File No. ____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form U-1
APPLICATION/DECLARATION WITH RESPECT TO THE ORGANIZATION
OF LIMITED PARTNERSHIPS, THE ISSUANCE OF PREFERRED
LIMITED PARTNERSHIP INTERESTS AND SUBORDINATED
DEBENTURES, AND RELATED TRANSACTIONS
under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
THE CONNECTICUT LIGHT AND POWER COMPANY
Selden Street
Berlin, Connecticut 06037
WESTERN MASSACHUSETTS ELECTRIC COMPANY
174 Brush Hill Avenue
West Springfield, Massachusetts 01089
(Name of companies filing this statement and address of principal
executive office)
NORTHEAST UTILITIES
(Name of top registered holding company parent of declarant)
Robert P. Wax, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders,
notices, and communications to
John B. Keane, Esq. Jeffrey C. Miller, Esq.
Vice President and Treasurer Assistant General Counsel
Northeast Utilities Service Northeast Utilities Service
Company Company
P.O. Box 270 P.O. Box 270
Hartford, CT 06141-0270 Hartford, CT 06141-0270
Richard J. Wasserman, Esq.
Day, Berry & Howard
CityPlace
Hartford, CT 06103-3499
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I
DESCRIPTION OF PROPOSED TRANSACTIONS
1. The Connecticut Light and Power Company ("CL&P") and Western
Massachusetts Electric Company ("WMECO"), both wholly-owned electric
utility subsidiaries (sometimes, individually, the "Company" and,
collectively, the "Companies") of Northeast Utilities ("NU"), a registered
holding company, hereby submit this Application/Declaration pursuant to the
Public Utility Holding Company Act of 1935, as amended (the "Act"), with
respect to proposed transactions relating to the formation by each Company
of an affiliated limited partnership, the issuance of preferred limited
partnership interests by each such limited partnership, and the use by each
such limited partnership of the proceeds from such issuance to purchase
subordinated debentures to be issued by its affiliated Company. As set
forth in paragraphs 18 through 21 below, the Companies will use the
proceeds of the proposed transactions to lower their after-tax cost of
capital and/or improve the quality of their respective capital structures
by redeeming or otherwise reacquiring a portion of their outstanding fixed
rate preferred stock and/or Dutch Auction Rate Transferable Securities
("DARTS").
2. Each Company proposes to organize a special purpose limited
partnership under the Delaware Revised Uniform Limited Partnership Act for
the sole purpose of issuing the limited partnership interests described
below (individually, an "Issuing Partnership" and, collectively, the
"Issuing Partnerships"). Each Company will act as the general partner of
its Issuing Partnership, and either (a) Northeast Utilities Service Company
("NUSCO"), an existing wholly-owned subsidiary of NU which provides
services to CL&P, WMECO, and the other NU subsidiaries, will act as the
initial limited partner of the Issuing Partnerships, or (b) each Company
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will organize a special purpose, wholly-owned corporation under the
Delaware General Corporation Law for the sole purpose of acting as the
initial limited partner of the related Issuing Partnership (individually, a
"Participating Subsidiary" and, collectively, "Participating
Subsidiaries"). The initial limited partners will withdraw from the
Issuing Partnerships upon, or shortly after, the issuance of the preferred
limited partnership interests described below.
3. Each Company will make an equity contribution to its Issuing
Partnership at the time such partnership is first formed and thereby
acquire all of the general partnership interest in such Issuing
Partnership. The equity contributions of each general partner to its
Issuing Partnership will at all times constitute at least 3% of the
aggregate equity contributions by all partners to such Issuing Partnership.
In addition, each Company will, indirectly through the initial limited
partner, make an equity contribution to its Issuing Partnership at the time
such partnership is first formed and thereby acquire all of the initial
limited partnership interest in its Issuing Partnership. Upon the
withdrawal of the initial limited partner from each of the Issuing
Partnerships as described in paragraph 2 above, each initial limited
partner will be entitled to withdraw its equity contribution.
4. The Issuing Partnerships will issue and sell, from time to time
in one or more series through August 31, 1996, preferred limited
partnership interests ("Preferred Partnership Interests"), $25 per share
stated liquidation preference, in an aggregate amount of (a) in the case of
CL&P, up to $150 million, and (b) in the case of WMECO, up to $100 million.
Each Company's Preferred Partnership Interests will be registered under the
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Securities Act of 1933, as amended, under registration statements filed on
Form S-3 (the "CL&P Registration Statement" and the "WMECO Registration
Statement," respectively, and, collectively, the "Registration
Statements"). The forms of the CL&P Registration Statement and the WMECO
Registration Statement will be filed through incorporation by reference as
Exhibits C.1 and C.2, respectively. The holders of the Preferred
Partnership Interests will be the limited partners of the Issuing
Partnerships, and the amounts paid by such holders for the Preferred
Partnership Interests will be treated as capital contributions to the
Issuing Partnerships.
5. Each Company will issue and sell, from time to time in one or
more series, subordinated debentures (the "CL&P Subordinated Debentures"
and the "WMECO Subordinated Debentures," respectively, and, collectively,
the "Subordinated Debentures") to its Issuing Partnership. Each Issuing
Partnership will use the proceeds from the sale of its Preferred
Partnership Interests, plus the equity contributions made to it by its
general partner, to purchase the CL&P Subordinated Debentures or the WMECO
Subordinated Debentures, as the case may be. Each Company's Subordinated
Debentures will be registered pursuant to the related Registration
Statement. The Subordinated Debentures will be issued pursuant to, and
governed by, indentures that will be qualified under the Trust Indenture
Act of 1939, as amended (the "CL&P Indenture" and the "WMECO Indenture,"
respectively, and, collectively, the "Indentures"). Drafts of the CL&P
Indenture and the WMECO Indenture will be filed by amendment as Exhibits
B.1 and B.2, respectively.
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6. Each series of the Subordinated Debentures will mature at such
time, not more than 50 years from their date of issuance, as the Companies
may determine at the time of issuance. The Indentures may permit the
Subordinated Debentures to be issued with an initial term of less than 50
years that may be extended at the Companies' option to up to 50 years from
the date of issuance. For example, the Subordinated Debentures may have an
initial term of 30 years with the Companies having the right to extend the
maturity for up to an additional 19 years. Prior to maturity, the
Companies will pay interest only, at a fixed rate set forth in the
Indentures, on the Subordinated Debentures. The distribution rates,
payment dates, redemption, and other similar provisions of each series of
Preferred Partnership Interests will be substantially identical to the
interest rates, payment dates, redemption, and other provisions of the
Subordinated Debentures relating thereto, and will be determined by the
Issuing Partnerships at the time of issuance. The interest paid by the
Companies on their respective Subordinated Debentures will constitute the
only income of the Issuing Partnerships and will be used by the Issuing
Partnerships to pay monthly distributions on the Preferred Partnership
Interests.
7. Each Company may also enter into a guaranty (the "CL&P Guaranty"
and the "WMECO Guaranty," respectively, and, collectively, the
"Guaranties") pursuant to which it will unconditionally guarantee (i)
payment of distributions on the Preferred Partnership Interests, if and to
the extent its respective Issuing Partnership has declared distributions
out of funds legally available therefor, (ii) payments to the holders of
Preferred Partnership Interests of amounts due upon liquidation of its
Issuing Partnership or redemption of the Preferred Partnership Interests,
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and (iii) certain additional "gross up" amounts that may be payable in
respect of the Preferred Partnership Interests, as described in paragraph
13 below. Each Guaranty will be registered pursuant to the related
Registration Statement. Drafts of the CL&P Guaranty and the WMECO Guaranty
will be filed by amendment as Exhibits B.3 and B.4, respectively, unless
the Companies have decided not to provide the guaranties described in this
paragraph 7.
8. Each Company's Subordinated Debentures and related Guaranty will
be subordinate to all other existing and future indebtedness for borrowed
money of the Company. Each Company will have the right to defer payment of
interest on its Subordinated Debentures for up to 60 months. However,
neither Company will be permitted to declare and pay dividends on any class
of its equity securities unless all payments due under its Subordinated
Debentures and Guaranty (including any payments previously deferred) have
been made.
9. Distributions on the Preferred Partnership Interests will be made
monthly, will be cumulative, and will be mandatory to the extent that the
Issuing Partnership has legally available funds and sufficient cash for
such purposes. The availability of such funds will depend on the Issuing
Partnership's receipt of the amounts due under the related Subordinated
Debentures. The Issuing Partnerships will have the right to defer
distributions on the Preferred Partnership Interests for up to 60 months,
but only if and to the extent that the related Company defers the interest
payments on the Subordinated Debentures as described in paragraph 8 above.
If distributions on the Preferred Partnership Interests (including all
previously deferred distributions, if any) are so deferred for 18
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consecutive months, then the holders of Preferred Partnership Interests
will have the right to appoint a special representative to enforce the
Issuing Partnership's rights under the related Subordinated Debentures and
Guaranty, including, after failure to pay distributions for 60 consecutive
months, to require the declaration and payment of distributions to holders
of Preferred Partnership Interests.
10. It is expected that the interest payments by each Company on its
Subordinated Debentures will be deductible for federal income tax purposes
and that its Issuing Partnership will be treated as a partnership for
federal income tax purposes. Consequently, the holders of Preferred
Partnership Interests and the general partners will be deemed to have
received partnership distributions, not dividends, from the Issuing
Partnerships and will not be entitled to any "dividend received deduction"
under the Internal Revenue Code.
11. The Preferred Partnership Interests will be subject to redemption
in whole or part on and after a specified date (the "Earliest Redemption
Date") at the option of the Issuing Partnership, with the consent of its
related Company, at a price equal to their stated liquidation preference
plus any accrued and unpaid distributions (the "Redemption Price"). The
Earliest Redemption Date will be determined based on, among other factors,
market conditions at the time of issuance, but will be not later than 10
years after the date of issuance. The Indentures and the Partnership
Agreements (as defined in paragraph 15 below) may set forth additional
provisions governing the optional redemption of the Preferred Partnership
Interests. In particular, it is expected that each Issuing Partnership
will have the option, with the consent of its related Company, to redeem
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the Preferred Partnership Interests at the Redemption Price upon the
occurrence of specified adverse tax events (each, a "Tax Event"). Examples
of possible Tax Events include (a) the Issuing Partnership is subject to
federal income tax with respect to interest received on the Subordinated
Debentures or is otherwise not treated as a partnership for federal income
tax purposes, (b) it is determined that the interest payments by the
Companies on the Subordinated Debentures are not deductible for federal
income tax purposes, or (c) the Issuing Partnership is subject to more than
a minimal amount of other taxes, duties, or other governmental charges.
The Indentures and the Partnership Agreements may also provide that the
Preferred Partnership Interests are subject to optional or mandatory
redemption upon the occurrence of specified adverse regulatory events
(each, a "Regulatory Event"). An example of a possible Regulatory Event is
that the Issuing Partnership becomes subject to regulation as an
"investment company" under the Investment Company Act of 1940, as amended.
12. It is expected that, upon the occurrence of a Tax Event or a
Regulatory Event, each Company may also have the right to exchange its
Subordinated Debentures for the Preferred Partnership Interests or to
otherwise distribute the Subordinated Debentures to the holders of
Preferred Partnership Interests, whereupon the Preferred Partnership
Interests would be cancelled and nullified.
