File No. 70-____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
CENTRAL AND SOUTH WEST CORPORATION
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75202
CSW ENERGY, INC.
1616 Woodall Rodgers Freeway
P.O. Box 660789
Dallas, Texas 75202
CSW SERVICES INTERNATIONAL, INC.
1616 Woodall Rodgers Freeway
P.O. Box 660789
Dallas, Texas 75202
(Names of companies filing this statement and
addresses of principal executive offices)
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
Wendy G. Hargus
Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75202
Terry D. Dennis
President
CSW Energy, Inc.
1616 Woodall Rodgers Freeway
P.O. Box 660789
Dallas, Texas 75202
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Terry D. Dennis
President
CSW Services International, Inc.
1616 Woodall Rodgers Freeway
P.O. Box 660789
Dallas, Texas 75202
Joris M. Hogan
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005-1413
(Names and addresses of agents for service)
Respectfully request that copies be sent to:
Edwin F. Feo
Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street
30th Floor
Los Angeles, California 90017
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Central and South West Corporation, a Delaware corporation
("CSW") and a registered holding company under the Public Utility Holding
Company Act of 1935, as amended (the "Act"), CSW Energy, Inc., a Texas
corporation and wholly-owned nonutility subsidiary of CSW ("Energy"), and CSW
Services International, Inc., a Delaware corporation and a wholly-owned
nonutility subsidiary of Energy ("CSW O&M Sub" and, collectively with CSW and
Energy, the "Applicants"), hereby file this Form U-1 Application-Declaration
(this "Application-Declaration") to seek the authority of the Commission as set
forth below.
In summary, the Applicants seek an order of the Commission
under Sections 6(a), 7, 9(a), 10, 12(b) and 13(b) of the Act, and Rules 43, 45,
51, 52, 58, 83, 86, 87, 88, 90, 91 and 94 thereunder, authorizing the Applicants
and their subsidiaries specified in this Application-Declaration to perform the
following transactions related to a proposed investment by CSW and Energy in CSW
O&M Sub, a subsidiary of Energy organized pursuant to authority under Rule 58
that is currently an energy-related company, as such term is defined in Rule 58
under the Act (an "Energy-Related Company"), and for the following exemptive
relief related to such transactions: (i) for Energy or CSW O&M Sub to acquire
the securities of and otherwise invest in companies ("Foreign Energy- Related
Companies") that will be engaged in the sale of technical, operational,
management and other similar kinds of services that use skills, abilities and
expertise that have been developed in the
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course of utility operations, including all activities currently authorized by
Rule 58 under the Act (collectively, "O&M Services"), within or outside the
United States, in an aggregate amount up to $150 million (the "Aggregate
Investment Amount"), (ii) for CSW and/or Energy to fund Energy's or CSW O&M
Sub's investment in Foreign Energy-Related Companies through intercompany loans,
open account advances and capital contributions, (iii) for CSW and Energy to
guaranty the securities, or performance of payment obligations under agreements,
of CSW O&M Sub and its subsidiaries and Energy's subsidiaries that are
Energy-Related Companies or Foreign Energy-Related Companies and to issue and
use the proceeds of debt and equity securities for which there is recourse to
CSW to invest in CSW O&M Sub or Foreign Energy-Related Companies in an aggregate
amount not to exceed the Aggregate Investment Amount, (iv) for CSW O&M Sub and
its subsidiaries and Energy's subsidiaries that are Energy-Related Companies or
Foreign-Energy Related Companies to provide energy-related services to associate
companies, other than CSW's domestic operating utility subsidiaries
(collectively, the "Operating Companies"), at fair market prices, (v) for Energy
to retain its investment in CSW O&M Sub and otherwise engage in the transactions
set forth in this Application- Declaration if CSW O&M Sub does not qualify as an
Energy-Related Company because it engages in the activities of a Foreign Energy-
Related Company or because of its ownership of and investment in
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Foreign Energy-Related Companies1 and (vi) for such other relief
as may be required under the Act.
Item 1. Description of Proposed Transaction.
(1) History and Nature of Request. CSW is a registered holding
company under the Act. Since 1990, CSW, directly or through Energy, has engaged
in development activities to conduct preliminary studies of, to investigate, to
research, to develop, to consult with respect to, and to agree to construct
(such construction subject to further Commission authorization), "qualifying
facilities" ("QFs"), as defined under the Public Utility Regulatory Policies Act
of 1978, as amended ("PURPA"), and independent power facilities, including
exempt wholesale generators, as defined under Section 32 of the Act ("EWGs").
