File No.
United States Securities and Exchange Commission
Washington, D.C. 20549
________________________________________
Form U-1
Application/Declaration
Under the
Public Utility Holding Company Act of 1935
________________________________________
National Grid Group plc
National Grid (US) Holdings Limited
National Grid (US) Investments
15 Marylebone Road
London, NW15JD
United Kingdom
National Grid USA
25 Research Drive
Westborough, MA 01582
(Names of companies filing this statement
and addresses of principal executive offices)
________________________________________
National Grid Group plc
(Name of top registered holding company)
________________________________________
Kirk L. Ramsauer
Deputy General Counsel
National Grid USA
25 Research Drive
Westborough, MA 01582
Telephone: (508) 389-2972
Facsimile: (508) 389-3518
(Names and addresses of agents for service)
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The Commission is also requested to send copies
of any communication in connection with this matter to:
Joanne C. Rutkowski
Markian M. W. Melnyk
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
1875 Connecticut Ave., N.W.
Washington, D.C. 20009-5728
Telephone: (202) 986-8000
Facsimile: (202) 986-8102
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Item 1. Description of the Proposed Transaction
A Introduction
This Application-Declaration ("Application") seeks approvals relating to
the financing of National Grid Group plc ("National Grid") and certain other
companies in the National Grid system. National Grid, a registered holding
company, currently operates under a Commission order dated March 15, 2000
("March Order")./1 National Grid proposes to make certain changes to its
financing authorization and the authorization applicable to the intermediate
registered holding companies that are direct or indirect parent companies of
National Grid USA ("Intermediate Companies"). National Grid USA is the holding
company over the former New England Electric System utility and nonutility
companies.
In particular, Applicants propose the following transactions:
(1) National Grid proposes to increase the aggregate amount of convertible bonds
that it may issue under the March Order from $1 billion to $2 billion while
maintaining the overall $4 billion limit on securities (excluding guarantees)
issued by National Grid unchanged;
(2) National Grid proposes to finance the Intermediate Companies and National
Grid USA with loans from National Grid, associate companies outside the National
Grid USA ownership chain, and/or with loans from an indirect parent holding
company, and;
(3) The Intermediate Companies propose to enter into currency derivatives with
National Grid and associate companies outside the National Grid USA ownership
chain.
Each of the proposed transactions is discussed in further detail below.
B. Request to Issue Up to $2.0 Billion of Convertible Bonds
The March Order authorizes National Grid to issue equity and debt
securities in an aggregate amount at any one time outstanding not to exceed $4
billion ("Aggregate Limitation") during an Authorization Period that extends to
May 31, 2003./2 National Grid's authorization is further subject to limits on
the types and amounts of securities that may be issued during the Authorization
Period. Within the overall Aggregate Limitation, the following sub-limits apply:
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1. The National Grid Group plc, Holding Co. Act Release No. 27154 (March 15,
2000).
2. Guarantees issued by National Grid are subject to a separate $2 billion
limit.
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Type of Security Issuance Limitation
Equity Securities
Ordinary Shares $500 million
Preferred Securities $100 million
Debt Securities
Bank Debt $3 billion
Commercial Paper $3 billion
Convertible Bonds $1 billion
Nonconvertible Bonds $3 billion
National Grid proposes to increase the limit applicable to the issuance of
convertible bonds to $2 billion. The Aggregate Limitation, as well as the
various terms and conditions of National Grid's financing authority set forth in
the March Order, would remain unchanged.
National Grid requests the increase in convertible bond financing authority
to provide additional flexibility to execute its financing program. The company
is considering issuing convertible bonds in the near future with a likely
program size of $1 billion. If market conditions are favorable at the time of
issuance, however, National Grid would like the flexibility to increase the size
of the offering. The proceeds of the sale of the convertibles will be used in
whole or in part to retire existing debt of National Grid.
