<PAGE> 1
File Number 70-9321
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 1
to
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
CNG INTERNATIONAL CORPORATION
Two Fountain Square, Suite 600
11921 Freedom Drive
Reston, Virginia 20190-5608
Consolidated Natural Gas Company, a registered holding company,
is the parent of the other party
Names and addresses of agents for service:
S. E. WILLIAMS, Senior Vice President
and General Counsel
Consolidated Natural Gas Company
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
N. F. CHANDLER, General Attorney
Consolidated Natural Gas Service Company, Inc.
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
<PAGE> 2 File Number 70-9321
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
FORM U-1
APPLICATION-DECLARATION UNDER THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
Item 1. Description of Proposed Transaction
___________________________________
I. PRIOR CNG INTERNATIONAL AUTHORIZATIONS
By order dated May 30, 1996, HCAR No. 26523, File No. 70-8759, the
Securities and Exchange Commission ("Commission" or "SEC") authorized
Consolidated Natural Gas Company ("CNG"), a registered holding company under
the Public Utility Holding Company Act of 1935 (the "Act"), to form CNG
International Corporation ("CNG International"), to directly or through
intermediary companies acquire interests in exempt wholesale generators (EWGs")
outside the United States and foreign utility companies ("FUCOs") as such terms
are respectively defined in Sections 32 and 33 of the Act. CNG was also
authorized under such order to provide CNG International with certain credit
support with respect to its investments. Jurisdiction was retained over the
applicant's request to invest up to $300 million(1) in Foreign Energy
Activities(2).
_______________
(1) All dollar amounts are in U.S. currency unless otherwise noted.
(2) "Foreign Energy Activities" is defined in the May 30, 1996 order as (i) the
sale and servicing of energy equipment; (ii) gas transmission and storage;
(iii) gas exploration and production; (iv) brokering and marketing of
electricity, gas and other energy commodities,; (v) services related to the
foregoing; (vi) energy consulting in foreign energy markets; and (vii)
administrative, technical, construction, operating, maintenance, and other
management services to nonassociates with respect to their foreign operations.
<PAGE> 3
Through various orders in 1996 and 1997(3) in the proceeding at File No.
70-8759, the Commission released jurisdiction over proposed investments by CNG
International in natural gas pipelines in South America and Australia. To
date CNG International has made the following investments in Foreign Energy
Activities pursuant to such authorizations.
Epic Energy initial acquisition of pipelines $ 38,731,000
Acquisition of Alinta Pipeline $143,105,000
______________
Total $181,836,000
Request for other authorizations in the proceeding under File No. 70-8759
are not affected by this filing and would continue after any order that may be
issued pursuant to this proceeding.
CNG and CNG International now seek expanded authority to engage in certain
foreign gas related activities. Specifically, the applicants request that (i)
CNG International, directly or through subsidiaries, be permitted through
December 31, 2003 to invest up to $750 million to acquire in areas outside the
United States interests in non-FUCO or non-EWG entities engaged in activities
permitted under Section 2(a) of the Gas Related Activities Act of 1990 ("GRAA")
and activities specified in Section 2(b) of the GRAA and approved by order of
the Commission under Section 9 and 10 of the Act (collectively "Gas
- ----------
(3) HCAR No. 26595, dated October 25, 1996; HCAR No. 26608, dated November 12,
1996; and HCAR No. 26824, dated February 12, 1998.
<PAGE> 4
Related Activities"), (ii) CNG International and its subsidiaries be allowed to
make investments in such entities that are organized to participate in
activities involving the transportation or storage of natural gas within the
meaning of Section 2(a) of the GRAA without any additional prior approval of
the Commission, and (iii) CNG and CNG International be authorized to enter into
guarantees and provide other credit support for obligations of CNG
International or its subsidiaries up to an aggregate amount not exceeding (y)
$750 million in the case of non-FUCO or non-EWG entities engaged in Gas Related
Activities, and (z) one-half of CNG's consolidated retained earnings, less the
amount of guarantees and credit support previously given and outstanding on
behalf of FUCOs and EWGs, in the case of FUCOs and EWGs(4).
