Amendment No. 1 to
SEC File No. 70-9329
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-l
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
METROPOLITAN EDISON COMPANY (Met-Ed)
2800 Pottsville Pike
Reading, Pennsylvania 19605
(Name of company filing this statement and address
of principal executive office)
GPU, INC. ("GPU")
(Name of top registered holding company parent of applicant)
Terrance G. Howson, Douglas E. Davidson, Esq.
Vice President and Treasurer Berlack, Israels & Liberman LLP
Mary A. Nalewako, Secretary 120 West 45th Street
Michael J. Connolly, New York, New York 10036
Assistant General Counsel
GPU Service, Inc.
300 Madison Avenue
Morristown, New Jersey 07962
Scott L. Guibord, Secretary W. Edwin Ogden, Esq.
Metropolitan Edison Company Ryan, Russell, Ogden &
2800 Pottsville Pike Seltzer LLP
Reading, Pennsylvania 19605 1100 Berkshire Boulevard
Reading, Pennsylvania 19610-1221
(Names and addresses of agents for service)
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Met-Ed hereby amends its Application on Form U-1, docketed in SEC
File No. 70-9329, as follows:
1. By amending Item 2 thereof to read in its entirety as follows:
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
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The estimated fees, commission and expenses to be incurred in
connection herewith are as follows:
Securities and Exchange Commission
Registration Fee . . . . . . . . . . . . ........$ 73,750
NYSE Listing Fee. . . . . . . . . . . . . . . ........$ 50,000
Blue Sky Fees . . . . . . . . . . . . . . . . ........$ 5,000
Accountants' Fees and Expense . . . . . . . . ........$ 25,000
Company Counsel's Fees and Expenses . . . . . ........$300,000
Trustees' Fees and Expenses, including Counsel
and Authentication Fees. . . . . . . . . ........$ 30,000
Printing of Registration Statement, Prospectus,
Prospectus Supplements, Supplemental
Indentures, etc. . . . . . . . . . . . . ........$ 25,000
Rating Agencies' Fees . . . . . . . . . . . . ........$ 30,000
Miscellaneous . . . . . . . . . . . . . . . . ........$ 26,250
Total Expenses . . . . . . . . . . . . . .......$565,000
2. By deleting Exhibits A-1 through A-9 from Item 6(a) thereof.
3. By redesignating and filing the following exhibits in Item 6(a)
thereof:
1
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A-1 - Certificate of Incorporation of General Partner
-- Incorporated by reference to Exhibit 3-C,
Registration Statement on Form S-3, SEC
Registration Nos. 333-62967, 333-62967-01 and
333-62967-02.
A-2 - By-Laws of General Partner -- Incorporated by
reference to Exhibit 3-D, Registration Statement
on Form S-3, SEC Registration Nos. 333-62967,
333-62967-01 and 333-62967-02.
A-3 - Certificate of Limited Partnership of Met-Ed
Capital -- Incorporated by reference to Exhibit
3E, Registration Statement on Form S-3, SEC
Registration Nos. 333-62967, 333-62967-01 and
333-62967-02.
A-4 - Form of Limited Partnership Agreement of Met-Ed
Capital -- Incorporated by reference to Exhibit
3-F, Registration Statement on Form S-3, SEC
Registration Nos. 333-62967, 333-62967-01 and
333-62967-02.
A-5 - Form of Amended and Restated Limited
Partnership Agreement of Met-Ed Capital --
Incorporated by reference to Exhibit 3-G,
Registration Statement on Form S-3, SEC
Registration Nos. 333-62967, 333-62967-01 and
333-62967-02.
A-6 - Form of Action Creating Series A Preferred
Securities -- Incorporated by reference to Exhibit
3-H, Registration Statement on Form S-3, SEC
Registration Nos. 333-62967, 333-62967-01 and
333-62967-02.
A-7 - Certificate of Trust of Met-Ed Capital Trust --
Incorporated by reference to Exhibit 4-K,
Registration Statement on Form S-3, SEC
Registration Nos. 333-62967, 333-62967-01 and
333-62967-02.
A-8 - Form of Trust Agreement of Met-Ed Capital Trust
-- Incorporated by reference to Exhibit 4-L,
Registration Statement on Form S-3, SEC
Registration Nos. 333-62967, 333-62967-01 and
333-62967-02.
2
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A-9 - Form of Amended and Restated Trust Agreement of
Met-Ed Capital Trust -- Incorporated by reference
to Exhibit 4-M, Registration Statement on Form
S-3, SEC Registration Nos. 333-62967, 333-62967-01
and 333-62967-02.
A-10 - Form of Trust Securities Certificate of Met-Ed
Capital Trust -- Incorporated by reference to
Exhibit 4-N, Registration Statement on Form S-3,
SEC Registration Nos. 333-62967, 333-62967-01 and
333-62967-02.
A-11 - Form of Met-Ed Subordinated Debenture Indenture
- Incorporated by reference to Exhibit 4-A,
Registration Statement on Form S-3, SEC
Registration Nos. 333-62967, 333-62967-01 and
333-62967-02.
A-12 - Form of Subordinated Debenture instrument --
incorporated by reference to Exhibit A-11.
B-1 - Form of Guaranty -- Incorporated by reference to
Exhibit 4-J, Registration Statement on Form S-3,
SEC Registration Nos. 333-62967, 333-62967-01 and
333-62967-02.
B-2 - Form of Underwriting Agreement -- to be filed
by Form 8-K.
C - Registration Statement on Form S-3 under the
Securities Act of 1933 relating to the various
securities which are the subject hereof and all
amendments and exhibits thereto -- Incorporated by
reference to SEC Registration Nos. 333-62967,
333-62967-01 and 333-62967-02.
D-1 - Copy of Securities Certificate filed by
Met-Ed with the PaPUC with respect to the
issuance of Subordinated Debentures and
Guaranties.
D-2 - Copy of Application under Section 1102(a)(4) of
the Code filed with the PaPUC.
3
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D-3 - Copy of PaPUC Order registering Met-Ed's
Securities Certificates and approving the
Application under Section 1102(a)(4) of the Code.
E - Not Applicable.
F-l - Opinion of Berlack, Israels & Liberman LLP.
F-2 - Opinion of Ryan, Russell, Ogden & Seltzer LLP.
F-3 - Opinion of Richards, Layton & Finger P.A.
4
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SIGNATURE
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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.
METROPOLITAN EDISON COMPANY
By: /s/ T. H. Howson
---------------------
T. G. Howson,
Vice President and Treasurer
Dated: December 10, 1998
5
EXHIBITS TO BE FILED BY EDGAR
Exhibits:
D-1 - Copy of Securities Certificate filed by Met-Ed
with the PaPUC with respect to the issuance of
Subordinated Debentures and Guaranties.
D-2 - Copy of Application under Section 1102(a)(4) of the
Code filed with the PaPUC.
D-3 - Copy of PaPUC Order registering Met-Ed's Securities
Certificate and approving the Application under
Section 1102(a)(4) of the Code.
F-l - Opinion of Berlack, Israels & Liberman LLP.
F-2 - Opinion of Ryan, Russell, Ogden & Seltzer LLP.
F-3 - Opinion of Richards, Layton & Finger P.A.
Exhibit D-1
BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION
In re:
SECURITIES CERTIFICATE OF :
METROPOLITAN EDISON COMPANY : Securities Certificate
IN THE MATTER OF THE ISSUANCE : No. S-
AND SALE OF UP TO $130,000,000 :
PRINCIPAL AMOUNT OF SUBORDINATED :
DEBENTURES AND EXECUTION AND :
DELIVERY OF THE GUARANTY IN :
CONNECTION WITH THE ISSUANCE :
OF TRUST SECURITIES HAVING :
AN AGGREGATE LIQUIDATION VALUE :
NOT TO EXCEED $125,000,000 BY A :
SPECIAL PURPOSE BUSINESS TRUST :
SUBSIDIARY OF METROPOLITAN :
EDISON COMPANY :
TO PENNSYLVANIA PUBLIC UTILITY COMMISSION:
1. The name and address of the public utility filing this Securities
Certificate are Metropolitan Edison Company d/b/a GPU Energy ("Met-Ed" or the
"Company"), 2800 Pottsville Pike, Muhlenberg Township, Berks County,
Pennsylvania, (mailing address: P.O. Box 16001, Reading, Pennsylvania
19640-0001).
