File No. 70-9069
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Post-Effective Amendment No. 5
FORM U-1 APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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Conectiv
800 King Street
Wilmington, DE 19899
Conectiv Services, Inc.
800 King Street
Wilmington, DE 19899
Delmarva Capital Investments, Inc.
800 King Street
Wilmington, DE 19899
Conectiv Solutions, Inc.
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)
Philip S. Reese
Treasurer
Conectiv
800 King Street
Wilmington, DE 19899
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(Name and address of agent of service)
<PAGE>
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application to:
Peter F. Clark Joyce Koria Hayes, Esquire
General Counsel 7 Graham Court
Conectiv Newark, DE 19711
800 King Street
Wilmington, DE 19899
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Item 1. Description of Proposed Transactions
(a) Furnish a reasonably detailed and precise description of the proposed
transaction, including a statement of the reason 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 and a registered holding company, holds
interests in certain direct and indirect nonutility subsidiary companies,
including ATE Investments, Inc. ("ATE"), which owns equity interests in three
leveraged leases and a 94% limited partnership interest in EnerTech Capital
Partners, L.P. ("EnerTech"), a company that invests in companies developing
energy-related technologies. By Commission order dated December 16, 1998
(Holding Co. Act Release No. 26953) (the "Restructuring Order"), Conectiv was
authorized to restructure its nonutility subsidiaries in two phases that would
ultimately result in, among other things, ATE being acquired by Delmarva Capital
Investments, Inc. (to be renamed Conectiv Property and Investments, Inc.
("CPI")). Conectiv intended to use CPI to hold passive investments. As a result
of the restructuring, Conectiv's active direct nonutility subsidiaries would be
reduced to just three companies: CPI; Conectiv Services, Inc. ("CSI"), a company
directly and indirectly engaged in energy-related services; and Conectiv Energy
Supply, Inc., a company directly and indirectly engaged in the marketing of
energy. As discussed below, Conectiv Solutions, Inc. ("Solutions") is to be
merged into CSI during phase one of the restructuring. For purposes of this
Application, Conectiv, CPI, Solutions and CSI are the "Applicants."
B. Requested Authorization
Conectiv now proposes to contribute stock in ATE to Solutions. Applicants
believe that the technology investments held by ATE through EnerTech are more
directly related to the energy-related services conducted by CSI and, therefore,
should be placed in the CSI chain of subsidiaries. In addition, Applicants
believe that repositioning EnerTech indirectly below CSI may provide favorable
tax treatment for EnerTech's investments./1 Applicant's request for
authorization to reorganize its nonutility businesses is supported by the
Commission's order in Cinergy Corp., Holding Co. Act Release No. 26984 (Mar. 1,
1999)./2
The investments made by and proposed to be made by EnerTech relate to the
businesses in which CSI is authorized to engage. Solutions (and after the merger
of Solutions into CSI, CSI) was authorized under Commission order dated February
25, 1998 (Holding Co. Act Release No. 26832) ("Merger Order") to engage in a
variety of activities, directly or through subsidiaries, including energy
management and consulting services that "may include: technical and consulting
services involving technology assessments, power factor correction and harmonics
mitigation analysis, meter reading and repair, rate schedule design and
analysis, environmental services, engineering services, billing services, risk
management services, communications systems, information systems/data
processing, system planning, strategic planning, finance, feasibility studies
and other similar or related services." In recognition of the Solutions/CSI
communications, information systems and data processing authority, Conectiv
Communications, Inc., an exempt telecommunications company will be made a
subsidiary of Solutions/CSI under the Restructuring Order.
The Merger Order also stated that "Solutions provides service line repair
and extended warranties with respect to all of the utility or energy-related
service lines that enter a customer's house, as well as utility bill insurance
and other similar or related services." The Merger Order also provides that "In
connection with its activities, Solutions from time to time may form new
subsidiaries to engage in the above activities, or acquire the securities or
assets of nonassociate companies that derive substantially all of their revenues
from the above activities." As a subsidiary of Solutions, ATE and ATE's
subsidiaries would have authority to invest, directly and indirectly, in
companies developing technologies related to any of these permissible lines of
business.
