(As filed on October 9, 1998)
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
-----------------------------------
IES UTILITIES INC.
ALLIANT TOWER
CEDAR RAPIDS, IOWA 52401
(Name of company filing this statement
and address of principal executive offices)
-----------------------------------
INTERSTATE ENERGY CORPORATION
(Name of top registered holding company parent of each
applicant or declarant)
-----------------------------------
Erroll B. Davis, Jr., Chief Executive Officer
IES Utilities Inc.
P.O. Box 192
Madison, Wisconsin 53701-0192
(Name and address of agent for service)
-----------------------------------
The Commission is also requested to send copies of any
communications in connection with this matter to:
Barbara J. Swan, General Counsel William T. Baker, Jr., Esq.
Steven R. Suleski, Thelen Reid & Priest LLP
Senior Attorney 40 West 57th Street
Interstate Energy Corporation New York, New York 10019-4097
222 West Washington Avenue
Madison, Wisconsin 53703-0192
<PAGE>
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
SECTION A. OVERVIEW
1. IES Utilities Inc., which does business under the
name Alliant Utilities (the "Company"), is an Iowa corporation
and a wholly-owned subsidiary of Interstate Energy Corporation
("Interstate"), a registered holding company under the Public
Utility Holding Company Act of 1935, as amended (the "Holding
Company Act"). The Company proposes, from time to time through
December 31, 2000, to:
(i) issue and sell one or more series of Collateral
Trust Bonds of the Company (the "Collateral Trust Bonds");
(ii) issue and sell one or more series of Senior
Unsecured Debentures of the Company (the "Senior
Debentures");
(iii) issue and sell one or more series of
Unsecured Subordinated Debt Securities of the Company (the
"Subordinated Debentures"); and
(iv) enter into arrangements for the issuance and sale
of one or more series of tax-exempt bonds (the "Tax-Exempt
Bonds", and, together with the Collateral Trust Bonds, the
Senior Debentures and the Subordinated Debentures, the "Debt
Securities") for the financing of certain pollution control
facilities, including without limitation sewage and solid
waste disposal facilities and air and water pollution
control facilities that have not heretofore been the subject
of such financing or for the refinancing of outstanding
tax-exempt bonds issued for that purpose, including the
possible issuance and pledge of one or more new series of
bonds ("Tax-Exempt Collateral Bonds") as collateral security
for such Tax-Exempt Bonds.
2. The aggregate principal amount of the Debt
Securities shall not exceed $200 million (such amount excludes
the principal amount of the Tax-Exempt Collateral Bonds). Each
of the proposed transactions is discussed in detail below.
3. The Company was incorporated under the laws of the
State of Iowa on May 25, 1925 as Iowa Railway and Light
Corporation. The name of the Company was changed to Iowa
Electric Light and Power Company in 1932. The Company is the
surviving corporation following a merger with Iowa Southern
Utilities Company on December 31, 1993. It was eventually
renamed IES Utilities Inc. on December 31, 1993. The Company
became a wholly-owned subsidiary of Interstate as a result of the
combination of WPL Holdings, Inc. ("WPLH"), IES Industries Inc.
and Interstate Power Company (the "Transaction"), pursuant to
which the Company became a subsidiary of WPLH, the surviving
corporation of the Transaction, which was renamed Interstate.
The Transaction was approved by Order 35-26856 of the Commission
on April 14, 1998 in File No. 70-8891. The Company operates
solely within the State of Iowa.
SECTION B. COLLATERAL TRUST BONDS
4. The Collateral Trust Bonds will be issued under
the Company's Indenture of Mortgage and Deed of Trust, dated as
of September 1, 1993, to The First National Bank of Chicago, as
trustee, as amended and supplemented and as proposed to be
further supplemented by additional supplemental indenture(s),
each relating to one or more new series of Collateral Trust Bonds
(the "1993 Indenture").
5. The Collateral Trust Bonds will be secured
primarily by (i) first mortgage bonds issued under the Company's
Indenture of Mortgage and Deed of Trust, dated as of August 1,
1940 (as amended and supplemented, the "1940 Indenture"), to The
First National Bank of Chicago, as trustee, and delivered to the
trustee under the 1993 Indenture; (ii) first mortgage bonds
issued under the Company's Indenture or Deed of Trust, dated as
of February 1, 1923 (as amended and supplemented, the "1923
Indenture"), to The Northern Trust Company (The First National
Bank of Chicago, successor) and Harold H. Rockwell (Richard D.
Manella, successor), as trustees, and delivered to the trustee
under the 1993 Indenture; and (iii) the lien of the 1993
Indenture on the Company's properties used in the generation,
purchase, transmission, distribution or sale of electric energy
by the Company, or in the manufacture of manufactured gas, or in
the purchase, transportation, distribution or sale of steam and
hot water, which lien is junior to the liens of the 1940
Indenture and the 1923 Indenture.
6. Each new series of Collateral Trust Bonds will be
sold at such price, bear interest at such rate or rates, and
mature on such date or dates as shall be determined at the time
of sale or when the agreement to sell is entered into, as the
case may be. No series of Collateral Trust Bonds will be issued
at rates in excess of the lower of 15% per annum or those rates
generally obtainable at the time of pricing for sales of mortgage
bonds having the same or reasonably similar maturities, issued by
companies of the same or reasonably comparable credit quality and
having reasonably similar terms, conditions and features. The
price, exclusive of accrued interest, to be paid to the Company
for each new series of Collateral Trust Bonds to be sold at
competitive bidding will be within a range (to be specified by
the Company to prospective purchasers) of 95% to 105% of the
principal amount thereof. Each series of Collateral Trust Bonds
will mature not later than 30 years from the day of issuance.
7. As to series having an adjustable interest rate,
the initial interest rate for Collateral Trust Bonds of such
series would be determined in discussions between the Company and
the purchasers of such series and would be based upon the current
market rate for comparable bonds. Thereafter, the interest rate
on such Collateral Trust Bonds would be adjusted according to a
pre-established formula or method of determination ("Floating
Rate Collateral Trust Bonds") or would be that rate which, when
set, would be sufficient to remarket the Collateral Trust Bonds
of such series at their principal amount ("Remarketed Collateral
Trust Bonds").
8. The interest rate for Floating Rate Collateral
Trust Bonds after the initial interest rate period may be set as
a percentage of, or as a specified spread from, a benchmark rate,
such as the London Interbank Offered Rate ("LIBOR") or the yield
to maturity of specified United States Treasury securities
("Treasury Rate"), or may be established by reference to orders
received in an auction procedure, and will not exceed a specified
maximum rate greater than 15% per annum. Such interest rate may
be adjusted at established intervals or may be adjusted
simultaneously with changes in the benchmark rate.
9. The interest rate for Remarketed Collateral Trust
Bonds after the initial interest rate period would not be greater
than rates generally obtained at the time of remarketing of bonds
having similar maturities, issued by companies of comparable
credit quality and having reasonably comparable terms, and would
not exceed a specified maximum rate greater than 15% per annum.
10. The supplemental indenture to the 1993 Indenture
for any series of Remarketed Collateral Trust Bonds would provide
that holders thereof would have the right to tender or be
required to tender their Collateral Trust Bonds at a price equal
to the principal amount thereof, plus any accrued and unpaid
interest thereon, on dates specified in or established in
accordance with the applicable supplemental indenture. A Tender
Agent may be appointed to facilitate the tender of any Collateral
Trust Bonds by holders. Any holder of Collateral Trust Bonds
wishing to have such Collateral Trust Bonds purchased may be
required to deliver the same during a specified period of time
preceding such purchase date to the Tender Agent, if one shall
have been appointed, or to the Remarketing Agent appointed to
reoffer such tendered Collateral Trust Bonds for sale.
11. The Company would be obligated to pay amounts
equal to the amounts to be paid to the Remarketing Agent or the
Tender Agent pursuant to the supplemental indenture for the
purchase of Collateral Trust Bonds so tendered, such amounts to
be paid by the Company on the dates such payments by the
Remarketing Agent or the Tender Agent are to be made, reduced by
the amount of any other moneys available therefor, including the
proceeds of the sale of such tendered Collateral Trust Bonds by
the Remarketing Agent. Upon the delivery of such Collateral
Trust Bonds by holders to the Remarketing Agent or the Tender
Agent for purchase, the Remarketing Agent would use its best
efforts to sell such Collateral Trust Bonds at a price equal to
the principal amount of such Collateral Trust Bonds.
