[Federal Register Volume 59, Number 110 (Thursday, June 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14032]


[[Page Unknown]]

[Federal Register: June 9, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26060]

 

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

June 3, 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 June 27, 1994, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549, and serve a copy on the relevant 
application(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.

Indiana Michigan Power Company (70-6458)

    Indiana Michigan Power Company (``I&M''), One Summit Square, P.O. 
Box 60, Fort Wayne, Indiana 46801, an electric utility subsidiary of 
American Electric Power Company, Inc., a registered holding company, 
has filed a post-effective amendment to its application-declaration 
under Sections 9(a), 10 and 12(d) of the Act.
    By orders dated June 11, 1980 and June 25, 1980 (HCAR Nos. 21618 
and 21642, respectively), I&M was authorized to enter into an agreement 
of sale (``Agreement'') with the City of Rockport, Indiana (``City'') 
concerning the construction, installation, financing and sale of 
pollution control facilities (``Facilities'') at I&M's Rockport Plant. 
Under the Agreement, the City may issue and sell its pollution control 
revenue bonds (``Revenue Bonds'') or pollution control refunding bonds 
(``Refunding Bonds''), in one or more series, and deposit the proceeds 
with the trustee (``Trustee'') under an indenture (``Indenture'') 
entered into between the City and the Trustee. The proceeds are applied 
by the Trustee to the payment of the costs of construction of the 
Facilities, or, in the case of proceeds from the sale of Refunding 
Bonds, to the payment of the principal, premium (if any) and/or 
interest on Revenue Bonds to be refunded.
    I&M was also authorized to convey an undivided interest in a 
portion of the Facilities to the City, and to reacquire that interest 
under an installment sales arrangement requiring I&M to pay as the 
purchase price semiannual installments in such an amount, together with 
other monies held by the Trustee under the Indenture for that purpose, 
as to enable the City to pay, when due, the interest and principal on 
the Revenue Bonds. The City issued and sold its Revenue Bonds, in one 
series, in the aggregate principal amount of $40 million.
    By subsequent orders dated December 4, 1984 and December 12, 1984 
(HCAR Nos. 23514 and 23528, respectively), the Commission authorized 
I&M to enter into amendments to the Agreement with the City providing 
for the disposition and acquisition of the Project in connection with 
the issuance by the City of $110 million principal amount of pollution 
control bonds (``Series 1984 A Bonds''), also in one series, to finance 
the construction of the remainder of the Project.
    Then, by order dated August 2, 1985 (HCAR No. 23781), the 
Commission authorized I&M to enter into further amendments to the 
Agreement with the City providing for the issuance and sale of an 
aggregate principal amount of $150 million, in three additional series, 
of pollution control bonds (``Series 1985 A Bonds''), each in the 
principal amount of $50 million with a maturity of August 1, 2014. The 
third series of the Series 1985 A Bonds were fixed rate bonds bearing 
interest at 9\1/4\% per annum, payable semiannually, and subject to 
optional redemption following an initial period not to exceed ten years 
(``Fixed Rate Bonds''). The proceeds of the Series 1985 A Bonds were 
used to cover a portion of the cost of construction of the Project and 
to refund the outstanding short-term Series 1984 A Bonds in the 
principal amount of $110 million.
    I&M now proposes to have the City issue and sell, no later than 
December 31, 1995, an additional series of Refunding Bonds in the 
aggregate principal amount of up to $50 million (``Refunding Fixed Rate 
Bonds''). The proceeds of the sale of the Refunding Fixed Rate Bonds 
will be deposited with the Trustee and applied by the Trustee, and used 
together with other funds supplied by I&M, to provide for the early 
redemption of the Fixed Rate Bonds at a price of 102% of their 
principal amount.
    It is contemplated that the Refunding Fixed Rate Bonds will be sold 
by the City pursuant to arrangements with Goldman, Sachs & Co. While 
I&M will not be a party to the underwriting arrangements for the 
Refunding Fixed Rate Bonds, the Agreement provides that the Refunding 
Fixed Rate Bonds shall have such terms as shall be specified by I&M.
    I&M is advised that the Refunding Fixed Rate Bonds will bear 
interest semi-annually. It is expected that the Refunding Fixed Rate 
Bonds will mature at a date or dates not more than 40 years from the 
date of their issuance. The Refunding Fixed Rate Bonds may be subject 
to mandatory or optional redemption under circumstances and terms 
specified at the time of pricing, and, if it is deemed advisable, may 
also include a sinking fund provision. In addition, the Refunding Fixed 
Rate Bonds may not be redeemable at the option of the City in whole or 
in part at any time for a period to be determined a the time of pricing 
the Refunding Fixed Rate Bonds. Finally, I&M may provide some form of 
credit enhancement for the Refunding Fixed Rate Bonds, such as a letter 
of credit, surety bond or bond insurance, and I&M may pay a fee in 
connection therewith. Any letter of credit would not exceed a face 
amount of $50 million and would be for a term of from one to five 
years. Drawings will bear interest at a rate not exceeding 1% above the 
bank's prime rate and annual fees will not exceed 1.25% of the face 
amount of the letter of credit.
    It is not possible to predict precisely the interest rate which may 
be obtained in connection with the issuance of the Refunding Fixed Rate 
Bonds. However, I&M has been advised that, depending on maturity and 
other factors, the annual interest rate on obligations, interest on 
which is so excludable from gross income, historically has been, and 
can be expected at the time of issuance of the Refunding Fixed Rate 
Bonds to be, 1\1/2\% to 2\1/2\% or more lower than the rates of 
obligations of like terms and comparable quality, interest on which is 
fully subject to Federal income tax.
    Moreover, I&M will not agree, without further order of this 
Commission, to the issuance of any Refunding Fixed Rate Bond by the 
City if: (1) The stated maturity of any such bond shall be more than 
forty years; (2) the rate of interest to be borne by any such bond 
shall exceed 8% per annum; (3) the discount from the initial public 
offering price of any such bond shall exceed 5% of the principal amount 
thereof; or (4) the initial public offering price shall be less than 
95% of the principal amount thereof. Further, I&M will not enter into 
the proposed refunding transaction unless the estimated present value 
savings derived from the net difference between interest payments on a 
new issue of comparable securities and on the securities to be refunded 
is, on an after tax basis, greater than the present value of all 
redemption and issuing costs, assuming an appropriate discount rate. 
The discount rate used shall be the estimated after-tax interest rate 
on the Refunding Fixed Rate Bonds to be issued.