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1/ In the Restructuring Order, the Commission granted Conectiv the authority to
retain certain passive nonregulated investments for tax or other reasons, rather
than hold them directly or indirectly through subsidiaries.
2/ See also, Entergy Corp., Holding Co. Act Release No. 27039 (June 22, 1999).
C. Statement Under Rule 54.
Rule 54 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) 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. 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. Due to earnings of the EWG
that have not been distributed, the net book investment in the EWG is $5.065
million. However, there has been no additional post-merger investment in this
EWG by Conectiv or a subsidiary.
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.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses to be incurred, directly or indirectly,
by Conectiv or any associate company thereof in connection with the proposed
transactions are estimated as follows:
Total $7,500
Item 3. Applicable Statutory Provisions.
Sections 9, 10 and 11 of the Act and the rules thereunder apply to the
transactions proposed in this Application.
Item 4. Regulatory Approval.
No state or federal commission, other than this Commission, has
jurisdiction over the proposed transactions.
Item 5. Procedure.
Applicants request that the Commission issue and publish not later than
July 9, 1999 the requisite notice under rule 23 with respect to the filing of
this Application. Applicants further request that such notice specify a date not
later than August 3, 1999 as the date after which the Commission may issue an
order granting this Application and that the order be issued as expeditiously as
possible thereafter.
Applicants waive a recommended decision by a hearing officer or other
responsible officer of the Commission; consents that the Staff of the Division
of Investment Management may assist in the preparation of the Commission's
order; and requests that there be no waiting period between the issuance of the
Commission's order and its effectiveness.
Item 6. Exhibits and Financial Statements.
a) Exhibits:
F Opinion of counsel
G Form of notice
b) Financial Statements:
Since the action proposed herein involves only a contribution of
capital to a subsidiary in the form of stock held in another
subsidiary, financial statements are omitted.
Item 7. Information as to Environmental Effects.
(a) The Commission's action in this matter will not constitute major
federal action significantly affecting the quality of the human environment.
(b) No other federal agency has prepared or is preparing an environmental
impact statement with regard to the proposed transactions.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this statement to be signed
on their behalf by the undersigned thereunto duly authorized.
Conectiv
Conectiv Services, Inc.
Delmarva Capital Investments, Inc.
Conectiv Solutions, Inc.
By: /s/ Philip S. Reese
Philip S. Reese
Treasurer
Dated: July 1, 1999
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EXHIBIT F
July 1, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D. C. 20549
Re: Conectiv
SEC File No. 70-9069
Dear Sir or Madam:
As General Counsel for Conectiv, a Delaware corporation ("Conectiv"), I
have acted as counsel to Conectiv in connection with Post-Effective Amendment
No. 5 to the Application/Declaration on Form U-1 (File No. 70-9069) (hereinafter
the "Amendment") filed with the Securities and Exchange Commission
("Commission") jointly by Conectiv and Delmarva Capital Investments, Inc. (to be
renamed Conectiv Property and Investments, Inc.), Conectiv Solutions, Inc.
("Solutions") and Conectiv Services, Inc. ("CSI"), each a nonutility subsidiary
of Conectiv (each an "Applicant" and collectively the "Applicants"). In this
amendment, Conectiv proposes to contribute stock in ATE Investments, Inc. to
Solutions (or, after the merger of Solutions into CSI, to CSI) (the "Proposed
Transaction").
I am a member of the bar of the State of Delaware, the state in which
certain of the Applicants are incorporated or qualified to do business. I am
also a member of the bar of the Commonwealth of Virginia, a state in which
certain of the Applicants are authorized to do business. I am not a member of
the bars of the States of Maryland or New Jersey or the Commonwealth of
Pennsylvania, states in which certain of the Applicants are incorporated or
qualified to do business, and do not hold myself out as an expert in the laws of
such states, although I have consulted and will consult with counsel to Conectiv
who are experts in such laws. For purposes of this opinion, to the extent I
deemed necessary, I have relied on advice from counsel employed or retained by
Conectiv who are members of the bars of the States of Maryland and New Jersey
and the Commonwealth of Pennsylvania.
