File No. 70 - 9527
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NUMBER 2 TO
APPLICATION-DECLARATION WITH RESPECT TO
THE ACQUISITION OF A SUBSIDIARY IN CONNECTION
WITH THE UNBUNDLING OF GENERATION BUSINESS
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
________________________________
EASTERN UTILITIES ASSOCIATES ("EUA")
750 West Center Street, West Bridgewater, Massachusetts 02379
EASTERN EDISON COMPANY ("EASTERN")
750 West Center Street, West Bridgewater, Massachusetts 02379
MONTAUP ELECTRIC COMPANY ("MONTAUP")
750 West Center Street, West Bridgewater, Massachusetts 02379
(Names of companies filing this statement and addresses of their principal
executive offices)
EASTERN UTILITIES ASSOCIATES
(Name of top registered holding company parent of each applicant or declarant)
_________________________________
Clifford J. Hebert, Jr.
Treasurer
Eastern Utilities Associates
750 West Center Street
West Bridgewater, Massachusetts 02379
(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
28 State Street
Boston, MA 02109-1775
This Amendment Number 2 amends that certain Application-Declaration on Form U-1
(File Number 70-9527) filed by the Declarants with the Commission on July 14,
1999, as previously amended by Amendment No. 1 dated July 28, 1999.
1. The first paragraph of Item 1, Section I.B (General Request and
Overview of Transaction), is hereby amended to provide for a staged transfer
and/or redemption of the Montaup Securities, and is restated in its entirety to
read as follows:
The Declarants hereby file this Declaration for the purpose of
obtaining Commission authorization for Eastern Edison to transfer to EUA, and
for EUA to acquire from Eastern Edison, all of Eastern Edison's investment in
Montaup's capitalization including its outstanding: (i) preferred stock of
Montaup (ii) common stock of Montaup (the securities described in clauses (i)
and (ii), collectively, the "Montaup Stock"); and (iii) debenture bonds of
Montaup (the "Bonds," and together with the Montaup Stock, the "Montaup
Securities") thereby causing Montaup to become a wholly-owned, first-tier
subsidiary of EUA. The transfer of the Montaup Securities to EUA by Eastern
will take the form of one or more special dividend payments comprising all the
Montaup Securities, which will be paid out of Eastern's retained earnings to
the maximum extent possible and, thereafter, subject to receipt of Commission
authorization, out of paid-in capital, unearned surplus and/or a redemption of
Eastern common stock, such redemption to be funded with Montaup Securities
(such transfer and acquisition of Montaup Securities, and the transactions
relating thereto, hereinafter collectively referred to as the "Spin-Off").
2. Section II of Item 1 (Dividend Distribution by Eastern Edison to EUA
and Payment Out of Paid In Capital), is hereby amended (i) to provide for a
staged transfer of the Montaup Securities through one or more dividend
distributions by Eastern Edison to EUA, and (ii) to establish a timeframe for
the payment to EUA by Eastern Edison of future dividends from other than
retained earnings. Section II of Item 1 is hereby restated in its entirety to
read as follows:
Eastern Edison hereby proposes and requests authorization to
distribute through one or more dividend distributions all of the remaining
Montaup Securities to EUA. Such dividend distribution(s) may, in part, exceed
Eastern Edison's retained earnings and be paid out of paid-in capital, unearned
surplus and/or as the redemption price for the redemption of Eastern Edison
common stock (as described in paragraph I.B above). EUA proposes and requests
authorization to acquire and/or receive such Montaup Securities in the form of
one or more dividend distributions from Eastern Edison. All of the Montaup
Securities are issued in the name of, and are beneficially owned by, Eastern
Edison. Eastern Edison hereby further requests authorization, upon
consummation of the Spin-Off and through April 30, 2000, to pay future
dividends to EUA out of other than retained earnings.
3. Item 2 is hereby amended and restated in its entirety to read as
follows:
The estimate of the approximate amount of fees and expenses payable in
connection with the proposed transactions is as follows:
Counsel fees $35,000
Miscellaneous $5,000
TOTAL $40,000
4. Item 4, Regulatory Approvals, is hereby amended by adding the following
paragraph which updates the status of certain regulatory approvals:
The FERC approved the proposed transactions through its approval of Docket
No. EC99-70-000 by Order issued September 29, 1999. The NRC has indicated by
letters dated October 27, 1998 that no NRC consent is required.
