[Federal Register Volume 61, Number 26 (Wednesday, February 7, 1996)]
[Notices]
[Pages 4701-4704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2616]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26467]
Filings Under the Public Utility Holding Company Act of 1935, as
amended (``Act'')
February 1, 1996.
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 26, 1996, 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.
Cinergy Corporation, et al. (70-8589)
Cinergy Corporation, a registered holding company (``Cinergy''),
Cinergy Service, Inc., Cinergy's wholly owned subsidiary service
company, both located at 139 East Fourth Street, Cincinnati, Ohio
45202, and Cinergy Investments, Inc. (``Investments''), Cinergy's
wholly owned nonutility subsidiary company, located at 251 North
Illinois Street, Suite 1410,
[[Page 4702]]
Indianapolis, Indiana 46204, have filed a post-effective amendment to
their application-declaration filed under sections 6(a), 7, 9(a), 10,
12(b), 13(b), 32 and 33 of the Act and rules 43, 45, 53 and 83
thereunder.
By order dated September 21, 1995 (HCAR No. 26376) (``Order''), the
Commission authorized Cinergy and Investments, among other things, to:
(1) Acquire the securities of one or more companies (``Special Purpose
Subsidiaries'') formed to engage exclusively in the business of
acquiring and holding the securities of, and/or providing services to,
exempt wholesale generators (``EWGs'') and foreign utility companies
(``FUCOs''); and (2) make direct and indirect investments in Special
Purpose Subsidiaries up to an aggregate principal amount of $115
million (``Investment Limitation''), through May 31, 1998. However, any
direct or indirect investment by Cinergy in any Special Purpose
Subsidiary would be made only if, on a pro forma basis, Cinergy's
aggregate investment in all EWGs, FUCOs and Special Purpose
Subsidiaries would not exceed 50% of Cinergy's consolidated retained
earnings, as defined in rule 53(a).
Applicants now propose to extend the authorization period
established in the Order from May 31, 1998 to the earlier of December
31, 1999, or the effective date of any rule of general applicability
adopted by the Commission that would exempt the proposed transaction
from the applicable provisions of the Act.
In addition, Cinergy requests authority to make direct or indirect
investments in Special Purpose Subsidiaries in an aggregate amount
which, when added to Cinergy's aggregate investment in all EWGs, FUCOs
and Special Purpose Subsidiaries, does not, at any point in time,
exceed 50% of Cinergy's consolidated retained earnings, as defined in
rule 53(a).
Consolidated Natural Gas Company, et al. (70-8667)
Consolidated Natural Gas Company (``Consolidated''), CNG Tower, a
registered holding company, and its subsidiaries, Consolidated System
LNG Company, CNG Research Company, CNG Financial Services, Inc. (``CNG
Financial''), Consolidated Natural Gas Service Company, Inc., and The
Peoples Natural Gas Company, each of CNG Tower, 625 Liberty Avenue,
Pittsburgh, Pennsylvania 15222; CNG Coal Company, CNG Producing Company
(``CNG Producing''), and CNG Pipeline Company, each of CNG Tower, 1450
Poydras Street, New Orleans, Louisiana 70112; CNG Transmission
Corporation and CNG Storage Service Company (``CNG Storage''), each of
445 West Main Street, Clarksburg, West Virginia 26301; CNG Power
Company (``CNG Power''), CNG Market Center Services, Inc., CNG Products
and Services, Inc. (``CNG Products''), and CNG Energy Services
Corporation (``CNG Energy''), each of One Park Ridge Center, P.O. Box
15746, Pittsburgh, Pennsylvania 15244; The East Ohio Gas Company
(``East Ohio''), 1717 East Ninth Street, Cleveland, Ohio 44115;
Virginia Natural Gas, Inc., 5100 East Virginia Beach Boulevard, Norfolk
Virginia 23501; Hope Gas, Inc. (``Hope Gas''), P.O. Box 2868,
Clarksburg, West Virginia 26302; and West Ohio Gas Company (``West
Ohio''), 319 West Market Street, Lima, Ohio 45802 (collectively, the
``Applicants''), have filed an application-declaration under sections
6, 7, 9(a), 10, 12(b) and 12(e) of the Act and rules 43, 45, 54 and 62
thereunder. The Applicants seek authorization to engage in various
financing and related transactions through March 31, 2001.\1\ The