2. The name and address of the public utility's attorneys are W. Edwin
Ogden, Jeffrey A. Franklin and Ryan, Russell, Ogden & Seltzer LLP, 1100
Berkshire Boulevard, Suite 301, Reading, Pennsylvania 19610-1221.
3. The Company, a public utility as defined in the Pennsylvania Public
Utility Code, as amended, is a corporation duly organized and existing under the
laws of the Commonwealth of Pennsylvania. It is engaged primarily in the
business of generating, purchasing, transmitting, distributing and selling
electric energy to the public in fourteen Pennsylvania counties.
4. All outstanding shares of the Company's common stock are owned by GPU,
Inc. (formerly General Public Utilities Corporation) ("GPU"), a Pennsylvania
corporation.
5. This Securities Certificate pertains to the issuance and sale by Met-Ed
of up to $130,000,000 of its subordinated debentures (the "Subordinated
Debentures") and execution and delivery of a guaranty agreement (the "Guaranty")
in connection with the issuance and sale by its subsidiaries of the Preferred
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Securities and the Trust Securities (each as defined below) as described in this
Securities Certificate. Met-Ed proposes to organize a special purpose business
trust under Delaware law ("Met-Ed Capital Trust"), which will issue and sell
from time to time in one or more series through December 31, 2000 up to
$125,000,000 aggregate liquidation value of preferred beneficial interests, in
the form of Trust Securities (having a liquidation value per interest to be
determined at the time of issuance based on market conditions) (the "Trust
Securities")*. Each Trust Security will represent a cumulative preferred
security (the "Preferred Securities") of a Delaware limited partnership ("Met-Ed
Capital L.P."), which will be a special purpose indirect subsidiary of Met-Ed.
Met-Ed also proposes to form a special purpose Delaware corporation ("Investment
Sub"), for the sole purpose of acting as general partner of Met-Ed Capital L.P.
The sole purpose of Met-Ed Capital Trust will be to acquire the Preferred
Securities and to issue and sell the Trust Securities evidencing the Preferred
Securities. Met-Ed Capital Trust will apply the proceeds from the sale of the
Trust Securities to purchase the Preferred Securities. Met-Ed Capital L.P. will,
in turn, use the proceeds received from the sale of the Preferred Securities to
purchase Met-Ed's Subordinated Debentures. The sole purpose of Met-Ed Capital
L.P. is to issue one or more series of Preferred Securities and to lend the
proceeds thereof, plus the capital contribution (in an amount not to exceed
$5,000,000) made by Met-Ed in Met-Ed Capital L.P., to Met-Ed, which loan will be
evidenced by the Subordinated Debentures issued by Met-Ed. Met-Ed will acquire
the common stock of Investment Sub for a nominal consideration and will
capitalize Investment Sub with (i) a
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* The transactions proposed herein are substantially the same as the
transactions approved by the Commission in the Securities Certificate
No. S-940428 and No. A-110300F0071 in connection with monthly income
preferred securities (?MIPS?), with the exception that the MIPS were
issued by a limited partnership subsidiary of Met-Ed and the Trust
Securities will be issued by a special purpose business trust
subsidiary. The trust structure is being utilized so that the buyers
of the securities receive a Form 1099 for their income tax purposes,
rather than a Form K-1.
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capital contribution in the amount of up to $5,000,000, and (ii) a demand
promissory note in the principal amount of up to $13,000,000, such note to
accrue interest, compounded semi-annually, at a rate equal to the Citibank, N.A.
base rate as in effect from time to time. Investment Sub will acquire all of the
general partner interests in Met-Ed Capital L.P. for up to $5,000,000.
Met-Ed will execute and deliver the Guaranty for the benefit of the
holders of the Preferred Securities, pursuant to which it will make certain
payments to the holders of the Preferred Securities to the extent not paid by
Met-Ed Capital L.P. Such payment may include (A) accrued but unpaid
distributions on the Preferred Securities, if and to the extent Met-Ed Capital
L.P. has funds legally available therefor, (B) the redemption price payable for
any Preferred Securities called for redemption to the extent that Met-Ed Capital
L.P. has funds legally available therefor, (C) the aggregate liquidation
preference on the Preferred Securities, including all accrued but unpaid
distributions, whether or not declared, to the extent that Met-Ed Capital L.P.
has funds legally available therefor, and (D) certain additional amounts.
Each Subordinated Debenture will be issued under an Indenture to be
entered into with United States Trust Company of New York, as trustee (the
"Debenture Indenture"), and will have a maturity not to exceed 49 years. The
issuance of the Subordinated Debentures by Met-Ed will be subject to the
restriction in Article 6th, Section 8(B)(b) of Met-Ed's Restated Articles of
Incorporation which limits, without the consent of the holders of a majority of
Met-Ed's outstanding Cumulative Preferred Stock, the amount of unsecured
indebtedness which Met-Ed may have outstanding at any one time to 20% of the
aggregate of the total outstanding principal amount of all bonds and other
securities representing secured indebtedness issued or assumed by Met-Ed, plus
Met-Ed's capital stock, premiums thereon, and surplus of Met-Ed as stated on its
books of account. Prior to maturity, Met-Ed will pay only interest on the
Subordinated Debentures at a rate equal to the distribution rate on the
Preferred Securities (which distribution payments will then be distributed by
Met-Ed
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Capital Trust to the holders of the Trust Securities), with any excess being
distributed to Met-Ed as a distribution on Met-Ed's investment in Met-Ed Capital
L.P., thereby reducing the interest cost on the Subordinated Debentures. Each
Subordinated Debenture and Met-Ed's obligations under the Guaranty will be
subordinate to all other existing and future "Senior Indebtedness," (as defined
below) of Met-Ed and will have no cross-default provisions with respect to other
Met-Ed indebtedness -- i.e., a default under any other outstanding Met-Ed
indebtedness will not result in a default under the Subordinated Debenture or
the Guaranty. However, Met-Ed may not declare and pay dividends on, or redeem or
retire, its outstanding Cumulative Preferred Stock or Common Stock unless all
payments then due (whether or not previously deferred) under the Subordinated
Debentures and the Guaranty have been made. "Senior Indebtedness" consists of
(i) the principal of and premium (if any) in respect of (A) indebtedness of
Met-Ed for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments (including purchase money
obligations) for payment of which Met-Ed is responsible or liable; (ii) all
capital lease obligations of Met-Ed; (iii) all obligations of Met-Ed issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of Met-Ed and all obligations of Met-Ed under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business); (iv) certain obligations of Met-Ed for the reimbursement of any
obligor on any letter of credit, banker's acceptance, security purchase facility
or similar credit transaction; (v) all obligations of the type referred to in
clauses (i) through (iv) of other persons for the payment of which Met-Ed is
responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the types referred to in clauses (i) through (v) of other persons
secured by any lien on any property or asset of Met-Ed (whether or not such
obligation is assumed by Met-Ed), except for any such indebtedness that is by
its terms subordinated to or pari passu with the Subordinated Debentures. The
Preferred Securities will be redeemed at the maturity of the Subordinated
Debentures or upon the redemption
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of such Subordinated Debentures, but will not be subject to any mandatory
sinking fund. The Preferred Securities may also be subject to redemption upon
the occurrence of certain events relating to the tax treatment of the Preferred
Securities and/or Met-Ed Capital L.P. and/or the treatment of Met-Ed Capital
L.P. under the Investment Company Act of 1940, as amended (the "1940 Act"). The
redemption of the Preferred Securities will cause a mandatory redemption of the
Trust Securities.
