File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
WHEELING POWER COMPANY
51- 16th Street, Wheeling, West Virginia 26003
(Name of company filing this statement and
address of principal executive office)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
A. A. Pena, Senior Vice President
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
Susan Tomasky, General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
Wheeling Power Company ("Wheeling"), a subsidiary company of
American Electric Power Company, Inc. ("AEP"), a registered holding company
under the Public Utility Holding Company Act of 1935 (the "1935 Act"), requests
authorization herein to issue and sell from time to time through June 30, 2000
unsecured promissory notes (the "Notes") in the aggregate principal amount of
$10,000,000, to one or more commercial banks, financial institutions or other
institutional investors pursuant to one or more term loan agreements (the
"Proposed Term Loan Agreement") with terms similar to those contained in the
form attached hereto as Exhibit B, with appropriate insertions or modifications
to specific terms thereof as may be negotiated between Wheeling and a specific
lender at the time of the issuance of the Notes.
The Proposed Term Loan Agreement and the Notes thereunder would be for a
term of not less than nine months nor more than ten years from the date of
borrowing.
The Proposed Term Loan Agreement would provide that the Notes bear
interest at either a fixed rate, a fluctuating rate or some combination of fixed
and fluctuating rates. The actual rate of interest which each Note shall bear
shall be subject to further negotiation between Wheeling and the lender. Any
fixed rate of interest of the Notes will not be greater than 300 basis points
above the yield at the time of issuance of the Notes to maturity of United
States Treasury obligations that mature on or about the date of maturity of the
Notes. Any fluctuating rate will not be greater than 200 basis points above the
rate of interest announced publicly by a major bank from time to time as its
base or prime rate.
In the event a bank or financial institution arranges for a borrowing from
a third party, such institution may charge Wheeling a placement fee, not to
exceed 1% of the principal amount of such borrowing.
A lender may desire to assign, or to sell participations in, all or any
part of the Proposed Term Loan Agreement and the Notes thereunder to other
entities. Such assignee would have the same rights and benefits under the
Proposed Term Loan Agreement as the lender. Such participant would not have any
rights under the Proposed Term Loan Agreement, but would have rights against the
lender in respect of the agreement between the participant and the lender.
The Proposed Term Loan Agreement specifies that, in the event a Note
bearing interest at a fixed rate is paid prior to maturity in whole or in part
and the fixed rate at that time exceeds the yield to maturity of certain United
States Treasury securities maturing on or close to the Note, Wheeling shall pay
to the lender an amount based upon the present value of such prepaid amounts
discounted at such treasury yield.
The Proposed Term Loan Agreement may contain restrictive covenants which
would prohibit Wheeling from, among other things, (i) creating, incurring,
assuming or suffering to exist any liens on its property, with certain stated
exceptions; (ii) creating or incurring any indebtedness for borrowed money,
other than as specified therein; (iii) failing to maintain a specified level of
capitalization; (iv) entering into certain mergers, consolidations and
dispositions of assets; and (v) permitting certain events to occur in connection
with its pension plans. In addition, the Proposed Term Loan Agreement may permit
the holder of a Note to require Wheeling to prepay the Note after an ownership
change.
Wheeling has been advised that funds for long-term unsecured note
borrowings of the magnitude proposed herein are generally available for not more
than 24 hours. Accordingly, Wheeling requests an order of this Commission
approving the proposed financings in all respects such that, upon receipt of
such order, and thereafter, Wheeling may unconditionally, and without further
order of this Commission, enter into a definitive agreement with a lender or
lenders, similar to the form of the Proposed Term Loan Agreement with
appropriate insertions or modifications to specific terms thereof as may be
negotiated between Wheeling and a specific lender subject to the conditions,
restrictions and limitations specified herein.
Proceeds realized from the sale of the Notes will be used to repay long
and short-term debt of Wheeling. At December 31, 1998 the outstanding short-term
indebtedness of Wheeling was $5,225,000.
Compliance with Rule 54.
Rule 54 provides that in determining whether to approve certain
transactions other than those involving an exempt wholesale generator ("EWG") or
a foreign utility company ("FUCO"), as defined in the 1935 Act, the Commission
will not consider the effect of the capitalization or earnings of any subsidiary
which is an EWG or FUCO if Rule 53(a), (b) and (c) are satisfied. As set forth
below, all applicable conditions of Rule 53(a) are currently satisfied and none
of the conditions set forth in Rule 53(b) exist or will exist as a result of the
transactions proposed herein, thereby satisfying such provision and making Rule
53(c) inapplicable.
Rule 53(a)(1). As of December 31, 1998, AEP, through its subsidiary,
AEP Resources, Inc., had aggregate investment in FUCOs of $810,049,000. This
investment represents approximately 48.4% of $1,674,221,000, the average of the
consolidated retained earnings of AEP reported on Forms 10-Q and 10-K for the
four consecutive quarters ended December 31, 1998.
Rule 53(a)(2). Each FUCO in which AEP invests will maintain books
and records and make available the books and records required by Rule 53(a)(2).
Rule 53(a)(3). No more than 2% of the employees of the operating
companies of AEP will, at any one time, directly or indirectly, render services
to any FUCO.
Rule 53(a)(4). AEP has submitted and will submit a copy of Item 9
and Exhibits G and H of AEP's Form U5S to each of the public service commissions
having jurisdiction over the retail rates of AEP's operating companies.
Rule 53(b). (i) Neither AEP nor any subsidiary of AEP is the subject
of any pending bankruptcy or similar proceeding; (ii) AEP's average consolidated
retained earnings for the four most recent quarterly periods ($1,674,221,000)
represented an increase of approximately $69,087,000 (or 4.3%) in the average
consolidated retained earnings from the previous four quarterly periods
($1,605,134,000); and (iii) for the fiscal year ended December 31, 1998, AEP did
not report operating losses attributable to AEP's direct or indirect investments
in EWGs and FUCOs.
AEP was authorized to invest up to 100% of its consolidated retained
earnings in EWGs and FUCOs (HCAR No. 26864, April 27, 1998) (the "100% Order")
in File No. 70-9021. In connection with its consideration of AEP's application
for the 100% Order, the Commission reviewed AEP's procedures for evaluating EWG
or FUCO investments. Based on projected financial ratios and on procedures and
conditions established to limit the risks to AEP involved with investments in
EWGs and FUCOs, the Commission determined that permitting AEP to invest up to
100% of its consolidated retained earnings in EWGs and FUCOs would not have a
substantial adverse impact upon the financial integrity of the AEP System, nor
would it have an adverse impact on any of the operating companies or their
customers, or on the ability of state commissions to protect the Utility
Subsidiaries or their customers. Since similar considerations are involved
hereunder with respect to Rule 54, Applicant should not be required to make
subsequent Rule 54 filings once AEP's aggregate investment in EWGs and FUCOs
exceeds 50% of its consolidated retained earnings.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The expenses of Wheeling in connection with the proposed
issuance of the Notes, other than placement fees, are estimated not to exceed
$2,000, consisting of expenses to be billed at cost by American Electric Power
Service Corporation.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
Wheeling and AEP consider Sections 6(a) and 7 of the 1935 Act
and Rules 50(a)(2) and 50(a)(5) thereunder to be applicable to the proposed
transactions. The proposed issuance and sale of the Notes is expressly excepted
from Rule 50 by the provisions of Rule 50(a)(2), unless Wheeling pays a
placement fee in connection therewith. Wheeling hereby requests the Commission
to find pursuant to Rule 50(a)(5) that, in the event a placement fee as
described above is paid in connection with the issuance and sale of the Notes,
compliance with the provisions of Rule 50 is not necessary.
