Post Effective Amendment No. 10
to SEC File No. 70-7926
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-l
DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
GPU, INC.("GPU")
100 Interpace Parkway
Parsippany, New Jersey 07054
JERSEY CENTRAL POWER & LIGHT COMPANY ("JCP&L")
METROPOLITAN EDISON COMPANY ("Met-Ed")
PENNSYLVANIA ELECTRIC COMPANY ("Penelec")
2800 Pottsville Pike
Reading, Pennsylvania 19640
(Names of companies filing this statement and
address of principal executive offices)
GPU, INC.
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(Name of top registered holding company parent of applicants)
T.G. Howson, Vice President and Douglas E. Davidson, Esq.
Treasurer Berlack, Israels & Liberman LLP
M.A. Nalaweko, Secretary 120 West 45th Street
GPU Service, Inc. New York, New York 10036
100 Interpace Parkway
Parsippany, New Jersey 07054
S.L. Guibord, Secretary W. Edwin Ogden, Esq.
Jersey Central Power & Light Ryan, Russell, Ogden &
Company Seltzer LLP
Metropolitan Edison Company 1100 Berkshire Blvd.
Pennsylvania Electric Company Suite 301
2800 Pottsville Pike Reading, Pennsylvania
Reading, Pennsylvania 19640 19610-1221
Robert C. Gerlach, Esq.
Ballard Spahr Adnrews & Ingersoll
1735 Market Street
Philadelphia, Pennsylvania 19103
----------------------------------------------------------------
(Names and addresses of agents for service)
<PAGE>
GPU, JCP&L, Met-Ed and Penelec (the "GPU Companies") hereby
post-effectively amend their Declaration on Form U-1, docketed in
SEC File No. 70-7926, as heretofore amended, as follows:
1. By amending paragraph E of Post-Effective Amendment No.
8 to read in its entirety follows:
E. Rule 53 Analysis. (i) As described below, GPU
meets all of the conditions of Rule 53, except for Rule 53(a)(1).
By Order dated November 5, 1997, (HCAR No. 35-26773) (the "100%
Order"), the Commission authorized GPU to increase to 100% of
average consolidated retained earnings, as defined in Rule 53,
the aggregate amount which it may invest in EWGs and FUCOs. At
September 30, 1997, GPU's average consolidated retained earnings
was approximately $2,164 million, and at November 6, 1997 (after
giving effect to the acquisition of PowerNet Victoria) GPU's
aggregate investment in EWGs and FUCOs was approximately $1,430
million, or 66% of average consolidated retained earnings.
Accordingly, under the 100% Order, GPU may invest up to an
additional $734 million in EWGs and FUCOs. GPU will not utilize
the debt authorization requested herein for purposes of financing
investments in EWGs or FUCOs (or any other authorization under
Rule 53 which would increase GPU's aggregate investment in EWGs
and FUCOs) if it would result in GPU's aggregate investment
exceeding the limitation set forth in the 100% Order, without
prior Commission authorization.
(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
<PAGE>
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 subsidiaries
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 subsidiaries
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
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<PAGE>
and financial statements (or copies thereof) in English
as the Commission may request 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 accordance 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 any EWG and FUCO in which GPU directly
or indirectly holds an interest.
(iv) Copies of this Declaration on Form U-1 are
being provided to the New Jersey Board of Public
Utilities and the Pennsylvania Public Utility
Commission, the only federal, state or local
regulatory agencies having jurisdiction over the retail rates of
GPU's electric utility subsidiaries.(1) 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 H and I 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
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<PAGE>
any pending bankruptcy or similar proceeding.
(B) GPU's average consolidated retained earnings for the
four most recent quarterly periods (approximately $2,164 million)
represented an increase of approximately $22 million in the
average consolidated retained earnings for the previous four
quarterly periods (approximately $2,142 million).
(C) GPU did not incur operating losses from direct or
indirect investments in EWGs and FUCOs in 1996 in excess of 5% of
GPU's December 31, 1996 consolidated retained earnings.
Rule 54 Analysis. The proposed transactions also
contemplate, among other things, the issuance by the GPU
Companies of debt in connection with transactions which do not
relate to EWGs and FUCOs (the "Other Transactions").
