[Federal Register Volume 62, Number 219 (Thursday, November 13, 1997)]
[Notices]
[Pages 60929-60933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29881]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26774]


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

November 6, 1997.
    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 December 1, 1997, 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.

New England Electric System, et al. (70-9143); Notice of Proposal to 
Amend Articles of Incorporation and Authorize Registered Holding 
Company to Acquire Preferred Stock of Utility Subsidiaries; Order 
Authorizing Solicitation of Proxies

    New England Electric System (``NEES''), a registered holding 
company, and its wholly-owned public utility subsidiaries, New England 
Power Company (``the Power Company''), Massachusetts Electric Company 
(``Mass Electric''), and the Narragansett Electric Company 
(``Narragansett''), all located at 25 Research Drive, Westborough, 
Massachusetts 01582, have filed an application-declaration under 
sections 6(a), 7, 9(a), 10, 12(c), 12(d) and 12(e) of

[[Page 60930]]

the Act and rules 43, 44, 51, 54, 62 and 65 under the Act.\1\
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    \1\ The Power Company, Mass. Electric and Narragansett are 
sometimes referred to individually as a ``Subsidiary'' or 
collectively as ``Subsidiaries.''
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The Power Company

    The Power Company has outstanding 6,449,896 shares of common stock, 
$100 par value per share (``Power Company Common Stock''), all of which 
are held by NEES. The Power Company also has issued a 6% cumulative 
preferred stock, outstanding 75,020 shares, $100 par value (``Power 
Company Cumulative Preferred Stock''). The Power Company's other 
outstanding preferred stock consists of 321,640 shares of dividend 
series preferred stock, $100 par value per share (``Power Company 
Dividend Series Preferred Stock''), issued in four series.\2\ There is 
also authorized another class of preferred stock (``Power Company 
Preferred Stock--Cumulative''), $25 par value, of which there are no 
series currently outstanding. The Power Company Common Stock shares 
general voting rights with the Power Company Cumulative Preferred 
Stock, and are entitled to one vote per share. No other class of Power 
Company equity securities is outstanding.
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    \2\The four series of Power Company Dividend Series Preferred 
Stock consist of a 4.56% series, of which 100,000 shares are 
outstanding; a 4.60% series, of which 80,140 shares are outstanding; 
a 4.64% series, of which 41,500 shares are outstanding; and a 6.08% 
series, of which 100,000 shares are outstanding (each, a ``Power 
Company Series'').
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    The Power Company's by-laws and articles of incorporation (``Power 
Company Articles'') currently provide that, without a vote of a 
majority of the outstanding Power Company Dividend Series Preferred 
Stock and Preferred Stock--Cummulative, the Power Company will not 
issue or assume any evidence of unsecured indebtedness (except for 
redemption of outstanding shares of all series of the stock), if the 
total amount (exclusive of certain unsecured indebtedness) immediately 
after the issue would exceed 20% of total secured indebtedness, 
capital, premium, and retained earnings, of which 20%, not more than 
one-half shall be short-term unsecured indebtedness.\3\ (``(Power 
Company Restriction Provision'').
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    \3\ The Power Company Restriction Provision specifically 
provides that the Power Company will not:
    [I]ssue any unsecured notes, debentures or other securities 
representing unsecured indebtedness, or assume any such unsecured 
securities, for purposes other than the redemption or other 
retirement of outstanding shares of all series of the Dividend 
Series Preferred Stock and the Preferred Stock--Cumulative, if 
immediately after such issue or assumption the total principal 
amount of all unsecured notes, debentures or other securities 
representing unsecured indebtedness issued or assumed by the 
corporation and then outstanding (including unsecured securities 
then to be issued or assumed but excluding unsecured securities 
theretofore so voted for by holders of Dividend Series Preferred 
Stock and Preferred Stock--Cumulative) (the ``Unsecured 
Indebtedness'') would exceed twenty per cent (20%) of the aggregate 
of (i) the total principal amount of all bonds and other securities 
representing secured indebtedness issued or assumed by the 
corporation and then outstanding and (ii) the capital, premium and 
retained earnings of the corporation as then stated on the books of 
account of the corporation; provided, however, that after July 1, 
1976, short-term unsecured indebtedness shall not exceed ten per 
cent (10%) of such aggregate of (i) and (ii) above; and provided, 
