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FILE NO. _______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1 APPLICATION - DECLARATION
UNDER SECTION 3(b) AND
RULE 10 OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
--------------------------------------------
UtiliCorp United Inc.
20 West Ninth Street
Kansas City, MO 64105
(Name of the company filing this statement and
address of its principal executive office)
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None
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(Name of top registered holding company,
parent of each applicant or declarant)
Robert Howell
Executive Vice-President
UtiliCorp United Inc.
20 West Ninth Street
Kansas City, MO 64105
(Name and address of agent for service)
The Commission is requested to send copies of all notices,
orders and communications in connection with this
Application - Declaration to:
M. Douglas Dunn, Esq.
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, NY 10005
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ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
Applicant UtiliCorp United Inc., a Delaware corporation
("UtiliCorp"), applies to the Securities and Exchange Commission (the
"Commission") under Section 3(b) of the Public Utility Holding Company Act of
1935, as amended (the "'35 Act"), and Rule 10 thereunder, for an order exempting
the following companies from the provisions of the '35 Act:
KINETIK ENERGY ("Kinetik"): Kinetik is a retail gas company
organized under the laws of Australia and operating solely in Australia.
Kinetik's service area includes the northeastern and outer western suburbs of
Melbourne, the principal city of the State of Victoria, Australia ("Victoria"),
and western and north central Victoria.
WESTAR: Westar is a gas distributor organized under the laws of
Australia and operating solely in Australia. Its distribution network serves the
western suburbs of Melbourne, and includes a large number of industrial
customers in the western county areas of Victoria. Westar serves approximately
411,000 industrial, commercial and residential customers and has fixed assets
valued at approximately $591.8 million (N.Z.).
Kinetik and Westar are "stapled" businesses that will be sold by the
government of Victoria through the bidding process described below.
IKON ENERGY ("Ikon"): Ikon is a gas retail company organized under
the laws of Australia and operating solely in Australia. Its service area
includes the western central and southeastern suburbs of Melbourne.
MULTINET: Multinet is a gas distribution company organized under the
laws of Australia and operating solely in Australia. Its gas distribution
network includes the eastern metropolitan area of Melbourne, which is densely
populated. Multinet serves approximately 587,000 industrial, commercial and
residential customers and has fixed assets valued at approximately $650.5
million (N.Z.).
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Ikon and Multinet are also stapled businesses for purposes of the
bidding process.
ENERGY 21: Energy 21 is a gas retail company organized under the
laws of Australia and operating solely in Australia. Its service area includes
parts of eastern Melbourne, the Morningstar Peninsula and northern and eastern
Victoria.
STRATUS: Stratus is a gas distribution company organized under the
laws of Australia and operating solely in Australia. Its distribution network
includes the northern and southeastern suburbs of Melbourne and the Morningstar
Peninsula. Stratus serves approximately 419,000 industrial, commercial and
residential customers and has fixed assets valued at approximately $650.5
million (N.Z.).
Energy 21 and Stratus are also stapled businesses for purposes of
the bidding process.
GAS TRANSMISSION CORPORATION ("GTC"): GTC is a gas transmission and
supply company organized under the laws of Australia and operating solely in
Australia. It owns and operates approximately 1,650 kilometers of high-pressure
transmission pipelines and supporting infrastructure throughout Victoria. GTC
also owns and operates a liquefied natural gas facility at Dandenong.
THE BIDDING PROCESS IN VICTORIA
UtiliCorp will participate in the bidding process for the stapled
businesses through one or more subsidiaries. The nature of the subsidiaries, and
whether UtiliCorp will invest as a member of a group or consortium, has not yet
been determined. In light of certain tax, legal and regulatory considerations,
however, it may be advisable for UtiliCorp to structure any such transactions
using one or more intermediate companies to be owned by a UtiliCorp subsidiary.
Also, to accommodate Australian tax considerations, it may be necessary to
effect the transaction
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through a series of asset and stock acquisitions. Regardless of how any such
transaction is ultimately structured, UtiliCorp expects to acquire an equity
ownership interest of up to, but not more than, 50% in one or more of the three
stapled businesses described above. UtiliCorp may bid to acquire a minority
investment (less than 20%) in GTC.
The government of the State of Victoria (the "Victorian Government")
has decided to privatize its natural gas industry with the goal of developing a
competitive energy market in southeastern Australia. The Victorian Government
believes that the transition from a state-owned monopoly structure to a
competitive market will lower natural gas prices and enhance service for
consumers.
