EXHIBIT H-1
Filings Under the Public Utility Holding Company Act of
1935, as amended ("Act")
SECURITIES AND EXCHANGE COMMISSION
Release No. 35-
, 2000
Notice is hereby given that the following filing(s) has/have been made
with the Commission pursuant to provisions of the Act and rules promulgated
under the Act. All interested persons are referred to the applications(s)
and/or declaration(s) for complete statements of the proposed transactions(s)
summarized below. The application(s) and/or declarations(s) and any
amendments is/are available for public inspection through the Commission's
Branch of Public Reference.
Interested persons wishing to comment or request a hearing on the
applications(s) and/or declaration(s) should submit their views in writing by
, 2000, to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549-0609, and serve a copy on the relevant applicant(s)
and/or declarant(s) at the address(es) specified below. Proof of service (by
affidavit or, in case of an attorney at law, by certificate) should be filed
with the request. Any request for hearing should identify specifically the
issues of facts or law that are disputed. A person who so requests will be
notified of any hearing, if ordered, and will receive a copy of any notice or
order issued in the matter. After , 2000, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted to
become effective.
Consolidated Edison, Inc. et al. (70-9711). Consolidated Edison, Inc., a
New York corporation ("CEI"), Consolidated Edison, Inc., a newly-formed
Delaware corporation ("New CEI"), and Consolidated Edison Company of New
York, Inc. ("CECONY"), whose principal offices are located at 4 Irving Place,
New York, N.Y. 10003; Consolidated Edison Solutions, Inc. and Consolidated
Edison Energy, Inc., located at 701 Westchester Avenue, Suite 201 West, White
Plains, N.Y. 10604; Consolidated Edison Development, Inc. ("CEDI"), CED/SCS
Newington, LLC, CED Generation Holding Company, LLC, CED Management Company,
Inc., CED Operating Company, L.P., Consolidated Edison Energy Massachusetts,
Inc., CED Ada, Inc., Lakewood Cogeneration LP, HCE-Lakewood, Inc., CED
Generation Lakewood Company and CED-GTM 1, LLC, whose principal offices are
located at 111 Broadway, 16th Floor, New York, N.Y. 10006; Consolidated
Edison Communications, Inc., 132 West 31st Street, 13th Floor, New York,
N.Y.; Orange and Rockland Utilities, Inc. ("O&R"), Rockland Electric Company
("RECO") and Pike County Light & Power Company ("Pike"), whose principal
offices are located at 1 Blue Hill Plaza, Pearl River, N.Y., 10965; Northeast
Utilities, a registered holding company ("NU"), Western Massachusetts
Electric Company ("WMECO") and The Quinnehtuck Company, located at 174 Brush
Hill Road, Springfield, MA 01089; The Connecticut Light and Power Company
("CL&P"), Yankee Energy System, Inc. ("YES"), Northeast Utilities Service
Company, NU Enterprises, Inc., Northeast Generation Company, Northeast
Generation Services Company, Select Energy, Inc., Mode 1 Communications,
Inc., The Rocky River Realty Company, Northeast Nuclear Energy Company
("NNECO"), Select Energy Portland Pipeline, Inc. and Charter Oak Energy,
Inc., located at 107 Selden Street, Berlin, CT 06037; North Atlantic Energy
Services Corporation, North Atlantic Energy Corporation ("NAEC") and Public
Service Company of New Hampshire ("PSNH"), located at 1000 Elm Street,
Manchester, N.H. 03105; Holyoke Water Power Company ("HWP"), 1 Canal Street,
Holyoke MA, 01040; HEC Inc., Select Energy Contracting, Inc. and Reeds Ferry,
Inc., located at 24 Prime Parkway, Natick, MA 01760; Yankee Gas Services
Company ("Yankee Gas"), Yankee Energy Financial Services Company, NorConn
Properties, Inc., located at 599 Research Parkway, Meriden, CT 06450; Yankee
Energy Services Company, located at 148 Norton Street, Milldale, CT 06467;
and R.M. Services, Inc., located at 639 Research Parkway, Meriden, CT 06450
(each an "Applicant" and collectively, the "Applicants") have filed an
Application/Declaration under sections 6(a), 7, 12 and 13 of the Act and
rules 42, 45, 87, 88, 90, and 91 under the Act. <FN1>
CEI, New CEI and NU have also filed a related application-declaration in
File No. 70-9613 seeking approvals required to complete the proposed
combination of CEI and NU under New CEI a to-be-registered holding
company.<FN2>
The Applicants now request authority with respect to the financing
arrangements, ongoing financings and other matters pertaining to New CEI and
its Subsidiaries after giving effect to the Mergers, as more fully set forth
below.