5. Item 6, Exhibits and Financial Statements, is hereby amended and
restated to read as follows:
(a) Exhibits.
* Filed herewith.
Exhibit A-1* Amended and Restated Articles of Organization of Montaup
Exhibit D-1 FERC Docket #EC99-70-000; Order dated September 29, 1999 (88
FERC Chapter 61,292)
Exhibit D-2 NRC Docket #50-423, #50-443
Exhibit D-3 CDPUC Docket #99-08-11
Exhibit D-4 MDTE Docket #99-67
Exhibit F* Opinion of Counsel
Exhibit G Proposed Form of Notice
(b) Financial Statements
* Filed by Amendment
b-1 Pro forma balance sheet of Eastern Utilities Associates as at June
30, 1999
b-2 Pro forma balance sheet of Eastern Edison Company as at June 30, 1999
b-3 Pro forma balance sheet of Montaup Electric Company as at June 30,
1999
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act of 1935,
as amended, each of the undersigned companies has duly caused this statement to
be duly signed on its behalf by the undersigned thereunto duly authorized.
Date: October 26, 1999
EASTERN UTILITIES ASSOCIATES,
EASTERN EDISON COMPANY, and
MONTAUP ELECTRIC COMPANY,
By /s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Treasurer
EXHIBIT A-1
AACR.5 FEDERAL IDENTIFICATION
NO. 04-1631680
The Commonwealth of Massachusetts
Examiner William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF AMENDMENT
(General Laws, Chapter 164, Section 8)
Name
Approved
We, John R. Stevens, *President
and Clifford J. Hebert, *Clerk,
of Montaup Electric Company,
(Exact name of corporation)
located at 750 West Center Street, West Bridgewater, MA 02379,
(Street address of corporation in Massachusetts)
certify that these Articles of Amendment affecting articles numbered:
2
(Number those articles 1, 2, 3, 4, 5 and/or 6 being amended)
of the Articles of Organization were duly adopted by a unanimous written
consent, dated , 19 , by vote of:
586,000 shares of Common Stock of 586,000 shares outstanding,
(type, class & series, if any)
1,500,000 shares of Preferred Stock of 1,500,000 shares outstanding,
and
(type, class & series, if any)
shares of of shares outstanding,
(type, class & series, if any)
C
P 1** being at least a majority of each type, class or series outstanding
and entitled to vote thereon: / or
M 2** being at least two-thirds of each type, class or series outstanding
and entitled to vote thereon
R.A. and of each type, class or series of stock whose rights are adversely
affected thereby:
* Delete the inapplicable words.
** Delete the inapplicable clause.
1 For amendments adopted pursuant to Chapter 156B, Section 70.
2 For amendments adopted pursuant to Chapter 156B, Section 71.
P.C. Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on one side only of separate 8 1/2 x
11 sheets of paper with a left margin of at least 1 inch. Additions to more
than one article may be made on a single sheet so long as each article
requiring each addition is clearly indicated.
2. The purposes for which the corporation is formed are as follows:
The corporation is organized under the provisions of Chapters 158 and
164 for the purpose of carrying on the business of an electric company and for
the purpose of making, by means of water power, steam power, or otherwise, and
selling and distributing and selling electricity within or outside the
Commonwealth and for the purpose of owning and operating works and distributing
plants for the manufacture and sale and distribution and sale of electricity
within or outside the Commonwealth a nd for the purpose of the transmission of
electricity within or outside the Commonwealth for lighting, heating and power
and particularly but without limitation for the purpose of the generating and
buying of electricity and the transmitting and selling of the same.
The foregoing amendment(s) will become effective when these Articles of
Amendment are filed in accordance with General Laws, Chapter 156B, Section 6
unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such later date.
Later effective date:
SIGNED UNDER THE PENALTIES OF PERJURY, this day of , 19 ,
/s/ John R. Stevens , *President
/s/ Clifford J. Hebert, *Clerk.
*Delete the inapplicable words.
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 164B, Section 8)
I hereby approve the within Articles of Amendment and, the filing fee in
the amount of $__________ having been paid, said articles are deemed
to have been filed with me this day of 19 .
Effective date:
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Amy J. Gould, Esq.
