File No. 70-9045
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM U-1
APPLICATION/DECLARATION WITH RESPECT TO THE ORGANIZATION OF A WHOLLY OWNED
SUBSIDIARY RELATED TO AN ACCOUNTS RECEIVABLE PURCHASE AND SALE PROGRAM AND
RELATED TRANSACTIONS
under
THE PUBLIC HOLDING COMPANY ACT OF 1935
THE CONNECTICUT LIGHT AND POWER COMPANY
107 Selden Street
Berlin, CT 06037-5457
(Name of companies filing this statement and address of principal executive
office)
NORTHEAST UTILITIES
(Name of top registered holding company parent of declarant)
Robert P. Wax, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders,
notices, and communications to:
David R. McHale Jeffrey C. Miller, Esq.
Assistant Treasurer - Finance The Connecticut Light and Power Company
Assistant General Counsel Northeast Utilities Service Company
Northeast Utilities Service Company P.O. Box 270
P.O. Box 270 Hartford, CT 06141-0270
Hartford, CT 06141-0270
Thomas R. Wildman, Esq.
Day, Berry & Howard - CityPlace I
Hartford, CT 06103-3499
<PAGE>
The Application/Declaration in this proceeding is hereby amended by (i)
the filing of the exhibits and financial statements listed in the "Index to
Exhibits and Financial Statements Filed with Amendment No. 1 to Form U-1 of The
Connecticut Light and Power Company" attached to this Amendment, (ii)
restating and resubmitting Paragraphs 3 and 25 to the Application/Declaration
to reflect the bracketed changes to the text as follows, and (iii) revising
Item VI, Exhibits and Financial Statements, to reflect a more recent "as of"
date of various Financial Statements:
ITEM I
DESCRIPTION OF PROPOSED TRANSACTIONS
3. The Company entered into a Receivables Purchase and Sale
Agreement dated July 11, 1996 (as amended, the "Existing Agreement") with
Corporate Asset Funding Company, Inc. ("CAFCO"), Citicorp North America, Inc.
(the "Agent") and Citibank, N.A. (together with its assignees, the "Banks")
under which the Company may sell (from time to time in its discretion and
subject to the satisfaction of certain conditions precedent) fractional,
undivided ownership interests expressed as a percentage ("Receivable
Interests") in (i) billed and unbilled indebtedness of customers as booked to
Accounts [142 (excluding amounts booked to Account 142.04)] and 173 under the
Federal Energy Regulatory Commission Chart of Accounts ("Receivables") and (ii)
certain related assets, including any security or guaranty for any Receivables,
all collections thereon, and related records and software (the "Related
Assets"). The purchaser(s) of the Receivable Interests (collectively, the
"Purchaser") will be either CAFCO or the Banks or their respective successors
or assigns. CAFCO is a special purpose Delaware corporation which acquires
receivables and other assets and issues commercial paper to finance these
acquisitions. The Agent will act as agent for the Purchaser for transactions
under the Existing Agreement.
<PAGE>
ITEM V
PROCEDURE
25. The Company hereby waives any recommended decision by a hearing
officer or by any other responsible officer of the Commission and waives the
30-day waiting period between the issuance of the Commission's order and the
date on which it is to become effective, since it is desired that the
Commission's order, when issued, become effective forthwith. The Company
consents that the Office of Public Utility Regulation within the Division of
Investment Management may assist in the preparation of the Commission's
decision and /or order unless the Office opposes the transactions covered by
this Application. It is requested that the Commission issue an order
authorizing the jurisdictional transactions proposed herein at the earliest
practicable date. It is further requested that (i) there not be a recommended
decision by the Administrative Law Judge or other responsible officer of the
Commission, (ii) the Office of Public Utility Regulation be permitted to assist
in the preparation of the Commission's decision, and (iii) the Commission's
order [be issued prior to receipt of the DPUC's Order. The Company consents to
the Commission's Order being conditioned upon receipt of the DPUC Order.]
<PAGE>
ITEM VI
EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits
A.1 Draft of the Certificate of Incorporation of CRC.
A.2 Draft of the Bylaws of CRC.
A.3 CL&P's authorizing resolution for purchase of CRC Common Stock.
D.1 Application to the DPUC for approval of the transactions
described herein.
F. Opinion of Counsel to CL&P.
G.1 CL&P Financial Data Schedule.
G.2 NU Financial Data Schedule.
H.1 Estimated Expenses -- CL&P.
H.2 Estimated Expenses -- CRC.
(b) Financial Statements
1. The Connecticut Light and Power Company
1.1 Balance Sheet, per books and pro forma, as of March 31, 1997.
1.2 Income Statement, per books and pro forma, twelve months
ended March 31, 1997.
1.3 Statement of Retained Earnings, per books and pro forma,
twelve months ended March 31, 1997 and Statement of
Capital Structure, per books and pro forma, as of March
31, 1997.
1.4 Explanation of Pro Forma Adjustments.
2. Northeast Utilities and Subsidiaries
2.1 Consolidated Balance Sheet, per books and pro forma, as
of March 31, 1997.
2.2 Consolidated Income Statement, per books and pro forma,
twelve month ended March 31, 1997.
2.3 Consolidated Statement of Retained Earnings, per books
and pro forma, twelve months ended March 31, 1997, and
Consolidated Statement of Capital Structure, per books
and pro forma, as of March 31, 1997.
2.4 Explanation of Pro Forma Adjustments.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned has duly caused this statement to be
signed on its behalf by the undersigned thereunto duly authorized.
Dated: August 27, 1997
THE CONNECTICUT LIGHT AND POWER COMPANY
By /s/John B. Keane
John B. Keane
Vice President and Treasurer
<PAGE>
File No. 70-9045
INDEX TO EXHIBITS AND FINANCIAL STATEMENTS FILED WITH
AMENDMENT NO. 1
to
FORM U-1
of
THE CONNECTICUT LIGHT AND POWER COMPANY
(a) Exhibits
A.1 Draft of the Certificate of Incorporation of CRC.
A.2 Draft of the Bylaws of CRC.
A.3 CL&P's authorizing resolution for purchase of CRC Common Stock.
D.1 Application to the DPUC for approval of the transactions
described herein.
F. Opinion of Counsel to CL&P.
G.1 CL&P Financial Data Schedule.
G.2 NU Financial Data Schedule.
H.1 Estimated Expenses -- CL&P.
H.2 Estimated Expenses -- CRC.
(b) Financial Statements
1. The Connecticut Light and Power Company
1.1 Balance Sheet, per books and pro forma, as of March 31, 1997.
1.2 Income Statement, per books and pro forma, twelve months
ended March 31, 1997.
1.3 Statement of Retained Earnings, per books and pro forma,
twelve months ended March 31, 1997 and Statement of
Capital Structure, per books and pro forma, as of March
31, 1997.
1.4 Explanation of Pro Forma Adjustments.
2. Northeast Utilities and Subsidiaries
2.1 Consolidated Balance Sheet, per books and pro forma, as
of March 31, 1997.
2.2 Consolidated Income Statement, per books and pro forma,
twelve month ended March 31, 1997.
2.3 Consolidated Statement of Retained Earnings, per books
and pro forma, twelve months ended March 31, 1997, and
Consolidated Statement of Capital Structure, per books
and pro forma, as of March 31, 1997.
2.4 Explanation of Pro Forma Adjustments.
EXHIBIT A.1
CERTIFICATION OF INCORPORATION
OF
CL&P RECEIVABLES CORPORATION
The undersigned incorporator hereby forms a corporation under the
Business Corporation Act of the State of Connecticut.
FIRST: The name of the corporation is CL&P RECEIVABLES CORPORATION.
SECOND: The address of the Corporation's initial registered office in
the State of Connecticut and the name of its initial registered agent at such
address is:
Theresa H. Allsop
107 Selden Street
Berlin, CT 06037-5227
The residence address of the initial registered agent is:
1008 Mott Hill Road
South Glastonbury, CT 06073
The initial registered agent hereby accepts appointment:
____________________________
Name: Theresa H. Allsop
THIRD: The nature of the business to be transacted, and the purpose to
be promoted or carried out by the Corporation, is to engage exclusively in the
following business and activities:
1. To purchase or otherwise acquire accounts, chattel paper,
instruments, general intangibles and certain related rights and property
(collectively, the "Assets") from its parent or other of its affiliates and to
sell such Assets, or an interest therein, to a commercial paper conduit or
other financial institution or institutions.
2. To service and collect, or retain a servicer to service and
collect, such Assets; and
3. To engage in any lawful act or activity and to exercise any powers
permitted to corporations organized under the Connecticut Business Corporation
Act, as the same may be amended from time to time, that are incidental to and
necessary, suitable or convenient for the accomplishment of the purposes
specified in clauses (1) and (2) above.
FOURTH: The amount of capital stock of the Corporation hereby
authorized is twenty thousand (20,000) shares, without par value, which stock
shall all be common stock (the "Common Stock").
1. Common Stock
(a) Except as otherwise expressly provided by law, all
voting rights shall be vested in the holders of the
Common Stock, and at each meeting of shareholders of the
Corporation, each holder of Common Stock shall be
entitled to one vote for each share on each matter to
come before the meeting.
(b) Dividends may be declared upon and paid to the holders
of the Common Stock as the Board of Directors shall
determine.
(c) In the event of voluntary or involuntary liquidation or
dissolution of the Corporation, the holders of the
Common Stock shall be entitled to share ratably in all
assets of the Corporation.
2. Vote Required in Certain Events
Without (i) the affirmative vote of 100% of the members of the
Board of Directors of the Corporation (including the Independent
Director described in Article SEVENTH), and (ii) the affirmative
vote of the holders of 100% of the number of shares of the
Common Stock outstanding, voting (A) in person or by proxy at a
special meeting called for the purpose or (B) by unanimous
written consent of the holders of the Common Stock acting
without such a meeting, as the case may be, the Corporation
shall not amend Article THIRD, this Article FOURTH(2), Article
SIXTH or Article SEVENTH of this Certificate of Incorporation,
or Article IV Section 4, Article VIII Section 2 or Article IX of
the Bylaws of the Corporation.
FIFTH: The minimum amount of stated capital with which the Corporation
shall commence business is One Thousand Dollars ($1,000).
SIXTH: The Corporation shall not, without the affirmative vote of 100%
of the members of the Board of Directors of the Corporation (including the
Independent Director described in Article SEVENTH), (i) make an assignment for
the benefit of creditors, file a petition in bankruptcy, petition or apply to
any tribunal for the appointment of a custodian, receiver or any trustee for it
or for a substantial part of its property, commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereinafter in
effect, consent or acquiesce in the filing of any such petition, application,
proceeding or appointment of or taking possession by the custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Corporation or any substantial part of its property, or admit its inability to
pay its debts generally as they become due or authorize any of the foregoing to
be done or taken on behalf of the Corporation or (ii) merge or consolidate with
any other entity, or dissolve, liquidate or otherwise terminate its existence;
provided that if at any time the Independent Director is not then in office and
acting, the Board of Directors shall not vote upon any of the matters set forth
in this Article SIXTH unless and until such Independent Director shall have
been duly elected.
