[Federal Register Volume 59, Number 83 (Monday, May 2, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10396]


[[Page Unknown]]

[Federal Register: May 2, 1994]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26034]

 

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

April 22, 1994.
    Notice is hereby given that the following filing(s) has/have been 
made with the Commission pursuant to provisions of the Act and rules 
promulgated thereunder. All interested persons are referred to the 
application(s) and/or declaration(s) for complete statements of the 
proposed transaction(s) summarized below. The application(s) and/or 
declaration(s) and any amendments thereto is/are available for public 
inspection through the Commission's Office of Public Reference.
    Interested persons wishing to comment or request a hearing on the 
application(s) and/or declaration(s) should submit their views in 
writing by May 16, 1994, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549, and serve a copy on the relevant 
applicant(s) and/or declarant(s) at the address(es) specified below. 
Proof of service (by affidavit or, in case of an attorney at law, by 
certificate) should be filed with the request. Any request for hearing 
shall identify specifically the issues of fact or law that are 
disputed. A person who so requests 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.

Metropolitan Edison Company (70-8401)

    Metropolitan Edison Company (``Met-Ed''), 2800 Pottsville Pike, 
Muhlenberg Township, Berks County, Pennsylvania 19640, a public-utility 
subsidiary company of General Public Utilities Corporation (``GPU''), a 
registered holding company, has filed an application-declaration under 
sections 6(a), 7, 9(a), 10 and 12(b) of the Act and rules 45, 50(a)(5) 
and 54 thereunder.
    Met-Ed proposes to organize a special purpose subsidiary (``Med-Ed 
Capital'') as either a limited liability company under the Delaware 
Limited Liability Company Act (``LLC Act'') or a limited partnership 
under the Pennsylvania or Delaware Revised Uniform Limited Partnership 
Act. Met-Ed may also organize a second special purpose wholly-owned 
subsidiary under the Delaware General Corporation Law (``Investment 
Sub'') for the sole purpose of either (i) acquiring and holding a 
second class of Met-Ed Capital common interests so as to comply with 
the requirement under the LLC Act that a limited liability company have 
at least two members or (ii) acting as the general partner of Met-Ed 
Capital, assuming a limited partnership structure. Met-Ed Capital will 
then issue and sell from time to time in one or more series through 
June 30, 1996 up to $125 million aggregate stated value of preferred 
limited liability company interests or limited partnership interests, 
in the form of Monthly Income Preferred Stock, $25 per share stated 
value (``MIPS'').
    Met-Ed and Investment Sub will acquire all of the common interests 
or, alternatively, Met-Ed or Investment Sub will acquire all of the 
general partnership interests, as the case may be, of Met-Ed Capital 
for up to $35 million (``Equity Contribution''). Met-Ed will enter into 
a loan agreement with Met-Ed Capital under which Met-Ed Capital will 
loan to Met-Ed both the Equity Contribution and proceeds from the sale 
of the MIPS from time to time, and Met-Ed will issue to Met-Ed Capital 
its unsecured promissory notes (``Notes'') or subordinated debentures 
(``Subordinated Debentures'') evidencing such borrowing.
    Met-Ed will also unconditionally guarantee (``Guaranty'') (i) 
payment of dividends or distributions on the MIPS, if and to the extent 
Met-Ed Capital has declared dividends or distributions out of funds 
legally available therefor, (ii) payments to the MIPS holders of 
amounts due upon liquidation of Met-Ed Capital or redemption of the 
MIPS, and (iii) certain additional amounts that may be payable in 
respect of the MIPS.
    Each Note or Subordinated Debenture will have an initial term of up 
to 30 years, and may be extended by Met-Ed for up to an additional 20 
