File No. 70-8955
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 to
FORM U-1
DECLARATION WITH RESPECT TO AUTHORIZATION OF
A REVOLVING CREDIT FACILITY FOR EASTERN UTILITIES ASSOCIATES
AND CERTAIN OF ITS SUBSIDIARIES
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
EASTERN UTILITIES ASSOCIATES ("EUA")
P.O. Box 2333, Boston, Massachusetts 02107
BLACKSTONE VALLEY ELECTRIC COMPANY ("BLACKSTONE")
Washington Highway, Lincoln, Rhode Island 02865
EASTERN EDISON COMPANY ("EASTERN")
110 Mulberry Street, Brockton, Massachusetts 02403
MONTAUP ELECTRIC COMPANY ("MECO")
P.O. Box 2333, Boston, Massachusetts 02107
NEWPORT ELECTRIC CORPORATION ("NEWPORT")
12 Turner Road, Middleton, Rhode Island 02840
(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
This Amendment No. 2 (the "Amendment") amends and restates in its
entirety the Declarants' Declaration on Form U-1 dated November 8, 1996, as
amended by Amendment No. 1 dated December 2, 1996.
ITEM 1. Description of Proposed Transactions.
1. Background. Eastern Utilities Associates ("EUA"), a public
utility holding company registered under the Public Utility Holding Company
Act of 1935, as amended (the "Act"), and Blackstone Valley Electric Company
("Blackstone"), Eastern Edison Company ("Eastern"), Montaup Electric
Company ("MECO"), Newport Electric Corporation ("Newport"), EUA Cogenex
Corporation ("Cogenex"), EUA Ocean State Corporation ("Ocean State") and
EUA Service Corporation ("ESC"), each of which is a wholly-owned subsidiary
of EUA (each of EUA, Blackstone, Eastern, MECO and Newport are sometimes
herein called a "Declarant" and collectively all such companies are herein
called "Declarants," and each of Cogenex, Ocean State and ESC are sometimes
herein called an "Affiliate" and collectively all such companies are called
"Affiliates") propose to enter into a revolving credit facility (the
"Facility") aggregating up to $150 million. The Declarants submit this
declaration (the "Declaration") pursuant to Sections 6(a) and 7 of the Act
and Rule 45 thereunder with respect to borrowings by the Declarants under
the Facility. The Affiliates are exempted from making this Declaration
pursuant to Rule 52(b) promulgated under the Act.
2. The Facility. The Declarants seek authorization to enter into a
revolving credit agreement pursuant to which they and the Affiliates will
be permitted to borrow from time to time, from one or more commercial banks
or other lending institutions (the "Lenders") up to $150 million in the
aggregate through a period ending five years after the closing date of the
agreement. Borrowings may take the form of (i) borrowings from all Lenders
under the Facility on a pro rata basis ("Pro Rata Borrowings"), (ii)
borrowings of at least $100,000 each and up to $20,000,000 in the aggregate
(the "Swing Line Borrowings") from a particular Lender (the "Swing Line
Lender"), and (iii) short-term borrowings (for a period from 7 days to 180
days) from Lenders on a competitive bid basis ("Competitive Bid
Borrowings"). All borrowings under the Facility will be unsecured and will
be evidenced by promissory notes.
A. Access to Facility; Limitations on Borrowings; EUA Guaranty. The
Declarants and Affiliates will have the following respective maximum
borrowing limits under the Facility: Blackstone - $20 million; Newport -
$25 million; Eastern - $75 million; Montaup - $20 million; Cogenex - $75
million; Ocean State - $10 million; ESC - $10 million; and EUA - $75
million. Access to the Facility will be limited for a Declarant or an
Affiliate other than Cogenex if such Declarant or Affiliate reduces its
operating income by more than twenty percent as a result of selling an
income-generating asset, and will be eliminated for a Declarant or an
Affiliate other than Cogenex if such Declarant reduces its operating income
by more than fifty percent as a result of selling an income-generating
asset.
It has become necessary for EUA to guaranty the short term borrowings
of Cogenex until such time as Cogenex satisfies certain performance
criteria; upon Cogenex's satisfaction of such performance criteria, such
guaranty by EUA shall be released. EUA hereby requests authorization to
make such guaranty on behalf of Cogenex.
