[Federal Register Volume 67, Number 221 (Friday, November 15, 2002)]
[Notices]
[Pages 69256-69260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-28987]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27598]


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

November 8, 2002.
    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 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 December 3, 2002 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 December 3, 2002, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

Alliant Energy Corporation, et al. (70-9891)

    Alliant Energy Corporation (``Alliant Energy''), a registered 
holding company, 4902 N. Biltmore Lane, Madison, Wisconsin 53718, and 
certain of its direct and indirect nonutility subsidiaries 
(collectively, ``Applicants'') have filed with the Commission a post-
effective amendment to a previously filed application-declaration under 
sections 6(a) and 7 of the Act and rule 54 under the Act.

[[Page 69257]]

I. Current Authority

    By order dated October 3, 2001 (HCAR No. 27448) (``Prior Order''), 
the Commission authorized, among other things, Alliant Energy to issue 
and sell through December 31, 2004 (``Authorization Period''), directly 
or indirectly through one or more financing subsidiaries, common stock, 
long-term debt, and preferred stock and other forms of preferred or 
equity-linked securities in an aggregate amount at any time outstanding 
not to exceed $1.5 billion. The issuances and sales of these securities 
are subject to certain conditions and restrictions, including the 
following (``Prior Order Limitations''):
    (1) The interest rate on long-term debt securities and the dividend 
rate on preferred or equity-linked securities will not 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 term of such 
securities.
    (2) All preferred and equity-linked securities will be redeemed no 
later than fifty years after issuance.
    (3) Except in accordance with a further order of the Commission in 
this proceeding, Alliant Energy will not issue any long-term debt or 
preferred stock or other type of preferred or equity-linked securities 
unless such securities are rated at the investment grade level as 
established by at least one ``nationally recognized statistical rating 
organization'' (``NRSRO''), as that term is used in paragraphs 
(c)(2)(vi)(E), (F) and (H) of rule 15c3-1 under the Securities Exchange 
Act of 1934.

II. Requested Authority

    Alliant Energy now requests that the Commission issue a 
supplemental order to modify the Prior Order by replacing the Prior 
Order Limitations with the following ones:

    (1) The interest rate on long-term debt securities issued by 
Alliant Energy may not exceed at the time of issuance the greater of 
500 basis points over the yield to maturity of comparable term U.S. 
Treasury securities or a gross spread over U.S. Treasury securities 
that is consistent with similar securities of comparable credit 
quality and maturities issued by other companies.
    (2) The dividend or distribution rate on preferred stock or 
other preferred or equity-linked securities issued by Alliant Energy 
may not exceed at the time of issuance the greater of 500 basis 
points over the yield to maturity of comparable term U.S. Treasury 
securities or a gross spread over U.S. Treasury securities that is 
consistent with similar securities of comparable credit quality and 
maturities issued by other companies.
    (3) Preferred stock or other preferred securities issued by 
Alliant Energy may be redeemable or perpetual in duration.
    (4) Without further order of the Commission, Alliant Energy will 
not publicly issue any long-term debt securities, preferred stock or 
other types of preferred or equity-linked securities unless such 
securities are rated as investment grade by at least one NRSO.

    Applicants state that, since the Prior Order was issued, the credit 
markets have tightened significantly for energy companies in general 
and electric utilities and electric utility holding companies in 
particular. They state that spreads over U.S. Treasury securities have 
widened dramatically,\1\ and Alliant Energy's current maximum interest 
rate and dividend spread (500 basis points) may limit the company's 
ability to access capital markets when necessary.
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    \1\Applicants state that, at the time that the Prior Order was 
issued, the spreads over U.S. Treasury securities for a company of 
Alliant Energy's credit quality ranged between 165 and 205 basis 
points for long-term unsecured holding company debt, and now those 
spreads have widened in recent weeks to between 190 and 590 basis 
points.
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    Applicants state that, except as specified above, no other 
modifications of the terms, conditions, or limitations imposed under 
the Prior Order are requested.