13. If, as a result of (a) the Subordinated Debentures not being
treated as indebtedness for federal income tax purposes, or (b) the Issuing
Partnership not being treated as a partnership for federal income tax
purposes, the Issuing Partnership is required by applicable tax laws to
withhold or deduct from payments on the Preferred Partnership Interests
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amounts which would not otherwise be required to be withheld or deducted,
the Issuing Partnership may also have the obligation, if the Preferred
Partnership Interests are not redeemed (as discussed in paragraph 11 above)
or replaced (as discussed in paragraph 12 above), to "gross up" such
payments so that the holders of Preferred Partnership Interests will
receive the same payment after such withholding or deduction as they would
have received if no such withholding or deduction were required. In such
latter event, the Guaranties (if issued) would also cover any such "gross
up" obligations.
14. In the event of any voluntary or involuntary liquidation,
dissolution, or winding up of the Issuing Partnership, holders of Preferred
Partnership Interests will be entitled to receive, out of the assets of the
Issuing Partnerships available for distribution to its limited partners,
before any distribution of assets to the general partner, an amount equal
to the stated liquidation preference of the Preferred Partnership Interests
plus any accrued and unpaid distributions.
15. Under the Amended and Restated Agreements of Limited Partnership
that will govern the activities of the Issuing Partnerships upon the
issuance of the Preferred Partnership Interests (the "CL&P Partnership
Agreement" and the "WMECO Partnership Agreement," respectively, and,
collectively, the "Partnership Agreements"), the activities of the Issuing
Partnerships will be limited to the issuance and sale of Preferred
Partnership Interests, the use of the proceeds thereof and the equity
contributions by the general partners to purchase the Subordinated
Debentures, the receipt of interest on the Subordinated Debentures, and the
payment of distributions on the Preferred Partnership Interests. Drafts of
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the CL&P Partnership Agreement and the WMECO Partnership Agreement will be
filed by amendment as Exhibits A.1 and A.2, respectively.
16. Each of the Partnership Agreements will further state that the
Issuing Partnership's business and affairs will be managed and controlled
directly by the general partner, that the general partner will be
responsible for all liabilities and obligations of the Issuing Partnership,
and that the general partnership interest is not transferrable except for a
transfer made (a) with the consent of all other partners, (b) to a direct
or indirect wholly-owned subsidiary, or (c) in the event of merger, subject
to certain conditions.
17. Because the Preferred Partnership Interests will be supported by
the respective Company's Subordinated Debentures and Guaranty (if issued),
and the distributions to holders of Preferred Partnership Interests will be
paid out of the interest payments on such Subordinated Debentures or
pursuant to such Guaranty, it is proposed that the Partnership Agreements
will not include any interest or distribution coverage or capitalization
ratio restrictions on its ability to issue and sell additional issues of
Preferred Partnership Interests. Such restrictions would not be relevant
or necessary, nor are the capital structures of the Issuing Partnerships
relevant, because the interest payments of the Companies on their
respective Subordinated Debentures are expected to fully service the
distributions on Preferred Partnership Interests. For this reason,
financial statements for the Issuing Partnerships are not included with
this Application/Declaration.
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18. CL&P proposes to use the proceeds from the issuance of its
Subordinated Debentures to redeem or otherwise reacquire one or more of the
series of its fixed rate preferred stock and DARTS, as set forth below:
<TABLE>
<CAPTION>
Aggregate
Series Designation Par Value Shares Outstanding Par Value
<S> <C> <C> <C>
1989 Series, 9% $25 3,000,000 $75,000,000
1968 Series, 6.56% $50 200,000 $10,000,000
1968 Series 3.24G $50 300,000 $15,000,000
1989 DARTS $25 2,000,000 $50,000,000
$150,000,000
</TABLE>
The 1989 Series, 9% preferred stock listed in the above table has a sinking
fund provision, while the two 1968 Series of preferred stock and the DARTS
listed in the above table are not subject to mandatory redemption.
19. WMECO proposes to use the proceeds from the issuance of its
Subordinated Debentures to redeem or otherwise reacquire one or more of the
series of its fixed rate preferred stock and DARTS, as set forth below:
<TABLE>
<CAPTION>
Aggregate
Series Designation Par Value Shares Outstanding Par Value
<S> <C> <C> <C>
1987 Series, 7.60% $25 1,020,000 $25,500,000
1971 Series, 7.72%B $100 200,000 $20,000,000
1988 DARTS $25 2,140,000 $53,500,000
$99,000,000<F1>
<F1>
WMECO expects to redeem or otherwise reacquire up to
$99,000,000 of its outstanding preferred stock and DARTS.
However, WMECO seeks approval of the issuance of up to
$100,000,000 of its Subordinated Debentures and of its related
Issuing Partnership's Preferred Partnership Interests in order to
maintain the flexibility of effecting such issuances in "round
lots."
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The 1987 Series, 7.60% preferred stock listed in the above table has a
sinking fund provision, while the two 1971 Series of preferred stock and
the DARTS listed in the above table are not subject to mandatory
redemption.
20. The Companies believe that the proposed financings would permit
them to lower their after-tax cost of capital. CL&P and WMECO expect to
achieve such savings by using approximately $100 million and $45.5 million,
respectively, of the proceeds from the financings to redeem or otherwise
reacquire shares of their outstanding fixed rate preferred stock. Although
the Preferred Partnership Interests may carry a distribution rate that is
higher than the dividend rate on such preferred stock, the expected tax
deductibility of interest payments on the Subordinated Debentures will
result in substantial after-tax savings. While a portion of the savings
from the fixed rate preferred stock redemptions/reacquisitions will be
offset by the redemptions/reacquisitions of the DARTS, which currently have
a lower after-tax cost than the Preferred Partnership Interests, the
Companies expect that the proposed financings on balance will result in net
savings, as shown in the financial statements filed with this
Application/Declaration.
21. The Companies further expect that the proposed financings would
improve or maintain the quality of their capital structures. The Companies
understand that the Preferred Partnership Interests would receive
substantially more equity credit from the major ratings agencies than the
DARTS currently receive and that the major rating agencies will view the
Preferred Partnership Interests as having equity characteristics comparable
to the equity characteristics of sinking fund preferred stock. The
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Companies understand that the basis for the rating agencies' view is that
the long maturities of the Preferred Partnership Interests, as well as the
ability to defer distributions for up to 60 months, provide an equity-like
stability to the Companies' capital structures.
22. The Preferred Partnership Interests will initially be marketed
and sold pursuant to underwriting agreements (the "CL&P Underwriting
Agreement" and the "WMECO Underwriting Agreement," respectively, and,
collectively, the "Underwriting Agreements") to be entered into by each
Company, its respective Issuing Partnership, and an underwriter or
underwriters to be selected by each Company (collectively for each Company,
an "Underwriter"). Drafts of the CL&P Underwriting Agreement and the WMECO
Underwriting Agreement will be filed by amendment as Exhibits B.5 and B.6,
respectively. Under the terms of the Underwriting Agreements, each
Underwriter will purchase the Preferred Partnership Interests directly from
the Issuing Partnership and then sell the Preferred Partnership Interests
to the public. Each Company will pay an underwriting fee of up to 3.50% of
the principal amount of its Issuing Partnership's Preferred Partnership
Interests to be purchased by such Underwriter.
23. Based on market conditions, tax laws, and the views of the rating
agencies, the Companies may conclude that they can substantially obtain the
benefits described in paragraphs 20 and 21 above by directly issuing their
Subordinated Debentures in a public offering. In such event, the Companies
may elect to undertake such public offerings directly without organizing
the Issuing Partnerships and causing the issuance of the Preferred
Partnership Interests as described above.
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24. Except in accordance with the Act, neither NU nor any subsidiary
thereof (a) has acquired an ownership interest in an exempt wholesale
generator ("EWG") or a foreign utility company ("FUCO") as defined in
Sections 32 and 33 of the Act, or (b) now is or as a consequence of the
transactions proposed herein will become a party to, or has or will as a
consequence of the transactions proposed herein have a right under, a
service, sales, or construction contract with an exempt wholesale generator
or a foreign utility company. None of the proceeds from the transactions
proposed herein will be used by the Companies to acquire any securities of,
or any interest in, an exempt wholesale generator or a foreign utility
company.
The NU system is in compliance with Rule 53(a), (b), and (c), as
demonstrated by the following determinations:
(i) NU's aggregate investment in EWGs and FUCOs (i.e., amounts
invested in or committed to be invested in EWGs and FUCOs, for which
there is recourse to NU) does not exceed 50% of the NU system's
consolidated retained earnings as reported for the four most recent
quarterly periods on NU's Form 10-K and 10-Qs.
(ii) Encoe Partners (NU's only EWG or FUCO at this time) maintains
books and records, and prepares financial statements in accordance
with Rule 53(a)(2). Furthermore, NU has undertaken to provide the
Commission access to such books and records and financial statements,
as it may request.
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(iii) No employees of the NU system's public utility companies have
rendered services to Encoe Partners.
(iv) NU has submitted (a) a copy of each Form U-1 and Rule 24
certificates that have been filed with the Commission under Rule 53
and (b) a copy of Item 9 of Form U5S and Exhibits G and H thereof to
each state regulator having jurisdiction over the retail rates of the
NU system public utility companies.
(v) Neither NU nor any NU subsidiary has been the subject of a
bankruptcy or similar proceeding unless a plan of reorganization has
been confirmed in such proceeding. In addition, NU's average
consolidated retained earnings for the four most recent quarterly
periods has not decreased by 10% or more from the average for the
previous four quarterly periods.
(vi) In the previous fiscal year, NU did not report operating losses
attributable to its investment in Encoe Partners, unless such losses
did not exceed 5 percent of NU's consolidated retained earnings.
II
FEES, COMMISSIONS, AND EXPENDITURES
25. The estimated fees, commissions, and expenses paid or incurred,
or to be paid or incurred, directly or indirectly, in connection with the
proposed refinancings by the Companies or any associate company thereof
will be specified in Exhibits H.1 and H.2 to be filed by amendment hereto.
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26. None of such fees, commissions, or expenses are to be paid to any
associate company or affiliate of the Companies or any affiliate of any
such associate company except for financial, legal, and other services to
be performed at cost by NUSCO and except that legal services will be
performed for the Companies by the firm of Day, Berry & Howard of Hartford,
Connecticut. C. Duane Blinn, a member of such firm, is Assistant Secretary
of Connecticut Yankee Atomic Power Company, an associate company of the
Companies.
III
APPLICABLE STATUTORY PROVISIONS
27. The formation of the Issuing Partnerships, the acquisition,
directly or indirectly, by the Companies of general and limited partnership
interests in the Issuing Partnerships, the making, directly and indirectly,
of the general and initial limited partner equity contributions, the
potential acquisition by the Companies of shares of the capital stock of
the Participating Subsidiaries, the acquisition by NUSCO or the
Participating Subsidiaries of limited partnership interests in the Issuing
Partnerships, and the acquisition by the Issuing Partnerships of the
Subordinated Debentures and the Guaranties may be subject to Sections 9(a),
10, and 12(b) of the Act and Rule 45 thereunder.
