[Federal Register Volume 62, Number 79 (Thursday, April 24, 1997)]
[Notices]
[Pages 20040-20043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10615]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26708]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
April 18, 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 May 12, 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 Century Energies, Inc., et al. (70-9007)
New Century Energies, Inc., a Delaware corporation currently not
subject to the Act (``NCE''),\1\ Public Service Company of Colorado
(``PSCo''), Cheyenne Light, Fuel and Power Company (``Cheyenne''), New
Century Services, Inc. (``NCE Services''), WestGas Interstate Inc.
(``WGI''), New Century Enterprises, Inc. (``Enterprises''), PS Colorado
Credit Corporation (``PSCCC''), Natural Fuels Corporation, PSRI
Investments, Inc., Green & Clear Lakes Company, 1480 Welton, Inc., and
e prime, inc. (``e prime'') and its subsidiary companies, each of 1225
Seventeenth Street, Denver, Colorado 80202, and Southwestern Public
Service Company (``SPS''), Quixx Corporation (``Quixx'') and its
subsidiary companies, and Utility Engineering Corporation (``UE'') and
its subsidiary companies, each of Tyler at Sixth, Amarillo, Texas 79101
(collectively, ``Applicants''), have filed an application-declaration
(``Application'') under sections 6(a), 7, 9(a), 10, 12(b), and 12(c) of
the Act and rules 42, 43, 45, 53 and 54 under the Act. The Applicants
seek authorization to engage in various financing and related
transactions through December 31, 1999 (the ``Authorization Period''),
unless otherwise noted.
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\1\ NCE previously filed an application-declaration requesting
authorization under section 9(a)(2) of the Act to acquire all of the
outstanding voting securities of PSCo, SPS, and Cheyenne, each a
public utility company (collectively, ``Utility Subsidiaries''), and
for related transactions (File No. 70-8787) (``Merger U-1''). Upon
consummation of the transactions described in the Merger U-1, NCE
will register as a holding company under the Act. Excluding the
Utility Subsidiaries, NCE's direct and indirect subsidiaries are
``Nonutility Subsidiaries.'' The Utility Subsidiaries, together with
Nonutility Subsidiaries, are ``Subsidiaries.''
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As described more fully below, the Applicants seek authority for:
(i) External financings by NCE, the Utility Subsidiaries and certain
Nonutility Subsidiaries; (ii) intrasystem financing, including
guarantees, between NCE and its Subsidiaries; and between Subsidiaries;
(iii) the issuance of types of securities not exempt under rules 45 and
52; (iv) the Utility Subsidiaries to enter into interest rate swaps and
other risk management instruments; (v) the Subsidiaries to alter their
capital stock; (vi) the Subsidiaries' formation of new financing
entities and the issuance of securities and related guarantees by the
new and one existing financing entities; and (vii) the retention of
existing financing arrangements.
The proceeds from the financing will be used for general corporate
purposes, including (i) Capital expenditures of NCE and its
Subsidiaries, (ii) the repayment, redemption, refunding or purchase of
debt and capital stock of NCE or its Subsidiaries without the need for
prior Commission approval or pursuant to rule 42 or a successor rule,
(iii) working capital requirements of the NCE system, (iv) investments
in exempt wholesale generators (``EWGs'') and foreign utility companies
(``FUCOs''), as defined in sections 32 and 33 of the Act, respectively,
and (v) other lawful corporate purposes. The Applicants also represent
that proceeds from the proposed financings will be used only in
connection with their respective existing businesses or to make an
acquisition that is exempt from the requirement of prior Commission
approval.
1. External Financing by NCE
a. Common Stock
NCE proposes during the Authorization Period to issue and sell
shares of its common stock, par value $1.00 per share, for an aggregate
offering price of up to $175 million. NCE also proposes to issue and
sell additional shares of its common stock for an aggregate offering
price of up to $360 million, the proceeds of which will be used by NCE
to purchase PSCo's interest in Yorkshire Electric Group, plc.\2\ In
addition, NCE proposes to issue up to an additional 30 million shares
of its common stock (and awards or options for the common stock) to
fund benefit and dividend reinvestment plans (collectively, ``Stock
Plans''), described below, for a period of ten years from the date of
the Commission's order.