Alliant Energy Corporation, et al. (70-10052)

    Alliant Energy Corporation (``Alliant Energy''), a registered 
holding company, 4902 N. Biltmore Lane, Madison, Wisconsin 53718, and 
certain of its utility and nonutility subsidiary companies 
(``Applicants''), including Interstate Power and Light Company 
(``IP&L''), a direct public-utility company subsidiary of Alliant 
Energy, Alliant Tower, 200 First Street S.E., Cedar Rapids, Iowa 52401, 
have filed with the Commission a post-effective amendment to a 
previously filed application-declaration under sections 6(a) and 7 of 
the Act and rule 54 under the Act.

I. Existing Authority

    By order dated June 21, 2002 (HCAR No. 27542) (``Prior Order''), 
the Commission authorized Alliant Energy and certain of its public-
utility company and nonutility subsidiaries to operate two separate 
money pools, a money pool for its public-utility company subsidiaries 
and Alliant Energy Corporate Services, Inc. (``Utility Money Pool'') 
and a money pool for certain of its direct and indirect nonutility 
subsidiaries (``Nonutility Money Pool''). To the extent required, 
participating subsidiaries were authorized to borrow from and extend 
credit to each other through the Utility Money Pool or Nonutility Money 
Pool, as applicable. In addition, the Commission authorized Alliant 
Energy to issue and sell, through December 31, 2004 (``Authorization 
Period''), commercial paper and/or unsecured notes evidencing short-
term borrowings from banks or other institutional lenders (``Short-term 
Debt'') in an aggregate amount at any time outstanding not to exceed $1 
billion.
    Further, by order dated October 10, 2002 (HCAR No. 27575) 
(``Supplemental Order''), the Commission authorized IP&L, during the 
Authorization Period, to issue and sell Short-term Debt in an aggregate 
principal amount at any time outstanding which, when added to any 
borrowings by IP&L under the Utility Money Pool, will not exceed the 
lesser of the limit set by the Minnesota Public Utilities Commission 
(``MPUC'') or $300 million.\2\
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    \2\ At the time the Supplemental Order was issued, IP&L was 
authorized to issue up to $180 million through March 31, 2003.
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II. Requested Authority

    Applicants now request that the Commission issue another 
supplemental order modifying one condition imposed by the Prior Order. 
Specifically, by the Prior Order, the Commission specified that, for 
all Short-term Debt issued by Alliant Energy and IP&L, the effective 
cost of money at the time of issuance cannot exceed 300 basis points 
over the London Interbank Offered Rate (``LIBOR'') for maturities of 
one year or less. Applicants request that the Commission authorize 
Alliant Energy and IP&L to issue Short-term Debt that, at the time of 
issuance, has an effective cost that does not exceed the greater of 500 
basis points over comparable-term LIBOR or a gross spread over LIBOR 
that is consistent with similar securities of comparable credit quality 
and maturities issued by other companies.
    Both Alliant Energy and IP&L maintain commercial paper programs 
that are back-stopped by 364-day credit facilities with banks. 
Applicants state that the interest rates charged on borrowings under 
these bank facilities are a function of the current ratings on Alliant 
Energy's or IP&L's long-term unsecured debt, as the case may be. 
Applicants further state that, since the date of the Prior Order, 
spreads over LIBOR on unsecured short-term bank borrowings have widened 
significantly, and the authorized 300 basis-point spread over LIBOR 
could limit Alliant Energy's and IP&L's ability to borrow under back-up 
credit lines if the need

[[Page 69258]]

should arise. Except as specified above, the terms, conditions, and 
limitations imposed under the Prior Order would remain unchanged.

