[Federal Register Volume 59, Number 39 (Monday, February 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4424]
[Federal Register: February 28, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-25990]
Filings Under the Public Utility Holding Company Act of 1935
(``Act'')
February 18, 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 March 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.
DQE, Inc. et al. (70-8096)
DQE, Inc. (``DQE''), P.O. Box 68, Pittsburgh, Pennsylvania 15230-
0068, and its wholly owned subsidiary company, Duquesne Enterprises,
Inc. (``DE''), Grant Building, 330 Grant Street, suite 2420,
Pittsburgh, Pennsylvania 15219, both Pennsylvania public-utility
holding companies exempt from registration under section 3(a)(1) of the
Act pursuant to Rule 2, have filed an application under sections
9(a)(2) and 10 of the Act in connection with the acquisition of
Allegheny Development Corporation (``ADC''), a wholly owned subsidiary
of DE, that operates an energy services business.
DQE was organized in 1989 for the purpose of becoming a holding
company for Duquesne Light Company (``DLC''), an electric utility
company, and other energy-related subsidiaries. DLC is engaged in the
generation, transmission, distribution and sale of electric energy and
serves an area of approximately 800 square miles which includes the
City of Pittsburgh. DE's subsidiaries other than ADC are engaged in
real estate ventures.
In 1987 a competitive bidding process was initiated by the County
of Allegheny, Pennsylvania (``County'') for the design, installation
and operation of facilities to provide a complete energy services
package to the new Midfield Terminal Complex being developed to replace
the then existing airline terminal at the Greater Pittsburgh
International Airport (``Airport''). DLC was the supplier of electric
energy to the Airport at that time. The applicants state that DLC, a
utility subject to the jurisdiction of the Pennsylvania Public Utility
Commission, was not in a position to submit a competitive bid; however,
it was important to participate in the bidding to avoid the loss of a
significant DLC customer when the Airport ceased operation.
Consequently, ADC then a wholly-owned subsidiary of DLC, submitted a
bid to the County and was awarded the contract out of a field of 12
bidders. As a result, ADC became a public utility company within the
meaning of the Act.
On July 7, 1989, DLC became a wholly-owned subsidiary of QE by
virtue of a merger transaction. ADC was still a wholly-owned subsidiary
of DLC. An Energy Services Agreement (``Agreement'') dated May 31, 1989
between the County and ADC was entered into on July 27, 1989. In
December 1989, DLC distributed all of the stock of ADC to DQE as a
dividend and later in December 1989, DQE contributed the ADC stock to
the capital of DE.
The Agreement requires ADC to supply all of the electrical and
thermal requirements of the Midfield Terminal Complex, including
electricity, hot water and chilled water. ADC purchases electricity at
tariff rates from DLC and sells a portion to the County at the unit
costs specified in the Agreement. The County also is required to pay to
ADC an annual fixed charge related to ADC's investment in the
facilities. The County is the sole customer for the energy services
provided by ADC.
OLS Acquisition Corp., et al. (70-8311)
OLS Acquisition Corporation (``Acquisition Corp.'') and OLS Energy-
Berkeley (``Berkeley''), One Upper Pond Road, Parsippany, New Jersey
07054, both indirect nonutility subsidiaries of Energy Initiatives,
Inc. (``EII''), an indirect subsidiary of General Public Utilities
Corporation, a registered holding company, have filed an application-
declaration pursuant to sections 6(a), 7, 9(a), 10, 12(a), and 12(b) of
the Act and Rule 45 thereunder.
By order dated August 1, 1989 (HCAR No. 24931), the Commission
authorized OLS Power Limited Partnership, a Delaware limited
partnership and an indirect subsidiary of EII, to, among other things,
acquire indirectly through Acquisition Corp. all of the outstanding
common stock of OLS-Energy-Chino, a California corporation (``Chino''),
OLS Energy-Camarillo, a California corporation (``Camarillo''), and
Berkeley.