further, that after July 1, 1976, in the event unsecured securities 
representing short-term unsecured indebtedness (excluding unsecured 
securities theretofore so voted for by the holders of Dividend 
Series Preferred Stock and Preferred Stock--Cumulative) exceed ten 
per cent (10%) of (i) and (ii) above, no unsecured securities 
representing unsecured indebtedness shall be issued or assumed 
(except for the purpose of redemption or other retirement of 
outstanding shares of all series of the Dividend Series Preferred 
Stock and the Preferred Stock--Cumulative) unless such ratio of 
short-term unsecured indebtedness immediately after such issue or 
assumption is to be not over ten per cent (10%) of such aggregate of 
(i) and (ii) above. ``Short-term unsecured indebtedness'' as used 
herein means unsecured indebtedness of an original maturity of less 
than ten years and ``long-term unsecured indebtedness'' means 
unsecured indebtedness of ten years or more. For the purposes 
hereof, when any long-term unsecured indebtedness becomes due within 
ten years, or when any long-term unsecured indebtedness is to be 
retired within ten years through a sinking fund or otherwise, such 
long-term unsecured indebtedness, in each case, shall be considered 
short-term unsecured indebtedness; provided, however, that any long-
term unsecured indebtedness of a single maturity (except as provided 
above in respect of a sinking fund therefore), or the last maturity 
of any long-term unsecured indebtedness of serial maturities, shall 
not be considered short-term unsecured indebtedness until due within 
five years.
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    The Power Company proposes to solicit proxies from the holders of 
outstanding shares of Power Company Dividend Series Preferred Stock and 
Common Stock (``Power Company Proxy Solicitation'') for use at a 
special meeting of its stockholders (``Power Company Special Meeting'') 
to consider a proposed amendment to the Power Company Articles that 
would eliminate in its entirety the Power Company Restriction Provision 
(``Power Company Proposed Amendment'') from the Power Company Articles. 
Approval of the Power Company Proposed Amendment requires the 
affirmative vote at the Power Company Special Meeting of the holders of 
not less than two-thirds of the total number of the then-outstanding 
shares of (1) The Power Company Dividend Series Preferred Stock of all 
Power Company Series, voting together as one class, and (2) the Power 
Company Common Stock. NEES will vote its shares of Power Company Stock 
in favor of the Power Company Proposed Amendment.
    If the Power Company Proposed Amendment is adopted, the Power 
Company would make a special cash payment of $1.00 per share (``Power 
Company Cash Payment'') to each holder of Power Company Dividend Series 
Preferred Stock of any Series who voted shares (in person by ballot or 
by proxy) (each, a ``Power Company Share'') in favor of the Power 
Company Proposed Amendment at the Power Company Special Meeting (except 
that no Power Company Cash Payment will be made with respect to any 
Power Company Share validly tendered under the concurrent tender offer 
described below). The Power Company will disburse Power Company Cash 
Payments out of its general funds following adoption of the Power 
Company Proposed Amendment.
    Concurrently with or shortly before the Power Company Proxy 
Solicitation, and subject to the terms and conditions stated in an 
Offer to Purchase and Proxy Statement and Information Statement and 
accompanying Letter of Transmittal (collectively, ``Power Company Offer 
Documents''), NEES proposes to make a cash tender offer (``Power 
Company Tender Offer'') to acquire any and all outstanding shares of 
Power Company Preferred Stock of each Power Company Series, at cash 
purchase prices which NEES anticipates will include a market premium 
for each Series (each, a ``Power Company Purchase Price''). The Power 
Company Purchase Price and the other terms and conditions of the Power 
Company Tender Offer apply equally to all preferred stockholders of the 
respective Power Company Series. The offer for any one Power Company 
Series is independent of the offer for any other Power Company Series 
or for the shares of any other subsidiary.
    NEES anticipates that the Power Company Tender Offer will expire at 
5:00 p.m. Eastern Standard Time on December 12, 1997, the date of the 
Power Company Special Meeting (``Power Company Expiration Date''), 
unless otherwise extended. The Power Company Tender Offer is not 
conditioned upon any minimum number of shares of Power Company 
preferred stock being tendered. Preferred stockholders who tender their 
shares under a Power Company Tender Offer are required to vote in favor 
of or consent to the Power Company Proposed Amendment, and one of the 
conditions of the Power Company Tender Offer requires that the Power 
Company Proposed Amendment be approved and adopted.

