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File No. 70-9317
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDED AND RESTATED FORM U-1A APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Interstate Energy Corporation
222 West Washington Avenue
Madison, Wisconsin 53703
Wisconsin Power & Light Company*
IES Utilities Inc.
200 First Street S.E.
Cedar Rapids, Iowa 52401
Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-0789
Alliant Services Company*
Alliant Industries, Inc.*
Heartland Environmental Holding Company*
RMT, Inc.*
Heartland Energy Group, Inc.*
Heartland Properties, Inc.*
Capital Square Financial Corporation*
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Whiting Petroleum Corporation
Mile High Center
1700 Broadway
Denver, Colorado 80290
Industrial Energy Applications Inc.
IES Transportation Inc.
200 First Street S.E.
Cedar Rapids, Iowa 52401
IEI Barge Services Inc.
2330 12th Street SW
Cedar Rapids, Iowa 52404
IES Transfer Services Inc.
200 First Street S.E.
Cedar Rapids, Iowa 52401
Cedar Rapids and Iowa City Railroad Company
2330 12th Street SW
Cedar Rapids, Iowa 52404
IES Investments Inc.
200 First Street S.E.
Cedar Rapids, Iowa 52401
Village Lakeshares Inc.
200 First Street S.E.
Cedar Rapids, Iowa 52401
Iowa Land and Building Company
200 First Street S.E.
Cedar Rapids, Iowa 52401
IES International Inc.
200 First Street S.E.
Cedar Rapids, Iowa 52401
IES Energy Inc.*
Interstate Energy Corporation PTE Ltd.
200 First Street S.E.
Cedar Rapids, Iowa 52401
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*Please note that the address for each of these entities is
222 West Washington Avenue
Madison, Wisconsin 53703
(Names of companies filing this statement and
addresses of principal executive offices)
Interstate Energy Corporation
222 West Washington Avenue
Madison, Wisconsin 53703
(Name of top registered holding company,
parent of each applicant or declarant)
Erroll B. Davis, Jr.
President and
Chief Executive Officer
Interstate Energy Corporation
222 West Washington Avenue
Madison, Wisconsin 53703-0192
(Names and addresses of agents for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application-Declaration to:
Barbara J. Swan M. Douglas Dunn
General Counsel Milbank, Tweed, Hadley & McCloy
Interstate Energy Corporation One Chase Manhattan Plaza
222 West Washington Avenue New York, New York 10005
Madison, Wisconsin 53703-0192
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ITEM. 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
In this Application-Declaration, Interstate Energy Corporation ("IEC")
a registered holding company under the Public Utility Holding Company Act of
1935, as amended (the "Act"), seeks authorization for (i) IEC to issue notes
and/or commercial paper and enter into certain guarantees, (ii) IEC and Alliant
Industries, Inc. ("Alliant") to make capital contributions, (iii) the
subsidiaries of IEC, including Alliant Services Company ("Services"), to incur
short-term borrowings and (iv) IEC and its subsidiaries, including Alliant, to
establish and utilize a system of separate money pools to coordinate and provide
for the short-term cash requirements of the applicants, as provided herein.
DESCRIPTION OF THE APPLICANTS
The Securities and Exchange Commission (the "Commission") issued an
order on April 14, 1998 (the "Order") approving the combination of WPL Holdings,
Inc. ("WPLH"), IES Industries Inc. ("IES") and Interstate Power Company ("IPC"),
pursuant to which the utility subsidiary of IES, IES Utilities Inc.
("Utilities"), and IPC would become subsidiaries of WPLH (the "Transaction"),
and Alliant would become the successor to IES Diversified Inc. and would hold
all of the non-utility businesses formerly owned by WPLH, IES and IPC. Upon the
consummation of the Transaction, WPLH was renamed IEC. Also, Services was
incorporated in Iowa as a non-utility subsidiary of WPLH and will function as
the service company for IEC. IEC registered with the Commission as a holding
company under the Act.
Additional information about the applicants and their businesses is set
forth in the Form U-1 Application-Declaration filed in respect of the
Transaction in File No. 70-8891 of the Commission, and the amendments and
exhibits thereto.
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NOTES, GUARANTEES AND COMMERCIAL PAPER
The parties request authority for IEC to issue commercial paper that
will have a commercial rating of at least A-1 by Standard & Poor's ("S&P") or at
least P-1 by Moody's Investor Services ("Moody's"), and for Alliant to issue
commercial paper that will have a commercial rating of at least A-2 by S&P or
P-2 by Moody's, in aggregate principal amounts not to exceed their respective
limits, as stated below. The parties have also entered into credit agreements
with banks to support the issuance of commercial paper and in lieu of issuing
commercial paper may borrow directly from the banks if it is more cost
effective. The parties request further that they be authorized by the Commission
to incur borrowings in an aggregate principal amount at any one time outstanding
not to exceed their respective limits. In addition to such short-term borrowing
authority, IEC requests authority to finance the acquisition of foreign utility
companies ("FUCO's") and exempt wholesale generators ("EWG's") on an interim
basis by issuing commercial paper or bank borrowings. IEC may use this authority
to support financing at a subsidiary level for such FUCO or EWG acquisitions.
IEC also requests authorization to enter into guarantees, obtain
letters of credit, enter into guarantee-type expense agreements or otherwise
provide credit support with respect to the obligations of its Non-Utility
subsidiaries as may be appropriate to enable those system companies to carry on
in the ordinary course of their respective businesses, in an aggregate principal
amount not to exceed $600,000,000 outstanding at any one time. Such credit
support may be in the form of committed bank lines of credit. The limits on
guarantees and other credit support obligations described herein are not
included in the aggregate respective limits applicable to external financings or
the limits on intrasystem financings requested in this Application-Declaration.
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BORROWING AUTHORITY
Under the authority requested herein, the maximum anticipated principal
amounts of such commercial paper or bank lines of credit outstanding at any one
time for IEC will not exceed:
<TABLE>
<CAPTION>
MONEY POOL/SHORT TERM BORROWING AUTHORITY AGGREGATE AMOUNT
----------------------------------------- ----------------
<S> <C>
Utility Money Pool (IEC) $ 450,000,000*
Non-Utility Money Pool $ 600,000,000
Investments/Acquisitions FUCO's and EWG's (IEC) $ 300,000,000**
----------------
Total $ 1,350,000,000
================
</TABLE>
*This amount includes the requested borrowing authority for Services.
**In any event not to exceed 50% of IEC's retained earnings.
The expected maximum outstanding borrowings for each of the
participants in the Utility Money Pool (see definition below) for each of the
next three calendar years are as follows:
<TABLE>
<CAPTION>
UTILITY* 1998 1999 2000
-------- ---- ---- ----
<S> <C> <C> <C>
Wisconsin Power & Light
Company** $ 80,000,000 $ 128,000,000 $ 128,000,000
IES Utilities Inc. 20,000,000 150,000,000 150,000,000
Interstate Power Company 30,000,000 72,000,000 72,000,000
Services*** 50,000,000 100,000,000 100,000,000
--------------- --------------- ---------------
Totals $ 180,000,000 $ 450,000,000 $ 450,000,000
--------------- --------------- ---------------
</TABLE>
*These figures include contingency amounts for the utilities to
repurchase outstanding remarketable pollution control revenue bonds in the event
that the remarketing agent is unable to place the bonds.
** These figures include the amounts of such maximum outstanding
borrowings for South Beloit Water, Gas & Electric Company ("South Beloit"),
which is a wholly-owned subsidiary of Wisconsin Power & Light Company ("WP&L").
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***Summary of Services' Borrowing Authority Request:
- The maximum anticipated borrowing authority that may be
required by Services is $100,000,000.
- The proceeds for Services' borrowing will be funded by IEC and
credit facilities established by Services which may require
IEC credit support.
- IEC will offer and sell commercial paper issues for the
Utility Money Pool (including Services).
- Services also requests permission in this
Application-Declaration to borrow directly from banks.
Factored into the $450,000,000 requested borrowing authority for the
Utility Money Pool is a contingency sum for the refinancing of variable-rate
pollution-control bonds in the event that these bonds for any reason cannot be
remarketed. The contingency sum is $65,000,000 for 2000.
Each utility will use the authorized amounts primarily for the
construction of needed transmission and distribution facilities in its service
area.
The expected maximum outstanding borrowings for the participants in the
Non-Utility Money Pool (see definition below), in the aggregate, for each of the
next three years, as categorized into anticipated areas of the use of proceeds,
are as follows:
<TABLE>
<CAPTION>
YEAR OPERATIONS INVESTMENTS* TOTAL
---- ---------- ----------- -----
<S> <C> <C> <C>
1998 $ 280,000,000 $ 20,000,000 $ 300,000,000
1999 300,000,000 200,000,000 500,000,000
2000 340,000,000 260,000,000 600,000,000
</TABLE>
- - Projected investments subject to appropriate approvals. These figures
do not include projected IEC investments in or acquisitions of FUCO's
or EWG's.
