File No. 70-09007
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT
No. 1
TO THE
FORM U-1 APPLICATION/DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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New Century Energies, Inc.
Public Service Company of Colorado
Cheyenne Light, Fuel and
Power Company
New Century Services, Inc.
WestGas Interstate Inc.
New Century Enterprises, Inc.
New Century International Inc. and
its subsidiary companies
e prime, inc. and its subsidiary companies
PS Colorado Credit Corporation
Natural Fuels Corporation
PSRI Investments, Inc.
Green & Clear Lakes Company
1480 Welton, Inc.
1225 Seventeenth Street
Denver, Colorado 80202
Southwestern Public Service Company
Quixx Corporation and its subsidiary companies
Utility Engineering Corporation and its subsidiary companies
Tyler at Sixth
Amarillo, Texas 79101
(Names of companies filing this statement and
addresses of principal executive offices)
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New Century Energies, Inc.
(Name of top registered holding company parent)
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Richard C. Kelly Doyle R. Bunch II
President and Treasurer Chairman and Secretary
1225 Seventeenth Street Tyler at Sixth
Denver, Colorado 80202 Amarillo, Texas 79101
(Name and address of agents for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application/Declaration to:
Susan A. Marshall, Esq. Gary W. Wolf, Esq.
LeBoeuf, Lamb, Greene & MacRae, Cahill Gordon & Reindel
L.L.P. 80 Pine Street
125 West 55th Street New York, New York 10005
New York, New York 10019
James D. Steinhilper William Lewis
Southwestern Public Service Public Service Company of
Company Colorado
Tyler at Sixth 1225 Seventeenth Street
Amarillo, Texas 79101 Denver, Colorado 80202
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TABLE OF CONTENTS
Page
Item 1. Description of Proposed Transaction................................1
A. General.........................................................1
B. Description of the Parties to the Transaction...................2
C. Overview of Financing Request...................................2
D. Parameters for Financing Authorization..........................4
E. Description of Specific Types of Financings.....................5
1. NCE External Financings....................................5
a. Common Stock............................................5
i. General..................................................5
ii. Benefit Plans and Open Market Purchases of
Common Stock............................................6
iii. Dividend Reinvestment Plan.............................7
b. Short-Term Debt......................................8
c. Other Securities.....................................9
2. Utility Subsidiary Financings..............................9
a. Short Term Debt.....................................10
b. Interest Rate Swaps.................................10
c. Other Securities....................................11
3. Non-Utility Subsidiary Financings.........................11
4. Intra-System Financings...................................12
a. General................................................12
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b. Guarantees.............................................13
6. Financing Entities........................................14
7. Existing Financing Arrangements...........................15
F. Financing of EWGs and FUCOs....................................15
G. Filing of Certificates of Notification.........................16
H. Statement Pursuant to Rule 54..................................17
Item 2. Fees, Commissions and Expenses....................................18
Item 3. Applicable Statutory Provisions...................................18
Item 4. Regulatory Approvals..............................................18
Item 5. Procedure.........................................................19
Item 6. Exhibits and Financial Statements.................................19
A. Exhibits.......................................................19
B. Financial Statements...........................................20
Item 7. Information as to Environmental Effects...........................21
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Item 1. Description of Proposed Transaction
A. General
New Century Energies, Inc. ("NCE"), a Delaware corporation, has
previously filed an Application/Declaration on Form U-1 with the Securities and
Exchange Commission (the "Commission") requesting authorization under Section
9(a)(2) of the Public Utility Holding Company Act of 1935, as amended (the
"Act"), to acquire all of the outstanding voting securities of Public Service
Company of Colorado, a Colorado corporation and an operating public utility
company ("PSCo"), Southwestern Public Service Company, a New Mexico corporation
and an operating public utility company ("SPS"), and Cheyenne Light, Fuel and
Power Company, a Wyoming corporation and an operating public utility company
("Cheyenne"), and for other related transactions (File No. 70-8787) (the "Merger
U-1").(1) Following the consummation of the transactions described in the Merger
U-1, NCE will register as a holding company under the Act. Each of the entities
that will be directly and indirectly owned subsidiaries (as defined in the Act)
of NCE upon consummation of the transactions described in the Merger U-1, is
referred to herein individually as a "Subsidiary" and collectively as
"Subsidiaries". The terms "Subsidiary" and "Subsidiaries" shall also include
entities that become subsidiaries of NCE after the consummation of the Merger.
In order to ensure that NCE and its Subsidiaries (the "Applicants") are
able to meet their capital requirements upon registration and plan their future
financing accurately, the
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1 No authority for the issuance or acquisition of any stock or debt security
is sought in the Merger U-1 except: (i) the issuance of NCE stock in
connection with the business combination, and in exchange for the stock, of
PSCo, SPS and Cheyenne, (ii) the issuance of stock to NCE by New Century
Enterprises, Inc. ("Enterprises"), New Century Services, Inc. and West Gas
Interstate, Inc., (iii) the acquisition by Enterprises of the outstanding
voting securities of all of SPS's, and certain of PSCo's, non-utility
subsidiaries and (iv) the issuance by Enterprises of debt to SPS to acquire
SPS's subsidiaries. Those transactions for which authority is sought in the
Merger U-1 are not covered hereby.
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Applicants are hereby requesting authorization for financing transactions for
the period beginning with the effective date of an order issued in this
proceeding through December 31, 1999 (the "Authorization Period").
B. Description of the Parties to the Transaction
Following the consummation of the merger of PSCo and SPS (the
"Merger"), NCE will register as a holding company under the Act and will have
three operating utility subsidiaries (the "Utility Subsidiaries"): PSCo, an
electric and gas utility company providing service in an area having an
estimated population of 2.8 million in Colorado; SPS, an electric utility
company providing service to an area with a population of approximately one
million in the Panhandle and south plains of Texas, eastern and southeastern New
Mexico, the Oklahoma Panhandle and southwestern Kansas; and Cheyenne, an
electric and gas utility operating principally in Cheyenne, Wyoming. NCE's other
direct Subsidiaries will include New Century Services, Inc. ("NC Services"),
West Gas Interstate Inc. ("WGI"), PS Colorado Credit Corporation (together with
its successor, if any, "PSCCC") and New Century Enterprises, Inc.
("Enterprises"), an intermediate holding company. All of NCE's directly and
indirectly owned subsidiaries, other than the Utility Subsidiaries, are herein
called the "Non-Utility Subsidiaries".
Additional information about the Applicants and their businesses is set
forth in the Merger U-1 and the exhibits thereto.
C. Overview of Financing Request
The Applicants hereby request authorization to engage in the financing
transactions set forth herein during the Authorization Period.
The approval by the Commission of this Application/Declaration (the
"Application") will give the Applicants flexibility that will allow them to
respond quickly and efficiently to their financing needs and to changes in
market conditions, which, in turn, should make them more competitive with other
utility companies that are not subject to the jurisdic-
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3
tion of the Act.(2) At the same time, the Commission will continue to have
oversight over financings by the Applicants through the regular disclosures
under the 1933 Act and the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and through the notification system established pursuant to this
Application. Finally, although the authorization sought herein is not as broad,
this form of financing authorization under the Act is consistent with existing
Commission precedent. See, e.g., Columbia Gas Systems, Inc., et al., HCAR No.
26634 (December 23, 1996); Consolidated Natural Gas Company, HCAR No. 26500,
File 70-8667 (March 28, 1996); Mississippi Power Company, HCAR No. 26491 (March
13, 1996); Gulf States Utilities Company, HCAR No. 26451 (January 16, 1996).
The Applicants also hereby request authorization to deviate from the
Commission's statements of policy with respect to first mortgage bonds and
preferred stock in connection with the securities proposed to be issued and sold
pursuant to this Application or pursuant to applicable exceptions under the Act.
