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FILE N0. _______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
APPLICATION OF UTILICORP UNITED INC.
UNDER SECTION 3(b) AND
RULE 10 OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
UTILICORP UNITED INC.
911 Main Street
Kansas City, MO 64105
(Name of the company filing this application and
address of its principal executive office)
_____________________________________________
Robert L. Howell
Vice President
UtiliCorp United Inc.
911 Main Street
Kansas City, MO 64105
(Name and address of agent for service)
Please also submit copies of all correspondence to:
M. Douglas Dunn, Esq.
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, NY 10005
Leslie J. Parrette, Jr.
Blackwell Sanders Matheny Weary & Lombardi L.C.
Two Pershing Square
2300 Main Street - Suite 1100
Kansas City, Missouri 64108
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Applicant UtiliCorp United Inc., a Delaware corporation
("UtiliCorp"), applies under Section 3(b) of the Public Utility Holding Company
Act of 1935, as amended (the "1935 Act"), for an order exempting Eastern Energy
Ltd. ("Eastern Energy"), an electric utility company organized under the laws of
Australia and operating solely in Australia, under Section 3(b) of the 1935 Act.
UtiliCorp proposes to participate in a consortium (the "Consortium")
that has prepared a preliminary bid to acquire Eastern Energy. Eastern is one
of the five electric distribution companies created by the state of Victoria,
Australia. The Victorian government commenced the sale of the five electric
distribution companies in June, 1995. The first company to be sold was United
Energy Ltd. ("United"), which was sold to a consortium led by UtiliCorp and
which is exempt without qualification from the 1935 Act pursuant to Section
3(b). SEE Holding Company Act Release No. 26353 (August 7, 1995). UtiliCorp
holds a 49.9% indirect equity interest in United.
The second of the five distribution companies to be sold by the
Victorian Government is Eastern Energy, a supplier of electricity to more than
450,000 customers in the east Melbourne suburbs and throughout the eastern
coastal areas of Victoria. On September 25, 1995, the Consortium was selected
to be one of four finalists to bid for the acquisition of Eastern Energy.
The Consortium comprises a special purpose corporation organized
under the laws of Delaware ("UtiliCorp Sub"), together with three institutional
investors from Australia. UtiliCorp Sub will be owned up to 100% by UtiliCorp
Asia Pacific, Inc., a Delaware corporation and wholly-owned subsidiary of
UtiliCorp ("UtiliCorp Asia"). Due to tax, legal and regulatory considerations,
it may be advisable for UtiliCorp to structure the transaction using one or more
intermediate companies to be owned by UtiliCorp Sub
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(referred to herein collectively as "Australian Holding Company"). In addition,
to accommodate Australian tax considerations, it may be necessary to effect the
transaction through a series of asset and stock acquisitions.
However, regardless of how the transaction is structured, it is
expected that UtiliCorp will acquire an indirect equity interest in Eastern
Energy of approximately 20%. The Applicant will not proceed with the
acquisition of Eastern Energy unless the order granting the exemption sought in
this Application is issued and unless UtiliCorp receives any necessary approvals
from state and local regulatory public utility authorities having jurisdiction
over UtiliCorp's acquisition of Eastern Energy.
The Victorian Government has established a very aggressive timetable
for the sale of Eastern Energy. Final, binding bids for the shares of Eastern
Energy are to be submitted by October 27, 1995. Accordingly, it is requested
that the Commission act on this Application no later than October 26, 1995 so
that a copy of the Commission's order can be submitted with the Consortium's
bid. UtiliCorp regrets the short time interval between the time of this filing
and the requested Commission action date. However, it was not determined until
very recently that UtiliCorp would participate in the Consortium and that this
Application would be required. Upon determining to participate in the
Consortium and to proceed under Section 3(b) of the Act, UtiliCorp has acted as
expeditiously as possible to file this Application.
