[Federal Register Volume 62, Number 158 (Friday, August 15, 1997)]
[Notices]
[Pages 43761-43763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21594]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26753]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
August 8, 1997.
Notice is hereby given that the following filing(s) has/have been
made with the Commission pursuant to provisions of the Act and rules
promulgated thereunder. All interested persons are referred to the
application(s) and/or declaration(s) for complete statements of the
proposed transaction(s) summarized below. The application(s) and/or
declaration(s) and any amendments thereto is/are available for public
inspection through the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in
writing by September 2, 1997, 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 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.
Central and South West Corporation, et al. (70-8423)
Central and South West Corporation (``CSW''), a registered holding
company, CSW International, Inc. (``CSWI''), and CSW Energy, Inc.
(``Energy''), both wholly owned nonutility subsidiary companies of CSW,
all at 1616 Woodall Rodgers Freeway, Dallas, Texas 75202, have filed a
post-effective amendment under sections 6(a), 7, 9(a), 10, 12(b), and
13(b) of the Act and rules 43, 45, 54, 83, 86, 87, 90 and 91 under the
Act to their application-declaration previously filed under sections
6(a), 7, 9(a), 10, 12(b), 13(b), 32 and 33 of the Act and rules 43, 45,
54, 83, 86, 87, 90 and 91 under the Act.
By order dated November 3, 1994 (HCAR No. 26156) (``1994 Order''),
CSW was authorized, through December 31, 1997, to (a) organize and
invest in CSW de Mexico, S.A. de C.V. (``CSWM''), and CSW de Mexico
Servicios (``CSWM Servicios''); \1\ (b) invest either directly or
indirectly, through CSWI, CSWM or other special purpose subsidiaries
(``Project Parents''), in exempt wholesale generators (``EWGs'') and
foreign utility companies (``FUCOs'' and, together with EWGs'',
``Exempt Facilities''); (c) provide directly or indirectly, through
CSWI and/or CSWM, certain operational and management services to Exempt
Facilities and to foreign electric utility enterprises (``Service
Activities'' and together with the businesses of the Exempt Facilities,
``Permitted Activities''); (d) guarantee, or provide other forms of
credit support for, the securities or contractual obligations of CSWI,
CSWM and the Project Parents issued or incurred in connection with the
Permitted Activities; and (e) fund such investments from time to time
through issuances by CSW, CSWI, CSWM, CSWM Servicios and/or the Project
Parents of stock, partnership interests, promissory notes, commercial
paper or other debt or equity securities.
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\1\ Energy was authorized to hold directly one share in CSWM to
comply with a requirement of Mexican law that CSWM have a minimum of
two shareholders. CSWM was authorized to hold all shares of CSWM
Servicios except for one share to be held by CSWI.
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The 1994 Order limited the amounts of investment by CSW in
subsidiaries engaged in the Permitted Activities and of guaranties or
other forms of credit support issued or arranged by CSW on behalf of
such subsidiaries (collectively, ``Aggregate General Authority'') to
$400 million. By order dated September 27, 1995 (HCAR No. 26383)
(``1995 Order''), CSW was authorized to increase its authority to make
investments under the Aggregate General Authority up to an amount not
to exceed 50% of its ``consolidated retained earnings,'' as determined
in accordance with rule 53(a)(1).\2\ By order dated January 24, 1997
(HCAR No. 26653) (together with the 1994 Order and the 1995 Order,
``Orders''), the Commission authorized CSW to increase its investments
in Exempt Facilities in amounts which, when aggregated with the
guaranties of the obligations of such entities, would not exceed 100%
of CSW's ``consolidated retained earnings,'' as determined in
accordance with rule 53(a)(1).
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\2\ The 1994 Order had also authorized CSWI, CSWM and the
Project Parents to issue securities to third parties without
recourse to CSW in connection with the Permitted Activities in
amounts not to exceed $600 million in the aggregate. The 1995 Order
raised this limit to $3 billion.
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CSW now seeks an extension, through December 31, 2002, of the
authority granted in the Orders to (a) invest directly or indirectly in
Exempt Facilities, (b) guarantee or provide other forms of credit
support for subsidiaries engaged in the ownership and/or operation of
Exempt Facilities, (c) fund such investments and/or guaranties through
the issuance of securities to third parties, and (d) engage directly or
indirectly in Service Activities. In addition, CSWI and Energy seek an
extension through December 31, 2002 of authority granted in the 1994
Order and the 1995 Order for CSWI, CSWM, CSWM Servicios and/or the
Project Parents to issue equity securities to third parties in
connection with the Permitted Activities.