28. The issuance and sale of the Preferred Partnership Interests by
the Issuing Partnerships and the potential exchange of the Preferred
Partnership Interests for Subordinated Debentures may be subject to
Sections 6(a) and 7 of the Act and Rules 53 and 54 thereunder.
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29. The Companies believe that the issuance of the Subordinated
Debentures and the Guaranties to the Issuing Partnerships will be exempt
from the declaration requirements of the Act by virtue of Rule 45(b)(1)
thereunder. If, as described in paragraph 23 above, the Companies forego
organization of the Issuing Partnerships and the issuance of the Preferred
Partnership Interests and, instead, directly issue their Subordinated
Debentures in a public offering, the issuance and sale of the Subordinated
Debentures may be subject to Sections 6(a) and 7 of the Act and Rules 53
and 54 thereunder.
IV
REGULATORY APPROVAL
30. The approval of the Connecticut Department of Public Utility
Control (the "CDPUC") will be sought for CL&P's proposed transactions. An
application for such approval will be filed with the CDPUC and a copy
thereof will be filed by amendment as Exhibit D.1 hereto. A copy of the
order of the CDPUC will be filed by amendment as Exhibit D.2 hereto upon
issuance.
31. The approval of the Massachusetts Department of Public Utilities
("MDPU") will be sought for WMECO's proposed transactions. A petition for
such approval will be filed with the MDPU and a copy thereof will be filed
by amendment as Exhibit D.3 hereto. A copy of the order of the MDPU will
be filed by amendment as Exhibit D.4 hereto upon issuance.
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32. The waiver of approval of the CDPUC also will be sought for
WMECO's proposed transactions. An application for such waiver of approval
will be filed with the CDPUC and a copy thereof will be filed by amendment
as Exhibit D.5. A copy of the order of the CDPUC will be filed by
amendment as Exhibit D.6 upon issuance.
V
PROCEDURE
33. It is requested that the Commission issue an order with respect
to the transactions proposed herein at the earliest practicable date, but
in any event not later than September 15, 1994, which is not less than 40
days from the date of the filing of this Application/Declaration. The
proposed issuance of the Preferred Partnership Interests will occur on or
before August 31, 1996. It is requested that the Commission issue a single
order that will permit the Companies to consummate, on or before August 31,
1996, the transactions proposed herein in an aggregate principal amount of
up to $150 million for CL&P and up to $100 million for WMECO, subject to
the condition that the effective distribution rate(s) applicable to the
Preferred Partnership Interests and/or the effective interest rate(s)
applicable to the Subordinated Debentures (in each case, taking into
account all applicable transaction costs) do not exceed 11.5% per annum.
34. Each Company hereby waives the recommended decision by a hearing
officer or other responsible officer of the Commission and consents that
the Division of Investment Management, Office of Public Utility Regulation,
may assist in the preparation of the Commission's decision and/or order and
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hereby requests that the Commission's order become effective forthwith upon
issuance.
VI
EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits
A.1 Draft of Amended and Restated Limited Partnership Agreement of
CL&P's Issuing Partnership, including a draft of the related form of
preferred limited partnership units. (To be filed by amendment.)
A.2 Draft of Amended and Restated Limited Partnership Agreement of
WMECO's Issuing Partnership, including a draft of the related form of
preferred limited partnership units. (To be filed by amendment.)
A.3 Draft of Certificate of Incorporation of CL&P's Participating
Subsidiary (if applicable). (To be filed by amendment.)
A.4 Draft of Bylaws of CL&P's Participating Subsidiary (if
applicable). (To be filed by amendment.)
A.5 Draft of Certificate of Incorporation of WMECO's Participating
Subsidiary (if applicable). (To be filed by amendment.)
A.6 Draft of Bylaws of WMECO's Participating Subsidiary (if
applicable). (To be filed by amendment.)
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B.1 Draft of the CL&P Indenture, including a draft of the related
form of Subordinated Debenture. (To be filed by amendment.)
B.2 Draft of the WMECO Indenture, including a draft of the related
form of Subordinated Debenture. (To be filed by amendment.)
B.3 Draft of CL&P Guaranty (if applicable). (To be filed by
amendment.)
B.4 Draft of WMECO Guaranty (if applicable). (To be filed by
amendment.)
B.5 Draft of CL&P Underwriting Agreement. (To be filed by
amendment.)
B.6 Draft of WMECO Underwriting Agreement. (To be filed by
amendment.)
C.1 CL&P Registration Statement on Form S-3 under the Securities Act
of 1933 relating to the various securities which are the subject hereof and
all amendments and exhibits thereto. (Incorporated by reference to the SEC
Registration No. to be assigned to such registration statement upon
filing.)
C.2 WMECO Registration Statement on Form S-3 under the Securities Act
of 1933 relating to the various securities which are the subject hereof and
all amendments and exhibits thereto. (Incorporated by reference to the SEC
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Registration No. to be assigned to such registration statement upon
filing.)
D.1 Application to the CDPUC for approval of CL&P's proposed
transactions. (To be filed by amendment.)
D.2 Copy of the Order of the CDPUC with respect to CL&P's proposed
transactions. (To be filed by amendment.)
D.3 Petition to the MDPU for approval of WMECO's proposed
transactions. (To be filed by amendment.)
D.4 Copy of the Order of the MDPU with respect to WMECO's proposed
transactions. (To be filed by amendment.)
D.5 Application to the CDPUC for waiver of approval of WMECO's
proposed transactions. (To be filed by amendment.)
D.6 Copy of the Order of the CDPUC with respect to WMECO's proposed
transactions. (To be filed by amendment.)
E. Not applicable.
F.1 Opinion of Counsel to CL&P. (To be filed by amendment.)
F.2 Opinion of Counsel to WMECO. (To be filed by amendment.)
G.1 CL&P Financial Data Schedule.
<PAGE>
-21-
G.2 WMECO Financial Data Schedule.
G.3 NU Financial Data Schedule.
H.1 Estimated Expenses--CL&P. (To be filed by amendment.)
H.2 Estimated Expenses--WMECO. (To be filed by amendment.)
I. Proposed notice of the proceeding initiated by the filing of this
Application/Declaration.
(b) Financial Statements
1. The Connecticut Light and Power Company
1.1 Balance Sheet, per books and pro forma, as of March 31,
1994.
1.2 Income Statement, per books and pro forma, twelve months
ended March 31, 1994.
1.3 Statement of Retained Earnings per books and pro forma,
twelve months ended March 31, 1994, and Statement of Capital
Structure, per books and pro forma, as of March 31, 1994.
1.4 Explanation of Pro Forma Adjustments.
<PAGE>
-22-
2. Western Massachusetts Electric Company
2.1 Balance Sheet, per books and pro forma, as of March 31,
1994.
2.2 Income Statement, per books and pro forma, twelve months
ended March 31, 1994.
2.3 Statement of Retained Earnings, per books and pro forma,
twelve months ended March 31, 1994, and Statement of Capital
Structure, per books and pro forma, as of March 31, 1994.
2.4 Explanation of Pro Forma Adjustments.
3. Northeast Utilities and Subsidiaries
3.1 Consolidated Balance Sheet, per books and pro forma, as of
March 31, 1994.
3.2 Consolidated Income Statement, per books and pro forma,
twelve months ended March 31, 1994.
3.3 Consolidated Statement of Retained Earnings, per books and
pro forma, twelve months ended March 31, 1994, and
Consolidated Statement of Capital Structure, per books and
pro forma, as of March 31, 1994.
3.4 Explanation of Pro Forma Adjustments.
<PAGE>
-23-
3.5 Annual Report of Northeast Utilities on Form 10-K for the
year ended December 31, 1993, and Quarterly Report on Form
10-Q for the quarter ended March 31, 1994, including Notes
to the Financial Statements. Incorporated by reference to
File No. 1-5324.
VII
INFORMATION AS TO ENVIRONMENTAL EFFECTS
(a) The issuance of an order with respect to this
Application/Declaration is not a major federal action significantly
affecting the quality of the human environment.
(b) No Federal agency has prepared or is preparing an environmental
impact statement with respect to the subject transactions.
<PAGE>
-24-
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned applicants each has duly caused this
statement to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: July 28, 1994
THE CONNECTICUT LIGHT AND POWER COMPANY
By_________________________/s/John B. Keane
John B. Keane
Vice President and Treasurer
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By_________________________/s/John B. Keane
John B. Keane
Vice President and Treasurer
<PAGE>
File No. _______
INDEX TO EXHIBITS FILED WITH
FORM U-1
of
THE CONNECTICUT LIGHT AND POWER COMPANY
and
WESTERN MASSACHUSETTS ELECTRIC COMPANY
(a) Exhibits
G.1 CL&P Financial Data Schedule.
G.2 WMECO Financial Data Schedule.
G.3 NU Financial Data Schedule.
I. Proposed notice of the proceeding initiated by the filing of this
Application/Declaration.
(b) Financial Statements
1. The Connecticut Light and Power Company
1.1 Balance Sheet, per books and pro forma, as of March 31,
1994.
1.2 Income Statement, per books and pro forma, twelve months
ended March 31, 1994.
1.3 Statement of Retained Earnings per books and pro forma,
twelve months ended March 31, 1994, and Statement of Capital
Structure, per books and pro forma, as of March 31, 1994.
1.4 Explanation of Pro Forma Adjustments.
2. Western Massachusetts Electric Company
2.1 Balance Sheet, per books and pro forma, as of March 31,
1994.
2.2 Income Statement, per books and pro forma, twelve months
ended March 31, 1994.
2.3 Statement of Retained Earnings, per books and pro forma,
twelve months ended March 31, 1994, and Statement of Capital
Structure, per books and pro forma, as of March 31, 1994.
2.4 Explanation of Pro Forma Adjustments.
3. Northeast Utilities and Subsidiaries
<PAGE>
-2-
3.1 Consolidated Balance Sheet, per books and pro forma, as of
March 31, 1994.
3.2 Consolidated Income Statement, per books and pro forma,
twelve months ended March 31, 1994.
3.3 Consolidated Statement of Retained Earnings, twelve months
ended March 31, 1994, and Consolidated Statement of Capital
Structure, per books and pro forma, as of March 31, 1994.
