<PAGE> 1
File Number 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
APPLICATION-DECLARATION UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
By
CONSOLIDATED NATURAL GAS COMPANY
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
and its subsidiary companies:
CNG COAL COMPANY CNG STORAGE SERVICE COMPANY
CNG ENERGY SERVICES CORPORATION CNG TRANSMISSION CORPORATION
CNG FINANCIAL SERVICES, INC. CONSOLIDATED NATURAL GAS
CNG POWER COMPANY SERVICE COMPANY, INC.
and its subsidiary company CONSOLIDATED SYSTEM LNG COMPANY
CNG MARKET CENTER SERVICES, INC. HOPE GAS, INC.
CNG PRODUCING COMPANY THE EAST OHIO GAS COMPANY
and its subsidiary THE PEOPLES NATURAL GAS COMPANY
company CNG PIPELINE COMPANY VIRGINIA NATURAL GAS, INC.
CNG RESEARCH COMPANY WEST OHIO GAS COMPANY
Consolidated Natural Gas Company,
a registered holding company,
is the parent of the other parties.
Names and addresses of agents for service:
STEPHEN E. WILLIAMS, Esq., N. F. CHANDLER, Esq., General Attorney
Senior Vice President and Consolidated Natural Gas Service
General Counsel Company, Inc.
Consolidated Natural Gas Company CNG Financial Services, Inc.
CNG Tower CNG Tower
625 Liberty Avenue 625 Liberty Avenue
Pittsburgh, PA 15222-3199 Pittsburgh, PA 15222-3199
Gary W. Wolf, Esq.
Cahill, Gordon & Reindel
Eighty Pine Street
New York, NY 10006
<PAGE> 2
File Number 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
APPLICATION-DECLARATION UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Item 1. Description of Proposed Transaction
___________________________________
(a) Furnish a reasonably detailed and precise description of the proposed
transaction, including a statement of the reasons why it is desired to
consummate the transaction and the anticipated effect thereof. If the
transaction is part of a general program, describe the program and its relation
to the proposed transaction.
Consolidated Natural Gas Company (the "Company" or "Consolidated") is
a public utility holding company registered as such under the Public Utility
Holding Company Act of 1935 (the "Act" or "1935 Act"). It is engaged solely in
the business of owning and holding all of the outstanding securities of sixteen
directly owned subsidiary companies most of which are in the natural gas
business. All directly and indirectly owned subsidiaries of Consolidated are
referred to individually as "Subsidiary" and collectively as "Subsidiaries."
The Subsidiaries are principally engaged in natural gas exploration,
production, purchasing, gathering, transmission, storage, distribution,
marketing and by-product operations. Consolidated and its Subsidiaries are
referred to herein as the "Consolidated System" or "CNG System."
<PAGE> 3
I. OVERVIEW OF OMNIBUS TYPE APPLICATION
This application-declaration ("Application") contains the request of
Consolidated and its Subsidiaries for authorization for financing of the
Consolidated System for the period beginning with the effective date of an
order issued in this proceeding through December 31, 2000. The Application is
an omnibus type filing and is a departure from Consolidated's traditional
annual system financing requests in several respects. The Application is
believed to be in alignment with the efforts of the Securities and Exchange
Commission ("Commission") to modernize its administration of the Act.
The Application seeks to consolidate in one filing all of the routine-type
financing authorizations for the Consolidated System, and simultaneously asks
for a significant amount of flexibility as to these financings - both as to
characteristics and as to amounts. It is similar in concept to the shelf-type
registration statement filings permitted under Rule 415 promulgated under the
Securities Act of 1933 ("1933 Act"). The Application approaches financing from
a system-wide viewpoint, and does not concentrate on the details of the
individual components within the over-all system financing program. As long as
Consolidated maintains a solid financial base which is reflected objectively by
ratings of a nationally recognized rating agency, Consolidated would be allowed
a great deal of discretion with respect to its financing activities. This
would allow it to be readily responsive so as to be able to take advantage of
current financial market conditions, which, in turn, should make it more
competitive with companies which are not subject to the jurisdiction of the
Act.
<PAGE> 4
The Application strives to open pathways for a variety of activities which
would occur within stated ambits, but for which specific prior authorization
would not be needed. Continuous Commission oversight would take place through
disclosures of Consolidated System activities made in the Commission's
integrated disclosure system in place for use under the 1933 Act and the
Securities Exchange Act of 1934 ("1934 Act"), and through the notification
system pursuant to this proceeding.
The following is a summary description of how the Application differs from
Consolidated's usual past annual financing applications.
Consolidated External Financings
1. The Application seeks financing for an approximate 5-1/2 year period
instead of the traditional 12 month fiscal financing period running from
July 1 of one year through June 30 of the succeeding year.
2. The Application requests authority for Consolidated to offer and sell a
variety of securities in an "out of the basket" or "off the shelf" manner,
and to sell the securities in a variety of ways in addition to the
formerly required competitive bidding process. Consolidated would have
the right to choose the amount and type of security as appropriate to its
needs and market conditions as they exist at the time of financing,
provided (i) the aggregate amount of securities sold during the
approximate 5-1/2 year period does not exceed $3.5 billion and (ii) its
debt has an investment grade financial rating.
<PAGE> 5
3. Consolidated's currently effective authorization to sell up to $350
million of debt securities under its new indenture would be superseded by
the omnibus Application; the ability to sell long-term debt would
accordingly be extended as to time.
4. Consolidated would be able to amend its certificate of incorporation to
authorize a new class of preferred stock with up-to-date terms and
conditions in place of its preferred stock currently authorized. There
are no shares of preferred stock presently outstanding.
Intra-system Financings by Consolidated
5. The Application seeks authority for Consolidated to finance its
Subsidiaries through investment vehicles in addition to the traditional
common stock, open account advances and long term note financings.
6. The Application requests authority for Consolidated to finance its
Subsidiaries during the approximate 5-1/2 year period to the extent not
exempt by Rule 52. Consolidated would be allowed to use its discretion as
to how much financing to give to each Subsidiary as its needs dictate
during the period.
Intra-system and External Financings by Subsidiaries
7. Second tier parent company financing of operational Subsidiaries thereof
through transactions involving securities not covered by Rule 52 is
included in the Application.
<PAGE> 6
8. The Application retains the request for Subsidiaries to alter their legal
capitalization in order to engage in financing with their parent company.
Enhancement of Financial Management Tools
9. The Application seeks authority for Consolidated to invest short-term
excess funds in a wide variety of securities.
Parent Company Credit Support
10. The Application requests authority for parent companies in the
Consolidated System to enter guarantees, obtain letters of credit or
otherwise provide credit support with respect to obligations of their
respective direct and indirect subsidiaries as required to enable them to
carry on their business.
II. PARAMETERS FOR AUTHORIZATIONS
The Application makes requests for authority, without any additional prior
Commission approvals, to engage in future financing transactions for which the
specific terms and conditions are not at this time known. Accordingly, it is
appropriate that certain conditions concerning the financial status of
Consolidated exist at the time of engaging in such activities. The general
conditions for doing such financing activities without further prior approval
are given directly below; further limitations on specific types of financing
are set forth further herein.
<PAGE> 7
CONSOLIDATED DEBT OF INVESTMENT GRADE. Consolidated would be authorized
to engage in the financing activities described herein as long as its long-term
debt rating is of investment grade as established by a nationally recognized
rating agency.
