[Federal Register Volume 66, Number 131 (Monday, July 9, 2001)]
[Notices]
[Pages 35813-35817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-17001]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27424]


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

June 29, 2001.
    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 under the Act. 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 amendment(s) is/are available for public 
inspection through the

[[Page 35814]]

Commission's Branch 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 July 24, 2001, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549-0609, 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 the case of an attorney at law, 
by certificate) should be filed with the request. Any request for 
hearing should identify specifically the issues of facts 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 July 24, 2001, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Ameren Corp. (70-9877)

    Ameren Corporation (``Ameren''), a registered holding company, 1901 
Chouteau Avenue, St. Louis, Missouri 63103, has filed a declaration 
under sections 6(a), 7, and 12(b) of the Act and rules 45(a) and 54 
under the Act, requesting approval for a new program of external 
financing and credit support arrangements. This new program would 
replace certain authorizations that the Commission has previously 
granted.
    Ameren requests authority to issue and sell through September 30, 
2004 (``Authorization Period'') up to $2.5 billion at any time 
outstanding (``Securities Limit'') of the following types of 
securities: common stock (``Common Stock''); \1\ options, warrants and 
other stock purchase rights exercisable for Common Stock (collectively, 
``Purchase Rights''); unsecured, long-term debt securities (``Long-Term 
Debt''); and preferred stock (``Preferred Stock'') and other preferred 
or equity-linked securities (``Equity-Linked Securities''). These 
securities, further described below, would be sold at rates or prices 
and under conditions negotiated or based upon, or otherwise determined 
by, competitive capital markets.
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    \1\ Ameren is currently authorized to issue up to an aggregate 
amount of $25 million of Common Stock for general corporate purposes 
(other than for use under Ameren's dividend reinvestment and 
employee benefit plans, further described below). See Ameren Corp., 
HCAR No. 26841 (March 13, 1998), as modified by Ameren Corp., HCAR 
No. 27011 (April 26, 1999) (collectively, ``Current Financing 
Order'').
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    Common Stock would be sold through underwriters,\2\ dealers,\3\ 
agents, or to a limited number of purchasers directly. Ameren might 
also issue Common Stock in publicly or privately negotiated 
transactions, as consideration for the equity securities or assets of 
other companies.\4\
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    \2\ Common Stock may be sold to underwriters for their own 
account and resold in one or more transactions, including negotiated 
transactions, at a fixed public offering price or at varying prices 
determined at the times of resale. If Common Stock is sold in an 
underwritten offering, Ameren may grant the underwriters a ``green 
shoe'' option, permitting the purchase from Ameren at the same price 
of additional shares solely for the purpose of covering over-
allotments.
    \3\ Ameren may sell Common Stock to dealers, as principals. 
Those dealers may then resell that Common Stock to the public at 
varying prices they determine at the times of resale.
    \4\ Ameren states that these acquisitions would be either 
expressly authorized in a separate proceeding or exempt under the 
Act or the rules under the Act.
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    Purchase Rights may be issued in one or more series and, like 
Common Stock, may be issued to acquire equity securities or assets in 
transactions that have been authorized by the Commission or are exempt 
under the Act. Ameren may issue Purchase Rights directly.
    Ameren would issue Long-Term Debt directly, or indirectly through 
one or more subsidiaries organized to facilitate the issuance and sale 
of long-term debt or equity securities (``Financing Subsidiaries'').\5\ 
Long-Term Debt would have maturities ranging from one to fifty 
years,\6\ and would bear interest at a rate not to exceed at the time 
