UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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Consolidated Papers, Inc. Stora Enso Acquisition, Inc.
510 High Street Two Landmark Square, 3rd Floor
P.O. Box 8050 Stamford, CT )6901-2792
Wisconsin Rapids, WI 54495-8050 USA
(Name of company filing this statement and address
of principal executive offices)
--------------------------------------------------------------------------------
None
(Name of top registered holding company
parent of each applicant or declarant)
--------------------------------------------------------------------------------
Carl H. Wartman
Consolidated Papers, Inc.
Secretary and General Counsel
510 High Street
P.O. Box 8050
Wisconsin Rapids, WI 54495-8050
(Name and address of agent for service)
--------------------------------------------------------------------------------
The Commission is also requested to send
copies of any communications in connection with
this matter to:
Sara D. Schotland Michael S. Nolan
Cleary, Gottlieb, Steen & Hamilton Foley & Lardner
2000 Pennsylvania Avenue, N.W. 777 East Wisconsin Avenue
Washington, D.C. 20006-1801 Milwaukee, WI 53202-5367
(Counsel for Stora Enso (Counsel for Consolidated
Acquisition, Inc.) Papers, Inc.)
<PAGE>
APPLICATION FOR EXEMPTION FROM THE PROVISIONS OF THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 PURSUANT TO
SECTION 3(a)(3)
Consolidated Papers, Inc. ("Consolidated Papers"), a Wisconsin corporation,
and Stora Enso Acquisition, Inc. (the "Surviving Corporation"following the
transaction described below and together with Consolidated Papers, the
"Applicants"), a Wisconsin corporation, hereby apply for an order declaring them
and their respective subsidiary companies as such to be exempt from the
provisions of the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act" or the "Act"), other than Section 9(a)(2), pursuant to Section
3(a)(3), upon completion of the transaction described below. Stora Enso Oyj
("Stora Enso"), a Finnish corporation and the parent of the Surviving
Corporation, will rely on the exemption provided by Rule 10 under the Act.
DESCRIPTION OF THE ACQUISITION
Pursuant to an Agreement and Plan of Merger, dated February 22, 2000 (the
"Merger Agreement"), by and among Consolidated Papers, Stora Enso and the
Surviving Corporation, Stora Enso will acquire Consolidated Papers, through a
merger of Consolidated Papers with and into the Surviving Corporation, for
aggregate consideration of approximately $4.8 billion, including assumed net
debt of approximately $0.9 billion (the "Acquisition").
A. Description of the Parties to the Acquisition
1. Stora Enso
Stora Enso is one of the world's leading forest industry companies. Stora
Enso was formed through the combination of Finland's Enso Oyj and Sweden's Stora
Kopparbergs Bergslags Aktiebolag (publ) at the end of 1998. To date this
combination has been extremely successful, with synergies more than double
targeted levels. Stora Enso is an integrated forest products group that
manufactures magazine paper, newsprint, fine paper and packaging boards,
supported by 2.1 million hectares of productive forestland. Stora Enso holds
strong global positions in all of the aforementioned product areas. Stora Enso
employs approximately 40,000 people and maintains operations in Europe, Asia and
North America. Additionally, Stora Enso has sales and marketing organizations
throughout the world.
Stora Enso is engaged in the ownership and/or operation of electric utility
assets in connection with its primary forest industry business, both directly
and through various foreign subsidiaries (the "Foreign Subs"). Although Stora
Enso is technically a holding company within the meaning of the Act, it is
currently exempt from all provisions of the Act pursuant to Rule 5. Stora Enso
and its subsidiaries have no electricity generation, transmission or
distribution operations, or any other electricity operations, in the United
States. Stora Enso's current activities in the United States, including the
activities of its subsidiary Stora Enso North America Corporation, relate solely
to the marketing and sale of paper and board products.
In connection with the Acquisition, Stora Enso will qualify the Foreign
Subs as exempt "foreign utility companies" or "FUCOs" within the meaning of
Section 33 of the Act.
Stora Enso is, and will remain, an electric utility company within the
meaning of the Act because it directly owns and/or operates generation
facilities located at mill sites, as well as the Huruskoski hydroelectric plant,
all in Finland.(1)
[FN]
(1) Stora Enso recently sold the major part of the power assets outside Stora
Enso's mills in Sweden and Finland to unrelated third parties. The assets
sold included a total of 1,511 megawatts ("MW") of electricity generation
capacity, of which 1,096 MW is hydro power, 301 MW is nuclear power and the
remaining 114 MW is oil and coal power. The transaction also involved the
transfer of regional distribution networks and power sales contracts in
Sweden.
