File No. 70-7320
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2 TO
FORM U-1
APPLICATION/DECLARATION WITH RESPECT TO
CREDIT FACILITY SUBSTITUTION
under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
THE CONNECTICUT LIGHT AND POWER COMPANY
SELDEN STREET
BERLIN, CONNECTICUT 06037
(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
communication to
David R. McHale Jane P. Seidl, Esq.
Manager-Project and Short-Term Finance Senior Counsel
Northeast Utilities Northeast Utilities
Service Company Service Company
P.O. Box 270 P.O. Box 270
Hartford, CT 06141-0270 Hartford, CT 06141-0270
The Application/Declaration in this proceeding, as previously amended,
is hereby further amended as follows:
1. It is proposed that the following new paragraph be added at the end of
Part I of the Application/Declaration (capitalized terms used herein being
used as defined above and in the Application/Declaration), and that such
paragraph amend and restate in full the paragraph previously set forth in
Item 2 of Post-Effective Amendment No. 1 to this Application/Declaration:
"CL&P seeks authority (a) to replace The Long-Term Credit Bank of Japan,
Limited, New York Branch (Bank) Letter of Credit and the Bank
Reimbursement Agreement with a new Letter of Credit and Reimbursement
Agreement (Substitute LOC Agreement), (b) to replace the Letter of
Credit provided by the Bank with a new Letter of Credit (Substitute
LOC), and (c) subsequently thereto, to extend, modify or replace the
Substitute LOC Agreement and the Substitute LOC from time to time during
the term of the Bonds supported thereby. The terms of any such
extensions, modifications or replacements, including the Substitute LOC
and the Substitute LOC Agreement, shall provide that (A) the total
amount available to be drawn under any such extended, modified, or
replacement letter of credit does not exceed $16,200,000, representing
principal in the amount of $15,400,000 and interest in the amount of
$800,000 (accumulated at the maximum rate of 15% for 123 days), (B) the
annual letter of credit costs applicable to any such extension,
modification, or replacement do not exceed 1.00% per annum of the total
amount available to be drawn under the extended, modified or replacement
letter of credit, (C) the reimbursement agreement applicable to any such
extension, modification or replacement shall provide (or shall afford
CL&P the option to elect) that Tender Advances bear interest until paid
at a rate not to exceed the higher of (1) the prime rate plus 2.00% or
(2) the federal funds rate plus 2.00%, (D) such extension, modification,
or replacement is otherwise on terms that are substantially similar in
all material respects to those applicable to the Substitute LOC and the
Substitute LOC Agreement (or previous extensions or modifications
thereof or replacements therefor) proposed to be entered into in
connection with the replacement of the Bank, the forms of which are
attached hereto as Exhibit B.5.1., and the Pledge Agreement, between
CL&P and the bank to be named (Exhibit B to Exhibit B.5.1), and (E) CL&P
shall have obtained all necessary State Commission approvals applicable
to such extension, modification or replacement."
2. The following exhibit is filed herewith:
D.6.1 Application to Connecticut Department of Public Utility
Control
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, as amended, the undersigned applicant has duly caused this Post-
Effective Amendment No. 2 to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: June 30, 1994
THE CONNECTICUT LIGHT AND POWER COMPANY
By /s/ Jane P. Seidl
Jane P. Seidl, Esq.
Senior Counsel
Northeast Utilities Service Company
Its Attorney
Exhibit D.6.1
June 8, 1994
Mr. Robert J. Murphy
Executive Secretary
Connecticut Department of Public Utility Control
One Central Park Plaza
New Britain, CT 06051
Re: Application of The Connecticut Light and Power Company
for Modification of Decision with Respect to Approval of Financing
for Pollution Control and/or Sewage or Solid Waste Disposal
Facilities Docket No. 86-11-10
Dear Mr. Murphy:
Enclosed herewith for filing are the original and twenty-two (22) copies
of an Application of The Connecticut Light and Power Company (the "Company")
for approval by the Connecticut Department of Public Utility Control (the
"Department") of a proposed modification of the Decision rendered by the
Department in the above-referenced docket. Pursuant to this Application, the
Company is seeking authority (i) to replace the existing letter of credit
issued to support the pollution control bonds by delivery of a substitute
credit facility and (ii) to obtain further extensions and modifications of
and replacements for the letter of credit during the term of the bonds
supported thereby.