1. Issuance of Common Stock and Acquisition Debt
New CEI requests authority to issue up to 56 million shares of its
Common Stock to shareholders of NU and to issue up to $2 billion in unsecured
debt or a mix of unsecured debt and hybrid debt securities (the "Acquisition
Debt") to effectuate the Merger. The hybrid securities, which are considered
debt for financial statement purposes, would be structured to have
characteristics of both debt and equity (for example, the ability of the
issuer to defer interest) and may have maturities ranging up to 50 years.
<FN1> As used in this Notice, the term "Utility Subsidiaries" means CECONY,
O&R, Pike, RECO, CL&P, WMECO, PSNH, NAEC, HWP, NNECO and Yankee Gas. In
addition, the term "Nonutility Subsidiaries" means each of the direct and
indirect nonutility subsidiaries of CEI and NU, including those identified
above, as well as any future direct or indirect nonutility subsidiaries of
New CEI whose equity securities may be acquired in accordance with the
Commission's authorization in this proceeding or in accordance with an
exemption provided under the Act or applicable rules. Further, the term
"Subsidiaries" means NU, YES, the Utility Subsidiaries and the Nonutility
Subsidiaries, collectively.
<FN2> Under an Amended and Restated Agreement and Plan of Merger, dated as of
January 11, 2000 ("Merger Agreement"), NU will merge with and into a wholly-
owned subsidiary of New CEI, and NU's utility subsidiaries will become
indirect subsidiaries of New CEI.
2. External Credit Facilities
New CEI and the Subsidiaries, including NU and its subsidiaries, request
authority to maintain in effect through June 30, 2005 (the "Authorization
Period"), all existing credit facilities and financing arrangements and to
maintain outstanding all indebtedness and similar obligations created
thereunder as of the date of the closing of the Merger (including the
Acquisition Debt) and to amend, renew, extend, and/or replace any of such
credit facilities, financing arrangements, indebtedness or similar
obligations, subject to certain terms and conditions.
3. Issuance of Stock Pursuant to Stock Plans
New CEI requests authority to issue and sell from time to time, pursuant
to its dividend reinvestment plan and stock-based management incentive and
employee benefit plans or in exchange for securities or assets being acquired
from other companies, up to 50 million shares of Common Stock (as such number
may hereafter be adjusted to reflect any stock split);
4. Issuance of Preferred Stock and Debt by the Holding Company
New CEI requests authority to issue and sell from time to time (A) up to
$ 500 million of Preferred Stock, (B) up to $3.15 billion principal amount at
any time outstanding of unsecured indebtedness having maturities of one year
or less (hereinafter, "Short-term Debt"), and (C) long term debt
("Debentures"), provided that the aggregate principal amount of Debentures at
any time outstanding, when added to the aggregate principal amount of all
other indebtedness of New CEI at any time outstanding (including,
specifically, Short-term Debt and Acquisition Debt), shall not exceed $4.25
billion (the "New CEI Debt Limit") and New CEI's consolidated equity
capitalization is not less than 30%.
NU received Commission authorization to issue up to $400 million in
Short-term Debt (the "NU Short-term Debt") through December 31, 2000 (Holding
Co. Act Rel. 35-27103). In the event that New CEI determines that it is more
beneficial for New CEI to issue the NU Short-term Debt instead of NU, New CEI
requests authorization to replace, amend, extend or renew the NU Short-term
Debt with short or long term debt issued by New CEI and to have the New CEI
Debt Limit increased accordingly. NU also received Commission authorization
to issue up to $275 million in short or long term debt for the purpose of
acquiring YES (the "YES Acquisition Debt") through June 30, 2002 (Holding Co.