McDermott, Will & Emery
28 State Street
Boston, MA 02109
Telephone: 617-535-4053
EXHIBIT F
October 26, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: File No. 70-9527
Eastern Utilities Associates et al. / Application-Declaration with Respect to
the Acquisition of a Subsidiary in Connection with the Unbundling of Generation
Business
Ladies and Gentlemen:
As counsel for Eastern Utilities Associates ("EUA"), Eastern Edison
Company, ("Eastern"), and Montaup Electric Company ("Montaup") (EUA, Eastern
and Montaup are sometimes hereinafter referred to collectively as the
"Declarants"), we are furnishing this opinion to be used in connection with the
filing by the Declarants, on July 14, 1999, with the U.S. Securities and
Exchange Commission (the "Commission"), of an Application-Declaration on Form
U-1, as amended (File No. 70-9527; hereinafter, the "Application-Declaration"),
under the Public Utility Holding Company Act of 1935, as amended. The
Declarants are filing the Application-Declaration for the purpose of obtaining
Commission authorization for Eastern to transfer to EUA, and for EUA to acquire
from Eastern, all of Eastern's investment in Montaup's capitalization including
the outstanding: (i) preferred stock of Montaup; (ii) common stock of Montaup
(the securities described in clauses (i) and (ii), collectively, the "Montaup
Stock"); and (iii) debenture bonds of Montaup (the "Bonds," and together with
the Montaup Stock, the "Montaup Securities"), thereby causing Montaup to become
a wholly-owned, first-tier subsidiary of EUA. The transfer of the Montaup
Securities to EUA by Eastern will take the form of one or more special dividend
payments comprising all remaining capitalization of Montaup, which will be paid
out of Eastern's retained earnings to the maximum extent possible and,
thereafter, subject to receipt of Commission authorization, out of paid-in
capital, unearned surplus and/or a redemption of Eastern common stock, such
redemption to be funded with Montaup Securities (such transfer and acquisition
of Montaup Securities, and the transactions relating thereto, hereinafter
collectively referred to as the "Spin-Off").
It is our opinion, subject to the additional assumptions, exceptions
and qualifications hereinafter stated, that in the event the Spin-Off is
consummated in accordance with the Application-Declaration:
(a) All Massachusetts state laws applicable to the Spin-Off will
have been complied with by EUA, Eastern, and Montaup.
(b) Montaup, the issuer of the Montaup Securities, is a validly
organized and duly existing corporation organized under the
laws of the Commonwealth of Massachusetts.
(c) The Montaup Stock is validly issued, fully paid and
nonassessable and EUA, as the holder thereof upon the consummation of the Spin-
Off, will be entitled to the rights and privileges appertaining thereto set
forth in the Articles of Organization of Montaup.
(d) The Bonds are the valid and binding obligation of Montaup,
enforceable in accordance with their respective terms.
(e) Upon consummation of the Spin-Off, EUA will legally acquire the
Montaup Securities.
(f) The consummation of the Spin-Off will not violate the legal
rights of the holders of any of the securities issued by EUA, Eastern, Montaup
or any of their associate companies, Blackstone Valley Electric Company
("Blackstone"), Newport Electric Corporation ("Newport"), EUA Cogenex
Corporation ("Cogenex"), EUA Ocean State Corporation ("Ocean State"), EUA
Service Corporation ("ESC"), EUA Telecommunications Corporation ("EUA
Telecommunications"), Northeast Energy Management, Inc. ("NEM"), EUA Citizens
Conservation Services, Inc. ("CCS"), EUA Cogenex-West Corporation ("Cogenex-
West"), EUA Cogenex-Canada Inc. ("Cogenex-Canada"), EUA Cogenex-Canada Energy
Services, Inc. ("Cogenex-Canada Energy Services") (each of NEM, CCS, Cogenex-
West, Cogenex-Canada and Cogenex-Canada Energy Services being an associate or
subsidiary company of Cogenex), EUA Energy Services, Inc. ("Energy Services"),
Duke/Louis Dreyfus Energy Services (New England) L.L.C. ("D/LDNE") (D/LDNE
being an associate company of Energy Services), EUA Energy Investment
Corporation ("EEIC"), EUA TransCapacity, Inc. ("TransCapacity"), EUA BIOTEN,
Inc. ("EUA BIOTEN"), BIOTEN Operations, Inc. ("BIOTEN Operations"), EUA
Compression Services, Inc. ("EUACS") (TransCapacity, EUA BIOTEN, BIOTEN
Operations and EUACS being associate companies of EEIC), Ocean State Power I
("OSP I"), Ocean State Power II ("OSP II") (OSP I and OSP II being Rhode Island
general partnerships), Eastern Edison Electric Company, APS Cogenex L. L.C.,
EUA WestCoast L.P., TransCapacity, L.P., BIOTEN GPM, Eastern Unicord
Corporation, EUA Energy Capital and Services I, EUA Energy Capital and Services
II, EUA FRC II Energy Associates, Micro Utility Partners of America, and
Renova, L.L.C.