3.4 Explanation of Pro Forma Adjustments.
DBH809/usr2/id15/work/MIPS/U1.F
July 28, 1994; 3:25pm
</TABLE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY Exhibit G.1
FINANCIAL DATA SCHEDULE (unaudited) Page 1 of 1
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENT TRANSACTION
<S> <C> <C> <C>
Total Net Utility Plant 4,183,786 0 4,183,786
Other Property and Investments 229,894 0 229,894
Total Current Assets 436,096 0 436,096
Total Deferred Charges 1,498,336 4,891 1,503,227
Balancing amount for Total Assets 0 0 0
Total Assets 6,348,112 4,891 6,353,003
Common Stock 122,229 0 122,229
Capital Surplus, Paid-In 630,732 (5,162) 625,570
Retained Earnings 773,643 2,229 775,872
Total Common Stockholders Equity 1,526,604 (2,933) 1,523,671
Preferred Stock Subject to Mandatory Redemption 230,000 (75,000) 155,000
Preferred Stock Not Subject to Mandatory Redemption 166,200 (75,000) 91,200
Long Term Debt, Net 1,712,682 0 1,712,682
Short Term Notes 0 0 0
Notes Payable 198,750 7,824 206,574
Commercial Paper 0 0 0
Long Term Debt - Current Portion 177,020 0 177,020
Preferred Stock - Current Portion 0 0 0
Obligations Under Capital Leases 135,146 0 135,146
Obligations Under Capital Leases - Current Portion 56,799 0 56,799
Balancing amount for Capitalization and Liabilities 2,144,913 0 2,144,913
Total Capitalization and Liabilities 6,348,114 4,891 6,353,005
Gross Operating Revenue 2,358,731 0 2,358,731
Federal and State Income Taxes Expense 167,930 (5,711) 162,219
Other Operating Expenses 1,929,110 0 1,929,110
Total Operating Expenses 2,097,040 (5,711) 2,091,329
Operating Income (Loss) 261,691 5,711 267,402
Other Income (Loss), Net 32,420 0 32,420
Income Before Interest Charges 294,111 5,711 299,822
Total Interest Charges 125,666 815 126,481
Net Income 140,752 2,229 142,981
Preferred Stock Dividends 27,693 (10,458) 17,235
Earnings Available For Common Stock 140,752 2,229 142,981
Common Stock Dividends 160,000 0 160,000
Total Annual Interest Charges on All Bonds 121,655 0 121,655
Cash Flow from Operations 230,303 5,711 236,014
Earnings per Share - Primary $1.134 $0.018 $1.152
Earnings per Share - Fully Diluted $1.051 $0.017 $1.068
Earnings per share based on 12-month average NU common shares outstanding (124,137,000 NU shares).
Fully diluted earnings per share include NU shares sold to company ESOP but not allocated to system employees (9,742,220
NU shares).
</TABLE>
<TABLE>
THE WESTERN MASSACHUSETTS ELECTRIC COMPANY Exhibit G.2
FINANCIAL DATA SCHEDULE (unaudited) Page 1 of 1
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENT TRANSACTION
<S> <C> <C> <C>
Total Net Utility Plant 845,034 0 845,034
Other Property and Investments 72,418 0 72,418
Total Current Assets 172,632 0 172,632
Total Deferred Charges 205,686 3,277 208,963
Balancing amount for Total Assets 0 0 0
Total Assets 1,295,770 3,277 1,299,047
Common Stock 26,812 0 26,812
Capital Surplus, Paid-In 149,392 (1,625) 147,767
Retained Earnings 102,888 200 103,088
Total Common Stockholders Equity 279,092 (1,425) 277,667
Preferred Stock Subject to Mandatory Redemption 24,000 (24,000) 0
Preferred Stock Not Subject to Mandatory Redemption 73,500 (73,500) 0
Long Term Debt, Net 379,107 0 379,107
Short Term Notes 0 0 0
Notes Payable 0 2,202 2,202
Commercial Paper 0 0 0
Long Term Debt - Current Portion 103,569 0 103,569
Preferred Stock - Current Portion 1,500 0 1,500
Obligations Under Capital Leases 27,180 0 27,180
Obligations Under Capital Leases - Current Portion 13,159 0 13,159
Balancing amount for Capitalization and Liabilities 394,663 0 394,663
Total Capitalization and Liabilities 1,295,770 3,277 1,299,047
Gross Operating Revenue 419,089 0 419,089
Federal and State Income Taxes Expense 30,397 (3,475) 26,922
Other Operating Expenses 326,816 0 326,816
Total Operating Expenses 357,213 (3,475) 353,738
Operating Income (Loss) 61,876 3,475 65,351
Other Income (Loss), Net 5,913 0 5,913
Income Before Interest Charges 67,789 3,475 71,264
Total Interest Charges 28,585 285 28,870
Net Income 33,980 200 34,180
Preferred Stock Dividends 5,224 (5,759) (535)
Earnings Available For Common Stock 33,980 200 34,180
Common Stock Dividends 28,946 0 28,946
Total Annual Interest Charges on All Bonds 27,566 0 27,566
Cash Flow from Operations 61,665 3,475 65,140
Earnings per Share - Primary $0.274 $0.002 $0.275
Earnings per Share - Fully Diluted $0.254 $0.001 $0.255
Earnings per share based on 12-month average NU common shares outstanding (124,137,000 NU shares).
Fully diluted earnings per share include NU shares sold to company ESOP but not allocated to system employees (9,742,220
NU shares).
</TABLE>
<TABLE>
NORTHEAST UTILITIES CONSOLIDATED Exhibit G.3
FINANCIAL DATA SCHEDULE (unaudited) Page 1 of 1
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENT TRANSACTION
<S> <C> <C> <C>
Total Net Utility Plant 6,650,612 0 6,650,612
Other Property and Investments 369,078 0 369,078
Total Current Assets 809,746 0 809,746
Total Deferred Charges 3,005,399 8,168 3,013,567
Balancing amount for Total Assets 0 0 0
Total Assets 10,834,835 8,168 10,843,003
Common Stock 671,045 0 671,045
Capital Surplus, Paid-In 677,734 (7,021) 670,947
Retained Earnings 920,681 2,432 923,113
Total Common Stockholders Equity 2,269,460 (4,356) 2,265,104
Preferred Stock Subject to Mandatory Redemption 379,000 (99,000) 280,000
Preferred Stock Not Subject to Mandatory Redemption 239,700 (148,500) 91,200
Long Term Debt, Net 3,970,456 0 3,970,456
Short Term Notes 0 0 0
Notes Payable 146,000 10,024 156,024
Commercial Paper 0 0 0
Long Term Debt - Current Portion 385,465 0 385,465
Preferred Stock - Current Portion 1,500 0 1,500
Obligations Under Capital Leases 187,546 0 187,546
Obligations Under Capital Leases - Current Portion 74,587 0 74,587
Balancing amount for Capitalization and Liabilities 3,181,125 250,000 3,431,125
Total Capitalization and Liabilities 10,834,839 8,168 10,843,007
Gross Operating Revenue 3,637,075 0 3,637,075
Federal and State Income Taxes Expense 270,129 (9,189) 260,940
Other Operating Expenses 2,880,914 0 2,880,914
Total Operating Expenses 3,151,043 (9,189) 3,141,854
Operating Income (Loss) 486,032 9,189 495,221
Other Income (Loss), Net 78,793 0 78,793
Income Before Interest Charges 564,825 9,189 574,014
Total Interest Charges 285,264 1,099 286,363
Net Income 233,394 2,432 235,826
Preferred Stock Dividends 46,167 (16,217) 29,950
Earnings Available For Common Stock 233,394 2,432 235,826
Common Stock Dividends 219,036 0 219,036
Total Annual Interest Charges on All Bonds 312,284 0 312,284
Cash Flow from Operations 333,960 9,189 343,149
Earnings per Share - Primary $1.88 $0.02 $1.90
Earnings per Share - Fully Diluted $1.74 $0.02 $1.76
Earnings per share based on 12-month average NU common shares outstanding (124,137,000 NU shares).
Fully diluted earnings per share include NU shares sold to company ESOP but not allocated to system employees (9,742,220
NU shares).
</TABLE>
Exhibit I
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- ____________)
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
___________________, 1994
The Connecticut Light and Power Company and Western Massachusetts Electric
Company (70-_______)
The Connecticut Light and Power Company ("CL&P"), Selden Street,
Berlin, Connecticut 06037, and Western Massachusetts Electric Company
("WMECO"), 174 Brush Hill Avenue, West Springfield, Massachusetts 01089,
both wholly-owned electric utility subsidiaries of Northeast Utilities
("NU"), a registered holding company, have filed a declaration pursuant to
Sections 6(a), 7, 9(a), 10, and 12(b) of the Act and Rules 45, 53, and 54
thereunder.
Each company proposes to organize a special purpose limited
partnership (each, an "Issuing Partnership") for the sole purpose of
issuing the limited partnership interests described below. Each company
will act as the general partner of its Issuing Partnership, and either (a)
Northeast Utilities Service Company, an existing wholly-owned subsidiary of
NU which provides services to CL&P, WMECO, and the other NU subsidiaries,
will act as the initial limited partner of the Issuing Partnerships, or (b)
each company will organize a special purpose, wholly-owned corporation for
the sole purpose of acting as the initial limited partner of the related
Issuing Partnership. The initial limited partners will withdraw from the
Issuing Partnerships upon, or shortly after, the issuance of the preferred
limited partnership interests described below.
Each company will make an equity contribution to its Issuing
Partnership at the time such partnership is first formed and thereby
acquire all of the general partnership interest in such Issuing
Partnership. The equity contributions of each general partner to its
Issuing Partnership will at all times constitute at least 3% of the
aggregate equity contributions by all partners to such Issuing Partnership.
In addition, each company will, indirectly through the initial limited
partner, make an equity contribution to its Issuing Partnership at the time
such partnership is first formed and thereby acquire all of the initial
limited partnership interest in its Issuing Partnership. Upon the
withdrawal of the initial limited partner from each of the Issuing
Partnerships, each initial limited partner will be entitled to withdraw its
equity contribution.
The Issuing Partnerships will issue and sell, from time to time in one
or more series through August 31, 1996, preferred limited partnership
interests ("Preferred Partnership Interests"), $25 per share stated
liquidation preference, in an aggregate amount of (a) in the case of CL&P,
up to $150 million, and (b) in the case of WMECO, up to $100 million. Each
company's Preferred Partnership Interests will be registered under the
Securities Act of 1933, as amended, under registration statements filed on
Form S-3. The holders of the Preferred Partnership Interests will be the
limited partners of the Issuing Partnerships, and the amounts paid by such
holders for the Preferred Partnership Interests will be treated as capital
contributions to the Issuing Partnerships.
<PAGE>
-2-
Each company will issue and sell, from time to time in one or more
series, subordinated debentures (the "Subordinated Debentures") to its
Issuing Partnership. Each Issuing Partnership will use the proceeds from
the sale of its Preferred Partnership Interests, plus the equity
contributions made to it by its general partner, to purchase the CL&P
Subordinated Debentures or the WMECO Subordinated Debentures, as the case
may be. Each company's Subordinated Debentures will be registered pursuant
to the related registration statement. The Subordinated Debentures will be
issued pursuant to, and governed by, indentures that will be qualified
under the Trust Indenture Act of 1939, as amended (the "Indentures").
Each series of the Subordinated Debentures will mature at such time,
not more than 50 years from their date of issuance, as the companies may
determine at the time of issuance. The Indentures may permit the
Subordinated Debentures to be issued with an initial term of less than 50
years that may be extended at the companies' option to up to 50 years from
the date of issuance. Prior to maturity, the companies will pay interest
only, at a fixed rate set forth in the Indentures, on the Subordinated
Debentures. The distribution rates, payment dates, redemption, and other
similar provisions of each series of Preferred Partnership Interests will
be substantially identical to the interest rates, payment dates,
redemption, and other provisions of the Subordinated Debentures relating
thereto, and will be determined by the Issuing Partnerships at the time of
issuance. The interest paid by the companies on their respective
Subordinated Debentures will constitute the only income of the Issuing
Partnerships and will be used by the Issuing Partnerships to pay monthly
distributions on the Preferred Partnership Interests.