</FN>
2. Consolidated Papers
Consolidated Papers, which is headquartered in Wisconsin Rapids, Wisconsin,
is North America's largest producer of coated paper and supercalendered printing
papers, as well as the leading manufacturer of specialty papers. Consolidated
Papers employs about 6,800 people and operates manufacturing facilities in
Biron, Kimberly, Niagara, Stevens Point, Whiting and Wisconsin Rapids,
Wisconsin, as well as in Duluth, Minnesota. Consolidated Papers owns and manages
nearly 700,000 acres of forestland in the States of Wisconsin, Michigan, and
Minnesota and in Ontario, Canada. Consolidated Papers, which is currently exempt
from registration under Section 3(a)(1) of the Act, is a holding company by
reason of its ownership of Consolidated Water Power Company ("CWPCo"). The
properties of CWPCo are used primarily for the generation and local distribution
of electric energy sold to Consolidated Papers and consumed at Consolidated
Papers' plants but are also used for the generation and local transmission and
distribution of electric energy as follows:
a. Distributed by it at retail directly to approximately one thousand
residential, commercial, industrial, and rural consumers in the City of
Wisconsin Rapids, Village of Biron, and Town of Grand Rapids, Wood County,
Wisconsin, and the Towns of Plover and Grant, Portage County, Wisconsin.
b. Infrequent sales of excess power to Wisconsin Public Service
Corporation ("WPSC") under a service agreement pursuant to WPSC's W3 FERC
tariff.
In addition, CWPCo has powerhouses and dams for the generation of electric
energy at the Cities of Wisconsin Rapids and Stevens Point, Wisconsin; Villages
of Biron and Whiting, Wisconsin; and Town of Eau Pleine, Portage County,
Wisconsin. It has electric distribution lines connecting its system with the
plants of Consolidated Papers and the electric transmission system of WPSC.
CWPCo also owns an electric transmission line connecting it to the hydroelectric
facilities of Wisconsin River Power Company ("WRPCo") and the electric
transmission system of Wisconsin Power and Light Company ("WPL"). CWPCo owns all
necessary land and flowage rights in connection with said dams and necessary for
the operation of its hydroelectric plants.
None of the properties of CWPCo used for the generation, transmission, or
distribution of electric energy for sale is located outside of the Counties of
Wood, Portage, Marathon, and Adams, Wisconsin. No electric energy is sold or
delivered by it outside of the State of Wisconsin. Occasionally, electric energy
is received by it at the borders of the State of Wisconsin.(2)
[FN]
(2) CWPCo owns a 33.8% interest in WRPCo. WRPCo engages in wholesale sales of
electricity to its three corporate owners. At the time of the Acquisition,
CWPCo will be the only "public utility" within the meaning of Section
2(a)(5) of the Act owned by Consolidated Papers.
</FN>
3. The Surviving Corporation
The Surviving Corporation is a newly formed wholly owned subsidiary of
Stora Enso with no operating history. Upon consummation of the Acquisition, the
Surviving Corporation will, as a matter of law, assume possession of all the
assets and liabilities of Consolidated Papers.
B. The Acquisition
The Acquisition will provide the opportunity to maximize returns on
investment for the shareholders of Consolidated Papers and Stora Enso and an
excellent match between the two companies given Consolidated Papers' strengths
in Stora Enso's core product areas. The combined enterprise will be the second
largest producer of paper and board by capacity worldwide, with total 1999 sales
of approximately $13.2 billion(3) and total paper capacity of 15,000,000 metric
tons.
[FN]
(3) See table entitled "CWPCo Contributions to Consolidated Papers and to Stora
Enso/Consolidated Papers Combined Company" below.
</FN>
Under the terms of the Merger Agreement, Consolidated Papers will merge
with and into the Surviving Corporation and all of the issued and outstanding
shares of common stock of Consolidated Papers will be converted, at the election
of the holder, into cash or Stora Enso ADSs (American Depositary Shares
representing an interest in underlying Series R shares of Stora Enso to
facilitate trading in the United States), or a combination of cash and ADSs,
with a value of $44.00 per Consolidated Papers share. Each ADS will represent
one Series R share of Stora Enso. Consolidated Papers shareholders' elections of
cash or ADSs will be pro-rated, to the extent necessary, so as to maintain a 50%
cash and 50% ADS aggregate consideration mix.(4) The transaction has been
unanimously approved by the boards of directors of both companies. Assuming 140
million Stora Enso Series R shares are issued, Consolidated Papers shareholders
would receive approximately a 15.5% economic interest and 5.0% of the vote in
Stora Enso.