12. One or more new series of Collateral Trust Bonds
may include provisions for redemption prior to maturity at
various percentages of the principal amount thereof and may
include restrictions on optional redemption for a given number of
years. In addition, one or more series of Collateral Trust Bonds
may include provisions for the mandatory retirement of some or
all of such series prior to maturity. The Company desires the
flexibility, in connection with the issuance of the Collateral
Trust Bonds of any series, to deviate from the provisions, if
applicable, of the Statement of Policy Regarding First Mortgage
Bonds with respect to (i) redemption and refunding provisions by,
for example, providing refunding limitations for periods of more
than five years or prohibiting redemptions for specified periods
of time (including as long as the life of any series of the
Collateral Trust Bonds), and (ii) limitations on payment of common
stock dividends by, for example, including a less restrictive
provision or no such provision in the supplemental indenture
relating to a particular series, all as determined in light of
market conditions and other relevant considerations at the time
of issuance.
13. Reference is made to Exhibits A-1, A-2 and A-3
hereto, respectively, for further information with respect to the
terms of each series of Collateral Trust Bonds, each series of
bonds issued under the 1940 Indenture, and each series of bonds
issued under the 1923 Indenture.
SECTION C. SENIOR DEBENTURES
14. The Senior Debentures will be issued under the
Company's Indenture (For Senior Unsecured Debt Securities), dated
as of August 1, 1997, to The First National Bank of Chicago, as
trustee, as amended and supplemented and as proposed to be
further supplemented by additional supplemental indenture(s),
each relating to one or more new series of Senior Debentures.
15. The Senior Debentures will be unsecured
obligations of the Company and will rank on a parity with all
other unsecured and unsubordinated debt of the Company.
16. Each series of Senior Debentures will be sold at
such price, will bear interest at such rate(s) and will mature on
such date(s) as shall have been be determined at the time of
sale. Senior Debentures will not be sold if the fixed interest
rate or initial adjustable interest rate thereon would exceed the
lower of 15% or rates generally obtainable at the time of pricing
for sales of debentures having the same or reasonably equivalent
maturity, issued by companies of comparable credit quality and
having reasonably similar terms, conditions and features. As to
series of Senior Debentures having an adjustable interest rate,
the initial interest rate for such series will be negotiated by
the Company and the purchasers of such series and will be based
on the current market rate for comparable debentures.
Thereafter, the interest rate on such Senior Debentures would be
adjusted according to a pre-established formula or method of
determination ("Floating Rate Senior Debentures") or will be that
rate which, when set, would be sufficient to remarket the Senior
Debentures of such series at their principal amount ("Remarketed
Senior Debentures").
17. The interest rate for Floating Rate Senior
Debentures after the initial interest rate period may be set as a
percentage of, or as a specified spread from, a benchmark rate
such as LIBOR or the Treasury Rate, or may be established by
reference to orders received in an auction procedure, and will
not exceed a specified maximum rate, which shall not exceed 15%
per annum. Such interest rate may be adjusted at established
intervals or may be adjusted simultaneously with changes in the
benchmark rate.
18. The interest rate for Remarketed Senior Debentures
after the initial interest rate period will not exceed rates
generally obtainable at the time of remarketing of debentures
having the same or reasonably similar maturity, issued by
companies of comparable credit quality and having the same or
reasonably comparable terms and will not exceed a specified
maximum rate not to exceed 15% per annum.
19. The terms of Remarketed Senior Debentures would
provide that holders thereof have the right to tender or are
required to tender their Senior Debentures and have them
purchased at a price equal to the principal amount thereof plus
accrued and unpaid interest thereon, on specified dates. A
Tender Agent may be appointed to facilitate the tender of any
Senior Debentures by holders. Any holder of Remarketed Senior
Debentures wishing to have them purchased may be required to
deliver the same during a specified period of time preceding such
purchase date to the Tender Agent, if one shall be appointed, or
to the Remarketing Agent appointed to reoffer the same for sale.
20. The Company would be obligated to pay amounts
equal to the amounts to be paid to the Remarketing Agent or the
Tender Agent for the purchase of Remarketed Senior Debentures so
tendered, which amounts would be paid by the Company on the dates
such payments by the Remarketing Agent or the Tender Agent are to
be made, reduced by the amount of any other moneys available
therefor, including the proceeds of the sale of such tendered
Senior Debentures by the Remarketing Agent. Upon the delivery of
such Senior Debentures by holders to the Remarketing Agent or the
Tender Agent for purchase, the Remarketing Agent would use its
best efforts to sell the same at a price equal to the principal
amount thereof.
21. The price, exclusive of accrued interest, to be
paid to the Company for each such series of Senior Debentures
sold at competitive bidding will be within a range (to be
specified by the Company to prospective purchasers) of 95% to
105% of the principal amount of such series. Each series of
Senior Debentures will mature not later than 30 years from the
day of issuance.
22. One or more series of Senior Debentures may
include provisions for redemption prior to maturity at various
percentages of the principal amount thereof, restrictions on
optional redemption for a given number of years and/or provisions
for the mandatory retirement of some or all of such series prior
to maturity.
23. Reference is made to Exhibit A-4 hereto for
further information with respect to the terms of each series of
Senior Debentures.
SECTION D. SUBORDINATED DEBENTURES
24. The Subordinated Debentures will be issued under
the Company's Indenture (For Unsecured Subordinated Debt
Securities), dated as of December 1, 1995, to The First National
Bank of Chicago, as trustee, as amended and supplemented and as
proposed to be further supplemented by additional supplemental
indenture(s), each relating to one or more new series of
Subordinated Debentures.
25. The Subordinated Debentures will be unsecured,
subordinated obligations of the Company. The indenture relating
the Subordinated Debentures provides that payment of the
principal of, premium, if any, and interest on Subordinated
Debentures is subordinated and subject in right or payment to the
prior payment in full of all senior indebtedness of the Company.
26. Each series of Subordinated Debentures will be
sold at such price, will bear interest at such rate(s) and will
mature on such date(s) as shall have been be determined at the
time of sale. Subordinated Debentures will not be sold if the
fixed interest rate or initial adjustable interest rate thereon
would exceed the lower of 15% or rates generally obtainable at
the time of pricing for sales of debentures having the same or
reasonably equivalent maturity, issued by companies of comparable
credit quality and having reasonably similar terms, conditions
and features. As to series of Subordinated Debentures having an
adjustable interest rate, the initial interest rate for such
series will be negotiated by the Company and the purchasers of
such series and will be based on the current market rate for
comparable debentures. Thereafter, the interest rate on such
Subordinated Debentures would be adjusted according to a
pre-established formula or method of determination ("Floating
Rate Subordinated Debentures") or will be that rate which, when
set, would be sufficient to remarket the Subordinated Debentures
of such series at their principal amount ("Remarketed
Subordinated Debentures").
27. The interest rate for Floating Rate Subordinated
Debentures after the initial interest rate period may be set as a
percentage of, or as a specified spread from, a benchmark rate
such as LIBOR or the Treasury Rate, or may be established by
reference to orders received in an auction procedure, and will
not exceed a specified maximum rate, which shall not exceed 15%
per annum. Such interest rate may be adjusted at established
intervals or may be adjusted simultaneously with changes in the
benchmark rate.
28. The interest rate for Remarketed Subordinated
Debentures after the initial interest rate period will not exceed
rates generally obtainable at the time of remarketing of
debentures having the same or reasonably similar maturity, issued
by companies of comparable credit quality and having the same or
reasonably comparable terms and will not exceed a specified
maximum rate not to exceed 15% per annum.
29. The terms of Remarketed Debentures would provide
that holders thereof have the right to tender or are required to
tender their Subordinated Debentures and have them purchased at a
price equal to the principal amount thereof plus accrued and
unpaid interest thereon, on specified dates. A Tender Agent may
be appointed to facilitate the tender of any Subordinated
Debentures by holders. Any holder of Remarketed Subordinated
Debentures wishing to have them purchased may be required to
deliver the same during a specified period of time preceding such
purchase date to the Tender Agent, if one shall be appointed, or
to the Remarketing Agent appointed to reoffer the same for sale.
