[Federal Register Volume 59, Number 92 (Friday, May 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-11607]
[[Page Unknown]]
[Federal Register: May 13, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26047]
Filings Under the Public Utility Holding Company Act of 1935
(``Act'')
May 6, 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 May 31, 1994, to the Secretary, Securities and Exchange
Commission, Washington, DC 20549, and serve a copy on the relevant
applicant(s) and/or declarant(s) at the address(es) specified below.
Proof of service (by affidavit or, in case of an attorney at law, by
certificate) should be filed with the request. Any request for hearing
shall identify specifically the issues of fact or law that are
disputed. A person who so requests ill be notified or 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.
The Southern Development and Investment Group (70-8173)
The Southern Development and Investment Group, Inc., a non-utility
subsidiary of The Southern Company (``Southern''), a registered holding
company, and Southern, each of 64 Perimeter Center East, Atlanta,
Georgia 30346, have filed an application-declaration under sections
6(a), 7, 9(a), 10, 12(b) and 13(b) of the Act and Rules 45, 50(a)(5),
81, 87, 90 and 91 thereunder.
Southern proposes to invest up to $275 million in Development from
time to time through December 31, 1998 in order to fund the following
activities, as discussed in more detail below: (a) To enable
Development to develop, construct, and acquire an energy management
prototype network ($175 million); (b) to provide Development with
necessary working capital in connection with its research and
development and technical consulting activities, as well as to pay
other general and administrative expenses ($50 million), including--(i)
Funding to commercialize POWERcall ($10 million of the total $50
million) and (ii) payment of predevelopment costs associated with
potential investments in other energy management facilities and energy
recovery facilities ($10 million of the total $50 million); and, (c) to
finance the costs of equipment and/or provide customer financing of
equipment in connection with energy management and efficiency services
provided by Development ($50 million).
Southern proposes to acquire, and Development proposes to issue and
sell, common stock and notes up to $275 million from time to time
through December 31, 1998, with maturities no later than December 31,
2003. Such loans will bear an interest rate equal to a rate not to
exceed the prime rate in effect on the date of the loan at a bank
designated by Southern. In addition, Development proposes to convert
the notes to capital contributions (through Southern's forgiveness of
the debt evidenced thereby). Alternatively, Southern proposes to make
up to $275 in cash capital contributions to Development from time to
time through December 31, 1998.
Development proposes to issue and sell to third parties, and
Southern proposes to guarantee, up to $275 million in notes or other
recourse liabilities from time to time through December 31, 1998, the
maturities of which will not extend past December 31, 2003. The loans
evidenced by such notes will be made with an interest rate not to
exceed 3% over the lender bank's prime rate.
Development proposes to acquire promissory notes evidencing the
debt of customers in connection with financing energy management and
efficiency equipment. Further, Development may assign evidences of
customer indebtedness to Southern in consideration of a reduction in
the amount of outstanding notes, in which case the aggregate amount of
outstanding customer indebtedness held by Southern would be added to
the aggregate amount of outstanding notes issued by Development and
held by Southern for purposes of the proposed $50 million limit.
Southern proposes to provide performance guarantees and to
undertake other contractual obligations with respect to the performance
and other obligations of Development under contracts and bids with
third parties. Southern proposes to provide guarantees in an aggregate
amount outstanding at any one time of $200 million through December 31,
2003; provided, that any guarantees or indemnifications outstanding at
December 31, 2003 shall continue until expiration or termination in
accordance with their terms. For purposes of computing the above
limitation, neither Southern's agreements to provide guarantees or
indemnifications of sureties of Development which have not actually
been issued, nor Development's joint venture partner's respective
shares of any joint venture obligations or indemnification of sureties
of the joint venture, shall be counted. In addition, Southern and
Development request that they have the flexibility to negotiate
specific guarantees and similar provisions and arrangements with third
parties, and indemnifications of sureties, as the need to do so arises,
without further Commission authorization.
Development proposes to enter into new service agreements with
Southern Company Services, Inc. (``Services'') and each of the
operating electric utility companies (each an ``Operating Company'',
collectively, ``Operating Companies'') that will be substantially
identical to the existing agreements between Development and Services.
Development proposes to undertake activities, including advertising
and marketing studies, additional pilot tests, testing of various
manufacturers' equipment, and purchases of equipment and software
enhancements, among other activities, with a view to commercializing
POWERcall and related customer services\1\ throughout Alabama and
Georgia and in the Gulf region of Mississippi and Florida. Development
also requests authority to enter into agreements with utilities that
are interconnected with Southern System companies pursuant to which
Development would offer POWERcall and related services to the customers
of such non-affiliated utilities. Development proposes to invest up to
$10 million in connection with these activities.
