Amendment No. 1 to
SEC File No. 70-8593
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
GENERAL PUBLIC UTILITIES CORPORATION ("GPU")
100 Interpace Parkway
Parsippany, New Jersey 07054
(Name of company filing this statement and address
of principal executive office)
T.G. Howson, Vice President Douglas E. Davidson, Esq.
and Treasurer Berlack, Israels & Liberman
M. A. Nalewako, Secretary 120 West 45th Street
GPU Service Corporation New York, New York 10036
100 Interpace Parkway
Parsippany, New Jersey 07054
(Names and addresses of agents for service)<PAGE>
GPU hereby amends its Application on Form U-1, docketed in
SEC File No. 70-8593, as follows:
1. By amending Item 1 to read in its entirety as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
A. (1) Under Sections 32(g) and 33(c) of the Act, a
registered holding company may acquire and hold interests in and
securities of exempt wholesale generators ("EWGs"), as defined in
Section 32(a)(1) of the Act, and foreign utility companies
("FUCOs"), as defined in Section 33(a)(3) of the Act, in each
case without prior Commission authorization.
(2) GPU believes that it may be desirable, and
therefore proposes, to acquire and hold the interests or
securities of one or more FUCOs and EWGs (each, an "Exempt
Entity") indirectly through subsidiary companies of GPU which are
not themselves Exempt Entities (each, a "Subsidiary Company").
Each Subsidiary Company will be engaged, directly or indirectly,
and exclusively, in the business of owning and holding the
interests and securities of one or more Exempt Entities, and in
project development activities relating to the acquisition of
such interests and securities and the underlying projects. GPU
believes that the acquisition of the securities of an Exempt
Entity indirectly through a Subsidiary Company may facilitate,
among other things, compliance with applicable laws of foreign
jurisdictions limiting or otherwise relating to the ownership of
domestic companies by foreign nationals; tax planning of the
transaction; a partial sale of an interest in any Exempt Entity;
and other lawful purposes.
B. Accordingly, GPU proposes to acquire the securities of
one or more Subsidiary Companies from time to time. Such
securities may take the form of capital stock or shares, trust
certificates, partnership interests or other equity or participa-
tion interests. GPU further proposes to make investments in one
or more Subsidiary Companies from time to time through December
31, 1997 in an aggregate amount of up to $200 million. Such
investments may take the form of cash capital contributions or
open account advances; loans evidenced by promissory notes;
guarantees by GPU of the principal of, or interest on, any
promissory notes or other evidences of indebtedness or
obligations of any Subsidiary Company, or of GPU's undertaking to
contribute equity to a Subsidiary Company; assumption of liabili-
ties of a Subsidiary Company; and reimbursement agreements with
banks entered into to support letters of credit delivered as
security for GPU's equity contribution obligation to a Subsidiary
Company or otherwise in connection with a Subsidiary Company's
project development activities.
1<PAGE>
C. (1) Any investment in the capital stock or other
equity securities of a Subsidiary Company having a stated or par
value will be in an amount equal to or greater than such stated
or par value, and any open account advance made by GPU will be
non-interest bearing and repayable within one year of the date of
the advance. Any promissory note issued by a Subsidiary Company
to GPU, and any promissory note or similar evidence of
indebtedness issued by a Subsidiary Company to a person other
than GPU with respect to which GPU may issue a guarantee, would
mature not later than 30 years after the date of issuance
thereof, and would bear interest at a rate (a) not greater than
the prime rate at a bank to be designated by GPU in the case of
any promissory note issued to GPU, and (b) in the case of any
note or similar evidence of indebtedness issued to a person other
than GPU and guaranteed by GPU, not in excess of the rates set
forth in paragraph J(2) below.
(2) Any promissory note issued to GPU by any
Subsidiary Company may, at GPU's option, be converted to a
capital contribution to such Subsidiary Company through GPU's
forgiveness of the indebtedness evidenced thereby.
(3) Any reimbursement agreement supporting a letter of
credit would have a term not in excess of 30 years. Drawings
under any such letter of credit would bear interest at not more
than 5% above the prime rate of the letter of credit bank as in
effect from time to time, and letter of credit fees would not
exceed 1% annually of the face amount of the letter of credit.
