[Federal Register Volume 61, Number 26 (Wednesday, February 7, 1996)]
[Notices]
[Pages 4701-4704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2616]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26467]


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

February 1, 1996.
    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 26, 1996, 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.

Cinergy Corporation, et al. (70-8589)

    Cinergy Corporation, a registered holding company (``Cinergy''), 
Cinergy Service, Inc., Cinergy's wholly owned subsidiary service 
company, both located at 139 East Fourth Street, Cincinnati, Ohio 
45202, and Cinergy Investments, Inc. (``Investments''), Cinergy's 
wholly owned nonutility subsidiary company, located at 251 North 
Illinois Street, Suite 1410, 

[[Page 4702]]
Indianapolis, Indiana 46204, have filed a post-effective amendment to 
their application-declaration filed under sections 6(a), 7, 9(a), 10, 
12(b), 13(b), 32 and 33 of the Act and rules 43, 45, 53 and 83 
thereunder.
    By order dated September 21, 1995 (HCAR No. 26376) (``Order''), the 
Commission authorized Cinergy and Investments, among other things, to: 
(1) Acquire the securities of one or more companies (``Special Purpose 
Subsidiaries'') formed to engage exclusively in the business of 
acquiring and holding the securities of, and/or providing services to, 
exempt wholesale generators (``EWGs'') and foreign utility companies 
(``FUCOs''); and (2) make direct and indirect investments in Special 
Purpose Subsidiaries up to an aggregate principal amount of $115 
million (``Investment Limitation''), through May 31, 1998. However, any 
direct or indirect investment by Cinergy in any Special Purpose 
Subsidiary would be made only if, on a pro forma basis, Cinergy's 
aggregate investment in all EWGs, FUCOs and Special Purpose 
Subsidiaries would not exceed 50% of Cinergy's consolidated retained 
earnings, as defined in rule 53(a).
    Applicants now propose to extend the authorization period 
established in the Order from May 31, 1998 to the earlier of December 
31, 1999, or the effective date of any rule of general applicability 
adopted by the Commission that would exempt the proposed transaction 
from the applicable provisions of the Act.
    In addition, Cinergy requests authority to make direct or indirect 
investments in Special Purpose Subsidiaries in an aggregate amount 
which, when added to Cinergy's aggregate investment in all EWGs, FUCOs 
and Special Purpose Subsidiaries, does not, at any point in time, 
exceed 50% of Cinergy's consolidated retained earnings, as defined in 
rule 53(a).

Consolidated Natural Gas Company, et al. (70-8667)

    Consolidated Natural Gas Company (``Consolidated''), CNG Tower, a 
registered holding company, and its subsidiaries, Consolidated System 
LNG Company, CNG Research Company, CNG Financial Services, Inc. (``CNG 
Financial''), Consolidated Natural Gas Service Company, Inc., and The 
Peoples Natural Gas Company, each of CNG Tower, 625 Liberty Avenue, 
Pittsburgh, Pennsylvania 15222; CNG Coal Company, CNG Producing Company 
(``CNG Producing''), and CNG Pipeline Company, each of CNG Tower, 1450 
Poydras Street, New Orleans, Louisiana 70112; CNG Transmission 
Corporation and CNG Storage Service Company (``CNG Storage''), each of 
445 West Main Street, Clarksburg, West Virginia 26301; CNG Power 
Company (``CNG Power''), CNG Market Center Services, Inc., CNG Products 
and Services, Inc. (``CNG Products''), and CNG Energy Services 
Corporation (``CNG Energy''), each of One Park Ridge Center, P.O. Box 
15746, Pittsburgh, Pennsylvania 15244; The East Ohio Gas Company 
(``East Ohio''), 1717 East Ninth Street, Cleveland, Ohio 44115; 
Virginia Natural Gas, Inc., 5100 East Virginia Beach Boulevard, Norfolk 
Virginia 23501; Hope Gas, Inc. (``Hope Gas''), P.O. Box 2868, 
Clarksburg, West Virginia 26302; and West Ohio Gas Company (``West 
Ohio''), 319 West Market Street, Lima, Ohio 45802 (collectively, the 
``Applicants''), have filed an application-declaration under sections 
6, 7, 9(a), 10, 12(b) and 12(e) of the Act and rules 43, 45, 54 and 62 
thereunder. The Applicants seek authorization to engage in various 
financing and related transactions through March 31, 2001.\1\ The 
authorization would be subject to the following conditions: (1) 
Consolidated's long-term debt must be rated investment grade by at 
least one nationally recognized statistical rating organization; (2) 
the effective cost of money for debt may not exceed 300 basis points 
over the interest rate on United States Treasury securities of a 
comparable term; (3) the effective cost of money for preferred stock 
and other fixed income securities may not exceed 500 basis points over 
the interest rate on 30-year United States Treasury securities; (4) the 
maturity of debt may not be more than 50 years; (5) issuance expenses 
in connection with an offering of securities, including any 
underwriting fees, commissions or other similar compensation, may not 
exceed 5% of the total amount of the securities being issued; (6) 
proceeds of the proposed financing may not be used to invest in an 
exempt wholesale generator or a foreign utility company; (7) at the 
time of each financing transaction, Consolidated must be in compliance 
with the requirements of rules 53 and 54 under the Act; and (8) 
proceeds of the proposed financing by the subsidiaries of Consolidated 
must be used only in connection with their respective existing 
businesses.\2\ Any deviation from these conditions would require 
further Commission approval.

