File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION - DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
***
INDIANA MICHIGAN POWER COMPANY
One Summit Square, P. O. Box 60, Fort Wayne, Indiana 46801
BLACKHAWK COAL COMPANY
c/o American Electric Power Service Corporation
161 West Main Street, Lancaster, Ohio 43130
(Names of companies filing this statement and
addresses of principal executive offices)
***
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
***
G. P. Maloney, Executive Vice President
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
John F. Di Lorenzo, Jr., Associate General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
<PAGE>
This Application-Declaration involves a proposal by
Blackhawk Coal Company ("Blackhawk"), a wholly owned subsidiary of
Indiana Michigan Power Company ("I&M"), to transfer interests in
certain coal mining equipment and surface (not mineral) properties
located in Utah. In connection therewith, Blackhawk may acquire
four promissory notes. I&M is a subsidiary company of American
Electric Power Company, Inc. ("AEP"), a registered holding company
under the Public Utility Holding Company Act of 1935 (the "Act").
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION
A. Background
Reference is made to the Form U-1 and amendments thereto
filed in File No. 70-6273, and the order and supplemental orders
issued by this Commission on August 7, 1980 (HCAR No. 21672),
September 30, 1980 (HCAR No. 21672A), October 19, 1981 (HCAR No.
22237) and September 20, 1985 (HCAR No. 23834). Reference is also
made to the Form U-1 and amendments thereto in File No. 70-5530,
and the order and supplemental order issued in that proceeding on
October 21, 1974 (HCAR No. 18614) and June 26, 1975 (HCAR No.
19064) and Form U-1 and amendments thereto in File No. 70-7231 and
the related order dated May 1, 1986 (HCAR No. 35-24080). Those
filings and orders concern certain coal mining equipment and prop-
erties located in Carbon County, Utah, including coal reserves
located west of the Price River, together with existing surface
facilities located east of the Price River for processing, handling
and shipping coal (the "Western Reserves").
By its Order dated September 20, 1985 in File No. 70-6273
(HCAR No. 23834), the Commission authorized I&M and Blackhawk to
enter into transactions to implement a settlement agreement, exe-
cuted on January 9, 1985 by AEP, its associate companies and the
staff of the Federal Energy Regulatory Commission (the "FERC") (the
"Settlement Agreement"). The Settlement Agreement, a copy of which
has previously been filed with this Commission as Exhibit B-4 to
Post-Effective Amendment No. 9 in File No. 70-6273, was intended to
dispose of all issues remaining to be resolved in an investigation
by the FERC of the coal procurement and pricing policies of AEP and
its associate companies.
By its Order dated May 1, 1986 in File No. 70-7231, the
Commission authorized Blackhawk to transfer its coal mining opera-
tions with respect to the Western Reserves to Castle Gate Coal
Company ("Castle Gate") and Meadowlark, Utah, Inc. ("Meadowlark"),
subsidiaries of AMAX Inc. ("AMAX"). This transfer was to be
accomplished by means of a set of transactions involving leases,
subleases, conveyances and assignments with respect to the various
surface interests, fee coal, coal preparation facilities, federal
and state leases, structures, equipment, permits and water rights
associated with the Western Reserves.
The transactions were designed to produce guaranteed
minimum lease revenues of $161,000,000 over twenty years. The
mineral lease and subleases provided for $80,000,000 of guaranteed
minimum lease payments over twenty years ($4,000,000 a year) with
a provision for six ten-year extensions at AMAX's option at no
additional charge. The equipment leases and subleases and the sur-
face lease would produce total rental income of $81,000,000 and
have terms ranging from three to fifteen years, which relate to the
lives of the subject equipment. The fair market value buyout op-
tions under the various equipment leases, if exercised by AMAX,
were estimated to produce additional revenues, at the end of the
lease terms, of between $10,000,000 and $16,000,000. Those trans-
actions were closed on May 30, 1986.
