Amendment No. 5 to
SEC File No.70-9565
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
GPU, INC. ("GPU")
300 Madison Avenue
Morristown, New Jersey 07960
(Name of company filing this statement and addresses
of principal executive offices)
GPU, INC.
(Name of top registered holding company parent of applicants)
T. G. Howson, Douglas E. Davidson, Esq.
Vice President and Treasurer Berlack, Israels & Liberman LLP
S. L. Guibord, Secretary 120 West 45th Street
GPU Service, Inc. New York, New York 10036
300 Madison Avenue
Morristown, New Jersey -07960
D. C. Brauer
Vice President
PGU Service, Inc.
300 Madison Avenue
Morristown, New Jersey 07960
(Names and addresses of agents for service)
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GPU hereby amends its Application on Form U-1, docketed in SEC File No.
70-9565, as heretofore amended, as follows:
1. By amending Item 1 thereof to read in its entirety as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
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A. GPU proposes to organize a new, wholly-owned subsidiary company,
("Newco"), as a Delaware corporation whose initial purpose will be to acquire
from time to time limited partner interests in EnerTech Capital Partners II,
L.P., a Delaware limited partnership formed pursuant to an Agreement of Limited
Partnership ("Partnership Agreement"), and any successor or affiliated limited
partnership having substantially similar investment objectives and terms
(EnerTech Capital Partners II, L.P. and all such successor or affiliated limited
partnerships are herein collectively referred to as the "EnerTech Partnership").
The interests to be acquired by Newco in any EnerTech Partnership will in the
aggregate not exceed $5 million.(1)
B. The targeted size of the EnerTech Partnership's investment pool
is $100 million, with a minimum commitment of $30 million necessary for an
initial closing (the "Initial Closing"). Additional commitments may be added
until the investment pool reaches a maximum not to exceed $150 million, unless
otherwise approved by a majority in interest of the Limited Partners. The
interests to be acquired by Newco will in the aggregate represent not more than
9.9% of the Limited Partner interests in any EnerTech Partnership.
C. The sole general partner of the EnerTech Partnership ("General
Partner") will be ECP II Management L.P., a Delaware limited partnership of
which EnerTech Capital Partners II LLC is the managing general partner. The
investments of the EnerTech Partnership will be managed by EnerTech Capital
Partners ("EnerTech"), a group of experienced investment professionals
associated with Safeguard Scientifics, Inc. and TL Ventures. EnerTech manages a
similar partnership which was formed in 1996 with $50,000,000 of capital and is
currently invested in twelve companies.
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(1) GPU has previously received Commission approval for investing in a
similar investment fund focusing on environmental technologies.
General Public Utilities Corporation, et al., HCAR No. 35-26230
--------------------------------------------
(File No. 70-8537) (February 8, 1995).
<PAGE>
1. Investment Objectives
The EnerTech Partnership is being formed to invest in companies
(each a "Portfolio Company") engaged in activities primarily related to the
electric and natural gas utilities and their convergence into the broader
energy, communications and other utility-like services industries. The EnerTech
Partnership will invest in companies (none of which will be an affiliate of GPU)
engaged in the development of technologies in one or more of the categories set
forth below.
a. Information Technology and Systems Integration.
----------------------------------------------
Continuing advances in information technology ("IT") will play a
significant role in the restructuring of the deregulated marketplace and will
present significant opportunities for superior investment returns resulting from
the application of these technologies to the changes in that marketplace.
Traditionally, many of the IT applications and systems in the utility industry
have been internally developed, resulting in long development cycles with little
flexibility and significant expense. Today, the utilities' increasing reliance
on IT solutions for competitive advantage is resulting in a commensurate
increase in the use of off-the-shelf solutions. The EnerTech Partnership's
managers expect to see a proliferation of new companies focused on innovative IT
solutions and services for this market. The managers are focusing their
attention on enterprise software and networking, CIS (customer information
system) and billing applications, data mining and analysis tools, systems
integration and support, and the transition to interactive e-commerce platforms.
Other examples include transmission scheduling and sales, transaction and risk
management and energy trading systems.
b. Communications and Networking.