Berkeley, Chino and Camarillo are each lessees, pursuant to leases
(``Leases'') with General Electric Capital Corporation or a wholly
owned subsidiary (collectively, ``GECC'') of operating cogeneration
facilities (``Facilities'') located in California, which are all
qualifying facilities under the Public Utility Regulatory Policies Act
of 1978. The Leases expire, in the cases of Chino and Camarillo, on
December 31, 2007, and in the case of Berkeley, on August 7, 2007, but
may be renewed, subject to certain conditions, for up to 10 years at
the lessee's option. Rent payable during such renewal term would be the
then fair market rent for the respective Facility, or, for an initial
three year renewal term, an amount which has been agreed upon if the
renewal option which provides for payment of rent in such agreed upon
amount is elected by the lessee.
At the time of the acquisition, Berkeley, Chino and Camarillo each
were parties to revolving credit agreements (``Credit Agreement(s)'')
with FECC that provided for the short-term working capital requirements
of their respective Facilities. Berkeley, Chino and Camarillo have
issued secured promissory notes to GECC evidencing these borrowings.
After the acquisition, each company was unable to generate
sufficient revenue from sales of steam and electricity to pay its
operating expenses and rent under its Lease on a current basis. In
order to remedy the problem, the OLS Companies ultimately reached
agreement with GECC and their host institutions to restructure their
Leases and the energy services agreements under which they sell
electricity and steam to their host institutions (``Energy Services
Agreements'').
On August 30, 1991, Chino and Camarillo entered into agreements
with GECC and their respective host institutions which, among other
things, reduced the rent payable to GECC under their respective Leases,
increased the amount each could borrow and reduced the rate of interest
payable under their respective Credit Agreements and reduced certain
rebates payable to their host institutions under their respective
Energy Service Agreements. The amendments to Chino's and Camarillo's
Credit Agreements were authorized by orders of the Commission dated
February 9, 1990 and December 26, 1990 (HCAR Nos. 25038 and 25230).
Pursuant to authorization granted in five previous orders of the
Commission issued from 1990 through 1992, Berkeley has previously
amended its Credit Agreement to, among other things, increase the
aggregate amount of the borrowings which may be outstanding at any time
from $1 million to $1.25 million, extend the time period for borrowings
to December 31, 1994, and reduce the rate of interest from 5% over the
prime rate, as defined, to 3% over the prime rate.
Pursuant to negotiations with GECC and the University of California
at Berkeley (``University''), where the Berkeley Facility is located,
Berkeley now proposes to restructure (``Restructure'') the Lease with
GECC as well as the Energy Services Agreement with the University and
related agreements. Berkeley also proposes to further amend the Credit
Agreement.
The Restructure contemplates, among other things, that (i) rent
payable to GECC under Berkeley's Lease will be reduced, effective
December 31, 1993, by approximately $780,000 per year and will be
payable quarterly in amounts which track expected revenue, rather than
semi-annually in equal payments, and (ii) rebates payable to the
University under the Energy Services Agreement will be reduced or
deferred to increase the cash retained by Berkeley to pay operating
expenses.
As part of the Restructure, Berkeley proposes to borrow, subject to
the satisfaction of certain conditions precedent, up to an aggregate
amount outstanding of $1 million under a loan facility (``Overhaul Loan
Facility'') as part of the Berkeley Credit Agreement with GECC. The
Overhaul Loan Facility would be used to fund the cost of major repairs,
nonroutine maintenance activities and overhauls of its Facility;
provided that the initial advance under the Overhaul Loan Facility may
be used to pay amounts due fuel suppliers and the operator of the
Facility, costs incurred to consummate the Restructure, prepayments of
working capital advances and rent under Lease.
Borrowings under the Overhaul Loan Facility may be made from time
to time until August 7, 2007, and would bear interest at a rate per
annum of 3% in excess of the rate of interest per annum publicly
announced by Morgan Guaranty Trust Company as its commercial reference
rate, or certain substantially equivalent rates of interest per annum
if Morgan Guaranty Trust Company ceases to announce such a rate of
interest. Borrowings would be repayable on a fixed amortization
schedule over the lesser of three years or the remaining term of
Berkeley's restructured Lease (August 7, 2007).