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\1\POWERcall is described as a utility customer service
involving the installation of a device at a customer's premises
which would monitor and automatically report power outages to a
utility's operations center. Development states that it is
investigating the additional capabilities of the monitoring device
and its related software to determine the commercial feasibility of
providing certain monitoring services in addition to POWERcall. Such
additional services would include both energy-related services, such
as automated meter reading and temperature monitoring, and other
services, such as fire, intrusion and health alarm services.
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Development also requests authority to develop, purchase,
construct, own and operate a prototype energy management communications
network\2\ at various locations within the Southern System. Development
requests authority to invest up to $175 million in equity investments
in such prototype systems, which would cover design and marketing costs
and the costs of building, purchasing, or leasing fiber and coaxial
cable lines and related equipment, facilities and properties.
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\2\Development states that, by utilizing his network, it
proposes to offer to customers power usage and outage monitoring
services (including POWERcall), two way customer/utility
communications, automated billing, energy and conservation
information, including ``Good Cents'' messages and information, and
communications-based programs, such as ``distance learning,'' that
may be offered in conjunction with a utility's industrial
development activities, among other potential utility and utility-
related interactive communications services. Development states that
the network may also be used for internal system communication of
voice and data.
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Development proposes to make available the balance of the bandwidth
capacity to other communications providers of voice, data, and video
services, such as cable television companies, local and long distance
telephone companies, computer networks, commercial merchants (e.g.,
home shopping networks), or large private users, such as banks,
pursuant to leases, network sharing agreements or licensing
transactions negotiated at arms' length for varying terms at market
values.
Development proposes to provide the necessary system operations and
maintenance services in connection with its energy management
communications network and will charge third party communications
providers the fair market value of such services based on their level
of use of the system.
Development also proposes to offer to utility customers directly,
or indirectly through public utility companies, a broader range of
energy management services, including demandside management (``DSM'')
measures, and, in connection therewith, proposes to invest in energy
management equipment and/or provide customer financing for the purchase
of equipment from third party vendors and suppliers. Specifically,
Development proposes to: (1) Engage in energy management services,
including--(a) Design of modifications and new equipment, (b)
management or direct installation of new equipment, (c) the entry into
performance contracts (where Development is paid on the basis of actual
energy savings), (d) the arrangement of third-party financing for
conservation programs, (e) the training personnel in use of equipment,
and (f) the observation of the operation of installed system to insure
that it meets design specifications; (2) offer demand-side management
services, including--(a) design of energy conservation programs, (b)
implementation of energy conservation programs, (a) performance
contracts for DSM work, and (d) the monitoring and/or evaluating of DSM
programs; (3) invest in energy management equipment; and, (4) provide
customer financing for the purchase of energy management equipment from
third parties.
Development requests authority to use up to $50 million of the
funds provided by Southern to make investments in energy efficiency and
conservation assets and/or loans to customers to enable such customers
to finance the purchase of such assets.
Development requests authority to provide the following general
types of technical consulting services to non-affiliated entities,
including utilities, industrial and commercial concerns and
governments: management expertise, such as strategic planning, finance,
feasibility studies, organization, energy efficiency, safety,
environmental and conservation matters, policy matters and management
services; technical services and expertise, such as design,
engineering, procurement, construction supervision, information systems
and services, environmental and conservation planning, auditing,
engineering and construction, engineering and construction planning and
procedures, data processing, system planning and operational planning;
training expertise, including training in the area of operation,
equipment repair, and maintenance; and technical and procedural
resources and systems, such as are embedded in computer, information,
and communications systems, programs or manuals developed or acquired
by Southern System companies. In addition, Development seeks authority
to render certain services that Southern Electric International, Inc.
(``SEI'') now provides in accordance with the Commission orders dated
July 17 and December 18, 1981 (HCAR Nos. 22132 and 22315A,
respectively) to public utility companies and others having need for
the procurement of materials, machinery, equipment, services and
supplies used in the generation, transmission, and distribution of
electric power and the maintenance of inventories of spare parts, such
as through joint procurement organizations (e.g., Pooled Inventory
Management Services), which may include, as members, participants, or
shareholders companies that are subsidiaries of Southern. Development
also seeks authority to assume SEI's obligations under existing
contracts to the extent that they can be assigned.
Development also requests authorization to offer to third parties
Intellectual property\3\ created or acquired by Development or its
associate companies within the Southern System.
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\3\``Intellectual Property'' is defined as ``any process,
program or technique which is protected by the copyright, patent or
trademark laws, or as a trade secret, and which has been
specifically and knowingly incorporated into, exhibited in, or
reduced to a tangible writing, drawing, manual, computer program,
product or similar manifestation or thing.'' see HCAR Nos. 22132 and
22315A (July 17 and December 18, 1981, respectively).
