<PAGE>
File No. 70-6458
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
Post-Effective Amendment No. 24
to
FORM U-1
--------------------------------
APPLICATION OR DECLARATION
under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
***
INDIANA MICHIGAN POWER COMPANY
One Summit Square, P.0. Box 60, Fort Wayne, Indiana 46801
----------------------------------------------------------
(Name of company filing this statement and
address 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, Senior Vice President
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)
<PAGE>
The undersigned Indiana Michigan Power Company, formerly Indiana &
Michigan Electric Company ("I&M"), hereby amends its Application or Declaration
on Form U-1 in File No. 70-6458, as heretofore amended to extend the period of
authorization granted by Order dated February 20, 2000 (Release No. 35-27143)
from June 30, 2000 to June 30, 2002.
1. The entire Item 1 is hereby amended and restated as follows:
"By prior Orders dated June 11, 1980 and June 25, 1980 (HCAR Nos.
21618 and 21642, respectively), I&M was authorized to enter into an
agreement of sale ("Agreement") with the City of Rockport, Indiana
("City"). By subsequent Order dated August 2, 1985 (HCAR No. 23781), I&M
was authorized to enter into amendments to the Agreement providing for the
issuance and sale of three additional series of pollution control bonds
("Series 1985 Bonds"), each in the principal amount of $50,000,000 with a
maturity of August 1, 2014.
The Series 1985 Bonds consisted of: (i) a series of Floating Rate
Weekly Demand Bonds; (ii) the Adjustable Rate Bonds ("Adjustable Rate
Bonds"); and (iii) Fixed Rate Bonds ("Fixed Rate Bonds").
By Orders dated October 5, 1994 (HCAR No. 26136) and June 26, 1995
(HCAR No. 35-26319), the Commission authorized I&M to enter into
agreements with the City whereby the City would issue and sell an
additional series of Pollution Control Revenue Refunding Bonds in the
aggregate principal amount of up to $50,000,000 for each series, the
proceeds of which were used to provide for the early redemption of the
Adjustable Rate Bonds and the Fixed Rate Bonds. By Order dated February
20, 2000, the Commission authorized the issuance and sale by the City of
one or more additional series of Refunding Bonds prior to June 30, 2000.
Pursuant to the Agreement, I&M may request the City to sell, issue
and deliver refunding bonds. Therefore, it is proposed that the City issue
and sell one or more additional series of Pollution Control Revenue
Refunding Bonds in the aggregate principal amount of up to $50,000,000
("Refunding Bonds" or "Bonds") in order to provide funds for the payment
of up to $50,000,000 aggregate principal amount of the Floating Rate
Weekly Demand Bonds, Series 1985A ("Floating Rate Weekly Bonds") prior to
their stated maturity.
The Refunding Bonds will be issued pursuant to the Indenture of
Trust dated as of December 1, 1984 between the City and Lincoln National
Bank & Trust Company (now Norwest Bank Fort Wayne, N.A.), as Trustee (the
"Indenture"), as supplemented by a Eighth Supplemental Indenture of Trust
between the City and the Trustee, the form of which is filed as Exhibit
B-7-7 hereto ("Supplemental Indenture") and the Fourth Amendment to
Agreement of Sale, the form of which is filed as Exhibit B-4-6 hereto.
Pursuant to the Indenture and the Eighth Supplemental Indenture, the
proceeds of the sale of the Refunding Bonds will be deposited with the
Trustee and applied by the Trustee, together with other funds supplied by
I&M, to the redemption of the Floating Rate Weekly Bonds at a price equal
to the principal amount thereof.
While I&M will not be a party to the underwriting arrangements for
the Refunding Bonds, the Agreement provides that the Refunding Bonds shall
have such terms as shall be specified by I&M. I&M understands that
interest on the Refunding Bonds will be exempt from Federal income
taxation under the provisions of Section 103 of the Internal Revenue Code
of 1986, as amended (except for interest on any Refunding Bond during a
period in which it is held by a person who is a substantial user of the
Project or a related person).
It is expected that the Refunding Bonds will mature at a date or
dates not more than 30 years from the date of their issuance. The
Refunding Bonds may be subject to mandatory or optional redemption under
circumstances and terms specified at the time of pricing or change in
interest rate. In addition, the Refunding Bonds may not, if it is deemed
advisable, be redeemable at the option of the City in whole or in part at
any time for a period to be determined at the time of pricing or change in
interest rate of the Refunding Bonds. No Refunding Bond may bear interest
at an initial interest rate higher than 8%.
It is not possible to predict precisely the interest rate which may
be obtained in connection with the original issuance of the Refunding
Bonds. However, I&M has been advised that, depending on maturity and other
factors, the annual interest rate on obligations, interest on which is so
excludable from gross income, historically has been, and can be expected
at the time of issuance of the Refunding Bonds to be, 1-1/2% to 2-1/2% or
more lower than the rates of obligations of like terms and comparable
quality, interest on which is fully subject to Federal income tax. In any
event, no series of Refunding Bonds will be issued at rates in excess of
those generally obtained at the time of pricing for sales of substantially
similar tax-exempt bonds (having the same maturity, issued by entities of
comparable credit quality and having similar terms, conditions and
features).