Act Rel. 27127, January 31, 2000). In the event that New CEI determines that
it is more beneficial for New CEI to issue the YES Acquisition Debt instead
of NU, New CEI requests authorization to replace, amend, extend or renew the
YES Acquisition Debt with short or long term debt issued by New CEI and to
have the New CEI Debt Limit increased accordingly;
5. Short-term Debt of the Utilities
The Utility Subsidiaries of New CEI, along with NU and YES, request
authority to issue, sell and have outstanding at any one time Short-term Debt
up to the amounts set forth in the Application.
6. Nonutility Subsidiary Debt
To the extent that such transactions are not exempt under Rule 52(b),
the Nonutility Subsidiaries request authority to issue and sell from time to
time during the Authorization Period, debt and equity securities in order to
finance their authorized operations;
7. New CEI Guaranties and other forms of Credit Support
New CEI requests authority to provide guaranties and other forms of
credit support ("New CEI Guaranties") with respect to the securities or other
obligations of its Nonutility Subsidiaries in an aggregate principal or
nominal amount not to exceed $1.5 billion at any one time outstanding.
NU intends to continue to provide guaranties and other forms of credit
support with respect to the securities or other obligations ("NU Guaranties")
of the nonutility subsidiaries of NU in an aggregate amount not to exceed
$500 million, as previously authorized by the Commission. NU requests
authorization to provide such NU Guaranties through the Authorization Period.
New CEI also requests authorization to undertake up to an additional
$500 million in New CEI Guaranties so that it could assume any or all of the
NU Guaranties as it deems necessary or appropriate;
8. Interest Rate Hedges
New CEI and, to the extent not exempt under Rule 52, the Subsidiaries
request authority to enter into hedging transactions with respect to
outstanding indebtedness of such companies in order to manage and minimize
interest rate costs. Such companies also request authority to enter into
hedging transactions with respect to anticipatory debt issuances in order to
lock-in current interest rates and/or manage interest rate risk exposure.
9. Establishment of Corporate and Competitive Service Companies
New CEI requests authority to establish and maintain a corporate
services company and a nonutility service company as subsidiary service
companies of New CEI and requests approval of the respective Service
Agreements.
10. Provision of Services among Nonutility Subsidiaries
Nonutility Subsidiaries may from time to time provide services and sell
goods to each other. To the extent not exempt pursuant to Rule 90(d), such
companies request authority to perform such services and to sell such goods
to each other at fair market prices, without regard to "cost," as determined
in accordance with Rules 90 and 91, subject to certain limitations.
11. Payment of Dividends by Nonutility Subsidiaries
New CEI requests authorization, on behalf of New CEI's current and
future non-exempt Nonutility Subsidiaries, other than Nonutility Subsidiaries
which are NU Subsidiaries, that such companies be permitted to pay dividends
with respect to the securities of such companies, from time to time through
the Authorization Period, out of capital and unearned surplus.
This type of authorization has already been granted to NU (see,
Northeast Utilities, et al., Holding Co. Act Rel. No. 35-27147 (March 7,
2000)) and the Applicants request that such order remain in effect after the
Mergers and that the authority granted within be extended through the
Authorization Period.
12. Rule 58 Activities Outside the United States
New CEI requests authority on behalf of any current and future
subsidiary formed pursuant to Rule 58 promulgated under the Act ("Rule 58
Subsidiaries") to engage in certain categories of activities permitted
thereunder outside the United States.
13. Formation of Financing Subsidiaries
New CEI and the Subsidiaries request authority to acquire the equity
securities of one or more special-purpose subsidiaries organized for the sole
purpose of issuing and selling securities, lending, dividending or otherwise
transferring the proceeds thereof to New CEI or an entity designated by New
CEI, and engaging in transactions incidental thereto, subject to the New CEI
Debt Limit and certain other conditions.
