File No. 70-9357
SECURITIES AND EXCHANGE COMMISSION
(the Commission)
Washington, D.C. 20549
AMENDMENT NUMBER TWO TO
FORM U-1
APPLICATION/DECLARATION
WITH RESPECT TO CERTAIN TRANSACTIONS
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 (the Act)
MONTAUP ELECTRIC COMPANY
P.O. Box 2333, Boston, Massachusetts 02107
EASTERN EDISON COMPANY
750 West Center Street, West Bridgewater, Massachusetts 02379
(Name of companies filing this statement
and addresses of their principal executive offices)
EASTERN UTILITIES ASSOCIATES
(Name of top registered holding company parent
of applicant or declarant)
CLIFFORD J. HEBERT, JR., TREASURER
EASTERN UTILITIES ASSOCIATES
P.O. Box 2333, Boston, Massachusetts 02107
(Name and address of agent for service)
The Commission is requested to mail signed copies of all
orders, notices and communications to:
ARTHUR I. ANDERSON, P.C.
McDermott, Will & Emery
75 State Street
Boston, Massachusetts 02109-1807
Item 1 and Item 3 are amended and restated in their entirety as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
A. Introduction.
Eastern Edison Company ("Eastern Edison") and Montaup Electric Company
("Montaup") each hereby request authorization to redeem or repurchase in one or
more transactions, up to $50,000,000 in the case of Eastern Edison and
$235,000,000 in the case of Montaup of any combination of debt or classes or
series of their respective capital stock held by affiliates in order to reduce
their respective total capitalization to an appropriate level for their reduced
scale of operations as a result of industry restructuring and Montaup's
divestiture of generation assets.
B. Purchases and Redemptions of Securities.
1. Montaup proposes to redeem or acquire and retire up to an aggregate
amount of $235,000,000 of its outstanding Debenture Bonds, preferred stock or
common stock (collectively, the "Montaup Securities") from Eastern Edison from
time to time through December 31, 2003. The redemption price for Debenture
Bonds will be the principal amount thereof plus accrued interest. The
repurchase price for shares of preferred stock and common stock of Montaup
will be their original purchase price (plus in the case of common stock a pro
rata allocated portion of paid-in capital, not to exceed $30,000,000). All of
the Montaup Securities are issued in the name of, and beneficially owned by,
Eastern Edison.
2. Montaup proposes to finance such redemptions and repurchases with (i)
the proceeds from the divestiture of its generation assets which are being sold
in accordance with applicable orders of the Federal Energy Regulatory
Commission, the Massachusetts Department of Telecommunications and Energy and
the Rhode Island Public Utilities Commission, (ii) proceeds from a possible
securitization financing or conventional financing, (iii) cash flow and (iv)
borrowings under other available credit facilities.
3. Eastern Edison proposes to repurchase and retire, in one or more
transactions, up to an aggregate amount of $50,000,000 of its outstanding
common stock from Eastern Utilities Associates ("EUA"), from time to time
through December 31, 2003. The repurchase price for shares of common stock
will be the original issue price (plus a pro rata allocation of paid-in
capital, not to exceed $50,000,000). Eastern Edison currently has outstanding
2,891,357 shares of common stock, all of which are owned by EUA.
4. Eastern Edison proposes to finance such acquisitions with the proceeds
from cash flow and other credit facilities and the proceeds from the redemption
and repurchase of the Montaup Securities. The proceeds from the redemption and
repurchase of Montaup Securities are initially required to be deposited with
the Trustee under the Indenture of First Mortgage and Deed of Trust of Eastern
Edison dated as of September 1, 1948 (the "Eastern Indenture"). To the extent
that such proceeds are not used to redeem first mortgage bonds issued under the
Eastern Indenture, Eastern Edison will obtain their release through the use of
available bond credits, as defined in Section 8.03 of the Eastern Indenture
(the "Bond Credits"), or by the use of available net additions, as defined in
Section 8.02 of the Eastern Indenture (the "Net Additions").
C. Payment of Purchase Price Out of Other Paid-In Capital.
Because the repurchase price of common stock of Eastern Edison and Montaup will
include an allocated pro rata portion of paid-in capital, Eastern Edison
requests authorization to reduce its paid-in capital by an aggregate amount of
up to $50, 000,000 and Montaup requests authorization to reduce its paid-in
capital by an amount of up to $30,000,000.
D. Conclusion.
Eastern Edison and Montaup desire the authority to engage in the proposed
transactions, which are part of a larger series of transactions whereby Eastern
Edison will seek to (i) reduce its outstanding indebtedness to an amount that
will result in an appropriate debt/equity ratio following Montaup's generation
assets divestiture, (ii) eliminate Eastern Edison's preferred stock or reduce
the number of shares outstanding through negotiated repurchases or an issuer
tender offer, (iii) reduce Montaup's common equity through repurchases from
Eastern Edison or dividends, (iv) reduce Eastern Edison's common equity through
repurchase from EUA or dividends, and (v) repay short term indebtedness.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
Transaction Applicable Sections
Purchases of common stock by Section 12(c); Rule 42;
Eastern Edison; redemption of
Montaup Securities by Montaup
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of 1935,
the undersigned companies have duly caused this statement to be signed on their
behalf by the undersigned thereunto duly authorized.