[[Page 60931]]

Mass. Electric

    Mass Electric has outstanding 2,398,111 shares of common stock, $25 
par value (``Mass. Electric Common Stock''), all of which are held by 
NEES. Mass. Electric's outstanding preferred stock consists of 350,000 
shares of dividend series preferred stock, $100 par value, issued in 
three series \4\ (``Mass. Electric Dividend Series Preferred Stock''), 
and 600,000 shares of preferred stock--cumulative, $25 par value, of 
which there is one series outstanding,\5\ all of which are traded over 
the counter. (``Mass. Electric Preferred Stock--Cumulative''). Mass. 
Electric Common Stock and Mass. Electric Dividend Series Preferred 
Stock are entitled to one vote per share. The Mass. Electric Preferred 
Stock--Cumulative is entitled to a quarter vote per share. No other 
class of Mass. Electric equity securities is outstanding.
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    \4\ The three series of Mass. Electric Dividend Series Preferred 
Stock consist of a 4.44% series, of which 75,000 shares are 
outstanding; a 4.76% Series, of which 75,000 shares are outstanding; 
and a 6.99% series, of which 200,000 shares are outstanding.
    \5\ The single series of Mass. Electric Preferred Stock--
Cumulative is a 6.84% series. Each of the series referred to in 
footnote 4 and this series shall be referred as a ``Mass. Electric 
Series.''
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    Mass. Electric's By-Laws and Articles of Organization (``Mass. 
Electric Articles'') currently provide that, without a vote of a 
majority of the outstanding Mass. Electric Dividend Series Preferred 
Stock and Preferred Stock--Cumulative, Mass. Electric will not issue or 
assume any unsecured indebtedness (except for redemption of outstanding 
shares of all series of preferred stock), if the total amount of the 
indebtedness (exclusive of certain unsecured indebtedness) immediately 
after the issue would exceed 20% of total capitalization, or if, 
immediately after the issue, the total amount of the short-term 
unsecured indebtedness (exclusive of certain short-term unsecured 
indebtedness) issued or assumed by Mass. Electric after September 30, 
1998, would exceed 10% of total capitalization.\6\ (``Mass. Electric 
Restriction Provision'').
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    \6\ The Mass. Electric Restrictive Provision specifically 
provides that Mass. Electric will not:
    [I]ssue or assume any unsecured notes, debentures or other 
securities representing unsecured indebtedness for purposes other 
than (x) the refunding of outstanding unsecured indebtedness 
theretofore issued or assumed by the corporation resulting in 
maturities later than the maturity of the indebtedness being 
refunded or (y) the reacquisition, redemption or other retirement of 
any indebtedness which reacquisition, redemption or other retirement 
has been authorized under the provisions of the Public Utility 
Holding Company Act of 1935, if, immediately after such issue or 
assumption, the total principal amount of all unsecured notes, 
debentures or other securities representing both long and short-term 
unsecured indebtedness issued or assumed by the corporation and then 
to be outstanding (but excluding unsecured indebtedness theretofore 
so voted for by holders of Preferred Stock and Preferred Stock--
Cumulative) would exceed twenty per cent (20%) of total 
capitalization, or if, immediately after such issue or assumption, 
such short-term unsecured indebtedness issued or assumed by the 
corporation after September 30, 1998, and then to be outstanding 
(but excluding short-term indebtedness theretofore so voted for by 
holders of Preferred Stock or Preferred Stock--Cumulative) would 
exceed ten per cent (10%) of total capitalization; provided, 
however, that in the event such short-term unsecured indebtedness 
(but excluding short-term unsecured indebtedness theretofore so 
vetoed by holders of Preferred Stock and Preferred Stock--
Cumulative) exceeds such latter limit, no unsecured securities 
representing unsecured indebtedness shall be issued or assumed 
(except for the purposes specified in clauses (x) and (y) above) 
unless such ratio of short-term unsecured indebtedness immediately 
after such issue or assumption is not in excess of such limit.
    ``Short-term unsecured indebtedness'' as used in this subsection 