SEVENTH: The Corporation shall at all times (except in the event of
death, incapacity, resignation or removal) have at least one director (the
"Independent Director") who (i) is not then currently and has not been at any
time since August 1, 1992, an officer, director or employee of The Connecticut
Light and Power Company or any affiliate or subsidiary of The Connecticut Light
and Power Company, (ii) is not a current or former officer or employee
of the Corporation and (iii) is not a stockholder of The Connecticut Light and
Power Company or any affiliate or subsidiary of The Connecticut Light and Power
Company. The Independent Director shall be elected in the same manner as other
directors. In the event of the death, incapacity, resignation or removal of
the Independent Director, the Board of Directors shall promptly appoint a
replacement Independent Director. The Independent Director shall not, in
connection with any act or failure to act in connection with any matter
described in Article SIXTH, have a duty or other obligation to the
Corporation's shareholders (except as may be required specifically by the
statutory law of any applicable jurisdiction); instead, the Independent
Director's fiduciary duty or other obligations with respect to such act or
failure to act in connection with any matter described in Article SIXTH shall
be owed to the Corporation, including the Corporation's creditors. Every
shareholder of the Corporation shall be deemed to have consented to the
foregoing by virtue of such shareholder's purchase of shares of capital stock
of the Corporation, and no further act or deed of any shareholder shall
be required to evidence such consent.
EIGHTH: The personal liability of any Director to the Corporation or
its shareholders for monetary damages for breach of duty as a Director is
hereby limited to the amount of the compensation received by the Director for
serving the Corporation during the year of the violation if such breach did not
(a) involve a knowing and culpable violation of law by the Director, (b) enable
the Director or an Associate, as defined in Section 33-840 of the Connecticut
General Statutes, to receive an improper personal economic gain, (c) show a
lack of good faith and a conscious disregard for the duty of the Director to
the Corporation under circumstances in which the Director was aware that his or
her conduct or omission created an unjustifiable risk of serious injury to the
Corporation, (d) constitute a sustained and unexcused pattern of inattention
that amounted to an abdication of the Director's duty to the Corporation,
or (e) create liability under Section 33-757 of the Connecticut General
Statutes. Any lawful repeal or modification of this provision by the
shareholders and the Board of Directors of the Corporation shall not adversely
affect any right or protection of a Director existing at or prior to the time
of such repeal or modification.
NINTH: The Corporation shall indemnify and advance expenses to an
individual made a party to a proceeding because he/she is or was a Director of
the Corporation under Section 33-771 of the Connecticut General Statutes,
Revision of 1958, as amended. The Corporation shall also indemnify and advance
expenses under Sections 33-770 to 33-778, inclusive, of the Connecticut General
Statutes, to any officer, employee or agent of the Corporation who is not
a director to the same extent as provided to a director.
Dated at Hartford, Connecticut, this day of August, 1997.
I hereby declare, under the penalties of false statement, that the
statements in the foregoing certificate are true.
________________________________
Sandra Bourgasser-Ketterling
Incorporator
Day, Berry & Howard
CityPlace I
Hartford, CT 06103-3499
EXHIBIT A.2
BYLAWS
of
CL&P RECEIVABLES CORPORATION
ARTICLE I.
GENERAL
These Bylaws are intended to supplement and implement applicable
provisions of law and of the Certificate of Incorporation of this Corporation
with respect to the regulation of the affairs of this Corporation.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
SECTION 1. Place of Meeting: Shareholders' meetings shall be held at
the principal offices of this Corporation or at such other place, either within
or without the State of Connecticut, as shall be designated in the notice of
meeting. Elections of directors need not be by ballot. The books of the
Corporation may be kept (subject to any provision contained in any applicable
statute) outside the State of Connecticut at such place or places as may be
designated from time to time by the Board of Directors or in these Bylaws.
SECTION 2. Annual Meeting: The Annual Meeting of Shareholders for the
election of Directors and the transaction of such other business as may
properly be brought before the meeting shall be held in March, April, May, June
or July in each year on the day and at the hour designated by the Board of
Directors.
SECTION 3. Special Meetings: Special meetings may be called at any
time by the President or Board of Directors and shall be called by the
President upon written request of the holders of not less than one-tenth of the
voting power of all shares entitled to vote at the meeting.
SECTION 4. Notice of Meetings: Written notice of the date, time and
place of each Annual and Special Meeting (a notice of a Special Meeting shall
also contain the general purpose or purposes for such meeting) shall be mailed
or delivered, at least ten (10) days but not more than sixty (60) days prior to
the date of such meeting, to each shareholder entitled to vote at such meeting
at his residence or usual place of business as shown on the records of this
Corporation, provided that any one or more of such shareholders, as to himself
or themselves, may waive such notice in writing or by attendance without
protest at such meeting.
SECTION 5. Quorum: The holders of a majority of the shares of the
issued and outstanding stock entitled to vote at a meeting, present either in
person or by proxy, shall constitute a quorum for the transaction of business
at such meeting of the shareholders. Except as otherwise provided by law or
these Bylaws, all questions shall be decided by a vote of the holders of a
majority of the shares present at any meeting of shareholders at which a quorum
is present. If a quorum be not present at such meeting, the shareholders
present in person or by proxy may adjourn to such future time as shall be
agreed upon by them and notice of such adjournment shall be given to the
shareholders not present or represented at the meeting.
SECTION 6. Shareholders' Action Without Meeting: Any action which,
under any provision of the Connecticut Business Corporation Act, may be taken
at a meeting of shareholders, may be taken without such a meeting if consent in
writing, setting forth the action so taken or to be taken, is signed severally
or collectively by all of the persons who would be entitled to vote upon such
action at a meeting, or by their duly authorized attorneys. The Secretary of
the Corporation shall file such consent or consents with the minutes of the
meetings of the shareholders.
ARTICLE III.
SHARES
SECTION 1. Share Certificates: Share certificates shall be in a form
adopted by the Board of Directors and shall be signed by the President or by
the Secretary. Such certificates shall bear the seal of the Corporation, the
name of the person to whom issued, and the number of such shares which such
certificate represents. The consideration for which the shares were
issued and the date of issue shall be entered on the Corporation's books.
SECTION 2. Transfer of Shares: Shares shall be transferred only on
the books of the Corporation by the holder thereof in person or by his
attorney.
ARTICLE IV.
DIRECTORS
SECTION 1. Number, Election and Term of Office: A Board of not less
than three (3) nor more than seven (7) Directors, including the Independent
Director described in Article SEVENTH of the Certificate of Incorporation of
the Corporation, shall be elected at the organization meeting of the
Corporation and thereafter shall be elected by the shareholders entitled to
vote at Annual or Special Meetings of Shareholders. The number of positions on
the Board of Directors for purposes of incorporation shall be the number fixed
by resolution of the incorporator(s). Thereafter, the number of positions on
the Board of Directors shall be the number fixed by resolution of the
shareholders or Board of Directors, or, in the absence of such resolution,
shall be the number of Directors elected at the preceding Annual Meeting of
Shareholders. The number of positions on the Board of Directors for any year,
as fixed in accordance with the foregoing (hereinafter referred to as the
"number of directorships") may be increased or decreased at any time as
provided by law, except that there shall always be at least one Independent
Director as described in Article SEVENTH of the Certificate of Incorporation of
the Corporation.
SECTION 2. Removal of Directors: Any Director may be removed from
office at any time, with or without cause, by concurrent vote of the holders of
not less than a majority of the issued and outstanding shares entitled to vote,
at any meeting of shareholders called for that purpose.
SECTION 3. Vacancies: Vacancies created by an increase in the number
of directorships shall be filled for the unexpired term by action of
shareholders. Vacancies occurring by reason other than by increase in the
number of directorships shall be filled for the unexpired term by the
concurring vote of a majority of the Directors remaining in office, even
though such remaining Directors may be less than a majority of the number of
directorships (as fixed for the current year in accordance with Article IV,
Section 1). If such remaining Directors fail to fill a vacancy, then such
vacancy shall be filled by action of shareholders. The vacancy of a position
of Independent Director shall be filled only with another person meeting the
requirements of an Independent Director as set forth in Article SEVENTH of the
Certificate of Incorporation of the Corporation.
SECTION 4. Powers: The property, business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors which may exercise all power and do all the things which may be
exercised or done by the Corporation subject to provisions of law, the statutes
of the State of Connecticut, the Certificate of Incorporation, these Bylaws,
and any vote of the shareholders. The Board of Directors is expressly
authorized to determine the use and disposition of any surplus and net profits
of the Corporation, including the determination of the amount of working
capital required, to set apart out of any of the funds of the Corporation,
whether or not available for dividends, a reserve or reserves for any proper
purpose and to abolish any such reserve in the manner in which it was created.
In addition to the foregoing, the Corporation shall conduct its affairs in the
following manner: (i) the Corporation will maintain separate bank accounts,
corporate records and books of account from those of any direct or ultimate
parent of the Corporation or any subsidiary or affiliate of any such parent;
(ii) the Corporation will pay from its own funds and assets its operating
expenses and liabilities; (iii) except as provided in the Receivables Purchase
and Sale Agreement dated __, 1997 to which the Corporation is a party, the
Corporation will act solely in its corporate name and through its own
authorized officers and agents; and (iv) the Corporation will not pay or
guaranty, or hold itself out as liable for, the obligations of its parent or
any subsidiary or affiliate of its parent.
SECTION 5. Compensation: The Board of Directors shall have the power
to fix from time to time the compensation of the Directors and the method of
payment thereof.
ARTICLE V.
MEETINGS OF DIRECTORS
SECTION 1. Annual Meetings: A regular meeting of the Board of
Directors shall be held without notice immediately after the Annual Meeting of
Shareholders, or as soon thereafter as convenient. At such meeting the Board
of Directors shall choose and appoint the officers of the Corporation who shall
hold their offices, subject to prior removal by the Board of Directors, until
the next annual meeting or until their successors are chosen and qualify.
SECTION 2. Regular Meetings: All other regular meetings of the Board
of Directors may be held without notice at such date, time and place as the
Board of Directors may determine and fix by resolution.
SECTION 3. Special Meetings: Special meetings of the Board of
Directors may be held upon call of the Chairman (if there be one) or the
President, or, in the event of the absence or inability of either to act, of a
Vice President, or upon call of any one or more Directors.