INTEREST RATES ON BORROWINGS. Interest rates on borrowings occurring
pursuant to the authorizations granted under the Application will not exceed
300 basis points over comparable term U. S. Treasury securities.
DIVIDEND RATES ON PREFERRED STOCK. Dividend rates on preferred stock will
not exceed 500 basis points over 30 year term U.S. Treasury securities.
MATURITY OF DEBT. The maturity of indebtedness will not exceed 50 years.
ISSUANCE EXPENSES. The underwriting fees, commissions, or other
remuneration paid in connection with the non-competitive bid issue, sale or
distribution of a security pursuant to the Application will not exceed 5% of
the principal or total amount of the financing.
AGGREGATE DOLLAR LIMIT. The aggregate amount of external financing
effected by Consolidated during the approximate 5-1/2 year period will not
exceed $3.5 billion; for purpose of calculating the amount effected only
outstanding amounts under revolving credit arrangements will be counted.
Further, credit support of underlying Subsidiary obligations (because the same
would be subject to a separate limitation) and the issue of securities to the
extent the proceeds thereof are used to retire outstanding securities would not
be included in the calculation.
<PAGE> 8
III. GENERAL FINANCING CONCEPT
Even though no dollar amounts of specific financing transactions are
discussed in this Application, Consolidated and its Subsidiaries would continue
to develop capital budgets and estimates of other financing needs on an annual
basis as they have customarily done for years. Actual financings during a
given year would occur based upon such normal financial planning.
Consolidated would be allowed to issue and sell additional debt, preferred
stock or common stock or any other equity security without any additional prior
Commission approval if Consolidated has a long-term debt rating of investment
grade as established by a nationally recognized rating agency. The provisions
of the securities would be determined by Consolidated at the time of sale and
would not be limited by any of the Commission's "policies" with respect
thereto.
To the extent not already exempt under Rule 52, Consolidated and its
Subsidiaries would be permitted to engage in intra-system financing of their
respective directly owned Subsidiaries without specific dollar limits and
without additional prior Commission approval. However, the use of proceeds
from the financings would be limited (i) to use in the operations of the
respective businesses in which such Subsidiaries are already authorized to
engage or (ii) to finance a new corporation, trust, partnership or other entity
which is created for the sole purpose of obtaining financing.
Due to statutory requirements, the authorization requested herein to
engage in external or intra-system financing without additional Commission
approval do not apply in the case of any financing (other than through the use
of internally generated funds) for the purpose of investing in either an exempt
<PAGE> 9
wholesale generator ("EWG") or a foreign utility company ("FUCO") as defined in
Sections 32 and 33 of the Act, respectively. Nor would any financing be
allowed under the above procedures if it would cause Consolidated to not be in
compliance with Rules 53 and 54 promulgated under the Act.
IV. DESCRIPTION OF SPECIFIC TYPES OF FINANCING
A. Consolidated External Financings
Consolidated obtains funds externally through short-term debt financing,
including commercial paper sales; long-term debt financing, such as debentures
and notes; and sales of capital stock. Debt and preferred stock financings can
be either privately placed or publicly distributed. Common stock can be issued
and sold pursuant to underwriting agreements of a type generally standard in
the industry. Public distributions can be pursuant to private negotiation with
underwriters, dealers or agents as discussed below or effected through
competitive bidding among underwriters. All such debt and stock sales are at
rates or prices and under conditions negotiated or based upon, or otherwise
determined by, competitive capital markets. Common stock is also sold pursuant
to various existing or new employee benefit plans and dividend reinvestment
plans.
Consolidated may sell the debt or equity securities covered by this
Application in any of the following ways: (i) through underwriters or dealers;
(ii) directly to a limited number of purchasers or to a single purchaser, or
(iii) through agents. If underwriters are used in the sale of the securities,
such securities will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. The securities may be offered to the public
<PAGE> 10
either through underwriting syndicates (which may be represented by managing
underwriters designated by the Company) or directly by one or more underwriters
acting alone. The securities may be sold directly by the Company or through
agents designated by the Company from time to time. If dealers are utilized in
the sale of any of the securities, the Company will sell such securities to the
dealers, as principal. Any dealer may then resell such securities to the
public at varying prices to be determined by such dealer at the time of resale.
If equity securities are being sold in an underwriting offering, the
Company may grant the underwriters thereof a "green shoe" option permitting the
purchase from the Company at the same price additional equity securities (an
additional 15% under present guidelines) then being offered solely for the
purpose of covering over-allotments.
If debt securities are being sold, they may be sold pursuant to "delayed
delivery contracts" which permit the underwriters to locate buyers who will
agree with the Company to buy the debt at the same price but at a later date
than the date of the closing of the sale to the underwriters.
1. Short-term Financing
To provide financing for general corporate purposes, including financing
gas storage inventories, other working capital requirements and construction
spending until long term financing can be obtained, Consolidated would continue
to sell commercial paper, from time to time, in established domestic or
European commercial paper markets. Such commercial paper would be sold to
dealers at the discount rate per annum prevailing at the date of issuance for
<PAGE> 11
commercial paper of comparable quality and maturities sold to commercial paper
dealers generally. It is expected that the dealers acquiring commercial paper
from Consolidated will reoffer such paper at a discount to corporate,
institutional and, with respect to European commercial paper, to individual
investors. It is anticipated that Consolidated's commercial paper will be
reoffered to investors such as commercial banks, insurance companies, pension
funds, investment trusts, foundations, colleges and universities, finance
companies and nonfinancial corporations.
Back-up bank lines of credit for 100% of the outstanding commercial paper
are required by credit rating agencies. To satisfy this requirement,
Consolidated proposes to establish back-up bank lines in an aggregate principal
amount not to exceed the amount of authorized commercial paper. Consolidated
would borrow, repay and reborrow under these lines from time to time, without
collateral, to the extent that it becomes impracticable to sell commercial
paper due to market conditions or otherwise. Loans under these lines shall
have a maturity date not more than one year from the date of each borrowing.
Consolidated may engage in other types of short-term financing as it may
deem appropriate in light of its needs and market conditions at the time of
issuance. Such short-term financing could include, without limitation, bank
lines and debt securities issued under its debt securities indenture.
<PAGE> 12
2. Long-term Financing
Consolidated was authorized to issue and sell up to $500 million of debt
securities in Commission order dated March 6, 1995, HCAR No. 26245, in File No.
70-8107. On April 12, 1995, Consolidated sold $150 million principal amount of
7 3/8% Debentures Due April 1, 2005, thus leaving $350 million of such
authorization available for future use. The aforesaid 7 3/8% Debentures were,
and new issuances of debt securities would be, issued pursuant to a new form of
simplified indenture which was also authorized in the proceeding under File No.
70-8107. The authorization under the March 6, 1995 order expires on June 30,
1996.
Consolidated is proposing herein a fundamental change in the method by
which it would be authorized to engage in external financings, which would
supersede the above authorization. Consolidated accordingly proposes to
incorporate the specific authorization into the more general financing
authorization requested in this Application. If such is permitted,
Consolidated would issue debt securities under its new indenture (or other
securities indentures) pursuant to the authorization granted in this proceeding
and not under the earlier specific authorization. One effect of this would be
a removal of the terms and conditions and dollar amount limits in the earlier
orders to the extent not replaced by like terms and conditions or issuance
limitations imposed by an order in this proceeding. The effective date of the
authorization to issue debt securities under the indenture would accordingly be
extended, pursuant to an order issued in this proceeding, to December 31, 2000.