ITEM 4. REGULATORY APPROVAL.
No commission other than the Securities and Exchange Commission has
jurisdiction over the proposed transactions.
ITEM 5. PROCEDURE.
It is requested, pursuant to Rule 23(c) of the Rules and Regulations of
the Commission, that the Commission's Order granting, and permitting to become
effective this Application or Declaration be issued on or before June 1, 1999.
Wheeling waives any recommended decision by a hearing officer or by any other
responsible officer of the Commission and waives the 30-day waiting period
between the issuance of the Commission's Order and the date it is to become
effective, since it is desired that the Commission's Order, when issued, become
effective forthwith. Wheeling consents to the Office of Public Utility
Regulation assisting in the preparation of the Commission's decision and/or
Order in this matter, unless the Office opposes the matter covered by this
Application or Declaration.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
The following exhibits and financial statements are filed as
part of this statement:
(a) Exhibits:
Exhibit B Copy of proposed form of Wheeling Term Loan
Agreement
Exhibit C None
Exhibit E None
Exhibit F Opinion of Counsel
Exhibit G Form of Notice
(b) Financial Statements:
Balance Sheets of Wheeling as of December 31, 1998 and statements of
income and retained earnings for the twelve months then ended.
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
It is believed that the proposed transactions will not have
any environmental effects which would require an environmental impact statement
under Section 102(c)(2) of the National Environmental Policy Act. No other
federal agency has prepared or is preparing an environmental impact statement
with respect to the proposed transactions.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this statement to be signed on its
behalf by the undersigned thereunto duly authorized.
WHEELING POWER COMPANY
By /s/ A. A. Pena
Vice President
Dated: April 19, 1999
Exhibit B
TERM LOAN AGREEMENT
AGREEMENT dated as of the ___ day of _______, 19__ between
_______________________________, an __________ corporation (herein called the
"Company"), and ___________________________ (the "Bank").
SECTION 1. Amounts and Terms of the Loan.
Section 1.01. Definitions. As used herein the following terms have the
following meanings (which are equally applicable to both the singular and plural
forms of such terms):
"Agreement" means this Term Loan Agreement and any future amendments
or supplements hereto.
"Capitalization" of the Company means, as of any particular time, an
amount equal to the sum of the total principal amount of all indebtedness
for borrowed money, secured or unsecured, of the Company then outstanding
(whether or not such indebtedness matures, pursuant to the instrument by
which such indebtedness shall be created or incurred, within twelve months
after such particular time) and the aggregate of the par value of, or
stated capital represented by, the outstanding shares of all classes of
stock and of the surplus of the Company, paid in, earned and other, if
any.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a business day, for the
next preceding business day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a business day, the
average of the quotations for such day on such transactions received by
the Bank from three Federal funds brokers of recognized standing selected
by the Bank.
"LIBO rate" means, for any Note in the form of Exhibit B, the
average rate of interest per annum at which deposits in United States
dollars are offered by the principal office of the Bank to prime banks in
the London interbank market at 11:00 a.m. (London time) two Business Days
prior to the date of such Note for the amount and term of such Note.
"Maturity Date" means _________.
"Note" means the promissory note of the Company substantially in the
form of Exhibit A, B or C hereto, with appropriate insertions.
"Prime Rate" means a fluctuating interest rate per annum as shall be
in effect from time to time, which rate per annum is at all times equal to
the higher of the (i) rate of interest announced publicly by the Bank in
________ ____________ from time to time as the Bank's __________________
rate and (ii) 1/2 of one percent per annum above the Federal Funds Rate
from time to time.
"Short-Term Debt" means the principal amount of indebtedness for
borrowed money represented by a note or draft issued, renewed or
guaranteed by the Company which has a maturity at the time of issuance,
renewal or guarantee of not more than twelve months, exclusive of days of
grace.
Section 1.02. Loan; Pricing; and Borrowing Procedure. The Bank agrees, on
the terms and conditions hereinafter set forth, to make a loan (the "Loan") to
the Company on _______________ (the "Loan Date") in an amount totaling
$_______________.
The Loan shall bear interest from the Loan Date to the Maturity Date at
one or more of the following interest rates per annum, as selected by the
Company from time to time:
(i) at a fixed interest rate for the term of each Note in the
form of Exhibit A, such term to be designated by the Company at
least three Business Days (as defined in Section 1.13) prior to the
date of the relevant Note and such rate to be quoted by the Bank for
the designated term and accepted by the Company; or
(ii) at a rate per annum for the term of each Note in the form
of Exhibit B, which shall be 1, 2, 3 or 6 months (such term to be
selected by the Company at least three Business Days prior to the
date of the relevant Note) equal to _____ of one percent (1.0%) per
annum above the LIBO rate (the rate of ____ of 1% per annum above
the LIBO rate is hereinafter called the "LIBO Rate"); or
(iii) at a fluctuating rate per annum for the term of each
Note in the form of Exhibit C, which shall mature on the Maturity
Date, equal to the Prime Rate.
The Company may, from time to time, change the pricing of the Loan (in
whole or in part) from the LIBO Rate to the Prime Rate or from the Prime Rate to
the LIBO Rate, and, in the case of the LIBO Rate, may continue such interest
rate option (in whole or in part) for a subsequent period, in either case by
giving the Bank at least three Business Days' notice thereof and by executing
and delivering a new promissory note in the form of Exhibit B or C, as the case
may be, with appropriate insertions, evidencing the changed or continued
interest rate option. Each such notice (which, in the case of a notice
requesting the LIBO Rate, shall be received by the Bank by _____ a.m.,
___________ time, at least three Business Days prior to the date of the proposed
change or continuation), shall specify the date of the proposed change or
continuation (which shall be a Business Day and, in the case of a change from,
or continuation of, the LIBO Rate, shall be the maturity date of the outstanding
Note), whether the proposed interest rate is to be the Prime Rate or the LIBO
Rate, and, in the case of a LIBO Rate, the term of the related Note.
