[Federal Register Volume 62, Number 85 (Friday, May 2, 1997)]
[Notices]
[Pages 24141-24144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11408]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26711]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
April 25, 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
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applications(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 19, 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.
Cinergy Corp., et al. (70-9015)
Cinergy Corp., a registered holding company (``Cinergy''); Cinergy
Investments, Inc., a nonutility subsidiary of Cinergy and itself a
holding company (``Investments''); Cinergy Services, Inc., a nonutility
subsidiary of Cinergy (``Services''); The Cincinnati Gas & Electric
Company, a utility subsidiary of Cinergy and itself a holding company
(``CG&E''); CG&E's utility subsidiaries, Lawrenceburg Gas Company
(``Lawrenceburg''), The West Harrison Gas and Electric Company (``West
Harrison''), The Union Light, Heat & Power Company (``Union'') and
Miami Power Corporation (``Miami''); CG&E's nonutility subsidiaries,
Tri-State Improvement Company (``Tri-State'') and KO Transmission
Company (``KO''), all located at 139 East Fourth Street, Cincinnati
Ohio 45202, and PSI Energy, Inc. (``PSI''), an electric utility
subsidiary of Cinergy located at 1000 East Main Street, Plainfield,
Indiana 46168, have filed an application-declaration under sections
6(a), 7, 9(a), 10 and 12(b) of the Act and rules 40, 43, 45, 52 and 54
thereunder.
By order dated August 25, 1995 (HCAR No. 26362) (``1995 Order''),
the Commission authorized the following transactions through May 31,
1997: (a) PSI, Union, Lawrenceburg, West Harrison, and Miami
(collectively, ``Utilities'') were authorized to incur short-term
borrowings from banks and, in PSI's case, to issue and sell commercial
paper; (b) Cinergy was authorized to issue guarantees and provide
letters of credit in connection with short-term bank borrowings of its
utility and nonutility subsidiaries; and (c) certain applicants were
authorized to implement a money pool (``Money Pool'') to coordinate and
provide for their short-term cash and working capital requirements.
The 1995 Order limited the aggregate principal amount of short-term
borrowings at any one time outstanding (whether through the Money Pool
or from banks or the sale of commercial paper) as follows: PSI, $400
million; Union, $35 million; Lawrenceburg, $3 million; West Harrison,
$200,000; and Miami, $100,000. The 1995 Order also granted Cinergy
authority to issue or obtain guarantees and letters or credit to or on
behalf of its subsidiaries in amounts that, when aggregated with short
term promissory notes and commercial paper issued by Cinergy, could not
exceed $375 million. By order dated March 12, 1996 (HCAR No. 26215)
(``1996 Order''), the limitation with respect to letters of credit,
short term promissory notes and commercial paper issued or obtained by
Cinergy was raised to $1 billion.
Applicants now propose through December 31, 2002: (a) For the
Utilities to make loans to and incur borrowings from one another under
the Money Pool, and (b) for Cinergy, CG&E, Cinergy Services, CG&E, Tri-
State and KO to make loans to the Utilities under the Money Pool. The
interest rate applicable to Money Pool loans of surplus treasury funds
of Money Pool participants is the CD yield equivalent of the 30-day
Federal Reserve ``AA'' Industrial Commercial Paper Composite Rate. This
rate parallels the lenders' effective cost of capital with respect to
such internal funds. The interest rate applicable to Money Pool loans
of proceeds from bank borrowings by Money Pool participants or the sale
of commercial paper by Cinergy, CG&E or PSI is the weighted average of
the lending companies' cost for such funds. The interest rate
applicable to Money Pool loans comprised of both types of funds is a
blended rate equal to the weighted average cost of those funds. All
Money Market loans would be repayable on demand and in any event not
later than one year from the date of advance.
In addition, the Utilities propose to incur short-term bank
borrowings from third parties and PSI proposes to issue and sell
commercial paper. Short-term borrowings would mature no later than one
year from the date of issuance, except in the case of borrowings by
Union, which would mature no later than two years from the date of
issuance. Such borrowings would bear interest at a rate no higher than
the prime rate for commercial bank loans prevailing on the date of such
borrowing. Commercial paper issued by PSI would have maturities not
exceeding 270 days and would be sold to dealers at rates not exceeding
those prevailing at the date of issuance for commercial paper of
comparable quality and the same maturity.