E(4) means unsecured indebtedness of an original maturity of less 
than ten years and ``long-term unsecured indebtedness'' means 
unsecured indebtedness of an original maturity of ten years or more. 
For the purposes hereof, when any long-term unsecured indebtedness 
becomes due within five years, or when any long-term unsecured 
indebtedness is to be retired within five years through a sinking 
fund or otherwise, such long-term unsecured indebtedness, in each 
case, shall be considered short-term unsecured indebtedness. ``Total 
capitalization'' as used in this subsection E(4) means the aggregate 
of (i) the total principal amount of all bonds and other securities 
representing secured indebtedness issued or assumed by the 
corporation and then outstanding and (ii) the capital. premium and 
surplus of the corporation as then stated on the books of account of 
the corporation.
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    Mass. Electric proposes to solicit proxies from the holders of 
outstanding shares of Mass. Electric Dividend Series Preferred Stock 
and Common Stock (``Mass. Electric Proxy Solicitation'') for use at a 
special meeting of its stockholders (``Mass. Electric Special 
Meeting'') to consider a proposed amendment to the Mass. Electric 
Articles that would eliminate in its entirety the Mass. Electric 
Restriction Provision (``Mass. Electric Proposed Amendment'') from the 
Mass. Electric Articles. Approval of the Mass. Electric Proposed 
Amendment requires the affirmative vote at the Mass. Electric Special 
Meeting of the holders of not less than two-thirds of the total number 
of the then-outstanding shares of (1) the Mass. Electric preferred 
stock of all Mass. Electric Series, voting together as one class, and 
(2) the Mass. Electric Common Stock. NEES will vote its shares of Mass. 
Electric Common Stock in favor of the Mass. Electric Proposed 
Amendment.
    If the Mass. Electric Proposed Amendment is adopted, Mass. Electric 
would make a special cash payment of $1.00 per share (``Mass. Electric 
Cash Payment'') to each holder of Mass. Electric Dividend Series 
Preferred Stock of any Series, and 25 cents per share to each holder of 
the Mass. Electric Preferred Stock--Cumulative who voted shares (each, 
a ``Mass. Electric Share'') (in person by ballot or by proxy) in favor 
of the Mass. Electric Proposed Amendment at the Mass. Electric Special 
Meeting (except that no Mass. Electric Cash Payment will be made with 
respect to any Mass. Electric Share validly tendered under the 
concurrent tender offer described below). Mass. Electric will disburse 
Mass. Electric Cash Payments out of its general funds following 
adoption of the Mass. Electric Proposed Amendment.
    Concurrently with or shortly before the Mass. Electric Proxy 
Solicitation, and subject to the terms and conditions stated in an 
Offer to Purchase Proxy Statement and accompanying Letter of 
Transmittal (together, ``Mass. Electric Offer Documents''), NEES 
proposes to make a cash tender officer (``Mass. Electric Tender 
Offer'') to acquire any and all outstanding shares of Mass. Electric 
Preferred Stock of each Series, at cash purchase prices which NEES 
anticipates will include a market premium for each Mass. Electric 
Series (each, a ``Mass. Electric Purchase Price''). The Mass. Electric 
Purchase Price and the other terms and conditions of the Mass. Electric 
Tender Offer apply equally to all preferred stockholders of the 
respective Mass. Electric Series. The offer for any one Mass. Electric 
Series is independent of the offer for any other Mass. Electric Series 
or for the shares of any other subsidiary.
    NEES anticipates that the Mass. Electric Tender Offer will expire 
at 5:00 P.M. Eastern Standard Time on December 12, 1997, the date of 
the Mass. Electric Special Meeting (``Mass. Electric Expiration 
Date''), unless otherwise extended. The Mass. Electric Tender Offer is 
not conditioned upon any minimum number of shares of Mass. Electric 
preferred stock being tendered. Preferred stockholders who tender their 
shares under a Mass. Electric Tender Offer are required to vote in 
favor of or consent to the Mass. Electric Proposed Amendment, and one 
of the conditions of the Mass. Electric Tender offer requires that the 
Mass. Electric Proposed Amendment be approved and adopted.

