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As Filed with the Securities and
Exchange Commission on September 28, 1998 File No. 70-9095
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO.5 TO
APPLICATION-DECLARATION
ON FORM U-1
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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CONECTIV
800 King Street
Wilmington, DE 19899
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(Names of companies filing this statement and
addresses of principal executive offices)
CONECTIV
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(Name of top registered holding company parent)
Louis M. Walters
Treasurer
Conectiv
800 King Street
Wilmington, DE 19899
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(Names and addresses of agents for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application-Declaration to:
Peter F. Clark, Esq. Joyce Koria Hayes, Esq.
Conectiv 7 Graham Court
800 King Street Newark, DE 19711
Wilmington, DE 19899
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Item 1 (a) of Post-Effective Amendment No. 4 to the Application-Declaration as
previously filed is hereby amended in its entirety as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS:
(a) Furnish a reasonably detailed and precise description of the
proposed transaction, including a statement of the reasons why it is desired to
consummate the transaction and the anticipated effect thereof. If the
transaction is part of a general program, describe the program and its relation
to the proposed transaction.
A. Background.
Conectiv, a Delaware corporation, 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 consummate
certain transactions resulting in the acquisition by Conectiv of all of the
outstanding voting securities of Delmarva Power & Light Company, a Delaware and
Virginia corporation and an operating public utility company ("Delmarva"), and
Atlantic City Electric Company, a New Jersey corporation and an operating public
utility company ("ACE") (File No. 70-9069)(ACE and Delmarva may be referred to
from time to time as the "Utility Subsidiaries." Subsidiaries other than the
Utility Subsidiaries may be referred to as the "Nonutility Subsidiaries."
Conectiv and its Utility Subsidiaries and Nonutility Subsidiaries may be
referred to as the "Conectiv System" or the "System.") The order approving the
merger was issued on February 25, 1998 (Release No. 26832). Pursuant to the
order issued in this file dated February 26, 1998 (Release No. 35-26833) (the
"Order"), Conectiv was authorized to issue, from the date of the Order through
December 31, 2000 (the "Authorization Period"), up to an aggregate of $500
million in common stock, par value $0.01 per share (the "Common Stock").
However, Conectiv requested that the Commission reserve jurisdiction over the
issuance of long-term debt. Conectiv was also authorized to have up to $500
million of short-term debt at any one time outstanding during the Authorization
Period. The Common Stock could be issued in public distributions effected
through competitive bidding among, or private negotiations with, underwriters,
dealers or agents or through private placements or other non-public offerings to
one or more persons. In addition, Conectiv was authorized to issue up to ten
million shares of common stock in the aggregate through the Conectiv Incentive
Compensation Plan and future compensation plans(1) and/or the Dividend
Reinvestment Plan. The Order also reserved jurisdiction over the participation
in the Conectiv System Money Pool by any subsidiaries acquired subsequent to the
effective date of the Order. Financings authorized in the Order are subject to
certain limitations contained therein as follows:
(i) Conectiv's common equity will be at least 30% of its consolidated
capitalization, as adjusted to reflect subsequent events that affect
capitalization; (ii) the effective cost of money on long-term debt
securities will not exceed 300 basis points over comparable term U.S.
Treasury securities and the effective cost of money on short-term
securities will not exceed 300 basis points over the comparable term
London Interbank Offered Rate ("LIBOR"); (iii) maturity of indebtedness
will not exceed 50 years; and (iv) the underwriting fees, commissions,
or similar remuneration paid in connection with the issue, sale or
distribution of a security will not exceed 5% of the principal amount
of the financing.
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(1) The maximum number of shares that may be issued pursuant to benefit plans
may not exceed 5 million shares. On September 18, 1998 a notice was issued
(Release No. 26917) of a proposed clarification that, pursuant to this
authority, shares of Conectiv common stock may also be issued under
outstanding options issued under the Delmarva Long-Term Incentive Plan that
existed prior to the Merger.
