94-1810. Filings Under the Public Utility Holding Company Act of 1935 (``Act'')  

  • [Federal Register Volume 59, Number 19 (Friday, January 28, 1994)]
    [Unknown Section]
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    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 94-1810]
    
    
    [Federal Register: January 28, 1994]
    
    
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    SECURITIES AND EXCHANGE COMMISSION
    [Release No. 35-25975]
    
    
    Filings Under the Public Utility Holding Company Act of 1935 
    (``Act'')
    
    January 21, 1994.
        Notice is hereby given that the following filing(s) has/have been 
    made with the Commission pursuant to provisions of the Act and rules 
    promulgated thereunder. All interested persons are referred to the 
    application(s) and/or declaration(s) for complete statements of the 
    proposed transaction(s) summarized below. The application(s) and/or 
    declaration(s) and any amendments thereto is/are available for public 
    inspection through the Commission's Office of Public Reference.
        Interested persons wishing to comment or request a hearing on the 
    application(s) and/or declaration(s) should submit their views in 
    writing by February 14, 1994 to the Secretary, Securities and Exchange 
    Commission, Washington, DC 20549, and serve a copy on the relevant 
    applicant(s) and/or declarant(s) at the address(es) specified below. 
    Proof of service (by affidavit or, in case of an attorney at law, by 
    certificate) should be filed with the request. Any request for hearing 
    shall identify specifically the issues of fact or law that are 
    disputed. A person who so requests will be notified of any hearing, if 
    ordered, and will receive a copy of any notice or order issued in the 
    matter. After said date, the application(s) and/or declaration(s), as 
    filed or as amended, may be granted and/or permitted to become 
    effective.
    
    The Columbia Gas System, Inc. et al. (70-8317)
    
