[Federal Register Volume 62, Number 219 (Thursday, November 13, 1997)]
[Notices]
[Pages 60929-60933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29881]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26774]
Filings Under the Public Utility Holding Company Act of 1935, as
amended (``Act'')
November 6, 1997.
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 December 1, 1997, to the Secretary, Securities and Exchange
Commission, Washington, D.C. 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.
New England Electric System, et al. (70-9143); Notice of Proposal to
Amend Articles of Incorporation and Authorize Registered Holding
Company to Acquire Preferred Stock of Utility Subsidiaries; Order
Authorizing Solicitation of Proxies
New England Electric System (``NEES''), a registered holding
company, and its wholly-owned public utility subsidiaries, New England
Power Company (``the Power Company''), Massachusetts Electric Company
(``Mass Electric''), and the Narragansett Electric Company
(``Narragansett''), all located at 25 Research Drive, Westborough,
Massachusetts 01582, have filed an application-declaration under
sections 6(a), 7, 9(a), 10, 12(c), 12(d) and 12(e) of
[[Page 60930]]
the Act and rules 43, 44, 51, 54, 62 and 65 under the Act.\1\
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\1\ The Power Company, Mass. Electric and Narragansett are
sometimes referred to individually as a ``Subsidiary'' or
collectively as ``Subsidiaries.''
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The Power Company
The Power Company has outstanding 6,449,896 shares of common stock,
$100 par value per share (``Power Company Common Stock''), all of which
are held by NEES. The Power Company also has issued a 6% cumulative
preferred stock, outstanding 75,020 shares, $100 par value (``Power
Company Cumulative Preferred Stock''). The Power Company's other
outstanding preferred stock consists of 321,640 shares of dividend
series preferred stock, $100 par value per share (``Power Company
Dividend Series Preferred Stock''), issued in four series.\2\ There is
also authorized another class of preferred stock (``Power Company
Preferred Stock--Cumulative''), $25 par value, of which there are no
series currently outstanding. The Power Company Common Stock shares
general voting rights with the Power Company Cumulative Preferred
Stock, and are entitled to one vote per share. No other class of Power
Company equity securities is outstanding.
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\2\The four series of Power Company Dividend Series Preferred
Stock consist of a 4.56% series, of which 100,000 shares are
outstanding; a 4.60% series, of which 80,140 shares are outstanding;
a 4.64% series, of which 41,500 shares are outstanding; and a 6.08%
series, of which 100,000 shares are outstanding (each, a ``Power
Company Series'').
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The Power Company's by-laws and articles of incorporation (``Power
Company Articles'') currently provide that, without a vote of a
majority of the outstanding Power Company Dividend Series Preferred
Stock and Preferred Stock--Cummulative, the Power Company will not
issue or assume any evidence of unsecured indebtedness (except for
redemption of outstanding shares of all series of the stock), if the
total amount (exclusive of certain unsecured indebtedness) immediately
after the issue would exceed 20% of total secured indebtedness,
capital, premium, and retained earnings, of which 20%, not more than
one-half shall be short-term unsecured indebtedness.\3\ (``(Power
Company Restriction Provision'').