EASTERN EDISON COMPANY
MONTAUP ELECTRIC COMPANY
By /s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Treasurer
DATED: December 28, 1998
<TABLE>
Eastern Edison Consolidated
Balance Sheet
Actual as of September 30, 1998
<CAPTION>
Eastern
Eastern Edison
Assets Montaup Edison Eliminations Consolidated
<S> <C> <C> <C> <C>
Net Utility Plant 384,687 151,234 535,921
Net Non-Utility Property 2,447 96 2,543
Inv. Subsidiaries 13,130 336,332 (336,332) 13,130
Other Investments 44 10 54
Total 400,308 487,672 (336,332) 551,648
Current Assets 74,642 57,126 (61,091) 70,677
Deferred Debits and
Other Non Current Assets 156,992 19,218 176,210
Total Assets 631,942 564,016 (397,423) 798,535
Proforma Eastern Edison Consolidated
Adjusting Entries Proforma Balance Sheet
Eastern
Eastern Eastern Edison
Assets Montaup Edison Montaup Edison Eliminations Consolidated
Net Utility Plant (72,000) (a) 312,687 151,234 463,921
Net Non-Utility Property 2,447 96 2,543
Inv. Subsidiaries (316,514) (e) 13,130 19,818 (19,818) 13,130
Other Investments 44 10 54
Total (72,000) (316,514) 328,308 171,158 (19,818) 479,648
Current Assets 95,600 (a) 316,514 (e) 84,642 67,126 (61,091) 90,677
230,914 (b) (223,864) (f)
(250,782) (c) (82,650) (g)
(65,732) (d)
Deferred Debits and
Other Non Current Assets 156,992 19,218 176,210
Total Assets (62,000) (306,514) 569,942 257,502 (80,909) 746,535
Eastern Edison Consolidated
Balance Sheet
Actual as of September 30, 1998
Eastern
Eastern Edison
Liabilities Montaup Edison Eliminations Consolidated
Capitalization
Common Stock 58,600 72,284 (58,600) 72,284
Other Paid in Capital 29,528 47,206 (29,528) 47,206
Retained Earnings 73,790 99,461 (73,790) 99,461
Total Common Equity 161,918 218,951 (161,918) 218,951
Redeemable Pref. Stock 1,500 30,000 (1,500) 30,000
Preferred Stock Exp/Premium (2,097) (2,097)
Long Term Debt 172,914 162,541 (172,914) 162,541
Total Capitalization 336,332 409,395 (336,332) 409,395
Short term debt 52,195 52,195
Other Current Liabilities 46,734 67,764 (61,091) 53,407
Deferred Credits and Other
Non-current Liabilities 248,876 34,662 283,538
Securitization Financing
Total Liabilities 631,942 564,016 (397,423) 798,535
Proforma Eastern Edison Consolidated
Adjusting Entries Proforma Balance Sheet
Eastern
Eastern Eastern Edison
Liabilities Montaup Edison Montaup Edison Eliminations Consolidated
Capitalization
Common Stock (57,430) (c) (50,000) (g) 1,170 22,284 (1,170) 22,284
Other Paid in Capital (28,938) (d) (32,650) (g) 590 14,556 (590) 14,556
Retained Earnings (65,732) (d) (58,864) (f) 8,058 40,597 (8,058) 40,597
Total Common Equity (152,100) (141,514) 9,818 77,437 (9,818) 77,437
Redeemable Pref. Stock (1,500) (c) (30,000) (f)
Preferred Stock Exp/Premium (2,097) (2,097)
Long Term Debt (162,914) (c) (83,000) (f) 10,000 79,541 (10,000) 79,541
Total Capitalization (316,514) (254,514) 19,818 154,881 (19,818) 154,881
Short term debt (52,000) (f) 0 195 0 195
Other Current Liabilities 46,734 67,764 (61,091) 53,407
Deferred Credits and Other 0 0
Non-current Liabilities 56,800 (a) 272,476 34,662 307,138
(22,300) (a)
(10,900) (a)
Securitization Financing 230,914 (b) 230,914 0 230,914
Total Liabilities (62,000) (306,514) 569,942 257,502 (80,909) 746,535
Proforma Adjusting Entries
Montaup Electric Company
(a) Dr. Current Assets - Cash 95,600
Non-Current Liabilities-Accum def tax-Reg. Liab 22,300
Non-Current Liabilities-Accum def tax-Bk/Tax timer 10,900
Cr. Net Plant 72,000
Non-Current Liabilities - Regulatory Liability 56,800
To record the proceeds of the asset sales divestiture and
associated tax accruals and payment
(b) Dr. Current Assets - Cash 230,914
Cr. Securitization Financing 230,914
To record securitization financing proceeds
(c) Dr. Common Stock 57,430
Other Paid in Capital 28,938
Redeemable Preferred Stock 1,500
Long Term Debt 162,914
Cr. Current Assets - Cash 250,782
To record recapitalization of Montaup
(d) Dr. Retained Earnings 65,732
Cr. Current Assets - Cash 65,732
To record Dividends Paid to Eastern Edison.
Eastern Edison Company
(e) Dr. Current Assets - Cash 316,514
Cr. Investment in Subsidiary 316,514
To record the redemption and repurchase of Montaup securities
(f) Dr. Retained Earnings 58,864
Redeemable Preferred Stock 30,000
Long Term Debt 83,000
Current Liabilities - Short Term Debt 52,000
Cr. Current Assets - Cash 223,864
To record redemption of Eastern Edison securities, Short Term Debt, and payment
of dividends to recapitalize Eastern Edison
(g) Dr. Common Stock 50,000
Other Paid in Capital 32,650
Cr. Current Assets - Cash 82,650
To record repurchase of Common Stock
</TABLE>