Since 1994, CSW, directly or through CSW International, Inc., a Delaware
corporation, has engaged in development and investment activities in EWGs and
foreign utility companies, as defined in Section 33 of the Act ("FUCOs" and,
collectively with EWGs, "Exempt Projects"), and is authorized to provide design,
construction, engineering, operation, maintenance, management, administration,
employment, tax, accounting, economic, financial, fuel, environmental,
communications, energy conservation, demand side management, overhead
efficiency, utility performance and electronic data
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1 To the extent that CSW O&M Sub no longer qualifies for a Rule 58 exemption as
an Energy-Related Company, Energy's existing investment in CSW O&M Sub will
decrease the amount available under the Aggregate Investment Amount and will
cease to count toward CSW's limit on investments under Rule 58 under the Act.
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processing services and software development and support services in connection
therewith to Exempt Projects and (except for operation services) to foreign
electric utility enterprises that are not Exempt Projects.
The Applicants now seek the approval of the Commission
required under the Act: (i) for Energy or CSW O&M Sub to acquire the securities
of and otherwise invest in Foreign Energy-Related Companies in an aggregate
amount up to the Aggregate Investment Amount, (ii) for CSW and/or Energy to fund
Energy's or CSW O&M Sub's investment in Foreign Energy-Related Companies through
intercompany loans, open account advances and capital contributions, (iii) for
CSW and Energy to guaranty the securities, or performance of payment obligations
under agreements, of CSW O&M Sub and its subsidiaries and Energy's subsidiaries
that are Energy- Related Companies2 or Foreign Energy-Related Companies and to
issue and use the proceeds of debt and equity securities for which there is
recourse to CSW to invest in CSW O&M Sub or Foreign Energy- Related Companies in
an aggregate amount not to exceed the Aggregate Investment Amount, (iv) for CSW
O&M Sub and its subsidiaries and Energy's subsidiaries that are Energy-Related
Companies or Foreign-Energy Related Companies to provide energy-related services
to associate companies, other than the Operating
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2 To the extent CSW or Energy shall guaranty the obligations of Energy-Related
Companies, the amount of such guarantees will count toward the limit on CSW's
investments under Rule 58 under the Act.
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Companies, at fair market prices, (v) for Energy to retain its investment in CSW
O&M Sub and otherwise engage in the transactions set forth in this
Application-Declaration if CSW O&M Sub does not qualify as an Energy-Related
Company because it engages in the activities of a Foreign Energy-Related Company
or because of its ownership of and investment in Foreign Energy-Related
Companies and (vi) for such other relief as may be required under the Act. The
authority requested pursuant to this Application-Declaration constitutes new
authority separate from the authority granted previously by the Commission to
the Applicants.
CSW O&M Sub's subsidiaries that are Energy-Related Companies
will engage (directly or indirectly) in those activities allowed under Rule 58
under the Act. CSW O&M Sub and its and Energy's subsidiaries that are Foreign
Energy-Related Companies will engage (directly or indirectly) in O&M Services
either inside or outside of the United States. CSW O&M Sub and its subsidiaries
will offer services to all customers that may desire the services of CSW O&M Sub
and its subsidiaries, subject to the limitations on providing such services to
associate companies set forth below in Section 5 to this Item 1.
Energy acquired the securities of CSW O&M Sub, and CSW O&M Sub
proposes to acquire the securities of its subsidiaries that are Energy-Related
Companies, on an exempt basis pursuant to Rule 58 under the Act. However, to the
extent that any authority is required for Energy to acquire or maintain an
investment in any
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securities of CSW O&M Sub or for CSW O&M Sub or its subsidiaries to perform any
of the O&M Services, the Applicants request an order of the Commission granting
such authority.
The requested time limit of Commission authorization, within
which the Applicants may engage in such activities, is until December 31, 2003.
After such date, the Applicants request approval to retain and preserve any
investment made, or any guaranty, bid bond or letter of credit issued, or any
agreement entered into for the rendering of energy-related services by CSW O&M
Sub or its subsidiaries or by Energy's subsidiaries that are Energy-Related
Companies or Foreign Energy-Related Companies, on or prior to such date pursuant
to authority granted by this Application-Declaration.