II. INCREASE IN AUTHORIZED INVESTMENT AMOUNT TO $750 MILLION
CNG International was authorized in the May 30, 1996 order to invest up to
$300 million in entities engaged in certain gas related activities and to make
guarantees and provide other credit support to FUCOs and EWGs not to exceed
$300 million. As in the earlier proceeding under File No. 70-8759, CNG and CNG
International propose that CNG International be authorized to identify,
evaluate and engage in Gas Related Activities in the foreign sector. The total
amount of investments made pursuant to the authorization granted in this
proceeding would not exceed $750 million.
_______________
(4) CNG International has minority interests in the following FUCOs: (i) The
Latin America Energy and Electricity Fund I, L.P. and (ii) Camuzzi Gas
Pampeana S.A., Camuzzi Gas del Sur, and Empresa Distribuidora de Energia
Atlantica S.A. in Argentina. CNG International has no interests in EWGs.
<PAGE> 5
It has been CNG International's experience that an amount such as the
$300 million in the May 30, 1996 order can be consumed over a relatively short
period of time. $39.2 million of this original authorization has already been
used to acquire interests in Epic pursuant to the supplemental order of
November 19, 1996. $143.1 million was allocated to acquisition of interests in
the Alinta pipeline. There is currently pending in the proceeding under File
No. 70-8759 an application for release of jurisdiction over $95 million in
order to acquire interests in the Gas Transmission Corporation pipeline in
Victoria, Australia. In order for CNG International to remain a viable
participant in foreign energy related markets, it is essential for it to have
sufficient dollar amount authorization in order to take advantage of investment
opportunities as they arise. Considering the size and financial stability of
the CNG holding company system, management has determined that a $750 million
authorization is reasonable.
Investments in foreign ventures involve a variety of risks that are not
necessarily present in the traditional, regulated public-utility industry. CNG
has addressed these concerns in the first instance by staffing CNG
International with experienced professionals who have worked extensively with
international project development and financing. By seeking project partners,
using project financing and limiting the size of any one investment, CNG acts
to ensure that the risks associated with foreign ventures do not adversely
<PAGE> 6
affect the financial strength of the CNG system. In addition, CNG has
established comprehensive procedures to identify and limit or mitigate the
risks that may be associated with a specific project.
Every investment opportunity pursued by CNG is subject to a series of
formal reviews to ensure that the project satisfies the Company's standards for
investment. The process begins with the identification of an investment
opportunity. An analysis of the host country focuses on the political and
economic stability of the particular country, the government's commitment to
energy services, the legal and regulatory framework for private investment, and
the potential effect of local business practices with respect to long-term
investment of private capital.
CNG has developed a formula and process for evaluating prospective CNG
International investments in foreign countries. The so-called "hurdle rate"
study assesses the additional risks of operating in a foreign business
environment and the uncertainty of projects in the development and construction
stages, or with complex or new technology.
The required rate of return or "hurdle rate" is calculated for high and
low commercial risk projects in the foreign country. Higher rates are applied
to projects in the development and construction phases. Tables are then
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prepared showing each country and the appropriate hurdle rates for each project
stage. The tables are revised on a periodic basis to reflect changes in the
country risk premiums, and to include countries where CNG International is
actively developing projects.
The hurdle rate table is then used to screen potential projects. If the
expected market rate is below the hurdle rate, the project can be rejected or
income enhancements can be sought to boost the expected return on the project.
After the project passes the initial screening process, a more intensive review
of the project and the country is undertaken. The hurdle rate is further
refined to take into account the risk profile of the project. For example, the
rate may be reduced if it is possible to (i) purchase political risk insurance
from the Overseas Private Investment Corporation, a U.S. Government agency, or
the Multilateral Investment Guarantee Agency, a World Bank unit, or (ii) obtain
sovereign guarantees from the host government for any of the project contracts
or for foreign exchange availability. The rate may also be modified upward or
downward if a detailed review forecasts a significant change in the fundamental
economic or political conditions of the country.
Once project development is undertaken, milestones are established and
the project team monitors the major technical, financial, commercial and legal
risks associated with the project and the management of those risks.
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In addition, each project is subjected to increasing levels of
management review. Depending on the amount of the potential exposure to the
CNG system, a project must be approved by the Chairman and Chief Executive
Officer, the Chief Financial Officer, and by the full board of directors of
CNG.