Narragansett

    Narragansett has outstanding 1,132,487 shares of common stock, $50 
par value (``Narragansett Common Stock''), all of which are held by 
NEES. Narragansett's outstanding preferred stock consists of 730,000 
shares of

[[Page 60932]]

cumulative preferred stock, $50 par value, issued in three series,\7\ 
all of which are traded over the counter. (``Narragansett Cumulative 
Preferred Stock''). Narragansett Common Stock and Narragansett 
Cumulative Preferred Stock are entitled to one vote per share. No other 
class of Narragansett equity securities is outstanding.
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    \7\ The three series of Narragansett cumulative preferred stock 
consist of a 4.50% series, of which 180,000 shares are outstanding; 
a 4.64% series, of which 150,000 shares are outstanding; and a 6.95% 
series, of which 400,000 shares are outstanding (each, a 
``Narragansett Series'').
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    Narragansett's Preferred Stock Provisions (``Narragansett 
Provisions'') currently provide that, without a vote of a majority of 
the outstanding Narragansett preferred stock, voting as a class, 
Narragansett will not issue or assume any unsecured indebtedness 
(except for redemption of outstanding shares of all series of preferred 
stock) if the total amount of the indebtedness (exclusive of certain 
unsecured indebtedness) immediately after the issue would exceed 10% of 
all secured indebtedness and capital and surplus of Narragansett.\8\ 
(``Narragansett Restriction Provisions'').
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    \8\ The Narragansett Restriction Provision specifically provides 
that Narragansett will not:
    [I]ssue any unsecured notes, debentures or other securities 
representing unsecured indebtedness, or assume any such unsecured 
securities, for purposes other than the refunding of outstanding 
unsecured securities theretofore issued or assumed by the Company 
resulting in equal or longer maturities or the redemption or other 
retirement of all outstanding shares of the Preferred Stock, if, 
immediately after such issue or assumption, the total principal 
amount of all unsecured notes, debentures or other securities 
representing unsecured indebtedness issued or assumed by the Company 
and then outstanding (including unsecured securities then to be 
issued or assumed) but excluding unsecured securities theretofore so 
consented to by holders of Preferred Stock, would exceed ten per 
cent (10%) of the aggregate of (i) the total principal amount of all 
bonds and other securities representing secured indebtedness issued 
or assumed by the Company and then outstanding and (ii) the capital 
and surplus of the Company as then stated on the books of account of 
the Company.
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    Narragansett proposes to solicit proxies from the holders of 
outstanding shares of Narragansett Cumulative Preferred Stock and 
Common Stock (``Narragansett Proxy Solicitation'') for use at a special 
meeting of its stockholders (``Narragansett Special Meeting'') to 
consider a proposed amendment to the Narragansett Provisions that would 
eliminate in its entirety the Narragansett Restriction Provision 
(``Narragansett Proposed Amendment'') from the Narragansett Provisions. 
Approval of the Narragansett Proposed Amendment requires the 
affirmative vote at the Narragansett Special Meeting of the holders of 
(1) not less than two-thirds of the total number of the then-
outstanding shares of Narragansett preferred stock of all Narragansett 
Series, voting together as one class, (2) 75% of the preferred shares 
present or represented at the meeting, and (3) a majority of the 
Narragansett Common Stock. NEES will vote its shares of Narragansett 
Common Stock in favor of the Narragansett Proposed Amendment.
    If the Narragansett Proposed Amendment is adopted, Narragansett 
would make a special cash payment of 50 cents per share (``Narragansett 
Cash Payment'') to each holder of Narragansett Cumulative Preferred 
Stock of any Narragansett Series who voted shares (each, a 
``Narragansett Share'') (in person by ballot or by proxy) in favor of 
the Narragansett Proposed Amendment at the Narragansett Special Meeting 