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\3\ The Power Company Restriction Provision specifically
provides that the Power Company will not:
[I]ssue any unsecured notes, debentures or other securities
representing unsecured indebtedness, or assume any such unsecured
securities, for purposes other than the redemption or other
retirement of outstanding shares of all series of the Dividend
Series Preferred Stock and the Preferred Stock--Cumulative, if
immediately after such issue or assumption the total principal
amount of all unsecured notes, debentures or other securities
representing unsecured indebtedness issued or assumed by the
corporation and then outstanding (including unsecured securities
then to be issued or assumed but excluding unsecured securities
theretofore so voted for by holders of Dividend Series Preferred
Stock and Preferred Stock--Cumulative) (the ``Unsecured
Indebtedness'') would exceed twenty per cent (20%) of the aggregate
of (i) the total principal amount of all bonds and other securities
representing secured indebtedness issued or assumed by the
corporation and then outstanding and (ii) the capital, premium and
retained earnings of the corporation as then stated on the books of
account of the corporation; provided, however, that after July 1,
1976, short-term unsecured indebtedness shall not exceed ten per
cent (10%) of such aggregate of (i) and (ii) above; and provided,
further, that after July 1, 1976, in the event unsecured securities
representing short-term unsecured indebtedness (excluding unsecured
securities theretofore so voted for by the holders of Dividend
Series Preferred Stock and Preferred Stock--Cumulative) exceed ten
per cent (10%) of (i) and (ii) above, no unsecured securities
representing unsecured indebtedness shall be issued or assumed
(except for the purpose of redemption or other retirement of
outstanding shares of all series of the Dividend Series Preferred
Stock and the Preferred Stock--Cumulative) unless such ratio of
short-term unsecured indebtedness immediately after such issue or
assumption is to be not over ten per cent (10%) of such aggregate of
(i) and (ii) above. ``Short-term unsecured indebtedness'' as used
herein means unsecured indebtedness of an original maturity of less
than ten years and ``long-term unsecured indebtedness'' means
unsecured indebtedness of ten years or more. For the purposes
hereof, when any long-term unsecured indebtedness becomes due within
ten years, or when any long-term unsecured indebtedness is to be
retired within ten years through a sinking fund or otherwise, such
long-term unsecured indebtedness, in each case, shall be considered
short-term unsecured indebtedness; provided, however, that any long-
term unsecured indebtedness of a single maturity (except as provided
above in respect of a sinking fund therefore), or the last maturity
of any long-term unsecured indebtedness of serial maturities, shall
not be considered short-term unsecured indebtedness until due within
five years.
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The Power Company proposes to solicit proxies from the holders of
outstanding shares of Power Company Dividend Series Preferred Stock and
Common Stock (``Power Company Proxy Solicitation'') for use at a
special meeting of its stockholders (``Power Company Special Meeting'')
to consider a proposed amendment to the Power Company Articles that
would eliminate in its entirety the Power Company Restriction Provision
(``Power Company Proposed Amendment'') from the Power Company Articles.
Approval of the Power Company Proposed Amendment requires the
affirmative vote at the Power Company Special Meeting of the holders of
not less than two-thirds of the total number of the then-outstanding
shares of (1) The Power Company Dividend Series Preferred Stock of all
Power Company Series, voting together as one class, and (2) the Power
Company Common Stock. NEES will vote its shares of Power Company Stock
in favor of the Power Company Proposed Amendment.
If the Power Company Proposed Amendment is adopted, the Power
Company would make a special cash payment of $1.00 per share (``Power
Company Cash Payment'') to each holder of Power Company Dividend Series
Preferred Stock of any Series who voted shares (in person by ballot or
by proxy) (each, a ``Power Company Share'') in favor of the Power
Company Proposed Amendment at the Power Company Special Meeting (except
that no Power Company Cash Payment will be made with respect to any
Power Company Share validly tendered under the concurrent tender offer
described below). The Power Company will disburse Power Company Cash
Payments out of its general funds following adoption of the Power
Company Proposed Amendment.
Concurrently with or shortly before the Power Company Proxy
Solicitation, and subject to the terms and conditions stated in an
Offer to Purchase and Proxy Statement and Information Statement and
accompanying Letter of Transmittal (collectively, ``Power Company Offer
Documents''), NEES proposes to make a cash tender offer (``Power
Company Tender Offer'') to acquire any and all outstanding shares of
Power Company Preferred Stock of each Power Company Series, at cash
purchase prices which NEES anticipates will include a market premium
for each Series (each, a ``Power Company Purchase Price''). The Power
Company Purchase Price and the other terms and conditions of the Power
Company Tender Offer apply equally to all preferred stockholders of the
respective Power Company Series. The offer for any one Power Company
Series is independent of the offer for any other Power Company Series
or for the shares of any other subsidiary.
NEES anticipates that the Power Company Tender Offer will expire at
5:00 p.m. Eastern Standard Time on December 12, 1997, the date of the
Power Company Special Meeting (``Power Company Expiration Date''),
unless otherwise extended. The Power Company Tender Offer is not
conditioned upon any minimum number of shares of Power Company
preferred stock being tendered. Preferred stockholders who tender their
shares under a Power Company Tender Offer are required to vote in favor
of or consent to the Power Company Proposed Amendment, and one of the
conditions of the Power Company Tender Offer requires that the Power
Company Proposed Amendment be approved and adopted.
