[Federal Register Volume 59, Number 131 (Monday, July 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16631]
[[Page Unknown]]
[Federal Register: July 11, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26078]
Filings Under the Public Utility Holding Company Act of 1935
(``Act'')
July 1, 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 July 25, 1994 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.
Connecticut Light and Power Company (70-7320)
Connecticut Light and Power Company (``CL&P''), Selden Street,
Berlin, Connecticut 06037, an electric public-utility subsidiary
company of Northwest Utilities, a registered holding company, has filed
a post-effective amendment under Sections 6(a) and 7 of the Act and
rule 54 thereunder to its declaration previously filed under Sections
6(a) and 5 of the Act and rule 50(a)(5) thereunder.
By order dated December 16, 1986 (HCAR No. 24263), the Commission
authorized CL&P, among other things, to issue a promissory note up to
an aggregate principal amount of $25 million to the Industrial
Development Authority of the State of New Hampshire (``IDA''). The note
evidenced IDA's loan to CL&P of the proceeds from pollution control
revenue bonds (``Bonds'') issued by IDA to finance the cost of
acquiring, constructing and installing certain pollution control
facilities and/or sewage or solid waste disposal facilities at the
Seabrook Nuclear Power Station, Unit No. 1 in Seabrook, New Hampshire.
In an effort to improve the credit ratings of the Bonds, CL&P
obtained a letter of credit (``LOC'') from the Long-Term Credit Bank of
Japan Limited (``Credit Bank''). Subsequent to the issuance of the
Bonds, Credit Bank's rating in the financial markets deteriorated. CL&P
has been informed that many institutional investors that otherwise
would be interested in purchasing the bonds will not purchase
securities secured by letters of credit issued by the Credit Bank, and
investors that are still willing to purchase the Bonds are demanding an
interest rate premium that is causing CL&P's effective interest cost to
be higher than it would have otherwise been using a bank with a higher
rating.
CL&P now seeks authority to: (1) replace Credit Bank LOC and the
Bank Reimbursement Agreement with a new Letter of Credit and
Reimbursement Agreement (``Substitute Agreement''); (2) replace the LOC
with a new letter of Credit (``New LOC''); and subsequently thereto (3)
extend, modify, or replace the Substitute Agreement and the New LOC
from time to time during the term of the bonds supported thereby. The
terms of any such extensions, modifications or replacements, including
the New LOC and the Substitute Agreement, shall provide that (a) the
total amount available to be drawn under any such extended, modified or
replacement letter of credit does not exceed $16.2 million,
representing principal in the amount of $15.4 million and interest in
the amount of $800,000 calculated at the maximum rate of 15% for 123
days, (b) the annual letter of credit costs applicable to any such
extension, modification, or replacement do not exceed 1% per annum of
the total amount available to be drawn under the extended, modified or
replacement letter of credit, and (c) the reimbursement agreement
applicable to any such extension, modification or replacement shall
provide (or shall afford CL&P the option to elect) that tender advances
tear interest until paid at a rate not to exceed the higher of the
prime rate plus 2% or the federal funds rate plus 2%, (d) such
extension, modification or replacement is otherwise on terms that are
substantially similar in all material respects to those applicable to
the New LOC and Substitute Agreement (or previous extensions or
modifications thereof or replacements therefore proposed to be entered
into in connection with the replacement of Credit Bank, and (e) CL&P
shall have obtained all necessary State Commission approvals applicable
to such extension, modification or replacement.
Consolidated Natural Gas Company (70-8167)
Consolidated Natural Gas Company (``CNG''), CNG Tower, 625 Liberty
Avenue, Pittsburgh, Pennsylvania 15222, a registered holding company,
has filed a post-effective amendment under Sections 6 and 7 of the Act
and Rule 54 thereunder to its declaration previously filed under
Sections 6 and 7 of the Act and Rule 50(a)(5) thereunder.
By order dated April 21, 1993 (HCAR No. 25800) (``April Order''),
the Commission authorized CNG to issue and sell on or before June 30,
1995 up to $400 million principal amount of debentures (``Debentures'')
in one or more series at a price, exclusive of accrued interest, which
would be not less than 98% nor more than 101% of the principal amount
and at an interest rate which would be a multiple of \1/8\, \1/10\, or
\1/20\ of 1%. The Debentures would mature in not more than thirty years
and would be issued in accordance with the indenture between CNG and
Chemical Bank (successor by merger to Manufacturers Hanover Trust
Company), as Trustee, dated May 1, 1971 (``Indenture''). CNG has sold
$300 million of Debentures under the April Order, thus $100 million of
Debentures remains authorized for issue and sale.