In addition, the Company may, from time to time, change the pricing of the
Loan (in whole or in part) from the LIBO Rate or the Prime Rate, as the case may
be, to a fixed interest rate for a term certain, and, in the case of a fixed
rate, may continue such interest rate option, by (i) requesting a fixed interest
rate option from the Bank for a term certain specified by the Company and (ii)
agreeing to the fixed interest rate proposed by the Bank within the period that
such proposal remains effective. The Company may only convert from the LIBO Rate
to a fixed interest rate or continue a fixed interest rate on the maturity date
of the outstanding Note.
Each such notice given to the Bank by the Company pursuant to this Section
1.02 shall be irrevocable. In the event that the Company fails to deliver a
proposed change or continuation notice prior to the third Business Day next
preceding the maturity date of a Note in the form of Exhibit A or B, the
interest rate on the Loan shall be converted on the maturity date of the
outstanding Note in the form of Exhibit A or B into the Prime Rate.
Section 1.03. Making the Loan. Not later than ___________
(________________ time) on the Loan Date and upon fulfillment of the applicable
conditions set forth in Section 2, the Bank will make the Loan available to the
Company in same day funds at the Bank's address referred to in Section 6.02.
Section 1.04. Optional Prepayments. The Company may prepay any Note in
whole at any time or in part from time to time without premium or penalty, by
giving at least 3 Business Days' notice to the Bank specifying the amount and
date of the proposed prepayment. If notice is given as prescribed above, the
principal amount of the Note which the Company proposes to prepay, together with
accrued interest on such amount to the date of payment, shall become due and
payable on the specified date of prepayment. Notwithstanding the foregoing, the
Company shall have no right to prepay a Note in the form of Exhibit A, unless
the Company pays the fee specified in Section 1.14 and shall have no right to
prepay a Note in the form of Exhibit B prior to maturity of such Note.
Section 1.05. Interest and Repayment. The Company shall repay the Loan in
full on the last day of each March, June, September and December (the "Repayment
Date") commencing on the first such date occurring on or after the Loan Date and
shall pay interest on the unpaid principal amount of the Loan in accordance with
one or more promissory notes of the Company (each, a "Note") executed and
delivered by the Company from time to time to evidence the indebtedness
resulting from the Loan. If the Loan or any part thereof bears interest at the
fixed interest rate, the Note evidencing such amount shall be substantially in
the form of Exhibit A, with appropriate insertions, and shall be dated the Loan
Date or the date upon which the interest rate has been continued for a
subsequent period at a fixed rate or has been changed into a fixed interest
rate, as the case may be. If the Loan or any part thereof bears interest at the
LIBO Rate, the Note evidencing such amount shall be substantially in the form of
Exhibit B, with appropriate insertions, and shall be dated the Loan Date or the
date upon which the interest rate has been continued for a subsequent period at
the LIBO Rate or has been changed into the LIBO Rate, as the case may be. If the
Loan or any part thereof bears interest at the Prime Rate, the Note evidencing
such amount shall be substantially in the form of Exhibit C, with appropriate
insertions, and shall be dated the Loan Date or the date upon which the interest
rate has been changed into the Prime Rate, as the case may be.
Section 1.06. Reborrowings. On each Repayment Date, the Company shall
reborrow and the Bank shall relend the principal so paid, provided that:
(a) No such reborrowing may be made on or after the Maturity Date and,
after giving effect to each such reborrowing, the aggregate outstanding
principal amount of the Loan shall not exceed the principal amount of the
Loan outstanding immediately prior to the date of such reborrowing.
(b) For purposes of this Section 1.06, any payment of principal of the
Loan, or any portion thereof, represented by a Note in the form of Exhibit
A pursuant to Section 1.05 hereof which (x) the Company is required to
reborrow under this Section 1.06 on the date of such payment but does not
reborrow on such date, or (y) the Company is not permitted to reborrow
under this Section 1.06 on the date of such payment by reason of clause (c)
below, shall be deemed a prepayment of the Loan prior to the Due Date (as
defined in Section 1.14), and shall have the effect of a prepayment,
subject to the prepayment provisions in Section 1.14. Any such payment
which is so reborrowed shall not be deemed a prepayment of the Loan for
purposes of Section 1.14.
(c) After giving effect to such reborrowing, each of the
representations and warranties of the Company set forth in Section 3.01
shall be true with the exceptions of Subsections 3.01(e) and (f) on and as
of the date of such reborrowing, and no Event of Default or other event
which, with the giving of notice or the lapse of time, or both, would
constitute such an Event of Default shall have occurred and be continuing.
Each reborrowing by the Company pursuant to this Section 1.06 shall be
deemed to be a representation and warranty by the Company as to such
matters.
Section 1.07. Additional Interest. The Company shall pay to the Bank,
during the time that the Bank shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency
liabilities (as defined in Regulation D of the Board of Governors of the Federal
Reserve System as in effect from time to time), additional interest on the
unpaid principal amount of each Note in the form of Exhibit B from the date of
such Note until such principal amount is paid in full, payable on the due date
of each interest payment for such Note, at an interest rate per annum equal at
all times during the term of such Note to the excess of (i) the rate obtained by
dividing the LIBO Rate for such Note by a percentage equal to 100% minus the
reserve percentage applicable during the term of such Note under regulations
issued from time to time by the Board of Governors of the Federal Reserve System
(or if more than one such percentage is so applicable, minus the daily average
for such percentages for those days during which such percentage shall be so
applicable) for determining the maximum reserve requirement (including, without
limitation, any marginal reserve requirement) for the Bank in respect of
liabilities or assets consisting of or including Eurocurrency liabilities over
(ii) the LIBO Rate for such Note.
Section 1.08. Increased Costs, etc.
(a) If either (i) the introduction of or any change (including,
without limitation, any change by way of imposition or increase of reserve
requirements) in or in the interpretation of any law or regulation or (ii)
the compliance by the Bank with any guideline or request from any central
bank or other governmental authority (whether or not having the force of
law), shall result in any increase in the cost to the Bank of making,
funding or maintaining loans bearing interest at the LIBO Rate, then the
Company shall from time to time, upon demand by the Bank, pay to the Bank
additional amounts sufficient to indemnify the Bank against such increased
cost. A certificate as to the amount of such increased cost (including
calculations thereof in reasonable detail), submitted to the Company by the
Bank, shall, in absence of manifest error, be conclusive.
(b) If it shall become unlawful for the Bank to obtain funds in the
London interbank market in order to fund or maintain loans bearing interest
at the LIBO Rate or otherwise to perform their obligations hereunder with
respect to any such loans, then, upon at least five Business Days' notice
by the Bank to the Company the rate of interest on any portion of the Loan
then bearing interest at the LIBO Rate shall thereupon be the Prime Rate,
and the right of the Company to select the LIBO Rate shall thereupon
terminate. In such event, the Company will execute and deliver a Note
substantially in the form of Exhibit C, with appropriate insertions.