[FN]
(4) The exchange ratio for Consolidated Papers shares converted into ADSs will
be between 2.678 and 3.621 ADSs per Consolidated Papers share, based on the
average trading value of Stora Enso Series R shares over a period just
prior to the closing, as necessary to provide $44.00 in value per share.
However, the exchange ratio will be fixed at 2.678 ADSs for each
Consolidated Papers share if Stora Enso Series R shares are then trading at
an average EUR trading price higher than a $16.43 equivalent and will be
fixed at 3.621 ADSs if the Series R shares are then trading at an average
below a $12.15 equivalent.
</FN>
The Applicant expects that the ADSs will be registered with the SEC and
listed on the New York Stock Exchange, Inc. ("NYSE"). In the event that the ADSs
have not been approved for listing on NYSE (or, failing that, approved for
quotation on NASDAQ) by October 31, 2000, Stora Enso will complete the
transaction on a 100% cash basis for $44.00 per Consolidated Papers share. The
Acquisition is expected to result in the establishment of a liquid market for
the Stora Enso ADSs with an estimated initial float of approximately $2 billion.
The Applicants currently expect the transaction to close by early September
2000.
The Surviving Corporation will survive the transaction as a direct
first-tier Wisconsin subsidiary of Stora Enso under a new name "Stora Enso
Consolidated Papers, Inc." Consolidated Papers' existing subsidiaries will
maintain their current status as direct or indirect subsidiaries, as the case
may be, of the Surviving Corporation. The Surviving Corporation will remain a
Wisconsin corporation with its principal executive offices in Wisconsin Rapids,
Wisconsin. Stora Enso will remain a Finnish corporation. The Merger Agreement
provides that the current officers of Consolidated Papers will remain the
officers of the Surviving Corporation and that George W. Mead, the current
chairman of Consolidated Papers, will, subject to the approval of Stora Enso's
shareholders, join the board of directors of Stora Enso upon completion of the
transaction.
Consummation of the transaction is subject to approval by the shareholders
of both companies. The Acquisition is subject to the approval by the holders of
at least two-thirds of the outstanding Consolidated Papers common stock and the
issuance of ADSs in the Acquisition is subject to approval by the holders of
two-thirds by number and voting power of the Stora Enso Series A shares and the
Stora Enso Series R shares present and voting as a single class at a meeting
called for the purpose of voting on such matter. The meetings of the Stora Enso
and Consolidated Papers shareholders will be held in August for the purpose of
approving the Acquisition and related matters.
The Acquisition also has been subject to certain regulatory approvals. An
application for approval was filed with the Federal Energy Regulatory Commission
("FERC") on March 23, 2000 and FERC granted approval on June 15, 2000. See
Exhibits D-1 and D-2. The Acquisition does not require the approval of the
Public Service Commission of Wisconsin ("PSCW"), as Consolidated Papers is
exempt from the Wisconsin Public Utilities Holding Company Act ("WPUHCA"). A
petition for a declaratory ruling confirming that no such approvals are required
and that the Surviving Corporation will remain exempt from WPUHCA was filed with
PSCW on March 22, 2000. See Exhibit D-3. At its meeting held on July 20, 2000,
PSCW granted the requested ruling. See Exhibit D-4. The Acquisition was notified
to the antitrust authorities pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") and to the provisions of similar
antitrust or competition laws in other jurisdictions where the companies
operate. Early termination of the HSR Act waiting period was granted on April
24, 2000.
For the reasons set forth herein, Consolidated Papers and the Surviving
Corporation qualify for an exemption from registration under Section
3(a)(3) of the Act.
APPLICABLE STATUTORY PROVISIONS
SECTION 3(a)(3)
Section 3(a)(3) provides for exemption where a company is:
only incidentally a holding company, being primarily engaged
or interested in one or more businesses other than the
business of a public utility company and (A) not deriving,
directly or indirectly, any material part of its income from
any one or more subsidiary companies, the principal business
of which is that of a public utility company, or (B) deriving
a material part of its income from any one or more such
subsidiary companies, if substantially all the outstanding
securities of such companies are owned, directly or
indirectly, by such holding company.
