[Federal Register Volume 59, Number 165 (Friday, August 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21005]
[[Page Unknown]]
[Federal Register: August 26, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26107]
Filing Under the Public Utility Holding Company Act of 1935
(``Act'')
August 19, 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 September 12, 1994 to the Secretary, Securities and Exchange
Commission, Washington, D.C. 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 any 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.
Consolidated Natural Gas Company, et al. (70-7508)
Consolidated Natural Gas Company (``CNG''), a registered holding
company, and its wholly-owned subsidiary company, CNG Financial
Services, Inc. (``CNGF''), both located at CNG Tower, 625 Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3199, have filed an application-
declaration under Sections 6(a), 7, 9(a), 10, 12(b), 12(c), and 13 of
the Act and Rules 42, 43, 45 and 87-90 thereunder.
CNG and CNGF request authorization, through December 31, 1998, for
CNGF to finance the purchase of certain gas utilizing equipment (``Gas
Equipment'')\1\ by creditworthy customers who purchase or may be
expected to purchase gas directly or indirectly from location
distribution companies (``LDCs'') of the CNG System.\2\ In addition,
CNG seeks authorization to provide CNGF with up to an aggregate of $25
million in funds, on a revolving basis, through December 31, 1998, to
enable CNGF to make Gas Equipment financing loans to such customers.
CNGF may obtain funds from GNG through this date by (1) selling CNGF
common stock, $10,000 par value, to CNG; and/or (2) obtaining open
account advances from CNG; and/or (3) obtaining long-term loans from
CNG.
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\1\The Gas Equipment to be financed would fall into one or more
of the following categories: (1) Standard Gas Appliances--the type
of standard gas appliances contemplated by Rule 48, including such
gas equipment as ranges, dryers, waterheaters and furnaces; (2) New
Technology Equipment--gas equipment marketed to promote new or
unfamiliar technology that uses gas as a fuel (which could include
equipment using existing technology designed for a new application),
such as gas heat pumps, gas air conditioning and gas turbines; (3)
Alternate Fuel Equipment--gas equipment that enables an end-user to
use natural gas as an alternative to another fuel; such equipment
would include both conversion equipment necessary to convert non-gas
utilizing equipment to equipment that can use gas as a fuel (e.g.,
energy connective apparatus enabling a coal-burning boiler to use
gas as a fuel) and gas utilizing equipment that is manufactured and
sold as a complete indivisible unit (e.g., compact gas generators).
\2\The ``CNG System'' is comprised of CNG and its 16 wholly-
owned subsidiaries. The six local distribution companies of the CNG
System are: The East Ohio Gas Company, The Peoples Natural Gas
Company, Virginia Natural Gas, Inc., Hope Gas, Inc., West Ohio Gas
Company and The River Gas Company.
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Open account advances made to CNGF will be made by book entry only,
not evidenced by short-term notes, and will bear the same interest rate
as open account advances made to participants in the CNG System Money
Pool, a rate equal to the effective weighted average rate of interest
on CNG's commercial paper and/or revolving credit borrowing. All such
advances will be payable on demand and may be prepaid at any time
without premium or penalty. Long-term loans to CNGF will be evidenced
by long-term non-negotiable notes (which may be book entry) of CNGF
maturing over a period of time to be determined by the officers of CNG,
with the interest predicated on and substantially equal to CNG's cost
of funds for comparable borrowings by CNG. In the event that CNG has
not had recent comparable borrowings, the rates will be tied to the
Solomon Brothers, Inc. Bond Market Roundup, or to a comparable rate
index, on the date nearest to the time of takedown. All such loans may
be prepaid at any time without premium or penalty.
CNG states that it will obtain the funds it loans to CNGF through
internal cash generation, issuance of long-term debt securities as
authorized by Commission orders dated April 21, 1993 (HCAR No. 25800)
and April 14, 1994 (HCAR No. 26026), borrowings under a credit
agreement, as authorized by Commission orders dated March 28, 1991
(HCAR No. 25283) and September 9, 1992 (HCAR No. 25626), or through
other authorizations approved or to be approved by the Commission.