The authorization requested herein relates to (i) external issues of
common stock, short term debt, and other securities by NCE; (ii) external
issuances of capital stock and debt securities not subject to the Rule 52
exemption, including short term debt and interest rate swaps, by the Utility
Subsidiaries, (iii) external issuances of capital stock and debt securities not
subject to the Rule 52 exemption by Non-Utility Subsidiaries, (iv) intrasystem
financing between NCE and its Subsidiaries, including the issuance of
intrasystem guarantees, (v) the ability of the Subsidiaries to alter their
capital stock in order to engage in financing with their parent company, (vi)
the formation of financing entities and the issuance by such entities of
securities otherwise authorized to be issued and sold pursuant to this
Application or pursuant to applicable exemptions under the Act, including
intrasystem guarantees of such securities and the retention of existing
financing entities, (vii) the retention of existing financings and (viii)
financing of investments in exempt wholesale generators ("EWGs") and foreign
utility companies ("FUCOs").
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2 This Application is consistent with the recommendations set forth in the
report of the Division of Investment management, The Regulation of
Public-Utility Holding Companies (June 1995) at 50 and 54.
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D. Parameters for Financing Authorization
This Application requests authority to engage in certain financing
transactions during the Authorization Period for which the specific terms and
conditions are not at this time known, and which are not covered by Rule 52,
without further prior approval by the Commission. The following general terms
will be applicable where appropriate to the financing transactions requested to
be authorized hereby:
1. Effective Cost of Money on Borrowings. The effective cost of money
on long-term debt financings authorized by this Application does not exceed 300
basis points over the interest rate borne by comparable term U.S. Treasury
securities and the effective cost of money on short-term debt financings
authorized by this Application does not exceed 300 basis points over the London
interbank offered rate (LIBOR);
2. Effective Cost of Money on Other Approved Securities. The effective
cost of money on preferred stock and other fixed income oriented securities does
not exceed 500 basis points over the interest rate borne by 30 year term U.S.
Treasury securities;
3. Maturity of Debt. The maturity of authorized indebtedness will not
exceed 50 years; and
4. Issuance Expenses. The underwriting fees, commissions and other
similar remunerations paid in connection with the non-competitive issue, sale or
distribution of a security pursuant to this Application does not exceed 5% of
the principal or total amount of the financing.
The proceeds from the financings authorized by the Commission pursuant
to this Application will be used for general and corporate purposes, including
(i) financing, in part, capital expenditures of NCE and its Subsidiaries, (ii)
the repayment, redemption, refunding or purchase of debt and capital stock of
NCE or its Subsidiaries without the need for prior Commission approval pursuant
to Rule 42 or a successor rule, (iii)financing working capital requirements and
capital spending of the NCE system and (iv) other lawful general purposes.
The authorization requested herein to engage in external or intrasystem
financing without additional Commission approval does not apply in the case of
any financing unless
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such financing is in compliance with Rules 53 and 54 (as described below).
The Applicants represent that no financing proceeds will be used to
acquire a new subsidiary unless the financing is consummated in accordance with
an order of the Commission or an available exemption under the Act.
E. Description of Specific Types of Financings
1. NCE External Financings
NCE may obtain funds externally through sales of common stock and
short-term debt financing, including commercial paper sales.
a. Common Stock
The aggregate amount of financing obtained by NCE from the issuance and
sale of common stock as described in this section during the Authorization
Period shall not exceed $175,000,000 for the uses set forth under Use of
Proceeds above, and up to an additional $360,000,000 to be used in connection
with the refinancing of the debt incurred by PSCo in connection with its
acquisition of 50% of Yorkshire Electric Group, plc.(3) In addition,
authorization is requested to issue 30 million shares of NCE common stock
pursuant to benefit plans and the dividend reinvestment plan described in Items
1.E.1.a.ii. and iii. below during the ten year period from the date of the order
of the Commission under this Application.
i. General
Subject to the foregoing, NCE may issue and sell common stock or
options exercisable for common stock and issue stock upon the exercise of
options. NCE may also buy back
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3 New Century International Inc., a wholly-owned subsidiary of PSCo, owns a
50% interest in Yorkshire Power Group Limited which through a wholly-owned
subsidiary Yorkshire Holdings plc, has made a tender offer to acquire
Yorkshire Electricity Group plc, a regional electric company operating in
the United Kingdom.
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6
shares of such stock or such options during the Authorization Period in
accordance with Rule 42.
Common stock financings may be issued and sold pursuant to underwriting
agreements of a type generally standard in the industry. Public distributions
may be pursuant to private negotiation with underwriters, dealers or agents as
discussed below or effected through competitive bidding among underwriters. In
addition, sales may be made through private placements or other non-public
offerings to one or more persons. All such common stock sales will be at rates
or prices and under conditions negotiated or based upon, or otherwise determined
by, competitive capital markets.
NCE may sell common stock covered by this Application in any of the
following ways: (i) through underwriters or dealers; (ii) through agents; (iii)
directly to a limited number of purchasers or a single purchaser; or (iv)
directly to employees (or to trusts established for their benefit) and other
shareholders through its employee benefit plans or its dividend reinvestment
plan. If underwriters are used in the sale of the securities, such securities
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The securities may be offered to the public either through
underwriting syndicates (which may be represented by a managing underwriter or
underwriters designated by NCE) or directly by one or more underwriters acting
alone. The securities may be sold directly by NCE or through agents designated
by NCE from time to time. If dealers are utilized in the sale of any of the
securities, NCE will sell such securities to the dealers, as principal. Any
dealer may then resell such securities to the public at varying prices to be
determined by such dealer at the time of resale. If common stock is being sold
in an underwriting offering, NCE may grant the underwriters thereof a "green
shoe" option permitting the purchase from NCE at the same price additional
shares then being offered solely for the purpose of covering over allotments.
ii. Benefit Plans and Open Market Purchases of Common
Stock
The number of shares of NCE common stock to be issued and sold under
benefit plans pursuant to the authority requested herein shall be subject to the
limitation set forth in the last sentence of Item 1.E.1.a. relating to benefit
plans
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and the dividend reinvestment plan. PSCo and SPS currently have seven employee
benefit plans pursuant to which they issue and/or sell common stock to their
employees. Pursuant to the terms of the Agreement and Plan of Reorganization
dated as of August 22, 1995, as amended, among NCE, PSCo and SPS, following the
effective time of the Merger, five of these plans may provide for the issuance
and/or sale of NCE common stock and the remaining two plans will be terminated.
Attached hereto as Exhibit B-4 is a summary of the terms of these plans. In
addition, NCE will adopt one or more other plans including an Omnibus Stock
Incentive Plan which will provide for the issuance and/or sale of NCE common
stock, stock options and stock awards to a group which has not yet been
determined but may include directors, officers and employees. NCE may issue
shares of its common stock under the authorization, and within the limitations,
set forth herein in order to satisfy its obligations under such plans. To the
extent that following consummation of the mergers NCE adopts its own employee
benefit plans that provide for the issuance of NCE common stock or options or
awards for NCE common stock, NCE may issue shares of its common stock or options
or awards for such shares under the authorization and within the limitations set
forth herein, provided that NCE will provide the Commission with a summary of
the terms of any such NCE employee benefit plan prior to issuing any shares or
options or awards pursuant to any authorization provided in this proceeding.
Shares of common stock for use under any employee benefit plans may either be
newly issued shares, treasury shares or shares purchased in the open market. NCE
hereby seeks authority for its open market purchase of these shares in
accordance with the terms of or in connection with the operation of the plans.
