person filing statement)
____________
Copy to:
Nancy A. Lieberman, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000
_____________________________________________________________
This statement amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 of Kansas
City Power & Light Company, a Missouri corporation ("KCPL"),
filed with the Securities and Exchange Commission (the
"Commission") on July 9, 1996, as amended, (the "Schedule 14D-
9"), with respect to the exchange offer made by Western
Resources, Inc., a Kansas corporation ("Western Resources"), to
exchange Western Resources common stock, par value $5.00 per
share, for all of the outstanding shares of KCPL common stock, no
par value ("KCPL Common Stock"), on the terms and conditions set
forth in the prospectus of Western Resources dated July 3, 1996
and the related Letter of Transmittal.
Capitalized terms used and not defined herein shall have the
meanings assigned to such terms in the Schedule 14D-9.
Item 9. Material to be Filed as Exhibits.
The following Exhibit is filed herewith:
Exhibit 122 Information distributed to brokers commencing
October 11, 1996.
SIGNATURE
After reasonable inquiry and to the best of her knowledge
and belief, the undersigned certifies that the information set
forth in this Statement is true, complete and correct.
KANSAS CITY POWER & LIGHT COMPANY
By: /s/Jeanie Sell Latz
Jeanie Sell Latz
Senior Vice President-Corporate Services
Dated: October 11, 1996
EXHIBIT INDEX
Exhibit No. Description Page
__________ _____________________________________________ ____
Exhibit 122 Information distributed to brokers commencing
October 11, 1996.
[KCPL logo]
WHY SHAREHOLDERS SHOULD NOT TENDER
SHARES TO WESTERN RESOURCES
October 1996
CERTAIN FORWARD-LOOKING INFORMATION
This presentation contains certain forward-looking
information. The Private Securities Litigation Reform Act of
1995 provides a new "safe harbor" for forward-looking information
to encourage companies to provide prospective information about
their companies without fear of litigation so long as such
information is identified as forward-looking and is accompanied
by meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from those
projected in the information. KCPL identifies the following
important factors which could cause KCPL's actual results to
differ materially from any such results which might be projected,
forecast, estimated or budgeted by KCPL in forward-looking
information. All of such factors are difficult to predict and
many of which are beyond the control of KCPL. Accordingly, while
KCPL believes that the assumptions underlying the forward-looking
information are reasonable for purposes of the development of
estimates of revenue enhancements and cost savings, there can be
no assurances that such assumptions will approximate actual
experience or that all such revenue enhancements and cost savings
will be realized or that resulting beliefs as to potential stock
values will prove to be correct, and in such event, actual
results could differ materially from the predictions herein.
These important factors include: (a) future economic conditions
in the regional, national and international markets in which KCPL
competes; (b) state, federal and foreign regulation and possible
additional reductions in regulated electric rates; (c) weather
conditions; (d) financial market conditions, including, but not
limited to, changes in interest rates; (e) inflation rates; (f)
changing competition, including, but not limited to, the
deregulation of the United States electric utility industry, and
the entry of new competitors; (g) the ability to carry out
marketing and sales plans; (h) the ability to achieve generation
planning goals and the occurrence of unplanned generation
outages; (i) the ability to enter new markets successfully and
capitalize on growth opportunities in non-regulated businesses;
and (j) adverse changes in applicable laws, regulations or rules
governing environmental, tax or accounting matters.
The following materials contain certain statements of
opinion and belief.
2
WESTERN RESOURCES' PROPOSAL
3
CONDITIONS TO WESTERN'S EXCHANGE OFFER
- - 90% OF KCPL SHARES MUST BE TENDERED
- If less than 90% is tendered, Western must wait until
the 1997 annual KCPL shareholders meeting and attempt
to gain the majority of shareholder votes to secure
control of KCPL's board .
- If Western gets above 90% tendered, they can merge
without a shareholder vote, pending regulatory
approval.
- - WESTERN CAN AMEND THE TERMS OR TERMINATE TRANSACTION ANY
TIME PRIOR TO CLOSING -- regulatory approvals could take
several months possibly delaying closing well into 1998 and
delaying the exchange of stock until then.
