File No. 70-09517
As filed with the Securities and Exchange Commission on October 15, 1999
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1 APPLICATION-DECLARATION
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AMENDMENT NO. 2
TO
APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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Dominion Resources, Inc. Consolidated Natural Gas
120 Tredegar Street Company
Richmond, VA 23219 CNG Tower, 625 Liberty Avenue
Pittsburgh, PA 15222
(Name of company filing this statement and
address of principal executive offices)
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Dominion Resources, Inc. Consolidated Natural Gas
Company
(Name of top registered holding company
parent of each applicant or declarant)
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James F. Stutts Stephen E. Williams
Vice President and Senior Vice President and
General Counsel General Counsel
Dominion Resources, Inc. Consolidated Natural Gas
120 Tredegar Street Company
Richmond, VA 23219 CNG Tower, 625 Liberty Avenue
Pittsburgh, PA 15222
(Name and address of agent for service)
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<PAGE>
The Commission is also requested to send copies
of any communication in connection with this matter to:
Norbert F. Chandler, Esq.
General Attorney & Assistant Secretary
Consolidated Natural Gas Company
CNG Tower, 625 Liberty Street
Pittsburgh, PA 15222
<PAGE>
APPLICATION-DECLARATION
UNDER
SECTIONS 6(a), 7, 9(a), 10, 32 and 33
AND
RULES 42, 53 and 54
OF
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
FOR APPROVAL OF
ISSUANCE OF SECURITIES
AND
RELATED MATTERS
TABLE OF CONTENTS
Page
Item 1. Description of Proposed Transactions.................................1
A. Introduction and General Request................................1
B. Issuance of Securities; Incurrence of Indebtedness;
Provision of Guarantees and other Credit Support................3
1. DRI and its Subsidiaries other than Virginia Power
and its Subsidiaries .......................................6
2. Virginia Power and its Subsidiaries........................15
3. CNG and its Subsidiaries...................................16
C. Dominion Direct Investment, Incentive Compensation Plans
and other Employee Benefit Plans...............................21
1. Dominion Direct Investment.................................21
2. Incentive Compensation Plans...............................22
3. Other Employee Benefit Plans...............................24
Item 2. Fees, Commissions and Expenses.................................25
Item 3. Applicable Statutory Provisions................................25
A. Issuance of Securities; Incurrence of Indebtedness;
Provision of Guarantees and other Credit Support...............26
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Page
Item 4. Regulatory Approvals...........................................27
Item 5. Procedure......................................................28
Item 6. Exhibits and Financial Statements..............................28
Item 7. Information as to Environmental Effects........................31
<PAGE>
APPLICATION-DECLARATION
UNDER
SECTIONS 6(a), 7, 9(a), 32 and 33
AND
RULES 42, 53 and 54
OF
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
FOR APPROVAL OF
ISSUANCE OF SECURITIES
AND
RELATED MATTERS
Dominion Resources, Inc. and Consolidated Natural Gas Company hereby
amend and restate in its entirety their Application-Declaration in File No.
70-09517.
Item 1. Description of Proposed Transactions.
A. Introduction and General Request.
This Application-Declaration is submitted in connection with the
proposed merger of Dominion Resources, Inc., a Virginia corporation and
currently a holding company exempt from the registration requirements of the
Public Utility Holding Company Act of 1935 (the "1935 Act") pursuant to Section
3(a)(1) thereof and Rule 2 thereunder ("DRI"), and Consolidated Natural Gas
Company, a Delaware corporation and a registered holding company under the 1935
Act ("CNG"), pursuant to the Amended and Restated Agreement and Plan of Merger
dated as of May 11, 1999 (the "Merger Agreement"). After entering into an
initial Agreement and Plan of Merger dated as of February 19, 1999, as amended
and restated as of March 31, 1999, the Boards of Directors of DRI and CNG
approved a revised structure for their Merger following CNG's receipt of an
unsolicited offer from a third party. The companies negotiated a revised merger
agreement and entered into the revised merger agreement as of May 11, 1999. In
this Application, any references to the Merger Agreement refer to the revised
merger agreement entered into as of May 11, 1999 unless otherwise noted.
The Merger Agreement contemplates a two-step merger transaction. In
the first step, a wholly owned subsidiary of DRI ("SPV") will merge (the "First
Merger") with and into DRI in a transaction in which DRI will be the surviving
corporation. The First Merger and the issuance of shares of DRI common stock to
DRI shareholders in connection therewith do not require Commission approval
under the 1935 Act. In the second step, CNG will either merge (the "Second
Merger") (i) with and into another wholly owned subsidiary of DRI ("CNG
Acquisition") in a transaction in which CNG Acquisition will be the surviving
corporation (which is the preferred structure for the Second Merger) or (ii)
with and into DRI in a transaction in which DRI will be the surviving
corporation (the alternative structure for the Second Merger). The Second Merger
is the subject of the Application of DRI and CNG on Form U-1 (File No. 70-09477)
previously filed with the Commission (the "Merger
<PAGE>
Application"), and which is hereby incorporated by reference herein. The First
and the Second Merger are each conditioned on the other occurring. The First
Merger and the Second Merger are herein together referred to as the "Merger". As
a result of the Merger and the other transactions contemplated by the Merger
Agreement (collectively, irrespective of the transaction structure actually
implemented, the "Transaction"), CNG will cease to exist and either CNG
Acquisition, as the successor in interest to CNG, will become a direct
subsidiary of DRI or each of CNG's four public utility subsidiaries will become
direct subsidiaries of DRI. As a result of the Merger, CNG's non-utility
subsidiaries will each become direct or indirect subsidiaries of CNG Acquisition
or DRI, as the case may be. Following completion of the Merger, irrespective of
the transaction structure actually implemented, DRI and, if applicable, CNG
Acquisition will register as a holding company pursuant to Section 5 of the 1935
Act. A more fulsome description of the Merger and the other transactions
contemplated by the Merger Agreement is contained in the Merger Application.
This Application-Declaration seeks authorization and approval of the
Commission with respect to the financing arrangements, ongoing financing
activities and other matters pertaining to, DRI and CNG and their subsidiaries
after giving effect to the Merger and the registration of DRI as a holding
company. Specifically, this Application-Declaration seeks authorization and
approval of the Commission:
(i) under Sections 6(a) and 7:
(1) for DRI to issue common stock of DRI to shareholders of
CNG in connection with the Second Merger;
(2) for DRI to maintain in effect and to amend, renew,
extend and/or replace its existing universal shelf registration
under the Securities Act of 1933 up to the aggregate dollar amount
specified below and, pursuant to such shelf registration, to issue
additional equity, preferred and/or debt securities for general
corporate purposes for the period from and after the Merger through
December 31, 2002;
(3) for DRI and its subsidiaries, including CNG, to
maintain in effect for the period from and after the Merger through
the third anniversary of the effectiveness of the Merger (the
"Authorization Date"), all existing credit facilities and financing
arrangements and to maintain outstanding all indebtedness and
similar obligations created thereunder as of the date of the closing
of the Merger (including, without limitation, any such facilities,
financing arrangements, indebtedness or similar obligations incurred
in connection with or to finance the Merger) and to amend, renew,
extend and/or replace any of such credit facilities, financing
arrangements, indebtedness or similar obligations up to the
aggregate dollar amounts specified below, provided that no such
amendment, renewal, extension and/or replacement which is effected
following completion of the Merger shall provide for an increase in
the aggregate amount of indebtedness to be incurred or for a final
maturity date
<PAGE>
relating to such indebtedness which occurs after the Authorization
Date unless the Commission shall otherwise approve or such
amendment, renewal, extension and/or replacement shall not require
Commission approval under applicable provisions of the 1935 Act and
rules and regulations promulgated thereunder; and
(4) for DRI and its subsidiaries, including CNG, to incur
additional indebtedness and similar obligations including, without
limitation, guarantees and other credit support in the amounts and
on the terms described below;
(ii) under Sections 9(a), 10, 32 and 33 and Rules 53 and 54 for DRI
and CNG to make additional investments in non-utility businesses
consistent with the business plans of DRI and CNG including in exempt
wholesale generators within the meaning of Section 32 of the Act ("EWGs")
and foreign utility companies within the meaning of Section 34 of the Act
("FUCOs") all as more specifically described below;
(iii) under Sections 6(a) and 7 for the issuance by DRI of up to
45.5 million shares of common stock under dividend reinvestment and
stock-based management incentive and employee benefit plans all as more
specifically described below; and
(iv) under other sections of the 1935 Act and applicable rules and
regulations of the Commission promulgated thereunder with respect to the
related matters described in this Application-Declaration.
B. Issuance of Securities; Incurrence of Indebtedness; Provision of
Guarantees and other Credit Support.
DRI is and, prior to the closing of the Second Merger DRI will
continue to be, a holding company exempt from the registration requirements of
the 1935 Act pursuant to Rule 2 promulgated thereunder and, thus, is not now,
and until the closing of the Second Merger will not be, subject to Sections 6(a)
and 7 of the 1935 Act. CNG now is, and following completion of the Second
Merger, CNG Acquisition will be, a registered holding company subject to the
provisions of Sections 6(a) and 7 of the 1935 Act.
Shareholders of DRI will, in connection with the First Merger, be
given the option to receive either $43.00 in cash or 1 share of DRI common stock
in exchange for each share of DRI common stock held, subject to limitations on
the aggregate amount of cash that may be distributed in connection with the
First Merger. The First Merger, the exchange of DRI common stock thereby
contemplated and any incurrence of indebtedness to obtain cash necessary to make
any payments to DRI shareholders in exchange for their shares of DRI common
stock in connection with the First Merger do not require Commission approval
under the 1935 Act. DRI will, in connection with the Second Merger, be incurring
indebtedness and will also be issuing common stock to shareholders of CNG.