D. (1) There may be occasions where GPU has acquired or
anticipates acquiring an ownership interest in an Exempt Entity
directly, rather than through a Subsidiary Company. In such
circumstances, it may be necessary or desirable for GPU to
guarantee the indebtedness or other obligations of, or to assume
liabilities of, the Exempt Entity, or to deliver a guarantee or
letter of credit to a third person (such as a project lender, for
example) in support of an equity contribution obligation to, or
otherwise in connection with project development activities for,
such Exempt Entity. Furthermore, even where GPU has acquired the
interest in the Exempt Entity indirectly through a Subsidiary
Company, GPU anticipates that it may on occasion be necessary to
guarantee the indebtedness, or to assume liabilities, of the
Exempt Entity directly.
(2) Accordingly, GPU proposes from time to time
through December 31, 1997, to (i) guarantee the indebtedness or
other obligations of one or more Exempt Entities; (ii) assume
liabilities of one or more Exempt Entities; and (iii) enter into
guarantees and letter of credit reimbursement agreements in
support of equity contribution obligations or otherwise in
connection with project development activities for one or more
Exempt Entities.
(3) Any such guarantees would have the terms described
in paragraph C(1) above, and any such reimbursement agreements
and related letters of credit would have the terms specified in
2<PAGE>
paragraph C(3) above. The aggregate amount of such guarantees,
liabilities assumed and reimbursement agreements entered into
pursuant to the authorization herein requested, together with the
amount invested in Subsidiary Companies as set forth above in
paragraph B, would not exceed $200 million in the aggregate
outstanding at any one time.
(4) By Order dated July 6, 1994, 68 FERC Paragraph
61,023, the Federal Energy Regulatory Commission ("FERC")
determined EI Power, Inc. ("EI Power"), a wholly owned subsidiary
of GPU, to be an EWG. EI Power was organized to acquire
interests in other EWGs, own and/or operate eligible facilities,
as defined in Section 32 of the Act, and to engage in project
development activities for eligible facilities. Since EI Power
is itself an Exempt Entity, EI Power is not a "Subsidiary
Company" with respect to which GPU is requesting authorization
herein.
E. GPU would obtain the funds for any direct or indirect
investment in any Subsidiary Company or Exempt Entity from
available cash or as the Commission may otherwise authorize by
separate order. GPU is not requesting authority herein to issue
any additional securities for the purpose of funding the
acquisition of any Subsidiary Companies or Exempt Entities.
F. Any direct or indirect investment by GPU in any
Subsidiary Company would be made only if, at the time thereof and
after giving effect thereto, GPU's "aggregate investment,"
determined in accordance with Rule 53(a)(1)(i), in all FUCOs,
EWGs and Subsidiary Companies does not exceed 50% of GPU's
"consolidated retained earnings," as defined in Rule
53(a)(1)(ii). In addition, GPU will limit its direct and
indirect investment in any particular Subsidiary Company to an
amount which does not exceed that reasonably required in
connection with making the underlying investment in any Exempt
Entities with respect to which such Subsidiary Company was
organized or formed, taking into account development
expenditures, working capital needs, and cash reserves required
to be maintained in accordance with any related financing
agreements.
G. A Subsidiary Company may be organized as a domestic
corporation or under the laws of a foreign jurisdiction at or
prior to the time of, and in order to facilitate the making of
bids or proposals to acquire an interest in, an Exempt Entity;
after the award of a bid proposal, in order to facilitate closing
on the purchase or financing of any such Exempt Entity; or at any
time subsequent to the consummation of an acquisition of an
interest in an Exempt Entity. As mentioned above, GPU may
utilize a Subsidiary Company to facilitate its foreign investment
activities, including in order to comply with laws of a foreign
country that may require a bidder to be a domestic entity. In
addition, utilization of a wholly-owned Subsidiary Company may be
necessary to minimize U.S. income taxes, for example, by
deferring repatriation of foreign source income, or in order to
take full advantage of favorable tax treaties. Subsidiary
3<PAGE>
Companies may also be useful in cases where GPU bids as one of a
group of companies, since each member of the group would
typically desire there to be at least one consolidated subsidiary
in the ultimate FUCO ownership structure for tax and accounting
purposes. Subsidiary Companies can also be used to isolate
business risks and facilitate sales of interests by members of
the group.
H. Within 45 days after GPU determines that the purpose
for which any Subsidiary Company whose securities it has acquired
no longer exists (whether due to termination of a proposed
project acquisition, loss of a bid, change of law, or otherwise),
it shall (to the extent that it is able to do so) liquidate or
dissolve such Subsidiary Company, unless GPU determines that such
Subsidiary Company may be used in conjunction with a proposal or
plan to acquire an interest in a different Exempt Entity. To the
extent necessary, GPU hereby requests authority to liquidate or
dissolve any Subsidiary Company under such circumstances.