In support hereof, the Applicant states:
(1) UtiliCorp is a publicly held corporation organized under
Delaware law with its principal offices located at 911 Main Street, Suite 3000,
Kansas City, Missouri 64105. UtiliCorp engages directly and indirectly in the
sale and distribution of gas and electricity to retail and wholesale customers
in nine states, British Columbia, Australia and New
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Zealand. As of December 31, 1994, UtiliCorp had operating revenues of
$1,514,600,000 and assets of over $3,111,100,000. Neither UtiliCorp nor any
corporation owned or controlled by UtiliCorp is a "holding company" subject to
regulation under the 1935 Act or a "subsidiary company" of a "holding company"
subject to regulation under the 1935 Act. UtiliCorp is exempt from regulation
as a public-utility holding company under Rule 10 with respect to its ownership
of West Kootenay Power and Light Company, Limited, a Canadian public utility
company, WEL Energy Group Limited, a New Zealand electric utility company, and
United, each of which is exempt without qualification from the 1935 Act pursuant
to Section 3(b). SEE Holding Company Act Release Nos. 35-24204, 35-25850 and
35-26353 (Sept. 29, 1986, July 8, 1993, and August 7, 1995, respectively).
(2) UtiliCorp proposes to effect its acquisition of Eastern Energy
through UtiliCorp Sub, a special purpose corporation organized under the laws of
Delaware and deemed a resident of Australia under Australian law. UtiliCorp
Sub, through Australian Holding Company, will acquire an indirect equity
interest in Eastern Energy of up to 20% and, as of the time of such
acquisition, will be a wholly-owned subsidiary of UtiliCorp engaged primarily
in the non-regulated energy business.
(3) The Applicant believes that the cost to acquire Eastern Energy
will be between A$1.5 billion and A$1.9 billion, which equates to approximately
U.S. $1.12 billion and U.S. $1.42 billion based upon the exchange rate as of
September 22, 1995, of one Australian dollar for .7495 United States dollars.
However, it is expected that up to 60% of the bid price (i.e. between A$.90
billion and A$1.14 billion or between U.S. $670 million and U.S. $850 million)
would be financed through borrowing by Eastern Energy, so that the members of
the Consortium would only be responsible for contributing equity in the
aggregate amount of between A$600 million and A$760 million (or between U.S.
$480
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million and U.S. $570 million). Therefore, the price payable by UtiliCorp for
the acquisition of its indirect interest of up to 20% would be between A$120
million and A$152 million (or between approximately U.S. $90 million and U.S.
$114 million).
UtiliCorp intends to finance its investment in Eastern Energy by
contributing up to U.S. $114 million from (a) its existing earnings and/or (b)
its available debt facilities (i.e. primarily from a credit facility arranged by
Citibank, N.A.). Alternatively, Australian Holding Company will borrow up to
U.S. $114 million (the "Loan") from an Australian bank or syndicate of banks
(the "Syndicate"). The Loan would have a maturity of up to 5 years and would
carry an interest rate commensurate with existing market rates for a "Triple B"
credit. The Loan will be a liability of Australian Holding Company and will be
reflected on the consolidated financial statements of UtiliCorp. In order for
the Syndicate to make the Loan, it will require that a loan support agreement or
similar guarantee (the "Guarantee") be executed by UtiliCorp, thereby
guaranteeing Australian Holding Company's obligations under the Loan. The
Guarantee would not be reflected on the consolidated financial statements of
UtiliCorp.
(4) UtiliCorp has sought approval of its proposed acquisition of
Eastern Energy from those State public utility commissions having jurisdiction
over such acquisition, viz. the Public Service Commission of the State of
Missouri, the Utilities Board of the State of Iowa, and the Public Service
Commission of the State of West Virginia. UtiliCorp has also applied to each of
the other state commissions having jurisdiction over its retail electric or gas
rates for a certification that such state commission has the authority and
resources to protect ratepayers subject to its jurisdiction and that it intends
to exercise its authority.