[[Page 60931]]
Mass. Electric
Mass Electric has outstanding 2,398,111 shares of common stock, $25
par value (``Mass. Electric Common Stock''), all of which are held by
NEES. Mass. Electric's outstanding preferred stock consists of 350,000
shares of dividend series preferred stock, $100 par value, issued in
three series \4\ (``Mass. Electric Dividend Series Preferred Stock''),
and 600,000 shares of preferred stock--cumulative, $25 par value, of
which there is one series outstanding,\5\ all of which are traded over
the counter. (``Mass. Electric Preferred Stock--Cumulative''). Mass.
Electric Common Stock and Mass. Electric Dividend Series Preferred
Stock are entitled to one vote per share. The Mass. Electric Preferred
Stock--Cumulative is entitled to a quarter vote per share. No other
class of Mass. Electric equity securities is outstanding.
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\4\ The three series of Mass. Electric Dividend Series Preferred
Stock consist of a 4.44% series, of which 75,000 shares are
outstanding; a 4.76% Series, of which 75,000 shares are outstanding;
and a 6.99% series, of which 200,000 shares are outstanding.
\5\ The single series of Mass. Electric Preferred Stock--
Cumulative is a 6.84% series. Each of the series referred to in
footnote 4 and this series shall be referred as a ``Mass. Electric
Series.''
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Mass. Electric's By-Laws and Articles of Organization (``Mass.
Electric Articles'') currently provide that, without a vote of a
majority of the outstanding Mass. Electric Dividend Series Preferred
Stock and Preferred Stock--Cumulative, Mass. Electric will not issue or
assume any unsecured indebtedness (except for redemption of outstanding
shares of all series of preferred stock), if the total amount of the
indebtedness (exclusive of certain unsecured indebtedness) immediately
after the issue would exceed 20% of total capitalization, or if,
immediately after the issue, the total amount of the short-term
unsecured indebtedness (exclusive of certain short-term unsecured
indebtedness) issued or assumed by Mass. Electric after September 30,
1998, would exceed 10% of total capitalization.\6\ (``Mass. Electric
Restriction Provision'').
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\6\ The Mass. Electric Restrictive Provision specifically
provides that Mass. Electric will not:
[I]ssue or assume any unsecured notes, debentures or other
securities representing unsecured indebtedness for purposes other
than (x) the refunding of outstanding unsecured indebtedness
theretofore issued or assumed by the corporation resulting in
maturities later than the maturity of the indebtedness being
refunded or (y) the reacquisition, redemption or other retirement of
any indebtedness which reacquisition, redemption or other retirement
has been authorized under the provisions of the Public Utility
Holding Company Act of 1935, if, immediately after such issue or
assumption, the total principal amount of all unsecured notes,
debentures or other securities representing both long and short-term
unsecured indebtedness issued or assumed by the corporation and then
to be outstanding (but excluding unsecured indebtedness theretofore
so voted for by holders of Preferred Stock and Preferred Stock--
Cumulative) would exceed twenty per cent (20%) of total
capitalization, or if, immediately after such issue or assumption,
such short-term unsecured indebtedness issued or assumed by the
corporation after September 30, 1998, and then to be outstanding
(but excluding short-term indebtedness theretofore so voted for by
holders of Preferred Stock or Preferred Stock--Cumulative) would
exceed ten per cent (10%) of total capitalization; provided,
however, that in the event such short-term unsecured indebtedness
(but excluding short-term unsecured indebtedness theretofore so
vetoed by holders of Preferred Stock and Preferred Stock--
Cumulative) exceeds such latter limit, no unsecured securities
representing unsecured indebtedness shall be issued or assumed
(except for the purposes specified in clauses (x) and (y) above)
unless such ratio of short-term unsecured indebtedness immediately
after such issue or assumption is not in excess of such limit.
``Short-term unsecured indebtedness'' as used in this subsection
E(4) means unsecured indebtedness of an original maturity of less
than ten years and ``long-term unsecured indebtedness'' means
unsecured indebtedness of an original maturity of ten years or more.
For the purposes hereof, when any long-term unsecured indebtedness
becomes due within five years, or when any long-term unsecured
indebtedness is to be retired within five years through a sinking
fund or otherwise, such long-term unsecured indebtedness, in each
case, shall be considered short-term unsecured indebtedness. ``Total
capitalization'' as used in this subsection E(4) means the aggregate
of (i) the total principal amount of all bonds and other securities
representing secured indebtedness issued or assumed by the
corporation and then outstanding and (ii) the capital. premium and
surplus of the corporation as then stated on the books of account of
the corporation.
