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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________
CONSOLIDATED NATURAL GAS COMPANY : CERTIFICATE
Pittsburgh, Pennsylvania : of
: NOTIFICATION
CNG INTERNATIONAL CORPORATION : NO. 4
Reston, Virginia :
: TRANSACTIONS
: DURING PERIOD
:
: October 1, 1997
through
December 31, 1997
:
File No. 70-8759 :
:
(Public Utility Holding Company Act of 1935) :
____________________________________________ :
TO THE SECURITIES AND EXCHANGE COMMISSION:
AUTHORIZATIONS
By order dated May 30, 1996 (HCAR No. 26523), File No. 70-8759, ("May
Order") the Securities and Exchange Commission ("SEC") authorized (i) financing
by Consolidated Natural Gas Company ("CNG") of its wholly-owned subsidiary, CNG
International Corporation, ("CNGI"), (ii) CNGI to directly acquire, or through
intermediate subsidiaries indirectly acquire, securities or interests in exempt
wholesale generators ("EWGs") outside the United States and foreign utility
companies ("FUCOs"), as respectively defined in the Public Utility Holding
Company Act of 1935 ("the Act"), and (iii) CNG, CNGI and intermediate
subsidiaries to enter into guarantee arrangements, obtain letters of credit,
and otherwise provide credit support for the obligations of intermediate
subsidiaries and EWGs and FUCOs in which CNGI has a direct or indirect
interest, in amounts in the aggregate not to exceed $300 million. The May
Order reserved jurisdiction, pending completion of the record, over (i)
investments by CNG and International, of up to $300 million in entities
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that would engage in a variety of consulting and support services to
nonassociates, as well as certain other energy-related businesses in foreign
countries, (ii) the provision of credit support by CNG, CNGI and its
subsidiaries, aggregating, together with EWG/FUCO credit support, of up to $300
million with nonassociates in connection with consulting, support and energy-
related businesses in foreign countries, and (iii) the issuance to
nonassociates by CNGI and its subsidiaries of securities that are not exempt
from prior SEC review under sections 6(a) and 7 of the Act, among other things.
By orders dated October 25 1996 (HCAR No. 26595) and November 19, 1996
(HCAR No. 26608), File No. 70-8759, the SEC respectively released jurisdiction
over proposed investments of (i) up to $75 million in foreign gas pipeline
projects located in Bolivia and Uruguay ("South American Pipeline Projects")
and (ii) up to $75 million in three pipeline projects in Australia ("Australian
Pipeline Projects").
This Certificate is filed in accordance with Rule 24, as a notification
that of the various transactions authorized by the aforesaid orders, the
following have been carried out in accordance with the terms and conditions of
and for the purposes represented by the Application-Declaration and such
orders.
EWGS AND FUCOS
The Latin America Energy and Electricity Fund I, L.P.
Through December 30, 1997 CNGI has invested approximately $7.4 million in
The Latin America Energy and Electricity Fund I, L.P. ("Fund"). The Fund has
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to date invested in three FUCOs: Empresa Distribuidora de Entre Rios, S.A. in
Argentina, Luz del Sur in Peru, and Companhia Forca e Luz in Cataguatesan in
Brazil.
Camuzzi Gas Pampeana S.A.
Camuzzi Gas del Sur S.A.
Empresa Distribuidora de Energia Atlantica S.A.
Pursuant to a stock purchase agreement dated December 22, 1997, CNG
International ("CNGI") acquired 12.5% of the voting shares of Sodigas Pampeana
S.A. ("Sodigas"), 12.5% of the voting shares of Sodigas Sur S.A. ("Sodigas
Sur") and 20% of the voting shares of Buenos Aires Energy Company S.A.
("Baeco").
Camuzzi Argentina S.A. operates the largest gas distribution concession in
Argentina and owns 51% of both Sodigas and Sodigas Sur. Loma Negra C.I.A.S.A.,
EDEA's largest customer and Argentina's largest cement manufacturer, owns 18.1%
of Sodigas and Sodigas Sur. Pacific Enterprises owns 12.5% of Sodigas and
Sodigas Sur.
