File No. 70-8461
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 16
(Post-Effective No. 13)
TO
FORM U-1
APPLICATION OR DECLARATION
under
The Public Utility Holding Company Act of 1935
ALABAMA POWER COMPANY GULF POWER COMPANY
600 North 18th Street 500 Bayfront Parkway
Birmingham, Alabama 35291 Pensacola, Florida 32501
GEORGIA POWER COMPANY MISSISSIPPI POWER COMPANY
241 Ralph McGill Boulevard, NE 2992 West Beach
Atlanta, Georgia 30308 Gulfport, Mississippi 39501
SAVANNAH ELECTRIC AND POWER COMPANY
600 East Bay Street
Savannah, Georgia 31401
(Name of company or companies filing this statement
and addresses of principal executive offices)
THE SOUTHERN COMPANY
(Name of top registered holding company parent of each applicant or declarant)
Art P. Beattie, Vice President, Warren E. Tate, Secretary
Secretary and Treasurer and Treasurer
Alabama Power Company Gulf Power Company
600 North 18th Street 500 Bayfront Parkway
Birmingham, Alabama 35291 Pensacola, Florida 32501
Judy M. Anderson, Vice President Michael W. Southern, Vice
and Corporate Secretary President, Secretary and Treasurer
Georgia Power Company Mississippi Power Company
241 Ralph McGill Boulevard, NE 2992 West Beach
Atlanta, Georgia 30308 Gulfport, Mississippi 39501
Kirby R. Willis, Vice President, Treasurer
and Chief Financial Officer
Savannah Electric and Power Company
600 East Bay Street
Savannah, Georgia 31401
(Names and addresses of agents for service)
The Commission is requested to mail signed copies of
all orders, notices and communications to:
W. L. Westbrook John D. McLanahan, Esq.
Financial Vice President Troutman Sanders LLP
The Southern Company 600 Peachtree Street, N.E.
270 Peachtree Street, NW Suite 5200
Atlanta, Georgia 30303 Atlanta, Georgia 30308-2216
<PAGE>
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
"It is considered that the record is now complete with respect to
the issuance by Gulf Power Capital Trust II and Gulf Power Capital Trust III of
$50,000,000 aggregate liquidation amount of Trust Preferred Securities and the
related issuance by Gulf of the related series of Junior Subordinated Notes and
the Guarantees. The terms of such Trust Preferred Securities, Junior
Subordinated Notes and Guarantees will be as particularly described in Amendment
No. 11 previously filed herein.
The applicants request that the Commission continue to reserve
jurisdiction, pending completion of the record, over the issuance and sale of
preferred securities through December 31, 2005, as follows: $500,000,000 for
Alabama; $310,750,000 for Georgia; $75,000,000 for Mississippi; and $40,000,000
for Savannah.
As described in Amendment No. 11, each Trust will issue only one
series of Trust Preferred Securities (the "Trust Preferred Securities") and the
distribution rate to be borne by the Trust Preferred Securities will not exceed
12.5% per annum (expressed as a percentage of liquidation amount) and shall also
be the distribution rate for the Trust Common Securities and the interest rate
for the related Junior Subordinated Notes (the "Securities Rate"). The Junior
Subordinated Notes will have a maturity of up to 50 years and will not be
convertible into any other securities or assets of Gulf or the Trust. In
addition, in view of the fact that the proceeds of the sale of the Trust
Preferred Securities will be loaned to Gulf, Gulf will agree to pay the
underwriters' compensation for their services in an amount not exceeding 4% of
the aggregate liquidation amount of such Trust Preferred Securities."
<PAGE>
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The estimated fees and expenses to be incurred by Gulf in
connection herewith are as follows:
<TABLE>
<CAPTION>
Each
Initial Additional
Issuance Issuance
<S> <C> <C>
* Florida Documentary Stamp Tax............................ $ 665,000 $ --
* Florida intangible personal property tax................. 28,500 --
* Filing fees - Securities and Exchange Commission......... 56,050 --
Fees and Expenses of Trustees............................ 9,500 9,500
* Listing on New York Stock Exchange....................... 58,300 --
Printing charges......................................... 40,000 10,000
Rating Agency Fees....................................... 37,000 20,000
Services of Southern Company Services, Inc............... 40,000 10,000
Fees and Expenses of counsel............................. 65,000 35,000
Blue sky fees and expenses............................... 3,500 3,500
Fees of accountants, Arthur Andersen LLP................. 40,000 20,000
Miscellaneous............................................ 17,150 7,000
TOTAL....................................... $1,060,000 $115,000
</TABLE>
*These catagories of expenses are a function of the amount of issuance.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
3.2 Rule 54 Analysis: The proposed transaction is also subject to Rule
54, which provides that, in determining whether to approve an application which
does not relate to any "exempt wholesale generator" ("EWG") or "foreign utility
company" ("FUCO"), the Commission shall not consider the effect of the
capitalization or earnings of any such EWG or FUCO which is a subsidiary of a
registered holding company if the requirements of Rule 53(a), (b) and (c) are
satisfied.