The bonds would be exchangeable into ordinary shares of Energis plc (a
National Grid subsidiary engaged in telecommunications in the U.K and certain
other countries),/3 or perhaps National Grid. Convertible bonds allow investors
to obtain higher income than they may receive from ordinary shares, while
benefiting from greater appreciation potential than regular bonds. The
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3. As of March 31, 2000, National Grid held 36.3% of the outstanding ordinary
shares of Energis plc.
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convertible feature also allows National Grid to enhance the marketability of a
bond issuance, perhaps allowing National Grid to price the issuance at an
interest rate lower than straight bonds of equal maturity and credit quality.
The lower interest rates possible with convertible bonds serve to reduce
National Grid's fixed debt burden in connection with an issuance, thus making
National Grid financially more robust and a better risk.
As with other securities issuances, prior to issuing the convertible bonds,
National Grid will evaluate the relevant financial implications of the issuance,
including without limit, the cost of capital, and select the security that
provides the most efficient capital structure consistent with sound financial
practices and the capital markets. Applicants note, in addition, that the
issuance of debt is subject to certain conditions under the March Order intended
to ensure the financial integrity of National Grid, including a minimum common
equity capitalization standard and an investment grade credit standard.
National Grid has stated publicly its objective to dispose of its
shareholding in Energis plc. A National Grid bond exchangeable into Energis plc
shares provides a means to do this and can often be structured to achieve a
premium over the current market price. The disposal that can arise at the
maturity of the bond would allow National Grid to record a profit on the share
disposal with the consequential benefit of strengthening the equity base of the
company. In the event that the Energis share price is such that conversion does
not occur, the benefits of having had a lower interest rate on the debt will be
retained.
C. Request to Finance Intermediate Companies and National Grid USA with
Loans from National Grid, "Foreign" Associates, and Indirect
Intermediate Companies
National Grid proposes to finance the Intermediate Companies and National
Grid USA with loans from National Grid, associate companies outside the National
Grid USA ownership chain (i.e., loans from "foreign" associate companies
including National Grid Holdings Limited, a foreign utility company, and its
subsidiaries), and/or with loans from an indirect parent holding company.
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From time-to-time, it may be advantageous for an Intermediate Company
and/or National Grid USA to borrow funds from an associate company on the
foreign utility company ("FUCO") side of the National Grid system (i.e.,
National Grid Holdings Limited or its direct or indirect subsidiaries) or from
the parent of its immediate parent company (or a more remote company), for
example a loan from National Grid (US) Investments ("NGUSI") to National Grid
USA. Such loans allow National Grid more flexibility to meet the short-term
working capital requirements of National Grid USA and its subsidiaries where the
funds could be raised more cheaply by National Grid than by National Grid USA or
its subsidiaries. Loans from associate companies in the system also allow the
efficient use of surplus cash. For example, surplus cash available in the FUCO
side may be loaned directly to National Grid USA or a direct or indirect
subsidiary. Such direct loans minimise having cash on deposit within the
National Grid group when other companies have borrowings.
Both National Grid USA and National Grid maintain unused committed bank
facilities to provide assured liquidity to meet variations in working capital
requirements. The banks charge fees in connection with the facilities. The
financial flexibility to loan funds to National Grid USA and the Intermediate
Companies requested in this Application will allow facilities made available to
National Grid to be used as and when needed to loan funds to National Grid USA.
An element of duplication could thus be avoided and a portion of National Grid
USA's bank facilities could be cancelled, with a consequent savings of bank
facility commitment fees.
To provide funds to support or expand operations in the National Grid USA
group it is, in many cases, preferable to use short-term loans rather than to
capitalise the Intermediate Companies with more equity. Equity can be less
flexible since it is difficult to reduce the equity capital of the Intermediate
Companies, to return the cash to the parent, once the National Grid USA group of
companies no longer needs the extra funds. In addition, when funds are required
on short notice, it may be easier from a financial/treasury management
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perspective to make loans directly to National Grid USA rather than via each
Intermediate Company down the chain. As required by the March Order, loans to
National Grid USA (and any of its direct or indirect subsidiaries) from any
company in the National Grid system would bear interest at rates designed to
parallel the effective cost of debt capital of National Grid. In addition, the
Commission's equity capitalization standard and all other terms of the March
Order applicable to National Grid USA, its utility subsidiary companies and the
Intermediate Companies would continue to apply.
