[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