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File No. 70-8627
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form U-1
AMENDMENT NO. 2
APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
THE COLUMBIA GAS SYSTEM, INC.
20 Montchanin Road
Wilmington, DE 19807
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(Name of Company or Companies Filing This Statement
and Addresses of the Principal Executive Offices)
THE COLUMBIA GAS SYSTEM, INC.
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(Name of Top Registered Holding Company Parent of
Each Applicant or Declarant)
L. J. BAINTER, TREASURER
The Columbia Gas System, Inc.
20 Montchanin Road
Wilmington, DE 19807
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(Name and Address of Principal Agent for Service)
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The Application-Declaration, as previously filed and amended, is hereby
further amended as follows:
Item 1. Description of Proposed Transaction
(a) Furnish a reasonably detailed and precise description of the
proposed transaction, including a statement of the reasons why it is desired
to consummate the transaction and the anticipated effect thereof. If the
transaction is part of a general program, describe the program and its
relation to the proposed transaction.
I. The following changes are to reflect the Securities Litigation
Settlement including a change in reference from "Securities Litigation
Settlement Offer" to Securities Litigation Settlement:
The third paragraph on page 16 is deleted and replaced in its entirety by
the following:
"Further, Columbia expects to repurchase from the leveraged
employee stock ownership ("LESOP") portion of the Employees' Thrift
Plan of Columbia Gas System (the "Thrift Plan") all shares (the
"LESOP Shares") held in the common stock fund which have not been
allocated to employees, to hold the LESOP Shares as treasury shares
and to use the LESOP Shares for one or more of the following
purposes as deemed appropriate by Columbia: (i) to sell all or a
part of the LESOP Shares on the open market for cash, (ii) to
reissue all or part of the LESOP Shares to fund additional
requirements under the TCO Guarantee, (iii) to reissue all or part
of the LESOP Shares to fund the Securities Litigation Settlement as
described below, and (iv) to fund an employee benefit plan."
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The first full paragraph on page 17 is deleted and replaced in its entirety by
the following:
"Columbia proposes the possible issuance of Columbia Common Stock
(in addition to any LESOP Shares) on behalf of Columbia Transmission
in connection with the TCO Guarantee and, as described below, to
fund the Securities Litigation Settlement. The Columbia Plan also
proposes certain amendments to Columbia's Certificate of
Incorporation and the assumption by the Debtors of the Tax
Allocation Agreement which provides for the allocation of tax
benefits and liabilities among System affiliates."
The second paragraph on page 33 is deleted and replaced in its entirety
by the following:
"It is Columbia's intention to hold the LESOP Shares in its
treasury and to use the LESOP Shares for one or more of the
following purposes as Columbia deems appropriate: (i) to sell all or
part of the LESOP Shares for cash in the open market, (ii) to use
all or part of the LESOP Shares to fund the TCO Guarantee, (iii) to
use all or part of the LESOP Shares to fund the Securities
Litigation Settlement and (iv) to fund an employee benefit program."
On page 33, Section III.E, "Potential Offering of Columbia Securities in
Connection with Settlement of Securities Litigation" is replaced in its
entirety by the following:
"The Columbia Plan also seeks Bankruptcy Court approval of
Columbia's participation in a settlement of securities class action
litigation brought against
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Columbia, certain present and former officers and directors of
Columbia and Columbia Transmission, the public accounting firm of
Arthur Andersen, L.L.P. and certain underwriter's for Columbia's
1990 common stock offering, who are defendants in the litigation
(the "Securities Litigation Settlement"). Pursuant to the
Securities Litigation Settlement, Columbia and the various
non-debtors will establish a settlement fund of $36.5 million
(approximately $16.5 million of which will be contributed by
Columbia) to settle the class action claims. The settlement fund
will be applied to pay District Court-approved counsel fees and
costs of administration, with the remainder of the fund distributed
to holders of the claims based on acquisitions of Columbia Common
Stock from January 19, 1990 to June 19, 1991. The Securities
Litigation Settlement is conditioned upon the approval of the
District Court and the Bankruptcy Court.
Columbia, without admitting any wrongdoing or liability, has
agreed to the proposed Securities Litigation Settlement primarily to
avoid costly and time-consuming litigation and to facilitate the
reorganization process.
Holders of securities claims may elect, by submitting a form, to
opt-out of the class action and not participate in or be bound by
the Securities Litigation Settlement. In order to preserve any
securities claims it may have against Columbia, an opt-out
securities claimant must indicate on its opt-out form that it elects
to pursue its claim against Columbia in the District Court sitting
in
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bankruptcy. Columbia intends to object to and/or seek estimation of
the claims of opt-out claimants. If and when such claims are
allowed, they will be paid by Columbia in Columbia Common Stock
valued at then current market prices or, at Columbia's option, in
cash, or any combination of the two.
Columbia seeks Commission authorization to issue Columbia Common
Stock, valued at the then current market value, in an aggregate
amount equal to all allowed amounts for opt-out claimants in excess
of $1.5 million. Thus the authorization for the issuance of
Columbia Common Stock commences when the combination of Columbia's
contribution to the settlement fund and successful opt-out claimants
exceeds $18 million. The Securities Litigation Settlement provides
that it may be terminated by the defendants if the amount of
securities as to which opt-out forms have been submitted exceeds an
undisclosed specified amount."