authorization would be subject to the following conditions: (1)
Consolidated's long-term debt must be rated investment grade by at
least one nationally recognized statistical rating organization; (2)
the effective cost of money for debt may not exceed 300 basis points
over the interest rate on United States Treasury securities of a
comparable term; (3) the effective cost of money for preferred stock
and other fixed income securities may not exceed 500 basis points over
the interest rate on 30-year United States Treasury securities; (4) the
maturity of debt may not be more than 50 years; (5) issuance expenses
in connection with an offering of securities, including any
underwriting fees, commissions or other similar compensation, may not
exceed 5% of the total amount of the securities being issued; (6)
proceeds of the proposed financing may not be used to invest in an
exempt wholesale generator or a foreign utility company; (7) at the
time of each financing transaction, Consolidated must be in compliance
with the requirements of rules 53 and 54 under the Act; and (8)
proceeds of the proposed financing by the subsidiaries of Consolidated
must be used only in connection with their respective existing
businesses.\2\ Any deviation from these conditions would require
further Commission approval.
\1\ This authorization would supersede the authorization granted
in Holding Co. Act Release Nos. 25926 (Nov. 16, 1993) (relating to
guarantees by Consolidated of obligations of CNG Energy); 26245
(March 6, 1995) (relating to issuance of debt securities by
Consolidated); and 26321 (June 29, 1995) (relating to the
Consolidated system's one-year financing plan).
\2\ The Commission has published and solicited public comment on
a proposed rule 58 under the Act that would permit registered
holding companies and their subsidiaries to acquire securities of
companies engaged in specified nonutility activities without prior
Commission approval. Holding Co. Act Release No. 26313 (June 20,
1995), 60 FR 33642 (June 28, 1995). If rule 58 is adopted, the
proceeds of the proposed financings could also be used for these
purposes.
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The proposed transactions and the proposed participation of the
various Applicants are described below.
1. External Financing by Consolidated. Consolidated proposes to
issue and sell common stock, preferred stock, short-term debt, long-
term debt and other securities from time to time through March 31,
2001, provided that the aggregate amount of short-term and revolving
debt outstanding at any one time and the aggregate amount of common
stock, preferred stock, long-term debt and other securities issued
during the period shall not exceed $7.0 billion.\3\ Securities may be
sold through underwriters or dealers, directly to a limited number of
purchasers, or through agents. Consolidated also proposes to engage in
interest rate and equity swaps from time to time through March 31,
2001.
\3\ This amount includes $3.5 billion of securities the proceeds
of which may be used to retire outstanding securities and $3.5
billion of securities the proceeds of which will be used for other
purposes. This amount excludes guarantees of subsidiary obligations
(which are described below and are subject to a separate
limitation).
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a. Short-term Debt. Consolidated proposes to issue and sell
commercial paper to dealers at the discount rate prevailing at the date
of issuance for comparable commercial paper. The dealers would reoffer
such commercial paper at a discount to investors. Consolidated also
proposes to establish back-up lines of credit providing for borrowings
from time to time when it is impracticable to issue commercial paper.
Such lines of credit would be in an aggregate principal amount not to
exceed the amount of authorized commercial paper, and borrowings under
these lines would mature not more than one year from the date of
borrowing. Consolidated also proposes to establish bank lines of credit
and issue debt securities under its existing indenture and note
programs.\4\
\4\ These programs are described in Holding Co. Act Release No.
26321 (June 29, 1995), which would be superseded by the
authorization granted herein.