The transactions described in this Application- Declaration
help to fulfill the goals of CSW's and Energy's program to provide
energy-related services that are derivative of the core business of the
Operating Companies. New domestic and international business opportunities
constitute a potential source of growth for the CSW system which would benefit
CSW's ratepayers and shareholders. In order to take advantage of the expertise
the CSW system has developed over its long history, the Applicants propose to
participate in the transactions described in this Application-Declaration. If
any future exemption under the Act provides the Applicants with greater latitude
with respect to any of the matters for which authority is requested pursuant to
this
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Application-Declaration, the Applicants intend to rely on that exemption rather
than on any authority granted pursuant to this Application-Declaration.
(2) Structure of the Investment. The Applicants propose that
CSW and/or Energy invest in CSW O&M Sub (to the extent it is an Energy-Related
Company), and CSW O&M Sub invest in Energy- Related Companies pursuant to
authority under Rules 45, 52 and 58 of the Act, and CSW and/or Energy invest in
CSW O&M Sub (to the extent it is a Foreign Energy-Related Company) and CSW O&M
Sub invest in Foreign Energy-Related Companies pursuant to authority sought
under this Application-Declaration. The Applicants further propose that CSW
invest in Energy and, indirectly through Energy, in Foreign Energy-Related
Companies.
This structure has been established in furtherance of the
policy considerations underlying Section 11 of the Act by accomplishing the
following purposes: localizing management of domestic and foreign office staffs;
efficiently operating domestic and foreign business activities; limiting
liability (domestic and foreign); minimizing taxes (domestic and foreign); and
increasing flexibility to respond to foreign business opportunities.
Furthermore, this organizational structure will not affect the distribution of
voting power among the security holders of CSW, but will serve the interests of
CSW's ratepayers and shareholders. Finally, the proposed transactions will not
contribute to an unduly or unnecessarily complicated capital structure for the
CSW system.
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(3) Proposed Financing of the Energy-Related Activities. CSW
and Energy seek Commission authority to finance in an aggregate amount up to the
Aggregate Investment Amount the activities of Energy and its subsidiaries that
are Foreign Energy-Related Companies and of CSW O&M Sub and its subsidiaries
through the issuance by CSW, Energy or CSW O&M Sub from time to time of stock,
promissory notes, commercial paper or other debt or equity securities to third
parties, including without limitation banks, insurance companies and other
financial institutions. The aggregate of such financing will be included in and
will not exceed the Aggregate Investment Amount. Equity securities issued by
CSW, Energy or CSW O&M Sub to any third party may include capital shares,
partnership interests, trust certificates or the equivalent of any of the
foregoing under applicable foreign law. Debt securities issued to third parties
may include secured and unsecured promissory notes, subordinated notes, bonds or
other evidences of indebtedness. Securities issued by CSW, Energy or CSW O&M Sub
may be denominated in either U.S. dollars or foreign currencies. The amount and
type of such securities, and the terms thereof, including (in the case of any
indebtedness) interest rate, maturity, prepayment or redemption privileges and
the terms of any collateral security granted with respect thereto, would be
negotiated in arm's length transactions on a case by case basis, taking into
account differences from time to time in optimum debt-
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equity ratios, projections of earnings and cash flow, depreciation lives and
methods and other similar financial and performance characteristics of CSW O&M
Sub and its subsidiaries.
Notwithstanding the foregoing, CSW states that no equity
security having a stated par value would be issued or sold by CSW, Energy, CSW
O&M Sub or any of their direct or indirect subsidiaries that are Energy-Related
Companies or Foreign Energy-Related Companies for a consideration that is less
than such par value. The Applicants also state that no note, bond or other
evidence of indebtedness issued or sold by CSW, Energy, CSW O&M Sub or such
subsidiaries will mature later than 30 years from the date of issuance thereof,
and will bear interest at a rate not in excess of the following: (i) if such
note, bond or other indebtedness is U.S. dollar denominated, at a rate not to
exceed the then applicable prime rate as announced from time to time by Mellon
Bank, N.A. (the "Applicable Rate") plus seven percentage points; and (ii) if
such note, bond or other indebtedness is denominated in the currency of a
country other than the United States, at a rate which, when adjusted (i.e.,
reduced) for the prevailing rate of inflation in such country, as reported in
official indices published by such country, would be equivalent to a rate on a
U.S. dollar denominated borrowing of identical average life that does not exceed
the Applicable Rate plus ten percentage points.