(c) The Company shall indemnify the Bank against any loss or expense
which the Bank may sustain or incur as a consequence of any default in
payment or prepayment of the principal amount of any portion of the Loan
bearing interest at the LIBO Rate.
Section 1.09. Inability to Determine LIBO Rate. In the event that the
Bank shall have determined that:
(i) by reason of circumstances affecting the London interbank
market generally, adequate and reasonable means do not exist for
ascertaining the LIBO Rate with respect to a changed or continued
interest rate option that the Company has requested be made bearing
interest at the LIBO Rate; or
(ii) the LIBO Rate will not adequately and fairly reflect the
cost to the Bank of maintaining or funding a changed or continued
interest rate option that the Company has requested be made bearing
interest at the LIBO Rate,
then, the Bank shall forthwith give prompt notice, confirmed in writing, of such
determination to the Company, at least one Business Day prior to the date for
such change or continuation. If such notice is given, the interest rate on such
portion of the Loan shall be the Prime Rate and the Company shall execute and
deliver to the Bank a Note substantially in the form of Exhibit C, with
appropriate insertions.
Section 1.10. Increased Capital. If the Bank determines (i) that
compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be
maintained by the Bank or any corporation controlling the Bank or would have the
effect of reducing the rate of return on the Bank's capital or on the capital of
such corporation and (ii) that the amount of such capital is increased by or
based upon, or such reduction is a consequence of the existence of, the Bank's
commitment to lend hereunder and other commitments of this type or the Loan or
any Note in the form of Exhibit B, then the Company shall, within ten days
following demand therefor by the Bank, from time to time as specified by the
Bank pay to the Bank additional amounts sufficient to compensate the Bank in the
light of such circumstances, to the extent that the Bank reasonably determines
such increase in capital or reduction in rate of return, as the case may be, to
be allocable to the existence of the Bank's commitment to lend hereunder or the
making or maintenance of its Loan or any Note in the form of Exhibit B. A
certificate as to such amounts submitted to the Company by the Bank accompanied
by an explanation of the basis therefor, shall constitute such demand and shall
be conclusive and binding for all purposes, absent manifest error.
Section 1.11. Assignments and Participations. The Bank may assign, or sell
participations in, all or any part of the Loan to another bank or other entity,
in which event (a) in the case of an assignment, upon notice thereof by the Bank
to the Company and receipt by the Bank of the Company's written consent to such
assignment, such consent not to be unreasonably withheld, the assignee shall
have, to the extent of such assignment, the same rights and benefits as it would
have if it were the Bank hereunder and (b) in the case of a participation, the
participant shall not have any rights under this Agreement and the Notes (the
participant's rights against the Bank in respect of such participation to be
those set forth in the agreement(s) executed by the Bank in favor of the
participant relating thereto) and all amounts payable by the Company under
Section I shall be determined as if the Bank had not sold such participation.
The Bank may furnish any information concerning the Company in the possession of
the Bank from time to time to assignees and participants (including prospective
assignees and participants).
Section 1.12. Payments and Computations. The Company shall make each
payment hereunder and under an outstanding Note not later than 12:00 noon (New
York Time) on the day when due in lawful money of the United States of America
and in same day funds to the Bank at its address referred to in Section 6.02.
The Company hereby authorizes the Bank, if and to the extent payment is not made
when due hereunder or under an outstanding Note, to charge from time to time
against the Company's account with the Bank any amount so due. All computations
of interest under a Note shall be made by the Bank on the basis of a year of
365/366 days for the actual number of days (including the first day but
excluding the last day) elapsed, except that interest under any Note in the form
of Exhibit B shall be computed on the basis of a year of 360 days for the actual
days elapsed.
Section 1.13. Payment on Non-Business Days. Whenever any payment to be
made hereunder or under a Note shall be stated to be due on a Saturday, a Sunday
or a public or bank holiday or the equivalent for banks generally under the laws
of the State of New York and, if the issuance or payment of a Note bearing
interest at the LIBO Rate is involved, or a day on which banks in the London
interbank market are not open for transactions in dollars (any other day being a
"Business Day"), such payment may be made on the next succeeding Business Day,
provided, however, that in the case of a Note in the form of Exhibit B, if such
extension would cause such payment to be made in a new calendar month, such
payment shall be made on the next preceding Business Day and such extension of
time shall in such case be included in the computation of payment of interest.
Any prepayments to the Bank on account of the principal of the Note shall be
endorsed on the Note prior to any transfer by the Bank of the Note.
Section 1.14. Fee for Cancellation or Payment Prior to Maturity Date.
(a) For purposes of this Section 1.14, the following terms shall have
the following meanings:
"Due Date" means the Due Date (as defined in the outstanding Note in
the form of Exhibit A which governs the Loan or the portion of the Loan
being repaid).
"Liquidation Rate" means one-quarter of the interest rate per annum
equal to the latest three-week moving average of secondary market
midafternoon quotations of yields to maturity of U.S. Treasury notes
trading closest to par value and maturing on, or within three months of,
the Due Date, such three-week moving average to be determined by the Bank
on the Fee Determination Date on the basis of such yields reported by
dealers of U.S. Treasury notes to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or terminated,
on the basis of quotations of such yields received by the Bank from three
New York dealers of U.S. Treasury notes of recognized standing.
"Loan Rate" means one-quarter of the Fixed Rate (as defined in the
outstanding Note in the form of Exhibit A which governs the Loan or the
portion of the Loan being repaid).
"Fee Determination Date" means the Loan Date, if the Loan has not
been made on or before the Loan Date, and means the date prior to the Due
Date on which the Company repays the Loan or any part thereof pursuant to
Section 1.04 or otherwise, if the Loan has been made.
(b) If the Company prepays the Loan or any part of it, which is then
evidenced by a Note in the form of Exhibit A, prior to the Due Date
(whether or not such prepayment is due to acceleration of the Loan pursuant
to Section 5.01), the Company shall pay to the Bank a fee (as liquidated
damages, and not as a penalty) equal to the sum of the present values, each
determined at the Liquidation Rate, of the excess, if any, of (A) the sum
of the quarterly interest payments on the principal amount of the Loan
evidenced by a Note in the form of Exhibit A that is prepaid between the
Fee Determination Date and the Due Date computed at the Loan Rate over (B)
the sum of the quarterly interest payments on the principal amount of the
Loan evidenced by a Note in the form of Exhibit A that is prepaid between
the Fee Determination Date and the Due Date computed at the Liquidation
Rate, such fee to be payable five Business Days after the Fee Determination
Date, and such present value ("PV") to be calculated in accordance with the
following formula:
PV = (P x (R - T)) x [(1 - (1 + T)-n)/T]
where R = the Loan Rate;
T = the Liquidation Rate;
n = the number of quarters or any portion thereof from the Fee
Determination Date to the Due Date; and
P = the principal amount of the Loan being prepaid.
SECTION 2. Conditions of Lending.