B. Proposed Transactions
Blackhawk, Castle Gate and Meadowlark were all parties to
that certain Lease Transaction Agreement dated January 31, 1986
("Lease Transaction Agreement") by which Blackhawk leased certain
coal lands, facilities and equipment to Castle Gate and Meadowlark
pursuant to a series of leases and subleases, including, among
others, the Crandall Canyon Facilities Lease, the Preparation Plant
Facility Lease, the Miscellaneous Owned Equipment Lease and the
Surface Lease (the four leases herein collectively, the "Four
Leases"). The Four Leases granted Castle Gate and/or Meadowlark,
as lessees, options to purchase the leased property and/or equip-
ment at the end of the initial term of the lease. Subsequent to
May 30, 1986, Castle Gate merged into its affiliate, Amax Coal
Company ("Amax Coal"); Meadowlark changed its name to Amax Land
Company ("Amax Land"); and Amax Inc. merged into Cyprus Amax
Minerals Company (formerly named Cyprus Minerals Company) ("Cyprus-
Amax").
Blackhawk, Amax Land and Amax Coal now propose to amend
the Lease Transaction Agreement to provide for the exercise by Amax
Land and Amax Coal of the purchase options for the Four Leases
prior to the end of the initial term. The Four Leases will be ter-
minated, Amax Land and/or Amax Coal will take title to all of the
properties and/or equipment being leased under the Four Leases and
in lieu of the obligation to make the remaining quarterly lease
payments, as partial consideration for the purchase, Amax Land and
Amax Coal will execute promissory notes in the same amounts and at
the same dates as the remaining lease payments under the Four
Leases. Amax Coal will also assume all remaining reclamation lia-
bilities associated with the leased facilities.
Payment of the consideration for the purchase of the
properties will be in the form of $5,700,000 in cash at closing and
four promissory notes, more particularly described as follows: (i)
Promissory Note from Amax Coal in the amount of $6,179,500 due
March 1, 2001, payable in 17 quarterly payments of $363,500, begin-
ning on March 1, 1996, for the Crandall Canyon Mine Shaft facili-
ties and fixed assets which were leased under the Crandall Canyon
Facilities Lease; (ii) Promissory Note from Amax Coal in the amount
of $8,952,750 due March 1, 1998, payable in 3 quarterly payments of
$976,250, followed by 6 quarterly payments of $1,004,000, beginning
on March 1, 1996, for the facilities and fixed assets comprising
the Coal Preparation Plant which were leased under the Preparation
Plant Facility Lease; (iii) Promissory Note from Amax Land in the
amount of $824,250 due March 1, 2001 and payable in 21 quarterly
payments of $39,250, beginning on March 1, 1996, for the surface
areas owned by Blackhawk west of Price River which were leased
under the Surface Leases and (iv) Promissory Note from Amax Coal in
the amount of $15,420,500 due March 1, 2006, payable in 1 quarterly
payment of $53,500, 8 quarterly payments of $93,250, 8 quarterly
payments of $1,097,250 and 4 quarterly payments of $1,460,750,
beginning on March 1, 1996, for miscellaneous equipment.
Forms of the promissory notes are filed as Exhibit B-2
hereto. The promissory notes will initially be secured by a Mort-
gage and Security Interest in the properties transferred. These
security interests may be released or subordinated to other secur-
ity interests in certain situations. All payments due under the
four promissory notes will be guaranteed by Cyprus-Amax Minerals
Company, the ultimate parent. Blackhawk hereby requests authoriza-
tion to acquire the four promissory notes in an aggregate amount
not to exceed approximately $25,200,000 as set forth above.
ITEM 2. FEES, COMMISSIONS AND EXPENSES
All fees, commissions and expenses to be incurred by
Applicants-Declarants in connection with those aspects of the
proposed transactions which are subject to the jurisdiction of this
Commission, including this Commission's filing fee, are not
estimated to exceed $10,000.
ITEM 3. APPLICABLE STATUTORY PROVISIONS
The acquisition of the promissory notes by Blackhawk is
subject to Sections 9(a) and 10 of the Act. No other aspects of
the proposed transactions are subject to the Act.