Energy and CSWI also request authority, through December 31, 2002,
to (a) acquire the securities of companies (``Intermediate
Subsidiaries'') that would have direct or indirect ownership interests
in companies engaged in Service Activities
[[Page 43762]]
outside the United States (``Foreign Service Companies'') and in
companies that are organized pursuant to rule 58 under the Act (``Rule
58 Companies'') and (b) guarantee or otherwise provide credit support
for the securities or contractual obligations of such companies, in
amounts not to exceed $200 million outstanding at any one time. The
obligations under the requested guarantees or other forms of credit
support would be nonrecourse to CSW.
Further, CSW requests authority for Foreign Service Companies to
offer services to those affiliates of such Foreign Service Companies
that do not derive, directly or indirectly, any material part of their
income from sources within the United States. In accordance with rule
83, compensation for such services would be charged without regard to
the restrictions imposed by rule 90(a)(2).
Entergy Power UK plc (70-9081)
Entergy Power UK plc (``EPUK''), Templar House, 81-87 High Holborn,
London WC1V 6NU, England, a wholly-owned subsidiary company of Entergy
Corporation (``Entergy''), a registered holding company, has filed an
application-declaration under sections 6(a), 7, 9(a), 10, 12 (b), (c)
and (f) of the Act and rules 45 and 54 thereunder.
EPUK \3\ proposes to organize an entity (``Issuing Entity'') in the
form of a special purpose limited partnership (``Limited Partnership'')
or statutory business trust (``Trust'') to issue and sell one or more
series of preferred securities (``Entity Interests'') in an aggregate
principal amount up to $500 million, from time to time through December
31, 2000.\4\ EPUK will make an equity contribution to the Issuing
Entity at the time the Entity Interests are issued. If the Issuing
Entity is formed as a Limited Partnership, EPUK or a special purpose
corporation wholly-owned by EPUK will acquire all of the general
partner interest of the Limited Partnership and act as its general
partner. If the Issuing Entity is formed as a Trust, EPUK would acquire
all of the Trust's voting interests and the business of the Trust would
be conducted by one or more trustees. Holders of the Entity Interests
will be either the limited partners of the Limited Partnership or the
holders of preferred interests in the Trust. EPUK represents that its
equity contribution to the Issuing Entity will at all times constitute
at least 3% of the aggregate equity contributions by all security
holders of the Issuing Entity.
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\3\ EPUK was incorporated in 1996 as a public limited company
under the laws of England to acquire London Electricity plc
(``LE''), a foreign utility company (``FUCO''), as defined in
section 33 under the Act. EPUK's sole investment and significant
asset is the entire share capital of LE.
\4\ The application states that tax considerations will
influence whether the Issuing Entity is formed as a Limited
Partnership or Trust.
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In connection with the issuance of Entity Interests, EPUK proposes
to issue and sell one or more series of junior subordinated debentures
or capital interests (collectively, ``Subordinated Securities'') to the
Issuing Entity. The Issuing Entity will purchase the Subordinated
Securities with the proceeds from the sale of its Entity Interests,
plus the equity contributions it received from EPUK. Each series of
Subordinated Securities will have either a stated maturity date or not
stated maturity date, and interest will be paid by EPUK at either a
fixed or adjustable rate. The distribution rates, payment dates,
redemption, maturity, if any, and other terms of the Subordinated
Securities will be substantially similar to those of the Entity
Interests, and will be determined by EPUK at the time of issuance
pursuant to a subordinated securities agreement (``Subordinated
Securities Agreement''). The interest paid by EPUK on the Subordinated
Securities will constitute the only source of income for the Issuing
Entity to pay monthly, quarterly, or semi-annual distributions on the
Entity Interests, as determined at the time of issuance.
Each series of Entity Interests and any corresponding series of
Subordinated Securities will be sold at such price and will be entitled
to receive such distributions or interest payments on such periodic
basis, as determined at the time of sale. No series of Entity Interests
or corresponding series of Subordinated Securities will be sold if the
interest rate, whether fixed or the initial adjustable rate, would
exceed the lower of 15% per annum or market rates at the time of
pricing for comparable securities of issuers of comparable credit
quality bearing comparable maturities. Interest or distributions
calculated in accordance with an adjustable rate will be established by
reference to a benchmark rate, such as the London Interbank Offered
Rate, the Treasury Rate or orders received in an auction procedure, and
will not exceed 15% per annum. Subsequent rate adjustments may be made
at established intervals or simultaneously with changes in the
benchmark rate.