-----------------------------
The evolution of the IT-enabled enterprise combined with the
convergence of energy and telecommunications services provides the EnerTech
Partnership with significant investment opportunities in communications and
networking. Given the utilities' significant size, financial strength and their
near-ubiquitous rights-of-way, the impact of utilities as both service providers
and consumers of communications services is substantial.
The Enertech Partnership's managers are focused on enabling
technologies for utility enterprise communications and
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also on the applications of e-commerce to the utilities and their customers.
Utilities are expected to look to e-commerce applications to cut costs, enhance
customer service, improve system capabilities, better manage their assets,
improve marketing capabilities and retain customers. Interactive communications
represent an opportunity for utilities to gather valuable information on
consumer demographics and preferences and to integrate this information with
real-time pricing and on-line analytical processing tools to develop new product
and sales strategies.
The EnerTech Partnership's investment opportunities in
communications are expected to include fixed communication and data networks,
building automation and controls, integration of voice and data networks, remote
connectivity, supply chain and managed infrastructure applications.
c. Customer Premise Products and Services.
--------------------------------------
As utilities search for new ways to retain and serve their current
customer base, the demand for innovative and competitive offerings will
increase. In order to retain and attract their most valuable asset, utilities
are actively seeking new products and services to bind them to their existing
customers. Bundled offerings increase the "switching" costs for customers, thus
providing a greater barrier to entry for competitors. In addition, a
competitive, multi-service offering will allow utilities to attract new
customers in a given service area and to compete in newly opened markets. Many
of these products and services will be offered by new entrants, providing
opportunities for entrepreneurial companies to compete directly or to
"private-label" their products and services into the home, office and industrial
markets.
Similar to the trends coming out of the deregulation of the
telephone industry, there has been a proliferation of new technologies, products
and services available to the utility customer. Examples include digital home
networks, electronic security alarm monitoring services, power quality and
efficiency devices, demand-side management tools, other energy conservation
devices and distributed generation technologies. The EnerTech Partnership's
managers expect to invest in companies developing new technologies and services
as well as in more traditional later stage opportunities, where economies of
scale and utility branding can leverage the EnerTech Partnership's
participation.
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Consumer premise products and services represent one of the largest
opportunities for the EnerTech Partnership's managers to leverage their
experience for the benefit of the EnerTech Partnership's investments in emerging
companies and new technologies. Selling to the utility or creating substantive
business relationships requires a fundamental understanding of the utility
business model and decision making process. The domain expertise and
relationships with utilities of the EnerTech Partnership's managers provides a
distinct advantage for investments in this area.
d. Industry Specific Content and Consulting Services.
-------------------------------------------------
Industries undergoing rapid and fundamental change invariably
require greater amounts of information and assistance from industry specific
service providers. Utility expenditures in 1998 for consulting services,
research and industry specific information are estimated to be $3 billion and
are expected to grow dramatically as deregulation continues. The EnerTech
Partnership's managers are proactively looking to invest in companies taking
advantage of this growing need for timely and focused information and are
pursuing opportunities in consulting, publishing, research and information
management services.
e. Asset Utilization and Efficiency Improvement.
--------------------------------------------
Many of today's utility infrastructure systems and equipment are
based on technologies designed and created in the mid-1990s. Furthermore, the
systems were designed and built for the purpose of providing "safe and reliable"
service. Since profits were based on the level of capital investment, this
historic focus on "safe and reliable" service resulted in redundant systems and
conservative engineering specifications. Many utilities are increasingly focused
on the optimal deployment of their infrastructure and are exploring strategies
that allow them to leverage their sizeable investments in fixed assets to
improve overall profitability.
As a result, a large market exists for companies that can help
utilities better utilize and increase the return on their existing
infrastructure. These are technologies and services that improve the efficiency,
speed, accuracy and flexibility of the utilities' physical infrastructure.
Today, these assets include power plants, communications networks, transmission
and distribution systems, rights-of-way and even the utility's substantial base
of human resources.
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Products and technologies that fall into this category include power
plant performance software and systems, distribution system automation,
automated mapping and facilities management, supervisory control and data
acquisition, system forecasting applications and work force management tools.
