File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION-DECLARATION
WITH RESPECT TO FINANCING OF SUBSIDIARY COMPANY
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
EASTERN UTILITIES ASSOCIATES
P.O. BOX 2333, BOSTON, MASSACHUSETTS 02107
EUA COGENEX-CANADA INC.
NORTHEAST ENERGY MANAGEMENT, INC.
EUA COGENEX CORPORATION
BOOTT MILLS SOUTH, 100 FOOT OF JOHN STREET, LOWELL, MASSACHUSETTS 01852
(Names of companies filing this statement
and addresses of their principal executive offices)
EASTERN UTILITIES ASSOCIATES
(Name of top registered holding company parent
of applicant or declarant)
CLIFFORD J. HEBERT, JR., TREASURER
EASTERN UTILITIES ASSOCIATES
P.O. BOX 2333, BOSTON, MASSACHUSETTS 02107
(Name and address of agent for service)
The Commission is requested to mail signed copies
of all orders, notices and communications to:
ARTHUR I. ANDERSON, P.C.
MCDERMOTT, WILL & EMERY
75 STATE STREET
BOSTON, MASSACHUSETTS 02109
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
A. Eastern Utilities Associates ("EUA"), a registered holding company
under the Public Utility Holding Company Act of 1935 (the "Act"), EUA Cogenex
Corporation ("Cogenex"), a wholly-owned non-utility subsidiary of EUA, and
Northeast Energy Management, Inc. ("NEM") and EUA Cogenex-Canada Inc. ("Cogenex
Canada"), each a wholly-owned non-utility subsidiary of Cogenex, are jointly
filing this application-declaration with the Securities and Exchange Commission
(the "Commission").
B. Cogenex is engaged in the energy conservation business, including the
following activities: (i) employing energy efficiency technology and equipment
primarily through shared savings agreements; (ii) participating in self-
generation projects; and (iii) contracting to assist electric utilities in
demand-side management activities including but not limited to shared-savings
energy conservation projects and demand-side utility programs (HCAR No. 35-
24273, December 19, 1986; HCAR No. 35-25697, December 9, 1992). Cogenex's
business has grown rapidly and is expected to continue to grow. Cogenex's
permanent capitalization, as of September 30, 1994, is approximately $167
million consisting of $47 million in common equity and $120 million of
unsecured long-term notes. In addition, Cogenex had outstanding $28 million of
short-term borrowings at that date.
C. By order dated June 29, 1993 (HCAR No. 35-25839), the Commission
authorized Cogenex for the period ending December 31, 1995, to undertake
various financing transactions in an amount, in addition to Cogenex's permanent
capitalization at that time, not to exceed $100 million from one or any
combination of the following sources: (i) up to an aggregate of $50 million
from EUA in any combination of capital contributions from EUA and short-term
borrowings from EUA to be effected upon the same terms as EUA and Cogenex
borrow funds under the EUA system credit lines, (ii) up to $50 million from the
issuance and sale of additional long-term unsecured notes, and (iii) up to $50
million of short-term borrowings under the EUA system credit lines. The
Commission initially reserved jurisdiction over the issuance of the additional
long-term unsecured notes and authorized the issuance of $50 million of 7%
notes due 2000 pursuant to a Rule 144A private placement by an order dated
September 23, 1993 (HCAR No. 35-25888). As of September 30, 1994, Cogenex had
utilized approximately $78 million of its $100 million financing authority,
including $8 million from EUA, $50 million in unsecured long-term notes and $20
million in short-term borrowings.
D. EUA proposes and hereby requests authority for the period ending
December 31, 1997 to (i) make investments in Cogenex in an aggregate amount of
up to $50 million in one or any combination of short-term loans, capital
contributions or proceeds from sales of common stock to EUA ("EUA
Investments"), and (ii) borrow up to $25 million under the EUA system credit
lines upon the terms set forth below in paragraph H to finance EUA Investments
in Cogenex.