Indebtedness will be incurred to finance cash payments to DRI shareholders in
connection with the First Merger and to finance the cash component of the Merger
consideration to be paid to CNG shareholders in connection
<PAGE>
with the Second Merger. DRI anticipates that such cash will initially be
obtained through the issuance of commercial paper under an expanded DRI
commercial paper program backed by a combination of short-term and long-term
credit facilities similar to the types of credit facilities that DRI currently
has in place and other short-term credit facilities. After closing of the
Merger, DRI anticipates replacing a significant portion of the commercial paper
program with proceeds from (i) the issuance of debt, preferred and/or
convertible securities, (ii) the timely divestiture of DRI's financial services
subsidiary, Dominion Capital, Inc. and (iii) the sale of other non-core assets
which do not support the combined company's MAIN to Maine strategy. DRI common
stock to be issued to CNG Shareholders in connection with the Second Merger has
been registered on Form S-4 under the Securities Act of 1933. The DRI common
stock to be issued in connection with the Transaction is described in DRI's
Registration Statement on Form S-4 under the Securities Act of 1933
(Registration No. 333-75669) which, as amended, was declared effective by the
Commission in May 1999. Such Registration Statement is hereby incorporated by
reference herein. DRI's acquisition capital structure will approximate 30%
common equity and 70% debt and convertible securities. As a result of the
acquisition financing, DRI's consolidated capital structure will approximate
60-65% debt securities, 5-10% preferred securities and 30-35% common equity. DRI
anticipates improving its consolidated capital structure by significantly
reducing debt levels through cash generated by the asset divestitures described
above, issuance of preferred and/or convertible securities and from cash flow
from operations. Specifically, in refinancing the approximately $4.5 billion
required for the cash portion of the Merger Consideration, DRI anticipates that
it will use at least $1 billion in proceeds from asset sales to pay down
short-term debt incurred and will issue up to $1 billion in equity securities or
securities convertible into equity securities.1 Depending on the outcome of
DRI's asset sales, an additional $200 million in proceeds may also be used to
pay down the short-term debt. The balance of the refinancing will be using debt
securities with a maturity not to exceed 50 years and interest rates not in
excess of 500 basis points over the comparable term London Interbank Offered
Rate (LIBOR).
Aside from the Merger, DRI, has, consistent with applicable law and
DRI's normal business practice and in order to make reasonable provision for the
anticipated financing needs of itself and its subsidiaries, caused to be
established a universal shelf registration with respect to DRI equity, preferred
and debt securities and has entered into a number of credit facilities with
outside lenders, issued debt securities and guaranteed or otherwise supported
the obligations of its non-utility subsidiaries. The universal shelf
registration statement and these credit facilities and other financing
arrangements are described in further detail in this Item 1, Section B.1 below.
DRI's sole public utility subsidiary, Virginia Electric and Power
Company, a Virginia corporation ("Virginia Power"), finances its and its
subsidiaries' operations on a stand-alone basis through the issuance of
preferred stock, bonds and commercial paper and in compliance with applicable
legal and regulatory requirements of the states of Virginia and
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(1) Convertible securities can be issued at a lower cost of funds to DRI
than straight equity while obtaining some equity credit from rating agencies.
<PAGE>
North Carolina, the states in which Virginia Power carries on its regulated
utility operations. These financing arrangements are described in this Item 1,
Section B.2 below. Each of these existing financings would have been permitted
without prior Commission approval pursuant to Rule 52 if at the time such
financings were entered into DRI had been a registered holding company under the
1935 Act with one exception relating to short-term financing which, under
applicable Virginia law, Virginia Power is permitted to incur without prior
approval of the Virginia State Corporation Commission (the "VSCC"). DRI and
Virginia Power anticipate further securities issuances by Virginia Power after
completion of the Merger. All such further securities issuances will be effected
in compliance with applicable law, including the 1935 Act and Rule 52.
CNG has, consistent with applicable law, including the 1935 Act, and
CNG's normal business practice and in order to make reasonable provision for the
anticipated financing needs of itself and its subsidiaries, entered into both
external and intrasystem financing arrangements and guaranteed or otherwise
supported the obligations of its subsidiaries, both utility and non-utility.
These financing arrangements are described in this Item 1, Section B.3 below.
The Commission has expressly approved these financing arrangements by CNG
pursuant to the 1935 Act except when applicable rules of the Commission permit
such arrangements to be entered into without prior Commission authorization.
In entering into the Merger Agreement and seeking to combine their
companies, both DRI and CNG recognize that successful integration of their
operations and activities cannot be achieved overnight. DRI and CNG have
established a Transition Team to oversee the process of integrating their
companies but, for both practical and legal reasons, this integration cannot be
fully implemented until after the receipt of required shareholder and regulatory
approvals and the actual closing of the Second Merger. Moreover, any requirement
that might be imposed on DRI to the effect that, upon closing of the Second
Merger, DRI and its subsidiaries must replace their existing financing and
credit arrangements with new financing and credit arrangements typical of those
historically employed by existing registered electric systems would (i) impose
substantial economic costs on the companies and (ii) cause substantial
disruption to their ongoing business activities as the companies, their
investors and the financial markets seek to understand such new arrangements.
Such a requirement would, in view of ongoing liberalization of the 1935 Act
regulation generally applicable to financings by registered holding companies,
undermine the interests of the companies and the interests of their investors
and consumers and would, therefore, be detrimental to the public interest and
the interests of investors and consumers. Thus, for a period of time following
the closing of the Merger, DRI and CNG and their respective subsidiaries are
seeking to maintain their existing financing arrangements and other commitments
and to continue to carry on their newly combined business without undue
interruption. Consequently, DRI and CNG request that the Commission authorize
DRI and CNG and their subsidiaries, through the Authorization Date, to continue
to finance their operations in the same manner as prior to closing of the Merger
all as more specifically described herein.
<PAGE>
1. DRI and its Subsidiaries other than Virginia Power and its
Subsidiaries.
DRI 's universal shelf registration filed with the Commission on
September 12, 1997 (Registration No. 333-35501) covers equity, preferred and
debt securities and allows DRI to issue any one or more of the foregoing types
of securities singly or in combination, provided that the aggregate principal
amount of proceeds of securities issuances that may be obtained pursuant to such
securities issuances under the universal shelf registration does not exceed
$950,000,000. As of the date of this Application-Declaration, DRI issued common
stock pursuant to the universal shelf registration and derived $275,000,000 of
proceeds from such issuance. DRI will likely reduce this universal registration
statement with a similar universal registration statement prior to completion of
the Merger.
Following completion of the Merger, DRI proposes to maintain in
effect its universal shelf registration as in effect at the time of the Merger
and to amend, renew, extend or replace such universal shelf registration as
necessary. DRI further proposes to continue to issue equity, preferred and/or
debt securities pursuant to its universal shelf registration and/or any
amendment, renewal, extension or replacement thereof including, without
limitation, for the purpose of refinancing indebtedness incurred to finance the
cash component of the consideration to be paid to DRI shareholders in connection
with the First Merger and to CNG shareholders in connection with the Second
Merger. Accordingly, DRI hereby requests authorization, from and after the
Merger and continuing through the period ending on the Authorization Date, to
issue equity, preferred and/or debt securities, singly or in combination,
pursuant to such universal shelf registration and/or any amendment, renewal,
extension or replacement thereof so long as the aggregate principal amount of
proceeds of securities issuances that may be thereby obtained does not exceed
$1,500,000,000. The dividends payable on preferred stock and the interest rate
and maturity of debt securities which may be issued pursuant to this
authorization will be determined at the time of issuance and will not exceed
those generally obtainable at the time of issuance for securities having the
same or reasonably similar maturities, terms, conditions and features issued by
utility companies or utility holding companies of reasonably comparable credit
quality; provided, however, that in any event the cost of money in respect of
such securities shall not exceed 500 basis points over LIBOR. Disclosure of
information relating to any such securities issuances in any fiscal quarter of
DRI, for 1935 Act reporting requirements, will be made to the Commission
pursuant to Rule 24, within 60 days following the end of the fiscal quarter in
which the issuance occurs.
DRI also maintains in effect the following additional separate
credit and financing facilities:
(i) DRI sells its commercial paper in regional and national markets.
Proceeds of commercial paper issuances are used for general
corporate purposes and are made available to DRI's non-utility
subsidiaries pursuant to intercompany credit agreements described
below. DRI's non-utility subsidiaries repay these financings through
cash flows and proceeds of permanent financings. DRI commercial
paper is supported by bank lines of credit maintained by DRI. At
<PAGE>
December 31, 1998, the aggregate outstanding maximum face amount of
DRI commercial paper was $3,100,000.
(ii) DRI has entered into an Amended and Restated Credit Agreement dated
as of April 3, 1996 as amended by the First Amendment thereto dated
as of April 2, 1997 (the "DRI Credit Agreement") among DRI, the
lenders identified therein, and NationsBank, N.A., as agent for said
lenders, pursuant to which the lenders have, subject to the terms
and conditions set forth in the Credit Agreement, agreed to make
loans to DRI in an aggregate principal amount not to exceed $300
million at any one time outstanding. Proceeds of loans may be used
for general corporate purposes and to support commercial paper. The
commitment of the lenders under the DRI Credit Agreement will expire
on April 3, 2002 if not theretofore canceled or terminated in
accordance with the terms thereof.
(iii) DRI has entered into a Second Amended and Restated Short-Term Credit
Agreement dated as of March 31, 1999 (the "DRI Short-Term Credit
Agreement") among DRI, the lenders identified therein, and
NationsBank, N.A., as administrative agent for said lenders,
pursuant to which the lenders have, subject to the terms and
conditions set forth in the DRI Short-Term Credit Agreement, agreed
to make loans to DRI in an aggregate principal amount not to exceed
$300 million at any one time outstanding. Proceeds of loans may be
used for general corporate purposes and to support commercial paper.
The commitment of the lenders under the DRI Short-Term Credit
Agreement will expire 364 days after the date thereof if not
theretofore canceled or terminated in accordance with the terms
thereof.