Applicants propose that the maximum principal amount of short-term
borrowings outstanding at any one time by PSI, Union, Lawrenceburg,
West Harrison and Miami (whether from banks, the Money Pool or, in
PSI's case, through the sale of commercial paper) not to exceed the
following amounts: PSI, $400 million; Union, $50 million; West
Harrison, $200,000; Lawrenceburg, $3 million; and Miami, $100,000.
Applicants otherwise propose no change to the terms of the Money Pool
authorized by the 1995 Order.
Proceeds of any short-term borrowings by the Utilities (whether
from banks, the Money Pool or, in PSI's case, through the sale of
commercial paper) would be used by such companies for general corporate
purposes, including (a) interim financing of capital requirements; (b)
working capital needs; (c) repayment, redemption, refinancing of debt
or preferred stock; (d) cash requirements to meet unexpected
contingencies and payment and timing differences; (e) loans through the
Money Pool; and (f) other transactions relating to these applicants'
utility businesses.
In addition, Cinergy and Investments propose to guarantee, through
December 31, 2002, the debt or other obligations of (a) certain
existing Cinergy system companies and (b) companies whose securities
may be acquired by Cinergy or any of Cinergy's subsidiaries from time
to time in accordance with rule 58 under the Act. Guaranties issued by
Cinergy would be subject to the $1 billion aggregate limitation
specified in the 1996 Order for letters of credit, short term
promissory notes and commercial paper issued by Cinergy. Guaranties
issued by Investments would not exceed $250 million at any one time
outstanding.
The only existing Cinergy subsidiary on whose behalf Cinergy alone
seeks authority to issue guarantees is Cinergy Services. The Cinergy
subsidiaries on whose behalf Cinergy and Investments seek authority to
issue guarantees are KO, Tri-State, Cinergy Resources, Inc., Cinergy
Capital & Trading, Inc., Cinergy Technology, Inc. and Enertech
Associates, Inc.
Debt financing so guaranteed will not exceed 30 years and will bear
interest either at a floating rate not in excess of 200 basis points
over the prime rate,
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applicable LIBOR or other appropriate index in effect from time to time
or at a fixed rate not in excess of 300 basis points above the yield at
the time of issuance of U.S. Treasury obligations of a comparable
maturity .
Mineral Energy Company (70-9033)
Mineral Energy Company (``MEC''), 101 Ash Street, San Diego,
California 92101, a California corporation not currently subject to the
Act, has filed an application for an order under sections 9(a) and 10
of the Act authorizing its proposed acquisition of all of the issued
and outstanding common stock of (1) Pacific Enterprises (``Pacific''),
a California corporation, and through such acquisition, Pacific's gas
utility subsidiary, Southern California Gas Company (``SoCalGas''); and
(2) Enova Corporation (``Enova''), a California corporation, and
through such acquisition, Enova's combination electric and gas utility
subsidiary, San Diego Gas & Electric Company (``SDG&E''). Pacific and
Enova are neighboring California public utility holding companies
exempt under section 3(a)(1) from all provisions of the Act except
section 9(a)(2).\1\ MEC also requests an order under section 3(a)(1)
exempting it from all provisions of the Act, except section 9(a)(2),
following consummation of the proposed transactions (``Transaction'').
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\1\ Pacific's section 3(a)(1) exemption was authorized by order
of the Commission. Pacific Lighting Corp., Holding Co. Act Release
No. 43 (Jan. 13, 1936), exemption continued, Holding Co. Act Release
No. 17855 (Jan. 11, 1973). Enova claims its section 3(a)(1)
exemption based on a filing pursuant to rule 2.
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Pacific's principal subsidiary, SoCalGas,\2\ is a California public
utility that owns and operates a natural gas distribution, transmission
and storage system which supplies natural gas in 535 cities and
communities throughout most of southern California and part of central
California.\3\ SoCalGas is subject to regulation by the California
Public Utilities Commission (``CPUC'') with respect to its rates for
intrastate transportation and retail sales of natural gas. In addition,
certain of Pacific's subsidiaries are subject to regulation by the
Federal Energy Regulatory Commission (``FERC'').
