Eversource 2010 Annual Report Download - page 35

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recoverable in distribution company rates. The cost impact of any such laws, rules or regulations would be dependent upon the specific
requirements adopted and cannot be determined at this time. For further information, see Item 1, Business - "Other Regulatory and
Environmental Matters," in this Annual Report on Form 10-K.
As a holding company with no revenue-generating operations, NU parent is dependent on dividends from its subsidiaries,
primarily the Regulated companies, its bank facility, and its ability to access the long-term debt and equity capital markets.
NU parent is a holding company and as such, has no revenue-generating operations of its own. Its ability to meet its financial
obligations associated with the debt service obligations on its debt and to pay dividends on its common shares is largely dependent on
the ability of its subsidiaries to pay dividends to or to repay borrowings from NU parent; and/or NU parent’s ability to access its credit
facility or the long-term debt and equity capital markets. Prior to funding NU parent, the Regulated companies have financial
obligations that must be satisfied, including among others, their operating expenses, debt service, preferred dividends (in the case of
CL&P) and obligations to trade creditors. Additionally, the Regulated companies could retain their free cash flow to fund their capital
expenditures in lieu of receiving equity contributions from NU parent. Should the Regulated companies not be able to pay dividends to
or repay funds due to NU parent or if NU parent cannot access its bank facilities or the long-term debt and equity capital markets, NU
parent’s ability to pay interest, dividends and its own debt obligations would be restricted.
Risks Related to the Proposed Merger with NSTAR
We may be unable to satisfy the conditions or obtain the approvals required to complete the merger or such approvals may
contain material restrictions or conditions.
The merger is subject to approval by the shareholders of both NU and NSTAR and numerous other conditions, including the approval of
various government agencies. Governmental agencies may not approve the merger or such approvals may impose conditions on the
completion, or require changes to the terms of the merger, including restrictions on the business, operations or financial performance of
the combined company, which could be adverse to the company's interests. These conditions or changes could also delay or increase
the cost of the merger or limit the net income or financial prospects of the combined company.
We will be subject to business uncertainties and contractual restrictions while the merger is pending.
The work required to complete the merger may place a significant burden on management and internal resources. Management's
attention and other company resources may be focused on the merger instead of on day-to-day management activities, including
pursuing other opportunities beneficial to NU. In addition, while the merger is pending our business operations are restricted by the
Agreement and Plan of merger to ordinary course of business activities consistent with past practice, which may cause us to forgo
otherwise beneficial business opportunities.
We may lose management personnel and other key employees and be unable to attract and retain such personnel and
employees.
Uncertainties about the effect of the merger on management personnel and employees may impair our ability to attract, retain and
motivate key personnel until the merger is completed and for a period of time thereafter, which could affect our financial performance.
The merger may not be completed, which may have an adverse effect on our share price and future business and financial
results and we could face litigation concerning the merger, whether or not the merger is consummated.
Failure to complete the merger could negatively affect NU's share price, as well as our future business and financial results. In addition,
purported class actions have been brought against us, NSTAR and others on behalf of holders of NSTAR common shares. If these
actions or similar actions that may be brought are successful, the costs of completing the merger could increase, or the merger could
be delayed or prevented. We cannot make any assurances that we will succeed in any litigation brought in connection with the merger.
See Item 3, Legal Proceedings, in this Annual Report on Form 10-K for discussion of pending litigation related to the merger.
If the merger is not completed for certain reasons specified in the merger agreement, we may be required to pay NSTAR a termination
fee of $135 million plus up to $35 million of certain expenses incurred by NSTAR. In addition, we must pay our own costs related to the
merger including, among others, legal, accounting, advisory, financing and filing fees and printing costs, whether the merger is
completed or not. Further, if the merger is not completed, we could be subject to litigation related to the failure to complete the merger
or other factors, which may adversely affect our business, financial results and share price.
If completed, the merger may not achieve its intended results.
We entered into the merger agreement with the expectation that the merger would result in various benefits. If the merger is completed,
our ability to achieve the anticipated benefits will be subject to a number of uncertainties, including whether our businesses can be
integrated in an efficient and effective manner. Failure to achieve these anticipated benefits could adversely affect our business,
financial results and share price.