(5) Eastern Energy is engaged in the distribution of electricity
to more than 450,000 Australian residential, commercial, industrial and other
types of Australian
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customers in the east suburbs Melbourne, Australia and throughout the eastern
coastal areas of Victoria. Like the other four newly-created distribution
companies, Eastern Energy was formed from the distribution components
formerly owned by the State Electricity Commission of Victoria ("SECV").
Specifically, Eastern Energy was created from merging three divisions of the
State-owned Electricity Services Victoria ("ESV"), two former local
council-owned Municipal Electricity Undertakings, some of the
subtransmission assets previously held by National Electricity (which was
created to own and operate the Victorian high voltage transmission system
during the disaggregation of SECV) and some of the corporate functions
previously carried out by ESV. The rates charged by Eastern Energy are
subject to the jurisdiction of the Victorian Government's Office of the
Regulator-General. Eastern Energy is not qualified to do business in any
state of the United States and operates as an electric utility exclusively
within Australia.
(6) Section 3(b) of the 1935 Act provides an exemption for any
subsidiary company, as such, of a holding company from provisions of the 1935
Act applicable to such subsidiary companies, "if such subsidiary company derives
no material part of its income, directly or indirectly, from sources within the
United States, and neither it nor any of its subsidiary companies is a public
utility company operating in the United States", provided that the Commission
finds that the application of the 1935 Act to such subsidiary company is "not
necessary in the public interest or for the protection of investors."
(7) Eastern Energy is not a public-utility company operating in
the United States and does not, and following its proposed acquisition by
UtiliCorp Sub will not, serve any customers in the United States. The proposed
acquisition by UtiliCorp Sub would not affect in any way Eastern Energy's status
as a distribution company subject to regulation by Australian authorities under
Australian law. Eastern Energy does not derive any income
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from United States operations or sources within the United States. As discussed
in Paragraphs (8) through (11) below, regulation of Eastern Energy under the
1935 Act is not necessary in the public interest, or for the protection of
investors or consumers. Therefore, Eastern Energy satisfies the standards of
Section 3(b) and should be accorded an unqualifiedexemption, as a subsidiary
company, from all provisions of the 1935 Act.
(8) Since the operations of Eastern Energy as a "public-utility
company" within the meaning of Section 2(a)(5) of the 1935 Act are and will be
exclusively in Australia, its sales and revenues, and the regulation thereof,
have little or no effect on the rates and business of electric sales and
generation within the United States. Moreover, since UtiliCorp is a publicly
traded company subject to the continuous disclosure requirements of the
Securities Exchange Act of 1934, as amended, regulation under the federal
securities laws offers significant additional protections for the interest of
investors.
(9) UtiliCorp's indirect investment in Eastern Energy will not in
any way diminish the ability of the various State commissions that regulate the
retail electric and gas operations of UtiliCorp to protect the interests of
consumers in their respective states. UtiliCorp's domestic utility operations
are, and will continue to be, fully separated from UtiliCorp's foreign
operations. UtiliCorp Sub will maintain separate books of account from
UtiliCorp and will commit to provide access to those books and records to each
State commission with retail rate jurisdiction to the extent not already
required under state law.
(10) As a result, UtiliCorp's domestic utility customers will not
be put at risk of any adverse financial effects resulting from UtiliCorp's
proposed indirect acquisition of Eastern Energy, nor will the ability of the
various State commissions to protect the interests of consumers in their
respective States be adversely affected. Accordingly, regulation of Eastern
Energy by the SEC under 1935 Act as a subsidiary of a holding
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company is not necessary for either the public interest or for the protection of
investors, and therefore no regulatory purpose would be served by treating
Eastern Energy as a subsidiary of a holding company.
(11) As a special purpose subsidiary formed for the primary purpose
of acquiring interests in Australian public utility companies, UtiliCorp Sub
will derive no income from United States operations and will not be a public
utility company operating in the United States. UtiliCorp Sub will not engage
in any business other than the acquisition of Australian public utility
companies and supervision of UtiliCorp's investments in Australia, and the
participation in the management and operations of Australian public utility
companies. Accordingly, regulation of UtiliCorp Sub as a holding company
subsidiary is not necessary for either the public interest or for the protection
of investors.
