(As filed December 28, 1999)
File No. 70- [____]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION OR DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
ALLIANT ENERGY CORPORATION
222 West Washington Avenue
Madison, Wisconsin 53703
WISCONSIN POWER & LIGHT COMPANY
222 West Washington Avenue
Madison, Wisconsin 53703
IES UTILITIES INC.
Alliant Tower
200 First Street, S.E.
Cedar Rapids, Iowa 52401
INTERSTATE POWER COMPANY
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-07691
(Names of companies filing this statement and
addresses of principal executive offices)
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ALLIANT ENERGY CORPORATION
(Name of top registered holding company parent)
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Erroll B. Davis, Jr.
President and
Chief Executive Officer
Alliant Energy Corporation
222 West Washington Avenue
Madison, Wisconsin 53703
(Name and address of agent for service)
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The Commission is requested to send copies of all notices, orders and
communications in connection with this Application or Declaration to:
Barbara J. Swan, General Counsel William T. Baker, Jr., Esq.
Alliant Energy Corporation Thelen Reid & Priest LLP
222 West Washington Avenue 40 West 57th Street
Madison, Wisconsin 53703 New York, New York 10019
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ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
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A. INTRODUCTION.
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Alliant Energy Corporation ("Alliant Energy") is a registered holding
company under the Public Utility Holding Company Act of 1935, as amended (the
"Act").1/ Its public utility subsidiaries are Wisconsin Power & Light Company
("WP&L"), IES Utilities, Inc. ("IES"), Interstate Power Company ("IPC") and
South Beloit Water, Gas and Electric Company. Together, these companies provide
public utility service to approximately 908,000 electric and 388,000 retail gas
customers in parts of Wisconsin, Iowa, Minnesota and Illinois. In addition, WP&L
provides water service to approximately 35,000 customers in Wisconsin and
Illinois. Alliant Energy's direct non-utility subsidiaries include Alliant
Energy Corporate Services, Inc. ("Services"), a subsidiary service company, and
Alliant Energy Resources, Inc., which serves as the holding company for
substantially all of Alliant Energy's investments in non-utility subsidiaries.
WP&L and IES currently have in place separate programs under which
each company sells its customer accounts receivable to Ciesco, L.P. ("Ciesco"),
an accounts receivable financing conduit managed by Citicorp North America, Inc.
(the "Agent"). The purpose of these programs is to enable the two utilities to
accelerate their receipt of cash from collection of customer accounts
receivables, thereby reducing their dependence upon more costly sources of
working capital.
Under the existing WP&L receivables program, WP&L may sell up to $150
million billed and unbilled receivables. The actual level of receivables
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1 / See WPL Holdings, Inc., et al., Holding Co. Act Release No. 26856
(April 14, 1998).
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financed under this program fluctuates from month to month depending upon the
prior month's level of qualifying receivables. Under the existing IES program,
IES maintains a constant sales level of $65 million throughout the year, which
is the lowest level of qualifying receivables that occur in any given month
during the year. Under the existing programs, WP&L and IES serve as collection
agents for Ciesco. These programs expire on March 31, 2000.
WP&L and IES and Ciesco propose to enter into a new receivables
financing program to replace the expiring programs. In addition, IPC will be
added to the new program. Ciesco's purchases under the new program will
initially be limited to $300 million of qualifying receivables outstanding at
any one time.
B. STRUCTURE OF THE PROGRAM.
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Under the new program, WP&L, IES and IPC (individually an "Operating
Company" and collectively the "Operating Companies") will each organize a
wholly-owned, special purpose entity ("SPE"), to which it will sell all of its
billed and unbilled accounts receivable representing obligations of purchasers
of electricity, natural gas and water and reimbursement obligations of joint
owners of utility facilities arising under joint plant operating agreements
pursuant to which an Operating Company pays operating and/or capital expenses on
behalf of all joint owners (collectively, the "Receivables"), subject to certain
program limitations described below. Each of the SPEs will be organized under
Delaware law as a single-member limited liability company. It will have nominal
capital and will conduct no business operations or own any assets other than the
Receivables purchased from its parent Operating Company. The SPEs in turn will
resell such Receivables to a newly-formed, special-purpose entity to be jointly
owned by the SPEs (herein referred to as "NewCo"). NewCo will also be formed as
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a Delaware limited liability company. It too will serve merely as a conduit for
ultimate sale of the purchased Receivables to Ciesco, and will have no assets or
operations other than as contemplated by the agreements described below.