In September of 1996, CNG's board of directors established a CNG
International Committee, the members of which consist of at least three non-
employee directors. The committee meets at least four times per year and
reviews and takes action on matters concerning CNG International. The
committee oversees generally the business of CNG International, and advises,
consults and otherwise constructively supports it. Further, the committee
assists in the selection of prospective projects and investments, and assists
in screening projects prior to their recommendation to the board for
investment. The committee also challenges management with ideas and questions
about CNG International, and provides counsel to the board with respect to
international investments.
Significantly, this internal review process is largely duplicated by the
lenders who provide debt financing for a foreign project, since repayment of
the debt will depend, in the first instance, on the success of the project.
Project debt documents typically require the establishment of debt service and
other funded reserves.
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CNG specifically undertakes that it will not seek recovery through
higher rates to the CNG system operating companies' customers to compensate it
for any possible loss that it might sustain by reason of the proposed foreign
Gas Related Activities, or for any inadequate returns on such foreign Gas
Related Activities.
CNG has been providing, and will continue to provide, copies of filings
in this matter to its state regulators. There has been no adverse comment from
those regulators.
III. ELIMINATION OF NEED FOR CASE-BY-CASE APPROVAL OF INVESTMENTS IN GAS
TRANSMISSION AND STORAGE ENTITIES
In its order dated October 25, 1996 in the proceeding under File No. 70-
8759, HCAR No. 26595, the Commission found that investments by CNG in foreign
gas pipeline projects "constitute entry into the business of transportation of
natural gas subject to section 2(a) of the GRAA. Thus, these acquisitions were
deemed to satisfy the requirements of section 11(b)(1) of the Act.
With the clear precedent of this decision, it is unnecessary to keep CNG
International "on a leash" to have to continue to go back to the Commission for
approval of each additional investment it desires to make in a foreign pipeline
or storage business which may not otherwise be exempt under the Act.
Particularly with the adoption by the Commission on February 14, 1997 of Rule
58, HCAR No. 26667, there appears no logical basis for continuing to
<PAGE> 10
distinguish by geography as between investments in Section 2(a) types of GRAA
activities. Good foreign pipeline and storage investment opportunities can
arise quickly in the increasingly competitive international energy marketplace;
CNG International should have the ability to effectively respond to the same
without the need to go through the time consuming process of obtaining
additional regulatory approval for each case.
IV. GUARANTEES
Authority is requested for CNG, CNG International and its subsidiaries
involved in the investments in EWGs, FUCOs and foreign Gas Related Activities
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 execute the transactions and to carry on in the ordinary course of their
respective businesses. Credit Support may be in the form (among others) of
guarantee of payment of a subsidiary capital contribution obligation or of a
debt obligation issued by a subsidiary. Fixed income securities being
guaranteed would not have a maturity in excess of 50 years, nor an effective
cost of money in excess of 500 basis points over 30 year term U.S. Treasury
securities. Any fees, commissions, penalties and expenses in connection with
the underlying obligation would not exceed fair, reasonable and customary fees,
<PAGE> 11
commissions, penalties and expenses comparable to those incurred at arms-length
in similar transactions by similar companies in the relevant securities
markets.
The maximum aggregate limit on all such credit support with respect to
EWGs and FUCOs will be an amount equal to 50% of CNG's consolidated retained
earnings, less the amount of guarantees and credit support previously given and
outstanding on behalf of investments in EWGs and FUCOs.(5) The maximum
aggregate limit on all such credit support with respect to foreign Gas Related
Activities will be $750 million at any one time outstanding. The $750 million
in guarantees and other credit support is in addition to the intra-company
financing authority requested elsewhere herein.
V. FINANCING
CNG International will carry on the proposed activities for which
authorization is requested herein through one or more special-purpose
subsidiary or associate companies, partnerships, limited liability companies,
joint ventures or other entities (depending upon the legal and regulatory
requirements of the particular project), including those to be formed with
unrelated persons or entities for the sole purpose of consummating the proposed
transactions.
__________
(5) This is similar to the authorization given New England Electric System in
HCAR No. 26792, June 10, 1997.
