Post-Effective Amendment No. 25 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")
GPU, Inc. ("GPU")
GPU Capital, Inc.
GPU Electric, Inc.
Victoria Electric Holdings, Inc.
EI UK Holdings, Inc.
Avon Energy Partners Holdings
Avon Energy Partners plc
GPU Australia Holdings, Inc.
Austran Holdings, Inc.
VicGas Holdings, Inc.
GPU Argentina Holdings, Inc.
GPU Argentina Services LtdA.
GPU International Australia Pty Ltd
GPU Brasil, Inc.
300 Madison Avenue
Morristown, New Jersey 07960
GPU INTERNATIONAL, INC. ("GPU International")
EI SERVICES, INC. ("EI Services")
Geddes II Corporation
Geddes Cogeneration Corporation
EI Selkirk, Inc.
EI Canada Holding Limited
EI Services Canada Limited
NCP Houston Power, Inc.
NCP Perry, Inc.
GPU Power, Inc.
Guaracachi America, Inc.
EI Barranquilla, Inc.
Barranquilla Lease Holdings, Inc.
EI International
Los Amigos Leasing Company, Ltd.
GPUI Colombia, Ltda.
International Power Advisors, Inc.
Hanover Energy Corporation
Austin Cogeneration Corporation
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GPU Power Philippines, Inc.
GPU International Asia, Inc.
GPU Power Ireland, Inc.
One Upper Pond Road
Parsippany, New Jersey 07054
(Names of companies filing this statement
and addresses of principal offices)
GPU, INC.
(Names of top registered holding company
parent of the applicants)
T. G. Howson, Douglas E. Davidson, Esq.
Vice President and Treasurer Thelen Reid & Priest LLP
M. J. Connolly, 40 West 57th Street
Vice President - Legal New York, New York 10019
S. L. Guibord, Secretary
GPU Service, Inc.
300 Madison Avenue
Morristown, New Jersey 07960
W. Edwin Ogden, Esq.
Ryan, Russell, Ogden & Seltzer LLP
1100 Berkshire Boulevard
P.O. Box 6219
Reading, Pennsylvania 19601-0219
(Names and addresses of agents for service)
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GPU, GPU International, EI Services, Geddes II Corporation, Geddes
Cogeneration Corporation, EI Selkirk, Inc., EI Canada Holding Limited, EI
Services Canada Limited, NCP Houston Power, Inc., NCP Perry, Inc., GPU Power,
Inc., Guaracachi America, Inc., EI Barranquilla, Inc., Barranquilla Lease
Holdings, Inc., EI International, Los Amigos Leasing Company, Ltd., GPUI
Colombia, Ltda., International Power Advisors, Inc., Hanover Energy Corporation,
Austin Cogeneration Corporation, Austin Cogeneration Partners, L.P., GPU Power
Philippines, Inc., GPU International Asia, Inc., GPU Power Ireland, Inc., GPU
Capital, Inc., GPU Electric, Inc., Victoria Electric Holdings, Inc., EI UK
Holdings, Inc., Avon Energy Partners Holdings, Avon Energy Partners plc, GPU
Australia Holdings, Inc., Austran Holdings, Inc., VicGas Holdings, Inc., GPU
Argentina Holdings, Inc., GPU Argentina Services LtdA., GPU International
Australia Pty Ltd and GPU Brasil, Inc., (collectively, "Applicants") hereby
post-effectively amend the application on Form U-1, docketed on SEC File No.
70-8593, as heretofore amended, as follows:
A. By order dated July 6, 1995 (HCAR No. 26326) (the "1995 Order"), GPU
was authorized 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. The
1995 Order also authorized GPU, directly or indirectly, to acquire from time to
time and own interests in subsidiaries ("Project Parents") that are not Exempt
Entities but are engaged, directly or indirectly, and exclusively, in the
business of owning and holding the interests and securities of one or more
Exempt Entities and related project development activities.
B. The 1995 Order also authorized GPU to make investments in Project
Parents from time to time through December 31, 1997 in an aggregate amount of up
to $200 million. Investments could take the form of: (i) cash capital
contributions or open account advances; (ii) loans evidenced by promissory
notes; (iii) guarantees by GPU of the principal of, or interest on, any
promissory notes or other evidences of indebtedness or obligations of any
Project Parent, or of GPU's undertaking to contribute equity to a Project
Parent; (iv) assumption of liabilities of a Project Parent; and (v)
reimbursement agreements with banks entered into to support letters of credit
delivered as security for GPU's equity contribution obligation to a Project
Parent or otherwise in connection with a Project Parent's development
activities.