(12) On the basis of the facts set forth in this Application,
Eastern Energy is entitled to the exemption without qualification provided for
by Section 3(b) of the 1935 Act. Although Eastern Energy could satisfy the
requirements under Section 33(a)(3) of the 1935 Act and become a foreign utility
company ("FUCO") as defined therein by filing a notice on Form U-57, the
capitalization limits in respect of acquisitions of FUCOs by domestic public
utility companies contained in Section 33(f)(2)(C) of the 1935 Act would then
prohibit UtiliCorp from financing its acquisition of Eastern Energy.
(13) If Eastern Energy is exempt without qualification under
Section 3(b) of the 1935 Act, then UtiliCorp, UtiliCorp Asia, UtiliCorp Sub and
Australian Holding Company would be entitled to the exemption provided under
Rule 10(a)(1) of the 1935 Act with respect to Eastern Energy.
(14) In addition, if Eastern Energy is exempt without qualification
under Section 3(b) of the 1935 Act, then UtiliCorp, UtiliCorp Asia, UtiliCorp
Sub and Australian
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Holding Company would be entitled under Rule 11(b)(1) to an exemption from
Section 9(a)(2) of the 1935 Act.
(15) The Applicant hereby consents to file an annual report on Form
U-33-S.
(16) The Applicant hereby waives a hearing with respect to this
application and requests that there be no 30-day waiting period between the
issuance of the Commission's order and the date on which it is to become
effective. The Applicant hereby waives a recommended decision by a hearing
officer or other responsible officer of the Commission and hereby consents that
the Office of Public Utility Regulation may assist in the preparation of the
Commission's decision and/or order.
(17) The following exhibits are hereby filed as a part of this
Application:
EXHIBIT 1 Form of Notice
EXHIBIT 2 Opinion of counsel [to be filed by amendment]
It is requested that copies of all orders, notices and
communications with respect to the above application be served as follows:
M. Douglas Dunn, Esq.
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, NY 10005
Leslie J. Parrette, Jr., Esq.
Blackwell Sanders Matheny Weary &
Lombardi L.C.
Two Pershing Square
2300 Main Street - Suite 1100
Kansas City, Missouri 64108
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WHEREFORE, Applicant respectfully requests that the Commission issue
an order herein determining that Eastern Energy is entitled to the exemption
without qualification provided for by Section 3(b) of the 1935 Act.
Dated: October 12, 1995
Respectfully submitted,
UTILICORP UNITED INC.
By:
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Dale J. Wolf
Vice President and Secretary
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INDEX OF EXHIBITS
EXHIBIT EXHIBIT TRANSMISSION
NUMBER METHOD
1 Proposed Notice of Proceeding Electronic
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EXHIBIT 1
[FORM OF NOTICE]
Notice is hereby given that UtiliCorp United Inc., a Delaware
corporation, ("UtiliCorp") has filed an application on behalf of Eastern Energy
Ltd., an electric utility company organized under the laws of Australia
("Eastern Energy"), for an exemption under Section 3(b) of the Public Utility
Holding Company Act of 1935, as amended, (the "1935 Act"). UtiliCorp asserts
that, by virtue of the order declaring that Eastern Energy is entitled to the
exemption provided by Section 3(b) of the 1935 Act, UtiliCorp and its
subsidiaries formed in connection with its acquisition of an interest in Eastern
Energy, would become exempt from all obligations as a holding company under Rule
10 promulgated by the Commission under the 1935 Act and exempt from Section
9(a)(2) of the 1935 Act pursuant to Rule 11(b)(1) promulgated thereunder. All
interested persons are referred to the application, which is summarized below,
for a complete statement of the facts.
UtiliCorp proposes to participate in a consortium (the "Consortium")
that will prepare a bid to acquire Eastern Energy. Eastern Energy is one of the
five electric distribution companies created by the state of Victoria,
Australia. The Victorian government commenced the sale of the five electric
distribution companies in June, 1995. The first company to be sold was United
Energy Ltd. ("United"), which was sold to a consortium led by UtiliCorp and
which is exempt without qualification from the 1935 Act pursuant to Section
3(b). UtiliCorp holds a 49.9% indirect equity interest in United.