It is anticipated that fees in the form of placement or
commitment fees, or other similar fees, may be paid to lenders,
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placement agents or other third parties in connection with the issuance of any
such securities. The Applicants request authority for CSW, Energy, CSW O&M Sub
and such subsidiaries to agree in any case to pay placement or commitment fees,
and other similar fees, in connection with any securities, provided that the
effective annual interest charge on any indebtedness evidencing such security is
not greater than 115% of the stated interest rate thereon.
In connection with the issuance of debt securities by Energy,
CSW O&M Sub or such subsidiaries, it is anticipated that Energy, CSW O&M Sub or
such subsidiaries may pledge and/or grant a security interest in its assets.
Such pledge or security interest may include, without limitation, the shares or
other equity securities of any company that it owns, including, without
limitation, a security interest in any distributions from any such company, or a
collateral assignment of its rights under and interests in its other property,
including, without limitation, any rights under any power purchase agreement,
fuel supply agreement, maintenance services agreement, energy brokering
agreement or other project agreement to which it is a party.
It is typical that a portion of the capital requirements of
any acquisition would be obtained through non-recourse financing involving
borrowings from banks, insurance companies and other third-party financial
institutions. Such non-recourse financing mitigates the same risks and the
potential adverse impacts upon the financial integrity of the CSW system that
are alleviated when the
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financing is arranged directly by CSW O&M Sub or its subsidiaries. The
Applicants anticipate that, to the extent available and financially reasonable,
Energy, CSW O&M Sub and their respective subsidiaries that are Energy-Related
Companies or Foreign Energy- Related Companies (as the case may be) will rely on
exemptions available under Rule 52(b) under the Act to issue debt securities to
secure financing for which there is no recourse to CSW or any Operating Company.
CSW and Energy propose to fund the activities of CSW O&M Sub
and its subsidiaries that are Energy-Related Companies pursuant to authority
under Rules 45 and 52 under the Act. The Applicants proposed to have CSW, Energy
and CSW O&M Sub fund the activities of their respective subsidiaries that are
Foreign Energy-Related Companies in an aggregate amount up to the Aggregate
Investment Amount by capital contributions, loans or open account advances from
CSW to Energy, from Energy to its subsidiaries that are Foreign Energy-Related
Companies and CSW O&M Sub, and from CSW O&M Sub to its subsidiaries that are
Foreign Energy-Related Companies pursuant to this Application-Declaration. All
such loans or open account advances from CSW to Energy, from Energy to its
subsidiaries that are Foreign Energy-Related Companies and CSW O&M Sub and from
CSW O&M Sub to its subsidiaries that are Foreign Energy-Related Companies would
have a final maturity not to exceed 25 years and would bear interest at a rate
per annum not in excess of CSW's weighted average cost of capital.
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(4) Request for Guarantee, Letter of Credit and Bid Bond
Authority. The Applicants anticipate that Energy, CSW O&M Sub and their
subsidiaries will require the ability to provide guarantees, letters of credit,
bid bonds or other credit support to compete effectively in the marketplace and
secure contracts to provide energy-related services. The inability of Energy,
CSW O&M Sub and their subsidiaries to provide such guarantees, letters of
credit, bid bonds or other credit support on a timely basis will variously
prevent, hinder or make more costly CSW's participation in the energy-related
services market.
The Applicants therefore request authority under this
Application-Declaration to provide such guarantees of, and to arrange for
letters of credit, bid bonds or similar credit support arrangements
(collectively, "Guarantees") concerning the performance and undertaking of
obligations, directly or indirectly, to be incurred by Energy, CSW O&M Sub and
their subsidiaries from time to time in connection their performance of
energy-related services. Accordingly, CSW and Energy propose and seek the
approval of the Commission required under Sections 6(a), 7 and 12(b) of the Act
for CSW and Energy to issue or arrange Guarantees in an aggregate amount not to
exceed the Aggregate Investment Amount, as required for Energy, CSW O&M Sub and
their subsidiaries to satisfy credit support requirements of agreements and
bidding requirements to which Energy, CSW O&M Sub or any of their subsidiaries
becomes a party in connection with the performance or
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provision of energy-related services.
