[Federal Register Volume 67, Number 239 (Thursday, December 12, 2002)]
[Notices]
[Pages 76427-76429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31336]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27611]


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

December 6, 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 31, 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 31, 2002, the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

System Energy Resources, Inc. et al. (70-7561)

    Entergy Corporation (``Entergy''), a registered holding company, 
639 Loyola Avenue, New Orleans, Louisiana 70113;

[[Page 76428]]

Entergy's nonutility subsidiary, System Energy Resources, Inc. 
(``System Energy''), Echelon One, 1340 Echelon Parkway, Jackson, 
Mississippi 39213; and Entergy's utility subsidiaries (``System 
Operating Companies''): Entergy Arkansas, Inc. (``EAI''), 425 West 
Capitol, 40th Floor, Little Rock, Arkansas 72201; Entergy Louisiana, 
Inc. (``ELI''), 4809 Jefferson Highway, Jefferson, Louisiana 70121; 
Entergy Mississippi, Inc. (``EMI''), 308 East Pearl Street, Jackson, 
Mississippi 39201; Entergy New Orleans, Inc. (``ENOI''), 1600 Perdido 
Building, New Orleans, LA 70112; (together, ``Applicants''), have filed 
a post-effective amendment under sections 6, 7 and 12(b) of the Act and 
rules 45, 53, and 54 under the Act to a previously filed application-
declaration with the Commission.
    By order dated December 23, 1998 (HCAR No. 24791), System Energy 
was authorized to enter into two separate but identical arrangements 
for the sale and leaseback of undivided portions of its interest in 
Unit No. 1 of the Grand Gulf Steam Electric Generating Station (``Unit 
No. 1''). In connection with the equity funding of the arrangements, 
financial support in the form of letters of credit (``LOCs'') was 
required to be maintained to secure the payment to the equity investors 
of certain amounts that may be payable by System Energy under the 
respective leases from time to time.
    Applicants state that initial LOCs in an aggregate principal amount 
of $128,126,450 were issued in 1988 and through additional orders, the 
Commission authorized issuances of replacement LOCs in this file in 
1991, 1993, 1996, and 1999.\1\ Applicants state that the LOCs issued in 
1999 in the amount of approximately $193 million are scheduled to 
expire on March 20, 2003.
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    \1\ See HCAR No. 25241 (January 11, 1991), HCAR No. 25944 
(December 10, 1993), HCAR No. 26601 (November 6, 1996), and HCAR No. 
27157 (March 23, 2000).
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    By order dated November 6, 1996 (HCAR No. 26601), during the basic 
terms of the leases, (a) System Energy was authorized to extend, 
increase the amount of and/or change the pricing terms of subsequent 
LOCs within the parameters set forth in the Commission's previous 
orders; (b) System Energy was authorized to enter into new 
reimbursement agreements or further amendments to the then existing 
reimbursement agreement; (c) System Energy and the System Operating 
Companies were authorized to enter into one or more additional 
assignments of the availability agreement (``Availability Agreement''); 
\2\ and (d) System Energy and Entergy were authorized to enter into one 
or more additional assignments of the capital funds agreement 
(``Capital Funds Agreement''),\3\ in each case, to provide further 
security for System Energy's reimbursement obligations to the entity 
which will issue the replacement LOCs (``LOC Entity'') the 
administrating bank and, the participating banks.
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    \2\ The System Operating Companies entered into an Availability 
Agreement in 1974 to pay System Energy each month, in return for the 
right to receive capacity and energy from Unit No. 1, amounts 
adequate (together with other funds received by System Energy) to 
cover a certain proportion of System Energy's operating expenses and 
interest charges. System Energy's benefits and rights under the 
Availability Agreement have been assigned to various creditors of 
System Energy since 1977.
    \3\ Under the Capital Funds Agreement dated as of June 21, 1974, 
Entergy agreed to furnish System Energy capital sufficient to enable 
System Energy to (a) maintain a minimum 35% equity ratio; (b) pay 
certain indebtedness when due; and (c) continue the commercial 
operation of Unit No. 1. Since 1977, System Energy has entered into 
supplementary agreements and assignments to secure System Energy's 
creditor group. These assignments extend terms comparable to the 
Capital Funds Agreement to each specific creditor group.
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    Applicants now request authority to enter into a transaction, which 
will result in pre-funded LOCs.\4\ Applicants state that the proposed 
transaction would require the creation of a financing entity 
(``Financing Entity''), currently anticipated to be a Delaware business 
trust. Applicants state that neither System Energy, Entergy, nor any 
associate company of either corporation would form the Financing Entity 
or hold an equity stake in the Financing Entity. Applicants further 
