[Federal Register Volume 62, Number 241 (Tuesday, December 16, 1997)]
[Notices]
[Pages 65829-65832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32775]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-22937; 811-5517]


Heartland Technology, Inc. (Formerly Milwaukee Land Company); 
Notice of Application

December 10, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for deregistration under section 8(f) of 
the Investment Company Act of 1940 (the ``Act'').

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SUMMARY OF APPLICATION:  Applicant seeks an order declaring that it has 
ceased to be an investment company.

    Filing Dates: The application was filed on June 20, 1997, and 
amended on

[[Page 65830]]

December 2, 1997. Applicant has agreed to file an amendment during the 
notice period, the substance of which is included in this notice.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the SEC orders a hearing. Interested 
persons may request a hearing by writing to the SEC's Secretary and 
serving applicant with a copy of the request, personally or by mail. 
Hearing requests should be received by the SEC by 5:30 p.m. on December 
30, 1997, and should be accompanied by proof of service on applicant, 
in the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 5th Street, N.W., Washington, DC 20549. 
Applicant, 547 West Jackson Blvd., Chicago, IL 60661.

FOR FURTHER INFORMATION CONTACT: Lisa McCrea, Attorney Adviser, at 
(202) 942-0562, or Nadya B. Roytblat, Assistant Director, at (202) 942-
0564 (Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 5th Street, N.W., Washington, DC 
20549 (tel. 202-942-8090).

Applicant's Representations

    1. Milwaukee Land Company is a registered closed-end management 
investment company organized as a Delaware corporation. On October 31, 
1997, Milwaukee Land Company amended its charter to change its name to 
Heartland Technology, Inc. (the ``Company''). That charter amendment 
was approved by shareholders on September 17, 1997.
    2. From its date of incorporation in 1881 until 1989, the Company 
was a subsidiary of the Chicago, Milwaukee, St. Paul and Pacific 
Railroad (the ``Railroad''). The Company was formed for the purpose, 
among other things, of acquiring and managing land used in the 
Railroad's operations. Immediately prior to November 30, 1989, the 
Company was a wholly-owned subsidiary of CMC Real Estate Corporation 
(``CMC Real Estate''), the successor to the Railroad, which was in turn 
a wholly-owned subsidiary of Chicago Milwaukee Corporation (``CMC''). 
CMC filed a notification of registration under the Act in March, 1988, 
and as a result, the Company and CMC Real Estate each registered under 
the Act in March, 1988. CMC Real Estate was liquidated on November 30, 
1989, and the Company became a wholly-owned subsidiary of CMC.
    3. In 1991, the real estate assets held by the Company and certain 
other assets and liabilities were contributed by the Company and CMC to 
two newly-organized partnerships, Heartland Partners, L.P. 
(``Heartland'') and CMC Heartland Partners (``CMC Heartland''). 
Heartland is a publicly traded limited partnership in which the Company 
is the general partner and holds a class B limited partner interest. 
CMC Heartland is a general partnership in which the Company and 
Heartland are the general partners and the Company is the managing 
general partner. Through Heartland and CMC Heartland, the Company is 
engaged in the business of developing real estate, including the 
properties formerly owned by the Company. In 1993, CMC distributed the 
Company's common stock to CMC's shareholders, spinning off the Company 
as a separate publicly-held company. The Company's stock has not 
otherwise been offered to the public, and the Company has never filed a 
registration statement under the Securities Act of 1933.
    4. Since its spin-off from CMC in 1993, the Company has represented 
to its stockholders that it has been engaged in a search for one or 
more acquisitions of operating businesses. The Company disclosed to its 
stockholders and to the investing public that such an acquisition would 
likely result in the Company ceasing to be an investment company and 
would therefore require stockholder approval. The Company disclosed in 
its proxy statement to shareholders that deregistration would result in 
shareholders no longer having the benefit of the regulatory protections 
afforded by the Act. The Company states that it communicated to its 
shareholders, in the Company's semiannual report for the period ending 
June 30, 1997, that it no longer holds itself out as being engaged in 
the business of investing, reinvesting, or trading in securities within 
the meaning of section 3(a)(1)(A) of the Act. Applicant states that it 
communicated to shareholders that the Company's assets would be better 
used to acquire an operating business that would be managed by the 
Company.
    5. On April 4, 1997, the board of directors of the Company (the 
``Board''), including those directors who are not ``interested 
persons'' of the Company under the Act, considered and approved for 
submission to the Company's shareholders a proposal for the Company and 
a new wholly-owned subsidiary of the Company called PG Newco Corp. 
(``PG Newco'') to purchase substantially all the assets and assume 
certain liabilities of PG Design Electronics, Inc. (``PG Design''). PG 
Design is a company engaged in the business of contract design and 
manufacture of printed circuit boards for computer products. Proxy 
materials that were sent to shareholders were filed with the SEC on 
April 28, 1997. On May 27, 1997, the shareholders of the Company 
approved the acquisition of PG Design, certain changes in the Company's 
investment policies necessary to permit the acquisition, and the 
deregistration of the Company under the Act.
    6. In determining that it was in the best interests of the Company 
and its shareholders that the Company cease to be an investment 
company, the Board considered the following factors: (a) The difficulty 
of managing operating businesses under the Act; (b) the limits on the 
Company's capital structure imposed by section 18 of the Act, which 
constrain the Company's ability to borrow and otherwise manage its 
capital structure in ways the Board believes prudent for an operating 
company, but prohibited for a registered investment company; and (c) 
the prohibitions on transactions with affiliates under section 17 of 
the Act, which prohibit many types of incentive-based compensation the 
Board considers reasonable and necessary to attract and retain the 
best-qualified persons to manage the Company's businesses. The Company 
believes that ceasing to be registered under the Act would result in 
the potential for greater long-term capital appreciation through its 
investment in PG Newco and potential further expansion into other 
operating businesses.
    7. The acquisition of PG Design was completed on May 30, 1997, and 
PG Newco's name has since been changed to P.G. Design Electronics, Inc. 
(``PG Design Electronics''). The Company intends to continue investment 
in and expansion of the business of PG Design Electronics, 
specifically, the contract design and manufacture of printed circuit 
boards and other components for computer products, and, if and when 
feasible, entry into other operating businesses. The Company intends to 
maintain its interest in Heartland and CMC Heartland and through those 
entities continue to engage in the business of real estate development. 
However, the Company expects that it will focus its efforts and 
resources in the