years, and may be extended by Met-Ed for up to an additional 20 years, 
subject to certain specified conditions. Prior to maturity, Met-Ed will 
pay only interest on the Notes or Subordinated Debentures at a rate 
equal to the dividend rate on the related series of MIPS. Such interest 
payments will constitute Met-Ed Capital's only income and will be used 
by it to pay monthly dividends or distributions on the MIPS and 
dividends or distributions on the common interests or the general 
partnership interests of Met-Ed Capital. The dividend or distribution 
rates, payment dates, redemption and other similar provisions of each 
MIPS series will be identical to the interest rates, payment dates, 
redemption and other similar provisions of the Note or Subordinated 
Debenture issued by Met-Ed with respect thereto.
    Each Note or Subordinated Debenture and related Guaranty will be 
subordinate to all other existing and future indebtedness for borrowed 
money of Met-Ed and will have no cross-default provisions with respect 
to other Met-Ed indebtedness. However, Met-Ed may not declare and pay 
dividends on its outstanding Cumulative Preferred Stock or Common Stock 
unless all payments then due (whether or not previously deferred) under 
the Notes or Subordinated Debentures and the Guaranties have been made.
    It is expected that Met-Ed's interest payments on the Notes or 
Subordinated Debentures will be deductible for income tax purposes and 
that Met-Ed Capital will be treated as a partnership for federal income 
tax purposes. Consequently, it is represented that MIPS holders and 
Met-Ed (and Investment Sub) will be deemed to have received partnership 
distributions in respect of their dividends or distributions from Met-
Ed Capital and will not be entitled to any ``dividend received 
distribution'' under the Internal Revenue Code.
    The MIPS may be redeemable at the option of Met-Ed Capital (with 
the consent of Met-Ed) at a price equal to their stated value plus any 
accrued and unpaid dividends, (i) at any time after five years from 
their date of issuance, or (ii) in the event that (w) Met-Ed Capital is 
required by applicable tax laws to withhold or deduct certain amounts 
in connection with dividends, distributions or other payments, or (x) 
Met-Ed Capital is subject to federal income tax with respect to 
interest received on the Notes or Subordinated Debentures or is 
otherwise not treated as a partnership for federal income tax purposes, 
or (y) it is determined that the interest payments by Met-Ed on the 
Notes or Subordinated Debentures are not deductible for federal income 
tax purposes, or (z) Met-Ed Capital becomes subject to regulation as an 
``investment company'' under the Investment Company Act of 1940. Upon 
the occurrence of any of the events in clause (ii) above, Met-Ed may 
also have the right to dissolve Met-Ed Capital and exchange the MIPS 
for Subordinated Debentures or, if Met-Ed's borrowings are evidenced by 
Subordinated Debentures, to distribute the Subordinated Debentures to 
the MIPS holders.
    In the event that Met-Ed Capital is required by applicable tax laws 
to withhold or deduct certain amounts in connection with dividends, 
distributions or other payments, Met-Ed Capital may also have the 
obligation, if the MIPS are not redeemed or exchanged, to ``gross up'' 
such payments so that the MIPS holders will receive the same payment 
after such withholding or deduction as they would have received if no 
such withholding or deduction were required. In such latter event, the 
Guaranties would also cover any such ``gross up'' obligations.
    Met-Ed represents that it will not use any of the net proceeds of 
the borrowings to acquire, either directly or indirectly, any interest 
in any EWG or FUCO.
    Finally, Met-Ed seeks an exception from the competitive bidding 
requirements of rule 50 under subsection (a)(5) thereof in order to 
begin negotiations with prospective underwriters and/or selling agents 
with respect to the sale of the MIPS. It may do so.