I. (1) GPU also requests authorization for each
Subsidiary Company to issue equity and debt securities to persons
other than GPU (and with respect to which there is no recourse to
GPU except to the extent GPU may guarantee payment of such
securities pursuant to the authorization herein requested),
including banks, insurance companies and other financial
institutions, exclusively for the purpose of financing or
refinancing investments in and project development activities for
Exempt Entities. Such securities may be issued in one or more
transactions from time to time through the earlier to occur of
(i) December 31, 1997, and (ii) the effective date of any rule or
regulation under the Act exempting such transactions from prior
Commission authorization.
(2) The aggregate principal amount of debt securities
issued by Subsidiary Companies to persons other than GPU will not
exceed $500 million at any one time outstanding. In any case in
which GPU directly or indirectly owns less than 100% of the
equity interests of a Subsidiary Company, only that portion of
the indebtedness of such Subsidiary Company equal to GPU's equity
ownership percentage shall be included for purposes of the
foregoing limitation.
(3) Equity securities issued by any Subsidiary Company
to a person other than GPU may include capital stock, partnership
interests, trust certificates, or other equity or participation
interests. Debt securities issued to persons other than GPU may
include secured and unsecured promissory notes, subordinated
notes, bonds, or other evidence of indebtedness. Securities
issued by Subsidiary Companies may be denominated in either U.S.
dollars or foreign currency.
J. (1) The amount and type of Subsidiary Company securi-
ties, and the terms thereof, including (in the case of any
indebtedness) interest rate, maturity, prepayment or redemption
privileges, and the terms of any collateral security granted with
4<PAGE>
respect thereto, would be negotiated on a case by case basis,
taking into account differences in debt-equity ratios,
projections of earnings and cash flow, depreciation lives, and
other similar financial and performance characteristics of each
project. Accordingly, GPU requests that it have the flexibility
to negotiate the terms and conditions of such securities without
further approval by the Commission.
(2) Notwithstanding the foregoing, no equity security
having a stated or par value would be issued or sold by a
Subsidiary Company for a consideration that is less than such
stated or par value; and any note, bond or other evidence of
indebtedness issued or sold by any Subsidiary Company will mature
not later than 30 years from the date of issuance thereof, and
will bear interest at a rate not in excess of the greater of
(A) if such note, bond or other indebtedness is U.S. dollar
denominated, the greater of (i) 250 basis points above the
greater of (a) the lending bank's or other recognized prime rate
and (b) 50 basis points above the federal funds rate, (ii) 400
basis points above the specified London Interbank Offered Rate
plus any applicable reserve requirement, or (ii) a negotiated
fixed rate which, in any event, would not exceed 500 basis points
above the 30 year "current coupon" treasury bond rate; and (B) if
such note, bond or other indebtedness is denominated in the
currency of a country other than the United States, at a fixed or
floating rate which, when adjusted (i.e., reduced) for the
prevailing rate of inflation in such country, as reported in
official indices published by such country, would be equivalent
to a rate on a U.S. dollar denominated borrowing of identical
average life that does not exceed 10% over the highest rate set
forth in (A) above.
K. In connection with the issuance of any securities by
any Subsidiary Company, it is anticipated that such Subsidiary
Company may grant a security interest in its assets. Such
security interest may take the form of a pledge of the shares or
other equity securities of an Exempt Entity that it owns,
including a security interest in any distributions from any such
Exempt Entity, and/or a collateral assignment of its rights under
and interests in other property, including rights under
contracts. It is also anticipated that fees in the form of
placement or commitment fees, or other similar fees, would be
paid to lenders, placement agents, or others in connection with
the issuance of any such securities. GPU requests authority for
any Subsidiary Company to agree in any case to pay placement or
commitment fees, and other similar fees, in connection with such
issuance, provided that the aggregate amount of any such fees (i)
payable at or about the time of the issuance of the securities
would not exceed 4% of the stated or principal amount thereof and
(ii) payable thereafter would not cause the effective annual
interest charge on such securities to exceed 115% of the stated
interest rate thereon.
L. (1) In connection with investments in Exempt Entities,
a portion of the capital requirements of any such Exempt Entity
5<PAGE>
would typically be obtained through non-recourse financing
involving borrowings from banks and other financial institutions.