It is expected that Met-Ed's interest payments on the Subordinated
Debentures will be deductible for income tax purposes. When implemented,
Met-Ed's consolidated balance sheet will reflect the Trust Securities as
"Met-Ed-obligated mandatorily redeemable preferred securities." The Subordinated
Debentures will not appear on Met-Ed's consolidated balance sheet because the
principal and interest on the Subordinated Debentures will be payable to a
subsidiary. For the same reason, the interest payments on the Subordinated
Debentures and the distributions to Met-Ed on Met-Ed's investment in Met-Ed
Capital L.P. will not appear on Met-Ed's consolidated balance sheet because
Met-Ed Capital L.P. is a subsidiary. The distribution payments made on the Trust
Securities will be reported in Met-Ed's consolidated income statements as
"Interest Charges - Met-Ed-obligated mandatorily redeemable preferred
securities."
Met-Ed desires to maintain the flexibility to issue and sell the Trust
Securities in one or more sales either publicly, through negotiated
underwritings, or privately, through direct placements, with amounts of the
offering, annual distribution rate, redemption provisions and other terms, along
with the terms of the Subordinated Debentures to be determined later at the time
of issuance. Met-Ed believes that this flexibility will enable it to react
effectively to various changes in market conditions. Met-Ed will provide to your
Honorable Commission (the "Commission") reports, within 60 days after each
issuance of the securities described herein, listing the terms and conditions of
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all the Trust Securities, Preferred Securities and the corresponding
Subordinated Debentures and the related Guaranty issued during that period
pursuant to this Securities Certificate together with a calculation of the
cumulative liquidation value of the Trust Securities and the Preferred
Securities and principal amount of Subordinated Debentures so issued.
Exact Title of Security
-----------------------
Trust Securities of Met-Ed Capital Trust, each representing a ---%
Cumulative Income Preferred Security, Series --- of Met-Ed Capital L.P.; ---%
Subordinated Debentures, Series --- of Metropolitan Edison Company; and the
Guaranty Agreement executed and delivered by Metropolitan Edison Company for the
benefit of the holders of the Preferred Securities and the payments thereunder.
Aggregate Number of Securities to be Issued and Aggregate Principal
------------------------------------------------------------------------
Amount
- ------
Met-Ed Capital Trust will issue and sell up to $125,000,000 aggregate
liquidation value of the Trust Securities. The aggregate principal amount of the
Guaranty will also be up to $125,000,000, plus, in the event of a redemption or
liquidation, accrued and unpaid distributions on the Trust Securities and
certain additional amounts. Met-Ed will issue and sell up to $130,000,000
aggregate principal amount of the Subordinated Debentures. The principal amount
of the Subordinated Debentures will correspond to the aggregate liquidation
value of the Preferred Securities, plus Met-Ed's capital contribution in Met-Ed
Capital L.P. of up to $5,000,000.
Par Value
---------
Without par value.
Nominal Date(s) of Issue
------------------------
From time to time through December 31, 2000, to be determined by market
conditions.
Date of Maturity
----------------
A series of the Preferred Securities, along with the Guaranty thereof, will be
redeemed at the maturity or redemption of the corresponding series of the
Subordinated Debentures. Upon a redemption of Preferred Securities, the
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corresponding Trust Securities will be redeemed. The maturity dates of the
Subordinated Debentures will not exceed 49 years from the date of issuance.
Interest Rate(s) and Payment Date(s) (Subordinated Debentures)
--------------------------------------------------------------
The interest payments on the Subordinated Debentures will be Met-Ed
Capital L.P.'s sole source of funds to make distributions on the Preferred
Securities. The interest rates and payment dates on the Subordinated Debentures
will be determined at the time of issuance based on then existing market
conditions. The interest payments on the Subordinated Debentures will be at
least equal to the distribution payments on the Preferred Securities (and the
corresponding Trust Securities) and will have interest payment dates which
correspond to the distribution dates on the Preferred Securities (and the
corresponding Trust Securities). Distributions, if declared, and correspondingly
all interest payments, will be made at least semi-annually. Met-Ed will have the
ability to defer interest payments on the Subordinated Debentures to Met-Ed
Capital L.P. for a period of up to five years but not beyond the maturity date
or any redemption date of the Subordinated Debentures (the "Deferral Period"),
in which event Met-Ed Capital L.P. may similarly defer payment of distributions
on the Trust Securities. In no event may distributions be deferred beyond
thematurity date of the Subordinated Debentures. However, Met-Ed may be required
to pay interest on the deferred interest payments to the extent required by law.
Distribution Rates and Payment Dates (Trust Securities, Preferred
------------------------------------------
Securities and Guaranty)
Whenever Met-Ed Capital Trust receives any cash distribution representing
a distribution on the Preferred Securities or payment under the Guaranty, Met-Ed
Capital Trust will distribute such amount to the holders of the Trust
Securities. The Preferred Securities will entitle the holders thereof to receive
cumulative distributions, paid at least semi-annually in arrears, at the amount
per security per annum fixed for the particular series. However, as stated
above, Met-Ed will have the ability to defer interest payments on the
Subordinated Debentures to
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Met-Ed Capital L.P. during the Deferral Period, in which event no distributions
will be made on the Preferred Securities or, accordingly, on the Trust
Securities. The payments under the Guaranty will be in the same amounts as the
distributions on the Preferred Securities, but only to the extent such payments
are not made by Met-Ed Capital L.P. from funds on hand legally available
therefor.
Extent to Which Taxes on Securities Are Assumed by the Issuer
-------------------------------------------------------------
No taxes on the Subordinated Debentures are to be assumed by Met-Ed;
however, Met-Ed may pay additional interest on the Subordinated Debentures equal
to taxes imposed on the Met-Ed Capital L.P. or Met-Ed Capital Trust. The extent
to which Met-Ed may assume taxes under the Guaranty will be negotiated at the
time of issuance subject to market conditions.
Redemption Provisions
---------------------
A series of the Trust Securities will be subject to mandatory redemption upon
redemption of the corresponding series of the Preferred Securities. A series of
the Preferred Securities will be subject to mandatory redemption upon the
maturity or prior redemption of the corresponding series of the Subordinated
Debentures and may also be redeemable at the option of Met-Ed at a price equal
to their liquidation value plus any accrued and unpaid distributions plus any
premium negotiated in connection with the marketing of the Trust Securities, (i)
at any time after a specified no-call period (if any) which could be up to the
life of the issuance, or (ii) in the event that (I) Met-Ed Capital L.P. is
required by applicable tax laws to withhold or deduct certain amounts in
connection with distributions or other payments, or (II) Met-Ed Capital L.P. or
Met-Ed Capital Trust is subject to federal income tax with respect to interest
received on the Subordinated Debentures for federal income tax purposes, or
(III) it is determined that the interest payments by Met-Ed on the Subordinated
Debentures are not deductible for federal income tax purposes or (IV) Met-Ed
Capital L.P. is subject to more than a de minimis amount of other taxes, duties
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or other governmental charges, or (V) Met-Ed Capital L.P. becomes subject to
regulation as an "investment company" under the 1940 Act. Upon occurrence of any
of the events set forth in clause (ii) of the immediately preceding sentence,
Met-Ed Capital Trust and Met-Ed Capital L.P. could be dissolved and the
Subordinated Debentures distributed directly to the holders of the Trust
Securities and to Met-Ed on a pro rata basis, resulting in direct ownership of
the Subordinated Debentures by the holders of the Trust Securities. The
Subordinated Debentures distributed to Met-Ed would be canceled.
Sinking Fund
------------
None.
Liquidation Value (Trust Securities and Preferred Securities)
------------------
The liquidation value of the Trust Securities and the Preferred
Securities will be determined at the time of issuance . Upon receipt by Met-Ed
Capital Trust of any distribution from Met-Ed Capital L.P. upon any voluntary or
involuntary liquidation, dissolution or winding up of Met-Ed Capital L.P., the
holders of the Trust Securities will be entitled to receive such amounts in
proportion to the respective number of Preferred Securities represented by such
Trust Securities, out of the assets of Met-Ed Capital L.P. available for
distribution after satisfaction of creditors of Met-Ed Capital Trust as required
by law. However, the holders of the Trust Securities would not be entitled to
share further in the assets of Met-Ed Capital Trust.