Accordingly, the Other Transactions are subject to Rule 54, which
provides that, in determining whether to approve an application
which does not relate to any EWG or FUCO, the Commission shall
not consider the effect of the capitalization or earnings of any
such EWG or FUCO which is a subsidiary of a registered holding
company if the requirements of Rule 53 (a), (b) and (c) are
satisfied.
As described above, GPU meets all the conditions of Rule
53(a), except for clause (1). With respect to clause (1), the
Commission determined in the 100% Order that GPU's financing of
investments in EWGs and FUCOs in an amount greater than 50% of
GPU's average consolidated retained earnings as otherwise
permitted by Rule 53(a)(1) would not have either of the adverse
effects set forth in Rule 53(c).
Moreover, even if the effect of the capitalization and
earnings of subsidiary EWGs and FUCOs were considered, there is no
4
<PAGE>
basis for the Commission to withhold or deny approval for the
Other Transactions proposed in this Application. The Other
Transactions would not, by themselves, or even considered in
conjunction with the effect of the capitalization and earnings of
GPU's subsidiary EWGs and FUCOs, have a material adverse effect
on the financial integrity of the GPU system, or an adverse
impact on GPU's public utility subsidiaries, their customers, or
the ability of State commissions to protect such public utility
customers.
The 100% Order was predicated, in part, upon the assessment
of GPU's overall financial condition which took into account,
among other factors, GPU s consolidated capitalization ratio and
the recent growth trend in GPU s retained earnings. As of June
30, 1997, the most recent period for which financial statement
information was evaluated in the 100% Order, GPU's consolidated
capitalization consisted of 49.2% equity and 50.8% debt. As
previously reported, on November 6, 1997, GPU acquired PowerNet
Victoria. GPU's June 30, 1997 pro forma capitalization,
reflecting the PowerNet acquisition, was 60.7% debt and 39.3%
equity.
GPU's September 30, 1997 consolidated capitalization
consists of 50.5% debt and 49.5% equity, and GPU's pro forma
capitalization as of such date, giving effect to the PowerNet
acquisition, is 59.9% debt and 40.1% equity. Thus, since the
date of the 100% Order, there has been no material change in
GPU's consolidated capitalization ratio, which remains within
acceptable ranges and limits as evidenced by the credit ratings
of GPU's electric utility subsidiaries.(2)
The authorization requested herein is for an extension of
the period during which the GPU Companies may issue short-term
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<PAGE>
debt, which authorization was in effect at the time of the
issuance of the 100% Order. Furthermore, as indicated in Exhibit
H hereto, the proposed transactions are not expected to have a
significant effect on GPU's capitalization ratio. On a pro forma
basis, after giving effect to the proposed transactions and the
PowerNet acquisition, GPU's capitalization ratio would be 61.8%
debt and 38.2% equity, as shown in Exhibit H filed hereto.
GPU's consolidated retained earnings grew on average
approximately 4.7% per year from 1991 through 1996. Earnings
attributable to GPU's investments in EWGs and FUCOs have
contributed positively to consolidated earnings, excluding the
impact of the windfall profits tax on the Midlands Electricity,
plc investment.(3)
Accordingly, since the date of the 100% Order, the
capitalization and earnings attributable to GPU's investments in
EWGs and FUCOs has not had any adverse impact on GPU's financial
integrity. Furthermore, as indicated on the earnings summary
filed in Exhibit H hereto, the proposed transactions will not
materially impact GPU's earnings.
2. By amending paragraph F to read in its entirety as
follows:
F. The estimated fees, commissions and expenses expected
to be incurred by the GPU Companies in connection with the
proposed transactions will be as follows:
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<PAGE>
Legal Fees:
Berlack, Israels & Liberman LLP $5,000
Ballard Spahr Andrews &
Ingersoll 500
Ryan, Russell, Ogden &
Seltzer LLP 500
---
Miscellaneous 500
---
Total: $6,500
======
3. The following exhibits are filed in Item 6 thereof:
F-1(c)- Opinion of Berlack, Israels & Liberman LLP.
F-2(c)- Opinion of Ryan, Russell, Ogden & Seltzer.
F-3(c)- Opinion of Ballard Spahr Andrews &
Ingersoll.
H - GPU Capitalization and Earnings Statement as at
September 30, 1997 and pro forma adjustments.
