[Federal Register Volume 60, Number 218 (Monday, November 13, 1995)]
[Notices]
[Pages 57032-57035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27882]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26403]


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

November 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 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 

[[Page 57033]]
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 November 27, 1995, to the Secretary, Securities and Exchange 
Commission, Washington, D.C. 20549, and serve a copy on the relevant 
applicant(s) and/or declaration(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 applicant(s) and/or declaration(s), as 
filed or as amended, may be granted and/or permitted to become 
effective.

American Electric Power Co., et al. (70-8693)

    American Electric Power Company, Inc. (``AEP''), 1 Riverside Plaza, 
Columbus, Ohio, 43215, a registered holding company, and eight electric 
utility subsidiary companies, Appalachian Power Company 
(``Appalachian''), 40 Franklin Road, S.W., Roanoke, Virginia, 24011, 
Columbus Southern Power Company (``Columbus''), 214 North Front Street, 
Columbus, Ohio, 43215, Indiana Michigan Power Company (``Indiana''), 
One Summit Square, P.O. Box 60, Forth Wayne, Indiana, 46801, Kentucky 
Power Company (``Kentucky''), 1701 Central Avenue, Ashland, Kentucky, 
41101, Ohio Power Company (``Ohio''), 301 Cleveland Avenue, S.W., 
Canton, Ohio, 44701, AEP Generating Company (``Generating''), 1 
Riverside Plaza, Columbus, Ohio, 43215, Kingsport Power Company 
(``Kingsport''), 40 Franklin Road, S.W., Roanoke, Virginia, 24011, and 
Wheeling Power Company (``Wheeling'') 51 Sixteenth St., Wheeling, West 
Virginia, 26003, have filed an application under section 6(b) of the 
Act and rule 54 thereunder.
    AEP, Appalachian, Columbus, Indiana, Kentucky and Ohio request 
authorization to incur short-term indebtedness, through December 31, 
2001, through the issuance and sale of short-term notes to banks and 
commercial paper to dealers in commercial paper and, in addition, 
Generating, Kingsport, and Wheeling request authorization to incur 
short-term indebtedness, through December 31, 2001, through the 
issuance and sale of short-term notes to banks, in aggregate amounts 
not to exceed those herein specified:

------------------------------------------------------------------------
                        Company                              Amount     
------------------------------------------------------------------------
AEP...................................................      $150,000,000
Appalachian...........................................       250,000,000
Columbus..............................................       175,000,000
Indiana...............................................       175,000,000
Kentucky..............................................       150,000,000
Generating............................................       100,000,000
Kingsport.............................................        30,000,000
Ohio..................................................       250,000,000
Wheeling..............................................        30,000,000
                                                       -----------------
      Total...........................................     1,310,000,000
------------------------------------------------------------------------

    AEP, Appalachian, Columbus, Indiana, Kentucky, Generating, 
Kingsport, Ohio and Wheeling (``Applicants'') request authorization for 
an increase in the exemption provided from the provisions of Section 
6(a) by the first sentence of Section 6(b) of the Act to the extent 
necessary to cover the issuance and sale of notes and commercial paper. 
AEP's request is in addition to the authority granted to AEP in Holding 
Co. Act Release No. 36200 (Dec. 22, 1994). Applicants will use the 
short-term debt to pay general obligations and for other corporate 
purposes.
    Applicants propose to issue and sell notes to several domestic and 
foreign banks through various credit arrangements, to include revolving 
credit agreements or shared lines of credit. Notes under the credit 
arrangements will mature within 270 days. Credit arrangements generally 
require commitment fees borne by each Applicant in proportion to its 
respective projected maximum need for credit.
    The total annual cost of borrowings under all such bank lines is 
estimated to be not in excess of the effective rate for borrowings that 
bear interest at the prime commercial rate with compensating balances 
of up to 10% of the line of credit.
    The maximum effective annual interest cost under any of these 
arrangements, assuming full use of the line of credit, is estimated to 
not exceed 125% of the prime commercial rate in effect from time to 
time, or not more than 10.94% on the basis of a prime commercial rate 
of 8.75%.
    Commercial paper will be sold directly by AEP, Appalachian, 
Columbus, Indiana, Kentucky, or Ohio to dealers in commercial paper. 
Commercial paper will be in the form of promissory notes in 
denominations of not less than $50,000 and will mature within 270 days. 
Such notes will not be prepayable and will be sold at a discount rate 
not in excess of the discount rate per annum prevailing at the time of 
issuance for commercial paper of comparable quality and maturity. The 
commercial paper dealers will re-sell the commercial paper to 
investors, generally at a discount rate of up to \1/8\ of 1% per annum 
less than the discount rate at which it was sold.
    Applicants also request authorization to issue unsecured promissory 
notes or other evidence of their reimbursement obligations in respect 
of letters of credit issued on their behalf by certain banks. Letters 
of credit, together with other short-term indebtedness authorized, 
would be in an aggregate amount not to exceed the above-itemized 
aggregate amounts authorized for each Applicant.
    Drawings under the letters of credit would bear interest at not 
more than 125% of the prime commercial rate in effect from time to 
time. An annual fee may be required for the issuance of such letters of 
credit. Such fee will not exceed 1% of the face amount of such letter 
of credit. Any such promissory note or other evidence of reimbursement 
obligations would mature within 270 days.

