<PAGE>
File No. 70-9315
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
Amendment No. 2 to
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
(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)
***
A. A. Pena, Treasurer
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
Susan Tomasky, General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
Indiana Michigan Power Company ("I&M") hereby amends its application
on Form U-1 in this file by restating in its entirety the description of the
transaction in ITEM 1. as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION
I&M requests authorization to guarantee loan payments, including
principal, interest, penalties, on a promissory note or notes (the "Note(s)")
issued by Iron Dynamics, Inc. ("IDI"), an Indiana corporation, which is an
electric utility service customer of I&M. IDI is constructing a production
facility in Butler, Indiana, in I&M's service territory. This facility is a
scrap substitute production facility using proprietary coal based, iron-making
technology to beneficiate and reduce iron ore concentrates or fines to high
quality liquid iron using coal as the primary carbon reductant source. This
project has a total capital cost of approximately $85 million which is being
financed through a national lending institution.
Energy and energy-related assets
Of those total assets, I&M is proposing to guarantee loan payments on
certain energy and energy-related assets totaling $6,500,000. These assets
include a main mill substation, power distribution facilities from station to
mill, power distribution facilities from main mill to coal preparation
facilities, coal preparation facilities and submerged arc furnace transformers
and vaults to be installed on IDI's property in DeKalb, Indiana (the
"Equipment").
The utility assets include substations, transformers, switchgear, motor
control centers and associated materials that make up the necessary equipment
required to distribute and control electric energy usage for the proper and safe
operation of the facility. These assets include a submersible arc furnace trans-
former that is used to regulate voltage levels. Certain other assets, such as
the coal handling equipment are not directly used to generate electric energy
but are utilized in providing heatenergy required for the IDI process. The coal
grinding facility uses a similar process to the process I&M uses to prepare
coal for use in some of its power plants.
None of the assets to be financed will be accounted for on I&M's books or
will be owned by I&M at any time. The distribution substation will be solely
dedicated to IDI.
I&M was retained to install, terminate and test the 34.5 kv main feeder
cables from the main substation to the IDI substation. This work has been
completed for a total cost of approximately $51,000 and is not part of the
assets being financed.
GE Capital loan
The note(s) will evidence a loan by GE Capital Corporation ("Lender" or
"GE Capital") or a similar lender to IDI in an amount up to $6,500,000 to
acquire the Equipment. The loan is for equipment only.
The loan will be made under a Loan Agreement, a copy of which is filed as
Exhibit B-1. The interest rate shall be the Index Rate plus 1.75% or if
converted pursuant to the Loan Agreement, a fixed rate. IDI may, upon written
notice to Lender at least thirty (30) days prior to the end of each 90-day
period during the term of the loans, elect to convert the interest rate on all,
but not less than all, of the Loans to a fixed percentage equal to 175 basis
points over the average of one, three and five year U. S. Treasuries as
published in the Wall Street journal on the date of such notice (the "Fixed
Rate"). On the date that the initial Loan is made, the "Index Rate" means the
interest rate equal to the per annum interest rate for commercial paper issued
for the period of time closest to 90 days by GE Capital ("CPR") on such day, and
thereafter the Index Rate shall be adjusted every ninety days and shall be equal
to the CPR as in effect on the tenth day preceding the end of each such 90 day
period during the term of the Loans. If, for any reason whatsoever, GE Capital
does not issue such commercial paper on the applicable date, the CPR shall be
equal to the rate listed for "3-Month" Commercial Paper under the column
indicating an average rate as stated in the Federal Reserve Statistical Release
H.15(519) for the calendar month preceding the calendar month in which such
90-day period ends. If, for any reason, the Federal Reserve Statistical Release
H.15(519) is no longer published, the CPR shall be equal to the latest
Commercial Paper Rate for high grade unsecured notes of 90 day maturity sold
through dealers by major corporations in multiples of $1,000, as indicated in
the "Money Rates" column of the Wall Street Journal, Eastern Edition, published
on the tenth day prior to the end of each 90-day period or the first Business
Day thereafter. The Note(s) will mature in not more than 96 months and be
secured by a first lien on the Equipment. There will be no consideration paid by
IDI for the guaranty, a copy of which is attached as Exhibit B-3.
In the alternative, I&M requests authority to make a direct loan to IDI
and to acquire the Note(s) on substantially the same terms as the loan from
Lender to IDI.
Reason for I&M guaranty
IDI is a start-up company which was incorporated in Indiana on June 12,
1995. It has obtained financing on the $85 million project through a national
institutional lender. I&M has agreed to guarantee loan payments on certain
energy-related assets in order to enable IDI to finance these assets at a lower
interest rate. I&M has determined that it is in its best interests to guarantee
these payments, because construction of the facility will increase the use of
electric energy by 66 megawatts at the Butler site. It is I&M's hope that
additional mini mills will be located in its service territory. This transaction
is not part of a company or system-wide financing line of business.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, the undersigned have duly caused this Amendment No. 2 to its
Application/Declaration on Form U-1 to be signed on their behalf by the
undersigned thereunto duly authorized.
INDIANA MICHIGAN POWER COMPANY
By: /s/ A. A. Pena
Treasurer
Dated: August 27, 1998