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Development also proposes to undertake preliminary development
activities with respect to potential investments in energy and resource
recovery facilities and technologies, including but not limited to coal
gasification facilities and other synthetic fuels technologies,
landfill gas recovery, refuse derived fuels, and other alternative
fuels technologies. Development states that it will not make any
capital investment in any such facility exceeding $1 million
individually or $10 million in the aggregate, except pursuant to
separate Commission authorization.
Gulf States Utilities Company (70-8375)
Gulf States Utilities Company (``GSU''), 350 Pine Street, Beaumont,
Texas 77701, an electric utility subsidiary company of Energy
Corporation, a registered holding company, has filed an application-
declaration pursuant to sections 6(a), 7, 9(a), 10, 12(c) and 12(d) of
the Act and Rules 42, 44(b), 50 and 50(a)(5) thereunder. GSU proposes
to engage in the transactions described herein from time to time
through December 31, 1995.
GSU proposes to issue and sell not more than $700 million aggregate
principal amount of: (1) One or more series of its preferred stock,
cumulative, $100 par value, and/or its preferred stock, cumulative,
without per value (``Preferred''); (2) one or more new series of its
first mortgage bonds (``Bonds''); and/or (3) one or more new sub-series
of the medium term note series of its first mortgage bonds (``MTNs'').
Each series of Bonds or sub-series of MTNs will be sold at such
price, will bear interest at such rates and will mature on such date
(not more than 40 years from the first day of the month of issuance) as
will be determined at the time of sale. No series of Bonds or sub-
series of MTNs will be issued at rates in excess of those generally
obtained at the time of pricing for sales of first mortgage bonds or
medium term notes having the same maturity, issued by companies of
comparable credit quality and having similar terms, conditions and
features. The price, exclusive of accrued interest, to be paid for each
series of Bonds to be sold at competitive bidding will be within a rang
of not more than 5 percentage points, but shall not exceed 5 percentage
points above or below 100% of the principal amount of such series of
Bonds, and the price of each sub-series of MTNs will be within a range
of 95-105% of the principal amount. GSU requests an exemption from the
Commission's Statement of Policy Regarding First Mortgage Bonds (HCAR
No. 13105, February 16, 1956, as modified by HCAR No. 16369, May 8,
1969) (``Bond SOP'') to the extent that, among other things, the
redemption provisions, the sinking fund provisions (or lack thereof),
the covenant limiting common stock dividends and/or the maintenance and
replacement provisions (or lack thereof) with respect to any series of
Bonds or sub-series of MTNs deviate from the Bond SOP.
The price, exclusive of accumulated dividends, for each series of
Preferred will be determined at the tome of sale and will not be less
than par or stated value on a per share basis. The price to be paid for
any series of Preferred to be sold at competitive bidding will not be
less than par or stated value nor more than 102.75% thereof per share,
plus accumulated dividends, if any. No series of Preferred would be
sold if the dividend rate thereon would exceed those generally obtained
at the time of pricing for sales of preferred stock of the same par or
stated value, issued by companies of comparable credit quality and
having similar terms, conditions and features. GSU requests an
exemption from the Commission's Statement of Policy Regarding Preferred
Stock (HCAR No. 13106, February, 16, 1956, as modified by HCAR No.
16758, June 22, 1970) (``Stock SOP'') to the extent that, among other
things, the redemption provisions of any series of Preferred deviate
from the Stock SOP.
Depending upon market conditions, GSU may sell one or more series
of Preferred having a par value of $100 to underwriters for deposit
with a bank or trust company (``Depositary''). The underwriters would
then receive from the Depositary and deliver to the repurchasers in the
subsequent public offering shares of depositary preferred stock
(``Depositary Preferred''), each representing a stated fraction of a
share of the Preferred. Depositary Preferred would be evidenced by
depositary receipts. Each owner of Depositary Preferred would be
entitled proportionally to all the rights and preferences of the series
of Preferred (including dividends, redemption and voting). A holder of
Depositary Preferred will be entitled to surrender Depositary Preferred
to the Depositary and receive the number of whole shares of Preferred
represented thereby. A holder of Preferred will be entitled to
surrender shares of Preferred to the Depositary and receive a
proportional amount of Depositary Preferred.
GSU proposes to use the net proceeds derived from the issuance and
sale of the Bonds, MTNs and/or Preferred for general corporate
purposes, including, but not limited to, the repayment of outstanding
securities when due and/or the possible redemption, acquisition or
refunding of certain outstanding securities prior to their stated
maturity or due date.
GSU states that it may sell the Bonds, MTNs and Preferred pursuant
to the competitive bidding requirements of Rule 50, or, by means of
agency arrangements or direct placement with purchasers under an
exception from the competitive bidding requirements of Rule 50 pursuant
to Rule 50(a)(5), in the event that GSU determines that a negotiated
public offering or private placement would be advantageous. GSU
requests authorization to undertake negotiations with respect to
arrangements for the issuance and sale of the Bonds, MTNs and
Preferred. It may do so.
