[Federal Register Volume 59, Number 68 (Friday, April 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8434]


[[Page Unknown]]

[Federal Register: April 8, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26018]

 

Filings Under the Public Utility Holding Company Act of 1935 
(``Act'')

April 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 April 25, 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 request 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 (70-8339)

    Central and South West Corporation (``CSW''), a registered holding 
company, has filed an application-declaration pursuant to sections 
6(a), 7, 9(a), 10 and 13(f) of the Act and Rules 50 and 80-91 
thereunder. CSW requests approval of its proposed acquisition 
(``Transaction'') of El Paso Electric Company (``EPE'' and after 
completion of its reorganization in bankruptcy, ``REPE''), the issuance 
of securities in connection with the acquisition, the addition of EPE 
to the existing CSW system service agreement (``Service Agreement''), 
and certain related transactions, as described herein.
    EPE is a Texas electric utility company and a debtor-in-possession 
in bankruptcy reorganization proceedings pending in the Bankruptcy 
Court for the Western District of Texas (``Bankruptcy Court''). EPE is 
engaged in the generation and distribution of electricity through an 
interconnected system to approximately 261,000 retail customers in El 
Paso, Texas and an area of the Rio Grande Valley in west Texas and 
southern New Mexico, and to wholesale customers located in southern 
California, Texas, New Mexico and Mexico. EPE has one subsidiary which 
it expects to dispose of in the first quarter of 1994. EPE's generating 
facilities have a net capacity of 1,497 megawatts (``MWs''), consisting 
of an entitlement of 600 MWs from Palo Verde Nuclear Generating Station 
Units 1, 2 and 3 and 104 MWs from the Four Corners Generating Project, 
and generating capacity of 246 MWs from the Rio Grande Power Station, 
478 MWs from the Newman Power Station and 69 MWs from the Copper 
Station. EPE also owns various transmission lines and associated 
substations and other equipment.
    CSW is a registered electric utility holding company.\1\ The 
Operating Companies are public utility companies engaged in generating, 
purchasing, transmitting, distributing and selling electricity. They 
supply electric service to approximately 1.6 million retail customers. 
CP&L and West Texas operate in south and central west Texas, 
respectively; PSC-OK operates in eastern and southwestern Oklahoma; and 
SWEPCO operates in northeastern Texas, northwestern Louisiana and 
western Arkansas.
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    \1\CSW owns all of the outstanding shares of common stock of 
Central Power and Light Company (``CP&L''), Public Service Company 
of Oklahoma (``PCS-OK''), Southwestern Electric Power Company 
(``SWEPCO''), West Texas Utilities Company (``West Texas'') 
(collectively, ``Operating Companies''), Transok, Inc. 
(``Transok''), CSW Credit, Inc. (``Credit''), CSW Energy, Inc. 
(``Energy''), and Central and South West Services, Inc. 
(``Services''). CSW owns 80% of the outstanding shares of common 
stock of CSW Leasing, Inc. (``Leasing''). In addition, Energy holds 
interests in several power projects.
    Transok is a natural gas gathering, transmission and processing 
company which transports for and sells natural gas to PSC-OK and for 
the other Operating Companies, as well as processes, transports and 
sells natural gas to and for non-affiliates. Services performs 
various accounting, engineering, tax, legal, financial, electronic 
data processing, centralized power dispatching and other services 
for the CSW system. Credit purchases accounts receivable of the 
Operating Companies, Transok, and unaffiliated electric and gas 
utilities. Energy pursues cogeneration projects and other energy 
ventures. Leasing invests in leveraged leases.
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Summary of the Transaction