Pennsylvania Electric Company (70-8403)

    Pennsylvania Electric Company (``Penelec''), 1001 Broad Street, 
Johnstown, Pennsylvania 15907, a public-utility subsidiary company of 
General Public Utilities Corporation (``GPU''), a registered holding 
Company, has filed an application-declaration under sections 6(a), 7, 
9(a), 10 and 12(b) of the Act and rules 45, 50(a)(5) and 54 thereunder.
    Penelec proposes to organize a special purpose subsidiary 
(``Penelec Capital'') as either a limited liability company under the 
Delaware Limited Liability Company Act (``LLC Act'') or a limited 
partnership under the Pennsylvania or Delaware Revised Uniform Limited 
Partnership Act. Penelec may also organize a second special purpose 
wholly-owned subsidiary under the Delaware General Corporation Law 
(``Investment Sub'') for the sole purpose of either (i) acquiring and 
holding a second class of Penelec Capital common interests so as to 
comply with the requirement under the LLC Act that a limited liability 
company have at least two members or (ii) acting as the general partner 
of Penelec Capital, assuming a limited partnership structure. Penelec 
Capital will then issue and sell from time to time in one or more 
series through June 30, 1996 up to $125 million aggregate stated value 
of preferred limited liability company interests or limited partnership 
interests, in the form of Monthly Income Preferred Stock, $25 per share 
stated value (``MIPS'').
    Penelec and Investment sub will acquire all of the common interests 
or, alternatively, Penelec or Investment Sub will acquire all of the 
general partnership interests, as the case may be, of Penelec Capital 
for up to $35 million (``Equity Contribution''). Penelec will enter 
into a loan agreement with Penelec Capital under which Penelec Capital 
will loan to Penelec both the Equity Contribution and the proceeds from 
the sale of the MIPS from time to time, and Penelec will issue to 
Penelec Capital its unsecured promissory notes (``Notes'') or 
subordinated debentures (``Subordinated Debentures'') evidencing such 
borrowings.
    Penelec will also unconditionally guarantee (``Guaranty'') (i) 
payment of dividends or distributions on the MIPS, if and to the extent 
Penelec Capital has declared dividends or distributions out of funds 
legally available therefor, (ii) payments to the MIPS holders of 
amounts due upon liquidation of Penelec Capital or redemption of the 
MIPS, and (iii) certain additional amounts that may be payable in 
respect of the MIPS.
    Each Note or Subordinated Debenture will have an initial term of up 
to 30 years, and may be extended by Penelec for up to an additional 20 
years, subject to certain specified conditions. Prior to maturity, 
Penelec will pay only interest on the Notes or Subordinated Debentures 
at a rate equal to the dividend rate on the related series of MIPS. 
Such interest payments will constitute Penelec Capital's only income 
and will be used by it to pay monthly dividends or distributions on the 
MIPS and dividends or distributions on the common interests or the 
general partnership interests of Penelec Capital. The dividend or 
distribution rates, payment dates, redemption and other similar 
provisions of each MIPS series will be identical to the interest rates, 
payment dates, redemption and other similar provisions of the Note or 
Subordinated Debenture issued by Penelec with respect thereto.
    Each Note or Subordinated Debenture and related Guaranty will be 
subordinate to all other existing and future indebtedness for borrowed 
money of Penelec and will have no cross-default provisions with respect 
to other Penelec indebtedness. However, Penelec may not declare any pay 
dividends on its outstanding Cumulative Preferred Stock or Common Stock 
unless all payments then due (whether or not previously deferred) under 
the Notes or Subordinated Debentures and the Guaranties have been made.
    It is expected that Penelec's interest payments on the Notes or 
Subordinated Debentures will be deductible for income tax purposes and 
that Penelec Capital will be treated as a partnership for federal 
income tax purposes. Consequently, it is represented that MIPS holders 
and Penelec (and Investment Sub) will be deemed to have received 
partnership distributions in respect of their dividends or 
distributions from Penelec Capital and will not be entitled to any 
``dividend received distribution'' under the Internal Revenue Code.
    The MIPS may be redeemable at the option of Penelec Capital (with 
the consent of Penelec) at a price equal to their stated value plus any 
accrued and unpaid dividends, (i) at any time after five years from 
their date of issuance, or (ii) in the event that (w) Penelec Capital 
is required by applicable tax laws to withhold or deduct certain 
amounts in connection with dividends, distributions or other payments, 
or (x) Penelec Capital is subject to federal income tax with respect to 
interest received on the Notes or Subordinated Debentures or is 
otherwise not treated as a partnership for federal income tax purposes, 
or (y) it is determined that the interest payments by Penelec on the 
Notes or Subordinated Debentures are not deductible for federal income 
tax purposes, or (z) Penelec Capital become subject to regulation as an 
``investment company'' under the Investment Company Act of 1940. Upon 
the occurrence of any of the events in clause (ii) above, Penelec may 
also have the right to dissolve Penelec Capital and exchange the MIPS 
for Subordinated Debentures or, if Penelec's borrowings are evidenced 
by Subordinated Debentures, to distribute the Subordinated Debentures 
to the MIPS holders.
    In the event that Penelec Capital is required by applicable tax 
laws to withhold or deduct certain amounts in connection with 
dividends, distributions or other payments, Penelec Capital may also 
have the obligation, if the MIPS are not redeemed or exchanged, to 
``gross up'' such payments so that the MIPS holders will receive the 
same payment after such withholding or deduction as they would have 
received if no such withholding or deduction were required. In such 
latter event, the Guaranties would also cover any such ``gross up'' 
obligations.
    Penelec represents that it will not use any of the net proceeds of 
the borrowings to acquire, either directly or indirectly, any interest 
if any EWG or FUCO.
    Finally, Penelec seeks an exception from the competitive bidding 
requirements of rule 50 under subsection (a)(5) thereof in order to 
begin negotiations with prospective underwriters and/or selling agents 
with respect to the sale of the MIPS. It may do so.