GSU also proposes to enter into arrangements for the issuance and
sale of tax-exempt bonds (``Tax-Exempt Bonds''), and in connection
therewith, GSU proposes to enter into one or more equipment lease/
sublease arrangements (``Equipment Lease''), pursuant to which one or
more governmental authorities (``Issuers'') may issue one or more
series of Tax-Exempt Bonds under one or more indentures (``Indenture'')
in an aggregate principal amount not to exceed $250 million. The net
proceeds from the sale of the Tax-Exempt Bonds will be used to finance
certain facilities including but not limited to sewage and/or solid
waste disposal or pollution control facilities (``Facilities'') that
have not heretofore been the subject of such financing, or to refinance
outstanding tax-exempt bonds issued for that purpose.
GSU further proposes, under the Equipment Lease, to acquire,
construct and install the Facilities, and lease the Facilities to the
Issuers and simultaneously sublease such Facilities from the Issuers at
subrentals sufficient (together with other monies held by the trustee
under the applicable Indenture and available for such purpose) to pay
the principal or redemption price of, premium, if any, interest and
other amounts owing on the Tax-Exempt Bonds together with related
expenses. Under the Equipment Lease, GSU will also be obligated to pay
certain fees incurred in connection with the transactions.
The Equipment Lease and the Indenture may provide for either a
fixed interest rate or an adjustable interest rate for each series of
the Tax-Exempt Bonds. No series of Tax-Exempt Bonds would be sold if
the fixed interest rate or initial adjustable interest rate thereon
would exceed the lower of 13% or rates generally obtained at the time
of pricing for sales of tax-exempt bonds having the same maturity,
issued for the benefit of companies of comparable credit quality and
having similar terms, conditions and features. The Tax-Exempt Bonds
will mature not earlier than five years from the first day of the month
of issuance nor later than 40 years from the date of issuance. Each
series may be subject to redemption and/or sinking fund provisions.
GSU proposes to arrange for one or more irrevocable letters of
credit, in an aggregate amount up to $300 million and for a term not to
exceed ten years, from a bank, in favor of the trustee for one or more
series of Tax-Exempt Bonds. GSU would enter into a letter of credit and
reimbursement agreement (``Reimbursement Agreement'') with the bank
under which GSU would agree to reimburse the bank for amounts drawn
under the letter of credit within 60 months with the interest rate not
to exceed the bank's prime commercial loan rate plus 2% and to pay
certain fees, including up-front fees not to exceed $100,000 and annual
fees not to exceed 1\1/4\% of the face amount of the letter of credit.
Provision may be made for extension of the term of such letter of
credit or for the replacement thereof, upon its expiration or
termination, by another letter of credit.
In addition, or as an alternative to a letter of credit, GSU may:
(1) Provide an insurance policy for one or more series of Tax-Exempt
Bonds, and/or (2) obtain authentication of and pledge one or more new
series of its First Mortgage Bonds (``Collateral Bonds'') to be issued
under GSU's mortgage and delivered to the trustee or the bank to
evidence and secure GSU's obligations under the Equipment Lease or the
Reimbursement Agreement. Such Collateral Bonds could be issued: (1) In
a principal amount equal to the principal amount of Tax-Exempt Bonds
and bearing interest at a rate equal to the rate of interest on such
Tax-Exempt Bonds; (2) in a principal amount equivalent to the principal
amount of Tax-Exempt Bonds plus an amount equal to interest on those
Tax-Exempt Bonds for a specified period and bearing no interest; (3) in
a principal amount equivalent to the principal amount of Tax-Exempt
Bonds or in such amount plus an amount equal to interest on those Tax-
Exempt Bonds for a specified period, but carrying a fixed interest rate
that would be lower than the fixed interest rate of the Tax-Exempt
Bonds; or (4) in a principal amount of Tax-Exempt Bonds at an
adjustable rate of interest, varying with such Tax-Exempt Bonds but
having a ceiling rate of 13%. Each series of the Collateral Bonds that
would bear interest would do so at a fixed interest rate or initial
adjustable interest rate not to exceed 13%. The terms of the Collateral
Bonds will correspond to the terms of the related Tax-Exempt Bonds. The
maximum amount of the Collateral Bonds would be $300 million, and the
Collateral Bonds would be in addition to the aggregate limitation on
the Bonds specified above. In connection with the proposed Tax-Exempt
Bonds financing, GSU requests a finding of the Commission that
competitive bidding of Collateral Bonds pursuant to Rule 50 is
inappropriate since the Collateral Bonds would be issued and pledged
solely to secure GSU's obligations and no public offering of the
Collateral Bonds would be made.