Additional services that can leverage the utility delivery infrastructure
include outage detection/notification, surge protection, power quality
monitoring, security monitoring, hazard detection, appliance monitoring,
electronic bill payment, messaging and many others.
In addition to the primary areas identified above, the EnerTech
Partnership's managers also expect to pursue investment opportunities arising
out of the utilities' response to increased competition and the resulting
reduction in margins. To counter these trends, utilities will focus on reducing
costs and increasing the operating performance of their generation and
distribution assets. Areas of expected interest will include alternative
generation technologies, power quality improvements, environmental remediation
processes, emission controls and waste disposal technologies.
2. Partnership Agreement.
---------------------
The term of the EnerTech Partnership will commence on the date of
the execution of the Partnership Agreement and will continue until December 31,
2009. The General Partner may extend the term for up to two one-year periods to
permit the orderly liquidation of the EnerTech Partnership's assets, upon
written consent of the Limited Partners holding a majority in interest of the
commitments of all Limited Partners. (Partnership Agreement, Sec. 1.4). The
Partnership Agreement provides that, not later than the date of becoming a
Limited Partner, each Limited Partner must contribute to the capital of the
EnerTech Partnership up to 5% of the capital commitment of such Limited Partner.
Thereafter, contributions will be made upon fifteen (15) days' notice, in
increments necessary to fund investments and operating expenses, up to a maximum
of 20% of total commitments being contributed per request. The General Partner
will contribute an amount equal to 1.0% of the total capital commitments of all
Limited Partners. The General Partner will make its capital commitments pari
passu with the capital contributions of the Limited Partners.
In addition, the General Partner, without the prior approval of a
majority in interest of the Limited Partners, may not cause or permit the
EnerTech Partnership to invest more than 15% of the EnerTech Partnership's total
capital commitments in the
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securities of any single Portfolio Company.(Partnership Agreement, Sec. 1.7(b)).
Subject to certain limitations set forth in the Partnership
Agreement, the management, operation and implementation of policy of the
EnerTech Partnership will be vested exclusively in the General Partner.
(Partnership Agreement, Sec. 2.1(a)). The General Partner may delegate certain
of its authority to an investment manager ("Investment Manager") pursuant to an
Investment Management Agreement. In addition, at the request of the General
Partner, a Limited Partner may provide advisory services to a Portfolio Company.
The EnerTech Partnership has an advisory board ("Advisory Board")
comprised of business leaders, professional advisors and industry visionaries.
Under the terms of the Partnership Agreement, the General Partner may remove any
member of the Advisory Board at any time, and may appoint new or additional
members from time to time. The Advisory Board will assist the General Partner in
evaluating potential investments and provide such other services as the General
Partner may from time to time request, but will have no authority to bind the
EnerTech Partnership or take part in its management. (Partnership Agreement,
Sec. 2.8).
The EnerTech Partnership will also have a valuation committee
("Valuation Committee"), which will consist of three representatives of the
Limited Partners, designated by the General Partner and approved by a majority
in interest of the Limited Partners. The Valuation Committee, among other
things, approves all valuations of securities by the General Partner and settles
all conflict of interest situations. Approval of the Valuation Committee will be
by a majority vote.
The Investment Manager will serve as the management company of the
EnerTech Partnership. The Investment Manager will be EnerTech Management L.L.C.,
a Delaware limited liability company. All of the individual members of the
General Partner's managing general partner will be officers of the Investment
Manager. The Investment Manager will be responsible for identifying acquisition
opportunities, structuring and negotiating the terms of such acquisition,
arranging for all necessary financing, and monitoring the progress of and
providing managerial assistance to the Portfolio Companies. The Investment
Manager will also provide personnel, office space, telephone and utility
expenses, supplies and other administrative services to the Enertech
Partnership.