USE OF PROCEEDS
The maximum anticipated borrowing authorization that will be required
by the regulated utility subsidiaries of IEC and Services from the Utility Money
Pool that shall be established pursuant to the authority requested herein shall
be $450,000,000. The utilities intend to use the funds for general corporate
purposes such as interim funding of the construction program until
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permanent financing can be arranged. Services intends to use these proceeds to
fund the following services, pro rated over the three-year period sought in the
request for authorization: (i) $35,000,000 for general convenience payments and
payroll, (ii) $30,000,000 for centralized bulk power purchases, (iii)
$20,000,000 for centralized coal purchases and (iv) $15,000,000 for centralized
gas purchases. Please note that as of July 31, 1998, the centralization of the
coal and gas purchases had not yet been implemented and the operations remain
decentralized at the utility subsidiaries of IEC.
The maximum anticipated borrowing authorization that will be required
for the account set aside to fund investments in and acquisitions of foreign
utility companies FUCO's and EWG's by IEC pursuant to the authority requested
herein shall be $300,000,000. Pursuant to the authority requested herein,
borrowings allocated to this fund will not at any time exceed 50% of the
retained earnings of IEC. These borrowings will be allocated to an account that
is separate and independent from either of the two Money Pools and shall be used
by IEC solely to fund, or give credit support to, subsidiary financing for its
investments in and acquisitions of FUCO's and EWG's. Any unused borrowing
authority hereunder can be transferred from IEC to Alliant to increase the
Non-Utility Money Pool authorization.
THE MONEY POOLS
The applicants named above hereby submit this Application-Declaration
with respect to the proposed establishment of three separate short-term
borrowing authorities, including two money pools, that will be administered by
Services. One Money Pool will be exclusively for the non-regulated, non-utility
subsidiaries of IEC (the "Non-Utility Money Pool"). The Non-Utility Money Pool
will be funded by Alliant on a short-term basis and, to a lesser degree, by the
non-
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utility subsidiaries that participate in that Money Pool. The funds will be
made available by Alliant to the non-utility subsidiaries that have a need for
short-term funds.
The second Money Pool will be for Services and for regulated utility
subsidiaries of IEC (the "Utility Money Pool"), which include WP&L, South Beloit
(as a wholly-owned subsidiary of WP&L), Utilities and IPC. The funds available
to the Utility Money Pool will be loaned by IEC on a short-term basis to
applicants that are regulated utility subsidiaries and, to a lesser extent, will
also come from the utility participants themselves, to the extent permitted by
state law, through the investment of surplus into that Money Pool. The third
short-term borrowing authority will be for short-term borrowings required by IEC
to invest in and acquire FUCO's.
Generally, under the proposed terms of the respective Money Pools, from
time to time short-term funds will be made available by IEC and Alliant for
short-term loans to the participants. Funds will be made available from such
sources in such order as Services, as administrator of the Money Pools, may
determine will result in a lower cost of borrowing, consistent with the
individual borrowing needs and financial standing of the participating
subsidiaries. The proposed terms of the Money Pools are memorialized in
definitive forms of agreement filed herewith as Exhibit A (the "Non-Utility
Money Pool Agreement") and Exhibit B (the "Utility Money Pool Agreement" and,
together with the Non-Utility Agreement, the "Money Pool Agreements").
Services will provide each Money Pool participant with periodic
activity and cash accounting reports that include, among other things, reports
of cash activity, the daily balance of loans outstanding and the calculation of
daily interest charged. No party will be required to effect a borrowing through
a Money Pool if it is determined that it could (and had authority to) effect a
borrowing at lower cost directly from banks.
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The operation of the Money Pools is designed to match, on a daily
basis, the available cash and short-term borrowing requirements of the
applicants, thereby minimizing the need for external short-term borrowings by
IEC and Alliant. To this end, the short-term borrowing requirements of the
applicants may be met internally with the proceeds of borrowings available
through the Money Pools. To the extent necessary, IEC and Alliant will use the
proceeds of external borrowings, up to the approved limits which are
subsequently authorized by this Commission, to accommodate the short-term
requirements of the other participants. Requirements satisfied by the Money
Pools will be in the form of open account advances and will not exceed the
approved limits contained in the financing program of IEC, Alliant and the other
subsidiaries that may be subsequently authorized by this Commission.
IEC and Alliant will be participants in the Money Pools only insofar as
they have funds available for lending obtained either through internal
generation or from external sources. Under no circumstances will IEC or Alliant
be permitted to borrow funds available through the Money Pools. If at any time
there are funds remaining in the Money Pools after satisfaction of the borrowing
needs of the participating subsidiaries, Services, as the agent of the Money
Pools, will invest these funds appropriately and consistent with applicable
state and federal regulations and allocate the earnings on any such investments
between or among those applicants within each respective Money Pool according to
the amount of excess funds provided by each respective applicant. The return on
the funds loaned by a subsidiary into either of the money pools will be
essentially equal to the cost of borrowing from the money pools. That is, the
applicable interest rate would be the average for the month of the CD yield
equivalent of the 30-day Federal Reserve "AA" Industrial Commercial Paper
Composite Rate (the daily rate, the "Composite") or,
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if no such Composite were established for that a particular day, then the
applicable rate would be the Composite for the next preceding day for which such
Composite was established.
All borrowings from, and contributions to, the Money Pools will be
adequately documented and will be evidenced on the books of each applicant that
is borrowing or contributing funds through the Money Pools. All loans will be
payable on demand, may be prepaid by any borrowing applicant at any time without
premium or penalty and will be subject to interest that shall be calculated and
added to the outstanding loan balance. Such rates shall be adjusted periodically
(see below). Any participating subsidiary that contributes funds to a Money Pool
may withdraw them at any time to satisfy its daily need of funds.
These procedures, as proposed, will be beneficial to the IEC financial
system because they will create significant economies from the effective use of
funds that will result in the reduction of bank balances; the reduction of
administrative costs associated with borrowings and investments created by,
among other things, eliminating the need for the participants to maintain their
own separate bank accounts, cash balances and credit facilities; provide
increased flexibility and control in cash management; and the ability of IEC and
Alliant, which will obtain external financing, to defer or pre-pay short-term
financing, such as loans with banks and commercial paper borrowings.
COMMERCIAL PAPER BORROWINGS
The applicants request authority for IEC to issue and sell commercial
paper rated at least A-1/P-1 and for Alliant to issue and sell commercial paper
rated at least A-2/P-2 to one or more dealers subject to the limitations on
aggregate outstanding principal amounts stated above. IEC will offer and sell
commercial paper issues for the Utility Money Pool and for investment in and
acquisition of FUCO's; Alliant will offer and sell commercial paper issues for
the Non-Utility
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Money Pool. There will not be an affiliation between IEC or any of its
subsidiaries, including Alliant, and any dealer or any of its affiliates.
The proceeds from the sales of the commercial paper issues intended to
fund the Non-Utility Money Pool will be added to Alliant's treasury funds in a
separate Non-Utility account and will be loaned by Alliant through the
Non-Utility Money Pool from that account from time to time to, or invested in,
the non-utility subsidiaries in the manner herein described. Similarly, the
proceeds from the sales of the commercial paper issues intended to fund the
Utility Money Pool and the investment in and acquisition of FUCO's will be added
to IEC's treasury funds in separate Utility and FUCO investment/acquisition
accounts, respectively. The funds to be loaned by IEC to the utility
subsidiaries will be through the Utility Money Pool.
The commercial paper that IEC and Alliant will issue to dealers will be
in the form of book-entry unsecured promissory notes (in substantially the form
filed herewith as Exhibit C (IEC) and Exhibit D (Alliant)), will be in varying
denominations of not less than $100,000 each and will have varying maturities of
not more than two-hundred and seventy days from the date of issue. Such notes
will be issued and sold by IEC and Alliant directly to dealers at rates not to
exceed the rate per annum prevailing at the time of issuance for commercial
paper of comparable qualities and maturities sold by issuers thereof to
commercial paper dealers. No commission or fee will be payable in connection
with the issuance and sale of the commercial paper. The purchasing dealer,
however, will reoffer such notes at a rate less than the rate to the issuer. The
dealers, as principals, will reoffer such notes in such a manner as not to
constitute a public offering under the Securities Act of 1933.
The IEC and Alliant paper notes that are sold to dealers are expected
to be held by purchasers to maturity, except that if purchasers wish to sell
such notes prior thereto, the dealers
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generally will repurchase such notes and reoffer them to other purchasers. The
IEC and Alliant commercial paper shall not be extended, although certain of the
commercial paper shall be paid at maturity by application of proceeds from the
issuance and sale by IEC and Alliant of other commercial paper or bank notes
(referred to below) issued prior to or contemporaneously with such maturity. At
final maturity, the commercial paper borrowings will be repaid by IEC and
Alliant from the repayment of loans made to the subsidiaries in the respective
Money Pools as well as from other internal sources, or from other short-term
borrowings if authorized by the Commission.
The applicants also request authorization for IEC and Alliant to sell
commercial paper directly to certain financial institutions. Sales of commercial
paper directly to such institutions would be undertaken only if the resulting
cost of money would be equal to or less than that available from dealer-placed
commercial paper or bank borrowings. Terms for directly-placed notes would be
similar to those of dealer-placed notes.