As indicated in the Application, the credit facility substitution
proposed thereunder must be approved by the Securities and Exchange
Commission (the "SEC") under the Public Utility Holding Company Act of 1935
and the SEC may decline to render such approval until it has received a copy
of the Decision of the Department. Consequently, final approval of the
Application by the Department is respectfully requested by July 12, 1994.
Please acknowledge receipt of the enclosed Application by stamping the
enclosed copy of this letter, and returning it to me with our messenger.
Sincerely,
/s/Jane P. Seidl
Jane P. Seidl
Senior Counsel
Enclosures
cc: (w/encs.) David McHale
Larry P. Kromidas
Jeffrey C. Miller, Esq.
STATE OF CONNECTICUT
DEPARTMENT OF PUBLIC UTILITY CONTROL
APPLICATION OF
THE CONNECTICUT LIGHT AND POWER COMPANY
FOR MODIFICATION OF DECISION WITH
RESPECT TO APPROVAL OF FINANCING FOR
POLLUTION CONTROL AND/OR SEWAGE OR
SOLID WASTE DISPOSAL FACILITIES
DOCKET NO. 86-11-10
I. Description of Proposed Modification
1. The Connecticut Light and Power Company ("CL&P"), a public service
company within the meaning of Section 16-1 of the General Statutes of
Connecticut, Revision of 1958, as amended (the "Connecticut General
Statutes"), hereby applies to the Department of Public Utility Control (the
"Department") pursuant to Section 16-43 of the Connecticut General Statutes
for approval of a modification of the Department's decision dated December
16, 1986 (the "Decision") in Docket No. 86-11-10, "Application of The
Connecticut Light and Power Company for Approval of Financing for Pollution
Control and/or Sewage or Solid Waste Disposal Facilities" (the
"Application"). Pursuant to Order No. 1 of the Decision, prior approval of
the Department is required for any material modifications of the terms and
conditions under which the Bonds (as hereinafter defined) were issued and
sold.
2. In the Decision, the Department approved CL&P's proposed financing
of pollution control and/or sewage or solid waste disposal facilities at the
Seabrook Station No. 1 nuclear electric generating plant (the "Facilities").
The cost of acquiring, constructing and installing the Facilities was
financed by CL&P through its use of the net proceeds from the sale by the
Industrial Development Authority of the State of New Hampshire ("IDA") of its
pollution control revenue bonds ("Bonds") in the principal amount of
$15,400,000. The Bonds were issued pursuant to an Indenture of Trust between
the IDA and Baybank Middlesex, as trustee (the "Trustee"), and the proceeds
of the issuance of the Bonds were loaned to CL&P pursuant to a financing
agreement (the "Loan Agreement").
3. As set forth in the Application, in order to obtain the benefits of
a high quality rating for the Bonds, CL&P's obligations under the Loan
Agreement are secured by an irrevocable letter of credit (the "Letter of
Credit") in the amount of $16,200,000 issued by The Long Term Credit Bank of
Japan, Limited, New York Branch (the "Bank") in favor of the Trustee. The
purpose of this application for modification of the Decision is to seek
authority for CL&P to replace the Letter of Credit provided by the Bank, as
permitted by Section 3.13 of the Loan Agreement, by delivery of a substitute
credit facility, consisting of a Letter of Credit, and related agreements, to
be provided by a substitute bank to be chosen by CL&P ("Substitute Bank").
4. As stated in the Application, delivery of the original Letter of
Credit to the Trustee obtained for the Bonds a rating equivalent to the
credit rating of the Bank. After the Bonds were issued, the Bank's rating in
the financial markets deteriorated. In addition, CL&P has been advised by
remarketing agents for the Bonds that (i) many institutional investors that
otherwise would be interested in purchasing the Bonds will not purchase
securities secured by letters of credit issued by the Bank and (ii) those
investors that are still willing to purchase the Bonds are demanding an
interest rate premium that is causing CL&P's effective interest cost to be
higher than it would have otherwise been using a bank with a better rating.