30. The Company would be obligated to pay amounts
equal to the amounts to be paid to the Remarketing Agent or the
Tender Agent for the purchase of Remarketed Subordinated
Debentures so tendered, which amounts would be paid by the
Company on the dates such payments by the Remarketing Agent or
the Tender Agent are to be made, reduced by the amount of any
other moneys available therefor, including the proceeds of the
sale of such tendered Subordinated Debentures by the Remarketing
Agent. Upon the delivery of such Subordinated Debentures by
holders to the Remarketing Agent or the Tender Agent for
purchase, the Remarketing Agent would use its best efforts to
sell the same at a price equal to the principal amount thereof.
31. The price, exclusive of accrued interest, to be
paid to the Company for each such series of Subordinated
Debentures sold at competitive bidding will be within a range (to
be specified by the Company to prospective purchasers) of 95% to
105% of the principal amount of such series. Each series of
Subordinated Debentures will mature not later than 30 years from
the day of issuance.
32. One or more series of Subordinated Debentures may
include provisions for redemption prior to maturity at various
percentages of the principal amount thereof, restrictions on
optional redemption for a given number of years and/or provisions
for the mandatory retirement of some or all of such series prior
to maturity.
33. Reference is made to Exhibits A-5 hereto for
further information with respect to the terms of each series of
Subordinated Debentures.
SECTION E. GENERAL MATTERS RELATING TO COLLATERAL TRUST
BONDS, SENIOR DEBENTURES AND SUBORDINATED
DEBENTURES
34. The Company anticipates that the issuance and sale
of each series of Collateral Trust Bonds, Senior Debentures and
Subordinated Debentures will be by means of competitive bidding
or negotiated public offering or private placement with
institutional investors in order to secure the advantages of an
advance marketing effort and/or the best available terms.
35. Sale(s) of Collateral Trust Bonds, Senior
Debentures and Subordinated Debentures are separate transactions
not contingent upon one another.
36. The Company proposes to use the net proceeds
derived from the issuance and sale of Collateral Trust Bonds,
Senior Debentures and Subordinated Debentures for general
corporate purposes, including without limitation the conduct of
its business as a utility, the repayment of outstanding
securities when due and/or the possible redemption, acquisition,
or refunding of certain outstanding securities prior to their
stated maturity or due date. The Company's request for
authorization for such sales is in part to provide the
flexibility to permit a quick response to changing market
conditions if it becomes beneficial for the Company to refinance,
refund, or otherwise acquire outstanding high cost securities.
SECTION F. TAX-EXEMPT BONDS AND RELATED TRANSACTIONS
37. Each issue of the proposed pollution control
revenue bonds will be issued for the financing or refinancing of
the costs of certain air and water pollution control facilities
and sewage and solid waste disposal facilities at one or more of
the Company generating plants or other facilities located in
various counties. It is proposed that each such municipality,
county or the otherwise appropriate public or state body or
instrumentality (the "Authority") will issue its revenue bonds
(the "Tax-Exempt Bonds") to finance or refinance the costs of the
acquisition, construction, installation and equipping of said
facilities at the plant or other facility located in its
jurisdiction (the "Project"). Each Authority is authorized by
relevant state law to issue its Tax-Exempt Bonds for such
purposes.
38. While the actual amount of Tax-Exempt Bonds to be
issued by each Authority has not yet been determined, such amount
will be based upon the cost of refunding outstanding bonds or the
cost of the Project located in its jurisdiction.
39. The Company proposes to enter into a Loan or
Installment Sale Agreement with the Authority relating to each
issue of the Tax-Exempt Bonds (the "Agreement"). Under the
Agreement, the Authority will loan to the Company the proceeds of
the sale of the Authority's Tax-Exempt Bonds, and the Company may
issue a non-negotiable promissory note therefor (the "Note"), or
the Authority will undertake to purchase and sell the related
Project to the Company. The installment sale structure may be
used because it is required by applicable state law or to the
extent it affords transactional advantages to the Company. Such
proceeds will be deposited with a trustee (the "Trustee") under
an indenture to be entered into between the Authority and such
Trustee (the "Trust Indenture"), pursuant to which such Tax-
Exempt Bonds are to be issued and secured, and will be applied by
the Company to payment of the Cost of Construction (as defined in
the Agreement) of the Project or to refund outstanding pollution
control revenue obligations.
40. The Note or the Agreement will provide for
payments to be made by the Company at times and in amounts which
shall correspond to the payments with respect to the principal
of, premium, if any, and interest on the related Tax-Exempt Bonds
whenever and in whatever manner the same shall become due,
whether at stated maturity, upon redemption or declaration or
otherwise.
41. The Agreement will provide for the assignment to
the Trustee of the Authority's interest in, and of the moneys
receivable by the Authority under, the Agreement and the Note.
42. The Agreement will also obligate the Company to
pay the fees and charges of the Trustee and may provide that the
Company may at any time, so long as it is not in default
thereunder, prepay the amount due under the Agreement or the
Note, including interest thereon, in whole or in part, such
payment to be sufficient to redeem or purchase outstanding Tax-
Exempt Bonds in the manner and to the extent provided in the
Trust Indenture.
43. The Trust Indenture will provide that the Tax-
Exempt Bonds issued thereunder will be redeemable (i) at any time
on or after a specified date from the date of issuance, in whole
or in part, at the option of the Company, and may require the
payment of a premium at a specified percentage of the principal
amount which may decline annually thereafter, and (ii) in whole,
at the option of the Company, in certain other cases of undue
burdens or excessive liabilities imposed with respect to the
related Project, its destruction or damage beyond practicable or
desirable repairability or condemnation or taking by eminent
domain, or if operation of the related facility is enjoined and
the Company determines to discontinue operation thereof, such
redemption of all such outstanding Tax-Exempt Bonds to be at the
principal amount thereof plus accrued interest, but without
premium. It is proposed that the Tax-Exempt Bonds will mature
not more than 30 years from the first day of the month in which
they are initially issued and may, if it is deemed advisable for
purposes of the marketability of the Tax-Exempt Bonds, be
entitled to the benefit of a mandatory redemption sinking fund
calculated to retire a portion of the aggregate principal amount
of the Tax-Exempt Bonds prior to maturity.
44. The Trust Indenture and the Agreement may give the
holders of the Tax-Exempt Bonds the right, during such time as
the Tax-Exempt Bonds bear interest at a fluctuating rate or
otherwise, to require the Company to purchase the Tax-Exempt
Bonds from time to time, and arrangements may be made for the
remarketing of any such Tax-Exempt Bonds through a remarketing
agent. The Company also may be required to purchase the Tax-
Exempt Bonds, or the Tax-Exempt Bonds may be subject to mandatory
redemption, at any time if the interest thereon is determined to
be subject to federal income tax. Also in the event of
taxability, interest on the Tax-Exempt Bonds may be effectively
converted to a higher variable or fixed rate, and the Company
also may be required to indemnify the bondholders against any
other additions to interest, penalties, and additions to tax;
such terms are not considered to constitute the issuance of a
separate security under Sections 6(a) and 7 of the Holding
Company Act, but rather possible additional terms of the Tax-
Exempt Bonds and the Company's obligations with respect thereto.
45. In order to obtain the benefit of ratings for the
Tax-Exempt Bonds equivalent to the rating of the Collateral Trust
Bonds outstanding under the 1993 Indenture, which ratings the
Company has been advised may be thus attained, the Company may
determine to secure its obligations under the Note and the
related Agreement by delivering to the Trustee, to be held as
collateral, a series of its Collateral Trust Bonds (the "Tax-
Exempt Collateral Bonds") in principal amount either (i) equal to
the principal amount of the Tax-Exempt Bonds or (ii) equal to the
sum of such principal amount of the Tax-Exempt Bonds plus
interest payments thereon for a specified period. Such series of
Tax-Exempt Collateral Bonds will be issued under an indenture
supplemental to the 1993 Indenture (the "Supplemental
Indenture"), will mature on the maturity date of such Tax-Exempt
Bonds and will be non-transferable by the Trustee. The Tax-
Exempt Collateral Bonds, in the case of clause (i) above, would
bear interest at a rate or rates equal to the interest rate or
rates to be borne by the related Tax-Exempt Bonds and, in the
case of clause (ii) above, would be non-interest bearing.