CNG now proposes to change its Indenture by adding section 4.02 so
that it may reserve the right, without the consent of the holders of
future debenture issues sold under the April Order, to amend sections
6.06 and 6.07 of the Indenture. New section 4.02 provides:
The Company reserves the right, subject to appropriate corporate
action, but without consent, approval or other action by holders of
debentures of any series created after May 1, 1994, to make such
amendments to the Indenture, as heretofore supplemented and amended,
as shall be necessary in order to amend Sections 6.06 and 6.07
thereof so as to modify or eliminate the provisions or requirements
of such Sections, or any part thereof and the definition of any term
used in either of such Sections or related thereto, as the Company
may determine in its sole discretion.
Section 6.06 provides that funded debt (as defined) cannot be
incurred and subsidiary preferred stock cannot be issued unless: (1)
The consolidated income available for interest and subsidiary preferred
stock dividends of CNG and its subsidiaries for any 12 consecutive
months within 15 months immediately preceding the date additional
funded debt is incurred is not less than 2\1/2\ times the sum of the
total annual interest charges and the total subsidiary preferred stock
dividends, assuming the incurrence of such additional funded debt or
issuance of such preferred stock, as the case may be; and (2) after
giving effect to the incurring of the additional funded debt and
issuance of preferred stock, the sum of the outstanding consolidated
debt of CNG and its subsidiaries and the amount of outstanding
subsidiary preferred stock shall not be more than 60% of the
consolidated net tangible assets of CNG and its subsidiaries. Section
6.07 provides that a subsidiary of CNG cannot incur funded debt or
issue preferred stock to a third party unless funded debt and preferred
stock of the subsidiary will not exceed 60% of the total capitalization
of the subsidiary, and the principal amount of funded debt and amount
of preferred stock of all subsidiaries of CNG shall not exceed 15% of
consolidated net tangible assets.
CNG also requests authorization to extend the expiration date for
the issuance and sale of the remaining $100 million principal amount of
Debentures under the April Order from June 30, 1995 to June 30, 1996.
The Columbia Gas System, Inc., et al. (70-8219)
The Columbia Gas System, Inc. (``Columbia''), 20 Montchanin Road,
Wilmington, Delaware 19807, a registered holding company; Columbia's
public utility subsidiary companies, Columbia Gas of Pennsylvania,
Inc., Columbia Gas of Ohio, Inc. (``Ohio''), Columbia Gas of Maryland,
Inc., Columbia Gas of Kentucky, Inc., and Commonwealth Gas Services,
Inc., each located at 200 Civic Center Drive, Columbus, Ohio 43215; and
Columbia's nonutility subsidiary companies, Columbia Gas System Service
Corporation, Columbia LNG Corporation, Columbia Atlantic Trading
Corporation, TriStar Ventures Corporation, TriStar Capital Corporation,
each located at 20 Montchanin Road, Wilmington, Delaware 19807;
Columbia Natural Resources, Inc., Columbia Coal Gasification
Corporation, both located at 900 Pennsylvania Avenue, Charleston, West
Virginia 25302; Columbia Energy Services Corporation, 2581 Washington
Road, Upper Saint Clair, Pennsylvania 15241; Columbia Gulf Transmission
Company, 1700 MacCorkle Avenue, S.E., Charleston, West Virginia 25314;
Columbia Gas Development Corporation, 5847 San Felipe, Houston, Texas
77057; Commonwealth Propane, Inc., and Columbia Propane Corporation,
located at 800 Moorefield Park Drive, Richmond, Virginia 23236
(collectively, ``Applicants''), have filed a post-effective amendment
to their application-declaration under Sections 6(a), 7, 9(a), 10,
12(b), and 12(f) of the Act and Rules 43 and 45 thereunder.
By order dated September 29, 1993 (HCAR No. 25896) (``September
Order''), the Commission authorized Applicants, among other things, to
engage in financing from September 30, 1993 through December 31, 1994
of up to $629.9 million. At that time, the Commission authorized Ohio
to engage in long-term financing of up to $73.1 million and short-term
financing of up to $162 million, and authorized Columbia to provide
$398.7 million in short-term financing to its subsidiaries.
Columbia now proposes to increase the amount of short-term
financing for Ohio $40 million. These short-term borrowings will have
the same terms and conditions as those authorized by the September
Order. Thus, Ohio proposes to borrow the funds directly from Columbia
and/or from certain other subsidiaries of Columbia through Columbia's
intrasystem money pool (``Money Pool''), and Columbia requests
authority to loan to its subsidiaries an additional $40 million for
short-term borrowings.