The terms of, and any fees or interest payable in respect of,
Guarantees will be established at arm's length in conformity with market
practice; provided that the cost of Guarantees (including interest on
outstanding reimbursement obligations in respect of Guarantees) provided by CSW
to or for the benefit of Energy, CSW O&M Sub or their subsidiaries will not
exceed CSW's weighted average cost of capital; provided further that the fees
with respect to any Guarantee would not exceed 2% per annum of the face amount
of such Guarantee, and the interest payable per annum on the unreimbursed
drawings under any Guarantee would not exceed the prime rate of the issuer plus
six percentage points. The authority requested in this Section 4 of Item 1 of
this Application-Declaration does not constitute a request to which Sections 9
and 10 of the Act would apply for authority for CSW or Energy to acquire,
directly or indirectly, any securities or utility assets or any other interest
in any business.
(5) Associate Contracts. The Applicants seek authority of the
Commission pursuant to Section 13(b) of the Act and Rules 83, 86, 87, 88, 90, 90
and 94 thereunder for CSW O&M Sub and its subsidiaries and for Energy's
subsidiaries that are Energy-Related Companies or Foreign Energy-Related
Companies from time to time to enter into agreements to provide energy-related
services to associate companies, other than the Operating Companies, at fair
market prices. No such energy-related services will be rendered to
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an associate company unless one or more the following conditions are satisfied:
(i) such associate company is an EWG that derives no part of its income,
directly or indirectly, from the generation, transmission or distribution of
electric energy for sale within the United States or is a FUCO; (ii) such
associate company is an EWG that sells electricity at market-based rates which
have been approved by the Federal Energy Regulatory Commission ("FERC") or the
appropriate state public utility commission, provided that the purchaser of
energy produced by such associate company is not an Operating Company; (iii)
such services are rendered to such associate company in respect of a QF that
sells electricity exclusively at rates negotiated at arm's length to one or more
industrial or commercial customers purchasing such electricity for their use not
for resale, or to an electric utility company, other than an Operating Company,
at the purchaser's "avoided cost" determined in accordance with the regulations
promulgated by FERC under PURPA; or (iv) such associate company is an EWG or a
QF that sells electricity at rates based on its cost of service, as approved by
FERC or any state public utility commission having jurisdiction, provided that
the purchaser of such electricity produced by such associate company is not an
Operating Company.
The Commission's authorization of fair market prices with
regard to energy-related services rendered to an associate company shall not be
binding on FERC or any state public-utility commission having jurisdiction over
rates charged by any such associate
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company. The Applicants and their subsidiaries will not assert or take any
position to the contrary in any administrative or judicial proceeding involving
the determination of rates that may be charged by any such associate company.
The price to be paid by such associate companies for such
energy-related services under such agreements will be determined at arm's
length, will be priced using the fair market value of the goods and services and
will contain typical commercial terms for transactions of similar character. In
no event will the agreements for such goods or services contemplate as of the
time of their execution and delivery that such goods or services will be
provided at a price less than the cost to Energy's subsidiary or CSW O&M Sub or
its subsidiary (as the case may be) or at a price that would result in any
subsidization of such associate company by Energy's subsidiary or CSW O&M Sub or
its subsidiary. In no event will the provision of such services adversely affect
the rate base or the costs to ratepayers of any Operating Company. Item 2. Fees,
Commissions and Expenses.
The estimate of the approximate amount of fees and expenses
payable in connection with this Application-Declaration is as follows:
Counsel fees
Milbank, Tweed, Hadley & McCloy....$15,000.00
Miscellaneous and incidental expenses
including travel, telephone,
postage and copying................ 5,000.00
Total.........................$20,000.00
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Item 3. Applicable Statutory Provisions.
Sections 6(a), 7, 9(a), 10, 12(b) and 13(b) of the Act, and
Rules 43, 45, 51, 52, 58, 83, 86, 87, 88, 90, 91 and 94 thereunder, are or may
be applicable to the proposed transactions. Specifically, Sections 6(a), 7 and
12(b) of the Act and Rule 43 thereunder are or may be applicable to the issuance
by CSW O&M Sub to Energy of its securities, to the issuance by Foreign Energy-
Related Companies to CSW O&M Sub of its securities and to the issuance by CSW or
Energy of the Guarantees. Sections 9(a) and 10 of the Act and Rules 45 and 51
thereunder are or may be applicable to the acquisition by Energy of the
securities of CSW O&M Sub or by Energy or CSW O&M Sub of the securities of any
Foreign Energy- Related Company. To the extent not authorized by Rule 45(b) or
52 promulgated under the Act, Section 12(b) of the Act and Rule 45 or 52
thereunder are or may be applicable to any intercompany loans or open account
advances made, directly or indirectly, by CSW to Energy, by Energy to its
subsidiaries that are Foreign Energy- Related Companies or CSW O&M Sub and by
CSW O&M Sub to its subsidiaries. Section 13(b) of the Act and Rules 83, 86, 87,
88, 91 and 94 thereunder are or may be applicable to the rendering of services
by Energy's subsidiaries or CSW O&M Sub and its subsidiaries to associate
companies, and the rationale of the Commission set forth in HCAR No. 26322
(Entergy Corporation, et al. Memorandum Opinion and Supplemental Order) issued
in File No. 70-8105 is applicable to the rendering of services at fair market
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rates by Energy's subsidiaries and CSW O&M Sub and its subsidiaries to associate
companies other than Operating Companies. To the extent any other sections of
the Act, or rules thereunder, may be applicable to the proposed transactions,
each of the Applicants hereby requests, for itself and its respective
subsidiaries and associates, appropriate orders thereunder.