EPUK may guarantee the payment of distributions on the Entity
Interests, payments to the holders of Entity Interests of amounts due
upon liquidation of the Issuing Entity or redemption of the Entity
Interests, and certain additional ``gross-up'' amounts that may be
payable in respect of Entity Interests.
EPUK may have the right to defer payment of interest on the
Subordinated Securities for specified periods or for an indefinite
period so long as dividends are not being paid on, or certain actions
are not being taken with respect to the retirement of, the common or
preferred stock of EPUK or one or more of the direct or indirect parent
companies of EPUK during the period of deferral. The Subordinated
Securities would be expressly subordinated to senior indebtedness of
EPUK.
Distributions on Entity Interests will be paid periodically, as
determined at the time of sale of such series, will be cumulative and
will be mandatory to the extent that the Issuing Entity has legally
available funds sufficient for such purposes. The availability of funds
will depend entirely upon the Issuing Entity's receipt of the amounts
paid under the Subordinated Securities. The Issuing Entity may also
defer payment of distributions for a specified period or for an
indefinite period, but only if and to the extent that EPUK defers
interest payments on the Subordinated Securities.
EPUK expects that its interest payments on the Subordinated
Securities will be deductible by it for United Kingdom income tax
purposes and that the Issuing Entity will not be subject to United
States or United Kingdom income tax on the interest received on the
Subordinated Securities.
At the option of the Issuing Entity with the consent of EPUK, the
Issuing Entity may redeem the Entity Interests, in whole or in part, at
a price equal to their stated liquidation preference plus any accrued
and unpaid distributions, on or before a date approximately five years
after the date of issuance, upon the occurrence of certain adverse tax
or regulatory events.\5\ The Entity Interests also may be subject to
mandatory redemption under certain circumstances. Moreover, EPUK may
reserve the right to exchange the Subordinated Securities for the
Entity Interests or to distribute the Subordinated Securities to
holders of
[[Page 43763]]
Entity Interests, whereupon the Entity Interests would be canceled.
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\5\ Examples of such adverse events include if the Issuing
Entity may become subject to United States or United Kingdom income
tax on the interest it received on Subordinated Securities, a
determination that the interest payments by EPUK on its Subordinated
Securities are not deductible for the United States earnings and
profits or United Kingdom income tax purposes, the Issuing Entity
becomes subject to a more than minimal amount of other taxes, or if
the Issuing Entity becomes subject to regulation as an ``investment
company'' under the Investment Company Act of 1940, as amended.
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In the event Subordinated Securities are not treated as
indebtedness for United Kingdom income tax purposes or the Issuing
Entity is not treated as a partnership or trust, as the case may be,
for United States income tax purposes, and the Issuing Entity is
required to withhold or deduct certain amounts from payments on the
Entity Interests, the Issuing Entity may have the obligation, if the
Entity Interests are not redeemed or exchanged, to ``gross up'' such
payments so that the holders of the Entity Interests will receive the
same payment after withholding or deduction as they would have received
if no withholding or deduction were required.
In the event of liquidation, dissolution or winding up of the
Issuing Entity, holders of Entity Interests will be entitled to receive
out of assets available for distribution before any distribution of
assets to the general partner if the Issuing Entity is a Limited
Partnership or to EPUK if the Issuing Entity is a Trust, an amount
equal to the stated liquidation preference of the Entity Interests plus
any accrued and unpaid distributions.
EPUK states that the constituent documents governing the Issuing
Entity will contain provisions limiting the Issuing Entity's activities
to (i) the issuance and sale of Entity Interests, (ii) the use of
proceeds from the sale of Entity Interests and the equity contributions
from EPUK to purchase Subordinated Securities, (iii) the receipt of
interest on the Subordinated Securities and (iv) the payment of
distributions on the Entity Interests. Moreover, EPUK represents that
the constituent documents of the Issuing Entity will not include any
interest or distribution coverage or capitalization ratio restrictions
on the issuing Entity's ability to issue and sell additional Entity
Interests.\6\ Transfer restrictions will apply to transfers of the
general partner interest or voting interests, as the case may be.