Notwithstanding anything in this Declaration to the contrary, EUA
agrees with respect to its proposed borrowings under the Facility that EUA
would limit its borrowings to an aggregate amount up to $25 million for the
funding of short-term loans to Cogenex, as currently authorized by
Commission Order dated April 5, 1995, HCAR No. 35-26266 (the "Cogenex
Order"). The terms and conditions of any loans made to Cogenex would be
the same as the terms and conditions under the Facility. EUA further
agrees that with the exception of the up to $25 million borrowings
described in the first sentence of this paragraph, EUA would not use any of
its proposed borrowings under the Facility to invest in Cogenex.
B. Use of proceeds. The Facility will be used: (1) to pay, reduce
or renew outstanding notes payable to banks as they become due; (2) to
finance the Declarants' respective cash construction expenditures for
fiscal years 1996 - 2000; (3) to provide funds to meet certain sinking fund
requirements and retirements or redemptions of outstanding securities; (4)
in the case of EUA, to make short term loans, capital contributions and
open account advances in accordance with Rule 45(b)(4) or Rule 52 or as
previously authorized by the Commission to Cogenex, EEIC and EUA Energy;
(5) to pay for the cost of issuance of New Notes and Bonds (as such terms
are defined in paragraph 3.2(B)(2)(b) below) of Cogenex; (6) to provide for
debt servicing reserves or expenses in connection with the issuance of New
Notes and Bonds; (7) for the Declarants' respective working capital
requirements; and (8) for other general corporate purposes.
C. Interest.
(a) The Declarants will pay interest on any Pro Rata Borrowings, at
the borrower's election, at a rate which is (i) the greater of the Bank of
New York's prime commercial lending rate or the federal funds rate plus
1/2% (the "Alternate Base Rate"), or (ii) the London interbank offering
rate ("LIBOR") for the applicable interest period, plus a margin of at
least .150% and up to .450%, which margin rate shall be determined based
upon the then current bond ratings of Eastern's first mortgage bonds (the
"LIBOR rate").
(b) The Declarants will pay interest on any Competitive Bid Borrowings
at a rate or rates determined by competitive bid auction(s) among the
Lenders. If a Declarant so elects, the competitive bid auction agent will
notify all of the Lenders of a requested loan amount, the date the loan
will begin and the interest period for such loan, and will request that
each Lender provide a quote for such loan. The Declarant may then choose
to accept or reject any quotes it receives.
(c) The Declarants will pay interest on any Swing Line Borrowings at a
rate or rates to be determined by the borrower and the Swing Line Lender.
Swing Line Borrowings in excess of $2,500,000 in the aggregate could be
converted, at the borrower's option, to Competitive Bid Borrowings or Pro
Rata Borrowings. Swing Line Borrowings in excess of $20,000,000 in the
aggregate will be converted to Pro Rata Borrowings which would initially
bear interest at the Alternate Base Rate. Upon the occurrence of an event
of default by the borrower, or at the request of the Swing Line Lender, all
outstanding Swing Line Borrowings could be replaced by and refinanced using
the proceeds from Pro Rata Borrowings.
(d) Interest calculations would be made on the basis of a 360-day year
for the actual number of days elapsed except with respect to interest
accruing at the Bank of new York's prime commercial lending rate, in which
case interest would be calculated on the basis of a 365 or 366 day year for
the actual number of days elapsed.
(e) Any payment of principal and/or interest which is not paid when
due would bear interest, to the extent permitted under applicable law, at a
rate per annum equal to the interest rate otherwise applicable plus two
percent.
D. Agency and Administrative Fees. The Declarants will pay to the
administrative agent for the Facility, for the pro rata account of the
Lenders, an annual facility fee to be based upon the average daily amount
of the Facility regardless of usage. The fee to be paid by the Declarants
will be at least .100% and up to .300% of the average daily amount of the
Facility, such percentage to be determined in accordance with the then
current bond ratings of Eastern's first mortgage bonds. The administrative
agent under the Facility will be a commercial bank, initially the Bank of
New York, which will be paid a one-time agency fee of $50,000. An
administrative fee of $7,500 will be paid to the administrative agent at
closing and on each subsequent anniversary of the closing during the term
of the Facility. Additionally, with respect to Competitive Bid Borrowings
only, in the event that one or more Declarants request(s) a competitive
bid, such Declarant(s) collectively will pay a $200 fee to the
administrative agent in connection with such request.
