[Federal Register Volume 59, Number 19 (Friday, January 28, 1994)]
[Unknown Section]
[Page ]
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