File No. 70-8539
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
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 2. FEES, COMMISSIONS AND EXPENSES.
Item 2 is hereby amended and restated in its entirety as follows:
The estimated fees, commissions and expenses to be paid or incurred
directly or indirectly in connection with the proposed transactions are as
follows:
Securities and Exchange Commission Fee $ 2,000*
EUA Service Corporation Expenses 1,000
Fees and Expenses of Company Counsel 15,000
TOTAL $ 18,000
(*actual)
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS (* FILED HEREWITH).
Item 6 is hereby amended and restated in its entirety as follows:
(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.
Exhibit G Bank Lines of Credit.
Exhibit H Proposed form of Notice.
(b) Financial Statements.
*Exhibit b-1 EUA Cogenex Corporation Balance Sheet and Pro
Forma Balance Sheet, Income Statement and Pro
Forma Income Statement and Statement of
Capitalization and Pro Forma Statement of
Capitalization, all at December 31, 1995; Eastern
Utilities Associates and Subsidiary companies
Balance Sheet and Pro Forma Balance Sheet, Income
Statement and Pro Forma Income Statement and
Statement of Capitalization and Pro forma
Statement of Capitalization, all at December 31,
1995.
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: April 4, 1995
April 4, 1995
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D.C. 20549
Re:File No. 70-8539
Eastern Utilities Associates; EUA Cogenex-Canada Inc;
Northeast Energy Management, Inc.; EUA Cogenex
Corporation Application - Declaration
with Respect to Financing of a Subsidiary Company
Ladies and Gentlemen:
As counsel for Eastern Utilities Associates ("EUA"), EUA
Cogenex-Canada Inc. ("Cogenex-Canada"), Northeast Energy
Management, Inc. ("NEM") and EUA Cogenex Corporation ("Cogenex")
we are furnishing this opinion to be used in connection with the
application-declaration on Form U-1 under the Public Utility
Holding Company Act of 1935 (the "Act") filed by EUA, Cogenex-
Canada, NEM and Cogenex with the Securities and Exchange
Commission (the "Commission") on December 27, 1994, File No. 70-
8539, as amended, (the "Application-Declaration"). In the
Application-Declaration, Cogenex requests Commission
authorization to undertake various financing transactions, for
the period ending December 31, 1997, in an amount not to exceed
$200 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, short-term
borrowings from EUA, or proceeds from sales of common stock to
EUA, the short-term borrowings to be effected upon the same terms
as EUA and Cogenex borrow funds under EUA system credit lines,
(collectively, "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, (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, and (c) the borrowing of up to $75 million under the EUA
system credit lines. The New Notes and the Bonds are hereinafter
referred to together as the "New Debt". Cogenex has requested
that the Commission reserve jurisdiction over the issuance of the
New Debt until such time as it provides the Commission with the
terms of the New Debt by an amendment to the Application-
Declaration.
Cogenex 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 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.
In the Application-Declaration EUA requests authority for
the period ending December 31, 1997 to (i) make investments in
Cogenex, in addition to its existing investments in Cogenex in an
aggregate amount of up to $50 million in one or any combination
of EUA Investments, and (ii) borrow up to $25 million under the
EUA system credit lines to finance EUA Investments in Cogenex.