Interstate Power and Light Company (70-10077)

    Interstate Power and Light Company (``Applicant''), 200 First 
Street, Cedar Rapids, Iowa 52401, a wholly owned public utility 
subsidiary of Alliant Energy Corporation (``Alliant''), 4902 North 
Biltmore Lane, Madison, Wisconsin 53718, a registered holding company 
has filed an application-declaration (``Application'') under sections 
6(a), 7, 9(a), 10, and 12(b) and rules 23, 24, 45 and 53 under the Act.
    The Applicant proposes, from time to time through December 31, 2005 
(``Authorization Period''):
    (a) To organize and acquire the stock or other equity interests in 
one or more special purpose limited partnerships, statutory business 
trusts or limited liability companies (``Issuing Entities'') for the 
sole purpose of issuing one or more series of preferred securities 
(``Entity Interests'');
    (b) For the Issuing Entities to issue and sell one or more series 
of preferred securities having a stated per share liquidation 
preference (``Entity Interests''). Applicant states that the issuance 
of the Entity Interests would also include the issuance of one or more 
series of the Applicant's subordinated debentures to Issuing Entities. 
Each series of subordinated debentures would be in an amount not to 
exceed the amount of the respective series of Entity Interests plus an 
equity contribution; and
    (c) For the Applicant to issue one or more new series of the 
Applicant's preferred stock, par value $0.01 per share (``Preferred 
Stock'').
    The Applicant proposes that the combined aggregate amount of Entity 
Interests and Preferred Stock issued under the authorization granted in 
the Application not exceed $200 million (``Aggregate Limit'') 
outstanding at any time. The Applicant anticipates that the issuance 
and sale of each series of Entity Interests and/or Preferred Stock will 
be by means of competitive bidding, negotiated public offering or 
private placement with institutional investors in order to secure the 
advantages of an advance marketing effort and/or the best available 
terms.

I. Issuing Entities

    The Applicant proposes organize and acquire the Issuing Entities 
for the sole purpose of issuing Entity Interests. The Applicant 
requests authority to use Issuing Entities to issue preferred 
securities because these securities are assigned more equity content by 
certain rating agencies. Additionally, the Applicant states that the 
use of Issuing Entities will afford it greater access to new sources of 
capital and may offer increased state and federal tax efficiency. The 
Applicant states that the Entity Interests will be reflected on its 
consolidated balance sheet in accordance with accounting principles 
generally accepted in the United States of America.\3\ One or more 
partners, trustees or members (individually and collectively, the 
``Manager'') would conduct the business and affairs of the Issuing 
Entity. Provided that the Entity Interests are not then in default, the 
Applicant would, as a result of its ownership of all of the voting 
interests in the Issuing Entity, be entitled to appoint, remove or 
replace the Manager. In the case of a limited partnership, the 
Applicant proposes to either act as the general partner of the Issuing 
Entity or organize a special purpose, wholly owned corporation for the 
sole purpose of acting as the general partner (``Participating 
Subsidiary'') of the Issuing Entity.\4\
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    \3\ The Company states that by organizing Issuing Entities in 
jurisdictions and/or in forms that have favorable terms, it can 
indirectly offer securities with features and terms that are 
attractive to a wider investor base. The Company further states that 
increased tax efficiency can result if an Issuing Entity is located 
in a state or country that has tax laws that make the proposed 
financing transaction more tax efficient relative to the sponsor 
company's existing taxing jurisdiction.
    \4\ In the case of a limited liability company formed under the 
laws of a state in which a limited liability company is required to 
have at least two members, the Company may organize a Participating 
Subsidiary for the purpose of acquiring and holding a membership 
interest.
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II. Entity Interests, Entity Subordinated Debentures, Guarantees