BANK BORROWINGS
A. EXISTING BANK FACILITIES
Alliant has two unsecured credit facilities totaling $600 million (the
"Credit Facilities"), with Citibank N.A. acting as agent. The Credit Facilities
were established originally by Diversified, which was the intermediate holding
company for the non-regulated affiliates of IES. Diversified was merged into
Alliant upon the consummation of the Transaction. Pursuant to an Assumption
Agreement, dated November 21, 1997, among WPLH, IES, Diversified, Alliant (which
was named Heartland Development Company at the time the agreement was executed),
Citibank N.A. and Citicorp Securities, Inc., Alliant assumed all of the
obligations of Diversified under the Credit Facilities. The first Credit
Facility is a 364-day facility totaling $150 million
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which terminates on October 19, 1998. The second is a three-year facility
totaling $450 million which terminates on October 20, 2000. Both facilities are
available for direct borrowing or commercial paper back-up.
IEC has a $150 million 364-day syndicated credit facility (the "Parent
Facility") with The First National Bank of Chicago acting as agent. The Parent
Facility was obtained originally by WPLH; upon the consummation of the
Transaction, the Parent Facility became the obligation of IEC. It will be
available for direct borrowing or for back-up of commercial paper. The Parent
Facility is unsecured and terminates on November 4, 1998. A Form of Credit
Agreement (which is actually the credit agreement for the Parent Facility)
establishing the credit facilities is included as Exhibit J to this
Application-Declaration.
B. AUTHORIZATION REQUESTED
The issuance of commercial paper by IEC would, in most periods, result
in effective interest costs lower than the interest costs of borrowing from
commercial banks. In the event, however, that borrowings from banks would
produce a lower cost of money than the issuance of IEC's commercial paper, and
to the extent that IEC's corporate funds and subsidiaries' loans of excess funds
through the Money Pools would be inadequate to fulfill the subsidiaries'
requests for short-term loans, IEC will borrow from banks, subject to the
limitations on aggregate principal amounts stated above. Services also requests
permission to borrow directly from banks. IEC may, from time to time, negotiate
increases or decreases to existing lines of credit or arrange new lines of
credit in order to minimize the cost of these lines by matching the amount of
the lines to the subsidiaries' short-term borrowing needs. In no event will the
total lines exceed the subsidiaries' total borrowing authority.
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Borrowings from banks will be evidenced by promissory notes; the form
of the notes is filed as Exhibit E to this Application-Declaration. Each of such
notes, whether issued pursuant to a term loan or an open credit line, shall be
for the principal amount available to be borrowed at the time from the lending
bank and be payable to the order of such bank, shall be dated the date of the
closing of the loan, shall bear interest at a rate no higher than the effective
cost of money for unsecured prime commercial bank loans prevailing on the date
of such borrowing, and shall be subject to repayment by the borrower in whole at
any time or in part from time to time without premium or penalty.
The cost of compensating balances and fees paid to banks to maintain
credit lines will be initially allocated to the subsidiaries of IEC on the basis
of relative maximum outstanding short-term borrowings for the prior calendar
year from the particular Money Pool in which a subsidiary participates, and such
costs will be retroactively reallocated at the end of each calendar year on the
basis of that year's actual relative maximum outstanding short-term borrowings
of each subsidiary in its particular Money Pool. Except that in the first
calendar year of operation of the Money Pools, such costs will be initially
allocated to the subsidiaries based on the relative maximum borrowing authority
of each subsidiary, and, similar to the calculations to be made in subsequent
years of operation, such costs will be retroactively reallocated at the end of
that first calendar year on the basis of that year's actual relative maximum
outstanding short-term borrowings for each subsidiary. Thus, each company will
be reallocated that proportion of the total line of credit costs which is equal
to the percentage which its maximum short-term borrowings from a particular
Money Pool during the year represent of the aggregate of the maximum short-term
borrowings, on a noncoincidental basis, of all the subsidiaries in that
particular Money Pool.
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TERM AND MATURITIES
IEC and Alliant request authority to enter into arrangements described
herein for a period ending December 31, 2000. Subject to the limitations set
forth above, commercial paper borrowings will be tailored to mature at such time
as excess funds from IEC and Alliant, respectively, are expected to become
available for loans through one of the Money Pools described above.
FORM OF LOANS TO PROPOSED SUBSIDIARIES
Loans to the subsidiaries through the Money Pools will be made pursuant
to open account advances under the terms of the Money Pool Agreements. A
separate promissory note will not be required for each individual transaction.
Instead, a promissory grid note evidencing the terms of the transactions shall
be signed by the parties to the transactions. Any such note will be
substantially in the form filed herewith as Exhibits F (IEC) and G (Alliant),
dated as of the date of the initial borrowing, maturing on a date agreed to by
the parties to the transaction and prepayable in whole at any time or in part
from time to time without premium or penalty.
INTEREST RATES
The interest rates applicable on any day to the then outstanding loans
through the Money Pools, or to Services from IEC, may be fixed or variable and
may be adjusted based on the weighted average daily effective cost incurred by
IEC and Alliant, respectively, for each Money Pool for borrowings from external
sources. If there are not external borrowings outstanding from a particular
Money Pool, however, then the rate will be the CD yield equivalent of the 30-day
Federal Reserve "AA" Industrial Commercial Paper Composite Rate (the
"Composite"), or if no Composite is established for that day, then the
applicable rate will be the Composite for the next preceding day for which the
Composite is established. The calculations to be used to
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determine the appropriate interest rates are described in detail in the forms of
the Non-Utility and Utility Money Pool Agreements, which are included herewith
as Exhibits A and B, respectively.
REPORTING
As stated above, operation of the Non-Utility and Utility Money Pools,
including record keeping and coordination of loans, will be handled by Services
under the authority of the appropriate officers of the participating companies.
Services will administer the Utility Money Pool on an "at cost" basis and may
administer the Non-Utility Money Pool on a different cost basis. It will
maintain separate records for each Money Pool. Funds in the Money Pools shall be
separately invested.
Services will also provide cash management and banking services to the
subsidiaries of IEC that participate in the Money Pools. These services shall
include maintaining controlled-disbursement checking accounts, electronic
disbursement facilities and cash concentration facilities. These services will
be paid for by the subsidiaries through fees calculated pursuant to different
cost bases for the Utility and the Non-Utility Money Pools to be determined by
Services and may be collected through a variety of means, including the payment
of a fee or the inclusion of the fee into the interest payments made by the
respective subsidiaries.
Within 45 days after the end of each calendar quarter, Services, on
behalf of the applicants, will file a certificate with the Commission pursuant
to Rule 24 under the Act setting forth (i) each applicant's maximum principal
amount of short-term borrowings outstanding during such quarter, (ii) the
average rate for the Utility Money Pool during such period, and (iii) the
maximum amount outstanding during such period for each source of outside
borrowings.
Also, within 45 days after the end of each calendar quarter, Services,
on behalf of the participating subsidiaries in the Non-Utility Money Pool and on
its own behalf, will file with the
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Commission a certificate of notification on Form U-6B-2 pursuant to Rule 52
including the following information for each participating subsidiary:
(i) the aggregate dollar amount borrowed from the Non-Utility
Money Pool by such subsidiaries in the preceding calendar
quarter, including as to each month thereof;
(ii) a statement explaining the subsidiaries' use of the proceeds
of such borrowings during such calendar quarter; and
(iii) the type of business engaged in by such subsidiaries during
such calendar quarter.
STATEMENT PURSUANT TO RULE 54
The applicants do not intend at present to use the Money Pools proposed
herein to finance the acquisition of an exempt wholesale generator ("EWG") or a
FUCO. Instead, IEC will utilize the separate and independent FUCO
investment/acquisition fund for such purposes If the applicants' intention
changes, an amended Form U-1 Application-Declaration will be filed requesting
authorization for such use. The applicants request, however, the authority to
use the proceeds from the separate and independent FUCO investment/acquisition
fund to finance such FUCO investments/acquisitions.
Under Rule 54, in determining whether to approve the issuance or sale
of a security by a registered holding company for purposes other than the
acquisition of an EWG or FUCO or other transactions by such registered holding
company or its subsidiaries other than with respect to EWG's or FUCO's, the
Commission shall not consider the effect of the capitalization or earnings of
any subsidiary which is an EWG or FUCO upon the registered holding company
system, if the conditions set forth in Rule 53(a), (b) and (c) are satisfied. As
set forth below, all applicable conditions set forth in Rule 53(a) are
satisfied, and none of the conditions set forth in Rule 53(b) exists.
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Four companies in the IEC system are FUCO's. IES International Inc.
("International"), IES New Zealand Ltd. ("IES New Zealand"), Interstate Energy
Corporation PTE Ltd. ("PTE") and IES Brazil Ltd. ("IES Brazil") are FUCO's and
have filed a Notification of FUCO status on Form U-57 with the Commission.
As for Rule 53(a)(1), the aggregate investment of IEC in EWG's and
FUCO's does not exceed fifty percent of IEC's consolidated retained earnings.
The average consolidated retained earnings of IEC for the four consecutive
quarters ended March 30, 1998, was $594,631,000, and the aggregate investment of
IEC in EWG's and FUCO's at March 30, 1998 was $59,000,000, or roughly 10% of
consolidated retained earnings.
Pursuant to Rule 53(a)(2), IEC will maintain books and records to
identify investments in and earnings from any EWG and any FUCO in which it will
directly or indirectly hold an interest. In accordance with Rule 53(a)(2)(i) and
(ii), the books and records and financial statements of each EWG and FUCO that
will be a "majority-owned subsidiary company" of IEC will be kept in conformity
with and prepared according to U.S. generally accepted accounting principles
("GAAP"). IEC will provide the Commission access to such books and records and
financial statements, or copies thereof, in English, as the Commission may
request.
