H Form of Notice
1. News Digest
ALLEGHENY ENERGY, INC., ET AL. A notice has been issued
giving interested persons until February _, 2001, to request a
hearing on a proposal by Allegheny Energy, Inc. ("Allegheny"), a
registered holding company, and Allegheny Energy Supply Company,
LLC, a wholly owned non-utility subsidiary of Allegheny, to
transfer a two percentage interest in AE Supply to Merrill Lynch
pursuant to an Asset Contribution and Purchase Agreement. (Rel.
35-27____).
2. Notice
Allegheny Energy, Inc. et al. (70-1______)
Allegheny Energy, Inc. ("Allegheny"), a registered holding
company, located at 10435 Downsville Pike, Hagerstown, MD 21740-
1766, and Allegheny Energy Supply Company, LLC ("AE Supply"), a
wholly owned non-utility subsidiary of Allegheny located at R.R.
12, P.O. Box 1000, Roseytown, Pennsylvania 15601 subsidiary
(collectively "Applicants"), have filed this application -
declaration pursuant to sections 6(a), 7, and 12 of the Public
Utility Holding Company Act of 1935, as amended ("Act"), and Rules
44, 53 and 54 under the Act.
The Applicants and Allegheny Energy Global Markets L.L.C., a
newly formed, wholly owned Rule 58 subsidiary of AE Supply ("Rule
58 Company"), Merrill Lynch & Co. ("ML") and Merrill Lynch Capital
Services, its wholly owned subsidiary ("MLCS" together with ML,
"Merrill Lynch"), have entered into an Asset Contribution and
Purchase Agreement dated January 8, 2001 ("Agreement"). Under the
Agreement AE Supply will acquire Global Energy Markets ("GEM"),
Merrill Lynch's energy commodity marketing and trading unit.<F1>
Under the Agreement, AE Supply, through the Rule 58 Company will
acquire GEM for $490 million plus, subject to Securities and
Exchange Commission ("Commission") approval, a two percent equity
interest in AE Supply. The Agreement further provides that if the
Commission does not approve the transfer of the two percent equity
interest by a date certain, AE Supply will make additional cash
payment to Merrill Lynch. The transaction will be accounted for
as a purchase.
Allegheny and AE Supply will finance the acquisition through
a sale of debt that is consistent with the Applicants' existing
financing limits under Rule 58.<F2> By this application, Applicants
seek authority to issue to Merrill Lynch a two percent (2%)
membership interest in AE Supply, or an equal percent in a
successor affiliate in the event AE Supply is merged therein.<F3>
Applicants request expedited treatment of this application and
request an order issued and effective not later than April 15,
2001.
<F1> See Exhibit A, Asset Contribution and Purchase Agreement.
<F2> Rule 58 provides that Section 9(a) of the Act shall not apply
to: The acquisition by a registered holding company, or a
subsidiary company thereof, of the securities of an energy-related
company; provided, that, after giving effect to any such
acquisition, the aggregate investment by such registered holding
company and subsidiaries in all such companies does not exceed the
greater of:(i) $50 million; or (ii) 15% of the consolidated
capitalization of such registered holding company, as reported in
the registered holding company's most recent Annual Report on Form
10-K or Quarterly Report on Form 10-Q.
<F3> AE Supply may be merged into an existing corporate shell for
tax purposes.
<PAGE>
For the twelve months ended September 30, 2000, Allegheny's
gross revenues and net income were approximately $3.524 billion
and $188 million, respectively. AE Supply, which began operating
as a separate company on November 18, 1999, had gross revenues of
approximately $1.497 billion and net income of approximately $42.6
million for the 9 month period ended September 30, 2000.