    The Applicant proposes to issue Entity Interests through the 
Issuing Entities in an amount up to the Aggregate Limit, when combined 
with Preferred Securities issued under this Application, through the 
Authorization Period. The Applicant states that the Entity Interests 
would have a stated per share liquidation preference and may be 
registered under the Securities Act of 1933, as amended (``Securities 
Act''). The holders of the Entity Interests would be either (a) the 
limited partners (in the case of a limited partnership); (b) the 
holders of preferred interests (in the case of a business trust) or (c) 
non-managing members (in the case of a limited liability company) of 
the Issuing Entity, and the amounts paid by the holders for the Entity 
Interests would be treated as capital contribution to the Issuing 
Entity.
    The Applicant proposes to issue, from time to time in one or more 
series, subordinated debentures (``Entity Subordinated Debentures'') to 
the Issuing Entity. The Issuing Entity would use the proceeds from the 
sale of its Entity Interests, plus the equity contributions made to it, 
directly or indirectly, by the Applicant, to purchase the Entity 
Subordinated Debentures. If the corresponding series of Entity 
Interests were registered under the Securities Act, then the Entity 
Subordinated Debentures would also be registered under the Securities 
Act. The Entity Subordinated Debentures would be issued by the 
Applicant under a debenture indenture, which, if the corresponding 
series of Entity Interests and Entity Subordinated Debentures are 
registered, will be qualified under the Trust Indenture Act of 1939, as 
amended.
    The Applicant states that the interest rate, maturity, payment 
dates, redemption terms and other terms of each series of Entity 
Subordinated Debentures would be designed to parallel the distribution 
rate, maturity, payment dates, redemption terms and other terms of the 
Entity Interests to which they relate and would be determined by the 
Applicant at the time of issuance. The Applicant states that Entity 
Interests may be redeemable or may be perpetual in duration and, prior 
to maturity, the Applicant would pay interest only on the Entity 
Subordinated Debentures, at either a fixed or adjustable rate as set 
forth in the Entity Subordinated Debenture indenture. The interest paid 
by the Applicant on the Entity Subordinated Debentures would constitute 
the only source of income for the Issuing Entity and would be used by 
the Issuing Entity to make regular scheduled distributions on the 
Entity Interests.
    The Applicant also proposes to enter into a guarantee 
(``Guarantee'') under which it will unconditionally guarantee (a) 
payment of distributions on the Entity Interests, if and to the extent 
the Issuing Entity has funds legally available therefore; (b) payments 
to the holders of Entity Interests of certain amounts due upon 
liquidation of the Issuing Entity or redemption of the Entity Interests 
and (c) certain additional ``gross up'' amounts that may be payable in 
respect of the Entity Interests.\5\
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    \5\ Any Guarantee will be registered under the Securities Act if 
the corresponding Entity Interests are registered under the 
Securities Act.
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    The Applicant states that the Entity Subordinated Debentures and 
any related Guarantee issued by the

[[Page 69259]]