Applicants also seek authorization for CNGF, from time to time
through December 31, 1998, to purchase, at par from CNG, shares of
CNGF's $10,000 par value common stock previously sold to CNG to obtain
funds, as described above, to hold such reacquired shares as treasury
shares and to resell such shares to CNG at par.
Applicants state that customers receiving loans (``Financing
Customers'') will come primarily from the commercial and/or industrial
sectors and will result mainly from contacts between CNG System LDCs
and their end-use customers.\3\ CNGF proposes to conduct its Gas
Equipment financing activities both within and outside of the four
states of Virginia, West Virginia, Pennsylvania and Ohio where the CNG
System LDC's are located (collectively, ``LDC States''). However,
applicants state that during the twelve-month period beginning on the
first day of January in the year following the date CNGF commences Gas
Equipment financing activities pursuant to a Commission order issued in
this matter, and for each subsequent calendar year thereafter, total
revenues of CNGF derived from Gas Equipment financing activities in the
LDC States will exceed total revenues of CNGF derived from Gas
Equipment financing activities in all other states.
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\3\CNGF will not act as a representative of any gas equipment
manufacturer or supplier by may recommend specific manufacturers or
types of gas equipment to end-users. For example, a CNG System LDC
marketing representative may recommend to a glass manufacturing
company that a new type of gas equipment be installed in a furnace
to increase production efficiency.
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CNGF will provide Gas Equipment financing to Financing Customers by
(1) making short-term loans to cover the period of installation of the
Gas Equipment until permanent financing can be obtained by the
customer, or (2) making long-term loans for a period of time not to
exceed the lesser of 10 years or the expected useful life of the
equipment. The aggregate amount of Gas Equipment financing loans by
CNGF outstanding at any one time will not exceed $25,000,000, with an
individual customer financing limit of $5,000,000 at any one time.
Loans to Financing Customers may be secured or unsecured and will
be made at a spread above the cost of funds from CNG in order to cover
CNGF's costs and earn a return on its capital. CNGF does not have any
full-time employees, and applicants expect CNGF to obtain accounting,
credit, financial, management, marketing, operating, technical and
clerical support, at cost, from CNG Service Company (``Service
Company'') pursuant to a written service agreement.
Northeast Utilities, et al. (70-8048)
Northeast Utilities (``Northeast''), 174 Brush Hill Avenue, West
Springfield, Massachusetts 01809, a registered holding company, and its
wholly owned subsidiary companies (``Subsidiaries''), Holyoke Water
Power Company (``Holyoke''), Canal Street, Holyoke, Massachusetts
01040, Western Massachusetts Electric Company (``WMECO'') and The
Quinnehtuk Company (``Quinnehtuk''), both of 174 Brush Hill Avenue,
West Springfield, Massachusetts 01809, Public Service Company of New
Hampshire (``PSNH'') and North Atlantic Energy Corporation (``North
Atlantic''), both of 1000 Elm Street, Manchester, New Hampshire 03015,
The Connecticut Light & Power company (``CL&P''), Northeast Nuclear
Energy Company (``Nuclear'') and The Rock River Realty Company (``Rocky
River''), each of 107 Selden Street, Berlin, Connecticut 06037, and HEC
Inc. (``HEC''), 24 Prime Parkway, Natick, Massachusetts 01760 (all
companies collectively, ``Applicants''), have filed a post-effective
amendment under Sections 6(a), 7, 9(a), 10 and 12(b) of the Act and
Rules 43 and 45 thereunder.