Section 2.01. Conditions Precedent to the Loan. The obligation of the
Bank to make the Loan on the Loan Date is subject to the conditions precedent
that:
(a) the Bank shall have received on or before the Loan Date the
following, each dated such day, in form and substance satisfactory to the
Bank:
(i) One or more promissory notes duly executed by the Company,
dated the Loan Date, in the form of one or more of the Notes
appended hereto;
(ii) Certified copies of the resolutions of the Board of
Directors of the Company approving this Agreement and the
transactions contemplated hereby, and of all documents evidencing
other necessary corporate action and governmental approvals
(including, without limitation, orders of the [state] Commission and
Securities and Exchange Commission approving the transactions
contemplated by this Agreement) with respect to this Agreement and
the transactions contemplated hereby;
(iii) A certificate of the Secretary or an Assistant Secretary
of the Company certifying the names and true signatures of the
officers of the Company authorized to sign this Agreement and the
Notes and the other documents to be delivered hereunder;
(iv) A favorable opinion of an attorney of the American
Electric Power Service Corporation, counsel for the Company, as to
matters referred to in Section 3.01 (except subsections (e) and (f)
thereof) and as to such other matters as the Bank may reasonably
request; and
(b) on the Loan Date the following statements shall be true and the
Bank shall have received a certificate signed by a duly authorized officer
of the Company, dated the Loan Date, stating that:
(i) The representations and warranties contained in Section
3.01 are correct on and as of the Loan Date as though made on and as
of such date, and
(ii) No event has occurred and is continuing, or would result
from the Loan, which constitutes an Event of Default (as defined in
Section 5.01 hereof) or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both; and
(c) the Bank shall have received such other approvals, opinions or
documents as the Bank may reasonably request.
SECTION 3. Representations and Warranties.
Section 3.01. Representations and Warranties of the Company. The
Company represents and warrants as follows:
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction indicated at the
beginning of this Agreement.
(b) The execution, delivery and performance by the Company of this
Agreement and the transactions contemplated hereby are within the Company's
corporate powers, have been duly authorized by all necessary corporate
action, and do not contravene (i) the Company's charter or by-laws or (ii)
law or any contractual restriction binding on or affecting the Company.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Company of this
Agreement or the transactions contemplated hereby, except for the
authorizations of the [state] Commission and Securities and Exchange
Commission, which authorizations have been duly obtained and are in full
force and effect.
(d) This Agreement is, and the Notes when delivered hereunder will be,
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditors' rights in general, and
except as the availability of the remedy of specific performance is subject
to general principles of equity (regardless of whether such remedy is
sought in a proceeding in equity or at law).
(e) The balance sheet of the Company as at December 31, 199_, and the
related statement of income and retained earnings of the Company for the
year then ended (the "Financial Statements"), copies of which have been
furnished to the Bank, fairly present the financial condition of the
Company as of such date and the results of the operations of the Company
for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since December 31,
199_, there has been no material adverse change in such condition or
operations or in the business prospects of the Company.
(f) There is no pending or threatened action or proceeding affecting
the Company, except as otherwise disclosed in the Financial Statements or
otherwise reported to the Bank prior to the date of this Agreement, before
any court, governmental agency or arbitrator, which may materially
adversely affect the financial condition, operations or business prospects
of the Borrower.
(g) No proceeds of the Loan will be used to acquire any security in
any transaction which is subject to Section 13 or 14 of the Securities
Exchange Act of 1934.
(h) The Company is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve
System), and no proceeds of the Loan will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.
SECTION 4. Covenants of the Company.
Section 4.01. Affirmative Covenants. The Company covenants and agrees that
during the term of this Agreement, and so long as any Note remains outstanding
and unpaid, the Company will, unless the Bank shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders, such compliance to
include, without limitation, paying before the same become delinquent all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent contested in good faith.
(b) Reporting Requirements. Furnish to the Bank: (i) as soon as
available and in any event within 90 days after the end of each of the
first three quarters of each fiscal year of the Company, the balance sheet
of the Company as of the end of each such quarter and the statement of
income and retained earnings of the Company for the period commencing at
the end of the previous fiscal year and ending with the end of such
quarter, certified by the chief financial officer of the Company; (ii) as
soon as available and in any event within 130 days after the end of each
fiscal year of the Company, a copy of the annual report for each such year,
containing financial statements for such year certified in a manner
acceptable to the Bank by Deloitte & Touche LLP or another independent
public accountant of recognized standing; and (iii) such other information
respecting the condition or operations, financial or otherwise, of the
Company as the Bank may from time to time reasonably request.
(c) Notices. Promptly give notice to the Bank of (a) any litigation
affecting the Company in which the amount involved is $____________ or more
and is not covered by insurance and (b) the occurrence of each Event of
Default and each event which, with notice or lapse of time or both, would
constitute an Event of Default.
(d) Maintenance of Corporate Existence; Etc. Preserve and maintain its
corporate existence in the jurisdiction of its incorporation (except as
provided in Section 4.02(c)) and the rights, franchises and privileges
necessary for the ordinary conduct of its business, maintain its properties
and assets in good working order and condition and maintain, with respect
to its properties and assets and its business, insurance with financially
sound and reputable insurers against loss or damage of the kinds and in the
amounts customarily carried under similar circumstances by other
corporations engaged in the same or similar businesses and similarly
situated. Notwithstanding the provisions of the foregoing sentence,
however, the Company may self-insure by deductible provisions in a prudent
amount with respect to each loss.
Section 4.02. Negative Covenants. The Company covenants and agrees that
during the term of this Agreement, and so long as any Note remains outstanding
and unpaid, it will not, without the written consent of the Bank:
(a) Limitation on Liens, Etc. Create, incur, assume or suffer to be
created, incurred, assumed, or to exist, any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance of any
nature (all of the foregoing being hereinafter referred to in this Section
as "liens") upon or with respect to any of its property or assets, whether
now owned or hereafter acquired, except that the foregoing restrictions
shall not apply to:
(i) the lien of the Indenture dated as of _________________
between the Company and ____________________, as Trustee, as
supplemented and amended, and "Permissible Encumbrances" as therein
defined;
(ii) liens for taxes, assessments or governmental charges or
levies not yet delinquent or being contested in good faith by
appropriate proceedings;
(iii) liens of landlords and liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of
business for sums not yet due or being contested in good faith by
appropriate proceedings;
(iv) liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of or compliance with statutory obligations, tenders,
bids, leases, surety and appeal bonds, performance and
return-of-money bonds and other similar obligations (other than
obligations for the payment of borrowed money);
(v) any judgment lien, unless the judgment it secures shall
not, within sixty days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been
discharged within sixty days after the expiration of any such stay;
(vi) liens on any property acquired, constructed or improved
by the Company after the date of this Agreement, or liens on any
property existing at the time of the acquisition thereof, provided
that the lien shall not apply to any property theretofore owned by
the Company other than any theretofore unimproved real property on
which the property so constructed, or the improvement, is located;
(vii) liens incidental to the conduct of the Company's
business or the ownership of its property and assets, which were not
incurred in connection with the borrowing of money or the obtaining
of credit, none of which materially interferes with the Company's
use and operation of its properties and assets or detracts from the
value thereof; and
(viii)liens for the sole purpose of extending, renewing or
replacing in whole or in part the indebtedness secured by any lien
referred to in the foregoing clauses (i) and (vi) or in this clause
(viii); provided, however, that the principal amount of indebtedness
secured thereby shall not exceed the principal amount of
indebtedness so secured at the time of such extension, renewal or
replacement, and that such extension, renewal or replacement shall
be limited to all or a part of the property which secured the lien
so extended, renewed or replaced (and any improvements on such
property).