Consolidated Papers and the Surviving Corporation qualify for an order of
exemption under Section 3(a)(3) because each of them primarily engages in a
business other than that of a public utility company, and (i) does not receive a
material part of its income from its small nonexempt utility subsidiary
operations (Section 3(a)(3)(A)) or (ii) owns all outstanding securities of CWPCo
(Section 3(a)(3)(B)).
1. CWPCo's Operations Are Functionally Related to Consolidated Papers'
-------------------------------------------------------------------
Primary Nonutility Business and, Following the Acquisition, Will be
-------------------------------------------------------------------
Functionally Related to the Surviving Corporation's Primary Nonutility
----------------------------------------------------------------------
Business.
---------
The Surviving Corporation will succeed to Consolidated Papers' existing
paper business and the utility operations of CWPCo will serve the nonutility
operations of the Surviving Corporation in the same way that they currently
serve those of Consolidated Papers. Thus, Consolidated Papers satisfies and the
Surviving Corporation will satisfy the reverse functionality test of Section
3(a)(3). In particular, paper companies have very frequently qualified for
Section 3(a)(3) exemptions. E.g., James River Corp., Holding Co. Act Release No.
22608 (August 19, 1982) (granting Section 3(a)(3) exemption with respect to a
wholly-owned power subsidiary that supplied most of its power to the parent
company); Hammermill Paper Co., Holding Co. Act Release No. 19474 (April 9,
1976) (granting Section 3(a)(3) exemption with respect to a wholly-owned power
subsidiary that supplied 97% of its power output to the parent paper company);
St. Regis Paper Co., Holding Co. Act Release No. 19255 (November 20, 1975)
(granting Section 3(a)(3) exemption to a paper manufacturer with respect to a
wholly-owned power subsidiary that supplied 78% of its power output to the
parent paper company); Gilman Paper Co., Holding Co. Act Release No. 11534
(October 8, 1952) (granting Section 3(a)(3) exemption with respect to a
wholly-owned power subsidiary that supplied most of its power to the parent
paper company); Nekoosa Paper Co., Holding Co. Act Release No. 2389 (November
22, 1940) (granting Section 3(a)(3) exemption with respect to a wholly-owned
power subsidiary that purchased power not used by the parent paper company and
supplied it to the local residents).
At present, CWPCo's total annual sales of electricity are about 1.4 TWh, of
which 99% is sold to Consolidated Papers. CWPCo generates 10-15% of its
electricity supply annually, and purchases the remaining amount from the
wholesale market.
2. The Surviving Corporation Will Not Derive a Material Part of Its
----------------------------------------------------------------
Income from CWPCo.
------------------
CWPCo will be small in both a relative and absolute sense. In AES
Corporation, Holding Co. Act Release No. 27063 (Aug. 20,1999), the SEC observed
that the same materiality test is applied under Sections 3(a)(3) and 3(a)(5),
i.e., the holding company may derive no material part of its income from
electric utility subsidiaries. In granting AES's request for exemption under
Section 3(a)(5), the SEC found that the utility operations that AES was
acquiring (CILCO) were small both in a relative sense (not material to AES) and
in an absolute sense. The SEC first examined whether CILCO was small in a
relative sense. The SEC found that in 1998 CILCO had operating revenues of
$532.3 million and net income of $41 million versus AES's operating revenues of
$2.4 billion and net income of $311 million. AES, Rel. No. 35-27063 (Aug. 20,
1999). The SEC found that on a pro forma basis CILCO, the utility subsidiary of
CILCORP, would have contributed 10.35% to AES's total operating revenues. Id.
In this matter, on a pro forma basis using 1999 numbers, CWPCo would
represent only 2.13% of the Surviving Corporation's total revenues (and only
0.30% of Stora Enso's total revenues). CWPCo's sales analysis for the year ended
December 31, 1999 reports $39.2 million in total revenue, and $0.7 million in
net operating revenue. In contrast, for the year ended December 31, 1999,
Consolidated Papers (and hence, the Surviving Corporation) had total revenues of
approximately $1.8 billion, after intercompany eliminations, and its net
operating revenues were approximately $164 million. CWPCo's net income of $1.7
million compares to Consolidated Papers' net income of $110.1 million.(5)
[FN]
(5) The combined Stora Enso/Consolidated Papers enterprise would have had 1999
sales revenues of approximately $13.2 billion on a pro forma basis.
