File No. 70-8539
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
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 of the Application-Declaration filed as of December 27, 1994 is
hereby amended and restated in its entirety as follows:
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 November 30, 1994, Cogenex had utilized approximately $81 million of
its $100 million financing authority, including $8 million from EUA, $50
million in unsecured long-term notes and $23 million in short-term
borrowings. The proceeds from such financings were used for general
working capital purposes, to fund Cogenex's demand-side management, self-
generation and energy conservation businesses and to pay, reduce and renew
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. The terms and conditions of any loans made to
Cogenex will mirror those for loans under the EUA System credit lines.
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 $200 million from the following sources:
(i) up to $50 million from EUA Investments; and (ii) $150 million from one
or any combination of (a) 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, (b) 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 (c) 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 demand-side management, energy conservation and self-generation
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 November 30, 1994 was 6.1% 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. Under the terms of an equity maintenance agreement, EUA would make
capital contributions to Cogenex if Cogenex's equity as a percentage of
total capitalization fell below a specified level.
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 as set forth in the above-
referenced orders. Cogenex is currently authorized to make investments in
NEM through capital contributions and short-term loans in an amount not to
exceed $9.1 million, which amount NEM has authorization to use for payment
of outstanding liabilities and working capital purposes. Cogenex is
currently authorized to make investments in Cogenex Canada through
additional stock purchases, capital contributions, open account advances
and/or short-term loans in an amount not to exceed $20 million.
Authorization to increase the amount of such investments is not being
sought.
EUA and Cogenex do not, directly or indirectly, own or operate, nor
are either of them an equity participant in, any exempt wholesale generator
("EWG") or foreign utility company ("FUCO"), as such terms are defined in
the Energy Policy Act of 1992. Cogenex will not use the proceeds of any
financing authorized hereunder to invest in any EWG or FUCO without prior
authorization from the Commission.
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: January 25, 1995