The Consortium will be comprised of a special purpose subsidiary of
UtiliCorp organized under the laws of Delaware ("UtiliCorp Sub") and three
institutional investors from Australia. UtiliCorp Sub will be owned up to 100%
by UtiliCorp Asia Pacific, Inc., a
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Delaware corporation and wholly-owned subsidiary of UtiliCorp ("UtiliCorp
Asia"). Due to tax, legal and regulatory considerations, it may be advisable
for UtiliCorp to structure the transaction using one or more intermediate
companies to be owned by UtiliCorp Sub (referred to herein collectively as
"Australian Holding Company"). In addition, to accommodate Australian tax
considerations, it may be necessary to effect the transaction through a series
of asset and stock acquisitions. Regardless of how the transaction is
structured it is expected that, if the Consortium's bid is accepted, UtiliCorp
will acquire an indirect equity interest in Eastern Energy of up to 20%.
Neither UtiliCorp nor any corporation owned or controlled by
UtiliCorp is a "holding company" subject to regulation under the 1935 Act or a
"subsidiary company" of a "holding company" subject to regulation under the 1935
Act. Eastern Energy is not a public utility company operating in the United
States and does not, and following the proposed acquisition will not, serve any
customers in the United States. Eastern Energy does not derive any income from
United States operations or sources within the United States.
UtiliCorp states that the proposed acquisition of its interest in
Eastern Energy would not affect in any way Eastern Energy's current status as an
electric utility company regulated by Australian authorities under Australian
law. UtiliCorp asserts that, since the operations of Eastern Energy as a
"public-utility company" within the meaning of Section 2(a)(5) of the 1935 Act
will be exclusively within Australia, its sales and revenues, and the regulation
thereof, have little or no effect on the rates and business of electric sales
and generation within the United States. Accordingly, UtiliCorp asserts that
regulation of Eastern Energy as a subsidiary of a holding company is not
necessary for either the public interest or for the protection of investors, and
therefore no regulatory purpose would be served by treating Eastern Energy as a
subsidiary of a holding company.
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UtiliCorp states that, as a special purpose subsidiary to be formed
for the primary purpose of acquiring an interest in Eastern Energy, UtiliCorp
Sub will derive no income from United States operations and will not be a public
utility company operating in the United States. UtiliCorp Sub will not engage
in any business other than the acquisition of Australian public utility
companies, supervision of UtiliCorp's investments in Australian and the
participation in the management and operations of Australian public utility
companies. Accordingly, regulation of UtiliCorp Sub as a subsidiary of a
holding company is not necessary for either the public interest or for the
protection of investors.
UtiliCorp asserts that Eastern Energy is entitled to the exemption
without qualification provided for by Section 3(b) of the 1935 Act, and
accordingly, that UtiliCorp, UtiliCorp Asia, UtiliCorp Sub and Australian
Holding Company are entitled to the exemption from all obligations as a holding
company provided for by Rule 10(a)(1) of the 1935 Act.
In addition, if Eastern Energy is exempt without qualification under
Section 3(b) of the 1935 Act, then UtiliCorp, UtiliCorp Asia, UtiliCorp Sub and
Australian Holding Company would be entitled under Rule 11(b)(1) to an exemption
from Section 9(a)(2) of the 1935 Act.
Notice is further given that any interested person may, not later
than October __, 1995, request in writing that a hearing be held in respect of
the request for exemption, relating to the nature of his interest and the
reasons for each request, and the issues of fact or law which he decides to
controvert; or he may request that he be notified should the Commission order a
hearing herein. Any such request should be addressed: Secretary, Securities
and Exchange Commission, Washington, DC 20549. At any time after said date, the
Commission may grant the exemption requested, or take such other action as it
deems appropriate.