Each company may also enter into a guaranty (each a "Guaranty" and,
collectively, the "Guaranties") pursuant to which it will unconditionally
guarantee (i) payment of distributions on the Preferred Partnership
Interests, if and to the extent its respective Issuing Partnership has
declared distributions out of funds legally available therefor, (ii)
payments to the holders of Preferred Partnership Interests of amounts due
upon liquidation of its Issuing Partnership or redemption of the Preferred
Partnership Interests, and (iii) certain additional "gross up" amounts that
may be payable in respect of the Preferred Partnership Interests, as
described in the declaration. Each Guaranty will be registered pursuant to
the related registration statement.
Each company's Subordinated Debentures and related Guaranty will be
subordinate to all other existing and future indebtedness for borrowed
money of the company. Each company will have the right to defer payment of
interest on its Subordinated Debentures for up to 60 months. However,
neither company will be permitted to declare and pay dividends on any class
of its equity securities unless all payments due under its Subordinated
Debentures and Guaranty (including any payments previously deferred) have
been made.
Distributions on the Preferred Partnership Interests will be made
monthly, will be cumulative, and will be mandatory to the extent that the
Issuing Partnership has legally available funds and sufficient cash for
such purposes. The availability of such funds will depend on the Issuing
Partnership's receipt of the amounts due under the related Subordinated
Debentures. The Issuing Partnerships will have the right to defer
distributions on the Preferred Partnership Interests for up to 60 months,
<PAGE>
-3-
but only if and to the extent that the related company defers the interest
payments on the Subordinated Debentures. If distributions on the Preferred
Partnership Interests (including all previously deferred distributions, if
any) are so deferred for 18 consecutive months, then the holders of
Preferred Partnership Interests will have the right to appoint a special
representative to enforce the Issuing Partnership's rights under the
related Subordinated Debentures and Guaranty, including, after failure to
pay distributions for 60 consecutive months, to require the declaration and
payment of distributions to holders of Preferred Partnership Interests.
It is expected that the interest payments by each company on its
Subordinated Debentures will be deductible for federal income tax purposes
and that its Issuing Partnership will be treated as a partnership for
federal income tax purposes. Consequently, the holders of Preferred
Partnership Interests and the general partners will be deemed to have
received partnership distributions, not dividends, from the Issuing
Partnerships and will not be entitled to any "dividend received deduction"
under the Internal Revenue Code.
The Preferred Partnership Interests will be subject to redemption in
whole or part on and after a specified date (the "Earliest Redemption
Date") at the option of the Issuing Partnership, with the consent of its
related company, at a price equal to their stated liquidation preference
plus any accrued and unpaid distributions. The Earliest Redemption Date
will be determined based on, among other factors, market conditions at the
time of issuance, but will be not later than 10 years after the date of
issuance. As described in the declaration, the Preferred Partnership
Interests may also be subject to other optional and mandatory redemption
provisions. The companies also expect that, upon the occurrence of certain
events specified in the declaration, each company may also have the right
to exchange its Subordinated Debentures for the Preferred Partnership
Interests or to otherwise distribute the Subordinated Debentures to the
holders of Preferred Partnership Interests, whereupon the Preferred
Partnership Interests would be cancelled and nullified. If, as a result of
(a) the Subordinated Debentures not being treated as indebtedness for
federal income tax purposes, or (b) the Issuing Partnership not being
treated as a partnership for federal income tax purposes, the Issuing
Partnership is required by applicable tax laws to withhold or deduct from
payments on the Preferred Partnership Interests amounts which would not
otherwise be required to be withheld or deducted, the Issuing Partnership
may also have the obligation, if the Preferred Partnership Interests are
not redeemed or replaced, to "gross up" such payments so that the holders
of Preferred Partnership Interests will receive the same payment after such
withholding or deduction as they would have received if no such withholding
or deduction were required. In such latter event, the Guaranties (if
issued) would also cover any such "gross up" obligations.
In the event of any voluntary or involuntary liquidation, dissolution,
or winding up of the Issuing Partnership, holders of Preferred Partnership
Interests will be entitled to receive, out of the assets of the Issuing
Partnerships available for distribution to its limited partners, before any
distribution of assets to the general partner, an amount equal to the
stated liquidation preference of the Preferred Partnership Interests plus
any accrued and unpaid distributions.
<PAGE>
-4-
As described in the declaration, each of the companies proposes to use
substantially all of the proceeds of the proposed transactions to lower
their after-tax cost of capital and/or improve the quality of their
respective capital structures by redeeming or otherwise reacquiring a
portion of their outstanding fixed rate preferred stock and/or Dutch
Auction Rate Transferable Securities.
The Preferred Partnership Interests will initially be marketed and
sold pursuant to underwriting agreements (the "Underwriting Agreements") to
be entered into by each company, its Issuing Partnership, and an
underwriter or underwriters to be selected by each company. Under the
terms of the Underwriting Agreements, each underwriter will purchase the
Preferred Partnership Interests directly from the Issuing Partnership and
then sell the Preferred Partnership Interests to the public. Each company
will pay an underwriting fee of up to 3.50% of the principal amount of its
Issuing Partnership's Preferred Partnership Interests to be purchased by
such underwriter.
Based on market conditions, tax laws, and the views of the rating
agencies, the companies may conclude that they can substantially obtain the
benefits of the proposed transactions by directly issuing their
Subordinated Debentures in a public offering. In such event, the companies
may elect to undertake such public offerings directly without organizing
the Issuing Partnerships and causing the issuance of the Preferred
Partnership Interests.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
DBH809/usr2/id15/work/MIPS/U1.NOTICE
July 28, 1994; 3:31pm
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY Exhibit 1.1
BALANCE SHEET (unaudited) Page 1 of 2
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENTS TRANSACTION
------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
UTILITY PLANT, AT ORIGINAL COST:
ELECTRIC $5,946,519 5,946,519
OTHER 0 0
------------- -------------- --------------
5,946,519 5,946,519
LESS: ACCUMULATED PROVISION FOR
DEPRECIATION 2,057,944 2,057,944
------------- -------------- --------------
3,888,575 3,888,575
CONSTRUCTION WORK IN PROGRESS 132,170 132,170
NUCLEAR FUEL, NET 163,041 163,041
------------- -------------- --------------
TOTAL NET UTILITY PLANT 4,183,786 4,183,786
------------- -------------- --------------
OTHER PROPERTY AND INVESTMENTS:
OTHER PROPERTY 14,039 14,039
INVESTMENTS IN REGIONAL NUCLEAR GENERATING
COMPANIES AND SUBSIDIARIES, AT EQUITY 54,276 54,276
NUCLEAR DECOMMISSIONING TRUSTS 161,442 161,442
OTHER, AT COST 137 137
------------- -------------- --------------
229,894 229,894
------------- -------------- --------------
CURRENT ASSETS:
144,940 (1)
CASH AND SPECIAL DEPOSITS 1,958 (144,940) (2) 1,958
NOTES AND ACCOUNTS RECEIVABLE, NET 239,999 239,999
ACCRUED UTILITY REVENUES 76,874 76,874
FUEL, MATERIAL AND SUPPLIES, AT AVERAGE COST 63,759 63,759
PREPAYMENTS AND OTHER 53,506 53,506
------------- -------------- --------------
436,096 0 436,096
------------- -------------- --------------
DEFERRED CHARGES: (169) (5)
UNAMORTIZED DEBT EXPENSE 8,788 5,060 (1) 13,679
ENERGY ADJUSTMENT CLAUSES, NET 11,867 11,867
CANCELLED NUCLEAR PROJECT 5,605 5,605
DEFERRED COSTS 324,082 324,082
SPENT FUEL DISPOSAL COSTS (1,079) (1,079)
UNRECOVERED CONTRACT OBLIGATION-YAEC 81,335 81,335
SFAS 109 ASSET 1,005,040 1,005,040
OTHER 62,698 62,698
------------- -------------- --------------
1,498,336 4,891 1,503,227
------------- -------------- --------------
TOTAL ASSETS $6,348,112 $4,891 $6,353,003
============= ============== ==============
</TABLE>
<PAGE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY Exhibit 1.1
BALANCE SHEET (unaudited) Page 2 of 2
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENTS TRANSACTION
------------- -------------- --------------
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $122,229 122,229
(5,340) (2)
CAPITAL SURPLUS, PAID IN 630,732 178 (5) 625,570
RETAINED EARNINGS 773,643 2,229 775,872
------------- -------------- --------------
TOTAL COMMON STOCKHOLDER'S EQUITY 1,526,604 (2,933) 1,523,671
CUMULATIVE PREFERRED STOCK NOT SUBJECT TO
MANDATORY REDEMPTION 166,200 (75,000) (2) 91,200
CUMULATIVE PREFERRED STOCK SUBJECT TO
