File No. 70-9055
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM U-1 APPLICATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East 6th Street
Tulsa, Oklahoma 74119-1212
(Names of company filing this statement and
address of principal executive office)
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CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
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William R. McKamey
General Manager
Public Service Company of Oklahoma
212 East 6th Street
Tulsa, Oklahoma 74119-1212
Wendy G. Hargus, Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Name and addresses of agents for service)
<PAGE>
Public Service Company of Oklahoma, an Oklahoma corporation ("PSO")
and a wholly-owned electric utility subsidiary of Central and South West
Corporation ("CSW"), a Delaware corporation and a registered holding company
under the Public Utility Holding Company Act of 1935, as amended (the "Act"),
hereby files this Amendment No. 2 to the Form U-1 Application in File No.
70-9055 to amend and restate the Application in its entirety. Item 1.
Description of Proposed Transaction.
PSO hereby requests authority to purchase shares of common
stock of SCIENTECH, Inc., an Idaho corporation ("SCIENTECH"), as described
below. Business of SCIENTECH, Inc.
SCIENTECH is a privately owned company that provides services
(and some ancillary and minor products, such as replacement parts and components
for commercial nuclear facilities) to the nuclear utility industry (the "utility
services business"), and under contracts relating to the nuclear industry with
the Department of Energy, the Department of Defense and the Nuclear Regulatory
Commission (the "government agency services business"). Historically, SCIENTECH
has provided a majority of its services to government agencies in support of the
nuclear utility market. Over the past three years, however, SCIENTECH has
adopted a strategy of reducing its reliance upon government contracts and
applying its expertise to capture a greater share of the utility market. In
September 1996, SCIENTECH purchased the business and a portion of the assets of
Halliburton NUS Company, a nuclear utility service provider; these assets were
primarily customer accounts receivable and other current assets relating to
Halliburton NUS Company's utility service customers. While a majority of
SCIENTECH's $53 million of actual revenues for its fiscal year ended January 31,
1997 came from government contracts, on a pro forma basis, including the NUS
acquisition, SCIENTECH's utility services business would have accounted for
approximately 48% of its total revenues of approximately $70 million, and
government contracts would also have accounted for approximately 48% of its
total revenues.
SCIENTECH's utility services business is aimed at electric
utilities, which are restructuring and outsourcing in an increasingly
competitive environment. In particular, SCIENTECH provides services (including
engineering and other services), systems (including security systems), and
instruments, which describe, regulate, monitor and enhance the safety and
reliability of plant operations and their environmental impacts. SCIENTECH's
diverse services and products are of particular value to U.S. electric
utilities. Nearly 40% of SCIENTECH's utility services business involves the
analysis and evaluation of operational safety and risk using proprietary
software. Approximately 20% of SCIENTECH's utility services business is
associated with engineering and operational support activities involving nuclear
materials and facilities, design and installation of microwave transmission
systems, and training and simulator instruction for nuclear power plants.
Approximately 10% of SCIENTECH's utility services business is involved with the
design and installation of enhanced physical security systems, and another 10%
of its utility services business involves support services related to
environmental compliance and cleanup. Information management and other network
services provide 15% of revenues and involve power plant and nuclear plant
support services among others. The other 5% of its utility services business is
derived from software sales, which includes software used to support power plant
operations.
SCIENTECH's government agency services business consists
principally of the design and installation of enhanced physical security systems
and work requiring skills in safety analysis and assessment, knowledge of safe
and secure handling of nuclear materials, technical review, technical
policy-making and technical policy implementation. Principal customers are the
Department of Energy and the Nuclear Regulatory Commission in many
utility-oriented activities. Recently, the Nuclear Regulatory Commission awarded
SCIENTECH the contract to promote, maintain and service two different safety
analysis computer codes developed by the U.S. Government for nuclear power
plants.
SCIENTECH also applies some of its expertise to applications
outside of the government and utility industries. It sells environmental
services to mining operations, internet services to non-utilities and risk and
reliability services to the industrial sector. Revenue from these services
totaled approximately $2 million for the fiscal year ended January 31, 1997,
which was approximately 3% of SCIENTECH's total revenue. Based on SCIENTECH's
present business strategy and its view of optimum growth opportunities, it is
anticipated that SCIENTECH will continue to provide the same or similar types of
services to non-utility and non-governmental customers and that in the future
the percentage of SCIENTECH's total revenue from sales of services to such
customers will not materially increase.