46. The Supplemental Indenture will provide, however,
that the obligation of the Company to make payments with respect
to the Tax-Exempt Collateral Bonds will be satisfied to the
extent that payments are made under the Note or the Agreement
sufficient to meet payments when due in respect of the related
Tax-Exempt Bonds. The Supplemental Indenture will provide that,
upon acceleration by the Trustee of the principal amount of all
related outstanding Tax-Exempt Bonds under the Trust Indenture,
the Trustee may demand the mandatory redemption of the related
Tax-Exempt Collateral Bonds then held by it as collateral at a
redemption price equal to the principal amount thereof plus
accrued interest, if any, to the date fixed for redemption. The
Supplemental Indenture may also provide that, upon the optional
redemption of the Tax-Exempt Bonds, in whole or in part, a
related principal amount of the Tax-Exempt Collateral Bonds will
be redeemed at the redemption price of the Tax-Exempt Bonds.
47. In the case of interest bearing Tax-Exempt
Collateral Bonds, because interest accrues in respect of such
Tax-Exempt Collateral Bonds until satisfied by payments under the
Note or the Agreement, "annual interest charges" in respect of
such Tax-Exempt Collateral Bonds will be included in computing
the "interest earnings requirement" of the 1993 Indenture which
restricts the amount of Collateral Trust Bonds which may be
issued and sold to the public in relation to the Company's net
earnings. In the case of non-interest bearing Tax-Exempt
Collateral Bonds, since no interest would accrue in respect of
such Tax-Exempt Collateral Bonds, the "interest earnings
requirement" would be unaffected.
48. The Trust Indenture will provide that, upon
deposit with the Trustee of funds sufficient to pay or redeem all
or any part of the related Tax-Exempt Bonds, or upon direction to
the Trustee by the Company to so apply funds available therefor,
or upon delivery of such outstanding Tax-Exempt Bonds to the
Trustee by or for the account of the Company, the Trustee will be
obligated to deliver to the Company the Tax-Exempt Collateral
Bonds then held as collateral in an aggregate principal amount as
they relate to the aggregate principal amount of such Tax-Exempt
Bonds for the payment or redemption of which such funds have been
deposited or applied or which shall have been so delivered.
49. As an alternative to or in conjunction with the
Company's securing its obligations through the issuance of the
Tax-Exempt Collateral Bonds as above described, the Company may
cause an irrevocable Letter of Credit or other credit facility
(the "Letter of Credit") of a bank or other financial institution
(the "Bank") to be delivered to the Trustee. The Letter of
Credit would be an irrevocable obligation of the Bank to pay to
the Trustee, upon request, up to an amount necessary in order to
pay principal of and accrued interest on the Tax-Exempt Bonds
when due. Pursuant to a separate agreement with the Bank, the
Company would agree to pay to the Bank, on demand or pursuant to
a borrowing under such agreement, all amounts that are drawn
under the Letter of Credit, as well as certain fees and expenses.
Such delivery of the Letter of Credit to the Trustee would obtain
for the Tax-Exempt Bonds the benefit of a rating equivalent to
the credit rating of the Bank. In the event that the Letter of
Credit is delivered to the Trustee as an alternative to the
issuance of the Tax-Exempt Collateral Bonds, the Company may also
convey to the Authority a subordinated security interest in the
Project or other property of the Company as further security for
the Company's obligations under the Agreement and the Note. Such
subordinated security interest would be assigned by the Authority
to the Trustee.
50. As a further alternative to, or in conjunction
with, securing its obligations under the Agreement and Note as
above described, and in order to obtain a "AAA" rating for the
Tax-Exempt Bonds by one or more nationally recognized securities
rating services, the Company may cause an insurance company to
issue a policy of insurance guaranteeing the payment when due of
the principal of and interest on such series of the Tax-Exempt
Bonds. Such insurance policy would extend for the term of the
related Tax-Exempt Bonds and would be non-cancelable by the
insurance company for any reason. The Company's payment of the
premium with respect to said insurance policy could be in various
forms, including a non-refundable, one-time insurance premium
paid at the time the policies are issued, and/or an additional
interest percentage to be paid to said insurer in correlation
with regular interest payments. In addition, the Company may be
obligated to make payments of certain specified amounts into
separate escrow funds and to increase the amounts on deposit in
such funds under certain circumstances. The amount in each
escrow fund would be payable to the insurance company as
indemnity for any amounts paid pursuant to the related insurance
policy in respect of principal of or interest on the related Tax-
Exempt Bonds. In the event that an insurance policy is issued as
an alternative to the issuance of the Tax-Exempt Collateral
Bonds, the Company may also convey to the Authority a
subordinated security interest in the Project or other property
of the Company as further security for the Company's obligations
under the Agreement and the Note. Such subordinated security
interest would be assigned by the Authority to the Trustee. If,
due to insufficiency of coverages or for other reasons, the
Company is unable or determines not to issue the Tax-Exempt
Collateral Bonds or to deliver the Letter of Credit to the
Trustee as above described or to cause an insurance policy to be
issued, the Tax-Exempt Bonds would be issued without the benefit
of such security. In that event the Company may convey to the
Authority a subordinated security interest in the Project or
other property of the Company as security for its obligations
under the Agreement and the Note. Such subordinated security
interest would be assigned by the Authority to the Trustee. The
Company also may guarantee the payment of the principal of,
premium, if any, and interest on the Tax-Exempt Bonds.
51. It is contemplated that the Tax-Exempt Bonds will
be sold by the Authority pursuant to arrangements with one or
more purchasers, placement agents or underwriters. In accordance
with applicable state laws, the interest rate to be borne by the
Tax-Exempt Bonds will be approved by the Authority and will be
either a fixed rate, which fixed rate may be convertible to a
rate which will fluctuate in accordance with a specified prime or
base rate or rates or may be determined pursuant to certain
remarketing or auction procedures, or a fluctuating rate, which
fluctuating rate may be convertible to a fixed rate. While the
Company may not be party to the purchase, placement or
underwriting arrangements for the Tax-Exempt Bonds, such
arrangements will provide that the terms of the Tax-Exempt Bonds
and their sale by the Authority shall be satisfactory to the
Company. Bond Counsel will issue an opinion that, based upon
existing law, interest on the Tax-Exempt Bonds will generally be
excludable from gross income for federal income tax purposes.
The Company has been advised that the interest rates on
obligations, the interest on which is tax exempt, recently have
been and can be expected at the time of issue of the Tax-Exempt
Bonds to be approximately one to three percentage points lower
than the rates on obligations of like tenor and comparable
quality, interest on which is fully subject to federal income
taxation.
52. The Company also proposes that it may enter into
arrangements providing for the delayed or future delivery of Tax-
Exempt Bonds to one or more purchasers or underwriters. The
obligations of the purchasers or underwriters to purchase Tax-
Exempt Bonds under any such arrangements may be secured by U.S.
Treasury securities, letters of credit or other collateral. The
effective cost to the Company of any series of the Tax-Exempt
Bonds will not exceed the yield on U.S. Treasury securities
having a maturity comparable to that of such series of Tax-Exempt
Bonds. Such effective cost will reflect the applicable interest
rate or rates and any underwriters' discount or commission.
53. The premium (if any) payable upon the redemption
of any Tax-Exempt Bonds at the option of the Company will not
exceed the greater of (i) 5% of the principal amount of the Tax-
Exempt Bonds so to be redeemed, or (ii) a percentage of such
principal amount equal to the rate of interest per annum borne by
such Tax-Exempt Bonds.
54. The purchase price payable by or on behalf of the
Company in respect of Tax-Exempt Bonds tendered for purchase at
the option of the holders thereof will not exceed 100% of the
principal amount thereof, plus accrued interest to the purchase
date.