Applicant will be expressly subordinated to senior indebtedness of the 
Applicant. The payment of interest on any Entity Subordinated 
Debentures may be deferred for specified periods without creating a 
default with respect thereto, so long as no dividends are being paid 
on, or certain actions are being taken with respect to the retirement 
of, the common or Preferred Stock of the Applicant during the period of 
deferral.
    The Applicant states that distributions on the Entity Interests 
will be paid at regularly scheduled times as determined at the time of 
sale of each series and will be mandatory to the extent that the 
Issuing Entity has legally available funds sufficient for theses 
purposes. The availability of funds will depend entirely upon the 
Issuing Entity's receipt of the amounts due under the Entity 
Subordinated Debentures. The Applicant states that the Issuing Entity 
would have the right to defer distributions on the Entity Interests for 
a specified period, but only if and to the extent that the Applicant 
defers the interest payments on the Entity Subordinated Debentures as 
described below. The Applicant states that if distributions on the 
Entity Interests (including all previously deferred distributions, if 
any) are deferred beyond a specified period, then the holders of Entity 
Interests may have the right to appoint a special representative to 
enforce the Issuing Entity's rights under the Entity Subordinated 
Debentures indenture and Guarantee (if issued), including the right to 
accelerate the maturity of the Entity Subordinated Debentures.
    The Applicant anticipates that interest payments on the Entity 
Subordinated Debentures made by the Applicant will be deductible by it 
for federal and state income tax purposes and that the Issuing Entity 
will be treated as either a partnership or a trust, as the case may be, 
for federal income tax purposes. Consequently, the holders of Entity 
Interests will be deemed to have received interest income rather than 
dividends, and will not be entitled to any ``dividends received 
deduction'' under the Internal Revenue Code.
    The Applicant states that if, as a result of (a) the Entity 
Subordinated Debentures not being treated as indebtedness for federal 
income tax purposes, or (b) the Issuing Entity not being treated as 
either a partnership or a trust, as the case may be, for federal income 
tax purposes, the Issuing Entity is required under applicable tax laws 
to withhold or deduct from payments on the Entity Interests amounts 
that otherwise would not be required to be withheld or deducted, the 
Issuing Entity may also have the obligation to increase or ``gross up'' 
such payments so that the holders of Entity Interests will receive the 
same payment after the withholding or deduction as they would have 
received if no withholding or deduction were required.
    The Applicant states that in the event of any voluntary or 
involuntary liquidation, dissolution or winding up of the Issuing 
Entity, holders of Entity Interests would be entitled to receive, an 
amount equal to the stated liquidation preference of the Entity 
Interests plus any accrued and unpaid distributions out of the assets 
of the Issuing Entity available for distribution before any 
distribution of assets to the Applicant.
    Applicant propose that the distribution rate or interest rate 
payable on each series of Entity Interests (and any corresponding 
series of Entity Subordinated Debentures) would be determined at the 
time of sale and would be consistent with rates on similar securities 
of comparable credit quality and maturities issued by other companies, 
provided that, if no comparable securities have been issued recently, 
the Entity Interests (and corresponding series of Entity Subordinated 
Debentures) may have a fixed rate or initial adjustable rate thereon at 
the time of issuance not greater than (a) 500 basis points over the 
yield to maturity of a U.S. Treasury security having a remaining term 
comparable to the average life of such series (``Treasury Rate''), if 
issued at a fixed rate, or 500 basis points over the London Interbank 
Offered Rate (``LIBOR'') for the relevant interest rate period, if 
issued at an adjustable rate.
    The Applicant states that the initial distribution or interest rate 
on Entity Interests of each series having an adjustable rate will be 
determined in negotiations between the Applicant and the underwriters 
or purchasers of the series. The Applicant further states that 
thereafter, the distribution or interest rate on the Entity Interests 
(``Adjustable Rate Entity Interests'' and on any corresponding series 
of Entity Subordinated Debentures) would be adjusted according to a 
pre-established formula or method of determination or would be that 
rate which, at the time of remarketing, would be sufficient to remarket 
the Entity Interests of the series (``Remarketed Interests'') at their 
principal amount, provided that the distribution or interest rate on 
Remarketed Entity Interests after the initial distribution or interest 
rate period will not exceed 500 basis points over LIBOR.
    The Applicant proposes that the holders of Remarketed Interests 
will have the right to tender, or can be required to tender, their 
Remarketed Interests and have them purchased at a price equal to the 
liquidation preference plus accrued and unpaid distributions, if any, 
on dates specified in, or established in accordance with the 
instruments creating the Remarketed Interests. The Applicant proposes 
that a tender agent (``Tender Agent'') may be appointed to facilitate 
the tender of Remarketed Interests by holders. Any holder of Remarketed 
Interests wishing to have them purchased may be required to deliver the 
Remarketed Interests during a specified period of time preceding the 
purchase date to the Tender Agent, if one shall be appointed, or to the 
remarketing agent (``Remarketing Agent'') appointed to reoffer the 
tendered Remarketed Interests for sale.
    The Applicant states that the Issuing Entity would be obligated to 
pay amounts equal to the amounts to be paid to the Remarketing Agent or 
the Tender Agent for the purchase of Remarketed Interests tendered (on 
the dates the payments by the Remarketing Agent or the Tender Agent are 
to be made), reduced by the amount of any other moneys available, 
including the proceeds of the sale of the tendered Entity Interests by 
the Remarketing Agent. Upon the delivery of the Entity Interests by 
holders to the Remarketing Agent or the Tender Agent for purchase, the 
Remarketing Agent would use its best efforts to sell the Remarketed 
Interests at a price equal to the liquidation amount of the Remarketed 
Interests.