NCE may also acquire treasury shares through other open market purchases. NCE
also proposes to issue and/or sell shares of common stock pursuant to these
existing plans and similar plans or plan funding arrangements hereafter adopted,
and to engage in other sales of its treasury shares for general business
purposes, without any additional prior Commission order. Stock transactions of
this variety would thus be treated the same as other stock transactions
permitted pursuant to this Application.
iii. Dividend Reinvestment Plan
The number of shares of NCE common stock to be issued and sold under
the dividend reinvestment plan pursuant to the authority requested herein shall
be subject to the limitation set forth in the last sentence of Item 1.E.1.a.
relating to benefit plans and the dividend reinvestment plan. In connection with
the Merger, an NCE Dividend Reinvestment Plan sub-
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8
stantially in the form attached hereto as Exhibit B-5 will become effective. NCE
may issue and/or sell shares of its common stock under the authorization, and
within the limitations set forth herein, in connection with the operation of the
NCE Dividend Reinvestment Plan. Shares of common stock for use under the plan
may either be newly issued shares, treasury shares or shares purchased in the
open market. NCE hereby seeks authority for the issuance and sale or open market
purchases and sales of its shares in accordance with the NCE Dividend
Reinvestment Plan.
b. Short-Term Debt
The aggregate amount of short term debt of NCE issued and sold pursuant
to the authorization sought by this Application to be outstanding at any time
during the Authorization Period shall not exceed $100,000,000 to be used as set
forth in the following two paragraphs, provided that upon PSCCC becoming a
direct subsidiary of NCE, such amount shall be increased by an additional
$125,000,000 for the purposes of providing liquidity for PSCCC as discussed in
the third paragraph set forth below.
To provide financing for general corporate purposes, other working
capital requirements and construction spending until long term financing can be
obtained, NCE may sell commercial paper, from time to time, in established
domestic or European commercial paper markets. Such 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 dealers acquiring
commercial paper from NCE will reoffer such paper at a discount to corporate,
institutional and, with respect to European commercial paper, individual
investors. It is anticipated that NCE's commercial paper will be reoffered to
investors such as commercial banks, insurance companies, pension funds,
investment trusts, foundations, colleges and universities, finance companies and
nonfinancial corporations.
Back-up bank lines of credit for 100% of the outstanding commercial
paper are required by credit rating agencies. To satisfy this requirement, NCE
proposes to establish back-up bank lines in an aggregate principal amount not to
exceed the amount of authorized commercial paper. NCE would borrow, repay and
reborrow under these lines from time to time, without collateral, to the extent
that it becomes impracticable to sell commercial paper due to market conditions
or otherwise.
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9
Loans under these lines will have a maturity date not more than one year from
the date of each borrowing. NCE may engage in other types of short-term
financing generally available to borrowers with investment grade credit ratings
as it may deem appropriate in light of its needs and market conditions at the
time of issuance.
PSCCC finances (factors) certain of PSCo's accounts receivable and fuel
inventory and has requested authority in the Merger U-1 to engage in financing
accounts receivable and fuel inventories for other companies in the NCE holding
company system and financing accounts receivable of non-affiliated utilities,
subject to the limitations described in the Merger U-1. Authority is requested
to finance such accounts receivable and fuel inventories. To provide financing
for its business, PSCCC sells commercial paper, from time to time, in
established commercial paper markets in a manner similar to that described above
with respect to NCE. Upon PSCCC becoming a direct subsidiary of NCE, NCE will
increase its then existing lines of credit and add PSCCC as a borrower
thereunder or establish, together with PSCCC, one or more new lines of credit to
provide credit support for PSCCC's commercial paper. Such lines of credit will
also provide for direct borrowings thereunder by PSCCC.
c. Other Securities
In addition to the specific securities for which authorization is
sought herein, NCE may also find it necessary or desirable to minimize financing
costs or to obtain new capital under then existing market conditions to issue
and sell other types of securities from time to time during the Authorization
Period. NCE requests that the Commission reserve jurisdiction over the issuance
of additional types of securities and the amount thereof. NCE also undertakes to
file a post-effective amendment in this proceeding which will describe the
general terms of each such security and the amount thereof to be issued and
request a supplemental order of the Commission authorizing the issuance thereof
by NCE.
2. Utility Subsidiary Financings
Although Rule 52 under the Act provides an exemption from the prior
authorization requirements of the Act for most of the issuances and sales of
securities by the Utility Subsidiaries as they will have been approved by the
Colorado Public Utility Commission ("CPUC") in the case of PSCo, the New Mexico
Public Service Commission ("NMPSC") in the case of SPS
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10
and the Wyoming Public Service Commission ("WPSC") in the case of Cheyenne.
However, certain external financings by the Utility Subsidiaries for which
authorization is requested herein may be outside the scope of the Rule 52
exemption. All securities issued by PSCo or SPS are approved by the CPUC or
NMPSC respectively, and all securities of Cheyenne, except for securities with
maturities of less than 12 months, are approved by the WPSC.
a. Short Term Debt
Authority is requested for Cheyenne to issue short-term debt. The
aggregate amount of such short-term debt to be outstanding at any one time
during the Authorization Period shall not exceed $25,000,000.
To provide financing for general corporate purposes and other working
capital requirements, Cheyenne may sell commercial paper, from time to time, in
established domestic or European commercial paper markets in a manner similar to
NCE as discussed in Item 1.E.1.b. above. Cheyenne may also maintain backup lines
of credit in aggregate principal amount not to exceed the amount of authorized
commercial paper. Cheyenne would borrow, repay and reborrow under such lines
from time to time, without collateral, to the extent that it becomes
impracticable to sell commercial paper due to market conditions or otherwise.
Loans under these lines shall have a maturity date not more than one year from
the date of each borrowing. Cheyenne may engage in other types of short-term
financing as it may deem appropriate in light of its needs and market conditions
at the time of issuance. Such short-term financing could include, without
limitation, bank lines and debt securities issued under its indentures and note
programs.
b. Interest Rate Swaps
The Utility Subsidiaries request authority to enter into, perform,
purchase and sell financial instruments intended to manage the volatility of
interest rates, including but not limited to interest rate swaps, caps, floors,
collars and forward agreements or any other similar agreements to the extent the
same are not exempt under Rule 52. Each Utility Subsidiary proposes to employ
interest rate swaps as a means of prudently managing the risk associated with
any of its outstanding debt issued pursuant to this authorization or an
applicable exemption by, in effect, synthetically (i) converting variable rate
debt to fixed rate debt, (ii) converting fixed rate debt to variable rate debt,
(iii) limiting the impact of changes in in-
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terest rates resulting from variable rate debt and (iv) providing an option to
enter into interest rate swap transactions in future periods for planned
issuances of debt securities. In no case will the notional principal amount of
any interest rate swap exceed that of the underlying debt instrument and related
interest rate exposure, i.e., each Utility Subsidiary will not engage in
"leveraged" or "speculative" transactions. The underlying interest rate indices
of such interest rate swaps will closely correspond to the underlying interest
rate indices of each Utility Subsidiary's debt to which such interest rate swap
relates. Each Utility Subsidiary will only enter into interest rate swap
agreements with counterparties whose senior secured debt ratings, as published
by Standard & Poor's Corporation, are greater than or equal to "BBB+", or an
equivalent rating from Moody's Investor Service, Inc., Fitch Investor Service or
Duff & Phelps.
c. Other Securities
In addition to the specific securities for which authorization is
sought herein, the Utility Subsidiaries may find it necessary or desirable to
issue other types of securities during the Authorization Period that are not
exempt from prior Commission approval. The Utility Subsidiaries request that the
Commission reserve jurisdiction over the issuance of such additional types of
securities and the amount thereof except to the extent the same are exempt
pursuant to Rule 52. Each Utility Subsidiary also undertakes to have a
post-effective amendment filed in this proceeding that will describe the general
terms of each such security and the amount thereof of such Utility Subsidiary
and request a supplemental order of the Commission authorizing the issuance
thereof.