</FN>
In AES, the SEC assessed the contribution of CILCO (the utility subsidiary
of CILCORP) to the gross revenues, net operating revenues, net income and net
assets of a pro forma combined AES/CILCORP consolidated holding company.
According to table 1 of the SEC's decision, on a pro forma consolidated basis,
CILCO contributed 12.81% of 1998 gross revenues; 10.35% of 1998 net operating
revenues; 12.54% of 1998 net income and 7.78% of 1998 net assets.
In Gaz Metropolitain, Holding Co. Act Release No. 26170 (Nov. 23, 1994), a
Canadian company received an exemption under Section 3(a)(5) in connection with
its indirect acquisition of a Vermont gas utility. The Vermont gas utility's
revenues of $38 million, net income of $2.8 million and customer base (24,600
customers) were relatively small and represented 4.2% of the acquirer's
consolidated revenues and 3.1% of consolidated net income. By comparison, CWPCo
contributes only 2.13% of 1999 gross revenues, 0.43% of 1999 net operating
revenues, 2.12% of 1999 net income and 0.93% of 1999 net assets to Consolidated
Papers and 0.30% of 1999 gross revenues, 0.04% of 1999 net operating revenues,
0.16% of 1999 net income and 0.16% of 1999 net assets to Stora Enso on a pro
forma consolidated basis after the Acquisition. The counterpart figures for
CWPCo, Consolidated Papers and the combined Stora Enso/Consolidated Papers
enterprise would have been as follows for the past three years:
CWPCo Contributions to Consolidated
Papers and to Stora Enso/Consolidated Papers Combined Company(6)
($MM)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
CWPCo as % of CWPCo as % of
Consolidated total Pro Forma
Papers Consolidated Stora Pro Forma Combined
CWPCo (excl. CWPCo) Papers Enso Oyj Combined
Total Sales 1997 $37.1 $1,642.4 2.21% $10,650.9 $12,330.4 0.30%
Revenues 1998 38.4 1,951.0 1.93 11,174.5 13,163.9 0.29
1999 39.2 1,799.6 2.13 11,330.2 13,169.0 0.30
Net Operating 1997 $1.0 $208.5 0.48% $875.8 $1,185.3 0.08%
Revenues 1998 1.9 236.1 0.80% 765.5 1,003.5 0.19
1999 0.7 163.1 0.43% 1,510.7 1,674.5 0.04
Net Income 1997 $1.5 $188.9 0.79% $677.5 $867.9 0.17%
Before Taxes 1998 2.4 175.8 1.35 361.6 539.8 0.44
1999 1.7 108.4 1.54 1,226.7 1,336.4 0.13
Net Income 1997 $1.0 $117.0 0.85% $435.7 $553.7 0.18%
1998 2.0 100.4 1.95 203.5 305.9 0.65
1999 1.4 64.7 2.12 801.6 867.7 0.16
Net Assets 1997 $30.4 $3,317.1 0.91% $16,569.7 $19,917.2 0.15%
1998 32.5 3,594.9 0.90 16,419.6 20,047.0 0.16
1999 32.8 3,493.4 0.93 17,081.0 20,607.2 0.16
</TABLE>
[FN]
(6) The calculations in this table are based on the assumption that Euro/Dollar
exchange rate of 1:1.0653 (an average noon buying rate for the year ended
December 31, 1999, as reported in the Federal Reserve Statistical Release
No. G5A (405, January 3, 2000)) is applicable to all the periods reflected
in the table. Stora Enso's financial information presented in the table has
been calculated in accordance with International Accounting Standards
("IAS"). Stora Enso's 1999 financial statements were reconciled to U.S.
GAAP in connection with the registration of Stora Enso's ADSs and are
included in the Definitive Proxy Statement/Prospectus. See Exhibit C-1. If
the Stora Enso figures in this table were calculated in accordance with
U.S. GAAP, some of the numbers and percentages would be different. Even
after giving effect to the reconciliation with U.S. GAAP, CWPCo's
contribution to the pro forma combined entity does not exceed 1% in any
category for 1999.