Sodigas owns 70% of the voting shares of Camuzzi Pampeana. Sodigas Sur
owns 90% of the voting shares of Camuzzi del Sur. The Argentine government
owns 20% of Camuzzi Pampeana. The employees of Camuzzi Pampeana and Camuzzi
del Sur each own 10% of their respective companies.
Camuzzi Argentina S.A. and Loma Negra C.I.A.S.A. own 60% and 20%,
respectively, of BAECO. Baeco owns 55% of the voting shares of Inversora
Electria de Buenos Aires S.A. ("IEBA"), which in turn owns 90% of EDEA. United
Utilities International Limited, one of the largest electric distributors in
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the United Kingdom, owns the remaining 45% of IBEA. The employees of EDEA own
the remaining 10% of EDEA.
Camuzzi Pampeana serves approximately 770,000 customers in Buenos Aires
province (but not in the city of Buenos Aires itself). Camuzzi del Sur serves
approximately 354,000 customers in Argentina to the south of Buenos Aires.
Camuzzi Pampeana and Camuzzi del Sur together sell approximately 335 bcf of
natural gas per year. EDEA serves approximately 398,000 electric customers in
the province of Buenos Aires, delivering about 1,800 gigawatt-hours a year.
OTHER FOREIGN INVESTMENTS
South American Pipeline Projects
No investments have been made in the South American Pipeline Projects.
Pursuit of investment in the Bolivian pipeline has been abandoned.
Australian Pipeline Projects
In December of 1996, CNGI acquired, through intermediate subsidiaries, a
30 percent interest in Epic Energy Pty. Ltd. ("Epic"), an Australian
corporation. On December 19, 1996, Epic purchased the Australian Pipeline
Projects' assets, which Epic operates, maintains and manages.
The Australian Pipeline Projects' assets are valued at more than $500
million in Australian dollars. The assets include three major long-distance
natural gas pipeline systems accessing gas supplies in Australia's Cooper
Basin: (i) a 488 mile pipeline from Moomba (the central supply point of the
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Cooper Basin) south to the city of Adelaide; (ii) a 44 mile pipeline from
Katnook to markets in South Australia; and (iii) a recently completed, 470
mile pipeline from the Cooper/Eromonga Basin in Southwest Queensland to the
city of Wallumbilla, interconnecting with existing pipelines serving the
Brisbane and Gladstone markets.
INTRA-AFFILIATE TRANSACTIONS INCLUDING FINANCING
CNGI incorporated CNG Cayman One Ltd and CNG Cayman Two Ltd in the Cayman
Islands as wholly-owned intermediate subsidiaries to own all the stock of CNGI
Australia Pty Ltd, which directly holds CNGI's 30% interest in Epic. Combined
balance sheet and income statement for the quarter ending December 31, 1997 for
CNGI, and these wholly-owned subsidiaries are attached as Exhibits A.
To date, no guarantees have been issued, by or for the account of CNGI or
any of its subsidiaries, with respect to any of the investments authorized in
this proceeding.
On December 30, 1997, CNG purchased 3,800 shares of CNGI common stock,
$10,000 par value per share for $38,000,000. Also on December 30, 1997, CNG
loaned $40,000,000 to CNGI and in return therefor received a long-term note
from CNGI. The note carries an interest rate of 6.95% (substantially equal to
the effective cost of money to CNG), and matures on December 15, 2027.
Interest is paid on June 15 and December 15 of each year. The proceeds from
the stock sale and borrowing were used by CNGI to acquire the interests in
FUCOs in Argentina as described above.
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By order dated July 18, 1997, HCAR No. 26742, CNGI was authorized to
participate in the CNG system money pool ("Money Pool"). During the reporting
period CNGI made withdrawals of $85,643,000 from, and made contributions of
$3,770,000 to, the Money Pool. CNGI's balance in the Money Pool on December
31, 1997 was a net borrowing of $82,243,000, of which $78,000,000 was repaid in
early January 1998 from the above described stock and loan transactions.
OTHER MATTERS
The business of CNGI is to participate in selected projects in
international markets in transactions either authorized by Commission order in
this proceeding or as permitted by statutory exemption. The proceeds of the
above described transactions were used by CNGI in such business.