GSU also proposes to use, in addition to or as an alternative for
the proceeds from the sale of the Bonds, MTNs, Preferred and/or Tax-
Exempt Bonds, other available funds to acquire, through tender offers,
open market or negotiated purchases, in whole or in part, prior to
their respective maturities, not more than $600 million aggregate
principal amount and par value and/or stated value of: (1) One or more
series of GSU's outstanding first mortgage bonds or sub-series of MTNs,
(2) one or more series of GSU's outstanding preferred stock, (3) one or
more series of outstanding tax-exempt bonds heretofore issued for the
benefit of GSU, (4) GSU's outstanding series of debentures, and/or (5)
GSU's outstanding series of preference stock. GSU states that it will
not use the proceeds from the sale of the Bonds, MTNs, Preferred and/or
Tax-Exempt Bonds to enter into refinancing transactions unless: (1) the
estimated present value savings derived from the net difference between
interest or dividend payments on a new issue of comparable securities
and those securities refunded is, on an after-tax basis, greater than
the present value of all repurchasing, redemption, tendering and
issuing costs, assuming an appropriate discount rate, determined on the
basis of the then estimated after-tax cost of capital of Entergy
Corporation and its subsidiaries, consolidated; or (2) GSU shall have
notified the Commission of the proposed refinancing transaction
(including the terms thereof) and obtained appropriate authorization to
consummate the transaction.
Louisiana Power & Light Co. (70-8391)
Louisiana Power & Light Company (``LP&L''), 639 Loyola Avenue, New
Orleans, Louisiana 70113, an electric utility subsidiary company of
Entergy Corporation (``Entergy''), a registered holding company, has
filed an declaration, pursuant to Sections 6(a) and 7 of the Act and
Rule 50(a)(5).
LP&L proposes to issue and sell up to $326 million in secured lease
obligation bonds (``Refunding Bonds''), in one or more series through
December 31, 1995, in order to redeem approximately $310 million in
previously issued and sold secured lease obligation bonds (``Original
Bonds'').
By orders dated September 26, 1989 (HCAR No. 24956) and September
27, 1989 (HCAR No. 24958) (``Orders''), LP&L sold to and leased back
from three separate trusts ``(Lessors''), on a long-term net lease
basis pursuant to three separate facility leases (``Leases''), an
approximate 9.3% aggregate ownership interest (``Undivided Interests'')
in Unit No. 3 of the Waterford nuclear power plant (``Waterford 3'') in
three almost identical but separate transactions. The First National
Bank of Commerce (``Owner-Trustee'') is the trustee for these trusts.
LP&L now has an approximate 9.3% leasehold interest in Waterford 3.
The purchase price of the Undivided Interests was $353.6 million.
About $43,603,000 was provided through equity contributions of the
owner-participant in each of the three Lessor trusts. About
$309,997,000 was provided through issuance of the Original Bonds by the
Owner-Trustee in an underwritten public offering. The Original Bonds
consist of three separate series of secured lease obligation bonds,
with an annual interest rate of 10.30%, to mature on January 2, 2005,
issued in an aggregate principal amount of $140,452,000 (``2005
Bonds''), and three separate series of secured lease obligation bonds,
with an annual interest rate of 10.67%, to mature on January 2, 2017,
issued in an aggregate principal amount of $169,545,000 (``2017
Bonds'').
LP&L now proposes to have the Owner-Trustee issue the Refunding
Bonds either under three amended and supplemented Indentures of
Mortgage and Deeds of Trust dated September 1, 1989 or under comparable
instruments (``Indentures''). The Refunding Bonds will be issued to
refund the Original Bonds. In the alternative, LP&L proposes to refund
all or a portion of the Original Bonds with interim funds obtained from
banks or other institutions by the Owner-Trustee (``Interim Funds'')
and to then issue Refunding Bonds to retire the Interim Funds.
The proceeds from the sale of the Refunding Bonds and possibly the
proceeds of the Interim Funds, possibly together with funds provided by
LP&L, will be used to redeem the Original Bonds and to meet associated
issuance costs. The 2005 Bonds are optionally redeemable on July 2,
1994 for 105.150% of their principal amount. The 2017 Bonds are first
optionally redeemable on July 2, 1994 for 108.003% of their principal
amount. Should Original Bonds be retired with the Interim Funds, the
proceeds of Refunding Bonds will be used to retire the Interim Funds.
It is not anticipated that there would be a redemption premium
associated with the retirement of the Interim Funds. The Refunding
Bonds will be structured and issued under the documents and pursuant to
the procedures applicable to the issuance of the Original Bonds, which
documents and procedures are described in the Orders, or comparable
documents with similar terms and provisions.
The Interim Funds would be provided through one or more domestic or
foreign financial institutions (``Interim Lenders''), which would make
loans to the Lessors evidenced by notes issued by the Lessors. The term
of the Interim Funds would be up to the remainder of the basic lease
terms under the Leases. LP&L might assume the Interim Funds upon the
occurrence of certain events or if it exercises certain purchase
options under the Leases. The Interim Funds would be refunded with the
proceeds of the Refunding Bonds. LP&L would use its best efforts to
arrange for refunds with desirable interest rates as quickly as
possible after the Interim Funds are required.