In accordance with Rule 53(a)(2)(iii), for each EWG or FUCO in which
IEC will directly or indirectly own 50 percent or less of the voting securities,
IEC will proceed in good faith, to the extent reasonable under the
circumstances, to cause each such entity's books and records to be kept in
conformity with, and the financial statements of each such entity to be prepared
according to, GAAP. If such books and records are maintained, or such financial
statements are prepared, according to a comprehensive body of accounting
principles other than GAAP, IEC will, upon request of the Commission, describe
and quantify each material variation from GAAP
16
<PAGE> 20
in the accounting principles, practices and methods used to maintain such books
and records and each material variation from GAAP in the balance sheet line
items and net income reported in such financial statements, as the case may be.
In addition, IEC will proceed in good faith, to the extent reasonable under the
circumstances, to cause access by the Commission to such books and records and
financial statements, or copies thereof, in English, as the Commission may
request, and in any event will make available to the Commission any such books
and records that are available to IEC.
Consistent with Rule 53(a)(3), no more than two percent of the
employees of IEC's domestic public utility companies will render services, at
any one time, to an EWG or a FUCO in which IEC will own an interest.
Approximately 7 employees of IEC at any one time will render services to IES New
Zealand, PTE, IES Brazil and International. Based on current staffing levels,
this represents approximately 0.1% of the 6,137 full-time employees of the
public utility subsidiary companies of IEC.
In accordance with Rule 53(a)(4), IEC will simultaneously submit a copy
of this Application-Declaration, and will submit copies of any Rule 24
certificates required hereunder, as well as a copy of Item 9 of IEC's Form U5S
and Exhibits thereto, to each of the public service commissions having
jurisdiction over the retail rates of IEC's utility subsidiaries at the time
such documents will be filed with the Commission. The provisions of Rule 53(a)
are not made inapplicable to the authorizations herein requested by reason of
the provisions of Rule 53(b). Inasmuch as Rule 53(c) will apply only if an
applicant will be unable to satisfy the requirements of Rules 53(a) and (b), it
will be inapplicable here.
17
<PAGE> 21
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
An estimate of the fees and expenses to be paid or incurred by the
applicants in connection with the proposed transactions is set forth below:
<TABLE>
<CAPTION>
Description Amount
----------- ------
<S> <C>
Rating agency fees for commercial paper(annual) $ 25,000
Fees with respect to bank borrowings $ 1,015,000
Counsel fees $ 30,000
Total $ 1,070,000
</TABLE>
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
(a) THE SECTIONS OF THE 1935 ACT. The following Sections of the
1935 Act are or may be applicable to one or more of the proposed transactions
described herein: Section 2 (definitions, in particular, the definitions of
"subsidiary company" and "security"); Sections 6 and 7 (regarding the approval
of the sale of securities related to the money pools); Sections 9 and 10
(approval requirement for the acquisition of securities a public utility company
or of another business); Section 12 (intercompany loans between companies in the
same holding company system); Section 12(b) (relating to guarantee authority);
Section 13 (service, sales and construction contracts (cost of borrowing issue)
to provide services between companies in the same holding company system).
(b) ACCOMPANYING RULES. The following Rules accompanying the 1935
Act are or may be applicable to one or more of the proposed transactions
described herein: Rules 40 and 43 (exemptions of certain security transactions);
Rule 45 (regarding the extension of credit by a holding company to an associate
company); Rule 53 (holding company financings relating to the
18
<PAGE> 22
acquisition of exempt wholesale generators); Rules 80, 87, 88 90, 91 and 93
(regarding the provision of services within a holding company system and the "at
cost" requirements).
ITEM 4. REGULATORY APPROVAL.
The Public Service Commission of Wisconsin (the "PSCW") is asserting
jurisdiction over the activities of WP&L (and South Beloit as its subsidiary) in
regards to the money pool as they are covered by Sections 196.525(1) and
196.795(5) of the Wisconsin Statutes Annotated. Under Section 196.525(1), a
public utility may not lend funds to a corporation except to a public utility
subject to regulation by the PSCW if the corporation owns (directly or
indirectly) 5% or more of the voting stock of the public utility or is a surety
or guarantor for, or loans funds to, the public utility. Section 196.795(5) more
broadly covers WP&L's (and South Beloit's) participation in the money pool
system. The PSCW is presently working on an order regarding WP&L's role.
IPC submits an annual report providing notice to the Minnesota Public
Utilities Commission of its financing program for the year pursuant to Section
216B.49 subd.3 of the Minnesota Statutes Annotated.
Except as described above, no state or federal regulatory authority,
other than the Commission under the Act, has jurisdiction over any of the
proposed transactions, and no other state or federal authorizations are required
for the transactions described herein.
ITEM 5. PROCEDURE.
It is requested that the Commission issue and publish no later than
October 8, 1998, the requisite notice under Rule 23 with respect to the filing
of this Application-Declaration, such notice to specify a date not later than
October 18, 1998 as the date after which an order granting and permitting this
Application-Declaration to become effective may be entered by the
19
<PAGE> 23
Commission and that the Commission enter not later than October 19, 1998 an
appropriate order granting and permitting this Application-Declaration to become
effective.
No recommended decision by a hearing officer or other responsible
officer of the Commission is necessary or required in this matter. The Division
of Investment Management of the Commission may assist in the preparation of the
Commission's decision in this matter. There should be no thirty-day waiting
period between the issuance and the effective date of any order issued by the
Commission in this matter, and it is respectfully requested that any such order
be made effective immediately upon the entry thereof.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
The following exhibits and financial statements are filed as part of
this statement:
EXHIBITS DESCRIPTIONS
Exhibit A Non-Utility Money Pool Agreement
(filed with Form U-1; amended version filed with
Form U-1A)
Exhibit B Utility Money Pool Agreement
(filed with Form U-1; amended version filed with
Form U-1A)
Exhibit C Form of commercial paper note of IEC
(as filed with Form U-1)
Exhibit D Form of commercial paper note of Alliant
(as filed with Form U-1)
Exhibit E Form of note to evidence borrowing from banks
(as filed with Form U-1)
Exhibit F Form of note to be executed by borrowing applicants to IEC as
lending applicant
(as filed with Form U-1)
Exhibit G Form of note to be executed by borrowing applicants to Alliant
as lending applicant
(as filed with Form U-1)
Exhibit H Form of Notice
(as filed with Form U-1A)
Exhibit I Preliminary opinion of counsel
(filed as Exhibit H with Form U-1; amended version
filed with Form U-1A)
Exhibit I-2 Final or "past tense" opinion of counsel
20
<PAGE> 24
(to be filed with Certificate of Notification)
Exhibit J Form of Credit Agreement
(as filed with Form U-1)
Exhibit K* Public Service Commission Wisconsin ("PSCW") Order Approving
Transaction
(to be filed by amendment)
*IEC did not file a formal application with the PSCW seeking an order;
instead, IEC has provided the PSCW with this Form U-1, as amended, and the
PSCW will base its draft on the substance included herein.
21
<PAGE> 25
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
The proposed transactions do not involve major federal action having a
significant effect on the human environment. To the best of the Applicant's
knowledge, no federal agency has prepared or is preparing an environmental
impact statement with respect to the proposed transactions.
22
<PAGE> 26
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 7, 1998
Interstate Energy Corporation
By: /s/ Erroll B. Davis, Jr.
-----------------------------
Erroll B. Davis, Jr.
President and Chief Executive
Officer
<PAGE> 27
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Interstate Power Company
By: /s/ Dean E. Ekstrom
-------------------------
Dean E. Ekstrom
Vice President
<PAGE> 28
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
IES Utilities Inc.
By: /s/ Eliot G. Protsch
-------------------------
Eliot G. Protsch
President
<PAGE> 29
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Alliant Services Company
By: /s/ Pamela J. Wegner
-------------------------
Pamela J. Wegner
President
<PAGE> 30
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Alliant Industries Inc.
By: /s/ James E. Hoffman
-------------------------
James E. Hoffman
President
<PAGE> 31
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Heartland Environmental Holding Company
By: /s/ Stephen D. Johannsen
-------------------------------
Stephen D. Johannsen
President
<PAGE> 32
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
RMT, Inc.
By: /s/ Stephen D. Johannsen
-------------------------
Stephen D. Johannsen
President
<PAGE> 33
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Heartland Energy Group, Inc.
By: /s/ Claire K. Fulenwider
-------------------------
Claire K. Fulenwider
President
<PAGE> 34
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Capital Square Financial Corporation
By: /s/ Ruth A. Domack
----------------------------
Ruth A. Domack
President
<PAGE> 35
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Whiting Petroleum Corporation
By: /s/ David A. Frawley
-------------------------
David A. Frawley
President and CEO
<PAGE> 36
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
IES Transportation Inc.
By: /s/ Thomas L. Aller
-------------------------
Thomas L. Aller
President
<PAGE> 37
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
IEI Barge Services Inc.
By: /s/ Thomas L. Aller
-------------------------
Thomas L. Aller
President
<PAGE> 38
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
IES Transfer Services Inc.