    \1\ This authorization would supersede the authorization granted 
in Holding Co. Act Release Nos. 25926 (Nov. 16, 1993) (relating to 
guarantees by Consolidated of obligations of CNG Energy); 26245 
(March 6, 1995) (relating to issuance of debt securities by 
Consolidated); and 26321 (June 29, 1995) (relating to the 
Consolidated system's one-year financing plan).
    \2\ The Commission has published and solicited public comment on 
a proposed rule 58 under the Act that would permit registered 
holding companies and their subsidiaries to acquire securities of 
companies engaged in specified nonutility activities without prior 
Commission approval. Holding Co. Act Release No. 26313 (June 20, 
1995), 60 FR 33642 (June 28, 1995). If rule 58 is adopted, the 
proceeds of the proposed financings could also be used for these 
purposes.
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    The proposed transactions and the proposed participation of the 
various Applicants are described below.
    1. External Financing by Consolidated. Consolidated proposes to 
issue and sell common stock, preferred stock, short-term debt, long-
term debt and other securities from time to time through March 31, 
2001, provided that the aggregate amount of short-term and revolving 
debt outstanding at any one time and the aggregate amount of common 
stock, preferred stock, long-term debt and other securities issued 
during the period shall not exceed $7.0 billion.\3\ Securities may be 
sold through underwriters or dealers, directly to a limited number of 
purchasers, or through agents. Consolidated also proposes to engage in 
interest rate and equity swaps from time to time through March 31, 
2001.

    \3\ This amount includes $3.5 billion of securities the proceeds 
of which may be used to retire outstanding securities and $3.5 
billion of securities the proceeds of which will be used for other 
purposes. This amount excludes guarantees of subsidiary obligations 
(which are described below and are subject to a separate 
limitation).
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    a. Short-term Debt. Consolidated proposes to issue and sell 
commercial paper to dealers at the discount rate prevailing at the date 
of issuance for comparable commercial paper. The dealers would reoffer 
such commercial paper at a discount to investors. Consolidated also 
proposes to establish back-up lines of credit providing for borrowings 
from time to time when it is impracticable to issue commercial paper. 
Such lines of credit would be in an aggregate principal amount not to 
exceed the amount of authorized commercial paper, and borrowings under 
these lines would mature not more than one year from the date of 
borrowing. Consolidated also proposes to establish bank lines of credit 
and issue debt securities under its existing indenture and note 
programs.\4\

    \4\ These programs are described in Holding Co. Act Release No. 
26321 (June 29, 1995), which would be superseded by the 
authorization granted herein.
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    b. Long-term Debt. Consolidated proposes to issue and sell bonds, 
debentures, notes, convertible debt, medium term notes, and securities 
with call or put options, and to enter into 