C. The 1995 Order also authorized GPU to make investments in Exempt
Entities from time to time, through December 31, 1997, in an aggregate amount
which, together with the amount invested in Project Parents would not exceed
$200 million outstanding at any one time (the "Investment Cap"). Such
investments could take
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the form of (i) guarantees of indebtedness, or other obligations of one or more
Exempt Entities; (ii) assumptions of liabilities of one or more Exempt Entities;
and (iii) 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.
D. The 1995 Order also authorized each Project Parent to issue equity and
debt securities in an aggregate principal amount of not more than $500 million,
to persons other than GPU, including banks, insurance companies and other
financial institutions, exclusively for the purpose of financing or refinancing
investments in project development activities for Exempt Entities. The
Commission authorized the issuance of such securities 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.
E. By order dated January 19, 1996 (HCAR No. 26457) (the "January 1996
Order"), the Commission authorized an increase in the Investment Cap, which
would include all forms of equity or participation interests, to 50% of GPU's
consolidated retained earnings at the time any investment in a Project Parent or
Exempt Entity is made. The January 1996 Order also noted that under then-new
Rules 45(b)(4) and 52 under the Act, open account advances without interest
would no longer be subject to the limit of the Investment Cap, nor would cash
capital contributions to Project Parents to the extent they are made in
connection with the acquisition of a new subsidiary. This authorization has no
expiration date.
F. The January 1996 Order also authorized certain GPU subsidiaries to
provide goods and services to certain associate entities at fair market prices.
By Order dated March 6, 1996 (HCAR No. 26484) (the "March 1996 Order"), the
Commission expanded the class of GPU subsidiaries that could provide such goods
and services at such fair market prices. These authorizations have no expiration
date.
G. By order dated November 5, 1997 (the "November 1997 Order"),(1) the
Commission authorized an increase in the Investment Cap, which would include all
forms of equity and participation interests, to 100% of GPU's "consolidated
retained earnings", as defined in Rule 53(a) under the Act, at the time any
investment in a Project Parent or Exempt Entity is made. This authorization has
no expiration date.
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1 After the November 1997 Order, the Commission separately issued a memorandum
opinion in connection with the November 1997 Order. HCAR No. 26779 (Nov. 17,
1997).
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H. By Order dated December 22, 1997 (HCAR No. 26800) (the "December 1997
Order"), the Commission extended, through December 31, 2000, the authorization
granted to GPU in the 1995 Order discussed above in paragraph B (except with
respect to the authorization of open account advances and cash capital
contributions, which, as discussed above in paragraph E, no longer require prior
Commission authorization).
I. The December 1997 Order also extended, through December 31, 2000, the
authorization granted in the 1995 Order discussed above in paragraph C,
although, as authorized by the November 1997 Order, GPU's "aggregate investment"
(as defined in Rule 53(a)) in Project Parents and Exempt Entities is now subject
to the revised Investment Cap described in paragraph G.
J. The December 1997 Order also authorized Project Parents, through
December 31, 2000, to guarantee or assume liabilities of the securities issued
by, or other obligations of, their direct or indirect subsidiaries in an
aggregate amount outstanding at any one time not to exceed $1 billion.
K. Applicants now propose to extend through June 30, 2003 such of the
authorizations under the 1995 Order, the January 1996 Order, the March 1996
Order, the November 1997 Order and the December 1997 Order that have other
stated expiration dates except to the extent any previously authorized
guarantees are exempt under rules 45 and 52. In all other respects, the
transactions as heretofore authorized by the Commission in this docket would
remain unchanged.
L. Rule 54 Analysis.
(a) As described below, GPU meets all of the conditions of Rule 53,
except for Rule 53(a)(1). As discussed above, in the November 1997 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 June 30, 2000, GPU's average consolidated retained
earnings was approximately $2.4 billion and GPU's aggregate investment in EWGs
and FUCOs was approximately $1.8 billion. Accordingly, under the November 1997
Order, GPU may invest up to an additional $614 million in FUCOs and EWGs as of
June 30, 2000.
(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.
(A) For each United States EWG in which GPU directly or
indirectly holds an interest:
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(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
(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
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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.
(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 $2.44 billion)
represented a decrease of approximately $13.7 million (or
approximately .5%) compared to the average consolidated retained
earnings for the previous four quarterly periods (approximately
$2.45 billion). The decrease in retained earnings results primarily
from a non-recurring loss of $295 million, after tax, from the sale
during the second quarter of 2000 of GPU PowerNet, which provides
transmission services in the State of Victoria, Australia.
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2 One of GPU's operating subsidiaries, the 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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(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 1997 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.
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 1997 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 1997 Order,
GPU's consolidated capitalization consisted of 42.5% common equity and 50.8%
debt. As stated in the application that formed the basis for the November 1997
Order, GPU's June 30, 1997 pro forma capitalization, reflecting the November 6,
1997 acquisition of PowerNet Victoria, was 33.5% common equity and 60.7% debt.