SECTION 4. Notice: Written or oral notice of the date, time and place
of all special meetings of the Board of Directors shall be given to each
Director personally or mailed to his residence or usual place of business at
least 24 hours prior to the date of the meeting, provided that any one or more
Directors, as to himself or themselves, may waive such notice in writing
or by attendance without protest at such meeting.
SECTION 5. Quorum: Directors holding one-third of the number of
directorships shall constitute a quorum. Except as otherwise provided by law
or these Bylaws, all questions shall be decided by a vote of a majority of the
Directors present at any meeting of the Board of Directors at which a quorum is
present.
SECTION 6. Director Participation in Meetings by Telephone: A
director may participate in a meeting of the Board of Directors by means of
conference telephone or similar communications equipment enabling all Directors
participating in the meeting to hear one another, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
SECTION 7. Directors' Action Without Meeting: If all the Directors
severally or collectively consent in writing to any action taken or to be taken
by the Corporation, such action shall be as valid as though it had been
authorized at a meeting of the Board of Directors. The Secretary of the
Corporation shall file such consent or consents with the minutes of the
meetings of the Board of Directors.
ARTICLE VI.
OFFICERS
SECTION 1. Titles, Election and Duties: At its annual meeting the
Board of Directors shall elect a President, a Secretary, a Treasurer and, if
the Board shall so determine, a Chairman. Each officer shall, subject to the
removal provision below, hold office until the next annual election of officers
and until his successor shall have been elected and qualified. Any two or more
offices may be held by the same person except that the offices of the
President and Secretary may not be simultaneously held by the same person. The
Board shall also elect at such annual meeting, and may elect at any regular or
special meeting, such other officers as may be required for the prompt and
orderly transaction of the business of the Corporation, and each officer shall
have such authority and shall perform such duties as may be assigned to him
from time to time by the Board of Directors. Any officer may be removed,
with or without cause, at any time by the Board in its discretion. Vacancies
among the officers by reason of death, resignation, removal (with or without
cause) or other reason shall be filled by the Board of Directors. Any vacancy
occurring in any office may be filled at any regular meeting of the Board or at
any special meeting of the Board held for that purpose. In addition to such
powers and duties as these Bylaws and the Board of Directors may prescribe,
and except as may be otherwise provided by the Board, each officer shall have
the powers and perform the duties which by law and general usage appertain to
his particular office.
SECTION 2. Chairman: The Chairman, if such office shall be filled by
the Directors, shall, when present, preside at all meetings of said Board and
of the shareholders. He shall have such other authority and shall perform such
additional duties as may be assigned to him from time to time by the Board of
Directors.
SECTION 3. President: The President shall be the chief executive
officer of the Corporation and shall be responsible for the general
supervision, direction and control of the business and affairs of the
Corporation. If the Chairman shall be absent or unable to perform the duties
of his office, or if the office of the Chairman shall not have been filled by
the Directors, the President shall preside at meetings of the Board of
Directors and of the shareholders. He shall have such other authority and
shall perform such additional duties as may be assigned to him from time to
time by the Board of Directors.
SECTION 4. Secretary: The Secretary shall keep the minutes of all
meetings of the shareholders and of the Board of Directors. He shall give
notice of all meetings of the shareholders and of said Board. He shall record
all votes taken at such meetings. He shall be custodian of all contracts,
leases, assignments, deeds and other instruments in writing and documents not
properly belonging to the office of the Treasurer, and shall perform such
additional duties as may be assigned to him from time to time by the Board of
Directors, the Chairman, the President or by law. The Secretary shall have the
custody of the Corporate Seal of the Corporation and shall affix the same to
all instruments requiring a seal except as otherwise provided in these Bylaws.
SECTION 5. Assistant Secretaries: One or more Assistant Secretaries
shall perform the duties of the Secretary if the Secretary shall be absent or
unable to perform the duties of his office. The Assistant Secretaries shall
perform such additional duties as may be assigned to them from time to time by
the Board of Directors, the Chairman, the President or the Secretary.
. SECTION 6. Treasurer: The Treasurer shall have charge of all receipts
and disbursements of the Corporation, and shall be the custodian of the
Corporation's funds. He shall have full authority to receive and give receipts
for all moneys due and payable to the Corporation from any source whatever, and
give full discharge for the same, and to endorse checks, drafts and warrants in
its name and on its behalf. He shall sign all checks, notes, drafts and
similar instruments, except as otherwise provided for the Board of Directors.
The Treasurer shall perform such additional duties as may be assigned to him
from time to time by the Board of Directors, the Chairman, the President or by
law.
SECTION 7. Assistant Treasurer: One or more Assistant Treasurers
shall perform the duties of the Treasurer if the Treasurer shall be absent or
unable to perform the duties of his office. The Assistant Treasurers shall
perform such additional duties as may assigned to them from time to time by the
Board of Directors, the Chairman, the President or the Treasurer.
ARTICLE VII.
SEAL
The corporate seal shall consist of a circular disc with the name of
the Corporation and the words "Connecticut" and "Seal" thereon.
ARTICLE VIII.
COMMITTEES
SECTION 1. The Board of Directors may designate two or more Directors
to constitute an executive committee or other committees, which committees
shall have and may exercise all such authority of the Board of Directors as
shall be provided in such resolution except as limited by Section 2. At the
time of such appointment, the Board of Directors may also appoint, in respect
to each member of any such committee, another Director to serve as his
alternate at any meeting of such committee which such member is unable to
attend. Each alternate shall have, during his attendance at a meeting, of such
committee, all the rights and obligations of a regular member thereof. Any
vacancy on such committee or among alternate members thereof may be filled by
the Board of Directors.
SECTION 2. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation with the exception of any authority the delegation
of which is prohibited by Section 33-753(f) of the Connecticut Business
Corporation Act, the Certificate of Incorporation or Bylaws of the Corporation.
No Committee shall have the power or authority in reference to amending the
Certificate of Incorporation, to authorize or take any action described in
Article FOURTH (2), Article SEVENTH, or Article EIGHTH, adopting an agreement
of merger or consolidation, recommending to the shareholders the sale, lease,
or exchange of all or substantially all of the Corporation's property and
assets, recommending to the shareholders a dissolution of the Corporation or
the revocation of a dissolution, or amending the Bylaws of the Corporation;
and, unless the resolution expressly so provides, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
SECTION 3. A majority of any committee shall have the power to act.
Committees shall keep full records of their proceedings and shall report the
same to the Board of Directors.
ARTICLE IX.
AMENDMENTS
These Bylaws may be altered, amended, added to, or repealed by the
affirmative vote of the holders of a majority of the voting power of shares
entitled to vote thereon or by an affirmative vote of Directors holding a
majority of the number of directorships, except that these Bylaws or any
alteration, amendment or repeal thereof shall not in any manner impair,
nor impair the intent of Article IV Section 4, Article VIII Section 2 or
Article IX of these Bylaws. Any notice of a meeting of shareholders or of the
Board of Directors at which these Bylaws are proposed to be altered, amended,
added to, or repealed shall include notice of such proposed action.
EXHIBIT A.3
I, the undersigned, HEREBY CERTIFY that at a meeting of the
Board of Directors of THE CONNECTICUT LIGHT AND POWER COMPANY, duly called and
held on February 10, 1997, at which a quorum was present and acting
throughout, the following preamble and resolutions were duly adopted:
WHEREAS, the Company has entered into a Receivables Purchase and
Sale Agreement dated July 11, 1996 (the "Existing Agreement") under which the
Company each month may, in its discretion and subject to the satisfaction of
certain conditions precedent, sell to Corporate Asset Funding Company, Inc. or
certain banks an undivided interest in certain billed and unbilled accounts
receivable and related assets originated by the Company and arising from the
sale of electricity and related services to its retail customers (the
"Receivables"); and
WHEREAS, the Company desires to have any sales of Receivables by
it accounted for as sales for financial reporting purposes; and
WHEREAS, in order for such sales made after January 1, 1997 to
be so treated, they must comply with the requirements of the Statement of
Financial Accounting Standards No. 125, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities, No. 162-C, issued in
June 1996 by the Financial Accounting Standards Board ("FAS 125"); and
WHEREAS, the formation of a wholly owned special purpose
corporation to serve as an intermediate transferee/transferor of the
Receivables will enable the company to satisfy certain requirements of FAS 125
on terms which are in the Company's interests; and
WHEREAS, the Company desires to restructure the accounts
receivable purchase and sale program contemplated by the Existing Agreement to
include, among other things, the special purpose corporation.
NOW, THEREFORE, IT IS
RESOLVED, that, subject to all necessary approvals from
regulatory agencies, the Company is authorized to (i) organize under the
Connecticut Business Corporation Act a wholly owned special purpose corporation
(the "SPC") for the sole purpose of acquiring Receivables from the Company and
selling Receivables or undivided interests therein to one or more purchasers on
terms similar to those set forth in the Existing Agreement; (ii) capitalize the
SPC and make equity contributions to it from time to time; and (iii) acquire
all of the capital stock of the SPC.
RESOLVED, that the Company is authorized to enter into a
receivables purchase and sale agreement with the SPC (the "New Agreement")
under which the Company will sell Receivables to the SPC on such terms as the
officers of the Company executing such agreement shall deem appropriate.
RESOLVED, that the Chairman, the President, any Vice President,
the Treasurer, and any Assistant Treasurer are severally authorized in the name
and on behalf of the Company to execute and deliver the New Agreement, the
execution and delivery thereof to be sufficient and conclusive evidence that
the same is within the authority conferred by these resolutions.
RESOLVED, that the officers of the Company shall cause the
Existing Agreement to terminate upon the effectiveness of the New Agreement.
RESOLVED, that the officers of the Company are authorized to
prepare and file with the Connecticut Department of Public Utility Control and
the Securities and Exchange Commission ("SEC"), such applications and, in the
case of the SEC, such disclaimers, as they may determine to be necessary to
request approval or authorization for the Company to engage in the transactions
contemplated by these resolutions or to take any actions necessary or
appropriate in connection therewith; and the officers of the Company are
severally authorized to file such amendments to the foregoing applications and
to take such other actions in relation thereto as they may deem necessary or
desirable.
RESOLVED, that the officers of the Company are severally
authorized to execute and deliver all such other documents and take all such
other actions to effect the restructured accounts receivable purchase and sale
program contemplated by these resolutions in accordance with the documents
relating thereto and the transactions contemplated by the foregoing resolutions
as the officer or officers so acting may deem necessary or advisable to carry
out the purposes of the foregoing resolutions, the execution and delivery
thereof and the taking of such actions to be sufficient and conclusive evidence
that the same is within the authority conferred by these resolutions.