(except that no Narragansett Cash Payment will be made with respect to 
any Narragansett Share validly tendered under the concurrent tender 
offer described below). Narragansett will disburse Narragansett Cash 
Payments out of its general funds following adoption of the Proposed 
Amendment.
    Concurrently with or shortly before the Narragansett Proxy 
Solicitation, and subject to the terms and conditions stated in an 
offer to Purchase Proxy Statement and accompanying Letter of 
Transmittal (collectively, ``Narragansett Offer Documents''), NEES 
proposes to make a cash tender offer (``Narragansett Tender Offer'') to 
acquire any and all outstanding shares of Narragansett Cumulative 
Preferred Stock of each Narragansett Series, at cash purchase prices 
which NEES anticipates will include a market premium for each 
Narragansett Series (each, a ``Narragansett Purchase Price''). The 
Narragansett Purchase Price and the other terms and conditions of the 
Narragansett Tender Offer apply equally to all preferred stockholders 
of the respective Narragansett Series. The offer for any one 
Narragansett Series is independent of the offer for any other 
Narragansett Series or for the shares of any other subsidiary.
    NEES anticipates that the Narragansett Tender Offer will expire at 
5:00 p.m. on December 12, 1997, the date of the Narragansett Special 
Meeting (``Narragansett Expiration Date''), unless otherwise extended. 
The Narragansett Tender Offer is not conditioned upon any minimum 
number of shares of Narragansett preferred stock being tendered. 
Preferred stockholders who tender their shares under a Narragansett 
Tender Offer are required to vote in favor of or consent to the 
Narragansett Proposed Amendment, and one of conditions of the 
Narragansett Tender offer requires that the Narragansett Proposed 
Amendment be approved and adopted.
    Tenders of Power Company Shares, Mass. Electric Shares and 
Narragansett Shares (collectively, ``Shares'') made under the Power 
Company Tender Offer, Mass. Electric Tender Offer and Narragansett 
Tender Offer, respectively (individually, ``Tender Offer'' and 
collectively, ``Tender Offers''), may be withdrawn at any time prior to 
the Power Company Expiration Date, Mass. Electric Expiration Date and 
the Narragansett Expiration Date, respectively (individually and 
collectively, ``Expiration Date''). Thereafter, the tenders are 
irrevocable, subject to certain exceptions identified in the Power 
Company Offer Documents, Mass. Electric Offer Documents and 
Narragansett Offer Documents (individually and collectively, ``Offer 
Documents''). NEES states that its obligations to proceed with the 
Tender Offers and to accept for payment and to pay for any Shares 
tendered will be made in accordance with rule 51 under the Act and are 
subject to various conditions enumerated in the Offer Documents, 
including the receipt of a Commission order under the Act authorizing 
the proposed transactions and the adoption of the Power Company 
Proposed Amendment, Mass. Electric Proposed Amendment and the 
Narragansett Proposed Amendment (individually, ``Proposed Amendment'' 
and collectively, ``Proposed Amendments'') at the Power Company Special 
Meeting, Mass. Electric Special Meeting and Narragansett Special 
Meeting, respectively (individually and collectively, ``Special 
Meeting'').
    Applicants undertake to comply with all requirements of the 
Securities Exchange Act of 1934 (``Exchange Act'') and rules and 
regulations thereunder in connection with the Power Company Proxy 
Solicitation, Mass. Electric Proxy Solicitation and Narragansett Proxy 
Solicitation, as applicable (individually, ``Proxy Solicitation'' and 
collectively, ``Proxy Solicitations''), except to the extent applicants 
rely on exemptions from the requirements of rule 13e-3 and regulation 
14A of the Exchange Act, and acknowledge that any authorization granted 
under the Act is conditioned upon their compliance. Shares validly 
tendered will be held by NEES until the Expiration Date (or returned in 
the event a Tender Offer is terminated). Subject to the terms and 
conditions of the Tender Offers, as promptly as practicable after the 
Expiration Date, NEES will accept for payment (and thereby purchase) 
and pay for Shares validly tendered and not

