[Federal Register Volume 61, Number 248 (Tuesday, December 24, 1996)]
[Notices]
[Pages 67862-67863]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32653]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26630]


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

December 17, 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 January 10, 1997, to the Secretary, Securities and Exchange 
Commission, Washington, D.C. 20549, and serve a copy of 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.

National Fuel Gas Company (70-8963)

    National Gas Fuel Company (``NFG''), a registered holding company, 
and its wholly-owned subsidiary companies, National Fuel Gas 
Distribution Corporation, National Fuel Gas Supply Corporation 
(``Supply), Seneca Resources Corporation, Highland Land & Minerals, 
Inc., Leidy Hub, Inc., Horizon Energy Development Inc., and Data-Track 
Account Services, Inc., all located at 10 Lafayette Square, Buffalo, 
New York 14203, and National Fuel Resources, Inc. 478 Main Street, 
Buffalo, New York 14202, and Utility Constructors, Inc., East Erie 
Extension, Linesville, Pennsylvania 16424 (collectively ``Subsidiary 
Companies''), have filed an application-declaration under sections 
6(a), 7, 9(a), 10, 12(b) and 13(b) of the Act and rules 16, 45, 54, 87, 
90 and 91 thereunder.\1\
---------------------------------------------------------------------------

    \1\ The Subsidiary Companies, except for Supply, are joining in 
this Application for the sole purpose of requesting that Affiliate 
(as described herein) be added to the Money Pool Arrangement (as 
described herein).
---------------------------------------------------------------------------

    NFG seeks authority to acquire, directly or indirectly through 
Supply, a wholly-owned subsidiary (``Affiliate'').\2\ Affiliate will 
participate in a joint venture (``Joint Venture'' or ``Special Purpose 
Entity'') with one or more subsidiaries of Tennessee Pipeline Company 
(``Tennessee Affiliate''), a non-affiliate, to develop, construct, 
finance, own and operate (i) natural gas gathering facilities 
commencing at locations offshore to gather gas produced in Green 
Canyon, Ewing Bank, Mississippi Canyon, Ship Shoal, Grand Isle and 
South Timbalier areas located in the Outer Continental Shelf and 
terminating onshore in Louisiana (``Gathering Facilities''), and (ii) 
natural gas processing facilities to be located at or near the terminus 
of the Gathering Facilities (``Processing Facilities''), and to engage 
in certain related transactions (collectively, the ``Project'').
---------------------------------------------------------------------------

    \2\ It is contemplated that Affiliate will be a new corporation 
formed by Tennessee. All of Affiliate's outstanding stock will be 
purchased for a nominal price.
---------------------------------------------------------------------------

I. Structure of the Joint Venture

    It is contemplated that the Project activities would be conducted 
through one or more Special Purpose Entities, which will be formed for 
the sole purpose of engaging in Project activities, and which will be 
50% owned by Affiliate, and 50% owned by Tennessee Affiliate.

II. Project Cost and Financing

a. Aggregate Cost

    The aggregate cost of the Project is estimated to be approximately 
$250 million, including development, construction and related costs 
until commercial operation, currently scheduled to commence in the 
fourth quarter of 1997 (``Commercial Operations Commencement Date'').

b. Initial Financing by Supply

    Supply may initially pay certain costs for Project materials and 
land, which shall be reimbursed by the Special Purpose Entities at cost 
plus and amount equal to the actual annual interest rate (``Money Pool 
Interest Rate'') charged on outstanding borrowings from the money pool 
arrangement between NFG and its subsidiary companies (HCAR No. 26443, 
December 28, 1995) (``Money Pool Arrangement''). Supply may also 
initially pay one-half of certain Project development costs, which 
shall be reimbursed by Affiliate at cost. Supply and/or Affiliate will 
pay a development fee to Tennessee Affiliate or one of its designated 
subsidiaries. All of the costs enumerated above shall be collectively 
referred to as the ``Initial Development Cost Obligations.'' Supply 
proposes to pay for the Initial Development Cost Obligations through 
borrowings from the Money Pool Arrangement.