of issuance 500 basis points over the yield to maturity of a U.S. 
Treasury security having a remaining term equal to the average life of 
the Long-Term Debt or, if no such Treasury security is outstanding, the 
yield to maturity of a thirty-year U.S. Treasury Bond.
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    \5\ The Commission authorized Ameren to acquire Financing 
Subsidiaries through December 31, 2003. See Ameren Corp., HCAR No. 
27053 (July 23, 1999) (``Restructuring Order'').
    \6\ Currently, Ameren is authorized to issue and sell up to an 
aggregate principal amount of $300 million at any one time 
outstanding of unsecured notes having maturities of more than one 
year and up to forty years (``Debentures''), subject to an overall 
limit of $1.5 billion in short-term debt and Debentures. See Current 
Financing Order.
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    Ameren would issue Preferred Stock directly. Ameren states that 
Equity-Linked Securities typically combine a security with a fixed 
obligation (such as preferred stock or debt) with a feature that 
requires or allows conversion into shares of Common Stock within a 
relatively short period. These instruments may be tax advantaged. 
Equity-Linked Securities include trust preferred securities, and debt 
or preferred securities that are converted or convertible (at the 
holder's option) into Common Stock and forward purchase contracts for 
Common Stock. Equity-Linked Securities would be issued either directly 
by Ameren or one or more Financing Subsidiaries. Both Preferred Stock 
and Equity Linked Securities would be issued in one or more series. The 
rights, preferences, and priorities of each series will be designated 
in the instrument creating each series of securities. These instruments 
would be redeemed no later than fifty years after the date of issuance 
unless it is converted into Common Stock, as is possible with Equity-
Linked Securities. The dividend rates on Preferred Stock and Equity-
Linked Securities would not, at the time of issuance, exceed 700 basis 
points over the yield to maturity of a U.S. Treasury security having a 
remaining term equal to the term of such securities or, if no such 
Treasury security is outstanding, the yield to maturity of a thirty-
year U.S. Treasury Bond.
    Ameren also requests authority to issue through the Authorization 
Period up to 25 million shares of Common Stock through stock-based 
plans that it maintains or will maintain, directly or indirectly, for 
shareholders, investors, employees, and non-employee directors 
(collectively, ``Ameren Plans'').\7\These proposed shares of Common 
Stock would not count against the Securities Limit. Shares of Common 
Stock issued through the Ameren Plans would either be newly issued 
shares, treasury shares, or shares purchased in the open market.\8\
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    \7\ At present, Ameren maintains the following stock-based 
plans: (1) Ameren's dividend reinvestment and stock purchase plan 
(``DRPlus''); (2) Ameren's long-term incentive plan (``1998 
Incentive Plan''); (3) Ameren's employee savings investment plan 
(``SIP''); (4) Ameren's two investment savings plans that permit 
employees of Central Illinois Public Service Company 
(``AmerenCIPS''), its direct public-utility company subsidiary, and 
Ameren Energy Generating Company, an ``energy-related company as 
that term is defined by rule 58 under the Act, who are members of 
certain collective bargaining units to defer federal income taxes on 
contributions to the plans and the earnings on those contributions 
(collectively, ``Union Investment Plans''). Ameren is authorized to 
issue up to 15 million shares of Common Stock through December 30, 
2002 under the DRPlus, SIP, and Union Investment Plans, see Ameren 
Corp., HCAR No. 26809 (December 30, 1997), and up to 4 million 
shares of Common Stock through March 31, 2003 under the 1998 
Incentive Plan. See Ameren Corp., HCAR No. 26862 (April 24, 1998).
    \8\ Ameren open-market purchases of Common stock would be made 
in accordance with the terms of, or in connection with, the 
operation of the Ameren Plans under rule 42.
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    In addition, Ameren requests authority to issue and sell, through 
the Authorization Period, directly or indirectly through one or more 
Financing Subsidiaries, up to an