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Mass. Electric proposes to solicit proxies from the holders of
outstanding shares of Mass. Electric Dividend Series Preferred Stock
and Common Stock (``Mass. Electric Proxy Solicitation'') for use at a
special meeting of its stockholders (``Mass. Electric Special
Meeting'') to consider a proposed amendment to the Mass. Electric
Articles that would eliminate in its entirety the Mass. Electric
Restriction Provision (``Mass. Electric Proposed Amendment'') from the
Mass. Electric Articles. Approval of the Mass. Electric Proposed
Amendment requires the affirmative vote at the Mass. Electric Special
Meeting of the holders of not less than two-thirds of the total number
of the then-outstanding shares of (1) the Mass. Electric preferred
stock of all Mass. Electric Series, voting together as one class, and
(2) the Mass. Electric Common Stock. NEES will vote its shares of Mass.
Electric Common Stock in favor of the Mass. Electric Proposed
Amendment.
If the Mass. Electric Proposed Amendment is adopted, Mass. Electric
would make a special cash payment of $1.00 per share (``Mass. Electric
Cash Payment'') to each holder of Mass. Electric Dividend Series
Preferred Stock of any Series, and 25 cents per share to each holder of
the Mass. Electric Preferred Stock--Cumulative who voted shares (each,
a ``Mass. Electric Share'') (in person by ballot or by proxy) in favor
of the Mass. Electric Proposed Amendment at the Mass. Electric Special
Meeting (except that no Mass. Electric Cash Payment will be made with
respect to any Mass. Electric Share validly tendered under the
concurrent tender offer described below). Mass. Electric will disburse
Mass. Electric Cash Payments out of its general funds following
adoption of the Mass. Electric Proposed Amendment.
Concurrently with or shortly before the Mass. Electric Proxy
Solicitation, and subject to the terms and conditions stated in an
Offer to Purchase Proxy Statement and accompanying Letter of
Transmittal (together, ``Mass. Electric Offer Documents''), NEES
proposes to make a cash tender officer (``Mass. Electric Tender
Offer'') to acquire any and all outstanding shares of Mass. Electric
Preferred Stock of each Series, at cash purchase prices which NEES
anticipates will include a market premium for each Mass. Electric
Series (each, a ``Mass. Electric Purchase Price''). The Mass. Electric
Purchase Price and the other terms and conditions of the Mass. Electric
Tender Offer apply equally to all preferred stockholders of the
respective Mass. Electric Series. The offer for any one Mass. Electric
Series is independent of the offer for any other Mass. Electric Series
or for the shares of any other subsidiary.
NEES anticipates that the Mass. Electric Tender Offer will expire
at 5:00 P.M. Eastern Standard Time on December 12, 1997, the date of
the Mass. Electric Special Meeting (``Mass. Electric Expiration
Date''), unless otherwise extended. The Mass. Electric Tender Offer is
not conditioned upon any minimum number of shares of Mass. Electric
preferred stock being tendered. Preferred stockholders who tender their
shares under a Mass. Electric Tender Offer are required to vote in
favor of or consent to the Mass. Electric Proposed Amendment, and one
of the conditions of the Mass. Electric Tender offer requires that the
Mass. Electric Proposed Amendment be approved and adopted.
Narragansett
Narragansett has outstanding 1,132,487 shares of common stock, $50
par value (``Narragansett Common Stock''), all of which are held by
NEES. Narragansett's outstanding preferred stock consists of 730,000
shares of
[[Page 60932]]
cumulative preferred stock, $50 par value, issued in three series,\7\
all of which are traded over the counter. (``Narragansett Cumulative
Preferred Stock''). Narragansett Common Stock and Narragansett
Cumulative Preferred Stock are entitled to one vote per share. No other
class of Narragansett equity securities is outstanding.
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\7\ The three series of Narragansett cumulative preferred stock
consist of a 4.50% series, of which 180,000 shares are outstanding;
a 4.64% series, of which 150,000 shares are outstanding; and a 6.95%
series, of which 400,000 shares are outstanding (each, a
``Narragansett Series'').