7
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY HOLDING
COMPANY ACT OF 1935, THE UNDERSIGNED COMPANIES HAVE DULY CAUSED THIS
STATEMENT TO BE SIGNED ON THEIR BEHALF BY THE UNDERSIGNED THEREUNTO
DULY AUTHORIZED.
GPU, INC.
JERSEY CENTRAL POWER & LIGHT COMPANY
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY
By:_______________________________
T. G. Howson
Vice President and Treasurer
Date: December 17, 1997
8
<PAGE>
1 Penelec is also subject to retail rate regulation by the New York
Public Service Commission with respect to retail service to York
Public Service Commission with respect to retail service to
approximately 11,300 customers in Waverly, New York served by Waverly
electric Power & Light Company, a Penelec subsidiary. Waverly
electric's revenues are immaterial, accounting for less than 1% of
Penelec's total operating revenues.
2 The debt ratings of GPU's electric utility subsidiaries have not
changed since the issuance of the 100% Order.
3 As discussed in the 100% Order, GPU expects to incur a loss for
1997 from its investments in EWGs and FUCOs as a result of the
windfall profits tax imposed on Midlands electricity, plc.
9
EXHIBIT F-1(c)
--------------
December 17, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: GPU, Inc.
Jersey Central Power & Light Company
Metropolitan Edison Company
Pennsylvania Electric Company
Declaration on Form U-1
SEC File No. 70-7926
--------------------
Ladies and Gentlemen:
We have examined Post-Effective Amendment No. 8, dated October
27, 1997, to the Declaration on Form U-1, dated December 24, 1991, as
amended, under the Public Utility Holding Company Act of 1935 (the
"Act"), of GPU, Inc. ("GPU"), Jersey Central Power & Light Company
("JCP&L"), Metropolitan Edison Company ("Met-Ed") and Pennsylvania
Electric Company ("Penelec") collectively referred to herein as the
"GPU Companies"), which has been docketed in SEC File No. 70-7926, as
amended by Post- Effective Amendment No. 9 thereto, dated November 20,
1997, and as to be amended by Post-Effective Amendment No. 10 thereto,
dated this date, of which this opinion is to be a part. (The
Declaration, as so amended and as thus to be amended, is hereinafter
referred to as the "Declaration".)
The Declaration now contemplates the issuance, sale and/or
renewal, through December 31, 2000, (i) by the GPU Companies of
unsecured promissory notes ("Bank Notes") to various commercial banks
pursuant to loan participation arrangements and lines of credit, (ii)
by JCP&L, Met-Ed and Penelec of their unsecured promissory notes as
commercial paper ("Commercial Paper"), and (iii) by the GPU Companies
of their unsecured promissory notes ("Unsecured Notes") evidencing
short-term borrowings from lenders including banks, insurance
companies or other institutions. The total principal amount of
borrowings outstanding at any one time under the Bank Notes,
Commercial Paper and Unsecured Notes together with all other
borrowings contemplated by the Declaration, would not, however,
10
<PAGE>
exceed the amounts permitted by the respective charters of JCP&L,
Met-Ed and Penelec and, in the case of GPU, $250,000,000.
We have been counsel to GPU, a Pennsylvania corporation, for many
years. In such capacity, and as special counsel to GPU's subsidiaries,
JCP&L, Met-Ed and Penelec, we have participated in various proceedings
relating to the GPU Companies and we are familiar with the terms of
the outstanding securities of the holding company system.
In addition to the matters set forth in our previous opinion
dated July 16, 1996 and filed as Exhibit F-1(b) to the Declaration, we
have examined a copy of the Commission's Orders dated October 26, 1994
and July 17, 1996, permitting the Declaration, each as then amended,
to become effective.
In addition, we have examined such corporate records, documents
and certificates as we have deemed necessary as a basis for this
opinion.
As to matters of Pennsylvania law insofar as it applies to the
transactions contemplated by Met-Ed, we have relied upon the opinion
of Ryan, Russell, Ogden & Seltzer LLP, which is being filed as Exhibit
F-2(c) to the Declaration. As to all other matters of Pennsylvania
law, we have relied upon the opinion of Ballard Spahr Andrews &
Ingersoll, which is being filed as Exhibit F-3(c) to the Declaration.