At June 30, 2000, GPU's common equity and debt represented 31.4% and
64.6%, respectively, of its consolidated capitalization, as set forth in Exhibit
H hereto. Thus, since the date of the November 1997 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
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3 The first mortgage bonds of GPU's operating subsidiaries, Jersey Central Power
& Light Company, Metropolitan Edison Company and Penelec are rated A+ by
Standard & Poors Corporation, and A2 by Moody's Investors Service, Inc.
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attributable to GPU's investments in EWGs and FUCOs have contributed positively
to consolidated earnings.
Accordingly, since the date of the November 1997 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 June 30, 2000 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.
M. GPU's estimated fees, commissions and expenses in connection with the
proposed transactions will be filed by further post-effective amendment.
N. GPU believes that Sections 6(a), 7, 9(a), 10, 12, 32, and 33 of the Act
and Rules 43, 45, 53 and 54 thereunder are applicable to the proposed
transactions.
O. No Federal or State commission, other than your Commission, has
jurisdiction with respect to the proposed transactions.
P. It is requested that the Commission issue an order with respect to the
transactions proposed herein at the earliest practicable date but, in any event,
not later than December 1, 2000. It is further requested that (iii) there not be
a recommended decision by an Administrative Law Judge or other responsible
officer of the Commission, (iv) the Office of Public Utility Regulation be
permitted to assist in the preparation of the Commission's decision, and (v)
there be no waiting period between issuance of the Commission's order and the
date on which it is to become effective.
Q. The following exhibits and financial statements are filed in Item 6.
(a) Exhibits:
F-1 - Opinion of Thelen Reid & Priest LLP - To be filed
by amendment.
F-2 - Opinion of Ryan, Russell, Ogden & Seltzer LLP -
To be filed by amendment.
G - Financial Data Schedule.
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H - Capitalization and Capitalization Ratios as at
June 30, 2000, actual and pro forma.
R. Information as to Environmental Effects.
(a) The issuance of an order by your Commission with respect to the
transactions contemplated herein is not a major Federal action significantly
affecting the quality of the human environment.
(b) No Federal agency has prepared or is preparing an environmental impact
statement with respect to the various proposed transactions which are the
subject hereof. Reference is made to Paragraph O hereof regarding regulatory
approvals with respect to the proposed transactions.
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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.
GPU Capital, Inc.
GPU Australia Holdings, Inc.
Austran Holdings, Inc.
VicGas Holdings, Inc.
GPU Argentina Holdings, Inc.
By: /s/ T. G. Howson
---------------------------------
T. G. Howson,
Vice President and Treasurer
GPU Electric, Inc.
Victoria Electric Holdings, Inc.
EI UK Holdings, Inc.
GPU Australia Holdings, Inc.
Austran Holdings, Inc.
VicGas Holdings, Inc.
GPU Argentina Holdings, Inc.
GPU Brasil, Inc.
By: /s/ T. G. Howson
---------------------------------
T. G. Howson,
Vice President
AVON ENERGY PARTNERS HOLDINGS
AVON ENERGY PARTNERS PLC
By: /s/ R. Browne
---------------------------------------
Robert Browne,
Secretary
GPU ARGENTINA SERVICES LTDA.
By: /s/ M. F. Grondona
---------------------------------------
M.F. Grondona,
Officer
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GPU INTERNATIONAL AUSTRALIA PTY LTD
By: /s/ R. H. Keller
---------------------------------
R. H. Keller
Chief Executive Officer
GPU INTERNATIONAL, INC.
By: /s/ R. P. Lantzy
---------------------------------
R. P. Lantzy
President
EI SERVICES, INC.
By: /s/ R. P. Lantzy
-------------------------------
R. P. Lantzy
President and Chief Executive
Officer
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Geddes II Corporation
Geddes Cogeneration Corporation
EI Selkirk, Inc.
EI Canada Holding Limited
EI Services Canada Limited
NCP Houston Power, Inc.
NCP Perry, Inc.
GPU Power, Inc.
Guaracachi America, Inc.
EI Barranquilla, Inc.
Barranquilla Lease Holdings, Inc.
EI International
Los Amigos Leasing Company, Ltd.
GPUI Colombia, Ltda.
International Power Advisors, Inc.
Hanover Energy Corporation
Austin Cogeneration Corporation
GPU Power Philippines, iNC.
GPU International Asia, Inc.
GPU Power Ireland, Inc.
By: /s/ R. P. Lantzy
--------------------------------
R. P. Lantzy,
President
Date: October 25, 2000
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