3. Non-Utility Subsidiary Financings
The Non-Utility Subsidiaries are engaged in and expected to continue to
be active in the development and expansion of their existing energy-related or
otherwise functionally related, non-utility businesses in the NCE holding
company system. They will be competing with large, well-capitalized companies in
different sectors of the energy and other industries. In order to accomplish
investments in such competitive arenas, it will be necessary for the Non-Utility
Subsidiaries to have the ability to engage in financing transactions which are
commonly accepted for such types of investments. The majority of such financings
will be exempt from prior Commission authorization pursuant to Rule 52(b).
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Authority is requested herein forPSCCC to finance accounts receivable
and fuel inventories. See Item 1.E.1.b. for further information. In addition,
authority is requested to allow PSCCC to continue to borrow under its private
unsecured medium-term note program. The program provides for the issuance of
notes having maturities from nine months to seven years and it is requested that
PSCCC be permitted to issue notes with an aggregate principal amount not to
exceed $150,000,000 outstanding at any one time.
The Non-Utility Subsidiaries may, however, engage in types of security
financing with non-affiliates that are not exempt from prior Commission
approval. The Non-Utility Subsidiaries therefore request that the Commission
reserve jurisdiction over the issuance of such additional types of securities
and the amounts thereof. They also undertake to cause a post-effective amendment
to be filed in this proceeding which will describe the general terms of each
such security and the amounts thereof and request a supplemental order of the
Commission authorizing the issuance thereof by the subject Non-Utility
Subsidiary.
4. Intra-System Financings
a. General
NCE may finance certain of its Subsidiaries and certain Subsidiaries
may finance other Subsidiaries in an aggregate amount not exceeding $300 million
outstanding at any one time during the Authorization Period. The $300 million
excludes financing that is exempt pursuant to Rules 45 and 52. Such financings
would generally be in the form of open account advances, long-term loans and/or
capital stock purchases, as requested by the chief financial officer or
treasurer or designee thereof of each such Subsidiary and agreed to by NCE or
the lending Subsidiary, as the case may be. Open account advances will provide
funds for general corporate purposes and other working capital requirements and
temporarily for capital expenditures until long-term financing is obtained
and/or cash is generated internally. NCE or the lending Subsidiary will
determine, at its discretion, how much financing to give each borrowing
Subsidiary as its needs dictate during the Authorization Period. Generally,
NCE's or the lending Subsidiary's long-term loans to, and purchase of capital
stock from, such borrowing Subsidiaries will provide financing for their capital
expenditures, and will be exempt transactions under Rule 52.
Open account advances with interest to the Subsidiaries, which would
not be covered by Rule 45 or Rule 52, may be made, repaid and remade on a
revolving basis, with interest at the same effective rate of interest as the
daily weighted average effective rate of commercial paper, revolving credit
and/or other short-term borrowings of NCE or the lending Subsidiary as the case
may be. If no such borrowings are outstanding then the interest rate shall be
predicated on the Federal Funds' ef-
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13
fective rate of interest as quoted daily by the Federal Reserve Bank of New
York.
The Non-Utility Subsidiaries may issue and NCE or other Non-Utility
Subsidiary may acquire other types of securities which do not qualify for use of
Rule 52 but which are considered appropriate during the Authorization Period.
NCE and the Non-Utility Subsidiaries request that the Commission reserve
jurisdiction over the issuance of such additional types of securities and the
amounts thereof. They also undertake to cause a post-effective amendment to be
filed in this proceeding which will describe the general terms of each such
security and the amounts thereof and request a supplemental order of the
Commission authorizing the issuance thereof by the subject Non-Utility
Subsidiary.
b. Guarantees
NCE requests authorization to enter into guarantees, obtain letters of
credit, enter into expense agreements or otherwise provide credit support with
respect to the obligations of other system companies as may be appropriate to
enable such system companies to carry on in the ordinary course of their
respective businesses, in an aggregate principal amount not to exceed $300
million outstanding at any one time, except to the extent the same are exempt
pursuant to Rule 45. Such credit support may be in the form of committed bank
lines of credit, including arrangements similar to those of PSCo described
below.
In addition, PSCo, PSCCC, and certain subsidiaries have entered into a
credit facility with several banks providing $300 million in committed bank
lines of credit which is in the process of being increased to $450 million. The
amount of such credit facility will be reduced if and to the extent such credit
support is provided by NCE as described above. The credit facility, which is
used primarily to support the issuance of commercial paper by PSCo and PSCCC,
alternatively provides for direct borrowings thereunder. Cheyenne, 1480 Welton,
Inc., Fuelco, e prime and PSRI are provided access to the credit facility with
direct borrowings guaranteed by PSCo. Authority is requested to continue such
credit facility and guarantee thereunder by PSCo or any similar credit facility
and guarantee thereunder by PSCo.
In addition, authority is requested for Subsidiaries to enter into
arrangements with each other similar to those described with respect to NCE
<PAGE>
14
above in an aggregate principal amount not to exceed $50 million outstanding at
any one time, except to the extent the same are exempt pursuant to Rule 45.
The limits on guarantees and other credit support obligations described
above are not to be included in the aggregate respective limits applicable to
external financings or the limits on intrasystem financing requested elsewhere
herein.
In summary, under this Item 1.E.4. authority is requested for the
following maximum amounts to be outstanding at any one time during the
Authorization Period: (a) $300 million for NCE to finance its Subsidiaries and
certain Subsidiaries to finance other Subsidiaries; (b) $300 million for NCE to
guarantee or otherwise provide credit support for obligations of its
Subsidiaries; (c) $300 million, which will increase to $450 million, for PSCo to
guarantee or otherwise provide credit support or certain of its subsidiaries;
and (d) $50 million for Subsidiaries to guarantee or otherwise provide credit
support with respect to other Subsidiaries.
5. Changes in Capital Stock of Subsidiaries
The portion of an individual Subsidiary's aggregate financing to be
effected through the sale of stock to NCE or other immediate parent company
during the Authorization Period cannot be ascertained at this time. It may
happen that the proposed sale of capital stock may in some cases exceed the then
authorized capital stock of such Subsidiary. In addition, the Subsidiary may
choose to use other forms of capital stock. As needed to accommodate such
proposed transactions and to provide for future issues, request is made for
authority to increase the amount or change the terms of any such Subsidiary's
authorized capital stock capitalization by an amount deemed appropriate by NCE
or other immediate parent company in the instant case. A Subsidiary would be
able to change the par value, or change between par and no-par stock, without
additional Commission approval.
6. Financing Entities
Authority is sought for the Subsidiaries to organize new corporations,
trusts, partnerships or other entities created for the purpose of facilitating
financings through their issue to third parties of income preferred securities
or other securities authorized hereby or issued pursuant to an applicable
exemption. Request is also made for these financing entities to issue such
securities to third parties in the event such issuances are not exempt pursuant
to Rule 52. Addition-
<PAGE>
15
ally, request is made for authorization with respect to (i) the issuance of
debentures or other evidences of indebtedness by any of the Subsidiaries to a
financing entity in return for the proceeds of the financing, (ii) the
acquisition by any of the Subsidiaries of voting interests or equity securities
issued by the financing entity to establish any such Subsidiary's ownership of
the financing entity (the equity portion of the entity generally being created
through a capital contribution or the purchase of equity securities, ranging
from 1 to 3 percent of the capitalization of the financing entity) and (iii) the
guarantee by the Applicants of such financing entity's obligations in connection
therewith. Each of the Subsidiaries also request authorization to enter into
expense agreements with its respective financing entity, pursuant to which it
would agree to pay all expenses of such entity. Any amounts issued by such
financing entities to third parties pursuant to this authorization will be
included in the overall external financing limitation authorized herein for the
immediate parent of such financing entity. In order to avoid double counting,
however, the indebtedness issued by an Applicant to a financing entity will not
count against the intrasystem financing limit set forth herein. Applicants also
request that SPS be authorized to retain Southwestern Public Service Capital I,
a wholly owned trust, that issued trust preferred securities and loaned the
proceeds to SPS.