By order dated December 16, 1992 (HCAR No. 25710) (``December 1992
Order''): (1) the Applicants (with the exception of HEC, which was not
an applicant-declarant) were authorized to make short-term borrowings
from time to time after December 31, 1992 and through December 31,
1994, evidenced (a) in the case of Northeast, Holyoke, WMECO, PSNH,
North Atlantic, CL&P, Nuclear, and Rocky River, by short-term notes
(``Short-Term Notes'') issued to banks and non-bank lending
institutions through formal and informal credit lines, and (b) in the
case of Northeast, WMECO and CL&P, by commercial paper (``Commercial
Paper'') issued to a dealer or dealers in commercial paper; (2) the
Applicants (with the exception of HEC) were authorized to continue to
use, through December 31, 1994, of the Northeast Utilities System Money
Pool (``Money Pool''), to assist in meeting the Subsidiaries' (except
for HEC) respective short-term borrowing needs; (3) Northeast was
authorized to make open account advances, through December 31, 1994, to
PSNH, Nuclear, North Atlantic, Quinnehtuk and Rocky River; and (4) PSNH
was authorized to continue to use, until its termination on May 14,
1994, of a revolving credit facility (``PSNH Facility'') entered into
before PSNH became subject to Commission jurisdiction.
By order dated June 25, 1993 (HCAR No. 25836) (``June 1993
Order''), the Applicants were authorized to: (1) add HEC as a
participant in the Money Pool for borrowings up to $11 million pursuant
to the same terms and conditions as authorized by the December 1992
Order, but only insofar as funds borrowed by HEC were contributed to
the Money Pool by Northeast; and (2) to increase Rocky River's short-
term borrowing authorization from $15 million (which was granted
pursuant to the December 1992 Order) to $25 million. In addition, the
June 1993 Order reserved jurisdiction over PSNH, North Atlantic and HEC
borrowings of Money Pool funds attributable to contributions from
WMECO.
The Applicants now propose that the aggregate amount of short-term
debt that CL&P may have outstanding at any one time through December
31, 1994 be increased from its presently authorized level of $375
million to $500 million. It is stated that CL&P requests such
authorization in order to use short-term debt to repay its Series WW
First Mortgage Bonds, which will mature on October 1, 1994.
Central and South West Corporation, et al. 70-8423
Central and South West Corporation (``CSW''), a registered holding
company, and CSW Energy, Inc. (``Energy'') (collectively,
``Applicants''), a wholly owned nonutility subsidiary company of CSW,
both located 1616 Woodall Rodgers Freeway, P.O. Box 660164, Dallas,
Texas 75202, have filed an application-declaration under Sections 6(a),
7, 9(a), 10, 12(b), 13(b), 32 and 33 of the Act and Rules 43, 45, 51,
53, 83, 86, 87, 90 and 91 thereunder.
Applicants propose to organize and to invest in certain entities
for the purpose of engaging in international business activities that
may arise from time to time (``Business Activities''). The Business
Activities will include forming, acquiring, financing and owning the
securities or interests in the business of exempt wholesale generators,
as defined in Section 32(e) of the Act (``EWG'') and foreign utility
companies, as defined in Section 33(a) of the Act (``FUCO'')
(collectively with EWGs and FUCOs, ``Facilities''). The EWGs will
develop, construct, own and operate electric generating assets and the
FUCOs will develop, construct, own and operate electric generation,
transmission and distribution assets (``E/F Activities''). CSW proposes
to organize, form, acquire and fund subsidiary companies (``Project
Parents'') that would engage in E/F Activities, and for Project Parents
to issue equity and debt securities to third parties.
The Business Activities will also consist of providing consulting
services, including, but not limited to, designing, constructing and
engineering services, to foreign electric utility enterprises and
Facilities in which CSW has no ownership interest (collectively, with
E/F Activities, ``Permitted Activities'').
CSW proposes to organize and to invest in a direct, wholly owned
subsidiary company, which is anticipated to be named CSW International,
Inc. (``CSWI''). In addition, Applicants propose for CSWI and Energy to
organize and to invest in a subsidiary company, which will be organized
and to invest in a subsidiary company, which will be organized under
the laws of the United Mexican States and is anticipated to be named
CSW de Mexico, S.A. de C.V. (``CSWdM''). Upon formation, CSWI and CSWdM
propose to organize and to invest in a subsidiary company, which will
be organized under the laws of the United Mexican States and is
anticipated to be named CSW de Mexico Servicios, S.A. de C.V. (``CSWdM
Servicios'').