The Victorian Government has established an aggressive timetable for
the sale of the stapled natural gas retail and distribution companies as well as
GTC. The bidding process will occur in two stages. Initially, beginning in June,
1998 and proceeding through August, 1998, any interested party may make a bid
that will be a non-binding offer. These non-binding bids will be based on the
information contained in memoranda regarding the state-owned companies that are
prepared and distributed by the Victorian Government. The Victorian Government
will select finalists based on these bids to advance to the second stage of the
process.
The second stage will begin in August, 1998 and proceed through
November, 1998. In the second stage, the finalists will first have an
opportunity to perform due diligence on the companies. After performing the due
diligence, the finalists will have the opportunity to make binding bids to the
Victorian Government for selection as successful bidders. As a result, UtiliCorp
will likely review and bid on several companies simultaneously in the process.
UtiliCorp anticipates that the Victorian Government will first put the stapled
company of Kinetik
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and Westar out to bid. UtiliCorp also anticipates that, shortly after the second
stage due diligence has begun on Kinetik and Westar, the Victorian Government
will put the second stapled company, Ikon and Multinet, out to bid. UtiliCorp
anticipates further that the Victorian Government will put the third stapled
company, Energy 21 and Stratus, out to bid shortly after the first stage of the
Ikon and Multinet bidding has begun. Moreover, the Victorian government will
release the informational memoranda on GTC to commence the bidding on that
entity sometime during this time period
UtiliCorp will not proceed with the acquisition of any of the
stapled businesses or GTC unless the order granting the exemptions 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 any of the businesses. In fact, the Victorian
Government will likely view bids submitted prior to the receipt of regulatory
approvals in a negative light.
UtiliCorp is requesting the exemption of Kinetik, Westar, Ikon,
Multinet, Energy 21, Stratus and GTC in this single application because the
aggressive timing of the bidding process and the overlapping bidding on the
three stapled businesses and GTC will preclude UtiliCorp from filing successive
Applications for exemption. Also, because of the aggressive timing of the
bidding process, UtiliCorp requests that the Commission act on this Application
no later than July 15, 1998 so that a copy of the Commission's order can be
submitted with UtiliCorp's bids. Upon deciding to participate in the bidding
process and identifying the need to proceed under Section 3(b) of the '35 Act,
UtiliCorp has acted as expeditiously as possible to file this Application.
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APPLICANT'S STATEMENTS IN SUPPORT OF APPLICATION
In support hereof, UtiliCorp states:
(1) UtiliCorp is a publicly held corporation organized under
Delaware law with its principal offices located at 20 West Ninth Street, 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 Zealand. As of December 31, 1997,
UtiliCorp had sales of $8.926 billion, earnings before interest and taxes of
$359.1 million and total assets of $5.113 billion. Neither UtiliCorp nor any
corporation owned or controlled by UtiliCorp is a holding company subject to
regulation under the '35 Act or a subsidiary company of a holding company
subject to regulation under the '35 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 Energy Ltd., an Australian electric distribution company, each of which
is exempt without qualification from the 1935 Act either pursuant to Section
3(b) or Section 33. 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 will participate in the bidding process for the
stapled businesses through one or more subsidiaries. The nature of the
subsidiaries, and whether UtiliCorp will invest as a member of a group or
consortium, has not yet been determined. UtiliCorp expects that it will acquire
an equity ownership interest of up to, but not more than, 50% in one or more of
the three stapled businesses described above. UtiliCorp may also bid to acquire
a minority investment (less than 20%) in GTC by similar means.
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(3) UtiliCorp is planning to invest no more than $500 million in any
combination of permissible acquisitions under the Victorian bidding rules.
UtiliCorp currently anticipates that it would finance its acquisition in the
near term with bank borrowings at a subsidiary level which may require a
guarantee by UtiliCorp or from (a) its existing earnings and/or (b) debt
facilities at the UtiliCorp level. Any obligation of UtiliCorp is subject to
multiple state approvals.
(4) UtiliCorp has sought approval of these potential acquisitions
from those State public utility commissions having jurisdiction over such
acquisitions. 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. These
commissions include the Public Service Commission of the State of Missouri, the
Utilities Board of the State of Iowa, the Public Service Commission of the State
of West Virginia, the Colorado Public Utilities Commission, the Kansas
Corporation Commission, the Minnesota Public Utilities Commission, the Michigan
Public Service Commission and the South Dakota Public Utilities Commission.