</FN>
In AES, the SEC assessed whether CILCO was small in an absolute sense by
considering what proportion CILCO represented of Illinois's electricity revenues
and of that State's electricity customers. CILCO represented only 2.8% of the
State's electric utility revenues and 3.4% of State customers. Like CILCO, CWPCo
is a minute factor in the state of Wisconsin: CWPCo represents only 1.1% of
Wisconsin's electricity revenues and less than 1% of its customers.(7) CILCO
represented only 0.9% of its region's revenues, while CWPCo represents less than
0.29% of the Mid-American Interconnected Network ("MAIN") region's revenues.
Unlike CILCO, which was a relatively significant gas utility, CWPCo does not
engage in the gas utility business. Thus, both from the perspective of relative
size/materiality and from the perspective of absolute size, CWPCo satisfies the
Section 3(a)(3) requirement that revenues derived from U.S. utility subsidiary
interests are not material in relative or absolute terms.
[FN]
(7) CWPCo's 1998 electric revenue was $38,215,340, compared to Wisconsin's
statewide retail electric revenues of $3,375,961,000. In 1998, CWPCo served
1,035 of Wisconsin's 2,536,715 retail electric consumers. Wisconsin figures
are taken from ftp://ftp.eia.doe.gov/pub/pdf/electricity/054098.pdf, at
page 217.
</FN>
Viewed in light of the AES and Gaz Metropolitain precedents, Consolidated
Papers and Stora Enso represent an a fortiori case. CWPCo is a smaller utility
both in an absolute sense (amount of sales and number of customers) and in a
relative sense (relative to Consolidated Papers and/or Stora Enso) than the
utility interests at issue in AES and Gaz Metropolitan. Compare Cities Service
Co. 8 SEC 318 (1940) (Section 3(a)(3) exemption unavailable where utility
operations accounted for 47.3% of holding company assets and 32.6% of revenues).
2. Consolidated Papers Owns and the Surviving Corporation Will Own
---------------------------------------------------------------
Substantially All of the Outstanding Securities of CWPCo.
---------------------------------------------------------
Section 3(a)(3)(B) of the Act provides an exemption in cases where an
"incidental" holding company owns "substantially all outstanding securities" of
a public utility, regardless of whether such holding company derives a material
part of its income from its public utility subsidiary. Consolidated Papers Owns
and the Surviving Corporation will own substantially all of the outstanding
securities of CWPCo.
3. Exemption of Consolidated Papers and of the Surviving Corporation
-----------------------------------------------------------------
Will Satisfies the "Public Interest" Test of Section 3(a).
-----------------------------------------------------------
Under the "unless and except" clause of Section 3(a), the Commission has
the authority to deny a request for exemption if it were to determine that
granting the exemption would be "detrimental to the public interest or to the
interest of investors or consumers." The Surviving Corporation will succeed to
the rights, duties and obligations of Consolidated Papers, which is already
exempt under one of the paragraphs of Section 3(a). Moreover, no public interest
concerns are presented with respect to the Surviving Corporation. First, the
Acquisition preserves what is already an economical and efficient operation.
Second, Stora Enso's acquisition of Consolidated Papers will foster economic
efficiency. Apart from substantial synergies expected for the paper business,
the transaction will offer a modest benefit to Consolidated Papers' small U.S.
utility operations. In the event that additional capital is needed for
expansion, Stora Enso by virtue of its extensive financial resources will
enhance Consolidated Papers' borrowing capability.(8)
[FN]
(8) See WPL Holdings, Holding Co. Act Rel. No. 35-25377(restructuring will help
financing alternatives).
</FN>
At the same time, Stora Enso's acquisition of Consolidated Papers (i) will
not diminish CWPCo's ability to provide adequate, reliable, efficient, and safe
utility service; (ii) will not impair the ability of CWPCo to raise necessary
capital on reasonable terms or to maintain a reasonable capital structure; (iii)
will not undermine the ability of PSCW to regulate CWPCo's retail operations;
(iv) is not likely to have any adverse impact on retail electricity customers of
CWPCo; (v) does not present significant opportunity for abusive affiliate
transactions or cross-subsidization; and (vi) is not likely to have a
significant adverse effect on competition.
REGULATORY APPROVALS
Consummation of the Acquisition is subject to approval by the holders of at
least two-thirds of the outstanding Consolidated Papers common stock. Issuance
of Stora Enso ADSs in the Acquisition is subject to approval by the holders of
two-thirds by number and voting power of the Stora Enso Series A shares and the
Stora Enso Series R shares present and voting as a single class at a meeting
called for the purpose of voting on such matter. Meetings of the Stora Enso and
Consolidated Papers shareholders will be held in August for the purpose of
approving the Acquisition and related matters. Stora Enso's registration
statement relating to the ADSs was declared effective by the SEC and the ADSs
are expected to be approved for listing on NYSE (or, failing that, approved for
quotation on NASDAQ).