By: /s/ Thomas L. Aller
-------------------------
Thomas L. Aller
President
<PAGE> 39
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Cedar Rapids and Iowa City Railroad Company
By: /s/ Thomas L. Aller
-----------------------------------
Thomas L. Aller
President
<PAGE> 40
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
IES Investments Inc.
By: /s/ James E. Hoffman
-------------------------
James E. Hoffman
President
<PAGE> 41
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Village Lakeshares Inc.
By: /s/ James E. Hoffman
-------------------------
James E. Hoffman
President
<PAGE> 42
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Iowa Land and Building Company
By: /s/ James E. Hoffman
-------------------------
James E. Hoffman
President
<PAGE> 43
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Wisconsin Power and Light Company
By: /s/ William D. Harvey
-------------------------
William D. Harvey
President
<PAGE> 44
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Heartland Properties, Inc.
By: /s/ Ruth A. Domack
-------------------------
Ruth A. Domack
President
<PAGE> 45
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
IES Energy Inc.
By: /s/ Erroll B. Davis, Jr.
-------------------------
Erroll B. Davis, Jr.
President
<PAGE> 46
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Industrial Energy Applications Inc.
By: /s/ Charles Castine
---------------------------
Charles Castine
President
<PAGE> 47
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
IES International Inc.
By: /s/ John K. Peterson
-------------------------
John K. Peterson
President
<PAGE> 48
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
to be signed on their behalf by the undersigned thereunto duly authorized.
Date: October 15, 1998
Interstate Energy Corporation PTE Ltd.
By: /s/ Lee Liu
------------------------------
Lee Liu
Chairman
<PAGE> 1
EXHIBIT A
NON-UTILITY MONEY POOL AGREEMENT
This Non-Utility Money Pool Agreement (the "Agreement"), dated
as of ________________, 199__, is made and entered into by and among Alliant
Industries, Inc. ("Alliant"), a Wisconsin corporation, Alliant Services Company
("Services") (solely in the role as administrator of the money pool), an Iowa
corporation and a non-utility subsidiary of Interstate Energy Corporation
("IEC"), a Wisconsin corporation and a registered holding company under the
Public Utility Holding Company Act of 1935, as amended (the "Act"), and each of
the non-utility subsidiaries of IEC whose name appears on the signature pages
hereof (each a "Party" and collectively, the "Parties").
WITNESSETH:
WHEREAS, the Parties desire to establish a Money Pool (the
"Non-Utility Money Pool") to coordinate and provide for certain of their
short-term cash and working capital requirements; and
WHEREAS, the non-utility subsidiaries that will participate in
the Non-Utility Money Pool (each a "Subsidiary" and collectively, the
"Subsidiaries") will from time to time have need to borrow funds on a short-term
basis, and certain of the Parties from time to time have funds available to loan
on a short-term basis;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements, covenants and provisions contained herein, the Parties hereto
agree as follows:
ARTICLE I
CONTRIBUTIONS AND BORROWINGS
Section 1.01 Contributions to Non-Utility Money Pool.
(a) Alliant will make short-term funds available from time to
time to the Non-Utility Money Pool. To the extent necessary, Alliant will use
the proceeds of external borrowings to accommodate the short-term borrowing
needs of the Subsidiaries consistent with Section 1.03(a) of this Agreement.
(b) Services shall establish on behalf of each Subsidiary one
or more zero-balance bank accounts ("Zero-Balance Accounts") that are linked to
the Non-Utility Money Pool. Each Subsidiary shall use these accounts to take
loans from and make repayments to the Non-Utility Money Pool. A Subsidiary may
have, from time to time, excess funds that it wants to lend to the Non-Utility
Money Pool. The Subsidiary may loan these funds to the Non-Utility Money Pool by
depositing them into one of its Zero-Balance Accounts. Services shall transfer
the loaned funds from the Zero-Balance Account to the Non-Utility Money Pool
and, only to the extent that the Subsidiary has no outstanding loans from
<PAGE> 2
the Non-Utility Money Pool, the funds shall be loaned from the Subsidiary to the
Non-Utility Money Pool (the "Loans"). Each Subsidiary may withdraw any of its
Loans at any time upon notice to Services as administrative agent of the
Non-Utility Money Pool.
Section 1.02 Rights to Borrow.
Subject to the provisions of Section 1.04(a) of this
Agreement, all short-term borrowing needs of the Subsidiaries will be met by
funds in the Non-Utility Money Pool to the extent such funds are available. The
Non-Utility Money Pool shall automatically provide funds to cover any net debit
balance that exists at the end of each day in each Subsidiary's Zero-Balance
Accounts subject to the limitations and conditions set forth herein and in the
applicable orders of the Securities and Exchange Commission (the "Commission")
and other regulatory authorities, resolutions of such Subsidiary's shareholders
and board of directors, such Subsidiary's governing corporate documents and any
agreements binding upon such Subsidiary.
Section 1.03 Source of Funds.
(a) Funds will be available through the Non-Utility Money Pool
from the following sources for use by the Subsidiaries from time to time: (i)
surplus funds in the treasuries of the Subsidiaries ("Internal Funds"), (ii)
Alliant bank borrowings and (iii) the sale of commercial paper by Alliant (the
funds referred to in clauses (ii) and (iii), the "External Funds"), in each
case to the extent permitted by applicable laws and regulatory orders. Funds
will be made available from such sources in such order as Services, as
administrator of the Non-Utility Money Pool, determines will result in a lower
cost of borrowing to the Subsidiaries borrowing from the Non-Utility Money
Pool, consistent with the individual borrowing needs and financial standing of
the Subsidiaries lending funds to the Non-Utility Money Pool.
(b) Each borrowing Subsidiary will borrow pro rata from each
lending Subsidiary in the proportion that the amount loaned by each Subsidiary
bears to the total amount then contributed to the Non-Utility Money Pool by all
lending Subsidiaries. On any day when more than one fund source (Internal Funds
and External Funds), with different rates of interest, are used to fund loans
through the Non-Utility Money Pool, each borrowing Subsidiary will borrow pro
rata from each fund source in the same proportion that the amount of funds
- 2 -
<PAGE> 3
provided by that fund source bears to the total amount of short-term funds
available to the Non-Utility Money Pool.
Section 1.04 Authorization.
(a) All borrowings from the Non-Utility Money Pool shall be
authorized by the borrowing subsidiary's chief financial officer or treasurer,
or by a designee thereof, pursuant to a reasonable method to be determined by
that subsidiary.
(b) Services, as administrator of the Non-utility Money Pool,
will provide each Party with periodic activity and cash accounting reports
that include, among other things, reports of cash activity, the daily balance of
loans outstanding and the calculation of interest charged.
(c) No Subsidiary shall be required to effect a borrowing
through the Non-Utility Money Pool if such Subsidiary determines that it can
effect such borrowing at lower cost directly from banks.
Section 1.05 Interest.
The daily outstanding balance of all loans to any Subsidiary
shall accrue interest as follows:
(a) If only Internal Funds comprise the daily outstanding
balance of all loans outstanding during a calendar month, the interest rate
applicable to such daily outstanding balances shall be the average for the
month of the CD yield equivalent of the 30-day Federal Reserve "AA" Industrial
Commercial Paper Composite Rate (the daily rate, the "Composite," the monthly
average of the Composite, the "Average Composite") or, if no such Composite is
established for that day, then the applicable rate shall be the Composite for
the next preceding day for which such Composite was established.
(b) If only External Funds comprise the daily outstanding
balance of all loans outstanding during a calendar month, the interest rate
applicable to such daily outstanding balances shall be the lender's cost for
such External Funds or, if more than one Party had made available External
Funds at any time during the month, the applicable interest rate shall be a
composite rate, equal to the weighted average of the costs incurred by the
respective Parties for such External Funds.
(c) In cases where the daily outstanding balances of all
loans outstanding at any time during the month include both Internal Funds and
External Funds, the interest rate applicable to the daily outstanding balances
for the month shall be equal to the weighted average of (i) the cost of all
Internal Funds contributed by Parties, as
- 3 -
<PAGE> 4
determined pursuant to Section 1.05(a) of this Agreement, and (ii) the cost of
all such External Funds, as determined pursuant to Section 1.05(b) of this
Agreement.
(d) The interest rate applicable to Loans made by a Subsidiary
to the Non-Utility Money Pool under Section 1.01(b) of this Agreement shall be
the Average Composite as determined pursuant to Section 1.05(a) of this
Agreement.
Section 1.06 Certain Costs.
The cost of compensating balances and fees paid to banks to
maintain credit lines by Parties lending External Funds to the Non-Utility Money
Pool shall initially be paid by the Party maintaining such line. A portion of
such costs shall be retroactively allocated every month to the Subsidiaries
borrowing such External Funds through the Non-Utility Money Pool in proportion
to their respective daily outstanding borrowings of such External Funds.
Section 1.07 Repayment.
Each Subsidiary receiving a loan from the Non-Utility Money
Pool hereunder shall repay the principal amount of such loan, together with all
interest accrued thereon, on demand and in any event within 365 days of the date
on which such loan was made. A Subsidiary shall make a repayment to the
Non-Utility Money Pool by depositing the repayment funds into its Zero-Balance
Account; Services shall transfer such funds from the Zero-Balance Account to the
Non-Utility Money Pool.
Section 1.08 Form of Loans to Subsidiaries.
