As filed with the Securities and Exchange Commission on April 27, 1998
File No. 70-9161
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO THE
FORM U-1 APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Wisconsin Energy Corporation
231 West Michigan Street
Milwaukee, Wisconsin 53203
(Name of companies filing this statement
and address of principal executive offices)
None
(Name of top registered holding company parent)
Richard A. Abdoo
Chairman of the Board, President and
Chief Executive Officer
Wisconsin Energy Corporation
231 West Michigan Street
Milwaukee, Wisconsin 53203
(Name and addresses of agents for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application-Declaration to:
Walter T. Woelfle Gary W. Wolf
Director, Legal Services Department Cahill Gordon & Reindel
Wisconsin Electric Power Company 80 Pine Street
231 West Michigan Street New York, New York 10005
Milwaukee, Wisconsin 53203
<PAGE>
Wisconsin Energy Corporation ("WEC") hereby amends its
Application/Declaration on Form U-1 (File No. 70-9161) as follows:
1. By amending and restating the fourth paragraph of Item 1.A. as follows:
The Merger was subject to the approval by the shareholders of ESELCO, and
at a special meeting of shareholders held on October 7, 1997 the required
approval of such shareholders was obtained. Approximately 76% of the holders of
common stock of ESELCO voted in favor of the Transaction. The combined Proxy
Statement of ESELCO and the Prospectus of WEC supplied to the ESELCO
shareholders in connection with the Transaction is included in WEC's
Registration Statement on Form S-4 (No. 333-34495); such Registration Statement,
including the exhibits thereto, is incorporated by reference as Exhibit C-1
hereto (the "Registration Statement"). The Merger is also subject to the
condition that the opinion rendered by Quarles & Brady, counsel for WEC, to the
effect that the Merger will be treated for federal income tax purposes as a tax
free reorganization (a copy of which is filed as an exhibit to the Registration
Statement) shall not have been withdrawn or modified in any material respect.
Various aspects of the Transaction are also subject to (i) the approval of the
Federal Energy Regulatory Commission (the "FERC"); and (ii) the expiration of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), both of which have occurred. Apart from the
approval of the Commission under the Act, the foregoing approvals are the only
governmental approvals required for the Transaction. In order to permit timely
consummation of the Transaction and the realization of the substantial benefits
it is expected to produce, the Applicant requests that the Commission's review
of this Application-Declaration commence and proceed as expeditiously as
practicable.
2. By amending and restating footnote 3 in Item 1.B.1.a. as follows:
ESELCO also owns all the issued and outstanding common stock of ESEG,
Inc. (ESEG, Inc. has no other capital stock outstanding). ESEG, Inc.,
pursuant to a FERC Order dated August 13, 1997, took title to
submarine electric cables under the Straits of Mackinac purchased from
Consumers Energy Company (formerly Consumers Power Company). ESEG,
Inc. was formed to acquire, finance and lease these submarine cables .
ESEG is an electric utility under ss. 2(a)(3) of the Act. Accordingly,
Applicant represents that ESEG, Inc. will be merged into Edison Sault
simultaneously with the Transaction and will then cease to exist. This
merger has been approved by the FERC, the only regulator having
jurisdiction over it. See Exhibit D-2, hereto, at p. 7.
3. By amending and restating the fifth and sixth paragraphs of Item
3.A.2.a.2. as follows:
Competitive Effects: Section 10(b)(1) also requires the Commission to
consider possible anticompetitive effects of a proposed combination. See Entergy
Corporation, supra, at 2041, citing Municipal Electric Ass'n of Massachusetts,
et al. v. SEC, 413 F. 2d 1052, 1056-1058 (D.C. Cir. 1969). As the Commission
noted in Northeast Utilities, Release No. 35-25221 (December 21, 1990), the
"antitrust ramifications of an acquisition must be considered in light of the
fact that the public utilities are regulated monopolies and that federal and
state administrative agencies regulate the rates charged to customers." ESELCO
and WEC filed Notification and Report Forms with the Department of Justice and
the Federal Trade Commission, pursuant to the HSR Act
-2-
<PAGE>
describing the effects of the Transaction on competition in the relevant market.
The applicable waiting period under the HSR Act has now expired.