state that the Financing Entity would issue pass-through certificates 
(``Pass-Through Certificates'') to investors in a private placement. 
The Pass-Through Certificates would evidence an undivided ownership 
interest in all of the Financing Entity's assets and contemplate a 
fixed or floating return on the investment. The amount of the proceeds 
of the sale of the Pass-Through Certificates would equal the amount of 
the replacement LOCs to be issued which amount will not exceed $200 
million.
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    \4\ System Energy states that, due to changes in the credit 
markets since the issuance of the 1999 replacement LOCs, it has 
become increasingly difficult and expensive to obtain these 
replacement LOCs. System Energy asserts that the purpose in 
proposing pre-funded LOCs is that the proposed transaction could 
result in replacement LOCs with terms that could extend through the 
remainder of the basic term of the leases (July 15, 2015) at a cost 
comparable to that which may be required to periodically renew, 
replace, or extend the LOCs in the commercial bank market through 
the basic term of the leases.
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    Applicants state that the Financing Entity would invest the 
proceeds of the sale of the Pass-Through Certificates in permitted 
investments, currently anticipated to include and primarily consist of 
a guaranteed investment contract (``GIC'') issued by an insurance 
company or other investments. The GIC or other investments would bear 
interest at a specified rate, would mature as to principal at the same 
time as the Pass-Through Certificates and be redeemable, at the option 
of its holder, in the same amounts and at the same time as drawings on 
the LOCs.
    System Energy, the entity which will issue the replacement LOCs 
(``LOC Entity''), and the Financing Entity propose to enter into a 
reimbursement agreement (``New Reimbursement Agreement'') providing for 
the issuance of the replacement LOCs that System Energy would be 
required to reimburse in the case of draws on the LOCs. Applicants 
state that, in the event of unreimbursed drawings on the LOCs, the LOC 
Entity would be permitted to cause the Financing Entity's investments 
to be liquidated and utilized to reimburse the LOC Entity for the 
drawings. System Energy would be obligated to reimburse the Financing 
Entity for the amount of the drawing. Applicants assert that the LOC 
Entity, currently anticipated to be a bank, may be the Financing Entity 
described above.
    Applicants state that annualized fees, not to exceed five percent 
per annum, payable by System Energy under the New Reimbursement 
Agreement to the Financing Entity would, together with the return on 
the Financing Entity's permitted investments, equal the return to be 
paid on the Pass-Through Certificates. Applicants further state that 
unreimbursed drawings on the LOCs would bear interest at the same rate 
and be payable at the same time as the principal and interest are 
payable on the Pass-Through Certificates.
    To support System Energy's obligations under the New Reimbursement 
Agreement to the LOC Entity and the Financing Entity, the Applicants 
may be required to enter into one or more supplementary agreements and 
assignments of the Capital Funds Agreement and one or more assignments 
of the Availability Agreement evidencing support to or for the benefit 
of the other parties to the New Reimbursement Agreement. The Applicants 
hereby request authority for (a) Entergy and System Energy to enter 
into one or more supplementary agreements and assignments of the 
Capital Funds Agreement and (b) the System Operating Companies and 
System Energy to enter into one or more assignments of the Availability 
Agreement, in each case to or for the

[[Page 76429]]

benefit of other parties to the New Reimbursement Agreement. 
Additionally, to evidence or secure System Energy's obligations under 
the New Reimbursement Agreement to LOC Entity and the Financing Entity, 
System Energy may be required to issue its first mortgage bonds or 
other secured or unsecured debt securities (``Bonds'') to or for the 
benefit of, other parties to the New Reimbursement Agreement. The Bonds 
would be issued in an amount equal to the maximum amount of up to $200 
million of the replacement LOCs, have the same term as the replacement 
LOCs, and bear interest at the same rates as will be borne by the Pass-
Through Certificates. The interest rate on the Pass-Through 
Certificates would not exceed at the time of issuance the greater of 
(a) 500 basis points over U.S. Treasury securities having a remaining 
term comparable to the term of such certificates, if issued at a fixed 
rate, or 500 basis points over LIBOR for the relevant interest rate 
period, if issued at a floating rate and (b) a spread over U.S. 
Treasury securities or LIBOR, as the case may be, that is consistent 
with similar securities of comparable credit quality and maturities 
issued in similar transactions with other companies.

    For the Commission by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-31336 Filed 12-11-02; 8:45 am]
BILLING CODE 8010-01-P