<PAGE> 13
Consolidated may engage in other types of long-term financing with such
terms and conditions as it may deem appropriate in the context of its needs and
financial market conditions at the time of issuance. Any long-term debt would
have such designation, aggregate principal amount, maturity, interest rate(s)
and terms of payment of interest, redemption provisions and sinking fund terms,
conversion or put terms and other terms and conditions as Consolidated may at
the time of issuance determine. Examples of such long-term securities would
include convertible debt, medium term notes, monthly income debt securities,
securities with call or put options, etc.
3. Stock Financing
Consolidated may also issue and sell preferred or common stock, or issue
stock upon the exercise of convertible debt of equity securities or pursuant to
rights, options, warrants and similar securities. Consolidated may also buy
back shares of such stock, during the authorization period. Consolidated
proposes that it be allowed, without additional prior Commission approval, to
(i) amend its Certificate of Incorporation to increase its authorized capital
as deemed necessary and appropriate by Consolidated for proper corporate
purposes, (ii) eliminate the current provision in its certificate of
incorporation authorizing its class of preferred stock and substitute therefor
new provisions authorizing a class of preferred stock with up-to-date terms and
conditions to the extent permitted by Delaware law, (iii) solicit proxies
through a proxy statement, filed under and meeting the standards of the 1934
Act, requesting shareholder approval of such amendments to the certificate of
incorporation, and (iv) permit the Board of Directors of Consolidated, or a
committee thereof as authorized by Delaware law, to set the terms and
<PAGE> 14
conditions of each series of the present or new classes of preferred stock to
the full extent permitted by Delaware law and as may be required in
Consolidated's judgment to take advantage of current market conditions. Any
preferred stock issued would have such designation, liquidation preferences,
issue price(s), dividend rate(s) and terms of payment of dividends, redemption
provisions and sinking fund terms, voting or other special rights, conversion
terms and other terms and conditions as Consolidated may at the time of
issuance determine.
Consolidated obtains funds through the sale of its common stock sold
pursuant to various employee benefit plans and a dividend reinvestment plan.
From time to time in the future, other similar plans may be adopted by
Consolidated and existing plans may be changed. Consolidated also acquires
treasury shares through the operations of such employee plans. Additionally,
by order dated May 8, 1992, HCAR No. 25528, File No. 70-7948, Consolidated is
authorized through December 31, 1995 to acquire up to 4,000,000 shares of its
common stock in the open market. Details concerning all the currently
effective authorizations relating to these plans and treasury share
acquisitions are set forth in Exhibit G. Consolidated now proposes to sell,
reacquire and resell shares of common stock pursuant to these existing plans
and similar plans hereafter adopted, and to engage in purchases of its stock
and reissuances of its treasury shares for reasonable business purposes,
without any additional prior Commission order. Stock transactions of this
variety would thus be treated the same as other stock transactions permitted
pursuant to this Application. Such authorization would supersede all prior
authorizations listed on Exhibit G, thereby simplifying considerably the
extensive reporting for generally small transactions now in place under
Consolidated's filings under the Act.
<PAGE> 15
B. Parent-Subsidiary Intra-System Financing
1. Rule 52 Exemption
Due to the Commission's adoption in HCAR No. 26311, dated June 20, 1995,
of amendments to its exemptive Rule 52, most of the financing transactions
between Consolidated and its Subsidiaries would now be exempt pursuant to such
rule. However, to the extent that the transaction (i) involves the issue and
sale of a security of a utility Subsidiary not subject to the approval
jurisdiction of a state utility commission, and/or (ii) does not involve the
issue and sale of common stock, preferred stock, bond, note or other form of
indebtedness transactions, Rule 52 would not apply. Short-term borrowings from
Consolidated by its utility Subsidiaries, The East Ohio Gas Company, West Ohio
Gas Company and The Peoples Natural Gas Company are not subject to state
commission jurisdiction. In order to cover these areas not included within the
ambit of Rule 52, request is made to engage in short-term parent-Subsidiary
debt financings and non-traditional types of financing as described below.
2. Intra-system Financings by Consolidated
Consolidated would continue to provide financing to each of its directly
owned Subsidiaries as required. Such financings would generally continue to be
in the form of open account advances, long-term loans and/or capital stock
purchases, as requested by the Treasurer of each such Subsidiary. Open account
advances will provide funds for general corporate purposes, including gas
storage inventories, other working capital requirements and temporarily for
<PAGE> 16
capital expenditures until long-term financing is obtained and /or cash is
generated internally. Generally, Consolidated's long-term loans to, and
purchase of capital stock from, such Subsidiaries will provide financing for
their capital expenditures, and will be exempt transactions under Rule 52. The
Subsidiaries may also, from time to time as deemed appropriate By them, buy
back shares of their respective common stock from Consolidated.
Open account advances may be made, repaid and remade on a revolving basis,
with interest at the same effective rate of interest as Consolidated's daily
weighted average effective rate of commercial paper, revolving credit and/or
other short-term borrowings. If no such borrowings are outstanding then the
interest rate shall be predicated on the Federal Funds' effective rate of
interest as quoted daily by the Federal Reserve Bank of New York. Such
advances will be made through the CNG System money pool ("Money Pool")
authorized under Commission order dated June 12, 1986, HCAR No. 24128, File No.
70-7258.
Consolidated and its Subsidiaries may engage in other types of financing
of their respective Subsidiaries. This may include capital donations, secured
financing and other types which have become accepted in capital markets
generally as viable and reasonable forms of financing for the kinds of
companies involved in the transaction.
3. Changes in Capital Stock of Subsidiaries
The portion of an individual Subsidiary's aggregate financing to be
effected through the sale of stock to Consolidated or other immediate parent
company during the 5-1/2 year authorization period cannot be ascertained at
<PAGE> 17
this time. It may happen that the proposed sale of common stock may in some
cases exceed the currently authorized capital stock of such Subsidiary. In
addition, the Subsidiary may chose to use other forms of capital stock. As
needed to accommodate such proposed transactions and to provide for future
issues, request is made for authority to increase any such Subsidiary's
authorized common stock by a number of shares as deemed appropriate by
Consolidated in the instant case, and to authorize other types of capital stock
in such amounts as deemed appropriate by the Subsidiary (with such terms as are
authorized by the corporate law of its state of incorporation) in view of
current and anticipated capital markets.
V. INCREASE IN RANGE OF INVESTMENTS FOR EXCESS FUNDS
From time to time Consolidated may be in the position of having cash
generated in the ordinary course of business available for investment.
Currently the range of investments opportunities is limited by those listed in
Rule 40 under the Act. These are essentially limited to bonds which qualify as
a legal investment for trust funds or for saving banks under the laws of New
York, Pennsylvania or Massachusetts, and prime commercial paper, trade
acceptance or bank certificate of deposit maturing within 12 months from the
date of issuance or payable in not more than 60 days after demand. These
categories are extremely conservative and do not always provide the best rate
of return when compared to other reasonable investment possibilities.
<PAGE> 18
Consolidated requests that it be authorized to adopt a more flexible
investment policy which would allow it to increase its returns on investments
of temporarily excess funds in the highly competitive securities market. The
marketable securities and investment vehicles in which Consolidated would be
allowed to invest are listed below.
CAPITAL STOCK. Common stock of U.S. companies that are listed on a
national securities exchange or traded in the NASDAQ National Market
System or preferred stock of such companies. In addition, up to 15% of
the allowed investments in this category may be in the form of American
Depository Receipts ("ADRs") of non-U.S. companies.