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From the date of the Partnership Agreement until five years after
the Initial Closing, the EnerTech Partnership will pay to the Investment Manager
quarterly in advance a management fee equal to 0.5% of the EnerTech
Partnership's total capital commitments (assuming all commitments were in effect
upon the initial formation of the EnerTech Partnership). Thereafter, the
quarterly management fee shall equal 0.5% of an amount equal to total capital
commitments less the cost of all securities disposed of or written off by the
EnerTech Partnership. Partners admitted after the Initial Closing will be
required to bear their proportionate share of the management fee and other
operating and formation expenses form the Initial Closing date. Fifty percent
(50%) of all fees or compensation accepted from Portfolio Companies by the
Investment Manager will offset the management fee.
The management fee will cover all expenses associated with
administering the EnerTech Partnership, including but not limited to,
compensation of all professional employees and the cost of providing certain
support and general services (e.g., office rental, secretarial, clerical and
bookkeeping expenses).
The EnerTech Partnership will be responsible for all other expenses
related to its operations, including, but not limited to, its legal and auditing
fees, costs related to the purchase or sale of securities whether or not
purchased or sold, interest on borrowed funds, taxes, commissions and brokerage
fees, the cost of directors' and officers' liability insurance, extraordinary
expenses such as litigation and "broken deal" expenses, expenses resulting from
due diligence and the normal course of activities related to the investments and
prospective investments of the EnerTech Partnership, expenses associated with
annual meetings of the EnerTech Partnership and the activities of the Valuation
Committee and Advisory Board and expenses incurred in organizing the EnerTech
Partnership.
Profits, gains and losses (both realized and unrealized) will
generally be allocated 80% to all Limited Partners, pro rata in accordance with
their capital contributions, and 20% to the General Partner. Net short-term
investment income (or loss) and expenses, represented by the excess or deficit
of income on cash equivalent securities over operating expenses, will be
allocated to the Limited Partners pro rata according to their respective capital
contributions. In addition, if the capital account of the General Partner is
reduced to the amount of its capital contribution, then remaining losses shall
be specially allocated 1% to the General
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Partner and 99% to the Limited Partners. In the event the capital account of the
Limited Partners is reduced to zero, then 100% of remaining losses shall be
specially allocated to the General Partner. Subsequent gains shall be specially
allocated to reverse any such special allocations of losses.
Distributions will be made at the General Partner's discretion. Net
short-term investment income (net of expenses), will be distributed to all
Partners pro rata in accordance with their capital contributions. Securities in
kind (or net cash proceeds from their sale) will be distributed, until such time
as the Limited Partners shall have received distributions totaling their
respective capital contribution, in the following manner:
(a) an amount equaling the sum of (i) the EnerTech
Partnership's cost for the total amount of such securities being
distributed or which were sold; (ii) the aggregate amount of net losses
previously realized by the EnerTech Partnership; (iii) the cost basis of
the securities of all Portfolio Companies previously written off as a
result of bankruptcy, liquidation or termination of operations of such
Portfolio Company; and (iv) the allocable amount of cumulative operating
expenses paid by the EnerTech Partnership, will be distributed to all
Partners pro rata in accordance with their capital contributions;
(b) the balance of such distribution will be distributed 80%
to the Limited Partners pro rata in accordance with their respective
capital contributions and 20% to the General Partners.
After the Limited Partners have received distributions equaling
their respective capital contributions, any further distributions of securities
in kind or the proceeds from the sale of securities will be made 80% to the
Partners pro rata in accordance with their respective capital contributions and
20% to the General Partners.
To the extent required, GPU requests authority to sell any Portfolio
Company securities received as a distribution in kind. Unless GPU obtains
approval from this Commission to retain such Portfolio Company securities, GPU
undertakes that it will in good faith attempt to sell such Portfolio Company
securities as soon as practicable, but in no event later than one year from the
date of its receipt.
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GPU will, on or by May 1 of each year, report to the Commission (1)
a description of each of Newco's Portfolio Company investments and (2) the dates
of the receipt and disposition of each security received by Newco as an in kind
distribution during the reporting period and the amount of other distributions
during such period. Such report will be included as an appendix to the Annual
Report on Form U-5-S filed pursuant to the Act. The foregoing reports shall be
in lieu of any Certificates of Completion or Partial Completion otherwise
required by Rule 24 under the Act.
GPU also requests that the Commission reserve jurisdiction over the
acquisition by Newco of limited partnership interests in any limited partnership
that is a successor of or affiliated with the EnerTech Partnership pending
completion of the record regarding such acquisition.