MANDATORY REDEMPTION 230,000 (75,000) (2) 155,000
LONG-TERM DEBT, NET 1,712,682 1,712,682
------------- -------------- --------------
TOTAL CAPITALIZATION 3,635,486 (152,933) 3,482,553
------------- -------------- --------------
MINORITY INTEREST - COMMON EQUITY OF SUBS 150,000 (1) 150,000
OBLIGATIONS UNDER CAPITAL LEASES 135,146 135,146
------------- -------------- --------------
CURRENT LIABILITIES:
NOTES PAYABLE TO ASSOCIATED COMPANIES 133,750 133,750
(5,711) (4)
13,125 (3)
(10,458) (3)
468 (3)
NOTES PAYABLE TO BANKS 65,000 10,400 (2) 72,824
COMMERCIAL PAPER 0 0
LONG-TERM DEBT AND PREFERRED STOCK -
CURRENT PORTION 177,020 177,020
OBLIGATIONS UNDER CAPITAL LEASES -
CURRENT PORTION 56,799 56,799
ACCOUNTS PAYABLE 120,211 120,211
ACCRUED TAXES 81,098 81,098
ACCRUED INTEREST 26,926 26,926
OTHER 30,735 30,735
------------- -------------- --------------
691,539 7,824 699,363
------------- -------------- --------------
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES 1,563,885 1,563,885
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS 152,916 152,916
DEFERRED CONTRACT OBLIGATION-YAEC 81,335 81,335
OTHER 75,733 75,733
------------- -------------- --------------
1,873,869 0 1,873,869
------------- -------------- --------------
OPERATING RESERVES 12,074 0 12,074
------------- -------------- --------------
TOTAL CAPITALIZATION AND LIABILITIES $6,348,114 4,891 $6,353,005
============= ============== ==============
</TABLE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY
INCOME STATEMENT (unaudited) Exhibit 1.2
12 Months Ended March 31, 1994 Page 1 of 1
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENTS TRANSACTION
------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATING REVENUES $2,358,731 2,358,731
------------- -------------- --------------
OPERATING EXPENSES:
OPERATION -
FUEL 227,675 227,675
PURCHASED AND INTERCHANGE POWER, NET 383,134 383,134
OTHER 630,673 630,673
MAINTENANCE 180,337 180,337
DEPRECIATION 221,491 221,491
AMORTIZATION/DEFERRAL OF 0
REGULATORY ASSETS, NET 114,712 114,712
FEDERAL AND STATE INCOME TAXES 167,930 (5,711) (4) 162,219
TAXES OTHER THAN INCOME TAXES 171,088 171,088
------------- -------------- --------------
TOTAL OPERATING EXPENSES 2,097,040 (5,711) 2,091,329
------------- -------------- --------------
OPERATING INCOME 261,691 5,711 267,402
------------- -------------- --------------
OTHER INCOME:
AFUDC-OTHER FUNDS (18) (18)
DEFERRED NUCLEAR PLANTS RETURN - OTHER FUNDS 20,650 20,650
EQUITY IN EARNINGS OF REGIONAL NUCLEAR
GENERATING COMPANIES 6,473 6,473
OTHER, NET 588 588
INCOME TAXES - CREDIT 4,727 4,727
------------- -------------- --------------
OTHER INCOME, NET 32,420 0 32,420
------------- -------------- --------------
INCOME BEFORE INTEREST CHARGES 294,111 5,711 299,822
------------- -------------- --------------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 121,655 121,655
OTHER INTEREST 10,265 10,265
INTEREST ON NOTES PAYABLE TO BANKS 468 (3) 468
ALLOWANCE FOR BORROWED FUNDS USED DURING
CONSTRUCTION (1,887) (1,887)
DEFERRED NUCLEAR PLANTS RETURN - BORROWED FUNDS,
NET OF INCOME TAXES (12,239) (12,239)
AMORT OF DEBT DISCOUNT, PREMIUM & EXPENSE, NET 7,872 347 (5) 8,219
------------- -------------- --------------
INTEREST CHARGES, NET 125,666 815 126,481
------------- -------------- --------------
INCOME BEFORE MIN. INTEREST and PREF. DIVIDENDS $168,445 $4,896 $173,341
MINORITY INTEREST IN EARNINGS OF SUBS 13,125 (3) 13,125
------------- -------------- --------------
INCOME BEFORE PREFERRED DIVIDENDS 168,445 (8,229) 160,216
PREFERRED STOCK DIVIDENDS 27,693 (10,458) (3) 17,235
------------- -------------- --------------
EARNINGS AVAILABLE FOR COMMON STOCK 140,752 2,229 142,981
------------- -------------- --------------
</TABLE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY
STATEMENT OF RETAINED EARNINGS (unaudited) Exhibit 1.3
12 Months Ended March 31, 1994 Page 1 of 1
(Thousands of Dollars)
Financial Statement 2.2
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENT TRANSACTION
------------- -------------- --------------
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $792,891 792,891
NET INCOME 168,445 4,896 173,341
CASH DIVIDENDS ON PREFERRED STOCK (27,693) 10,458 (17,235)
CASH DISTRIBUTION ON MINORITY INTEREST (13,125) (13,125)
CASH DIVIDENDS ON COMMON STOCK (160,000) (160,000)
------------- -------------- --------------
BALANCE AT END OF PERIOD $773,643 $2,229 $775,872
============= ============== ==============
</TABLE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY
CAPITAL STRUCTURE (unaudited)
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS % ADJUSTMENT TRANSACTION %
----------------------- -------------- ----------------------
<S> <C> <C> <C> <C> <C>
LONG-TERM DEBT, NET $1,712,682
- CURRENT PORTION 177,020
TOTAL LONG-TERM DEBT 1,889,702 49.57% 1,889,702 51.64%
PREF. STOCK SUBJECT TO MANDATORY REDEMPTION 230,000
- CURRENT PORTION 0
TOTAL PREFERRED MANDATORY REDEMPTION 230,000 (75,000) 155,000
PREF. STOCK NOT SUBJECT TO MANDATORY REDEMP. 166,200 (75,000) 91,200
TOTAL PREFERRED STOCK 396,200 10.39% (150,000) 246,200 6.73%
COMMON STOCK EQUITY 1,526,604 40.04% (2,933) 1,523,671 41.64%
------------- ------- -------------- ----------------------
TOTAL CAPITALIZATION $3,812,506 100.00% ($152,933) $3,659,573 100.00%
============= ======= ============== ============== =======
Capitalization ratios do not include $150 million of Minority Interest - Common Equity of Subsidiaries.
</TABLE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY Exhibit 1.4
EXPLANATION OF PRO FORMA ADJUSTMENTS Page 1 of 2
(Thousands of Dollars)
<S> <C> <C>
1) Cash and Special Deposits 144,940
Unamortized Debt Expense 5,060
Minority Interest - Common Equity of Subs 150,000
To reflect the consolidation of $150 million MIPS on books of CL&P and $5.06 million issuance expense.
2) Cumulative Preferred Stock Subject to Mandatory Redemption 75,000
Cumulative Preferred Stock Not Subject to Mandatory Redemption 75,000
Capital Surplus, Paid In 5,340
Notes Payable to Banks 10,400
Cash and Special Deposits 144,940
To record redemption of principal and payment of $5.34 million redemption or market premium as follows:
Principal Premium
Cum. Preferred Stock Subject to Mandatory Redemption:
Series 1989, 9% 75,000 4,500
Cum. Preferred Stock Not Subject to Mandatory Redemption:
DARTS 50,000 0
1968 Series 6.56% 10,000 288
1968 Series 3.24G 15,000 552
TOTAL Preferred Redemptions 150,000 5,340
3) A. Minority Interest in Earnings of Subs ($150M @8.7%) 13,125
Notes Payable to Banks 13,125
B. Notes Payable to Banks 10,458
Preferred Stock Dividends 10,458
C. Interest on Notes Payable to Banks ($10,400 @ 4.5%) 468
Notes Payable to Banks 468
To record income statement impact of MIPS outstanding for one year:
Principal Rate Interest
Minority Interest - Common Equity of Subs 150,000 8.75% 13,125
To record the decrease in Preferred Stock Dividends as follows:
Principal Rate Dividend
Series 1989 75,000 9.00% 6,750
DARTS 50,000 4.16% 2,080
1968 Series 6.56% 10,000 6.56% 656
1968 Series 3.24G 15,000 6.48% 972
$10,458
To reflect change in interest expense due to change in Notes Payable to Banks.
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY Exhibit 1.4
EXPLANATION OF PRO FORMA ADJUSTMENTS Page 2 of 2
(Thousands of Dollars)
4) Notes Payable to Banks 5,711
Federal and State Income Taxes 5,711
To reflect change in income taxes due to the increase in interest expense on Notes Payable to Banks, the deductible interest
on the subordinated debentures net of the general partner's share of the income of the limited partnership, and to reflect
change in income tax expense due to 30-year amortization of $5.06 million issuance expense (assume an effective tax rate
of 41.5%).
5) Amortization of Debt Discount, Premium & Expense 347
Unamortized Debt Expense 169
Capital Surplus, Paid In 178
To record one year's amortization of redemption premiums and debt issuance expenses.
6) CL&P Capital LP will return CL&P's 3% equity contribution ($4.5M) and the proceeds of the MIPS issuance by CL&P Capital LP
($150M)($154.5M in total) to CL&P in exchange for a CL&P Debenture. CL&P's payments of interest and principal on the Debenture
will service corresponding obligations on CL&P's equity contribution and on the MIPS. These transactions are eliminated on
consolidation of CL&P and CL&P Capital LP's accounts and are not shown on the accompanying financial statements.
</TABLE>
<TABLE>
THE WESTERN MASSACHUSETTS ELECTRIC COMPANY Exhibit 2.1
BALANCE SHEET (unaudited) Page 1 of 2
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENTS TRANSACTION
------------- -------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
UTILITY PLANT, AT ORIGINAL COST:
ELECTRIC $1,186,810 1,186,810
OTHER 0 0
------------- -------------- ---------------
1,186,810 1,186,810
LESS: ACCUMULATED PROVISION FOR
DEPRECIATION 406,141 406,141
------------- -------------- ---------------
780,669 780,669
CONSTRUCTION WORK IN PROGRESS 27,050 27,050
NUCLEAR FUEL, NET 37,315 37,315
------------- -------------- ---------------
TOTAL NET UTILITY PLANT 845,034 845,034
------------- -------------- ---------------
OTHER PROPERTY AND INVESTMENTS:
OTHER PROPERTY 3,618 3,618
INVESTMENTS IN REGIONAL NUCLEAR GENERATING
COMPANIES AND SUBSIDIARIES, AT EQUITY 14,725 14,725
NUCLEAR DECOMMISSIONING TRUSTS 53,852 53,852
OTHER, AT COST 223 223
------------- -------------- ---------------
72,418 72,418
------------- -------------- ---------------
CURRENT ASSETS:
96,610 (1)
CASH AND SPECIAL DEPOSITS 180 (96,610) (2) 180
NOTES AND ACCOUNTS RECEIVABLE, NET 140,818 140,818