I DO FURTHER CERTIFY that the foregoing resolutions are still in
full force and effect as of this date.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
corporate seal of said Company on this 30{th} day of June, 1997.
O. Kay Comendul
Assistant Secretary
(Seal)
EXHIBIT D.1
STATE OF CONNECTICUT
DEPARTMENT OF PUBLIC UTILITY CONTROL
SUPPLEMENTAL APPLICATION OF
THE CONNECTICUT LIGHT AND POWER COMPANY
WITH RESPECT TO THE SALE OF ACCOUNTS RECEIVABLE
DOCKET NO. 96-05-24
I. Background
1. On June 5, 1996, in the above referenced docket, the Department
of Public Utility Control (the "Department") approved the transactions
described in a letter dated May 20, 1996 and subsequent submissions by The
Connecticut Light and Power Company ("CL&P" or the "Company"), a public service
company within the meaning of Section 16-1 of the General Statutes of
Connecticut, revision of 1958, as amended (the "Connecticut General Statutes"),
with respect to the sale from time to time of fractional undivided interests
("Receivable Interests") in certain categories of CL&P's billed and unbilled
accounts receivable and related assets ("Receivables"), pursuant to Section 16-
43 of the Connecticut General Statutes. Reference is made to the submitted
materials and to the Department's decision (the "Decision") for a complete
description of the transactions approved by the Department.
2. In accordance with the Decision, CL&P has entered into a
Receivables Purchase and Sale Agreement (the "Existing Agreement") dated July
11, 1996 among CL&P, Corporate Asset Funding Company, Inc. ("CAFCO"), Citicorp
North America, Inc. (the "Agent") and Citibank, N.A. (together with its
assignees, the "Banks") providing for sales from time to time of Receivable
Interests. As of the date of this Supplemental Application, CL&P has sales of
$100 million outstanding under the Existing Agreement. Since entering into the
Existing Agreement, CL&P has at times made sales of Receivable Interests in the
full amount of $200 million permitted by the terms of the Existing Agreement.
Such sales have assisted CL&P in meeting its short term cash needs, including
costs associated with the current outages at the Millstone nuclear units
located in Waterford, Connecticut.
3. When entering into the Existing Agreement, CL&P contemplated
that sales of Receivable Interests thereunder would be accounted for as sales
under generally accepted accounting principles, and CL&P desires such
accounting treatment for financial reporting purposes. In order for such
transfers made after January 1, 1997 to be so treated, they must comply with
the requirements of newly adopted Statement of Financial Accounting Standards
No. 125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, No. 162-C (June 1996), ("FAS 125") issued in
June 1996 by the Financial Accounting Standards Board, an organization which
develops accounting standards, including industry standards for U.S.
corporations. FAS 125 establishes a standard that differentiates, for
accounting purposes, transfers of financial assets that should be considered
sales from transfers that should be considered secured borrowings. One
requirement for sale treatment under FAS 125 is that transferred assets be
isolated from the seller and its creditors, even in bankruptcy or receivership
of the seller. Moreover, as a result of recent downgrades in the credit rating
of CL&P, CL&P does not meet one requirement of the Existing Agreement (i.e.,
the requirement that CL&P have a long-term senior debt rating of at least BBB-
by Standard & Poor's or Baa3 by Moody's) for sales of Receivable Interests on
the most favorable terms contemplated by the Existing Agreement. {1} The other
parties to the Existing Agreement have temporarily waived this requirement but
have indicated that they will require the restructuring of the purchase and
sale program as described herein in order for CL&P to continue to have the full
benefits of the program (i.e., to receive the benefits of commercial paper
based financing).
4. In order to meet the requirements of FAS 125 and the
requirements of the parties to the Existing Agreement, CL&P proposes to form a
wholly owned special purpose corporation, CL&P Receivables Corporation ("CRC"),
for the sole purpose of purchasing Receivables from CL&P and selling Receivable
Interests. A draft of the Certificate of Incorporation of CRC is filed
herewith as Exhibit A and a draft of the bylaws of CRC is filed herewith as
Exhibit B. CL&P's authorizing resolution for the restructured arrangements is
filed herewith as Exhibit C.
5. The restructured purchase and sale arrangements are intended to
accomplish the ultimate sales of Receivable Interests in a manner similar to
sales under the Existing Agreement. The addition of CRC to these arrangements
serves merely as a vehicle to comply with FAS 125 and provide greater
protection to the parties to the Existing Agreement by permitting the
"isolation" of the Receivables in a special purpose entity which should have no
material creditors other than the parties to the arrangements. Compared to the
costs of the program under the Existing Agreement, when viewed on an overall
basis, the restructured purchase and sale arrangements add only relatively
minor costs of the formation and maintenance of CRC as a separate entity.
However, as more fully described below, certain fees and other costs associated
with the program will also increase due to the decline in CL&P's credit rating.
6. As explained in greater detail below, the proposed restructuring
of the purchase and sale program approved in the Decision will not have any
effect on CL&P's provision of service to the public nor will it cause an
increase in the rates CL&P charges its customers. Furthermore, CL&P does not
expect its customers to experience any change in the procedures to collect on
outstanding accounts. Thus, CL&P believes that its implementation of the
restructured program is in the public interest.
7. CL&P is seeking the Department's approval for the formation of
CRC and the restructuring of the program from a one-step to a two-step sales
transaction as more fully described below.
<PAGE>
II. Proposed Transactions
1. The restructured accounts receivable purchase and sale
arrangements will consist of two agreements which will replace the Existing
Agreement. Under the first agreement (the "Company Agreement"), CL&P will sell
or transfer as equity contributions from time to time Receivables to CRC. A
draft of the Company Agreement is filed herewith as Exhibit D. The purchase
price for any Receivables so sold will reflect a discount based on assumptions
concerning the estimated collection period of the Receivables, collections
costs and collection risks as well as CRC's anticipated funding costs. Under
the second agreement (the "CRC Agreement"), CRC will sell Receivable Interests
to CAFCO, the Banks or their respective successors and assigns (collectively,
the "Purchaser") from time to time. A draft of the CRC Agreement is filed
herewith as Exhibit E. Such Receivable Interests may be funded and repaid
on a revolving basis. The size of Receivable Interests will be calculated
according to a formula. Such formula will include reserves based on a multiple
of historical losses, carrying costs and other costs associated with the
agreements.
2. CL&P anticipates that the availability of Receivables will vary
from time to time in accordance with electric energy use by its customers. As
a result of this and other factors important to the overall structure of the
program, the funds CRC has available to make a purchase at any time {2} may not
match the cost of Receivables available. The proposed program includes certain
mechanisms to accommodate this mismatch. When the amount of Receivables
originated by CL&P exceeds the amount of cash CRC has available, either CRC
will make the purchase and owe the balance of the purchase price to CL&P on a
deferred basis (the unpaid portion will accrue interest or the purchase price
will involve a discount to reflect the deferral), or CL&P will make a capital
contribution to CRC in the form of the Receivables for which CRC lacks
purchase price funds at that time. Conversely, if CRC develops a substantial
cash balance (due to collections of previously transferred Receivables
exceeding the balance of newly created Receivables available for purchase), CRC
will likely dividend the excess cash to CL&P.
3. Under the CRC Agreement, purchases may be funded by the
Purchaser's issuance of commercial paper. The minimum purchase price for a
Receivable Interest which may be sold in a single transaction will continue to
be $5,000,000 with a purchase limit of $200,000,000.
4. The Agent will have the right to appoint a collection agent on
behalf of the Purchaser and CRC, to administer and collect receivables and to
notify the obligors of the sale of their receivables, at the Agent's option.
CL&P will be appointed as the initial collection agent, and only under certain
adverse conditions can the Agent appoint a successor collection agent.
Therefore, CL&P's customers are not expected to experience any change in
current servicing and collection procedures.
5. Certain obligations under the Company Agreement will create
limited recourse against CL&P. Such recourse claims include liability for (i)
failure to transfer to CRC a first priority ownership interest in the
Receivables, (ii) CL&P's breach of its representations, warranties or
covenants, and (iii) certain indemnity obligations. In order to secure these
obligations, CL&P will grant to the Agent a lien on, and security interest in,
any rights which the Company may have in respect of Receivables. The CRC
Agreement will create comparable recourse obligations against CRC, and CRC will
grant a security interest in the Receivables and certain other rights and
remedies (including its rights and remedies under the Company Agreement) to
secure such recourse obligations. Neither CRC's nor the Purchaser's
recourse to CL&P will include any rights against CL&P should customer defaults
on the Receivables result in collections attributable to the Receivable
Interests sold to the Purchaser being insufficient to reimburse the Purchaser
for the purchase price paid by it for the Receivable Interests and its
anticipated yield. The Purchaser bears the risk for any credit losses on the
Receivables which exceed the reserves for such losses included in the
Receivable Interests.
6. The Company and CRC will be obligated to reimburse the
Purchaser, the Agent and the Banks for various costs and expenses associated
with the Company Agreement and the CRC Agreement. The Company and CRC will
also be required to pay to the Agent certain fees for services in connection
with such agreements. CL&P as collection agent will receive fees from CRC
and/or the Purchaser. However, CL&P does not anticipate paying any fees to
CRC. See Exhibit G for details of fees, commissions and expenses. While CRC
may realize a profit on these transactions, such profit will inure to the
benefit of CL&P since CL&P will wholly own CRC.
7. CL&P believes that, based upon pricing under the existing
facility, funding under the proposed transactions will continue to be more
advantageous than other sources of funds available to CL&P. The facility fees
related to the restructured program will not exceed 0.250% of the total
available amount of $200,000,000, or $500,000 per annum compared to 0.11% or
$220,000 per annum for sales under the Existing Agreement (both as compared to
a $200,000,000 committed line at 0.500% or $1,000,000 per annum). Funding
spreads under the restructured program will remain the same as under the
Existing Agreement (not greater than 0.145%), compared to 0.95% under the
committed line. The increase in fees from the Existing Agreement to the
restructured program is related to the decline in CL&P's credit rating. Only
minor costs will be incurred as a result of the creation and maintenance of CRC
through the restructuring. See Exhibit G for a complete listing of fees and
expenses.
8. The arrangements under the Company Agreement and the CRC
Agreement are scheduled to terminate on July 11, 2001. The CRC Agreement
allows the Purchaser to assign all of its rights and obligations under the CRC
Agreement to other persons, including the providers of its bank facilities.
However, any such assignment will not change the nature of the obligations of
CL&P or CRC under the Company Agreement and the CRC Agreement.