E. Cogenex proposes and hereby requests authority for the period ending
December 31, 1997 to undertake various financing transactions in an additional
amount not to exceed $150 million from one or any combination of the following
sources: (i) one or more issuances and sales of unsecured notes with either
fixed or variable rates (the "New Notes"), either through a private or a public
offering, all on terms and conditions to be authorized by the Commission upon
application of Cogenex through an amendment hereto, (ii) the borrowing of the
proceeds of one or more issues of bonds (the "Bonds") to be issued by an agency
of a state or any political subdivision thereof which is authorized to issue
private activity bonds (the "Agency"), and (iii) the borrowing of up to $75
million under the EUA system credit lines upon the terms set forth below in
paragraph H. The New Notes and the Bonds are hereinafter referred to together
as the "New Debt". The timing and amounts of the New Debt will be determined
in light of market conditions and other relevant factors at the time of
issuance, and the New Debt will be issued from time to time on such terms and
conditions as are authorized by the Commission upon application of Cogenex
through one or more amendment(s) hereto. Cogenex and EUA hereby request that
the Commission reserve jurisdiction over the issuance and sale of the New Debt
until such amendment(s) are filed.
F. The net proceeds from the EUA Investments, the New Debt, and the
short-term borrowings by Cogenex under the EUA system credit lines will be used
for one or any combination of the following purposes: (i) to pay, reduce, or
renew short-term borrowings from banks, (ii) to pay, reduce, or renew short-
term loans from EUA, (iii) for working capital to operate Cogenex's business
and general corporate purposes, including construction expenditures for plant
and equipment, (iv) to pay the costs of issuance of the New Debt, and (v) to
provide for such reserves for debt service or other capital or current expenses
as may be required by a bond resolution, financing documents or agreements
securing the New Debt.
G. The proceeds or any part thereof of the New Debt may be temporarily
invested in securities meeting the requirements of Section 9(c)(i) of the Act
or of Rule 40(a)(1) or (2).
H. The borrowings authorized hereunder for EUA and Cogenex under the EUA
system's existing credit lines will be evidenced by notes which may be issued
and renewed during the period ending December 31, 1997. The weighted average
interest rate for borrowings under the EUA system credit lines on October 31,
1994 was 5.13% per annum. Such notes will mature in not more than one year
from their respective dates of issuance, and the principal amount of notes
authorized hereunder and outstanding at any one time will not exceed
$25,000,000 for EUA and $75,000,000 for Cogenex. EUA expects that funds for
the repayment of its borrowings will be provided by internally generated cash,
by EUA's dividend reinvestment plan and its employees' savings plan, and by
repayment of funds advanced to Cogenex. Cogenex expects that funds for the
repayment of its borrowings will be provided by internally generated cash, the
proceeds from the issuance and sale of the New Debt and/or capital
contributions or loans from EUA. Information as to existing credit lines,
commitment fees and/or compensating balance requirements and effective costs of
borrowing is set forth in Exhibit G filed herewith. The existing credit line
arrangements include borrowing at the prime rate or money market rates,
together with a commitment fee equal to 1/4 of 1% multiplied by the credit
line, if applicable. Notes bearing interest at the prime rate will be
prepayable at any time without premium. Notes bearing interest at available
money market rates will not be prepayable. The EUA system credit lines expire
on June 30, 1995 and their continued availability is subject to continuing
review by the banks. The lines may be increased or decreased and additional
lines may be obtained from other banks not shown on Exhibit G. EUA will notify
the Commission of any material changes in the EUA system credit lines.
I. If it becomes necessary to do so to obtain more favorable terms for
the New Debt, EUA hereby proposes and requests authorization to guaranty, or to
provide an equity maintenance agreement (similar to the agreements previously
authorized by the Commission in three orders dated October 24, 1991, November
12, 1991, and September 25, 1992 (HCAR Nos. 35-25396, 35-25412, and 35-25643,
respectively), pursuant to which EUA agreed to maintain the consolidated common
equity of Cogenex at 20% of consolidated capitalization through June 30, 1995
and 30% thereafter) for all or a portion of the obligations of Cogenex with
respect to the New Debt.
J. Cogenex hereby further requests authorization to extend from December
31, 1995 through December 31, 1997 its authorization to provide financial
support to NEM and Cogenex Canada, as set forth in orders dated January 28,
1994 (HCAR No. 35-25982) and September 30, 1994 (HCAR No. 35-26135),
respectively. NEM and Cogenex Canada hereby request authorization to extend
from December 31, 1995 through December 31, 1997 their respective
authorizations to borrow funds from Cogenex and outside parties as set forth in
the above-referenced orders.