(b) Limitations on Borrowing. Create or incur any indebtedness for
borrowed money (other than Short-Term Debt in an aggregate principal amount
not exceeding the greater of 10% of the Capitalization of the Company,
excluding Short-Term Debt, or such other amount as shall be approved by the
Securities and Exchange Commission pursuant to the Public Utility Holding
Company Act of 1935) if, immediately after the creation or incurring of
such indebtedness and the application of the proceeds thereof, if any, the
total principal amount of all indebtedness of the Company for borrowed
money (other than Short-Term Debt to the extent specified above) shall at
any time exceed 65% of the Capitalization of the Company.
(c) Limitation on Mergers. Merge into or consolidate with any
corporation or other entity, or permit any corporation or other entity to
merge into or consolidate with it, or sell or otherwise dispose of all or
substantially all of its assets to any other corporation or entity, if, in
any such case, (a) the indebtedness of such successor corporation or entity
(whether or not the Company) for borrowed money would exceed the amount
permitted by Section 4.02(b) hereof, or (b) such successor corporation or
entity (if other than the Company) shall fail to assume the obligations of
the Company under any outstanding Note and to subject itself to the terms
of this Agreement.
(d) Limitation on Plan Withdrawals or Terminations. Permit any
employee benefit pension plan (other than a multiemployer plan of the
United Mine Workers of America) with respect to which the Company may have
any liability to terminate, or withdraw from such a plan, while there shall
exist a deficiency of more than $50,000,000 in plan assets available to
satisfy the benefits guaranteeable under the Employee Retirement Income
Security Act of 1974, as amended, with respect to such plan.
SECTION 5. Events of Default.
Section 5.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Company shall fail to pay the principal of, or any installment
of interest on, any outstanding Note when due or shall fail to pay any
other amounts payable under this Agreement when due; or
(b) Any representation or warranty made by the Company herein or by
the Company (or any of its officers) in connection with this Agreement
shall prove to have been incorrect in any material respect when made; or
(c) The Company shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for 10
days after written notice thereof shall have been given to the Company by
the Bank; or
(d) The Company shall fail to pay the principal of, or interest on,
any obligation of the Company for borrowed money (other than under this
Agreement and any outstanding Note) when due, whether by acceleration, by
required prepayment or otherwise, for a period longer than any period of
grace provided in such obligation, or fail to perform any other term,
condition or covenant contained in any such obligation, the effect of which
is to cause, or to permit the holder of such obligation or others on its
behalf to cause, such obligation then to become due prior to its stated
maturity, unless such failure shall have been cured or effectively waived;
or
(e) The Company shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the Company seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official
for it or for any substantial part of its property; or the Company shall
take any corporate action to authorize any of the actions set forth above
in this subsection (e); or
(f) All of the Common Stock, other than directors' qualifying shares,
of the Company, or of any successor corporation or entity, shall not be
owned, directly or indirectly, by American Electric Power Company, Inc., or
a successor thereto;
then, and in any such event, the Bank may, by notice to the Company, (i) declare
its obligation to make the Loan to be terminated, whereupon the same shall
forthwith terminate, and (ii) declare any outstanding Note or Notes, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon such Note or Notes, all such interest and
all such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Company.
SECTION 6. Miscellaneous.
Section 6.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or any Note, nor consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Bank and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
Section 6.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic communication) and
mailed or telegraphed or delivered, if to the Company, at its address at 1
Riverside Plaza, Columbus, Ohio 43215, Attention: A. A. Pena; and if to the
Bank, at its address at ____________________________________ or, as to each
party, at such other address as shall be designated by such party in a written
notice to the other party. All such notices and communications shall, when
mailed or telegraphed, be effective when deposited in the mails or delivered to
the telegraph company, respectively, addressed as aforesaid.
Section 6.03. No Waiver; Remedies. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder or under any Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder or under any Note preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 6.04. Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank to
or for the credit or the account of the Company against any and all of the
obligations of the Company now or hereafter existing under this Agreement and
any Note, irrespective of whether or not the Bank shall have made any demand
under this Agreement or any Note and although such obligations may be unmatured.
The Bank agrees promptly to notify the Company after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity to such set-off and application. The rights of the Bank under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Bank may have.
Section 6.05. Binding Effect; Governing Law. This Agreement shall be
binding upon and inure to the benefit of the Company and the Bank and their
respective successors and assigns, except that the Company shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Bank. This Agreement and any Notes shall be governed by,
and construed in accordance with, the laws of the State of __________.
Section 6.06. Costs, Expenses and Taxes. The Company agrees to pay or
reimburse the Bank for the payment of (i) all reasonable out-of-pocket expenses
of the Bank, including attorneys' fees, arising in connection with the
enforcement or preservation of any rights under this Agreement and any Note, and
(ii) any and all present and future stamp and other taxes (including interest
and penalties, if any) which may be assessed or payable in respect of any Note,
or of any modification of any Note, or of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
-------------------------------
By: _____________________________
Treasurer
------------------------------
By: ______________________________
Treasurer
FIXED RATE EXHIBIT A
PROMISSORY NOTE
$_________ Dated:__________, 19__
FOR VALUE RECEIVED, the undersigned, _____________________, an __________
corporation (the "Borrower"), hereby promises to pay to the order of
____________________ (the "Bank"), the principal sum of __________________
Dollars ($__________________) on _____________________ (the "Due Date"),
together with interest on the principal amount remaining unpaid hereunder from
time to time outstanding from the date hereof until said principal sum shall be
paid in full, payable ________________________ during the term hereof and on the
Due Date, at a rate of interest per annum equal at all times to ____% per annum
(the "Fixed Rate"). Any amount of principal hereof which is not paid when due,
whether at stated maturity, by acceleration or otherwise, shall bear interest
from the day when due until said principal amount is paid in full, payable on
demand, at a rate of interest per annum equal at all times to one percent (1%)
over the Fixed Rate. Interest shall be computed on the basis of a year
consisting of 365 or 366 days, as the case may be, for the actual number of days
elapsed.