(iv) DRI also has in place an Indenture dated as of December 1, 1997 (the
"DRI Indenture") between DRI and The Chase Manhattan Bank pursuant
to which DRI may, subject to the terms and conditions set forth in
the DRI Indenture, issue an unlimited amount of Junior Subordinated
Debentures in one or more series. As of the date of this
Application-Declaration, DRI has entered into a First Supplemental
Indenture dated December 1, 1997 with The Chase Manhattan Bank
pursuant to which DRI has issued $257,700,000 aggregate principal
amount of 7.83% Junior Subordinated Debentures to Dominion Resources
Capital Trust I which has in turn issued $250,000,000 aggregate
principal amount of Capital Securities to investors in an offering
under Rule 144a under the Securities Act of 1933. Proceeds of the
issuance of the Capital Securities by Dominion Resources Capital
Trust I are used solely to acquire Junior Subordinated Debentures.
Payments on account of the Junior Subordinated Debentures are used
by Dominion Resources Capital Trust I to make payments on account of
the Capital Securities. Proceeds of the issuance of the Junior
Subordinated Debentures are used by DRI for general corporate
purposes including debt repayment. Amounts in respect of the Capital
Securities are guaranteed by DRI pursuant to the Capital Securities
Guarantee Agreement dated as of December 8, 1997 between DRI and The
Chase
<PAGE>
Manhattan Bank, as guarantee trustee, and the New Capital Securities
Guarantee Agreement dated as of June 18, 1998 between DRI and The
Chase Manhattan Bank, as Trustee.
(v) DRI has also entered into a five year End Loaded Lease Financing
(the "ELLF"). The ELLF is structured as an off-balance sheet
financing with a single purpose grantor trust, the lessor, formed to
purchase, improve and own certain assets which are then leased to
DRI. The lease structure is designed to permit DRI to finance the
assets on an off-balance sheet basis while allowing DRI to maintain
control of the property and retain the benefits of ownership for tax
purposes. The assets which are financed under the ELLF include an
office building and two aircraft. Payments made by DRI under this
leasing arrangement are intended to cover the periodic interest and
principal payments required to be made by the lessor which has
financed its acquisition of the lease assets. The estimated
aggregate amount of lease payments that DRI is required to make
under the lease are $12,500,000.
(vi) DRI also has issued a Note in the face amount of $28,400,000 due
2008 which bears interest at a rate of 9.25% per annum with respect
to the financing of the office building occupied by Virginia Power.
As of December 31, 1998, the principal balance outstanding of the
Note was $18,600,000.
(vii) DRI has also entered into a Guarantee Agreement dated as of October
30, 1998 in favor of Bayerische Landesbank Girozentrale in
connection with the Pounds Sterling 33,500,000 Committed
Multi-Currency Revolving Advances Facility dated as of October 30,
1998 between DR Group Holdings, a company organized under the laws
of the United Kingdom, and Bayerische Landesbank Girozentrale.
As discussed above, DRI will be incurring additional indebtedness,
anticipated to be in the form of an expanded commercial paper program and other
short-term credit facilities, to finance the cash component of the consideration
to be paid to DRI shareholders in connection with the First Merger and to CNG
shareholders in connection with the Second Merger. In addition, it is possible
that, prior to the Merger, DRI will seek to increase the commitments of the
lenders, and borrow, under the DRI Credit Agreement and the DRI Short-Term
Credit Agreement and/or enter into additional credit facilities renewing,
extending and/or replacing the DRI Credit Agreement and the DRI Short-Term
Credit Agreement. It is also possible that, prior to the Merger, DRI will seek
to issue additional Junior Subordinated Debentures to Dominion Resources Capital
Trust I (or to another trust vehicle under a similar financing arrangement) and
that in connection with such issuance Dominion Resources Capital Trust I (or
such other trust vehicle) will issue additional Capital Securities to investors.
DRI hereby requests Commission authorization to maintain in effect
the above described financing arrangements, any additional financing
arrangements entered into by DRI prior to the completion of the Merger and any
amendments, renewals, extensions or
<PAGE>
replacements thereof entered into prior to completion of the Merger. DRI further
requests Commission authorization, during the period from and after the Merger
through the Authorization Date, to amend, renew, extend and/or replace any
financing arrangement entered into by DRI prior to completion of the Merger and
which remains in effect on the date the Merger is completed; provided that no
such amendments, renewal, extension and/or replacement which is effected
following completion of the Merger shall provide for an increase in the
aggregate amount of indebtedness to be incurred (taking into account all
outstanding DRI financing arrangements) or for a cost of money to exceed 500
basis points over LIBOR or for a final maturity date of more than 50 years
unless the Commission shall otherwise approve or such amendment, renewal,
extension and/or replacement shall not require Commission approval under the
1935 Act and the rules and regulations promulgated thereunder. DRI further
requests authorization to enter into additional financing arrangements similar
to those described above in paragraphs (i) through (vii) above for the period
from and after the Merger through the Authorization Date; provided that the
additional aggregate principal amount of debt obligations incurred by DRI
pursuant to this separate request for authorization shall not exceed
$250,000,000, the cost of money relative to such financing shall not exceed 500
basis points over LIBOR and the final maturity of securities issued shall not
exceed 50 years.
Within 90 days following completion of the Merger, DRI will,
pursuant to Rule 24, notify the Commission of all financing arrangements entered
into by DRI prior to the Merger and which will remain in effect upon the closing
of the Merger. Thereafter, DRI will, pursuant to Rule 24, notify the Commission
of all DRI financings occurring within any fiscal quarter of DRI within 60 days
following the end of such fiscal quarter.
In addition to the foregoing financing facilities, DRI also supports
the operations of its non-utility subsidiaries through capital contributions,
guarantees and other support arrangements. These other support arrangements
include covenants of DRI to maintain a specific level of ownership of the
companies involved and to maintain a minimum net worth for such subsidiaries.
DRI's non-utility businesses are principally conducted through Dominion Energy,
Inc., a Virginia corporation and a wholly owned subsidiary of DRI ("DEI" and,
together with its subsidiaries, the "DEI Companies"), and Dominion Capital,
Inc., a Virginia corporation and a wholly owned subsidiary of DRI ("DCI" and,
together with its subsidiaries, the "DCI Companies"). As discussed in further
detail in this Item 1, Section C below, the DEI Companies are principally
involved in energy-related businesses and the DCI Companies are principally
involved in financial services businesses. An organizational chart of DRI and
its subsidiaries is annexed hereto as Exhibit E-3.
a. DRI Investment in and Support of the DEI Companies.
As of December 31, 1998, DEI had paid in capital from equity
investments made by DRI of $456,400,000. As of the date of this
Application-Declaration, except as described below, DRI has not entered into any
capital contribution agreement or similar arrangement which expressly requires
DRI to make any additional cash capital contributions to DEI or any of the other
DEI Companies.
<PAGE>
As of the date of this Application-Declaration, DRI has entered into
an Intercompany Credit Agreement dated as of August 31, 1987 between DRI and DEI
pursuant to which DEI may, subject to the terms and conditions of the
Intercompany Credit Agreement, borrow up to $350,000,000 aggregate principal
amount at any one time outstanding from DRI. Proceeds of borrowings may be used
by DEI for general corporate and working capital purposes.
As of the date of this Application-Declaration, DRI has guaranteed
$122,312,000 aggregate principal amount of payment obligations of the DEI
Companies pursuant to the following agreements:
(i) Liquidity Support Agreement dated as of February 27,
1998 made by DRI in favor of Commonwealth Edison Company
in support of the obligations of Kincaid Generation,
L.L.C. under its Power Purchase Agreement with
Commonwealth Edison Company. DEI holds both a direct
(1%) and an indirect (99%) equity interest in Kincaid
Generation, L.L.C. The Liquidity Support Agreement
requires DRI to make up to $22,000,000 of capital
contributions to DEI if required in order to enable DEI
to fulfill its obligations relating to the Power
Purchase Agreement.
(ii) Backstop Cash Management Agreement dated as of April 28,
1998 between DRI, Kincaid Generation, L.L.C. and LaSalle
National Bank, as collateral trustee, pursuant to which
DRI is required to guarantee the repayment of certain
amounts into collateral accounts maintained by the
collateral agent if Kincaid Generation, L.L.C. takes
advances from such accounts, the repayment of which
advances is guaranteed, in the first instance, by DEI.
(iii) Backstop Equity Subscription Agreement dated as of April
28, 1998 between DRI, Kincaid Generation, L.L.C. and
LaSalle National Bank, as collateral trustee, pursuant
to which DRI is required to make up to $100,312,000 of
capital contributions to Kincaid Generation, L.L.C. in
connection with financing arrangements entered into by
Kincaid Generation, L.L.C. and guaranteed, in the first
instance, by DEI.
DEI has entered into an arrangement with Bank of America Leasing
and Capital Group, an affiliate of NationsBank, with respect to a $825,000,000
lease financing for the construction and lease of ten to fourteen new gas-fired
turbines and associated equipment to be installed at a number of new power
generation facilities currently under development by DEI. The terms of this
arrangement require DRI to guarantee the obligations of the lessee under the
lease financing documents. It is anticipated that the above generation
facilities will be "eligible facilities" within the meaning of Section 32(a)(2)
of the Act and their owners will qualify as EWGs.
DRI hereby requests authorization to maintain in place the foregoing
guarantee and other credit support arrangements following completion of the
Merger and any other guarantees and other credit support arrangements entered
into by DRI prior to completion of the Merger and which remain in effect on the
date the Merger is completed. DRI further requests authorization for the period
from and after the Merger through the Authorization Date to provide additional
guarantees or other credit support for the DEI Companies; provided that the
aggregate additional cash amount guaranteed by DRI pursuant to this
authorization does not exceed $1,500,000,000. Securities issuances, including
guarantees and other credit support,
<PAGE>
made by DEI and the other DEI Companies will be effected in compliance with all
applicable laws and regulations, including, if applicable, the 1935 Act and Rule
52.