The Acquisition was also subject to approval by FERC. An application for
such approval was filed on March 23, 2000 and on June 15, 2000 FERC granted its
approval. Exhibits D-1 and D-2.
Stora Enso and Consolidated Papers applied to PSCW for a declaratory order
confirming that the Surviving Corporation will continue to be exempt from the
provisions of WPUHCA, which includes the requirement that the sum of the assets
of all non-utility affiliates in a holding company system of any holding company
formed on or after November 28, 1985 may not exceed 25% of the assets of all
public utility affiliates. See also Wis. Stat.Sec.196.795(5)(p). See petition
dated March 22, 2000. Exhibit D-3. PSCW granted the petition at its meeting held
on July 20, 2000. Exhibit D-4.
The Acquisition was subject to the notification provisions of the HSR Act
and to the provisions of similar antitrust or competition laws in other
jurisdictions where the companies operate. The antitrust authorities granted
early termination of the HSR Act waiting period on April 24, 2000.
PROCEDURE
Consolidated Papers respectfully requests that the Commission issue its
order granting and permitting the requested exemption as soon as practicable,
but in no event later than August 30, 2000 (the date of the special meeting of
Consolidated Papers' shareholders to consider the Acquisition).
It is submitted that a recommended decision by a hearing officer is not
needed for approval of the proposed transaction. The Division of Investment
Management may assist in the preparation of the Commission's decision. There
should be no waiting period between issuance of the Commission's Order and the
date on which it is to become effective.
EXHIBITS AND FINANCIAL STATEMENTS
A. Exhibits.
---------
A-1 Articles of Incorporation of Consolidated Papers (previously filed
with the Commission as Exhibit (3)(i)to Consolidated Papers' Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996, File No.
001-11359, and incorporated herein by reference)
A-2 By-Laws of Consolidated Papers (previously filed with the commission
as Exhibit 3.B. to the Consolidated Papers' Annual Report on Form 10-K
for the year ended December 31, 1999, filed on March 26, 1998, file
No. 001-11359, and incorporated herein by reference)
B-1 Agreement and Plan of Merger (previously filed with the Commission as
Exhibit 2.1 to the Consolidated Papers' Current Report on Form 8-K,
filed on March 2, 2000, File No. 001-11359, and incorporated herein by
reference)
C-1 Definitive Proxy Statement/Prospectus relating to the special meeting
of shareholders of Consolidated Papers, Inc. to approve the merger
with Stora Enso (previously filed with the Commission on July 28,
2000, File No. 001-11359, and incorporated herein by reference)
D-1 Application to FERC, filed on March 23, 2000 (previously filed with
the Commission as Exhibit D-2 to Stora Enso's Application Under the
Public Utility Holding Company Act of 1935 on Form U-1, filed on March
28, 2000, File No. 070-09651, and incorporated herein by reference)
D-2 Order Issued by the Federal Energy Regulatory Commission pursuant to
the application filed on March 22, 2000
D-3 Petition to the Public Service Commission of Wisconsin, filed on March
22, 2000 (previously filed with the Commission as Exhibit D-1 to Stora
Enso's application under the Public Utility Holding Company Act of
1935 on Form U-1, filed on March 28, 2000, File No. 070-09651, and
incorporated herein by reference)
D-4 Order Issued by the Public Service Commission of Wisconsin pursuant to
petition filed by CWPCo on March 22, 2000 (to be filed by amendment)
E-1 Consolidated Papers organization chart (previously filed with the
Commission as Exhibit E-1 to Stora Enso's Application Under the Public
Utility Holding Company Act of 1935 on Form U-1/A, filed on May 9,
2000, File No. 070-09651, and incorporated herein by reference)
F-1 Consolidated Papers' Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999 (File No. 001-11359, filed on May 12,
2000 and incorporated herein by reference)
F-2 Consolidated Papers' Annual Report on Form 10-K for the fiscal year
ended December 31, 1999 (File No. 001-11359, filed on March 24, 2000
and incorporated herein by reference)
F-3 Consolidated Papers' Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (File No. 001-11359, filed on March 26, 1999,