Forms of the limited liability company articles of organization and
member operating agreements of the SPEs and NewCo will be filed as Exhibits A-1
through A-4 hereto.
The purpose in forming the SPEs is to isolate the Receivables from the
Operating Company which has originated them such that, pursuant to Financial
Accounting Standards Board Statement No. 125 ("FASB 125"),2 / the sale of the
Receivables to the SPEs qualifies for treatment as a true sale of assets by the
Operating Companies rather than as a loan secured by the Receivables. This will
allow the Receivables to be removed as assets from the books of the Operating
Companies. Through NewCo, the Operating Companies will be able to consolidate
their Receivables into a much larger pool of Receivables and eliminate duplicate
structuring and administrative costs that would be associated with creating and
maintaining separate programs with Ciesco.
C. DESCRIPTION OF THE PROGRAM AGREEMENTS.
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The new receivables program will be implemented through a series of
related agreements, as follows: First, each Operating Company (as Seller) will
enter into a Receivables Sale Agreement (the "SPE Agreement") with its
wholly-owned SPE (as Purchaser), pursuant to which the Operating Company will
sell all of its eligible Receivables to the SPE. Services will be designated the
initial Collection Agent under this agreement, but will subcontract with the
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2 / See FASB Statement No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities" (June 1996). FASB 125
sets forth various tests which have to be met in order for the transferred
assets to be deemed to be isolated from (i.e., out of the control of) the
transferor. Special-purpose entities such as those described in this filing are
typically used to establish such separateness.
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Operating Companies to perform the duties of the Collection Agent, and, in such
capacity, each of the Operating Companies will continue to bill its customers
and service their accounts. Second, each SPE (as Seller) will enter into a
Receivables Purchase and Sale Agreement (the "NewCo Agreement") with NewCo (as
Purchaser), pursuant to which the SPE will sell and NewCo will purchase all of
the Receivables that the SPE has acquired from its parent Operating Company.
Third, NewCo (as Seller) and Ciesco (as Investor) will enter into a Receivables
Purchase and Sale Agreement (the "Ciesco Agreement"), pursuant to which NewCo
will sell and Ciesco will purchase an undivided percentage ownership interest in
the pool of Receivables originated by the Operating Companies. Under the terms
of a separate Receivables Purchase and Sale Agreement (the "Citibank
Agreement"), Citibank N.A. ("Citibank") would be obligated to purchase the
Receivables from NewCo in the event that Ciesco, for any reason, does not
purchase the Receivables. Finally, Alliant Energy will execute and deliver a
credit support agreement (the "Alliant Energy Agreement") in favor of Ciesco,
the Agent and Citibank pursuant to which Alliant Energy will provide limited
credit support. The forms of the SPE Agreement, the NewCo Agreement, the Ciesco
Agreement, the Citibank Agreement and the Alliant Energy Agreement will be filed
by amendment as Exhibits B-1, B-2, B-3, B-4, and B-5, respectively.
The SPE Agreements: Each Operating Company will enter into an SPE
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Agreement with its wholly-owned SPE pursuant to which the Operating Company will
sell and the SPE will purchase, from time to time, all of the Operating
Company's Receivables. Under Section 2.01 of the SPE Agreement, the SPE will
purchase the Receivables at a discount that takes into account Ciesco's cost of
funds and program fees and administrative and servicing costs, all of which are
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passed through to the SPE by NewCo, and the historical default experience on
accounts receivable originated by the Operating Company. The SPE will pay the
purchase price in cash, unless it has insufficient cash on hand to pay the full
purchase price, in which case a portion of the purchase price will be paid by
the issuance of additional membership interests in the SPE to its parent
Operating Company. In subsequent months, if the SPE has excess funds on hand
from collections of Receivables purchased in previous months, it will distribute
such excess to its parent Operating Company as a return of capital.