As of the date of this Application-Declaration, DRI has entered into
additional support agreements on behalf of the DEI Companies under which DRI has
no current payment obligation or quantifiable monetary exposure. These
agreements are all in the nature of contractual undertakings on the part of DRI
to maintain ownership levels in the specified DEI Companies and to cause the
specified DEI Companies to maintain a minimum net worth (or similar
undertakings). The descriptions of these agreements are included herein for
informational purposes only as any equity investments made by DRI in the DEI
Companies pursuant to these agreements would be expressly permitted without
Commission authorization under Rule 45(b)(4). Such agreements in effect as of
the date of this Application-Declaration are the following:
(i) Support Agreement dated as of October 21, 1987 made in
connection with the $143,900,000 Loan Agreement between
Rumford Cogeneration Company and Bank of America
National Trust and Savings Association. DEI is a limited
partner of Rumford Cogeneration Company. The Support
Agreement requires DRI to maintain direct or indirect
ownership of at least 50% or more of the voting shares
of DEI.
(ii) Support Agreement dated as of July 19, 1993 made in
connection with the Loan Agreement and the Investment
Agreement, each between Belize Electric Company Ltd. and
Commonwealth Development Corporation and International
Finance Corporation. DEI holds an indirect equity
interest in Belize Electric Company Ltd. The Support
Agreement requires DRI to maintain ownership of at least
a majority of the voting stock of DEI, to maintain the
net worth of DEI at not less than $10,000,000 and to
cause DEI to, directly or indirectly, to maintain 100%
ownership of Dominion Energy Central America, which
holds 95% of the voting stock of Belize Electric Company
Limited.
(iii) Support Agreement dated as of February 8, 1996 made by
DRI in favor of DEI in connection with the $400,000,000
Multi-Currency Credit Agreement between DEI, the lenders
party thereto and ABN AMRO North America, Inc. as agent.
The Support Agreement requires DRI to maintain 100%
ownership of DEI voting stock, to maintain a net worth
of $10,000,000 for DEI and to cause DEI to maintain
$500,000 of specified eligible investments.
(iv) Support Agreement dated as of April 9, 1998 made by DRI
in favor of DEI in connection with the Extending
Revolving Term Loan Agreement between Dominion Energy
Canada, Ltd., the lenders party thereto and The Bank of
Nova Scotia, as agent. DEI owns 100% of Dominion Energy
Canada, Ltd. The Support Agreement requires DRI to
maintain
<PAGE>
100% ownership of DEI voting stock, to maintain a net
worth of $10,000,000 for DEI and to cause DEI to
maintain $500,000 of specified eligible investments.
It is possible that, prior to completion of the Merger, DRI will
make additional equity investments in and/or provide additional guarantees or
other credit support for or on behalf of the DEI Companies. Prior to completion
of the Merger, none of such additional equity investments and/or additional
guarantees or other credit support will require Commission approval under the
1935 Act. Following completion of the Merger, DRI may make additional equity
investments in the DEI Companies without prior Commission authorization under
Rule 45(b)(4) and will provide guarantees and other credit support to the DEI
Companies in compliance with all applicable provisions of the 1935 Act and
rules, regulations and orders under the 1935 Act which are or may be applicable
to DRI.
Within 90 days following completion of the Merger, DRI will,
pursuant to Rule 24, notify the Commission of all equity investments in, and
guarantees or other credit support for or on behalf of, the DEI Companies made
or provided prior to the Merger and which will remain in effect upon closing of
the Merger. Thereafter, DRI will, pursuant to Rule 24, notify the Commission of
all further equity investments in, and guarantees or other credit support for or
on behalf of, the DEI Companies made or provided during any fiscal quarter of
DRI within 60 days following the end of such fiscal quarter.
b. DRI Investment in and Support of the DCI Companies.
As of December 31, 1998, DCI had paid in capital from equity
investments made by DRI of $593,500,000. As of the date of this
Application-Declaration, except as described below, DRI has not entered into any
capital contribution agreement or similar arrangement which expressly requires
DRI to make additional cash capital contributions to DCI or any of the other DCI
Companies.
As of the date of this Application-Declaration, DRI has entered into
an Intercompany Credit Agreement dated as of December 20, 1985 between DRI and
DCI pursuant to which DCI may, subject to the terms and conditions of the
Intercompany Credit Agreement, borrow up to $250,000,000 aggregate principal
amount at any one time outstanding from DRI. Proceeds of borrowings by DCI may
be used for general corporate and working capital purposes.
As of the date of this Application-Declaration, DRI has guaranteed
$47,500,000 aggregate principal amount of payment obligations of the DCI
Companies and has provided liquidity support pursuant to the following
agreements:
(i) Guaranty Agreement dated as of May 13, 1996 by DRI in
favor of DYNEX Capital, Inc. (formerly Resource Mortgage
Capital, Inc.). The Guaranty was given in connection
with a $47,500,000 promissory note
<PAGE>
made by Dominion Mortgage Services, Inc., an indirect
wholly owned subsidiary of DRI.
(ii) Support Agreement dated as of February 5, 1999 made by
DRI in favor of DCI in connection with the
implementation of a $400,000,000 commercial paper
financing program by DCI. The Support Agreement requires
DRI to maintain 100% ownership of DCI voting stock, to
maintain a net worth of $100,000,000 for DCI and to
provide liquidity support for DCI.
DRI hereby requests authorization to maintain in place the foregoing
guarantee and other credit support arrangements following completion of the
Merger and any other guarantees and other credit support arrangements entered
into by DRI prior to completion of the Merger and which remain in effect on the
date the Merger is completed. DRI further requests authorization for the period
from and after the Merger through the Authorization Date to provide additional
guarantees or other credit support for the DCI Companies; provided that the
aggregate additional cash amount guaranteed by DRI pursuant to this
authorization does not exceed $1,600,000,000. Securities issuances, including
guarantees and other credit support, made by DCI and the other DCI Companies
will be effected in compliance with all applicable laws and regulations
including, if applicable, the 1935 Act and Rule 52.
As of the date of this Application-Declaration, DRI has entered into
the additional support agreements on behalf of the DCI Companies under which DRI
has no current payment obligation or quantifiable monetary exposure. These
agreements are all in the nature of contractual undertakings on the part of DRI
to maintain ownership levels in the specified DCI Companies and to cause the
specified DCI Companies to maintain a minimum net worth (or similar
undertakings). The descriptions of these agreements are included herein for
informational purposes only as any equity investments made by DRI in the DCI
Companies pursuant to these agreements would be expressly permitted without
Commission authorization under Rule 45(b)(4). Such agreements in effect as of
the date of this Application-Declaration are the following:
(i) Support Agreement dated as of May 20, 1997, as amended
from time to time made by DRI in favor of DCI in
connection with the Letter of Credit Reimbursement
Agreement between DCI and The Bank of Nova Scotia. The
Support Agreement requires DRI to maintain 100%
ownership of DCI and to maintain a net worth for DCI of
$50,000,000.
(ii) Support Agreement dated as of November 7, 1997, as
amended, made by DRI in favor of DCI in connection with
the Credit Agreement between DCI, the lenders party
thereto and ABN AMRO Bank N.V., as agent. The Support
Agreement requires DRI to maintain 100% ownership of DCI
voting stock and to maintain a net worth of $100,000,000
for DCI.
<PAGE>
(iii) Support Agreement dated as of May 12, 1999, as amended,
made by DRI in favor of DCI in connection with the
Letter of Credit Reimbursement Agreement between DCI and
Citibank, N.A. The Support Agreement requires DRI to
maintain 100% ownership of DCI and to maintain a net
worth of $50,000,000 for DCI.
(iv) Support Agreement dated as of November 3, 1998, as
amended, made by DRI in favor of DCI in connection with
the Credit Agreement between DCI, the lenders party
thereto and The Chase Manhattan Bank, as agent. The
Support Agreement requires DRI to maintain 100%
ownership of DCI voting stock and to maintain a net
worth of $100,000,000 for DCI.
It is possible that, prior to completion of the Merger, DRI will
make additional equity investments in and/or provide additional guarantees or
other credit support for or on behalf of the DCI Companies. Prior to completion
of the Merger, none of such additional equity investments and/or additional
guarantees or other credit support will require Commission approval under the
1935 Act. Following completion of the Merger, DRI may make additional equity
investments in the DCI Companies without prior Commission authorization under
Rule 45(b)(4) and will provide guarantees and other credit support to the DCI
Companies in compliance with all applicable provisions of the 1935 Act and
rules, regulations and orders under the 1935 Act which are or may be applicable
to DRI.
Within 90 days following completion of the Merger, DRI will,
pursuant to Rule 24, notify the Commission of all equity investments in, and
guarantees or other credit support for or on behalf of, the DCI Companies made
or provided prior to the Merger and which will remain in effect upon closing of
the Merger. Thereafter, DRI will, pursuant to Rule 24, notify the Commission of
all further equity investments in, and guarantees or other credit support for or
on behalf of, the DCI Companies made or provided during any fiscal quarter of
DRI within 60 days following the end of such fiscal quarter.
c. Investment in EWGs and FUCOs.
Each of DRI and CNG also holds investments in various EWGs and
FUCOs. DRI's specific EWG investments are described in detail in DRI's Exemption
Statement on Form U-3A-2 for the fiscal year ended December 31, 1998 and filed
with the Commission in File No. 69-278. Such Exemption Statement on Form U-3A-2
is hereby incorporated by reference herein. CNG's specific EWG and FUCO
investments are described below and are also described in more detail in CNG's
Annual Report on Form U5S for the fiscal year ended December 31, 1998 and filed
with the Commission in File No. 30-203. Such Annual Report on Form U5S is hereby
incorporated by reference herein. On a pro forma consolidated basis at December
31, 1998, DRI and CNG together have invested $918,700,000 in EWGs and FUCOs
which represents 32% of pro forma consolidated retained earnings at December 31,
1998. However, in order to obtain the cash required in connection with the
Merger and in order to focus DRI's efforts on achieving its MAIN to Maine
strategy, DRI has announced its
<PAGE>
intention to divest its interests (and the interests it will acquire from CNG)
in non-U.S. EWG and FUCO holdings. In that connection, DRI has already entered
into an agreement with Duke Energy International, a subsidiary of Duke Energy
Corporation pursuant to which DRI agreed to sell to Duke all of DRI's interest
in its Latin American projects.