The Money Pool provides a vehicle by which Columbia and its
subsidiary companies loan their excess cash to their associate
companies. Funds would be advanced, repaid, and reborrowed as required
through December 31, 1994, with all such advances to be fully repaid by
April 30, 1995. All short-term borrowings from Columbia and/or the
Money Pool will be evidenced by a promissory note (``Short-Term Note''
and ``Money Pool Note'', respectively). A default rate of 2% per annum
above the pre-default rate on unpaid principal or interest amounts will
be assessed if any interest or principal payment becomes past due.
The interest rate charged on all Short-Term Notes and Money Pool
Notes, and the investment rate earned on moneys invested in the Money
Pool, will be the interest rate per annum equal to the composite
weighted average effective rate on short-term transactions of Columbia
and/or the Money Pool short-term investment rate. During any month,
this composite rate may be based on one or any combination of: (1) The
cost of Columbia's borrowings under its bank facility; (2) the interest
rate earned by Columbia on invested excess cash; and/or (3) the
interest rate earned by subsidiaries on investments of excess Money
Pool funds.
The Southern Company (70-8421)
The Southern Company (``Southern''), 64 Perimeter Center East,
Atlanta, Georgia 30346, a registered holding company, has filed an
application-declaration under Sections 6(a), 7, 9(a), 10 and 12(b) of
the Act and Rules 45 and 50(a)(5) thereunder.
Southern proposes to acquire the securities of one or more
companies (``Project Parents'') engaged directly or indirectly, and
exclusively, in the business of owning and holding the securities of
``foreign utility companies'' (``FUCOs''), as defined in Section 33(a)
of the Act, and ``exempt wholesale generators'' (``EWGs''), as defined
in Section 32(a) of the Act. Southern requests that the authorization
for its proposals remain effective until the earlier of: (i) December
31, 1996; and (ii) the effective date of any rule of general
applicability adopted by the Commission that would exempt the
acquisition of any securities of any Project Parent from the
requirements of Sections 9(a) and 10 of the Act.
Southern states that a Project Parent may be organized at the time
of, and in order to facilitate: the making of bids or proposals to
acquire an interest in any EWG or FUCO (``Exempt Subsidiaries''); after
the award of a bid proposal, in order to facilitate closing on the
purchase or financing of any such Exempt Subsidiary; or at any time
subsequent to the consummation of an acquisition of an interest in an
Exempt Subsidiary. A Project Parent would be formed after the
acquisition of an Exempt Subsidiary in order to: effect an adjustment
in the respective ownership interests in any Exempt Subsidiary held by
Southern and unaffiliated co-investors; facilitate a partial sale of an
interest in any such Exempt Subsidiary; comply with applicable laws of
foreign jurisdictions limiting or otherwise relating to the ownership
of domestic companies by foreign nationals; or, to limit Southern's
exposure to U.S. and foreign taxes as part of tax planning.
Southern requests authority to make direct or indirect investments
in Project Parents in an aggregate amount at any one time outstanding
not to exceed $400 million. Any such direct or indirect investment by
Southern in any Project Parent would be consummated only if, at the
time thereof, and giving effect thereto, Southern's ``aggregate
investment,'' determined in accordance with Rule 53(a)(1)(i), in all
FUCOs, EWGs and Project Parents would not exceed 50% of Southern's
``consolidated retained earnings,'' as defined in Rule 53(a)(1)(ii). In
addition, any such investment in any particular Project Parent would be
limited to an amount no greater than the amount reasonably required in
connection with making the underlying investment in any Exempt
Subsidiary (or Exempt Subsidiaries) with respect to which such Project
Parent was organized or formed, taking into account development
expenditures, working capital needs, and cash reserves required to be
maintained in accordance with financing documents. Southern states that
it will also comply with all other applicable rules under the Act,
including, without limitation, such rules as may be promulgated in the
future pursuant to Sections 32 and 33.
It is proposed that investments by Southern in any Project Parents
may take the form of any combination of the following: (i) Ppurchases
of capital shares, partnership interests, trust certificates, or the
equivalent of any of the foregoing under the laws of foreign
jurisdictions, if applicable; (ii) cash capital contributions or open
account advances; (iii) loans evidenced by promissory notes; and (iv)
guaranties by Southern of the principal of or interest on any
promissory notes or other evidences of indebtedness of any Project
Parent issued to lenders other than Southern.