The obligation of GECC to make each loan under the Overhaul Loan
Facility would be subject, among other conditions, to the delivery of
certain documentation, the absence of a material adverse change in the
financial condition of Berkeley, the showing by Berkeley in form and
substance satisfactory to GECC that Berkeley will have sufficient cash
to repay the loan and the absence of a default under, among other
agreements, the amended Lease and the amended Credit Agreement.
Berkeley also proposes to make the following amendments to the
Credit Agreement: (1) Provide for the Overhaul Loan Facility with GECC
and borrow thereunder from time to time prior to August 7, 2007 in
amounts of up to $1 million at any time outstanding and issue to GECC
its promissory note evidencing such borrowings; (2) change the
aggregate amount of the borrowings which may be outstanding at any time
thereunder to the lesser of $1.25 million or $1.5 million less the
aggregate face amount of outstanding letters of credit issued under the
Credit Agreement; (3) extend until August 7, 2007, which is the end of
the term of Berkeley's restructured lease, for borrowings to be made
and letters of credit to be outstanding under the Credit Agreement; (4)
provide that borrowings under the Credit Agreement may be made only
upon the satisfaction of certain conditions precedent, such as certain
documentation and the absence of a default under, among other
agreements, the amended lease and the amended Credit Agreement; and (5)
provide for an origination fee of $2,500 for the issuance of letters of
credit in replacement of those presently outstanding under the Credit
Agreement, plus an annual fee of 1% per annum of the face amount of any
such replacement letter of credit.
Acquisition Corp. also proposes to enter into a pledge agreement
with U.S. Trust Company of New York, the owner trustee and lessor or
Berkeley's facility under its lease, pledging Berkeley's stock as
security for Berkeley's obligations under its amended Credit Agreement
and in connection with the Restructure. Outstanding borrowings under
the amended Credit Agreement would be required to be repaid in full
annually and the amended Credit Agreement would contain certain other
mandatory and optional prepayment provisions.
Monongahela Power Company, et al. (70-8349)
Monongahela Power Company (``Monongahela''), 1310 Fairmont Avenue,
Fairmont, West Virginia 26554, The Potomac Edison Company (``Potomac
Edision''), 10435 Downsville Pike, Hagerstown, Maryland 21740-1766, and
West Penn Power Company (``West Penn''), 800 Cabin Hill Drive,
Greensburg, Pennsylvania 15601 (collectively, ``Applicants''), each an
electric utility subsidiary of Allegheny Power System, Inc., a
registered holding company, have filed an application-declaration under
sections 9(a), 10 and 12(c) of the Act.
Applicants propose, through December 31, 1996, to redeem all of the
shares of certain series of their preferred stock, which are eligible
for optional redemption at specified premiums over their respective par
values, as follows:
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Current
Dividend No. of optional
Company Series rate shares Par value redemption Date price applicable
price
----------------------------------------------------------------------------------------------------------------
Monongahela............ G $8.80 50,000 $100 $104.20 After 5/1/86.
Monongahela............ H 7.92 50,000 100 103.52 After 4/1/87.
Monongahela............ I 7.92 100,000 100 103.52 After 11/1/88.
Monongahela............ J 8.60 150,000 100 103.33 After 12/1/91.
Potomac Edison......... F 8.32 50,000 100 103.54 After 5/1/86.
Potomac Edison......... G 8.00 100,000 100 103.25 After 5/1/87.
West Penn.............. G 8.08 100,000 100 103.27 After 7/1/87.
West Penn.............. H 7.60 100,000 100 103.23 After 6/1/87.
West Penn.............. I 7.64 100,000 100 103.16 After 11/1/88.
West Penn.............. J 8.20 200,000 100 103.30 After 12/1/91.
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Applicants propose to effect such redemptions by issuing new
preferred stock with a lower dividend rate.
Applicants will not enter into the proposed refunding transactions
unless, in each instance, the estimated present value savings derived
from the net difference between interest payments on the new issue of
comparable securities and on the securities to be refunded is, on an
after tax basis, greater than the present value of all redemption and
issuing costs, assuming an appropriate discount rate. The discount rate
used shall be the estimated after tax interest rate on the securities
to be issued.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-4424 Filed 2-25-94; 8:45 am]
BILLING CODE 8010-01-M