    To effect the Transaction, EPE will merge with a shell subsidiary 
to be established by CSW (``CSW Sub''),\2\ with EPE as the surviving 
corporation. As a result of the Transaction, EPE will become a wholly 
owned subsidiary of CSW. Simultaneously with the merger, EPE's plan of 
reorganization (``Plan'') will become effective. As part of the 
reorganization and merger, in exchange for existing EPE securities and 
claims against EPE, EPE's current stockholders and creditors will 
receive shares of CSW common stock, $3.50 par value (``CSW Common 
Stock''), securities of REPE (``New EPE Securities'') and/or cash. The 
total Transaction consideration will be approximately $2.1 billion, 
exclusive of cash retained by EPE and paid out to EPE creditors and 
preferred shareholders prior to the date on which the Plan becomes 
effective (``Effective Date'') and exclusive of bonds to be issued in 
pledge as security for other obligations. Because the Plan and merger 
agreement allow CSW to substitute CSW Common Stock for certain of New 
EPE Securities and to substitute cash for CSW Common Stock, the exact 
amount and mixture of CSW Common Stock, New EPE Securities and cash has 
not yet been determined. In addition, because the amount of 
consideration to be paid to holders of EPE common stock is subject to 
certain contingencies, the total Transaction consideration may be 
somewhat higher than $2.1 billion. It is currently anticipated that the 
consideration will consist of approximately $773 million in CSW Common 
Stock, approximately $1.19 billion in New EPE Securities, and 
approximately $149 million in cash.
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    \2\CSW Sub will be formed solely for the purpose of effecting 
the Transaction, and all authorized shares of CSW Sub common stock 
of 1,000 shares, $0.01 par value per share, will be issued to CSW at 
the price of $1 per share and held by it until consummation of the 
Transaction, at which time such shares will be converted into shares 
of REPE common stock.
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    Under the Plan and merger agreement, CSW may issue a maximum of 
approximately $925 million in CSW Common Stock to EPE creditors and 
shareholders. In addition, certain options to purchase EPE common 
stock, if not exercised prior to the Effective Date, will be converted 
into options to purchase shares of CSW Common Stock.

Interconnection

    CSW states that EPE is physically interconnected with the CSW 
electric utility system through the transmission system of Southwestern 
Public Service Company (``SPS'').\3\ SPS and EPE are interconnected at 
EPE's transmission substation near Artesia, New Mexico. SPS has three 
points of interconnection with the Operating Companies: A 115 KV 
interconnection with West Texas near its Shamrock substation; a 230 KV 
interconnection with PSC-OK at the Oklahoma-Texas state line by a 
transmission line, jointly owned by PSC-OK and SPS, connecting PSC-OK's 
Elk City substation and SPS's Harrington/Nichols substation; and a 345 
KV interconnection with PSC-OK at its Oklaunion substation
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    \3\It is noted here that SPS was also interested in acquiring 
EPE and held intensive negotiations with EPE. However, on September 
17, 1993, the Bankruptcy Court entered an order denying SPS's motion 
for permission to file a competing plan of reorganization.
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    In order to gain access to the SPS transmission system, EPE and CSW 
(through Services, as agent for the Operating Companies) filed an 
application with the Federal Energy Regulatory Commission (``FERC'') on 
November 4, 1993 seeking an order pursuant to section 211 of the 
Federal Power Act (``FPA'') to require SPS to provide firm and non-firm 
transmission services in connection with the transfer of power and 
energy between the EPE and CSW control areas at rates and on terms and 
conditions that the FERC determines to be just and reasonable. Through 
its section 211 application with the FERC, CSW intends to enter into an 
agreement with SPS giving EPE and PSC-OK the right to use the SPS 
transmission system connecting the utility assets of EPE with those of 
PSC-OK. If wheeling through the SPS system cannot be obtained on a 
timely basis or ultimately is determined not to be available under the 
FPA, CSW states that it would implement an alternative plan of 
integration, including construction of transmission facilities by one 
or more of the Operating Companies.

EPE New Securities

    Under the Plan, the New EPE Securities that will be issued are as 
follows: Reorganized EPE First Mortgage Bonds (Series A, B, C and X) 
(``FMBs''), Reorganized EPE Second Mortgage Bonds (Series A, B, X, Y, 
and Z) (``SMBs''), Reorganized EPE Secured Floating Rate Notes (Classes 
3A, 5A and 6A) (``Secured Notes''), Reorganized FPE Senior Floating 
Rate Notes (Classes 11 and 13) (``Senior Floating Rate Notes'') and 
Reorganized EPE Senior Fixed Rate Notes (Series A and Class 13) 
(``Senior Fixed Rate Notes'') in the maximum aggregate principal 
amounts of $400 million, $500 million, $250 million, $125 million and 
$525 million, respectively, and Reorganized EPE Preferred Stock 
(``Preferred'') with a maximum aggregate value (calculated as set forth 
in the Plan) of $68 million.\4\ These maximum levels reflect the 
options of CSW and creditors for distributions of securities and bonds 
to be issued in pledge as security for other obligations, and therefore 
exceed the total amount of the New EPE Securities projected to be 
issued. In addition, holders of the Series A and Series B FMBs and 
Series A SMBs have the right (to be exercised not later than five days 
before the Effective Date) to have REPE, at its expense, cause to be 
underwritten and sold in a registered secondary offering such bonds 
within 60 days after the Effective Date.\5\
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    \4\CSW proposes to deviate from the Commission's Statement of 
Policy Regarding First Mortgage Bonds (HCAR No. 13105, Feb. 16, 
1956, as modified by HCAR No. 16369, May 8, 1969) and the 
Commission's Statement of Policy Regarding Preferred Stock (HCAR No. 
13106, Feb. 16, 1956, as modified by HCAR No. 16758, June 22, 1970) 
with respect to the issuance of the FMBs and SMBs and the Preferred.
    \5\To the extent that such sales does not provide the holder 
with net proceeds equal to the principal amount of the bonds so 
sold, then REPE must pay such holder cash in an amount of such 
deficiency.
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FMBs