III. Preferred Stock

    The Applicant proposes to directly issue Preferred Securities in an 
amount up to the Aggregate Limit, when combined with Preferred 
Securities issued under this Application, through the Authorization 
Period. The Applicant states that as of June 30, 2002, it had 
24,000,000 authorized shares of common stock, 13,370,788 of which were 
issued and outstanding, and 1,927,787 authorized shares of Preferred 
Stock, 1,127,787 of which were issued and outstanding. In September 
2002, the Applicant redeemed all of its outstanding shares of preferred 
stock according to rule 42. The Applicant states that its parent 
company, Alliant Energy, as the sole holder of the Applicant's common 
stock, has approved a restatement (``Restatement'') of its Articles of 
Incorporation and the Applicant now requests authorization to act on 
the Restatement to authorize

[[Page 69260]]

16,000,000 shares of Preferred Stock. The Applicant proposes that 
Preferred Stock be issued in one or more series with rights and 
preferences as the Applicant's board of directors may fix and determine 
from time to time during the Authorization Period, including, without 
limitation, the voting power (if any) of any series of Preferred Stock; 
the redemption price; the dividend rate; the right (if any) of the 
holders of any series of Preferred Stock to convert the same into, or 
exchange the same for, other classes of stock of the Applicant; 
liquidation preferences and sinking fund provisions.
    Applicant proposes that the price, exclusive of accumulated 
dividends, to be paid to the Applicant for each series of Preferred 
Stock will be fixed from time to time by the board of directors. The 
dividend rate on each series of Preferred Stock would be consistent 
with the dividend rate on similar securities of comparable credit 
quality and maturities issued by other companies. If no comparable 
securities have been issued recently, the Applicant proposes that the 
series of Preferred Stock may have a dividend rate at the time of 
issuance not greater than 500 basis points over the applicable Treasury 
Rate, if issued at a fixed rate, or 500 basis points over LIBOR for the 
relevant interest rate period, if issued at a floating rate.
    The Applicant proposes that each series of Preferred Stock may be 
redeemable at specified redemption prices, subject to a restriction on 
optional redemption for a given number of years, or may be perpetual in 
duration. The Applicant proposes to include, for any series of 
Preferred Stock, provisions for a sinking fund designed to redeem 
annually, commencing a specified number of years, at the stated value 
per share of the series, plus accumulated dividends, a number of shares 
equal to a stated percentage of the total number of shares of the 
series. In the case of the sinking fund provision, the Applicant 
proposes to have an option to redeem an additional number of shares 
annually up to a certain percentage of the total number of shares of 
the series.
    The Applicant commits that it will not publicly issue any Preferred 
Stock or Equity Interests unless the securities are rated at the 
investment grade level as established by at least one nationally 
recognized statistical rating organization, as that term is used in 
paragraphs (c)(2)(vi)(E), (F) and (H) of rule 15c3-1 under the 
Securities Exchange Act of 1934 and that it will maintain its common 
equity as a percentage of capitalization (inclusive of short-term debt) 
at no less than thirty percent.