Applicants propose to organize CSWI, CSWdM and CSWdM Servicios in
the following manner: (1) CSWI will be organized under the laws of the
State of Delaware with an authorized share capital of 1,000 shares of
common stock, par value $.01 per share; (2) CSWdM will be organized
under the laws of the United Mexican States with an authorized share
capital of up to 10,000 shares of common stock, par value NP$5.00 per
share; and (3) CSWdM Servicios will be organized under the laws of the
United Mexican States with an authorized share capital of up to 10,000
shares of common stock, par value NP$5.00 per share.
CSW will initially subscribe to 1,000 shares of CSWI's authorized
and issued common stock, at a subscription price of $1.00 per share.
CSWI will initially subscribe to 9,999 shares of CSWdM common stock at
a subscription price of NP$5.00 per share, and Energy will initially
subscribe to one share of CSWdM common stock at a subscription price of
NP$5.00 per share. CSWI and Energy will thus own all authorized and
issued shares of CSWdM. CSWdM will initially subscribe to 9,999 shares
of CSWdM Servicios common stock at a subscription price of NP$5.00 per
share, and CSWI will initially subscribe to one share of CSWdM
Servicios common stock at a subscription price of NP$5.00 per share.
CSWI and CSWdM will thus own all authorized and issued shares of CSWdM
Servicios. Energy will hold directly one share in CSWdM, and CSWI will
hold directly one share in CSWdM Servicios, to comply with the
requirement under Mexican law that each of CSWdM and CSWdM Servicios
has a minimum of two shareholders. In the event any company in the CSW
System is to acquire an interest in CSWI, CSWdM or CSWdM Servicios
(other than as set forth above), appropriate Commission approval will
be requested.
The Applicants assert that the purpose of this structure is to: (1)
localize management of domestic and foreign office staffs; (2) operate
domestic and foreign business activities efficiently; (3) limit
liability (domestic and foreign); (4) minimize taxes, both domestic and
foreign; and (5) increase flexibility to respond to foreign business
opportunities.
CSWI will engage exclusively in Permitted Activities by serving as
a holding company for CSWdM, CSWdM Servicios and Project Parents. CSWdM
anticipates engaging in Permitted Activities primarily in Mexico.
However, CSWdM may also engage in Permitted Activities in other foreign
countries through joint ventures with third parties (``Joint
Ventures''). The nature of the independent power market in Mexico is
such that CSWdM's nonaffiliate Mexican entity partner(s) in a Joint
Venture may seek to have such Joint Venture engage in Permitted
Activities in a foreign country other than Mexico. It is, therefore,
desirable that CSWdM, in order to attract Joint Venture partners, have
the authority, directly or indirectly, to engage in Permitted
Activities in foreign countries other than Mexico.
CSWdM Servicios will provide services to CSWdM and Project Parents
that shall conduct Permitted Activities outside of the United States.
Such services shall include management, administrative, employment,
tax, accounting, engineering, consulting, utility performance and
electronic data processing services and software development and
support services in connection therewith. CSWdM Servicios will provide
localized management of Mexican employees, increased efficiency from a
consolidated foreign office staff and a vehicle to insulate CSW and its
affiliates from tax, labor and other liabilities that may apply under
Mexican law. CSWdM Servicios will not provide services to any
subsidiary company or affiliate of CSW other than CSWdM, CSWI, their
subsidiary companies or Project Parents that shall conduct Permitted
Activities outside the United States, without prior Commission
approval.
Project Parents will engage in E/F Activities and be special
purpose domestic corporations, partnerships or limited liability
companies or foreign corporations, partnerships or limited liability
companies (or the equivalent thereof), and will include Joint
Venture(s) engaged in E/F Activities. CSW's experience, in connection
with its foreign project development activities to date, including the
preparation and submission of bids in connection with foreign
government energy privatization programs, is that the organization,
formation or acquisition of one or more Project Parents is necessary or
desirable to facilitate E/F Activities.