[[Page 65831]]

business of PG Design Electronics and other potential operations.
    8. On September 30, 1997, the Company entered into a letter of 
intent to acquire all of the outstanding common stock of Solder Station 
One, Inc. (``Solder Station One''), a service provider to the circuit 
board industry. Subject to certain adjustments, the purchase price is 
expected to be $7,250,000. The Company expects to form a new wholly-
owned subsidiary which will serve as the acquisition vehicle. The 
Company expects to invest $1,500,000 in cash in that subsidiary, all of 
which the Company expects to obtain from repayment of debt owned to the 
Company by PG Design Electronics. The new subsidiary then expects to 
borrow against the receivables and equipment of Solder Station One to 
raise additional cash, and to pay the shareholders of Solder Station 
One: (i) $5,250,000 in cash at closing, and (ii) notes to be issued by 
the new subsidiary in the aggregate amount of $2,000,000, bearing 
interest at 8% annually. The close of the Solder Station One 
acquisition is currently scheduled for January 2, 1998.
    9. A predecessor of the Company was petitioner in a suit in the 
U.S. Court of Federal Claims for refund of claimed overpaid railroad 
retirement taxes. That claim was transferred to the Company as part of 
the Company's spin-off from its former parent corporation, CMC. A 
judgment adverse to the Company was entered in the trial court on April 
26, 1996. The Company appealed to the U.S. Court of Appeals for the 
Federal Circuit, and is awaiting decision. The Company is not a party 
to any other litigation or administrative proceeding.
    10. The Company states that it is not now operating and will not in 
the future operate its business so as to be an investment company 
required to be registered under the Act. The Company states that it 
does not now and will not in the future hold itself out as being 
engaged primarily in the business of investing, reinvesting or trading 
in securities.