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\2\ New Century International, Inc., a wholly-owned subsidiary
of PSCo, owns a 50% interest in Yorkshire Power Group Limited which
through its wholly-owned subsidiary, Yorkshire Holdings plc, has
made a tender offer to acquire Yorkshire Electricity Group plc, a
regional electric company operating in the United Kingdom.
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Securities may be sold through underwriters or dealers, through
agents, directly to a limited number of purchasers or a single
purchaser, or directly to employees (or to trusts established for their
benefit) and other shareholders through NCE's Stock Plans.
NCE common stock may be issued and sold pursuant to underwriting
agreements of a type generally standard in the industry. Public
distributions may be pursuant to negotiation with underwriters, dealers
or agents or effected through competitive bidding among underwriters.
In addition, sales may be made through private
[[Page 20041]]
placements or other non-public offerings to one or more persons. All
such common stock sales will be at rates or prices and under conditions
negotiated or based upon, or otherwise determined by, competitive
capital markets.
PSCo and SPS currently have seven employee benefit plans and under
which they issue and/or sell common stock to their employees. Following
the Merger, five of these plans, as well as a divided reinvestment
plan, may provide for the issuance and/or sale of NCE common stock; the
remaining two benefit plans will be terminated. The benefit plans
include: (1) Southwestern Public Service Company Employee Investment
Plan, which permits the employees of SPS and its subsidiaries to make
contributions, matched by SPS, to be invested in one or more investment
accounts, including an NCE common stock fund; (2) Southwestern Public
Service Company Directors' Deferred Compensation Plan, which permits
directors to defer all or a portion of their annual fees and credit
those fees to either a dollar account or an NCE common stock account;
(3) Southwestern Public Service 1989 Stock Incentive Plan, which
enables SPS to encourage key employees to increase their company
ownership through the grant of stock option awards (both incentive and
non-qualified), restricted stock, and the delivery of shares in lieu of
cash compensation to eligible employees; (4) Public Service Company of
Colorado Employee's Savings and Stock Ownership Plan, a defined
contribution plan offered to all eligible employees, under which
employees may contribute a maximum percentage of their compensation (in
tax deferred and after-tax dollars, with PSCo matching certain tax
deferred contributions) for investment in any of six investment funds,
including purchase of NCE common stock after the Merger; and (5) PSCo
Omnibus Incentive Plan, designed to reward management officials and
generally benefit PSCo. NCE anticipates adopting one or more additional
plans, including an Omnibus Stock Incentive Plan, which will provide
for the issuance and/or sale of NCE common stock, stock options and
stock awards to a group which may include directors, officers and
employees.
NCE may fund the Stock Plans and the Omnibus Stock Incentive Plan
with newly issued common stock, treasury shares or shares purchased in
the open market, and may engage in sales of treasury shares for general
business purposes.
b. Short-term Debt
NCE proposes from time to time through the Authorization Period to
issue short-term debt aggregating not more than $100 million
outstanding at any one time. In the vent that PSCCC becomes a direct
subsidiary of NCE, however, NCE proposes to increase its short-term
debt by an additional $125 million for the purpose of providing
liquidity for PSCCC, as described below.\3\
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\3\ PSCCC currently finances PSCO's accounts receivable and fuel
inventory. In the Merger U-1, PSCCC proposes to continue providing
these services to PSCo and to offer them to NCE associates; PSCCC
also proposes in the Merger U-1 to finance accounts receivable for
nonassociate utilities.
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NCE may sell commercial paper, from time to time, in established
domestic or European commercial paper markets. The commercial paper
would be sold to dealers at the discount rate prevailing at the date of
issuance for commercial paper of comparable quality and maturities sold
to commercial paper dealers generally. It is expected that the dealers
acquiring NCE's commercial paper will reoffer it at a discount to
corporate and institutional investors, such as commercial banks,
insurance companies, pension funds, investment trusts, foundations,
colleges and universities, finance companies and nonfinancial
corporations, and, with respect to European commercial paper,
individual investors.
NCE proposes to establish back-up bank lines in an aggregate
principal amount not to exceed the amount of authorized commercial
paper. NCE would borrow, repay and reborrow under these lines from time
to time, without collateral, to the extent that it becomes
impracticable to sell commercial paper due to market conditions or
otherwise. Loans under these lines will have a maturity date not more
than one year from the date of each borrowing.