Loans to the Subsidiaries from the Non-Utility Money Pool
shall be made as open-account advances, pursuant to the terms of this
Agreement. A separate promissory note will not be required for each individual
transaction. Instead, a promissory grid note evidencing the terms of the
transactions shall be signed by the parties to the transaction. Any such note
shall: (a) be in substantially the form filed as Exhibits F and G to the Form
U-1 Application-Declaration in File No. 70-9317 of the Commission; (b) be
dated as of the date of the initial borrowing; (c) mature on demand or on a
date agreed by the Parties to the transaction, but in any event not later than
one year after the date of the applicable borrowing; and (d) be repayable in
whole at any time or in part from time to time, without premium or penalty.
- 4 -
<PAGE> 5
ARTICLE II
OPERATION OF NON-UTILITY MONEY POOL
Section 2.01 Operation.
Operation of the Non-Utility Money Pool, including record
keeping and coordination of loans, will be handled by Services under the
authority of the appropriate officers of the Parties. Services shall be
responsible for the determination of all applicable interest rates and charges
to be applied to advances outstanding at any time hereunder, shall maintain
records of all advances, interest charges and accruals and interest and
principal payments for purposes hereof, and shall prepare periodic reports
thereof for the Parties. Services will administer the Non-Utility Money Pool on
either an "at cost" basis or, in its sole discretion, on a different basis.
Separate records shall be kept by Services for the Non-Utility Money Pool
established by this Agreement and any other money pool administered by Services.
Section 2.02 Investment of Surplus Funds in the Non-
Utility Money Pool.
Funds not required to meet Non-Utility Money Pool loans (with
the exception of funds required to satisfy the Non-Utility Money Pool's
liquidity requirements) will ordinarily be invested in one or more short-term
investments, including (i) interest-bearing accounts with banks; (ii)
obligations issued or guaranteed by the U.S. government and/or its agencies and
instrumentalities, including obligations under repurchase agreements; (iii)
obligations issued or guaranteed by any state or political subdivision thereof,
provided that such obligations are rated not less than A by a nationally
recognized rating agency; (iv) commercial paper rated not less than A-1 by S&P
or P-1 by Moody's, or their equivalent by a nationally recognized rating
agency; (v) money market funds; (vi) bank certificates of deposit; (vii)
Eurodollar funds; and (viii) such other investments as are permitted by Section
9(c) of the Act and Rule 40 thereunder.
Section 2.03 Allocation of Investment Earnings.
Any income earned by the Non-Utility Money Pool shall be
allocated among the Parties at the end of each calendar month in accordance
with the proportion that each Party's average contribution of funds in the
Non-Utility Money Pool for the month bears to the average total amount of funds
in the Non-Utility Money Pool for the month.
- 5 -
<PAGE> 6
Section 2.04 Event of Default.
If any Subsidiary shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors, or
any proceeding shall be instituted by or against any Party seeking to adjudicate
it bankrupt or insolvent, then Services, on behalf of the Non-Utility Money
Pool, may, by notice to the Subsidiary, terminate the Non-Utility Money Pool's
commitment to the Subsidiary and/or declare the principal amount then
outstanding of, and the accrued interest on, the loans and all other amounts
payable to the Non-Utility Money Pool by the Subsidiary hereunder to be
forthwith due and payable, whereupon such amounts shall be immediately due and
payable without presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by each Subsidiary.
ARTICLE III
MISCELLANEOUS
Section 3.01 Amendments.
No amendment to this Agreement shall be adopted except in a
writing executed by the Parties.
(a) Prior to filing any amendment to this Agreement with the
Commission, the Parties will file for approval of the amendment, if required,
with the Public Service Commission of Wisconsin, the Iowa Utilities Board, the
Illinois Commerce Commission and the Minnesota Public Utilities Commission
(together, the "Regulatory Commissions").
(b) In the event that an amendment is finally rejected or
disapproved or found to be unreasonable by one or more of the Regulatory
Commissions prior to filing with the Commission, the amendment will not become
effective and the Parties will not request Commission approval of the amendment.
(c) In the event that an amendment is rejected or disapproved
or found to be unreasonable by one or more of the Regulatory Commissions after
it has been filed with the Commission but before it has been approved by the
Commission, the amendment will be terminated and the Parties agree to request
withdrawal of the filing.
(d) Notwithstanding paragraphs (b) and (c) above, in the event
that an amendment is rejected, disapproved or found to be unreasonable by one or
more of the Regulatory Commissions before it has been approved by the
Commission, the Parties shall have the right to request further revisions of the
amendment in order to cure or remove the cause of the Commission's rejection,
disapproval or finding of unreasonableness. Upon request by a
- 6 -
<PAGE> 7
Party, the other Parties agree promptly to negotiate in good faith to revise the
amendment, and thereafter to file for any necessary regulatory authorization of
the renegotiated amendment. If the Parties are unable to reach agreement
satisfactory to each of them and to each affected Regulatory Commission after
good faith negotiations, then paragraphs (b) and (c) above, as applicable, will
apply.
(e) In the event that each Regulatory Commission has
previously approved an amendment prior to Commission approval, paragraph (f)
below shall not apply.
(f) In the event that an amendment has become effective and is
subsequently rejected, disapproved or found to be unreasonable by one or more of
the Regulatory Commissions, the Parties will make a good faith effort to
terminate, amend or modify the amendment in a manner which remedies the
Regulatory Commission's adverse findings without adverse impact on any of the
Parties. The Parties will request to meet with representatives of the Regulatory
Commissions and make a good faith attempt to resolve any differences in the
affected states regarding the subject amendment. If agreement can be reached to
terminate, amend or modify the amendment in a manner satisfactory to the Parties
and to the representatives of each Regulatory Commission, the Parties shall file
such amended contract with the appropriate state and federal regulatory
agencies, seeking all necessary regulatory authorizations. If the Parties are
unable to reach agreement satisfactory to each of them and to each affected
Regulatory Commission, after good faith negotiations, then they shall be under
no obligation to further amend the amendment.
(g) Nothing in this Section 3.01, is intended to amend, modify
or alter the authority of the Commission under the Act.
Section 3.02 Legal Responsibility.
Nothing herein contained shall render any Party liable for the
obligations of any other Party hereunder and the rights, obligations and
liabilities of the Parties are several in accordance with their respective
obligations, and not joint.
Section 3.03 Rules for Implementation.
The Parties may develop a set of guidelines for implementing
the provisions of this Agreement, provided that the guidelines are consistent
with all of the provisions of this Agreement.
Section 3.04 Governing Law.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each company hereto as of the date
first above written.
INTERSTATE ENERGY CORPORATION
By
-----------------------------------
Name:
Title:
ALLIANT SERVICES COMPANY
By
-----------------------------------
Name:
Title:
ALLIANT INDUSTRIES, INC.
By
-----------------------------------
Name:
Title:
Date: __________, 199__
- 8 -
<PAGE> 1
EXHIBIT B
UTILITY MONEY POOL AGREEMENT
This Utility Money Pool Agreement (the "Agreement"), dated as
of ______ , 199_, is made and entered into by and among Interstate Energy
Corporation ("IEC"), a Wisconsin corporation and a registered holding company
under the Public Utility Holding Company Act of 1935, as amended (the "Act"),
Alliant Services Company ("Services"), an Iowa corporation and a non-utility
subsidiary of IEC (in its role as administrator of the money pool and as a
participant in the money pool), and each of the utility subsidiaries whose name
appears on the signature pages hereof (each a "Party" and collectively, the
"Parties").
WITNESSETH:
WHEREAS, the Parties desire to establish a Money Pool (the
"Utility Money Pool") to coordinate and provide for certain of their short-term
cash and working capital requirements; and
WHEREAS, the utility subsidiaries that will participate in the
Utility Money Pool (each a "Subsidiary" and collectively, the "Subsidiaries")
will from time to time have need to borrow funds on a short-term basis, and
certain of the Parties will from time to time have funds available to loan on a
short-term basis;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements, covenants and provisions contained herein, the Parties hereto
agree as follows:
ARTICLE I
CONTRIBUTIONS AND BORROWINGS
Section 1.01 Contributions to Utility Money Pool.
(a) IEC will make short-term funds available from time to time
to the Utility Money Pool. To the extent necessary, IEC will use the proceeds of
external borrowings to accommodate the short-term borrowing needs of the
Subsidiaries consistent with Section 1.03(a) of this Agreement.
(b) Services shall establish on behalf of each Subsidiary one
or more zero-balance bank accounts ("Zero-Balance Accounts") that are linked to
the Utility Money Pool. Each Subsidiary shall use these accounts to take loans
from and make repayments to the Utility Money Pool. A Subsidiary may have, from
time to time, excess funds that it wants to lend to the Utility Money Pool. The
Subsidiary may loan these funds to the Utility Money Pool by depositing them
into one of its Zero-Balance Accounts. Services shall transfer the loaned funds
from the Zero-Balance Accounts to the Utility Money Pool and, only to the extent
that the Subsidiary has no outstanding loans from the Utility Money Pool, the
funds shall be loaned from the Subsidiary to the Utility Money Pool (the
"Loans"). Each Subsidiary may
<PAGE> 2
withdraw any of its Loans at any time upon notice to Services as administrative
agent of the Utility Money Pool.