Arkansas Power & Light Company (70-8405)

    Arkansas Power & Light Company (``AP&L''), 425 West Capitol, 40th 
Floor, Little Rock, Arkansas 72201, an electric utility subsidiary 
company of Entergy Corporation, a registered holding company, has filed 
an application-declaration under Sections 6(a), 7, 9(a), 10 and 12(d) 
of the Act and Rules 44 and 50(a)(5) thereunder.
    AP&L proposes to enter into arrangements for the issuance and sale, 
by one or more governmental authorities (each an ``Issuer''), of one or 
more series of tax-exempt bonds (``Tax-Exempt Bonds'') in an aggregate 
principal amount not to exceed $200 million at one time or from time to 
time through December 31, 1996.
    The AP&L would enter into one or more installment sale agreements 
or loan agreements and/or one or more supplements or amendments thereto 
(``Agreement'') contemplating the issuance and sale by the Issuer(s) of 
one or more series of Tax-Exempt Bonds pursuant to one or more trust 
indentures and/or one or more supplements thereto (``Indenture'') 
between the Issuer and one or more trustees (``Trustee''). The proceeds 
of the sale of Tax-Exempt Bonds, net of any underwriters' discounts or 
other expenses payable from proceeds, will be applied to acquire and 
construct certain pollution control or sewage and solid waste disposal 
facilities (``Facilities'') at the AP&L's generating plants or to 
refinance outstanding tax-exempt bonds issued for that purpose.
    If the Agreement is an installment sale agreement, AP&L would sell 
Facilities to the Issuer for cash and simultaneously repurchase such 
Facilities from the Issuer for a purchase price payable on an 
installment basis over a period of years. If the Agreement is a loan 
agreement, the Issuer will loan the proceeds of the sale of Tax-Exempt 
Bonds to AP&L, and AP&L will agree to repay the loan on an installment 
payment basis over a period of years. Such installment payments or loan 
repayments will be in amounts sufficient (together with any other 
moneys held by the Trustee under the Indenture and available for the 
purpose) to pay the principal or purchase price of, the premium, if 
any, and the interest on the related series of Tax-Exempt Bonds as the 
same become due and payable, and will be made directly to the Trustee 
pursuant to an assignment and pledge thereof by the Issuer to the 
Trustee as set forth in the Indenture. Under the Agreement, AP&L will 
also be obligated to pay (i) the fees and charges of the Trustee and 
any registrar or paying agent under the Indenture and, if any, the 
remarketing agent (``Remarketing Agent'') and the tender agent 
(``Tender Agent''), (ii) all expenses incurred by the Issuer in 
connection with its rights and obligations under the Agreement, (iii) 
all expenses necessarily incurred by the Issuer or the Trustee under 
the Indenture in connection with the transfer or exchange of Tax-Exempt 
Bonds, and (iv) all other payments which AP&L agrees to pay under the 
Agreement.
    The Indenture may provide that, upon the occurrence of certain 
events relating to the operation of the Facilities financed, the Tax-
Exempt Bonds will be redeemable by the Issuer, at the direction of 
AP&L. Any series of Tax-Exempt Bonds may be made subject to a mandatory 
cash sinking fund under which stated portions of Tax-Exempt Bonds of 
such series are to be retired at stated times. Tax-Exempt Bonds may be 
subject to mandatory redemption in certain other cases. The payments by 
the AP&L under the Agreement in such circumstances shall be sufficient 
(together with any other moneys held by the Trustee under the Indenture 
and available therefor) to pay the principal of all Tax-Exempt Bonds to 
be redeemed or retired, and the premium, if any, thereon together with 
interest accrued or to accrue to the redemption date of such bonds.
    It is proposed that the Tax-Exempt Bonds mature not less than five 
years from the first day of the month of issuance nor later than 40 
years from the date of issuance. Tax-Exempt Bonds will be subject to 
optional redemption, at the direction of AP&L, in whole or in part at 
the redemption prices (expressed as percentages of principal amount) 
plus accrued interest to the redemption date, and at the times, set 
forth in the Indenture.
    The Agreement and the Indenture may provide for a fixed interest 
rate or for an adjustable interest rate for each series of the Tax-
Exempt Bonds as hereinafter described. If the series of Tax-Exempt 
Bonds has an adjustable interest rate, the interest rate during the 
first rate period (``Rate Period'') would be determined in discussions 
between AP&L and the purchasers thereof from the Issuer and be based on 
the current tax-exempt market rate for comparable bonds having a 
maturity comparable to the length of the initial Rate Period. 