SCIENTECH also provides risk and reliability services
internationally. These services, which totaled approximately $1.3 million for
the fiscal year ended January 31, 1997, are currently being provided to
governments of and/or utilities located in Canada, Japan, Korea and former
Soviet Block countries. Approximately 75% of these services are being funded
under contract with the Department of Energy and the Nuclear Regulatory
Commission. Most of the remaining work is performed under direct contract with
Japanese and Canadian utilities.
SCIENTECH has four wholly-owned subsidiaries, three
majority-owned subsidiaries and one minority-owned subsidiary. SCIENTECH's
wholly-owned subsidiaries are: UNC Analytical Services, Inc. (d/b/a Belfort
Engineering and Environmental Services, Inc.) ("UNC"), Grant Environmental, Inc.
("Grant"), NUS Information Services, Inc. ("NUS Information") and NUS
Instruments, Inc. ("NUS Instruments"). UNC provides engineering services,
primarily safety and environmental services, to U.S. government agencies and
U.S. government prime contractors. Grant provides environmental engineering to
commercial customers. NUS Information provides utility database access, research
and analysis services to utility companies on a subscription basis. NUS
Instruments manufactures and re-manufactures electronic control panels for
utility control/operations rooms.
SCIENTECH's majority-owned subsidiaries are: SRVNet, Inc.
("SRVNet"), Technology Applications, Inc. ("TAI") and SCIENTECH de Venezuela,
Inc. ("SDV"). SRVNet provides internet access services to subscribers in Eastern
Idaho. TAI provides nuclear safety engineering services to utilities in the
former Soviet Block countries, usually under U.S. Government funding. SDV
markets and installs information systems and provides network consulting
services, including data safety and integrity consulting, in Venezuela.
SCIENTECH's only minority-owned subsidiary is SEMTECH, Inc.,
which provides services in support of minerals exploration and nuclear safety
engineering activities in Kazakhstan. The Proposed Transaction
PSO has entered into a Stock Purchase Agreement, dated as of
June 2, 1997 (the "Stock Purchase Agreement"), between Dr. Lawrence J.
Ybarrondo, Chairman of the Board of Directors and founder of SCIENTECH (and
certain related trusts and family members) (collectively, the "Sellers") and
PSO. Pursuant to the Stock Purchase Agreement, and subject to certain conditions
including receipt of an order from the Securities and Exchange Commission (the
"Commission") approving this Application, PSO shall purchase from the Sellers,
at a purchase price of $6.00 per share, or an aggregate purchase price of
$3,036,000, an aggregate of 506,000 shares of SCIENTECH common stock (the
"Shares"), representing approximately 25% of the outstanding capital stock of
SCIENTECH. The Shares shall consist of 70,000 shares of Class A Voting Common
Stock ("Class A Stock") (representing 4.5% of the Class A Voting Common Stock to
be outstanding immediately following the consummation of PSO's purchase of the
Shares) and 436,000 shares of Class B Nonvoting Common Stock ("Class B Stock",
and together with the Class A stock, the "Common Stock") (representing 100% of
the Class B Nonvoting Common Stock to be outstanding immediately following the
consummation of PSO's purchase of the Shares). In addition, PSO has been granted
an option (the "Option") to purchase, subject to and conditioned upon approval
by the Commission of this Application, an additional 206,000 shares of Class B
Nonvoting Common Stock from the Sellers not later than September 2, 1998, at a
purchase price per share of $9.00. The acquisition of the Shares and the Option,
and of the shares subject to the Option upon exercise thereof, will be funded by
PSO out of internally generated funds. Including the Option Shares, PSO may
purchase up to an aggregate of 712,000 shares of SCIENTECH common stock, or
approximately 34% of SCIENTECH's outstanding common stock, for an aggregate
purchase price of up to $4,890,000.
SCIENTECH's capitalization as of June 2, 1997, consisted of
2,105,364 shares of Class A Stock and no shares of Class B Stock. Each share of
Class A Stock entitles its holder to one vote on any matter coming before the
SCIENTECH shareholders for a vote. The holders of Class B Stock shall not be
entitled to vote on any matter coming before the shareholders, except that no
amendment to SCIENTECH's Articles of Incorporation may be effected without the
affirmative vote of holders of a majority of the outstanding shares of Class B
Stock. Each holder of Class A Stock shall have the right at any time, at the
option of such holder, to exchange each share of Class A Stock, without payment
of any further consideration, into one share of fully paid Class B Stock, and
each holder of Class B Stock shall have the right at any time, at the option of
such holder, to exchange each share of Class B Stock, without payment of any
further consideration, into one share of fully paid Class A Stock. In all other
respects, each share of Class A Stock and Class B Stock issued and outstanding
shall be identical.