If it is deemed advisable, I&M may provide some form of credit
enhancement for the Refunding Bonds, such as a letter of credit, surety
bond or bond insurance, and I&M may pay a fee in connection therewith. The
type of credit enhancement may change while the Refunding Bonds are
outstanding. I&M may pay an annual or upfront fee for the credit
enhancement which would not exceed 1.25% annually of the face amount.
I&M will not agree, without further order of this Commission, to the
issuance of any Refunding Bond by the City (i) if the stated maturity of
any such Bond shall be more than thirty (30) years, (ii) if the fixed rate
of interest to be borne by any such Refunding Bond shall exceed 8% per
annum or the initial rate of interest to be borne by any fluctuating rate
Refunding Bond shall exceed 8%, (iii) if the discount from the initial
public offering price of any such Bond shall exceed 3% of the principal
amount thereof, or (iv) if the initial public offering price shall be less
than 97% of the principal amount thereof
I&M hereby requests that an Order be issued by this Commission
extending the time when the transactions will be consummated from June 30,
2000 to June 30, 2002.
* * *
Rule 54 provides that in determining whether to approve certain
transactions other than those involving an exempt wholesale generator ("EWG") or
a foreign utility company ("FUCO"), as defined in the Act, the Commission will
not consider the effect of the capitalization or earnings of any subsidiary
which is an EWG or FUCO if Rule 53(a), (b) and (c) are satisfied. All applicable
conditions of Rule 53(a) are currently satisfied except for clause (1). As of
March 31, 2000, AEP, through its subsidiary, AEP Resources, Inc., had aggregate
investment in FUCOs of $918,907,000. This investment represents approximately
53.2% of $1,727,264,000, the average of the consolidated retained earnings of
AEP reported on Forms 10-Q and 10-K for the four consecutive quarters ended
March 31, 2000. However, AEP was authorized to invest up to 100% of its
consolidated retained earnings in EWGs and FUCOs (HCAR No. 26864, April 27,
1998) (the "100% Order") in File No. 70-9021. Although AEP's aggregate
investment exceeds the 50% 'safe harbor' limitation contained in Rule 53, AEP's
aggregate investment is below the 100% limitation authorized under the 100%
Order.
As of September 30, 1997, the most recent period for which financial
statement information was evaluated in the 100% Order, AEP's consolidated
capitalization consisted of 47.4% common and preferred equity and 52.6% debt. As
of March 31, 2000, AEP's consolidated capitalization consisted of 38.1% common
and preferred equity and 61.9% debt. The requested authorization will have no
impact on AEP's consolidated capitalization ratios on a pro forma basis. AEP
believes this ratio remains within acceptable ranges and limits. Further, AEP's
interests in EWGs and FUCOs have contributed positively to its consolidated
earnings.
AEP will continue to maintain in conformity with United States generally
accepted accounting principles and make available the books and records required
by Rule 53(a)(2). AEP does, and will continue to, comply with the requirement
that no more than 2% of the employees of AEP's operating utility subsidiaries
shall, at any one time, directly or indirectly, render services to an EWG or
FUCO in which AEP directly or indirectly owns an interest, satisfying Rule
53(a)(3). And lastly, AEP will continue to submit a copy of Item 9 and Exhibits
G and H of AEP's Form U5S to each of the public service commissions having
jurisdiction over the retail rates of AEP's operating utility subsidiaries,
satisfying Rule 53(a)(4). Rule 53(c) is inapplicable by its terms because the
proposals contained herein do not involve the issue and sale of securities
(including any guarantees) to finance an acquisition of an EWG or FUCO.
Rule 53(b). (i) Neither AEP nor any subsidiary of AEP is the subject of
any pending bankruptcy or similar proceeding; (ii) AEP's average consolidated
retained earnings for the four most recent quarterly periods ($1,727,264,000)
represented an increase of approximately $33,566,000 (or 2.0%) in the average
consolidated retained earnings from the previous four quarterly periods
($1,693,698,000); and (iii) for the fiscal year ended December 31, 1999, AEP did
not report operating losses attributable to AEP's direct or indirect investments
in EWGs and FUCOs.
As noted, AEP was authorized to invest up to 100% of its consolidated
retained earnings in EWGs and FUCOs. In connection with its consideration of
AEP's application for the 100% Order, the Commission reviewed AEP's procedures
for evaluating EWG or FUCO investments. Based on projected financial ratios and
on procedures and conditions established to limit the risks to AEP involved with
investments in EWGs and FUCOs, the Commission determined that permitting AEP to
invest up to 100% of its consolidated retained earnings in EWGs and FUCOs would
not have a substantial adverse impact upon the financial integrity of the AEP,
nor would it have an adverse impact on any of the utility subsidiaries or their
customers, or on the ability of state commissions to protect the utility
subsidiaries or their customers."
2. By adding the following paragraph at the end of Item 5 of said U-1:
It is requested, pursuant to Rule 23(c) of the Rules and Regula- tions of
the Commission, that the Commission's order granting and permitting to become
effective this Application or Declaration be issued on or before September 1,
2000. I&M waives any recommended decision by a hearing officer or by any other
responsible officer of the Commission and waives 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. I&M consents to the Division of Investment Management
assisting in the preparation of the Commission's decision and/or order in this
matter, unless the Division opposes the matter covered by this Application or
Declaration.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Post-Effective Amendment No.
24 to be signed on its behalf by the undersigned thereunto duly authorized.
INDIANA MICHIGAN POWER COMPANY
By /s/ A. A. Pena
-------------------
Vice President
Dated: June 27, 2000