Union Electric Company (70-10089)

    Union Electric Company (``AmerenUE''), 1901 Chouteau Avenue, St. 
Louis, Missouri 63103 (``Declarant''), an electric and gas utility 
subsidiary of Ameren Corporation (``Ameren''), a registered holding 
company, has filed a declaration under section 12(d) of the Act and 
rules 44 and 54 under the Act.
    Declarant requests authority to sell its ownership interest in new 
electric generating facilities to the City of Bowling Green, Missouri 
(``Bowling Green''), and then lease back the facilities from Bowling 
Green for a term of approximately 20 years.
    AmerenUE supplies electric service to approximately 1.2 million 
customers in a 24,500 square-mile area of Missouri and Illinois, 
including the greater St. Louis area. AmerenUE also provides retail gas 
service to approximately 130,000 customers in 90 Missouri communities 
and in the City of Alton, Illinois and vicinity. In 2001, AmerenUE 
derived approximately 95% of its revenues from electric operations and 
5% from the sale of natural gas. At June 30, 2002, AmerenUE had $7.3 
billion in total assets, including net property, plant and equipment of 
$5.8 billion. AmerenUE's consolidated capitalization at June 30, 2002, 
consisted of 55.7% common equity, 3.3% preferred stock, 33.5% long-term 
debt (excluding current maturities), and 7.5% of short-term debt 
(including current portion of long-term debt). AmerenUE's senior 
secured long-term debt is currently rated A+ by Standard & Poor's and 
Aa3 by Moody's Investors Service.
    AmerenUE has constructed a new electric generating facility 
consisting of four 47 megawatt combustion turbine generating units, 
fueled primarily by natural gas with fuel oil as a back-up, in Bowling 
Green (the ``Project''). In order to provide a financing structure and 
economic incentives to construct the Project in Bowling Green, AmerenUE 
has entered into a Pre-Annexation and Development Agreement (the 
``Grant Agreement'') dated as of November 9, 2001, with the City, which 
provides, among other things, that (a) AmerenUE will convey certain 
land (the ``Site'') and any improvements located on the site, including 
the four combustion turbine generating units to Bowling Green in 
exchange for the issuance by Bowling Green of its taxable industrial 
development revenue bond in a principal amount not to exceed 
$125,000,000 (the ``Bond''), and (b) Bowling Green will lease the Site 
and the Project to AmerenUE for a term of approximately 20 years.
    The Trust Indenture will provide the specific terms of the Bond, 
including a final maturity of twenty years and an interest rate of 
5.15%. The Trust Indenture will also specify the terms and details of 
the Bond and will contain various provisions, covenants and agreements 
to protect the security of the bondholders (initially AmerenUE). The 
Bond will be a special limited obligation of Bowling Green payable 
solely from the rental payments to be made by AmerenUE pursuant to a 
facility lease agreement, and in the event of a default by AmerenUE 
under such lease agreement, the rents, revenues and receipts of Bowling 
Green derived from the Site and the Project. The Bond will also be 
secured by a Deed of Trust and Security Agreement granted by Bowling 
Green encumbering the Site and the Project.
    AmerenUE will transfer the Site and the Project to Bowling Green 
under to a Special Warranty Deed and a Bill of Sale. Concurrently with 
the issuance of the Bond, Bowling Green will lease the Site and Project 
constructed on the Site to AmerenUE pursuant to a Lease Agreement (the 
``Lease'') between the City and AmerenUE. The Lease term will be the 
same as the final maturity of the Bond and will be a net lease, with 
AmerenUE being responsible for rental payments in an amount sufficient 
to pay the debt service on the Bond, equal to approximately $9.2 
million per year. Under the Lease, AmerenUE will be responsible for 
maintaining, insuring, operating and paying any taxes related to the 
Project. AmerenUE will have the option, at any time during the term of 
the Lease, at the expiration of the twenty-year Lease, or if there is 
an early termination of the Grant Agreement, to purchase Bowling 
Green's interest in the Project and the Site upon providing for the 
payment of the principal balance of and interest on the Bond and the 
payment of a nominal fee to Bowling Green. AmerenUE will record the 
Lease as a capital lease on its accounting books and records.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 02-28987 Filed 11-14-02; 8:45 am]
BILLING CODE 8010-01-P