CASH RESERVES. Short-term obligations issued or guaranteed as to
interest and principal by the U.S. Government or any agency or
instrumentality thereof (including repurchase agreements collateralized by
such securities).
Negotiable certificates of deposit and bankers' acceptances of U.S.
banks having total assets in excess of $1 billion, commercial paper
(including variable amount master demand notes) rated A-1 or higher by
Standard & Poor's Corporation ("Standard & Poor's") or Prime-1 or higher
by Moody's Investors Service, Inc. ("Moody's")
Long-term corporate obligations that mature within one year from date
of purchase rated A or better by Moody's or Standard & Poor's.
<PAGE> 19
Municipal bonds and notes rated A or MIG2 or better by Moody's or A
or Sp-2 or better by Standard & Poor's.
Money market preferred stock that is rated "a" or better by Moody's
or A or better by Standard & Poor's.
MUTUAL FUNDS. No-load open-end and publicly traded closed-end mutual
funds. No-load funds may be used to obtain broad diversification,
professional management, and liquidity. Closed-end funds which can be
purchased at a discount to their net asset values may also provide
opportunities to enhance portfolio returns if such discounts are expected
to narrow or if redemption windows are adopted.
CONVERTIBLE SECURITIES. Corporate debt instruments and preferred
stocks that are convertible into the types of common stock described under
"COMMON STOCK" above in this section. These securities must be rated Baa
or better by Moody's and BBB by Standard & Poor's. Desirable
characteristics of these securities include the potential for capital
appreciation if the value of the underlying common stock increases, the
relatively high yield received from dividend or interest payments as
compared to common stock dividends, and decreased risks of decline in
value, relative to the underlying common stock due to their fixed income
nature.
<PAGE> 20
WARRANTS. Warrants which entitle the holder to buy the type of
common stock described above in this section at a specific price or at the
end of a specific period of time.
To reduce the system investment portfolio's exposure to certain risks, the
following restrictions would apply.
1. No security of any one issuer (other than the U.S. Government, its agencies
and instrumentalities) can exceed 5% of the portfolio's total market value
("PTMV").
2. No more than 20% of the PTMV may be invested in the securities of companies
primarily engaged in any one industry.
3. Investments in ADRs shall be limited to 15% of the PTMV.
4. Ownership of voting securities of any one issuer held in the portfolio will
not equal or exceed 5% of the total outstanding voting securities of such
issuer.
5. Investments shall not be made which would permit the exercise of control.
6. Without the written consent of an investment committee (described below),
the portfolio may not be invested in non-convertible fixed income securities
with maturities beyond one year of the date of purchase or straight
preferred stock.
<PAGE> 21
7. Short sales of securities are not permitted.
8. The purchase or sale of portfolio securities from or to officers, directors
or affiliates of Consolidated is prohibited.
9. No more than 5% of the PTMV may be invested in the securities of companies
that have a continuous operating history (including that of a predecessor)
of less than three years.
10. No more than 5% of the PTMV may be invested in warrants.
11. No more than 5% of the PTMV may be invested in convertible securities.
All value limitations calculated as a percentage of the PTMV shall be made
giving effect to the acquisition of the securities proposed to be acquired and
the disposition of securities proposed to be sold or replaced.
A committee of no less than three individuals appointed by Consolidated's
Board of Directors shall be responsible for all matters related to the system
investment portfolio. These matters will include, but are not limited to, the
hiring and firing of professional investment advisors, monitoring investment
performance, portfolio accounting, and periodic reports to the Financial Policy
Committee of the Board of Directors.
<PAGE> 22
VI. PARENT COMPANY GUARANTEES
Consolidated and its Subsidiaries request authorization to enter guarantee
arrangements, obtain letters of credit, and otherwise provide credit support
with respect to obligations of their respective Subsidiaries to third parties
as may be needed and appropriate to enable them to carry on in the ordinary
course of their respective businesses. The maximum aggregate limit on all such
credit support by Consolidated at any one time will be $1.5 billion. Such
authorization of Consolidated to provide credit support would supersede and
replace the current authorization of Consolidated to guarantee up to $750
million of obligations of CNG Energy Services Corporation as set forth in
Commission order dated November 16, 1993, HCAR No. 25926, File No. 70-8231.
VII. FILING OF CERTIFICATES OF NOTIFICATION
It is proposed that, with respect to Consolidated, the reporting system of
the 1933 Act and the 1934 Act be integrated with the reporting system under the
1935 Act. This would eliminate duplication of filings with the Commission that
cover essentially the same subject matters, resulting in a reduction of expense
for both the Commission and Consolidated. To effect such integration, the 1933
Act and 1934 Act reports would be incorporated by reference into this
proceeding. The parties to this Application therefore undertake to file a
certificate of notification with respect to any financing transaction which is
not otherwise reported or reflected, directly or indirectly, in a report filed
by Consolidated under the 1933 Act or 1934 Act. Such certificate of
notification would be filed within 60 days after the end of the calendar
quarter in which the transaction occurs.
<PAGE> 23
VIII. DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission before or during the
period of effectiveness of an order issued in this proceeding shall be deemed
to be incorporated into this Application and to be a part hereof from the date
of filing of such documents with the Commission, or if filed before the date of
filing of this Application, from the date of the filing hereof.
1933 Act
Consolidated's currently effective Form S-3 Registration Statements Nos.
33-49469 and 33-52585 heretofore filed with the Commission pursuant to the
1933 Act, and each Registration Statement and other filings made under the
1933 Act from the date hereof through December 31, 2000.
1934 Act
Consolidated's most recent Form 10-K Annual Report heretofore filed with
the Commission, its Form 10-Q Quarterly Reports filed heretofore
subsequent to the filing of the aforesaid Form 10-K, and all documents
filed by Consolidated pursuant to Section 13(a), 13(c), 14 or 15(d) of the
1934 Act subsequent to the date of filing of this Application. (File No.
1-3196).
1935 Act
Consolidated's most recent Form U5S Annual Report, File No. 30-203,
heretofore filed with the Commission pursuant to the Act, and each Form
U5S filed from the date hereof through December 31, 2000.
<PAGE> 24
IX. CURRENTLY EFFECTIVE SYSTEM FINANCING FORM U-1 SUPERSEDED
On April 28, 1995 Consolidated and certain of its Subsidiaries filed a
Form U-1 application-declaration, File No. 70-8619, seeking Commission
authorization for Consolidated System financing for the fiscal period July 1,
1995 through June 30, 1996. The Form U-1 in such earlier proceeding is in the
traditional format used by Consolidated over many years in seeking intra-system
financing on an annual basis. An order dated June 29, 1995, HCAR No. 26321,
was issued by the Commission in the File No. 70-8619 proceeding. An order
issued in this proceeding would supersede and replace the authorizations
granted in the June 29, 1995 order.
(b) Describe briefly, and where practicable state the approximate amount
of, any material interest in the proposed transaction, direct or indirect, of
any associate company or affiliate of the applicant or declarant or any
affiliate of any such associate company.
None, except as set forth in Item 1.(a) above.
(c) If the proposed transaction involves the acquisition of securities
not listed by a registered holding company or a subsidiary thereof, describe
briefly the business and property, present or proposed, of the issuer of such
securities.
Inapplicable.