2. Virginia Power and its Subsidiaries.
As noted above, DRI's sole public utility subsidiary, Virginia
Power, finances its operations and the operations of its subsidiaries on a
stand-alone basis and independent of any credit support from DRI. All financings
undertaken by Virginia Power, all investments made by Virginia Power and all
support arrangements undertaken by Virginia Power in support of its subsidiaries
are subject to the jurisdiction of the VSCC which has regulatory jurisdiction
over Virginia Power.
Financing transactions undertaken by Virginia Power generally
require specific approval of the VSCC. There is, however, a limited exception
for short-term financing transactions which do not require specific VSCC
approval. Under Virginia Code Sections 56- 65 and 56-65.1, without prior VSCC
approval, Virginia regulated utilities may incur debt of less than 12 months
maturity provided that the aggregate amount of debt so incurred does not exceed
12% of the total capitalization of the utility. Pursuant to this authority,
Virginia Power has, as of the date of this Application-Declaration, entered into
two 364-day credit facilities in support of its commercial paper program, one in
the amount of $20,000,000 and the other in the amount of $19,500,000. DRI hereby
requests authorization of the Commission for Virginia Power to continue in
effect these credit facilities after completion of the Merger and to amend,
renew, extend and/or replace such credit facilities and/or enter into new credit
facilities of similar duration in accordance with Virginia law, provided that in
any event the aggregate amount of indebtedness incurred under such facilities
shall not exceed the lesser of $75,000,000 and 12% of Virginia Power's total
capitalization and the interest rate under any of such facilities shall not
exceed 500 basis points over LIBOR.
Any future financings undertaken by Virginia Power will be
undertaken in compliance with all applicable laws, rules and regulations
including, after completion of the Merger, the 1935 Act and Rule 52. Exhibit E-8
hereto, contains the information which would have been required by Rule 52(c)
and form U-6B-2 to be filed with the Commission with respect to all financing
arrangements entered into by Virginia Power and its subsidiaries as of the date
of this Application-Declaration if such financing arrangements had been effected
in compliance with Rule 52. Within 90 days following completion of the Merger,
DRI will, pursuant to Rule 24, notify the Commission of all financing
arrangements entered into by Virginia Power and its subsidiaries prior to the
Merger and which will remain in effect upon closing of the Merger. Thereafter,
DRI will, pursuant to Rule 24, notify the Commission of all further financing
arrangements undertaken by Virginia Power and its subsidiaries in compliance
with Rule 52 during any fiscal quarter of DRI within 60 days following the end
of such fiscal quarter.
<PAGE>
3. CNG and its Subsidiaries.
By Commission order dated March 28, 1996, Holding Co. Act Release
No. 35-26500 (the "Omnibus Order"), CNG was authorized to engage in various
financing and related transactions through March 31, 2001. The Omnibus Order
allows CNG financing if CNG meets the following conditions: (i) CNG's long-term
debt must be rated investment grade by at least one nationally recognized
statistical rating organization; (ii) CNG's common equity, as reflected in its
most recent Form l0-K or Form l0-Q and as adjusted to reflect subsequent events
that affect capitalization, will be at least 30% of consolidated capitalization;
(iii) the effective cost of money for debt may not exceed 300 basis points over
the interest rate on United States Treasury securities of a comparable term;
(iv) the effective cost of money for preferred stock and other fixed securities
may not exceed 500 basis points over the interest rate on 30-year United States
Treasury securities; (v) the maturity of debt may not be more than 50 years;
(vi) issuance expenses in connection with an offering of securities, including
any underwriting fees, commissions or other similar compensation, may not exceed
5% of the total amount of securities being issued; (vii) proceeds of the
proposed financing may not be used to invest in an EWG or a FUCO; (viii) at the
time of each financing transaction, CNG must be in compliance with the
requirements of Rules 53 and 54 under the Act; and (ix) proceeds of the proposed
financing by subsidiaries of CNG must be used only in connection with their
respective existing businesses.
Under the Omnibus Order CNG may issue and sell common stock,
preferred stock, short-term debt, long-term debt and other securities from time
to time through March 3l, 2001, provided that the aggregate amount of short-term
and revolving debt outstanding at any one time and the aggregate amount of
common stock, preferred stock, long-term debt and other securities issued during
the period shall not exceed $7 billion. All sales and issuances of common stock,
short-term debt and long-term debt by CNG subsequent to March 28, 1996 have
occurred pursuant to the Omnibus Order.
CNG issues and sells commercial paper under the Omnibus Order to
dealers at the discount rate prevailing at the date of issuance for comparable
commercial paper. The dealers reoffer such commercial paper at a discount to
investors. The amount of commercial paper outstanding at any one time varies
according to the seasonal working capital needs of CNG. There was $558,900,000
principal amount of CNG commercial paper outstanding on December 31, 1998.
Currently outstanding under the Omnibus Order is a Credit Agreement
dated as of June 27, 1997 ("CNG Credit Agreement"), among CNG and several banks
with The Chase Manhattan Bank, as agent. The CNG Credit Agreement provides a
line of credit of up to $775 million as back-up for commercial paper. The CNG
Credit Agreement had a termination date of June 26, 1998, but was first extended
by amendment to terminate June 25, 1999 and subsequently amended to increase the
line of credit to $1,000,000,000 with a termination date of June 22, 2000. No
loans are currently outstanding under the Credit Agreement.
<PAGE>
As of December 31, 1998, CNG had an aggregate of $1,392,875,000
principal amount of senior debentures outstanding (excluding current
maturities). Of this amount, $950,000,000 principal amount were issued under an
Indenture, dated as of April 1, 1995, between CNG and United States Trust
Company of New York, as trustee. The remaining $442,875,000 principal amount was
issued pursuant to an Indenture, dated as of May 1, 1971, between CNG and The
Chase Manhattan Bank, as successor trustee. Until the effective date of the
Omnibus Order each sale and issuance of a series of debentures by CNG was
required to be individually authorized by Commission order under the Act.
Subsequent to March 28, 1996, sales and issuances of debenture series have been
pursuant to the Omnibus Order authorization, with the Commission being notified
of each such sale and issuance through the filing of quarterly Rule 24
certificates. In September 1999, CNG issued an additional $400,000,000 principal
amount of senior notes under the April 1, 1995 indenture.
CNG had a universal shelf registration effective under the
Securities Act of 1933, Registration Statement No. 333-25347, pursuant to which
it made public offerings of stock or debt in the aggregate amount of
approximately $1,062,000,000 through September 1999. It is expected that CNG
will soon file a new debt shelf registration in the amount of $1,000,000,000.
CNG from time to time under the Omnibus Order has issued and sold
common stock, frequently to satisfy the requirements of stock related
obligations of employee benefit plans and the CNG Dividend Reinvestment Plan.
Such issuances are reported to the Commission on quarterly Rule 24 certificates.
CNG's financing of its subsidiaries through the purchase of debt or
common stock of such subsidiaries is done primarily pursuant to Rule 52 under
the 1935 Act. Certificates of Notification on Form U-6B-2 with respect to these
transactions are filed as exhibits to CNG's quarterly Rule 24 certificates.
However, short-term debt sales by CNG's Ohio and Pennsylvania utility company
subsidiaries to CNG do not require prior state commission approval and thus do
not qualify for the use of Rule 52; such sales are made pursuant to the Omnibus
Order.
CNG is authorized under the Omnibus Order to enter into guarantee
arrangements, obtain letters of credit and otherwise provide credit support with
respect to the obligations of subsidiaries which were parties to the proceeding.
The aggregate amount of all such arrangements cannot exceed $2 billion. As of
June 30, 1999, there is approximately $209.8 million in such guarantees was
outstanding. Certain subsidiaries of CNG have authority under the Omnibus Order
to enter into such arrangements with respect to the obligations of their
respective subsidiaries.
The Omnibus Order also contains provisions concerning types of
securities other than customary short-term debt, long-term debt and stock;
interest rate and equity swaps; acquisition of affiliate securities; charter
amendments and financing entities.
<PAGE>
There are several individual outstanding authorizations granted to
CNG system companies under the Act outside of the Omnibus Order. These are as
follows.
CNG Money Pool. By orders dated June 12 and July 16, 1986 (Holding Co.
Act Release No. 35-24128 and Holding Co. Act Release No. 35-24150 (g),
respectively, as amended by orders dated May 27, 1987 (Holding Co. Act
Release No. 35-24399), February 14, 1990 (Holding Co. Act Release No.
35-25040), May 13, 1991 (Holding Co. Act Release No. 35-25311), April
8, 1994 (Holding Co. Act Release No. 35- 26021), and July 18, 1997
(Holding Co. Act Release No. 35-26742), the Commission authorized the
establishment and operation of the Consolidated System Money Pool.
Iroquois Pipeline. By orders dated January 9, 1991, February 28, 1991,
May 7, 1991, July 6, 1993 and September 12, 1996 (Holding Co. Act
Release Nos. 35-25239, 35- 25263, 35-25308, 35-25845 and 35-26571,
respectively) the Commission authorized CNG Transmission Corporation
("CNGT") to provide financing to its wholly owned subsidiary, CNG
Iroquois, Inc. ("CNGI"), for use relating to CNGI's 16% general
partnership interest in Iroquois Gas Transmission System L.
P.("Iroquois"). The interstate pipeline owned by Iroquois was completed
in 1992. The financing of CNGT's interest in Iroquois was accomplished
through the purchase by CNGT of common stock of CNGI. Related
authorizations concerning credit support expire on June 30, 2001.
Hub Market Center. By order dated October 21, 1994, Holding Co. Act
Release No. 35-26148, the Commission authorized CNG to provide its
subsidiary, CNG Power Company ("CNG Power") with up to $2 million in
financing to be used by CNG Power to invest in its special purpose
wholly-owned subsidiary, CNG Market Center Services, Inc. ("CNGMC").
Such financing can be provided by CNG through the purchase of CNG Power
common stock, the making of open account advances or long-term loans to
CNG Power, in any combination thereof. CNGMC owns a 50% general
partnership interest in CNG/Sabine Center, which operates a market
center or "super-hub" at points along the 7,400 mile pipeline system of
CNGT. This authorization expires on July 1, 2004.