4
CONDITIONS TO WESTERN'S EXCHANGE
OFFER -- CONTINUED
- - EXCHANGE OFFER MUST RECEIVE POOLING OF INTERESTS TREATMENT;
but the exchange offer will permit participants in KCPL's
Long Term Incentive Plan to receive cash payments in lieu of
securities that are essentially the same as common stock,
violating paragraph 47 (b) of opinion 16 of the Accounting
Principles Board and thereby prohibiting pooling of
interests
5
WHY KCPL REJECTED THE WESTERN PROPOSAL:
- - KCPL believes the Western proposal is based on faulty
synergies and savings retention assumptions and therefore is
not credible -- see pages 7 through 10
- - Significant rate reductions for Western could adversely
impact Western's stock price and ability to deliver promised
dividends -- see pages 11 and 12
- - Rate disparity between KGE/KPL customers see page 11
- - Western has stated that no layoffs would result from its
offer but its synergy analysis filed with the KCC indicates
531 reductions and assumes savings available by January 1,
1998
- - As a result of its acquisition adjustment of KGE, Western
must amortize the $801 million acquisition adjustment at the
rate of approximately $20 million per year over 40 years
- - KCPL believes a KCPL/Western merger would create a company
ill-suited for industry's future -- see page 16
- - Concentrated Wolf Creek asset = concentrated business risk
(KCPL owns 47% of the Wolf Creek nuclear plant, and a
combined KCPL/Western entity would own 94% of Wolf Creek.)
6
KCPL believes WR used faulty assumptions
OUR VIEWS ON WESTERN'S SYNERGIES ANALYSIS Western's synergy
analysis is set forth in a report filed with the Kansas
Corporation Commission dated April 1996 and entitled "Project
Royal". KCPL analyzed this report and found that such report
used public data regarding KCPL and made certain assumptions
regarding KCPL. Based on a more complete understanding of its
own business, KCPL formed certain beliefs as to inaccuracies in
Western's analysis. Such beliefs are summarized below.
Estimated
Overstatement
SAVINGS CATEGORY ($MM) Comments
- - Procurement Savings [$150] - Overstated due to universe
of materials upon which
savings are calculated and
discount rate applied (e.g.,
universe includes generation
and small volume items)
- Forecasts not based on any
transaction-specific data,
but on claimed experience in
prior transactions.
- FERC has criticized similar
projections by Western's
consultant as
"unsubstantiated".
- Difference between Western's
and KCP&L's/UCU's
procurement estimates
accounts for nearly half of
the difference in total cost
savings estimates.
- - Labor
- Irrelevant and [$110] - Relied on previous studies
statistically and assumptions unrelated to
invalid benchmarks actual KCPL data
- Salary and benefits [$27] - Assumed a 34% benefit rate
calculations for KCP&L (KCP&L rate is (26%).
- Aggressive salary and
benefits escalation of 4.3%
(KCP&L believes 3.5% is the
rate which Deloitte and
Touche generally uses).
- Implementation of [$43] - Assumes implementation of
synergies all synergies on January 1,
1998.
- Projected force reduction
and timing reduction
contradicts "no layoff
statement."
- - Customer Information [$100] - Ignored actual KCPL MIS
Systems and Data costs and configuration.
Center Operation
Costs
- - Transaction Costs [$88] - Left out of calculation.
TOTAL OVERSTATEMENT [$518]
7
KCPL believes WR used faulty assumptions
COMPARISON OF CLAIMED SYNERGIES IN RECENT UTILITY MERGERS
In Descending Order by Estimated Cost Savings as a Percent of Combined Revenues
Estimated Cost Savings: As a Percent of Combined:
__________________________________ _________________________________
Aggregate # of Per Year Pre-Tax
($MM) Years ($MM) Revenues O&M Income
_____________ ______ ________ _________ ____ _________
PSI Resources/ $1,500 10 $150 5.7% 9.3% 34.4%
Cinn. G&E
Wisconsin Energy/ $2,000 10 $200 4.8% 7.9% 27.3%
Northern States Power
KCP&L/ $1,000 10 $100 4.0% 7.1% 22.6%
WESTERN RESOURCES
Sierra Pacific Res./ $450 10 $45 3.9% 6.2% 22.1%
Wash. Water Power
IES/Interstate/WPL $700 10 $70 3.5% 5.4% 27.0%
Gulf States/Entergy $1,700 10 $170 3.0% 5.4% 18.4%
Potomac Electric/ $1,300 10 $130 2.7% 4.8% 17.5%
Baltimore G&E
Southwestern P.S./ $770 10 $77 2.7% 3.9% 21.6%
P.S.Co. of Colorado
Iowa-Illinois G&E/ $400 10 $40 2.6% 3.9% 18.5%
Midwest Resources
Washington Energy/ $370 10 $37 2.3% 3.8% 22.3%
Puget Sound P&L
CIPSCO/Union $570 10 $57 1.8% 3.4% 9.0%
Electric
Kansas G&E/ $140 5 $28 1.7% 2.6% 18.7%
Kansas P&L
UTILICORP/KCP&L $600 10 $60 1.6% 2.1% 19.1%
Source: As disclosed in merger proxies for respective transactions.
