[Federal Register Volume 60, Number 47 (Friday, March 10, 1995)]
[Notices]
[Pages 13191-13193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5866]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26244]


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

March 3, 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 
[[Page 13192]] 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 March 27, 1995, 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 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.

Notice of Proposal to Amend Certificate of Incorporation and Adopt and 
Implement Shareholder Rights Plan; Order Authorizing Solicitation of 
Proxies

The Columbia Gas System, Inc. (70-8565)

    The Columbia Gas System, Inc. (``Columbia''), 20 Montchanin Road, 
Wilmington, Delaware 19807, a registered holding company and a debtor-
in-possession under Chapter 11 of the United States Bankruptcy Code 
(``Code''), has filed a declaration under sections 6(a), 7 and 12(e) of 
the Act and rules 62 and 65 thereunder.
    Columbia proposes to amend its certificate of incorporation 
(``Charter'') to change the description of preferred stock, as 
presently authorized, in order to permit the use of preferred stock 
pursuant to a proposed shareholder rights plan (``Rights Plan''). 
Shareholder approval of the amendment to the Charter will be sought at 
Columbia's annual meeting scheduled for April 28, 1995. The adoption 
and implementation of the Rights Plan is subject to the approval of the 
United States Bankruptcy Court for the District of Delaware 
(``Bankruptcy Court'') and this Commission.
    Rights plans are designed to allow a board to take additional time 
to negotiate with potential acquirors and enhance the probability that 
competing bids will emerge. They may permit a board to thwart an 
inadequate offer. Under Columbia's Rights Plan, existing shareholders 
would be granted a right to purchase preferred stock that has voting 
and dividend rights equivalent to common stock at a substantial 
discount to common stock if a triggering event occurs. The triggering 
event in the Rights Plan is the acquisition of 10% or more of 
Columbia's common stock. If a triggering event occurs, the rights held 
by the acquiror would be void and the exercise of the rights by other 
stockholders would result in a dilution of the value and voting power 
of the potential acquiror. If the Columbia board of directors 
determines that an acquisition should be allowed, it has the option of 
redeeming the rights to permit a proposed offer to proceed. The Rights 
Plan would terminate eighteen months after the effective date of 
Columbia's plan of reorganization under the Code subject to extension 
if an offer to purchase 10% or more of Columbia's common stock is 
pending.
    The Charter amendment would change the par value of Columbia's 
preferred stock from $50 to $10 per share and delete provisions in the 
Charter which subject Columbia to certain restrictions on dividends and 
on unsecured debt while any preferred stock is outstanding and which 
define the voting rights and liquidation rights of the preferred stock 
in a manner inconsistent with the voting and liquidation rights 
proposed for the Series A Participating Preferred Stock to be utilized 
in the Rights Plan (``Preferred Stock'') should the rights become 
exercisable. Columbia currently has no preferred stock outstanding. 
Instead of being set forth in the Charter, voting rights, liquidation 
rights, and dividend and other terms of each issue of preferred stock 
would be set forth in the individual certificates of designation to be 
authorized to Columbia's board of directors and filed with the 
secretary of state of Delaware.
    Each one-one thousandth of a share of Preferred Stock would be 
equivalent to one share of common stock for dividend, voting and 
liquidation process. Once a person (an ``Acquiror'') has acquired 10% 
or more of the Columbia's common stock, each shareholder other than the 
Acquiror would be entitled to purchase for $100 that number of 
fractions of Preferred Stock which is equal to the number of shares of 
common stock with a market value totalling $200 at the time of 
purchase.
    Dividends on the Preferred Stock will consist of: (1) Dividends 
payable quarterly (each a ``Quarterly Dividend Payment Date'') in the 
amount of $10.00 per whole share less the amount of all cash dividends 
declared on the Preferred Stock pursuant to the following clause (2) 
since the immediately preceding Quarterly Dividend Payment Date (the 
total of which shall not be less than zero); and (2) dividends payable 
in cash on the payment date for each cash dividend declared on the 
common stock in an amount per whole share equal to the Formula Number 
then in effect times the cash dividends then to be paid on each share 
of common stock.\1\ In addition, if Columbia shall pay any dividend or 
make any distribution on common stock payable in assets, securities or 
other forms of noncash consideration (other than dividends or 
distributions solely in shares of Columbia common stock), then Columbia 
shall simultaneously pay or make on each outstanding whole share of 
Preferred Stock a dividend or distribution in like kind equal to the 
Formula Number than in effect, times such dividend or distribution on 
each share of common stock.

