[Federal Register Volume 59, Number 199 (Monday, October 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25602]
[[Page Unknown]]
[Federal Register: October 17, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26140]
Filings Under the Public Utility Holding Company Act of 1935
(``Act'')
October 7, 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 October 31, 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.
Energy Initiatives, Inc., et al. (70-8369)
Energy Initiatives, Inc. (``EII''), One Upper Pond Road,
Parsippany, New Jersey 07054, a nonutility subsidiary of General
Portfolios Corporation (``GPC''), a nonutility subsidiary of General
Public Utilities Corporation (``GPU''), and GPU, 100 Interpace Parkway,
Parsippany, New Jersey 07054, a registered holding company, have filed
a post-effective amendment under Sections 6(a), 7, 9(a), 10 and 12(b)
and Rules 45, 53 and 54 to their application-declaration filed under
Sections 6(a), 7, 9(a), 10, 12(b) and 13(b) of the Act and Rules 45,
51, 90 and 91 thereunder.
By order dated May 17, 1994 (HCAR No. 26053) (``May 1994 Order''),
the following proposals were authorized: (i) for EII (a) to acquire
through December 31, 1995 all of the stock of North Canadian Power Inc.
(``NCP''), a company engaged exclusively in the business of owning or
leasing and operating qualifying cogeneration facilities (``QFs''), as
defined in the Public Utility Regulatory Policies Act of 1978, as
amended (``PURPA''), and developing other QFs and electric wholesale
generators (``EWGs''), as defined in Section 32 of the Act, for a total
of $72 million (``Purchase Price'') and (b) to enter into assumption
agreements obligating EII to make payments up to $25 million; and, (ii)
for GPU (a) to make up to $72 million in capital contributions or loans
to EII through December 31, 1995 to pay the Purchase Price and (b) to
assume certain guarantees associated with QFs and/or unconditionally
guaranty EII's obligations and to make additional capital contributions
up to a maximum aggregate amount of $25 million; and, (iii) for EII to
issue, sell and renew through December 31, 2004 notes in an aggregate
principal amount of $25 million, and for GPU to unconditionally
guaranty the notes and EII's other related obligations. The May 1994
Order reserved jurisdiction over EII's proposals to (i) issue and sell
$2.5 million of unsecured promissory notes to banks and accept
guarantees or supporting agreements from GPU, and (ii) provide services
to the QF projects as managing general partner under an exception to
Section 13 under the Act.
It is stated that, on June 13, 1994, EII acquired the common stock
of NCP pursuant to the May 1994 Order. At the closing, GPU made a cash
capital contribution to EII in order to fund the amount of the purchase
price then being paid ($53,517,590). The balance of the purchase price
(approximately $20 million) remains deposited in escrow pending receipt
of required third party consents. Since the acquisition, EII and GPU
have reached an agreement in principal on the terms and conditions of a
loan agreement (``Loan Agreement'') with a group of lenders for whom
Citibank, N.A. would initially act as agent.
EII and GPU now request the authority to enter into the Loan
Agreement and a support agreement (``Support Agreement''). The Loan
Agreement would permit borrowings by EII in an aggregate amount not to
exceed $30 million. Notes issued under the Loan Agreement would bear
interest at either (i) the higher of Citibank, N.A.'s prime rate and
the Federal Funds Rate plus 50 basis points (``Alternative Base
Rate''), or (ii) the interest rate per annum at which deposits in U.S.
dollars are offered by the principal office of the reference bank
(initially, Citibank, N.A.) in London, England to prime banks in the
London interbank market, plus additional costs for reserves, if
applicable (``Eurodollar Rate'') plus 50 basis points.
Issuance of the Notes would be subject to certain conditions, and
the Notes would be subject to acceleration under certain circumstances.
Borrowings bearing interest at the Alternate Base Rate would be
prepayable at any time without penalty. Borrowings bearing interest at
the Eurodollar Rate would also be prepayable, subject to payment of
certain costs incurred by the lenders in connection with the
prepayment.
EII would agree to pay the lenders under the Loan Agreement a
facility fee of 37.5 basis points per annum and a one-time commitment
fee payable at the initial closing of five basis points.