(5) Neither Kinetik, Westar, Ikon, Multinet, Energy 21, Stratus nor
GTC is qualified to do business in any state of the United States; each operates
exclusively within Australia.
(6) Section 3(b) of the 1935 Act provides an exemption for any
subsidiary company of a holding company from provisions of the '35 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
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companies is a public utility company operating in the United States," provided
that the Commission finds that the application of the '35 Act to such subsidiary
company is "not necessary in the public interest or for the protection of
investors."
(7) Neither Kinetik, Westar, Ikon, Multinet, Energy 21, Stratus nor
GTC is a public utility company operating in the United States and do not, and
following the proposed acquisitions by UtiliCorp, would not, serve any customers
in the United States. The proposed acquisitions by UtiliCorp would not affect in
any way the status of Kinetik, Westar, Ikon, Multinet, Energy 21, Stratus or GTC
as natural gas companies subject to regulation by Australian authorities under
Australian law. Neither Kinetik, Westar, Ikon, Multinet, Energy 21, Stratus nor
GTC derives any income from United States operations or sources within the
United States. As discussed in paragraphs (8) through (10) below, the regulation
of Kinetik, Westar, Ikon, Multinet, Energy 21, Stratus or GTC under the '35 Act
is not necessary in the public interest or for the protection of investors or
consumers. Therefore, each of Kinetik, Westar, Ikon, Multinet, Energy 21,
Stratus and GTC satisfies the standards of Section 3(b) and should be accorded
an unqualified exemption, as a subsidiary company, from all provisions of the
'35 Act.
(8) Since the operations of Kinetik, Westar, Ikon, Multinet, Energy
21, Stratus and GTC are and will continue to be exclusively in Australia, its
sales and revenues, and the regulation thereof, have little or no effect on the
rates and business of natural gas sales and production 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 interests of investors.
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(9) An investment by UtiliCorp in Kinetik, Westar, Ikon, Multinet,
Energy 21, Stratus or GTC 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 will maintain separate
books of account for any of its subsidiaries that may control any of these
companies 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 Kinetik, Westar, Ikon, Multinet, Energy 21, Stratus or
GTC, nor will the ability of the various State commissions to protect the
interests of consumers in their respective States be adversely affected.
Accordingly, regulation by the SEC of Kinetik, Westar, Ikon, Multinet, Energy
21, Stratus or GTC, under the '35 Act 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 either Kinetik,
Westar, Ikon, Multinet, Energy 21, Stratus or GTC as a subsidiary of a holding
company.
(11) If Kinetik, Westar, Ikon, Multinet, Energy 21, Stratus and GTC
are exempt without qualification under Section 3(b) of the '35 Act, then
UtiliCorp and intervening subsidiaries would be entitled to the exemption
provided under Rule 10(a)(1) of the '35 Act with respect to these companies.
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(12) In addition, if Kinetik, Westar, Ikon, Multinet, Energy 21,
Stratus and GTC are exempt without qualification under Section 3(b) of the '35
Act, then UtiliCorp would be entitled under Rule 11(b)(1) to an exemption from
Section 9(a)(2) of the '35 Act.
(13) UtiliCorp hereby consents to file an annual report on Form
U-33-S.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
An estimate of the fees and expenses to be paid or incurred by the
applicants in connection with the proposed transactions is set forth below:
<TABLE>
<CAPTION>
Description Amount
----------- ------
<S> <C>
Counsel fees...................................... $ 5,000
Banking and other fees............................ $2,465,000
Total............................................. $2,470,000*
</TABLE>
* This total includes fees for a successful bid that proceeds
through all of the stages of the bidding process.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
Sections 3(b), 9(a)(2), 10(a)(1) and 33 and Rules 10 and 11(b)(1) of
the Act are or may be applicable to one or more of the transactions described
herein. To the extent any other sections of the Act and the Commission's rules
thereunder may be applicable to the proposed transactions, the Applicant hereby
requests appropriate orders thereunder.
ITEM 4. REGULATORY APPROVAL.
UtiliCorp either applied for approval of these potential
acquisitions or requested a certification letter from the Public Service
Commission of the State of Missouri, the Utilities Board of the State of Iowa,
the Public Service Commission of the State of West Virginia, the Colorado Public
Utilities Commission, the Kansas Corporation Commission, the Minnesota
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Public Utilities Commission, the Michigan Public Service Commission and the
South Dakota Public Utilities Commission.