Arkansas Power & Light Company (70-8723)

    Arkansas Power & Light Company (``AP&L''), 425 West Capitol Avenue, 
40th Floor, Little Rock, Arkansas 72201, an electric public utility 
subsidiary company of Entergy Corporation, a registered holding 
company, has filed an application-declaration under sections 6(a), 7, 
9(a), 10 and 12(b) of the Act and rules 45 and 54 thereunder.
    AP&L proposes, from time-to-time through December 31, 2000, to: (1) 
Issue and sell through one or more special purpose subsidiaries, one or 
more series of preferred securities of such subsidiary having a stated 
per share liquidation preference (``Entity Interests''), in an 
aggregate principal amount not to exceed $200 million; (2) issue one or 
more series of AP&L's junior subordinated debentures to the special 
purpose subsidiary(ies), each series in an amount not to exceed the 
amount of the respective series of Entity Interests, plus an equity 
contribution; and (3) provide certain guarantees.
    AP&L proposes to organize either a special purpose limited 
partnership or a statutory business trust (``Issuing Entity'') for the 
sole purpose of issuing the Entity Interests. In the case of a limited 
partnership, AP&L would either: (1) Act as the general partner of the 
Issuing Entity; or (2) organize a special purpose, wholly owned 
corporation for the sole purpose of acting as the general partner of 
the Issuing Entity. In the case of a business trust, the business and 
affairs of the trust would be conducted 