LP&L is obligated to make payments under the Leases in amounts that
will provide for scheduled payments of principal and interest on the
Refunding Bonds when due. Upon the refund of the Original Bonds,
amounts payable by LP&L under the Leases will be adjusted pursuant to
the terms of supplements to the Leases to be entered into. A similar
procedure would be used if the Interim Funds are used.
Neither the Refunding Bonds nor the Interim Funds will be direct
obligations of or guaranteed by LP&L. However, under certain
circumstances, LP&L might assume all or a portion of the Refunding
Bonds of the Interim Funds. Each Refunding Bond will be secured by,
inter alia, (i) A lien on and security interest in the Undivided
Interest of the Lessor that issues the Refunding Bond and (ii) certain
other amounts payable by LP&L thereunder. The notes of the Lessor in
evidence of the Interim Funds would also be secured.
The Refunding Bonds are to be issued in registered form without
coupons in denominations of $1,000 or integral multiples thereof.
Interest on the Refunding Bonds of each series will be payable January
2 and July 2 of each year to commence with the interest payment date
after the initial issuance of the Refunding Bonds. Interest on Interim
Funds could be paid on a different basis. The Refunding Bonds might be
redeemed if a Lease is to be terminated prior to the end of the basic
lease term provided for therein. Similar provisions would be applicable
to the Interim Funds.
Instead of Refunding Bonds issued through the Owner-Trustee, LP&L
might arrange for a funding corporation to issue the Refunding Bonds,
in which case the proceeds from Refunding Bonds would be loaned by the
funding corporation to the Lessors, which would issue notes (``Lessor
Notes'') to the funding corporation to evidence the loans and secure
the Refunding Bonds, and the Lessors would use the loans to redeem the
Original Bonds.
The terms of the Lessor Notes and the indentures for their issuance
would reflect the redemption and other terms of the Refunding Bonds.
The rental payments of LP&L would be used for payments on principal and
interest on the Lessor Notes, which payments would be used for payments
on Refunding Bonds when due. The Refunding Bonds would be secured by
the Lessor Notes, which would be secured by a lien on and security
interest in the Undivided Interests and by certain rights under the
Leases.
An alternative to Refunding Bonds issued by the Owner-Trustee would
be for LP&L to use a trust structure in which the Lessors would issue
Lessor Notes to one or more passthrough trusts and the trusts would
issue certificates in evidence of ownership interests in the trusts.
The debt terms of the Refunding Bonds would be comparable to the terms
of the Lessor Notes and the indentures for their issuance.
LP&L might have some Refunding Bonds or trust certificates to be
sold by competitive bidding, negotiated underwritten public offering,
or private placement with institutional investors. LP&L intends to
arrange the Interim Funds through commercial banks or similar
institutions.
LP&L believes that it would be impossible to sell the Refunding
Bonds or the trust certificates, or to arrange the Interim Funds, by
competitive bidding in accordance with Rule 50. Thus LP&L requests
under Rule 50(a)(5) an exception from the competitive bidding
requirements of the rule. LP&L further requests authorization to
negotiate for the sale of the Refunding Bonds or the trust certificates
or for the Interim Funds. It may do so.
LP&L shall not have the Owner-Trustee sell the Refunding Bonds or
the trust certificates, or acquire the Interim Funds, unless: (i) The
estimated present value savings derived from the net difference between
interest payments on a new issue of comparable securities and those
securities refunded is, on an after-tax basis, in excess of the present
value of all redemption and issuance costs, based on an appropriate
discount rate, determined on the basis of the then estimated after-tax
cost of capital of Entergy and its consolidated subsidiaries, or (ii)
LP&L shall have obtained Commission authorization.
Under the separate 1989 participation agreements relative to the
sale of the Undivided Interests, LP&L issued three separate promissory
notes to the owner-participants in an aggregate principal amount equal
to the highest of either the maximum net casualty value or the maximum
net special casualty value payable under the Leases during the basic
lease term.--$208,236,768 on July 2, 1994, which is expected to be the
approximate date of the sale. Redemption of the Original Bonds could,
in some circumstances, cause an increase in these values and therefore,
require an increase in the principal amount of the related promissory
notes.
In addition, LP&L is required to collateralize its obligations to
the owner-participants five years after the sales either through first
mortgage bonds in a principal amount equal to that of the promissory
notes or a letter of credit (HCAR No. 24956, September 26, 1989). To
the extent the proposed transactions would necessitate the issuance of
promissory notes or first mortgage bonds in a principal amount in
excess of that previously authorized, LP&L also seeks authorization of
such increases.
