[Federal Register Volume 60, Number 18 (Friday, January 27, 1995)]
[Notices]
[Pages 5450-5452]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2024]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26219]


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

January 20, 1995.
    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 February 13, 1995, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549, and serve a copy on the relevant 
applications(s) and/or declarant(s) at the address(s) 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.

Entergy Corporation, et al.

[70-8535]

    Entergy Corporation (``Entergy''), 639 Loyola Street, New Orleans, 
Louisiana 70113, a registered holding company, and its bulk power 
marketing subsidiary, Entergy Power, Inc. (``EPI'') (together, 
``Applicants''), Three Financial Center, Little Rock, Arkansas 72211, 
have filed an application-declaration under sections 6(a), 7, 9(a), 10 
and 12(b) of the Act and Rules 42, 43 and 45 thereunder.
    The Applicants request authority for: (1) Entergy to recapitalize 
EPI through the conversion of outstanding amounts of principal and 
interest under the existing $250 million loan agreement between Entergy 
and EPI (``Loan Agreement'') to capital contributions; and (2) Entergy 
to make additional equity investments in EPI from time-to-time through 
December 31, 1995 to fund EPI's working capital and other capital 
requirements.
    By Commission orders, dated August 27, 1990 (HCAR No. 25136) \1\ 
and July 16, 1992 (HCAR No. 25583) (``Orders''), EPI was formed and has 
been financed by Entergy to participate as a supplier of capacity and 
energy in the wholesale bulk power market. Under the Orders, EPI 
acquired the ownership interests of its associate company, Arkansas 
Power & Light Company in Unit 2 of the Independent Steam Electric 
Generating Station and Unit 2 of the Ritchie Steam Electric Generating 
Station representing an aggregate of 809 MW of capacity (``Transferred 
Capacity''). The Transferred Capacity included various leases, mine 
facilities and mining equipment, oil storage and handling facilities 
associated with providing fuel supplies for the Transferred Capacity.

    \1\This order is currently before the commission on remand from 
the D.C. Circuit Court of Appeals. See, New Orleans v. SEC, 969 F.2d 
1163 (D.C. Cir. 1992).
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    Entergy and EPA state that various constraints on EPI's business 
activities, including the highly leveraged nature of its authorized 
capital structure and the consequent debt service requirements, which 
currently amounts to approximately $4.1 million per quarter, have had a 
negative effect on EPI's financial condition and significantly impaired 
its ability to market and sell the Transferred Capacity. In order to 
provide EPI with a capital structure more suited to EPI's authorized 
activities by eliminating EPI's debt service requirements under the 
Loan Agreement, Entergy and EPI propose to terminate the Loan Agreement 
and to convert to capital contributions all outstanding borrowings, in 
the approximate amount of $217.55 million, together with any accrued 
and unpaid interest through the date of the conversion. After the 
recapitalization, EPI's capital structure would consist of 100% equity.
    The Applicants further propose that Entergy make additional equity 
investments in EPI from time-to-time through December 31, 1995 in an 
aggregate amount not to exceed the approximate total principal amount 
of additional borrowings EPI could have been under the Loan Agreement, 
as of September 30, 1994, or $32.45 million. [[Page 5451]] Additional 
investments by Entergy may take the form of the issuance and sale by 
EPI, and the purchase by Entergy, of additional shares of EPI's Common 
Stock and/or capital contributions. The additional investments would be 
used by EPI to meet its working capital requirements and to pay its 
associate companies for services provided to EPI.

Eastern Utilities Associates, et al.

[70-8539]