Section 1.02 Rights to Borrow.
Subject to the provisions of Section 1.04(a) of this
Agreement, all short-term borrowing needs of the Subsidiaries will be met by
funds in the Utility Money Pool to the extent such funds are available. The
Utility Money Pool shall automatically provide funds to cover any net debit
balance that exists at the end of each day in each Subsidiary's Zero-Balance
Accounts subject to the limitations and conditions set forth herein and in the
applicable orders of the Securities and Exchange Commission (the "Commission")
and other regulatory authorities, resolutions of such Subsidiary's shareholders
and board of directors, such Subsidiary's governing corporate documents, and
agreements binding upon such Subsidiary. No borrowings through the Utility
Money Pool shall be made by IEC or Services.
Section 1.03 Source of Funds.
(a) Funds will be available through the Utility Money Pool
from the following sources for use by the Subsidiaries from time to time: (i)
surplus funds in the treasuries of the Subsidiaries ("Internal Funds"), (ii) IEC
bank borrowings and (iii) the sale of commercial paper by IEC (the funds
referred to in clauses (ii) and (iii), the "External Funds"), in each case to
the extent permitted by applicable laws and regulatory orders. Funds will be
made available from such sources in such order as Services, as administrator of
the Utility Money Pool, determines will result in a lower cost of borrowing to
Subsidiaries borrowing from the Utility Money Pool, consistent with the
individual borrowing needs and financial standing of the Subsidiaries lending
funds to the Utility Money Pool.
(b) Each borrowing Subsidiary will borrow pro rata from each
lending Subsidiary in the proportion that the amount loaned by each Subsidiary
bears to the total amount then contributed to the Utility Money Pool by all
lending Subsidiaries. On any day when more than one fund source (Internal
Funds and External Funds), with different rates of interest, are used to fund
loans through the Utility Money Pool, each borrowing Subsidiary will borrow
pro rata from each fund source in the same proportion that the amount of funds
provided by that fund source bears to the total amount of short-term funds
available to the Utility Money Pool.
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<PAGE> 3
Section 1.04 Authorization.
(a) All borrowings from the Utility Money Pool shall be
authorized by the borrowing subsidiary's chief financial officer or treasurer,
or by a designee thereof, pursuant to a reasonable method to be determined by
that subsidiary.
(b) Services, as administrator of the Utility Money Pool, will
provide each Party with periodic activity and cash accounting reports that
include, among other things, reports of cash activity, the daily balance of
loans outstanding and the calculation of interest charged.
(c) No Subsidiary shall be required to effect a borrowing
through the Utility Money Pool if such Subsidiary determines that it can effect
such borrowing at lower cost directly from banks.
Section 1.05 Interest.
The daily outstanding balance of all loans to any Subsidiary
shall accrue interest as follows:
(a) If only Internal Funds comprise the daily outstanding
balance of all loans outstanding during a calendar month, the interest rate
applicable to such daily balances shall be the average for the month of the CD
yield equivalent of the 30-day Federal Reserve "AA" Industrial Commercial Paper
Composite Rate (the daily rate, the "Composite," the monthly average of the
Composite, the "Average Composite") or, if no such Composite is established
for that day, then the applicable rate shall be the Composite for the next
preceding day for which such Composite was established.
(b) If only External Funds comprise the daily outstanding
balance of all loans outstanding during a calendar month, the interest rate
applicable to such daily outstanding balance shall be the lender's cost for
such External Funds or, if more than one Party had made available External
Funds at any time during the month, the applicable interest rate shall be a
composite rate, equal to the weighted average of the costs incurred by the
respective Parties for such External Funds.
(c) In cases where the daily outstanding balances of all
loans outstanding at any time during the month include both Internal Funds
and External Funds, the interest rate applicable to the daily outstanding
balances for the month shall be equal to the weighted average of the (i) cost
of all Internal Funds contributed by Parties, as determined pursuant to Section
1.05(a) of this Agreement, and (ii) the cost
- 3 -
<PAGE> 4
of all such External Funds, as determined pursuant to Section 1.05(b) of this
Agreement.
(d) The interest rate applicable to Loans made by a Subsidiary
to the Utility Money Pool under Section 1.01(b) of this Agreement shall be the
Average Composite as determined pursuant to Section 1.05(a) of this Agreement.
Section 1.06 Certain Costs.
The cost of compensating balances and fees paid to banks to
maintain credit lines by Parties lending External Funds to the Utility Money
Pool shall initially be paid by the Party maintaining such line. A portion of
such costs shall be retroactively allocated every month to the Subsidiaries
borrowing such External Funds through the Utility Money Pool in proportion to
their respective daily outstanding borrowings of such External Funds.
Section 1.07 Repayment.
Each Subsidiary receiving a loan from the Utility Money Pool
hereunder shall repay the principal amount of such loan, together with all
interest accrued thereon, on demand and in any event within 365 days of the date
on which such loan was made. A Subsidiary shall make a repayment to the Utility
Money Pool by depositing the repayment funds into its Zero-Balance Account;
Services shall transfer such funds from the Zero-Balance Account to the Utility
Money Pool.
Section 1.08 Form of Loans to Subsidiaries.
Loans to the Subsidiaries from the Utility Money Pool shall be
made as open-account advances, pursuant to the terms of this agreement. A
separate promissory note will not be required for each individual transaction.
Instead, a promissory grid note evidencing the terms of the transactions shall
be signed by the parties to the transaction. Any such note shall: (a) be in
substantially the form filed as Exhibits F and G to the Form U-1
Application-Declaration in File No. 70-9317 of the Commission; (b) be dated as
of the date of the initial borrowing; (c) mature on demand or on a date agreed
by the Parties to the transaction, but in any event not later than one year
after the date of the applicable borrowing; and (d) be repayable in whole at any
time or in part from time to time, without premium or penalty.
ARTICLE II
OPERATION OF UTILITY MONEY POOL
Section 2.01 Operation.
- 4 -
<PAGE> 5
Operation of the Utility Money Pool, including record keeping
and coordination of loans, will be handled by Services under the authority of
the appropriate officers of the Parties. Services shall be responsible for the
determination of all applicable interest rates and charges to be applied to
advances outstanding at any time hereunder, shall maintain records of all
advances, interest charges and accruals and interest and principal payments for
purposes hereof, and shall prepare periodic reports thereof for the Parties.
Services will administer the Utility Money Pool on an "at cost" basis. Separate
records shall be kept by Services for the Utility Money Pool established by this
Agreement and any other money pool administered by Services.
Section 2.02 Investment of Surplus Funds in the
Utility Money Pool.
Funds not required to meet Utility Money Pool loans (with the
exception of funds required to satisfy the Utility Money Pool's liquidity
requirements) will ordinarily be invested in one or more short-term investments,
including (i) interest-bearing accounts with banks; (ii) obligations issued or
guaranteed by the U.S. government and/or its agencies and instrumentalities,
including obligations under repurchase agreements; (iii) obligations issued or
guaranteed by any state or political subdivision thereof, provided that such
obligations are rated not less than A by a nationally recognized rating agency;
(iv) commercial papaer rated not less than A-1 by S&P or P-1 by Moody's, or
their equivalent by a nationally recognized rating agency; (v) money market
funds; (vi) bank certificates of deposit; (vii) Eurodollar funds; and (viii)
such other investments as are permitted by Section 9(c) of the Act and Rule 40
thereunder.
Section 2.03 Allocation of Investment Earnings.
Any income earned by the Utility Money Pool shall be
allocated among the Parties at the end of each calendar month in accordance
with the proportion that shall Party's average contribution of funds in the
Utility Money Pool for the month bears to the average total amount of funds in
the Utility Money Pool for the month.
Section 2.04 Event of Default.
If any Subsidiary shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors, or
any proceeding shall be instituted by or against any Party seeking to adjudicate
it bankrupt or insolvent, then Services, on behalf of the Utility Money Pool,
- 5 -
<PAGE> 6
may, by notice to the Subsidiary, terminate the Utility Money Pool's commitment
to the Subsidiary and/or declare the principal amount then outstanding of, and
the accrued interest on, the loans and all other amounts payable to the Utility
Money Pool by the Subsidiary hereunder to be forthwith due and payable,
whereupon such amounts shall be immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by each Subsidiary.
ARTICLE III
MISCELLANEOUS
Section 3.01 Amendments.
No amendment to this Agreement shall be adopted except in a
writing executed by the Parties.
(a) Prior to filing any amendment to this Agreement with the
Commission, the Parties will file for approval, if required, with the Public
Service Commission of Wisconsin, the Iowa Utilities Board, the Illinois Commerce
Commission and the Minnesota Public Utilities Commission (together, the
"Regulatory Commissions").
(b) In the event that an amendment is finally rejected or
disapproved or found to be unreasonable by one or more of the Regulatory
Commissions prior to filing with the Commission, the amendment will not become
effective and the Parties will not request Commission approval of the amendment.
(c) In the event that an amendment is rejected or disapproved
or found to be unreasonable by one or more of the Regulatory Commissions after
it has been filed with the Commission but before it has been approved by the
Commission, the amendment will be terminated and the Parties agree to request
withdrawal of the filing.