A holding structure of one or more Project Parents may be necessary
to minimize foreign and domestic tax liabilities (e.g., by deferring
repatriation of foreign source income, or in order to take full
advantage of favorable tax treaties among foreign countries). Project
Parents may be necessary or desirable for bidding on FUCOs or EWGs
through Joint Ventures, since each member of the Joint Venture will
typically want to have at least one consolidated subsidiary in the
final FUCO or EWG ownership structure for tax and accounting purposes.
Project Parents would insulate CSW, CSWI and CSWdM from certain
business, tax and labor risks and facilitate subsequent adjustments to
or sales of interests among or by the members of such Joint Venture. A
Project Parent may also acquire and hold direct or indirect interests
in both FUCOs and EWGs.
Any such indirect investment by CSW in any Project Parent would be
consummated only if, at the time thereof and after giving effect
thereto, CSW's ``aggregate investment,'' determined in accordance with
Rule 53(a)(1)(i), in all FUCOs, EWGs and Project Parents would not
exceed 50% of CSW's ``consolidated retained earnings,'' as defined in
Rule 53(a)(1)(ii).
Investments by CSW, CSWI or CSWdM, directly or indirectly, in any
Project Parent may take the form of any combination of acquisition of
capital shares, partnership interests, trust certificates or the
equivalent of any of the foregoing under the laws of foreign
jurisdictions, if applicable. Any investment in the capital shares or
other equity securities of a Project Parent that have a stated par
value will be in an amount equal to or greater than such par value. Any
investment in any particular Project Parent would be limited to an
amount no greater than the amount reasonably required in connection
with making the underlying investment in any FUCO and/or EWG with
respect to which such Project Parent was organized, taking into account
development expenditures, working capital needs and cash reserves
required to be maintained in accordance with any financing document.
Within 45 days after CSW, CSWI or CSWdM determines that the purpose
for owning any Project Parent no longer exists, it shall liquidate,
dissolve or sell such Project Parent, unless, within that time-period,
CSW, CSWI or CSWdM, as the case may be, determines that such Project
Parent may be used in connection with a proposal or plan to develop or
acquire an interest in a different FUCO or EWG. The Applicants request
authority to liquidate, dissolve or sell any Project Parent under such
circumstances.
CSWI, CSWdM and CSWdM Servicios propose to enter into agreements
with CSW Services and Energy concerning services to be provided in
connection with the Permitted Activities. CSW Services and Energy will
initially provide services necessary or desirable for the operation of
CSWI, CSWdM and CSWdM Servicios. CSWI, CSWdM and CSWdM Servicios will
not provide services to any subsidiary of CSW other than Energy,
themselves and their subsidiary companies.
In addition, CSWI, CSWdM and CSWdM Servicios may from time to time
require the services of certain employees of the Central Power and
Light, Company, Public Service Company of Oklahoma, Southwestern
Electric Power Company and West Texas Utilities Company (collectively,
``Operating Subsidiaries'') in connection with Permitted Activities.
Certain employees of the Operating Subsidiaries are fluent in languages
other than English or knowledgeable in the operation of Facilities,
which may be necessary or desirable skills for CSWI, CSWdM or CSWdM
Servicios to demonstrate in connection with the Permitted Activities.
However, the necessity or desirability of such skills does not
economically justify hiring employees of CSWI, CSWdM and/or CSWdM
Servicios with such skills during the commencement of activities at
such companies. Accordingly, the Applicants seek authority for the
Operating Subsidiaries to provide such services to CSWI, CSWdM and
CSWdM Services.
Pursuant to Rule 53(a)(3), no more than 2% of the employees of the
Operating Subsidiaries will render services, at any one time, directly
or indirectly, to CSWI, CSWdM, CSWdM Servicios or any EWG or FUCO held
directly or indirectly by CSW. The accounting by the CSW system of such
services will ensure that CSWI, CSWdM or CSWdM Servicios, as the case
may be, will be obligated to reimburse the appropriate Operating
Subsidiary for such services. In no event will the provision of such
services adversely affect the rate base or the costs to ratepayers of
any such Operating Subsidiary.