[[Page 4703]]
other bank debt arrangements. Long-term debt securities would have such 
designation, maturity, interest rate(s) (or methods of determining the 
same) and terms of payment, redemption provisions (including 
nonrefunding provisions), sinking fund terms, conversion provisions, 
put terms, and other terms and conditions as are determined at the time 
of issuance.
    c. Capital Stock. Consolidated proposes to issue and sell preferred 
stock or common stock, including stock issued upon the exercise of 
convertible debt or pursuant to rights, options, warrants and similar 
securities, monthly income preferred stock and cumulative quarterly 
income preferred securities.\5\ Any such preferred stock would have 
such designation, liquidation preferences, price, dividend rate(s) (or 
methods of determining the same) and terms of payment, redemption and 
sinking fund provisions (including nonrefunding provisions), voting or 
other special rights, conversion terms and other terms and conditions 
as may be determined at the time of issuance. Any such common stock 
sold by Consolidated may include shares that have been acquired through 
employee benefit and dividend reinvestment and stock purchase plans or 
otherwise and held as treasury shares.

    \5\ In connection with issuance of such securities, Consolidated 
proposes to form financing entities, as described below, and to 
issue debt to such entities to back up obligations under securities 
issued by such entities. For purposes of determining the amount of 
authorization used by such transactions, such securities shall not 
be considered to be short-term debt.
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    3. Interest Rate and Equity Swaps. Consolidated proposes to engage 
in interest rate swaps involving its interest obligations existing at 
the date of the swap. Consolidated also proposes to engage in equity 
swaps in which it would exchange one equity investment market risk for 
another or would exchange fixed or floating rate interest income from 
an investment for payments based on a stock index.\6\ Interest rate and 
equity swaps would be limited to obligations and investments existing 
at the time of the swap.

    \6\ Consolidated states that equity swaps could be used to hedge 
earnings from its domestic or international investments, but would 
not be used to transfer title to the equity securities owned by it 
that are used in the swap transaction.
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    e. Other Securities. In addition to the specific securities for 
which authorization is sought, Consolidated also proposes to issue 
other types of securities that it deems appropriate during the period 
of the Commission's authorization. Consolidated requests that the 
Commission reserve jurisdiction over the issuance of additional types 
of securities. Consolidated also undertakes that it will file a post-
effective amendment in this proceeding describing the general terms of 
each such security and obtain a supplemental order of the Commission 
authorizing the issuance thereof by Consolidated. Such supplemental 
orders may be issued by the Commission without further public notice in 
the Federal Register.
    2. Intrasystem Financing. The Applicants propose various financing 
transactions between Consolidated and its subsidiaries and between 
certain subsidiaries and their respective subsidiaries.
    a. Transactions between Consolidated and its Subsidiaries. 
Consolidated proposes to make open-account advances to East Ohio, 
Peoples, and West Ohio. These borrowings would be made on a revolving 
basis through the CNG System Money Pool,\7\ and would bear interest at 
a rate equal to the weighted average effective interest rate of 
Consolidated's short-term borrowings or, if no such borrowings are 
outstanding, at a rate based on the Federal Funds effective rate of 
interest quoted daily by the Federal Reserve Bank of New York.