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Narragansett's Preferred Stock Provisions (``Narragansett
Provisions'') currently provide that, without a vote of a majority of
the outstanding Narragansett preferred stock, voting as a class,
Narragansett will not issue or assume any unsecured indebtedness
(except for redemption of outstanding shares of all series of preferred
stock) if the total amount of the indebtedness (exclusive of certain
unsecured indebtedness) immediately after the issue would exceed 10% of
all secured indebtedness and capital and surplus of Narragansett.\8\
(``Narragansett Restriction Provisions'').
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\8\ The Narragansett Restriction Provision specifically provides
that Narragansett will not:
[I]ssue any unsecured notes, debentures or other securities
representing unsecured indebtedness, or assume any such unsecured
securities, for purposes other than the refunding of outstanding
unsecured securities theretofore issued or assumed by the Company
resulting in equal or longer maturities or the redemption or other
retirement of all outstanding shares of the Preferred Stock, if,
immediately after such issue or assumption, the total principal
amount of all unsecured notes, debentures or other securities
representing unsecured indebtedness issued or assumed by the Company
and then outstanding (including unsecured securities then to be
issued or assumed) but excluding unsecured securities theretofore so
consented to by holders of Preferred Stock, would exceed ten per
cent (10%) of the aggregate of (i) the total principal amount of all
bonds and other securities representing secured indebtedness issued
or assumed by the Company and then outstanding and (ii) the capital
and surplus of the Company as then stated on the books of account of
the Company.
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Narragansett proposes to solicit proxies from the holders of
outstanding shares of Narragansett Cumulative Preferred Stock and
Common Stock (``Narragansett Proxy Solicitation'') for use at a special
meeting of its stockholders (``Narragansett Special Meeting'') to
consider a proposed amendment to the Narragansett Provisions that would
eliminate in its entirety the Narragansett Restriction Provision
(``Narragansett Proposed Amendment'') from the Narragansett Provisions.
Approval of the Narragansett Proposed Amendment requires the
affirmative vote at the Narragansett Special Meeting of the holders of
(1) not less than two-thirds of the total number of the then-
outstanding shares of Narragansett preferred stock of all Narragansett
Series, voting together as one class, (2) 75% of the preferred shares
present or represented at the meeting, and (3) a majority of the
Narragansett Common Stock. NEES will vote its shares of Narragansett
Common Stock in favor of the Narragansett Proposed Amendment.
If the Narragansett Proposed Amendment is adopted, Narragansett
would make a special cash payment of 50 cents per share (``Narragansett
Cash Payment'') to each holder of Narragansett Cumulative Preferred
Stock of any Narragansett Series who voted shares (each, a
``Narragansett Share'') (in person by ballot or by proxy) in favor of
the Narragansett Proposed Amendment at the Narragansett Special Meeting
(except that no Narragansett Cash Payment will be made with respect to
any Narragansett Share validly tendered under the concurrent tender
offer described below). Narragansett will disburse Narragansett Cash
Payments out of its general funds following adoption of the Proposed
Amendment.
Concurrently with or shortly before the Narragansett Proxy
Solicitation, and subject to the terms and conditions stated in an
offer to Purchase Proxy Statement and accompanying Letter of
Transmittal (collectively, ``Narragansett Offer Documents''), NEES
proposes to make a cash tender offer (``Narragansett Tender Offer'') to
acquire any and all outstanding shares of Narragansett Cumulative
Preferred Stock of each Narragansett Series, at cash purchase prices
which NEES anticipates will include a market premium for each
Narragansett Series (each, a ``Narragansett Purchase Price''). The
Narragansett Purchase Price and the other terms and conditions of the
Narragansett Tender Offer apply equally to all preferred stockholders
of the respective Narragansett Series. The offer for any one
Narragansett Series is independent of the offer for any other
Narragansett Series or for the shares of any other subsidiary.
NEES anticipates that the Narragansett Tender Offer will expire at
5:00 p.m. on December 12, 1997, the date of the Narragansett Special
Meeting (``Narragansett Expiration Date''), unless otherwise extended.
The Narragansett Tender Offer is not conditioned upon any minimum
number of shares of Narragansett preferred stock being tendered.
Preferred stockholders who tender their shares under a Narragansett
Tender Offer are required to vote in favor of or consent to the
Narragansett Proposed Amendment, and one of conditions of the
Narragansett Tender offer requires that the Narragansett Proposed
Amendment be approved and adopted.