As indicated, the originating Operating Company (as subcontractor to
Services) will perform the duties of the initial Collection Agent having sole
responsibility for servicing the Receivables, for which it will be entitled to
receive an agent's fee of 1/4 of 1% per annum on the average daily amount of the
capital ("Capital") invested in its Receivables by Ciesco, as described below.
The NewCo Agreement: NewCo will serve as the conduit through which the
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Receivables originated by each of the Operating Companies and purchased by the
separate SPEs will be aggregated to create a single pool of Receivables. The
terms and conditions of the purchase of Receivables by NewCo from the separate
SPEs will be the same as the terms and conditions under which the SPEs purchase
those Receivables from the Operating Companies under the SPE Agreements, except
that NewCo will pay each of the SPEs in cash and/or additional membership
interests an amount equal to the purchase price paid by the SPEs to the
Operating Companies for the Receivables sold.
The Ciesco Agreement: Under Section 2.01 of the Ciesco Agreement,
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NewCo (as Seller) will sell and Ciesco (as Investor) may, in its discretion,
purchase an undivided percentage ownership interest (a "Share") in the pool of
Receivables held by NewCo from time to time. The percentage interest in the pool
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of Receivables represented by such Share shall, subject to certain
contingencies, be calculated by dividing (i) the sum of the Capital invested by
the Investor as of the date of computation, the Investor's funding cost, the
Collection Agent fee reserve, and other program fees, by (ii) the net
Receivables pool balance at the time of computation, i.e., the total of all
Receivables, less defaulted Receivables in the pool balance and the amount by
which the outstanding Receivables of each customer exceeds the "Concentration
Limit" for such customer multiplied by the amount of Capital invested by Ciesco
at any time. The Concentration Limit is a limit on the amount of Receivables of
any single customer of an Operating Company that may be financed under the
program. It is equal to 3% of the pool of Receivables sold by NewCo in any
particular period.
Under normal circumstances, Ciesco will fund its investment in the
Share from the proceeds of commercial paper sales. The applicable rate applied
by Ciesco for each calendar month will be equal to the weighted average of the
rates at which Ciesco sells commercial paper notes having a term equal to a
period not exceeding 270 days, plus dealer commissions and note issuance costs.
In addition, Ciesco will charge a program fee equal to 1/8th of 1% per annum on
the average daily amount of Capital invested by Ciesco, an investor fee equal to
0.01% of the annual average Capital outstanding, plus a one-time structuring fee
of $100,000.
The Citibank Agreement: In the event Ciesco is unable to issue
----------------------
commercial paper for any reason, Citibank would be obligated to purchase the
Receivables pursuant to the terms of the Citibank Agreement. Under the Citibank
Agreement, the applicable funding rate will be based on a Eurodollar borrowing
rate for borrowings having a period equal to one, two, three or six months, as
selected by NewCo. In the event of an inability to make Eurodollar borrowings,
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or in the case of borrowing for a period of 29 days or less or in an amount of
less than $500,000, then the applicable rate would be a fluctuating rate based
on Citibank's base rate or the latest three-week moving average of secondary
market morning offering rates for three-month certificates of deposit of major
U.S. money market banks. The spread over the reference rates will vary over the
life of the program based on market conditions and on changes in the corporate
credit rating of Alliant Energy, or, if there is no such rating at the time, the
two highest long-term public senior debt ratings of the Operating Companies.
Citibank will also charge a liquidity fee of between 0.15% and 0.275% (depending
on the corporate credit rating of Alliant Energy) times the amount of Citibank's
commitment to purchase interests in the Receivables.