(d) If the proposed transaction involves the acquisition or disposition
of assets, describe briefly such assets setting forth original cost, vendor's
book cost (including the basis of determination) and applicable valuation and
qualifying reserves.
Inapplicable.
<PAGE> 25
Item 2. Fees, Commissions and Expenses
______________________________
(a) State (1) the fees, commissions and expenses paid or incurred, or to
be paid or incurred, directly or indirectly, in connection with the proposed
transaction by the applicant or declarant or any associate company thereof, and
(2) if the proposed transaction involves the sale of securities at competitive
bidding, the fees and expenses to be paid to counsel selected by
applicant or declarant to act for the successful bidder.
In the event underwriting fees and expenses in a transaction not
involving competitive bidding exceed 5% of the proceeds and the amounts have
not been reported or reflected in a filing made under the 1933 Act or 1934 Act
which is incorporated by reference into this Application, Consolidated will
file a separate report prior to completion of the transaction. The fees and
expenses involved with a competitively bid transaction are deemed to be
reasonable.
Other expense of issuance and distribution disclosed in 1933 Act
filings, including Item 14 of Part II of Form S-3, are incorporated by
reference into this Application. There shall be no need to file a separate
memorandum of services of counsel selected by an applicant to act for the
successful bidder in a transaction involving competitive bidding.
<PAGE> 26
(b) If any person to whom fees or commissions have been or are to be paid
in connection with the proposed transaction is an associate company or an
affiliate of the applicant or declarant, or is an affiliate of an associate
company, set forth the facts with respect thereto.
Charges of CNG Service Company in connection with the preparation of
this application-declaration on Form U-1 and other related documents and papers
required to consummate the proposed transactions are included in the
information stated above.
Item 3. Applicable Statutory Provisions
_______________________________
(a) State the sections of the Act and the rules thereunder believed to
be applicable to the proposed transaction. If any section or rule would be
applicable in the absence of a specific exemption, state the basis of
exemption.
Transactions by Consolidated Only
_________________________________
A. Short-Term Bank Borrowings
__________________________
Sections 6(a) and 7 are deemed applicable to the proposed borrowings
or stock sales to be incurred by Consolidated. It is believed that such
borrowings or sales will be for necessary and urgent corporate purposes of
Consolidated and that the requirements of the provisions of paragraph (1) of
subsection (c) of Section 7 would impose an unreasonable financial burden upon
Consolidated and are not necessary or appropriate in the public interest or for
the protection of investors or consumers.
<PAGE> 27
Rule 70. G. A. Davidson, Jr., an officer and director of
Consolidated and CNG Service Company, and R. P. Simmons and P. E. Lego,
directors of Consolidated, are each directors of PNC Bank Corp. (holding
company owning PNC Bank), Pittsburgh, Pennsylvania. R. R. Gifford, an officer
and director of CNG Energy Company, is a director of National City Bank,
Cleveland, Ohio. J. W. Connolly, a director of Consolidated, is a director of
Mellon Bank Corporation and Mellon Bank, N.A., Pittsburgh, Pennsylvania. S. A.
Minter, a director of Consolidated, is a director of KeyCorp (holding company
owning Society National Bank), Cleveland, Ohio. These persons are acting in
such capacities by virtue of paragraphs (a), (c), (e) and/or (f) of Rule 70.
All said banks are expected to participate in back-up bank lines and
may participate in other banking arrangements with Consolidated. In the
opinion of counsel for Consolidated, borrowing from any of the banks is not
prohibited by the provisions of Rule 70 of the Commission promulgated under the
Act.
Transactions Between Consolidated
and Its Subsidiaries
_________________________________
It is believed that Sections 6(a), 7, 9(a), 10, and 12(b) of the Act
and Rules 43 and 45 are applicable to the transactions among Consolidated and
its Subsidiaries.
Sections 6(a)2 and 7(e) of the act are deemed applicable to any
changes in the authorized common stock of the Subsidiaries.
<PAGE> 28
(b) If an applicant is not a registered holding company or a subsidiary
thereof, state the name of each public utility company of which it is an
affiliate, or of which it will become an affiliate as a result of the proposed
transaction, and the reasons why it is or will become such an affiliate.
Inapplicable.
Item 4. Regulatory Approval
___________________
(a) State the nature and extent of the jurisdiction of any State
commission or any Federal commission (other than the Securities and Exchange
Commission) over the proposed transaction.
The Public Service Commission of West Virginia has jurisdiction over
the short-term and long-term borrowings and capital stock sales by Hope Gas,
Inc.
The Public Utilities Commission of Ohio has jurisdiction over the
long-term borrowings and the capital stock sales by The East Ohio Gas Company
and West Ohio Company.
The Virginia State Corporation Commission has jurisdiction over the
short-term and long-term borrowings, and the sales of common stock, by Virginia
Natural Gas, Inc.
The Pennsylvania Public Utility Commission has jurisdiction over the
long-term borrowings and capital stock sales by The Peoples Natural Gas
Company.
<PAGE> 29
No other State commission and no Federal commission other than the
Securities and Exchange Commission has jurisdiction over any of the proposed
transactions.
(b) Describe the action taken or proposed to be taken before any
commission named in answer to paragraph (a) of this item in connection with the
proposed transaction.
Required applications as needed will be filed with the commissions
mentioned above. Debt financings subject to state commission jurisdictions
will be carried out pursuant to Rule 24(c)(2), and equity financings will be
exempt pursuant to Rule 52.
Item 5. Procedure
_________
(a) State the date when Commission action is requested. If the date is
less than 40 days from the date of the original filing, set forth the reasons
for acceleration.
It is requested that Commission action with respect to the
transaction set forth in this application-declaration become effective on or
before October 2, 1995.
(b) State (i) whether there should be a recommended decision by a hearing
officer, (ii) whether there should be a recommended decision by any other
responsible officer of the Commission, (iii) whether the Office of
Public Utility Regulation of the Division of Investment Management may assist
in the preparation of the Commission's decision, and (iv) whether there should
be a 30-day waiting period between the issuance of the Commission's order and
the date on which it is to become effective.
<PAGE> 30
It is submitted that a recommended decision by a hearing or other
responsible officer of the Commission is not needed with respect to the
proposed transactions. The Office of Public Utility Regulation of the Division
of Investment Management may assist in the preparation of the Commission's
decision. There should be no waiting period between the issuance of the
Commission's order and the date on which it is to become effective.
Item 6. Exhibits and Financial Statements
_________________________________
The following exhibits and financial statements are filed as a part
of this statement:
(a) Exhibits
A - Constituent Instruments Relating to the Security
(1) Transactions by Consolidated Only
Capital Stock
A-1 The certificate of incorporation and by-laws
of Consolidated as filed as exhibits to
Consolidated's Form U5S, File No. 30-203,
are hereby incorporated by reference.
Forms of Notes
A-2 Form of Commercial Paper notes.
(Incorporated by reference to Files No. 70-6153
and 70-7393.)
A-3 Form of Indenture.
(Incorporated by reference to File No. 70-8107)
(2) Intrasystem Transactions Among Consolidated and
Subsidiaries
<PAGE> 31
Capital Stock
A-3 The capital stock to be issued by Subsidiaries
to their respective parent company, as indicated
in III. of the response to Item 1(a)hereof, will
be the authorized form of capital stock certificate
for each such Subsidiary and such exhibits are
therefore omitted. The certificate of incorporation
and by-laws of each Subsidiary as filed as exhibits
to Consolidated's Form U5S, File No. 30-203, are
hereby incorporated by reference. To the extent
permitted by state law, shares may also be
uncertificated and evidenced by book-entry only.