PSO and the Sellers have also entered into an Escrow
Agreement, dated as of June 2, 1997, with a neutral, independent escrow agent
(the "Escrow Agreement"), pursuant to which certificates representing the Shares
and the purchase price therefor have been deposited with an escrow agent until
the Commission has acted on this Application. If all of the conditions to the
Escrow Agreement are satisfied, upon notice by PSO to the escrow agent that the
Commission has issued an appropriate order approving this Application, (i) the
escrow agent will deliver to SCIENTECH the certificates representing the Shares,
(ii) SCIENTECH will convert 436,000 of the Shares from Class A Stock to Class B
Stock and redeposit the certificates representing the Shares with the escrow
agent, and (iii) upon redeposit of the certificates representing the Shares, the
escrow agent will promptly deliver the certificates representing the Shares to
PSO and the purchase price to the Sellers. Accordingly, the 436,000 shares will
not be Class A Stock when PSO obtains control over such shares. PSO will not
take any action that would cause it to own or control, and at no time will PSO
own or control, more than 4.9% of the outstanding voting stock of SCIENTECH.
PSO and each SCIENTECH shareholder have entered into a
Shareholders Agreement, dated as of June 2, 1997 (the "Shareholders Agreement"),
whereby the shareholders have agreed that for so long as PSO holds 10% or more
of the outstanding SCIENTECH Common Stock on a fully diluted basis (without
regard to the voting rights thereof), PSO shall have the right to designate one
member of the Board of Directors, which shall consist of a minimum of six
members, and which currently consists of 11 members. In addition, the
shareholders have agreed that in all cases where the number of directors is
greater than six, such additional directorships shall be filled only with
independent directors. Finally, SCIENTECH has agreed that, without first
obtaining PSO's consent, it will not issue any Common Stock, on a fully diluted
basis, at a price lower than $6.00 per share, proportionately adjusted to
reflect any stock dividend, stock split, combination of shares,
reclassification, recapitalization, automatic conversion, redemption or other
similar event affecting the number or character of outstanding shares of Common
Stock.
PSO has also entered into a Registration Rights Agreement,
dated as of June 2, 1997 (the "Rights Agreement"), among SCIENTECH and each of
its larger shareholders (not including SCIENTECH's Employee Stock Ownership
Plan). The Rights Agreement provides that at any time after February 1, 2001,
and before February 1, 2011, upon written request by the holders of at least 60%
of the outstanding Common Stock in the case of registration on any form other
than Form S-3, and 50% of the outstanding Common Stock in the case of
registration on Form S-3, SCIENTECH shall use its best efforts to register with
the Commission the shares which SCIENTECH has been so requested to register by
such holders.
The Stock Purchase Agreement provides that, in the event
approval or denial of this Application is not received from the Commission prior
to August 16, 1997, the Stock Purchase Agreement, the Escrow Agreement, the
Rights Agreement and the Shareholders Agreement shall be rescinded, the
certificates representing the Shares shall be returned to the Sellers, and the
purchase price shall be returned to PSO. Services to the CSW System
SCIENTECH, through its NUS Information subsidiary, has
performed a small amount of work at the South Texas Project ("STP"), a nuclear
generating facility partially owned by a CSW subsidiary, Central Power and Light
Company. Currently, STP is subscribing to four informational database services
provided by NUS Information. It also has an open work order with NUS Information
for database maintenance, although no work has been performed under this
contract this year. No other services are presently being provided by SCIENTECH
or its subsidiaries to CSW or its affiliate companies. After consummation of the
proposed investment, SCIENTECH and/or its subsidiaries may provide additional
services or products to CSW and its affiliate companies without additional
Commission approval. Subsequent to PSO's proposed purchase of common shares of
SCIENTECH, SCIENTECH will not be an affiliate, as defined in Section 2(a)(11) of
the Act, of PSO, CSW or any of their affiliate companies. As such, transactions
between CSW or any of its affiliate companies will not be "affiliate
transactions" requiring Commission approval under Section 13(b) of the Act.