Southern proposes that any investment in the capital shares or
other equity securities of a Project Parent that have a stated par
value will be in an amount equal to or greater than such par value, and
that any open account advance made by Southern to a Project Parent be
non-interest bearing and repayable within one year of the date of the
advance. Southern also proposes that any promissory note issued by a
Project Parent to Southern, and any promissory note or similar evidence
of indebtedness with respect to which Southern may issue a guaranty,
would mature not later than 30 years after the date of insurance, and
would bear interest at a rate: (a) Not greater than the prime rate at a
bank to be designated by Southern in the case of any promissory note
issued to Southern, and (b) not greater than 3% over such prime rate in
the case of any note or similar evidence of indebtedness guarantied by
Southern.
Any promissory note issued to Southern by any Project Parent may,
at Southern's option, be converted to a capital contribution to such
Project Parent through Southern's forgiveness of the indebtedness
evidenced thereby.
Funds for any direct or indirect investment by Southern in any
Project Parent (including the guaranty of any securities of any Project
Parent) will be derived from: (i) The sale of common stock or the
issuance of guarantees (within the limitations of HCAR No. 25980
(January 25, 1994), or in any future authorization obtained from the
Commission); (ii) bank borrowings or commercial paper sales (within the
limitations of HCAR No. 26004 (March 15, 1994), or any future
authorization obtained from the Commission); and, (iii) available cash.
Southern is not requesting the authority to issue any additional
securities for the purpose of financing investments in any Project
Parents.
Southern states that it is currently investigating potential
opportunities to acquire or construct electric generation, transmission
or distribution facilities in Europe, Asia, Australia and South
America. Southern believes that, in almost all cases, such facilities
will qualify as facilities that a FUCO may own or operate.\1\ Southern
states that it has been Southern's experience, in connection with its
foreign project development activities to date, including the
preparation and submission of bid proposals in foreign government
privatization programs, that the formation and acquisition of one or
more Project Parents (usually, but not always, foreign corporations or
the equivalent thereof) is necessary or desirable to facilitate the
acquisition and ownership of a FUCO. For example, laws of some foreign
countries may require that the bidder in a privatization program be a
domestic company. In such cases, it would be necessary for Southern to
form a foreign subsidiary as the entity submitting the bid or other
proposal.
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\1\In some instances, a foreign utility facility may also
qualify as an ``eligible facility,'' as defined in Section 32(a)(2)
of the Act. Depending upon various facts and circumstances, Southern
may in the future pursue any particular foreign utility investment
opportunity as an EWG rather than as a FUCO, in which case the
requisite filing or filings would be made with the Federal Energy
Regulatory Commission.
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Southern states that there would typically be other business
reasons for creating Project Parents. Southern states that, for
example, the interposition of one or more wholly-owned Project Parents
may be necessary to minimize U.S. income taxes (e.g., by deferring
repatriation of foreign source income, or in order to take full
advantage of favorable tax treaties among foreign countries). Further,
Project Parents are useful in cases in which Southern may bid as a part
of a consortium of companies, since each member of the consortium will
typically want to have at least one consolidated subsidiary in the
final FUCO ownership structure for tax and accounting purposes.
Finally, Project Parents serve to isolate business risks and facilitate
subsequent adjustments to or sales of interests among or by the members
of the ownership group.
Southern proposes herein that a Project Parent may also acquire and
hold direct or indirect interests in both FUCOs and EWGs.\2\ The
ability to combine ownership of both FUCOs and EWGs under a single
company will enable Southern to minimize the number of separate
intermediate subsidiaries needed in connection with its investments in
EWGs and FUCOs.
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\2\An entity engaged exclusively in the business of holding the
securities of one or more EWGs may itself seek a determination of
EWG status from the Federal Energy Regulatory Commission. However,
such an entity could not hold the securities of both EWGs and FUCOs.
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Southern states that, within 45 days after Southern determines that
the purposes for owning any Project Parent no longer exists, it shall
liquidate or dissolve such Project Parent, unless, within that time,
Southern determines that such Project Parent may be used in conjunction
with a proposal or plan to acquire an interest in a different Exempt
Subsidiary. Southern requests authority to liquidate or dissolve any
Project Parent under such circumstances.
Southern also requests approval for any Project Parent to issue
equity securities and debt securities to persons other than Southern
(and with respect to which there is no recourse to Southern), including
banks, insurance companies, and other financial institutions,
exclusively for the purpose of financing (including any refinancing of)
investments in Exempt Subsidiaries. Such securities may be issued in
one or more transactions from time to time through the earlier to occur
of (i) December 31, 1996, and (ii) the effective date of any rule of
general applicability adopted by the Commission exempting such
transaction from the application requirements under the Act. It is
proposed that the aggregate principal amount of non-recourse debt
securities issued by Project Parents to persons other than Southern
will not exceed $800 million at any one time outstanding. No more than
$200 million principal amount of such non-recourse debt securities at
any time outstanding may be denominated in currencies other than U.S.
dollars. In any case in which Southern directly or indirectly owns less
than all of the equity interests of a Project Parent, only that portion
of the non-recourse indebtedness of such Project Parent equal to
Southern's equity ownership percentage shall be included for purposes
of the foregoing limitations.