D. Rule 54 Analysis.
----------------
The proposed transactions contemplate, among other things, the acquisition
of securities by the GPU which do not relate to exempt wholesale generators
("EWGs") and foreign utility companies ("FUCOs") (the "Transactions").
Accordingly, the 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.
(a) 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 "November 5 Order"), the Commission authorized GPU to increase to 100% of
its "average consolidated retained earnings," as defined in Rule 53, the
aggregate amount which it may invest in EWGs and FUCOs. At December 31, 1999,
GPU's average consolidated retained earnings was approximately $2.416 billion
and GPU's aggregate investment in EWGs and FUCOs was approximately $2.172
billion. Accordingly, under the November 5 Order, GPU may invest up to an
additional $244 million in EWGs and FUCOs as of December 31, 1999.
(i) 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.
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(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 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
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(3) access by the Commission to such books and
records and financial statements (or copies thereof) in
English as the Commission may request and, in any event,
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.
(ii) 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.
(iii) Copies of this Application 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.(2) In addition, GPU will
submit to each such commission copies of any amendments to this
Application and 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).
(iv) None of the provisions of paragraph (b) of Rule 53 render
paragraph (a) of that Rule unavailable for the proposed
transactions.
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(2) Pennsylvania Electric Company ("Penelec") is also subject to retail rate
regulation by the New York Public Service Commission with respect to
retail service to approximately 3,700 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.
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(A) Neither GPU nor any subsidiary of GPU having a book
value exceeding 10% of GPU's consolidated retained earnings 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 $2.416 billion)
represented an increase of approximately $49 million (or
approximately 2%) compared to the average consolidated retained
earnings for the previous four quarterly periods (approximately
$2.367 billion).
(C) GPU did not incur operating losses from direct or
indirect investments in EWGs and FUCOs in 1999 in excess of 5% of
GPU's December 31, 1999 consolidated retained earnings.
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 November 5 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 basis for the Commission
to withhold or deny approval for the transactions proposed in this Application.
GPU will fund Newco's investment in the EnerTech Partnership from internal
funds. Accordingly, the 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 November 5 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 quarterly period for
which financial statement information was evaluated in the November 5 Order,
GPU's consolidated capitalization consisted of 49.2% equity and 50.8% debt. As
stated in the November 5 Order, GPU's
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June 30, 1997 pro forma capitalization, reflecting the November 6, 1997
acquisition of PowerNet Victoria, was 39.3% equity and 61.7% debt.
At December 31, 1999, GPU's common equity and debt represented 30.2%
and 66.2%, respectively. As set forth in Exhibit H hereto, GPU expects its
common equity ratio to increase during 2000 to approximately 35% of consolidated
capitalization, principally as a result of the planned sale of certain FUCO
investments. Thus, since the date of the November 5 Order, there has been no
material adverse 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.(3)
GPU's consolidated retained earnings grew on average approximately
6.5% per year from 1994 through 1999. Earnings attributable to GPU's investments
in EWGs and FUCOs have contributed positively to consolidated earnings.
Accordingly, since the date of the November 5 Order, the
capitalization and earnings attributable to GPU's investments in EWGs and FUCOs
have not had any adverse impact on GPU's financial integrity.
Reference is made to Exhibit H which sets forth GPU's
consolidated capitalization at December 31, 1999 and after giving effect to the
transactions proposed herein. As set forth in such exhibit, the proposed
transactions will not have a material impact on GPU's capitalization or
earnings.
2. By filing the following exhibit in Item 6 thereto:
H - Actual and Pro Forma Capitalization and Capitalization
Ratios as at December 31, 1999.
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(3) The first mortgage bonds of Jersey Central Power & Light Company,
Metropolitan Edison Company and Pennsylvania Electric Company are rated A+
by Standard & Poore Corporation, and Baa1, A3 and A2, respectively, by
Moody's Investors Service, Inc.
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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 UNDERSIGNED THEREUNTO DULY AUTHORIZED.
GPU, INC.