9. The above-described transactions permit CL&P to accelerate its
receipt of cash collections from accounts receivable and thereby increase its
ability to meet its short term cash needs. The purchase and sale transactions
provide CL&P with needed financial flexibility. This restructured purchase and
sale program is one of several financing tools CL&P is pursuing in connection
with its overall strategy to meet its anticipated financing needs, including
its capital and liquidity requirements. See, e.g., DPUC Docket No. 97-03-23,
Application to Issue First and Refunding Mortgage Bonds.
10. The transactions proposed hereunder are subject to certain
approvals of the Securities and Exchange Commission (the "SEC") under the
Public Utility Holding Company Act of 1935, as amended. The SEC's approval of
CL&P's proposed transactions is subject to CL&P's receipt of all necessary
state regulatory approvals, including the approval of the Department hereunder.
CL&P hereby waives the requirement under Section 16-43 of the General Statutes
of Connecticut that the Department act on this Supplemental Application
within 30 days. However, CL&P is desirous of obtaining all necessary approvals
as soon as possible; accordingly, final approval of this Supplemental
Application by the Department is respectfully requested on or before August 15,
1997. A copy of CL&P's application to the SEC is attached as Exhibit F.
11. The financial statements attached as Exhibits H (CL&P) and I
(Northeast Utilities), include a balance sheet, income statement, statement of
retained earnings, capital structure and explanation of pro forma adjustments
which reflect the proposed transactions.
III. Additional Information
The following additional information is supplied as part of this
Supplemental Application:
A. The exact legal name of the Applicant and its principal place of
business:
The Connecticut Light and Power Company
107 Selden Street
Berlin, Connecticut 06037-5457
CL&P is a corporation specially chartered by the General Assembly of
the State of Connecticut.
B. The name, title, address, and telephone number of the attorneys
and others to whom correspondence or communications in regard to this
Supplemental Application are to be addressed:
David R. McHale
Assistant Treasurer-Finance
Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
Telephone: (860) 665-5601
Fax: (860) 665-5457
and
Jeffrey C. Miller
Assistant General Counsel
The Connecticut Light & Power Company
c/o Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141
Telephone: (860) 665-3532
Fax: (860) 665-5504
and
Thomas R. Wildman, Esq.
Day, Berry & Howard
CityPlace
Hartford, Connecticut 06103-3499
Telephone: (860) 275-0114
Fax: (860) 275-0343
C. A concise and explicit statement of facts on which the
Department is expected to rely in granting this Supplemental Application;
1. As a result of (i) CL&P's determination that it would be
beneficial to continue to have the ability to sell Receivable Interests in
order to increase its ability to meet its short term cash needs and (ii) CL&P's
desire to make such sales in accord with the requirements of FAS 125 in order
to obtain "true sale" financial reporting for these sales, CL&P proposes to
restructure its accounts receivable sales program as previously approved by the
Department. The restructured arrangements involve formation of a wholly owned
special purpose subsidiary for the sole purpose of purchasing Receivables from
CL&P. The subsidiary will sell Receivable Interests to the Purchaser which
will issue commercial paper or utilize other funding arrangements available to
it to fund those transactions.
2. The restructured arrangements involving the subsidiary will be
for sales of Receivable Interests on terms similar to those previously approved
by the Department under the Existing Agreement.
3. The contemplated sales of accounts receivable to the subsidiary
will permit the acceleration by 30 to 60 days of anticipated income through the
conversion of accounts receivable to cash. The proposed transactions will not
result in a rate increase to CL&P's retail customers now or in the future.
Furthermore, CL&P does not expect its customers to experience any change in the
procedures to service or collect on outstanding accounts since it is intended
that CL&P will continue to serve as the collection agent for any accounts
receivable sold under the program and can be removed as such collection agent
only in certain unlikely circumstances. Thus, it is expected that the
restructured program will continue to provide CL&P with important financial
flexibility with no change in the rates charged or CL&P's provision of service
to the public.
4. CL&P believes that, as in the case of sales under the Existing
Agreement, the proposed restructured purchase and sale program will provide it
with needed financial flexibility at a time when the company is incurring costs
associated with the current outages at the Millstone nuclear plants. CL&P will
meet its short-term funding requirements through a combination of internally
generated funds, borrowing under existing credit facilities and external
financing arrangements such as this program. CL&P has been utilizing the
existing program approved in the Decision, and expects that the restructured
program will continue to be an important funding option to the Company.
5. CL&P further expects that the proposed program will continue to
offer attractive pricing as compared to alternative funding sources.
6. An estimate of the expenses that CL&P will incur in connection
with the proposed transaction is filed herewith as Exhibit G.
IV. Exhibits
CL&P is filing herewith (or, as indicated, will file by amendment) the
exhibits listed in Appendix 1 hereto. This Supplemental Application and
Appendix 1 set forth all information and exhibits required to be filed by CL&P
and which CL&P deems necessary or desirable to support the granting of this
Supplemental Application. CL&P, however, hereby reserves the right to file
such testimony and additional exhibits as it may consider to be necessary or
desirable.
V. Requests for Approval
WHEREFORE, CL&P respectfully requests the Department's approval,
pursuant to Section 16-43 of the Connecticut General Statutes, of the
transactions described herein.
Dated this 30th day of June, 1997.
Respectfully submitted,
THE CONNECTICUT LIGHT AND POWER COMPANY
By:
David R. McHale
Assistant Treasurer - Finance
**FOOTNOTES**
{1} CL&P's current credit ratings are BB+ by Standard & Poor's and Ba1
by Moody's.
{2} The only funds available to CRC are those resulting from
its participation in the program and CL&P's capital contributions to it.
<PAGE>
SUPPLEMENTAL APPLICATION OF
THE CONNECTICUT LIGHT AND POWER COMPANY
WITH RESPECT TO THE SALE OF
ACCOUNTS RECEIVABLE
DOCKET NO. 96-05-24
APPENDIX 1
LIST OF EXHIBITS {***}
A. Draft of the Certificate of Incorporation of CRC.
B. Draft of the Bylaws of CRC.
C. CL&P's authorizing resolution for the proposed transactions.
D. Draft of Company Agreement.
E. Draft of CRC Agreement.
F. Application to the Securities and Exchange Commission.
G. Schedule of Fees, Commissions and Expenses.
H. The Connecticut Light and Power Company.
H.1 Balance Sheet, per books and pro forma.
H.2 Income Statement, per books and pro forma.
H.3 Statement of Retained Earnings, per books and pro forma,
and Statement of Capital Structure per books and pro
forma.
H.4 Explanation of Pro Forma Adjustments.
I. Northeast Utilities and Subsidiaries.
I.1 Consolidated Balance Sheet, per books and pro forma.
I.2 Consolidated Income Statement, per books and pro forma.
I.3 Consolidated Statement of Retained Earnings, per books
and pro forma, and Consolidated Statement of Capital
Structure, per books and pro forma.
I.4 Explanation of Pro Forma Adjustments.
**FOOTNOTES**
{***} Please note that all of the Exhibits listed on this Appendix 1
(other than Items D & E) have been filed in both paper form and on diskette.
<PAGE>
Exhibits to the copy of "SUPPLEMENTAL APPLICATION OF THE CONNECTICUT LIGHT AND
POWER COMPANY WITH RESPECT TO THE SALE OF ACCOUNTS RECEIVABLE" filed as Exhibit
D.1 to Form U-1/A intentionally omitted.
EXHIBIT F.
August 18, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: File No. 70-9045
Application/Declaration of The Connecticut Light and Power Company with
Respect to the Organization of a Wholly Owned Subsidiary Related to an
Accounts Receivable Purchase and Sale Program
Ladies and Gentlemen:
I am Assistant General Counsel of Northeast Utilities Service Company
("NUSCO"), the service company subsidiary of Northeast Utilities ("NU"), and I
am furnishing this opinion as Exhibit F to the Application/Declaration, as
amended, on Form U-1 (the "Declaration") of The Connecticut Light and Power
Company ("CL&P"), a subsidiary of NU, to the Commission with respect to the
organization by CL&P of a wholly owned subsidiary (CL&P Receivables Corporation
or "CRC") related to an accounts receivable purchase and sale program and
related transactions, as more fully set forth in the Declaration.
In connection with this opinion, I have examined or caused to be
examined by counsel associated with or engaged by me, including counsel who are
employed by NUSCO, such papers, documents, and records, and have made such
examination of law and have satisfied myself as to such other matters as I have
deemed relevant or necessary for the purpose of this opinion. I have assumed
the authenticity of all documents submitted to me as originals, the genuineness
of all signatures, the legal capacity of natural persons, and the conformity to
originals of all documents submitted to me as copies.
The opinions set forth herein are limited to the laws of the State of
Connecticut and the federal laws of the United States. I am a member of the
bar of the State of New York. I am not a member of the bar of the State of
Connecticut, and do not hold myself out as an expert in the laws of such
jurisdiction, although I have made a study of relevant laws of such
jurisdiction. In expressing opinions about matters governed by the laws of
the State of Connecticut, I have consulted with counsel who are employed by
NUSCO and are members of the bars of such jurisdiction.
The opinions set forth in paragraph (b) below are subject to the effect
of bankruptcy, insolvency, moratorium and other similar laws affecting
creditors rights generally and general principles of equity.
Based upon and subject to the foregoing, and if the proposed
transactions contemplated by the Declaration are carried out in accordance
therewith, I am of the opinion that:
(a) all Connecticut laws applicable to the proposed
transactions will have been complied with;
(b) (i) CRC will be validly organized and duly existing
under the laws of the State of Connecticut, (ii) the common stock of CRC issued
to CL&P will be validly issued, fully paid and nonassessable, and CL&P will be
entitled to all of the rights and privileges appertaining to the ownership of
100% of the issued and outstanding common stock of CRC, and (iii) insofar as
any interests in receivables sold by CRC as part of such transactions are
regulated as the issuance of securities, such securities will be valid and
binding obligations of CRC in accordance with their terms;
(c) CL&P will legally acquire the common stock of CRC to be
acquired by it as part of the proposed transactions; and
(d) the consummation of the proposed transactions by CL&P
and CRC will not violate the legal rights of the holders of any securities
issued by CL&P or CRC or any associate company thereof.