It is our opinion, subject to the assumptions hereinafter
stated, that in the event the transactions for which EUA,
Cogenex-Canada, NEM and Cogenex have requested authorization as
described above (the "Proposed Transactions") are consummated in
accordance with the Application-Declaration:
All State laws applicable to the Proposed Transactions
will have been complied with by EUA, Cogenex-Canada, NEM and
Cogenex;
EUA, the issuer of the notes to evidence bank
borrowings in accordance with the Application-Declaration, is a
validly organized and duly existing voluntary association under
the laws of The Commonwealth of Massachusetts and any notes
issued by EUA will be the valid and binding obligations of EUA in
accordance with their terms;
(c) Cogenex, the issuer of the New Notes and notes to
evidence bank borrowings and borrowings from EUA, in accordance
with the Application-Declaration, is a validly organized and duly
existing corporation organized under the laws of The Commonwealth
of Massachusetts and the New Notes and any other notes issued by
Cogenex will be valid and binding obligations of Cogenex in
accordance with their terms;
(d) Cogenex-Canada, the issuer of notes to evidence
borrowings from Cogenex, in accordance with the Application-
Declaration, is a validly organized and duly existing corporation
organized under the federal laws of Canada and any notes issued
by Cogenex-Canada will be valid and binding obligations of
Cogenex-Canada in accordance with their terms;
(e) NEM, the issuer of notes to evidence borrowings from
Cogenex, in accordance with the Application-Declaration, is a
validly organized and duly existing corporation organized under
the laws of The Commonwealth of Massachusetts and any notes
issued by NEM will be valid and binding obligations of NEM in
accordance with their terms;
(f) EUA will legally acquire any notes issued to it by
Cogenex in accordance with the Application-Declaration;
(g) Cogenex will legally acquire any notes issued to it by
Cogenex-Canada and/or NEM in accordance with the Application-
Declaration;
(h) The consummation of the proposed transactions will not
violate the legal rights of the holders of any of the securities
issued by EUA, Cogenex-Canada, NEM or Cogenex or by Eastern
Edison Company ("Eastern Edison"), Blackstone Valley Electric
Company ("Blackstone"), Newport Electric Corporation ("Newport"),
Montaup Electric Company ("Montaup"), EUA Service Corporation
("EUA Service"), EUA Energy Investment Corporation ("EUA
Energy"), EUA Ocean State Corporation ("EUA Ocean State"), Ocean
State Power ("OSP I"), Ocean State Power II ("OSP II"), OSP
Finance Company ("OSP Finance"), EUA Transcapacity, Inc. ("EUA
Transcapacity") and EUA Citizens Conservation Services, Inc.
("CCS"), all associate companies of EUA, Cogenex-Canada, NEM and
Cogenex.
This opinion, in addition to being subject to the
consummation of the Proposed Transactions in accordance with the
Application-Declaration, is also subject to the following
additional assumptions:
compliance with such order or orders as the Commission
may issue from time to time upon the Application-Declaration;
the accuracy of information furnished to us (a) as to
the outstanding securities of EUA, Cogenex-Canada, NEM, Cogenex,
Eastern Edison, Blackstone, Newport, Montaup, EUA Service, EUA
Energy, EUA Ocean State, OSP I, OSP II, OSP Finance, EUA
TransCapacity and CCS and (b) that there is no provision or
condition in any note or other document in connection with
outstanding short-term borrowings of any of those companies
limiting the transactions which are the subject of the
Application-Declaration;
that requirements of applicable state securities or
"blue sky" laws will have been complied with;
that the enforceability of the Proposed Transactions
may be subject to and affected by applicable bankruptcy,
receivership, insolvency, reorganization, moratorium, fraudulent
conveyance or other laws affecting the enforcement of the rights
and remedies of creditors generally (including, without
limitation, such as may deny giving effect to waivers of rights
to debtors or guarantors); and such duties and standards as are
or may be imposed on creditors, including, without limitation,
good faith, reasonableness and fair dealing under any applicable
statute, rule, regulation or judicial decision; and
that the enforceability of the Proposed Transactions
may be subject to and affected by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and the exercise of equitable
powers by a court of competent jurisdiction (and no opinion is
given herein as to specific performance or as to the availability
of other equitable remedies or equitable relief of any kind).
This opinion relates only to Federal law and the laws of The
Commonwealth of Massachusetts. To the extent that certain
matters addressed may involve the laws of other States, we have
assumed that such laws are not materially different from the laws
of The Commonwealth of Massachusetts.
We consent to the use of this opinion in connection with the
Application-Declaration filed with the Commission.