Cogenex does not now, and will not in the future, without prior Commission
approval, own or operate or be an equity participant in any exempt wholesale
generator or foreign utility company, as such terms are defined in the Energy
Policy Act of 1992.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The estimated fees, commissions and expenses to be paid or incurred
directly or indirectly in connection with the proposed transactions will be
supplied by amendment.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
Transaction Applicable Sections and Rules
Payment of EUA short-term notes to Section 12(c); exempt from Rule 42
banks, and by Cogenex of short-term by paragraph (b)(2) thereof.
notes to EUA and to banks.
Issuance and sale by EUA and Cogenex
of short-term notes to banks. Sections 6(a) and 7.
Issuance and sale by Cogenex of
short-term notes to EUA. Sections 6(a) and 7.
Capital contributions by EUA to,
and receipt thereof by, Cogenex. Rule 45(a).
Issuance and sale by Cogenex of Sections 6(a), 7, 9(a) and 10;
short-term notes or common stock Rule 43(a).
to EUA, and purchase by EUA of
common stock and notes of Cogenex.
Issuance and sale of New Notes Sections 6(a) and 7.
by Cogenex.
Borrowing the proceeds of the Sections 6(a) and 7.
Bonds from the Agency by Cogenex.
Provision of guaranty or equity Section 12(b) and Rule 45(a).
maintenance agreement by EUA in
connection with the New Debt.
Temporary investment of all or Section 9(c)(1); Rule 40(a)(1) or (2).
a portion of the proceeds of
the sale of the New Debt.
Issuance and sale of notes by Sections 6(a) and 7 and Rule 43(a).
Cogenex Canada and/or by NEM
to Cogenex.
Purchase by Cogenex of notes of Sections 9(a), 10 and 12(b);
Cogenex Canada and/or of NEM. Rule 45(a).
Prepayment by Cogenex Canada Section 12(c); exempt from Rule 42
and/or by NEM of their respective by paragraph (b)(2) thereof.
notes or other obligations held
by Cogenex.
Open account advances, short-term Section 12(b); Rule 45(a).
loans and guaranties by Cogenex to,
and receipt thereof by, NEM and/or
Cogenex Canada.
Capital contributions by Cogenex Section 12(f); Rule 45(a).
to, and receipt thereof by, NEM
and/or Cogenex Canada.
Guaranty of certain obligations Section 12(b); Rule 45(a).
of NEM by Cogenex.
ITEM 4. REGULATORY APPROVAL.
No State commission and no Federal commission, other than the Securities
and Exchange Commission, has jurisdiction over the proposed transaction.
ITEM 5. PROCEDURE.
A. In order to be in a position to carry out the proposed transactions
at the most advantageous time, the Applicants request that the Commission issue
its order on the authorization requested herein on the earliest practicable
date, with the exception of authorization of the New Debt, over which the
Applicants request that the Commission reserve jurisdiction until such time as
one or more post-effective amendment(s) with respect to the terms and
conditions thereof are filed with the Commission.
B. It is not considered necessary that there be a recommended decision
by a hearing officer or by any other responsible officer of the Commission.
The Office of Public Utility Regulation may assist in the preparation of the
decision of the Commission and it is believed that 30-day waiting period
between the issuance of the order of the Commission and the date on which the
order is to become effective would not be appropriate.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS (*FILED HEREWITH).
(a) Exhibits
Exhibit A-1 Articles of Organization of Cogenex (Exhibit A-1, File
No. 70-7287, Exhibit B-15 to Form U5S of EUA for
1986).
Exhibit A-2 By-Laws of Cogenex (Exhibit A-2, File No. 70-7287, to
Form U5S of EUA for 1986).
Exhibit F-1 Opinion of McDermott, Will & Emery (to be supplied by
amendment).
*Exhibit G Bank Lines of Credit.
*Exhibit H Proposed form of Notice.
(b) Financial Statements (to be supplied by amendment).
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
The transaction described in Item 1 does not involve major federal action
significantly affecting the quality of 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 companies have duly caused this statement to be signed on
its behalf by the undersigned thereunto duly authorized.