Upon voluntary or involuntary dissolution or winding up of Met-Ed Capital
L.P., the holders of Preferred Securities will be entitled to receive out of the
assets of Met-Ed Capital L.P., after satisfaction of liabilities to creditors
and before any distribution of assets is made to holders of its general partner
interests, the sum of their stated liquidation preference and all accumulated
and unpaid distributions to the date of payment of the Preferred Securities. All
assets of Met-Ed Capital L.P. remaining after payment of the liquidation
distribution to the holders of Preferred Securities will be distributed to the
general partner.
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Upon any liquidation, dissolution or winding up of Met-Ed, the amount
payable on each series of the Preferred Securities would be limited to a pro
rata portion of any amount recovered by Met-Ed Capital L.P. in its capacity as a
subordinated debt holder of Met-Ed. The Subordinated Debentures and the payment
obligations under the Guaranty will be subordinate to all other existing and
future Senior Indebtedness, except for any such indebtedness that is by its
terms subordinated to or pari passu with the Subordinated Debentures.
Name and Address of Trustee and Whether Affiliated
--------------------------------------------------
The Subordinated Debentures will be issued under the Debenture Indenture
with United States Trust Company of New York, as trustee. United States Trust
Company of New York is not and will not be affiliated with either Met-Ed, Met-Ed
Capital L.P. or Met-Ed Capital Trust.
6. (i) Subject to the receipt from the Commission of a Notice of
Registration with respect to this Securities Certificate and of orders from the
Securities and Exchange Commission (?SEC?) declaring effective the Application
on Form U-1 and the Registration Statement referred to in Item 8 hereof, in the
case of a public offering, Met-Ed proposes to issue and sell the Trust
Securities either (a) in one or more public sales through negotiated
underwritings to or through non-affiliated underwriters, purchasers or agents,
or (b) in one or more private placement sales through non-affiliated banks or
investment banking firms acting as agents of Met-Ed or directly to
non-affiliated agents, purchasers or underwriters. The names of the
underwriters, purchasers or agents will be included in the Underwriting
Agreement or Purchase Agreement and will be filed at a later time. To the best
of Met-Ed's knowledge and belief, there is no person, firm or corporation
ordinarily engaged in underwriting securities or acting as an agent for the sale
of securities, which is an "affiliated interest" of Met-Ed, nor is Met-Ed an
"affiliated interest" of any such person, firm or corporation as the term is
defined in Section 2101 of the Pennsylvania Public Utility Code, as amended.
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Met-Ed expects that the commissions payable to the underwriters or selling
agents for selling the Trust Securities will be approximately 1% of the
liquidation value of the Trust Securities sold through such agents or
underwriters for an institutional offering and approximately 3.15% of the
liquidation value of the Trust Certificates sold through such agents or
underwriters for a retail offering.
(ii) An estimate of the expenses of issuance of the various
securities described in this Securities Certificate and the Securities
Certificate relating to the issuance of the Senior Notes, described in another
Securities Certificate being filed concurrently, all of which are proposed to be
issued and sold under a new financing program, assuming that an aggregate
principal amount of $250,000,000 of such securities is sold, is as follows:
Filing Fees - SEC $ 85,000
Printing Fees 25,000
New York Stock Exchange Fees 50,000
Legal Fees 300,000
Trustee Fees and Expenses 30,000
Rating Agencies Fees and Expenses 30,000
Accounting Fees 25,000
Miscellaneous Expenses 20,000
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Total $565,000
The expenses incurred in connection with issuance and sale of each
series of the Trust Securities, together with the terms and conditions of the
corresponding series of the Preferred Securities and the Senior Notes, will be
provided to the Commission within 60 days after issuance of such series.
7. The net proceeds (after deduction of underwriting discounts and
commissions and the expenses of the offering) of the Trust Securities will be
applied by Met-Ed: (i) to redeem other outstanding securities of Met-Ed,
including preferred securities, preferred stock and first mortgage bonds, (ii)
to repay outstanding short-term bank loans or other unsecured indebtedness,
(iii) for construction purposes (see Met-Ed's 1998 Construction Budget attached
as Exhibit M), (iv) for other corporate purposes and (v) to reimburse Met-Ed's
treasury for funds previously expended therefrom for the above purposes.
-11-
<PAGE>
8. An Application on Form U-1 will be filed and one or more Registration
Statements will be filed with the SEC with respect to the issuance and sale of
the Trust Securities, the related securities and the related transactions.
Concurrently with the filing of this Securities Certificate, Met-Ed is
filing another Securities Certificate with the Commission relating to the
proposed issuance and sale of Senior Notes secured by "fall away" first mortgage
bonds. The securities of Met-Ed described in these Securities Certificates are
proposed to be issued as a part of Met-Ed's new financing program, pursuant to
which program Met-Ed contemplates the issuance and sale of either the Senior
Notes and/or Subordinated Debentures and execution and delivery of the Guaranty
described in this Securities Certificate in one or more series; provided,
however, that the total principal amount of the Senior Notes and total
liquidation value of the Trust Securities to be issued and sold may not in the
aggregate exceed $250,000,000; and provided, further, that the total principal
amount of the Trust Securities may not in the aggregate exceed $125,000,000.
Accordingly, Met-Ed requests that the Commission take action on both Securities
Certificates simultaneously.
9. There are appended hereto and made part hereof the following Exhibits:
Exhibit A - Balance Sheet of Met-Ed per books as at March 31,
1998.
Exhibit B-1 - Statement of Income of Met-Ed for the 12 months ended
March 31, 1998.
Exhibit B-2 - Statement of Retained Earnings and Statement of
Capital Surplus of Met-Ed for the 12 months ended March
31, 1998.
Exhibit C - Statement of Utility Plant by Classified Accounts of
Met-Ed as at March 31, 1998.
Exhibit D - Statement of Securities of Other Corporations Owned
by Met-Ed as at March 31, 1998.
Exhibit E - Statement of Status of Funded Debt Outstanding of
Met-Ed as at March 31, 1998.
-12-
<PAGE>
Exhibit F - Statement of Status of Capital Stock Outstanding of
Met-Ed as at March 31, 1998.
Exhibit G-1 - Copy of Registration Statements filed by Met-Ed on
Form S-3 with the SEC under the Securities Act of
1933, as amended, with respect to the proposed
issuance and sale of, among other things, the Trust
Securities, the Preferred Securities, the Guaranty
and the Subordinated Debentures (to be filed
supplementally).
Exhibit G-2 - Copy of the Application on Form U-1 with the SEC
under the Public Utility Holding Company Act of 1935 (to
be filed supplementally).
Exhibit H - Not applicable.
Exhibit I - Copy of Resolutions of the Board of Directors of
Met-Ed authorizing, among other things, the proposed
issuance and sale of the Subordinated Debentures and the
Guaranty.
Exhibit J-1 - Proposed form of Underwriting Agreement (to be
filed supplementally).
Exhibit J-2 - Proposed form of Trust Agreement for Met-Ed
Capital Trust (to be filed supplementally).
Exhibit J-3 - Proposed form of Guaranty by Met-Ed (to be filed
supplementally).
Exhibit J-4 - Proposed form of Subordinated Debenture Indenture,
including the form of the Subordinated Debentures (to be
filed supplementally).
Exhibit K - Journal Entries of Met-Ed, showing all charges and
credits to be made on the books of account of Met-Ed as
a result of the issuance of securities described herein.
Exhibit L - Source and Application Funds.
Exhibit M - Met-Ed's 1998 Construction Budget.
-13-
Exhibit D-2
BEFORE
PENNSYLVANIA PUBLIC UTILITY COMMISSION
In re: APPLICATION OF METROPOLITAN )
EDISON COMPANY FOR APPROVAL )
OF THE ACQUISITION OF MORE )
THAN 5% OF THE VOTING CAPITAL )
INTEREST OF ANOTHER ENTITY ) APPLICATION DOCKET NO.
UNDER SECTION 1102(a)(4) OF )
THE PENNSYLVANIA PUBLIC )
UTILITY CODE )
TO PENNSYLVANIA PUBLIC UTILITY COMMISSION:
1. The name and address of the public utility filing this Application are
Metropolitan Edison Company ("Met-Ed"), 2800 Pottsville Pike, Muhlenberg
Township, Berks County, Pennsylvania (mailing address: P.O. Box 16001,
Reading, PA 19640-0001).