The cost of services provided by an Operating Subsidiary to CSWI,
CSWdM or CSWdM Servicios will include all direct charges based on the
wage rates or salaries of assigned employees (including direct labor
costs and direct labor benefits; costs of material, vehicle and
equipment usage; and meals, lodging and miscellaneous expenses) and
indirect or overhead costs including insurance, employment taxes,
benefits plans (if applicable) and a portion of the administrative and
general expenses of such Operating Subsidiary.
All services rendered by an Operating Subsidiary to CSWI, CSWdM Or
CSWdM Servicios will be performed in accordance with a work order which
sets forth the services requested and time allocated for such services.
No Operating Subsidiary shall be obligated to render services to CSWI,
CSWdM or CSWdM Servicios if the personnel and resources needed to fill
the work order are not available.
There will be no diversion of CSW system personnel or resources
that would adversely affect any operating subsidiary's domestic
ratepayers or CSW's shareholders. CSWI will report to the Commission
the nature and scope of such services provided by any Operating
Subsidiary, CSW Services and Energy to CSWI, CSWdM and CSWdM Servicios,
including a quarterly summary of the type and cost of any services
furnished by such associates. Such reports will represent that no such
associate has subsidized the operations of CSWI, CSWdM or CSWdM
Servicios, and, further, that the transfer of any personnel from, and
the rendering of services by, such associates in connection with
Permitted Activities have not adversely affected the services provided
by such associates to their respective customers.
CSW proposes through December 31, 1997, to: (1) finance the
activities of the CSWI, CSWdM, CSWdM Servicios and Project Parents in
the form of capital contributions, loans or open account advances
(``Investments''); and/or (2) issue guarantees in the form of letters
of credit, bid bonds or other credit support to secure certain
obligations incurred by CSWI, CSWdM, CSWdM Servicios and Project
Parents (``Guarantees''), in any combination of Investments and/or
Guarantees up to an aggregate principal amount of $400 million
(``Aggregate General Authority'').
Contributions may be made from CSW to CSWI, CSWdM, CSWdM Servicios
and/or Project Parents directly or indirectly. However, the amount of
all outstanding Guarantees and/or Investments provided by CSW directly
or indirectly to CSWI CSWdM, CSWdM Servicios and/or Project Parents
shall not exceed the Aggregate General Authority. Such Investments
would bear interest at a rate per annum based on market rates for
similar credits, but in any event not in excess of CSW's weighted cost
of capital and would have a final maturity not to exceed five years.
Applicants contend that in order to compete in the marketplace and
to develop Facilities, CSWI, CSWdM and each Project Parent will require
the ability to bid on or otherwise pursue multiple projects on a
simultaneous basis and to provide Guarantees at the time of bid or
during development. The inability of CSWI, CSWdM and/or the Project
Parents to provide such Guarantees on a timely basis will variously
prevent, hinder or make more costly their participation in Facilities
for which it would otherwise be able to secure contracts.
The terms of, and any fees or interest payable in respect of,
Guarantees will be established at arm's length in conformity with
market practice; provided that the cost of Guarantees (including
interest on outstanding reimbursement obligations in respect of
Guarantees) provided by CSW to or for the benefit of CSWI, CSWdM or any
Project Parent will not exceed CSW's weighted cost of capital; provided
further that the fees with respect to any Guarantee would not exceed 2%
per annum of the face amount of such Guarantee, and the interest
payable per annum on the unreimbursed drawings under any Guarantee
would not exceed the prime rate of the issuer plus six percentage
points.
Investments and, if necessary, the payment of the Guarantees shall
be funded through third party financing. CSW, CSWI, CSWdM and each
Project Parent request authority to finance the Investment in
Facilities or, if necessary, to fund the payment of Guarantees through
the issuance from time to time of stock, promissory notes, commercial
paper or other debt or equity securities to third parties, including,
without limitation, banks, insurance companies and other financial
institutions. The aggregate of such financing will not, when added to
the Investments and Guarantees, exceed the Aggregate General Authority.