Southern currently meets all of the conditions of Rule 53(a), except
for clause (1). At December 31, 1997, Southern's "aggregate investment," as
defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $2.795 billion, or
about 74.06% of Southern's "consolidated retained earnings," also as defined in
Rule 53(a)(1), for the four quarters ended September 30, 1997 ($3,774 million).
With respect to Rule 53(a)(1), however, the Commission has determined that
Southern's financing of investments in EWGs and FUCOs in an amount greater than
the amount that would otherwise be allowed by Rule 53(a)(1) would not have
either of the adverse effects set forth in Rule 53(c). See The Southern Company,
Holding Company Act Release No. 16501, dated April 1, 1996 (the "Rule 53(c)
Order"); and Holding Company Act Release No. 26646, dated January 15, 1997
(order denying request for reconsideration and motion to stay).
In addition, Southern has complied and will continue to comply with the
record-keeping requirements of Rule 53(a)(2), the limitation under Rule 53(a)(3)
on the use of Operating Company personnel to render services to EWGs and FUCOs,
and the requirements of Rule 53(a)(4) concerning the submission of copies of
certain filings under the Act to retail rate regulatory commissions. Further,
none of the circumstances described in Rule 53(b) has occurred.
Moreover, even if the effect of the capitalization and earnings of EWGs
and FUCOs in which Southern has an ownership interest upon the Southern holding
company system were considered, there is no basis for the Commission to withhold
or deny approval for the proposal made in this Application-Declaration. The
action requested in the instant filing (viz. Issuance of preferred securities by
Gulf Power Capital Trust II and Gulf Power Capital Trust III) would not, by
itself, or even considered in conjunction with the effect of the capitalization
and earnings of Southern's EWGs and FUCOs, have a material adverse effect on the
financial integrity of the Southern system, or an adverse impact on Southern's
public-utility subsidiaries, their customers, or the ability of State
commissions to protect such public-utility customers.
The Rule 53(c) Order was predicated, in part, upon an assessment of
Southern's overall financial condition which took into account, among other
factors, Southern's consolidated capitalization ratio and the recent growth
trend in Southern's retained earnings. As of December 31, 1995, the most recent
fiscal year preceding the Rule 53(c) Order, Southern's consolidated
capitalization consisted of 49.3% equity (including mandatorily redeemable
preferred securities) and 50.7% debt (including $1.68 billion of long-term,
non-recourse debt and short-term debt related to EWGs and FUCOs). As of year-end
1996, that ratio was 52.9% equity and 47.1% debt (including $1.74 billion of
long-term, non-recourse debt and short-term debt related to EWGs and FUCOs); and
as of September 30, 1997, the comparable ratio was 48.9% equity and 51.1% debt
(including $4.354 billion of long-term, non-recourse debt and short-term debt
related to EWGs and FUCOs). On a pro forma basis, taking into consideration,
among other things, the transactions contemplated hereby such ratios are 48.4%
and 51.6%, respectively, for equity and debt. The common equity component of
Southern's pro forma consolidated capitalization represents 38.1% of total
capitalization at September 30, 1997. Thus, since the date of the Rule 53(c)
Order, there has been no material change in Southern's consolidated
capitalization ratio, which remains within acceptable ranges and limits of
rating agencies as evident by the continued "A" corporate credit rating of
Southern. Specifically, in January 1997 Standard & Poor's assigned Southern its
corporate credit rating of "A" which was consistent with the implied corporate
rating previously held by Southern. This implied rating had been in effect since
May 1995. Therefore, since the April 1996 issue of the Rule 53(c) Order, the
Southern consolidated credit rating has remained at "A" thereby demonstrating
Southern's continued strong financial integrity. In addition, the underlying
ratings of the affiliated operating companies, which have a strong influence on
the Southern corporate rating, are all "A+". As a point of reference, the
consolidated pro forma percentage of debt in the total capital structure of the
Southern domestic operating utility companies is 41.1%, which is solidly below
the median total debt ratio of the Standard & Poor's "A" rated vertically
integrated utilities.1
Southern's consolidated retained earnings grew on average approximately
8.8% per year from 1991 through 1995. In 1996, consolidated retained earnings
increased $280,365,000, or slightly more than 8%. The small reduction in the
rate of earnings growth was primarily attributable to reduced domestic utility
sales due to mild weather conditions throughout most of 1996 in the southeastern
United States. Earnings attributable to Southern's investments in EWGs and FUCOs
continued to contribute modestly to consolidated retained earnings.