8
KCPL believes WR used faulty assumptions
KCPL BELIEVES WESTERN'S CLAIM OF RETAINING
70% OF SYNERGIES IS UNREALISTIC
- - Implicit assumption in KCC filing that Western would be
allowed to retain 70% of the synergy savings
- - This is inconsistent with applicable precedent (50%)
- KCC, in order authorizing KGE merger, required merger
savings (above acquisition adjustment, not applicable
to Western's proposal to KCPL) to be shared 50/50
between customers and stockholders
- Missouri Public Service Commission staff is
recommending an equal sharing of merger savings in the
UEP/CIPSCO merger
9
KCPL believes WR used faulty assumptions
KCC ECHOES KCPL'S CONCERNS WITH A WESTERN MERGER
The Kansas Corporation Commission (KCC), Western Resources'
primary regulatory agency, has echoed KCPL's concerns regarding
a merger with Western. In a September 30, 1996 filing with the
Federal Energy Regulatory Commission (FERC), the KCC exhibited
skepticism about Western's prospects for success.
- - THERE HAS BEEN NO SHAREHOLDER APPROVAL OF A WESTERN MERGER --
"The absence of shareholder approval in this case makes
all assertions about this merger speculative."
- - THE KCC QUESTIONS WESTERN'S COST SAVINGS ESTIMATES AND
MERGER BENEFITS -- "The numbers on savings appear to be
based on [Western synergy consultant's] standard model.
Whether the results of that model can be implemented in
practice is unknown...."
- - WESTERN NEEDS TO PROVE THE BENEFITS/COST SAVINGS OF JOINT
DISPATCH, LOAD DIVERSITY AND FUEL PROCUREMENT CAN BE
ACHIEVED ONLY THROUGH A MERGER WITH KCPL
10
Potential for significant rate reductions
WESTERN FACES SIGNIFICANT RATE REDUCTIONS
- - Western originally filed for a $8.7 million yearly cash rate
reduction.
- - In an agreement with the KCC staff, Western committed to a
$64.7 million cash rate reduction.
- - ON OCTOBER 2, 1996 THE KCC REJECTED THE PROPOSED SETTLEMENT
AS UNREASONABLE AND INDICATED THAT A RATE REDUCTION OF
BETWEEN $71.5 MILLION AND $97 MILLION COULD BE REASONABLE.
The KCC also expressed concern over rate disparity between
the Topeka and Wichita areas.
- - KCPL believes these reduction could adversely impact
Western's stock price and its ability to deliver promised
dividends.
11
The following is not a prediction as to specific future market values Potential for significant rate reductions
and should be read in conjunction with page 3 hereof. Specific future
market values cannot be predicted with certainty
WE BELIEVE WESTERN RATE REDUCTIONS WILL RESULT IN LOWER VALUES FOR SHAREHOLDERS
$8.7 MM $64.7 MM $84 MM Incre-
Rate Red/ Reduction/ Reduction/ mental
WR KCC/WR KCC Net Depr
Rate Case Scenarios: Proposal* Stipulation** Proposal*** Increases
_________________________________ ________ ___________ _________ _________
Pro forma 1998 EPS $2.52(1) $2.44(4) $2.35(5)
Less: Synergy adjustment -See page 13 0.11 0.11
_____ _____
Adjusted pro forma 1998 EPS $2.33 $2.24
Cash flow impact ($48MM) ($60MM)
Combined dividend payout(2) 84.9% 91.8% 95.5%
Implied WR price at P/E of 11.5(3) $28.98 $26.80 $25.76
Implied KCPL share value $31.00 $29.48 $28.34
(1) As reported in Amendment No. 2 to S-4 dated July 3, 1996 filed by Western
with the SEC; EPS based on exchange ratio of 1.01224
(2) Using $2.14 dividend rate reported in Amendment No. 2 to Western S-4
(3) Utility industry average as calculated in Merrill Lynch report dated June
24, 1996
(4) Represents an $0.08 reduction from Western's estimated 1998 EPS of $2.52.
In its agreement with the KCC staff, Western committed to $64.7 million in
case rate reductions in 1998 and agreed that certain other depreciation
adjustments would be considered by the KCC staff in the future. KCPL
believes the difference between this $64.7 million stipulated revenue
reduction and Western's original regulatory proposal negatively impacts
earnings before income taxes by approximately $17 million. When adjusted
by an effective tax rate of 40%, the resulting after-tax effect is $10.2
million. This results in a reduction to earnings per share of
approximately $0.08, based on 128,136,000 shares outstanding.