Funds would not be lent from the Intermediate Companies or National Grid
USA to any companies on the FUCO side of the National Grid system. Accordingly,
the proposed transactions do not raise the risks of FUCO financing identified in
Section 33 of the Act or affect the Rule 53 investment limits. The loans allow
the National Grid system to move funds from the FUCO side of the system to the
National Grid USA group of companies without the inefficiencies of passing the
funds up to National Grid and down the US chain. The relief requested is similar
to the flexible short-term financing that many registered holding company
systems engage in through the use of a money pool, except that it involves
direct loans among associate companies rather than a pooling device.
D. Request for the Intermediate Companies to Enter Into Currency
Derivatives
The Intermediate Companies propose to enter into currency derivatives with
National Grid and associate companies outside the National Grid USA ownership
chain. The proposed authority will allow National Grid more flexibility to
structure its ownership of National Grid USA through the Intermediate Companies
in a tax efficient manner and to manage foreign exchange risk.
In the UK, it is often more tax efficient to finance intermediate holding
companies with equity rather than debt. For example, if an intermediate holding
company is financed by a small amount of equity and a significant intra-group
loan, any increase in the value of the company can produce a taxable gain on the
equity but any decrease may produce a loss on the loan which is not tax
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deductible. If the company is capitalized mostly with equity, this risk is
reduced as a loss on equity is deductible, thereby giving a symmetrical
treatment for losses and gains.
However, where the company has an investment in a foreign currency asset
such as shares in a foreign company it is also necessary to have regard to the
UK tax treatment of foreign exchange differences. The UK tax treatment of
foreign exchange differences arising on the shares in the foreign company is
different from the tax treatment accorded to the foreign currency denominated
liability that commercially hedges the investment. Foreign exchange gains and
losses on the liability are taxed on an accruals basis but no exchange gain or
loss is recognized on the shares for tax purposes until disposal. This creates a
fundamental timing difference between the tax and accounting treatment, which
could leave National Grid with a substantial tax liability on an unrealized
exchange gain that does not appear in the consolidated group profit and loss
account.
To avoid this problem, a company may elect for UK tax purposes to "match"
dollar denominated shares with a dollar denominated liability. When a so-called
"matching election" is made, exchange gains and losses on the liability are not
taxed on an accruals basis but are held in suspense until the shares are
disposed. However, a matching election may only be made if the asset and
liability are in the same company. NGUSI, for example, has made such a matching
election with regard to its investment in the shares of National Grid Ireland 1
Ltd ("NGI1"). (i.e., the asset) and its liability with respect to a loan from
National Grid (US) Holdings Ltd. ("NGUSH"). See Exhibit A-1.
Thus, while National Grid would prefer to finance NGUSI with equity rather
than debt, if it is so financed it would still be necessary for NGUSI to have a
US dollar denominated liability in order to continue to be able to hedge its US
dollar investment in NGI1 for UK tax purposes. One way is for NGUSI to enter
into cross currency swaps with National Grid or another Intermediate Company to
create the foreign currency liability in NGUSI to match with the asset. Such a
swap, as it is legally a derivative financial contract, does not involve any
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borrowing, but does qualify as a US dollar liability for the relevant UK tax
purposes. A swap would typically in these circumstances oblige NGUSI to pay the
counterparty (i.e., National Grid or another Intermediate Company) an amount of
U.S. Dollars and would oblige the counterparty to pay NGUSI an amount of Pounds
sterling. These amounts can be settled gross, or if the parties prefer, the net
value of the contract can be calculated at maturity with a single net payment by
the appropriate party. The counterparty to the swap will be taxed on an accruals
basis. See Exhibit A-2. The proposed derivatives transactions would be entered
into on an arm's-length basis with market-based interest rates.