Both principal and interest are payable in lawful money of the United
States of America and in same day funds to the Bank at
- ---------------------------------.
This Note evidences indebtedness incurred under a Term Loan Agreement
dated as of _____________________, between the Borrower and the Bank (the
"Agreement"), as the same may be amended, modified or supplemented from time to
time, and is entitled to the benefits thereof. The Agreement, among other
things, contains provisions for acceleration of the maturity of the principal
amount hereof upon the happening of certain stated events and also for the
payment of a fee in the event of repayment of principal hereof prior to the Due
Date hereof upon the terms and conditions therein specified.
-------------------------------
By:_____________________________
Title:
LIBO RATE EXHIBIT B
PROMISSORY NOTE
$_____________ Dated: _______________, 19___
FOR VALUE RECEIVED, the undersigned, _____________________, an __________
corporation (the "Borrower"), hereby promises to pay to the order of
________________________ (the "Bank"), the principal sum of
__________________________________ Dollars ($_____________) on
_____________________, and to pay interest on the unpaid principal amount hereof
from the date hereof as provided below. For Notes with a term greater than three
months, interest on the unpaid principal amount shall be payable quarterly on
the last day of March, June, September and December prior to, and at maturity
hereof; for Notes with a term of three months or less, interest on the unpaid
principal amount shall be payable at maturity only; in all cases, without
exception, interest on the unpaid principal amount shall be payable after such
maturity on demand. Said interest shall be: (i) prior to the maturity hereof, at
a rate per annum equal to _____% (the "Rate"), and (ii) from the maturity hereof
(whether by acceleration or otherwise), at a rate per annum equal at all times
to the sum of 1% plus the Rate until payment in full. Interest shall be computed
on the basis of a year consisting of 360 days for the actual number of days
elapsed.
Both principal and interest are payable in lawful money of the United
States of America in immediately available funds to the Bank at
- -------------------------------------------------.
This Note evidences indebtedness incurred under a Term Loan Agreement
dated as of _____________________, between the Borrower and the Bank (the
"Agreement"), as the same may be amended, modified or supplemented from time to
time, and is entitled to the benefits thereof. The Agreement, among other
things, contains provisions for acceleration of the maturity of the principal
amount hereof upon the happening of certain stated events and also for optional
and mandatory prepayments of principal prior to the maturity hereof.
-------------------------------
By:_________________________
Title:
PRIME RATE EXHIBIT C
PROMISSORY NOTE
$_____________ Dated: _______________, 19___
FOR VALUE RECEIVED, the undersigned, ______________________, an __________
corporation (the "Borrower"), hereby promises to pay to the order of
_____________________________ (the "Bank"), the principal sum of
_______________________________________ Dollars ($_____________) on
______________________, and to pay interest on the unpaid principal amount
hereof from the date hereof as provided below. Interest on the unpaid principal
amount shall be payable quarterly on the last day of March, June, September and
December prior to and, at the maturity hereof (whether by acceleration or
otherwise), and after such maturity on demand. Said interest shall be: (i) prior
to the maturity hereof, at a fluctuating rate per annum equal at all times to
the Prime Rate (the "Prime Rate") as defined in the Term Loan Agreement dated as
of __________________ between the Borrower and the Bank (the "Agreement"); and
(ii) from the maturity hereof (whether by acceleration or otherwise), at a
fluctuating rate per annum equal at all times to 1% plus the Prime Rate until
payment in full. Any change in the interest rate hereon resulting from a change
in the Prime Rate shall be effective as of the opening of business on the date
of such change in the Prime Rate. Interest shall be computed on the basis of a
year consisting of 365 or 366 days, as the case may be, for the actual number of
days elapsed.
Both principal and interest are payable in lawful money of the United
States of America in immediately available funds to the Bank at
- ----------------------------------------------.
This Note evidences indebtedness incurred under the Agreement, as the same
may be amended, modified or supplemented from time to time, and is entitled to
the benefits thereof. The Agreement, among other things, contains provisions for
acceleration of the maturity of the principal amount hereof upon the happening
of certain stated events and also for optional and mandatory prepayments of
principal prior to the maturity hereof.
-------------------------------
By:_________________________
Title:
Exhibit F
614/223-1624
Securities and Exchange Commission
Office of Public Utility Regulation
450 Fifth Street, N.W.
Washington, D.C. 20549-1004
April 19, 1999
Gentlemen:
With respect to the Application or Declaration on Form U-1 of Wheeling Power
Company ("Wheeling") relating to the issuance and sale by Wheeling of certain
unsecured long-term promissory notes (the "Notes") pursuant to a Term Loan
Agreement, I wish to advise you as follows:
I am of the opinion that, in the event that the proposed transactions are
consummated in accordance with said Application or Declaration, as the same may
be amended, and when the steps referred to in the next following paragraph shall
have been taken:
(a) All state laws applicable to the proposed transactions will have
been complied with;
(b) The Notes will be valid and binding obligations of Wheeling in
accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforceability of creditors' rights
generally and by general principles of equity; and
(c) Consummation of the proposed transactions will not violate the legal
rights of the holders of any securities issued by Wheeling or any
associate company thereof.
The steps to be taken which are referred to in the next preceding paragraph
consist of the following:
1. Appropriate action by the Board of Directors of Wheeling with
respect to the transactions described in said Application or
Declaration;
2. Appropriate action by the Securities and Exchange Commission with
respect to the transactions described in said Application or
Declaration;
3. Compliance with Federal, state and other securities laws;
4. Execution and delivery of the proposed Term Loan Agreement pursuant
to which the Notes will be issued; and
5. Issuance and sale of the Notes in accordance with the governmental
and corporate authorizations aforesaid.
I hereby consent to the filing of this opinion as an exhibit to the
above-mentioned Application or Declaration.
Very truly yours,
/s/ William E. Johnson
William E. Johnson
Counsel for
Wheeling Power Company
Exhibit G
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. /__________ , 1999
- ----------------------------------------
:
In the Matter of :
:
WHEELING POWER COMPANY :
51 - 16th Street :
Wheeling, West Virginia 26003 :
:
(70- ) :
- ----------------------------------------
NOTICE OF PROPOSED ISSUANCE AND SALE OF LONG-TERM NOTES
Wheeling Power Company ("Wheeling"), an electric utility subsidiary of American
Electric Power Company, Inc., a registered holding company, has filed with this
Commission an Application or Declaration pursuant to Sections 6(a) and 7 of the
Public Utility Holding Company Act of 1935 (the "1935 Act") and Rule 50
thereunder.