Equity securities issued by any Project Parent to any party other
than Southern may include capital shares, partnership interests, trust
certificiates, or the equivalent of any of the foregoing under
applicable foreign law. Non-recourse debt securities issued to parties
other than Southern may include secured and unsecured promissory notes,
subordinated notes, bonds, or other evidence of indebtedness.
Securities issued by Project Parents may be denominated in either U.S.
dollars or foreign currencies.
Southern states that the amount and type of such securities, and
the terms thereof, including interest rate, maturity, prepayment or
redemption privileges, and the terms of any collateral security granted
with respect thereto, would be negotiated on a case by case basis,
taking into account differences from project to project in optimum
debt-equity ratios, projections of earnings and cash flow, depreciation
lives, and other similar financial and performance characteristics of
each project. Accordingly, Southern requests the authority to negotiate
the terms and conditions of such securities without further approval by
the Commission.
Notwithstanding the foregoing, Southern states that no equity
security having a stated par value would be issued or sold by a Project
Parent for a consideration that is less than such par value. Southern
also states that no note, bond or other evidence of indebtedness issued
or sold by any Project Parent will mature later than 30 years from the
date of issuance thereof, and will bear interest at a rate exceeding
the following: (i) if such note, bond or other indebtedness is U.S.
dollar denominated, at a fixed rate not to exceed 6.5% over the yield
to maturity on an actively traded, non-callable, U.S. Treasury note
having a maturity equal to the average life of such note, bond or other
indebtedness (``Applicable Treasury Rate''),\3\ or at a floating rate
not to exceed 6.5% over the then applicable prime rate at a U.S. money
center bank to be designated by Southern (``Applicable Prime Rate'');
and (ii) if such note, bond or other indebtedness is denominated in the
currency of a country other than the United States, at a fixed or
floating rate which, when adjusted (i.e., reduced) for the prevailing
rate of inflation in such country, as reported in official indices
published by such country, would be equivalent to a rate on a U.S.
dollar denominated borrowing of identical average life that does not
exceed 10% over the Applicable Treasury Rate or Applicable Prime Rate,
as the case may be.
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\3\If there is no actively traded U.S. Treasury note with a
maturity equal to the average life of such note, bond or other
evidence of indebtedness, then the Applicable Treasury Rate would be
determined by interpolating linearly with reference to the yields to
maturity on actively traded, non-callable, Treasury notes having
maturities near (i.e., both shorter and longer than) such average
life.
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In connection with the issuance of any non-recourse debt securities
by any Project Parent, it is anticipated that such Project Parent may
grant security in its assets. Such security interest may take the form
of a pledge of the shares or other equity securities of an Exempt
Subsidiary that it owns, including a security interest in any
distributions from any such Exempt Subsidiary, or a collateral
assignment of its rights under and interests in other property,
including rights under contracts. It is also anticipated that fees in
the form of placement or commitment fees, or other similar fees, would
be paid to lenders, placement agents, or others in connection with the
issuance of any such non-recourse debt securities. Southern requests
authority for any Project Parent to agree in any case to pay placement
or commitment fees, and other similar fees, in connection with any
borrowing, provided that the effective annual interest charge on any
indebtedness evidencing such borrowing is not greater than 115% of the
stated interest rate thereon.
In connection with investments in Exempt Subsidiaries, Southern
states that it is typical that a portion of the capital requirements of
any such Exempt Subsidiary would be obtained through non-recourse
financing involving borrowings from banks and other financial
institutions. Southern also states that, in some cases, however, it may
be necessary or desirable to structure an investment in an Exempt
Subsidiary such that the obligations created are not those of the
Exempt Subsidiary, but instead those of its parent companies. For
example, in a consortium of non-affiliated companies bidding to
purchase the securities or assets of an EWG or FUCO, each of the
consortium members would be obligated to fund its respective share of
the proposed purchase price. If external sources of funds are needed
for this purpose, a participant in the consortium may choose to engage
in non-recourse financing through one or more single-purpose
subsidiaries that would then utilize the proceeds of the financing to
acquire an ownership interest in the Exempt Subsidiary.\4\
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\4\Typically, the capital shares or other equity interests in
the Exempt Subsidiary would be pledged to secure the securities
issued by the Project Parent.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 94-16631 Filed 7-8-94; 8:45 am]
BILLING CODE 8010-01-M