ITEM 5. PROCEDURE.
It is requested that the Commission issue and publish no later than
July 7, 1998, the requisite notice under Rule 23 with respect to the filing of
this Application-Declaration, such notice to specify a date not later than July
14, 1998 as the date after which an order granting and permitting this
Application-Declaration to become effective may be entered by the Commission and
that the Commission enter not later than July 15, 1998 an appropriate order
granting and permitting this Application-Declaration to become effective.
No recommended decision by a hearing officer or other responsible
officer of the Commission is necessary or required in this matter. The Division
of Investment Management of the Commission may assist in the preparation of the
Commission's decision in this matter. There should be no thirty-day waiting
period between the issuance and the effective date of any order issued by the
Commission in this matter, and it is respectfully requested that any such order
be made effective immediately upon the entry thereof.
ITEM 6. EXHIBITS.
The following exhibits are filed as part of this statement:
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- -------- -----------
<S> <C>
Exhibit A Preliminary Opinion of Counsel
Exhibit B-1 Letter of Public Service Commission of the
State of Missouri
(to be filed by amendment)
Exhibit B-2 Letter of Utilities Board of the State of Iowa
(to be filed by amendment)
</TABLE>
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<TABLE>
<S> <C>
Exhibit B-3 Approval of Public Service Commission of the
State of West Virginia
(to be filed by amendment)
Exhibit B-4 Letter of Colorado Public Utilities Commission
Exhibit B-5 Letter of Kansas Corporation Commission
Exhibit B-6 Letter of Minnesota Public Utilities
Commission
(to be filed by amendment)
Exhibit B-7 Letter of Michigan Public Service Commission
(to be filed by amendment)
Exhibit B-8 Letter of South Dakota Public Utilities
Commission
(to be filed by amendment)
</TABLE>
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
The proposed transactions do not involve major federal action having
a significant effect on the environment and to the best of the Applicant's
knowledge, no federal agency has prepared or is preparing an environmental
impact statement with respect to such the proposed transactions.
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WHEREFORE, the Applicant respectfully requests that the Commission
issue an order herein determining that each of Kinetik, Westar, Ikon, Multinet,
Energy 21, Stratus and GTC is entitled to the exemption without qualification
provided for by Section 3(b) of the '35 Act.
Dated: June 30, 1998
Respectfully submitted,
UTILICORP UNITED INC.
By: Robert Howell
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Robert Howell
Executive Vice-President
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EXHIBIT A
FILE 70-
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, NY 10005
July 1, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form U-1 Application-Declaration
Ladies and Gentlemen:
We refer to the Form U-1 Application-Declaration (the
"Application-Declaration") filed by UtiliCorp United Inc.("UtiliCorp"), a
Delaware corporation. Capitalized terms and parties not defined herein shall
have the meanings ascribed to such terms and parties in the
Application-Declaration.
In the Application-Declaration, UtiliCorp applies under Section 3(b)
of the Public Utility Holding Company Act of 1935, as amended (the "1935 Act"),
and Rule 10 thereunder for an order from the Securities and Exchange Commission
(the "SEC") to exempt the following companies from the provisions of the 1935
Act: Kinetik Energy/Westar, Ikon Energy/Multinet, Energy 21/Stratus and Gas
Transmission Corporation ("GTC"). UtiliCorp will participate in a bidding
process to be conducted by the government of the State of Victoria, Australia
(the "Victorian Government"), for one or more of the above-listed stapled
companies, and possibly for GTC as well, and seeks the SEC exemptions prior to
submitting bids to the Victorian Government.. Stages of the bidding will be held
over the course of the summer (June through August). We have acted as counsel
for UtiliCorp in connection with this Application-Declaration and, as such
counsel, we are familiar with the corporate proceedings taken and to be taken by
UtiliCorp and its subsidiaries as described in the Application-Declaration.
We have examined originals, or copies certified to our satisfaction,
of such corporate records of UtiliCorp, certificates of public officials,
certificates of officers and representatives of UtiliCorp and other documents as
we have deemed it necessary to require as a basis for the opinions hereinafter
expressed. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
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the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon statements of governmental officials and upon representations made
by officers of UtiliCorp and other appropriate persons, and statements contained
in the Application-Declaration.