EII and GPU also propose that the Loan Agreement will include a
letter of credit (``L/C'') facility. Pursuant to this facility, EII
would be able to request any lender which is a party to the Loan
Agreement to issue an L/C, in a maximum aggregate face amount for all
L/Cs outstanding of up to $15 million. The lender would, however, have
the discretion not to issue an L/C. The aggregate amount that EII could
borrow under the Loan Agreement would be reduced by the face amount of
the outstanding L/Cs. Drawings on an L/C would initially bear interest
at the Alternate Base Rate. If EII elects not to immediately reimburse
the issuing bank, the drawing would be treated as a borrowing under the
Loan Agreement. EII would be required to pay the issuing bank a letter
of credit fee of .50% per annum on the face amount of the L/C.
The Loan Agreement would have an initial term of three years,
subject to extension for one year in the sole discretion of the
lenders. Upon termination, EII would be permitted to repay any then
outstanding loans over a two year period in quarterly installments, but
EII would not be permitted to re-borrow during such period.
To induce the lenders to enter into the Loan Agreement, GPU
proposes to deliver to the lenders a Support Agreement. Among other
things, that agreement would provide that GPU would maintain 100%
ownership of EII and would use its best efforts to arrange for
repayment of the Notes when they become due and payable.
Since substantially all of the NCP purchase price has heretofore
been funded with a cash capital contribution from GPU, EII now proposes
to use the proceeds of the sale of the Notes from time to time in its
general business activities, and, in particular: (i) to fund
preliminary project development and administrative activities in
connection with EII's investments in QFs and small power production
facilities, and defined in PURPA, and EWGs and foreign utility
companies (``FUCOs''), as defined in Section 33 of the Act, as may be
authorized in File No. 70-7727; (ii) to acquire securities or other
interests in QFs, EWGs or FUCOs, provided, however, that EII will not,
without prior Commission authorization, acquire (a) an interest in a QF
(which is not also an LWG) or (b) except as may be permitted by
Commission rule, regulation or order, an indirect ownership interest in
a FUCO (which is not also an EWG); and (iii) to reimburse GPU for a
portion of its funding of the NCP purchase price.
EUA Cogenex Corporation (70-8473)
EUA Cogenex Corporation (``Cogenex''), a wholly-owned subsidiary of
Eastern Utilities Associates (``EUA''), both at P.O. Box 2333, Boston,
Massachusetts 02107, a registered holding company, has filed an
application-declaration under Sections 6(a), 7, 9(a), 10, 12(b) and
12(c) of the Act and Rules 43, 45, 46 and 54 thereunder.
Cogenex now requests authorization to form and acquire a subsidiary
company for the purpose of acquiring certain assets of a company
engaged in related business activities and funding those activities.
Specifically, authorization is now sought for: (1) Cogenex to form and
acquire a wholly-owned subsidiary to be named EUA Citizens Conservation
Services, Inc. (``CCS''); (2) for CCS to issue common stock to Cogenex;
(3) for Cogenex to acquire such common stock from CCS; (4) for Cogenex
to make loans to CCS; (5) for CCS to issue notes to Cogenex to evidence
such loans; (6) for CCS to issue preferred stock; (7) for CCS to redeem
such preferred stock pursuant to the terms thereof; (8) for CCS to
acquire certain assets of Citizens Conservation Corporation (``CCC''),
a nonaffiliated,tax-exempt Massachusetts corporation; and, (9) for CCS
to assume certain liabilities from CCC.
It is stated that CCS will primarily specialize in energy services
for residential multi-family housing. The services will include energy
audits, technical assistance to owners/residents regarding energy costs
and end uses, assistance with financing projects, and energy
performance contracting similar to the services Cogenex currently
provides to its commercial and institutional customers. CCS will also
contract directly with utilities to implement residential low-income
multi-family demand-side management programs and will provide program
design consultation to utilities, governments and private entities.
The initial authorized capitalization of CCS shall be 200,000
shares of common stock, $.01 par value per share, and 7,500 shares of
preferred stock, $.01 par value (``Preferred Stock'').