Based upon the foregoing, we are of the opinion that, subject to
the conditions specified in the following paragraph:
(a) all State laws applicable to the proposed transactions
as contemplated in the Declaration will have been complied with;
(b) GPU, JCP&L, Met-Ed and Penelec are each validly
organized and duly existing;
(c) the Bank Notes, the Commercial Paper and the Unsecured
Notes will each be valid and binding obligations of the
respective issuers thereof in accordance with their respective
terms, subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
(including, without limitation, the Atomic Energy Act of 1954, as
amended, and the regulations thereunder) affecting creditors'
rights generally; and
(d) the issuance of the Bank Notes, the Commercial Paper and the
Unsecured Notes will not violate the legal rights of the holders of
any securities issued by any of the GPU Companies or any company
which is an "associate company" thereof, as defined in the Act.
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<PAGE>
The foregoing opinions assume the following conditions shall have been
satisfied:
(1) the Commission shall have entered an appropriate order
forthwith permitting the Declaration, as amended, to become effective;
and
(2) the appropriate officers of each of the GPU Companies shall,
on their respective behalves, have issued and sold to the extent
contemplated by the Declaration, the Bank Notes, the Commercial Paper
and the Unsecured Notes against the receipt of cash or renewal thereof
equal to the principal amount thereof, each of which (i) is issued,
sold or renewed in accordance with the terms and under the conditions
set forth in the Declaration, (ii) is issued and sold under
circumstances which are permitted under Section 12(f) of the Act and
paragraph (b)(2) of Rule 70 under the Act, and (iii) together with all
other notes and drafts representing unsecured borrowings at the time
the outstanding does not exceed, in the case of JCP&L, Met-Ed and
Penelec, such amounts as may be imposed by their respective charters.
We hereby consent to the filing of this opinion as an
exhibit to the Declaration and in any proceedings before the
Commission that may be held in connection therewith.
Very truly yours,
BERLACK, ISRAELS & LIBERMAN LLP
12
Exhibit F-2(c)
--------------
December 17, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Metropolitan Edison Company
Declaration on Form U-1
SEC File No. 70-7926
--------------------
Ladies and Gentlemen:
On behalf of Metropolitan Edison Company ("Met-Ed"), we have
examined the above Declaration on Form U-1, dated December 24, 1991,
as amended, under the Public Utility Holding Company Act of 1935 (the
"Act"), of GPU, Inc. ("GPU"), Jersey Central Power & Light Company
("JCP&L"), Met-Ed and Pennsylvania Electric Company ("Penelec")
(collectively referred to herein as the "GPU Companies"), which has
been docketed in SEC File No. 70-7926, as amended by Post-Effective
Amendment No. 8 thereto, dated October 27, 1997, and Post-Effective
Amendment No. 9 thereto, dated November 20, 1997, and as to be amended
by Post-Effective Amendment No. 10 thereto, dated this date, of which
this opinion is to be a part. (The Declaration, as so amended and as
thus to be amended, is hereinafter referred to as the "Declaration".)
The Declaration now contemplates the issuance, sale and/or
renewal, through December 31, 2000, (i) by the GPU Companies of
unsecured promissory notes ( Bank Notes ) to various commercial banks
pursuant to loan participation arrangements and lines of credit, (ii)
by JCP&L, Met-Ed and Penelec of their unsecured promissory notes as
commercial paper ( Commercial Paper ), and (iii) by the GPU Companies
of their unsecured promissory notes ( Unsecured Notes ) evidencing
short-term borrowings from lenders including banks, insurance
companies or other institutions. The total principal amount of
borrowings outstanding at any one time under the Bank Notes,
Commercial Paper and Unsecured Notes together with all other
borrowings contemplated by the Declaration, would not, however, exceed
the amounts permitted by the respective charters of JCP&L, Met-Ed and
Penelec and, in the case of GPU, $250,000,000.
13
<PAGE>
We have been counsel to Met-Ed, a Pennsylvania corporation,
for many years. In such capacity, we have participated in various
proceedings relating to Met-Ed and we are familiar with the terms of
the outstanding Met-Ed securities.