<PAGE> 12
CNG International will obtain funds for its subsidiaries (which
subsidiaries are likely to obtain such funds in essentially mirror financing
arrangements) to engage in the proposed transactions by (i) selling shares of
its common stock, $10,000 par value per share ("Common Stock"), to CNG, (ii)
open account advances as described below, or (iii) long-term loans from CNG, in
any combination thereof. The open account advances and long-term loans will
have the same effective terms and interest rates as related borrowings of CNG
in the forms listed.
Open account advances may be made to CNG International on a revolving
basis to provide working capital and to finance the activities authorized by
the Commission. Open account advances will be made under letter agreement with
CNG International and will be repaid on or before a date not more than one year
from the date of the first advance with interest at the same effective rate of
interest as CNG's weighted average effective rate for commercial paper and/or
revolving credit borrowings. If no such borrowings are outstanding, 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. Only
outstanding amounts of open account advances will be calculated against the
$750 million cap on financing requested herein.
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CNG may make long-term loans to CNG International for the financing of its
activities. Loans to CNG International shall be evidenced by long-term non-
negotiable notes of CNG International (documented by book entry only) maturing
over a period of time (not in excess of 50 years) to be determined by the
officers of Consolidated, with the interest predicated on and equal to CNG's
cost of funds for comparable borrowings. In the event CNG has not had recent
comparable borrowings, the rates will be tied to the Salomon Brothers
indicative rate for comparable debt issuances published in Salomon Brothers
Inc. Bond Market Roundup or similar publication on the date nearest to the time
of takedown. All loans may be prepaid at any time without premium or penalty.
It is anticipated that most subsequent intra-system financings among, and
external financings of CNG International and its subsidiaries will be exempt
pursuant to Rule 52 under the Act. However, there may arise the need to issue
securities in a transaction with respect to which an exemptive rule under the
Act might not apply. Such securities would encompass interests in
partnerships, joint ventures or other entities, and other types of equity
instruments regardless of preference with respect to, or conditional on,
distributions of the issuer upon liquidation or otherwise. Fees, commissions
and expenses expected to be incurred in connection with the issuance of such
securities will not exceed (a) those amounts prescribed by statute or
regulation, in the case of fees and/or expenses charged by governmental
<PAGE> 14
agencies; (b) cost, in the case of fees and/or expenses charged by CNG system
associates; or (c) in all other cases, fair, reasonable and customary fees and
commissions at market rates, comparable to those incurred in similar
transactions by similar companies, and arrived at in a negotiated, competitive
and/or arms-length manner. Fees, commissions and expenses of any underwriter
that may be incurred with respect to such securities will not exceed those
amounts generally paid at the time of pricing for sales of such securities
issued by companies of comparable credit quality and having similar terms,
conditions and features. CNG requests that the Commission reserve jurisdiction
over the issuance of such additional types of securities. CNG also undertakes
to cause a post-effective amendment to be filed in this proceeding which will
describe the general terms of each such security and request a supplemental
order of the Commission authorizing such transactions. CNG further requests
that each supplemental order be issued by the Commission without further time-
consuming public notice.
CNG will obtain the funds required for CNG International either through
internal cash generation or from financings at the time authorized by the SEC.
CNG requests that it be authorized to use proceeds obtained pursuant to its
five year intrasystem financing authorization granted under HCAR No. 26500
(March 28, 1996) for investments in CNG International.
<PAGE> 15
VI. INCREASE IN CAPITALIZATION OF CNG INTERNATIONAL
CNG International has authorized capital of 30,000 shares of Common Stock,
$10,000 par value per share, of which 21,555 shares are issued and outstanding.
In order to accommodate future financings including those requested herein,
application is made under Section 6(a)(2) of the Act to amend CNG
International's certificate of incorporation to increase its Common Stock
equity authorization to 200,000 shares of Common Stock, $10,000 par value per
share. The issuance of such additionally authorized shares of Common Stock
would allow CNG International to consummate additional equity financing for the
purposes described herein and for other authorized or exempt transactions.
VII. COMPLIANCE WITH RULE 53
Rule 54 promulgated under the Act states that in determining whether to
approve the issue or sale of a security by a registered holding company for
purposes other than the acquisition of an EWG or a FUCO, or other transactions
by such registered holding company or its subsidiaries other than with respect
to EWGs or FUCOs, the Commission shall not consider the effect of the
capitalization or earnings of any subsidiary which is an EWG or a FUCO upon the
registered holding company system if Rules 53(a), (b) and (c) are satisfied.