The new accounts receivable purchase and sale program will be
structured so as to satisfy the requirements of FASB 125. In order to satisfy
these requirements: (i) the transfers of Receivables from an Operating Company
to its wholly-owned SPE must be on terms that the Operating Company believes
will result in such transfers being classified as "true sales" in the unlikely
event of a bankruptcy proceeding involving the Operating Company; (ii) the SPE,
as the purchaser and transferee of the Receivables, must be a "qualifying
special purpose entity" within the meaning of FASB 125 and as such will be a
legally separate entity engaged only in activities related to the program; (iii)
the SPE, and any subsequent purchaser (including, in this case, NewCo and
Ciesco), must have the right to pledge or exchange the Receivables; and (iv) the
originating Operating Company cannot maintain effective control over the
Receivables that are transferred to the SPE.
The amount of Receivables originated by WP&L, IES and IPC will vary
from time to time in accordance with electric, gas and water consumption by
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their customers. As a result of this and other factors, the funds available to
NewCo to make a purchase may not match the cost of Receivables available. The
proposed program (like the existing programs it replaces) includes a mechanism
to accommodate this mismatch. When the amount of Receivables available for sale
by the SPEs exceeds the amount of cash NewCo has available, a portion of the
purchase price will be paid by the issuance of additional membership interests
in NewCo to each of the SPEs in amounts which parallel the additional membership
interests issued by each SPE to its parent Operating Company which has
originated the Receivables. Conversely, if NewCo develops a substantial cash
balance due to collections of previously purchased Receivables exceeding the
balance of newly created Receivables available for purchase, NewCo will
distribute such excess cash to the SPEs and the SPEs will distribute such excess
cash to the Operating Companies, in each case as a return of capital. Through
this mechanism, it is expected that neither NewCo nor the SPEs will retain
substantial cash balances at any time and that substantially all cash realized
from the collection of the Receivables (net of the costs of the program and any
reductions in the outstanding purchase price of Shares) will be made available
to the Operating Companies.
Although the actual funding cost will vary depending on, inter alia,
Ciesco's own funding costs, it is expected that the all-in credit spread to the
Operating Companies will be substantially lower than the weighted average cost
of permanent capital that the Operating Companies would otherwise have to
maintain in order to finance their operations. The savings can be illustrated as
follows: Currently, the Operating Companies' average outstanding accounts
receivable balance at any one time is about $200 million. The capital required
to finance this level of Receivables essentially represents permanent capital of
the Operating Companies. The average pre-tax weighted cost of capital of the
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Operating Companies currently ranges between 13.2% and 14.0%. In contrast, based
on a current pre-tax yield on Ciesco's commercial paper of 5.85% and overall
transaction fees and expenses estimated not to exceed 25 basis points, the
program would result in a pre-tax reduction of more than 7.4 percentage points
(or more than 50%) from the Operating Companies' pre-tax weighted average cost
of capital.
As indicated, each Operating Company (as a subcontractor to Services)
will perform the duties of the initial Collection Agent with respect to the
Receivables originated by it. Consequently, the Operating Companies will
continue to perform all of the billing and servicing functions that they now
perform, and their customers will not experience any change in current billing
and collection procedures.3 Under certain adverse conditions, including, among
others, an unremedied default by Alliant Energy, an Operating Company, an SPE or
NewCo, an event of insolvency affecting any of the foregoing, and the loss
experience on Receivables in the Receivables pool exceeding certain specified
ratios, Ciesco would have the right to designate a new collection agent.
The Alliant Energy Agreement: Under the Alliant Energy Agreement,
----------------------------
Ciesco and Citibank would have limited recourse against Alliant Energy. Such
recourse claims include liability for Ciesco's funding costs, the Collection
Agent fee, and limited recourse for defaulted Receivables. The recourse limit
for defaulted Receivables is calculated by multiplying (i) a percentage equal to
the greatest of (a) three times the Concentration Limit (excluding any special
concentration limit), (b) three times the greatest 12-month rolling average
default ratio for the Receivables over the twelve months ending immediately on
the date of calculation, and (c) 9%, by (ii) the amount of Capital invested by
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3 Likewise, the services provided to NewCo and the SPEs by Services, as
Collection Agent, will be the same as the services it now renders to the
Operating Companies, and its compensation under the program agreements will be
passed on to the Operating Companies.