Similarly to NCE, PSCCC finances its activities by selling
commercial paper in established commercial paper markets.\4\ Upon PSCCC
becoming a direct subsidiary of NCE, NCE proposes to increase its then
existing lines of credit and add PSCCC as a borrower under them or
establish, together with PSCCC, one or more new lines of credit to
provide credit support for PSCCC's commercial paper. Such lines of
credit will also provide for direct borrowings thereunder by PSCCC.
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\4\ Applicants state that PSCCC's issuance of short-term debt to
finance its authorized activities, so long as it is nonrecourse to
NCE, is exempt under rule 52.
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NCE may engage in other types of short-term debt financing
generally available to borrowers with investment grade credit ratings
as it may deem appropriate in light of its needs and market conditions
at the time of issuance.
2. Utility Subsidiary External Financings
a. Cheyenne
Cheyenne proposes to issue short-term debt aggregating not more
than $25 million outstanding at any one time during the Authorization
Period. Cheyenne may sell commercial paper in established domestic or
European commercial paper markets in the same manner as NCE. Similarly,
Cheyenne may also maintain backup lines of credit that, aggregated, do
not exceed the amount of commercial paper. Cheyenne would borrow, repay
and reborrow under such lines from time to time, without collateral, to
the extent that it becomes impracticable to sell commercial paper due
to market conditions or otherwise. Loans under these lines shall have a
maturity date not more than one year from the date of each borrowing.
b. Interest Rate Swaps
The Utility Subsidiaries request authority to enter into, perform,
purchase and sell financial instruments intended to manage the
volatility of interest rates, including but not limited to interest
rate swaps, caps, floors, collars and forward agreements or any other
similar agreements. Each Utility Subsidiary proposes to employ interest
rate swaps as a means of prudently managing the risk associated with
outstanding debt issued pursuant to this authorization or an applicable
exemption by, in effect, (i) Converting variable rate debt to fixed
rate debt, (ii) converting fixed rate debt to variable rate debt, (iii)
limiting the impact of changes in interest rates resulting from
variable rate debt and/or (iv) providing an option to enter into
interest rate swap transactions in future periods for planned issuances
of debt securities. In no case will the notional principal amount of
any interest rate swap exceed that of the underlying debt instrument
and related interest rate exposure, i.e., each Utility Subsidiary will
not engage in ``leveraged'' or ``speculative'' transactions. The
underlying interest rate indices of such interest rate swaps will
closely correspond to the underlying interest rate indices of each
Utility Subsidiary's debt to which the interest rate swap relates. Each
Utility Subsidiary will only enter into interest
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rate swap agreements with counterparties whose senior secured debt
ratings, as published by Standard & Poor's Corporation, are greater
than or equal to ``BBB+'', or an equivalent rating from Moody's
Investor Service, Inc., Fitch Investor Service or Duff & Phelps.
3. Nonutility Subsidiary External Financings
The Nonutility Subsidiaries expect to continue, as part of the NCE
system, to engage in the development and expansion of their businesses
and to finance authorized activities. The Applicants anticipate that
the majority of such financings will be exempt from prior Commission
authorization under rule 52(b).
The Applicants seek authorization, however, for PSCCC to continue
to borrow under its existing private unsecured medium-term note
program, which provides for the issuance of medium-term notes with
maturities from nine months to seven years. As of December 31, 1996,
notes aggregating $100 million are outstanding. The Applicants propose
that PSCCC be permitted to issue notes under the program in an
aggregate principal amount not to exceed $150 million outstanding at
any one time.
4. Intrasystem Financing
The Applicants propose to engage in intrasystem financings in an
aggregate amount that will not exceed $300 million outstanding at any
one time during the Authorization Period. The $300 million limit
excludes financings that are exempt under rules 45 and 52 under the
Act. Under the proposed intrasystem financing, NCE may acquire
securities issued by its Subsidiaries, and Subsidiaries may acquire
securities issued by other Subsidiaries.
5. Guarantees
NCE also requests authorization to enter into guarantees, obtain
letters of credit, enter into expense agreements or otherwise provide
credit support for the obligations of its system companies, in an
aggregate principal amount not to exceed $300 million outstanding at
any one time during the Authorization Period. Guarantees that are
exempt pursuant to rules under the Act are not included in the limit.
Credit support may be in the form of committed bank lines of credit,
including arrangements similar to those of PSCo described below.