ACCRUED UTILITY REVENUES 13,206 13,206
FUEL, MATERIAL AND SUPPLIES, AT AVERAGE COST 5,871 5,871
PREPAYMENTS AND OTHER 12,557 12,557
------------- -------------- ---------------
172,632 0 172,632
------------- -------------- ---------------
DEFERRED CHARGES: (113) (5)
UNAMORTIZED DEBT EXPENSE 2,185 3,390 (1) 5,462
ENERGY ADJUSTMENT CLAUSES, NET 0 0
CANCELLED NUCLEAR PROJECT 0 0
DEFERRED COSTS 53,176 53,176
SPENT FUEL DISPOSAL COSTS (424) (424)
UNRECOVERED CONTRACT OBLIGATION-YAEC 23,239 23,239
SFAS 109 ASSET 92,102 92,102
OTHER 35,408 35,408
------------- -------------- ---------------
205,686 3,277 208,963
------------- -------------- ---------------
TOTAL ASSETS $1,295,770 $3,277 $1,299,047
============= ============== ===============
</TABLE>
<PAGE>
<TABLE>
THE WESTERN MASSACHUSETTS ELECTRIC COMPANY Exhibit 2.1
BALANCE SHEET (unaudited) Page 2 of 2
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENTS TRANSACTION
------------- ------------- -------------
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $26,812 26,812
(1,681) (2)
CAPITAL SURPLUS, PAID IN 149,392 56 (5) 147,767
RETAINED EARNINGS 102,888 200 103,088
------------- -------------- ---------------
TOTAL COMMON STOCKHOLDER'S EQUITY 279,092 (1,425) 277,667
CUMULATIVE PREFERRED STOCK NOT SUBJECT TO
MANDATORY REDEMPTION 73,500 (73,500) (2) 0
CUMULATIVE PREFERRED STOCK SUBJECT TO
MANDATORY REDEMPTION 24,000 (24,000) (2) 0
LONG-TERM DEBT, NET 379,107 379,107
------------- -------------- ---------------
TOTAL CAPITALIZATION 755,699 (98,925) 656,774
------------- -------------- ---------------
MINORITY INTEREST - COMMON EQUITY OF SUBS 100,000 (1) 100,000
OBLIGATIONS UNDER CAPITAL LEASES 27,180 27,180
------------- -------------- ---------------
CURRENT LIABILITIES:
NOTES PAYABLE TO ASSOCIATED COMPANIES 0 0
(3,475) (4)
8,750 (3)
(5,759) (3)
116 (3)
NOTES PAYABLE TO BANKS 0 2,571 (2) 2,202
COMMERCIAL PAPER 0 0
LONG-TERM DEBT AND PREFERRED STOCK -
CURRENT PORTION 105,069 105,069
OBLIGATIONS UNDER CAPITAL LEASES -
CURRENT PORTION 13,159 13,159
ACCOUNTS PAYABLE 21,252 21,252
ACCRUED TAXES 14,612 14,612
ACCRUED INTEREST 7,007 7,007
OTHER 24,117 24,117
------------- -------------- ---------------
185,216 2,202 187,418
------------- -------------- ---------------
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES 251,311 251,311
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS 35,771 35,771
DEFERRED CONTRACT OBLIGATION-YAEC 23,239 23,239
OTHER 13,943 13,943
------------- -------------- ---------------
324,264 0 324,264
------------- -------------- ---------------
OPERATING RESERVES 3,411 0 3,411
------------- -------------- ---------------
TOTAL CAPITALIZATION AND LIABILITIES $1,295,770 3,277 $1,299,047
============= ============== ===============
</TABLE>
<TABLE>
THE WESTERN MASSACHUSETTS ELECTRIC COMPANY
INCOME STATEMENT (unaudited) Exhibit 2.2
12 Months Ended March 31, 1994 Page 1 of 1
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENTS TRANSACTION
------------- -------------- ---------------
<S> <C> <C> <C> <C>
OPERATING REVENUES $419,089 419,089
------------- -------------- ---------------
OPERATING EXPENSES:
OPERATION -
FUEL 24,569 24,569
PURCHASED AND INTERCHANGE POWER, NET 41,861 41,861
OTHER 142,919 142,919
MAINTENANCE 35,173 35,173
DEPRECIATION 35,941 35,941
AMORTIZATION/DEFERRAL OF 0
REGULATORY ASSETS, NET 29,022 29,022
FEDERAL AND STATE INCOME TAXES 30,397 (3,475) (4) 26,922
TAXES OTHER THAN INCOME TAXES 17,331 17,331
------------- -------------- ---------------
TOTAL OPERATING EXPENSES 357,213 (3,475) 353,738
------------- -------------- ---------------
OPERATING INCOME 61,876 3,475 65,351
------------- -------------- ---------------
OTHER INCOME:
AFUDC-OTHER FUNDS 347 347
DEFERRED NUCLEAR PLANTS RETURN - OTHER FUNDS 1,277 1,277
EQUITY IN EARNINGS OF REGIONAL NUCLEAR
GENERATING COMPANIES 1,757 1,757
OTHER, NET 1,982 1,982
INCOME TAXES - CREDIT 550 550
------------- -------------- ---------------
OTHER INCOME, NET 5,913 0 5,913
------------- -------------- ---------------
INCOME BEFORE INTEREST CHARGES 67,789 3,475 71,264
------------- -------------- ---------------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 27,566 27,566
OTHER INTEREST 1,241 116 (3) 1,357
ALLOWANCE FOR BORROWED FUNDS USED DURING
CONSTRUCTION (481) (481)
DEFERRED NUCLEAR PLANTS RETURN - BORROWED FUNDS,
NET OF INCOME TAXES (958) (958)
AMORT OF DEBT DISCOUNT, PREMIUM & EXPENSE, NET 1,217 169 (5) 1,386
------------- -------------- ---------------
INTEREST CHARGES, NET 28,585 285 28,870
------------- -------------- ---------------
INCOME BEFORE MIN. INTEREST and PREF. DIVIDENDS $39,204 $3,191 $42,395
MINORITY INTEREST IN EARNINGS OF SUBS 8,750 (3) 8,750
------------- -------------- ---------------
INCOME BEFORE PREFERRED DIVIDENDS 39,204 (5,559) 33,645
PREFERRED STOCK DIVIDENDS 5,224 (5,759) (3) (535)
------------- -------------- ---------------
EARNINGS AVAILABLE FOR COMMON STOCK 33,980 200 34,180
------------- -------------- ---------------
</TABLE>
<TABLE>
THE WESTERN MASSACHUSETTS ELECTRIC COMPANY
STATEMENT OF RETAINED EARNINGS (unaudited) Exhibit 2.3
12 Months Ended March 31, 1994 Page 1 of 1
(Thousands of Dollars)
Financial Statement 2.2
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENT TRANSACTION
------------- ------------- -------------
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $97,854 97,854
NET INCOME 39,204 3,191 42,395
CASH DIVIDENDS ON PREFERRED STOCK (5,224) 5,759 535
CASH DISTRIBUTION ON MINORITY INTEREST (8,750) (8,750)
CASH DIVIDENDS ON COMMON STOCK (28,946) (28,946)
------------- -------------- ---------------
BALANCE AT END OF PERIOD $102,888 $200 $103,088
============= ============== ===============
</TABLE>
<TABLE>
THE WESTERN MASSACHUSETTS ELECTRIC COMPANY
CAPITAL STRUCTURE (unaudited)
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS % ADJUSTMENT TRANSACTION %
----------------------- -------------- -------------------------
<S> <C> <C> <C> <C> <C>
LONG-TERM DEBT, NET $379,107
- CURRENT PORTION 103,569
TOTAL LONG-TERM DEBT 482,676 56.17% 482,676 63.48%
PREF. STOCK SUBJECT TO MANDATORY REDEMPTION 22,500
- CURRENT PORTION 1,500
TOTAL PREFERRED MANDATORY REDEMPTION 24,000 (24,000) 0
PREF. STOCK NOT SUBJECT TO MANDATORY REDEMP. 73,500 (73,500) 0
TOTAL PREFERRED STOCK 97,500 11.35% (97,500) 0 0.00%
COMMON STOCK EQUITY 279,092 32.48% (1,425) 277,667 36.52%
------------- ------- -------------- -------------------------
TOTAL CAPITALIZATION $859,268 100.00% ($98,925) $760,343 100.00%
============= ======= ============== =============== =======
Capitalization ratios do not include $100 million of Minority Interest - Common Equity of Subsidiaries.
</TABLE>
<TABLE>
THE WESTERN MASSACHUSETTS ELECTRIC COMPANY Exhibit 2.4
EXPLANATION OF PRO FORMA ADJUSTMENTS Page 1 of 2
(Thousands of Dollars)
<S> <C> <C>
1) Cash and Special Deposits 96,610
Unamortized Debt Expense 3,390
Minority Interest - Common Equity of Subs 100,000
To reflect the consolidation of $100 million MIPS on books of WMECO and $3.39 million issuance expense.
2) Cumulative Preferred Stock Subject to Mandatory Redemption 24,000
Cumulative Preferred Stock Not Subject to Mandatory Redemption 73,500
Capital Surplus, Paid In 1,681
Notes Payable to Banks 2,571
Cash and Special Deposits 96,610
To record redemption of principal and payment of $1.681 million redemption or market premium as follows:
Principal Premium
Cum. Preferred Stock Subject to Mandatory Redemption:
Series 1987, 7.60% 24,000 979
Cum. Preferred Stock Not Subject to Mandatory Redemption:
DARTS 53,500 0
1971 Series 7.72%B 20,000 702
TOTAL Preferred Redemptions 97,500 1,681
3) A. Minority Interest in Earnings of Subs ($100M @8.75%) 8,750
Notes Payable to Banks 8,750
B. Notes Payable to Banks 5,759
Preferred Stock Dividends 5,759
C. Interest on Notes Payable to Banks ($5.071M @ 4.5%) 116
Notes Payable to Banks 116
To record income statement impact of MIPS outstanding for one year:
Principal Rate Interest
Minority Interest - Common Equity of Subs 100,000 8.75% 8,750
To record the decrease in Preferred Stock Dividends as follows:
Principal Rate Dividend
Series 1987 24,000 7.60% 1,824
DARTS 53,500 4.47% 2,391
1971 Series 7.72%B 20,000 7.72% 1,544
5,759
To reflect change in interest expense due to change in Notes Payable to Banks.
<PAGE>
THE WESTERN MASSACHUSETTS ELECTRIC COMPANY Exhibit 2.4
EXPLANATION OF PRO FORMA ADJUSTMENTS Page 2 of 2
(Thousands of Dollars)
4) Notes Payable to Banks 3,475
Federal and State Income Taxes 3,475
To reflect change in income taxes due to the increase in interest expense on Notes Payable to Banks, the deductible interest
on the subordinated debentures net of the general partner's share of the income of the limited partnership, and to reflect
change in income tax expense due to 30-year amortization of $3.39 million issuance expense (assume an effective tax rate
of 39.2%).
5) Amortization of Debt Discount, Premium & Expense 169
Unamortized Debt Expense 113
Capital Surplus, Paid in 56
To record one year's amortization of redemption premiums and debt issuance expenses.
6) WMECO Capital LP will return WMECO's 3% equity contribution ($3M) and the proceeds of the MIPS issuance by WMECO Capital LP
($100M)($103M in total) to WMECO in exchange for a WMECO Debenture. WMECO's payments of interest and principal on the
Debenture will service corresponding obligations on WMECO's equity contribution and on the MIPS. These transactions are
eliminated on consolidation of WMECO and WMECO Capital LP's accounts and are not shown on the accompanying financial
statements.