7. Existing Financing Arrangements
NCE and the Subsidiaries hereby request authority to retain such
financing arrangements as were in place prior to the Merger and which are not
otherwise exempted from the provisions of the Act. The existing financing
arrangements of the Utility Subsidiaries are set forth on Annex I attached
hereto. The existing financing arrangements of the Non-Utility Subsidiaries are
set forth on Annex II attached hereto.
F. Financing of EWGs and FUCOs
As described in the Merger U-1, upon consummation of the Merger, NCE,
through its Non-Utility Subsidiaries (including New Century International Inc.
which is currently a subsidiary of PSCo but will be transferred by PSCo to a
Non-Utility Subsidiary of NCE as described in the Merger U-1), will own certain
interests in EWGs and FUCOs. As outlined in the Merger U-1, NCE's Non-Utility
Subsidiaries, e prime, New Century International and Quixx and their
subsidiaries, may expend internally generated funds on the development of such
projects.
<PAGE>
16
In addition, e prime, New Century International and Quixx and their subsidiaries
will continually seek out and review investment opportunities which could lead
to the acquisition of an interest in or the construction of EWGs or FUCOs.
Sections 32 and 33 of the Act permit a registered holding company to acquire and
maintain interests in one or more EWGs or FUCOs without the need to apply for or
receive approval from the Commission. To the extent that funds for one or more
projects are required in excess of internally generated funds, NCE hereby
requests Commission authorization to invest proceeds from the financings
authorized hereby in EWGs and FUCOs and to guarantee the obligations of an EWG
or FUCO in compliance with Rule 53(a)(1) such that NCE's aggregate investment at
any one time during the period covered by this Application, including any such
guarantees of an EWG or FUCO at that time outstanding, will not exceed 50% of
its "consolidated retained earnings", as defined in Rule 53(a)(1)(ii). NCE may
seek additional Commission authorization if one or more prospective transactions
warrant additional financing.
At the time of issuance of any securities authorized in connection with
this Application, the proceeds of which will be used to invest in any EWG or
FUCO, NCE will be in compliance with Rule 53.
G. Filing of Certificates of Notification
It is proposed that, with respect to NCE, the reporting system of the
1933 Act and the 1934 Act be integrated with the reporting system under the 1935
Act. This would eliminate duplication of filings with the Commission that cover
essentially the same subject matters, resulting in a reduction of expense for
both the Commission and NCE. To effect such integration, the portion of the 1933
Act and 1934 Act reports containing or reflecting disclosures of transactions
occurring pursuant to the authorization granted in this proceeding would be
incorporated by reference into this proceeding through Rule 24 certificates of
notification. The certificates would also contain all other information required
by Rule 24, including the certification that each transaction being reported on
had been carried out in accordance with the terms and conditions of and for the
purposes represented in this Application. Such certificates of notification
would be filed within 60 days after the end of each of the first three calendar
quarters, and 90 days after the end of the last calendar quarter, in which
transactions occur.
<PAGE>
17
The Rule 24 certificates will contain the following
information:
(a) If sales of common stock by NCE are reported, the purchase
price per share and the market price per share at the date of the
agreement of sale;
(b) Consolidated balance sheets as of the end of the quarter, and
separate balance sheets as of the end of the quarter for each company,
including NCE, that has engaged in financing transactions during the
quarter; and
(c) Future registration statements filed under the 1933 Act with
respect to securities that are the subject of the Application will be
filed (or incorporated by reference) as exhibits to the next
certificate filed pursuant to Rule 24.
H. Statement Pursuant to Rule 54
Rule 54 promulgated under the Act states that in determining whether to
approve the issue or sale of a security by a registered holding company for
purposes other than the acquisition of an exempt wholesale generator ("EWG") or
a foreign utility company ("FUCO"), or other transactions by such registered
holding company or its subsidiaries other than with respect to EWGs or FUCOs,
the Commission shall not consider the effect of the capitalization or earnings
of any subsidiary which is an EWG or a FUCO upon the registered holding company
system if Rules 53(a), (b) or (c) are satisfied. As demonstrated below, such
rules are satisfied.
Rule 53 requires that the aggregate investment in EWGs and FUCOs not
exceed 50% of a system's consolidated retained earnings. NCE's present
investments in EWGs and FUCOs, pro froma to include the proposed investment in
Yorkshire Electricity Group plc, satisfies the 50% limitation, and the NCE
system will not make any additional investments in EWGs and FUCOs that cause it
to exceed that limitation, unless the Commission otherwise authorizes.
NCE and its Subsidiaries will maintain books and records to identify
the investments in and earnings from EWGs and FUCOs in which they directly or
indirectly hold an interest, thereby satisfying Rule 53(a)(2). In addition, the
books and records of each such entity are and will be kept in conformity with
United States generally accepted accounting princi-
<PAGE>
18
ples ("GAAP"), the financial statements are and will be prepared according to
GAAP, and NCE undertakes to provide the Commission access to such books and
records and financial statements as it may request.
Employees of NCE's domestic public-utility companies will not render
services, directly or indirectly, to the EWGs or FUCOs in the NCE System,
thereby satisfying Rule 53(a)(3).
NCE, in connection with any Form U-1 seeking approval of EWG or FUCO
financing, will submit copies of the documents described in Rule 53(a)(4) with
every federal, state or local regulation having jurisdiction over the retail
rates of the public-utility companies in the NCE System. Rule 53(a)(4) will be
correspondingly satisfied.
None of the conditions described in Rule 53(b) exist with respect to
NCE, thereby satisfying Rule 53(b) and making Rule 53(c) inapplicable.
Item 2. Fees, Commissions and Expenses
Estimated Legal Fees
and Expenses $
Estimated Miscellaneous
Expenses $---------
Total
Item 3. Applicable Statutory Provisions
Sections 6(a), 7, 9(a), 10, 12, and 32 of the Act and Rules 42, 43, 45,
52, 53, and 54 are considered applicable to the proposed transactions.
To the extent that the proposed transactions are considered by the
Commission to require authorization, approval or exemption under any section of
the Act or provision of the rules or regulations other than those specifically
set forth herein, request for such authorization, approval or exemption is
hereby made.
Item 4. Regulatory Approvals
No state or federal regulatory agency other than the Commission under
the Act has jurisdiction over the proposed
<PAGE>
19
transactions. If any such agency obtains jurisdiction over any of the proposed
transactions, any orders obtained will be promptly filed with the Commission.
Item 5. Procedure
The Applicants hereby request that there be no hearing on this
Application and that the Commission issue its order as soon as practicable after
the filing hereof. The Commission is respectfully requested to issue and publish
the requisite notice under Rule 23 with respect to the filing of this
Application not later than April 4, 1997, such notice to specify a date not
later than April 28, 1997, by which comments may be entered and a date not later
than the date of the Commission's order for the Merger U-1, as the date which an
order of the Commission granting and permitting the Application to become
effective may be entered by the Commission. A form of Notice is filed herewith
as Exhibit G-1.
Without prejudice to its right to modify the same if a hearing should
be ordered on this Application, NCE hereby makes the following specifications
required by paragraph (b) of Item 5 of Form U-1:
1. There should not be a recommended decision by a hearing officer
or any other responsible officer of the Commission.
2. The Division of Investment Management may assist in the
preparation of the Commission's decision and/or order.
3. There should not be a 30-day waiting period between issuance of
the Commission's order and the date on which the order is to become
effective.