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The Order also noted that "The proceeds from the sale of securities in external
financing transactions will be used for general and corporate purposes
including: (i) the financing of capital expenditures of the Conectiv System
including investments in Exempt Wholesale Generators ("EWG") and Foreign
Utility Companies ("FUCO"); (ii) the financing of working capital requirements
of the Conectiv System; (iii) the aquisition, retirement, or redemption of
existing securities; and (iv) direct or indirect investment in companies
approved under an order of the Commission or exempt under rule 58 or Section 34
of the Act."
B. Authorizations Sought:
Subject to the foregoing terms and restrictions except that the
maturity of the long-term debt will not exceed 15 years, the purpose of this
filing is to delete the request for a reservation of jurisdiction over the
issuance of long-term debt in an amount not to exceed $250 million, and when
combined with the proceeds of any Common Stock issued during the Authorization
Period (other than Common Stock issued pursuant to the Conectiv Incentive Plan
or Dividend Reinvestment Plan) in an amount not to exceed $500 million.
Conectiv requests that such authorization be issued as quickly as possible, and
that the Commission reserve jurisdiction over the issuance of the balance of
the $250 million of long-term debt originally requested. It is also requested
that jurisdiction continue to be reserved over the issuance of securities that
do not qualify for issuance pursuant to Rule 52 There is also pending in this
file a request for an increase in short-term debt authorization for Conectiv to
$300 million, for participation by Petron Oil Corporation in the Conectiv
System Money Pool and for the issuance of Common Stock by Conectiv under the
old Delmarva Incentive Plan. The notice with respect to these transactions was
issued on September 18,1998 (Release No. 26917).
Conectiv is a combination company deriving revenues from the sale of
both electricity and natural gas at the wholesale level. As of June 30, 1998,
Conectiv's consolidated balance sheets reflect gross investments $245.6 million
in gas utility plant and $156.1 million in common utility plant. For the twelve
months ended June 30, 1998, Conectiv's consolidated statements of income
reflected $304.4 million in operating revenues from natural gas. The
authorization sought herein is consistent with that issued for Cinergy Corp.,
Holding Company Act Release No. 26909 dated August 21, 1998 (1998 SEC LEXIS
1794).
C. Compliance with 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 EWG or a 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)(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. Conectiv and its
subsidiaries will not make any investments in EWGs and FUCOs that cause it to
exceed that limitation, unless the Commission otherwise authorizes. Currently
Conectiv has one insignificant indirect interest in an EWG. DCTC-Burney, Inc.,
an indirect subsidiary of Conectiv, holds a 45% direct and indirect interest in
Burney Forest Products, a Joint Venture, which is an EWG. As of December 31,
1997, the book value of the investment was $0.
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Conectiv 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 will be kept in conformity
with United States generally accepted accounting principles ("GAAP"), the
financial statements will be prepared according to GAAP, and Conectiv undertakes
to provide the Commission access to such books and records and financial
statements as it may request.
Employees of Conectiv's domestic public-utility companies will not
render services directly or indirectly to any EWGs or FUCOs in the Conectiv
System, thereby satisfying Rule 53(a)(3).
Conectiv, in connection with any Form U-1 seeking approval of EWG or
FUCO financing, will submit copies of such Form U-1 and every certificate filed
pursuant to Rule 24 with every federal, state or local regulator having
jurisdiction over the retail rates of the public utility companies in the
Conectiv System. Rule 53(a)(4) will be correspondingly satisfied.
None of the conditions described in Rule 53(b) exists with respect to
Conectiv, thereby satisfying Rule 53(b) and making rule 53(c).
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SIGNATURE
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Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this Post-Effective
Amendment No. 5 to Form U-1 to be signed on their behalf by the undersigned
thereunto duly authorized.
CONECTIV
/s/ L. M. WALTERS
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L. M. Walters
Treasurer
Dated: September 28, 1998