Accordingly, CL&P seeks authority to replace the Letter of Credit with a new
letter of credit ("Substitute LOC") to be issued by the Substitute Bank. The
Substitute LOC would be issued under a new Letter of Credit and Reimbursement
Agreement ("New LOC Agreement") substantially identical to the Letter of
Credit and Reimbursement Agreement dated as of September 1, 1993 among CL&P,
Deutsche Bank AG, New York Branch, Issuing Bank and Agent, and various co-
agents and participating banks, as approved by the Department in Docket No.
93-06-23.
5. Furthermore, CL&P seeks authority hereunder to obtain from time to
time new letters of credit from the same or different banks and further
extensions and modifications of and replacements for the New LOC Agreement
with such banks from time to time during the term of the Bonds supported
thereby, in accordance with the provisions of the Loan Agreement and provided
that (A) the total amount available to be drawn under any such extended,
modified, or replacement letter of credit does not exceed $16,200,000, (B)
the annual letter of credit costs applicable to any such extension,
modification, or replacement do not exceed 1.00% per annum of the total
amount available to be drawn under the extended, modified or replacement
letter of credit, (C) the reimbursement agreement applicable to any such
extension, modification or replacement shall provide (or shall afford CL&P
the option to elect) that tender advances bear interest until paid at a rate
not to exceed the higher of (1) the prime rate plus 2.00% or (2) the federal
funds rate plus 2.00%, (D) such extension, modification, or replacement is
otherwise on terms that are substantially similar in all material respects to
those applicable to the Letter of Credit and the Reimbursement Agreement (or
previous extensions or modifications thereof or replacements therefor)
proposed to be entered into in connection with the replacement of the Bank,
the form of which is attached hereto as Exhibit 1, and the Pledge Agreement
between CL&P and the bank to be named (Exhibit B to Exhibit 1), and (E) CL&P
shall have obtained all necessary approvals applicable to such extension,
modification or replacement. The Department has previously granted CL&P
authority to obtain extensions of, and replacements for, its letters of
credit and reimbursement agreements from time to time during the terms of
certain of its pollution control revenue bonds in Docket No. 93-06-23.
II. Additional Information
The following additional information is supplied as part of this
Application:
A. The exact legal name of the applicant and its principal place of
business:
The Connecticut Light and Power Company
107 Selden Street
Berlin, Connecticut 06037
CL&P is a corporation specially chartered by the General Assembly of the
State of Connecticut.
B. The name, title, address and telephone number of the attorney and
other person to whom correspondence or communications in regard to this
application are to be addressed:
Mr. David R. McHale
Manager - Project and Short-Term Finance
Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
Telephone: 665-5601
and
Jane P. Seidl, Esq.
Senior Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
Telephone: 665-5051
C. A concise and explicit statement of facts on which the Department is
expected to rely in granting this application:
1. Delivery of a Letter of Credit is expected to secure ratings on the
Bonds equivalent to the credit rating of the issuing bank. At the time of
the original issuance, CL&P had chosen to obtain a Letter of Credit to
improve the credit rating for the Bonds because it had been advised that the
marketplace is accustomed to seeing variable rate securities supported by a
letter of credit, and that without such support the Bonds would be
unmarketable. CL&P had elected to cause the issuance of variable rate
securities because of the significant interest savings under current market
conditions that it expected to derive from the variable rates and because of
the flexibility that this type of security offers. The flexibility of
affording CL&P the right to direct the redemption of Bonds at par when
permitted and CL&P's option to be able to cause the New Bonds to be converted
to another interest rate mode (i.e., commercial paper, multiannual, fixed)
also make these securities highly attractive.