2. The names and addresses of the public utility's attorneys are W. Edwin
Ogden, Jeffrey A. Franklin and Ryan, Russell, Ogden & Seltzer LLP, 1100
Berkshire Boulevard, Suite 301, Reading, Pennsylvania 19610-1221.
3. The Company, a public utility as defined in the Pennsylvania Public
Utility Code, as amended, is a corporation duly organized and existing under the
laws of the Commonwealth of Pennsylvania. It is engaged primarily in the
business of generating, purchasing, transmitting, distributing and selling
electric energy to the public in fourteen Pennsylvania counties.
4. Met-Ed has previously filed a Securities Certificate relating to the
proposed issuance and sale by Met-Ed of up to $130,000,000 of its subordinated
debentures (the "Subordinated Debentures") and execution and delivery of a
guaranty agreement (the "Guaranty") in connection with the issuance and sale by
its subsidiaries of the Preferred Securities and the Trust Securities (each as
defined below). In connection with the proposed issuance and sale of the Trust
Securities, Met-Ed proposes to organize a special purpose business trust under
Delaware law ("Met-Ed Capital Trust") which will issue and sell from time to
time
<PAGE>
in one or more series through December 31, 2000 up to $125,000,000 aggregate
liquidation value of preferred beneficial interests, in the form of Trust
Securities (having a liquidation value per interest to be determined at the time
of issuance based on market conditions) (the "Trust Securities"). Each Trust
Security will represent a cumulative preferred security (the "Preferred
Securities") of a Delaware limited partnership ("Met-Ed Capital L.P.") which
will be formed by Met-Ed as a special purpose indirect subsidiary of Met-Ed. The
sole purpose of Met-Ed Capital L.P. will be to issue one or more series of
Preferred Securities and to lend the proceeds thereof, plus the capital
contribution (in an amount not to exceed $5,000,000) made by Met-Ed in Met-Ed
Capital L.P., to Met-Ed, which loan will be evidenced by the Subordinated
Debentures issued by Met-Ed. Met-Ed also proposes to form a special purpose
Delaware corporation ("Investment Sub") for the sole purpose of acting as
general partner of Met-Ed Capital L.P. The sole purpose of Met-Ed Capital Trust
will be to issue and sell the Trust Securities evidencing the Preferred
Securities and to purchase the Preferred Securities with the proceeds thereof.
This Application requests authority from your Honorable Commission for Met-Ed to
acquire all of the capital stock of Investment Sub. Information concerning the
proposed issuance and sale of the Trust Securities and the Preferred Securities
by Met-Ed Capital Trust and Met-Ed Capital L.P., respectively, is contained in
the Securities Certificate previously filed on June 30, 1998 (Docket No.
S-00980689) (the "Securities Certificate"), which information is incorporated in
this Application by reference.
5. As stated above, Met-Ed Capital L.P. will be a limited partnership to
be formed under the laws of the State of Delaware. All of its general partner
interests will be owned by Investment Sub, a wholly owned subsidiary of Met-Ed,
as the general partner (the "General Partner"). As a limited partnership, all of
the business and affairs of Met-Ed Capital L.P. will be managed (directly or
indirectly through Investment Sub) by Met-Ed. The Subordinated Debentures will
be the only assets of Met-Ed Capital L.P. and the only revenues of Met-Ed
Capital
2
<PAGE>
L.P. will be interest on the Subordinated Debentures. Investment Sub, as the
General Partner, will pay all of Met-Ed Capital L.P.'s operating expenses and
will have general liability for all of Met-Ed Capital L.P.'s obligations. The
general partner interests of Met-Ed Capital L.P. will not be transferable.
Met-Ed Capital L.P. will have no material liabilities. Met-Ed Capital L.P.
will be treated for federal income tax purposes as a partnership. Met-Ed
Capital L.P. will have no directors or officers.
Investment Sub will hold all of the general partner interests of Met-Ed
Capital L.P. Investment Sub would have one class of common stock, all of which
would be held by Met-Ed, and would have no material liabilities. The Board of
Directors and the officers of Investment Sub would be employees of Met-Ed who
would not receive any additional compensation for serving in such capacities.
Investment Sub would have a perpetual existence.
6. Met-Ed will acquire the common stock of Investment Sub for a nominal
consideration and will capitalize Investment Sub with (i) a capital contribution
in the amount of up to $5,000,000, and (ii) a demand promissory note in the
principal amount of up to $13,000,000, such note to accrue interest, compounded
semi-annually, at a rate equal to the Citibank, N.A. base rate as in effect from
time to time. Investment Sub will acquire all of the general partner interests
in Met-Ed Capital L.P. for up to $5,000,000.
7. Certified copies of the resolutions of the Board of Directors of Met-Ed
authorizing the acquisition of the capital stock of Investment Sub will be filed
by amendment.
8. Met-Ed requests authority from your Honorable Commission to acquire all
of the capital stock of Investment Sub which would then acquire general partner
interests of Met-Ed Capital L.P.
Prior to the filing of this Application, Met-Ed has filed with the
Commission the Securities Certificate. The securities of Met-Ed described in the
Securities Certificate are proposed to be issued as a part of Met-Ed's new
financing program and the formations of the Investment Sub, Met-Ed Capital L.P.
3
<PAGE>
and Met-Ed Capital Trust are intended to facilitate such financing program.
Accordingly, Met-Ed requests that the Commission take action on this Application
and the Securities Certificate simultaneously.
9. Exhibits
Exhibit A - Limited Partnership Agreement (to be filed by
amendment)
Exhibit B - Certificate of Incorporation of Investment Sub (to be
filed by amendment)
Exhibit C - By-laws of Investment Sub (to be filed by amendment)
Exhibit D - Resolutions of the Board of Directors of Met-Ed (to
be filed by amendment)
4
<PAGE>
WHEREFORE, Metropolitan Edison Company prays your Honorable Commission to
approve the aforesaid acquisition pursuant to Section 1102(a)(4) of the Public
Utility Code, as amended, and to grant any other approvals your Commission deems
appropriate to further the consummation of the financing program described
herein.
METROPOLITAN EDISON COMPANY
By
------------------------
5
<PAGE>
AFFIDAVIT
STATE OF NEW JERSEY :
COUNTY OF MORRIS :
T. G. Howson, being duly sworn according to law, deposes and says that he
is a Vice President and Treasurer of Metropolitan Edison Company; that he is
authorized to and does make this affidavit for it; and that the facts set forth
in the foregoing Application are true and correct (or are true and correct to
the best of his knowledge, information and belief) and he expects the said
Metropolitan Edison Company to be able to prove the same at any hearing hereof.
METROPOLITAN EDISON COMPANY
By:
------------------------
Sworn to and subscribed before
me this day of , 1998
----- -----
- -------------------------------
Notary Public
Exhibit D-3
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
Harrisburg, PA 17105-3265
Public Meeting held August 27, 1998
Commissioners Present:
John M. Quain, Chairman
Robert K. Bloom, Vice Chairman
David W. Rolka
Nora Mead Brownell
Aaron Wilson, Jr.
Securities Certificate of Metropolitan S-00980689
Edison Company for the issuance of
its subordinated debentures in a principal
amount not to exceed $130 million and its
guaranty in connection with the issuance
through a special purpose subsidiary of
trust securities having and aggregate
principal amount not to exceed $125 million.
Application of Metropolitan Edison Company A-110300F0087
for the approval of its acquisition of a
special-purpose corporation to act as the
general partner in a partnership involved in
the issuance of certain preferred securities
OPINION AND ORDER
BY THE COMMISSION:
On June 30, 1998, Metropolitan Edison Company (Met Ed) filed for
registration pursuant to Chapter 19 of the Pennsylvania Public utility Code, 66
Pa. C.S. ss.ss.1901, et seq., the above-captioned securities certificate for the
issuance of its subordinated debentures (Debentures) in a principal amount not
to exceed $130 million and its guaranty (Guaranty) in connection with the
issuance through a special purpose subsidiary (Trust) of securities (Trust
Securities) having an aggregate principal amount not to exceed $125 million. On
August 14, 1998, Met-Ed
<PAGE>
filed the above-captioned application for the acquisition of a special-purpose
corporation (Investment Sub) to act as the general partner in a partnership
involved in the issuance of the Trust Securities. Met-Ed voluntarily extended
the statutory consideration period for the securities certificate to August 28,
1998. All of the outstanding common stock of Met-Ed is owned by GPU, Inc., a
Pennsylvania corporation. Notice of the application was not required to be
published.