c. Construction Financing From the Money Pool Arrangement

    NFG proposes to provide, or arrange for, short-term loans, through 
borrowings from the Money Pool Arrangement, for construction financing 
(``Construction Financing''). Interest will accrue at the Money Pool 
Interest Rate. The Construction Financing will be with recourse to the 
Special Purpose Entities and the Affiliate and Tennessee Affiliate. 
Each of the Affiliate and Tennessee Affiliate will provide, in a form 
acceptable to the other, a guarantee regarding repayment of the 
Construction Financing.
    The Construction Financing and the Initial Development Cost 
Obligations will be repaid by the Special Purpose Entities in full on 
the Commercial Operations Commencement Date by a

[[Page 67863]]

combination of debt and equity financing in one of the following ways: 
Affiliate and the Tennessee Affiliate (i) will each contribute 15% of 
the total Project costs as a capital contribution to the Special 
Purposes Entities, which shall be used to pay down the debt, and (ii) 
will attempt to seek non-recourse project financing for the remaining 
70% of the Project costs.

d. Interim Financing by NFG or Affiliate

    To the extent that additional financing is required for the Project 
costs (``Interim Financing''), National or Affiliate proposes to (i) 
provide, or cause to be provided, under the same terms, conditions and 
limitations described in the system's long-term financing authorization 
(HCAR No. 26537, June 26, 1996) (``Long-Term Financing Arrangement''), 
non-recourse loans secured by the project assets, due on the second 
anniversary of the Commercial Operations Commencement Date (``Second 
Anniversary''), or (ii) provide guarantees or make arrangements for 
recourse to National or Affiliate (collectively, ``Guarantees''), which 
shall terminate on the Second Anniversary, at which time the Affiliate 
and the Tennessee Affiliate will be required to make substitute 
recourse arrangements with lenders, or, alternatively, make additional 
equity contributions on a 50/50 basis for repayment of such 
obligations.

III. Requests for Authorizations to Allow Proposed Construction and 
Permanent Financing

    The following requests for approval are made to implement the 
foregoing construction and permanent financing arrangements:
    (a) For the Construction Financing and Initial Development Cost 
Obligations, NFG and the Other Applicants request approval to add 
Affiliate to the Money Pool Arrangement, for short-term loans not to 
exceed $250 million in principal amount at any one time outstanding; 
\3\
---------------------------------------------------------------------------

    \3\ The $250 million maximum amount includes all loans made to 
Supply or Affiliate or both in connection with any of the Initial 
Development Cost Obligations and/or Construction Financing.
---------------------------------------------------------------------------

    (b) From and after the Commencement of Commercial Operations Date, 
for the Interim Financing, NFG requests approval to add Affiliate to 
the group of NFG's subsidiary companies to which NFG can make long-term 
loans pursuant to the terms, conditions, and limitations contained in 
the Long-Term Financing Arrangement, for long-term loans not to exceed 
$210 million in principal amount at any one time not outstanding; 
provided, however, that all loans by NFG to Affiliate, whether pursuant 
to the Money Pool Arrangement and/or the Long-Term Financing 
Arrangement, shall not in the aggregate exceed $250 million in 
principal at any one time outstanding.\4\
---------------------------------------------------------------------------

    \4\ As appropriate, various financings and extensions of credit, 
by and among, National, Supply, Affiliate and the subsidiary 
companies, and affiliates, of Affiliate, in the future may be exempt 
from Commission authorization pursuant to various exemptions under 
the Act, as in effect, or as they may be amended from time to time.
---------------------------------------------------------------------------

IV. Guarantees for Construction and Interim Financing, and Future 
Business Operations

    NFG proposes to enter into guarantee arrangements, obtain letters 
of credit, and otherwise provide credit support for Affiliate and the 
Special Purpose Entities, to third parties to enable Affiliate and the 
Special Purpose Entities to carry on in the ordinary course of their 
respective businesses, including as necessary for the Construction 
Financing and Interim Financing.\5\ In order to implement this 
proposal, NFG requests that Affiliate and the Special Purpose Entities 
be added to the group of NFG's subsidiary companies to which National 
may give such credit support pursuant to the terms, conditions and 
limitations contained in the authorization in HCAR No. 25922, November 
12, 1993; and for Affiliate, either by itself or together with NFG, to 
provide such credit support to the Special Purpose Entities, not to 
exceed $175 million at any one time outstanding.\6\

    \5\ Tennessee will be responsible for one-half of all such 
credit support needed.
    \6\See footnote 3.
---------------------------------------------------------------------------

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-32653 Filed 12-23-96; 8:45 am]
BILLING CODE 8010-01-M