[[Page 35815]]

aggregate principal amount at any time outstanding of $1.5 billion in 
commercial paper and other short-term debt securities (collectively, 
``Short-Term Debt'').\9\ Short-Term Debt would have maturities of less 
than one year. The effective cost of money on all Short-Term Debt would 
not exceed 300 basis points over the London Interbank Offered Rate. 
Commercial paper would be sold in established domestic or European 
commercial paper markets. Typically, commercial paper would be sold to 
dealers at the discount rate per annum prevailing at the date of 
issuance for commercial paper of comparable quality and maturities sold 
to commercial paper dealers generally. It is expected that the 
acquiring dealers would re-offer it at a discount to corporate, 
institutional and, with respect to European commercial paper, 
individual investors.\10\ Short-Term Debt may also include back-up 
credit lines with banks or other institutional lenders established and 
maintained to support its commercial paper program(s) and other credit 
arrangements and/or borrowing facilities.\11\
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    \9\ Ameren is currently authorized to issue up to $1.5 billion 
in Short-Term Debt through February 27, 2003. See Current Financing 
Order.
    \10\ Ameren expects that this commercial paper would be re-
offered to investors such as commercial banks, insurance companies, 
pension funds, investment trusts, foundations, colleges and 
universities, finance companies and non-financial corporations.
    \11\ Only the amounts drawn and outstanding under these 
agreements and facilities would be counted against the proposed 
limit on Short-Term Debt.
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    Ameren requests authority to provide guaranties and other forms of 
credit support (``Guaranties'') on behalf or for the benefit of its 
direct and indirect nonutility subsidiaries (``Nonutility 
Subsidiaries''), in an aggregate principal or nominal amount that would 
not exceed $1.5 billion at any one time outstanding (``Guaranty 
Limit'').\12\ Securities issued by Financing Subsidiaries of Ameren 
that are guaranteed or supported by other forms of credit enhancement 
provided by Ameren would not count against the Guaranty Limit. 
Guaranties would be provided to cover the debt or contractual 
obligations of any Nonutility Subsidiary as may be appropriate in the 
ordinary course of the subsidiary's business. Guaranties may be in the 
form of formal credit enhancement agreements, including ``keep well'' 
agreements and reimbursement undertakings under letters of credit. 
Ameren may charge a fee for each Guaranty it provides. Those fees would 
not exceed the cost, if any, of obtaining the liquidity necessary to 
perform the Guaranty for the period of time the Guaranty remains 
outstanding.
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    \12\ Currently, Ameren is authorized to provide up to an 
aggregate amount of $1 billion in Guaranties on behalf or for the 
benefit of the Nonutility Subsidiaries through February 27, 2003. 
See Current Financing Order.
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    Ameren requests authority directly, or indirectly through any 
Financing Subsidiary, to enter into hedging transactions with respect 
to existing indebtedness (``Interest Rate Hedges'') using financial 
instruments commonly used in today's capital markets, such as interest 
rate swaps, caps, collars, floors, and structured notes (i.e., a debt 
instrument in which the principal and/or interest payments are 
indirectly linked to the value of an underlying asset or index), or 
transactions involving the purchase or sale, including short sales, of 
U.S. Treasury Securities. Interest Rate Hedges would be used to reduce 
or manage the effective interest rate cost. These transactions would be 
for fixed periods and stated notional amounts, and would be entered 
into only with counterparties (``Approved Counterparties'') whose 
senior debt ratings, or the senior debt ratings of the parent companies 
of the counterparties, as published by Standard and Poor's Ratings 
Group, are equal to or greater than BBB, or an equivalent rating from 
Moody's Investors Service or Fitch, Inc. Fees, commissions, and other 
amounts payable to an Approved Counterparty or exchange (excluding, 
however, the swap or option payments) in connection with an Interest 
Rate Hedge would not exceed those generally obtainable in competitive 
markets for parties of comparable credit quality.
    Ameren also requests authority directly, or indirectly through any 
Financing Subsidiary, to enter into hedging transactions with respect 
to anticipatory debt issuances (``Anticipatory Hedges''). Anticipatory 
Hedges would only be entered into with Approved Counterparties, and 
would be utilized to fix the interest rate and/or limit the interest 
rate risk associated with any new issuance through: A forward sale of 
exchange-traded U.S. Treasury futures contracts, U.S. Treasury 
Securities and/or a forward swap (each, ``Forward Sale''); the purchase 
of put options on U.S. Treasury Securities (``Put Options Purchase''); 
a Put Options Purchase in combination with the sale of call options on 
U.S. Treasury Securities (``Zero Cost Collar''); transactions involving 
the purchase or sale, including short sales, of U.S. Treasury 
Securities; or some combination of a Forward Sale, Put Options 
Purchase, Zero Cost Collar and/or other derivative or cash 
transactions, including, but not limited to structured notes, caps and 
collars, appropriate for the Anticipatory Hedges. Each Interest Rate 
Hedge and Anticipatory Hedge would, at the time it is entered into, 
qualify for hedge accounting treatment under Generally Accepted 
Accounting Principles. Ameren would comply with all applicable 
financial disclosure requirements of the Financial Accounting Standards 
Board associated with hedging transactions.
    Ameren states that the proposed securities will not be issued if 
issuance would result in its common equity as a percentage of its 
consolidated capitalization (including Short-term Debt) falling below 
thirty percent. Ameren also states that it would maintain the common 
stock equity ratios of Union Electric Company (``AmerenUE'') and 
AmerenCIPS, its direct public-utility company subsidiaries, at or above 
thirty percent during the Authorization Period.
    It is further requested that the Commission release jurisdiction 
reserved under the Restructuring Order over Ameren's request to allow 
the Financing Subsidiaries to dividend to Ameren any financing proceeds 
of a Financing Subsidiary.\13\
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    \13\ In the Restructuring Order, the Commission reserved 
jurisdiction over this proposal, pending completion of the record.
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Wisconsin Energy Corporation, et al. (70-9881)