    The FMBs will consist of Series A, B, C and X and will be issued 
under an indenture, pursuant to which State Street Bank and Trust 
Company will act as trustee. The Series A and Series B FMBs will mature 
on the fifth and fifteenth anniversaries of the Effective Date, 
respectively; provided that, by timely notice to the recipients 
thereof, CSW may elect another maturity for such series of not less 
than five nor more than thirty years which will be in increments of 
five years if a maturity of greater than fifteen years is chosen. The 
Series C FMBs will mature on the eighth anniversary of the Effective 
Date or such shorter maturity as CSW may elect. The Series A, B and C 
FMBs will bear interest semi-annually in arrears at a per annum rate 
equal to a ``Market Basket Rate'' (as defined in the Plan) to be 
determined based on the actual maturity and rating of each series of 
such bonds.
    Neither the Series A nor the Series B FMBs will be redeemable prior 
to the fifth anniversary of their issuance. On and after such date, the 
Series A and Series B FMBs will be redeemable at redemption prices 
calculated in accordance with the Plan. The Series C FMBs will be 
redeemable at any time in whole or in part at redemption prices 
calculated in accordance with the Plan.
    The Series X FMBs will be issued to partially secure the payment of 
the principal and interest due on the Class 3A Secured Notes. The 
Series X FMBs will mature on the same dates and bear interest at the 
same rates as the Class 3A Secured Notes. The Series X FMBs will be 
redeemable only upon an acceleration of the maturity of the Class 3A 
Secured Notes.
    Additional FMBs may be issued by REPE only upon the basis of: (i) 
66\2/3\% of bondable property (including bondable property existing on 
the Effective Date less an amount that would be utilized if the 66\2/
3\% test were applied to the issuance of the bonds on such date), (ii) 
retired bonds and (iii) the deposit of cash. A net earnings test of two 
times interest requirements may be applicable in certain situations.

SMBs

    SMBs will consist of Series A, B, X, Y and Z, and under certain 
circumstances specified below, Series D, E and F, and will be issued 
under an indenture, pursuant to which IBJ Schroder Bank & Trust Company 
will act as trustee. The Series A SMBs will mature on the tenth 
anniversary of the Effective Date; provided that, by timely notice to 
the recipients thereof, CSW may elect another maturity for such series 
of not less than five nor more than thirty years which will be in 
increments of five years if a maturity of greater than fifteen years is 
chosen. The Series B SMBs will mature on the eighth anniversary of the 
Effective Date or such shorter maturity as CSW may elect. The Series A 
and B SMBs will bear interest semi-annually in arrears at a per annum 
rate equal to a ``Market Basket Rate'' to be determined based on the 
actual maturity and rating of each series of such bonds.
    The Series A SMBs will not be redeemable prior to the fifth 
anniversary of their issuance. On and after such date, the Series A 
SMBs will be redeemable at redemption prices calculated in accordance 
with the Plan. The Series B SMBs will be redeemable at any time in 
whole or in part at redemption prices calculated in accordance with the 
Plan.
    The Series X, Y (sub-series Y-1 through Y-8) and Z SMBs will be 
issued to secure the payment of the principal and interest due on 
certain secured notes or the payment of certain reimbursement and other 
obligations described in such bonds. These pledged SMBs will mature on 
the same dates and bear interest at the same rates as the obligations 
which such bonds secure. The pledged SMBs will be redeemable only upon 
an acceleration of the maturity of the obligations which such bonds 
secure.
    In the event the Maricopa pollution control revenue bonds 
(``PCBs'') are not refunded on the Effective Date as contemplated by 
the Plan, REPE will issue Series D, E or F pledged SMBs, as the case 
may be, to replace the existing EPE Series D, E or F Second Mortgage 
Bonds, as applicable, currently securing the Maricopa PCBs. Upon 
refunding, the Maricopa PCBs will no longer be secured.
    Additional SMBs may be issued only upon the basis of: (i) 33\1/3\% 
of bondable property additions after the Effective Date, (ii) retired 
bonds and (iii) the deposit of cash. A net earnings test of two times 
interest requirements may be applicable in certain situations.