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Ciesco. Also included is liability for (i) failure to transfer to NewCo or
Ciesco a first priority ownership interest in the Receivables; (ii) the breach
by an Operating Company, an SPE or NewCo of its representations, warranties and
covenants; and (iii) certain indemnity obligations. Neither NewCo's nor Ciesco's
recourse to the Operating Companies will include any rights against the
Operating Companies should customer defaults on the Receivables result in
collections attributable to the Shares sold to Ciesco being insufficient to
reimburse Ciesco for the purchase price paid by it for the Shares and its
anticipated yield. Ciesco will bear the risk for any credit losses on the
Receivables that exceed the reserves for such losses included in the Shares and
Ciesco's rights under the Alliant Energy Agreement.
The term of the new Receivables sales program is 3 years. NewCo may,
upon at least five business days' notice to the Agent, terminate, in whole, or
reduce in part, the unused portion of its purchase limit in accordance with the
terms and conditions of the Ciesco Agreement. The Ciesco Agreement allows Ciesco
to assign all of its rights and obligations under said Agreement (including its
Share and the obligation to fund the Share) to other persons, including the
providers of its bank facilities. However, any such assignment will not change
the nature of the obligations of the Operating Companies, the SPEs or NewCo
under the program agreements to which they are parties.
D. OTHER MATTERS
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None of the proceeds from the transactions proposed herein will be
used by the Operating Companies to acquire any securities of, or any interest in
any "exempt wholesale generator" ("EWG") or foreign utility company ("FUCO").
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ITEM 2. FEES, COMMISSIONS AND EXPENSES.
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The estimated fees, commissions and expenses paid or incurred, or to
be paid or incurred, directly or indirectly, in connection with the proposed
transaction are estimated not to exceed $100,000, exclusive of the one-time
structuring fee and other recurring program fees paid to Ciesco and Citibank, as
described in Item 1.C., above.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
-------------------------------
The acquisition of the membership interests of the SPEs by the
Operating Companies and of the membership interests of NewCo by the SPEs, and
the issuance of such membership interests by the SPEs and NewCo, in each case
are subject to Sections 6(a), 7, 9(a), 10, and 12(f) of the Act and Rules 43
thereunder. Alliant Energy's proposal to provide credit support pursuant to the
Alliant Energy Agreement is subject to Section 12(b) of the Act and Rule 45
thereunder. These transactions are also subject to Rule 54.
The applicants believe that none of the other transactions described
above are subject to the Commission's jurisdiction, or are exempt by rule.
Specifically, the Operating Companies believe that their sale of Receivables to
the SPEs are not sales of a "security," as defined in Section 2(a)(16) of the
Act, or of "utility assets," as defined in Section 2(a)(18) of the Act, or of an
interest in an other business. Furthermore, Alliant Energy believes that NewCo's
sale of a Share in the Receivables pool to Ciesco, to the extent such may be
considered the issuance of a security, would be exempt from regulation under
Rule 52(b).4
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4 The Commission has not heretofore asserted jurisdiction over the sale of
accounts receivable, or the purchase thereof by an associate company of the
seller. See Western Massachusetts Electric Co., Holding Co. Act Rel. No. 26710
(April 25, 1997).
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Compliance with Rule 54. The transactions proposed herein are also
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subject to Rule 54. Rule 54 provides that the Commission shall not consider the
effect of the capitalization or earnings of subsidiaries of a registered holding
company that are EWGs or FUCOs, as defined in Sections 32 and 33, respectively,
in determining whether to approve other transactions if the requirements of Rule
53(a), (b) and (c) are satisfied. Alliant Energy currently meets all of the
requirements of Rule 53.
Rule 53(a)(1): Alliant Energy's "aggregate investment" in EWGs and
FUCOs is currently $223.6 million, or approximately 40.9% of Alliant Energy's
"consolidated retained earnings" for the four quarters ended September 30, 1999
($547.4 million).
Rule 53(a)(2): Alliant Energy will maintain books and records enabling
it to identify investments in and earnings from each EWG and FUCO in which it
directly or indirectly acquires and holds an interest. Alliant Energy will cause
each domestic EWG in which it acquires and holds an interest, and each foreign
EWG and FUCO that is a majority-owned subsidiary, to maintain its books and
records and prepare its financial statements in conformity with U.S. generally
accepted accounting principles ("GAAP"). All of such books and records and
financial statements will be available to the Commission, in English, upon
request.