Tenders of Power Company Shares, Mass. Electric Shares and
Narragansett Shares (collectively, ``Shares'') made under the Power
Company Tender Offer, Mass. Electric Tender Offer and Narragansett
Tender Offer, respectively (individually, ``Tender Offer'' and
collectively, ``Tender Offers''), may be withdrawn at any time prior to
the Power Company Expiration Date, Mass. Electric Expiration Date and
the Narragansett Expiration Date, respectively (individually and
collectively, ``Expiration Date''). Thereafter, the tenders are
irrevocable, subject to certain exceptions identified in the Power
Company Offer Documents, Mass. Electric Offer Documents and
Narragansett Offer Documents (individually and collectively, ``Offer
Documents''). NEES states that its obligations to proceed with the
Tender Offers and to accept for payment and to pay for any Shares
tendered will be made in accordance with rule 51 under the Act and are
subject to various conditions enumerated in the Offer Documents,
including the receipt of a Commission order under the Act authorizing
the proposed transactions and the adoption of the Power Company
Proposed Amendment, Mass. Electric Proposed Amendment and the
Narragansett Proposed Amendment (individually, ``Proposed Amendment''
and collectively, ``Proposed Amendments'') at the Power Company Special
Meeting, Mass. Electric Special Meeting and Narragansett Special
Meeting, respectively (individually and collectively, ``Special
Meeting'').
Applicants undertake to comply with all requirements of the
Securities Exchange Act of 1934 (``Exchange Act'') and rules and
regulations thereunder in connection with the Power Company Proxy
Solicitation, Mass. Electric Proxy Solicitation and Narragansett Proxy
Solicitation, as applicable (individually, ``Proxy Solicitation'' and
collectively, ``Proxy Solicitations''), except to the extent applicants
rely on exemptions from the requirements of rule 13e-3 and regulation
14A of the Exchange Act, and acknowledge that any authorization granted
under the Act is conditioned upon their compliance. Shares validly
tendered will be held by NEES until the Expiration Date (or returned in
the event a Tender Offer is terminated). Subject to the terms and
conditions of the Tender Offers, as promptly as practicable after the
Expiration Date, NEES will accept for payment (and thereby purchase)
and pay for Shares validly tendered and not
[[Page 60933]]
withdrawn. NEES intends to use its general funds (which, in the
ordinary course, include funds from the Power Company, Mass. Electric
and Narragansett) and incur indebtedness under NEES' committed lines of
credit, including any bank revolving credit agreements, in an amount
sufficient to pay the Power Company Purchase Price, Mass. Electric
Purchase Price and Narragansett Purchase Price (individually and
collectively, ``Purchase Price'') for all tendered Shares. Merrill
Lynch, Pierce, Fenner & Smith Incorporated will act as dealer manager
for NEES in connection with the Tender Offers.\9\
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\9\ NEES has agreed to pay the dealer manager a fee of .5% of
par per share for any Shares tendered, accepted for payment and paid
for pursuant to the Tender Offers, the Subsidiaries have agreed to
pay the dealer managers a fee of .5% of par per share for any Shares
that are not tendered pursuant to the Tender Offers but which vote
in favor of the Proposed Amendment. NEES has agreed to reimburse the
dealer manager for its reasonable out-of-pocket expenses, including
attorneys' fees.
In addition, NEES has agreed to pay soliciting brokers and
dealers a separate fee of 1.5% of par per share for any Shares
tendered, accepted for payment and paid for pursuant to the Tender
Offers except that for transactions with beneficial owners equal to
or exceeding 2,500 Shares, NEES will pay a solicitation fee of 1% of
par per share for Shares of such Series.
Any fee payable for transactions equal to or exceeding 2,500
shares shall be payable 80% to the dealer manager and 20% to any
soliciting dealer (which may be the dealer manager). No fee shall be
payable to a soliciting dealer in respect of shares (a) beneficially
owned by such soliciting dealer or (b) registered in the name of
such soliciting dealer as nominee when the shares are being rendered
for the benefit of one or more beneficial owners identified in the
applicable Letter of Transmittal or in the applicable Notice of
Solicited Tenders (including in the materials provided to brokers
and dealers).
NEES proposes to pay Boston Equiserve, L.P., in its capacity as
depositary for the Tender Offers, a fee estimated at approximately
$40,000.