Request For Authority
PSO hereby requests authority to acquire the Shares and the
Option, and to acquire the shares subject to the Option upon the exercise
thereof, as described herein. To the extent that any other aspects of the
proposed investment requires authority from the Commission, PSO hereby requests
the same.
PSO agrees to file semi-annual certificates of notification,
no later than sixty (60) days after the end of each semi-annual period,
concerning the business activities carried out pursuant to any order approving
this Application, which certificates of notification shall contain, inter alia,
the following information: (i) a description of the types of services performed
by SCIENTECH during the period; (ii) a description of any services provided to
PSO or CSW or any other CSW affiliate by SCIENTECH during the period; (iii) a
statement of any dividends or interest paid to PSO, both for the period and
cumulatively, as a result of its equity interests in SCIENTECH; and (iv) a
statement regarding the purchase by PSO of any additional shares of SCIENTECH
pursuant to the Option. Item 2. Fees, Commissions and Expenses
PSO estimates that the approximate amount of fees and expenses payable
in connection with the transactions described herein is as follows:
Legal Fees and Expenses
Milbank, Tweed, Hadley & McCloy
New York, New York................... $ 5,000
Doerner, Saunders, Daniel
& Anderson
Tulsa, Oklahoma...................... $ 20,000
Miscellaneous and incidental
expenses including travel,
telephone and postage................ 500
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$ 25,500
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Item 3. Applicable Statutory Provisions
General
Sections 9, 10 and 11 of the Act and Rule 23 under the Act are
or may be applicable to the proposed investment described herein. Section 9(a)
of the Act makes unlawful the acquisition by a subsidiary of a registered
holding company of "any securities . . . or any other interest in any business"
without the prior approval of the Commission under Section 10. Under Section
10(c)(1), the Commission may not approve an acquisition of securities or any
other interest in any business if the proposed acquisition is "detrimental to
the carrying out of the provisions of Section 11". Under Section 11(b)(1), the
Commission must limit the operations of public utility holding companies and
their subsidiaries to such other businesses as are reasonably incidental, or
economically necessary or appropriate, to the operations of such integrated
public-utility system. The Commission may permit as reasonably incidental, or
economically necessary or appropriate, to the operations of one or more
integrated public-utility systems the retention of an interest in any business
(other than the business of a public-utility company as such) which the
Commission shall find necessary or appropriate in the public interest or for the
protection of investors or consumers and not detrimental to the proper
functioning of such system or systems.
The proposed investment by PSO in SCIENTECH satisfies the
requirements of Sections 9(a)(1) and 10 in that it is incidental, and
economically necessary or appropriate, to PSO's core business of generating,
transmitting and distributing electric energy. The proposed investment is also
appropriate in the public interest and is not detrimental to the proper
functioning of PSO or the CSW system.
SCIENTECH is a highly diverse company that provides a broad
range of services that will benefit PSO and the CSW System. Historically,
SCIENTECH has provided expert testimony, as well as risk and reliability
database subscription services, to the South Texas Project ("STP"), a generating
unit owned in part by Central Power and Light Company, a CSW subsidiary.
Currently, SCIENTECH has a work order in place to provide database maintenance
services to STP.
SCIENTECH is currently pursuing several opportunities to
provide additional services to PSO and the CSW System. EnerShop, Inc., a CSW
subsidiary, has requested a proposal for SCIENTECH to provide it with an
intranet solution for electronic communication services. The CSW fossil fuel
generation group is interested in three proposals regarding SCIENTECH's
services. The first proposal is for SCIENTECH to provide water quality training
to personnel of the generating facilities of PSO and the other utilities in the
CSW System. The second proposal is for SCIENTECH to provide an inter-utility
inventory parts database service in order to reduce CSW's inventory level. The
third proposal is for SCIENTECH to perform a competitive skills assessment for
the fossil fuel generation organization. Once the assessment is completed,
SCIENTECH would assist in the scheduling of excess capacity services rendered to
non-affiliates by certain personnel of Central and South West Services, Inc.
("CSWS") (the sale of certain excess capacity services to non-affiliates by CSWS
was previously approved by the Commission by order dated April 26, 1995 (Holding
Co. Act Release No. 26280; File No. 70-8531)). Separately, SCIENTECH is
currently in preliminary discussions with CSW Communications, Inc., a CSW
subsidiary and an exempt telecommunications company, to provide a system which
would allow CSW Communications to provide an internet subscription service to
its customers. Subsequently, in connection with the provision of such system,
SCIENTECH may identify opportunities to provide fiber-optic and microwave
maintenance services to CSW Communications in certain locations. Such
maintenance services are also potentially of interest to CSW's utility
subsidiaries in respect of their telecommunications operations.