Energy Related Services. By orders dated August 28, 1995 and August 27,
1997 (Holding Co. Act Release No. 35-26363 and Holding Co. Act Release
No. 35-26757, respectively), the Commission authorized CNG Products and
Services, Inc. ("CNGP&S") to engage in the business of providing
several categories of energy- related services to customers of CNG's
local distribution companies and to others, primarily customers of
utilities not affiliated with CNG. CNG was authorized to provide CNGP&S
with up to $10 million of financing through the sale of debt and common
stock to its immediate parent, or through the obtaining of open account
advances from such parent. This authorization expires on December 31,
2000.
Partnering. By orders dated July 26, 1995 and December 30, 1997
(Holding Co. Act Release No. 35-26341 and Holding Co. Act Release No.
35-26807), the Commission
<PAGE>
authorized a former wholly-owned subsidiary of CNG, CNG Energy Services
Corporation ("Energy Services"), to acquire ownership interests with
nonaffiliates in projects that involve gas-related activities. The
dollar limit on such investments is $200 million. Pursuant to this
authorization, Energy Services formed CNG Main Pass Gas Gathering
Corporation and CNG Main Pass Oil Gathering System. In connection with
the sale of Energy Services to an unaffiliated third party, ownership
in these two companies was transferred to CNG, and the authority to
"partner" with nonaffiliates without prior Commission approval was
transferred to CNG Producing Company. See Commission order dated July
29, 1998, HCAR No. 26900. This partnering authorization expires on
December 31, 2002.
Power Services Guarantees. By order dated August 2, 1996, Holding Co.
Act Release No. 35-26551, the Commission authorized CNG to issue parent
guarantees of up to an aggregate of $250 million on behalf of its
wholly-owned subsidiary, CNG Power Services Corporation ("CNG Power
Services"). CNG Power Services is engaged in the purchase and sale of
electricity at wholesale. This authorization expires on March 31, 2001.
Energy Marketing. By order dated January 15, 1997, Holding Co. Act
Release No. 35-26652, the Commission authorized Energy Services to
invest up to $250 million to expand its business to market electricity
and other energy commodities and to engage in fuel management and other
incidental related activities. In pursuit of such activities, Energy
Services was authorized to acquire interests in other entities,
including corporations, partnerships, limited liability companies, and
joint ventures. CNG Retail Corporation was formed on January 30, 1997
pursuant to the order to engage in the business of selling natural gas,
electricity and other products at retail. Pursuant to Holding Co. Act
Release No. 35-26900, dated July 29, 1998, CNG Retail Corporation
became a direct subsidiary of CNG and succeeded to the authorizations
and reporting obligations under the order subsequent to the sale of
Energy Services by CNG to an unaffiliated party. This authorization
expires on December 31, 2001.
CNG International. By order dated May 30, 1996, Holding Co. Act Release
No. 35- 26523, the Commission authorized CNG to form CNG International
Corporation ("CNG International"), to acquire directly or through
intermediary companies interests in foreign EWG's and FUCOs as defined
in Sections 32 and 33 of the Act, respectively. The order also
authorized CNG to provide CNG International up to $300 million credit
support with respect to its investments. Jurisdiction was retained over
CNG's request to invest up to $300 million in certain foreign energy
activities including foreign gas pipelines.
By supplemental order dated October 25, 1996, Holding Co. Act Release
No. 35- 26595, the Commission released jurisdiction over proposed
investments of up to an aggregate of $75 million in two gas pipelines,
one in Bolivia and the other in Argentina. No direct investment was
made by CNG International under this authorization, and the
authorization is regarded as having lapsed.
<PAGE>
By supplemental order dated November 19, 1996, Holding Co. Act Release
No. 35- 26608, the Commission released jurisdiction over a proposed
investment of up to $75 million in three gas pipelines in Australia.
Approximately $38.8 million in these projects was consummated in late
1996. As a result of such transaction, CNG International now indirectly
holds a 30% ownership interest in Epic Energy Pty Ltd., an Australian
company.
By supplemental order dated February 12, 1998, Holding Co. Act Release
No. 35- 26824, the Commission released jurisdiction over a proposed
investment of up to $165 million by CNG International in the Alinta gas
pipeline in Western Australia. In March 1998, CNG International paid
approximately $143.2 million to acquire its 33% equity interest in the
pipeline, through intermediate companies including Epic Energy
Australia Trust.
By supplemental order dated April 9, 1999, Holding Co. Act Release No.
35-27002, the Commission released jurisdiction over a proposed
investment of up to $100 million by CNG International in a gas pipeline
being privatized by the state of Victoria, Australia. CNG International
was not the winning bidder for the pipeline, and no investment will be
made pursuant to this authorization.
The Commission has retained jurisdiction over the remaining requests of
CNG and CNG International to invest in other foreign energy activities.
CNG and CNG International have pending before the Commission an
application to invest up to an additional $750 million to acquire
interests, through December 31, 2003, in entities engaged in gas
related activities permitted by the Gas Related Activities Act of 1990,
and to be able to make such investments in entities engaged in gas
transportation and storage activities without any additional
case-by-case approval of the Commission. The application also seeks
authority for CNG and CNG International to make guarantees and provide
other credit support to CNG International, and for both companies to
make guarantees and provide such support to subsidiaries of CNG
International. The aggregate amount of such support would be $750
million. The Commission gave public notice of the application in
Holding Co. Act Release No. 35- 26992, dated March 19,1999.
It is possible that, prior to the Merger, CNG and its subsidiaries
will undertake additional financing transactions pursuant to Rule 52, the
Omnibus Order and/or other, including new, express Commission authorization.
DRI and CNG hereby request Commission authorization to maintain in
effect the above described financing arrangements and to extend through the
Authorization Date all of the above described authorizations which are stated to
expire prior to the Authorization Date, to maintain in effect all additional
financing arrangements entered into by CNG or any of its subsidiaries prior to
completion of the Merger and any renewals, extensions and/or replacements of any
of the foregoing financing arrangements entered into by CNG or any of its
<PAGE>
subsidiaries prior to completion of the Merger. DRI and CNG further request
Commission authorization, during the period from and after the Merger through
the Authorization Date, to renew, extend and/or replace any financing
arrangement entered into by CNG or any of its subsidiaries prior to completion
of the Merger and which remains in effect on the date the Merger is completed;
provided that no such renewal, extension and/or replacement which is effected
following completion of the Merger shall provide for an increase in the
aggregate amount of indebtedness incurred (taking into account all outstanding
CNG financing arrangements) or for a final maturity date which occurs after the
Authorization Date unless the Commission shall otherwise approve or such
renewal, extension and/or replacement shall not require Commission approval
under the 1935 Act and the rules and regulations promulgated thereunder. In
addition, the following changes in the Omnibus Order authorizations are hereby
requested:
1. That the aggregate amount of financing permitted
under the Omnibus Order, as extended, be increased
from $7 billion to $10 billion.
2. That the aggregate amount of guarantees and credit
support that may be given by CNG and its subsidiaries
be increased from $2 billion to $3 billion.
3. That CNG be authorized to give guarantees and other
credit support for the benefit of any of its direct
and indirect subsidiaries as needed to support such
subsidiary's normal course of business.
4. That the restriction (condition (vii)) of not using
proceeds of proposed financing to invest in EWGs and
FUCOs be deleted and that CNG be permitted to invest
in EWGs and FUCOs through non-utility intermediate
subsidiaries.
Financings of CNG subsidiaries beyond the amounts authorized in some of
the orders discussed above may be permitted to occur under Rule 52.
C. Dominion Direct Investment, Incentive Compensation Plans and other
Employee Benefit Plans.
DRI proposes, from time to time during a period of five years from
the date of an Order issued by the Commission, to issue and/or acquire in open
market transactions or by some other method which complies with applicable law
and Commission interpretations then in effect up to 45,500,000 shares of DRI
common stock under DRI's direct stock purchase and dividend reinvestment plan,
certain incentive compensation plans and certain other employee benefit plans
described below.
1. Dominion Direct Investment.
<PAGE>
DRI maintains Dominion Direct Investment ("Dominion Direct"), a
direct stock purchase plan with a dividend reinvestment feature, and CNG
maintains a dividend reinvestment plan. Dominion Direct will remain in effect
following consummation of the Merger. The CNG plan will terminate and
participants in the CNG plan will be eligible to become participants in Dominion
Direct.
The purpose of Dominion Direct is to provide eligible participants
with a convenient and economical way to purchase DRI common stock and to
increase ownership in DRI by reinvesting dividends and/or making optional
monthly investments. Current shareholders of DRI and new investors residing in
the U.S. who would like to become DRI shareholders are eligible to participate.
Foreign citizens are eligible to participate as long as their participation
would not violate any laws in their home countries.
At DRI's discretion, shares of DRI common stock purchased under
Dominion Direct will be either newly issued or purchased on the open market by
an independent agent selected by the Dominion Direct administrator. As of the
date of this Application, the independent agent is purchasing shares in the open
market for Dominion Direct. Following consummation of the Merger, the decision
whether shares are to be purchased directly from DRI or in the open market will
be based on DRI's need for common equity and other factors considered relevant
by DRI. Any determination by DRI to change the manner in which shares will be
purchased for Dominion Direct, and implementation of any such change, will
comply with applicable law and Commission interpretations then in effect.
Net proceeds from the sale of newly issued shares of DRI common
stock will be added to the general corporate funds of DRI and will be used to
meet its capital requirements and the capital requirements of its subsidiaries.
DRI will not receive any proceeds from shares acquired in the open market.
A full statement of the current provisions of Dominion Direct is
included in DRI's Registration Statement on Form S-3 (Exhibit H-1.1 hereto).