Item 6. Exhibits and Financial Statements
A. Exhibits
B-1 Form of Commercial Paper Note (previously filed)
B-2 Form of Standard Purchase Agreement - Debt securities (previously
filed)
B-3 Form of Standard Purchase Agreement - Stock (previously filed)
<PAGE>
20
B-4 Summary of Terms of Employee Benefit Plans (filed herewith)
B-5 Form of NCE Dividend Reinvestment Plan (previously filed)
B-6 Form of Indenture for Debt Securities (previously filed)
F-1 Opinion of Counsel (to be filed by Amendment)
G-1 Revised Proposed Form of Public Notice (filed herewith)
G-2 Financial Data Schedules (incorporated by reference to the Annual
Report on Form 10-K of NCE for the fiscal year ended December 31,
1996)
G-3 Cash flow projections (Confidential) (to be filed by Amendment)
B. Financial Statements
1.1 Pro-Forma Balance Sheet of NCE and subsidiaries, consolidated, as
of December 31, 1996 (incorporated by reference to the Annual
Report on Form 10-K of PSCo for the fiscal year ended December 31,
1996 (File No. 1-3280)).
1.2 Pro-Forma Statement of Income of NCE and subsidiaries, for the 12
months ended December 31, 1996 (incorporated by reference to the
Annual Report on Form 10-K of PSCo for the fiscal year ended
December 31, 1996 (File No. 1-3280)).
2.1 Balance Sheet of PSCo as of December 31, 1996 (incorporated by
reference to the Annual Statement on Form 10-K of PSCo for the
year ended December 31, 1996 (File No. 1-3280)).
2.2 Statement of Income and Retained Earnings of PSCo for the nine
months ended December 31, 1996 (incorporated by reference to the
Quarterly Statement on Form 10-K of PSCo for the year ended
December 31, 1996 (File No. 1-3280)).
<PAGE>
21
3.1 Balance Sheet of SPS as of November 30, 1996 (incorporated by
reference to the Quarterly Statement on Form 10-Q of SPS for the
quarter ended November 30, 1996 (File No. 1-3789)).
3.2 Statement of Earnings for the three months ended November 30, 1996
(incorporated by reference to the Quarterly Statement on form 10-Q
of SPS for the quarter ended November 30, 1996 (File No. 1-3789)).
Item 7. Information as to Environmental Effects
None of the matters that are the subject of this application and
declaration involve a "major federal action" nor do they "significantly affect
the quality of the human environment" as those terms are used in section
102(2)(C) of the National Environmental Policy Act. The transaction that is the
subject of this application will not result in changes in the operation of the
company that will have an impact on the environment. The Applicants are not
aware of any federal agency that has prepared or is preparing an environmental
impact statement with respect to the transactions that are the subject of this
application.
<PAGE>
22
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned company has duly caused this amendment to the
application and declaration to be signed on its behalf by the undersigned
thereunto duly authorized.
By: /s/ Doyle R. Bunch, II
--------------------------------
Name: Doyle R. Bunch, II
Title: Chairman and Secretary
Date: April 1, 1997
<PAGE>
ANNEX I
Existing Non-Exempt Financing of Utility Subsidiaries
PSCo
Guarantees of Subsidiary Obligations
1. Guarantee of up to $16 million of debt of Young Gas Storage
(currently $12.5 million).
2. Guarantee of subsidiary (excluding PSCCC) short term debt
under a revolving credit agreement. Revolver capacity is $300
million.
3. Guarantee of a total of $15.5 million of e prime debt.
Intercompany Notes
1. Holder of a $12,066,207 6% Note due May 30, 1997 issued by
1480 Welton, Inc.
SPS
Long-term debt
SPS has $460,769.07 total principal amount of debt remaining outstanding
which was incurred in the acquisition of water and mineral rights. The
individual amounts are as follows:
Payee Rate Due Amount
Daniel Limited
Partnership 6% 6/19/99 $9,763.50
Bryant Flowers 4% 1/8/98 $9,928.55
Flowers Family 4% 1/8/98 $101,576.52
James Williams 6% 6/19/99 $339,500.50
$460,769.07
<PAGE>
-2-
Letters of Credit
SPS has obtained a Letter of Credit from Tokai Bank in the amount of
$5,000,000 to back up indemnities in favor of its Officers and Directors.
Intercompany Notes
1. Issuer of a $15,000,000 revolving note issued to due August 31, 1997
($9,000,000 drawn as of December 1996.) Interest linked to cost of capital
(5.5625% as of December 1996).
2. Issuer of a $9,560,000 note to Quixx due December 31, 1997. Interest
linked to cost of capital (5.5625% as of December 1996).
3. Issuer of a $15,000,000 note to Quixx due November 30, 1997. Interest
linked to cost of capital (5.5625% as of December 1996).
Cheyenne
Cheyenne has borrowed $18.5 million under the revolving credit agreement
referred to in item 2 above under the "PSCo" heading.
<PAGE>
ANNEX II
Existing Non-Exempt Financing of Non-Utility Subsidiaries
PSCCC
Medium term notes
PSCCC has a medium term note program used to finance its business. The
following amounts were outstanding as of December 31, 1996:
Interest Due Total Issue Balance O/S
- -------- --- ----------- -----------
5.85% 11/24/97 (10,000,000) (10,000,000)
6.01% 11/27/98 (10,000,000) (10,000,000)
6.03% 12/01/98 (10,000,000) (10,000,000)
5.83% 11/28/97 (20,000,000) (20,000,000)
5.86% 12/01/97 ( 5,000,000) ( 5,000,000)
5.75% 12/15/97 (25,000,000) (25,000,000)
5.99% 05/02/97 (20,000,000) (20,000,000)
Utility Engineering Corporation
Intercompany Notes
See "SPS" on Annex I.
Quixx Corporation
Intercompany Notes
See "SPS" on Annex I.
NEW CENTURY ENERGIES, INC.
FORM U-1
EXHIBIT B-4
Summary of Terms of Employee Benefit Plans
1. Southwestern Public Service Company Employee Investment Plan
(the "EIP")
The EIP is a broad-based employee savings plan available to all
eligible employees of SPS, Quixx and UE and their respective subsidiaries. The
EIP permits employees to elect to make contributions and provides for matching
contributions to be made on behalf of participating employees by SPS. In
addition, the EIP provides for a discretionary contribution by SPS allocated to
all eligible employees participating in the EIP in proportion to their
respective compensation during the period for which the contribution is made.
The contributions are invested in one or more investment accounts, as selected
by each participant, including an NCE common stock fund. Distributions from the
EIP are generally made to an employee upon his or her termination, death,
disability or retirement.
2. Southwestern Public Service Company Directors' Deferred
Compensation Plan (the "Directors' Plan")
The Directors' Plan permits a director to defer all or a portion of his
or her annual retainer or meeting fees or both. Each participant may elect to
credit any amounts deferred to either a dollar account or an NCE common stock
account. Distributions from the account, which shall be in the form of cash with
respect to dollar accounts and in the form of NCE common stock with respect to
stock accounts, are made to participants following termination of service as a
director.
3. Southwestern Public Service 1989 Stock Incentive Plan (the
"SIP")
The SIP enables SPS to encourage key employees of SPS and its
subsidiaries to acquire or increase their ownership of SPS common stock on
reasonable terms or as an incentive bonus. The SIP provides for (i) the granting
of awards of stock options, which may be incentive stock options or
non-qualified
<PAGE>
2
stock options, (ii) the granting of restricted stock and (iii) the
delivery of shares in lieu of cash compensation to each employee eligible for an
award under the SIP who receive cash under any management bonus or incentive
plan, if so requested by such employee and approved by the SPS compensation
committee. Any outstanding awards, and any future awards that may be made under
the SIP, will be payable in NCE common stock after consummation of the mergers.