(d) Notwithstanding paragraphs (b) and (c) above, in the event
that an amendment is rejected, disapproved or found to be unreasonable by one or
more of the Regulatory Commissions before it has been approved by the
Commission, the Parties shall have the right to request further revisions of the
amendment in order to cure or remove the cause of the Regulatory Commission's
rejection, disapproval or finding of unreasonableness. Upon request by a Party,
the other Parties agree promptly to negotiate in good faith to revise the
amendment, and thereafter to file for any necessary regulatory authorization of
the renegotiated amendment. If the Parties are unable to reach agreement
satisfactory to each of them and to each affected Regulatory Commission after
good faith negotiations, then paragraphs (b) and (c) above, as applicable, will
apply.
- 6 -
<PAGE> 7
(e) In the event that each Regulatory Commission has
previously approved an amendment prior to Commission approval, paragraph (f)
below shall not apply.
(f) In the event that an amendment has become effective and is
subsequently rejected, disapproved or found to be unreasonable by one or more of
the Regulatory Commissions, the Parties will make a good faith effort to
terminate, amend or modify the amendment in a manner which remedies the
Regulatory Commission's adverse findings without adverse impact on any of the
Parties. The Parties will request to meet with representatives of the Regulatory
Commissions and make a good faith attempt to resolve any differences in the
affected states regarding the subject amendment. If agreement can be reached to
terminate, amend or modify the amendment in a manner satisfactory to the Parties
and to the representatives of each Regulatory Commission, the Parties shall file
such amended contract with the appropriate state and federal regulatory
agencies, seeking all necessary regulatory authorizations. If the Parties are
unable to reach agreement satisfactory to each of them and to each affected
Regulatory Commission, after good faith negotiations, then they shall be under
no obligation to further amend the amendment.
(g) Nothing in this Section 3.01, is intended to amend, modify
or alter the authority of the Commission under the Act.
Section 3.02 Legal Responsibility.
Nothing herein contained shall render any Party liable for the
obligations of any other Party hereunder and the rights, obligations and
liabilities of the Parties are several in accordance with their respective
obligations, and not joint.
Section 3.03 Rules for Implementation.
The Parties may develop a set of guidelines for implementing
the provisions of this Agreement, provided that the guidelines are consistent
with all of the provisions of this Agreement.
Section 3.04 Governing Law.
This Agreement shall be governed by and construed in
accordance with, the laws of the State of New York.
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each company hereto as of the date
first above written.
INTERSTATE ENERGY CORPORATION
By
-----------------------------------
Name:
Title:
ALLIANT SERVICES COMPANY
By
-----------------------------------
Name:
Title:
WISCONSIN POWER & LIGHT COMPANY
By
-----------------------------------
Name:
Title:
IES UTILITIES INC.
By
-----------------------------------
Name:
Title:
INTERSTATE POWER COMPANY
By
-----------------------------------
Name:
Title:
Date: ________, 199__
<PAGE> 1
EXHIBIT H
Securities and Exchange Commission
(Release No. __-____)
Filing Under the Public Utility Holding Company Act of 1935 (the "Act")
_________________, 1998
Notice is hereby given that the following filing(s) has/have been made
with the Commission pursuant to provisions of the Act and rules promulgated
thereunder. All interested persons are referred to the application(s) and/or
declaration(s) for complete statements of the proposed transaction(s) summarized
below. The application(s) and/or declaration(s) and any amendment(s) thereto
is/are available for public inspection through the Commission's Office of Public
Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
_________, 1998 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarants at the address(es) specified below. Proof of service (by affidavit
or, in case of an attorney-at-law, by certificate) should be filed with the
request. Any request for hearing shall identify specifically the issues of fact
or law that are disputed. A person who so requests will be notified of any
hearing, if ordered, and will receive a copy of any notice or order issued in
the matter. After said date, the application(s) and/or declaration(s), as filed
or as amended, may be granted and/or permitted to become effective.
Interstate Energy Corporation ("IEC"), 222 West Washington Avenue,
Madison, Wisconsin 53703, a registered public utility holding company, has filed
an Application-
H-1
<PAGE> 2
Declaration under Sections 2, 6, 7, 9, 10, 12 and 13 under the Act and Rules 40,
43, 45, 53, 80, 87, 88, 90, 91 and 93 thereunder.
In its Application-Declaration, IEC, a Wisconsin corporation, seeks
authorization for (i) IEC to issue notes and/or commercial paper and enter into
certain guarantees, (ii) IEC and Alliant to make capital contributions, (iii)
the subsidiaries of each of IEC and Alliant, including Alliant Services Company,
to incur short-term borrowings, (iv) IEC and its subsidiaries, including
Alliant, to establish and utilize a system of separate money pools to coordinate
and provide for the short-term cash requirements of the applicants and (v) to
provide funds for IEC to finance on an interim basis the acquisition of foreign
utility companies and exempt wholesale generators.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Jonathan G. Katz
Secretary
H-2
<PAGE> 1
DRAFT EXHIBIT I
FILE 70-9317
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, NY 10005
June 16, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form U-1 Application-Declaration
Dear Ladies and Gentlemen:
We refer to the Form U-1 Application-Declaration (the
"Application-Declaration"), filed by Interstate Energy Corporation ("IEC") a
Wisconsin corporation and a registered holding Company under the Public Utility
Holding Company Act of 1935, as amended. Capitalized terms and parties not
defined herein shall have the meanings ascribed to such terms and parties in the
Application-Declaration.
The Application-Declaration requests authorization for: (i)
IEC and Alliant Industries, Inc. ("Alliant") to issue notes and/or commercial
paper, (ii) IEC and Alliant to make capital contributions, (iii) the
subsidiaries of each of IEC and Alliant to incur short-term borrowings, and
(iv) IEC and its subsidiaries, including Alliant, to establish and utilize a
system of separate money pools to coordinate and provide for the short-term
cash requirements of the applicants (collectively, the "Transaction"). We have
acted as counsel for IEC in connection with the Transaction and, as such
counsel, we are familiar with the corporate proceedings taken and to be taken
by IEC
<PAGE> 2
in connection with the Transaction as described in the Application-Declaration.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of IEC, certificates of public
officials, certificates of officers and representatives of IEC and other
documents as we have deemed it necessary to require as a basis for the opinions
hereinafter expressed. In our examination, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals
and the conformity with authentic original documents of all documents submitted
to us as copies. When relevant facts were not independently established, we
have relied upon statements of governmental officials and upon representations
made by officers of IEC and other appropriate persons, and statements contained
in the Application-Declaration.
The opinions expressed below in respect of the Transaction
described in the Application-Declaration are subject to the following
assumptions or conditions:
a. The Transaction shall have been duly authorized and
approved to the extent required by federal and state law and by the Board of
Directors of IEC;
b. The Securities and Exchange Commission shall have duly
entered an appropriate order or orders granting the Application-Declaration and
permitting the Application-Declaration to become effective with respect to the
Transaction;
c. The Transaction shall have been accomplished in accordance
with all approvals, authorizations, consents, certificates and orders of any
applicable state commission or regulatory authority required for the
consummation of the Transaction, and all such required approvals,
authorizations, consents, certificates and orders shall have been obtained and
remain in effect;
d. The commercial paper and other notes proposed to be issued
by IEC and Alliant to non-associate companies, and the notes proposed to be
issued by borrowing applicants to lending Applicants, shall be substantially in
the form attached as exhibits to the Application-Declaration and shall be
properly completed and executed and, where required, countersigned;
e. The rates of interest on the commercial paper and notes
that are the subject of the Application-Declaration shall not exceed the
interest rates permitted by applicable state and federal law;
2
<PAGE> 3
f. Borrowings will not exceed those levels permitted from time
to time by the borrowing Applicant's Articles or Certificate of Incorporation or
other governing corporate documents and debt instruments and agreements to which
the borrowing Applicant is a party or by which its property is bound, and
applicable laws and orders of governmental and regulatory authorities with
jurisdiction over such borrowing Applicant;
g. No act or event other than as described herein shall have
occurred subsequent to the date hereof which would change the opinions expressed
above; and
h. The consummation of the Transaction shall be conducted
under our supervision, and all legal matters incident thereto shall be
satisfactory to us, including the receipt in satisfactory form of such opinions
of other counsel, qualified to practice in jurisdictions pertaining to such
transaction in which we are not admitted to practice, as we may deem
appropriate.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion that, in the event
that the Transaction is consummated in accordance with the
Application-Declaration, and subject to the assumptions and conditions set forth
above:
1. IEC will be validly organized and duly existing under the
laws of the State of Wisconsin. Alliant will be validly organized and duly
existing under the laws of the State of Wisconsin;
2. All state laws applicable to the Transaction will
have been complied with;
3. The lending Applicants will legally acquire any promissory
notes of the borrowing Applicants issued in connection with the Transaction;
4. The commercial paper and notes proposed to be issued by
IEC and Alliant to non-associate companies will be valid and binding
obligations of IEC and Alliant, enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); and
5. The consummation of the Transaction will not violate the
legal rights of the holders of any securities issued by any Applicant.
3
<PAGE> 4
We hereby consent to the use of this opinion as an exhibit to
the Application-Declaration. The opinions set forth herein are issued and
expressed as of the date hereof. We do not assume or undertake any
responsibility to advise you of changes in either fact or law which may come to
our attention after the date hereof.
Very truly yours,
Milbank, Tweed, Hadley & McCloy
MDD/____
4