2. Incentive Compensation Plans.
DRI currently maintains the DRI Incentive Compensation Plan (the
"DRI Incentive Compensation Plan") in which employees of Virginia Power and
employees and certain outside directors of DRI participate. CNG currently
maintains several stock incentive plans including the 1997 Stock Incentive Plan,
the 1995 Employee Stock Incentive Plan, the 1991 Stock Incentive Plan, the
Long-Term Incentive Plan and the Non-Employee Directors' Restricted Stock Plan
(collectively, the "CNG Plans"). The DRI Incentive Compensation Plan will remain
in effect following consummation of the Merger. Immediately following
consummation of the Merger, with respect to the CNG Plans under which the
delivery of CNG common stock is required for payment:
o DRI and CNG will use their respective best efforts to take
such action as may be necessary so that all benefits, grants
of awards and options are
<PAGE>
converted to the right to receive cash from DRI equal to the
fair value of each such benefit, grant of award or option as
determined in good faith by DRI and CNG using recognized
valuation methodologies.
(a) Set forth below is a summary of certain features of the DRI
Incentive Compensation Plan, which summary is qualified by
reference to such plan (Exhibit H-2 hereto).
The DRI Incentive Compensation Plan is administered by a committee
comprised of DRI outside directors. All employees of DRI and its subsidiaries
are eligible to receive incentive awards under the DRI Incentive Compensation
Plan if the committee determines that the employee has contributed, or can be
expected to contribute, significantly to his or her employer. The committee has
the power and complete discretion to select eligible employees and outside
directors to receive awards, the type of awards granted and the terms and
conditions of such awards. Approximately 11,000 employees and 13 non-employee
directors of DRI are currently eligible to receive awards under the plan.
There are currently 11 million shares available under the DRI
Incentive Compensation Plan and the annual limit of awards to any one individual
is 1.5 million shares.
The following types of awards may be granted under the DRI Incentive
Compensation Plan: performance grants, restricted stock, goal-based stock, stock
options and stock appreciation rights.
Performance Grants. Performance grants are subject to the
achievement of pre-established performance goals comprised of objective and
quantifiable performance criteria. The committees set target and maximum amounts
payable under each performance grant. The employee receives appropriate payments
at the end of the performance period if the performance goals (and other terms
and conditions of the award) were met. The actual payments under a performance
grant can be cash, DRI common stock, or both. Performance grants are
administered to comply with Section 162(m) of the Internal Revenue Code of 1986,
as amended, (the "Code").
The aggregate maximum cash amount payable pursuant to a performance
grant to any employee in any year cannot exceed 0.5% of DRI's consolidated
operating income, before taxes and interest. The committees must make
performance grants prior to the 90th day of the period for which the performance
grant relates or the completion of 25% of such period.
Restricted Stock Awards. Restricted stock awards consist of shares
of DRI common stock which are subject to certain terms and conditions.
Recipients are not able to sell or transfer restricted stock until the
restrictions stated in the award agreement have been met. The restricted stock
is forfeited if the applicable terms and conditions are not met.
<PAGE>
Goal-Based Stock Awards. Goal-based stock is DRI common stock
subject to performance goals. The stock is not issued to the employee until the
committee certifies that the performance goals (and any other terms and
conditions) have been met.
Stock Options and Stock Appreciation Rights. Stock options may be
granted to eligible employees subject to terms and conditions established by the
committee. The exercise price of an option must be at least 100% of the fair
market value of DRI common stock on the date that the option is granted. Options
may be either incentive stock options or nonqualified stock options. Stock
appreciation rights may be granted on all or any part of an option, and are
subject to terms and conditions established by the committee. Stock appreciation
rights also may be granted separately. A stock appreciation right entitles the
employee to receive an amount equal to the excess of (i) the fair market value
on the date of exercise of stock covered by the surrendered stock appreciation
right over (ii) the price of the stock on the date the stock appreciation right
was granted. The award can be paid in stock or cash, or both.
When granting incentive awards, the committee can allow the awards
to become fully exercisable upon a change of control. Employees cannot sell,
transfer or pledge their interest in performance grants and goal-based stock
awards. Employees cannot sell, transfer or pledge shares of restricted stock
until such stock becomes unrestricted. Options and stock appreciation rights may
be transferred by a participant according to the terms and conditions for such
awards.
Following shareholder approval at the 1997 Annual Meeting, the DRI
Incentive Compensation Plan became effective as of January 1, 1997. On April 16,
1999, DRI shareholders approved an amendment to the DRI Incentive Compensation
Plan increasing authorized shares from 3 million to 11 million and allowing
outside directors to participate. The additional shares were registered under
the Securities Act of 1933 in May, 1999. The Incentive Plan will terminate at
the close of business on December 31, 2006 unless the DRI board of directors
terminates the plan prior to that date.
The DRI board of directors can amend or terminate the plan; however,
shareholder approval is required of amendments that would (i) increase the
number of shares of DRI common stock that is reserved and available for issuance
under the plan; (ii) materially change or impact which employees are eligible to
participate in the plan; or (iii) materially change the benefits that eligible
employees may receive under the plan. Notwithstanding the foregoing, the DRI
board can amend the plan as necessary and without shareholder approval to ensure
that the plan continues to comply with Section 162(m) of the Code and Rule
16b-3.
3. Other Employee Benefit Plans.
Both DRI and CNG have plans, in addition to the plans described
above, that provide for the issuance of shares of common stock. DRI maintains
the DRI Employee Savings Plan, the Virginia Power Hourly Employee Savings Plan
and the Dominion Subsidiary Savings Plan (the "DRI 401(k) Plans"), which will be
maintained following consummation of the Merger. CNG maintains the CNG Employee
Stock Ownership Plan (the "ESOP") and the
<PAGE>
Thrift Plan of CNG and its Participating Subsidiaries (the "Thrift Plan"), both
of which will, at the election of DRI, either be maintained and modified to
provide for the issuance of DRI common stock in lieu of CNG common stock, or
terminated, with CNG common stock held under the plans converted into shares of
common stock of DRI and participants in the plans becoming participants in the
DRI 401(k) Plans. Each of the plans is qualified for purposes of 401(a) of the
Code.
The DRI 401(k) Plans. The DRI 401(k) Plans allows participating
employees to elect to defer a portion of their compensation and have such funds
invested in designated investment media selected by the participants, including
a common stock fund of the sponsoring company.
The Thrift Plan. The Thrift Plan allows participating employees to
elect to have a certain percentage of their compensation withheld and invested
in any combination of ten investment options, including investment in shares of
CNG common stock. CNG matches a percentage of the contributions made by
participants. The percentage matched depends on the length of time the
participant has been employed. As of December 31, 1998, there were approximately
8,451,000 shares of CNG common stock held by trusts under the Thrift Plan.
The ESOP. The ESOP is an employee stock ownership plan established
by CNG in 1976. CNG currently makes contributions to the ESOP to the extent it
obtains a tax deduction for such contributions. As of December 31, 1998, there
were 475,083 shares of CNG common stock held in the ESOP.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses to be paid or incurred, directly
or indirectly, in connection with seeking the authorizations herein requested
are estimated as follows:
Fee, Commission or Expense Thousands
Legal Fees and Expenses 50
=====
Total $ 50
Item 3. Applicable Statutory Provisions.
The following sections of the 1935 Act and the Commission's rules
thereunder are or may be directly or indirectly applicable to the proposed
transactions for which authorization is sought in this Application-Declaration.
<PAGE>
Section of/Rule under Transactions to which such Section/Rule is or
the 1935 Act may be applicable
Sections 6(a), 7 Issuance of Securities; Incurrence of Indebtedness;
Provision of Guarantees and other Credit Support
Sections 9(a), 10, 32, 33 Investment in Non-Utility Businesses, including
Rules 53 and 54 EWGs and FUCOs
Sections 6(a), 7 Issuance of Securities in connection with
Rule 42 Dividend Reinvestment Plans and Stock-Based
Employee Benefit Plans
A. Issuance of Securities; Incurrence of Indebtedness; Provision of
Guarantees and other Credit Support.
DRI's proposed issuance of securities in connection with the Mergers
including the proposed issuance of common stock to shareholders of CNG in
connection with the Second Merger is expressly permitted by Section 7(c)(2)(A)
of the 1935 Act as such securities are to be issued "solely...for the purpose of
effecting a merger." DRI's limited credit support for its non-utility
subsidiaries is also expressly permitted by the 1935 Act under Section
7(c)(1)(C). The particular question that arises in the current situation relates
to the existence and future issuance of debt securities by DRI generally.
Section 1(b) of the 1935 Act identifies the issuance of securities
"upon the basis of fictitious or unsound asset values having no fair relation to
the sums invested in or the earning capacity of the properties" as one of the
particular evils the 1935 Act was designed to address. The Commission has
historically interpreted this provision of the statute, together with the
technical criteria set forth in Section 7(d) of the statute, as prohibiting
leverage at both the operating company and holding company level on the basis of
the same assets or earnings. However, debt incurred by DRI at the holding
company level has been incurred in compliance with all applicable laws and
regulations and is not the type of leverage identified as a matter of concern
under the 1935 Act. Thus, DRI should not be required to terminate its own credit
arrangements upon closing of the Merger and should be expressly permitted and
authorized to continue its financing activities as it has done in the past.
DRI submits that its continued maintenance of indebtedness at the
DRI level does not constitute the type of leverage that the 1935 Act was
intended to restrict because Virginia Power, DRI's sole public utility
subsidiary today, and the entire CNG system (which contains numerous companies
and each of which will become a subsidiary of DRI after completion of the
Merger) each finance on a stand-alone basis without reliance on or recourse to
DRI. Moreover, DRI receives and will receive no financing benefit from either
Virginia Power or CNG beyond that of an equity shareowner. As described above in
detail, leverage incurred by DRI finances the operations of DRI's non-utility
businesses and other operations of DRI, such as maintenance of office buildings,
and does not finance the operations of Virginia
<PAGE>
Power and will not finance the utility operations of CNG's public utility
subsidiaries. The Commission has previously authorized registered holding
companies to incur indebtedness at the holding company level to finance the
operations of their public utility subsidiaries when such subsidiaries were not
financing on a stand-alone basis, see infra, the discussion relating to CNG's
Omnibus Order, and with respect to other operations conducted at the subsidiary
level. See, Cinergy Corp., Holding Co. Act Release No. 35-26909 (Aug. 21, 1998)
and General Public Utilities Corporation, Holding Co. Act Release No. 35-26559
(Aug. 23, 1996).