Cogenex requests authorization: for CCS to issue and for Cogenex to
acquire 10,000 shares of CCS' common stock at a purchase price of $100;
and for CCS to issue to CCC 7,500 shares of the Preferred Stock. The
Preferred Stock shall be issued to CCC in exchange for, and Cogenex
requests authority for: the transfer of certain assets of CCC to CCS,
including the rights to prospective business opportunities of CCC, and
the rights to contracts to which CCC is a party, pursuant to a
memorandum of understanding between Cogenex and CCC dated September 2,
1994 (regarding the proposed acquisition of certain of CCC's assets),
and the goodwill associated with such assets (``Assets''); and CCC
entering into a noncompete and cooperation agreement with CCS. Cogenex
also requests authority for CCS to assume the obligations of CCC with
respect to the Assets.
It is stated that the acquisition of the Assets will allow Cogenex
to indirectly expand its customer base by, among other things, entering
into the public housing sector and will provide the public housing
sector with the benefit of Cogenex's experience and expertise in energy
conservation and management. Cogenex anticipates a synergistic
relationship with CCS whereby CCS will provide a new outlet for the
services and products of EUA Day and EUA NOVA (both divisions of
Cogenex) and for the engineering services of Cogenex.
The Preferred Stock shall be non-redeemable until January 1, 2002
or upon the seventh anniversary of the execution of the definitive
agreement (``Definitive Agreement'') between Cogenex, CCS and CCC
(which shall fully set forth the terms and conditions of CCS'
acquisition of CCC's Assets), whichever is later. Upon such date, the
Preferred Stock may be redeemed at Cogenex's sole discretion at a
redemption price equal to $100 per share plus then-accrued dividends,
if any, plus an additional amount, if any, determined in accordance
with a specific formula. The Preferred Stock shall be entitled to an
annual dividend per share at a rate equal to 33% of the net income of
CCS divided by 7,500. The Preferred Stock dividends shall be paid
annually when and as declared by the board of directors of CCS, but not
later than June 30th of the calendar year in which they are to be paid.
The first such year for which dividends shall be paid shall be the year
ending December 31, 1995. Dividends shall be noncumulative and shall be
paid only from current earnings, if any.
Authorization is also requested: (i) for Cogenex to make loans to
CCS in an aggregate amount not to exceed $5 million outstanding at any
one time for the purpose of funding the development of projects
(``Development Loans''); (ii) for CCS to issue notes to Cogenex for the
Development Loans; (iii) for Cogenex to make loans to CCS in an
aggregate amount not to exceed $2.5 million outstanding at any one time
for working capital purposes (``Working Capital Loans''); and (ii) for
CCS to issue notes to Cogenex for the Working Capital Loans. The
aggregate amount outstanding at any one time for the Development Loans
and the Working Capital Loans combined shall not exceed $7.5 million.
Provision of credit shall be made at Cogenex's sole discretion and
shall be provided upon such terms, conditions and rates as is
customarily provided to affiliates of Cogenex. The Development Loans,
and the Working Capital Loans shall (i) mature within twelve months of
their issuance and be renewable from time to time (ii) be prepayable in
whole or in part without penalty and (iii) shall earn interest at a
rate equal to the lesser of Cogenex's short-term borrowing costs or the
prime rate on the date of issuance. The source of this financing will
be short-term borrowings by Cogenex under the EUA system's existing
bank lines of credit, internally generated cash, repayment of funds
advanced to CCS, proceeds of future long-term debt to be issued by
Cogenex and/or purchases of stock, capital contributions, loans and/or
advances by EUA previously authorized, or to be authorized, by the
Commission. CCS shall repay the Development Loans and the Working
Capital Loans from internally generated funds, permanent project
financing and the issuance of additional notes for Development Loans
and Working Capital Loans, as authorized under this application-
declaration. CCS shall not incur any indebtedness in the form of
permanent project financing, nor use the proceeds thereof for the
purpose of repaying Cogenex, without first obtaining Commission
authorization.
Cogenex is currently restricted to earning less than 50% of its
revenues from outside New England and New York (``50% Restriction'').
CCS' revenues will be subject to the 50% Restriction just like any
other aspect of Cogenex's business (other than revenues from qualifying
cogeneration facility projects, as defined in the Public Utility
Regulatory Policies Act of 1978, as amended, and consulting revenues,
which revenues are not included in the calculation for the 50%
Restriction); however, Cogenex states that revenues received by CCS
through the service agreement it will enter into with CCC will not be
included in the calculation for the 50% Restriction.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-25602 Filed 10-14-94; 8:45 am]
BILLING CODE 8010-01-M