    Eastern Utilities Associates (``EUA''), P.O. Box 2333, Boston, 
Massachusetts 02107, a registered holding company, and EUA Cogenex 
Corporation (``Cogenex''), wholly owned nonutility subsidiary company 
of EUA, and EUA Cogenex-Canada, Inc. (``Cogen-Canada''), and Northeast 
Energy Management, Inc. (``NEM''), two wholly owned nonutility 
subsidiary companies of Cogenex, all located at Boott Mills South, 100 
Foot of John Street, Lowell, Massachusetts 01852, have filed an 
application-declaration under sections 6(a), 7, 9(a), 10, and 12(b) of 
the Act, and rules 42, 43 and 45 thereunder.
    EUA proposes to invest in Cogenex, through December 31, 1997, up to 
an aggregate principal amount of $50 million through any one or 
combination of short-terms loans, capital contributions, or purchases 
of Cogenex common stock. EUA proposes to borrow up to $25 million under 
the EUA system credit lines, which if used, would fund the short-term 
loans to Cogenex. The terms and conditions of any loans made to Cogenex 
would be the same as the terms and conditions under the EUA system 
credit lines.
    Cogenex proposes, through December 31, 1997, to obtain financing, 
in an amount not to exceed $200 million, from any of these sources: (i) 
up to $50 million from EUA; and (ii) $150 million from (a) the issuance 
and sale of unsecured notes (``New Notes'') through a private or a 
public offering, (b) the borrowing of proceeds from the issuance and 
sale of bonds by a state or political subdivision agency (``Bonds''), 
and (c) the borrowing of up to $75 million under the EUA system credit 
lines. Cogenex will use the proceeds: (i) to pay, reduce, or renew 
short-term bank loans; (ii) to pay, reduce, or renew short-term loans 
from EUA; (iii) for working capital to operate its demand side 
management, energy conversation and self-generation business and 
general corporate purposes; (iv) to pay the costs of issuance of the 
New Notes and Bonds; and (v) to provide for debt servicing reserves or 
expenses for issuance of the New Notes and Bonds.
    The terms and conditions of the New Notes and the Bonds will be 
provided in a post-effective amendment, the EUA and Cogenex request a 
reservation of jurisdiction over the issuance and sale of the New Notes 
and Bonds.
    Interest on notes issued under the existing EUA system credit lines 
are either the prime rate or money market rates, and may include a 
commitment fee. The weighted average interest rate for borrowings under 
the EUA system credit lines on November 30, 1994, was 1% per annum. 
Notes issued under the EUA system credit lines will mature in not more 
than one year and the principal amount of notes that EUA and Cogenex 
will have outstanding at one time will not exceed $25 million and $75 
million, respectively.
    EUA also proposes, if it becomes necessary to obtain favorable 
terms for the New Notes and Bonds, to guaranty the New Notes and Bonds 
or provide an equity maintenance agreement, under which EUA would make 
capital contributions to Cogenex if Cogenex's equity as a percentage of 
total capitalization fell below a specified level.
    Cogenex proposes to extend, until December 31, 1997, its authority 
to invest in Cogen-Canada and NEM, and Cogen-Canada and NEM propose to 
extend their authority to December 31, 1997, to borrow from Cogenex. 
Cogenex is currently authorized to invest in Cogen-Canada in an amount 
not to exceed $20 million through stock purchases, capital 
contribution, open account advances, and short-term loans. Cogenex is 
currently authorized to invest in NEM in an amount not to exceed $9.1 
million through capital contributions and short-term loans. Cogenex's 
authority to invest, and NEM's and Cogen-Canada's authority to borrow 
from Cogenex expires December 31, 1995. Cogenex does not propose to 
increase the amount it may invest in Cogen-Canada or NEM.

National Fuel Gas Company, et al.

[70-8541]