Accordingly, since the date of the Rule 53(c) Order, the
capitalization and earnings attributable to Southern's investments in EWGs and
FUCOs has not had any adverse impact on Southern's financial integrity.
Reference is made to Exhibit I filed herewith which reflects
capitalization at September 30, 1997 and the Statement of Income for the twelve
months ended September 30, 1997 for Southern and subsidiaries consolidated.
__________________________
1 Currently, capitalization ratios, including short-term debt, for "A" rated
vertically integrated electric utilities have a median total debt to total
capital ratio of 45% as noted by Standard & Poor's in May 1997 for companies
rated both publicly and confidentially. Prior to issuing this rating standard,
the Standard & Poor's total debt to total capital benchmark for an "A" rated
vertically integrated investor-owned-utility having an average business position
was 47%.
<PAGE>
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
A. Exhibits:
A-1 - Trust Agreement of Gulf Power Capital Trust II. (Designated
in Form S-3 File No. 333-19271, as Exhibit 4.6-A.)
A-2 - Trust Agreement of Gulf Power Capital Trust III. (Designated
in Form S-3 File No. 333-42033, as Exhibit 4.6-B.)
A-3 - Form of Amended and Restated Trust Agreement for Gulf Power
Capital Trust II. (Designated in Form S-3 File No. 333-19271,
as Exhibit 4.7-A.)
A-4 - Form of Amended and Restated Trust Agreement for Gulf Power
Capital Trust III. (Designated in Form S-3 File No. 333-42033,
as Exhibit 4.7-B.)
B-1 - Subordinated Note Indenture between Gulf Power Company and
The Chase Manhattan Bank, as Trustee. (Designated in Gulf's
Current Report on Form 8-K dated January 27, 1997 as Exhibit
4.1)
B-2 - Form of Supplemental Indenture to Subordinated Note
Indenture between Gulf Power Company and The Chase Manhattan
Bank, as Trustee. (Designated in Form S-3 File No. 333-19271,
as Exhibit 4.2-A.)
B-3 - Forms of Guarantee with respect to Preferred Securities of
Gulf Power Capital Trust II and Gulf Power Capital Trust III.
(Designated in Form S-3 File No. 333-19271, as Exhibit 4.11-A
and in Form S-3 File No. 333-42033, as Exhibit 4.11-B.)
C-1 - Registration Statement under the Securities Act of 1933.
(Filed electronically December 11, 1997, File Nos. 333-42033,
333-42033-01 and 333-42033-02.)
I - Capitalization and Income Statement of The Southern Company
and Subsidiary Companies after giving effect to the issuance
of the preferred securities.
B. Financial Statements.
Balance sheet of Gulf at September 30, 1997. (Designated in
Gulf's Form 10-Q for the quarter ended September 30, 1997, File
No. 0-2429.)
Statements of Income of Gulf for the period ended September 30,
1997. (Designated in Gulf's Form 10-Q for the quarter ended
September 30, 1997, File No. 0-2429.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this amendment to be signed
on their behalf by the undersigned thereunto duly authorized.