Rule 53(a)(3): No more than 2% of the employees of Alliant Energy's
domestic public utility subsidiaries will, at any one time, directly or
indirectly, render services to EWGs and FUCOs.
Rule 53(a)(4): Alliant Energy will submit a copy of each Application
or Declaration, and each amendment thereto, relating to any EWG or FUCO, and
will submit copies of any Rule 24 certificates required thereunder, as well as a
copy of relevant portions of Alliant Energy's Form U5S, to each of the public
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service commissions having jurisdiction over the retail rates of its domestic
public utility subsidiaries.
In addition, Alliant Energy states that the provisions of Rule 53(a)
are not made inapplicable to the authorization herein requested by reason of the
occurrence or continuance of any of the circumstances specified in Rule 53(b).
Rule 53(c) is inapplicable by its terms.
ITEM 4. REGULATORY APPROVAL.
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WP&L will file an application with the Wisconsin Public Service
Commission ("WPSC") and IPC will file applications with the Illinois Commerce
Commission ("ICC") and the Minnesota Public Utilities Commission ("MPUC"), in
each case seeking approval for the sale of its receivables to an affiliated
interest. A copy of these filings will be filed by amendment hereto as Exhibits
D-1, D-2 and D-3, and copies of the orders of the WPSC, ICC and MPUC will be
filed by amendment as Exhibits D-4, D-5 and D-6, respectively. Alliant Energy
represents that WP&L and IPC will not engage in any of the transactions
described herein until such time as the required state commission orders have
been obtained.
No other state and no federal commission, other than this commission,
has jurisdiction over any aspect of the proposed transactions.
ITEM 5. PROCEDURE.
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The applicants respectfully request that the Commission issue a notice
of the proposed transaction as soon as practicable and that the Commission issue
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an order authorizing the jurisdictional transactions proposed herein at the
earliest practicable date after the required notice period.
The applicants hereby waive any recommended decision by a hearing
officer or by any other responsible officer of the Commission and waive the
30-day waiting period between the issuance of the Commission's order and the
date on which it is to become effective, since it is desired that the
Commission's order, when issued, become effective forthwith. The applicants
consent to the Division of Investment Management assisting in the preparation of
the Commission's decision and/or order unless such Division opposes the
transaction proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
---------------------------------
The following exhibits and financial statements are filed as a part of
this Application/Declaration:
(a) Exhibits (to be filed by amendment except as noted)
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A-1 Form of articles of organization of the SPEs
A-2 Form of members operating agreement of the SPEs A-3 Form of
articles of organization of NewCo A-4 Form of members
operating agreement of NewCo B-1 Form of Receivables Sale
Agreement ("SPE Agreement")
B-2 Form of Receivables Purchase and Sale Agreement ("NewCo
Agreement")
B-3 Form of Receivables Purchase and Sale Agreement ("Ciesco
Agreement")
B-4 Form of Receivables Purchase and Sale Agreement ("Citibank
Agreement")
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B-5 Form of Alliant Energy Agreement
C Not Applicable
D-1 WP&L Application to WPSC.
D-2 IPC Application to ICC.
D-3 IPC Application to MPUC.
D-4 Order of WPSC approving WP&L application.
D-5 Order of ICC approving the IPC application.
D-6 Order of the MPUC approving IPC application.
E Not Applicable
F Opinion of Counsel.
G Alliant Energy Financial Data Schedule - per books
(Incorporated by reference to Exhibit 27.7 to the Quarterly
Report on Form 10-Q of Alliant Energy for the period ended
September 30, 1999) (File No. 1-09894).
H Form of Federal Register Notice (filed herewith).
(b) Financial Statements
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1.1 Consolidated Balance Sheet of Alliant Energy and
subsidiaries as of June 30, 1999 (incorporated by reference
to the Quarterly Report on Form 10-Q of Alliant Energy for
the quarter ended September 30, 1999) (File No. 1-09894).