        The Columbia Gas System, Inc. (``Columbia''), a registered holding 
    company,\1\ and its nonutility subsidiary company Columbia LNG 
    Corporation (``Columbia LNG''), both of 20 Montchanin Road, Wilmington, 
    Delaware 19807, have filed an application-declaration under sections 
    6(a), 7, 9(a), 10, 12(b) and 12(c) of the Act and rules 42, 43, 45 and 
    46 thereunder.
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        \1\On July 31, 1991, Columbia and Columbia Gas Transmission 
    Corporation, a wholly owned subsidiary which is not an applicant-
    declarant hereunder, filed petitions for reorganization under 
    Chapter 11 of Title 11 of the United States Code with the United 
    States Bankruptcy Court for the District of Delaware (Case Nos. 91-
    803 and 91-804) and were thereupon continued in the management of 
    their respective businesses and possession of their respective 
    properties as debtors-in-possession.
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        Columbia LNG owns and is currently maintaining in a standby mode a 
    one Bcf per day liquefied natural gas (``LNG'') importation terminal at 
    Cove Point, Maryland (``Terminal''). Columbia LNG also owns and 
    operates an 87-miles, 36-inch natural gas pipeline from Cove Point to 
    Loudoun County, Virginia (``Pipeline,'' collectively, the 
    ``Facility''). Columbia owns 90.8% of the issued and outstanding common 
    stock of Columbia LNG, and Shell LNG Company (``Shell LNG'') owns the 
    balance (9.2%).
        Columbia LNG and PEPCO Enterprises, Inc. (``PEI''), a wholly owned 
    subsidiary of Potomac Electric Power Company (``PEPCO''), a public-
    utility company unaffiliated with Columbia, have agreed to develop a 
    peak shaving service (``Peaking'') at the Terminal.\2\ The business 
    plan contemplates the use of the Terminal's existing storage tanks, 
    vaporization equipment, and other plant infrastructure to provide the 
    Peaking service. A liquefaction facility (``Liquefaction Unit'') would 
    be constructed at the Terminal to liquefy natural gas received from 
    Peaking customers for storage in the existing tanks.
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        \2\A peak shaving facility has the ability to deliver large 
    amounts of gas on very short notice over brief periods of time for 
    use on occasions, such as very cold winter days or very hot summer 
    days, when such increased supplies are needed to meet the 
    requirements of heating or electric generating customers. Peaking 
    service is distinguishable from storage service because storage is 
    typically designed to provide meaningful deliveries of natural gas 
    on a more frequent basis over a longer period of time, e.g., 120 
    days.
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        Applicants-declarants propose that, a limited partnership between 
    Columbia LNG and a subsidiary of PEI, Cove Point Energy Company 
    (``Partnership'') will: (i) Own and operate the Facility; (ii) provide 
    Peaking and pipeline transportation services; and (iii) pursue the 
    implementation of an ongoing baseload LNG import trade.
        The Partnership agreement will provide for the contribution of the 
    Facility (including specified associated rights and liabilities) by 
    Columbia LNG to the Partnership, and for PEI's contribution to the 
    Partnership of up to $25 million which will consist of $10 million in 
    cash to the Partnership in the form of equity plus a $15 million loan 
    secured by the assets of the Partnership. The transfer of assets and 
    PEI's contribution of capital would take place at a closing to occur on 
    a date after all necessary regulatory approvals are obtained and 
    certain conditions precedent are satisfied (``Construction Capital 
    Closing''). Columbia LNG and PEI, either directly or through 
    subsidiaries, will each obtain a 50% interest and equal voting rights 
    in the Partnership. Applicants-declarants expect that Columbia LNG will 
    hold a limited partner interest and a general partner interest either 
    directly or indirectly through one or more new, wholly owned 
    subsidiaries of Columbia LNG (``CLG Subsidiaries'') that will be the 
    operator of, and/or hold partnership interests in, the Partnership.
        PEI's equity contributions and loan proceeds will be used for 
    recommissioning the Facility (including building the Liquefaction Unit 
    and related equipment), operating and maintenance expenses, and working 
    capital. Amounts in excess of $25 million necessary prior to the 
    completion of the recommissioning of the Facility, including any 
    necessary construction backstop and working capital, will be provided 
    by Columbia LNG and/or the CLG Subsidiaries, as an equity contribution, 
    up to $7.0 million.
        By Commission order dated September 29, 1993 (HCAR No. 25896) 
    (``September Order''), Columbia and Columbia LNG were authorized to 
    defer principal and interest payments on Columbia LNG's long- and 
    short-term debt for the period September 30, 1993 through February 28, 
    1994. The aggregate amount of such deferred principal and interest 
    payments is estimated to be $3.8 million.
        Columbia and Columbia LNG now propose to continue to defer 
    principal and interest payments on Columbia LNG's long- and short-term 
    debt for the period March 1, 1994 through December 31, 1994, or 
    Construction Capital Closing, whichever is earlier. The aggregate 
    amount of such principal and interest payments proposed to be deferred 
    is $7.9 million.
        Columbia and Columbia LNG propose to proceed immediately upon 
    Commission approval and prior to the issuance of the additional common 
    stock by Columbia LNG to reduce the par value of Columbia LNG's common 
    stock from $25 to $1 and increase the number of Columbia LNG's 
    authorized shares to up to 15,000,000.
        Accomplishing this reduction in par value would involve the 
    following steps: (i) Columbia LNG's certificate of incorporation would 
    be amended to reduce the common stock's par value from $25.00 per share 
    to $1.00 per share and to increase the number of Columbia LNG's 
    authorized shares to up to 15,000,000; and (ii) the value of Columbia 
    LNG's stated capital would be reduced by up to $24.00 per share of 
    common stock outstanding, and such amount would be transferred to 
    additional paid in capital.
        Columbia and Columbia LNG also propose to proceed immediately after 
    Construction Capital Closing with a recapitalization of Columbia LNG to 
    establish a 100% equity capital structure for Columbia LNG. To effect 
    this recapitalization, Columbia and Columbia LNG propose that Columbia 
    make a capital contribution to Columbia LNG of up to $48.1 million of 
    installment promissory notes and short-term debt. An additional amount 
    up to $3.9 million would also be contributed which would consist of 
    accrued interest to the effective date of the recapitalization deferred 
    pursuant to this application-declaration and the interest which was 
    deferred pursuant to the September Order.
        Columbia LNG also proposes to contribute the Facility to the 
    Partnership at Construction Capital Closing in exchange for a 50% 
    interest in the Partnership to be held directly by Columbia LNG and/or 
    indirectly through one or more of the CLG Subsidiaries.
        Further, Columbia LNG and Columbia propose that through December 
    31, 1995, Columbia LNG offer to issue and sell to Columbia and Shell 
    LNG, in proportion to their respective common stock holdings in 
    Columbia LNG, up to 7,000,000 shares of common stock, $1 par value, in 
    an aggregate amount up to $7.0 million. The up to $7.0 million, 
    together with funds on hand and anticipated tax benefits, will (i) 
    provide for the continued operation and maintenance of the Facility 
    pending Columbia LNG's contribution of the Facility to the Partnership; 
    (ii) provide for continued expenditure of developmental costs prior to 
    Construction Capital Closing; (iii) provide for any direct and indirect 
    Columbia LNG cash capital contributions to the Partnership, including 
    the recommissioning costs, if any, and (iv) provide for all other 
    operating requirements of Columbia LNG through December 31, 1995. If 
    Shell LNG chooses not to purchase any common stock, the entire amount 
    up to $7.0 million will be purchased by Columbia, with a corresponding 
    increase in Columbia's ownership of Columbia LNG. Some or all of the 
    additional developmental costs incurred prior to Construction Capital 
    Closing may be reimbursed to Columbia LNG by Cove Point Energy Company.
        Columbia LNG also proposes to create and fund the CLG Subsidiaries 
    which will be operator of, and/or hold interests as partners in, the 
    Partnership. At the time of the Construction Capital Closing, Columbia 
    LNG anticipates transferring all current Columbia LNG employees to one 
    or more of the CLG Subsidiaries which will hire additional employees as 
    necessary to undertake day-to-day responsibility for operation of the 
    various Partnership assets. The Partnership will reimburse the operator 
    for all costs incurred by it in such operations and pay the operator 
    certain management fees. After this transfer, Columbia LNG's principal 
    assets will consist of its Partnership interest and its common stock 
    holdings in the CLG Subsidiaries. To fund the CLG Subsidiaries' 
    operating requirements through December 31, 1995, Columbia LNG proposes 
    to acquire from the CLG Subsidiaries in the aggregate up to $1.0 
    million of common stock, $1 par value, to be issued and sold by the CLG 
    Subsidiaries.
    
        For the Commission, by the Division of Investment Management, 
    pursuant to delegated authority.
    Margaret H. McFarland,
    Deputy Secretary.
    [FR Doc. 94-1810 Filed 1-27-94; 8:45 am]
    BILLING CODE 8010-01-M
    
    
    

Document Information

Published:
01/28/1994
Department:
Securities and Exchange Commission
Entry Type:
Uncategorized Document
Document Number:
94-1810
Pages:
0-0 (None pages)
Docket Numbers:
Federal Register: January 28, 1994, Release No. 35-25975