As another alternative, NGUSI could enter into a cross currency swap with
an associate company on the FUCO side of the National Grid system. See Exhibit
A- 3. This approach has the advantage of isolating potential losses from a swap
that, under UK company law, could block the flow of distributable reserves by
National Grid to shareholders, if the losses occurred at National Grid.
In either case, because the proposed swaps are with a company in the
National Grid system, any gain or loss on the swap would be a wash on a
consolidated basis, other than the tax effect associated with the gain or loss.
Any derivative transactions to be undertaken under this section D would be to
facilitate the equity financing of the Intermediate Companies or to accommodate
foreign exchange hedging and would be limited to transactions within the
National Grid System. The proposed transactions are, therefore, consistent with
the use of the Intermediate Company structure as an investment conduit. It is
also important to note that the swaps discussed above would not involve National
Grid USA or its subsidiaries and, consequently, would not have any adverse
effect on these companies.
E. Rule 54 Analysis
Under Rule 54, the Commission may not consider the effect of the
capitalization or earnings of any subsidiary which is an exempt wholesale
generator ("EWG") or FUCO upon the registered holding company system "if Rules
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53(a), (b) and (c) are satisfied." National Grid currently meets all of the
conditions of Rule 53(a), except for clauses (1) and (2)./4 Due to the level of
National Grid's aggregate investment in EWGs and FUCOs and the lack of U.S. GAAP
books and records for its FUCO investments, National Grid cannot comply with
Rule 53(a) and consequently, it must demonstrate that it complies with Rule
53(c).
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4. As the Commission noted in the March Order, National Grid has preexisting
foreign operations and cannot at this time commit to maintain the books and
records of these interests in conformity with U.S. GAAP. National Grid will,
however, comply fully with the substantive provisions of Rule 53.
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National Grid's aggregate investment, as defined in Rule 53(a), in EWGs and
FUCOs as of September 30, 2000 was $4,034,303,800. As of September 30, 2000,
National Grid's consolidated retained earnings calculated in accordance with
U.S. GAAP was $3,296,256,000. Consequently, National Grid's aggregate investment
in EWGs and FUCOs as a percentage of its consolidated retained earnings was 122%
as of September 30, 2000./5 In the Commission's March Order, National Grid was
authorized to invest up to 252% of its retained earnings in EWGs and FUCOs.
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5. National Grid's consolidated capitalization was 33.5% common stock and 66.5%
debt as of September 30, 2000.
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National Grid also notes that none of the conditions described in paragraph
(b) of Rule 53 is applicable. Specifically, (1) there has been no bankruptcy of
any National Grid associate company in which a plan of reorganization has not
been confirmed, (2) the average consolidated retained earnings for the two most
recent semiannual periods has not decreased by 10 percent from the average for
the previous two semiannual periods, and (3) in the past fiscal year, National
Grid has not reported operating losses attributable to its direct or indirect
investments in EWGs and FUCOs. Indeed, National Grid's interests in EWGs and
FUCOs have contributed positively to its consolidated earnings during the period
since the March Order.
National Grid is in full compliance with the conditions of Rule 53(c).
Under Rule 53(c), "[a]n applicant that is unable to satisfy the requirements of
paragraphs (a) and (b) of this section must affirmatively demonstrate that the
proposed issue and sale of a security to finance the acquisition of an exempt
wholesale generator, or the guarantee of a security of an exempt wholesale
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generator (1) will not have a substantial adverse impact upon the financial
integrity of the registered holding company system; and (2) will not have an
adverse impact on any utility subsidiary of the registered holding company, or
its customers, or on the ability of state commissions to protect such subsidiary
or customers.