(5) On October 2, 1996, the KCC rejected the rate reduction agreement as
unreasonable and recommended a rate reduction of between $71.5 million and
$97 million. The mid point of this range represents an additional $19
million reduction or $0.09 per share.
* As filed with the KCC in the WR stand-alone regulatory plan.
** Per Western Resources' stipulation agreement with KCC Utilities Division
staff
*** On October 2, 1996, the KCC rejected the rate reduction agreement as
unreasonable. The KCC indicated that a settlement calling for a rate
reduction of between $71.5 million and $97 million could be reasonable.
$84 million represents the midpoint in this range.
12
WE BELIEVE WESTERN OVERSTATED SYNERGY SAVINGS
Western first year claimed savings $70,421 (1)
Percentage reduction X 1/3 (2)
_______
Adjustment to Western's synergies 23,474
Tax affect (1-40%) X .60
_______
After-tax adjustment $14,084
Shares outstanding 128,136 (1)
EPS adjustment for overstated savings $0.11
(1) As reported in Amendment No. 2 to S-4 dated July 3,
1996 filed by Western with the SEC
(2) See page 7 for our views on Western's synergies
analysis -- we believe Western's synergies could be
overstated by as much as approximately 50%.
13
ANALYSIS OF COLLAR
[graph]
Market Value of WR Stock/KCPL Share
- Price 9-11-96 $28 5/8
- KCPL shareholders would receive a maximum of 1.1 WR shares
- Participate in downside if WR stock price falls below $28.18
- KCPL shareholders would receive a minimum of 0.933 WR share
- Participate in upside only if WR stock price rises above $33.23
14
ANALYSIS OF COLLAR
[graph]
Dividend of WR Stock/KCPL Share
- Price 9-11-96 $28 5/8
- KCPL shareholders would receive a maximum of 1.1 WR shares
- Receive maximum dividends of $2.35 per KCPL share
- KCPL shareholders would receive a minimum of 0.933 WR share
- Receive minimum dividends of $2.00 per KCPL share
15
KCPL believes Western is an ill-suited merger partner
PROFILE OF WESTERN
Western
_______
Geographic Concentrated in eastern and
Diversification: central Kansas
Foreign Utility None
Operations:
IPP Business: Acquired the Wing Group, with options to
buy into overseas projects; no equity in
any operating (foreign) power projects.
Energy Marketing: Modest gas marketing operation
established in 1995; applied for FERC
electric marketing license.
Customer Centered Planned pilot program for 32,000
Technology drive-by meters; passive investment in
ADT Ltd.
16
KCPL'S PLANS FOR ENHANCING
SHAREHOLDER VALUE - SUMMARY
17
[chart]
HISTORICAL GROWTH IN SHAREHOLDER VALUE
KCPL Util Index
1986 1,335.4 1,317.5
1987 1,289.8 1,196.6
1988 1,752.1 1,415.3
1989 2,100.5 1,788.4
1990 2,296.2 1,773.2
1991 3,298.8 2,283.5
1992 3,377.9 2,486.7
1993 3,625.6 2,718.2
1994 3,953.3 2,430.1
1995 4,732.9 3,109.8
10 Yr. Avg. Annual Returns
_______________________________
KCPL 17.7%
D&P Index 13.1%
Utility Index represents Duff & Phelps (D&P) Electric Utility Index
18
EARNINGS GROWTH STRATEGIES
OVERVIEW
The KCPL Board is reviewing all its options to ensure KCPL can:
- Successfully compete in a deregulated environment
- Become a formidable competitor in the evolving energy
services industry
- Provide opportunities for significant earnings growth
in three areas:
- Core utility business
- Marketing of new products and services
- Unregulated subsidiaries - KLT Inc.
19
SUMMARY
- - KCPL's board continues to recommend that shareholders do not
tender shares -- while the board considers its options, KCPL
is proceeding with the implementation of its strategic
business plan to continue adding share value.
- Western/KCPL combination would be a company ill-suited
for the future -- see page 16.
- Purported merger savings are not credible -- see page 7.
- Western faces significant rate reductions -- see page 11.
- Western needs to address their own financial and
operational issues -- see pages 11 through 13.
- KCPL believes these issues continue to undermine
Western's ability to deliver their promised dividend or
share price -- see pages 11 through 13.
20