The indirect investment by CSW in Foreign Energy-Related
Companies meets the requirements of Section 10 of the Act. The indirect
acquisition by CSW of securities of such Foreign Energy- Related Companies will
not cause interlocking relations or concentration of control of public-utility
companies detrimental to the public interest or the interest of CSW investors or
the Operating Companies' ratepayers. The consideration to be paid indirectly by
CSW for the securities of the Foreign Energy-Related Companies is reasonable and
bears a fair relation to the amounts to be so invested in the Foreign
Energy-Related Companies. As set forth above, the transactions described in this
Application- Declaration have been structured to accomplish discrete purposes
and to ensure that the indirect acquisition by CSW of securities of the Foreign
Energy-Related Companies will not unduly complicate the capital structure of the
CSW system or be detrimental to the public interest or the interest of CSW's
investors or the Operating Companies' ratepayers or the proper functioning of
the CSW system.
CSW is subject to extensive reporting requirements under
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the Act. CSW is subject also to the continuous disclosure requirements of the
Securities Exchange Act of 1934. The terms and conditions of the proposed
transactions afford protections for the interests of the Operating Companies'
ratepayers. First, CSW, not the Operating Companies, will fund the investment.
Second, any debt of CSW O&M Sub or its subsidiaries will be secured by the
assets of CSW O&M Sub or such subsidiaries and will be nonrecourse to the
Operating Companies. Third, the Aggregate Investment Amount represents
approximately 8% of CSW's consolidated retained earnings; loss of the entire
investment should not imperil the financial stability of the CSW system. Fourth,
any additional intrasystem financing would be subject to Commission approval
(including pursuant to Rules 45(b) or 52 adopted by the Commission under the
Act).
Additional protections are afforded by the holding company
structure of the CSW system. The use of separate corporate subsidiaries of the
holding company tends to insulate consumers of the Operating Companies from the
risks of unrelated activities, such as the indirect investment by CSW in CSW O&M
Sub and its subsidiaries. Any detriment that may result from the activities of
CSW O&M Sub and its subsidiaries should flow to the security holders of CSW,
rather than to the Operating Companies' ratepayers. Accordingly, the standards
of Section 10 are met.
Rule 54 under the Act is satisfied because Rules 53(a),
(b) and (c) are satisfied. As of April 24, 1997, CSW has invested
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approximately $891 million in the aggregate in Exempt Projects, or approximately
46% of $1,939 million, the average of CSW's consolidated retained earnings for
the four consecutive quarters ended December 31, 1996, thus satisfying Rule
53(a)(1). CSW maintains in conformity with United States generally accepted
accounting principles and makes available the books and records and financial
statements required by Rule 53(a)(2). No more than 2% of the employees of CSW's
domestic public utility subsidiaries presently render services to any Exempt
Project in which CSW owns an interest, satisfying Rule 53(a)(3). CSW submitted
those documents required by Rule 53(a)(4) to be submitted. None of the
conditions described in Rule 53(b) exist with respect to CSW or any of its
subsidiaries, thereby satisfying such rule and making Rule 53(c) inapplicable.
Item 4. Regulatory Approval.
No state or federal regulatory authority, other than the
Commission under the Act, has jurisdiction over the proposed
transactions.
Item 5. Procedure.