The additional financing authority sought in this Application would not
have an adverse effect on the financial integrity of the National Grid system,
or an adverse impact on National Grid's public-utility subsidiaries, their
customers, or the ability of State commissions to protect such public-utility
customers. The lack of any adverse effect associated with National Grid's
current financing plan was fully demonstrated in National Grid's Application in
File No. 70-9519 and confirmed by the Commission in its March Order. The
financing transactions proposed in the instant Application do not require a
different conclusion. The March Order notes that in its Application referenced
above; (1) National Grid demonstrated that it had an investment grade credit
rating, (2) a history of positive contributions to earnings from National Grid
Company (the most significant part of National Grid's FUCO operations), (3) that
the Application contained various commitments by National Grid to maintain its
financial strength, and (4) that the public utility subsidiaries in the National
Grid system were insulated from the direct effects of EWG and FUCO investments.
Lastly, the Application notes that National Grid has demonstrated expertise and
sound management skills with respect to its operation of the high-voltage system
in England and Wales and that its project review procedures are stringent. Based
on all these factors, the Commission found in the March Order that "National
Grid has made the requisite showing under rule 53(c)."/6
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6. March Order at 64.
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Given that National Grid will continue to comply with the terms of the
March Order as modified by this Application in a manner that increases financial
flexibility while assuring the continued soundness of the National Grid system,
the Commission should find the terms of Rule 54 satisfied.
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Item 2. Fees, Commissions and Expenses
National Grid expects to pay or incur up to $100,000 in aggregate fees,
commissions and expenses, directly or indirectly, in connection with the
proposed transactions. The above fees do not include expenses for the public
issuance of securities. Such expenses would be within the parameters specified
in the March Order.
Item 3. Applicable Statutory Provisions
A. Applicable Provisions
The proposed transactions are subject to Sections 6(a), 7, 9(a), 10, 12(b)
and 12(f) of the Act and Rule 45(a) thereunder.
To the extent that the proposed transactions are considered by the
Commission to require authorization, exemption or approval under any section of
the Act or the rules and regulations other than those set forth above, request
for such authorization, exemption or approval is hereby made.
B. Legal Analysis
The proposed increase in convertible debt authority is merely a request for
additional financing flexibility that is fully consistent with the terms of the
March Order. Since the Aggregate Limitation and the other terms and conditions
of the March Order remain unchanged, there is no increase in risk to the
financial soundness of the National Grid system. Indeed, as discussed above in
Item 1.B., convertible bonds may be preferable to straight bonds because they
can increase the financial strength of the system by lowering its fixed debt
service burden.
National Grid's request to finance the Intermediate Companies and National
Grid USA with loans from associate companies outside the National Grid USA
ownership chain and the request to make loans to the Intermediate Companies and
National Grid USA from an indirect parent company is fully consistent with the
Act. Loans from one associate company to another are commonly made in the
context of money pools authorized by the Commission./7 The Commission has also
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7. See e.g., PowerGen plc, Holding Co. Act Release No. 27291 (December 6, 2000)
(authorizing the formation of utility and nonutility money pools).
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authorized intercompany loans among a holding company and its nonutility
subsidiaries./8 Associate company loans as proposed in the Application do not
involve the credit of the National Grid USA utility subsidiaries and do not
create third party interests in any National Grid subsidiary company. In
addition, the loans will be made under terms that provide the same protections
as Rule 52(b)(2), in particular, the interest rate and maturity of any loan to
an associate will be designed to parallel the effective cost of capital of a
similar maturity debt security issued by National Grid. Consequently, the
concerns underlying the Act regarding complex capital structures, overleveraged
utility subsidiaries, and abusive affiliate relationships are not raised by the
proposed transactions.
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8. Id. (applicants were authorized to make "inter-company loans among LG&E
Energy and the LG&E Energy Nonutility Subsidiaries" in an amount up to $1
billion in addition to amounts that were exempt under Rules 45(b) and 52 and
amounts outstanding under the system money pools).