C - Registration Statement under the Securities Act of 1933
C-1 Form S-3 Registration Statement.
(Incorporated by reference to Registration
Statement No. 33-49469 filed via EDGAR on
April 6, 1993)
C-2 Form S-3 Registration Statement.
(Incorporated by reference to Registration
Statement No. 33-52585 filed via EDGAR on
March 9, 1994)
D - Proceedings before State Commissions
D-1 Application of Virginia Natural Gas, Inc. to
the Virginia State Corporation Commission.
(Incorporated by reference to Exhibit D-1 to Form
U-1, File No. 70-8415)
D-2 Order of the Virginia State Corporation Commission
to Virginia Natural Gas, Inc.
(Incorporated by reference to Exhibit D-2 to Form
U-1, File No. 70-8415)
<PAGE> 32
F - Opinion of Counsel.
F-1 Opinion of Counsel for Consolidated
(To be filed by amendment)
F-2 Combined Opinion of Counsel for CNG Coal
Company, CNG Energy Services Corporation,
CNG Financial Services, Inc., CNG Power
Company, CNG Market Center Services, Inc.,
CNG Producing Company, CNG Pipeline Company,
CNG Research Company, CNG Storage Service
Company, CNG Transmission Corporation,
Consolidated Natural Gas Service Company, Inc.,
Consolidated System LNG Company, Hope, Gas, Inc.,
The East Ohio Gas Company, The Peoples Natural Gas,
Virginia Natural Gas, Inc., and West Ohio Gas
Company
(To be filed by amendment)
G - Currently effective authorizations for sale of stock to
employee benefit plans and dividend reinvestment plan, and
for acquisition of treasury shares on the open market.
O - Proposed notice pursuant to Rule 22(f).
(b) Financial Statements
Financial statements are not submitted with respect to the
authorizations herein sought due to (i) the extended period for which
authorizationS are sought and (ii) the impracticality of knowing the type and
extent of financing transactions that may occur during such period. However,
Consolidated will furnish any financial information that the Commission shall
request.
Item 7. Information as to Environmental Effects
_______________________________________
(a) Describe briefly the environmental affects of the proposed
transaction in terms of the standards set forth in Section 102(2)(c) of the
National Environmental Policy Act (42 U.S.C. 4332(2)(C)). If the response to
this item is a negative statement as to the applicability of Section 102(2)(C)
in connection with the proposed transaction, also briefly state the reasons for
that response.
As more fully described in Item 1(a), the proposed transactions
subject to the jurisdiction of this Commission relate to financing proposals
<PAGE> 33
and involve no major federal action significantly affecting the human
environment.
(b) State whether any other federal agency has prepared or is preparing
an environmental impact statement ("EIS") with respect to the proposed
transaction. If any other federal agency has prepared or is preparing an EIS,
state which agency or agencies and indicate the status of that EIS preparation.
None.
SIGNATURES
__________
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, the undersigned companies have duly caused this statement to be
signed on their behalf by the undersigned thereunto duly authorized.
CONSOLIDATED NATURAL GAS COMPANY
By L. D. Johnson, Vice Chairman and
Chief Financial Officer
CNG COAL COMPANY
CNG ENERGY SERVICES CORPORATION
CNG FINANCIAL SERVICES, INC.
CNG POWER COMPANY
CNG MARKET CENTER SERVICES, INC.
CNG PRODUCING COMPANY
CNG PIPELINE COMPANY
CNG RESEARCH COMPANY
CNG STORAGE SERVICE COMPANY
CNG TRANSMISSION CORPORATION
CONSOLIDATED NATURAL GAS SERVICE
COMPANY, INC.
CONSOLIDATED SYSTEM LNG COMPANY
HOPE GAS, INC.
THE EAST OHIO GAS COMPANY
THE PEOPLES NATURAL GAS COMPANY
VIRGINIA NATURAL GAS, INC.
WEST OHIO GAS COMPANY
By N. F. Chandler, Their Attorney
Dated: August 1, 1995
<PAGE> 1
EXHIBIT G
CURRENTLY EFFECTIVE STOCK TRANSACTION AUTHORIZATIONS TO BE
SUPERSEDED BY AN OMNIBUS FINANCING AUTHORIZATION
HCAR No.,
Auth Date(A)
File No. & Exp Date(E) Subject
_______ _____________ _______
70-6306 26174 Acquisition of shares for
11/30/94(A) Employee Stock Ownership
12/31/99(E) Plan
70-7095 25425 Stock transactions under
6/21/85(A) Employee Long-Term Incentive
No Exp date Plan
70-7170 26175 Issuance of shares pursuant
11/30/94(A) to Dividend Reinvestment Plan
12/31/99(E)
70-7922 25512 Stock transactions involving
4/8/92(A) Employee Thrift Plan
12/31/01(E)
70-7948 25528 & 25538 Treasury stock transactions
5/8/92 &
5/18/92(A)
12/31/95(E)
70-8371 26030 Issuance of shares pursuant
4/18/94(A) to Non-employee Directors'
No Exp date Stock Plan
<PAGE> 1
EXHIBIT O
Proposed Notice
Pursuant to Rule 22(f)
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
August , 1995
Notice is hereby given that the following filing(s) has/have been made
with the Commission pursuant to provisions of the Act and rules promulgated
thereunder. All interested persons are referred to the application(s) and/or
declaration(s) for complete statements of the proposed transaction(s)
summarized below. The application(s) and/or declaration(s) and any amendments
thereto is/are available for public inspection through the Commission's Office
of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
August , 1995 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) at the address(es) specified below. Proof of service (by
affidavit or, in case of an attorney at law, by certificate) should be filed
with the request. Any request for hearing shall identify specifically the
issues of fact or law that are disputed. A person who so requests will be
notified of any hearing, if ordered, and will receive a copy of any notice or
order issued in the matter. After said date, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted to
become effective.
_____________________________
<PAGE> 2
EXHIBIT O
Consolidated Natural Gas Company, Et Al. (70- )
________________________________________
Consolidated Natural Gas Company ("Consolidated"), a registered holding
company, CNG Tower, Pittsburgh, Pennsylvania 15222-3199, and its wholly owned
nonutility subsidiary companies, Consolidated System LNG Company, CNG Research
Company, CNG Financial Services, Inc. and Consolidated Natural Gas Service
Company, Inc., located at CNG Tower, Pittsburgh, Pennsylvania 15222-3199; CNG
Coal Company, CNG Producing Company, and its subsidiary CNG Pipeline Company,
CNG Tower, 1450 Poydras Street, New Orleans, Louisiana 70112-6000; CNG
Transmission Corporation and CNG Storage Service Company, 445 West Main Street,
Clarksburg, West Virginia 26301; CNG Energy Services Corporation, CNG Power
Company and its subsidiary CNG Market Center Services, Inc., One Park Ridge
Center, P.O. Box 15746, Pittsburgh, PA 15244-0746; and Consolidated's wholly
owned public-utility subsidiary companies, The Peoples Natural Gas Company, CNG
Tower, Pittsburgh, Pennsylvania 15222-3199; The East Ohio Gas Company, 1717
East Ninth Street, Cleveland, Ohio 44115; Virginia Natural Gas, Inc., 5100 East
Virginia Beach Boulevard, Norfolk, Virginia 23501-3488; Hope Gas, Inc., P.O.