Secured Floating Rate Notes

    The Secured Notes will consist of Class 3A, Class 5A and Class 6A. 
The Class 3A Secured Notes will be issued under a term loan agreement 
among REPE, the holders of such notes, and an agent acting for such 
holders. The Class 5A Secured Notes will be issued under four separate 
term loan agreements (each having substantially similar terms and 
conditions) between REPE and the holders of the Class 5(a), 5(b) and 
5(c) claims. The Class 6A Secured Notes will be issued under a term 
loan agreement among REPE, the holders of such notes, and Canadian 
Imperial Bank of Commerce, as agent for such holders.
    The Class 3A and Class 5A Secured Notes will mature on the earlier 
of December 31, 1997 and the last business day of the month in which 
the third anniversary of the Effective Date occurs. The Class 6A 
Secured Notes will mature on the earlier of December 31, 1998 and the 
last business day of the month in which the fourth anniversary of the 
Effective Date occurs.
    The Class 3A, Class 5A and Class 6A Secured Notes will each be 
payable in equal quarterly principal installments commencing on the 
earlier of December 31, 1994 and the last business day of the month in 
which the first anniversary of the Effective Date occurs (provided 
that, if the Effective Date occurs after December 31, 1994, any such 
installments that would otherwise have been payable prior to the 
Effective Date will be payable on the last business day of the month in 
which the Effective Date occurs).
    The Class 3A and Class 6A Secured Notes will bear interest at a 
rate equal to the 3-month London interbank offered rate (``LIBOR'') 
plus 150 basis points (or, at the option of REPE, at the respective 
agent's adjusted reference rate plus 50 basis points),\6\ payable at 
the end of each interest period. The Class 5A Secured Notes will bear 
interest at a rate equal to the LIBOR (resetting, at the option of 
REPE, at 1, 3 or 6 months) plus 150 basis points (or, at the option of 
REPE, at the respective holder's adjusted reference rate plus 50 basis 
points), payable at the end of each interest period (but in any event 
not less often than quarterly).
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    \6\The term ``adjusted reference rate'' means, with respect to 
any bank, a rate determined with reference to such bank's ``base'' 
or ``prime'' rate, such determination to be made according to the 
formula customarily applied by such bank to its domestic loans 
priced with reference to such rate, which formula may require that 
such rate be the higher of such ``base'' or ``prime'' rate and the 
sum of a specified margin plus a rate determined with reference to 
certificates of deposit and/or federal funds.
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    The Second Notes will be prepayable by REPE at any time in whole or 
in part without premium, subject only to LIBOR breakage costs, if any. 
In addition, the Class 5A Secured Notes will provide that the net 
proceeds of any remarketing or refunding after the Effective Date of 
any Maricopa PCBs purchased prior to the Effective Date through draws 
on letters of credit (``LCs'') issued by the holders of such notes will 
be applied to repay the principal of such notes. The Class 3A Secured 
Notes will be secured by bonds, one-third of which will be Series X 
FMBs and two-thirds of which will be Series X SMBs; the Class 5A 
Secured Notes will be secured by Series Y SMBs; and the Class 6A 
Secured Notes will be secured by Series Z SMBs. Such Series X FMBs and 
Series X, Series Y and Series Z SMBs will be issued and deposited as 
security for the payment of, and will have interest and payment terms 
identical to those in, the Class 3A, Class 5A and Class 6A Secured 
Notes, as the case may be. However, no principal or interest will be 
payable on such bonds except if, and to the extent that, the 
corresponding payment on the related Class 3A, Class 5A or Class 6A 
Secured Notes remains unpaid after the due date thereof.

Senior Fixed Rate Notes

    The Senior Fixed Rate Notes will consist of Series A and Class 13 
and will be issued under an indenture, pursuant to which United States 
Trust Company of New York will act as trustee. The Series A Senior 
Fixed Rate Notes will mature at the end of the quarter immediately 
following the tenth anniversary of the earlier of the Effective Date 
and December 31, 1994. The term of the Series A Senior Fixed Rate Notes 
may be adjusted at the election of CSW provided that such term may not 
exceed 10 years. The Class 13 Senior Fixed Rate Notes will mature on 
the ninth anniversary of the earlier of the Effective Date and December 
31, 1994.
    The Senior Fixed Rate Notes will bear interest semi-annually in 
arrears at a per annum rate equal to a ``Market Basket Rate'' to be 
determined pursuant to the Plan based on the actual maturity and rating 
of each series of such notes. The Senior Fixed Rate Notes will be 
redeemable at any time in whole or in part at redemption prices 
calculated in accordance with the Plan.