In addition, the competitive impact of the Transaction was fully considered
by the FERC and the FERC issued its order approving the Transaction on April 22,
1998. The FERC found that the Transaction will not adversely affect competition.
See Item 4.B. The application filed by ESELCO and WEC with the FERC is filed
herewith as Exhibit D-1. The FERC order approving the Transaction is filed
herewith as Exhibit D-2. The Commission may appropriately rely upon the FERC
with respect to such matters. Entergy Corporation, supra, at 2042, citing City
of Holyoke Gas & Electric Department, et al. v. SEC, 972 F.2d 358, 363-64,
quoting Wisconsin's Environmental Decade, Inc. v. SEC, 882 F.2d 523, 527 (D.C.
Cir. 1989).
4. By amending and restating the last paragraph of Item 3.A.2.c. as
follows:
Protected interests: Section 10(b)(3) also requires the Commission to
determine whether the proposed combination will be detrimental to the public
interest, the interests of investors or consumers or the proper functioning of
the WEC system. The combination of ESELCO and WEC is entirely consistent with
the proper functioning of an exempt holding company system. Many of Edison
Sault's and WEPCO's utility operations will be integrated. Further, the
combination will result in otherwise unavailable savings and benefits to the
public and to consumers and investors of both companies and the integration of
Edison Sault and WEPCO will improve the efficiency of their respective systems
and result in the benefits and savings described in Item 3.a. The integration of
ESELCO and WEPCO is described below in Item 3.b. Moreover, as noted by the
Commission in Entergy Corporation, Release No. 35-25952 (December 17, 1993),
"concerns with respect to investors' interests have been largely addressed by
developments in the federal securities laws and the securities market
themselves." WEC will continue to be a reporting company subject to the
continuous disclosure requirements of the 1934 Act following the completion of
the Transaction. The various reports filed by ESELCO1 and WEC under that Act
provide readily available information concerning the companies and the
Transaction. Furthermore, the consummation of the Transaction was approved by
the FERC under section 203 of the Federal Power Act which required a finding by
the FERC that the Transaction be "consistent with the public interest." The FERC
found that the Transaction "will not adversely affect competition, rates, or
regulation." See Exhibit D-2, hereto, at p. 1. For these reasons, the Applicant
believes that the Transaction will be in the public interest and the interest of
investors and consumers, and will not be detrimental to the proper functioning
of the resulting holding company system.
5. By amending and restating the third paragraph of Item 3.A.3.b. as
follows:
First, the physical interconnection between WEPCO and Edison Sault is
presently under construction and is expected to be completed in May of 1999. As
noted in item 1.B.3., above, the new 138 kV line resulted from an October, 1994
agreement between Edison Sault, WEPCO, UPPCO and Cloverland Electric Cooperative
which was developed and executed prior to and independent of the Reorganization
Agreement that is the subject of this Application. The interconnect was designed
to provide Edison Sault and Cloverland, which are electrically isolated
- --------
1 ESELCO will cease to exist after the Transaction.
-3-
<PAGE>
from the western upper peninsula of Michigan, with a tie to electric capacity
from the west and south. Conversely, it was also intended to, and will, provide
WEPCO and UPPCO, which are electrically isolated from the lower peninsula of
Michigan, with an electric tie to the lower peninsula through the Edison Sault
system. Applications for approval of the project were filed with the MPSC in
July of 1995, and with the PUCW in April, 1995. Approvals were received from
these agencies in October, 1995 and December, 1995, respectively. The project
consists of approximately 70.5 miles of 138 kV electric transmission line from
WEPCO's Arnold switching station to WEPCO's Perkins switching station to Edison
Sault's Indian Lake substation. The total cost of the project is approximately
$36.7 million and WEPCO and Edison Sault's respective shares are $19.4 million
and $11.9 million. The project is currently 31% completed and is expected to be
fully operational by May, 1999. Accordingly, the system is capable of being
physically interconnected, and will in fact be interconnected in the near term.