On page 37, item 8 under Section IV, "Summary of Approvals", is replaced
in its entirety by the following:
"8) Reissue all or a part of the LESOP Shares for one or more of
the following purposes as Columbia deems appropriate: (i) to
sell all of part of the LESOP Shares for cash in the open
market, (ii) to fund the TCO Guarantee, (iii) to fund the
Securities Litigation Settlement and (iv) to fund an
employee benefit program."
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On page 38, item 10 under Section IV, "Summary of Approvals", is
replaced in its entirety by the following:
"10) Issue shares of Columbia Common Stock to effectuate payment
of Columbia's portion of any payment to claimants opting
out of the Securities Litigation Settlement which causes
the aggregate of Columbia's payment to the settlement fund
and payments to such opt-out claimants to exceed of
$18 million."
II. Delete the paragraph beginning on the fourth line on page 10 and
ending with the seventh line on page 11 of Amendment No. 1 to the Application-
Declaration and substitute the following:
"The aggregate projected distribution to Producers under the TCO
Plan totals approximately $1.2 billion. The Producer Agreement
reflects agreements with Initial Accepting Producers representing
approximately 80% of that value or approximately $960 million, while
distributions on settlement values attributable to all other
Producers aggregate approximately $240 million. Initial Accepting
Producers agreed to a 5% holdback from the distributions due to them
(approximately $48 million at the 80% acceptance level but subject
to increase as additional Producers accept) and have agreed that,
to the extent that claim values in excess of the settlement values
contained in the TCO Plan are agreed to or allowed, the holdback
will be applied with dollar for dollar matching by Columbia
Transmission (and Columbia under the
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TCO Guarantee) to pay the ultimate distribution. On July 20, 1995,
a motion was filed with the Bankruptcy Court for approval of
settlement agreements with producers representing an additional 6%
of the settlement values in the TCO Plan.
The claims mediator requested that Producers either file their
claims recalculation forms or notify Columbia Transmission of their
acceptance of the proposed settlement amounts by June 30, 1995.
Columbia Transmission is in the process of analyzing the filed
recalculated claims and a discussion of the filed recalculated
claims will be included in the Quarterly Report on Form 10-Q for the
Quarter Ended June 30, 1995 which will be incorporated into the
Disclosure Statement (Exhibit D-2 to this Application-Declaration)
as an exhibit and mailed with the solicitation materials. That
Form10-Q will be incorporated into this Application-Declaration by
reference upon filing."
Item 2. Fees, Commissions and Expenses
(a) State (1) the fees, commissions and expenses paid or incurred, or to
be paid or incurred, directly or indirectly, in connection with the proposed
transaction by the applicant or declarant or any associate company thereof,
and (2) if the proposed transaction involves the sale of securities at
competitive bidding, the fees and expenses to be paid to counsel selected by
applicant or declarant to act for the successful bidder.
There are set forth below the estimated fees and expenses expected to be
incurred in connection with Columbia's bankruptcy and the proposed transactions
described in this Application-Declaration other than those which are subject to
the approval of the Bankruptcy Court. All payments for nonaffiliated
professional services are subject to the approval of the
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Bankruptcy Court pursuant to the Bankruptcy Code and therefore, pursuant to
Rule 63, need not be approved by this Commission.
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000
Services of Columbia Gas System Service Corporation
since 7/31/91 and projected to emergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000,000*
Printing, solicitation of votes and tabulation of votes . . . . . . . . . . . . . . . . . . . . . . . . . 1,020,000*
Miscellaneous and other incidental expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000*
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Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,072,000
* estimated
</TABLE>
Item 6. Exhibits and Financial Statements
D-1 Columbia Gas Transmission Corporation Plan of Reorganization and
Disclosure Statement (filed herewith by incorporation by reference
to the Plan of Reorganization and Disclosure Statement filed in File
No. 1-1098 on August 4, 1995)
D-2 The Columbia Gas System, Inc. Plan of Reorganization and Disclosure
Statement (filed herewith by incorporation by reference to the Plan
of Reorganization and Disclosure Statement filed in File No. 1-1098
on August 4, 1995)
D-3 Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
(to be filed by amendment)
F Opinion of Counsel (to be filed by amendment)
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Application-Declaration to
be signed on its behalf by the undersigned thereunto duly authorized.
THE COLUMBIA GAS SYSTEM, INC.
Date: August 8, 1995 By: /s/ L. J. BAINTER
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L. J. Bainter
Treasurer
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EXHIBIT INDEX
(a) Exhibits
D-1 Columbia Gas Transmission Corporation Plan of Reorganization and
Disclosure Statement (filed herewith by incorporation by reference
to the Plan of Reorganization and Disclosure Statement filed in
File No. 1-1098 on August 4, 1995)
D-2 The Columbia Gas System, Inc. Plan of Reorganization and
Disclosure Statement (filed herewith by incorporation by reference
to the Plan of Reorganization and Disclosure Statement filed in
File No. 1-1098 on August 4, 1995)
D-3 Quarterly Report on Form 10-Q for the quarter ended June 30, 1995
(to be filed by amendment)
F Opinion of Counsel (to be filed by amendment)