WPS Resources Corporation, (70-8379)

    WPS Resources Corporation (``WPS Resources''), a Wisconsin 
corporation not currently subject to the Act, 700 North Adams Street, 
Green Bay, Wisconsin 54307, has filed an application requesting an 
order: (1) Approving the direct acquisition by WPS Resources, under 
sections 9(a)(2) and 10 of the Act, of all the outstanding shares of 
common stock of Wisconsin Public Service Corporation (``Wisconsin 
Public Service''), and, through such acquisition, the indirect 
acquisition of 33.1% of the outstanding shares of Wisconsin River Power 
Company (``Wisconsin River Power''), and (2) granting WPS Resources and 
its subsidiary companies, upon consummation of the proposed 
transaction, an exemption under section 3(a)(1) of the Act from all of 
the provisions of the Act, except section 9(a)(2).
    Wisconsin Public Service, a public-utility company and a public-
utility holding company exempt from registration by order of the 
Commission under section 3(a)(2) of the Act,\1\ is principally engaged 
in the production, transmission, distribution and sale of electricity 
to approximately 347,000 customers in northeastern Wisconsin and upper 
Michigan. Wisconsin Public Service also engages in the purchase, 
distribution, transportation and sale of natural gas to approximately 
190,000 customers in northeastern Wisconsin and upper Michigan. Total 
operating revenues for 1993 were $680.6 million, of which $493.2 
million (72%) was from electric service and $187.4 million (28%) was 
from gas service. In 1993, Wisconsin Public Service derived 97.8% of 
its operating revenues and 98.6% of its net income from operations in 
Wisconsin, and 2.2% of its operating revenues and 1.4% of its net 
income from operations in Michigan.
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    \1\Wisconsin Public Service Corporation, 1 S.E.C. 512 (1936).
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    Wisconsin River Power, a Wisconsin corporation, owns and operates 
two dams and related hydroelectric plants on the Wisconsin River with 
an aggregate installed capacity of about 35 megawatts. The output of 
the plants is sold, at the sites of the plants, to the three companies 
which own the outstanding capital stock of Wisconsin River Power, 
substantially in proportion to their stock ownership interests.\2\ 
Total assets of Wisconsin River Power at December 31, 1993 were $6.06 
million, representing 0.51% of Wisconsin Public Service's total assets 
of $1.2 billion. Wisconsin Public Service's share of Wisconsin River 
Power's net income for 1993 was $310,000, representing 0.50% of 
Wisconsin Public Service's total net income of $62 million.
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    \2\See Wisconsin Public Service Corporation, 27 S.E.C. 539 
(1948) (approving the acquisition by the utility of the capital 
stock of transmission or distribution facilities.
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    Wisconsin Public Service proposes to reorganize by forming a 
holding company over itself. Under an Agreement and Plan of Share 
Exchange (``Plan''), one share of common stock, $1 par value, of WPS 
Resources, a corporation organized to facilitate the reorganization, 
will be exchanged for each share of common stock, $4 par value, or 
Wisconsin Public Service outstanding (``Exchange'') at the effective 
time of the Plan, and the outstanding shares of WPS Resources common 
stock held by Wisconsin Public Service prior to the effective time of 
the Plan will be canceled. Following the Exchange, all of the 
outstanding common stock of WPS Resources will be owned by the former 
Wisconsin Public Service common shareholders, and WPS Resources will 
own all of the outstanding common stock of Wisconsin Public Service. 
Wisconsin River Power will remain a subsidiary of Wisconsin Public 
Service.\3\ There will be no exchange of the outstanding preferred 
stock or first mortgage bonds of Wisconsin Public Service in connection 
with the exchange.
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    \3\Wisconsin Public Service, by means of a non-cash dividend, 
will transfer to WPS Resources all the outstanding stock of its 
nonutility subsidiary companies, WPS Communications, Inc. and 
Packerland Energy Services, Inc.
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    The holders of the common stock of Wisconsin Public Service 
approved the Plan at the annual meeting of shareholders held on May 5, 
1994. The Wisconsin Public Service Commission approved the formation of 
a holding company by order dated May 31, 1994.
    The principal reasons for the proposed restructuring are: (1) To 
create a structure which can more effectively address the growing 
national competition in the energy industry; (2) to facilitate 
selective diversification into nonutility businesses which are related 
to the utility business of Wisconsin Public Service or energy 
conservation or energy resources or which otherwise benefit the service 
territory of the utility; (3) to separate the utility and nonutility 
businesses; and (4) to provide additional flexibility for financing and 
for maintaining appropriate utility capital ratios.
    The application states that following the restructuring, WPS 
Resources and its subsidiaries will meet the requirements for an 
exemption under section 3(a)(1). WPS Resources, Wisconsin Public 
Service and River Power are and will continue to be predominantly 
intrastate in character and will continue to carry on their business 
substantially in Wisconsin, the state in which they are organized.