Concurrently, with the filing of the instant securities certificate,
Met-Ed filed a securities certificate docketed at S-00980690 for the issuance of
senior notes (Notes), secured by "fall away" first mortgage bonds each in an
aggregate principal amount not to exceed $250 million. The total principal
amount of Notes and total liquidation value of the Trust Securities may not in
the aggregate exceed $250 million, and the total principal amount of the Trust
Securities may not in the aggregate exceed $125 million.
Met-Ed proposes to acquire a special purpose Delaware corporation
(Investment Sub) by making a capital contribution of up to $5 million and
issuing a demand promissory note. Investment Sub will invest up to $5 million to
acquire all of the general partner interests in a limited partnership
(Partnership), a special purpose indirect subsidiary of Met-Ed. The sole purpose
of Partnership will be to issue preferred securities (Preferred Securities).
2
<PAGE>
Met-Ed proposes to organize Trust for the purpose of issuing and selling
to the public from time to time in one or more series through December 31, 2000
up to $125 million liquidation value of preferred beneficial interests, in the
form of Trust Securities. The Trust will apply the proceeds from the sale of the
Trust Securities to purchase the Preferred Securities from Partnership.
Partnership will use the proceeds from the sale of its Preferred Securities, up
to $125 million, and the proceeds from Investment Sub's capital investment of up
to $5 million, to purchase Met-Ed's Debentures. The principal amount of the
Debentures will correspond to the aggregate liquidation value of the Preferred
Securities, plus the up to $5 million capital contribution in Partnership, and
will not exceed $130 million.
The maturity date of the Debentures will not exceed 49 years. The interest
payments and principal dates on the Debentures will be a least equal to the
distribution payments to be made on the Preferred Securities. Met-Ed has the
ability to defer interest payments on the Debentures for a period up to sixty
consecutive months. If payments of principal or interest are not made on the
Debentures, distributions on the Preferred Securities and Trust Receipts may
similarly be deferred. The Debentures will be redeemable prior to maturity at
the option of Met-Ed after an initial no-call period, or may be redeemed if the
advantages for income tax deductibility disappear. The Trust Securities are
subject to mandatory redemption, in whole or in
3
<PAGE>
part, upon redemption of the corresponding series of the Preferred
Securities.
Met-Ed will execute and deliver the Guaranty, for the benefit of the
holders of the Preferred Securities, under which Met-Ed will make certain
payments to the holders of Preferred Securities to the extent not paid by
Partnership.
The proceeds from the Debentures to be issued in conjunction with the
Preferred Securities and Trust Securities, will be used by Met-Ed to redeem
other outstanding securities of Met-Ed, to repay outstanding short-terms bank
loans or other unsecured indebtedness, and to provide funds for construction and
general corporate purposes.
Our review of the subject securities certificate leads us to conclude that
the proposed issuance is necessary or proper for the present and probable future
capital needs of Met-Ed, and that the related application is necessary or proper
for the service, accommodation, convenience, or safety of the public. As a
result, the securities certificate should be registered and the application
should be approved; THEREFORE,
IT IS ORDERED:
4
<PAGE>
1. That the securities certificate of Metropolitan Edison Company for the
issuance of its subordinated debentures in a principal amount not to exceed $130
million and its guaranty in connection with the issuance through a special
purpose subsidiary of trust securities having an aggregate principal amount not
to exceed $125 million, is hereby registered.
2. That the application of Metropolitan Edison Company for the approval of
its acquisition of a special-purpose corporation to act as the general partner
in a partnership involved in the issuance of certain preferred securities is
approved.
BY THE COMMISSION,
James J. McNulty
Secretary
(SEAL)
ORDER ADOPTED: August 27, 1998
ORDER ENTERED: August 27, 1998
5
Exhibit F-1
December 10, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Metropolitan Edison Company -
Application on Form U-1
SEC File No. 70-9329
Ladies and Gentlemen:
We have examined the Application on Form U-1, dated July 14, 1998,
under the Public Utility Holding Company Act of 1935 (the "Act"), filed by
Metropolitan Edison Company ("Met-Ed") with the Securities and Exchange
Commission and docketed in SEC File No. 70-9329, as amended by Amendment No. 1
thereto, dated this date, of which this opinion is to be a part. (The
Application, as so amended and as thus to be amended, is hereinafter referred to
as the "Application".)
The Application contemplates, among other things, the organization
by Met-Ed of a special purpose Delaware business trust ("Met-Ed Trust"), which
will issue and sell up to $125 million aggregate liquidation value of preferred
beneficial interests, in the form of Trust Securities (the "Trust Securities").
Each Trust Security will represent a cumulative preferred security ("Preferred
Securities") of a Delaware limited partnership ("Met-Ed Capital"), which will be
a special purpose indirect subsidiary of Met-Ed. The proceeds, together with the
capital contribution of Met-Ed Capital's general partner, Met-Ed Preferred
Capital II, Inc., a wholly owned subsidiary of Met-Ed, will be used to purchase
subordinated debentures issued by Met-Ed (the "Subordinated Debenture"). Met-Ed
will guarantee (the "Guarantee") the payment by Met-Ed Capital of distributions
on the Preferred Securities and of amounts due upon liquidation of Met-Ed
Capital or redemption of the Preferred Securities, all to the extent set forth
in the Guarantee. The Trust Securities are to be issued by Met-Ed Trust pursuant
to an Amended and Restated Trust Agreement (the "Trust Agreement"), the
Preferred Securities are to be issued by Met-Ed Capital pursuant to an Amended
and Restated Limited Partnership Agreement and one or more Actions thereunder
(collectively, the "Limited Partnership Agreement")
<PAGE>
and the Subordinated Debentures are to be issued by the Company pursuant to an
indenture between the Company and United States Trust Company of New York, as
Trustee (the "Debenture Indenture").
For many years, we have participated in various proceedings related
to the issuance and sale of securities by Met-Ed, its parent, GPU, Inc., and its
affiliates, Jersey Central Power & Light Company and Pennsylvania Electric
Company, and we are familiar with the terms of the outstanding securities of the
corporations comprising GPU, Inc.
We have examined such records of Met-Ed, Met-Ed Capital and Met-Ed
Trust and such other instruments, documents, certificates and agreements,
including the forms of Limited Partnership Agreement, Trust Agreement and
Debenture Indenture, and made such further investigation as we have deemed
necessary as a basis for this opinion. With respect to all matters of
Pennsylvania law, we have relied on the opinion of Ryan, Russell, Ogden &
Seltzer LLP, and with respect to all matters of Delaware law, we have relied
upon the opinion of Richards, Layton & Finger, P.A., which are being filed as
Exhibits F-2 and F-3, respectively, to the Application.
Based upon the foregoing, and assuming that the transactions therein
proposed are carried out in accordance with the Application, we are of the
opinion that when (i) the Commission shall have entered an order forthwith
granting the Application, (ii) all necessary corporate, trust and partnership
action required on the part of Met-Ed, Met-Ed Trust, Met-Ed Preferred Capital
II, Inc., and Met-Ed Capital shall have been duly taken, (iii) all action under
state "Blue Sky" laws to permit the consummation of the proposed transactions
shall have been completed, and (iv) the certificates representing the Trust
Securities, Preferred Securities and Subordinated Debentures are, upon issuance
thereof, duly signed, countersigned and authenticated, as may be necessary, and
assuming that the Trust Securities, Preferred Securities and Subordinated
Debentures are issued and sold under circumstances which are permitted under
Section 12(f) of the Act and Rule 70 of the General Rules and Regulations under
the Act.