In addition to the matters set forth in our previous opinion
dated July 16, 1996 and filed as Exhibit F-2(b) to the Declaration, we
have examined a copy of the Commission's Orders, dated October 26,
1994 and July 17, 1996, permitting the Declaration, each as then
amended, to become effective. We have examined such corporate records,
minutes, documents and certificates as we have deemed necessary as a
basis for this opinion.
Based upon the foregoing, we are of the opinion that,
subject to the conditions specified in the following paragraph:
(a) all State laws applicable to the proposed transactions
on the part of Met-Ed as contemplated in the Declaration will
have been complied with;
(b) Met-Ed is validly organized and duly existing;
(c) the Met-Ed Bank Notes, Commercial Paper and Unsecured
Notes will each be valid and binding obligations of Met-Ed in
accordance with their respective terms, subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws (including, without limitation, the Atomic
Energy Act of 1954, as amended, and the regulations thereunder)
affecting creditors' rights generally; and
(d) the issuance of the Met-Ed Bank Notes, Commercial Paper
and Unsecured Notes will not violate the legal rights of the
holders of any securities issued by Met-Ed.
The foregoing opinions assume that the following conditions
shall have been satisfied:
(1) the Commission shall have entered an appropriate order
forthwith permitting the Declaration, as amended, to become
effective; and
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(2) the appropriate officers of Met-Ed shall have issued and
sold, to the extent contemplated by the Declaration, the Met-Ed
Bank Notes, Commercial Paper and Unsecured Notes against the
receipt of cash or renewal thereof equal to the principal amount
thereof, each of which (i) is issued, sold or renewed in
accordance with the terms and under the conditions set forth in
the Declaration,(ii) is issued and sold under circumstances which
are permitted under Section 12(f) of the Act and paragraph (b)(2)
of Rule 70 under the Act, and (iii) together with all other notes
and drafts representing unsecured borrowings at the time
outstanding does not exceed, in the case of Met-Ed, the amount as
may be imposed by its charter.
We hereby consent to the filing of this opinion as an
exhibit to the Declaration and in any proceedings before the
Commission that may be held in connection therewith.
Very truly yours,
Ryan, Russell, Ogden & Seltzer LLP
15
Exhibit F-3(c)
--------------
December 17, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: GPU, Inc.
Jersey Central Power & Light Company
Metropolitan Edison Company
Pennsylvania Electric Company
Declaration on Form U-1
SEC File No. 70-7926
--------------------
Dear Sirs:
We have examined Post-Effective Amendment No. 8, dated
October 27, 1997, to the Declaration on Form U-1, dated December 24,
1991, as amended, under the Public Utility Holding Company Act of 1935
(the "Act"), of GPU, Inc. ("GPU"), Jersey Central Power & Light
Company ("JCP&L"), Metropolitan Edison Company ("Met-Ed") and
Pennsylvania Electric Company ("Penelec") (collectively referred to
herein as the "GPU Companies"), which has been docketed in SEC File
No. 70-7926, as amended by Post- Effective Amendment No. 9 thereto,
dated November 20, 1997, and as to be amended by Post-Effective
Amendment No. 10 thereto, dated this date, of which this opinion is to
be a part. (The Declaration, as so amended and as thus to be amended,
is hereinafter referred to as the "Declaration".)
The Declaration now contemplates the issuance, sale and/or
renewal, through December 31, 2000, (i) by the GPU Companies of
unsecured promissory notes ("Bank Notes") to various commercial banks
pursuant to loan participation arrangements and lines of credit, (ii)
by JCP&L, Met-Ed and Penelec of their unsecured promissory notes as
commercial paper ("Commercial Paper"), and (iii) by the GPU Companies
of their unsecured promissory notes ("Unsecured Notes") evidencing
short-term borrowings from lenders including banks, insurance
companies or other institutions. The total principal amount of
borrowings outstanding at any one time under the Bank Notes,
Commercial Paper and Unsecured Notes together with all other
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borrowings contemplated by the Declaration, would not, however,
exceed the amounts permitted by the respective charters of JCP&L,
Met-Ed and Penelec and, in the case of GPU, $250,000,000.
We have been counsel to Penelec, a Pennsylvania corporation,
for many years and are familiar with the terms of its outstanding
securities. We have also acted as Pennsylvania counsel in connection
with the transactions contemplated by the Declaration (a) to GPU, a
Pennsylvania corporation, and (b) to JCP&L, a New Jersey corporation
which is qualified to do business in Pennsylvania as a foreign
corporation and owns certain interests in utility facilities in
Pennsylvania.