    \1\Since each 1/1,000th of a share of Preferred Stock is 
designed to be equivalent to one share of common stock, the 
``Formula Number'' is 1,000, subject to adjustment in the event of 
stock dividends, stock splits or similar events.
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    Each holder of Preferred Stock shall be entitled to a number of 
votes equal to the Formula Number then in effect, for each share of 
Preferred Stock held of record on each matter which holders of common 
stock or stockholders generally are entitled to vote, multiplied by the 
maximum number of votes per share which any holder of common stock or 
stockholders generally have with respect to such matter (assuming any 
requirement to vote a greater number of shares is satisfied).
    Except as otherwise provided in the certificate of designation or 
by applicable law, the holders of shares of Preferred Stock and the 
holders of shares of common stock shall vote together as one class for 
the election of directors of Columbia and on all other matters 
submitted to a vote of stockholders of Columbia.
    If, at the time of any annual meeting of stockholders for the 
election of directors, the equivalent of six quarterly dividends 
(whether or not consecutive) payable on any share of Preferred Stock 
are in default, the number of directors constituting the board shall be 
increased by two. In addition to voting together with the holders of 
common stock for the election of other directors of Columbia, the 
holders of Preferred Stock (and of any other stock on a parity with the 
Preferred Stock and also entitled to vote due to a default), voting 
separately as a class to the exclusion of the holders [[Page 13193]] of 
common stock, shall be entitled at said meeting of stockholders (and at 
each subsequent annual meeting of stockholders), unless all dividends 
in arrears have been paid or declared and set apart for payment prior 
thereto, to vote for the election of two directors of Columbia. If and 
when such default shall cease to exist, the holders of Preferred Stock 
shall be divested of the foregoing special voting rights, subject to 
revesting in the event of each and every subsequent like default in 
payments of dividends. Upon the termination of the foregoing special 
voting rights, the terms of office of all persons who may have been 
elected directors pursuant to said special voting rights shall 
terminate and the number of directors constituting the board shall be 
decreased by two. Except as provided in the certificate of designation 
or by application law, holders of Preferred Stock shall have no special 
voting rights and their consent shall not be required (except to the 
extent they are entitled to vote with holders of common stock as 
described above) for authorizing or taking any corporate action.
    Upon the liquidation, dissolution or winding up of Columbia, 
whether voluntary and involuntary, no distribution shall be made: (1) 
to the holders of shares of stock ranking junior (either as to 
dividends or upon liquidation, dissolution or winding up) to the 
Preferred Stock unless, prior thereto, the holders of shares of 
Preferred Stock shall have received an amount equal to the accrued and 
unpaid dividends and distributions thereon, whether or not declared, to 
the date of such payment, plus an amount equal to the greater of (x) 
$10.00 per whole share or (y) an aggregate amount per share equal to 
the Formula Number then in effect times the aggregate amount to be 
distributed per share to holders of Common Stock; or (2) to the holders 
of stock ranking on a parity (either as to dividends or upon 
liquidation, dissolution or winding up) with the Preferred Stock, 
except distributions made ratably on the Preferred Stock and all other 
such parity stock in proportion to the total amounts to which the 
holders of all such shares are entitled upon such liquidation, 
dissolution or winding up.
    The Preferred Stock will rank junior to all other series of 
preferred stock of Columbia unless the board shall specifically 
determine otherwise in fixing the special rights of such series and the 
limitations thereof. Declarants state, however, that there is no 
expectation that the rights would become exercisable and the above 
described Preferred Stock issued.
    The board of directors may at its option satisfy the rights by 
issuing one half the securities that would be issuable for the purchase 
price or by issuing sufficient common stock to be equivalent to the 
preferred stock that would be issuable, (each one one-thousandth of a 
share of preferred stock being the equivalent of one share of common 
stock).
    Columbia requests authority to solicit proxies from its 
stockholders for approval of the amendment to the Charter. Columbia has 
filed its proxy solicitation material and requests that the 
effectiveness of its declaration with respect to the solicitation be 
accelerated pursuant to Rule 62(d).
    It appearing to the Commission that Columbia's declaration 
regarding the proposed solicitation of proxies should be permitted to 
become effective forthwith pursuant to rule 62(d):
    It is ordered that the declaration regarding the proposed 
solicitation of proxies be, and it hereby is, permitted to become 
effective forthwith under rule 62(d), and subject to the terms and 
conditions prescribed in rule 24 under the Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 95-5866 Filed 3-9-95; 8:45 am]
BILLING CODE 8010-01-M