[[Page 57034]]
by one or more trustees. AP&L will directly or indirectly make an 
equity contribution to the Issuing Entity at the time the Entity 
Interests are issued and thereby directly or indirectly acquire all of 
the general partnership interest (in the case of a limited partnership) 
or all of the voting interests (in the case of a business trust) in the 
Issuing Entity.
    AP&L will issue, from time-to-time in one or more series, 
Subordinated Debentures (``Entity Subordinated Debentures'') to the 
Issuing Entity. The Issuing Entity will use the proceeds from the sale 
of its Entity Interests, plus the equity contributions made to it by 
AP&L to purchase the Entity Subordinated Debentures.
    Each series of Entity Subordinated Debentures will mature at such 
time, not more than fifty years from their date of issuance, as AP&L 
may determine at the time of issuance. Prior to maturity, AP&L will pay 
interest only on the Entity Subordinated Debentures at either a fixed 
or adjustable rate. The distribution rates, payment dates, redemption, 
maturity, and other terms applicable to each series of Entity Interests 
will be substantially identical to the related interest rates, payment 
dates, redemption, maturity, and other terms applicable to the Entity 
Subordinated Debentures, and will be determined by AP&L at the time of 
issuance. The interest paid by AP&L on the Entity Subordinated 
Debentures will constitute the only source of income for the Issuing 
Entity and will be used by the issuing Entity to pay monthly or 
quarterly distributions on the Entity Interests.
    AP&L may also enter into a guaranty (``Guaranty'') to guarantee 
unconditionally: (1) Payment of distributions on the Entity Interests, 
if and to the extent the Issuing Entity has legally available funds; 
(2) payments to the holders of Entity Interests of certain amounts due 
upon liquidation of the Issuing Entity or redemption of the Entity 
Interests; and (3) certain additional ``gross up'' amounts that may be 
payable regarding the Entity Interests. AP&L's Entity Subordinated 
Debentures and any Guaranty will be subordinated to senior 
indebtedness. Payment of interest on Entity Subordinated Debentures may 
be deferred for specified periods, without creating a default, so long 
as no dividends are being paid on, or certain actions are being taken 
with respect to the retirement of, the common or preferred stock of 
AP&L, respectively, during the deferral period.
    Distributions on the Entity Interests will be paid monthly, 
quarterly or as determined at the time of sale of each series, will be 
cumulative, and will be mandatory to the extent that the Issuing Entity 
has legally available funds sufficient for such purposes. The Issuing 
Entity will have the right to defer distributions on the Entity 
Interests for a specified period, but only if and to the extent that 
AP&L defers the interest payments on the Entity Subordinated 
Debentures. It is anticipated that interest payments by AP&L on the 
Entity Subordinated Debentures will be deductible for federal and state 
income tax purposes and that the Issuing Entity will be treated as 
either a partnership or a trust, as the case may be, for federal income 
tax purposes. Consequently, the holders of Entity Interests will be 
deemed to have received interest income rather than dividends, and will 
not be entitled to any ``dividends received deduction'' under the 
Internal Revenue Code.
    One or more series of Entity Interests and Entity Subordinated 
Debentures may include provisions for the mandatory and/or optional 
retirement of some or all of such series prior to maturity. The Entity 
Interests will be subject to redemption, in whole or in part, on and 
after a specified date (``Earliest Redemption Date'') at the option of 
the Issuing Entity, with the consent of AP&L, at a price equal to their 
stated liquidation preference, plus any accrued and unpaid 
distributions. The Earliest Redemption Date will be not later than five 
years after the date of issuance.
    AP&L may also reserve the right, under certain circumstances, to 
exchange the Entity Subordinated Debentures for the Entity Interests or 
otherwise to distribute the Entity Subordinated Debentures to the 
holders of Entity Interests. If, as the result of: (1) The Entity 
Subordinated Debentures not being treated as indebtedness for federal 
income tax purposes; or (2) the Issuing Entity not being treated as 
either a partnership or a trust, for federal income tax purposes, the 
Issuing Entity is required to withhold or deduct from payments on the 
Entity Interests amounts that otherwise would not be required to be 
withheld or deducted, the Issuing Entity may also have the obligation, 
if the Entity Interests are not redeemed or exchanged, to increase or 
``gross up'' such payments so that the holders of Entity Interests will 
receive the same payment after such withholding or deduction were 
required.
    In the event of any voluntary or involuntary liquidation, 
dissolution or winding up of the Issuing Entity, holders of Entity 
Interests will be entitled to receive, out of the assets of the Issuing 
Entity available for distribution to the limited partners or the 
preferred security holders, before any distribution of assets to the 
general partner or AP&L, an amount equal to the stated liquidation 
preference of the Entity Interests, plus any accrued and unpaid 
distributions.
    No series of Entity Interests or corresponding series of Entity 
Subordinated Debentures will be sold if the fixed distribution or 
interest rate or initial adjustable distribution or interest rate would 
exceed the lower of 15% per annum or market rates generally obtainable 
at the time of pricing for sales of limited partnership or business 
trust interests having a reasonably equivalent maturity, issued by 
subsidiaries of companies of reasonably comparable credit quality and 
having reasonably similar terms, conditions and features. The initial 
distribution rate for Entity Interests of such series having an 
adjustable distribution will be determined in negotiations between AP&L 
and the purchasers of such series and be based on then current market 
rates for comparable subsidiary securities. Thereafter, the 
distribution rate on the Entity Interests would be adjusted according 
to a pre-established formula or method of determination or would be 
that rate which, at the time of remarketing, would be sufficient to 
remarket the Entity Interests at their principal amount.
    The price, exclusive of accrued distributions, to be paid to the 
Issuing Entity for each such series of Entity Interests to be sold at 
competitive bidding will be within a range from 95% to 105% of the 
liquidation amount of such series of Entity Interests.