Based upon the foregoing, we are of the opinion, insofar as
Pennsylvania law is concerned, that, subject to the conditions
specified in the following paragraph:
(a) all Pennsylvania laws applicable to the proposed
transactions by GPU, JCP&L and Penelec as contemplated in
the Declaration will have been complied with;
(b) GPU and Penelec are each validly organized
and duly existing;
(c) the Bank Notes, the Commercial Paper and the
Unsecured Notes to be issued by GPU and Penelec will each be
valid and binding obligations of the respective issuers
thereof in accordance with their respective terms, subject
to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws (including,
without limitation, the Atomic Energy Act of 1954, as
amended, and the regulations thereunder) affecting
creditors' rights generally; and
(d) the issuance of the Bank Notes, the Commercial
Paper and the Unsecured Notes will not violate the legal
rights of the holders of any securities issued by Penelec or
any of its subsidiaries.
The foregoing opinions assume the following conditions shall
have been satisfied:
(1) the Commission shall have entered an appropriate
order forthwith permitting the Declaration, as amended, to
become effective; and
(2) the appropriate officers of GPU and Penelec shall,
on their respective behalves, have issued and sold to the
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extent contemplated by the Declaration, the Bank Notes, the
Commercial Paper and the Unsecured Notes against the receipt
of cash or renewal thereof equal to the principal amount
thereof, each of which (i) is issued, sold or renewed in
accordance with the terms and under the conditions set forth
in the Declaration, (ii) is issued and sold under the
circumstances which are permitted under Section 12(f) of the
Act and paragraph (b)(2) of Rule 70 under the Act, and (iii)
together with all other notes and drafts representing
unsecured borrowings at the time outstanding does not
exceed, in the case of Penelec, the amount imposed by its
charter.
We hereby consent to the filing of this opinion as an
exhibit to the Declaration and in any proceedings before the
Commission that may be held in connection therewith.
Very truly yours,
BALLARD SPAHR ANDREWS & INGERSOLL
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<TABLE>
<CAPTION>
GPU, Inc. and Subsidiary Companies Exhibit H
Capitalization Ratios at September 30, 1997
(In Thousands)
Actual Actual Per 10-Q Pro Forma
Per 10-Q Pro Forma(1) Pro Forma(2) Equity Debt Equity Debt
-------- ------------ ------------ ------ ---- ------ ----
Capitalization:
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock $ 314,458 $ 314,458 $ 314,458
Capital surplus 753,082 753,082 753,082
Retained earnings 2,188,770 $ (17,879) 2,188,770 2,170,891
Reacquired common stock,
at cost (82,391) (82,391) (82,391)
Cumulative preferred stock
(incl. due within one yr.) 170,478 170,478 170,478
Subsidiary-obligated
mandatorily redeemable
preferred securities 330,000 330,000 330,000
Long-term debt (incl. due
within one year) 3,262,825 $ 1,830,000 $ 3,262,825 $ 5,092,825
Notes payable 334,685 50,000 437,900 334,685 822,585
------- ------ ------- ------- ------- ------- -------
Total (incl. due within
one year) $ 7,271,907 $ 1,880,000 $ 420,021 $3,674,397 $ 3,597,510 $ 3,656,518 $ 5,915,410
=========== =========== =========== ========== =========== ========== ===========
Capitalization Ratios: 100.0% 50.5% 49.5% 38.2% 61.8%
(1) To give effect to the November 1997 acquisition of PowerNet Victoria, for $1,880,000, which was financed through a
combination of recourse ($500,000) and non-recourse $1,380,000) debt.
(2) To give effect to the pro forma adjustments reflected in SEC File No.
70-7926, Post Effective Amendment No. 9. The decrease of $17.879 million
in retained earnings represents the net effect of the annual interest
expense and decrease in the provision for income taxes attributable to
the proposed issuance of $487.9 million in short-term borrowings. The
$437.9 million increase in notes payable represents the short-term
borrowings available under the companies respective charter limits,
after taking the $50 million in short-term borrowings for the PowerNet
purchase into account.
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</TABLE>