Very truly yours,
/s/ Jeffrey C. Miller
Jeffrey C. Miller
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
EXHIBIT G.1
THE CONNECTICUT LIGHT AND POWER COMPANY
FINANCIAL DATA SCHEDULE
AS OF MARCH 31, 1997
(THOUSANDS OF DOLLARS)
<SUBSIDIARY>
<NAME> THE CONNECTICUT LIGHT AND POWER COMPANY
<NUMBER> 1
<MULTIPLIER> 1000
<CAPTION>
PRO FORMA
GIVING EFFECT
TO PROPOSED
DESCRIPTION PER BOOK TRANSACTION
<S> <C> <C>
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1997
<PERIOD-END> MAR-31-1997 MAR-31-1997
<PERIOD-TYPE> YEAR YEAR
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 3,820,873 3,820,873
<OTHER-PROPERTY-AND-INVEST> 384,335 384,335
<TOTAL-CURRENT-ASSETS> 743,373 541,678
<TOTAL-DEFERRED-CHARGES> 1,327,315 1,327,315
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 6,275,896 6,074,201
<COMMON> 122,229 122,229
<CAPITAL-SURPLUS-PAID-IN> 640,077 640,077
<RETAINED-EARNINGS> 535,184 534,201
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,297,490 1,296,507
155,000 155,000
116,200 116,200
<LONG-TERM-DEBT-NET> 1,816,657 1,816,657
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 200,000 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 224,116 224,116
0 0
<CAPITAL-LEASE-OBLIGATIONS> 144,062 144,062
<LEASES-CURRENT> 12,370 12,370
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,310,001 2,309,289
<TOT-CAPITALIZATION-AND-LIAB> 6,275,896 6,074,201
<GROSS-OPERATING-REVENUE> 2,363,013 2,363,013
<INCOME-TAX-EXPENSE> (47,865) (47,865)
<OTHER-OPERATING-EXPENSES> 2,417,934 2,417,934
<TOTAL-OPERATING-EXPENSES> 2,370,069 2,370,069
<OPERATING-INCOME-LOSS> (7,056) (7,056)
<OTHER-INCOME-NET> 19,084 19,207
<INCOME-BEFORE-INTEREST-EXPEN> 12,028 12,151
<TOTAL-INTEREST-EXPENSE> 131,547 132,653
<NET-INCOME> (119,519) (120,502)
15,221 15,221
<EARNINGS-AVAILABLE-FOR-COMM> (134,740) (135,723)
<COMMON-STOCK-DIVIDENDS> 84,339 84,339
<TOTAL-INTEREST-ON-BONDS> 130,683 130,683
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> OPUR1
<LEGEND>
EXHIBIT G.2
NORTHEAST UTILITIES AND SUBSIDIARIES
FINANCIAL DATA SCHEDULE
AS OF MARCH 31, 1997
(THOUSANDS OF DOLLARS)
<SUBSIDIARY>
<NAME> NORTHEAST UTILITIES AND SUBSIDIARIES
<NUMBER> 10
<MULTIPLIER> 1000
<CAPTION>
PRO FORMA
GIVING EFFECT
TO PROPOSED
DESCRIPTION PER BOOK TRANSACTION
<S> <C> <C>
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1997
<PERIOD-END> MAR-31-1997 MAR-31-1997
<PERIOD-TYPE> YEAR YEAR
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 6,672,859 6,672,859
<OTHER-PROPERTY-AND-INVEST> 659,054 659,054
<TOTAL-CURRENT-ASSETS> 1,107,231 905,536
<TOTAL-DEFERRED-CHARGES> 2,230,362 2,230,362
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 10,669,506 10,467,811
<COMMON> 680,260 680,260
<CAPITAL-SURPLUS-PAID-IN> 935,784 935,784
<RETAINED-EARNINGS> 817,890 816,907
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,266,065 2,265,082
274,500 274,500
136,200 136,200
<LONG-TERM-DEBT-NET> 3,574,119 3,574,119
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 226,250 26,250
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 315,338 315,338
26,500 26,500
<CAPITAL-LEASE-OBLIGATIONS> 189,128 189,128
<LEASES-CURRENT> 19,832 19,832
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,641,574 3,640,862
<TOT-CAPITALIZATION-AND-LIAB> 10,669,506 10,467,811
<GROSS-OPERATING-REVENUE> 3,739,314 3,739,314
<INCOME-TAX-EXPENSE> 35,353 35,353
<OTHER-OPERATING-EXPENSES> 3,479,521 3,479,521
<TOTAL-OPERATING-EXPENSES> 3,514,874 3,514,874
<OPERATING-INCOME-LOSS> 224,440 224,440
<OTHER-INCOME-NET> 39,943 40,066
<INCOME-BEFORE-INTEREST-EXPEN> 264,383 264,506
<TOTAL-INTEREST-EXPENSE> 277,240 278,346
<NET-INCOME> (12,857) (13,840)
33,309 33,309
<EARNINGS-AVAILABLE-FOR-COMM> (46,166) (47,149)
<COMMON-STOCK-DIVIDENDS> 152,330 152,330
<TOTAL-INTEREST-ON-BONDS> 283,245 283,245
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> (0.36) (0.37)
<EPS-DILUTED> (0.36) (0.37)
</TABLE>
<PAGE>
EXHIBIT H.1
<TABLE>
<CAPTION>
SCHEDULE OF ESTIMATED FEES, COMMISSIONS AND EXPENSES
CL&P
<S> <C>
Securities and Exchange Commission Filing Fee $2,000
Legal Fees
Counsel to the Purchaser and Agent 65,000
Counsel to the Applicants 50,000
Northeast Utilities Service Company 53,000
(Financial, Accounting, Legal and Other Fees
and Services)
Total Estimate of Fees, Commissions and Expenses $170,000*
</TABLE>
* It is estimated that approximately $60,000 will be related to the set up of
CRC.
<PAGE>
EXHIBIT H.2
<TABLE>
<CAPTION>
SCHEDULE OF ESTIMATED FEES, COMMISSIONS AND EXPENSES
CRC
<S> <C>
Independent Director Fees $10,000
Audit Fees 15,000
Total Estimate of Fees, Commissions and Expenses $25,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CONNECTICUT LIGHT AND POWER COMPANY Exhibit 1.1
CONSOLIDATED BALANCE SHEET Page 1 of 2
AS OF MARCH 31, 1997
(THOUSANDS OF DOLLARS)
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
----------- ----------- -------------
<S> <C> <C> <C>
ASSETS
UTILITY PLANT, AT ORIGINAL COST:
ELECTRIC $6,312,883 $6,312,883
LESS: ACCUMULATED PROVISION FOR
DEPRECIATION 2,722,637 2,722,637
----------- ----------- -------------
3,590,246 0 3,590,246
CONSTRUCTION WORK IN PROGRESS 96,735 96,735
NUCLEAR FUEL, NET 133,892 133,892
----------- ----------- -------------
TOTAL NET UTILITY PLANT 3,820,873 0 3,820,873
----------- ----------- -------------
OTHER PROPERTY AND INVESTMENTS:
NUCLEAR DECOMMISSIONING TRUSTS, AT MARKET 307,230 307,230
INVESTMENTS IN REGIONAL NUCLEAR
GENERATING COMPANIES, AT EQUITY 58,369 58,369
OTHER, AT COST 18,736 18,736
----------- ----------- -------------
384,335 0 384,335
----------- ----------- -------------
CURRENT ASSETS:
CASH 197 200,000 (a) 198,502
(200,000)(a)
200,000 (b)
(195)(c)
(1,500)(d)
RECEIVABLES, NET 224,041 (190,735)(b) 33,306
RECEIVABLES FROM AFFILIATED COMPANIES 225,864 (200,000)(a) 25,864
ACCRUED UTILITY REVENUES 77,461 (77,445)(b) 16
FUEL, MATERIAL AND SUPPLIES, AT
AVERAGE COST 85,110 85,110
TAXES RECEIVABLES 32,414 32,414
RECOVERABLE ENERGY COSTS, NET -- CURRENT 18,724 18,724
PREPAYMENTS AND OTHER 79,562 79,562
INVESTMENT IN SECURITIES 67,074 (b) 68,180
1,106 (d)
----------- ----------- -------------
TOTAL CURRENT ASSETS 743,373 (201,695) 541,678
----------- ----------- -------------
DEFERRED CHARGES:
REGULATORY ASSETS:
INCOME TAXES, NET 735,844 735,844
UNRECOVERED CONTRACT OBLIGATIONS 281,527 281,527
DEFERRED DEMAND SIDE MANAGEMENT COSTS 76,947 76,947
NET RECOVERABLE ENERGY COSTS 84,541 84,541
COGENERATION COSTS 58,029 58,029
OTHER 60,173 60,173
UNAMORTIZED DEBT EXPENSE 17,084 17,084
OTHER 13,170 13,170
----------- ----------- -------------
TOTAL DEFERRED CHARGES 1,327,315 0 1,327,315
----------- ----------- -------------
TOTAL ASSETS $6,275,896 ($201,695) $6,074,201
=========== =========== =============
* EXPLANATION ON EXHIBIT 1.4 PAGE 1 OF 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CONNECTICUT LIGHT AND POWER COMPANY Exhibit 1.1
CONSOLIDATED BALANCE SHEET Page 2 of 2
AS OF MARCH 31, 1997
(THOUSANDS OF DOLLARS)
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
----------- ----------- -------------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $122,229 $122,229
CAPITAL SURPLUS, PAID IN 640,077 640,077
RETAINED EARNINGS 535,184 (983) 534,201
----------- ----------- -------------
TOTAL COMMON STOCKHOLDER'S EQUITY 1,297,490 (983) 1,296,507
PREFERRED STOCK NOT SUBJECT TO
MANDATORY REDEMPTION 116,200 116,200
PREFERRED STOCK SUBJECT TO MANDATORY
REDEMPTION 155,000 155,000
LONG-TERM DEBT 1,816,657 1,816,657
----------- ----------- -------------
TOTAL CAPITALIZATION 3,385,347 (983) 3,384,364