By:
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T. G. Howson,
Vice President and Treasurer
Date: February 2000
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EXHIBITS TO BE FILED BY EDGAR
Exhibits:
H - Actual and Pro Forma Capitalization and Capitalization
Ratios as at December 31, 1999.
EXHIBIT H
Page 1 of 2
GPU, INC. CONSOLIDATED
ACTUAL AND PRO FORMA CAPITALIZATION
(IN THOUSANDS)
The actual and pro forma capitalization of GPU, Inc. and Subsidiary
Companies at December 31, 1999 is as follows:
Actual Pro Forma(1)
--------------- ---------------
Amount % Amount %
------ --- ------ ---
Long-term debt $ 6,420,910 56.0% $5,365,228 56.5%
Notes payable 1,171,869 10.2% 385,832 4.0%
Trust preferred securities 200,000 1.7% 200,000 2.1%
Subsidiary-obligated mantadorily
Redeemable preferred securities 125,000 1.1% 125,000 1.3%
Preferred stock 96,649 0.8% 96,649 1.0%
Common equity 3,464,953 30.2% 3,339,953 35.1%
---------- ----- --------- -----
Total $11,479,381 100.0% $9,502,662 100.0%
========== ===== ========= =====
(1) Reflects the following adjustments:
(a) The sale in April 2000 of GPU Powernet and GPU Gasnet for their book
value of $2,389 million (which amount includes the related acquisition
and other debt).
(b) GPU acquisition of MYR Group Inc., for $225 million in cash for which
authorization is being sought in SEC File No. 70-9599.
(c) The issuance through a JCP&L affiliate of asset securitization bonds
for $587 million in the third quarter of 2000.
(d) GPU common stock repurchases of up to $125 million from time to time as
subject to favorable market conditions following the sale of the
Australian assets.
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EXHIBIT H
Page 2 of 2
GPU ENERGY SUBSIDIARIES
ACTUAL AND PRO FORMA CAPITALIZATION
(IN THOUSANDS)
The actual and pro forma capitalization of JCP&L, Met-Ed and Penelec
Companies at December 31, 1999 is as follows:
JCP&L
Actual Pro Forma(1)
--------------- ---------------
Capitalization Amount % Amount %
- -------------- ------ --- ------ ---
Long-term debt $1,173,773 42.2% $1,561,773 52.6%
Notes payable - 0.0% - 0.0%
Trust preferred securities - 0.0% - 0.0%
Subsidiary-obligated mantadorily
redeemable preferred securities 125,000 4.5% 125,000 4.2%
Preferred stock 96,649 3.5% 96,649 3.3%
Common equity 1,385,367 49.8% 1,185,367 39.9%
--------- ----- --------- -----
Total $2,780,789 100.0% $2,968,789 100.0%
========= ===== ========= =====
(1) Includes the Asset Securitization Issuance of $587 million less a paydown
on debt of $199 million.
Met-Ed
Actual Pro Forma(1)
--------------- ---------------
Capitalization Amount % Amount %
- -------------- ------ --- ------ ---
Long-term debt $ 546,908 47.6% $ 596,908 52.0%
Notes payable - 0.0% 105,000 9.1%
Trust preferred securities 100,000 8.7% 100,000 8.7%
Subsidiary-obligated mantadorily
redeemable preferred securities - 0.0% - 0.0%
Preferred stock - 0.0% - 0.0%
Common equity 501,417 43.7% 346,417 30.2%
--------- ----- --------- -----
Total $1,148,325 100.0% $1,148,325 100.0%
========= ===== ========= =====
Penelec
Actual Pro Forma(1)
--------------- ---------------
Capitalization Amount % Amount %
- -------------- ------ --- ------ ---
Long-term debt $ 424,654 40.9% $ 474,654 45.7%
Notes payable 53,600 5.2% 148,600 14.3%
Trust preferred securities 100,000 9.6% 100,000 9.6%
Subsidiary-obligated mantadorily
redeemable preferred securities - 0.0% - 0.0%
Preferred stock - 0.0% - 0.0%
Common equity 461,182 44.4% 316,182 30.4%
--------- ----- --------- -----
Total $1,039,436 100.0% $1,039,436 100.0%
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