Very truly yours,
McDermott, Will & Emery
<TABLE>
Exhibit No. b-1
Page 1 of 6
EUA COGENEX CORPORATION
BALANCE SHEET AND PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1995
(Unaudited) (In Thousands)
<CAPTION>
EUA Cogenex EUA Cogenex
Consolidated Pro Forma Consolidated
Per Books Adjustments Pro Forma
<S> <C> <C> <C>
Assets
Property and Other Investments:
Total Property $135,362 $135,362
Less: Accumulated provision for depreciation
and amortization of property 31,223 31,223
Total Investments 54,913 54,913
Net Property and Investments 159,052 168,520<F1><F2><F3> 327,572
Current Assets:
Cash and Special Deposits 4,988 10,605 <F4> 15,593
Receivables, net 37,874 37,874
Prepayments and Other Current Assets 5,359 5,359
Total Current Assets 48,221 10,605 58,826
Deferred Debits 4,037 4,037
Total Assets $211,310 $179,125 $390,435
EUA Cogenex EUA Cogenex
Consolidated Pro Forma Consolidated
Per Books Adjustments Pro Forma
Liabilities and Capitalization
Capitalization:
Common Equity $48,230 $60,605 <F2><F4> $108,835
Long-term Debt, net 119,200 100,000 <F1> 219,200
Total Capitalization 167,430 160,605 328,035
Current Liabilities:
Current Maturities of Long-term Debt 800 800
Notes Payable 31,480 (31,480) <F1> 0
50,000 <F3> 50,000
Accounts Payable 5,667 5,667
Other Current Liabilities 3,523 3,523
Total Current Liabilities 41,470 18,520 59,990
Other Non-current Liabilities 2,410 2,410
Total Liabilities and Cap $211,310 $79,125 $390,435
<FN>
Footnotes:
EUA Cogenex Corporation is seeking authorization to undertake various transactions from time to time
through December 31, 1997 in an amount not to exceed $200 million from one or any combination of
the following sources: (i) up to $50 million from EUA in any combination of capital contributions or
short-term borrowings; (ii) up to $150 million from the issuance of long-term debt; (iii) up to $75
million short-term borrowings under the EUA System lines of credit.
<F1> Issuance of $100 million long-term debt used to repay currently outstanding short-term debt, with
excess cash utilized for other corporate purposes. LTD issuance assumed to be at 8.50%.
<F2> Capital contribution for EUA to EUA Cogenex of $50 million, from time to time through December
31, 1997, the proceeds of which will be used to fund additional property and investments. EUA will
fund its capital contribution with proceeds from its dividend reinvestment plan, internally generated funds.
and repayment of EUA Cogenex's notes from EUA.
<F3> EUA Cogenex borrows $50 million short-term debt from time to time through December 31, 1997
to fund additional property and investments. EUA Cogenex may seek authorization to refinance this
short-term debt with permanent capital.
<F4> Earnings assumed to result from additional investments.
</FN>
</TABLE>
<TABLE>
Exhibit No. b-1
Page 2 of 6
EUA COGENEX CORPORATION
INCOME STATEMENT AND PRO FORMA INCOME STATEMENT
AT DECEMBER 31, 1995
(Unaudited) (In Thousands)
<CAPTION>
EUA Cogenex EUA Cogenex
Consolidated Pro Forma Consolidated
Per Books Adjustments Pro Forma
<S> <C> <C> <C>
Operating Revenues: $74,480 $74,480
Expenses:
Contract, Operating Expenses
and Cost of Goods Sold 61,354 61,354
Taxes, Other than Income 663 663
Income Taxes 872 (3,364) <F4> (2,492)
Total Expenses 62,889 (3,364) 59,525
Operating Income 11,591 3,364 14,955
Other Income and Deductions 3,001 16,852 <F1> 19,853
Income before Interest Charges 14,592 20,216 34,808
Interest Charges:
Interest on Long-tern Debt 10,199 8,500 <F2> 18,699
Other Interest (primarily
interest on short-term debt) 1,630 1,111 <F3> 2,741
Capitalized Interest (1,408) (1,408)
Total Interest Charges 10,421 9,611 20,032
Earnings Available for
Common Dividend $4,171 $10,605 $14,776
<FN>
Footnotes:
<F1> Earned income on $168.5 million increase in investments and property at estimated (after-tax) rate
of 10.00% made solely for purpose of this analysis. Analysis assumes earnings come from Other Income
and Deductions.
<F2> Increase in long-term debt interest expense resulting from issuance of $100 million LTD at 8.50%.
Rate assumption is made solely for the purpose of this analysis.
<F3> Increase in Other Interest expense as a result of net decrease in notes payable refinanced with
proceeds from $100 million LTD issuance offset by $50 million in new borrowings from time to time
through December 31, 1997, at an assumed borrowing rate of 6.00%.