Senior Floating Rate Notes

    The Senior Floating Rate Notes will consist of Class 11 and Class 
13. The Senior Floating Rate Notes will be issued under separate term 
loan agreements among REPE, the holders of such notes, and an agent 
acting for such holders.
    The Senior Floating Rate Notes will mature on the seventh 
anniversary of the earlier of the Effective Date and December 31, 1994, 
and will each be payable in equal quarterly principal installments 
commencing at the end of the quarter after the earlier of the fifth 
anniversary of the Effective Date and December 31, 1994 (provided, that 
the maturity and amortization schedule of such notes will be adjusted 
prior to the Effective Date, if necessary, such that the maturity 
thereof is not greater than the maturity of the Series A Senior Fixed 
Rate Notes, as selected by CSW).
    The Senior Floating Rate Notes will bear interest at a rate equal 
to 3-month LIBOR plus 200 basis points (or, at the option of REPE, at 
the respective agent's adjusted reference rate plus 100 basis points), 
payable at the end of each interest period (but in any event not less 
often than quarterly). The Senior Floating Rate Notes will be 
prepayable by REPE at any time in whole or in part without premium, 
subject only to LIBOR breakage costs, if any. REPE will be required to 
redeem all of the outstanding Class 11 and Class 13 Senior Floating 
Rate Notes if at any time less than 33\1/3\% of the Series A Senior 
Fixed Rate Notes issued on the Effective Date remain outstanding. In 
addition, the Class 11 Senior Floating Rate Notes will include 
provisions for the mandatory prepayment thereof from the proceeds of 
any remarketing or refunding of the Farmington Series A 1983 PCBs paid 
for or purchased prior to the Effective Date with a draw on the 
Farmington PCB LC.

Letters of Credit Supporting Maricopa PCBs

    The post-Effective Date obligations of REPE with respect to 
replacement LCs supporting the Maricopa PCBs will be governed by 
separate letter of credit and reimbursement agreements between REPE and 
the respective issuers of such replacement LCs. Such replacement LCs 
will be scheduled to expire (i) in the case of the replacement LC for 
the Maricopa Series A 1983 PCBs, on the earlier of December 31, 1997 
and the third anniversary of the Effective Date, (ii) in the case of 
the replacement LC for the Maricopa Series E 1984 PCBs, on the last day 
of the fourth month following the earlier of December 31, 1998 and the 
fourth anniversary of the Effective Date, and (iii) in the case of the 
replacement LC for the Maricopa Series A 1985 PCBs, on the earlier of 
December 31, 1998 and the fourth anniversary of the Effective Date, in 
each case with a one-year extension at the option of REPE.
    Drawings under the replacement LCs may be treated as loans by the 
respective issuer to REPE. Such loans would mature on the stated 
termination date of the relevant replacement LC, would be payable in 
equal quarterly installments (commencing on the last day of the 
calendar quarter in which the 90th day following the relevant drawing 
occurs), would bear interest at a rate equal to LIBOR (resetting, at 
the option of REPE, at 1, 3 or 6 months) plus 150 basis points (or, at 
the option of REPE, at the respective issuer's adjusted reference rate 
plus 50 basis points), and would be prepayable by REPE at any time in 
whole or in part without premium, subject only to LIBOR breakage costs, 
if any. Reimbursement obligations in respect of the replacement LCs 
(including those treated as loans, together with interest thereon) will 
be secured by pledged Series Y SMBs.
    LC commissions will be payable to the respective issuers of the 
replacement LCs at an initial rate per annum equal to 0.75% of the 
amount available to be drawn under such LC, such rate increasing by 
0.125% per annum on each anniversary of the earlier of December 31, 
1994 and the Effective Date.