Finally, the financings undertaken by DRI have been fully disclosed
pursuant to the Federal securities laws, have been scrutinized by rating
agencies and are completely in keeping with financing arrangements of many
exempt holding company systems. As the operating utilities of DRI (e.g.,
Virginia Power and CNG and its subsidiaries, together) will be self-financing,
leverage at the DRI level does not adversely impact the public interest or the
interest of consumers which are, in the first instance, protected by state level
regulatory review of financings. The interest of investors is, as the Commission
has itself acknowledged, "been largely addressed by developments in the federal
securities laws and the securities markets themselves." Entergy Corporation, 55
SEC Docket 2035, 2045 (1993).
Item 4. Regulatory Approvals.
Virginia Natural Gas, Inc. (VNG), a wholly-owned subsidiary of CNG,
is a public utility subject to regulation by the Virginia State Corporation
Commission (VSCC). Hope Gas, Inc. (Hope), a wholly-owned subsidiary of CNG, is a
public utility subject to regulation by the West Virginia Public Service
Commission (WVPSC). Virginia Electric and Power Company, (Virginia Power), a
wholly-owned subsidiary of DRI, is a public utility subject to regulation by the
VSCC and the North Carolina Utilities Commission (NCUC). The Peoples Natural Gas
Company (Peoples), a wholly-owned subsidiary of CNG, is a public utility subject
to regulation by the Pennsylvania Public Utility Commission (PAPUC). The East
Ohio Gas Company (East Ohio), a wholly-owned subsidiary of CNG, is a public
utility subject to regulation by the Public Utilities Commission of Ohio (PUCO).
The VSCC, NCUC, WVPSC, PAPUC and PUCO must approve agreements and
arrangements between public utilities subject to their jurisdiction and the
affiliates of those utilities, including service companies, before such
agreements or arrangements can become effective. The participation of VNG, Hope,
Peoples and East Ohio in the existing CNG Service Agreement has been approved by
the VSCC, WVPSC, PAPUC and PUCO, respectively. Any material changes to the CNG
Service Agreement must be approved by these commissions. Virginia Power must
obtain prior approval of the VSCC and NCUC before it may participate in a new
DRI Service Agreement.
<PAGE>
Item 5. Procedure.
The Commission is respectfully requested to issue and publish, not
later than October 15, 1999, the requisite notice under Rule 23, with respect to
the filing of this Application-Declaration, such notice to specify a date not
later than November 9, 1999 by which comments may be entered and a date not
later than November 10, 1999 as the date after which an order of the Commission
granting and permitting this Application-Declaration to become effective may be
entered by the Commission. The Commission is respectfully requested to issue its
order granting the authorizations herein requested no later than the date the
Commission issues its order approving the Second Merger and the other matters
contained in the Merger Application.
It is submitted that a recommended decision by a hearing or other
responsible officer of the Commission is not needed for approval of the
Transaction. The Division of Investment Management may assist in the preparation
of the Commission's decision. There should be no waiting period between the
issuance of the Commission's order and the date on which it is to become
effective.
Item 6. Exhibits and Financial Statements.
A-1 Application-Declaration on Form U-1 filed by DRI and CNG seeking
authority for the Merger. (File No. 70-09477 and incorporated by
reference herein)
A-2 Joint Proxy/Registration Statement on Form S-4 of DRI and CNG. (File
No. 333- 75669 and incorporated by reference herein)
B-1 DRI Registration Statement on Form S-3. (File No. 333-35501 and
incorporated by reference herein) B-2 DRI Credit Agreement.
(Previously filed) B-3 DRI Short-Term Credit Agreement. (Previously
filed)
B-4.1 DRI Indenture. (Filed as Exhibit 4.1 to Form S-4 Registration, File
No. 333-50653, April 21, 1998 and incorporated by reference herein)
B-4.2 First Supplemental Indenture. (Filed as Exhibit 4.1 to Form S-4
Registration, File No. 333-50653, April 21, 1998 and incorporated by
reference herein)
B-5 ELLF. (Previously filed)
B-6 Promissory Note due 2008. (Previously filed)
B-7 Guarantee Agreement dated as of October 30, 1998 in favor of
Bayerische Landesbank Girozentrale. (Previously filed)
<PAGE>
C-1 Intercompany Credit Agreement dated as of August 31, 1987 with DEI.
(Previously filed)
C-2 Liquidity Support Agreement dated as of February 27, 1998 made by
DRI in favor of Commonwealth Edison Company. (Previously filed)
C-3 Backstop Cash Management Agreement dated as of April 28, 1998
between DRI, Kincaid Generation, L.L.C. and LaSalle National Bank,
as collateral trustee. (Previously filed)
C-4 Backstop Equity Subscription Agreement dated as of April 28, 1998
between DRI, Kincaid Generation, L.L.C. and LaSalle National Bank,
as collateral trustee. (Previously filed)
C-5 Support Agreement dated as of October 21, 1987 made in connection
with the $143,900,000 Loan Agreement between Rumford Cogeneration
Company and Bank of America National Trust and Savings Association.
(Previously filed)
C-6 Support Agreement dated as of July 19, 1993 made in connection with
the Loan Agreement and the Investment Agreement, each between Belize
Electric Company Ltd. and Commonwealth Development Corporation and
International Finance Corporation. (Previously filed)
C-7 Support Agreement dated as of February 8, 1996 made by DRI in favor
of DEI in connection with the $400,000,000 Multi-Currency Credit
Agreement between DEI, the lenders party thereto and ABN AMRO North
America, Inc. as agent. (Previously filed)
C-8 Support Agreement dated as of April 9, 1998 made by DRI in favor of
DEI in connection with the Extending Revolving Term Loan Agreement
between Dominion Energy Canada, Ltd., the lenders party thereto and
The Bank of Nova Scotia, as agent. (Previously filed)
C-9 Indicative Term Sheet with respect to DEI/Bank of America Leasing
and Capital Group financing.
D-1 Intercompany Credit Agreement dated as of December 20, 1985 with
DCI. (Previously filed)
D-2 Guaranty Agreement dated as of May 13, 1996 by DRI in favor of DYNEX
Capital, Inc. (formerly Resource Mortgage Capital, Inc.) (Previously
filed)
D-3 Support Agreement dated as of February 5, 1999 made by DRI in favor
of DCI . (Previously filed)
D-4 Support Agreement dated as of May 20, 1997 made by DRI in favor of
DCI . (Previously filed)
<PAGE>
D-5 Support Agreement dated as of November 7, 1997, as amended, made by
DRI in favor of DCI in connection with the Credit Agreement between
DCI, the lenders party thereto and ABN AMRO Bank N.V., as agent.
(Previously filed)
D-6 Support Agreement dated as of June 30, 1998, as amended, made by DRI
in favor of DCI in connection with the Letter of Credit
Reimbursement Agreement between DCI and Citibank, N.A. (Previously
filed)
D-7 Support Agreement dated as of November 3, 1998, as amended, made by
DRI in favor of DCI. (Previously filed)
E-1 Press Release issued by DRI re Virginia Power restructuring.
(Previously filed)
E-2 DRI Exemption Statement on Form U-3A-2 for the fiscal year ended
December 31, 1998. (File No. 69-278 and incorporated by reference
herein)
E-3 Organizational Chart of DRI Subsidiaries. (Previously filed)
F-1 CNG Annual Report on Form U5S for the fiscal year ended December 31,
1998. (File No. 30-203 and incorporated by reference herein)
F-2 CNG Credit Agreement. (Previously filed)
F-2A Amendment to CNG Credit Agreement (Filed in paper format on Form SE)
H-1.2 CNG Registration Statement on Form S-3. (File No. 333-25347 and
incorporated by reference herein)
H-1.2 Dominion Direct. Filed as Registration Statement on Form S-3, File
No. 333-46043, effective February 11, 1998 and incorporated by
reference herein)
H-2 DRI Incentive Compensation Plan. (Filed as Registration Statement on
Form S-8, File No. 333-25587, effective April 22, 1997 and
Registration Statement on Form S-8, as amended, effective May 10,
1999 and incorporated by reference herein)
H-3 Virginia Power Hourly Employee Savings Plan. (Filed as Registration
Statement on Form S-8, File No. 333-09167, effective July 30, 1996
as amended effective September 22, 1999 and incorporated by
reference herein)
H-4 Dominion Subsidiary Savings Plan. (Filed as Registration Statement
on Form S-8, File No. 333-62705, effective September 15, 1995 and
incorporated by reference herein)
H-5.1 Withdrawn
H-5.2 Withdrawn
<PAGE>
H-5.3 Withdrawn
H-6 Withdrawn
H-7 Withdrawn
H-8 Withdrawn
H-9 Withdrawn
I Form of Notice. (Previously filed)
Item 7. Information as to Environmental Effects.
The Transaction neither involves a "major federal action" nor
"significantly affects the quality of the human environment" as those terms are
used in Section 10(2)(C) of the National Environmental Policy Act, 42 U.S.C.
Section 4321, et seq. The only federal actions related to the Transaction
pertain to the Commission's approval of this Application-Declaration under the
1935 Act and the Commission's clearance and declaration of the effectiveness of
the Joint Proxy and Registration Statement of DRI and CNG on Form S-4 pursuant
to the Securities Exchange Act of 1934 and the other approvals and actions
described in Item 4 of this Application-Declaration. Consummation of the
Transaction will not result in changes in the operations of DRI, CNG or any of
their respective subsidiaries that would have any impact on the environment. No
federal agency is preparing an environmental impact statement with respect to
this matter.
<PAGE>
Pursuant to the Public Utility Holding Company Act of 1935, each of
the undersigned companies has caused this Application-Declaration to be signed
on its behalf by the undersigned thereunto duly authorized.
DOMINION RESOURCES, INC. CONSOLIDATED NATURAL GAS COMPANY
By: /s/ James F. Stutt By: /s/ Stephen E. Williams
------------------------- ----------------------------
Name: James F. Stutts Name: Stephen E. Williams
Title: Vice President and Title: Senior Vice President and
General Counsel General Counsel
Date: October 15, 1999 Date: October 15, 1999