Southern Indiana Gas and Electric Company (70-8407)

    Southern Indiana Gas and Electric Company (``SIGECO''), 20 N.W. 
Fourth Street, Evansville, Indiana 47741-0001, an Indiana public-
utility holding company exempt from registration under sections 3(a)(1) 
and 3(a)(2) of the Public Utility Holding Company Act of 1935 (``Act'') 
by order and pursuant to rule 2, has filed an application under 
sections 9(a)(2) and 10 of the Act in connection with the proposed 
acquisition of all of the outstanding common stock (``Lincoln Common 
Stock'') of Lincoln Natural Gas Company, Inc. (``Lincoln''), an Indiana 
public utility corporation engaged in the gas utility business.\4\
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    \4\SIGECO is a holding company as defined under section 
2(a)(7)(A) of the Act by virtue of SIGECO's ownership of 33% of the 
capital stock of Community Natural Gas Company, Inc., an Indiana 
corporation, which is a gas utility company serving customers in 
southwestern Indiana.
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    A wholly-owned subsidiary of SIGECO, Spencer Energy Corp., an 
Indiana corporation (``Spencer''), will be merged with and into Lincoln 
(the ``Merger'') pursuant to an Agreement and Plan of Merger among 
SIGECO, Spencer and Lincoln (``Agreement''), with Spencer ceasing to 
exist and Lincoln the surviving corporation. Spencer was incorporated 
for the sole purpose of effecting SIGECO's acquisition of the Lincoln 
Common Stock and consummating the transactions described herein and is 
not engaged in any business.
    SIGECO is a publicly held operating public utility engaged in the 
generation, transmission, distribution and sale of electricity and the 
purchase of natural gas and its transportation, distribution and sale 
in a service area which covers ten counties in southwestern Indiana.\5\ 
At December 31, 1993, SIGECO served 118,163 electric customers and 
supplied gas service to 100,398 customers in Evansville and 63 other 
nearby communities and their environs.\6\
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    \5\The only property SIGECO owns outside of Indiana is 
approximately eight miles of electric transmission line which is 
located in Kentucky. SIGECO does not distribute any electric energy 
in Kentucky.
    \6\For the twelve months ended December 31, 1993, approximately 
79% of SIGECO's total utility operating revenues were derived from 
its electric operations and approximately 21% from its gas 
operations.
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    Lincoln is a closely held public utility corporation which owns and 
operates a gas distribution system in the City of Rockport, Spencer 
County, Indiana, and surrounding territory. Lincoln serves 
approximately 1,330 customers in Spencer County in southwestern Indiana 
and owns, operates, maintains and manages plant, property, equipment 
and facilities used and useful for the transmission, transportation, 
distribution and sale of natural gas to the public. Lincoln's gas 
service territory is adjacent to SIGECO's gas service territory.
    In the Merger, the holders of Lincoln Common Stock issued and 
outstanding immediately prior to the Merger would be entitled to 
receive shares of common stock, without par value, of SIGECO (``SIGECO 
Common Stock'') having a market value of approximately $1,350,000 in 
accordance with the formula contained in the Agreement, and each share 
of common stock, no par value (``Spencer Common Stock''), of Spencer 
issued and outstanding immediately prior to the Merger would be 
converted into one share of Lincoln Common Stock. Any shares of Lincoln 
Common Stock held in treasury by Lincoln at the effective time of the 
Merger will be canceled.
    The number of shares of SIGECO Common Stock to be exchanged in the 
transactions will be determined by their average closing market price 
over a five-day period before the relevant closing date. After the 
consummation of the Merger, Lincoln will operate as a gas utility 
subsidiary company of SIGECO but, if appropriate, SIGECO may eventually 
merge Lincoln into itself.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-14032 Filed 6-8-94; 8:45 am]
BILLING CODE 8010-01-M