In addition, PSCo proposes to provide guarantees and other credit
support to PSCCC and certain other subsidiaries under an existing
credit facility with several banks that will provide $450 million in
committed banks lines of credit. The credit facility is used primarily
to support the issuance of commercial paper by PSCo and PSCCC. The
credit facility also provides, however, for direct borrowings by
Cheyenne, 1480 Welton, Inc., Fuelco, e prime and PSRI, and the
borrowings are guaranteed by PSCo. PSCo and its subsidiaries propose to
continue the credit facility and guarantees, or any similar facility
and guarantee program. The Applicants state, however, that the amount
of PSCo's guarantee authority under the credit facility will be reduced
if and to the extent NCE provides guarantees or credit support. In
addition, the applicants state that PSCCC's borrowings under the credit
facility are not guaranteed by PSCo.
The Subsidiaries propose to enter into guarantees and other credit
support arrangements with each other, similar to those described with
respect to NCE, in an aggregate principal amount that will not exceed
$50 million outstanding at any one time during the Authorization
Period.
The Applicants state that the aggregate limit for guarantees and
other credit support arrangements excludes such arrangements that are
exempt pursuant to rules under the Act. The Applicants also propose
that the aggregate limits for intrasystem guarantees and other credit
support obligations not be included in the aggregate limits applicable
to the external or other intrasystem financings.
6. Other Securities
NCE, the Utility Subsidiaries and the Nonutility Subsidiaries state
that it may become necessary or desirable during the Authorization
Period to issue and sell, to associate and nonassociate companies,
other types of securities (``Other Securities'') that are not exempt
under rules 45 and 52 to minimize financing costs or to obtain new
capital under changing market conditions. The Applicants request that
the Commission reserve jurisdiction over the issuance and amount of
such Other Securities pending completion of the record.
7. Changes in Capital Stock of Subsidiaries
The Applicants state that they cannot ascertain at this time the
portion of an individual Subsidiary's aggregate financing to be
effected through the sale of capital stock to NCE or other immediate
parent company during the Authorization Period. They assert that
circumstances may arise where the proposed sale of capital stock would
exceed the then authorized capital stock of such Subsidiary. They also
note that the Subsidiary may choose to use other forms of capital
stock. As needed to accommodate such proposed transactions and to
provide for future issues, the Applicants propose that each Subsidiary
be authorized to increase the amount of its authorized capital stock by
an amount that it deems appropriate, and to change the par value, or
change between par and no-par stock, without additional Commission
approval.
8. Financing Entities
The Subsidiaries also propose to organize new corporations, trusts,
partnerships or other entities created to facilitate financings through
the issuance, to third parties, of authorized or otherwise exempt
income preferred securities or other securities. To the extent not
exempt under rule 52, the Subsidiaries request authority for the
financing entities to issue securities to third parties. Additionally,
the Subsidiaries request authorization to (i) Issue debentures or other
evidences of indebtedness to a financing entity in return for the
proceeds of the financing, (ii) acquire voting interests or equity
securities issued by the financing entity to establish the Subsidiary'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, ranging from 1 to 3 percent of the capitalization
of the financing entity) and (iii) guarantee the financing entity's
obligations in connection with the financing activities. Each
Subsidiary also requests authorization to enter into expense agreements
with its respective financing entity, pursuant to which it would agree
to pay all expenses of such entity. The Applicants state that any
amounts issued by financing entities to third parties will be included
in the overall external financing limitation for the immediate parent
of the financing entity. However, the indebtedness issued by a
Subsidiary to a financing entity will not count against the intrasystem
financing limit set forth herein. Applicants also request that SPS be
authorized to maintain the financing transactions with its existing
financing entity, Southwestern Public Service Capital I, a wholly owned
trust, that issued trust preferred securities and loaned the proceeds
to SPS.
9. Financing EWGs and FUCOs
NCE proposes, to the extent internally generated funds are not
available, to invest proceeds from the financings in EWGs and FUCOs and
to guarantee the obligations of EWGs or FUCOs. NCE states that, unless
otherwise authorized by the Commission, its aggregate
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investment in EWGs and FUCOs will not exceed 50% of its consolidated
retained earnings, as defined in rule 53, and that at the time of each
issuance, the proceeds of which will be used to invest in EWGs or
FUCOs, NCE will be in compliance with rule 53.