Letter of Credit Supporting Farmington PCBs

    The post-Effective Date obligations of REPE with respect to the 
replacement LC supporting the Farmington PCBs will be governed by a 
letter of credit and reimbursement agreement between REPE and the 
issuer of such replacement LC. Such replacement LC will be scheduled to 
expire on the last day of the sixth month after the scheduled final 
maturity date of the Class 13 Senior Floating Rate Notes.
    Drawings under such replacement LC may be treated as loans by such 
issuer to REPE. Such loans would mature on the stated termination date 
of the replacement LC, would be payable in equal quarterly installments 
(commencing on the last day of the calendar quarter in which the 90th 
day following the relevant drawing occurs), would bear interest at a 
rate equal to LIBOR (resetting, at the option of REPE, at 1, 3 or 6 
months) plus 150 basis points (or, at the option of REPE, at the 
issuer's adjusted reference rate plus 50 basis points), and would be 
prepayable by REPE at any time in whole or in part without premium, 
subject only to LIBOR breakage costs, if any. Reimbursement obligations 
in respect of the replacement LC (including those treated as loans, 
together with interest thereon) will be secured by pledged Series Y 
SMBs.
    LC commissions will be payable to the issuer of such replacement LC 
at an initial rate equal to 0.625% per annum of the amount available to 
be drawn under such LC, such rate increasing on the first seven 
anniversaries of the earlier of December 31, 1994 and the Effective 
Date to 0.75% per annum, 0.875% per annum, 1% per annum, 1.125% per 
annum, 1.25% per annum, 1.625% per annum and 2% per annum, 
respectively.

Preferred Stock

    The Preferred will provide for cumulative cash dividends payable 
quarterly at a rate equal to a ``Market Basket Rate'' to be determined 
based on the actual rating of such stock. The Preferred will be 
redeemable at any time in whole or in part at redemption prices 
calculated in accordance with the Plan plus accrued dividends. In 
addition, on each of the eleventh, twelfth, thirteenth and fourteenth 
anniversaries of the Effective Date, REPE is required to redeem one-
twentieth of the originally issued Preferred, and on the fifteenth 
anniversary, it is required to redeem all outstanding Preferred, in 
each case at a redemption price equal to the liquidation value of such 
stock.
    The Preferred will be entitled to vote only in the following 
limited circumstances: (i) Amendments to terms of the Preferred which 
are adverse to the holders thereof (including increases in authorized 
number of shares); (ii) creation of a class of stock having a 
preference superior to the Preferred or of a security convertible into 
any kind of stock; (iii) issuance of additional Preferred or parity 
stock (unless an earnings test is met); and (iv) merger or sale of all 
or substantially all of REPE's assets. In addition, if dividends are in 
default in an amount at least equal to four quarterly dividends, the 
Preferred, voting as a class, will be entitled to elect a majority of 
the REPE Board of Directors.

Rule 50

    CSW requests an exemption from the competitive bidding requirements 
of Rule 50 pursuant to subsection (a)(5) thereunder for the issuance of 
CSW Common Stock and the New EPE Securities. In addition, CSW requests 
authorization to retain one or more experienced investment banking 
firms to assist in the determination of the ``Market Basket Rate'' for 
the New EPE Securities. It may do so.

Addition of EPE to the Service Agreement

    CSW seeks authority to add EPE as a party to the Service Agreement 
effective immediately upon the consummation of the transaction. 
However, the full assimilation of EPE into the CSW system is expected 
to occur over a number of years. Under the proposed phase-in 
arrangements, EPE will bear one-third of its pro-rata allocation of 
Services' indirect charges during the first twelve months after the 
Effective Date, two-thirds during the second twelve months after the 
Effective Date, and the full allocation thereafter. EPE would bear its 
full share of direct charges by Services for functions such as 
information processing. This phase-in procedure for indirect charges 
will require an amendment to section 3 of the Service Agreement, which 
governs the allocation of costs among the parties for services 
performed by Services.

Reacquisition by EPE of Ownership of the Palo Verde Assets

    On November 15, 1993, EPE entered into, and on December 8, the 
Bankruptcy Court approved, settlement agreements (``OP Settlements'') 
with the beneficiaries of the trusts (``Palo Verde Owner 
Participants'') holding title to certain interests in the Palo Verde 
Nuclear Generating Station. The Plan and the OP Settlements provide for 
EPE to reacquire ownership of the Palo Verde interests previously sold 
and leased back by EPE.
    Under the Plan, holders of the Palo Verde bonds will be treated as 
creditors of the EPE estate and will receive consideration equal to 
95.5% of their claims, to be allowed in the amount of $700 million, 
together with post-petition interest at LIBOR plus 200 basis points 
from July 29, 1993. Pursuant to the OP Settlements, the liens of the 
Palo Verde bondholders and the Palo Verde indenture trustees will be 
discharged, and the Palo Verde indenture trustees will transfer their 
rights with respect to the leased Palo Verde assets to REPE and 
exchange releases with the Palo Verde Owner Participants. Subject to 
the approval of the Nuclear Regulatory Commission, the Palo Verde Owner 
Participants will transfer their interests in the leased Palo Verde 
assets to REPE, release their claims for any additional damage amounts 
under the Palo Verde leases, retain $288.4 million previously drawn 
under related LCs, and be released from claims by EPE and other 
creditors. After the consummation of the Transaction and the OP 
Settlements, the Palo Verde assets will be used for the benefit of 
EPE's operations and customers.
    There will be no change in the extent of EPE's utilization of the 
Palo Verde Nuclear Generating Station, the percentage of costs that EPE 
is to bear, or the percentage of capacity it is entitled to receive. As 
a consequence of the settlement, $956.9 million will have been paid on 
account of the Palo Verde claims, including the $288.4 million received 
by the Palo Verde Owner Participants as a result of their draws on the 
Palo Verde LCs, for the reacquisition of the leased Palo Verde assets 
and lease rejection damages. Of this amount, the Bankruptcy Court has 
determined that $605 million is reflective of the fair market value, 
based on the regulatory book value as of June 30, 1993, of the assets 
which are being reacquired, and $351.9 million is attributable to lease 
rejection damages.