4. Public Service Company of Colorado Employee's Savings and Stock
Ownership Plan
The Employees' Savings and Stock Ownership Plan (the "Savings Plan") is
a defined contribution plan and is offered to all eligible employees. Under the
provisions of the Savings Plan, employees may contribute a maximum of 12% of
their eligible compensation to the Savings Plan. Employee contribution can be
made in any combination of tax deferred and after-tax percentages as long as no
more then 8% of compensation is contributed on an after-tax basis. Contributions
may only be made on a payroll deduction basis. Effective January 1, 1991, the
PSCo match of tax-deferred contributions is 100% of up to the first 3% of
eligible compensation contributed by the employee, and 50% of up to the next 4%
of compensation contributed. Employees can choose to invest their contributions
among any of six investment funds. The PSCo contribution purchases PSCo common
stock for the employee (and will purchase NCE common stock after consummation of
the mergers). Loans and withdrawals are available to employees under certain
circumstances; otherwise distribution of funds and stock is made only upon the
resignation, retirement, death, or disability of the employee, or in certain
hardship cases.
5. The PSCo Omnibus Incentive Plan
The PSCo Omnibus Incentive Plan (the "OIP") was established to (i)
recognize, reward and retain management employees of PSCo whose performance,
contribution and skills promote the achievement of PSCo's long-term financial
and business objectives; (ii) align the interests of the shareholders and
management of PSCo with each other; (iii) attract and retain high-quality
employees; and (iv) improve the earnings of PSCo. Awards under the OIP may be in
the form of (i) options to purchase shares, including but not limited to,
incentive stock options within the meaning of Section 422 of the Code, (ii)
shares subject to certain restrictions (the "Restricted Shares"), or (iii)
performance awards entitling the holder thereof to cash, shares, or a
combination thereof if certain
<PAGE>
3
performance goals are met during the applicable performance period (the
"Performance Awards"). Persons eligible to participate will be those management
employees, including officers, who are employed by PSCo or a subsidiary in which
50 percent or more of the outstanding common stock was owned by PSCo, and whose
performance, contributions and skills promote the achievement of PSCo's
long-term financial and business objectives. Upon a Change In Control (as
defined in the OIP), all stock-based awards, such as options and Restricted
Shares, will vest 100 percent, and all Performance Awards will be paid out
immediately in cash, as if the performance objectives have been obtained through
the effective date of the Change In Control. Change In Control in the OIP means,
among other things, when a person becomes the owner, directly or indirectly, of
20 percent or more of outstanding PSCo Common Stock pursuant to a tender or
exchange offer by such person. The consummation of the mergers will constitute a
Change In Control under the OIP. Any future awards will be payable in NCE common
stock.
EXHIBIT G-1
New Century Energies, Inc., et al. (70-9007)
New Century Energies, Inc. ("NCE"), it service company subsidiary, New
Century Services, Inc., and its non-utility holding company subsidiary, New
Century Enterprises, Inc., together with Public Service Company of Colorado, a
Colorado public utility company ("PSCo"), Cheyenne Light, Fuel and Power Company
("Cheyenne"), WestGas Interstate Inc., New Century International Inc. and its
subsidiary companies ("New Century International"), e prime, inc. and its
subsidiary companies ("e prime"), PS Colorado Credit Corporation ("PSCCC"),
Natural Fuels Corporation, PSRI Investments, Inc., Green & Clear Lakes Company
and 1480 Welton, Inc., each of 1225 Seventeenth Street, Denver, Colorado 80202
and Southwestern Public Service Company, a New Mexico public utility company
("SPS" and together with PSCo and Cheyenne, the "Utility Subsidiaries"), Utility
Engineering Corporation and its subsidiary companies and Quixx Corporation and
its subsidiary companies ("Quixx"), each of Tyler at Sixth, Amarillo, Texas
79101 (together, "Applicants")(all subsidiaries, "Subsidiaries")(all subsidiary
companies, excluding the Utility Subsidiaries, the "Non-Utility Subsidiaries")
have filed a joint application/declaration under sections 6, 7, 9, 10, 12(b),
12(c), 12(e), 12(f), 32 and 33 and rules 42, 43, 45, 52, 53 and 54 thereunder.
<PAGE>
2
The Applicants are seeking, for the period from the effective date of
an order in this matter through December 31, 1999 (the "Authorization Period"),
as more fully described below, Commission authorization for: (1) external
financings by NCE, including (a) common stock financing, (b) short-term
financing and (c) reservation of authority over the issuance of other
securities; (2) financing by the Utility Subsidiaries, including (a) short-term
debt, (b) interest rate swaps and (c) reservation of authority over the issuance
of other securities; (3) financing by the Non-Utility Subsidiaries; (4)
intrasystem financing of Subsidiaries, including (a) open account advances, long
term loans and/or capital stock purchases and (b) guarantees; (5) changes in
capital stock of the Subsidiaries; (6) the formation and retention of financing
entities and the issuance of securities by such entities; (7) certain existing
financing arrangements; and (8) financing for the purpose of investing in exempt
wholesale generators ("EWGs") and foreign utility companies ("FUCOs").
The Applicants request authority to engage in various financing and
related transactions, for a period from the effective date of an order in this
matter through December 31, 1999, for which the specific terms and conditions
are not at this time known. The following general terms will be applicable,
where appropriate, to the financing transactions for which authorization is
sought: (1) the effective cost of money on financings authorized in this
proceeding will not ex-
<PAGE>
3
ceed, for long-term debt, 300 basis points over the rate borne by comparable
term U.S. Treasury securities, and for short-term debt, 300 basis points over
the London interbank offered rate; (2) the effective cost of money for preferred
stock and other fixed income oriented securities will not exceed 500 basis
points over the interest rate borne by 30 year term U.S. Treasury securities;
(3) the maturity of authorized indebtedness will not exceed 50 years; and (4)
issuance expenses in connection with an offering of securities, including any
underwriting fees, commissions or other similar compensation, may not exceed 5%
of the total amount of the securities being issued.
The proceeds of the proposed financings will be used for general and
corporate purposes including: (a) capital expenditures of NCE and its
Subsidiaries, (b) the repayment, redemption, refunding or repurchase of debt and
capital stock of NCE or its Subsidiaries, (c) financing working capital
requirements, and (d) other lawful general purposes. Financing may not be used
to invest in an EWG or a FUCO unless, at the time of each financing transaction
to be used for such purposes, NCE is in compliance with the requirements of
rules 53 and 54 under the Act. No financing proceeds will be used to acquire a
new subsidiary except pursuant to an order of the Commission or an available
exemption under the Act. Any deviation from these conditions would require
further Commission approval.
<PAGE>
4
The proposed transactions and the proposed participation of the various
Applicants are described below.
1. External Financing by NCE. During the Authorization Period NCE
proposes from time to time to issue and sell pursuant to the authorization
requested by the Application an aggregate amount of up to $175,000,000 of common
stock to be used for general purposes and an additional $360,000,000 in
connection with the refinancing of certain acquisition indebtedness; and a
maximum of 30 million shares of common stock (and awards or options for such
common stock) pursuant to benefit plans and the dividend reinvestment plan for a
period of ten years from the date of the Commission's order; proposes that the
aggregate amount of short-term debt issued pursuant to the authorization not
exceed $100,000,000 outstanding at any time during the Authorization Period,
such amount to be increased by an additional $125,000,000 upon the occurrence of
certain corporate restructurings and requests the Commission to reserve
jurisdiction over the issuance and sale of other securities as market conditions
may warrant. Securities may be sold through underwriters or dealers, directly to
a limited number of purchasers, or through agents.
a. Common Stock. NCE proposes to issue and sell common stock, including
in financings. NCE also proposes to issue and sell common stock under benefit
plans and dividend reinvestment plans in existence or to be adopted.