Metropolitan Edison Company (70-8401)
Metropolitan Edison Company (``Met-Ed''), 2800 Pottsville Pike,
Muhlenberg Township, Berks County, Pennsylvania 19640, a public-utility
subsidiary company of General Public Utilities Corporation (``GPU''), a
registered holding company, has filed an amended application-
declaration under sections 6(a), 7, 9(a), 10 and 12(b) of the Act and
rules 45, 50(a)(5) and 54 thereunder. A notice of the application-
declaration was issued by the Commission on April 22, 1993 (HCAR No.
26034) (``Prior Notice'').
As described in the Prior Notice, Met-Ed proposes to organize a
special purpose subsidiary (``Met-Ed Capital'') as either a limited
liability company under the Delaware Limited Liability Company Act
(``LLC Act'') or a limited partnership under the Pennsylvania or
Delaware Revised Uniform Limited Partnership Act. Met-Ed may also
organize a second special purpose wholly owned subsidiary under the
Delaware General Corporation Law (``Investment Sub'') for the sole
purpose of either: (i) Acquiring and holding a second class of Met-Ed
Capital common interests so as to comply with the requirement under the
LLC Act that a limited liability company have at least two members or
(ii) acting as the general partner of Met-Ed Capital, assuming a
limited partnership structure. Met-Ed Capital will then issue and sell
from time to time in one or more series through June 30, 1996 up to
$125 million aggregate stated value of preferred limited liability
company interests or limited partnership interests, in the form of
Monthly Income Preferred Stock, $25 per share stated value (``MIPS'').
Met-Ed states that there are certain changes to the transactions as
described in the Prior Notice. First, each note or Subordinated
Debenture, as described in the Prior Notice, will have a term of up to
50 years, rather than 30 years that may be extended for up to an
additional 20 years, subject to certain specified conditions.
In addition, Met-Ed states that there are certain changes to the
structure of Met-Ed Capital and Investment Sub. Met-Ed may acquire all
of the common stock of Investment Sub for a nominal consideration and
may capitalize Investment Sub with a demand promissory note in the
principal amount of up to 10% of the total capitalization of Met-Ed
Capital from time to time, or up to an initial principal amount of $13
million. If Met-Ed Capital is organized as a limited partnership,
Investment Sub may also acquire up to a 3% general partnership interest
in Met-Ed Capital. The amount of such capital contribution (up to $4.0
million), together with the gross proceeds received by Met-Ed Capital
from the issuance and sale of the MIPS (i.e., a maximum of $125
million), would be applied by Met-Ed Capital to acquire Met-Ed's
Subordinated Debentures. The total equity contributions by Met-Ed to
Met-Ed Capital would not exceed $35 million.
Finally, Met-Ed may acquire a separate class of limited partnership
interest in Met-Ed Capital for a nominal consideration to ensure that
Met-Ed Capital will at all times have a limited partner as required by
the Delaware Revised Uniform Limited Partnership Act.
Pennsylvania Electric Company (70-8403)
Pennsylvania Electric Company (``Penelec''), 1001 Broad Street,
Johnstown, Pennsylvania 15907, a public-utility subsidiary company of
General Public Utilities Corporation (``GPU''), a registered holding
company, has filed an amended application-declaration under sections
6(a), 7, 9(a), 10 and 12(b) of the Act and rules 45, 50(a)(5) and 54
thereunder. A notice of the application-declaration was issued by the
Commission on April 22, 1993 (HCAR No. 26034) (``Prior Notice'').
As described in the Prior Notice, Penelec proposes to organize a
special purpose subsidiary (``Penelec Capital'') as either a limited
liability company under the Delaware Limited Liability Company Act
(``LLC Act'') or a limited partnership under the Pennsylvania or
Delaware Revised Uniform Limited Partnership Act. Penelec may also
organize a second special purpose wholly owned subsidiary under the
Delaware General Corporation Law (``Investment Sub'') for the sole
purpose of either: (1) Acquiring and holding a second class of Penelec
Capital common interests so as to comply with the requirement under the
LLC Act that a limited liability company have at least two members or
(ii) acting as the general partner of Penelec Capital, assuming a
limited partnership structure. Penelec Capital will then issue and sell
from time to time in one or more series through June 30, 1996 up to
$125 million aggregate stated value of preferred limited liability
company interests or limited partnership interests, in the form of
Monthly Income Preferred Stock, $25 per share stated value (``MIPS'').
Penelec states that there are certain changes to the transactions
described in the Prior Notice. First, each Note or Subordinated
Debenture, as described in the Prior Notice, will have a term of up to
50 years, rather than 30 years that may be extended for up to an
additional 20 years, subject to certain specified conditions.