    Wisconsin Energy Corporation (``WEC''), a public utility holding 
company exempt from registration under section 3(a)(1) of the Act,\14\ 
and Wisconsin Electric Power Company (``WEPCo''), a wholly owned 
subsidiary holding company of WEC claiming exemption under section 
3(a)(1) of the Act by rule 2, both at 31 West Michigan Street, 
Milwaukee, Wisconsin 53201 (together, ``Applicants''), have filed an 
application under sections 3(a)(1), 9(a)(2) and 10 of the Act.
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    \14\ WEC is exempt from registration by order of the Commission. 
Its exemption was most recently reaffirmed in HCAR No. 27329 
(December 28, 2000).
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    WEC is a public utility holding company incorporated in the state 
of Wisconsin. WEC owns directly all of the common stock of two public 
utility companies: WEPCo, a combination electric and gas utility 
company and Edison Sault Electric Company (``Edison Sault''), an 
electric utility company incorporated in Michigan. WEPCo generates, 
distributes, and sells electric energy in southeastern, east central 
and northern Wisconsin and in the Upper Peninsula of Michigan. As of 
December 31, 2000, WEPCo had approximately

[[Page 35816]]

one million electric customers. WEPCo also purchases, distributes and 
sells natural gas to retail customers and transports customer owned gas 
in four distinct service areas encompassing approximately 3,800 square 
miles in Wisconsin with an estimated population of approximately 
1,200,000: west and south of the City of Milwaukee, the Appleton area, 
the Prairie du Chien area, and areas within Iron and Vilas Counties. 
During 2000, WEPCo had gas operating revenues of $400 million and at 
December 31, 2000, WEPCo's gas distribution system included 
approximately 8,200 miles of mains connected at twenty-two gate 
stations to four different pipeline transmission systems and its gas 
service territory has an estimated population of approximately 
1,200,000. Edison Sault provides retail electric service in certain 
territories in Michigan.\15\
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    \15\ WEPCo and Edison Sault own membership interests in American 
Transmission Company LLC, (``ATC''), a limited liability 
transmission utility company organized in Wisconsin. WEPCo owns 
approximately forty-two percent and Edison Sault owns approximately 
six percent of the interests in ATC. In addition, WEPCo owns a 
forty-eight percent interest in ATC Management Inc., a limited 
liability company organized to manage the operations of ATC.
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    WEC also owns all of the common stock of WICOR, a public utility 
holding company incorporated in Wisconsin and exempt from registration 
under the Act under section 3(a)(1) by order of the Commission.\16\ 
WICOR has one wholly owned public utility subsidiary, Wisconsin Gas, 
which is a gas utility company organized in Wisconsin. Wisconsin Gas 
distributed gas to approximately 544,000 customers in 531 communities 
throughout Wisconsin as of December 31, 2000.
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    \16\ See Wisconsin Energy Corporation, HCAR No. 27163 (April 10, 
2000).
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    WEPCo seeks to transfer its gas utility assets (``Transferred 
Assets'') to Wisconsin Gas. The Transferred Assets are expected to have 
a book value of $479 million and have associated liabilities 
(``Liabilities'') of $115 million for an aggregate value of 
approximately $364 million (``Aggregate Value''). Wisconsin Gas will 
acquire the Transferred Assets along with the Liabilities associated 
and will provide, as consideration, shares of a newly created Class B 
common stock (``Class B Common Stock'') with a fair market value of 
approximately $364 million. Applicants seek authority for WEPCo to 
acquire the Class B Common Stock from Wisconsin Gas in an amount equal 
to the Aggregate Value. According to the agreement (``Asset Transfer 
Agreement''), the Transferred Assets will consist of:
    1. All of WEPCo's rights, title and interest in and to all 
contracts and agreements with customers, suppliers, employees and other 
persons exclusively related to WEPCo's gas utility business 
(``Business''), including but not limited to gas supply agreements 
(``Contracts'');
    2. WEPCo's accounts receivable related to the Business;
    3. All of WEPCo's rights, title and interest in and to the real 
property interests used in the distribution of gas and for other 
purposes in the Business;
    4. WEPCo's equipment, computer software, construction in progress, 