[[Page 60933]]

withdrawn. NEES intends to use its general funds (which, in the 
ordinary course, include funds from the Power Company, Mass. Electric 
and Narragansett) and incur indebtedness under NEES' committed lines of 
credit, including any bank revolving credit agreements, in an amount 
sufficient to pay the Power Company Purchase Price, Mass. Electric 
Purchase Price and Narragansett Purchase Price (individually and 
collectively, ``Purchase Price'') for all tendered Shares. Merrill 
Lynch, Pierce, Fenner & Smith Incorporated will act as dealer manager 
for NEES in connection with the Tender Offers.\9\
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    \9\ NEES has agreed to pay the dealer manager a fee of .5% of 
par per share for any Shares tendered, accepted for payment and paid 
for pursuant to the Tender Offers, the Subsidiaries have agreed to 
pay the dealer managers a fee of .5% of par per share for any Shares 
that are not tendered pursuant to the Tender Offers but which vote 
in favor of the Proposed Amendment. NEES has agreed to reimburse the 
dealer manager for its reasonable out-of-pocket expenses, including 
attorneys' fees.
    In addition, NEES has agreed to pay soliciting brokers and 
dealers a separate fee of 1.5% of par per share for any Shares 
tendered, accepted for payment and paid for pursuant to the Tender 
Offers except that for transactions with beneficial owners equal to 
or exceeding 2,500 Shares, NEES will pay a solicitation fee of 1% of 
par per share for Shares of such Series.
    Any fee payable for transactions equal to or exceeding 2,500 
shares shall be payable 80% to the dealer manager and 20% to any 
soliciting dealer (which may be the dealer manager). No fee shall be 
payable to a soliciting dealer in respect of shares (a) beneficially 
owned by such soliciting dealer or (b) registered in the name of 
such soliciting dealer as nominee when the shares are being rendered 
for the benefit of one or more beneficial owners identified in the 
applicable Letter of Transmittal or in the applicable Notice of 
Solicited Tenders (including in the materials provided to brokers 
and dealers).
    NEES proposes to pay Boston Equiserve, L.P., in its capacity as 
depositary for the Tender Offers, a fee estimated at approximately 
$40,000.
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    If a Proposed Amendment is adopted at a Subsidiary's Special 
Meeting, promptly after consummation of the Tender Offer, either the 
issuing Subsidiary will purchase the Shares sold to NEES under the 
Tender Offer at the relevant Purchase Price plus expenses incurred in 
the Tender Offer, or NEES will donate the Shares to that Subsidiary as 
a capital contribution. The Subsidiary will then retire and cancel the 
shares.
    If a Proposed Amendment is not adopted at the relevant Special 
Meeting, NEES may elect, but is not obligated, to waive adoption of the 
Proposed Amendment as a condition to its obligation to proceed with the 
Tender Offer, subject to applicable law. In that case, as promptly as 
practicable after NEES's waiver of the condition and its purchase of 
Shares validly tendered under the Tender Offers, the affected 
Subsidiary anticipates that it would call another special meeting and 
solicit proxies to secure the requisite affirmative vote of 
stockholders to amend the Power Company Articles, Mass. Electric 
Articles and Narragansett Provisions (individually and collectively, 
``Articles''), to eliminate the Power Company Restriction Provision, 
Mass. Electric Restriction Provision and Narragansett Restriction 
Provision (collectively, ``Restriction Provisions''), as the case may 
be. At each meeting, NEES would vote any Shares acquired by it under 
the Tender Offer or otherwise \10\ (as well as all of its shares of 