Date: January 14, 1998 ALABAMA POWER COMPANY
By: /s/Wayne Boston
Wayne Boston, Assistant Secretary
GEORGIA POWER COMPANY
By: /s/Wayne Boston
Wayne Boston, Assistant Secretary
GULF POWER COMPANY
By: /s/Wayne Boston
Wayne Boston, Assistant Secretary
MISSISSIPPI POWER COMPANY
By: /s/Wayne Boston
Wayne Boston, Assistant Secretary
SAVANNAH ELECTRIC AND POWER COMPANY
By: /s/Wayne Boston
Wayne Boston, Assistant Secretary
Exhibit I
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
Capitalization Ratios at September 30, 1997
<TABLE>
<CAPTION>
Consolidated Pro Forma
per 10-Q Amounts (A) Equity Debt
---------------- ------------- ---------------- ---------------
Capitalization (in thousands of dollars):
<S> <C> <C> <C> <C>
Common stock................................... $ 3,447,958 $ - $ 3,447,958
Paid-in capital................................ 2,265,204 - 2,265,204
Retained earnings.............................. 3,875,410 (19,302)(B) 3,856,108
Preferred stock................................ 695,702 67,745 (B) 763,447
Capital & preferred securities................. 1,742,020 50,000 (D) 1,792,020
Long-term debt................................. 10,055,279 359,070 (B) $10,414,349
Preferred due within one year.................. 28,913 - 28,913
Long-term debt due within one year............. 679,670 - 679,670
Notes payable & commercial paper............... 1,871,505 - 1,871,505
================ ============= ================ ===============
Total (Incl Amts Due in 1 Year)......... $24,661,661 $457,513 $12,153,650 $12,965,524
================ ============= ================ ===============
Actual Amounts in Millions of Dollars.......... $24,661 $12,055 $12,606
Actual Capitalization Ratios................... 100.0% 48.9% 51.1%
Pro Forma Amounts in Millions of Dollars....... $25,120 $12,154 $12,966
Pro Forma Capitalization Ratios................ 100.0% 48.4% 51.6%
</TABLE>
Pro Forma Consolidated Statements of Income (Unaudited)
(Stated in Thousands of Dollars)
<TABLE>
<CAPTION>
For the Twelve
Months Ended Pro Forma
September 30, 1997 Amounts (A) As Adjusted
<S> <C> <C> <C>
OPERATING REVENUES $ 11,805,284 $ - $ 11,805,284
---------------- ------------ ----------------
OPERATING EXPENSES:
Operation--
Fuel 2,241,717 - 2,241,717
Purchased power 2,415,542 - 2,415,542
Other 1,836,972 - 1,836,972
Maintenance 795,769 - 795,769
Depreciation and amortization 1,186,509 - 1,186,509
Amortization of deferred Plant Vogtle costs 148,371 - 148,371
Taxes other than income taxes 585,649 - 585,649
Income taxes 717,808 (10,126)(C) 707,682
---------------- ------------ ----------------
Total operating expenses 9,928,337 (10,126) 9,918,211
---------------- ------------ ----------------
OPERATING INCOME 1,876,947 10,126 1,887,073
OTHER INCOME:
Allowance for equity funds used during construction 5,992 - 5,992
Interest income 92,549 - 92,549
Other, net (124,970) - (124,970)
Income taxes applicable to other income 14,359 - 14,359
---------------- ------------ ----------------
INCOME BEFORE INTEREST CHARGES 1,864,877 10,126 1,875,003
---------------- ------------ ----------------
INTEREST CHARGES AND OTHER:
Interest on long-term debt 618,529 22,749 (C) 641,278
Allowance for debt funds used during construction (14,306) - (14,306)
Interest on notes payable 93,746 - 93,746
Amortization of debt discount, premium and expense, net 22,431 - 22,431
Other interest charges 50,863 - 50,863
Minority interest in subsidiaries 21,479 - 21,479
Distributions on capital and preferred securities of subsidiary companies 94,817 3,500 (D) 98,317
Preferred dividends of subsidiary companies 61,313 (1,832)(C) 59,481
---------------- ------------ ----------------
Interest charges and other, net 948,872 24,417 973,289
---------------- ------------ ----------------
CONSOLIDATED NET INCOME $ 916,005 $ (14,291) $ 901,714
================ ============ ================
</TABLE>
(See Notes on Following Page)
<PAGE>
NOTES
(A) The amounts and types of the securities to be issued by Gulf Power
Company will be dependent upon, among other things, market conditions
prevailing at the time of issuance. The amounts estimated to be issued
are the maximum amounts requested in the subject application and are used
solely for the purpose of illustrating the effect upon Southern Company
consolidated capitalization and earnings. In addition, no assumptions are
made in connection with possible refundings.
(B) To give effect to (i) the proposed issuance by Gulf Power Company of
$200,000,000 of first mortgage bonds, $200,000,000 of preferred stock,
and $159,070,000 of pollution control obligations and (ii) the collective
retirements of $132,255,000 of preferred stock at various rates by
Alabama Power Company, Georgia Power Company, Gulf Power Company and
Mississippi Power Company in connection with tender offers on December
10, 1997 and fees and expenses recorded therefrom.
(C) To give effect to (i) the proposed issuance by Gulf Power Company of
$200,000,000 of first mortgage bonds at an assumed rate of 7%,
$200,000,000 of preferred stock at an assumed rate of 6-1/2%, and
$159,070,000 of pollution control obligations at an assumed rate of
5-1/2% and (ii) the collective retirements of $132,255,000 of preferred
stock at various rates by Alabama Power Company, Georgia Power Company,
Gulf Power Company and Mississippi Power Company in connection with
tender offers on December 10,1997 and net gains and fees recorded
therefrom.
(D) To give effect to the proposed issuance of $50,000,000 of preferred
securities which is contemplated in this Form U-1 application.