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Associate company loans are beneficial to the registered holding company
system because they permit free cash in National Grid's foreign utility
operations to be applied to constructive uses in the National Grid USA group.
Such flexibility allows the National Grid USA group to minimize commitment fees
on duplicative credit facilities. The Commission has been supportive of measures
taken by registered holding companies to structure their finances as efficiently
as possible to respond to the pressures of the increasingly competitive utility
business./9 National Grid's proposal does just that: it is intended to lower the
system's overall cost of funds, to improve its competitiveness, and to increase
shareholder returns.
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9. The Southern Company, Holding Co. Act Release No. 27134 (Feb. 9, 2000) (the
order noted that "Southern states that the competitive nature of power
generation places a premium on access to capital at the lowest cost, and thus
requires the type of financial flexibility that Southern is seeking").
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National Grid's request to make loans to the Intermediate Companies and
National Grid USA from an indirect parent company is also consistent with the
Act. Such loans merely avoid entities in the Intermediate Company "conduit" when
it is more efficient to structure a loan directly with a lower level holding
company. It is important to note that the authority requested in this
Application is limited to downstream loans and that any loan to National Grid
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USA will be made under terms that provide the same protections as Rule 52(b)(2),
in particular, the interest rate and maturity of any loan to National Grid USA
will be designed to parallel the effective cost of capital of a similar maturity
debt security issued by National Grid.
The authority requested to make indirect loans down the Intermediate
Company chain is consistent with the flexibility granted in the Commission's
March Order to restructure its Intermediate Company holdings under certain
circumstances. In the March Order, the Commission recognized that a structure
that maximized the efficiency of the ownership of foreign assets was appropriate
under the Act, provided that it did not involve the historical abuses associated
with pyramided ownership accomplished through the issuance of securities at many
levels to outside security holders or lenders. The Commission also emphasized
the requirement that the Intermediate Company structure and the related
financing transactions not adversely affect National Grid USA or its
subsidiaries.
Consistent with the view that the Intermediate Company structure is merely
a conduit used to improve economic efficiency, the Commission granted National
Grid the flexibility to revise various organizational details of the
Intermediate Companies. The Commission stated: "For the reasons noted above, and
especially the absence of any third-party interests in the upper structure, we
grant the Merger Applicants authority to make non-material corporate structure
changes to the upper structure without first seeking specific authorization for
each change. This authority applies only to changes that will not (1) result in
the introduction of any third-party interests in the upper structure or (2) have
any material impact on the financial condition or operations of the NEES Group
companies or National Grid."/10
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10. March Order at 45, note 71. The financing flexibility granted by the
Commission may, however, be viewed as conflicting with other language in the
Commission's order limiting the Intermediate Companies to issuing and selling
securities to their immediate parent companies, and the acquisition of
securities from direct subsidiary companies. We believe that the conflict, if
any, is resolved by restricting Intermediate Companies from issuing securities
to third parties and their subsidiaries thus preventing the abuses that the Act
was intended to address. See March Order at E-6 ("in no case will any
Intermediate Holding Company borrow, or receive any extension of credit or
indemnity, from any of its subsidiaries").
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The proposed associate company loans, and the proposed currency derivatives
discussed in Item 1.D, are consistent with these conditions and limitations. The
loans and derivatives would not result in an Intermediate Company or National
Grid USA borrowing from a subsidiary. External, third-party interests also are
not created by a loan or derivative with an associate company. Because the
proposed derivatives would involve the Intermediate Companies and associates on
the FUCO side of the National Grid system only, the transactions would have no
adverse impact on the financial condition or operations of National Grid USA or
its subsidiaries. To the extent that National Grid USA is a borrower from an
associate company, but not a subsidiary, the cost of debt capital would be
matched to the cost borne by National Grid. In addition, National Grid USA's
commitment to maintain its equity capitalization at 35% or above would prevent
excessive leverage. Further, since the proposed transactions would be wholly
within the National Grid system, they would not adversely affect the financial
soundness of National Grid.