In some cases, however, it may be necessary or desirable to
structure an investment in an Exempt Entity such that the
obligations created are not those of the Exempt Entity, but
instead those of its parent companies. For example, in a
consortium of non-affiliated companies bidding to purchase the
securities or assets of an EWG or FUCO, each of the consortium
members would ordinarily be obligated to fund its respective
share of the proposed purchase price. If external sources of
funds are needed for this purpose, a participant in the
consortium may choose to engage in non-recourse financing through
one or more single-purpose subsidiaries that would then utilize
the proceeds of the financing to acquire an ownership interest in
the Exempt Entity.(1)
(2) GPU believes that external financing by any
Subsidiary Company as described above involves the same issues
that are involved when the financing is carried out by an Exempt
Entity, in terms of the potential adverse impacts upon the
financial integrity of a registered holding company system.
Accordingly, where the proceeds of any such financing (including
any refinancing) are utilized to make an investment in any Exempt
Entity, and there is no recourse directly or indirectly to GPU
with respect to the securities issued or sold, there is no basis
for any adverse findings under Sections 6, 7 and 12 of the Act,
provided that, at the time of the issuance thereof, GPU is in
compliance with Rule 53.
M. GPU submits that all of the criteria of Rules 53
and 54 under the Act with respect to the proposed transactions
are satisfied.
(i) The average consolidated retained earnings
for GPU and its subsidiaries, as reported for the four
most recent quarterly periods in GPU's Annual Report on
Form 10-K for the year ended December 31, 1994 and
Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1994, June 30, 1994 and March 31, 1994,
as filed under the Securities Exchange Act of 1934, was
approximately $1.815 billion. At the date hereof, GPU
had invested, or committed to invest, directly or
indirectly, an aggregate of approximately $15 million
in EWGs and $0 in FUCOs. Accordingly, GPU's investment
in EWGs and FUCOs, assuming (A) the entire $200 million
authorization requested herein and (B) all other
outstanding or pending authorizations ($200 million in
_____________________________
(1) Typically, the capital shares or other equity interests in
the Exempt Entity would be pledged to secure the securities
issued by the Subsidiary Company.
6<PAGE>
SEC File No. 70-7727, $30 million in SEC File No. 70-
8369, $130 million in SEC File No. 70-8455 and $200
million in SEC File No. 70-7926), is invested in EWGs
or FUCOs, would be approximately 43% of such average
consolidated retained earnings, which is below the 50%
limitation in Rule 53.
(ii) GPU maintains books and records to identify
investments in, and earnings from, each EWG and FUCO in
which it directly or indirectly holds an interest. (A)
For each United States EWG in which GPU directly or
indirectly holds an interest:
(1) the books and records for such EWG
will be kept in conformity with United States
generally accepted accounting principles ("GAAP");
(2) the financial statements will be
prepared in accordance with the GAAP; and
(3) GPU directly or through its subsid-
iaries undertakes to provide the Commission access
to such books and records and financial statements
as the Commission may request.
(B) For each FUCO or foreign EWG which is a
majority-owned subsidiary of GPU:
(1) the books and records for such
subsidiary will be kept in accordance with GAAP;
(2) the financial statements for such
subsidiary will be prepared in accordance with
GAAP; and
(3) GPU directly or through its subsid-
iaries undertakes to provide the Commission access
to such books and records and financial
statements, or copies thereof in English, as the
Commission may request.
(C) For each FUCO or foreign EWG in which
GPU owns 50% or less of the voting securities, GPU directly
or through its subsidiaries will proceed in good faith, to
the extent reasonable under the circumstances, to cause
(1) such entity to maintain books and
records in accordance with GAAP;
(2) the financial statements of such entity
to be prepared in accordance with GAAP; and
(3) access by the Commission to such books
and records and financial statements (or copies
thereof) in English as the Commission may request
7<PAGE>
and, in any event, GPU will provide the Commission
on request copies of such materials as are made
available to GPU and its subsidiaries. If and to
the extent that such entity's books, records or
financial statements are not maintained in accor-
dance with GAAP, GPU will, upon request of the
Commission, describe and quantify each material
variation therefrom as and to the extent required
by subparagraphs (a) (2) (iii) (A) and (a) (2)
(iii) (B) of Rule 53.
(iii) No more than 2% of GPU's domestic public
utility subsidiary employees will render any services,
directly or indirectly, to EWGs and FUCOs in which GPU
directly or indirectly holds an interest.