EUA COGENEX CORPORATION
By:/s/ Basil G. Pallone
Basil G. Pallone
Vice President
EASTERN UTILITIES ASSOCIATES
By:/s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Treasurer
EUA COGENEX-CANADA INC.
By:/s/ Basil G. Pallone
Basil G. Pallone
Vice President
NORTHEAST ENERGY MANAGEMENT, INC.
By:/s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Treasurer
Dated: December 27, 1994
<TABLE>
EUA SYSTEM CREDIT LINES EXHIBIT G
($ MILLIONS)
<CAPTION>
TOTAL BORROWING LIMITATIONS
COMMITTED GUIDANCE EFFECTIVE
COST CREDIT CREDIT COMMITTED BORROWING
BANK BASE EXPIRATION LINE LINE FEE COST* EUA BVE EECO MECO COGENEX EUA OS SERVICE NECO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BANK OF NEW YORK (A) 6/30/95 $40 3/16% X LINE 8.6875% $40 $30 $30 $30 $20 - $30 -
CITIBANK (A) 6/30/95 $15 3/16% X LINE 8.6875% $10 $10 $10 $10 $15 $5 $5 $5
STATE STREET (C) 6/30/95 $15 3/16% X LINE 8.6875% $15 $15 $15 $15 $15 $3 $15 $3
BANK OF BOSTON (A) 6/30/95 $10 3/16% X LINE 8.6875% $10 $10 $10 $10 $10 $5 $5 $5
(A) 6/30/95 $10 NO FEE 8.5000% $10 - - - $10 - - -
SHAWMUT (B) 6/30/95 $20 3/16% X LINE 8.6875% $20 $20 $20 $20 $10 $10 $10 $10
(B) 6/30/95 $10 NO FEE 8.5000% $10 - - - $10 - - -
CANADIAN IMPERIAL (B) 6/30/95 $10 3/16% X LINE 8.6875% $10 $10 $10 $10 - - - -
CREDIT LYONNAIS (C) 9/30/95 $10 3/16% X LINE 8.6875% $10 - - - - - - -
SANWA (C) 6/30/95 $10 3/16% X LINE 8.6875% $10 - - - - - - -
TOTAL $130 $20
<FN>
CODES: (A) COST OF BORROWING BASED ON MONEY MARKET OR ALTERNATE BASE.
(B) COST OF BORROWING BASED ON MONEY MARKET OR PRIME.
(C) COST OF BORROWING BASED ON MONEY MARKET OR NEGOTIATED.
* ASSUMES BORROWING AND PRIME RATE OF 8.50%.
REVISED: 12/23/94
</FN>
</TABLE>
Exhibit H
(PROPOSED FORM OF NOTICE)
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- , 70- )
Eastern Utilities Associates ("EUA"), a registered holding company, EUA
Cogenex Corporation ("Cogenex"), a wholly-owned non-utility subsidiary of EUA,
and Northeast Energy Management, Inc. ("NEM") and EUA Cogenex-Canada Inc.
("Cogenex Canada"), each a wholly-owned non-utility subsidiary of Cogenex, have
filed an application-declaration with this Commission pursuant to Sections
6(a), 7, 9(a), 9(c)(1), 10, 12(b), 12(c) and 12(f) of the Public Utility
Holding Company Act of 1935 (the "Act") and Rules 40(a)(1) and (2), 42(b)(2),
43(a) and 45(a) promulgated thereunder.
By order dated June 29, 1993 (HCAR No. 35-25839), the Commission
authorized Cogenex through the period ending December 31, 1995, to undertake
various financing transactions in an amount, in addition to Cogenex's permanent
capitalization at that time, not to exceed $100 million from one or any
combination of the following sources: (i) up to an aggregate of $50 million
from EUA in any combination of capital contributions from EUA and short-term
borrowings from EUA to be effected upon the same terms as EUA and Cogenex
borrow funds under EUA system credit lines, (ii) up to $50 million from the
issuance and sale of additional long-term unsecured notes, and (iii) up to $50
million of short-term borrowings under the EUA system credit lines. The
Commission initially reserved jurisdiction over the issuance of the additional
long-term unsecured notes and authorized the issuance of $50 million of 7%
notes due 2000 pursuant to a Rule 144A private placement by an order dated
September 23, 1993 (HCAR No. 35-25888). As of September 30, 1994, Cogenex had
utilized approximately $78 million of its $100 million financing authority,
including $8 million from EUA, $50 million in unsecured long-term notes and $20
million in short-term borrowings.