Ocean State Power, et al. (70-8373)

    Ocean State Power (``OSP'') and Ocean State Power II (``OSP II'') 
(collectively, ``Applicants'') both located at P.O. Box 561, 
Harrisville, Rhode Island 02830, each electric public-utility 
subsidiary companies of both Eastern Utilities Associates (``EUA'') and 
New England Electric System (``NEES''), registered holding companies, 
have filed an application-declaration under sections 6(a), 7 and 12(c) 
of the Act and Rule 42 thereunder.
    The Applicants, each Rhode Island general partnerships propose to 
enter into financing arrangements whereby they may borrow up to $25 
million aggregate principal amount of secured revolving debt 
(``Revolver'').\7\ As evidence of the Revolver, Applicants propose to 
issue, through June 1, 1995, notes (``Notes'') with maturities not in 
excess of ten years from the date of the initial borrowing under the 
Revolver (``Final Maturity'').
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    \7\The investors in both partnerships, and their respective 
ownership and voting interests, are identical. The partners in OSP 
and OSP II are JCM Ocean State Corporation, a subsidiary of J. 
Makowski Company, Inc., TCPL Power Ltd., a subsidiary of TransCanada 
PipeLines Limited, Narragansett Energy Resources Company, a 
subsidiary company of NEES, and EUA Ocean State Corporation, a 
subsidiary company of EUA.
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    The Notes will bear interest at a floating rate not to exceed the 
then current market rate for revolving debt of comparable issuers. The 
Notes may be prepaid in whole or in part by the Applicants at any time 
prior to the final maturity date without premium or penalty. The 
principal amount of optional prepayments may be reborrowed by the 
Applicants any time prior to the Final Maturity date. The Notes may be 
subject to mandatory prepayment, without penalty or premium, upon the 
occurrence of certain loss events., which prepayment obligation may be 
limited in certain situations. The Notes may be renewed, replaced or 
extended, for additional periods pursuant to the terms of the Revolver 
Loan Agreement, including any renewal, replacement or extension of the 
Revolver Loan Agreement.
    The obligations of the Applicants under the Notes will be secured, 
jointly and severally, under a security agreement dated as of October 
19, 1992, as amended, among the Applicants and State Street Bank and 
Trust Company, as collateral agent (``Guarantor Security Agreement''). 
All of the collateral subject to the Guarantor Security Agreement will 
be shared ratably and pari passu in right of security among one or more 
lending institutions (collectively, ``Lender'') and the holders of the 
notes issued in connection with the refinancing of the construction and 
term financing of the two units of a 500 MW combined cycle electric 
generating facility owned by the Applicants. In order to become 
entitled to the benefits of the Guarantor Security Agreement, the 
Lender will execute a supplement thereto. The Guarantor Security 
Agreement creates a first-priority security assignment of the 
Applicants' interests in their respective unit power agreements subject 
only to the exclusive security interest of Tennessee Gas Pipeline 
Company, in certain components of the revenues received under their 
respective unit power agreements.
    The Applicants propose to use the proceeds from the Revolver to 
fund capital expenditures, to pay transaction costs and other costs in 
connection with the financing, and to provide liquidity in general.
    The Applicants request that the Commission reserve jurisdiction, 
pending completion of the record, with respect to any renewal or 
extension of the Notes for additional periods in excess of ten years 
from the date of initial borrowing under the Revolver.