<PAGE>
5
Such shares may be newly issued shares, treasury shares or shares purchased in
the open market. NCE may also buy back shares of such stock or such other
securities during the Authorization Period.
b. Short-term Debt. NCE proposes to issue and sell commercial paper in
established domestic or European commercial paper markets to dealers at the
discount rate prevailing at the date of issuance for comparable commercial
paper. The dealers would reoffer such commercial paper at a discount to
investors. NCE also proposes to establish back-up lines of credit providing for
borrowings from time to time when it is impracticable to issue commercial paper.
Such lines of credit would be in an aggregate principal amount not to exceed the
amount of authorized commercial paper, and borrowings under these lines would
mature not more than one year from the date of borrowing. NCE also proposes to
engage in other types of short-term financing generally available to borrowers
with investment grade credit ratings as it may deem appropriate.
Upon PSCCC becoming a direct subsidiary of NCE, NCE shall increase its
then existing lines of credit and add PSCCC as a borrower thereunder or,
together with PSCCC, establish a new line of credit to provide credit support
for PSCCC's commercial paper. Authority is requested for PSCCC to finance its
business.
<PAGE>
6
c. Other Securities. In addition to the specific securities for which
authorization is sought, NCE also proposes to issue other types of securities
necessary or desirable to respond to market conditions during the period of the
Commission's authorization. NCE requests that the Commission reserve
jurisdiction over the issuance of additional types of securities and the amounts
thereof. NCE also undertakes that it will file a post-effective amendment in
this proceeding describing the general terms of each such security and the
amounts thereof and obtain a supplemental order of the Commission authorizing
the issuance thereof by NCE.
2. Utility Subsidiary Financings. The Utility Subsidiaries request
authorization to engage in certain external financings which are outside the
scope of the Rule 52 exemption for financings of utility companies, interest
rate swaps and other securities.
a. Short-term debt. In addition to short-term debt which may be issued
without Commission approval pursuant to an exemption under the Act,
authorization is sought for Cheyenne to issue and sell short-term debt in an
aggregate amount not to exceed $25,000,000 outstanding at any time during the
Authorization Period. Cheyenne may issue commercial paper in established
domestic or European commercial paper markets or otherwise issue and sell
short-term debt in a manner similar to NCE as discussed above.
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b. Interest Rate Swaps. Each Utility Subsidiary may engage in interest
rate swaps involving its obligations existing at the date of the swap.
c. Other Securities. The Commission is requested to reserve
jurisdiction over the issuance and sale of other securities in the same manner,
and subject to the same conditions, as requested for NCE.
3. Non-Utility Subsidiary Financings. Authorization is sought to allow
PSCCC to continue its medium-term note program under which an aggregate amount
of notes not to exceed $150,000,000 could be outstanding at any one time. The
Commission is also requested to reserve jurisdiction over the issuance and sale
of securities by the Non-Utility Subsidiaries that are not exempted by Rule 52
from the requirement of Commission approval in the same manner and subject to
the same conditions as requested for NCE.
4. Intrasystem Financing. The Applicants propose various financing
transactions between NCE and its subsidiaries and between certain subsidiaries.
The aggregate amount of all such financing would not exceed $300,000,000
excluding amounts exempt pursuant to Rules 45 and 52.
a. General. NCE proposes to make to its Subsidiaries and certain
Subsidiaries propose to make to other Subsidiaries open-account advances,
long-term loans and/or capital stock purchases, as determined by NCE and its
respective Sub-
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sidiaries to be appropriate. These borrowings would be made on a revolving basis
and would bear interest at a rate equal to the weighted average effective
interest rate of NCE's short-term borrowings or, if no such borrowings are
outstanding, at a rate based on the Federal Funds effective rate of interest
quoted daily by the Federal Reserve Bank of New York.
In addition, the Commission is requested to reserve jurisdiction over
the issuance and sale by the Non-Utility Subsidiaries and the acquisition by NCE
or other Non-Utility Subsidiaries of other types of securities that are not
exempted by Rule 52 from the requirement of Commission approval in the same
manner and subject to the same conditions as requested for the issuance and sale
of other securities by NCE.
b. Guarantees. The Applicants propose to enter into guarantee
arrangements, obtain letters of credit, enter into expense agreements and
otherwise provide credit support with respect to the obligations of the other
Applicants to third parties. NCE proposes to enter into such arrangements with
respect to the obligations of any Subsidiary and any Subsidiary proposes to
enter into such arrangements with respect to any other Subsidiary. The aggregate
amount of all such arrangements would not exceed $300,000,000, $300,000,000 (to
be increased to $450,000,000), and $50,000,000 outstanding at any one time, with
respect to NCE, PSCo and the Subsidiaries, respectively, except to the extent
the same are exempt pursu-
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9
ant to Rule 45 and are in addition to the other respective aggregate limits on
external financing and intrasystem financing for NCE and its Subsidiaries.
5. Changes in Capital Stock of Subsidiaries. The portion of an
individual Subsidiary's aggregate financing through the sale of stock to NCE or
other immediate parent company cannot be ascertained at this time. NCE and its
Subsidiaries request authority to increase such Subsidiary's authorized capital
stock and to change the amount or terms of any such Subsidiary's capital stock
capitalization by an amount deemed appropriate by NCE or other immediate parent
company and to change or eliminate the par value of such stock without further
Commission approval.
6. Financing Entities. In connection with the issuance of income
preferred securities or other securities authorized in this proceeding or
pursuant to an applicable exemption, the Applicants seek authorization to
organize new corporations, trusts, partnerships or other entities created for
the purpose of facilitating such financings.
Request is also made for these financing entities to issue such
securities to third parties in the event such transactions involving financing
by the Applicants are not exempt pursuant to Rule 52, including authorization
with respect to (i) the issuance of debentures or other evidences of
indebtedness by any of the Applicants to a financing entity in return
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10
for the proceeds of the financing, (ii) the acquisition by any of the Applicants
of voting interests or equity securities issued by the financing entity to
establish any such Applicant's ownership of the financing entity (the equity
portion of the entity generally being created through a capital contribution or
the purchase of equity securities, ranging from 1 to 3 percent of the
capitalization of the financing entity) and (iii) the guarantee by the
Applicants of such financing entity's obligations in connection therewith. Each
of the Applicants and the Subsidiaries also request authorization to enter into
expense agreements with its respective financing entity, pursuant to which it
would agree to pay all expenses of such entity. Any amounts issued by such
financing entities to third parties pursuant to this authorization will be
included in the overall external financing limitation authorized herein for the
immediate parent of such financing entity, however, the indebtedness issued by
an Applicant to a financing entity will not count against the intrasystem
financing limit set forth herein. Applicants also request that SPS be authorized
to retain Southwestern Public Service Capital I, a wholly owned trust, that
issued trust preferred securities and loaned the proceeds to SPS.
7. Existing Financing Arrangements. The Applicants propose to retain
such financing arrangements as were in place prior to the Merger and which are
not otherwise exempted from the provisions of the Act.
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8. Financing of EWGs and FUCOs. NCE's Non-Utility Subsidiaries, New
Century International Inc., e prime and Quixx and their subsidiaries, currently
own investments in EWGs or FUCOs. Sections 32 and 33 of the Act permit a
registered holding company to acquire and maintain interests in one or more EWGs
or FUCOs without the need to apply for or receive approval from the Commission.
To the extent that funds for one or more projects are required in excess of
internally generated funds, NCE hereby requests Commission authorization to
invest proceeds from the financings authorized hereby in EWGs and FUCOs and to
guarantee the obligations of an EWG or FUCO in compliance with Rule 53(a)(1)
such that NCE's aggregate investment at any one time during the period covered
by this Application will not exceed 50% of its "consolidated retained earnings",
as defined in Rule 53(a)(1)(ii).
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