Thereafter, for each Rate Period, the interest rate on such Tax-Exempt 
Bonds would be that rate which will be sufficient to remarket such Tax-
Exempt Bonds at their principal amount. No series of Tax-Exempt Bonds 
will be issued at rates in excess of those generally obtained at the 
time of pricing for sales of substantially similar tax-exempt bonds 
(having the same maturity, issued for the benefit of companies of 
comparable credit quality and having similar terms, conditions and 
features). It is stated that, at April 18, 1994, such rate is estimated 
to be approximately 7% per annum for tax-exempt bonds having a maturity 
of 30 years, no optional redemption for the first ten years after 
initial issuance, and issuance and pledge of collateral first mortgage 
bonds as security.
    Rate Period means a period during which the interest rate on such 
Tax-Exempt bonds of a particular series bearing an adjustable rate (or 
method of determination of such interest rate) is fixed. The initial 
Rate Period would commence on the date as of which interest begins to 
accrue on such Tax-Exempt Bonds. The length of each Rate Period would 
be not less than one day nor more than five years.
    The Agreement and the Indenture would provide that holders of Tax-
Exempt Bonds would have the right to tender or be required to tender 
their Tax-Exempt Bonds and have them purchased at a price equal to the 
principal amount thereof, plus any accrued and unpaid interest thereon, 
on dates specified in, or established in accordance with, the 
Indenture. A Tender Agent may be appointed to facilitate the tender of 
any Tax-Exempt Bonds by holders. Any holders of Tax-Exempt Bonds 
wishing to have such Tax-Exempt Bonds purchased may be required to 
deliver such Tax-Exempt Bonds during a specified period of time 
preceding such purchase date to the Tender Agent, if one shall be 
appointed, or to the Remarketing Agent appointed to offer such tendered 
Tax-Exempt Bonds for sale.
    Under the Agreement AP&L would be obligated to pay amounts equal to 
the amounts to be paid by the Remarketing Agent or the Tender Agent 
pursuant to the Indenture for the purchase of Tax-Exempt Bonds so 
tendered, such amounts to be paid by AP&L on the dates such payments by 
the Remarketing Agent or the Tender Agent are to be made; provided, 
however, that the obligation of AP&L to make any such payment under the 
Agreement would be reduced by the amount of any other moneys available 
therefor, including the proceeds of the sale of such tendered Tax-
Exempt Bonds by the Remarketing Agent.
    Upon the delivery of such Tax-Exempt Bonds by holders to the 
Remarketing Agent or the Tender Agent for purchase, the Remarketing 
Agent would use its best efforts to sell such Tax-Exempt Bonds at a 
price equal to the stated principal amount of such Tax-Exempt Bonds.
    In order to obtain a more favorable rating on one or more series of 
the Tax-Exempt Bonds and, thereby, improve the marketability thereof, 
AP&L may arrange for one of more irrevocable letter(s) of credit for an 
aggregate amount up to $226 million from a bank (``Bank'') in favor of 
the Trustee. In such event, payments with respect to principal, 
premium, if any, interest and purchase obligations in connection with 
such Tax-Exempt Bonds coming due during the term of such letter of 
credit would be secured by, and payable from funds drawn under, the 
letter of credit. In order to induce the Bank to issue such letter of 
credit, the AP&L would enter into a Letter of Credit and Reimbursement 
Agreement (``Reimbursement Agreement'') with the Bank pursuant to which 
AP&L would agree to reimburse the Bank for all amounts drawn under such 
letter of credit within a specified period (not to exceed 84 months) 
after the date of the draw and with interest thereon at a rate that 
would not exceed rates generally obtained at the time of entering into 
the Reimbursement Agreement companies of comparable credit quality on 
letters of credit having comparable terms, and, in any event, not in 
excess of the Bank's prime commercial loan rate plus 2%. The terms of 
the Reimbursement Agreements would correspond to the terms of the 
letter of credit.
    It is anticipated that the Reimbursement Agreement would require 
the payment by AP&L to the Bank of annual letter of credit fees not to 
exceed 1.25% of the face amount of the letter of credit per annum and 
perhaps an up-front fee not to exceed 0.25% of the face amount of the 
letter of credit. Any such letter of credit may expire or be terminated 
prior to the maturity date of related Tax-Exempt Bonds and, in 
connection with such expiration or termination, such Tax-Exempt Bonds 
may be made subject to mandatory redemption or purchase on or prior to 
the date of expiration or termination of such letter of credit, 