MINORITY INTEREST IN COLSOLIDATED SUBSIDIARY 100,000 100,000
OBLIGATIONS UNDER CAPITAL LEASES 144,062 144,062
NOTES PAYABLE TO BANKS 200,000 (200,000)(a) 0
LONG-TERM DEBT AND PREFERRED STOCK -
CURRENT PORTION 224,116 224,116
OBLIGATIONS UNDER CAPITAL LEASES -
CURRENT PORTION 12,370 12,370
ACCOUNTS PAYABLE 96,027 96,027
ACCOUNTS PAYABLE TO AFFILIATED
COMPANIES 58,008 58,008
ACCRUED TAXES 28,223 (712)(e) 27,511
ACCRUED INTEREST 34,982 34,982
NUCLEAR COMPLIANCE 27,855 27,855
OTHER 23,516 23,516
----------- ----------- -------------
TOTAL CURRENT LIABILITIES 705,097 (200,712) 504,385
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES 1,349,880 1,349,880
ACCUMULATED DEFERRED INVESTMENT
TAX CREDITS 133,239 133,239
DEFERRED CONTRACT OBLIGATION 287,773 287,773
OTHER 170,498 170,498
----------- ----------- -------------
TOTAL DEFERRED CREDITS 1,941,390 0 1,941,390
----------- ----------- -------------
TOTAL CAPITALIZATION AND
LIABILITIES $6,275,896 ($201,695) $6,074,201
=========== =========== =============
* EXPLANATION ON EXHIBIT 1.4 PAGE 1 OF 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CONNECTICUT LIGHT AND POWER COMPANY Exhibit 1.2
CONSOLIDATED INCOME STATEMENT Page 1 of 1
FOR 12 MONTHS ENDED MARCH 31, 1997
(THOUSANDS OF DOLLARS)
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
<S> <C> <C> <C>
OPERATING REVENUE $2,363,013 $0 $2,363,013
---------- --------- ----------
OPERATING EXPENSES:
OPERATION -
FUEL PURCHASED AND INTERCHANGE
POWER 873,049 873,049
OTHER 730,630 730,630
MAINTENANCE 321,578 321,578
DEPRECIATION 244,312 244,312
AMORTIZATION/DEFERRALS OF REGULATORY
ASSETS, NET 76,051 76,051
FEDERAL AND STATE INCOME TAXES (47,865) (47,865)
TAXES OTHER THAN INCOME TAXES 172,314 172,314
---------- --------- ----------
TOTAL OPERATING EXPENSES 2,370,069 0 2,370,069
---------- --------- ----------
OPERATING INCOME: (7,056) 0 (7,056)
---------- --------- ----------
OTHER INCOME:
EQUITY IN EARNINGS OF REGIONAL NUCLEAR
GENERATING COMPANIES 6,600 6,600
OTHER, NET 23,557 (195)(c) 22,968
(394)(d)
MINORITY INTEREST IN INCOME OF SUBSIDIARY (11,625) (11,625)
INCOME TAXES - CREDIT 552 712 (e) 1,264
---------- --------- ----------
OTHER INCOME, NET 19,084 123 19,207
---------- --------- ----------
INCOME BEFORE INTEREST CHARGES 12,028 123 12,151
---------- --------- ----------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 130,683 130,683
OTHER INTEREST 864 864
LOSS ON SALE OF ACCOUNTS RECEIVABLE 1,106 (b) 1,106
---------- --------- ----------
TOTAL INTEREST CHARGES 131,547 1,106 132,653
---------- --------- ----------
NET INCOME ($119,519) ($983) ($120,502)
* EXPLANATION ON EXHIBIT 1.4 PAGE 1 OF 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CONNECTICUT LIGHT AND POWER COMPANY Exhibit 1.3
CONSOLIDATED STATEMENT OF RETAINED EARNINGS Page 1 of 1
FOR 12 MONTHS ENDED MARCH 31, 1997
(THOUSANDS OF DOLLARS)
PER BOOK
ADJUSTED TO
PRO FORMA REFLECT
PER BOOK ADJUSTMENTS* PRO FORMA
---------- --------- ----------
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $754,263 $754,263
NET INCOME (119,519) ($983) (120,502)
CASH DIVIDENDS ON PREFERRED STOCK (15,221) (15,221)
CASH DIVIDEND ON COMMON STOCK (84,339) (84,339)
---------- --------- ----------
BALANCE AT END OF PERIOD $535,184 ($983) $534,201
========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
THE CONNECTICUT LIGHT AND POWER COMPANY
CONSOLIDATED STATEMENT OF CAPITAL STRUCTURE
AS OF MARCH 31, 1997
(THOUSANDS OF DOLLARS)
PER BOOK
ADJUSTED TO
PRO FORMA REFLECT
% PER BOOK ADJUSTMENTS* PRO FORMA %
<S> <C> <C> <C> <C> <C>
DEBT:
LONG-TERM DEBT 56.5% $2,040,773 0 $2,040,773 56.6%
PREFERRED STOCK:
NOT SUBJECT TO REDEMPTION 116,200 116,200
SUBJECT TO REDEMPTION 155,000 155,000
--------- -------- ----------
TOTAL PREFERRED STOCK 7.5% 271,200 0 271,200 7.5%
COMMON EQUITY:
COMMON SHARES 122,229 122,229
CAPITAL SURPLUS, PAID IN 640,077 640,077
RETAINED EARNINGS 535,184 (983) 534,201
--------- -------- ----------
TOTAL COMMON STOCKHOLDER'S EQUITY 36.0% 1,297,490 (983) 1,296,507 35.9%
--------- -------- ----------
TOTAL CAPITAL 100.0% $3,609,463 (983) $3,608,480 100.0%
========= ======== ==========
* EXPLANATION ON EXHIBIT 1.4
PAGE 1 OF 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE CONNECTICUT LIGHT AND POWER COMPANY Exhibit 1.4
EXPLANATION OF ADJUSTMENTS Page 1 of 1
(THOUSANDS OF DOLLARS)
DEBIT CREDIT
<S> <C> <C>
(a) NOTES PAYABLE TO BANK $200,000
CASH 200,000
RECEIVABLES FROM AFFILIATED COMPANIES $200,000
CASH 200,000
To reverse entries related to funding under the Existing
Agreement.
(b) CASH $200,000
INVESTMENT IN SECURITIES 67,074
LOSS ON SALE OF ACCOUNTS RECEIVABLE 1,106
RECEIVABLES, NET $190,735
ACCRUED UTILITY REVENUES 77,445
To record a initial sale of 3/31/97 accounts receivable
for proceeds of $200,000.
</TABLE>
<TABLE>
<CAPIION>
Fair Value % of Total Fair Allocated Book
Assets Value of Assets Value Loss
========== =============== ============== =========
<S> <C> <C> <C> <C>
Cash Proceeds from sale less funding
costs ($200,000 - $1,500
(see (d) below)) $198,500 74.43% $199,606 $1,106
Estimated value of portion retained
(($190,735+$77,445) - $200,000) 68,180 25.57% 68,574
========== =============== ==============
$266,680 100% $268,180
========== =============== ==============
(c) LOSS ON INVESTMENT IN SECURITIES
- OTHER, NET $195
CASH $195
To record upfront fees associated with
establishing the program.
(d) LOSS ON INVESTMENT IN SECURITIES
- OTHER, NET $394
INVESTMENT IN SECURITIES 1,106
CASH $1,500
</TABLE>
To reflect the costs and market valuation associated with the transaction. The
costs are based on the March 1997 funding rate of 5.60% plus a spread of .40%.
The Loss on Sale of Accounts Receivable and Loss on Investments in Securities,
will, over the life of the program reflect the funding and administrative costs
of the program.
<TABLE>
<CAPTION>
<S> <C>
Proceeds from initial sale of Acounts Receivable $200,000
Funding Rate * 6.00%
/ (45/360)
-------------
Costs associated with initial sale of Accounts Receivable $1,500
=============
(e) ACCRUED TAXES $712
INCOME TAX EXPENSE $712
To record the reduction in Federal and State income taxes:
$1,695 x 42.00% = $712
</TABLE>
NOTE: CL&P anticipates that the availability of accounts receivable will vary
from time to time in accordance with electric energy usage. As a result, the
funds that CRC has available to make the purchase may not exactly match the
purchase requirement. The proposed program includes certain mechanisms to
accommodate this mismatch. When the amount of receivable originated by CL&P
exceed the amount of cash CRC has available, either CRC will make the purchase
and owe the balance of the purchase price to CL&P on a deferred basis, or CL&P
will make a capital contribution to CRC in the form of the receivables for which
CRC lacks purchase price funds at that time. Conversely, if CRC develops a
substantial cash balance CRC will likely dividend the excess cash to CL&P. Such
dividends may represent a return of previous capital contributions by CL&P to
CRC. As a reminder, the only funds available to CRC will be those resulting
from its participation in the program and CL&P's capital contributions to it.
CRC will have no source of funds or obligations outside of the receivables
purchase and sale program. Also under the program agreements CRC is required to
pay CL&P a servicing fee for servicing the receivables. This being an
intercompany transaction, it is eliminated on CL&P's consolidated financial
statements, and therefore is not reflected above.