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b. Long-term Debt. Consolidated proposes to issue and sell bonds,
debentures, notes, convertible debt, medium term notes, and securities
with call or put options, and to enter into
[[Page 4703]]
other bank debt arrangements. Long-term debt securities would have such
designation, maturity, interest rate(s) (or methods of determining the
same) and terms of payment, redemption provisions (including
nonrefunding provisions), sinking fund terms, conversion provisions,
put terms, and other terms and conditions as are determined at the time
of issuance.
c. Capital Stock. Consolidated proposes to issue and sell preferred
stock or common stock, including stock issued upon the exercise of
convertible debt or pursuant to rights, options, warrants and similar
securities, monthly income preferred stock and cumulative quarterly
income preferred securities.\5\ Any such preferred stock would have
such designation, liquidation preferences, price, dividend rate(s) (or
methods of determining the same) and terms of payment, redemption and
sinking fund provisions (including nonrefunding provisions), voting or
other special rights, conversion terms and other terms and conditions
as may be determined at the time of issuance. Any such common stock
sold by Consolidated may include shares that have been acquired through
employee benefit and dividend reinvestment and stock purchase plans or
otherwise and held as treasury shares.
\5\ In connection with issuance of such securities, Consolidated
proposes to form financing entities, as described below, and to
issue debt to such entities to back up obligations under securities
issued by such entities. For purposes of determining the amount of
authorization used by such transactions, such securities shall not
be considered to be short-term debt.
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3. Interest Rate and Equity Swaps. Consolidated proposes to engage
in interest rate swaps involving its interest obligations existing at
the date of the swap. Consolidated also proposes to engage in equity
swaps in which it would exchange one equity investment market risk for
another or would exchange fixed or floating rate interest income from
an investment for payments based on a stock index.\6\ Interest rate and
equity swaps would be limited to obligations and investments existing
at the time of the swap.
\6\ Consolidated states that equity swaps could be used to hedge
earnings from its domestic or international investments, but would
not be used to transfer title to the equity securities owned by it
that are used in the swap transaction.
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e. Other Securities. In addition to the specific securities for
which authorization is sought, Consolidated also proposes to issue
other types of securities that it deems appropriate during the period
of the Commission's authorization. Consolidated requests that the
Commission reserve jurisdiction over the issuance of additional types
of securities. Consolidated also undertakes that it will file a post-
effective amendment in this proceeding describing the general terms of
each such security and obtain a supplemental order of the Commission
authorizing the issuance thereof by Consolidated. Such supplemental
orders may be issued by the Commission without further public notice in
the Federal Register.
2. Intrasystem Financing. The Applicants propose various financing
transactions between Consolidated and its subsidiaries and between
certain subsidiaries and their respective subsidiaries.
a. Transactions between Consolidated and its Subsidiaries.
Consolidated proposes to make open-account advances to East Ohio,
Peoples, and West Ohio. These borrowings would be made on a revolving
basis through the CNG System Money Pool,\7\ and would bear interest at
a rate equal to the weighted average effective interest rate of
Consolidated's short-term borrowings or, if no such borrowings are
outstanding, at a rate based on the Federal Funds effective rate of
interest quoted daily by the Federal Reserve Bank of New York.
\7\ The CNG System Money Pool arrangements were authorized in
Holding Co. Act Release No. 24128 (June 12, 1986).
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In addition, CNG Financial, CNG Producing, CNG Storage, CNG Power
and CNG Energy also propose to issue and Consolidated proposes to
acquire other types of securities that are not exempted by rule 52 from
the requirement of Commission approval but that are considered by such
companies to be approriate during the period of the Commissions
authorization. These Applicants request that the Commission reserve
jurisdiction over the issuance of additional types of securities and
also undertake that they will cause a post-effective amendment to be
filed in this proceeding describing the general terms of each such
security and obtain a supplemental order of the Commission authorizing
the issuance and acquisition thereof. Such supplemental orders may be
issued by the Commission without further public notice in the Federal
Register.