Applicant is unconditionally committed to the construction of this
interconnection as presently planned. As set forth in item 1.C.1., above, ESELCO
did not begin to contemplate any sale or merger of the company until after its
December, 1996 board of directors meeting. ESELCO thereafter solicited competing
offers. ESELCO did not choose to be acquired by WEC until March 24, 1997. The
1994 interconnection agreement and the purposes it serves are independent of the
merger.
6. By amending the eighth paragraph of Item 3.B.1. to add the following
sentence at the end of the paragraph:
Applicant believes, based on historical information and its knowledge of the
Michigan and Wisconsin service territories of WEPCO and Edison Sault, that the
percentage of WEC utility revenues from its Michigan operations will remain at
or below the percentages recited herein for the foreseeable future.
7. By amending the first paragraph of Item 4.B. to add the following
sentences at the end of the paragraph:
The FERC found that those and other voluntary commitments will ensure that the
Transaction will not adversely affect competition, rates, or regulation. On
April 22, 1998 the FERC approved the Transaction. A copy of the FERC Order is
filed as Exhibit D-2 hereto.
8. The Exhibit List in Item 6.A. is hereby amended as follows:
D-2 FERC Order dated April 22, 1998 approving the Transaction.
(Copy filed herewith.)
F-1 Preliminary Opinion of Counsel. (Copy filed herewith.)
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Pre-Effective Amendment No. 1
to be signed on its behalf by the undersigned thereunto duly authorized.
WISCONSIN ENERGY CORPORATION
BY: /s/ Calvin H. Baker
-------------------------------------
Calvin H. Baker
Treasurer and Chief Financial Officer
Date: April 27, 1998
-5-
<PAGE>
Index of Exhibits
EXHIBIT - DESCRIPTION - TRANSMISSION METHOD
Form SE D-2 FERC Order dated April 22, 1998 approving the Transaction.
Electronic F-1 Preliminary Opinion of Counsel.
EXHIBIT F-1
April 21, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
I have acted as counsel for Wisconsin Energy Corporation, a Wisconsin
corporation ("WEC"), in connection with the proposed merger of ESL Acquisition,
Inc., a Michigan corporation and a wholly owned subsidiary of WEC ("Acquisition
Sub"), with and into ESELCO, INC. ("ESELCO"), a Michigan corporation (the
"Merger"), pursuant to the terms of the Amended and Restated Agreement and Plan
of Reorganization dated as of July 11, 1997 between WEC, Acquisition Sub and
ESELCO (the "Reorganization Agreement"), and the contemporaneous merger of
ESELCO with and into WEC (these two mergers collectively, the "Transaction").
This opinion is being delivered in connection with WEC's Application on Form U-1
(File No. 70-9161) filed under the Public Utility Holding Company Act of 1935
(the "Application").
I am familiar with the proceedings to date with respect to (a) the Transaction
and (b) the proposed issuance as a result of the Transaction of the shares of
WEC Common Stock, $.01 par value (the "Shares"), and I have examined such
records, documents and questions of law and satisfied myself as to such matters
of procedure, law and fact as I have considered relevant and necessary to render
the opinions expressed below. In rendering these opinions, I am relying as to
all matters of Michigan law upon the opinion of Loomis, Ewert, Ederer, Parsley,
Davis & Gotting.
Based upon and subject to the foregoing, I am of the opinion that:
1. WEC is a corporation duly incorporated and validly existing under the laws
of the State of Wisconsin.
2. Upon the Transaction being consummated in accordance with the
Reorganization Agreement and as contemplated by the Application:
(a) all State laws applicable to the consummation of the Transaction will
have been complied with;
<PAGE>
Securities and Exchange Commission
April 21, 1998
Page 2
(b) the Shares, when issued as contemplated by the Reorganization
Agreement, will be duly authorized and validly issued and fully paid
and nonassessable (except as otherwise provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law, as
judicially interpreted) entitling the holders thereof to the rights
and privileges appertaining thereto as set forth in the Restated
Articles of Incorporation of WEC;
(c) WEC will legally acquire all outstanding shares of common stock of
ESELCO; and
(d) the consummation of the Transaction will not violate the legal rights
of the holders of any securities issued by WEC or any company
associated with WEC.
I hereby consent to the filing of this opinion as Exhibit F-1 to the
Application.
Very truly yours,
James D. Zakrajsheck
Counsel
gm