Applicant's Legal Analysis

    1. The Company asserts that it no longer holds itself out as being 
engaged in the business of investing, reinvesting, or trading in 
securities within the meaning of section 3(a)(1)(A) of the Act. For 
example, in the Company's semiannual report to shareholders for the 
period ended June 30, 1997, the Company stated: ``During the second 
quarter of 1997, the Company liquidated its entire non-affiliated 
investment portfolio. Most of the resulting cash was used on May 30, 
1997 to acquire the assets, subject to certain liabilities, of PG 
Design. Shortly after the successful acquisition of PG Design, the 
Company applied for deregistration under the Act.''
    2. Section 3(a)(1)(C) of the Act defines an investment company as 
any issuer which ``is engaged in the business of investing, 
reinvesting, owning, holding, or trading in securities, and owns or 
proposes to acquire investment securities having a value exceeding 
forty percent of the value of such issuer's total assets (exclusive of 
Government securities and cash items) on an unconsolidated basis.'' 
1 The Company asserts that it no longer meets the definition 
of an investment company under section 3(a)(1)(C) because it does not 
own, and does not propose to acquire ``investment securities'' having a 
value exceeding 40% of the value of its total assets.
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    \1\ Investment securities are defined in section 3(a)(2) of the 
Act to include all securities except (A) Government securities, (B) 
securities issued by employees' securities companies, and (C) 
securities issued by majority owned subsidiaries of the owner which 
are not investment companies, and are not relying on the exception 
from the definition of investment company in sections 3(c)(1) or 
3(c)(7) of the Act.
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    3. The Company asserts that because PG Design Electronics is a 
wholly-owned subsidiary of the Company, its common stock owned by the 
Company is not an ``investment security'' within the meaning of section 
3(a)(2) of the Act. The Company states that, at September 30, 1997, its 
``investment securities'' for purposes of section 3(a)(1)(C), 
represented 32.6% of its total assets, excluding cash and Government 
securities.
    4. The Company's total assets at September 30, 1997, totaled 
$24,087,022. The Company's interests in Heartland and CMC Heartland 
were valued at $7,589,129 and the Company's investment in PG Design 
Electronics was valued at $15,085,543. The Company's accounts payable 
and accrued liabilities at September 30, 1997 consisted of liabilities 
of a predecessor corporation, accrued federal income taxes, and other 
liabilities.
    5. The Company states that its income from the date of the close of 
the acquisition of PG Design has consisted primarily of income 
generated by PG Design Electronics, and less than 5% of the Company's 
income during the period June 1, 1997 through September 30, 1997 was 
derived from ``investment securities.'' The Company states that it 
anticipates receiving income from PG Design Electronics, the amount of 
which will be within the Company's control but limited by PG Design 
Electronics' net income. PG Design's 1996 revenues totaled $25,022,000, 
resulting in net income of $1,255,000. For the period June 1, 1997 
through September 30, 1997, PG Design Electronics had net income of 
approximately $1,727,974. The Company anticipates similar revenues and 
income for PG Design Electronics for the coming year although there can 
be no assurance that such levels will be achieved.
    6. If the planned acquisition of Solder Station One is consummated, 
the Company anticipates that it will receive income from that company. 
The amount will be within the Company's control, but limited by Solder 
Station One's net income. Solder Station One's revenues for the nine 
months ended September 30, 1997 were approximately $5,941,000 and net 
income before taxes was about $1,399,000. The Company anticipates 
similar revenues and net income for Solder Station One after 
consummation of the acquisition although there can be no assurance that 
such levels will be achieved.
    7. The Company states that it receives an annual management fee of 
$425,000 from CMC Heartland, and that it does not anticipate receiving 
any significant income other than the management fee from Heartland or 
CMC Heartland.
    8. The Company states that it currently intends to continue to 
develop and expand its operating business. The Company believes that 
the percentage of its total assets represented by its interests in 
Heartland and CMC Heartland will decline. Giving effect to the planned 
Solder Station One acquisition, the Company's investment securities 
would be 32.6% of the Company's total assets. The Company states that 
it has no intention to increase the number of investment securities it 
holds. The Company does not expect to invest its net income in 
investment securities within the meaning of section 3(a)(2) of the Act, 
except as discussed below. The Company expects that it may invest in 
short-term securities as a cash management tool when accumulation of 
cash is necessary or appropriate to meet the Company's requirements, 
including pending payment of dividends, to make additional investments 
in the Company's subsidiaries or to acquire other companies or 
businesses, or to repay borrowings. In addition, the Company expects 
that it may invest in longer-term debt securities to offset particular 
Company liabilities. The Company intends to manage its cash and its 
investments in such a way as to avoid again coming within the 
definition of investment company under the Act.


[[Page 65832]]


    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-32775 Filed 12-15-97; 8:45 am]
BILLING CODE 8010-01-M