The March Order supports flexible financing arrangements that promote an
efficient capital structure. Restrictions should be applied to prohibit only
transactions that could lead to abuses under the Act, for example, an
Intermediate Company's issuance of securities to third parties (creating a
complex pyramided capital structure), or to National Grid USA or to one of
National Grid USA's subsidiary companies that would create an abusive upstream
loan. The Act should not be applied to deny the benefits from innovative
financing where the proposed financing is consistent with a financially sound
system. In the instant matter, the proposed transactions are intended to improve
the efficiency of the financial structure and do not present the potential for
abuse. No utility investors or consumers would be adversely affected by these
transactions. In this matter, the broad restructuring authority granted by the
Commission in the March Order should control and the Commission's preference for
promoting financing flexibility when consistent with the Act should be followed.
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For all the reasons stated above, Applicants request that the Commission
authorize the proposed transactions.
Item 4. Regulatory Approvals
A. State Regulation
No other federal regulatory approvals, other than the approval of this
Commission, are required with respect to the proposed transactions.
Item 5. Procedure
Applicants respectfully request that the Commission issue and publish, not
later than January 31, 2001, the requisite notice under Rule 23 with respect to
the filing of this Application-Declaration, such notice to specify a date not
later than February 28, 2001 by which comments may be entered and a date not
later than March 15, 2001 as the date after which an order of the Commission
granting and permitting this Application to become effective may be entered by
the Commission.
Applicants waive a recommended decision by a hearing or other responsible
officer of the Commission for approval of the proposed transactions and consent
to the Division of Investment Management's assistance in the preparation of the
Commission's decision. There should not be a waiting period between the issuance
of the Commission's order and the date on which it is to become effective.
Item 6. Exhibits and Financial Statements
Exhibits
A-1 Current Intermediate Company Structure
A-2 Proposed Currency Swap Example with National Grid
A-3 Proposed Currency Swap Example with FUCO Associate
E-1 Opinion of Counsel - National Grid Group plc (to be filed by
amendment).
E-2 Past Tense Opinion of Counsel (to be filed by amendment).
I Proposed Form of Notice.
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Financial Statements
FS-1 National Grid Group plc Unaudited Pro Forma Condensed Consolidated
Balance Sheet as of September 30, 2000 (to be filed by amendment).
FS-2 National Grid Group plc Unaudited Pro Forma Condensed Statement of
Consolidated Income for the Twelve Months Ended September 30,
2000 (to be filed by amendment).
FS-3 Notes to the Unaudited Pro Forma Combined Condensed Consolidated
Financial Statements (to be filed by amendment).
FS-4 National Grid Group plc Consolidated Balance Sheet and Statement
of Income for the Year Ended September 30, 2000 (to be
filed by amendment).
Item 7. Information as to Environmental Effects.
The proposed Acquisition involves neither a "major federal action" nor
"significantly affects the quality of the human environment" as those terms are
used in Section 102(2)(C) of the National Environmental Policy Act, 42 U.S.C.
Sec. 4321 et seq. No federal agency is preparing an environmental impact
statement with respect to this matter.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, Applicants have duly caused this Application-Declaration to be signed on
their behalf by the undersigned thereunto duly authorized.
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Date: January 12, 2001 National Grid Group plc and
National Grid USA
By: /s/ Jonathan M.G. Carlton
Jonathan M.G. Carlton
Vice President and Director of
Regulatory Research
National Grid USA
National Grid (US) Holdings Limited
and National Grid (US) Investments
By: /s/ Martin O'Donovan
Martin O'Donovan
Director
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Exhibit Index
A-1 Current Intermediate Company Structure
A-2 Proposed Currency Swap Example with National Grid
A-3 Proposed Currency Swap Example with FUCO Associate
I Proposed Form of Notice.
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