and other items of tangible personal property related to the Business;
    5. WEPCo's inventory of gas, fuel, materials and supplies related 
to the Business;
    6. All of the intangible assets owned or used by WEPCo relating 
primarily to the operation of the Business;
    7. All books, documents and records owned or used by WEPCo relating 
primarily to the operation of the Business;
    8. All assets related to the Business and existing at the closing 
date which are included within the financial books and records of WEPCo 
related to the Business and described as ``Prepayments and Other 
Current Assets,'' ``Regulatory Assets,'' ``Accumulated Deferred Income 
Taxes'' and ``Other Assets''; and
    9. All rights to recoveries from third parties and causes of action 
against third parties relating to any of the Transferred Assets or any 
of the Assumed Liabilities (as defined below).
    Under the Asset Transfer Agreement, Wisconsin Gas will assume the 
following obligations of WEPCo (``Assumed Liabilities''):
    1. All obligations of WEPCo under the Contracts arising from and 
after the closing date;
    2. All obligations of WEPCo related to the Business existing on the 
closing date or arising after the closing date which are included 
within the financial books and records of WEPCo related to the Business 
and described as ``Accounts Payable,'' ``Accrued Liabilities and 
Other,'' ``Accumulated Deferred Income Taxes,'' ``Regulatory 
Liabilities'' and ``Other, including Post-Retirement Benefit 
Obligation;'' and
    3. Any and all claims, demands, liabilities, debts, obligations, 
damages and causes of action for any environmental liability arising 
out of or related to the operation of the Business prior to the closing 
date, excluding punitive or exemplary damages.
    Wisconsin Gas will pay its own newly issued Class B Common Stock to 
WEPCo for the Transferred Assets under the Asset Transfer Agreement. 
Wisconsin Gas will issue to WEPCo the number of shares which reflect 
the percentage of equity in Wisconsin Gas represented by the 
Transferred Assets as compared to Wisconsin Gas' total assets after the 
transaction takes place.\17\ The approximate worth of the Class B 
Common Stock will also be calculated to equal the Aggregate Value, as 
stated above. Additionally, in order for the transaction to qualify as 
a tax-free exchange under section 351 of the Internal Revenue Code, 
Wisconsin Electric must end up controlling at least eighty percent of 
the total combined voting power of all Wisconsin Gas stock entitled to 
vote. This will be accomplished by assigning the class A common stock 
(``Class A Common Stock'') one vote per share and the Class B Common 
Stock ten votes per share or such other number of votes per share as 
the Board of Directors of Wisconsin Gas shall determine so that 
Wisconsin Electric shall have a number of votes representing at least 
eighty percent of the total combined voting power of all classes of 
Wisconsin Gas stock entitled to vote immediately after consummation of 
the transaction.
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    \17\ Thus, for illustration purposes only, if sixty percent of 
Wisconsin Gas' net assets after the transaction will consist of the 
Transferred Assets, then Wisconsin Gas will issue enough Class B 
Stock to WEPCo so that WEPCo will own sixty percent of Wisconsin 
Gas' outstanding common stock.
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    Currently, the authorized capital stock of Wisconsin Gas consists 
of: (i) 5,000,000 shares of common stock, $8.00 par value, of which 
1,125 shares are issued and outstanding and owned by WICOR, and (ii) 
1,500,000 shares of cumulative preferred stock without par value, none 
of which are issued and outstanding.
    The Asset Transfer Agreement requires that, as of the closing date, 
the entire authorized capital stock of Wisconsin Gas shall consist of: 
(i) 5,000,000 shares of Class A common stock, $8.00 par value, of which 
1,125 shares will be issued and outstanding and owned by WICOR; (ii) 
5,000,000 shares of Class B Common Stock, $8.00 par value, none of 
which shall be issued and outstanding prior to the issuance of shares 
to WEPCo contemplated by the Asset Transfer Agreement, and (iii) 
1,500,000 shares of cumulative preferred stock without par value, none 
of which will be issued and outstanding.
    In addition to Applicants' request for WEPCo to acquire Wisconsin 
Gas' securities, Applicants request that the Commission approve 
exemptions for

[[Page 35817]]

both WEC and WEPCo under section 3(a)(1) of the Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-17001 Filed 7-6-01; 8:45 am]
BILLING CODE 8010-01-M