The Southern Company (70-8725)

    The Southern Company (``Southern''), 64 Perimeter Center East, 
Atlanta, Georgia 30346, a registered holding company, has filed an 
application-declaration under sections 6(a), 7, 12(b), 32 and 33 of the 
Act and rules 45, 53, 54 and 100(a) thereunder.
    Southern is currently authorized under the terms of three separate 
orders to finance the operations of its subsidiaries: (1) by issuing 
and selling approximately 50 million additional authorized shares of 
its common stock, par value $5 per share, from time to time through 
December 31, 1999, (2) by issuing guaranties of the securities of one 
or more exempt wholesale generators (``EWGs'') or foreign utility 
companies (``FUCOs''), as defined in sections 32 and 33 of the Act, in 
an aggregate amount not to exceed $1.2 billion at any one time 
outstanding, from time to time through December 31, 

[[Page 57035]]
1999, and (3) by issuing notes evidencing short-term and term loan 
borrowings and/or commercial paper, in an aggregate principal amount 
not to exceed $1 billion at any one time outstanding, from time to time 
through March 31, 2000 (Holding Co. Act Release Nos. 26349 (Aug. 3, 
1995), 26347 (Aug. 2, 1995), and 26346 (Aug. 1, 1995) (the 
``Orders'')).
    Under the terms of the Orders, Southern may use the proceeds of 
common stock sales and borrowings to finance the acquisition of the 
securities of one or more EWGs or FUCOs, and may issue guaranties in 
respect of the securities of such entities, provided that the sum of 
the net proceeds of common stock sales and borrowings used by Southern 
for these purposes and the guaranties at any time outstanding shall 
not, when added to Southern's ``aggregate investment'' (as defined in 
rule 53(a) under the Act) in all EWGs and FUCOs, exceed 50% of 
Southern's ``consolidated retained earnings'' (as defined in rule 
53(a)).\1\

    \1\ This investment limitation is consistent with the investment 
limitation contained in Rule 53(a)(1).
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    Southern requests the Commission to modify this limitation, and 
exempt Southern from the requirements of rule 53(a)(1), to permit 
Southern to use the net proceeds of common stock sales and borrowings 
authorized by the Orders to acquire the securities of EWGs and FUCOs, 
and to issue guaranties pursuant to the Orders,\2\ in an aggregate 
amount that, when added to Southern's direct and indirect ``aggregate 
investment'', as defined, in all EWGs and FUCOs, would not at any time 
exceed 100% of Southern's ``consolidated retained earnings'', as 
defined. The current amount of Southern's ``aggregate investment'', as 
defined, in EWGs and FUCOs (approximately $1.244 billion) represents 
approximately 38.72% of its ``consolidated retained earnings'', as 
defined, at June 30, 1995 (approximately $3.213 billion). Increasing 
this limitation as Southern proposes would allow financing of 
additional investments in EWGs and FUCOs of approximately $1.97 
billion.

    \2\ In a separate proceeding in File No. 70-8733, Southern is 
proposing to restate its authority to guaranty the securities of 
EWGs, FUCOs and certain other nonutility subsidiaries. If an order 
in that matter is issued prior to the issuance of the order 
requested in this filing, such order will be subject to the 
percentage limitation sought to be increased herein. The issuance of 
an order in this filing would amend Southern's guaranty authority as 
in effect at the date of issuance of such order.
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    Southern states that it is committed to making substantial 
additional investments in EWGs and FUCOs, primarily because (1) since 
1988 and for at least the next ten years, there has been and is 
projected to be little or no need for Southern to make any significant 
equity investment in any of its utility subsidiaries; and (2) Southern 
has invested in utility systems in countries where competition is more 
fully developed so that it will be better able to compete in the future 
in the southeastern United States. Southern also describes 
comprehensive procedures that it has established to identify and 
address risks involved in EWG and FUCO investments.
    Southern states that the use of financing proceeds and guaranties 
to make investments in EWGs and FUCOs to the proposed increased level 
will not have a substantial adverse impact on the financial integrity 
of the Southern system or an adverse impact on any utility subsidiary 
of Southern or its customers or on the ability of the affected state 
commissions to protect such customers. Southern further represents that 
it will not seek recovery through higher rates to its utility 
subsidiaries' customers in order to compensate Southern for any 
possible losses that it may sustain on investments in EWGs and FUCOs or 
for any inadequate returns on such investments.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-27882 Filed 11-9-95; 8:45 am]
BILLING CODE 8010-01-M