Equity securities issued by any Project Parent to any third party
may include capital shares, partnership interests, trust certificates
or the equivalent of any of the foregoing under applicable foreign law.
Debt securities issued to third parties may include secured and
unsecured promissory notes, subordinated notes, bonds or other evidence
of indebtedness. Securities issued by Project Parents may be
denominated in either U.S. dollars or foreign currencies. The amount
and type of such securities, and the terms thereof, including (in the
case of any indebtedness) interest rate, maturity, prepayment or
redemption privileges and the terms of any collateral security granted
with respect thereto, would be negotiated in arm's length transactions
on a case by case basis, taking into account differences from project
to project in optimum debt-equity ratios, projections of earnings and
cash flow, depreciation lives and methods and other similar financial
and performance characteristics of each project.
Notwithstanding the foregoing, CSW states that no equity security
having a stated par value would be issued or sold by a Project Parent
for a consideration that is less than such par value. CSW also states
that no note, bond or other evidence of indebtedness issued or sold by
any Project Parent will mature later than 30 years from the date of
issuance thereof, and will bear interest at a rate not in excess of the
following: (1) if such note, bond or other indebtedness is U.S. dollar
denominated, at a rate not to exceed seven percent over the then
applicable prime rate as announced from time to time by Mellon Bank,
N.A. (``Applicable Rate''); and (2) if such note, bond or other
indebtedness is denominated in the currency of a country other than the
United States, at a rate which, when adjusted (i.e., reduced) for the
prevailing rate of inflation in such country, as reported in official
indices published by such country would be equivalent to a rate on a
U.S. dollar denominated borrowing of identical average life that does
not exceed 10% over the Applicable Rate.
It is anticipated that fees in the form of placement or commitment
fees, or other similar fees, would be paid to lenders, placement agents
or other third parties in connection with the issuance of any such non-
recourse debt securities. CSW requests authority for any Project Parent
to agree to pay placement or commitment fees, and other similar fees,
in connection with any borrowing, provided that the effective annual
interest charge on any indebtedness evidencing such borrowing is not
greater than 115% of the stated interest rate thereon.
In connection with the issuance of debt securities by any Project
Parent, it is anticipated that such Project Parent may pledge and/or
grant a security interest in its assets. Such pledge or security
interest may include, without limitation, the shares or other equity
securities of any FUCO, EWG or Project Parent that it owns, including,
without limitation, a security interest in any distributions from any
such FUCO, EWG or Project Parent, or a collateral assignment of its
rights under and interests in its other property, including, without
limitation, any rights under any power purchase agreement, fuel supply
agreement or other project agreement to which it is a party.
It is proposed that the aggregate outstanding principal amount of
non-recourse debt securities issued by Project Parents to third parties
will not exceed $600 million at any one time. Such amount is separate
and apart from, and in excess of, the Aggregate General Authority. No
more than $200 million principal amount of such non-recourse debt
securities at any time outstanding may be denominated in currencies
other than U.S. dollars. In any case in which CSW directly or
indirectly owns less than all of the equity interests of a Project
Parent, only that portion of the non-recourse indebtedness of such
Project Parent equal to CSW's equity ownership percentage shall be
included for purposes of the foregoing limitations.
CSW, Energy, CSWI, CSWdM, CSWdM Servicios and their affiliates
further request that no additional authority be required from the
Commission after December 31, 1997 in order to maintain existing
Guarantees and/or Investments made prior to such date in accordance
with the Act and all applicable rules, regulations and orders of the
Commission. If CSW, Energy, CSWI, CSWdM or CSWdM Servicios determine to
make any additional investments after December 31, 1997, appropriate
authority of the Commission will be sought.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-21005 Filed 8-25-94; 8:45 am]
BILLING CODE 8010-01-M