E. Other Terms and Conditions. The revolving credit agreement, the
form of which will be filed by amendment as Exhibit B-1 hereto, will
include other terms and conditions, including financial covenants and fees,
that are customary in revolving credit agreements. A summary of the
preliminary principal terms and conditions is set forth in Exhibit B-2
hereto. The final terms will be set forth in the credit agreement to be
filed as Exhibit B-1 hereto.
3. Effect on Existing Authorizations.
A. Use of the Facility. Borrowings under the Facility will replace
borrowings authorized by the Commission in File No. 70-8713 (short term
borrowing authority for each of Blackstone, Eastern, MECO, Newport, ESC and
Ocean State), HCAR No. 35-26433 dated December 19, 1995.
Additionally, as a result of replacing EUA's "regular bank lines of
credit," the Facility will become the source of borrowings by EUA:
(i) for the financing of its wholly owned subsidiary, EUA Energy
Investment Corporation ("EEIC") and borrowings authorized pursuant to File
No. 70-7426, HCARs No. 35-24515A and 35-26028 dated December 4, 1987, as
amended January 11, 1988 and April 15, 1994, respectively;
(ii) authorized in connection with investments by EUA in EUA Energy
Services, Inc. ("EUA Energy") authorized pursuant to File No. 70-8769, HCAR
No. 35-26493 dated March 14, 1996, as subsequently amended; and
(iii) for the financing of Cogenex authorized pursuant to the Cogenex
Order; and
the Facility will become the source of borrowings by Cogenex authorized
pursuant to the Cogenex Order.
B. Proposed Replacement of Commission Orders.
(1) The authorization granted by the Commission pursuant to HCAR No.
35-26433 dated December 19, 1995 (File No. 70-8713) will be replaced in its
entirety and will cease to have effect upon the issuance of the
Commission's order authorizing the transactions proposed in this
Declaration.
(2) The authorization granted by the Commission pursuant to the
Cogenex Order will be replaced in its entirety and will cease to have
effect upon the issuance of the Commission's order authorizing the
transactions proposed in this Declaration; provided, that the Commission's
order authorizing the transactions proposed in this Declaration shall
include authorization for the following transactions previously authorized
by the Cogenex Order:
(a) EUA proposes to invest in Cogenex up to an aggregate principal
amount of $50 million in one or any combination of short-term loans,
capital contributions, or purchases of Cogenex common stock.
(b) Cogenex proposes to obtain financing in an aggregate principal
amount not to exceed $200 million from any of the following sources: (i)
up to $50 million from EUA, as described above, and (ii) $150 million from
one or any combination of (A) the issuance and sale of unsecured notes
("New Notes") through a private or a public offering, (B) the borrowing of
proceeds from the issuance or sale of bonds by a state or political
subdivision agency ("Bonds"), and (c) the borrowing of up to $75 million
under the Facility. Should it become necessary to secure more favorable
terms for the New Notes or Bonds, EUA proposes to guarantee, or provide an
equity maintenance agreement for all or a portion of the obligations of
Cogenex on the New Notes and Bonds. EUA and Cogenex request that the
Commission reserve jurisdiction over the issuance and sale of the new Notes
and Bonds and EUA's guarantee of or provision of an equity maintenance
agreement for the New Notes and Bonds pending completion of the record.
(c) Cogenex proposes to extend its authority to invest in Northeast
Energy Management, Inc. ("NEM") and EUA Cogenex-Canada Inc. ("Cogenex-
Canada), two wholly-owned non-utility subsidiaries of Cogenex, and their
authority to borrow funds, with no increase in the amount of authorized
funding. By Commission order dated January 28, 1994 (HCAR No. 25982), the
Commission authorized Cogenex to invest in NEM, and NEM to borrow from
Cogenex, up to an aggregate $9.1 million. By Commission order dated
September 30, 1994 (HCAR No. 26135), the Commission authorized Cogenex to
provide equity and debt funding for Cogenex-Canada and for Cogenex-Canada
to borrow from third parties in amounts not to aggregate more than $20
million outstanding. These authorizations were extended from December 31,
1995 through December 31, 1997 by the Cogenex Order.
(3) The Commission orders issued in connection with the financing of
EEIC (HCARs No. 35-24515A and 35-26028) and investment in EUA Energy (HCAR
No. 70-26493) will remain in full force and effect, as presently written.