Wheeling proposes, subject to receipt of appropriate authori-zation, to issue
$10,000,000 principal amount of unsecured promissory notes with a maturity not
less than nine months nor more than ten years (the "Notes") to one or more
commercial banks or other financial institutions pursuant to a proposed term
loan agreement. The proposed term loan agreement would provide that the Notes
bear interest at a fixed rate, fluctuating rate, or some combination of fixed
and fluctuating rates. The actual rate of interest which each Note shall bear
shall be subject to negotiation between Wheeling and the lender. Any fixed rate
of interest of the Notes will not be greater than 300 basis points above the
yield at the time of issuance of the Notes to maturity of United States Treasury
obligations that mature on or about the date of maturity of the Notes. Any
fluctuating rate will not be greater than 200 basis points above the rate of
interest announced publicly from time to time as the base or prime rate by a
major bank.
In the event a bank or financial institution arranges for a borrowing from a
third party, such institution may charge Wheeling a placement fee, not to exceed
1% of the principal amount of such borrowing.
Any proceeds realized from the sale of the Notes will be used to repay long and
short-term debt.
The Application or Declaration and any 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 __________ , 1999 to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549, and serve a copy on the applicant at the
address specified above. Proof of service (by affidavit or, in case of any
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 Application, as filed or as it may be amended, may be permitted to
become effective.
For the Commission, by the Office of Public Utility Regulation, pursuant to
delegated authority.
Jonathan G. Katz
Secretary
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997 1996
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES $86,295 $85,297 $85,882
------- ------- -------
OPERATING EXPENSES:
Purchased Power - Affiliated Company 58,527 58,744 60,432
Other Operation 8,200 9,368 8,449
Maintenance 3,512 3,021 3,381
Depreciation 2,869 2,774 2,685
Taxes Other Than Federal Income Taxes 5,597 5,600 5,719
Federal Income Taxes 2,137 1,362 1,172
------- ------- -------
TOTAL OPERATING EXPENSES 80,842 80,869 81,838
------- ------- -------
OPERATING INCOME 5,453 4,428 4,044
NONOPERATING LOSS (110) (255) (106)
------- ------- -------
INCOME BEFORE INTEREST CHARGES 5,343 4,173 3,938
INTEREST CHARGES 1,964 1,982 2,083
------- ------- -------
NET INCOME $ 3,379 $ 2,191 $ 1,855
======= ======= =======
STATEMENTS OF RETAINED EARNINGS
Year Ended December 31,
1998 1997 1996
(in thousands)
RETAINED EARNINGS JANUARY 1 $5,924 $6,048 $6,569
NET INCOME 3,379 2,191 1,855
CASH DIVIDENDS DECLARED 2,416 2,315 2,376
------ ------ ------
RETAINED EARNINGS DECEMBER 31 $6,887 $5,924 $6,048
====== ====== ======
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997 1996
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 3,379 $ 2,191 $ 1,855
Adjustments for Noncash Items:
Depreciation 2,869 2,774 2,685
Amortization Under Rate Settlement
of Deferred Wholesale Purchased Power Costs 1,131 1,314 1,307
Deferred Federal Income Taxes (244) (286) (351)
Changes in Certain Current Assets and Liabilities:
Accounts Receivable (net) 486 (722) (1,393)
Materials and Supplies (10) 106 279
Accrued Utility Revenues (680) 441 509
Accounts Payable (459) (1,098) 1,264
Accrued Taxes 51 88 (822)
Other (net) 631 1,047 (527)
------- -------- --------
Net Cash Flows From Operating Activities 7,154 5,855 4,806
------- -------- --------
INVESTING ACTIVITIES:
Construction Expenditures (4,203) (4,254) (3,982)
Proceeds from Sale and Leaseback
Transactions and Other 84 136 481
------- -------- --------
Net Cash Flows Used For
Investing Activities (4,119) (4,118) (3,501)
------- -------- --------
FINANCING ACTIVITIES:
Capital Contributions from Parent Company 1,000 1,000 -
Issuance of Long-term Debt - - 10,000
Retirement of Long-term Debt - - (10,000)
Change in Short-term Debt (net) (750) (700) 1,300
Dividends Paid (2,416) (2,315) (2,376)
------- -------- --------
Net Cash Flows Used For
Financing Activities (2,166) (2,015) (1,076)
------- -------- --------
Net Increase (Decrease) in Cash and Cash Equivalents 869 (278) 229
Cash and Cash Equivalents January 1 197 475 246
------- -------- --------
Cash and Cash Equivalents December 31 $ 1,066 $ 197 $ 475
======= ======== ========
</TABLE>
See Notes to Financial Statements.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1998 1997
(in thousands)
<S> <C> <C>
ASSETS
ELECTRIC UTILITY PLANT:
Transmission $22,950 $22,074
Distribution 64,932 63,706
General 7,850 7,450
Construction Work in Progress 2,766 1,855
------- -------
Total Electric Utility Plant 98,498 95,085
Accumulated Depreciation 39,062 37,355
------- -------
NET ELECTRIC UTILITY PLANT 59,436 57,730
------- -------
OTHER PROPERTY AND INVESTMENTS 2,755 2,951
------- -------
CURRENT ASSETS:
Cash and Cash Equivalents 1,066 197
Accounts Receivable:
Customers 6,446 7,922
Affiliated Companies 1,185 792
Miscellaneous 1,245 644
Allowance for Uncollectible Accounts (86) (82)
Materials and Supplies - at average cost 158 148
Accrued Utility Revenues 2,018 1,338
Other 208 213
------- -------
TOTAL CURRENT ASSETS 12,240 11,172
------- -------
REGULATORY ASSETS 11,750 13,955
------- -------
DEFERRED CHARGES 1,609 1,568
------- -------
TOTAL $87,790 $87,376
======= =======
See Notes to Financial Statements.
December 31,
1998 1997
(in thousands)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock - No Par Value:
Authorized and Outstanding - 150,000 Shares $ 2,428 $ 2,428
Paid-in Capital 14,596 13,596
Retained Earnings 6,887 5,924
------- -------
Total Common Shareholder's Equity 23,911 21,948
Long-term Debt - Notes Payable to Banks 21,000 26,000
------- -------
TOTAL CAPITALIZATION 44,911 47,948
------- -------
OTHER NONCURRENT LIABILITIES 6,346 6,353
------- -------
CURRENT LIABILITIES:
Long-term Debt Due Within One Year 5,000 -
Short-term Debt - Notes Payable 5,225 5,975
Accounts Payable - General 270 340
Accounts Payable - Affiliated Companies 5,415 5,804
Taxes Accrued 2,121 2,070
Customer Deposits 321 334
Interest Accrued 590 599
Obligations under Capital Leases 644 597
Other 1,403 902
------- -------
TOTAL CURRENT LIABILITIES 20,989 16,621
------- -------
DEFERRED INCOME TAXES 14,650 15,668
------- -------
DEFERRED CREDITS 67 -
------- ----
REGULATORY LIABILITIES 827 786
------- -------
COMMITMENTS AND CONTINGENCIES (Note 3)
TOTAL $87,790 $87,376
======= =======
</TABLE>
