[Federal Register Volume 59, Number 142 (Tuesday, July 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18131]


[[Page Unknown]]

[Federal Register: July 26, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26087]

 

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

July 15, 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 August 15, 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.

National Fuel Gas Company (70-8143)

    National Fuel Gas Company (``NFG''), 10 Lafayette Square, Buffalo, 
New York, 14203, a registered holding company, has filed an 
application-declaration under Sections 6(a), 7, 9(a) and 10 of the Act 
and Rule 42 thereunder.
    NFG requests authorization to enter into one or more interest rate 
swaps, plus interest rate caps, collars and floors (together with 
swaps, ``Derivative Instruments'') through December 31, 1994 in 
notional amounts that in the aggregate will not exceed $350 million.
    NFG requests authorization to make fixed-to-floating and floating-
to-fixed swaps. Under the former, NFG would agree to make payments to a 
counterparty, payable periodically at a floating rate of interest 
calculated on an agreed notional principal, in return for payments 
based upon the same notional amount but at a fixed rate of interest. 
Under the latter, NFG would agree to make payments to a counterparty, 
payable periodically at a fixed rate of interest calculated on an 
agreed notional principal, in return for payments based upon the same 
notional amount but at a floating rate of interest.
    The effective interest rate that NFG may pay on fixed rate debt 
obtained in a floating-to-fixed rate swap, inclusive of any 
intermediary fee would not exceed 200 basis points over the yield on 
U.S. Treasury obligations bearing maturities comparable to the term of 
the swap.
    In a fixed-to-floating rate swap, the fixed rate to be received by 
NFG is calculated as that rate of interest that sets the net present 
value of the forward curve for the short-term index to zero, plus the 
bid/ask spread. That is, the fixed rate chosen will be a rate that 
discounts the floating interest payments expected by the market to be 
paid by NFG over the life of the swap to an amount that equals the 
present value of the fixed interest payments to NFG, exclusive of the 
bid/ask spread.
    The term of a fixed-to-floating interest rate swap would vary from 
one month to forty years, while the term of a floating-to-fixed 
interest rate swap would vary from nine months to forty years. The cost 
of terminating an interest rate swap before the end of the term could 
be substantial, but NFG anticipates it would not exceed more than ten 
percent of the notional principal amount of the swap.
    Each time NFG issues debentures or medium-term notes, the proceeds 
are lent to one or more if its subsidiaries at an all in cost that is 
equal to the coupon on the debt plus the amortization of the 
underwriters or agents' fees. Similarly, each interest rate swap, cap, 
floor, collar ``or option'' would ``directly relate'' to then 
outstanding debt so that the financial effect of such instrument would 
be allocated to the subsidiary on whose behalf the underlying debt was 
issued.
    To protect against adverse interest rate changes on floating rate 
debt, NFG may purchase one or more interest rate caps. NFG may 
additionally sell an interest rate floor to either lower the cost of 
the debt underlying the floor or, in conjunction with an interest rate 
cap, to lower the cost of the cap. As with interest rate swaps, 
payments or receipts associated with a cap, collar, floor will be 
allocated to the subsidiary for whose benefit the underlying debt was 
issued.

Consolidated Natural Gas Company (70-8365)

    Consolidated Natural Gas Company (``CNG''), CNG Tower, 625 Liberty 
Avenue, Pittsburgh, Pennsylvania 15222, a registered holding company, 
has filed a post-effective amendment under Sections 6(a) and 7 of the 
Act and Rule 54 thereunder to its declaration previously filed under 
Sections 6(a) and 7 of the Act and Rules 50 and 50(a)(5) thereunder.
    By order dated April 14, 1993 (HCAR No. 26026) (``Order''), the 
Commission authorized CNG to issue and sell on or before June 30, 1996 
up to $400 million principal amount of debentures (``Debentures'') in 
one or more series at a price, exclusive of accrued interest, which 
would be not less than 98% nor more than 101% of the principal amount 
and at an interest rate which would be a multiple of \1/8\, \1/10\, or 
\1/20\ of 1%. The Debentures would mature in not more than thirty years 
and would be issued in accordance with the indenture between CNG and 
Chemical Bank, as Trustee, dated May 1, 1971 (``Indenture''). As of 
this date, CNG has sold no Debentures.
    CNG now proposes to amend its Indenture by adding a new section 
4.02 (``Section 4.02''). Section 4.02 would allow CNG to reserve the 
right, without the consent of the holders of future debenture issues 
sold under the Order, to amend sections 6.06 and 6.07 of the Indenture. 
Section 4.02 states:

    The Company reserves the right, subject to appropriate corporate 
action, but without consent, approval or other action by holders of 
debentures of any series created after May 1, 1994, to make such 
amendments to the Indenture, as heretofore supplemental and amended, 
as shall be necessary in order to amend Section 6.06 and 6.07 
thereof so as to modify or eliminate the provisions or requirements 
of such Sections, or any part thereof and the definition of any term 
used in either of such Sections or related thereto, as the Company 
may determine in its sole discretion.

Section 6.06 essentially provides that funded debt, as defined in the 
Indenture, cannot be incurred and subsidiary preferred stock cannot be 
issued unless: (1) The consolidated income available for interest and 
subsidiary preferred stock dividends of CNG and its subsidiary 
companies for any 12 consecutive months within 15 months immediately 
preceding the date additional funded debt is incurred is not less than 
two and one-half times the sum of the total annual interest charges and 
the total subsidiary preferred stock dividends, assuming the incurrence 
of such additional funded debt or issuance of such preferred stock, as 
the case may be; and (2) after giving effect to the incurring of the 
additional funded debt and issuance of preferred stock, the sum of the 
outstanding consolidated debt of CNG and its subsidiary companies and 
the amount of outstanding subsidiary preferred stock shall not be more 
than 60% of the consolidated net tangible assets of CNG and its 
subsidiaries. Section 6.07 provides that a subsidiary company of CNG 
cannot incur funded debt or issue preferred stock to a third party 
unless funded debt and preferred stock of the subsidiary company will 
not exceed 60% of the total capitalization of the subsidiary, and the 
principle amount of funded debt and amount of preferred stock of all 
subsidiary companies of CNG shall not exceed 15% of consolidated net 
tangible assets.
    CNG contends that its credit and ability to raise debt financing 
would not be adversely affected if the provisions of Sections 6.06 and 
6.07 were excluded from the Indenture and a relaxing or elimination of 
the provisions of such sections would allow significantly greater 
flexibility in CNG's use of funded debt.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-18131 Filed 7-25-94; 8:45 am]
BILLING CODE 8010-01-M