4. EWGs. As required by Rule 54, all applicable conditions
contained in Rule 53(a) are, and assuming the consummation of the proposed
transactions will be, satisfied and none of the conditions contained in
Rule 53(b) exist or will exist as a result of the proposed transactions
making Rule 53(c) inapplicable.
ITEM 2. FEES, COMMISSIONS, AND EXPENSES.
The fees, commissions and expenses of the Declarants expected to be
paid or incurred, directly or indirectly, in connection with the
transaction described above are estimated as follows:
Company Legal Fees $________*
Lenders' Legal Fees $________*
Administrative and Agency Fees $ 57,500
Miscellaneous $________*
TOTAL $________*
* To be filed by amendment.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
The sections of the Act and rules or exemptions thereunder that the
Declarants consider applicable to the transactions or the basis for
exemption therefrom are set forth below:
Transactions related to the Facility Sections 6(a), 7 and 12(b), and
Rules 45 and 52(b).
ITEM 4. REGULATORY APPROVALS.
No consent or approval of any state commission or any federal
commission other than the Commission is necessary for the transactions
which are the subject of this Declaration.
ITEM 5. PROCEDURE.
(a) In order to enable the Declarants to enter into the proposed
transactions promptly, each Declarant hereby requests that this Declaration
be granted and made effective at the earliest convenient date.
(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 a
thirty (30) day waiting period between the issuance of the order of the
Commission and the day on which the order is to become effective would not
be appropriate.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
(* To be filed by amendment.)
(+ Confidential treatment requested.)
(a) Exhibits.
*+ Exhibit B-1 Form of Revolving Credit Agreement
Exhibit B-2 Preliminary Terms and Conditions of
Facility (previously filed)
* Exhibit F Opinion of Counsel
* Exhibit H Proposed Form of Notice
(b) Financial Statements.
+ b-1 Projected Cash Flow Statement of EUA (parent company
only) for 1997-2001
+ b-2 Projected Cash Flow Statement of Blackstone for 1997-
2001
+ b-3 Projected Cash Flow Statement of Eastern for 1997-2001
+ b-4 Projected Cash Flow Statement of Montaup for 1997-2001
+ b-5 Projected Cash Flow Statement of Newport for 1997-2001
+ b-6 Projected Cash Flow Statement of Cogenex for 1997-2001
+ b-7 Projected Cash Flow Statement of Ocean State for 1997-
2001
+ b-8 Projected Cash Flow Statement of ESC for 1997-2001
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
The transaction described in Item 1 does not involve major federal
actions 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, each of the undersigned Declarants has duly caused this statement
to be signed on its behalf by the undersigned duly authorized individual.
EASTERN UTILITIES ASSOCIATES,
BLACKSTONE VALLEY ELECTRIC COMPANY,
EASTERN EDISON COMPANY,
MONTAUP ELECTRIC COMPANY, and
NEWPORT ELECTRIC CORPORATION,
By: /s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Treasurer
Dated: January 29, 1997
EX b-1, PROJECTED CASH FLOW STATEMENT OF EUA (parent company
only) for 1997-2001
**CONFIDENTIAL TREATMENT REQUESTED**
EX b-2, PROJECTED CASH FLOW STATEMENT OF BLACKSTONE FOR 1997-2001
**CONFIDENTIAL TREATMENT REQUESTED**
EX b-3, PROJECTED CASH FLOW STATEMENT OF EASTERN FOR 1997-2001
**CONFIDENTIAL TREATMENT REQUESTED**
EX b-4, PROJECTED CASH FLOW STATEMENT OF MONTAUP FOR 1997-2001
**CONFIDENTIAL TREATMENT REQUESTED**
EX b-5, PROJECTED CASH FLOW STATEMENT OF NEWPORT FOR 1997-2001
**CONFIDENTIAL TREATMENT REQUESTED**
EX b-6, PROJECTED CASH FLOW STATEMENT OF COGENEX FOR 1997-2001
**CONFIDENTIAL TREATMENT REQUESTED**
EX b-7, PROJECTED CASH FLOW STATEMENT OF OCEAN STATE FOR 1997-2001
**CONFIDENTIAL TREATMENT REQUESTED**
EX b-8, PROJECTED CASH FLOW STATEMENT OF EUA SERVICE FOR 1997-2001
**CONFIDENTIAL TREATMENT REQUESTED**