In connection with this opinion, I or attorneys in whom I have confidence,
have examined originals or copies, certified or otherwise identified to my
satisfaction, of such records and such other documents, certificates and
corporate or other records as I have deemed necessary or appropriate as a basis
for the opinions set forth herein. In my examination, I have assumed the
genuineness of all signatures, the legal capacity of all persons, the
authenticity of all documents submitted to me as originals, the conformity to
original documents of documents submitted to me as certified or photostatic
copies and the authenticity of the originals of such copies. As to various
questions of fact material to such opinions, I have, when relevant facts were
not independently established relied upon statements contained in the Amendment.
The opinions expressed below with respect to the Proposed Transaction are
subject to the following assumptions, qualifications, limitations, conditions
and exceptions:
(a) The Commission shall have duly entered an appropriate order or orders
with respect to the Proposed Transaction, as described in the
Amendment, permitting the Amendment to become effective under the Act
and the rules and regulations thereunder, and the Proposed Transaction
is consummated in accordance with the Amendment and the Commission's
orders.
(b) No act or event other than as described herein shall have occurred
subsequent to the date hereof which would change the opinions
expressed below.
(c) Appropriate corporate action will have been taken by both the
contributor and the acquirer of the securities and the documents
transferring the securities will have been duly authorized, executed
and delivered with all appropriate transfer or other taxes paid.
(d) Each of the Applicants, and their subsidiaries involved in the
Proposed Transaction, will at the time of the Proposed Transaction be
a duly incorporated corporation or duly formed limited liability
company or partnership in the jurisdiction in which it is domiciled.
Based on the foregoing and subject the assumptions, qualifications,
limitations, conditions and exceptions set forth herein, I am of the
opinion that, in the event the Proposed Transaction is consummated in
accordance with the Amendment:
1. All state laws applicable to the Proposed Transaction will have been
complied with.
2. Each Applicant is, and will be at the time of the Proposed
Transaction, duly formed or incorporated under the laws of the
jurisdiction in which it is domiciled.
3. Each Applicant will legally acquire any equity securities or assets
pursuant to the Proposed Transaction.
4. The consummation of the Proposed Transaction will not violate the
legal rights of the holders of any securities issued by any Applicant
or any associate company thereof.
I hereby consent to the use of this opinion in connection with the
Application.
Very truly yours,
//s// Peter F. Clark
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EXHIBIT G
SECURITIES AND EXCHANGE COMMISSION
(Release No. )
July __, 1999
Conectiv, a registered holding company, and its subsidiary companies
Conectiv Solutions, Inc. ("Solutions"), Conectiv Services, Inc. ("CSI") and
Delmarva Capital Investments, Inc., have filed an application under sections 9,
10 and 11 of the Public Utility Holding Company Act of 1935, as amended.
Applicants seek authorization for Solutions or CSI, if at the time the merger of
Solutions into CSI has been implemented, to acquire the common stock of ATE
Investments, Inc.
The filings and amendments thereto are available for public inspection
through the Commission's Office of Public Reference. Interested persons wishing
to comment or request a hearing should submit their views in writing by , to the
Secretary, Securities and Exchange Commission, Washington, D.C. 20549, and serve
a copy on the applicants-declarants at the address specified above. Proof of
service (by affidavit or, in case of an attorney-at-law, by certificate) should
be filed with the request. Any request for a hearing shall identify specifically
the issues of fact or law that are disputed. A person who so requests will be
notified of any hearing, if ordered, and will receive a copy of any notice or
order issued in this matter. After said date, the joint application-declaration,
as filed or as it may be amended, may be permitted to become effective.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
Jonathan G. Katz
Secretary