1.2 Consolidated Statements of Income of Alliant Energy and
subsidiaries for the period ended June 30, 1999
(incorporated by reference to the Quarterly Report on Form
10-Q of Alliant Energy for the quarter ended September 30,
1999) (File No. 1-09894).
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
---------------------------------------
The transactions proposed in this Application/Declaration do not
involve a "major federal action" nor do they "significantly affect the quality
of the human environment" as those terms are used in Section 102(2)(C) of the
National Environmental Policy Act. Such transactions will not result in changes
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in the operation of the applicants that will have an impact on the environment.
The applicants are not aware of any federal agency that has prepared or is
preparing an environmental impact statement with respect to the transactions
that are the subject of this Application/Declaration.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this Application
or Declaration filed herein to be signed on their behalf by the undersigned
thereunto duly authorized.
ALLIANT ENERGY CORPORATION
By: /s/ Erroll B. Davis, Jr.
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Name: Erroll B. Davis, Jr.
Title: Chief Executive Officer
WISCONSIN POWER & LIGHT
CORPORATION
By: /s/ Erroll B. Davis, Jr.
------------------------
Name: Erroll B. Davis, Jr.
Title: Chief Executive Officer
IES UTILITIES INC.
By: /s/ Erroll B. Davis, Jr.
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Name: Erroll B. Davis, Jr.
Title: Chief Executive Officer
INTERSTATE POWER COMPANY
By: /s/ Erroll B. Davis, Jr.
------------------------
Name: Erroll B. Davis, Jr.
Title: Chief Executive Officer
Date: December 28, 1999
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EXHIBIT INDEX
Exhibit Description
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H Proposed form of Federal Register notice.
EXHIBIT H
PROPOSED FORM OF FEDERAL REGISTER NOTICE
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35-_____)
Filings under the Public Utility Holding Company Act of 1935, as amended ("Act")
January __, 2000
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 amendments 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
________, 2000 to the Secretary, Securities and Exchange Commission, Washington,
D.C. 20549, and serve a copy on the relevant applicant(s) and/or declarant(s) at
the address(es) as 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 ________, 2000, the application(s) and/or declaration(s), as filed or as
amended, may be granted and/or permitted to become effective.
* * * * * *
ALLIANT ENERGY CORPORATION, ET AL. (70-[____])
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Alliant Energy Corporation ("Alliant Energy"), a registered holding
company whose principal executive offices are at 222 West Washington Avenue,
Madison, Wisconsin 53703, and its wholly-owned public-utility subsidiary
companies, Wisconsin Power & Light Company ("WP&L"), IES Utilities, Inc.
("IES"), and Interstate Power Company ("IPC," and together with WP&L and IES,
the "Operating Companies") have filed an Application or Declaration pursuant to
Sections 6(a), 7, 9(a), 10 and 12(f) of the Act and Rules 43, 45 and 54
thereunder requesting authorization to engage in certain transactions relating
to the sale of customer accounts receivable by the Operating Companies.
WP&L and IES currently have in place separate programs under which
each company sells its customer accounts receivable to Ciesco, L.P. ("Ciesco"),
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an accounts receivable financing conduit managed by Citicorp North America, Inc.
(the "Agent"). The purpose of these programs is to enable the two utilities to
accelerate their receipt of cash from collection of customer accounts
receivables, thereby reducing their dependence upon more costly sources of
working capital. These programs expire on March 31, 2000. WP&L and IES and
Ciesco have agreed to enter into a new receivables financing program to replace
the expiring programs, in connection with which IPC will be added as a
participant. Ciesco's purchases under the new program will initially be limited
to $300 million of qualifying receivables outstanding at any one time.
Under the new program, each Operating Company will organize a
wholly-owned, special purpose entity ("SPE"), to which it will sell all of its
billed and unbilled accounts receivable representing obligations of purchasers
of electricity, natural gas, water and certain other obligations (collectively,
the "Receivables"), subject to certain program limitations. The SPEs will have
nominal capital and will conduct no business operations or own any assets other
than the Receivables purchased from the Operating Companies. The SPEs in turn
will resell such Receivables to a newly-formed, special-purpose entity to be
jointly owned by the SPEs (herein referred to as "NewCo"). NewCo will serve
merely as a conduit for ultimate sale of the purchased Receivables to Ciesco.