    \7\ The CNG System Money Pool arrangements were authorized in 
Holding Co. Act Release No. 24128 (June 12, 1986).
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    In addition, CNG Financial, CNG Producing, CNG Storage, CNG Power 
and CNG Energy also propose to issue and Consolidated proposes to 
acquire other types of securities that are not exempted by rule 52 from 
the requirement of Commission approval but that are considered by such 
companies to be approriate during the period of the Commissions 
authorization. These Applicants request that the Commission reserve 
jurisdiction over the issuance of additional types of securities and 
also undertake that they will cause a post-effective amendment to be 
filed in this proceeding describing the general terms of each such 
security and obtain a supplemental order of the Commission authorizing 
the issuance and acquisition thereof. Such supplemental orders may be 
issued by the Commission without further public notice in the Federal 
Register.
    The aggregate amount of all such financing would not exceed $1.5 
billion.
    b. Transactions between Certain Subsidiaries and their 
Subsidiaries. Consolidated, CNG Energy and CNG Products have filed an 
application-declaration in File No. 70-8703, pursuant to which CNG 
Power and CNG Storage would become subsidiaries of CNG Energy. In the 
event such changes are authorized and occur, CNG Storage and CNG Power 
propose to issue and CNG Energy proposes to acquire other types of 
securities that are not exempted by rule 52 from the requirement of 
Commission approval but that are considered by these companies to be 
appropriate during the period of the Commission's authorization in this 
proceeding. These Applicants request that the Commission reserve 
jurisdiction over the issuance of additional types of securities, and 
also undertake that they will cause a post-effective amendment to be 
filed in this proceeding describing the general terms of each such 
security and obtain a supplemental order of the Commission authorizing 
the acquisition and issuance thereof. Such supplemental orders may be 
issued by the Commission without further public notice in the Federal 
Register.
    c. Guarantees. Consolidated proposes to enter into guarantee 
arrangements, obtain letters of credit and otherwise provide credit 
support with respect to the obligations of the other Applicants to 
third parties. CNG Energy, CNG Power, CNG Storage, CNG Financial and 
CNG Producing also propose to enter into such arrangements with respect 
to the obligations of their respective subsidiaries. The aggregate 
amount of all such arrangements would not exceed $2.0 billion.
    3. External Financing by Subsidiaries. CNG Energy, CNG Financial, 
CNG Power, CNG Producing, and CNG Storage seek authorization to issue 
to third parties monthly and quarterly income preferred securities.\8\ 
In addition to the specific securities for which authorization is 
sought, these Applicants also propose to issue other types of 
securities that are not exempted by rule 52 from the requirement of 
Commission approval and that they deem appropriate during the period of 
the Commission's authorization. These Applicants request that the 
Commission reserve jurisdiction over the issuance of additional types 
of securities and also undertake that they will cause a post-effective 
amendment to be filed in this proceeding describing the general terms 
of each such security and obtain a supplemental order of the Commission 
authorizing the issuance thereof by such Applicants. Such supplemental 
orders may be issued by the Commission without further public notice in 
the Federal Register.

    \8\ In connection with issuance of such securities, these 
Applicants propose to form financing entities, as described below, 
and to issue debt or other securities to such entities to back up 
obligations under securities issued by such entities.
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    The aggregate amount of all such securities to be issued would not 
have a dollar limitation.

[[Page 4704]]

    4. Acquisition of Securities. Consolidated seeks authorization to 
reacquire shares of any monthly or quarterly income preferred 
securities that may be issued pursuant to authorization in this 
proceeding. All of the other Applicants seek authorization to 
repurchase shares of their common stock and preferred stock from their 
parent companies. In each case, there is no limitation as to amount.
    5. Charter Amendments. Consolidated proposes to amend its 
certificate of incorporation to increase its authorized common stock 
and to authorize a new class of preferred stock. Consolidated requests 
the Commission to reserve jurisdiction over the amendments to its 
certificate of incorporation pending completion of the record and 
filing of related documents under the Securities Exchange Act of 1934. 
One or more supplemental orders may be issued by the Commission 
authorizing such amendments without further public notice in the 
Federal Register. The Applicants, other than Consolidated, propose to 
increase the amount of their authorized common stock up to a maximum of 
twice the current authorized amount, and to change or eliminate the par 
value of such stock.
    6. Financing Entities. In connection with the issuance of monthly 
and quarterly income preferred securities, Consolidated, CNG Energy, 
CNG Storage, CNG Power, CNG Producing, and CNG Financial seek 
authorization to organize new corporations, trusts, partnerships or 
other entities created for the purpose of facilitating such financings. 
Request is made for the acquisition by such Applicants of voting 
interests or equity securities issued by the financing entity to 
establish such Applicant's ownership of the financing entity (the 
equity portion of the entity generally being created through a capital 
contribution or the purchase of equity securities, such as shares of 
stock or partnership interests, involving an amount usually ranging 
from 1-3% of the capitalization of the financing entity.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-2616 Filed 2-6-96; 8:45 am]
BILLING CODE 8010-01-M