(iv) Copies of this Application on Form U-1 are
being provided to the New Jersey Board of Public Utilities,
the Pennsylvania Public Utility Commission and the New York
Public Service Commission, the only federal, state or local
regulatory agencies having jurisdiction over the retail
rates of GPU's electric utility subsidiaries. In addition,
GPU will submit to each such commission copies of any Rule
24 certificates required hereunder, as well as a copy of
Item 9 of GPU's Form U5S and Exhibits G and H thereof
(commencing with the Form U5S to be filed for the calendar
year in which the authorization herein requested is
granted).
(v) None of the provisions of paragraph (b) of
Rule 53 render paragraph (a) of that Rule unavailable for
the proposed transactions.
(A) Neither GPU nor any subsidiary of GPU is
the subject of any pending bankruptcy or similar
proceeding.
(B) GPU's average consolidated retained
earnings for the four most recent quarterly
periods (approximately $1.815 billion) represented
an increase of approximately $2 million in the
average consolidated retained earnings for the
previous four quarterly periods (approximately
$1.813 billion).
(C) GPU did not incur operating losses from
direct or indirect investments in EWGs and FUCOs
in 1994 in excess of 5% of GPU's December 31, 1994
consolidated retained earnings.
8<PAGE>
2. By filing the following Exhibit in Item 6 thereof:
(a) Exhibits:
H - Revised form of public notice.
9<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANY HAS DULY
CAUSED THIS STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDER-
SIGNED THEREUNTO DULY AUTHORIZED.
GENERAL PUBLIC UTILITIES CORPORATION
By: ________________________________
T.G. Howson
Vice President and Treasurer
Date: March 22, 1995<PAGE>
EXHIBIT TO BE FILED BY EDGAR
Exhibit:
H - Revised form of public notice<PAGE>
EXHIBIT H
General Public Utilities Corporation (70-______)
General Public Utilities Corporation ("GPU"), 100 Interpace
Parkway, Parsippany, New Jersey 07054, a registered holding
company, has filed an Application on Form U-1 under Sections
6(a), 7, 9(a), 10 and 12(b) of the Act and Rules 46 and 53
thereunder.
GPU proposes to acquire and hold the interests or securities
of one or more foreign utility companies ("FUCOs") and exempt
wholesale generators ("EWGs") (each, an "Exempt Entity"), as
defined in Sections 32 and 33 of the Act, indirectly through
subsidiary companies of GPU which are not themselves Exempt
Entities (each, a "Subsidiary Company"). Each Subsidiary Company
will be engaged, directly or indirectly, and exclusively, in the
business of owning and holding the interests and securities of
one or more Exempt Entities, and in project development
activities relating to the acquisition of such interests and
securities and the underlying projects. GPU believes that the
acquisition of the securities of an Exempt Entity indirectly
through a Subsidiary Company may facilitate, among other things,
compliance with applicable laws of foreign jurisdictions limiting
or otherwise relating to the ownership of domestic companies by
foreign nationals; tax planning of the transaction; a partial
sale of an interest in any Exempt Entity; and other lawful
purposes.
1<PAGE>
Accordingly, GPU proposes to acquire the securities of one
or more Subsidiary Companies from time to time. Such securities
may take the form of capital stock or shares, trust certificates,
partnership interests or other equity or participation interests.
GPU further proposes to make investments in one or more
Subsidiary Companies from time to time through December 31, 1997
in an aggregate amount of up to $200 million. Such investments
may take the form of cash capital contributions or open account
advances; loans evidenced by promissory notes; guarantees by GPU
of the principal of, or interest on, any promissory notes or
other evidences of indebtedness or obligations of any Subsidiary
Company, or of GPU's undertaking to contribute equity to a
Subsidiary Company; assumption of liabilities of a Subsidiary
Company; and reimbursement agreements with banks entered into to
support letters of credit delivered as security for GPU's equity
contribution obligation to a Subsidiary Company or otherwise in
connection with a Subsidiary Company's project development
activities.