<F4> Decrease in tax expense resulting from additional interest expense incurred, at a tax rate of 35%.
</FN>
</TABLE>
<TABLE>
Exhibit No. b-1
Page 3 of 6
EUA COGENEX CORPORATION
STATEMENT OF CAPITALIZATION AND PRO FORMA STATEMENT OF CAPITALIZATION
AT DECEMBER 31, 1995
(Unaudited) (In Thousands)
<CAPTION>
EUA Cogenex EUA Cogenex
Consolidated Pro Forma Consolidated
Per Books Adjustments Pro Forma
Capitalization Including Short-term Debt:
<S> <C> <C> <C>
Common Equity 48,230 60,605 108,835
Long-term Debt, net 119,200 100,000 219,200
Short-term Debt 31,480 18,520 50,000
Total Capitalization 198,910 179,125 378,035
Ratios Including Short-term Debt:
Common Equity % 24% 29%
Long-term Debt % 60% 58%
Short-term Debt % 16% 13%
</TABLE>
<TABLE>
<CAPTION>
EUA Cogenex EUA Cogenex
Consolidated Pro Forma Consolidated
Per Books Adjustments Pro Forma
Capitalization Excluding Short-term Debt:
<S> <C> <C> <C>
Common Equity 48,230 60,605 108,835
Long-term Debt, net 119,200 100,000 219,200
Total Capitalization 167,430 160,605 328,035
Ratios Excluding Short-term Debt:
Common Equity % 29% 33%
Long-term Debt % 71% 67%
</TABLE>
<TABLE>
Exhibit No. b-1
Page 4 of 6
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
BALANCE SHEET AND PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1995
(Unaudited) (In Thousands)
<CAPTION>
EUA EUA
Consolidated Pro Forma Consolidated
Per Books Adjustments Pro Forma
<S> <C> <C> <C>
Assets:
Utility Plant and Other Investments:
Utility Plant in Service $1,020,859 $1,020,859
Less: Accumulated provision for depreciation
and amortization of property 304,034 304,034
Construction Work in Progress 8,389 8,389
Net Utility Plant 725,214 725,214
Other Investments 233,894 233,894
Total Utility Plant and Investments 959,108 168,520 <F1><F2><F3> 1,127,628
Current Assets:
Cash and Special Deposits 20,109 10,605 <F4> 30,714
Receivables, net 103,254 103,254
Prepayments and Other Current Assets 23,685 23,685
Total Current Assets 147,048 10,605 157,653
Deferred Debits and Other
Non-Current Assets 127,893 127,893
Total Assets $1,234,049 $179,125 $1,413,174
EUA EUA
Consolidated Pro Forma Consolidated
Per Books Adjustments Pro Forma
Liabilities and Capitalization
Capitalization:
Common Equity $365,443 $60,605 <F2><F4> $426,048
Preferred Stock (less sinking funds) 32,290 32,290
Long-term Debt, net 455,412 100,000 <F1> 555,412
Total Capitalization 853,145 160,605 1,013,750
Current Liabilities:
Current Maturities of Long-term Debt 41,601 41,601
Notes Payable 31,678 (31,480) <F1>
50,000 <F3> 50,198
Preferred Stock Sinking Fund 50 50
Accounts Payable 33,442 33,442
Other Current Liabilities 46,921 46,921
Total Current Liabilities 153,692 18,520 172,212
Other Non-current Liabilities and Deferred Credits 227,212 227,212
Total Liabilities and Capitalization $1,234,049 $179,125 $1,413,174
<FN>
Footnotes:
EUA Cogenex Corporation is seeking authorization to undertake various transactions from time to time
through December 31, 1997 in an amount not to exceed $200 million from one or any combination of
the following sources: (i) up to $50 million from EUA in any combination of capital contributions or
short-term borrowings; (ii) up to $150 million from the issuance of long-term debt; (iii) up to $75
million short-term borrowings under the EUA System lines of credit.
<F1> Issuance of $100 million long-term debt used to repay currently outstanding short-term debt, with
excess cash utilized for other corporate purposes. LTD issuance assumed to be at 8.50%.