EUA proposes and requests authority for the period ending December 31,
1997 to (i) make investments in Cogenex in an aggregate amount of up to $50
million in one or any combination of short-term loans, capital contributions or
proceeds from sales of common stock to EUA ("EUA Investments"), and (ii) borrow
up to $25 million under the EUA system credit lines upon the terms set forth
below to finance EUA Investments in Cogenex.
Cogenex proposes and requests authority for the period ending December 31,
1997 to undertake various financing transactions in an additional amount not to
exceed $150 million from one or any combination of the following sources: (i)
one or more issuances and sales of unsecured notes with fixed or variable rates
(the "New Notes"), either through a private or a public offering, all on terms
and conditions to be authorized by the Commission upon application of Cogenex
through an amendment of the application-declaration, (ii) the borrowing of the
proceeds of one or more issues of bonds (the "Bonds") to be issued by an agency
of a state or any political subdivision thereof which is authorized to issue
private activity bonds (the "Agency"), and on such terms and conditions to be
authorized by the Commission upon application of Cogenex through an amendment
to the application-declaration, and (iii) the borrowing of up to $75 million
under the EUA system credit lines upon the terms set forth below. The New
Notes and the Bonds are hereinafter referred to together as the "New Debt".
The timing and amounts of the New Debt will be determined in light of market
conditions and other relevant factors at the time of issuance.
The proceeds or any part thereof of the New Debt may be temporarily
invested in securities meeting the requirements of Section 9(c)(i) of the Act
or of Rule 40(a)(1) or (2).
If it becomes necessary to do so to obtain more favorable terms for the
New Debt, EUA proposes and requests authorization to guaranty, or to provide an
equity maintenance agreement (similar to the agreements previously authorized
by the Commission in three orders dated October 24, 1991, November 12, 1991,
and September 25, 1992 (HCAR Nos. 35-25396, 35-25412, and 35-25643,
respectively), pursuant to which EUA agreed to maintain the consolidated common
equity of Cogenex at 20% of consolidated capitalization through June 30, 1995
and 30% thereafter) for all or a portion of the obligations of Cogenex with
respect to the New Notes.
Additionally, Cogenex proposes and requests authority to extend from
December 31, 1995 through December 31, 1997 its authorization to provide
financial support to NEM and Cogenex Canada, as set forth in orders dated
January 28, 1994 (HCAR No. 35-25982) and September 30, 1994 (HCAR No. 35-
26135), respectively. NEM and Cogenex Canada request authority to extend from
December 31, 1995 through December 31, 1997 their respective authorizations to
borrow funds from Cogenex and outside parties as set forth in the above-
referenced orders.
NOTICE IS FURTHER GIVEN that any interested person may, not later than
_________, 1995, request in writing that a hearing be held on such matter,
stating the nature of his interest, the reasons for such request, and the
issues of fact or law raised by said application/declaration which he desires
to controvert; or he may request that he be notified if the Commission should
order a hearing thereon. Any such request should be addressed: Secretary,
Securities and Exchange Commission, 450 5th Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. A copy of such request should be served personally or
by mail upon the applicant/declarant at the above-stated address and proof of
service (by affidavit or, in case of an attorney at law, by certificate) should
be filed with the request. At any time after said date the
application/declaration, as filed or as it may be amended, may be granted and
permitted to become effective as provided in Rule 23 of the General Rules and
Regulations promulgated under the Act, or the Commission may grant exemption
from such rules as provided in Rules 20(a) and 100 thereof or take such other
action as it may deem appropriate. Persons who request a hearing or advice as
to whether a hearing is ordered will receive any notices and orders issued in
this matter, including the date of the hearing (if ordered) and any
postponements thereof.
For the Commission, by the Division of Corporate Regulation, pursuant to
delegated authority.
Secretary