It is requested that the Commission issue and publish no later
than May 2, 1997, the requisite notice under Rule 23 with respect to the filing
of this Application-Declaration, such notice to specify a date not later than
May 27, 1997, as the date after which an order granting and permitting this
Application-Declaration to become effective may be entered by the Commission and
the
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Commission enter not later than May 28, 1997, an appropriate order granting and
permitting this Application-Declaration to become effective.
The Applicants respectfully request that appropriate and
timely action be taken by the Commission in this matter in order that the
transactions contemplated by this Application-Declaration may take place in the
time period for the transactions contemplated hereby.
No recommended decision by a hearing officer or other
responsible officer of the Commission is necessary or required in this matter.
The Division of Investment Management of the Commission may assist in the
preparation of the Commission's decision in this matter, unless such Division
opposes the matters covered hereby. There should be no thirty-day waiting period
between the issuance and the effective date of any order issued by the
Commission in this matter, and it is respectfully requested that such order be
made effective immediately upon the entry thereof. Item 6. Exhibits and
Financial Statements.
Exhibit 1 - Proposed Notice of Proceeding.
Exhibit 2 - Preliminary Opinion of Milbank, Tweed, Hadley &
McCloy, counsel for CSW, Energy and CSW O&M Sub.
Exhibit 3 - Financial Statements per book and pro forma as of
December 31, 1996 of CSW and Subsidiaries
(consolidated), CSW and Energy.
Item 7. Information as to Environmental Effects.
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The proposed transactions do not involve major federal action
having a significant effect on the human environment. See Item 1. No federal
agency has prepared or is preparing an environmental impact statement with
respect to the proposed transactions.
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S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned company has duly caused this document to be
signed on its behalf by the undersigned thereunto duly authorized.
Date: April 25, 1997
CENTRAL AND SOUTH WEST CORPORATION
By:/s/WENDY G. HARGUS
Wendy G. Hargus
Treasurer
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S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned company has duly caused this document to be
signed on its behalf by the undersigned thereunto duly authorized.
Date: April 25, 1997
CSW ENERGY, INC.
By:/s/TERRY D. DENNIS
Terry D. Dennis
President and Chief Executive
Officer
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S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned company has duly caused this document to be
signed on its behalf by the undersigned thereunto duly authorized.
Date: April 25, 1997
CSW SERVICES INTERNATIONAL, INC.
By:/s/TERRY D. DENNIS
Terry D. Dennis
President and Chief Executive
Officer
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INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
1 Proposed Notice of Proceeding. Electronic
2 Preliminary Opinion of Milbank, ---
Tweed, Hadley & McCloy, counsel
for CSW, Energy and CSW O&M Sub
(to be filed by amendment).
3 Financial Statements per book and ---
pro forma as of December 31, 1996
of CSW and Subsidiaries (consoli-
dated), CSW and Energy (to be
filed by amendment).
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Exhibit 1
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35-________)
Filings Under the Public Utility Holding Company Act of 1935
("Act") __________, 1997
Notice is hereby given that the following filing(s) has/have been made
with the Commission pursuant to provisions of the Act and rules promulgated
thereunder. All interested persons are referred to the application(s) and/or
declaration(s) for complete statements of the proposed transaction(s) summarized
below. The application(s) and/or declaration(s) and any amendment(s) thereto
is/are available for public inspection through the Commission's Office of Public
Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
__________, 1997 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) at the address(es) specified below. Proof of service (by affidavit
or, in the case of an attorney at law, by certificate) should be filed with the
request. Any request for hearing shall identify specifically the issues of fact
or law that are disputed. A person who so requests will be notified of any
hearing, if ordered, and will receive a copy of any notice or order issued in
the matter. After said date, the application(s) and/or declaration(s), as filed
or as amended, may be granted and/or permitted to become effective. Central and
South West Corporation, CSW Energy, Inc. and CSW Services International, Inc.
(70-____)
Central and South West Corporation ("CSW"), a registered holding
company, its nonutility subsidiary, CSW Energy, Inc. ("Energy"), and Energy's
nonutility subsidiary, CSW Services International, Inc. ("CSW O&M Sub"), have
filed an application- declaration (the "Application") pursuant to the Act.