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\2\ Pacific owns all of the issued and outstanding common stock
of SoCalGas. SoCalGas also has outstanding a class of preferred
stock, which is listed on the Pacific Stock Exchange.
\3\ SoCalGas provides gas service to residential, commercial,
industrial, electric generation and wholesale customers through
approximately 4.7 million meters in a 23,000 square mile service
area with a population of approximately 17.4 million people.
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Pacific is also engaged in a number of energy-related businesses
through approximately 50 subsidiaries organized into the following five
business lines: (1) Pacific Energy engages in alternate energy
development, centralized heating and cooling for large building
complexes and energy management services; (2) Pacific Interstate
Company provides interstate and offshore natural transmission to serve
utility operations; (3) Pacific Enterprises Oil Company owns various
mineral interests and a working interest in the Aliso Canyon Oil Field;
(4) Pacific Enterprises International invests in foreign utility-
related businesses; and (5) Ensource engages in gas marketing.
For the year ended December 31, 1996, Pacific's operating revenues
on a consolidated basis were approximately $2.603 billion, of which
approximately $2.076 billion were attributable to sales of natural gas,
$386 million were attributable to transportation revenues, and $141
million were attributable to nonutility activities. Consolidated assets
of Pacific and its subsidiaries at December 31, 1996 were approximately
$5.186 billion, of which approximately $3.237 billion consisted of net
gas plant and equipment. As of December 31, 1996, Pacific had
82,013,469 issued and outstanding shares of common stock, no par value
(``Pacific Common Stock''), and 800,253 outstanding shares of preferred
stock, no par value (``Pacific Preferred Stock'').
Enova's principal subsidiary, SDG&E,\4\ is a California public
utility that generates, purchases and transmits electric energy and
distributes it through 1.2 million meters to customers in San Diego
county and an adjacent portion of Orange County, California. SDG&E also
purchases and distributes natural gas through 700,000 meters to
customers in San Diego County and transports gas for others in SDG&E's
service territory.\5\ SDG&E is subject to regulation by the CPUC as a
public utility with respect to retail electric and gas rates, and by
the CPUC and FERC with respect to rates for the sale for resale of
electricity.\6\
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\4\ Enova owns all of the issued and outstanding common stock of
SDG&E. SDG&E also has outstanding two classes of preferred stock,
most of the series of which are listed on the American Stock
Exchange.
\5\ SDG&E service area encompasses 4,100 square miles, covering
two counties and 25 cities, with a population of approximately 3
million people.
\6\ SDG&E is also subject to regulation by the Nuclear
Regulatory Commission with respect to certain nuclear facilities in
which it has a partial ownership interest.
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SDG&E has six nonutility subsidiaries, each a California
corporation. Enova Financial, Inc. invests in limited partnerships
representing approximately 1100 affordable-housing projects located
throughout the United States. Califia Company leases computer
equipment. Enova Energy, Inc. is an energy management consulting firm
offering services to utilities and large consumers, including gas and
electric marketing, scheduling services, facilities operation and
management of customer energy demand and supply. Pacific Diversified
Capital Company is the parent company of a nonutility subsidiary, Phase
One Development, Inc., which is engaged in real estate development.
Enova Technologies, Inc. is in the business of developing new
technologies generally related to utilities and energy services. Enova
International was formed to develop and operate natural gas and power
projects outside the United States. A subsidiary of Enova International
and a subsidiary of Pacific have entered into a joint venture to build
and operate a natural gas distribution system in Mexicali, Baja
California.
For the year ended December 31, 1996, Enova's operating revenues on
a consolidated basis were approximately $1.993 billion, of which
approximately $1.591 billion were attributable to its electric utility
operations, approximately $348 million were attributable to its gas
utility operations and approximately $54 million were attributable to
its energy-related and other operations. Consolidated assets of Enova
and its subsidiaries at December 31, 1996 were approximately $4.65
billion of which approximately $2.625 billion consists of net electric
utility plant and $449 million consists of net gas plant. As of
December 31, 1996, Enova had 116,628,735 outstanding shares of common
stock, no par value (``Enova Common Stock''). Enova has no other class
of equity securities.