ITEM 4. REGULATORY APPROVALS
No state commission and no Federal commission, other than
this Commission, has jurisdiction over the proposed transactions
described in Item 1 above.
ITEM 5. PROCEDURE
It is requested, pursuant to Rule 23(c) of the Rules and
Regulations of the Commission, that the Commission's Order per-
mitting this Application-Declaration to become effective be issued
on or before December 31, 1995. Applicants-Declarants waive any
recommended decision by a hearing officer or by any other respon-
sible officer of the Commission and waive the 30-day waiting period
between the issuance of the Commission's Order and the date it is
to become effective, since it is desired that the Commission's
Order, when issued, become effective forthwith. Applicants-
Declarants consent to the Office of Public utility Regulation
assisting in the preparation of the Commission's decision and/or
Order in this matter, unless the Office opposes the matters covered
by this Application-Declaration.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
The following exhibits and financial statements are filed
as part of this statement:
(a) Exhibits:
Exhibit A - None
Exhibit B-1 - Second Addendum to Lease Trans-
action Agreement (to be filed
by Amendment).
Exhibit B-2 - Form of Promissory Note (to be
filed by amendment).
Exhibit C - None
Exhibit D - None
Exhibit E - None
Exhibit F - Opinion of Counsel
Exhibit G - Form of Notice
(b) Financial Statements:
Balance Sheets as of September 30, 1995 and Statements of
Income and Retained Earnings, per books and pro forma, for the 12
months ended September 30, 1995, of I&M and of AEP and its subsidi-
aries consolidated, together with journal entries reflecting the
proposed transaction (to be filed by amendment).
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
It is believed that permitting this Application-Declara-
tion to become effective will not constitute a major Federal action
significantly affecting the quality of the human environment. No
other Federal agency has prepared or is preparing an environmental
impact statement with respect to the proposed transactions.
SIGNATURES
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned have duly caused this
statement to be signed on their behalf by the undersigned thereunto
duly authorized.
INDIANA MICHIGAN POWER COMPANY
By:G.P. Maloney
Vice President
BLACKHAWK COAL COMPANY
By:G.P. Maloney
Vice President
Dated: November 21, 1995
[95FN0060.IMP]<PAGE>
EXHIBIT F
American Electric Power
Service Corporation
1 Riverside Plaza
Columbus, OH 43215-2373
(614) 223-1000
(614) 223-1687 (Telecopier)
Writer's Direct Dial No.
(614) 223-1649
November 21, 1995
Securities and Exchange Commission
Division of Corporate Regulation
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: American Electric Power Company, Inc.
Indiana Michigan Power Company
Blackhawk Coal Company
File No. 70-
Gentlemen:
In connection with the transactions proposed and described in the
Application-Declaration on Form U-1 filed with the Securities and
Exchange Commission by Indiana Michigan Power Company ("I&M") and
Blackhawk Coal Company ("Blackhawk"), to which this opinion is an
exhibit, I have examined, among other things, the Application-
Declaration on Form U-1 and the exhibits attached thereto.
In my opinion, if the Application-Declaration is permitted to
become effective; if all of the conditions precedent specified in
said exhibits are satisfied; and if the proposed transactions are
consummated in accordance with the aforesaid Application-Declara-
tion:
(a) all state laws applicable to the proposed
transactions will have been complied with;
(b) I&M and Blackhawk will have legally acquired
promissory notes from Amax Coal Company and Amax Land
Company, all as described in the Application-Declaration;
and;
(c) the consummation of the proposed transactions
will not violate the legal rights of the holders of any
securities issued by I&M or Blackhawk or any associate
company.
I consent to the use of this opinion as part of the above-mentioned
Application-Declaration.