55. Any Letter of Credit issued as security for the
payment of Tax-Exempt Bonds will be issued pursuant to a
Reimbursement Agreement between the Company and the financial
institution issuing such Letter of Credit. Pursuant to the
Reimbursement Agreement, the Company will agree to pay or cause
to be paid to the financial institution, on each date that any
amount is drawn under such institution's Letter of Credit, an
amount equal to the amount of such drawing, whether by cash or by
means of a borrowing from such institution pursuant to the
Reimbursement Agreement. Any such borrowing may have a term of
up to 10 years and will bear interest at the lending
institution's prevailing rate offered to corporate borrowers of
similar quality which will not exceed (i) the London Interbank
Offered Rate plus up to 2%, (ii) the lending institution's
certificate of deposit rate plus up to 1-3/4%, or (iii) a rate
not to exceed the prime rate plus 1%, to be established by
agreement with the lending institution prior to the borrowing.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
56. The fees, commissions and expenses, other than
those of the underwriters, to be incurred in connection with the
issuance and sale of the Collateral Trust Bonds, Senior
Debentures and Subordinated Debentures will be filed by amendment
to this Form U-1.
57. The fees, commissions and expenses, other than
those of the underwriters, to be incurred in connection with the
issuance and sale of the Tax-Exempt Bonds (including expenses
related to the issuance and pledge of the Tax-Exempt Collateral
Bonds) will be filed by amendment to this Form U-1.
58. The fees, commissions and expenses of the
underwriters expected to be incurred with respect to the Debt
Securities will not exceed the lesser of 2% of the principal
amount of the Debt Securities to be sold or those generally paid
at the time of pricing for sales of first mortgage bonds, senior
debentures, subordinated debentures or tax-exempt bonds having
the same maturity, issued by companies of comparable credit
quality and having similar terms, conditions and features.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
SECTION A. DEBT SECURITIES
59. The Company considers that the issuance of the
Debt Securities is subject to Sections 6(a), 7 and 12(c) of the
Holding Company Act and Rules 23, 24 and 42 thereunder.
60. The Company further considers that the sale or
granting of subordinated security interests in the Projects or
other property of the Company, as set forth under Section F of
Item 2 above, may be subject to Section 12(d) of the Holding
Company Act and Rule 44 thereunder.
61. The Company considers that any guarantee of
payment of the Tax-Exempt Bonds, or any promissory note of the
Company to the Authority in connection with the Tax-Exempt Bonds,
may be subject to Sections 6(a) and 7 of the Holding Company Act.
62. The Company considers that Sections 9(a) and 10 of
the Holding Company Act may be applicable to any purchase of Tax-
Exempt Bonds by the Company as described herein and to the extent
that the transactions contemplated herein in connection with the
Tax-Exempt Bonds involve an Installment Sale Agreement or
agreements pursuant to which the Authority undertakes to sell the
related Project to the Company.
63. The proposed transactions will be carried out in
accordance with the procedure specified in Rule 23 and pursuant
to an order or orders of the Commission in respect thereto.
SECTION B. RULE 54 ANALYSIS
64. Under Rule 54, in determining whether to approve
the issue or sale of a security by a registered holding company
for purposes other than the acquisition of an "exempt wholesale
generator" or "foreign utility company", as such terms are
defined in Sections 32 and 33, respectively, of the Holding
Company Act, or other transactions by such registered holding
company or its subsidiaries other than with respect to "exempt
wholesale generators" or "foreign utility companies", the
Commission shall not consider the effect of the capitalization or
earnings of any subsidiary which is an "exempt wholesale
generator" or a "foreign utility company" upon the registered
holding company system if the "safe harbor" conditions of Rule 53
are satisfied.
65. Interstate currently meets all of the "safe
harbor" conditions of Rule 53. Interstate's "aggregate
investment", as defined in Rule 53(a)(1)(i) under the Holding
Company Act, in "exempt wholesale generators" and "foreign
utility companies" at June 30, 1998 was approximately $68
million, representing approximately 11.5% of Interstate's
"consolidated retained earnings", as defined in Rule
53(a)(1)(ii), for the four quarters ended June 30, 1998 ($591
million). Furthermore, Interstate has and will continue to
comply with the record keeping requirements of Rule 53(a)(2)
concerning affiliated "exempt wholesale generators" and "foreign
utility companies." In addition, as required by Rule 53(a)(3),
no more than 2% of the employees of Interstate's operating
utility subsidiaries will, at any one time, directly or
indirectly, render services to "exempt wholesale generators" and
"foreign utility companies". Finally, since none of the
circumstances described in Rule 53(b) exists, the provisions of
Rule 53(a) are not made inapplicable by Rule 53(b).
ITEM 4. REGULATORY APPROVAL.
66. No state regulatory body or agency and no federal
commission or agency other than this Commission has jurisdiction
over the transactions proposed herein.
ITEM 5. PROCEDURE
67. The Company requests that the Commission's notice
of proposed transactions published pursuant to Rule 23(e) be
issued by October 16, 1998, or as soon thereafter as practicable.
The Company further requests that the Commission's order
authorizing the consummation of the proposed transactions be
entered no later than November 25, 1998, or as soon thereafter as
practicable.
68. Upon the completion of each transaction involving
the issuance and sale of any of the Debt Securities, the Company
shall file a Certificate pursuant to Rule 24 with copies of the
executed documents relating thereto as exhibits.
69. The Company hereby waives a recommended decision
by a hearing officer or any other responsible officer of the
Commission; agrees that the Staff of the Division of Investment
Management may assist in the preparation of the Commission's
decision; and requests that there be no waiting periods between
the issuance of the Commission's orders and the dates on which
they are to become effective.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
SECTION A. EXHIBITS:
A-1(a) Indenture of Mortgage and Deed of Trust, dated as
of September 1, 1993, between the Company
(formerly Iowa Electric Light and Power Company
("IE")) and The First National Bank of Chicago, as
Trustee ("Mortgage") (incorporated by reference to
Exhibit 4(c) to IE's Form 10-Q for the quarter
ended September 30, 1993.)
A-1(b) Supplemental Indentures to the Mortgage:
Supp.
Ind. Incorporated by Reference to:
-----------------------------
Number Dated as of File Exhibit
------ ----------- ---- -------
First October 1, 1993 Form 10-Q, 11/12/93 4(d)
Second November 1, 1993 Form 10-Q, 11/12/93 4(e)
Third March 1, 1995 Form 10-Q, 5/12/95 4(b)
Fourth September 1, 1996 Form 8-K, 9/19/96 4(c)(i)
Fifth April 1, 1997 Form 10-Q, 5/14/97 4(a)
A-1(c) Proposed form of Supplemental Indenture
establishing the series of Collateral Trust Bonds
(including form of Collateral Trust Bonds)
(incorporated by reference to Exhibit 4(c) to the
Company's Registration Statement, File No. 333-
29391).
A-2(a) Indenture of Mortgage and Deed of Trust, dated as
of August 1, 1940, between the Company (formerly
IE) and The First National Bank of Chicago, as
Trustee ("1940 Indenture") (incorporated by
reference to Exhibit 2(a) to IE's Registration
Statement, File No. 2-25347).
A-2(b) Supplemental Indentures to the 1940 Indenture:
Supp.