MEC \7\ was incorporated under California law to become a holding
company for Pacific and Enova following consummation of the Transaction
in accordance with the terms of an Agreement and Plan of Merger and
Reorganization, dated as of October 12, 1996, as amended as of January
13, 1997 (``Merger Agreement''), among MEC, Enova, Pacific, B Mineral
Energy Sub (``Pacific Sub'') and G Mineral Energy Sub (``Enova
Sub'').\8\
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The Merger Agreement provides for the Transaction to be effected by (a)
a merger of Pacific Sub with and into Pacific, with Pacific remaining
as the surviving corporation and (b) a merger of Enova Sub with and
into Envoa, with Enova remaining as the surviving corporation.
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\7\ MEC's authorized capital consists of 1,000 shares of common
stock, all of which are issued and outstanding (``MEC Common
Stock''). Enova and Pacific each own 500 shares.
\8\ Pacific Sub and Enova Sub, each a California corporation
with an authorized share capital of 1,000 shares of common stock, no
par value, were formed solely to facilitate the Transaction. MEC
owns all of the issued and outstanding shares of common stock in
each of Pacific Sub and Enova Sub.
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The application states that the combination of Pacific and Enova is
expected to provide strategic, financial and other benefits to the
shareholders of both companies, and their respective employees,
customers and communities. Such benefits are anticipated to include
cost savings and cost avoidances derived from the integration of
corporate functions, corporate programs and field support functions,
the streamlining of inventories and purchasing economics, and
consolidation of facilities. The applicants state that the combination
is timed to coincide with California electric utility deregulation and
ongoing natural gas utility deregulation and is intended to establish a
company that, by providing multiple energy products and services to
customers at lower prices than either company could offer individually,
will have the ability to compete effectively in the California and the
rapidly developing national and international markets for energy and
energy services.
Upon consummation of the proposed Transaction: (1) Each share of
Pacific Common Stock \9\ will be canceled and converted into the right
to receive 1.5038 shares of MEC Common Stock; and (2) each share of
Enova Common Stock \10\ will be canceled and converted into the right
to receive one share of MEC Common Stock. The Transaction will not
affect any other class of common or preferred stock of the parties to
the Transaction. Thus, any shares of Pacific Preferred Stock and
preferred stock of SoCalGas and SDG&E outstanding on the date of the
consummation of the Transaction will remain outstanding preferred stock
of the same companies.
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\9\ Shares of Pacific Common Stock owned by Enova, Pacific, MEC
or any of their wholly-owned subsidiaries and shares as to which
dissenters' rights are perfected will not be eligible for this
treatment.
\10\ Shares of Enova Common Stock owned by Enova, Pacific, MEC
or any of their wholly-owned subsidiaries and shares as to which
dissenters' rights are perfected will not be eligible for this
treatment.
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Upon completion of the Transaction, Pacific and Enova will become
subsidiaries of MEC, which will own all of the issued and outstanding
common stock of each of Pacific and Enova. Pacific and Enova would
continue to own and operate their primary subsidiaries, SoCalGas and
SEG&E, respectively.\11\ MEC's Board of Directors will consist of an
equal number of directors designated by Pacific and Enova. The
Transaction is expected to qualify as tax-free reorganization under
section 351 of the Internal Revenue Code of 1986, as amended.
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\11\ Pursuant to the Merger Agreement, Pacific and Enova have
formed a joint venture company (``JV Company'') with an initial
capitalization of $10 million to engage in energy marketing
activities and provide energy-related services. The JV Company is
terminable by either party in the event the Merger Agreement is
terminated.
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As a result of the Transaction, MEC will be a public-utility
holding company as defined in section 2(a)(7) of the Act with indirect
ownership of two public-utility companies, SoCalGas and SDG&E. MEC
states that following consummation of the Transaction, it will be
entitled to an exemption from all provisions of the Act except section
9(a)(2) because it and each of its pubic-utility subsidiaries from
which it derives a material part of its income will be predominantly
intrastate in character and will carry on their utility businesses
substantially within the state of California.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-11408 Filed 5-1-97; 8:45 am]
BILLING CODE 8010-01-M