Any investment in the capital stock or other equity
securities of a Subsidiary Company having a stated or par value
will be in an amount equal to or greater than such stated or par
value, and any open account advance made by GPU will be non-
interest bearing and repayable within one year of the date of the
advance. Any promissory note issued by a Subsidiary Company to
GPU, and any promissory note or similar evidence of indebtedness
issued by a Subsidiary Company to a person other than GPU with
respect to which GPU may issue a guarantee, would mature not
2<PAGE>
later than 30 years after the date of issuance thereof, and would
bear interest at a rate (a) not greater than the prime rate at a
bank to be designated by GPU in the case of any promissory note
issued to GPU, and (b) in the case of any note or similar
evidence of indebtedness issued to a person other than GPU and
guaranteed by GPU, not in excess of the rates proposed below for
borrowings by Subsidiary Companies.
Any promissory note issued to GPU by any Subsidiary Company
may, at GPU's option, be converted to a capital contribution to
such Subsidiary Company through GPU's forgiveness of the
indebtedness evidenced thereby. Any reimbursement agreement
supporting a letter of credit would have a term not in excess of
30 years. Drawings under any such letter of credit would bear
interest at not more than 5% above the prime rate of the letter
of credit bank as in effect from time to time, and letter of
credit fees would not exceed 1% annually of the face amount of
the letter of credit.
GPU also proposes from time to time through December 31,
1997, to (i) guarantee the indebtedness or other obligations of
one or more Exempt Entities; (ii) assume liabilities of one or
more Exempt Entities; and (iii) enter into guarantees and letter
of credit reimbursement agreements in support of equity
contribution obligations or otherwise in connection with project
development activities for one or more Exempt Entities. Any such
guarantees, reimbursement agreements and related letters of
credit would have the terms specified above for Subsidiary
3<PAGE>
Company obligations. The aggregate amount of such guarantees,
liabilities assumed and reimbursement agreements entered into
pursuant to the authorization herein requested, together with the
amount invested in Subsidiary Companies, would not exceed $200
million in the aggregate outstanding at any one time.
GPU would obtain the funds for any direct or indirect
investment in any Subsidiary Company or Exempt Entity from
available cash or as the Commission may otherwise authorize by
separate order. GPU is not requesting authority to issue any
additional securities in this Application for the purpose of
funding the acquisition of any Subsidiary Companies or Exempt
Entities.
Any direct or indirect investment by GPU in any Subsidiary
Company would be made only if, at the time thereof and after
giving effect thereto, GPU's "aggregate investment," determined
in accordance with Rule 53(a)(1)(i), in all FUCOs, EWGs and
Subsidiary Companies does not exceed 50% of GPU's "consolidated
retained earnings," as defined in Rule 53(a)(1)(ii). In
addition, GPU will limit its direct and indirect investment in
any particular Subsidiary Company to an amount which does not
exceed that reasonably required in connection with making the
underlying investment in any Exempt Entities with respect to
which such Subsidiary Company was organized or formed, taking
4<PAGE>
into account development expenditures, working capital needs, and
cash reserves required to be maintained in accordance with any
related financing agreements.
A Subsidiary Company may be organized as a domestic
corporation or under the laws of a foreign jurisdiction at or
prior to the time of, and in order to facilitate the making of
bids or proposals to acquire an interest in, an Exempt Entity;
after the award of a bid proposal, in order to facilitate closing
on the purchase or financing of any such Exempt Entity; or at any
time subsequent to the consummation of an acquisition of an
interest in an Exempt Entity. As mentioned above, GPU may
utilize a Subsidiary Company to facilitate its foreign investment
activities, including in order to comply with laws of a foreign
country that may require a bidder to be a domestic entity. In
addition, utilization of a wholly-owned Subsidiary Company may be
necessary to minimize U.S. income taxes, for example, by
deferring repatriation of foreign source income, or in order to
take full advantage of favorable tax treaties. Subsidiary
Companies may also be useful in cases where GPU bids as one of a
group of companies, since each member of the group would
typically desire there to be at least one consolidated subsidiary
in the ultimate FUCO ownership structure for tax and accounting
purposes. Subsidiary Companies can also be used to isolate
business risks and facilitate sales of interests by members of
the group.
Within 45 days after GPU determines that the purpose for
which any Subsidiary Company whose securities it has acquired no
5<PAGE>
longer exists (whether due to termination of a proposed project
acquisition, loss of a bid, change of law, or otherwise), it
shall (to the extent that it is able to do so) liquidate or
dissolve such Subsidiary Company, unless GPU determines that such
Subsidiary Company may be used in conjunction with a proposal or
plan to acquire an interest in a different Exempt Entity. To the
extent necessary, GPU also requests authority to liquidate or
dissolve any Subsidiary Company under such circumstances.