While discussions are extremely preliminary at this point,
several other opportunities exist for SCIENTECH to provide services to PSO and
the CSW System. CSW intends to evaluate opportunities for SCIENTECH to provide
information management and consulting services to PSO and the CSW System.
Further, SCIENTECH may assist the CSW System in identifying outsourcing
opportunities in various business units. These decisions will be made and
pursued in conjunction with CSW's strategic planning and business development
processes. CSW also believes that SCIENTECH's international presence may lead to
business opportunities for CSW International, Inc., a CSW subsidiary. In each of
these instances, SCIENTECH's extensive expertise and market presence would
provide significant cost savings and/or other benefits to PSO and the CSW
System. The cost of all services provided by SCIENTECH to the CSW System will be
determined by arms-length negotiation or, more likely, through competitive
bidding.
In addition, PSO's investment in SCIENTECH will be small
relative to PSO's total financial resources. Risks to the financial position of
PSO also will be limited because PSO will not be obligated to make further
capital contributions beyond its initial equity investment. PSO will not seek
recovery through higher rates from utility customers to compensate for possible
future losses or inadequate returns on capital invested in SCIENTECH, so that
PSO's shareholders will bear all risks associated with the proposed investment.
Likewise, the proposed investment is consistent with Rule 58
under the Act. Paragraph (b)(1)(vii) of Rule 58 would permit PSO to acquire the
securities of a company primarily involved in the "sale of technical,
operational, management, and other similar kinds of services and expertise,
developed in the course of utility operations in such areas as power plant and
transmission system engineering, development, design and rehabilitation;
construction; maintenance and operation; ... environmental licensing, testing
and remediation; and other similar areas". Except for the minor international
element of its business, SCIENTECH would qualify as an Energy Related Company
under paragraph (b)(1)(vii) of Rule 58. In this regard, it is noted that the
Commission has permitted subsidiaries of registered holding companies to engage
in certain energy-related activities outside of the United States. In Eastern
Utilities Associates, Holding Co. Act Release No. 26135 (September 30, 1994),
the SEC authorized EUA Cogenex Corporation, a subsidiary of Eastern Utilities
Associates, to engage in energy and demand-side management activities in Canada
based upon the SEC's determination that such activities are "closely related" to
EUA's core utility business. See also Northeast Utilities, Holding Co. Act
Release No. 26108 (August 19, 1994). As in the above orders, the minor
international element of SCIENTECH's business is closely-related to PSO's core
utility business.
The proposed investment also satisfies the two-pronged
"functional relationship" test established by the United States Court of Appeals
for the District of Columbia Circuit in Michigan Consolidated Gas Co. v. SEC,
444 F.2d 913 (D.C. Cir. 1971), which traditionally has been used by the
Commission in applying Section 11(b)(1) of the Act. Under the "functional
relationship" test, an integrated public-utility system may retain an interest
in another business if (i) the additional business is "reasonably incidental or
economically necessary or appropriate" to the integrated system, and (ii) the
retention of the additional business is in the public interest. Michigan
Consolidated at 916. As discussed in the preceding paragraphs, the proposed
investment satisfies the first prong of the "functional relationship" test in
that it is reasonably incidental and economically necessary and appropriate to
PSO's core business. The proposed investment is also consistent with the orders
cited in the footnote to the Commission's discussion of paragraph (b)(1)(vii) of
Rule 58, which strongly suggests that a functional relationship exists between
SCIENTECH's business activities and PSO's core utility business. See Holding Co.
Act Release No. 35-26313 n. 27 (June 20, 1995). These orders authorize a variety
of services to be rendered by new subsidiaries of the applicants to
non-affiliated electric utility companies and others: Southern Company, Holding
Company Act Release No. 22132 (July 17, 1981), authorizing the sale of
"management, technical and training services to non-affiliates"; American
Electric Power Company, Inc., Holding Company Act Release No. 22468 (April 28,
1982), authorizing the sale of "management, technical, and training expertise in
the open, competitive market to non-affiliated entities including domestic and
foreign governmental agencies, public utilities and other business concerns";
Middle South Utilities, Inc., Holding Company Act Release No. 22818 (January 11,
1983), as supplemented by Holding Company Act Release No. 23152 (December 5,
1983), authorizing the operation of "a consulting business for profit, marketing
to nonaffiliates management, technical, and training expertise developed by
System companies"; and New England Electric System, Holding Company Act Release
No. 22719 (November 19, 1982), authorizing the offering of "energy management
services on the open, competitive market exclusively to non-affiliates,
primarily the operators of large institutional, commercial, residential or
industrial buildings ... including the installation of meters and controls on
equipment, the modification or replacement of inefficient equipment, and the
monitoring of energy consumption".