2. CL&P has elected to replace the current letter of credit facility
provider of the Bonds at this time for several reasons. The rating in the
financial markets of the Bank has deteriorated since the issuance of the
Bonds and CL&P is concerned that such deterioration may continue. CL&P has
been advised that, due to such deterioration, (i) many institutional
investors that otherwise would be interested in purchasing the Bonds will not
purchase securities secured by letters of credit issued by the Bank and (ii)
those investors that are still willing to purchase the Bonds are demanding an
interest rate premium that is causing CL&P's effective interest costs to be
higher that they would otherwise be. The Substitute Bank will be a higher
rated financial institution than the Bank and CL&P believes that it will
realize lower effective interest costs because of this credit rating
difference. CL&P also expects to realize letter of credit savings by
replacement of the Bank through its negotiations for a lower annual fee rate.
The annual letter of credit fee paid to the Bank under the existing Letter of
Credit is 55 basis points. CL&P currently contemplates that the annual
letter of credit fee to be paid under the Substitute LOC will be less than 50
basis points. These savings will also apply for an extended period of time,
as the Substitute LOC will have a three-year term while the existing Letter
of Credit expires in two years. Exhibit 2 filed herewith sets forth certain
information with respect to the Bank, including the Bank's credit rating and
the annual commissions payable with respect to the Letter of Credit.
CL&P has invited six banks to submit proposals to provide the Substitute
LOC. CL&P will accept the proposal which has the lowest effective interest
cost to CL&P, after giving effect to any bank fee, commission, trading
premium (if any), or other compensation. Information with respect to the
Substitute LOC supporting the Bonds (and any extension, modification or
replacement thereof) will be filed by amendment as Exhibit 3.
3. In support of this Application, CL&P hereby also submits herewith
and incorporates herein the exhibits listed in Appendix I hereto, and
reference is made to the information contained therein.
D. Explanation of any unusual circumstances involved in this
application:
The Department's attention is directed to the fact that the
modifications proposed hereunder must be approved by the Securities and
Exchange Commission (the "SEC") under the Public Utility Holding Company
Act of 1935 and that such approval may not be granted until the SEC has
received a certified copy of the Decision of this Department. Final
approval of this application by the Department is therefore respectfully
requested on or before July 12, 1994.
III. Exhibits
CL&P is filing herewith (or, as indicated, will file by amendment) the
exhibits listed in Appendix I hereto. This Application and Appendix I set
forth all exhibits required to be filed by CL&P and which CL&P deems
necessary or desirable to support the granting of this application. CL&P,
however, hereby reserves the right to file such additional testimony and
exhibits as it may consider to be necessary or desirable.
IV. Requests for Approval
CL&P respectfully requests the Department's approval, pursuant to
Section 16-43 of the General Statutes of Connecticut, of the transactions
described herein.
Dated this 8th day of June, 1994.
Respectfully submitted,
THE CONNECTICUT LIGHT AND POWER COMPANY
By/s/Jane P. Seidl
Jane P. Seidl
Senior Counsel
Northeast Utilities Service Company
Its Attorney
APPLICATION OF
THE CONNECTICUT LIGHT AND POWER COMPANY
FOR MODIFICATION OF DECISION WITH
RESPECT TO APPROVAL OF FINANCING FOR
POLLUTION CONTROL AND/OR SEWAGE OR
SOLID WASTE DISPOSAL FACILITIES
APPENDIX I - EXHIBITS
1. Draft of Reimbursement Agreement, including drafts of the related Letter
of Credit and the related Pledge Agreement. (To be filed by amendment.)
2. Information with respect to Letter of Credit.
3. Information with respect to Substitute Letter of Credit. (To be filed
by amendment.)
4. Resolutions of Board of Directors of The Connecticut Light and Power
Company. (To be filed by amendment.)
5. Estimated Expenses of the Proposed Refinancing. (To be filed by
amendment.)
Exhibit 2
Information with Respect to
CL&P/Long Term Credit Bank of Japan
Letter of Credit
Bank Rating
December 1986: AAA
June 1994: A-
Expiration of LOC: November 21, 1996
Annual Letter of Credit Fee in Basis Points: 55