CNG believes that Rule 53(a), (b) and (c) are satisfied in its case as follows.
<PAGE> 16
Rule 53 requires that the aggregate investment in EWGs and FUCOs not
exceed 50% of a system's consolidated retained earnings.(6) CNG's present
investments in EWGs and FUCOs satisfies the 50% limitation, and the CNG system
will not make any additional investments in EWGs and FUCOs from proceeds of
authorized financings if such were to cause it to exceed that limitation,
unless the Commission otherwise authorizes.
CNG and its subsidiaries maintain books and records to identify the
investments in and earnings from its EWGs and FUCOs in which they directly or
indirectly hold an interest, thereby satisfying Rule 53(a)(2). The books and
records of CNG's EWGs are kept in conformity with United States generally
accepted accounting principles ("GAAP"), the financial statements are prepared
according to GAAP, and Consolidated undertakes to provide the Commission access
to such books and records and financial statements as it may request.
CNG owns less than 50% of the FUCOs in which it has invested. The books
and records of such FUCOs are maintained according to the comprehensive body of
accounting principles applicable in the respective countries in which such
FUCOs operated. Material variations from GAAP in such books and records and
related financial statements will be described and quantified upon the
Commission's request. CNG undertakes to provide the Commission access to such
books, records and financial statements, in English, as it may request.
______________
(6) The amount of the CNG limit remaining unused as of September 30, 1998 is
calculated to be approximately $641,976,000.
<PAGE> 17
It is anticipated that a minimal number of employees of CNG's domestic
public-utility companies will render services, directly or indirectly, to EWGs
and FUCOs in the CNG system, and the number of such employees shall not in any
event exceed two percent of the total number of employees of such utility
companies, thereby satisfying Rule 53(a)(3).
All Form U-1 filings seeking authority to finance EWGs or FUCOs, together
with related filings of Rule 24 and Item 9 of Form U5S (including Exhibits G
and H thereof), have been, or will be, submitted to the public utility
commissions of the states having jurisdiction over the rates of the public-
utility companies in the CNG system, thereby satisfying Rule 53(a)(4).
None of the conditions described in Rule 53(b) under the Act exist with
respect to Consolidated, thereby satisfying Rule 53(b) and making Rule 53(c)
inapplicable.
<PAGE> 18
Item 2. Fees, Commissions and Expenses
______________________________
It is estimated that the fees, commissions and expenses ascertainable at
this time to be incurred by Consolidated in connection with the subject
proceeding will not exceed $25,000, including fees payable to Consolidated
Natural Gas Service Company, Inc. for services on a cost basis (including costs
of regularly employed counsel).
Item 3. Applicable Statutory Provisions
_______________________________
The acquisition of interests in entities engaged in foreign Gas Related
Activities are subject to sections 9(a), 10, 11, 32 of the Act and rule 54
thereunder, and the Gas Related Activities Act of 1990. Section 6(a)(2) is
deemed applicable to the request for increased Common Stock authorization.
Section 12 and Rule 45 are deemed applicable to guarantees requested herein.
Rule 16 would also apply in the event the ownership interest held by CNG
International and its subsidiaries did not exceed 50% of the total equity
interests in a project investment entity.
In its order dated October 25, 1996, the Commission found that
investments by CNG in foreign gas pipeline projects "constitute entry into the
business of transportation of natural gas subject to section 2(a) of the GRAA.
HCAR No. 26595. Thus, these acquisitions are deemed to satisfy the
requirements of section 11(b)(1) of the Act.
<PAGE> 19
The other requirements of section 10 of the Act continue to apply. CNG
submits that these requirements are met for the reasons set forth in post-
effective amendment No. 3 in the proceeding at File No. 70-8759. Briefly
stated, the proposed foreign Gas Related Activities requested herein are a
necessary complement to the foreign utility activities authorized by the Energy
Policy Act of 1992. Strategic benefits are anticipated to stem from CNG's
participation in new energy markets. While investments in foreign pipeline
projects may pose risks that do not arise in the domestic utility industry,
these risks are not an absolute bar to foreign investment. Rather, as the
Commission emphasized in its April 1, 1996 order, HCAR No. 26501, permitting
the Southern Company to invest an amount equal to 100% of its consolidated
retained earnings in exempt wholesale generators and foreign utility companies,
there is a need for the registered holding company to establish procedures to
identify and mitigate such risks. See also HCAR Nos. 26653 and 26864, dated
January 24, 1997 and April 27, 1998, allowing Central and South West
Corporation and American Electric Power Company, respectively, to also invest
up to 100% of their consolidated retained earnings in EWGs and FUCOs.