Consolidated Natural Gas Co., et al. (70-8387)

    Consolidated Natural Gas Co. (``CNG''), CNG Tower, 625 Liberty 
Avenue, Pittsburgh, Pennsylvania 15222, a registered holding company, 
The East Ohio Gas Co. (``Ohio''), 1717 East 9th Street, Cleveland, Ohio 
44114, a local distribution company (``LDC'') and a subsidiary company 
of CNG, and The River Gas Company (``River''), 324 4th Street, 
Marietta, Ohio 45750, also an LDC and a subsidiary company of CNG, have 
filed an application-declaration under sections 6(a), 7, 9(a), 10 and 
12(c) of the Act and Rule 42 thereunder. The application-declaration 
proposes to merge Ohio and River.
    CNG is a registered holding company with fifteen subsidiaries 
engaged in natural gas exploration, production, transmission, storage, 
distribution, and research and other activities related to the natural 
gas business. Ohio is the largest LDC in the CNG system, serves the 
northeastern region of Ohio, and has over 2,000 employees. River serves 
the Marietta area in southeastern Ohio and has 50 employees.
    To effect the combination, Ohio and River propose to conclude an 
Agreement and Plan of Merger (``Agreement''), to which CNG will 
consent. The Agreement will provide for Ohio to survive the 
combination, upon which each share of River common stock, $100 par 
value,\8\ will be cancelled, and each share of Ohio common stock, $50 
par value, will continue to be one share of Ohio common stock, $50 par 
value.\9\
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    \8\On December 31, 1993, River had authorized common stock of 
70,000 shares, $100 par value, and outstanding common stock of 
35,500 shares.
    \9\On December 31, 1993, Ohio had authorized common stock of 
4,500,000 shares, $50 par value, and outstanding common stock of 
3,159,353 shares.
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    Upon the combination, Ohio shall acquire all rights, privileges, 
powers and franchises of both Ohio and River. It also shall acquire all 
restrictions, disabilities, liabilities and duties of both Ohio and 
River. All indebtedness of River shall become indebtedness of Ohio, and 
all capital and retained earnings of River shall become capital and 
retained earnings of Ohio. The River properties that Ohio will acquire 
will be recorded on its books on the basis of the value with which 
River recorded them on its books.
    It is proposed that River will become a division of Ohio. It is 
stated that no changes in general functional activities are needed for 
River to make the transition from a stand-alone corporation to a 
division of Ohio and that no organizational changes are expected to 
Ohio. Finally, it states that for most Ohio employees the proposed 
combination will result in no change.
    By order dated June 30, 1993 (HCAR No. 25841) (``Order''), CNG was 
authorized to finance its system from July 1, 1993 through June 30, 
1994. The Order authorized Consolidated to provide up to $10 million to 
River through: (i) Open account advances, (ii) long-term loans, and 
(iii) the purchase of River common stock, $100 par value. Since July 1, 
1993, CNG, under the Order, has refinanced long-term loans to River in 
the amount of $1.125 million. On December 31, 1993, there was, under 
the Order, $4.65 million in open account advances to River. The 
application-declaration requests Commission approval for Ohio to assume 
the amount of unused advances, loans, and stock purchases authorized 
under the Order.

Public Service Co. of Oklahoma (70-8389)

    Public Service Company of Oklahoma (``PSCO''), P.O. Box 201, Tulsa, 
Oklahoma 74102, an electric utility subsidiary company of Central and 
South West Corporation, a registered holding company, has filed a 
declaration, pursuant to section 12(d) of the Act and Rule 44 
promulgated thereunder, for the sale of certain electrical distribution 
facilities to St. Francis Hospital, Inc. (``St. Francis''), a non-
profit Oklahoma corporation and a commercial customer of PSCO.
    PSCO owns and maintains, relative to its transmission and 
distribution system, certain electrical distribution facilities located 
on PSCO property and on the premises of St. Francis in Tulsa, Oklahoma. 
The distribution facilities consist of four 15KV 1200 amp vacuum 
circuit breakers, two 15KV vacuum tie breakers, four 15 KV aluminum 
conductor circuits, and associated equipment.
    The declaration proposes that St. Francis purchase the distribution 
facilities for $166,871, which price was reached through arms-length 
negotiation and is based on the depreciated replacement value of the 
distribution facilities found in the Handy-Whitman Index. PSCO records 
reflect an original cost of $159,431 and a book value--net of 
depreciation--of $129,357 for the distribution facilities on December 
31, 1993.
    Since 1989, St. Francis has received electric service from the 
distribution facilities and is the sole customer provided electric 
service from such facilities. The distribution facilities are not 
adaptable for electric service for other customers. After the purchase, 
in accordance with standard PSCO electric service price schedules, St. 
Francis is expected to save about $150,000 annually. Oklahoma expects 
to use the proceeds of the proposed sale for its general operational 
funds.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-8434 Filed 4-7-94; 8:45 am]
BILLING CODE 8010-01-M