and incorporated herein by reference)
F-4 Consolidated Papers Statement by Holding Company on Form U-3A-2 for
the fiscal year ended December 31, 1999 (File No. 69-53-3, filed on
February 25, 2000 and incorporated herein by reference)
F-5 Consolidated Papers Statement by Holding Company on Form U-3A-2 for
the fiscal year ended December 31, 1998 (File No. 69-53-3, filed on
February 25, 1999 and incorporated herein by reference)
F-6 Consolidated Papers Statement by Holding Company on Form U-3A-2 for
the fiscal year ended December 31, 1997 (File No. 69-53-3, filed on
February 24, 1998 and incorporated herein by reference)
G-1 Stora Enso's Annual Report to the Finnish National Board of Patents
and Registration for the fiscal year ended December 31, 1999
(previously filed with the Commission as Exhibit G-1 to Stora Enso's
Application Under the Public Utility Holding Company Act of 1935 on
Form U-1/A, filed on May 9, 2000, File No. 070-09651, and incorporated
herein by reference)
G-2 Stora Enso's Annual Report to the Finnish National Board of Patents
and Registration for the fiscal year ended December 31, 1998
(previously filed with the Commission as Exhibit G-3 to Stora Enso's
Application Under the Public Utility Holding Company Act of 1935 on
Form U-1/A, filed on May 9, 2000, File No. 070-09651, and incorporated
herein by reference)
H-1 Proposed Form of Notice
I-1 Stora Enso's Energy Assets
B. Financial Statements
--------------------
FS-1 Consolidated Papers' Consolidated Balance Sheet as of December 31,
1999 (previously filed with the Commission in Consolidated Papers'
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
(Exhibit F-1 hereto), filed on May 12, 2000, File No. 001-11359, and
incorporated herein by reference)
FS-2 Consolidated Papers' Consolidated Statement of Income for the 12
months ended December 31, 1999 (previously filed with the Commission
in Consolidated Papers' Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000 (Exhibit F-1 hereto), filed on May 12, 2000, File
No. 001-11359, and incorporated herein by reference)
FS-3 Consolidated Papers' Consolidated Balance Sheet as of December 31,
1999 (previously filed with the Commission in Consolidated Papers'
Annual Report on Form 10-K for the year ended December 31, 1999
(Exhibit F-2 hereto), filed on March 24, 2000, File No. 001-11359, and
incorporated herein by reference)
FS-4 Consolidated Papers' Consolidated Statement of Income for the 12
months ended December 31, 1999 (previously filed with the Commission
in Consolidated Papers' Annual Report on Form 10-K for the year ended
December 31, 1999 (Exhibit F-2 hereto), filed on March 24, 2000, File
No. 001-11359, and incorporated herein by reference)
FS-5 Consolidated Papers' Consolidated Balance Sheet as of December 31,
1998 (previously filed with the Commission in Consolidated Papers'
Annual Report on Form 10-K for the year ended December 31, 1998
(Exhibit F-3 hereto), filed March 26, 1999, File No. 001-11359, and
incorporated herein by reference)
FS-6 Consolidated Papers Consolidated Statement of Income for the 12 months
ended December 31, 1998 (previously filed with the Commission in
Consolidated Papers' Annual Report on Form 10-K for the year ended
December 31, 1998 (Exhibit F-3 hereto), filed March 26, 1999, File No.
001-11359, and incorporated herein by reference)
FS-7 Stora Enso's Consolidated Balance Sheet as of December 31, 1999, 1998
and 1997 (previously filed with the Commission as Exhibit FS-1 to
Stora Enso's Application Under the Public Utility Holding Company Act
of 1935 on Form U-1, filed on March 28, 2000, File No. 070-09651, and
incorporated herein by reference)
FS-8 Stora Enso's Consolidated Statement of Income for the 12 months ended
December 31, 1999, 1998 and 1997 (previously filed with the Commission
as Exhibit FS-2 to Stora Enso's Application Under the Public Utility
Holding Company Act of 1935 on Form U-1, filed on March 28, 2000, File
No. 070-09651, and incorporated herein by reference)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Application to be signed on
its behalf by the undersigned thereunto duly authorized. CONSOLIDATED PAPERS,
INC.
By: /s/ Carl H. Wartman
-------------------
Name: Carl H. Wartman
Title: Secretary and General Counsel
STORA ENSO ACQUISITION, INC.
By: /s/ Leif Smedman
----------------
Name: Leif Smedman
Title: Director
Date: August 3, 2000
