EXHIBIT D-2
STATE OF NORTH CAROLINA
UTILITIES COMMISSION
RALEIGH
DOCKET NO. G-21, SUB 403
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Application of North Carolina Natural Gas ) ORDER GRANTING
Corporation for Authority to Issue and Sell ) AUTHORITY TO
Additional Securities (Long-Term Debt ) ISSUE LONG-TERM
Securities) ) DEBT SECURITIES
BY THE COMMISSION: On August 11, 2000, North Carolina Natural Gas Company
(NCNG or Company) filed an Application requesting Commission approval under G.S.
62161 to issue and sell up to $300,000,000 of long-term debt securities.
This matter was presented to the Commission for its consideration at the
Commission's weekly Staff Conference on August 28, 2000. Based upon the verified
Application and the Commission's entire files and records, the Commission now
makes the following
FINDINGS OF FACT
1. NCNG is a corporation organized and existing under the laws of the State
of Delaware, with its principal office at 411 Fayetteville Street, Raleigh,
North Carolina, 27601. NCNG's correct name and address is North Carolina Natural
Gas Corporation, 411 Fayetteville Street Mall, Raleigh, North Carolina 27601.
2. NCNG's capital stock outstanding at December 31, 1999, consisted of 100
shares of Common Stock with associated stockholders' equity of $365,102,000.
NCNG had no long-term debt outstanding as of December 31, 1999, but did have
indebtedness of $1 '34,9,83,000 pursuant to a revolving credit facility with
Carolina Power & Light Company, a North Carolina Corporation ("CP&L").
3. NCNG proposes to issue and sell up to $300,000,000 of long-term debt
securities. NCNG intends to sell the proposed long-term debt securities during
the effective period of a shelf Registration Statement that NCNG has filed with
the Securities and Exchange Commission in connection with the registration of
such securities. Such shelf Registration Statement included a prospectus
relating to the proposed $300,000,000 principal amount of long-term debt
securities. NCNG currently has no long-term debt available for issuance pursuant
to any previous registration statements.
4. The net proceeds to be received from the proposed issuance of up to
$300,000,000 in long-term debt securities will be used for (i) NCNG's ongoing
construction and maintenance program, (ii) the redemption, repurchase,
repayment, or retirement of outstanding indebtedness, (iii) the possible future
acquisition of other entities or their assets, and (iv) for other general
corporate purposes. Part of the proceeds will be used to repay NCNG's
indebtedness to CP&L. This indebtedness was incurred as part of a general
liability restructuring which included CP&L's provision of working capital after
the closing of CP&L's acquisition of NCNG in July, 1999. The general liability
restructuring of NCNG was implemented in order to increase cash flow and reduce
interest expense and other associated fees.
5. NCNG will consider the issuance of unsecured debt, including unsecured
medium-term notes, debentures, or other forms of long-term debt securities not
specifically referenced in its application. NCNG continuously monitors rates,
terms and. conditions for alternative forms of debt financing and will determine
which type of security offers the most favorable terms to NCNG.
<PAGE>
6. NCNG proposes to issue the long-term debt securities either in discrete
financing transactions or pursuant to a continuous offering program. Under a
continuous offering program involving the debt securities medium-term notes
could be continuously offered and issued in an amount deemed appropriate and
necessary by NCNG but in no event exceeding the amount authorized pursuant to
NCNG's Application.
7. NCNG proposes to enter into negotiations with, or request competitive
proposals from, investment bankers or other financial institutions to act as
agents, dealers, underwriters or direct purchasers in connection with either the
public or private offering of each issuance in accordance with the terms
thereof. The interest rate will be determined by NCNG at or prior to the sale of
the securities. NCNG intends to determine the method of sale and the financial
institution(s) that will offer the most favorable terms to NCNG.
8. The long-term debt securities will be created and issued under and
subject to the provisions of the Indenture (For Debt Securities), substantially
in the form attached to NCNG's Application as. Exhibit A to be executed in
connection with. their issuance.
9. NCNG estimates that it will incur expenses, excluding underwriting fees,
in the range of approximately $534,200 in connection with a private placement of
or a public offering of the debt securities. Underwriting fees may vary
significantly depending on the terms of the offering.
10. NCNG indicated in its Application that if the authority to issue and
sell additional long-term debt on the conditions set forth above is delayed or
not granted, NCNG's ability to take advantage of financial market and liability
management opportunities may be impaired, resulting in higher costs to NCNG and
its ratepayers.
WHEREUPON, the Commission reaches the following
CONCLUSIONS
Based upon the foregoing Findings of Fact and a review of the Application
and supporting material, as well as the Commission's entire files and records,
the Commission is of the opinion and so concludes that the proposed transactions
described herein:
(a) Are for a lawful object within the corporate purposes of NCNG;
(b) Are compatible with the public interest;
(c) Are necessary and appropriate for and consistent with the proper
performance by NCNG of its service to the public as a utility;
(d) Will not impair NCNG's ability to perform its public service; and
(e) Are reasonably necessary and appropriate to provide adequate
funds for such corporate purposes.
IT IS, THEREFORE, ORDERED as follows:
1. That North Carolina Natural Gas Corporation be and is hereby authorized
under the terms set forth in its Application to issue and sell up to
$300,000,000 of long-term debt securities;
2
<PAGE>
2. That North Carolina Natural Gas Corporation shall file a written report
with the Commission within thirty (30) days after the consummation of the sale
of the securities setting forth the particulars of the transaction, including
the fees and expenses directly relating to the financing transaction; and
3. That the Commission's approval in this docket does not restrict the
Commission's right to review, and if deemed appropriate, adjust North Carolina
Natural Gas Corporation's cost of capital and expenses for ratemaking purposes
for the effect of these securities.
ISSUED BY ORDER OF THE COMMISSION
This the 30th day of August, 2000.
NORTH CAROLINA UTILITIES COMMISSION
Cynthia S. Trinks, Deputy Clerk
3