The authorization requested by the Applicants would be subject to
the following conditions: (1) NCE's (and each Utility Subsidiary's)
common equity will be at least 30% of its consolidated capitalization,
as adjusted to reflect subsequent events that affect capitalization;
(2) the effective cost of money on short-term debt financings may not
exceed 300 basis points over the London interbank offered rate; (3) the
effective cost of money on preferred stock and other fixed income
oriented securities may not exceed 500 basis points over the interest
rate on 30-year U.S. Treasury securities; (4) 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; and (5) the aggregate
amount of external financing, not including existing financing
arrangements, will not exceed (i) $535 million from NCE's issuance and
sale of common stock, excluding amounts from the issuance of up to 30
million shares of common stock to fund the Stock Plans, (ii) $225
million from NCE's issuance and sale of short-term debt, (iii) $25
million from Cheyenne's issuance and sale of short-term debt, and (iv)
$150 million from PSCCC's issuance and sale of medium-term notes; (6)
the aggregate amount of guarantees will not exceed (i) $300 million for
NCE to guarantee or provide credit support for obligations of its
Subsidiaries, (ii) $450 million for PSCs to guarantee or provide credit
support for certain of its subsidiaries, and (iii) $50 million for
Subsidiaries to guarantee or provide credit support to other
Subsidiaries; and (7) intrasystem financing will not exceed $300
million for NCE to finance its Subsidiaries, and Subsidiaries to
finance Subsidiaries.
The Applicants request authorization to deviate from the
Commission's Statement of Policy Regarding First Mortgage Bonds, HCAR
No. 13105 (Feb. 16, 1956), as amended by HCAR No. 16369 (May 8, 1969),
and Statement of Policy Regarding Preferred Stock, HCAR No. 13106 (Feb.
16, 1956), as amended by HCAR No. 16758 (June 22, 1970), as applicable,
with respect to the proposed financings.
American Electric Power Co., et al. (70-9021)
American Electric Power Company, Inc. (``AEP''), a registered
holding company, and AEP Resources, Inc. (``AEP Resources''), a
nonutility subsidiary company of AEP, both of 1 Riverside Plaza,
Columbus, Ohio, 43215, have filed a declaration under sections 6(a), 7,
12(b), 32 and 33 of the Act and rules 45, 53 and 54 thereunder.
AEP, through its direct and indirect subsidiary companies, is
engaged in development activities relative to exempt wholesale
generators (``EWGs''), as defined in section 32 of the Act, and foreign
utility companies (``FUCOs''), as defined in section 33 of the Act.
AEP is authorized under several Commission orders (``Orders'') to
finance these activities through the issuance and sale of debt and
equity securities and through the issuance of guarantees relative to
the obligations of certain subsidiary companies.\5\
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\5\ HCAR No. 24898 (June 6, 1989); HCAR No. 25905 (Oct. 8,
1993); HCAR No. 25984 (Feb. 4, 1994); HCAR No. 26200 (Dec. 22,
1994); HCAR No. 26516 (May 10, 1996).
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Under the Orders, AEP is authorized to use the proceeds of common
stock sales and borrowings to finance the acquisition of interests in
EWGs and FUCOs and to issue guarantees relative to the obligation of
such entities, provided that the sum of the guarantees and the net
proceeds of common stock sales and borrowing used for this purpose,
together with AEP's aggregate investment in all EWG's and FUCOs, shall
not exceed 50% of its consolidated retained earnings.
AEP and AEP Resources request that the Commission authorize them to
issue securities for the purpose of financing the acquisition, directly
or indirectly, of interests in EWGs and FUCOs, and to issue guarantees
relative to the obligations of such entities, in an aggregate amount
that, together with AEP's aggregate investment in all EWGs and FUCOs,
would not exceed 100% of its consolidated retained earnings.
The consolidated retained earnings of AEP through December 31, 1996
were about $1.508 billion. Thus, under rule 53(a), it was authorized to
invest up to about $754 million in EWGs and FUCOs. Although AEP had
aggregate investments of about $1 million through December 31, 1996, in
February 1997, it committed about $360 million to its investment in
Yorkshire Electricity Group plc. In addition, it has $110 million
designated for another FUCO, of which about $11.5 million was invested
through March 13, 1997. AEP is considering further investment
opportunities, some of which would require an investment in excess of
the approximately $284 million that it would be authorized to invest
under rule 53(a).
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-10615 Filed 4-23-97; 8:45 am]
BILLING CODE 8010-01-M