<TABLE>
<PAGE>
<CAPTION>
NORTHEAST UTILITIES AND SUBSIDIARIES Exhibit 2.1
CONSOLIDATED BALANCE SHEET Page 1 of 2
AS OF MARCH 31, 1997
(THOUSANDS OF DOLLARS)
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
----------- ----------- -------------
<S> <C> <C> <C>
ASSETS
UTILITY PLANT, AT ORIGINAL COST:
ELECTRIC & OTHER $9,911,051 $9,911,051
LESS: ACCUMULATED PROVISION FOR
DEPRECIATION 4,061,570 4,061,570
----------- ----------- -------------
5,849,481 0 5,849,481
UNAMORTIZED ACQUISITION COSTS - PSNH 469,353 469,353
CONSTRUCTION WORK IN PROGRESS 155,140 155,140
NUCLEAR FUEL, NET 198,885 198,885
----------- ----------- -------------
TOTAL NET UTILITY PLANT 6,672,859 0 6,672,859
----------- ----------- -------------
OTHER PROPERTY AND INVESTMENTS:
NUCLEAR DECOMMISSIONING TRUSTS, AT MARKET 418,208 418,208
INVESTMENTS IN REGIONAL NUCLEAR
GENERATING COMPANIES, AT EQUITY 87,399 87,399
INVESTMENTS IN TRANSMISSION COMPANIES,
AT EQUITY 20,342 20,342
INVESTMENTS IN CHARTER OAK ENERGY 87,286 87,286
OTHER, AT COST 45,819 45,819
----------- ----------- -------------
659,054 0 659,054
----------- ----------- -------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS 261,409 (200,000)(a) 259,714
200,000 (b)
(195)(c)
(1,500)(d)
RECEIVABLES, NET 411,384 (190,735)(b) 220,649
ACCRUED UTILITY REVENUES 121,197 (77,445)(b) 43,752
FUEL, MATERIAL AND SUPPLIES, AT
AVERAGE COST 219,036 219,036
PREPAYMENTS AND OTHER 62,245 62,245
RECOVERABLE ENERGY COSTS, NET CURRENT PORTION 31,960 31,960
INVESTMENT IN SECURITIES 67,074 (b) 68,180
1,106 (d)
----------- ----------- -------------
TOTAL CURRENT ASSETS 1,107,231 (201,695) 905,536
----------- ----------- -------------
DEFERRED CHARGES:
REGULATORY ASSET
INCOME TAXES - NET 986,477 986,477
DEFERRED COSTS - NUCLEAR PLANTS 190,094 190,094
UNRECOVERED CONTRACT OBLIGATIONS 408,439 408,439
RECOVERABLE ENERGY COSTS, NET 298,069 298,069
DEFERRED DEMAND SIDE MANAGEMENT COSTS 76,947 76,947
COGENERATION COSTS - CLP 58,029 58,029
OTHER 99,335 99,335
UNAMORTIZED DEBT EXPENSE 37,425 37,425
OTHER 75,547 75,547
----------- ----------- -------------
TOTAL DEFERRED CHARGES 2,230,362 0 2,230,362
----------- ----------- -------------
TOTAL ASSETS $10,669,506 ($201,695) $10,467,811
=========== =========== =============
* EXPLANATION ON EXHIBIT 2.4 PAGE 1 OF 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NORTHEAST UTILITIES AND SUBSIDIARIES Exhibit 2.1
CONSOLIDATED BALANCE SHEET Page 2 of 2
AS OF MARCH 31, 1997
(THOUSANDS OF DOLLARS)
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
----------- ----------- -------------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $680,260 $680,260
CAPITAL SURPLUS, PAID IN 935,784 935,784
DEFERRED BENEFIT PLAN-EMPLOYEE STOCK
OWNERSHIP PLAN (167,869) (167,869)
RETAINED EARNINGS 817,890 (983) 816,907
----------- ----------- -------------
TOTAL COMMON STOCKHOLDER'S EQUITY 2,266,065 (983) 2,265,082
PREFERRED STOCK NOT SUBJECT TO
MANDATORY REDEMPTION 136,200 136,200
PREFERRED STOCK SUBJECT TO MANDATORY
REDEMPTION 274,500 274,500
LONG-TERM DEBT 3,574,119 3,574,119
----------- ----------- -------------
TOTAL CAPITALIZATION 6,250,884 (983) 6,249,901
OBLIGATIONS UNDER CAPITAL LEASES 189,128 189,128
MINORITY INTEREST IN CONSOLIDATED SUBS 99,944 99,944
CURRENT LIABILITIES:
NOTES PAYABLE TO BANKS 226,250 (200,000)(a) 26,250
LONG-TERM DEBT AND PREFERRED STOCK -
CURRENT PORTION 341,838 341,838
OBLIGATIONS UNDER CAPITAL LEASES -
CURRENT PORTION 19,832 19,832
ACCOUNTS PAYABLE 328,008 328,008
ACCRUED TAXES 34,430 (712)(e) 33,718
ACCRUED INTEREST 71,187 71,187
ACCRUED PENSION BENEFITS 96,063 96,063
NUCLEAR COMPLIANCE 34,930 34,930
OTHER 76,392 76,392
----------- ----------- -------------
TOTAL CURRENT LIABILITIES 1,228,930 (200,712) 1,028,218
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME TAXES 2,024,502 2,024,502
ACCUMULATED DEFERRED INVESTMENT
TAX CREDITS 166,776 166,776
DEFERRED CONTRACT OBLIGATIONS 414,685 414,685
OTHER 294,657 294,657
----------- ----------- -------------
TOTAL DEFERRED CREDITS 2,900,620 0 2,900,620
----------- ----------- -------------
TOTAL CAPITALIZATION AND
LIABILITIES $10,669,506 ($201,695) $10,467,811
=========== =========== =============
* EXPLANATION ON EXHIBIT 2.4 PAGE 1 OF 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NORTHEAST UTILITIES AND SUBSIDIARIES Exhibit 2.2
CONSOLIDATED INCOME STATEMENT Page 1 of 1
FOR 12 MONTHS ENDED MARCH 31, 1997
(THOUSANDS OF DOLLARS)
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
----------- ------------ -------------
<S> <C> <C> <C>
OPERATING REVENUE $3,739,314 $0 $3,739,314
----------- ------------ -------------
OPERATING EXPENSES:
OPERATION -
FUEL PURCHASED AND INTERCHANGE
POWER 1,168,360 1,168,360
OTHER 1,113,301 1,113,301
MAINTENANCE 446,266 446,266
DEPRECIATION 357,742 357,742
AMORTIZATION/DEFERRALS OF REGULATORY
ASSETS, NET 139,629 139,629
FEDERAL AND STATE INCOME TAXES 35,353 35,353
TAXES OTHER THAN INCOME TAXES 254,223 254,223
----------- ------------ -------------
TOTAL OPERATING EXPENSES 3,514,874 0 3,514,874
----------- ------------ -------------
OPERATING INCOME: 224,440 0 224,440
----------- ------------ -------------
OTHER INCOME:
DEFERRED NUCLEAR PLANTS RETURN-OTHER
FUNDS 7,736 7,736
EQUITY IN EARNINGS OF REGIONAL NUCLEAR
GENERATING COMPANIES 12,939 12,939
MINORITY INTEREST IN INCOME OF SUBSIDIARY (11,625) (11,625)
OTHER, NET 33,623 (195)(c) 33,034
(394)(d)
INCOME TAXES - CREDIT (2,730) 712 (e) (2,018)
----------- ------------ -------------
OTHER INCOME, NET 39,943 123 40,066
----------- ------------ -------------
INCOME BEFORE INTEREST CHARGES 264,383 123 264,506
----------- ------------ -------------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 283,245 283,245
OTHER INTEREST 7,373 7,373
DEFERRED NUCLEAR PLANTS RETURN -
BORROWED FUNDS, NET OF INCOME TAX (13,378) (13,378)
LOSS ON SALE OF ACCOUNTS RECEIVABLE 1,106 (b) 1,106
----------- ------------ -------------
TOTAL INTEREST CHARGES 277,240 1,106 278,346
----------- ------------ -------------
INCOME BEFORE PREFERRED DIVIDENDS (12,857) (983) (13,840)
PREFERRED DIVIDENDS OF SUBSIDIARIES 33,309 33,309
----------- ------------ -------------
NET INCOME (46,166) (983) (47,149)
EARNINGS FOR COMMON SHARE (46,166) (983) (47,149)
EARNINGS PER COMMON SHARE (0.36) (0.37)
COMMON SHARES OUTSTANDING (AVERAGE) 128,627,693 128,627,693
* EXPLANATION ON EXHIBIT 2.4 PAGE 1 OF 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NORTHEAST UTILITIES AND SUBSIDIARIES Exhibit 2.3
STATEMENT OF RETAINED EARNINGS Page 1 of 1
FOR 12 MONTHS ENDED MARCH 31, 1997
(THOUSANDS OF DOLLARS)
PER BOOK
ADJUSTED TO
PRO FORMA REFLECT
PER BOOK ADJUSTMENTS* PRO FORMA
----------- ------------ -------------
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $1,016,660 $1,016,660
NET INCOME (12,857) ($983) (13,840)
CASH DIVIDENDS ON PREFERRED STOCK (33,309) (33,309)
CASH DIVIDEND ON COMMON STOCK (152,330) (152,330)
LOSS ON RETIREMENT OF PREFERRED STOCK (374) (374)
MISCELLANEOUS ELIMINATION 100 100
----------- ------------ -------------
BALANCE AT END OF PERIOD $817,890 ($983) $816,907
=========== ===========- =============
</TABLE>
<TABLE>
<CAPTION>
NORTHEAST UTILITIES AND SUBSIDIARIES
CAPITAL STRUCTURE AS OF MARCH 31, 1997
(THOUSANDS OF DOLLARS)
PER BOOK
ADJUSTED TO
PRO FORMA REFLECT
% PER BOOK ADJUSTMENTS* PRO FORMA %
----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
DEBT:
LONG-TERM DEBT, NET 59.4% $3,914,457 $0 $3,914,457 59.4%
PREFERRED STOCK:
NOT SUBJECT TO REDEMPTION 136,200 136,200
SUBJECT TO REDEMPTION 276,000 276,000
----------- ------------ -------------
TOTAL PREFERRED STOCK 6.3% 412,200 0 412,200 6.3%
COMMON EQUITY:
COMMON SHARES 680,260 680,260
CAPITAL SURPLUS, PAID IN 935,784 935,784
DEFERRED BENEFIT PLAN-EMPLOYEE STOCK
OWNERSHIP PLAN (167,869) (167,869)
RETAINED EARNINGS 817,890 (983) 816,907
----------- ------------ -------------
TOTAL COMMON STOCKHOLDER'S EQUITY 34.3% 2,266,065 (983) 2,265,082 34.3%
----------- ------------ -------------
TOTAL CAPITAL 100.0% $6,592,722 ($983) $6,591,739 100.0%
=========== ===========- =============
* EXPLANATION ON EXHIBIT 2.4 PAGE 1 OF 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NORTHEAST UTILITIES AND SUBSIDIARIES Exhibit 2.4
EXPLANATION OF ADJUSTMENTS Page 1 of 1
(THOUSANDS OF DOLLARS)
DEBIT CREDIT
<S> <C> <C>
(a) NOTES PAYABLE TO BANK $200,000
CASH 200,000
To reverse entries related to funding under the CL&P Existing Agreement.
(b) CASH $200,000
INVESTMENT IN SECURITIES 67,074
LOSS ON SALE OF ACCOUNTS RECEIVABLE 1,106
RECEIVABLES, NET $190,735
ACCRUED UTILITY REVENUES 77,445
To record initial sale of 3/31/97 CL&P accounts receivable for
proceeds of $200,000.
</TABLE>
<TABLE>
<CAPTION>
Fair Value % of Total Fair Allocated Book
Assets Value of Assets Value Loss
========== =============== ============== =========
<S> <C> <C> <C> <C>
Cash Proceeds from sale less funding
costs ($200,000 - $1,500 (see (d) below)) $198,500 74.43% $199,606 $1,106
Estimated value of portion retained
(($190,735+$77,445) - $200,000) 68,180 25.57% 68,574
========== =============== ==============
$266,680 100% $268,180
========== =============== ==============
(c) LOSS ON INVESTMENT IN SECURITIES
- OTHER, NET $195
CASH $195
To record upfront fees associated with
establishing the CL&P receivables program.
(d) LOSS ON INVESTMENT IN SECURITIES
- OTHER, NET $394
INVESTMENT IN SECURITIES 1,106
CASH $1,500
</TABLE>
To reflect the costs and market valuation associated with the transaction. The
costs are based on the March 1997 funding rate of 5.60% plus a spread of .40%.
The Loss on Sale of Accounts Receivable and Loss on Investments in Securities,
will, over the life of the program reflect the funding and administrative costs
of the program. Actual funding costs will vary in accordance with actual
collections on accounts receivable.
<TABLE>
<CAPTION>
<S> <C>
Proceeds from initial sale of Acounts Receivable $200,000
Funding Rate * 6.00%
/ (45/360)
-------------
Costs associated with initial sale of Accounts Receivable $1,500
=============
(e) ACCRUED TAXES $712
INCOME TAX EXPENSE $712
To record the reduction in Federal and State income taxes:
$1,695 x 42.00% = $712
</TABLE>