The aggregate amount of all such financing would not exceed $1.5
billion.
b. Transactions between Certain Subsidiaries and their
Subsidiaries. Consolidated, CNG Energy and CNG Products have filed an
application-declaration in File No. 70-8703, pursuant to which CNG
Power and CNG Storage would become subsidiaries of CNG Energy. In the
event such changes are authorized and occur, CNG Storage and CNG Power
propose to issue and CNG Energy proposes to acquire other types of
securities that are not exempted by rule 52 from the requirement of
Commission approval but that are considered by these companies to be
appropriate during the period of the Commission's authorization in this
proceeding. These Applicants request that the Commission reserve
jurisdiction over the issuance of additional types of securities, and
also undertake that they will cause a post-effective amendment to be
filed in this proceeding describing the general terms of each such
security and obtain a supplemental order of the Commission authorizing
the acquisition and issuance thereof. Such supplemental orders may be
issued by the Commission without further public notice in the Federal
Register.
c. Guarantees. Consolidated proposes to enter into guarantee
arrangements, obtain letters of credit and otherwise provide credit
support with respect to the obligations of the other Applicants to
third parties. CNG Energy, CNG Power, CNG Storage, CNG Financial and
CNG Producing also propose to enter into such arrangements with respect
to the obligations of their respective subsidiaries. The aggregate
amount of all such arrangements would not exceed $2.0 billion.
3. External Financing by Subsidiaries. CNG Energy, CNG Financial,
CNG Power, CNG Producing, and CNG Storage seek authorization to issue
to third parties monthly and quarterly income preferred securities.\8\
In addition to the specific securities for which authorization is
sought, these Applicants also propose to issue other types of
securities that are not exempted by rule 52 from the requirement of
Commission approval and that they deem appropriate during the period of
the Commission's authorization. These Applicants request that the
Commission reserve jurisdiction over the issuance of additional types
of securities and also undertake that they will cause a post-effective
amendment to be filed in this proceeding describing the general terms
of each such security and obtain a supplemental order of the Commission
authorizing the issuance thereof by such Applicants. Such supplemental
orders may be issued by the Commission without further public notice in
the Federal Register.
\8\ In connection with issuance of such securities, these
Applicants propose to form financing entities, as described below,
and to issue debt or other securities to such entities to back up
obligations under securities issued by such entities.
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The aggregate amount of all such securities to be issued would not
have a dollar limitation.
[[Page 4704]]
4. Acquisition of Securities. Consolidated seeks authorization to
reacquire shares of any monthly or quarterly income preferred
securities that may be issued pursuant to authorization in this
proceeding. All of the other Applicants seek authorization to
repurchase shares of their common stock and preferred stock from their
parent companies. In each case, there is no limitation as to amount.
5. Charter Amendments. Consolidated proposes to amend its
certificate of incorporation to increase its authorized common stock
and to authorize a new class of preferred stock. Consolidated requests
the Commission to reserve jurisdiction over the amendments to its
certificate of incorporation pending completion of the record and
filing of related documents under the Securities Exchange Act of 1934.
One or more supplemental orders may be issued by the Commission
authorizing such amendments without further public notice in the
Federal Register. The Applicants, other than Consolidated, propose to
increase the amount of their authorized common stock up to a maximum of
twice the current authorized amount, and to change or eliminate the par
value of such stock.
6. Financing Entities. In connection with the issuance of monthly
and quarterly income preferred securities, Consolidated, CNG Energy,
CNG Storage, CNG Power, CNG Producing, and CNG Financial seek
authorization to organize new corporations, trusts, partnerships or
other entities created for the purpose of facilitating such financings.
Request is made for the acquisition by such Applicants of voting
interests or equity securities issued by the financing entity to
establish such Applicant's ownership of the financing entity (the
equity portion of the entity generally being created through a capital
contribution or the purchase of equity securities, such as shares of
stock or partnership interests, involving an amount usually ranging
from 1-3% of the capitalization of the financing entity.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-2616 Filed 2-6-96; 8:45 am]
BILLING CODE 8010-01-M