<F2> Capital contribution for EUA to EUA Cogenex of $50 million, the proceeds of which will be used to
fund additional property and investments. EUA will fund its capital contribution with proceeds from its
fund its capital contribution with proceeds from its dividend reinvestment plan, internally generated funds.
and repayment of EUA Cogenex's notes from EUA.
<F3> EUA Cogenex borrows $50 million short-term debt from time to time through December 31, 1997
to fund additional property and investments. EUA Cogenex may seek authorization to refinance this
short-term debt with permanent capital.
<F4> Earnings assumed to result from additional investments.
</FN>
</TABLE>
<TABLE>
Exhibit No. b-1
Page 5 of 6
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
INCOME STATEMENT AND PRO FORMA INCOME STATEMENT
AT DECEMBER 31, 1995
(Unaudited) (In Thousands)
<CAPTION>
EUA Cogenex EUA Cogenex
Consolidated Pro Forma Consolidated
Per Books Adjustments Pro Forma
<S> <C> <C> <C>
Operating Revenues: $564,278 $564,278
Expenses:
Operation and Maintenance 402,148 402,148
Depreciation and Amortization 46,455 46,455
Taxes, Other than Income 24,337 24,337
Income Taxes 18,208 (3,364) <F4> 14,844
Total Expenses 491,148 (3,364) 487,784
Operating Income 73,130 3,364 76,494
Allowance for Funds used During Construction 351 351
Other Income and Deductions 19,997 16,852 <F1> 36,849
Income before Interest Charges 93,478 20,216 113,694
Interest Charges:
Interest on Long-tern Debt 38,987 8,500 <F2> 47,487
Other Interest (primarily interest
on short-term debt) 6,578 1,111 <F3> 7,689
Capitalized Interest (1,788) (1,788)
Total Interest Charges 43,777 9,611 53,388
Net Income 49,701 10,605 60,306
Preferred Dividends of Subsidiaries 2,331 2,331
Earnings Available for Common Dividend $47,370 $10,605 $57,975
<FN>
Footnotes:
<F1> Earned income on $168.5 million increase in investments and property at estimated (after-tax) rate
of 10.00% made solely for purpose of this analysis. Analysis assumes earnings come from Other Income
and Deductions.
<F2> Increase in long-term debt interest expense resulting from issuance of $100 million LTD at 8.50%.
Rate assumption is made solely for the purpose of this analysis.
<F3> Decrease in Other Interest expense as a result of net decrease in notes payable refinanced with
proceeds from $100 million LTD issuance offset by $50 million in new borrowings from time to time
through December 31, 1997, at an assumed borrowing rate of 6.00%.
<F4> Decrease in tax expense resulting from additional interest expense incurred, at a tax rate of 35%.
</FN>
</TABLE>
<TABLE>
Exhibit No. b-1
Page 6 of 6
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
STATEMENT OF CAPITALIZATION AND PRO FORMA STATEMENT OF CAPITALIZATION
AT DECEMBER 31, 1995
(Unaudited) (In Thousands)
<CAPTION>
EUA EUA
Consolidated Pro Forma Consolidated
Per Books Adjustments Pro Forma
<S> <C> <C> <C>
Capitalization Including Short-term Debt:
Common Equity 365,443 60,605 426,048
Long-term Debt, net 455,412 100,000 555,412
Preferred Stock, net 32,290 32,290
Short-term Debt 31,678 18,520 50,198
Total Capitalization 884,823 179,125 1,063,948
Ratios Including Short-term Debt:
Common Equity % 41% 40%
Long-term Debt % 51% 52%
Preferred Stock % 4% 3%
Short-term Debt % 4% 5%
</TABLE>
<TABLE>
<CAPTION>
EUA EUA
Consolidated Pro Forma Consolidated
Per Books Adjustments Pro Forma
Capitalization Excluding Short-term Debt:
<S> <C> <C> <C>
Common Equity 365,443 60,605 426,048
Long-term Debt, net 455,412 100,000 555,412
Preferred Stock, net 32,290 32,290
Total Capitalization 853,145 160,605 1,013,750
Ratios Excluding Short-term Debt:
Common Equity % 43% 42%
Long-term Debt % 53% 55%
Preferred Stock % 4% 3%
</TABLE>