In addition, Penelec states that there are certain changes to the
structure of Penelec Capital and Investment Sub. Penelec may acquire
all of the common stock of Investment Sub for a nominal consideration
and may capitalize Investment Sub with a demand promissory note in the
principal amount of up to 10% of the total capitalization of Penelec
Capital from time to time, or up to an initial principal amount of $13
million. If Penelec Capital is organized as a limited partnership,
Investment Sub may also acquire up to a 3% general partnership interest
in Penelec Capital. The amount of such capital contribution (up to $4.0
million), together with the gross proceeds received by Penelec Capital
from the issuance and sale of the MIPS (i.e., a maximum of $125
million), would be applied by Penelec Capital to acquire Penelec's
Subordinated Debentures. The total equity contributions by Penelec to
Penelec Capital would not exceed $35 million.
Finally, Penelec may acquire a separate class of limited
partnership interest in Penelec Capital for a nominal consideration to
ensure that Penelec Capital will at all times have a limited partner as
required by the Delaware Revised Uniform Limited Partnership Act.
Allegheny Power System, Inc., et al. (70-8411)
Allegheny Power System, Inc., (``Allegheny''), 12 East 49th Street,
New York, New York, 10017, a registered holding company, has filed an
application-declaration under Sections 6(a), 7, 9(a), 10, 12(b) and
13(b) of the Act and Rules 45, 87,90 and 91 promulgated thereunder.
Allegheny requests Commission authorization through December 31,
1996 to organize and finance a new wholly-owned non-utility subsidiary
company--AYP Capital, Inc., (``AYP'')--that would invest directly or
indirectly in (i) companies involved in new technologies that are
related to the core business of Allegheny; and (ii) companies for the
acquisition and ownership of exempt wholesale generators (``EWGs'')
within the definition of Section 32 of the Act. Allegheny also proposes
through December 31, 1996 to invest up to $500,000 in AYP.
Allegheny proposes to incorporate AYP in Delaware with initial
authorized capital of up to 1,000 shares of common stock (no par value)
and to subscribe to 100 shares of AYP common stock for $10.00 per
share. Allegheny also proposes to fund AYP from time to time through
December 31, 1996 through purchases of additional AYP stock, or capital
contributions, in an aggregate amount not to exceed $500,000. AYP will
use those funds to pursue appropriate investment opportunities in new
technologies or in EWGs. Allegheny proposes to obtain funds for this
purpose from: (i) Sales of Allegheny common stock pursuant to its
Dividend Reinvestment and Stock Purchase and Employee Stock Ownership
and Savings Plans, (ii) regular bank lines of credit, or (iii) internal
sources. Allegheny states that it will not guarantee indebtedness of
AYP.
Allegheny states that it anticipates that AYP will have no paid
employees and that personnel employed by Allegheny Power Service
Corporation (``Allegheny Service''), a wholly-owned nonutility
subsidiary company of Allegheny, will provide a wide range of services,
on an as-needed basis, to AYP pursuant to a service agreement to be
entered into between AYP and Allegheny Service. Under this service
agreement, AYP will reimburse Allegheny Service for the cost of
services provided in accordance with Rules 90 and 91 of the Act. All
time spent by Allegheny Service employees on AYP matters will be billed
to and paid by AYP on a monthly basis.
Allegheny states that AYP will maintain separate financial records
with profit and loss statements. Allegheny Service, it is stated,
pursuant to the service agreement with AYP, will be responsible for the
financial records and for audit procedures that are in compliance with
generally accepted principles.
With respect to EWGs, Allegheny states that if AYP acquires an
interest in an EWG, it will use Allegheny Service employees or other
Allegheny system employees ``within a de minimis limit'' for services.
It is stated that AYP will not use in excess of 2% of the total
employees of all other Allegheny system domestic public utility
companies for services to an affiliated EWG.
With respect to new technologies related to its core business,
Allegheny states that there are significant opportunities for
investment in companies engaged in the development of new technologies
that would promote the public interest through efficient and clean
electric power generation and utilization. It is stated that the new
technologies would be related to: (i) Electric power conversion and
storage; (ii) conservation, load management, and demand side
management; (iii) environmental and waste treatment; (iv) advanced
computer hardware and software; (v) power-related electronic systems,
control systems and components; (vi) electronic automation systems and
components.
Allegheny states that, to invest in EWGs or in companies engaged in
new technologies, AYP might directly invest or seek experienced
investment partners and structure investment vehicles with those
partners. In either event, each investment, it is stated, will be
structured to limit the exposure of AYP to excessive liabilities and to
allow AYP a role in the direction of the business.
Allegheny states that it now has no proposed specific investment in
mind and that AYP shall make no investment without prior Commission
approval. Allegheny also states that neither it nor AYP will, without
Commission approval, finance the future acquisition by AYP of an EWG or
new technologies company.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-11607 Filed 5-12-94; 8:45 am]
BILLING CODE 8010-01-M