    National Fuel Gas Company (``National''), a registered holding 
company, and its wholly owned nonutility subsidiary companies, National 
Fuel Gas Resources (``Resources''), National Fuel Gas Supply 
(``Supply''), Seneca Resources Corporation (``Seneca), and Utility 
Constructors (``Constructors''), and National Fuel Gas Distribution 
Company (``Distribution''), a wholly owned gas public utility 
subsidiary company of National, all of 10 Lafayette Square, Buffalo, 
New York 14203, have filed an application-declaration under sections 
6(a), 7, 9(a), 10 and 12(b) of the Act and rules 42, 43, and 45 
thereunder.
    National proposes to issue and sell, through December 31, 1997, in 
one or more transactions, up to an aggregate principal amount of $350 
million of debt securities in any combination of (a) debentures 
(``Debentures'') and (b) medium-term notes (``MTNs''), which will 
mature in not over 40 years. The Debentures will be offered by use of 
negotiated sales or competitive bidding. The MTNs will be offered, as 
needed, through agents. National will not issue Debentures or MTNs at 
rates in excess of those generally obtained at the time of pricing for 
sales of medium-term notes or debentures having the same maturity, 
issued by companies of comparable credit quality and having similar 
terms, conditions, and features. The price and annual interest rate 
(which may be fixed or variable) of each series of Debentures and MTNs 
will be determined at the time of bidding or when the agreement to sell 
is made.
    The Debentures and MTNs will be issued under an Indenture dated as 
of October 15, 1974, as supplemented, and as it will be supplemented by 
one or more supplemental indentures. The supplemental indentures, which 
provide for the issuance of the Debentures and the MTNs, may include 
provisions for redemption prior to maturity at various percentages of 
the principal amount and may include restrictions on optional 
redemption for a given number of years up to the term of the Debentures 
and MTNs.
    National proposes to lend from the proposed financing, in exchange 
for unsecured notes (``Notes''), up to (a) $250 million to 
Distribution; (b) $150 million to Supply; (c) $150 million to Seneca; 
(d) $20 million to Resources; and (e) $20 million to Constructors. The 
total amount lent from National to the subsidiaries will not exceed the 
proceeds National receives from issuance of the Debentures and MTNs.
    The Notes to be issued by the subsidiaries will bear interest at 
the effective interest cost of the principal amount of the related 
Debentures and MTNs. National will have the option to require payment 
of the notes at any time if the related Debentures and MTNs mature, are 
redeemed, or otherwise acquired by National. The subsidiaries will use 
the proceeds from the Notes: (i) To reduce short-term debt under 
certain credit lines; (ii) to repay notes issued to National in 
connection with the sale by National of certain debentures and medium-
term notes; (iii) for construction or other capital expenditure 
programs; and (iv) for general corporate purposes.
    National also proposes, in connection with its long-term financing, 
to enter [[Page 5452]] into one or more interest rate swaps and related 
interest rate caps, collars and floors, through December 31, 1997, in 
notional amounts that in the aggregate will not exceed $350 million.
    National requests authorization to make floating-to-fixed rate 
(``Strategy 1 Swaps'') and fixed-to-floating rate swaps (``Strategy 2 
Swaps''). Under Strategy 1 Swaps, National would make periodic interest 
payments at a floating rate of interest, calculated on an agreed 
notional amount, in return for periodic interest payments based upon 
the same notional amount but payable at an agreed-upon fixed rate of 
interest. Under Strategy 2 Swaps, National would pay a fixed interest 
rate and receive a variable interest rate on an agreed notional amount.
    National's floating rate of interest for Strategy 1 Swaps would be 
based on certain indices, such as the London Interbank Deposit Offered 
Rate, the Federal Funds Rate, certificate of deposit indices, or 
commercial paper indices. There will be no maximum interest rate 
respecting payments that National may make under Strategy 1 Swaps 
unless National purchases an interest rate cap. However, National will 
not enter a Strategy 1 Swap in which the floating interest rate it pays 
would exceed by more than 200 basis points, at each reset period, the 
index used for the Strategy 1 Swap. The fixed interest National 
receives in a Strategy 1 Swap 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. Thus, the fixed rate chosen 
will be a rate that discounts the floating interest payments expected 
by the market to be paid by National over the life of the swap to an 
amount that equals the present value of the fixed interest payments to 
National, exclusive of the bid-ask spread.
    To protect against adverse interest rate changes on floating rate 
debt, National may purchase one or more interest rate caps or may 
additionally sell an interest rate floor to either lower the cost of 
the debt under the floor or, in conjunction with an interest rate cap, 
to lower the cost of the cap.
    National will not enter any Strategy 2 Swaps if the fixed rate of 
interest paid by National would exceed 2% over the yield on U.S. 
Treasury obligations bearing comparable terms. Strategy 2 Swaps would 
be used in lieu of issuing Debentures or MTNs. The aggregate notional 
amount of Strategy 2 Swaps will not, at any one time, exceed the 
difference between (a) $350 million and (b) the aggregate principal 
amount of Debentures and MTNs then outstanding. Furthermore, the 
aggregate notional amount of Strategy 2 Swaps will not exceed, at the 
time the swap contract is entered into, the difference between (a) the 
amount of short-term debt then outstanding pursuant to National's 
short-term borrowing arrangements (File No. 70-8297) (which shall not 
exceed $400 million) and b) the aggregation notional amount of swaps 
then outstanding pursuant to National's short-term borrowings and 
system Money Pool arrangements (File No. 70-8297). In no event will the 
aggregate notional amount of Strategy 2 Swaps, at any one time, exceed 
$350 million.
    The term of Strategy 1 Swaps could vary from one month to forty 
years, while the term of Strategy 2 Swaps could vary from nine months 
to forty years.
    Each time National issues debenture or medium-term notes, the 
proceeds are lent to one or more of 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, or collar would ``directly relate'' to then outstanding debt so 
that the gains and losses of doing a swap and one or more derivative 
instruments would be allocated to the subsidiary on whose behalf the 
underlying debt was issued. The subsidiary will enter an agreement with 
National for the financial obligations of the swaps and other 
derivatives.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 95-2024 Filed 1-26-95; 8:45 am]
BILLING CODE 8010-01-M