GPU also requests authorization for each Subsidiary Company
to issue equity and debt securities to persons other than GPU
(and with respect to which there is no recourse to GPU except to
the extent GPU may guarantee payment of such securities pursuant
to the authorization herein requested), including banks,
insurance companies and other financial institutions, exclusively
for the purpose of financing or refinancing investments in and
project development activities for Exempt Entities. Such
securities may be issued in one or more transactions from time to
time through the earlier to occur of (i) December 31, 1997, and
(ii) the effective date of any rule or regulation under the Act
exempting such transactions from prior Commission authorization.
The aggregate principal amount of debt securities issued by
Subsidiary Companies to persons other than GPU will not exceed
$500 million at any one time outstanding. In any case in which
GPU directly or indirectly owns less than 100% of the equity
interests of a Subsidiary Company, only that portion of the
6<PAGE>
indebtedness of such Subsidiary Company equal to GPU's equity
ownership percentage shall be included for purposes of the
foregoing limitation. Equity securities issued by any Subsidiary
Company to a person other than GPU may include capital stock,
partnership interests, trust certificates, or other equity or
participation interests. Debt securities issued to persons other
than GPU may include secured and unsecured promissory notes,
subordinated notes, bonds, or other evidence of indebtedness.
Securities issued by Subsidiary Companies may be denominated in
either U.S. dollars or foreign currency.
The amount and type of Subsidiary Company securities, and
the terms thereof, including (in the case of any indebtedness)
interest rate, maturity, prepayment or redemption privileges, and
the terms of any collateral security granted with respect
thereto, would be negotiated on a case by case basis, taking into
account differences in debt-equity ratios, projections of
earnings and cash flow, depreciation lives, and other similar
financial and performance characteristics of each project.
Accordingly, GPU requests that it have the flexibility to
negotiate the terms and conditions of such securities without
further approval by the Commission.
Notwithstanding the foregoing, no equity security having a
stated or par value would be issued or sold by a Subsidiary
Company for a consideration that is less than such stated or par
value; and any note, bond or other evidence of indebtedness
issued or sold by any Subsidiary Company will mature not later
7<PAGE>
than 30 years from the date of issuance thereof, and will bear
interest at a rate not in excess of the greater of (A) if such
note, bond or other indebtedness is U.S. dollar denominated, the
greater of (i) 250 basis points above the greater of (a) the
lending bank's or other recognized prime rate and (b) 50 basis
points above the federal funds rate, (ii) 400 basis points above
the specified London Interbank Offered Rate plus any applicable
reserve requirement, or (ii) a negotiated fixed rate which, in
any event, would not exceed 500 basis points above the 30 year
"current coupon" treasury bond rate; and (B) if such note, bond
or other indebtedness is denominated in the currency of a country
other than the United States, at a fixed or floating rate which,
when adjusted (i.e., reduced) for the prevailing rate of
inflation in such country, as reported in official indices
published by such country, would be equivalent to a rate on a
U.S. dollar denominated borrowing of identical average life that
does not exceed 10% over the highest rate set forth in (A) above.
In connection with the issuance of any securities by any
Subsidiary Company, it is anticipated that such Subsidiary
Company may grant a security interest in its assets. Such
security interest may take the form of a pledge of the shares or
other equity securities of an Exempt Entity that it owns,
including a security interest in any distributions from any such
Exempt Entity, and/or a collateral assignment of its rights under
and interests in other property, including rights under
contracts. It is also anticipated that fees in the form of
placement or commitment fees, or other similar fees, would be
8<PAGE>
paid to lenders, placement agents, or others in connection with
the issuance of any such securities. GPU requests authority for
any Subsidiary Company to agree in any case to pay placement or
commitment fees, and other similar fees, in connection with such
issuance, provided that the aggregate amount of any such fees (i)
payable at or about the time of the issuance of the securities
would not exceed 4% of the stated or principal amount thereof and
(ii) payable thereafter would not cause the effective annual
interest charge on such securities to exceed 115% of the stated
interest rate thereon.
GPU submits that all of the criteria of Rules 53 and 54
under the Act with respect to the proposed transactions are
satisfied.
Interested persons wishing to comment or request a hearing
on the Application should submit their views in writing by
_______________, 1995 to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549, and serve a copy on the
applicant at the address specified above. Proof of service (by
affidavit or, in the 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, as
filed or as amended, may be granted.
9<PAGE>