Box 2868 Clarksburg, West Virginia 26302-2868; and West Ohio Gas Company, 319
West Market Street, Lima Ohio 45802, have filed an application-declaration
("Application") under Sections 6(a), 7, 9(a), 10 and 12(b) of the Act and Rules
43 and 45 thereunder. All directly and indirectly owned subsidiaries of
Consolidated are referred to individually as "Subsidiary" and collectively as
"Subsidiaries." Consolidated and its Subsidiaries are referred to herein as
the "Consolidated System."
<PAGE> 3
I. OVERVIEW OF OMNIBUS TYPE APPLICATION
The Application contains the request of Consolidated and its Subsidiaries
for authorization for financing of the Consolidated System for the period
beginning with the effective date of an order issued in this proceeding through
December 31, 2000. The Application seeks to consolidate in one filing all of
the routine-type financing authorizations for the Consolidated System, and
simultaneously asks for a significant amount of flexibility as to these
financings - both as to characteristics and as to amounts. It is similar in
concept to the shelf-type registration statement filings permitted under Rule
415 promulgated under the Securities Act of 1933 ("1933 Act"). The Application
approaches financing from a system-wide viewpoint, and does not concentrate on
the details of the individual components within the over-all system financing
program.
To the extent not already exempt under Rule 52, Consolidated and its
Subsidiaries would be permitted to engage in intra-system financing of their
respective directly owned Subsidiaries without specific dollar limits and
without additional prior Commission approval. However, the use of proceeds
from the financings would be limited (i) to use in the operations of the
respective businesses in which such Subsidiaries are already authorized to
engage or (ii) to finance a new corporation, trust, partnership or other entity
which is created for the sole purpose of obtaining financing.
<PAGE> 4
Due to statutory requirements, the authorization requested herein to
engage in external or intra-system financing without additional Commission
approval do not apply in the case of any financing (other than through the use
of internally generated funds) for the purpose of investing in either an exempt
wholesale generator ("EWG") or a foreign utility company ("FUCO") as defined in
Sections 32 and 33 of the Act, respectively. Nor would any financing be
allowed under the above procedures if it would cause Consolidated to not be in
compliance with Rules 53 and 54 promulgated under the Act.
II. PARAMETERS FOR AUTHORIZATIONS
The Application makes requests for authority, without any additional prior
Commission approvals, to engage in future financing transactions for which the
specific terms and conditions are not at this time known. The general
conditions for doing such financing activities without further prior approval
are as follows.
CONSOLIDATED DEBT OF INVESTMENT GRADE. Consolidated would be authorized
to engage in the financing activities described herein as long as its long-term
debt rating is of investment grade as established by a nationally recognized
rating agency.
INTEREST RATES ON BORROWINGS. Interest rates on borrowings occurring
pursuant to the authorizations granted under the Application will not exceed
300 basis points over comparable term U. S. Treasury securities.
<PAGE> 5
DIVIDEND RATES ON PREFERRED STOCK. Dividend rates on preferred stock will
not exceed 500 basis points over 30 year term U.S. Treasury securities.
MATURITY OF DEBT. The maturity of indebtedness will not exceed 50 years.
ISSUANCE EXPENSES. The underwriting fees, commissions, or other
remuneration paid in connection with the non-competitive bid issue, sale or
distribution of a security pursuant to the Application will not exceed 5% of
the principal or total amount of the financing.
AGGREGATE DOLLAR LIMIT. The aggregate amount of external financing
effected by Consolidated during the approximate 5-1/2 year period will not
exceed $3.5 billion; for purpose of calculating the amount effected only
outstanding amounts under revolving credit arrangements will be counted.
Further, credit support of underlying Subsidiary obligations (because the same
would be subject to a separate limitation) and the issue of securities to the
extent the proceeds thereof are used to retire outstanding securities would not
be included in the calculation.
III. DESCRIPTION OF SPECIFIC TYPES OF FINANCING
A. Consolidated External Financings
Consolidated obtains funds externally through short-term debt financing,
including commercial paper sales; long-term debt financing, such as debentures
and notes; and sales of capital stock. Debt and preferred stock financings can
be either privately placed or publicly distributed. Common stock can be issued
<PAGE> 6
and sold pursuant to underwriting agreements of a type generally standard in
the industry. Public distributions can be pursuant to private negotiation with
underwriters, dealers or agents as discussed below or effected through
competitive bidding among underwriters. All such debt and stock sales are at
rates or prices and under conditions negotiated or based upon, or otherwise
determined by, competitive capital markets. Common stock is also sold pursuant
to various existing or new employee benefit plans and dividend reinvestment
plans.
Consolidated may sell the debt or equity securities covered by this
Application in any of the following ways: (i) through underwriters or dealers;
(ii) directly to a limited number of purchasers or to a single purchaser, or
(iii) through agents. If underwriters are used in the sale of the securities,
such securities will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. The securities may be offered to the public
either through underwriting syndicates (which may be represented by managing
underwriters designated by the Company) or directly by one or more underwriters
acting alone. The securities may be sold directly by the Company or through
agents designated by the Company from time to time. If dealers are utilized in
the sale of any of the securities, the Company will sell such securities to the
dealers, as principal. Any dealer may then resell such securities to the
public at varying prices to be determined by such dealer at the time of resale.
If equity securities are being sold in an underwriting offering, the
Company may grant the underwriters thereof a "green shoe" option permitting the
<PAGE> 7
purchase from the Company at the same price additional equity securities (an
additional 15% under present guidelines) then being offered solely for the
purpose of covering over-allotments.
If debt securities are being sold, they may be sold pursuant to "delayed
delivery contracts" which permit the underwriters to locate buyers who will
agree with the Company to buy the debt at the same price but at a later date
than the date of the closing of the sale to the underwriters.
1. Short-term Financing
To provide financing for general corporate purposes, including financing
gas storage inventories, other working capital requirements and construction
spending until long term financing can be obtained, Consolidated would continue
to sell commercial paper, from time to time, in established domestic or
European commercial paper markets. Such commercial paper would be sold to
dealers at the discount rate per annum prevailing at the date of issuance for
commercial paper of comparable quality and maturities sold to commercial paper
dealers generally. It is expected that the dealers acquiring commercial paper
from Consolidated will reoffer such paper at a discount to corporate,
institutional and, with respect to European commercial paper, to individual
investors.
Back-up bank lines of credit for 100% of the outstanding commercial paper
are required by credit rating agencies. To satisfy this requirement,
Consolidated proposes to establish back-up bank lines in an aggregate principal
amount not to exceed the amount of authorized commercial paper. Consolidated
would borrow, repay and reborrow under these lines from time to time, without
collateral, to the extent that it becomes impracticable to sell commercial
<PAGE> 8
paper due to market conditions or otherwise. Loans under these lines shall
have a maturity date not more than one year from the date of each borrowing.
Consolidated may engage in other types of short-term financing as it may
deem appropriate in light of its needs and market conditions at the time of
issuance. Such short-term financing could include, without limitation, bank
lines and debt securities issued under its debt securities indenture.
2. Long-term Financing
Consolidated would engage in long-term financing with such terms and
conditions as it may deem appropriate in the context of its needs and financial
market conditions at the time of issuance. Any long-term debt would have such
designation, aggregate principal amount, maturity, interest rate(s) and terms
of payment of interest, redemption provisions and sinking fund terms,
conversion or put terms and other terms and conditions as Consolidated may at
the time of issuance determine. Examples of such long-term securities would
include convertible debt, medium term notes, monthly income debt securities,
securities with call or put options, etc.