The opinions expressed below in respect of the transactions
described in the Application-Declaration (the "Transactions")are subject to the
following assumptions or conditions:
a. The Transactions shall have been duly authorized and approved to
the extent required by federal and state law and by the Board of Directors of
UtiliCorp;
b. The SEC shall have duly entered an appropriate order or orders
granting the Application-Declaration and permitting the Application-Declaration
to become effective with respect to the Transactions;
c. The Transactions shall have been accomplished in accordance with
all approvals, authorizations, consents, certificates and orders of any
applicable state commission or regulatory authority required for the
consummation of the Transactions, and all such required approvals,
authorizations, consents, certificates and orders shall have been obtained and
remain in effect; and
d. No act or event other than as described herein shall have
occurred subsequent to the date hereof which would change the opinions expressed
above.
Based upon the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that, in the event that the
Transactions are completed in accordance with the Application-Declaration, and
subject to the assumptions and conditions set forth above:
1. UtiliCorp will be validly organized and duly existing under the
laws of the State of Delaware; and
2. All state and federal laws applicable to the Transaction will
have been complied with.
We hereby consent to the use of this opinion as an exhibit to the
Application-Declaration. The opinions set forth herein are issued and expressed
as of the date hereof. We do not assume or undertake any responsibility to
advise you of changes in either fact or law which may come to our attention
after the date hereof.
Very truly yours,
Milbank, Tweed, Hadley & McCloy
MDD/____
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STATE OF COLORADO
[PUBLIC UTILITIES COMMISSION LETTERHEAD]
EXHIBIT B-4
May 26, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Commission Members:
The Public Utilities Commission of the State of Colorado has been advised
that UtiliCorp United Inc., either itself or through a subsidiary or other
entity in which UtiliCorp holds an ownership interest, may obtain an interest in
one or more natural gas businesses in Australia. This letter is submitted
pursuant to the requirements of Section 3(b) of the Public Utility Holding
Company Act of 1935, as amended (the "Act").
The Public Utilities Commission of the State of Colorado has jurisdiction
over the retail electric and natural gas rates of UtiliCorp United Inc., which
is a public utility company as such term is defined in the Act. In Colorado,
UtiliCorp United Inc. provides electric service to retail customers through its
WestPlains Energy Division and retail natural gas service through its Peoples
Natural Gas Division.
The Public Utilities Commission of the State of Colorado hereby certifies
that it has the authority and resources to protect ratepayers subject to its
jurisdiction with respect to any foreign acquisitions and that it intends to
exercise its authority.
Sincerely,
/s/ Bruce N. Smith
Bruce N. Smith
Director
cc: Steven H. Denman, Esq.
[STAMP]
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[Kansas Corporation Commission Letterhead]
EXHIBIT B-5
May 26, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Commission Members:
This letter is submitted to you pursuant to the requirements of Section
33(a)(2) of the Public Utility Holding Company Act of 1935, as amended, 15
U.S.C. 79z-5b(1996)("PUHCA"). On May 8, 1998, counsel for UtiliCorp United, Inc.
("UtiliCorp"), requested this letter from the State Corporation Commission of
the State of Kansas ("KCC"), in order to satisfy all regulatory requirements
prior to its acquisition, either by itself, or through a subsidiary or other
entity in which UtiliCorp holds and ownership interest, of an interest in
electric and gas facilities in foreign countries.
The KCC is the statutorily-created agency empowered to regulate all public
utilities in the State of Kansas, including UtiliCorp and its divisions, Peoples
Natural Gas and West Plains Energy. With this letter, the KCC hereby certifies
that it has the authority and resources to protect ratepayers subject to its
jurisdiction with respect to any foreign acquisitions, and that it intends to
exercise its authority. Further, this Commission notes that the certification
may be revised or withdrawn prospectively as to any future acquisition. In
making this certification, this Commission is relying on the belief that the
Securities and Exchange Commission will enforce all sections of the PUHCA which
govern UtiliCorp's proposed investment in the Australian gas properties over
which it has jurisdiction.
Sincerely,
/s/ John Wine
-----------------------------
John Wine
Chair
Kansas Corporation Commission
1500 SW Arrowhead Rd.
Topeka, Kansas 66604-4027
cc: Jim Grimes
Foulston & Siefkin, L.L.P.
1515 NationsBank Tower
534 Kansas Avenue
Topeka, Kansas 66603