Each respective "past tense" opinion required by paragraph F(2) of the
instructions as to exhibits for Form U-1 will be filed when all transactions
authorized under the respective order have been consummated.
CONSOLIDATED NATURAL GAS COMPANY
CNG INTERNATIONAL CORPORATION
By N. F. Chandler
Their Attorney
February 19, 1998
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EXHIBIT A
<TABLE>
<CAPTION>
CNG International Corporation
Balance Sheet
December 31, 1997 (Unaudited) (1)
CAYMAN CAYMAN CNGI
CNGI 1 2 AUSTRALIA
ELIMIN. TOTALS
______ ______ ______ _________
________ ______
Assets
______
<S> <C> <C> <C> <C>
<C> <C>
Property, plant
& equipment
Total Investment 706,641 0 0 0
0 706,641
Less Accum. Deprec. (164,171) 0 0 0
0 (164,171)
Net property,
plant & equipment 542,470 0 0 0
0 542,470
Cash 12,115 0 0 42,740
0 54,854
Special deposits 1,114 0 0 0
0 1 114
Accounts Receivable 31,590 0 0 13,593
0 45,183
Accts. Rec.-Assoc. Cos. 78,501,675 496,917 5,206 448
(1,004,247) 78,000,000
Investments in Subs. 38,731,500 38,344,000 387,500 0
(77,463,000) 0
Other Investments 86,230,344 0 0 34,513,866
0 120,744,211
Deferred Charges 238,311 0 0 0
0 238,311
Deferred Income Taxes 233,000 0 0 0
0 233,000
Total Assets 204,522,119 38,353,305 392,706 34,570,647
(78,467,247) 199,859,143
=========== ========== ======== ==========
========== ===========
</TABLE>
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EXHIBIT A
<TABLE>
<CAPTION>
CAYMAN CAYMAN CNGI
CNGI 1 2 AUSTRALIA
ELIMINATIONS TOTALS
______ ______ ______ _________
___________ ______
Stockholders Equity
& Liabilities
___________________
<S> <C> <C> <C> <C>
<C> <C>
Capitalization
Common stock 85,550,000 38,344,000 387,500 38,731,500
(77,463,000) 85,550,000
Retained earnings (5,965,971) 0 0 (4,662,528
0 (10,628,499)
Total stock-
holder's equity 79,584,029 38,344,000 387,500 34,068,972
(77,463,000) 74,921,501
Long-term notes
payable to parent
company 40,000,000 0 0 0
0 40,000,000
Total capitalization 119,584,029 38,344,000 387,500 34,068,972
(77,463,000) 114,921,501
Total curr. liabil. 84,909,089 496,917 5,206 501,675
(1,004,247) 84,908,641
Deferred credits 29,000 0 0 0
0 29,000
Total stockholder's
equity and liabil. 204,522,118 38,840,917 392,706 34,570,647
(78,467,247) 199,859,142
=========== ========== ======== ==========
========== ===========
(1) This balance sheet has not been audited by the Company's independent
auditors.
</TABLE>
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EXHIBIT A
<TABLE>
<CAPTION>
CNG International Corporation
Income Statement for the Year Ending
December 31, 1997 (Unaudited) (1)
CAYMAN CAYMAN CNGI
CNGI 1 2 AUSTRALIA
ELIMIN. TOTALS
_________ ______ ______ _______
______ __________
<S> <C> <C> <C> <C>
<C> <C>
Total operating revenues 395,798 0 0 0
0 395,798
Total operating expenses 3,976,200 0 0 705,530
0 4,681,730
_________ ______ ______ _______
_____ __________
Net Operating Income (loss) (3,580,402) 0 0 (705,530)
0 (4,285,932)
Other income 514,497 0 0 158,727
0 673,224
Other income deductions 36,216 0 0 (50,975)
0 (14,758)
Interest charges 233,005 0 0 0
0 233,005
_________ ______ ______ _______
_____ _________
Net income (loss) (3,335,126) 0 0 (495,828)
0 (3,830,954)
========= ====== ====== =======
===== =========
(1) This income statement has not been audited by the Company's independent
auditors.
</TABLE>