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\6\ In EPUK's view, such restrictions would not be necessary
because the interest payments by EPUK on the Subordinated Securities
will be sufficient to fully service the distributions on Entity
Interests.
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EPUK anticipates that the issuance and sale of Entity Interests
will be by means of competitive bidding,\7\ or negotiated public
offering or private placement with institutional investors. The
commission payable to underwriters is not expected to exceed the lesser
of 3.25% of the principal amount of the Entity Interests to be sold or
an amount payable for comparable issuances of securities having terms,
conditions and features similar to those of the Entity Interests.
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\7\ The price for Entity Interests to be sold through the
competitive bidding process is expected to range from 95% to 105% of
the liquidation amount of that particular series of Entity
Interests.
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EPUK intends to use the net proceeds from the issuance and sale of
Entity Interests to repay a portion of the credit facility used to
finance the acquisition of LE (``LE Credit Facility'').\8\ In
connection with such repayment, the LE Credit Facility may be amended
and restated, and one or more subsidiaries of Entergy formed to hold,
with EPUK, LE, may be required to become a guarantor or co-maker of, or
jointly or severally obligated to make payments under the amended and
restated LE Credit Facility.
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\8\ EPUK states that neither the proceeds from the issuance and
sale of Entity Interests nor any savings derived from the repayment
of the LE Credit Facility will be used to make new investments in an
exempt wholesale generator, as defined in section 32 of the Act, or
any other FUCO.
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Central and South West Corporation, et al. (70-9083)
Central and South West Corporation, a Delaware corporation
(``CSW'') and a registered holding company under the Act, CSW Energy,
Inc., a Texas corporation, and EnerShop, Inc., a Delaware corporation,
all located at 1616 Woodall Rodgers Freeway, P.O. Box 660164, Dallas,
Texas 75202, and collectively referred to as the ``Applicants,'' have
filed a declaration under sections 6(a), 7 and 12(b) of the Act, and
rules 45 and 54 thereunder.
Applicants state that under rule 58 of the Act, they intend to
acquire the securities of or interests in one or more companies that
will engage in all forms of brokering and marketing transactions
involving electricity and other energy commodities, including natural
gas, oil and coal, at wholesale and retail, through one or more
associate energy-related companies (hereinafter referred to as
``Marketing Companies''), and to provide incidental related services,
such as fuel management, storage and procurement (``Marketing
Activities''). In addition, the Applicants from time to time state that
they may acquire the securities of or interests in the business of one
or more other companies, each of which will engage exclusively in
energy-related activities under rule 58 (collectively with Marketing
Companies, ``Energy-Related Companies'').
In connection with the activities of the Energy-Related Companies,
the Applicants seek authority to issue or arrange various kinds of
credit support in an aggregate amount that will not exceed $250
million, as required or appropriate for any Energy-Related Company,
directly or indirectly: (i) to secure debt financing; (ii) to satisfy
bid bond requirements; and/or (iii) to satisfy credit support
requirements in connection with exempt activities conducted by Energy-
Related Companies and/or financing documents and agreements to which
any Energy-Related Company (directly or indirectly) becomes a party
(``Guarantees''). The Applicants state that any Guarantee issued by
them on behalf of any Energy-Related Company will be included in the
determination of aggregate investment for purposes of rule 58.
The debt financing guaranteed by the Applicants will not: (i)
exceed a term of fifteen years; or (ii)(a) bear a rate equivalent to a
floating interest rate in excess of 2% over the prime rate, London
Interbank Offered Rate or other appropriate index, in effect from time
to time, or (b) bear a fixed rate in excess of 2.5% above the yield at
the time of issuance of United States Treasury obligations of a
comparable maturity. Any commitment or other fees with respect to the
debt will not exceed one percent per annum of the total amount of debt
financing.
The Applicants state that the Energy-Related Companies will take
appropriate measures in the normal course of their business to mitigate
the risks associated with electric power and fuel purchase or sale
contracts. CSW will not seek recovery through higher rates to customers
of its operating utility company subsidiaries to compensate CSW for any
possible losses that it may sustain in connection with Guarantees or
its investment in Energy-Related Companies.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-21594 Filed 8-14-97; 8:45 am]
BILLING CODE 8010-01-M