</TABLE>
<TABLE>
NORTHEAST UTILITIES CONSOLIDATED Exhibit 3.1
BALANCE SHEET (unaudited) Page 1 of 2
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENTS TRANSACTION
------------- --------------- --------------
<S> <C> <C> <C> <C>
ASSETS
UTILITY PLANT, AT ORIGINAL COST:
ELECTRIC $9,147,276 9,147,276
OTHER 142,220 142,220
------------- --------------- --------------
9,289,496 0 9,289,496
LESS: ACCUMULATED PROVISION FOR
DEPRECIATION 3,096,760 3,096,760
------------- --------------- --------------
6,192,736 0 6,192,736
CONSTRUCTION WORK IN PROGRESS 232,606 232,606
NUCLEAR FUEL, NET 225,270 225,270
------------- --------------- --------------
TOTAL NET UTILITY PLANT 6,650,612 0 6,650,612
------------- --------------- --------------
OTHER PROPERTY AND INVESTMENTS:
OTHER PROPERTY 26,778 26,778
INVESTMENTS IN REGIONAL NUCLEAR GENERATING
COMPANIES AND SUBSIDIARIES, AT EQUITY 107,779 107,779
NUCLEAR DECOMMISSIONING TRUSTS 225,735 225,735
OTHER, AT COST 8,786 8,786
------------- --------------- --------------
369,078 0 369,078
------------- --------------- --------------
CURRENT ASSETS:
(241,550) (2)
CASH AND SPECIAL DEPOSITS 34,285 241,550 (1) 34,285
NOTES AND ACCOUNTS RECEIVABLE, NET 401,192 401,192
ACCRUED UTILITY REVENUES 122,805 122,805
FUEL, MATERIAL AND SUPPLIES, AT AVERAGE COST 195,473 195,473
PREPAYMENTS AND OTHER 55,991 55,991
------------- --------------- --------------
809,746 0 809,746
------------- --------------- --------------
DEFERRED CHARGES: (282) (5)
UNAMORTIZED DEBT EXPENSE 36,944 8,450 (1) 45,112
ENERGY ADJUSTMENT CLAUSES, NET 11,867 11,867
CANCELLED NUCLEAR PROJECT 5,605 5,605
DEFERRED COSTS 611,298 611,298
SPENT FUEL DISPOSAL COSTS (1,504) (1,504)
UNRECOVERED CONTRACT OBLIGATION-YAEC 126,576 126,576
REGULATORY ASSET, NET 746,976 746,976
SFAS 109 ASSET 1,338,629 1,338,629
OTHER 129,008 129,008
------------- --------------- --------------
3,005,399 8,168 3,013,567
------------- --------------- --------------
TOTAL ASSETS $10,834,835 $8,168 $10,843,003
============= =============== ==============
</TABLE>
<PAGE>
<TABLE>
NORTHEAST UTILITIES CONSOLIDATED Exhibit 3.1
BALANCE SHEET (unaudited) Page 2 of 2
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENTS TRANSACTION
------------- ------------- -------------
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $671,045 671,045
234 (5)
CAPITAL SURPLUS, PAID IN 677,734 (7,021) (2) 670,947
RETAINED EARNINGS 920,681 2,432 923,113
------------- --------------- --------------
TOTAL COMMON STOCKHOLDER'S EQUITY 2,269,460 (4,356) 2,265,104
CUMULATIVE PREFERRED STOCK NOT SUBJECT TO
MANDATORY REDEMPTION 239,700 (148,500) (2) 91,200
CUMULATIVE PREFERRED STOCK SUBJECT TO
MANDATORY REDEMPTION 379,000 (99,000) (2) 280,000
LONG-TERM DEBT, NET 3,970,456 3,970,456
------------- --------------- --------------
TOTAL CAPITALIZATION 6,858,616 (251,856) 6,606,760
------------- --------------- --------------
MINORITY INTEREST - COMMON EQUITY OF SUBS 250,000 (1) 250,000
OBLIGATIONS UNDER CAPITAL LEASES 187,546 187,546
------------- --------------- --------------
CURRENT LIABILITIES:
NOTES PAYABLE TO ASSOCIATED COMPANIES 0 0
(9,189) (4)
21,875 (3)
(16,217) (3)
584 (3)
NOTES PAYABLE TO BANKS 146,000 12,971 (2) 156,024
COMMERCIAL PAPER 0 0
LONG-TERM DEBT AND PREFERRED STOCK -
CURRENT PORTION 386,965 386,965
OBLIGATIONS UNDER CAPITAL LEASES -
CURRENT PORTION 74,587 74,587
ACCOUNTS PAYABLE 218,871 218,871
ACCRUED TAXES 93,109 93,109
ACCRUED INTEREST 82,534 82,534
OTHER 171,827 171,827
------------- --------------- --------------
1,173,893 10,024 1,183,917
------------- --------------- --------------
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES 1,926,489 1,926,489
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS 199,293 199,293
DEFERRED CONTRACT OBLIGATION-YAEC 126,576 126,576
OTHER 338,591 338,591
------------- --------------- --------------
2,590,949 0 2,590,949
------------- --------------- --------------
OPERATING RESERVES 23,835 0 23,835
------------- --------------- --------------
TOTAL CAPITALIZATION AND LIABILITIES $10,834,839 8,168 $10,843,007
============= =============== ==============
</TABLE>
<TABLE>
NORTHEAST UTILITIES CONSOLIDATED
INCOME STATEMENT (unaudited) Exhibit 3.2
12 Months Ended March 31, 1994 Page 1 of 1
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENTS TRANSACTION
------------- --------------- --------------
<S> <C> <C> <C> <C>
OPERATING REVENUES $3,637,075 3,637,075
------------- --------------- --------------
OPERATING EXPENSES:
OPERATION -
FUEL 335,616 335,616
PURCHASED AND INTERCHANGE POWER, NET 533,809 533,809
OTHER 970,233 970,233
MAINTENANCE 272,558 272,558
DEPRECIATION 323,894 323,894
AMORTIZATION/DEFERRAL OF
REGULATORY ASSETS, NET 201,862 201,862
FEDERAL AND STATE INCOME TAXES 270,129 (9,189) (4) 260,940
<S> <C> <C> <C> <C>
TAXES OTHER THAN INCOME TAXES 242,942 242,942
------------- --------------- --------------
TOTAL OPERATING EXPENSES 3,151,043 (9,189) 3,141,854
------------- --------------- --------------
OPERATING INCOME 486,032 9,189 495,221
------------- --------------- --------------
OTHER INCOME:
AFUDC-OTHER FUNDS 821 821
DEFERRED NUCLEAR PLANTS RETURN - OTHER FUNDS 34,882 34,882
EQUITY IN EARNINGS OF REGIONAL NUCLEAR
GENERATING COMPANIES 13,079 13,079
OTHER, NET 5,521 5,521
INCOME TAXES - CREDIT 24,490 24,490
------------- --------------- --------------
OTHER INCOME, NET 78,793 0 78,793
------------- --------------- --------------
INCOME BEFORE INTEREST CHARGES 564,825 9,189 574,014
------------- --------------- --------------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 312,284 312,284
OTHER INTEREST 14,743 584 (3) 15,327
ALLOWANCE FOR BORROWED FUNDS USED DURING
CONSTRUCTION (3,231) (3,231)
DEFERRED NUCLEAR PLANTS RETURN - BORROWED FUNDS,
NET OF INCOME TAXES (51,297) (51,297)
AMORT OF DEBT DISCOUNT, PREMIUM & EXPENSE, NET 12,765 516 (5) 13,281
------------- --------------- --------------
INTEREST CHARGES, NET 285,264 1,099 286,363
------------- --------------- --------------
NET INCOME BEFORE MIN. INTEREST and PREF. DIVIDENDS $279,561 $8,089 $287,650
MINORITY INTEREST IN EARNINGS OF SUBS 21,875 21,875
------------- --------------- --------------
INCOME BEFORE PREFERRED DIVIDENDES 279,561 ($13,786) $265,775
PREFERRED STOCK DIVIDENDS 46,167 (16,217) 29,950
------------- --------------- --------------
EARNINGS AVAILABLE FOR COMMON STOCK 233,394 2,432 235,826
------------- --------------- --------------
</TABLE>
<TABLE>
NORTHEAST UTILITIES CONSOLIDATED
STATEMENT OF RETAINED EARNINGS (unaudited) Exhibit 3.3
12 Months Ended March 31, 1994 Page 1 of 1
(Thousands of Dollars)
Financial Statement 2.2
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS ADJUSTMENT TRANSACTION
------------- ------------- -------------
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $906,323 906,323
NET INCOME 279,561 8,089 287,650
CASH DIVIDENDS ON PREFERRED STOCK (46,167) 16,217 (29,950)
CASH DISTRIBUTION ON MINORITY INTEREST (21,875) (21,875)
CASH DIVIDENDS ON COMMON STOCK (219,036) (219,036)
------------- --------------- --------------
BALANCE AT END OF PERIOD $920,681 $2,432 $923,113
============= =============== ==============
</TABLE>
<TABLE>
NORTHEAST UTILITIES CONSOLIDATED
CAPITAL STRUCTURE (unaudited)
As of March 31, 1994
(Thousands of Dollars)
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOKS % ADJUSTMENT TRANSACTION %
---------------------- --------------- ----------------------
<S> <C> <C> <C> <C> <C>
LONG-TERM DEBT, NET $3,970,456
- CURRENT PORTION 385,465
TOTAL LONG-TERM DEBT 4,355,921 60.13% 0 4,355,921 62.30%
PREF. STOCK SUBJECT TO MANDATORY REDEMPTION 377,500
- CURRENT PORTION 1,500
TOTAL PREFERRED MANDATORY REDEMPTION 379,000 (99,000) 280,000
PREF. STOCK NOT SUBJECT TO MANDATORY REDEMP. 239,700 (148,500) 91,200
TOTAL PREFERRED STOCK 618,700 8.54% (247,500) 371,200 5.31%
COMMON STOCK EQUITY 2,269,460 31.33% (4,356) 2,265,104 32.39%
------------- ------- --------------- ----------------------
TOTAL CAPITALIZATION $7,244,081 100.00% ($251,856) $6,992,225 100.00%
============= ======= =============== ============== =======
Capital Structure excludes $250 million of Minority Interest - Common Equity of Subsidiaries.
</TABLE>
<TABLE>
NORTHEAST UTILITIES Exhibit 3.4
EXPLANATION OF PRO FORMA ADJUSTMENTS Page 1 of 2
(Thousands of Dollars)
<S> <C> <C>
1) Cash and Special Deposits 241,550
Unamortized Debt Expense 8,450
Minority Interest - Common Equity of Subs 250,000
To reflect the consolidation of $247.5 million MIPS on books of CL&P and WMECO; and $5.06 million issuance expense for CL&P,
and $3.39 million issuance expense for WMECO.
2) Cumulative Preferred Stock Subject to Mandatory Redemption 99,000
Cumulative Preferred Stock Not Subject to Mandatory Redemption 148,500
Capital Surplus, Paid In 7,021
Notes Payable to Banks 12,971
Cash and Special Deposits 241,550
To record redemption of principal and payment of $7.021 million redemption or market premium as follows:
Principal Premium
Cum. Preferred Stock Subject to Mandatory Redemption:
Series 1989, 9%, CL&P 75,000 4,500
Series 1987, 7.60%, WMECO 24,000 979
99,000 5,479
Cum. Preferred Stock Not Subject to Mandatory Redemption:
DARTS, CL&P 50,000 0
1968 Series 6.56%, CL&P 10,000 288
1968 Series 3.24G, CL&P 15,000 552
DARTS, WMECO 53,500 0
1971 Series 7.72%B, WMECO 20,000 702
148,500 1,542
Total redemption or market premium = 7,021
3) A. Minority Interest in Earnings of Subs ($250M @ 8.75%) 21,875
Notes Payable to Banks 21,875
B. Notes Payable to Banks 16,217
Preferred Stock Dividends 16,217
C. Interest on Notes Payable to Banks ($12.971M @ 4.5%) 584
Notes Payable to Banks 584
To record income statement impact of MIPS outstanding for one year:
Principal Rate Interest
Minority Interest - Common Equity of Subs 250,000 8.75% 21,875
To record the decrease in Preferred Stock Dividends as follows:
Principal Rate Dividend
Series 1989, CL&P 75,000 9.00% 6,750
DARTS, CL&P 50,000 4.16% 2,080
1968 Series 6.56%, CL&P 10,000 6.56% 656
1968 Series 3.24G, CL&P 15,000 6.48% 972
Series 1987, 7.60%, WMECO 24,000 7.60% 1,824
1971 Series 7.72%B, WMECO 20,000 7.72% 1,544
DARTS, WMECO 53,500 4.47% 2,391
$16,217
To reflect change in interest expense due to change in Notes Payable to Banks.
<PAGE>
NORTHEAST UTILITIES Exhibit 3.4
EXPLANATION OF PRO FORMA ADJUSTMENTS Page 2 of 2
(Thousands of Dollars)
4) Notes Payable to Banks 9,189
Federal and State Income Taxes 9,189
To reflect change in income taxes due to the increase in interest expense on Notes Payable to Banks, the deductible interest
on the subordinated debentures net of the general partner's share of the income of the limited partnership, and to reflect
change in income tax expense due to 30-year amortization of $8.45 million issuance expense.
5) Amortization of Debt Disc, Premium & Expense 516
Unamortized Debt Expense 282
Capital Surplus, Paid In 234
To record one year's amortization of redemption premiums and debt issuance expenses.
</TABLE>