14. Tax Allocation Agreement
New CEI requests approval for an agreement among New CEI and the
Subsidiaries to allocate consolidated income tax. Approval is necessary
because the proposed Tax Allocation Agreement may provide for the retention
by New CEI of certain payments for tax losses incurred from time to time,
rather than the allocation of such losses to Subsidiaries without payment as
would otherwise be required by Rule 45(c)(5);
15. System Money Pool
New CEI and the Subsidiaries seek authorization to maintain a money pool
for certain companies within the New CEI System. The Subsidiaries, to the
extent that a transaction is not exempt under rule 52, request authorization
to make unsecured short-term borrowings from the utility money pool,
contribute surplus funds to the utility money pool, and lend and extend
credit to (and acquire promissory notes from) one another through the utility
money pool. A newly-formed service company will administer the money pools
on an "at cost" basis. The Nonutility Subsidiaries request that there be no
limit on the amount of borrowing each may make through the money pool.
New CEI is requesting authorization to contribute surplus funds and to
lend and extend credit to the participating subsidiaries through the money
pool.
16. Calculation of Consolidated Retained Earnings for purposes of Rule 53
New CEI seeks authorization to include the amount of consolidated
retained earnings of NU, as of the date immediately prior to the Mergers, in
New CEI's calculation of its consolidated retained earnings for purposes of
Rule 53(a)(1)(ii). In the alternative, New CEI requests that the aggregate
amount of EWG and FUCO investments made by CEI prior to the Mergers be
"grandfathered" and allowed by the Commission without being included in the
calculation of New CEI's investment in EWGs and FUCOs for purposes of Rule
53.
17. Corporate Reorganization of Nonutility Subsidiaries
New CEI seeks authorization to consolidate or otherwise reorganize all
or any part of its direct and indirect ownership interests in Nonutility
Subsidiaries under one or more new or existing subsidiaries.
18. Low Income Housing Tax Credit Investments and Other Investments
New CEI requests authority on behalf of CECONY and CEDI, to retain
CECONY's current low income housing tax credit ("LIHTC") investments and to
permit CEDI to invest in a limited number of LIHTC properties in the United
States from time to time during the Authorization Period up to an aggregate
amount of $500 million. New CEI also requests authority on behalf of CECONY
for CECONY to retain its investment in the New York City Discovery Fund, a
venture capital partnership fund formed to provide equity capital to foster
development of high technology businesses in the New York City area.
19. ESOP Amendment
20. Use of Proceeds
The proceeds from the financings authorized by the Commission pursuant
to this Application/Declaration will be used for general corporate purposes,
including (i) the refunding of the Yes Acquisition Debt and the Acquisition
Debt, (ii) financing, in part, investments by and capital expenditures of New
CEI and its Subsidiaries, including, without limitation, the funding of
future investments in exempt wholesale generators, foreign utility companies,
Rule 58 Subsidiaries, and exempt telecommunication companies, (iii) the
repayment, redemption, refunding or purchase by New CEI or any Subsidiary of
any of its own securities pursuant to Rule 42, and (iv) financing working
capital requirements of New CEI and its subsidiaries.
New CEI represents that no financing proceeds will be used to acquire
the securities of, or other interests in, any company unless such acquisition
has been approved by the Commission in this proceeding or in a separate
proceeding or is in accordance with an available exemption under the Act or
rules thereunder, including Sections 32 and 33 and Rule 58. New CEI states
that the aggregate amount of proceeds of financing and New CEI Guaranties
approved by the Commission in this proceeding used to fund investments in
EWGs and FUCOs will not, when added to New CEI's "aggregate investment" (as
defined in Rule 53) in all such entities at any point in time, exceed 50% of
New CEI's "consolidated retained earnings" (also as defined in Rule 53).
Further, New CEI represents that proceeds of financing and New CEI Guaranties
and NU Guaranties utilized to fund investments in Rule 58 Subsidiaries will
adhere to the limitations of that rule.
For the Commission by the Division of Investment Management, under
delegated authority.
