EXHIBIT (8)-1
[LETTERHEAD OF WINTHROP, STIMSON, XXXXXX & XXXXXXX]
January 25, 1996
Baltimore Gas and Electric Company
Liberty and Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Re: Agreement and Plan of Merger by and among
Baltimore Gas and Electric Company, Potomac
Electric Power Company and Constellation Energy
Corporation Dated as of September 22, 1995
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Ladies and Gentlemen:
You have requested our opinion as to the United States federal income tax
consequences to Baltimore Gas and Electric Company, a corporation organized
under the laws of the State of Maryland ("BGE"), Constellation Energy
Corporation, a corporation organized under the laws of the State of Maryland and
the Commonwealth of Virginia (the "Company"), and the shareholders of BGE,
resulting from the consummation of the merger of BGE and Potomac Electric Power
Company, a corporation organized under the laws of the District of Columbia and
the Commonwealth of Virginia ("PEPCO"), with and into the Company pursuant to
the Agreement and Plan of Merger by and among BGE, PEPCO and the Company Dated
as of September 22, 1995 (the "Merger Agreement").
As counsel to BGE, we have assisted in the preparation of the Joint Proxy
Statement/Prospectus to be used in connection with the Merger, including the
descriptions of certain federal income tax consequences resulting therefrom
contained therein under the headings "Certain Federal Income Tax Consequences of
the Merger."
Except as otherwise provided, capitalized terms not defined herein have the
meanings set forth in the Merger Agreement or in the certificates dated on or
about the date hereof, which have been delivered to us by BGE, PEPCO and the
Company for purposes of this opinion and which contain certain representations
of BGE, PEPCO and the Company (the "Officer's Certificates").
The descriptions in the Joint Proxy Statement/Prospectus under the headings
"Certain Federal Income Tax Consequences of the Merger" and our opinion as
stated herein are based upon and subject to:
(i) the Merger being effected in the manner described in the Joint Proxy
Statement/Prospectus and in accordance with the provisions of the Merger
Agreement;
(ii) the accuracy of the representations made to us by BGE, PEPCO and
the Company in their respective Officer's Certificates, and their continuing
accuracy at all times through the Effective Time of the Merger;
(iii) the accuracy and completeness of the statements concerning the
Merger set forth in the Joint Proxy Statement/Prospectus, including the
purposes of BGE, PEPCO and the Company for consummating the Merger; and
(iv) the accuracy of the information concerning the Merger that has come
to our attention during our engagement.
Based on our examination of the foregoing items and subject to the
limitations set forth herein, we are of the opinion that, under current law, for
United States federal income tax purposes, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"). Accordingly:
(i) BGE and the Company will each be a party to a reorganization within
the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by BGE or the Company in the
Merger;
(iii) no gain or loss will be recognized by the shareholders of BGE upon
their receipt of (a) Company Common Stock in exchange for BGE Common Stock,
(b) Company Preferred Stock in exchange for BGE Preferred Stock or (c)
Company Preference Stock in exchange for BGE Preference Stock;
(iv) the tax basis of the shares of capital stock of the Company received
by the shareholders of BGE will be the same as the tax basis of their shares
of capital stock of BGE exchanged therefor; and
(v) the holding period of the shares of capital stock of the Company in
the hands of the shareholders of BGE will include the holding period of
their shares of capital stock of BGE exchanged therefor, provided such
shares of capital stock of BGE are held as capital assets at the Effective
Time.
This opinion does not address state, local or foreign tax consequences that
may result from the Merger. In addition, no opinion is expressed as to any
United States federal income tax consequence of the Merger except as
specifically set forth herein and this opinion may not be relied upon except
with respect to the consequences specifically discussed herein.
We hereby consent to (i) the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and (ii) the
reference to our firm under the headings "Certain Federal Income Tax
Consequences of the Merger" in the Joint Proxy Statement/Prospectus that
constitutes part of the Registration Statement. In giving such consent, we do
not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Winthrop, Stimson, Xxxxxx &
Xxxxxxx
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