Ind. Incorporated by Reference to:
-----------------------------
Number Dated as of File Exhibit
------ ----------- ---- -------
First March 1, 1941 2-25347 2(a)
Second July 15, 1942 2-25347 2(a)
Third August 2, 1943 2-25347 2(a)
Fourth August 10, 1944 2-25347 2(a)
Fifth November 10, 1944 2-25347 2(a)
Sixth August 8, 1945 2-25347 2(a)
Seventh July 1, 1946 2-25347 2(a)
Eighth July 1, 1947 2-25347 2(a)
Ninth December 15, 1948 2-25347 2(a)
Tenth November 1, 1949 2-25347 2(a)
Eleventh November 10, 1950 2-25347 2(a)
Twelfth October 1, 1951 2-25347 2(a)
Thirteenth March 1, 1952 2-25347 2(a)
Fourteenth November 5, 1952 2-25347 2(a)
Fifteenth February 1, 1953 2-25347 2(a)
Sixteenth May 1, 1953 2-25347 2(a)
Seventeenth November 3, 1953 2-25347 2(a)
Eighteenth November 8, 1954 2-25347 2(a)
Nineteenth January 1, 1955 2-25347 2(a)
Twentieth November 1, 1955 2-25347 2(a)
Twenty-first November 9, 1956 2-25347 2(a)
Twenty-second November 6, 1957 2-25347 2(a)
Twenty-third November 4, 1959 2-25347 2(a)
Twenty-fourth November 3, 1959 2-25347 2(a)
Twenty-fifth November 1, 1960 2-25347 2(a)
Twenty-sixth January 1, 1961 2-25347 2(a)
Twenty-seventh November 7, 1961 2-25347 2(a)
Twenty-eighth November 6, 1962 2-25347 2(a)
Twenty-ninth November 5, 1963 2-25347 2(a)
Thirtieth November 4, 1964 2-25347 2(a)
Thirty-first November 2, 1965 2-25347 2(a)
Thirty-second September 1, 1966 Form 10-K, 1966 4.10
Thirty-third November 30, 1966 Form 10-K, 1966 4.10
Thirty-fourth November 7, 1967 Form 10-K, 1967 4.10
Thirty-fifth November 5, 1968 Form 10-K, 1968 4.10
Thirty-sixth November 1, 1969 Form 10-K, 1969 4.10
Thirty-seventh December 1, 1970 Form 8-K, 12/70 1
Thirty-eighth November 2, 1971 2-43131 2(g)
Thirty-ninth May 1, 1972 Form 8-K, 5/72 1
Fortieth November 7, 1972 2-56078 2(i)
Forty-first November 7, 1973 2-56078 2(j)
Forty-second September 10, 1974 2-56078 2(k)
Forty-third November 5, 1975 2-56078 2(l)
Forty-fourth July 1, 1976 Form 8-K, 7/76 1
Forty-fifth November 1, 1976 Form 8-K, 12/76 1
Forty-sixth December 1, 1977 2-60040 2(o)
Forty-seventh November 1, 1978 Form 10-Q, 6/30/79 1
Forty-eighth December 1, 1979 Form S-16,2-65996 2(q)
Forty-ninth November 1, 1981 Form 10-Q, 3/31/82 2
Fiftieth December 1, 1980 Form 10-K, 1981 4(s)
Fifty-first December 1, 1982 Form 10-K, 1982 4(t)
Fifty-second December 1, 1983 Form 10-K, 1983 4(u)
Fifty-third December 1, 1984 Form 10-K, 1984 4(v)
Fifty-fourth March 1, 1985 Form 10-K, 1984 4(w)
Fifty-fifth March 1, 1988 Form 10-Q, 4(b)
5/12/88
Fifty-sixth October 1, 1988 Form 10-Q, 4(c)
11/10/88
Fifty-seventh May 1, 1991 Form 10-Q, 4(d)
8/13/91
Fifty-eighth March 1, 1992 Form 10-K, 1991 4(c)
Fifty-ninth October 1, 1993 Form 10-Q, 4(a)
11/12/93
Sixtieth November 1, 1993 Form 10-Q, 4(b)
11/12/93
Sixty-first March 1, 1995 Form 10-Q, 4(a)
5/12/95
Sixty-second September 1, 1996 Form 8-K, 4(c)(i)
9/19/96
Sixty-third April 1, 1997 Form 10-Q, 4(b)
5/14/97
A-2(c) Proposed form of Supplemental Indenture providing
for the issuance of Class "A" Bonds under the 1940
Indenture (including form of Class "A" Bonds)
(incorporated by reference to Exhibit 4(f) to the
Company's Registration Statement, File No. 333-
29391).
A-3(a) Indenture or Deed of Trust dated as of February 1,
1923, between the Company (successor to Iowa
Southern Utilities Company ("IS") as a result of
merger of IS and IE) and The Northern Trust
Company (The First National Bank of Chicago,
successor) and Harold H. Rockwell (Richard D.
Manella, successor), as Trustees ("1923
Indenture") (incorporated by reference to Exhibit
B-1 to File No. 2-1719).
A-3(b) Supplemental Indentures to the 1923 Indenture:
Incorporated by Reference to:
-----------------------------
Dated as of File Exhibit
----------- ---- -------
May 1, 1940 2-4921 B-1-k
May 2, 1940 2-4921 B-1-l
October 1, 1945 2-8053 7(m)
October 2, 1945 2-8053 7(n)
January 1, 1948 2-8053 7(o)
September 1, 1950 33-3995 4(e)
February 1, 1953 2-10543 4(b)
October 2, 1953 2-10543 4(q)
August 1, 1957 2-13496 2(b)
September 1, 1962 2-20667 2(b)
June 1, 1967 2-26478 2(b)
February 1, 1973 2-46530 2(b)
February 1, 1975 2-53860 2(aa)
July 1, 1975 2-54285 2(bb)
September 2, 1975 2-57510 2(bb)
March 10, 1976 2-57510 2(cc)
February 1, 1977 2-60276 2(ee)
January 1, 1978 0-849 2
March 1, 1979 0-849 2
March 1, 1980 0-849 2
May 31, 1986 33-3995 4(g)
July 1, 1991 0-849 4(h)
September 1, 1992 0-849 4(m)
December 1, 1994 Form 10-K, 1994 4(f)
A-4 Indenture (For Senior Unsecured Debt Securities),
dated as of August 1, 1997, between the Company
and The First National Bank of Chicago, Trustee
(incorporated by reference to Exhibit 4(j) to the
Company's Registration Statement, File No. 333-
29391).
A-5 Indenture (For Unsecured Subordinated Debt
Securities), dated as of December 1, 1995, between
the Company and The First National Bank of
Chicago, Trustee (incorporated by reference to
Exhibit 4(i) to the Company's Registration
Statement, File No. 33-62259).
B None.
C Registration Statement filed under the Securities
Act of 1933 with respect to the Collateral Trust
Bonds, Senior Debentures and Subordinated
Debentures (incorporated by reference to File No.
333-29391).
D None.
E None.
F Opinion of counsel for the Company (to be filed by
amendment).
G-1 Financial Data Schedule for Interstate
(incorporated by reference to Exhibit 27.2 to the
Interstate's Form 10-Q for the quarter ended June
30, 1998).
G-2 Financial Data Schedule for the Company
(incorporated by reference to Exhibit 27.4 to the
Company's Form 10-Q for the quarter ended June 30,
1998).
H Form of Notice.
SECTION B. FINANCIAL STATEMENTS
70. Balance sheet of the Company at June 30, 1998
(incorporated by reference to the Company's Form 10-Q for the
quarter ended June 30, 1998, File No. 001-04117).
71. Statement of income and surplus of the Company for
the six months ended June 30, 1998 (incorporated by reference to
the Company's Form 10-Q for the quarter ended June 30, 1998, File
No. 001-04117).
72. Consolidated balance sheet of Interstate at June
30, 1998 (incorporated by reference to the Company's Form 10-Q
for the quarter ended June 30, 1998, File No. 001-09894).
73. Consolidated statement of income and surplus of
Interstate for the six months ended June 30, 1998 (incorporated
by reference to the Company's Form 10-Q for the quarter ended
June 30, 1998, File No. 001-09894).
74. Since June 30, 1998, there have been no material
adverse changes, not in the ordinary course of business, in the
financial condition of the Company or of Interstate and its
subsidiaries consolidated from that set forth in or contemplated
by the foregoing financial statements.
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
75. The proposed transactions are strictly financial
in nature in the ordinary course of the Company's business.
Accordingly, the Commission's action in these matters will not
constitute any major federal action significantly affecting the
quality of the human environment within the meaning of the
National Environmental Policy Act.
76. No other federal agency has prepared or is
preparing an environmental impact statement with regard to the
proposed transactions.
<PAGE>
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.
Dated: October 9, 1998 IES UTILITIES INC.
By: /s/ Erroll B. Davis, Jr.
------------------------
Name: Erroll B. Davis, Jr.
Title: Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
H Form of Notice
EXHIBIT H
FORM OF NOTICE OF PROPOSED TRANSACTIONS
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- ; 70 )
Filings Under the Public Utility Holding Company Act of 1935
("Act").