It is stated that the purpose in forming the SPEs is to isolate the
Receivables from the Operating Company which has originated them such that,
pursuant to Financial Accounting Standards Board Statement No. 125 ("FASB
125"),1 / the sale of the Receivables to the SPEs qualifies for treatment as a
true sale of assets by the Operating Companies rather than as a loan secured by
the Receivables. The purpose in forming NewCo is to consolidate the Receivables
of the three utilities into a much larger pool of Receivables, which will
eliminate duplicate structuring and administrative costs that would be
associated with creating and maintaining separate programs with Ciesco.
The new receivables program will be implemented through a series of
substantially similar Receivables sale and purchase agreements pursuant to which
the Operating Companies will sell the Receivables to the SPEs, the SPEs will
sell the Receivables to NewCo, and NewCo will sell an undivided percentage
ownership interest in the pool of Receivables originated by the Operating
Companies to Ciesco.
Under normal circumstances, Ciesco will fund its purchases with the
proceeds of commercial paper sales. The applicable rate applied by Ciesco for
any calendar month will be equal to the weighted average of the rates at which
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1 / See FASB Statement No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" (June 1996). FASB 125 sets
forth various tests which have to be met in order for the transferred assets to
be deemed to be isolated from (i.e., out of the control of) the transferor.
Special-purpose entities such as those described in this filing are typically
used to establish such separateness.
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Ciesco sells commercial paper notes having a term equal to a period not
exceeding 270 days, plus dealer commissions and note issuance costs. In
addition, Ciesco will charge a program fee equal to 1/8th of 1% per annum on the
average daily amount invested by Ciesco, an investor fee equal to 0.01% of the
annual average amount invested, plus a one-time structuring fee of $100,000.
Citibank will provide liquidity to the program under a separate
agreement pursuant to which Citibank would be obligated to purchase the
Receivables from NewCo in the event that Ciesco, for any reason (e.g., its
inability to sell commercial paper), does not do so. Citibank's funding cost
would generally be based on a Eurodollar borrowing rate for borrowings having a
period equal to one, two, three or six months, as selected by NewCo. In certain
cases, the applicable rate would be a fluctuating rate based on Citibank's base
rate or the latest three-week moving average of secondary market morning
offering rates for three-month certificates of deposit of major U.S. money
market banks. The spread over the reference rates will vary over the life of the
program based on market conditions and on changes in the corporate credit rating
of Alliant Energy, or, if there is no such rating at the time, the two highest
long-term public senior debt ratings of the Operating Companies. Citibank will
also charge a liquidity fee of between 0.15% and 0.275% (depending on the
corporate credit rating of Alliant Energy) times the amount of Citibank's
commitment to purchase interests in the Receivables.
Alliant Energy will provide limited credit support in favor of Ciesco,
the Agent and Citibank. Such recourse claims include liability for Ciesco's
funding costs, Collection Agent fees, and limited recourse for defaulted
Receivables, which in no case would exceed 9% of the amount invested by Ciesco
at any time. The pool of Receivables created by the Operating Companies includes
a reserve for all such credit losses.
The applicants state that, although the actual funding cost will vary
depending on, inter alia, Ciesco's own funding costs, it is expected that the
all-in credit spread to the Operating Companies will be substantially lower than
the weighted average cost of permanent capital that the Operating Companies
would otherwise have to maintain in order to finance their operations.
The estimated fees, commissions and expenses paid or incurred, or to
be paid or incurred, directly or indirectly, in connection with the proposed
transaction are estimated not to exceed $100,000, exclusive of a one-time
$100,000 structuring fee and other recurring program fees paid to Ciesco and
Citibank. WP&L will file an application with the Wisconsin Public Service
Commission and IPC will file an application with the Illinois Commerce
Commission and the Minnesota Public Utilities Commission, in each case seeking
approval for the sale of its receivables to an affiliated interest.
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