This opinion, in addition to being subject to the consummation of the
Spin-Off in accordance with the Application-Declaration, is also subject to the
following additional assumptions, exceptions and qualifications:
(1) compliance with such order or orders as the SEC may issue from
time to time upon the Application-Declaration;
(2) the accuracy of information furnished to us (a) as to the
outstanding securities of EUA, Eastern, Montaup and their associate companies,
Blackstone, Newport, Cogenex, Ocean State, ESC, EUA Telecommunications, NEM,
CCS, Cogenex-West, Cogenex-Canada, Cogenex-Canada Energy Services, Energy
Services, D/LDNE, EEIC, TransCapacity, EUA BIOTEN, BIOTEN Operations, EUACS,
OSP I, OSP II, and OSP Finance, and (b) that there is no provision or condition
in the Bonds or in any document in connection with the Bonds or any of the
above listed corporations limiting the Spin-Off;
(3) that all requirements of applicable state securities or "blue
sky" laws will have been complied with;
(4) that the enforceability of the Spin-Off 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
(5) that the enforceability of the Spin-Off 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, and we express no opinion with respect to any
other jurisdiction. 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.
Very truly yours,
McDermott, Will & Emery
<TABLE>
Exhibit b-1
Eastern Utilities Associates
Balance Sheet
Proforma
Adjusting Entries
<CAPTION>
(a) (b)
Actual Montaup
as of Capital Acquisition EUA
Assets June 30,1999 Contribution From Eastern Proforma
<S> <C> <C> <C> <C>
Net Utility Plant
Net Non-Utility Property
Inv. Subsidiaries 325,612 40,000 215,615 365,612
(215,615)
Other Investments 1 1
Total 325,613 40,000 365,613
Current Assets 47,156 47,156
Deferred Debits and
Other Non Current Assets 25,202 25,202
Total Assets 397,971 40,000 437,971
Liabilities
Capitalization
Common Stock 102,180 102,180
Other Paid in Capital 214,203 214,203
Retained Earnings 55,889 55,889
Total Common Equity 372,272 372,272
Preferred Stock
Preferred Stock Exp/Premium
Long Term Debt
Total Capitalization 372,272 372,272
Short term debt 17,860 40,000 57,860
Other Current Liabilities 2,870 2,870
Deferred Credits and Other
Non-current Liabilities 4,969 4,969
Total Liabilities 397,971 40,000 437,971
</TABLE>
<TABLE>
Exhibit b-2
Eastern Edison
Balance Sheet
Proforma
Adjusting Entries
<CAPTION>
Actual (a) (b) (c) (d) (e) (f)
as of Montaup Eastern FMB EUA Cap. Eastern FMB Eastern FMB Montaup Eastern Ed
Assets June 30,1999 Redemption Redemption Contribution Redemption Redemption Spin-Off Proforma
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Utility Plant 150,744 150,744
Net Non-Utility Property 96 96
Inv. Subsidiaries 270,365 (54,750) (215,615)
Other Investments 10 10
Total 421,215 (54,750) (215,615) 150,850
Current Assets 58,240 54,750 (48,000) 40,000 (40,000) 64,990
Deferred Debits and
Other Non Current Assets 18,239 18,239
Total Assets 497,694 (48,000) 40,000 (40,000) (215,615) 234,079
Liabilities
Capitalization
Common Stock 58,485 (28,080) 30,405
Other Paid in Capital 38,005 40,000 (78,005) 0
Retained Earnings 109,530 (109,530) 0
Total Common Equity 206,020 40,000 (215,615) 30,405
Redeemable Pref. Stock 30,000 30,000
Preferred Stock Exp/Premium (1,823) (1,823)