Interstate Energy Corporation ("Interstate")
IES Utilities Inc. (the "Company")
Notice of Proposal to Issue and Sell Debt Securities
October ___, 1998
Notice is hereby given that the following filing(s)
has/have been made with the Commission pursuant to provisions of
the Act and rules promulgated thereunder. All interested persons
are referred to the application(s) and/or declaration(s) for
complete statements of the proposed transaction(s) summarized
below. The application(s) and/or declaration(s) and any
amendments thereto is/are available for public inspection through
the Commission's Office of Public Reference.
Interested persons wishing to comment or request a
hearing on the application(s) and/or declaration(s) should submit
their views in writing by __________, 1998 to the Secretary,
Securities and Exchange Commission, Washington, D.C. 20549, and
serve a copy on the relevant applicant(s) and/or declarant(s) at
the address(es) specified below. Proof of service (by affidavit
or, in case of an attorney at law, by certificate) should be
filed with the request. Any request for 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
the matter. After said date, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or
permitted to become effective.
* * * * *
SECTION A. OVERVIEW
The Company, which does business under the name Alliant
Utilities, is an Iowa corporation and a wholly-owned subsidiary
of Interstate, a registered holding company under the Act. The
Company proposes, from time to time through December 31, 2000,
to:
(i) issue and sell one or more series of Collateral
Trust Bonds of the Company (the "Collateral Trust Bonds");
(ii) issue and sell one or more series of Senior
Unsecured Debentures of the Company (the "Senior
Debentures");
(iii) issue and sell one or more series of
Unsecured Subordinated Debt Securities of the Company (the
"Subordinated Debentures"); and
(iv) enter into arrangements for the issuance and sale
of one or more series of tax-exempt bonds (the "Tax-Exempt
Bonds", and, together with the Collateral Trust Bonds, the
Senior Debentures and the Subordinated Debentures, the "Debt
Securities") for the financing of certain pollution control
facilities, including without limitation sewage and solid
waste disposal facilities and air and water pollution
control facilities that have not heretofore been the subject
of such financing or for the refinancing of outstanding
tax-exempt bonds issued for that purpose, including the
possible issuance and pledge of one or more new series of
bonds ("Tax-Exempt Collateral Bonds") as collateral security
for such Tax-Exempt Bonds.
The aggregate principal amount of the Debt Securities
shall not exceed $200 million (such amount excludes the principal
amount of the Tax-Exempt Collateral Bonds). Each of the proposed
transactions is discussed in detail below.
The Company was incorporated under the laws of the
State of Iowa on May 25, 1925 as Iowa Railway and Light
Corporation. The name of the Company was changed to Iowa
Electric Light and Power Company in 1932. The Company is the
surviving corporation following a merger with Iowa Southern
Utilities Company on December 31, 1993. It was eventually
renamed IES Utilities Inc. on December 31, 1993. The Company
became a wholly-owned subsidiary of Interstate as a result of the
combination of WPL Holdings, Inc. ("WPLH"), IES Industries Inc.
and Interstate Power Company (the "Transaction"), pursuant to
which the Company became a subsidiary of WPLH, the surviving
corporation of the Transaction, which was renamed Interstate.
The Transaction was approved by Order 35-26856 of the Commission
on April 14, 1998 in File No. 70-8891. The Company operates
solely within the State of Iowa.
SECTION B. COLLATERAL TRUST BONDS
The Collateral Trust Bonds will be issued under the
Company's Indenture of Mortgage and Deed of Trust, dated as of
September 1, 1993, to The First National Bank of Chicago, as
trustee, as amended and supplemented and as proposed to be
further supplemented by additional supplemental indenture(s),
each relating to one or more new series of Collateral Trust Bonds
(the "1993 Indenture").
The Collateral Trust Bonds will be secured primarily by
(i) first mortgage bonds issued under the Company's Indenture of
Mortgage and Deed of Trust, dated as of August 1, 1940 (as
amended and supplemented, the "1940 Indenture"), to The First
National Bank of Chicago, as trustee, and delivered to the
trustee under the 1993 Indenture; (ii) first mortgage bonds
issued under the Company's Indenture or Deed of Trust, dated as
of February 1, 1923 (as amended and supplemented, the "1923
Indenture"), to The Northern Trust Company (The First National
Bank of Chicago, successor) and Harold H. Rockwell (Richard D.
Manella, successor), as trustees, and delivered to the trustee
under the 1993 Indenture; and (iii) the lien of the 1993
Indenture on the Company's properties used in the generation,
purchase, transmission, distribution or sale of electric energy
by the Company, or in the manufacture of manufactured gas, or in
the purchase, transportation, distribution or sale of steam and
hot water, which lien is junior to the liens of the 1940
Indenture and the 1923 Indenture.
Each new series of Collateral Trust Bonds will be sold
at such price, bear interest at such rate or rates, and mature on
such date or dates as shall be determined at the time of sale or
when the agreement to sell is entered into, as the case may be.
No series of Collateral Trust Bonds will be issued at rates in
excess of the lower of 15% per annum or those rates generally
obtainable at the time of pricing for sales of mortgage bonds
having the same or reasonably similar maturities, issued by
companies of the same or reasonably comparable credit quality and
having reasonably similar terms, conditions and features. The
price, exclusive of accrued interest, to be paid to the Company
for each new series of Collateral Trust Bonds to be sold at
competitive bidding will be within a range (to be specified by
the Company to prospective purchasers) of 95% to 105% of the
principal amount thereof. Each series of Collateral Trust Bonds
will mature not later than 30 years from the day of issuance.
One or more new series of Collateral Trust Bonds may
include provisions for redemption prior to maturity at various
percentages of the principal amount thereof and may include
restrictions on optional redemption for a given number of years.
In addition, one or more series of Collateral Trust Bonds may
include provisions for the mandatory retirement of some or all of
such series prior to maturity.
SECTION C. SENIOR DEBENTURES
The Senior Debentures will be issued under the
Company's Indenture (For Senior Unsecured Debt Securities), dated
as of August 1, 1997, to The First National Bank of Chicago, as
trustee, as amended and supplemented and as proposed to be
further supplemented by additional supplemental indenture(s),
each relating to one or more new series of Senior Debentures.
The Senior Debentures will be unsecured obligations of
the Company and will rank on a parity with all other unsecured
and unsubordinated debt of the Company.
Each series of Senior Debentures will be sold at such
price, will bear interest at such rate(s) and will mature on such
date(s) as shall have been be determined at the time of sale.
Senior Debentures will not be sold if the fixed interest rate or
initial adjustable interest rate thereon would exceed the lower
of 15% or rates generally obtainable at the time of pricing for
sales of debentures having the same or reasonably equivalent
maturity, issued by companies of comparable credit quality and
having reasonably similar terms, conditions and features. As to
series of Senior Debentures having an adjustable interest rate,
the initial interest rate for such series will be negotiated by
the Company and the purchasers of such series and will be based
on the current market rate for comparable debentures.
Thereafter, the interest rate on such Senior Debentures would be
adjusted according to a pre-established formula or method of
determination or will be that rate which, when set, would be
sufficient to remarket the Senior Debentures of such series at
their principal amount.
One or more series of Senior Debentures may include
provisions for redemption prior to maturity at various
percentages of the principal amount thereof, restrictions on
optional redemption for a given number of years and/or provisions
for the mandatory retirement of some or all of such series prior
to maturity.
SECTION D. SUBORDINATED DEBENTURES
The Subordinated Debentures will be issued under the
Company's Indenture (For Unsecured Subordinated Debt Securities),
dated as of December 1, 1995, to The First National Bank of
Chicago, as trustee, as amended and supplemented and as proposed
to be further supplemented by additional supplemental
indenture(s), each relating to one or more new series of
Subordinated Debentures.
The Subordinated Debentures will be unsecured,
subordinated obligations of the Company. The indenture relating
the Subordinated Debentures provides that payment of the
principal of, premium, if any, and interest on Subordinated
Debentures is subordinated and subject in right or payment to the
prior payment in full of all senior indebtedness of the Company.