(a) all State laws applicable to the proposed transactions
will have been complied with;
(b) Met-Ed Trust, the proposed issuer of the Trust Securities,
has been duly formed and is validly existing in good standing as a trust;
(c) Met-Ed Capital, the proposed issuer of the Preferred
Securities, has been duly formed and is validly existing in good standing as a
limited partnership;
<PAGE>
(d) Met-Ed, the proposed issuer of the Subordinated Debentures
and the Guarantee, is validly organized and duly existing;
(e) upon payment of the purchase price therefor by the
purchasers thereof, the Trust Securities will be validly issued, fully paid and
non-assessable beneficial interests, and holders thereof will be entitled to the
rights and privileges appertaining thereto set forth in the Trust Agreement;
(f) upon payment of the purchase price therefor by the
purchasers thereof, the Preferred Securities will be validly issued, fully paid
and non-assessable limited partner interests, and the holders thereof will be
entitled to the rights and privileges appertaining thereto set forth in the
Limited Partnership Agreement;
(g) upon payment of the purchase price therefor by the
purchasers thereof, the Subordinated Debentures will be the valid and binding
obligations of Met-Ed in accordance with their terms, and the Guarantee will be
the valid and binding obligation of Met-Ed in accordance with its terms subject,
in each case, to applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting creditors rights generally (including, without
limitation, the Atomic Energy Act and applicable regulations of the Nuclear
Regulatory Commission thereunder) and general equitable principles; and
(h) the consummation of the proposed transactions will not
violate the legal rights of the holders of any securities issued by Met-Ed or
any "associate company" thereof, as defined in the Act.
We hereby consent to the filing of this opinion as an exhibit to the
Application and in any proceedings before the Commission that may be held in
connection therewith.
Very truly yours,
BERLACK, ISRAELS & LIBERMAN LLP
[Letterhead of Ryan, Russell, Ogden & Seltzer LLP]
Exhibit F-2
December 10, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Metropolitan Edison Company -
Application on Form U-1
SEC File No. 70-9329
-------------------------------
Ladies and Gentlemen:
We have examined the Application on Form U-1, dated July 14, 1998,
under the Public Utility Holding Company Act of 1935 (the "Act"), filed by
Metropolitan Edison Company ("Met-Ed") with the Securities and Exchange
Commission ("Commission") and docketed in SEC File No. 70-9329, as amended by
Amendment No. 1 thereto, dated this date, of which this opinion is to be a part.
(The Application, as so amended and as thus to be amended, is hereinafter
referred to as the "Application").
The Application contemplates, among other things, the organization
by Met-Ed of a special purpose Delaware business trust ("Met-Ed Trust"), which
will issue and sell up to $125 million aggregate liquidation value of preferred
beneficial interests, in the form of Trust Securities (the "Trust Securities").
Each Trust Security will represent a cumulative preferred security ("Preferred
Securities") of a Delaware limited partnership ("Met-Ed Capital"), which will be
a special purpose indirect subsidiary of Met-Ed. The proceeds, together with the
capital contribution of Met-Ed Capital's general partner, Met-Ed Preferred
Capital II, Inc., a wholly owned subsidiary of Met-Ed, will be used to purchase
subordinated debentures issued by Met-Ed (the "Subordinated Debenture"). Met-Ed
will guarantee (the "Guarantee") the payment by Met-Ed Capital of distributions
on the Preferred Securities and of amounts due upon liquidation of Met-Ed
Capital or redemption of the Preferred Securities, all to the extent set forth
in the Guarantee. The Trust Securities are to be issued by Met-Ed Trust pursuant
to an Amended and Restated Trust Agreement (the "Trust Agreement"), the
Preferred Securities are to be issued by Met-Ed Capital pursuant to an Amended
and
<PAGE>
Securities and Exchange Commission
December 10, 1998
Page 2
Restated Limited Partnership Agreement and one or more Actions thereunder
(collectively, the "Limited Partnership Agreement") and the Subordinated
Debentures are to be issued by the Company pursuant to an indenture between the
Company and United States Trust Company of New York, as Trustee (the "Debenture
Indenture").
We have been counsel to Met-Ed, a Pennsylvania corporation, for many
years. In such capacity, we have participated in various proceedings relating to
Met-Ed and we are familiar with the terms of the outstanding securities of
Met-Ed.
We have participated in the preparation of or examined such records
of Met-Ed, Met-Ed Capital and Met-Ed Trust and such other instruments,
documents, certificates and agreements, including the forms of Limited
Partnership Agreement, Trust Agreement and Debenture Indenture. We have also
examined the securities certificate and application filed by Met-Ed with the
Pennsylvania Public Utility Commission ("PaPUC") and the Opinion and Order of
the PaPUC, dated August 27, 1998 registering the securities certificate and
formation of Met-Ed Preferred Capital II, Inc. In addition, we have examined
such other instruments, agreements and documents and made such further
investigation, as we have deemed necessary as a basis for this opinion.
Based upon the foregoing, and assuming that the transactions therein
proposed are carried out in accordance with the Application, we are of the
opinion that when (i) the Commission shall have entered an order forthwith
granting the Application, (ii) all necessary corporate, trust and partnership
action required on the part of Met-Ed, Met-Ed Trust, Met-Ed Preferred Capital
II, Inc., and Met-Ed Capital shall have been duly taken, (iii) all action under
state "Blue Sky" laws to permit the consummation of the proposed transactions
shall have been completed, and (iv) the certificates representing the Trust
Securities, Preferred Securities and Subordinated Debentures are, upon issuance
thereof, duly signed, countersigned and authenticated, as may be necessary, and
assuming that the Trust Securities, Preferred Securities and Subordinated
Debentures are issued and sold under circumstances which are permitted under
Section 12(f) of the Act and Rule 70 of the General Rules and Regulations under
the Act:
(a) all Pennsylvania laws applicable to the proposed
transactions will have been complied with;
<PAGE>
Securities and Exchange Commission
December 10, 1998
Page 3
(b) Met-Ed, the proposed issuer of the Subordinated Debentures
and the Guarantee, is validly organized and duly existing;
(c) upon payment of the purchase price therefor by the
purchasers thereof, the Subordinated Debentures will be the valid and binding
obligations of Met-Ed in accordance with their terms, and the Guarantee will be
the valid and binding obligation of Met-Ed in accordance with its terms subject,
in each case, to applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting creditors rights generally
(including, without limitation, the Atomic Energy Act and applicable regulations
of the Nuclear Regulatory Commission thereunder) and general equitable
principles; and
(d) the consummation of the proposed transactions will not
violate the legal rights of the holders of any securities issued by Met-Ed or
any "associate company" thereof, as defined in the Act.
We hereby consent to the filing of this opinion as an exhibit to the
Application and in any proceedings before the Commission that may be held in
connection therewith. The firm of Berlack, Israels & Liberman LLP is authorized
to rely on this opinion, dated the date hereof, which is being filed as Exhibit
F-1 to the Application.
Very truly yours,
RYAN,RUSSELL,OGDEN & SELTZER LLP
[Letterhead of Richards, Layton & Finger, P.A.]
Exhibit F-3
December 10, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Metropolitan Edison Company
Application on Form U-1
SEC File No. 70-9329
--------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Met-Ed Preferred
Capital II, Inc., a Delaware corporation (the "General Partner"), Met-Ed Capital
II, L.P., a Delaware limited partnership (the "Partnership"), and Met-Ed Capital
Trust, a Delaware business trust (the "Trust"), in connection with the matters
set forth herein. At the Partnership's and the Trust's request, this opinion is
being furnished to you. Capitalized terms used herein and not otherwise defined
are used as defined in the LP Agreement (as defined below).
The Application (as defined below) contemplates, among other things,
(i) the issuance and sale by the Partnership of cumulative preferred limited
partner interests in the Partnership (each, a "Preferred Partner Interest" and
collectively, the "Preferred Partner Interests"), and (ii) the issuance and sale
by the Trust of up to $125 million aggregate liquidation value of preferred
beneficial interests (each, a "Trust Security" and collectively, the "Trust
Securities"). The issuance and sale by the Partnership of the Preferred Partner
Interests pursuant to the LP Agreement and the issuance and sale by the Trust of
the Trust Securities pursuant to the Trust Agreement (as defined below) are
hereinafter referred to as the "Transaction."