In this matter, as discussed previously, there are ample safeguards for
consumer interests. The proposed transactions will be structured so that
investors and not consumers will bear the risks that may be associated with
these new ventures. As explained previously, CNG conducts a thorough review of
any proposed investment, with a view toward risk management. The international
<PAGE> 20
operations will be conducted with the same prudence and sound business judgment
that has resulted in CNG's present status as one of the country's most
financially sound energy providers.
The applicants request that the Commission reserve jurisdiction, pending
completion of the record, over: (i) The investment by CNG, through CNG
International, of up to $750 million in foreign Gas Related Activities,
including the elimination of the need for any required case-by-case approval of
investments which are not otherwise exempt under the Act; (ii) the provision by
CNG, CNG International and its subsidiaries of credit support agreements
aggregating no more than $750 million with third parties in connection with
foreign Gas Related Activities; and (iii) the issuance by CNG International and
its subsidiaries of securities to third parties that are not exempt from prior
Commission review under Section 6(a) and 7 of the Act.
Item 4. Regulatory Approval
___________________
The financing authorization sought herein is not subject to the
jurisdiction of any State or Federal Commission (other than the SEC).
<PAGE> 21
Item 5. Procedure
_________
It is hereby requested that the Commission issue its order with respect
to the transactions proposed herein on or before March 15, 1999.
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 Division of Investment Management - Office of
Public Utility Regulation 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 made a part of this
statement:
(a) Exhibits
A-1 Certificate of Incorporation of CNG International.
(Incorporated by reference to Exhibit A-1 of Post-Effective
Amendment No. 1, File No. 70-8759)
A-2 By-laws of CNG International.
(Incorporated by reference to Exhibit A-2 of Post-Effective
Amendment No. 1, File No. 70-8759)
F Opinion of counsel for CNG and CNG International
(To be filed by amendment)
O Draft of Notice.
<PAGE> 22
(b) Financial Statements
The most recent balance sheet and income statement of CNG International as
filed as part of the quarterly Rule 24 certificates of notification under File
No. 70-8759 are hereby incorporated by reference.
Item 7. Information as to Environmental Effects
_______________________________________
The proposed transactions do not involve major federal action having a
significant effect on the human environment. No federal agency has prepared or
is preparing an environmental impact statement with respect to the proposed
transaction.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned company has duly caused this statement to be signed
on its behalf by the undersigned thereunto duly authorized.
CONSOLIDATED NATURAL GAS COMPANY
By D. M. Westfall
Senior Vice President,
Non-Regulated Business
and Chief Financial Officer
CNG INTERNATIONAL CORPORATION
By N. F. Chandler
Its attorney
Date: January 25, 1999
<PAGE> 1 EXHIBIT O
Proposed Notice
Pursuant to Rule 22(f)
(Release No. 35- )
FILINGS UNDER THE PUBLIC UTILITY HOLDING
COMPANY ACT OF 1935 ("ACT")
January , 1999
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
February , 1999 to the Secretary, Securities and Exchange Commission,
Washington, DC 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
Consolidated Natural Gas Company, et al. al. (70-9321)
___________________________________________________
Consolidated Natural Gas Company ("CNG"), CNG Tower, 625 Liberty Avenue,
Pittsburgh, Pennsylvania, 15222-3199, a registered holding company, and CNG's
wholly-owned subsidiary, CNG International Corporation ("CNG International"),
Two Fountain Square, Suite 600, 11921 Freedom Drive, Reston, Virginia 20190-
5608, have filed an application- declaration pursuant to Sections 6, 9, 10, 11,
12 and 32 of the Act and Rules 16, and 45 thereunder.