Each series of Subordinated Debentures will be sold at
such price, will bear interest at such rate(s) and will mature on
such date(s) as shall have been be determined at the time of
sale. Subordinated Debentures will not be sold if the fixed
interest rate or initial adjustable interest rate thereon would
exceed the lower of 15% or rates generally obtainable at the time
of pricing for sales of debentures having the same or reasonably
equivalent maturity, issued by companies of comparable credit
quality and having reasonably similar terms, conditions and
features. As to series of Subordinated Debentures having an
adjustable interest rate, the initial interest rate for such
series will be negotiated by the Company and the purchasers of
such series and will be based on the current market rate for
comparable debentures. Thereafter, the interest rate on such
Subordinated Debentures would be adjusted according to a
pre-established formula or method of determination or will be
that rate which, when set, would be sufficient to remarket the
Subordinated Debentures of such series at their principal amount.
One or more series of Subordinated Debentures may
include provisions for redemption prior to maturity at various
percentages of the principal amount thereof, restrictions on
optional redemption for a given number of years and/or provisions
for the mandatory retirement of some or all of such series prior
to maturity.
SECTION E. GENERAL MATTERS RELATING TO COLLATERAL TRUST
BONDS, SENIOR DEBENTURES AND SUBORDINATED
DEBENTURES
The Company anticipates that the issuance and sale of
each series of Collateral Trust Bonds, Senior Debentures and
Subordinated Debentures will be by means of competitive bidding
or negotiated public offering or private placement with
institutional investors in order to secure the advantages of an
advance marketing effort and/or the best available terms.
Sale(s) of Collateral Trust Bonds, Senior Debentures
and Subordinated Debentures are separate transactions not
contingent upon one another.
The Company proposes to use the net proceeds derived
from the issuance and sale of Collateral Trust Bonds, Senior
Debentures and Subordinated Debentures for general corporate
purposes, including without limitation the conduct of its
business as a utility, the repayment of outstanding securities
when due and/or the possible redemption, acquisition, or
refunding of certain outstanding securities prior to their stated
maturity or due date. The Company's request for authorization
for such sales is in part to provide the flexibility to permit a
quick response to changing market conditions if it becomes
beneficial for the Company to refinance, refund, or otherwise
acquire outstanding high cost securities.
SECTION F. TAX-EXEMPT BONDS AND RELATED TRANSACTIONS
Each issue of the proposed pollution control revenue
bonds will be issued for the financing or refinancing of the
costs of certain air and water pollution control facilities and
sewage and solid waste disposal facilities at one or more of the
Company generating plants or other facilities located in various
counties. It is proposed that each such municipality, county or
the otherwise appropriate public or state body or instrumentality
(the "Authority") will issue its revenue bonds (the "Tax-Exempt
Bonds") to finance or refinance the costs of the acquisition,
construction, installation and equipping of said facilities at
the plant or other facility located in its jurisdiction (the
"Project"). Each Authority is authorized by relevant state law
to issue its Tax-Exempt Bonds for such purposes.
While the actual amount of Tax-Exempt Bonds to be
issued by each Authority has not yet been determined, such amount
will be based upon the cost of refunding outstanding bonds or the
cost of the Project located in its jurisdiction.
The Company proposes to enter into a Loan or
Installment Sale Agreement with the Authority relating to each
issue of the Tax-Exempt Bonds (the "Agreement"). Under the
Agreement, the Authority will loan to the Company the proceeds of
the sale of the Authority's Tax-Exempt Bonds, and the Company may
issue a non-negotiable promissory note therefor (the "Note"), or
the Authority will undertake to purchase and sell the related
Project to the Company. The installment sale structure may be
used because it is required by applicable state law or to the
extent it affords transactional advantages to the Company. Such
proceeds will be deposited with a trustee (the "Trustee") under
an indenture to be entered into between the Authority and such
Trustee (the "Trust Indenture"), pursuant to which such Tax-
Exempt Bonds are to be issued and secured, and will be applied by
the Company to payment of the Cost of Construction (as defined in
the Agreement) of the Project or to refund outstanding pollution
control revenue obligations.
The Note or the Agreement will provide for payments to
be made by the Company at times and in amounts which shall
correspond to the payments with respect to the principal of,
premium, if any, and interest on the related Tax-Exempt Bonds
whenever and in whatever manner the same shall become due,
whether at stated maturity, upon redemption or declaration or
otherwise.
The Agreement will provide for the assignment to the
Trustee of the Authority's interest in, and of the moneys
receivable by the Authority under, the Agreement and the Note.
The Agreement will also obligate the Company to pay the
fees and charges of the Trustee and may provide that the Company
may at any time, so long as it is not in default thereunder,
prepay the amount due under the Agreement or the Note, including
interest thereon, in whole or in part, such payment to be
sufficient to redeem or purchase outstanding Tax-Exempt Bonds in
the manner and to the extent provided in the Trust Indenture.
The Trust Indenture will provide that the Tax-Exempt
Bonds issued thereunder will be redeemable (i) at any time on or
after a specified date from the date of issuance, in whole or in
part, at the option of the Company, and may require the payment
of a premium at a specified percentage of the principal amount
which may decline annually thereafter, and (ii) in whole, at the
option of the Company, in certain other cases of undue burdens or
excessive liabilities imposed with respect to the related
Project, its destruction or damage beyond practicable or
desirable repairability or condemnation or taking by eminent
domain, or if operation of the related facility is enjoined and
the Company determines to discontinue operation thereof, such
redemption of all such outstanding Tax-Exempt Bonds to be at the
principal amount thereof plus accrued interest, but without
premium. It is proposed that the Tax-Exempt Bonds will mature
not more than 30 years from the first day of the month in which
they are initially issued and may, if it is deemed advisable for
purposes of the marketability of the Tax-Exempt Bonds, be
entitled to the benefit of a mandatory redemption sinking fund
calculated to retire a portion of the aggregate principal amount
of the Tax-Exempt Bonds prior to maturity.
The Trust Indenture and the Agreement may give the
holders of the Tax-Exempt Bonds the right, during such time as
the Tax-Exempt Bonds bear interest at a fluctuating rate or
otherwise, to require the Company to purchase the Tax-Exempt
Bonds from time to time, and arrangements may be made for the
remarketing of any such Tax-Exempt Bonds through a remarketing
agent. The Company also may be required to purchase the Tax-
Exempt Bonds, or the Tax-Exempt Bonds may be subject to mandatory
redemption, at any time if the interest thereon is determined to
be subject to federal income tax. Also in the event of
taxability, interest on the Tax-Exempt Bonds may be effectively
converted to a higher variable or fixed rate, and the Company
also may be required to indemnify the bondholders against any
other additions to interest, penalties, and additions to tax;
such terms are not considered to constitute the issuance of a
separate security under Sections 6(a) and 7 of the Act, but
rather possible additional terms of the Tax-Exempt Bonds and the
Company's obligations with respect thereto.
It is contemplated that the Tax-Exempt Bonds will be
sold by the Authority pursuant to arrangements with one or more
purchasers, placement agents or underwriters. In accordance with
applicable state laws, the interest rate to be borne by the Tax-
Exempt Bonds will be approved by the Authority and will be either
a fixed rate, which fixed rate may be convertible to a rate which
will fluctuate in accordance with a specified prime or base rate
or rates or may be determined pursuant to certain remarketing or
auction procedures, or a fluctuating rate, which fluctuating rate
may be convertible to a fixed rate. While the Company may not be
party to the purchase, placement or underwriting arrangements for
the Tax-Exempt Bonds, such arrangements will provide that the
terms of the Tax-Exempt Bonds and their sale by the Authority
shall be satisfactory to the Company. Bond Counsel will issue an
opinion that, based upon existing law, interest on the Tax-Exempt
Bonds will generally be excludable from gross income for federal
income tax purposes. The Company has been advised that the
interest rates on obligations, the interest on which is tax
exempt, recently have been and can be expected at the time of
issue of the Tax-Exempt Bonds to be approximately one to three
percentage points lower than the rates on obligations of like
tenor and comparable quality, interest on which is fully subject
to federal income taxation.
* * * * *
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
Jonathan G. Katz
Secretary