<PAGE> 9
3. Stock Financing
Consolidated may also issue and sell preferred or common stock, or issue
stock upon the exercise of convertible debt of equity securities or pursuant to
rights, options, warrants and similar securities. Consolidated may also buy
back shares of such stock, during the authorization period. Consolidated
proposes that it be allowed, without additional prior Commission approval, to
(i) amend its Certificate of Incorporation to increase its authorized capital
as deemed necessary and appropriate by Consolidated for proper corporate
purposes, (ii) eliminate the current provision in its certificate of
incorporation authorizing its class of preferred stock and substitute therefor
new provisions authorizing a class of preferred stock with up-to-date terms and
conditions to the extent permitted by Delaware law, (iii) solicit proxies
through a proxy statement, filed under and meeting the standards of the 1934
Act, requesting shareholder approval of such amendments to the certificate of
incorporation, and (iv) permit the Board of Directors of Consolidated, or a
committee thereof as authorized by Delaware law, to set the terms and
conditions of each series of the present or new classes of preferred stock to
the full extent permitted by Delaware law and as may be required in
Consolidated's judgment to take advantage of current market conditions. Any
preferred stock issued would have such designation, liquidation preferences,
issue price(s), dividend rate(s) and terms of payment of dividends, redemption
provisions and sinking fund terms, voting or other special rights, conversion
terms and other terms and conditions as Consolidated may at the time of
issuance determine.
<PAGE> 10
Consolidated obtains funds through the sale of its common stock sold
pursuant to various employee benefit plans and a dividend reinvestment plan.
From time to time in the future, other similar plans may be adopted by
Consolidated and existing plans may be changed. Consolidated also acquires
treasury shares through the operations of such employee plans. Additionally,
Consolidated is authorized through December 31, 1995 to acquire up to 4,000,000
shares of its common stock in the open market. Consolidated now proposes to
sell, reacquire and resell shares of common stock pursuant to these existing
plans and similar plans hereafter adopted, and to engage in purchases of its
stock and reissuances of its treasury shares for reasonable business purposes,
without any additional prior Commission order. Stock transactions of this
variety would thus be treated the same as other stock transactions permitted
pursuant to this Application.
B. Parent-Subsidiary Intra-System Financing
1. Rule 52 Exemption
Due to the Commission's adoption in HCAR No. 26311, dated June 20, 1995,
of amendments to its exemptive Rule 52, most of the financing transactions
between Consolidated and its Subsidiaries would now be exempt pursuant to such
rule. However, to the extent that the transaction (i) involves the issue and
sale of a security of a utility Subsidiary not subject to the approval
jurisdiction of a state utility commission, and/or (ii) does not involve the
issue and sale of common stock, preferred stock, bond, note or other form of
<PAGE> 11
indebtedness transactions, Rule 52 would not apply. Short-term borrowings from
Consolidated by its utility Subsidiaries, The East Ohio Gas Company, West Ohio
Gas Company and The Peoples Natural Gas Company are not subject to state
commission jurisdiction. In order to cover these areas not included within the
ambit of Rule 52, request is made to engage in short-term parent-Subsidiary
debt financings and non-traditional types of financing as described below.
2. Intra-system Financings by Consolidated
Consolidated would continue to provide financing to each of its directly
owned Subsidiaries as required. Such financings would generally continue to be
in the form of open account advances, long-term loans and/or capital stock
purchases, as requested by the Treasurer of each such Subsidiary. Open account
advances will provide funds for general corporate purposes, including gas
storage inventories, other working capital requirements and temporarily for
capital expenditures until long-term financing is obtained and /or cash is
generated internally. Generally, Consolidated's long-term loans to, and
purchase of capital stock from, such Subsidiaries will provide financing for
their capital expenditures, and will be exempt transactions under Rule 52. The
Subsidiaries may also, from time to time as deemed appropriate By them, buy
back shares of their respective common stock from Consolidated.
<PAGE> 12
Open account advances may be made, repaid and remade on a revolving basis,
with interest at the same effective rate of interest as Consolidated's daily
weighted average effective rate of commercial paper, revolving credit and/or
other short-term borrowings. If no such borrowings are outstanding then the
interest rate shall be predicated on the Federal Funds' effective rate of
interest as quoted daily by the Federal Reserve Bank of New York. Such
advances will be made through the CNG System money pool ("Money Pool")
authorized under Commission order dated June 12, 1986, HCAR No. 24128, File No.
70-7258.
Consolidated and its Subsidiaries may engage in other types of financing
of their respective Subsidiaries. This may include capital donations, secured
financing and other types which have become accepted in capital markets
generally as viable and reasonable forms of financing for the kinds of
companies involved in the transaction.
3. Changes in Capital Stock of Subsidiaries
The portion of an individual Subsidiary's aggregate financing to be
effected through the sale of stock to Consolidated or other immediate parent
company during the 5-1/2 year authorization period cannot be ascertained at
this time. It may happen that the proposed sale of common stock may in some
cases exceed the currently authorized capital stock of such Subsidiary. In
addition, the Subsidiary may chose to use other forms of capital stock. As
needed to accommodate such proposed transactions and to provide for future
issues, request is made for authority to increase any such Subsidiary's
<PAGE> 13
authorized common stock by a number of shares as deemed appropriate by
Consolidated in the instant case, and to authorize other types of capital stock
in such amounts as deemed appropriate by the Subsidiary (with such terms as are
authorized by the corporate law of its state of incorporation) in view of
current and anticipated capital markets.
IV. INCREASE IN RANGE OF INVESTMENTS FOR EXCESS FUNDS
Consolidated requests that it be authorized to adopt a more flexible
investment policy which would allow it to increase its returns on investments
of temporarily excess funds in the highly competitive securities market. The
marketable securities and investment vehicles in which Consolidated would be
allowed to invest include common stock, preferred stock and depository receipts
of companies that are listed on a national securities or have securities traded
in the NASDAQ system. Cash reserves of Consolidated would be invested in
short-term government obligations, negotiable certificates of deposit and
bankers' acceptances, long-term corporate obligations maturing within one year
and money market preferred stock. Consolidated also seeks to invest surplus
funds in mutual funds and corporate debt instruments and preferred stocks that
are convertible into the types of common stock in which it could otherwise
invest. Such securities would generally need to meet certain quality rating
standards, and would be further limited as to what proportion of the total
portfolio market value each could comprise. Further, ownership of voting
securities of any one issuer will not equal or exceed 5% of the total
outstanding voting securities of such issuer, and no investments will be made
for the purpose of exercising control.
<PAGE> 14
V. PARENT COMPANY GUARANTEES
Consolidated and its Subsidiaries request authorization to enter guarantee
arrangements, obtain letters of credit, and otherwise provide credit support
with respect to obligations of their respective Subsidiaries to third parties
as may be needed and appropriate to enable them to carry on in the ordinary
course of their respective businesses. The maximum aggregate limit on all such
credit support by Consolidated at any one time will be $1.5 billion. Such
authorization of Consolidated to provide credit support would supersede and
replace the current authorization of Consolidated to guarantee up to $750
million of obligations of CNG Energy Services Corporation as set forth in
Commission order dated November 16, 1993, HCAR No. 25926, File No. 70-8231.
_____________________________
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Jonathan G. Katz
Secretary