possibly subject to the right of owners of Tax-Exempt Bonds not to have 
their Tax-Exempt Bonds redeemed or purchased. Provision may be made for 
extension of the term of any such letter of credit for the replacement 
thereof, upon its expiration or termination, by another letter of 
credit from the Bank or a different bank.
    In addition or as an alternative to the security provided by a 
letter of credit, in order to obtain a more favorable rating on Tax-
Exempt Bonds and consequently improve the marketability thereof, AP&L 
may (a) determine to provide an insurance policy for the payment of the 
principle of and/or interest and/or premium on the Tax-Exempt Bonds, 
and/or (b) provide security for holders of Tax-Exempt Bonds, and/or the 
Bank equivalent to the security afforded to holders of first mortgage 
bonds outstanding under AP&L's mortgage by obtaining the authentication 
of and pledging one or more new series of first mortgage bonds 
(``Collateral Bonds'') under the mortgage as it may be supplemented. 
Collateral Bonds would be issued on the basis of unfunded net property 
additions and/or previously-retired first mortgage bonds and delivered 
to the Trustee under the Indenture and/or the Bank to evidence and 
secure AP&L's obligation to pay the purchase price of the related 
Facilities or repay the loan made by the Issuer under the Agreement and 
AP&L's obligation to reimburse the Bank under the Reimbursement 
Agreement.
    These Collateral Bonds could be issued in several ways. First, if 
the Tax-Exempt Bonds bear a fixed interest rate, Collateral Bonds could 
be issued in a principal amount equal to the principal amount of such 
Tax-Exempt Bonds and bear interest at a rate equal to the rate of 
interest on such Tax-Exempt Bonds. Secondly, they could be issued in a 
principal amount equivalent to the principal amount of such Tax-Exempt 
Bonds plus an amount equal to interest on those bonds for a specified 
period. In such a case, Collateral Bonds would bear no interest. 
Thirdly, Collateral Bonds could be issued in a principal amount 
equivalent to the principal amount of such Tax-Exempt Bonds or in such 
amount plus an amount equal to interest on those bonds for a specified 
period, but carry a fixed interest rate that would be lower than the 
fixed interest rate of the Tax-Exempt Bonds. Fourthly, they could be 
issued in a principal amount equivalent to the principal amount of Tax-
Exempt Bonds at an adjustable rate of interest, varying with such Tax-
Exempt Bonds.
    No series of Collateral Bonds will be issued at interest rates in 
excess of those of the related series of Tax-Exempt Bonds (the rate of 
which is described above). The maximum aggregate principal amount of 
the Collateral Bonds would be $226 million. The terms of the Collateral 
Bonds relating to maturity, interest payment dates, if any, redemption 
provisions and acceleration will correspond to the terms of the related 
Tax-Exempt Bonds. Upon issuance, the terms of the Collateral Bonds will 
not vary during the life of such series except for the interest rate in 
the event the Collateral Bonds bear interest at an adjustable rate.
    It is contemplated that the Tax-Exempt Bonds may be sold by the 
Issuer pursuant to arrangements with an underwriter or a group of 
underwriters or by private placement in a negotiated sale or sales. The 
AP&L will not be party to the underwriting or placement arrangements; 
however, the Agreement will provide that the terms of the Tax-Exempt 
Bonds, and their sale by the Issuer, shall be satisfactory to AP&L.
    The AP&L has been advised that the interest rates on tax-exempt 
bonds have been and are expected at the time(s) of issuance of Tax-
Exempt Bonds to be lower than the interest rates on bonds of similar 
tenor and maturities and comparable quality, interest on which is fully 
subject to Federal income tax.
    The AP&L shall not use the proceeds from the Agreement to enter 
into refinancing transactions unless: (1) The estimated present value 
savings derived from the net difference between interest or dividend 
payments on a new issue of comparable securities and those securities 
refunded is, on an after tax basis, greater than the present value of 
all repurchasing, redemption, tendering an issuing costs, assuming an 
appropriate discount rate, determined on the basis of the then 
estimated after-tax cost of capital of Energy Corporation and its 
subsidiaries, consolidated; or (2) AP&L shall have notified the 
Commission of the proposed refinancing transaction (including the terms 
thereof) by post-effective amendment hereto and obtained appropriate 
supplemental authorization.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary
[FR Doc. 94-10396 Filed 4-29-94; 8:45 am]
BILLING CODE 8010-01-M