CNG and CNG International seek expanded authority to engage in certain
foreign gas related activities. Specifically, the applicants request that (i)
CNG International, directly or through subsidiaries, be permitted to invest up
to an additional $750 million to acquire outside the United States interests in
non-FUCO or non-EWG entities engaged in activities permitted under Section 2(a)
of the Gas Related Activities Act of 1990 ("GRAA") and activities specified in
Section 2(b) of the GRAA and approved by order of the Commission under Section
9 and 10 of the Act, (ii) CNG International and its subsidiaries be allowed to
make investments in such entities that are organized to participate in
activities involving the transportation or storage of natural gas within the
meaning of Section 2(a) of the GRAA without any additional prior approval of
the Commission, and (iii) that CNG and CNG International be authorized to
enter into guarantees and provide other credit support for obligations of CNG
International or its subsidiaries up to an aggregate amount not exceeding an
additional $750 million in the case of non-FUCO or non-EWG entities engaged in
gas-related activities, and one-half of CNG's consolidated retained earnings
less the amount of guarantees and other credit support previously given and
outstanding on behalf of FUCOs and EWGs in the case of FUCOs and EWGs.
<PAGE> 3
CNG International will carry on the proposed activities for which
authorization is requested herein through one or more special-purpose
subsidiary or associate companies, partnerships, limited liability companies,
joint ventures or other entities (depending upon the legal and regulatory
requirements of the particular project), including those to be formed with
unrelated persons or entities for the sole purpose of consummating the proposed
transactions.
CNG International will obtain funds for its subsidiaries (which
subsidiaries will obtain such funds to engage in the proposed transactions by
(i) selling shares of its common stock, $10,000 par value per share ("Common
Stock"), to CNG, (ii) open account advances as described below, or (iii) long-
term loans from CNG, in any combination thereof. The open account advances and
long-term loans will have the same effective terms and interest rates as
related borrowings of CNG in the forms listed.
Open account advances may be made to CNG International on a revolving
basis to provide working capital and to finance the activities authorized by
the Commission. Open account advances will be made under letter agreement with
CNG International and will be repaid on or before a date not more than one year
from the date of the first advance with interest at the same effective rate of
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interest as CNG's weighted average effective rate for commercial paper and/or
revolving credit borrowings. If no such borrowings are outstanding, 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. Only
outstanding amounts of open account advances will be calculated against the
$750 million cap on financing requested herein.
CNG may make long-term loans to CNG International for the financing of its
activities. Loans to CNG International shall be evidenced by long-term non-
negotiable notes of CNG International (documented by book entry only) maturing
over a period of time (not in excess of 50 years) to be determined by the
officers of Consolidated, with the interest predicated on and equal to CNG's
cost of funds for comparable borrowings. In the event CNG has not had recent
comparable borrowings, the rates will be tied to the Salomon Brothers
indicative rate for comparable debt issuances published in Salomon Brothers
Inc. Bond Market Roundup or similar publication on the date nearest to the time
of takedown. All loans may be prepaid at any time without premium or penalty.
CNG will obtain the funds required for CNG International either through
internal cash generation or from financings at the time authorized by the SEC.
CNG requests that it be authorized to use proceeds obtained pursuant to its
five year intrasystem financing authorization under HCAR No. 26500 (March 28,
1996) for investments in CNG International.
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Authority is requested for CNG, CNG International and its subsidiaries
involved in the investments in EWGs, FUCOs and foreign Gas Related Activities
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 execute the transactions and to carry on in the ordinary course of their
respective businesses. Credit Support may be in the form (among others) of
guarantee of payment of a subsidiary capital contribution obligation or of a
debt obligation issued by a subsidiary. Fixed income securities being
guaranteed would not have a maturity in excess of 50 years, nor an effective
cost of money in excess of 500 basis points over 30 year term U.S. Treasury
securities. Any fees, commissions, penalties and expenses in connection with
the underlying obligation would not exceed fair, reasonable and customary fees,
commissions, penalties and expenses comparable to those incurred at arms-length
in similar transactions by similar companies in the relevant securities
markets.
CNG International has authorized capital of 30,000 shares of Common Stock,
of which 21,555 shares are issued and outstanding. In order to accommodate
future financings including those requested herein, application is made to
amend CNG International's certificate of incorporation to increase its Common
Stock equity authorization to 200,000 shares of Common Stock, $10,000 par value
per share.
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_____________________________________
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