Very truly yours,
s/Ann B. Graf
Ann B. Graf
Counsel for
Indiana Michigan Power Company
Blackhawk Coal Company
[95FN0060.IMP]<PAGE>
EXHIBIT G
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. _______/November ___, 1995
:
In the Matter of :
:
INDIANA MICHIGAN POWER COMPANY :
Fort Wayne, Indiana 46801 :
:
BLACKHAWK COAL COMPANY :
Lancaster, Ohio 43130 :
:
File No. 70-__________ :
:
NOTICE OF PROPOSED ACQUISITION OF PROMISSORY NOTES
Indiana Michigan Power Company ("I&M"), an electric utility sub-
sidiary of American Electric Power Company, Inc. ("AEP"), a
registered holding company, and Blackhawk Coal Company ("Black-
hawk"), a coal mining subsidiary of I&M, have filed an application-
declaration with this Commission pursuant to Sections 9(a) and 10
of the Public Utility Holding Company Act of 1935 ("Act").
By its Order dated September 20, 1985 in File No. 70-6273 (HCAR No.
23834), the Commission authorized I&M and Blackhawk to enter into
transactions to implement a settlement agreement, executed on
January 9, 1985 by AEP, its associate companies and the staff of
the Federal Energy Regulatory Commission (the "FERC") (the "Settle-
ment Agreement"), concerning certain coal mining properties located
in Carbon County, Utah, including coal reserves located west of the
Price River, together with existing surface facilities located east
of the Price River for processing, handling and shipping coal (the
"Western Reserves"). The Settlement Agreement was intended to dis-
pose of all issues remaining to be resolved in an investigation by
the FERC of the coal procurement and pricing policies of AEP and
its associate companies.
By its Order dated May 1, 1986 in File No. 70-7231 (HCAR No. 35-
24080), the Commission authorized Blackhawk to transfer its coal
mining operations with respect to the Western Reserves to Castle
Gate Coal Company ("Castle Gate") and Meadowlark, Utah, Inc.
("Meadowlark"), subsidiaries of AMAX, Inc. ("AMAX"). This transfer
was accomplished by means of a set of transactions involving
leases, subleases, conveyances and assignments with respect to the
various surface interests, fee coal, coal preparation facilities,
federal and state leases, structures, equipment, permits and water
rights associated with the Western Reserves. The transaction was
closed on May 30, 1986.
Subsequent to May 30, 1986, Castle Gate merged into its affiliate,
Amax Coal Company ("Amax Coal"); Meadowlark changed its name to
Amax Land Company ("Amax Land"); and AMAX merged into Cyprus Amax
Minerals Company (formerly named Cyprus Minerals Company) ("Cyprus-
Amax").
Blackhawk, Amax Land and Amax Coal now propose to amend the Lease
Transaction Agreement to provide for the exercise by Amax Land and
Amax Coal of the purchase options for four of the leases entered
into pursuant to this authority prior to the end of the initial
terms of the leases. The four leases will be terminated, Amax Land
and/or Amax Coal will take title to all of the properties and/or
equipment being leased under the four leases and in lieu of the
obligation to make the remaining quarterly lease payments, as
partial consideration for the purchase, Amax Land and Amax Coal
will execute promissory notes in the same amounts and at the same
dates as the remaining lease payments under the four leases. Such
notes will be guaranteed by Cyprus-Amax. Amax Coal will also
assume all remaining reclamation liabilities associated with the
leased facilities. Payment of the consideration for the purchase
of the properties will be in the form of $5,700,000 in cash at
closing and four promissory notes, totalling approximately
$25,200,000.
The promissory notes will initially be secured by a Mortgage and
Security Interest in the properties transferred. These security
interests may be released or subordinated to other security
interests in certain situations. All payments due under the four
promissory notes will be guaranteed by Cyprus-Amax, the ultimate
parent. Blackhawk hereby requests authorization to acquire the
four promissory notes in an aggregate amount not to exceed
approximately $25,200,000 as set forth above.
The proposal and any amendments thereto are available for public
inspection through the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing should
submit their views in writing by December ____, 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 a 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 this matter. After said date, the pro-
posal, as filed or as amended, may be authorized.
For the Commission, by the Office of Public Utility Regulation,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
[95FN0060.IMP]