Common Stock of the affected Subsidiaries) in favor of the Proposed 
Amendment. If a Proposed Amendment is adopted at that meeting and in 
any event within one year from the Expiration Date (including any 
potential extension under a Tender Offer), NEES will promptly after the 
meeting or at the expiration of the one-year period, as applicable, 
sell the Shares to the Subsidiary at the applicable Purchase Price plus 
expenses paid under the Tender Offer, and the Subsidiary will retire 
and cancel the Shares.
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    \10\ Applicant states that, in contrast, if the Subsidiary, 
rather than NEES, had acquired its shares under the Tender Offer, 
upon the acquisition the shares would be deemed treasury shares 
under applicable state law and, as such, the Subsidiary would be 
precluded from voting those shares under any circumstance.
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    The Applicants believe that the purchase of the Shares at this time 
represents an attractive economic opportunity that will benefit NEES, 
its shareholders, and its Subsidiaries. The Applicants further contend 
that elimination of the Restriction Provisions will produce savings in 
financing costs that outweigh the one-time costs of the Tender Offers 
and the Proxy Solicitations,\11\ and will be in the best interests of 
their customers and shareholders.\12\
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    \11\ Each of the Subsidiaries have engaged Georgeson & Company, 
Inc. to act as information agent in connection with the Proxy 
Solicitations for a fee and reimbursement of reasonable out-of-
pocket expenses expected not to exceed approximately $10,000.
    \12\ The Applicants state that the proposed acquisition by NEES 
of Shares under the Tender Offers will benefit NEES' utility system 
customers and shareholders by (1) contributing to the elimination of 
the provisions concerning unsecured indebtedness, and (2) acquiring 
and retiring of outstanding shares of the preferred stock and their 
potential replacement with comparatively less expensive financing 
alternatives. Moreover, the applicants maintain that tendering Power 
Company Preferred Stockholders, Mass. Electric Preferred 
Stockholders and Narragansett Preferred Stockholders will benefit by 
having the option to sell their Preferred Stock at prices that NEES 
expects will be a premium to the market price and without the usual 
transaction costs associated with a sale.
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    To finance its proposed purchase of Shares under the Tender Offers, 
NEES plans to use general funds and incur debt under its committed 
lines of credit, including any bank revolving credit agreements, in an 
amount sufficient to pay the Purchase Price for all tendered Shares, an 
amount expected to be approximately $135 million, excluding payment of 
accrued dividends, but including fees and other expenses.
    The applicants also request authorization to deviate from the 
preferred stock provisions of the Statement of Policy Regarding 
Preferred Stock Subject to the Public Utility Holding Company Act of 
1935, HCAR No. 13106 (Feb. 16, 1956), to the extent applicable with 
respect to the Proposed Amendments.
    It appears to the Commission that the application-declaration, to 
the extent that it relates to the proposed Proxy Solicitations should 
be permitted to become effective immediately under rule 62(d).
    It is ordered, that the application-declaration, to the extent that 
it relates to the proposed Proxy Solicitations be, and it hereby is, 
permitted to become effective immediately, under rule 62 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.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-29881 Filed 11-12-97; 8:45 am]
BILLING CODE 8010-01-M