<PAGE>
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Incorporation of the General Partner, dated
September 1, 1998 (the "Certificate of Incorporation"), as filed in the office
of the Secretary of State on September 1, 1998;
(b) The By-Laws of the General Partner (the "By-Laws");
(c) A certificate of an officer of the General Partner;
(d) The Certificate of Limited Partnership of the Partnership, dated
as of September 1, 1998 (the "Partnership Certificate"), as filed in the office
of the Secretary of State of the State of Delaware (the "Secretary of State") on
September 1, 1998;
(e) The Limited Partnership Agreement of the Partnership, dated as
of September 1, 1998;
(f) The Application on Form U-1, dated July 14, 1998 (the "Original
Application"), under the Public Utility Holding Company Act of 1935, filed by
Metropolitan Edison Company with the Securities and Exchange Commission and
docketed in SEC File No. 70-9329, as amended by Amendment No. 1 to the Original
Application, dated December 10, 1998 ("Amendment No.1") (the Original
Application as amended by Amendment No. 1 being hereinafter referred to as the
"Application");
(g) A form of Amended and Restated Limited Partnership Agreement of
the Partnership (the "Partnership Agreement"), filed as an exhibit to the
Application;
(h) A form of Action of the General Partner, relating to the
Preferred Partner Interests (as defined below) (the "Action");
(i) The Certificate of Trust of the Trust, dated as of September 1,
1998 (the "Trust Certificate"), as filed in the office of the Secretary of State
on September 1, 1998;
(j) The Trust Agreement of the Trust, dated as of September 1, 1998,
among the Partnership and the trustees of the Trust named therein;
(k) A form of Amended and Restated Trust Agreement of the Trust (the
"Trust Agreement"), to be entered into among the Partnership, the trustees named
<PAGE>
therein and, for limited purposes, the General Partner, filed as an exhibit
to the Application;
(l) A Certificate of Good Standing for the Partnership, dated
December 10, 1998, obtained from the Secretary of State; and
(m) A Certificate of Good Standing for the Trust, dated December 10,
1998, obtained from the Secretary of State.
The Partnership Agreement as amended and supplemented by the
Action is hereinafter referred to as the "LP Agreement."
For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (m) above. In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (m) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own, but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i)
the authenticity of all documents submitted to us as authentic originals, (ii)
the conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the LP
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the admission
of partners to, and the creation, operation and termination of, the Partnership,
and that the LP Agreement and the Partnership Certificate are in full force and
effect and have not been amended, (ii) that the Trust Agreement constitutes the
entire agreement among the parties thereto with respect to the subject matter
thereof, including with respect to the creation, operation and termination of
the Trust, and that the Trust Agreement and the Trust Certificate are in full
force and effect and have not been amended, (iii) that the Certificate of
Incorporation and the By-Laws are in full force and effect and have not been
amended, (iv) that the Board of Directors of the General Partner has duly
adopted resolutions (collectively, the "Resolutions") authorizing
<PAGE>
the General Partner's execution and delivery of, and the performance of its
obligations under, the LP Agreement, (v) except to the extent provided in
paragraph 2 below, the due creation or the due organization or due formation, as
the case may be, and valid existence in good standing of each party to the
documents examined by us under the laws of the jurisdiction governing its
creation or organization or formation, (vi) the legal capacity of natural
persons who are signatories to the documents examined by us, (vii) except to the
extent provided in paragraphs 3 and 4 below, that each of the parties to the
documents examined by us has the power and authority to execute and deliver, and
to perform its obligations under, such documents, (viii) the due authorization,
execution and delivery by all parties thereto of all documents examined by us,
(ix) the receipt by each Person to whom a Preferred Partner Interest is to be
issued by the Partnership (each, a "Preferred Partner" and collectively, the
"Preferred Partners") of a Certificate and the payment for the Preferred Partner
Interests acquired by it, in accordance with the LP Agreement, (x) that the
books and records of the Partnership set forth all information required by the
LP Agreement and the Delaware Revised Uniform Limited Partnership Act (6 Del. C.
ss. 17-101, et seq.) (the "Partnership Act"), including all information with
respect to all Persons to be admitted as Partners and their contributions to the
Partnership, (xi) that the Preferred Partner Interests are issued and sold to
the Preferred Partners in accordance with the LP Agreement, (xii) the receipt by
each Person to whom a Trust Security is to be issued by the Trust (collectively,
the "Holders") of a certificate substantially in the form of the trust
certificate attached to the Trust Agreement as Exhibit A and the payment for the
Trust Security acquired by it, in accordance with the Trust Agreement, (xiii)
that the Trust Securities are issued and sold to the Holders in accordance with
the Trust Agreement, and (xiv) that neither the Partnership, the General
Partner, the Trust nor Metropolitan Edison Company derive income from or
connected with sources within the State of Delaware or have any assets,
activities (other than the Partnership's and the General Partner's maintaining a
registered office and registered agent in the State of Delaware and the Trust's
having a Delaware trustee) or employees within the State of Delaware. We have
not participated in the preparation of the Application and assume no
responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
<PAGE>
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Transaction does not violate applicable Delaware law.
2. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act (12 Del. C.
ss. 3801, et seq.). The Partnership has been duly formed and is validly existing
in good standing as a limited partnership under the Partnership Act.
3. Upon issuance and payment as contemplated by the Trust Agreement,
the Trust Securities will be validly issued and, subject to the qualifications
set forth herein, will be fully paid and nonassessable beneficial interests in
the Trust. Each Holder will be entitled to the rights and privileges of a Holder
that are set forth in the Trust Agreement. The Holders, in their capacity as
such, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware (8 Del. C. ss. 101, et seq.) (the
"GCL"). We note that the Holders may be obligated to make payments as set forth
in the Trust Agreement. The Partnership has the requisite partnership power and
authority under the Partnership Act and the LP Agreement to execute and deliver,
and to perform its obligations under, the Trust Agreement.
4. Assuming that the Preferred Partners, as limited partners of the
Partnership, do not participate in the control of the business of the
Partnership, upon issuance and payment as contemplated by the LP Agreement, the
Preferred Partner Interests will be validly issued and, subject to the
qualifications set forth herein, will be fully paid and nonassessable limited
partner interests in the Partnership, as to which the Preferred Partners, as
limited partners of the Partnership, will have no liability in excess of their
obligations to make payments provided for in the LP Agreement and their share of
the Partnership's assets and undistributed profits (subject to the obligation of
a Preferred Partner to repay any funds wrongfully distributed to it). Each
Preferred Partner will be entitled to the rights and privileges of a Preferred
Partner that are set forth in the LP Agreement. The General Partner has the
requisite corporate power and authority under the GCL, the Certificate of
Incorporation, the By-Laws and the Resolutions to execute and deliver, and to
perform its obligations under, the LP Agreement.
<PAGE>
5. The consummation of the Transaction will not violate the legal
rights of Metropolitan Edison Company, in its capacity as the sole stockholder
of the General Partner, the General Partner, in its capacity as general partner
of the Partnership, the Partnership, in its capacity as grantor of the Trust, or
the Holders, in their capacities as beneficial owners of the Trust.
In rendering the opinions expressed herein, we express no opinion
regarding applicable law relating to fiduciary duties.
The opinions expressed in the second sentences of paragraphs 3 and 4
above are subject to (i) bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation, fraudulent transfer and other similar laws relating
to or affecting the rights and remedies of creditors generally, and (ii)
principles of equity, including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in equity or at
law).
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Application. We also consent to
Berlack, Israels & Liberman LLP's relying as to matters of Delaware law upon
this opinion in connection with an opinion to be rendered by it to you in
connection with the Application. Except as stated above, without our prior
written consent, this opinion may not be furnished or quoted to, or relied upon
by, any other Person for any purpose.
Very truly yours,
Richards, Layton & Finger, P.A.