Further, the Commission has previously authorized relatively
modest investments by registered holding companies and their subsidiaries in
developing technologies that have the potential to yield benefits to the
system's utility operations. For example, in an order dated December 30, 1996
(Holding Co. Act Release No. 26638), the Commission authorized PSO to acquire a
4.9% voting interest in Nuvest, L.L.C., a company which, indirectly through its
subsidiaries, provides manpower services to public utility companies, primarily
to nuclear electric generating plants and related substations. In addition, by
order dated December 17, 1996 (Holding Co. Act Release No. 26631), the
Commission authorized GPU International, Inc. to invest up to $30 million in a
joint venture with Ballard Power Systems, Inc. for the development, manufacture
and marketing of stationary electric power systems employing fuel cell
technology. Similarly, by order dated January 17, 1996 (Holding Co. Act Release
No. 26454), the Commission authorized Southern Development and Investment Group,
Inc. to acquire up to 3% of the common stock of ITC Holding Co., Inc., a
telecommunications holding company. Further, by order dated December 11, 1991
(Holding Co. Act Release No. 25424), the Commission authorized AEP Investments,
Inc. to acquire up to 9.9% of the issued and outstanding stock of Intersource
Technologies, Inc., a company engaged in the development of electronic light
bulb technology. Lastly, by order dated July 25, 1991 (Holding Co. Act Release
No. 25353), the Commission authorized Entergy Corporation to acquire up to a
9.5% equity interest in First Pacific Networks, Inc., a telecommunications
company. PSO's proposed investment in SCIENTECH is consistent with such
precedent.
Such orders authorize the acquisition of companies that provide
a wide variety of services related to core electric utility operations to public
utilities and other customers without restriction by a so-called "50%
limitation" discussed in In the Matter of CSW Credit, Inc., Holding Co. Act
Release No. 25995 (March 2, 1995). See also Eastern Utilities Associates,
Holding Co. Act Release No. 26232 (February 15, 1995), in which the Commission
recognized that the plain language of Section 11 of the Act is a sufficient
basis on which to grant authorization for the sale of services to
non-affiliates, without a 50% limitation, when those services constitute a close
complement to the applicant's core business. The services authorized by prior
orders in the same matter included demand-side management and energy management
services (and the sale of related products) and consulting services. The order
also recognized that changes in the utility industry (in that case the
substitution of efficiencies in energy use for the construction of additional
generating capacity) could result in expanded views of what constitutes a part
of, or is closely related to, the core business of a public utility company or
system. Finally, PSO believes that its maintenance of equity interests in
SCIENTECH will be consistent with GPU Nuclear Corporation, Holding Co. Act
Release No. 26139 (October 7, 1994). In that order, GPU Nuclear Corporation was
authorized to offer to non-affiliates a wide range of services to nuclear power
plant operators similar to the services offered by SCIENTECH and based on
expertise, resources and facilities developed in the course of GPU's core
business operations.
To the extent any other sections of the Act may be applicable to
the proposed investment, PSO hereby requests appropriate orders thereunder.
Rule 54
No proceeds from the proposed investment will be used by CSW or
any subsidiary thereof for the direct or indirect acquisition of an interest in
an exempt wholesale generator, as defined in Section 32 of the Act ("EWG"), or a
foreign utility company, as defined in Section 33 of the Act ("FUCO"). Rule 54
promulgated under the Act states that in determining whether to approve the
issue or sale of a security by a registered holding company for purposes other
than the acquisition of an EWG or a FUCO, or other transactions by such
registered holding company or its subsidiaries other than with respect to EWGs
or FUCOs, the Commission shall not consider the effect of the capitalization or
earnings of any subsidiary which is an EWG or a FUCO upon the registered holding
company system if Rule 53(a), (b) and (c) are satisfied. As set forth below, all
applicable conditions set forth in Rule 53(a) are, and, assuming the
consummation of the transactions proposed herein, will be, satisfied and none of
the conditions set forth in Rule 53(b) exist or will exist as a result of the
transactions proposed herein.