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If a Proposed Amendment is adopted at a Subsidiary's Special
Meeting, promptly after consummation of the Tender Offer, either the
issuing Subsidiary will purchase the Shares sold to NEES under the
Tender Offer at the relevant Purchase Price plus expenses incurred in
the Tender Offer, or NEES will donate the Shares to that Subsidiary as
a capital contribution. The Subsidiary will then retire and cancel the
shares.
If a Proposed Amendment is not adopted at the relevant Special
Meeting, NEES may elect, but is not obligated, to waive adoption of the
Proposed Amendment as a condition to its obligation to proceed with the
Tender Offer, subject to applicable law. In that case, as promptly as
practicable after NEES's waiver of the condition and its purchase of
Shares validly tendered under the Tender Offers, the affected
Subsidiary anticipates that it would call another special meeting and
solicit proxies to secure the requisite affirmative vote of
stockholders to amend the Power Company Articles, Mass. Electric
Articles and Narragansett Provisions (individually and collectively,
``Articles''), to eliminate the Power Company Restriction Provision,
Mass. Electric Restriction Provision and Narragansett Restriction
Provision (collectively, ``Restriction Provisions''), as the case may
be. At each meeting, NEES would vote any Shares acquired by it under
the Tender Offer or otherwise \10\ (as well as all of its shares of
Common Stock of the affected Subsidiaries) in favor of the Proposed
Amendment. If a Proposed Amendment is adopted at that meeting and in
any event within one year from the Expiration Date (including any
potential extension under a Tender Offer), NEES will promptly after the
meeting or at the expiration of the one-year period, as applicable,
sell the Shares to the Subsidiary at the applicable Purchase Price plus
expenses paid under the Tender Offer, and the Subsidiary will retire
and cancel the Shares.
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\10\ Applicant states that, in contrast, if the Subsidiary,
rather than NEES, had acquired its shares under the Tender Offer,
upon the acquisition the shares would be deemed treasury shares
under applicable state law and, as such, the Subsidiary would be
precluded from voting those shares under any circumstance.
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The Applicants believe that the purchase of the Shares at this time
represents an attractive economic opportunity that will benefit NEES,
its shareholders, and its Subsidiaries. The Applicants further contend
that elimination of the Restriction Provisions will produce savings in
financing costs that outweigh the one-time costs of the Tender Offers
and the Proxy Solicitations,\11\ and will be in the best interests of
their customers and shareholders.\12\
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\11\ Each of the Subsidiaries have engaged Georgeson & Company,
Inc. to act as information agent in connection with the Proxy
Solicitations for a fee and reimbursement of reasonable out-of-
pocket expenses expected not to exceed approximately $10,000.
\12\ The Applicants state that the proposed acquisition by NEES
of Shares under the Tender Offers will benefit NEES' utility system
customers and shareholders by (1) contributing to the elimination of
the provisions concerning unsecured indebtedness, and (2) acquiring
and retiring of outstanding shares of the preferred stock and their
potential replacement with comparatively less expensive financing
alternatives. Moreover, the applicants maintain that tendering Power
Company Preferred Stockholders, Mass. Electric Preferred
Stockholders and Narragansett Preferred Stockholders will benefit by
having the option to sell their Preferred Stock at prices that NEES
expects will be a premium to the market price and without the usual
transaction costs associated with a sale.
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To finance its proposed purchase of Shares under the Tender Offers,
NEES plans to use general funds and incur debt under its committed
lines of credit, including any bank revolving credit agreements, in an
amount sufficient to pay the Purchase Price for all tendered Shares, an
amount expected to be approximately $135 million, excluding payment of
accrued dividends, but including fees and other expenses.
The applicants also request authorization to deviate from the
preferred stock provisions of the Statement of Policy Regarding
Preferred Stock Subject to the Public Utility Holding Company Act of
1935, HCAR No. 13106 (Feb. 16, 1956), to the extent applicable with
respect to the Proposed Amendments.
It appears to the Commission that the application-declaration, to
the extent that it relates to the proposed Proxy Solicitations should
be permitted to become effective immediately under rule 62(d).
It is ordered, that the application-declaration, to the extent that
it relates to the proposed Proxy Solicitations be, and it hereby is,
permitted to become effective immediately, under rule 62 and subject to
the terms and conditions prescribed in rule 24 under the Act.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-29881 Filed 11-12-97; 8:45 am]
BILLING CODE 8010-01-M