Long Term Debt 162,567 (48,000) (40,000) (35,000) 39,567
Total Capitalization 396,764 (48,000) 40,000 (40,000) (35,000) (215,615) 98,149
Short term debt 35,000 35,000
Other Current Liabilities 63,263 63,263
Deferred Credits and Other
Non-current Liabilities 37,667 37,667
Total Liabilities 497,694 (48,000) 40,000 (40,000) (215,615) 234,079
</TABLE>
<TABLE>
Exhibit b-3
Montaup
Balance Sheet
<CAPTION>
Proforma
Adjusting Entries
Actual (a) (b)
as of Somerset Securities Montaup
Assets June 30,1999 Sale Redemption Proforma
<S> <C> <C> <C> <C>
Net Utility Plant 307,674 (28,907) 278,767
Net Non-Utility Property 2,283 2,283
Inv. Subsidiaries 12,959 12,959
Other Investments 169 169
Total 323,085 (28,907) 294,178
Current Assets 114,078 54,750 (54,750) 108,378
(5,700)
Deferred Debits and
Other Non Current Assets 301,267 301,267
Total Assets 738,430 20,143 (54,750) 703,823
Liabilities
Capitalization
Common Stock 58,600 (16,460) 42,140
Other Paid in Capital 29,528 (8,290) 21,238
Retained Earnings 62,620 62,620
Total Common Equity 150,748 (24,750) 125,998
Redeemable Pref. Stock 1,500 1,500
Preferred Stock Exp/Premium
Long Term Debt 118,117 (30,000) 88,117
Total Capitalization 270,365 (54,750) 215,615
Short term debt
Other Current Liabilities 60,256 11,947 72,203
Deferred Credits and Other
Non-current Liabilities 407,809 20,143 416,005
(7,692)
(4,255)
Total Liabilities 738,430 20,143 (54,750) 703,823
</TABLE>
<TABLE>
Proforma Adjusting Entries
<CAPTION>
Montaup Electric Company Debit Credit
<S> <C> <C> <C>
(a) Dr. Current Assets - Cash 54,750
Non-Current Liabilities - Accum def tax - Reg. Liab 7,692
Non-Current Liabilities - Accum def tax - Bk/Tax timers 4,255
Cr. Net Plant 28,907
Current Assets - Fuel + M & S 5,700
Non-Current Liabilities - Regulatory Liability 20,143
Current Tax 11,947
To record the proceeds of the Somerset sale divestiture and
associated tax accruals and payment
(b) Dr. Common Stock 16,460
Other Paid in Capital 8,290
Long Term Debt 30,000
Cr. Current Assets - Cash 54,750
To record redemption of Montaup securities
Eastern Edison Company
(a) Dr. Current Assets - Cash 54,750
Cr. Investment in Subsidiary 54,750
To record the redemption and repurchase of Montaup securities
(b) Dr. Long Term Debt
8% due 2023 40,000
6.35% due 2003 8,000
Cr. Current Assets - Cash 48,000
To record redemption of Eastern Edison securities
(c) Dr. Current Assets - Cash 40,000
Cr. Other Paid in Capital 40,000
To record capital contribution from EUA to Eastern
(d) Dr. Long Term Debt - 6.875% due 2003 40,000
Cr. Current Assets - Cash 40,000
To record redemption of Eastern Edison securities
(e) Dr. Long Term Debt - 7.78% due 2002 35,000
Cr. Short Term Debt 35,000
To record redemption of Eastern Edison securities
with short term debt
(f) Dr. Retained Earnings 109,530
Other Paid in Capital 78,005
Common Stock 28,080
Cr. Investment in Subsidiary 215,615
To record special dividend to EUA of Eastern Edison
investment in the remaining capitalization of Montaup
EUA Parent
(a) Dr. Investment in Subsidiary 40,000
Cr. Short Term Debt 40,000
To record capital contribution from EUA to Eastern
(b) Dr. Investment in Subsidiary - Montaup 215,615
Cr. Investment in Subsidiary - Eastern Edison 215,615
To record spin-off of Montaup from Eastern Edison to EUA
</TABLE>