CSW's "aggregate investment" (as defined under Rule 53(a) of the
Act) in EWGs and FUCOs as of June 30, 1997 was approximately $910 million, or
about 47% of CSW's average "consolidated retained earnings" for the four
consecutive quarterly periods ended March 31, 1997. CSW thus satisfies Rule
53(a)(1). CSW will maintain and make available the books and records required by
Rule 53(a)(2). No more than 2% of the employees of CSW's operating subsidiaries
will, at any one time, directly or indirectly, render services to an EWG or FUCO
in which CSW directly or indirectly owns an interest, satisfying Rule 53(a)(3).
And lastly, CSW will submit a copy of Item 9 and Exhibits G and H of CSW's Form
U5S to each of the public service commissions having jurisdiction over the
retail rates of CSW's operating utility subsidiaries, satisfying Rule 53(a)(4).
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 regulatory authority and no federal regulatory
authority, other than the Commission under the Act, have jurisdiction over the
proposed transactions.
Item 5. Procedure
It is requested that the Commission issue and publish no later
than June 20, 1997, the requisite notice under Rule 23 with respect to the
filing of this Application, such notice to specify a date not later than July
14, 1997, as the date after which an order granting and permitting this
Application to become effective may be entered by the Commission and the
Commission enter not later than July 15, 1997, an appropriate order granting and
permitting this Application to become effective.
No recommended decision by a hearing officer or other
responsible officer of the Commission is necessary or required in this matter.
The Division of Investment Management of the Commission may assist in the
preparation of the Commission's decision in this matter. There should be no
thirty-day waiting period between the issuance and the effective date of any
order issued by the Commission in this matter, and it is respectfully requested
that any such order be made effective immediately upon the entry thereof. Item
6. Exhibits and Financial Statements
Exhibit 1 -Preliminary Opinion of Milbank, Tweed, Hadley &
McCloy, counsel to PSO.
Exhibit 2 -Final or "Past Tense" opinion of Milbank, Tweed,
Hadley & McCloy, counsel to the Company (to be filed with
Certificate of Notification).
Exhibit 3 -Proposed Notice of Proceeding.
Exhibit 4 -Financial Statements of Public Service Company of
Oklahoma, as of March 31, 1997.
Exhibit 5 -Stock Purchase Agreement, dated as of June 2, 1997.
Exhibit 6 -Form of Amended and Restated Articles of Incorporation of
Scientech, Inc.
Exhibit 7 -Escrow Agreement, dated as of June 2, 1997.
Exhibit 8 -Shareholders' Agreement, dated as of June 2, 1997.
Exhibit 9 -Registration Rights Agreement, dated as of June 2, 1997.
Confidential
Exhibit 10 -Financial Statements of SCIENTECH as at and for the fiscal
year ended January 31, 1997.
Item 7. Environmental Effects
The proposed transaction does not involve major federal action
having a significant effect on the human environment. To the best of PSO's
knowledge, no federal agency has prepared or is preparing an environmental
impact statement with respect to the proposed transaction.
<PAGE>
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.
Dated: July 25, 1997
PUBLIC SERVICE COMPANY
OF OKLAHOMA
By:/s/ WILLIAM R. MCKAMEY
William R. McKamey
General Manager
<PAGE>
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
1 Preliminary Opinion of Milbank, Previously
Tweed, Hadley & McCloy, counsel Filed
to the Company.
2 Final or "Past Tense" opinion of ---
Milbank, Tweed, Hadley & McCloy,
counsel to the Company (to be filed
with Certificate of Notification).
3 Proposed Notice of Proceeding. Previously
Filed
4 Financial Statements of Public Previously
Service Company of Oklahoma, as of Filed
March 31, 1997.
5 Stock Purchase Agreement, dated Previously
as of June 2, 1997. Filed
6 Form of Amended and Restated Previously
Article of Incorporation of Filed
Scientech, Inc.
7 Escrow Agreement, dated as of Previously
June 2, 1997. Filed
8 Shareholders' Agreement, dated Previously
as of June 2, 1997. Filed
9 Registration Rights Agreement, Previously
dated as of June 2, 1997. Filed
10 Financial Statements of SCIENTECH Filed
as at and for the fiscal year ended Separately
January 31, 1997 (Confidential Pursuant to
Exhibit). Rule 104