In summary, the Applicants seek an order of the Commission
under Sections 6(a), 7, 9(a), 10, 12(b) and 13(b) of the Act, and Rules 43, 45,
51, 52, 58, 83, 86, 87, 88, 90, 91 and 94 thereunder, authorizing the Applicants
and their subsidiaries to perform the following transactions related to a
proposed investment by CSW and Energy in CSW O&M Sub, a subsidiary of Energy
organized pursuant to authority under Rule 58 that is currently an
energy-related company, as such term is defined in Rule 58 under the Act (an
"Energy-Related Company"), and for the following exemptive relief related to
such transactions: (i) for Energy or CSW O&M Sub to acquire the securities of
and otherwise invest in companies ("Foreign Energy-Related Companies") that will
be engaged in the sale of technical, operational, management and other similar
kinds of services that use skills, abilities and expertise that have been
developed in the course of utility operations, including all activities
currently authorized by Rule 58 under the Act (collectively, "O&M Services"),
within or outside the United States, in an aggregate amount up to $150 million
(the "Aggregate
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Investment Amount"), (ii) for CSW and/or Energy to fund Energy's or CSW O&M
Sub's investment in Foreign Energy-Related Companies through intercompany loans,
open account advances and capital contributions, (iii) for CSW and Energy to
guaranty the securities, or performance of payment obligations under agreements,
of CSW O&M Sub and its subsidiaries and Energy's subsidiaries that are Energy-
Related Companies or Foreign Energy-Related Companies and to issue and use the
proceeds of debt and equity securities for which there is recourse to CSW to
invest in CSW O&M Sub or Foreign Energy- Related Companies in an aggregate
amount not to exceed the Aggregate Investment Amount, (iv) for CSW O&M Sub and
its subsidiaries and Energy's subsidiaries that are Energy-Related Companies or
Foreign-Energy Related Companies to provide energy-related services to associate
companies, other than CSW's domestic operating utility subsidiaries
(collectively, the "Operating Companies"), at fair market prices, (v) for Energy
to retain its investment in CSW O&M Sub and otherwise engage in such
transactions if CSW O&M Sub does not qualify as an Energy-Related Company
because it engages in the activities of a Foreign Energy-Related Company or
because of its ownership of and investment in Foreign Energy-Related Companies
and (vi) for such other relief as may be required under the Act.
The estimate of the approximate amount of fees and expenses payable in
connection with the transactions is $20,000.
Sections 6(a), 7, 9(a), 10, 12(b) and 13(b) of the Act, and
Rules 43, 45, 51, 52, 58, 83, 86, 87, 88, 90, 91 and 94 thereunder, are or may
be applicable to the proposed transactions. Specifically, Sections 6(a), 7 and
12(b) of the Act and Rule 43 thereunder are or may be applicable to the issuance
by CSW O&M Sub to Energy of its securities, to the issuance by Foreign Energy-
Related Companies to CSW O&M Sub of its securities and to the issuance by CSW or
Energy of the Guarantees. Sections 9(a) and 10 of the Act and Rules 45 and 51
thereunder are or may be applicable to the acquisition by Energy of the
securities of CSW O&M Sub or by Energy or CSW O&M Sub of the securities of any
Foreign Energy- Related Company. To the extent not authorized by Rule 45(b) or
52 promulgated under the Act, Section 12(b) of the Act and Rule 45 or 52
thereunder are or may be applicable to any intercompany loans or open account
advances made, directly or indirectly, by CSW to Energy, by Energy to its
subsidiaries that are Foreign Energy- Related Companies or CSW O&M Sub and by
CSW O&M Sub to its subsidiaries. Section 13(b) of the Act and Rules 83, 86, 87,
88, 91 and 94 thereunder are or may be applicable to the rendering of services
by Energy's subsidiaries or CSW O&M Sub and its subsidiaries to associate
companies, and the rationale of the Commission set forth in HCAR No. 26322
(Entergy Corporation, et al. Memorandum Opinion and Supplemental Order) issued
in File No. 70-8105 is applicable to the rendering of services at fair market
rates by Energy's subsidiaries and CSW O&M Sub and its subsidiaries to associate
companies other than Operating Companies. To the extent any other sections of
the Act, or rules thereunder, may be applicable to the proposed transactions,
the Applicants seek, for itself and its respective subsidiaries and associates,
appropriate orders thereunder.
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The Applicants state that the indirect investment by CSW in
Foreign Energy-Related Companies meets the requirements of Section 10 of the
Act. The Applicants further state that Rule 54 under the Act is satisfied
because Rules 53(a), (b) and (c) are satisfied.
The Applicants state that no state or federal regulatory authority,
other than the Commission under the Act, has jurisdiction over the proposed
transactions.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Jonathan G. Katz
Secretary
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