Post-Effective Amendment No. 20 to
SEC File No. 70-7727
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ("Act")
GPU, INC. ("GPU")
100 Interpace Parkway
Parsippany, New Jersey 07054
GPU INTERNATIONAL, INC. ("GPU International")
One Upper Pond Road, Parsippany, New Jersey 07054
(Names of companies filing this statement
and addresses of principal offices)
GPU, INC
(Name of top registered holding company
parent of the applicants)
M.A. Nalewako, Secretary Douglas E. Davidson, Esq.
M. J. Connolly, Esq., Berlack, Israels & Liberman LLP
Assistant General Counsel 120 West 45th Street
GPU Service Corporation New York, New York 10036
100 Interpace Parkway
Parsippany, New Jersey 07054
W. S. Greengrove, Secretary
GPU International, Inc.
One Upper Pond Road
Parsippany, New Jersey 07054
(Names and addresses of agents for service)
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GPU and GPU International hereby amend Post-Effective
Amendment No. 19 to their Application on Form U-1, docketed in
SEC File No. 70-7727, as heretofore amended, to read in its
entirety as follows:
A. By Orders dated November 16, 1995 (HCAR No. 35-26409),
June 14, 1995 (HCAR No. 35-26307), December 28, 1994 (HCAR No.
35-26205), September 12, 1994 (HCAR No. 35-26123), December 18,
1992 (HCAR No. 35-25715) and June 26, 1990 (HCAR No. 35-25108) in
SEC File No. 70-7727 (collectively, the "Orders"), the
Commission, among other things, authorized GPU International to
engage in preliminary project development and administrative
activities ("Project Activities') in connection with its
investments in (i) qualifying facilities ('QFs"), as defined in
the Public Utility Regulatory Policies Act of 1978 ("PURPA'),
(ii) exempt wholesale generators ("EWGs"), as defined in Section
32 of the Act, and (iii) foreign utility companies ("FUCOs"), as
defined in Section 33 of the Act.
B. The Orders also authorized GPU from time to time
through December 31, 1997 to (i) enter into Guarantees(1) to
secure or support GPU International's agreement with any person
(including without limitation project lenders) in connection with
Project Activities and the acquisition of ownership or
participation interests in projects; (ii)guarantee the securities or
other obligations of EWGs and FUCOs; and (iii) assume liabilities of
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1 "Guarantees" include guarantees, support instruments and bank
letters of credit reimbursement agreements or similar financial
instruments or undertakings.
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EWGs and FUCOs, in an aggregate amount of up to $500 million. In
addition, the Orders authorized GPU International from time to
time through December 31, 1997 to enter into Guarantees, and to
assume liabilities of EWGs and FUCOs, in an aggregate amount of
up to $50 million.
C. By orders dated December 1, 1994 (HCAR No. 35-26179)
and September 15, 1995 (HCAR No. 35-26374), GPU International was
authorized to enter into a loan agreement with a group of lenders
for which Citibank N.A. acts as agent, which permits revolving
credit borrowings of up to $30 million outstanding at any time,
of which up to $15 million may be utilized to obtain letters of
credit. The orders also authorized GPU to deliver a support
agreement to the lenders on behalf of GPU International. This
loan agreement permits new borrowings through December 12, 1997,
and GPU International is in the process of discussing with the
lenders an extension and increase in such borrowing arrangements.
D. At June 30, 1997, GPU s committed equity investment in
all such QFs, EWGs and FUCOs, including amounts represented by
equity contribution obligations, and Guarantee obligations and
the like, amounted to approximately $1,031 million, of which $954
million represented GPU s "aggregate investment", as defined in
Rule 53, in EWGs and FUCOs. In addition, at August 31, 1997, no
revolving credit borrowings and approximately $1.8 million in
face amount of letters of credit was outstanding under the
Citibank loan agreement.
E. GPU and GPUI now propose as follows:
(i) to expand the purposes for which GPU may enter into
Guarantees on behalf of GPU International to include
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Guarantees of any security or other obligation of GPU
International or a subsidiary of GPU International ("GPUI
Subsidiary") (provided the issuance and sale of any such
security is exempt from the requirement of prior Commission
approval under Section 6(a) of the Act or has been otherwise
authorized by the Commission);
(ii) to increase to $150 million the aggregate
principal amount of Guarantees which GPU International may
have outstanding hereunder and to expand the purposes for
which GPU International may enter into Guarantees to include
guarantees of the securities or other obligations of GPUI
Subsidiaries (provided the issuance and sale of any such
security is exempt from the requirement of prior Commission
approval under Section 6(a) of the Act or has been otherwise
authorized by the Commission);
(iii) to extend until December 31, 2000 the period
during which GPU and GPU International may enter into
Guarantees; and
(iv) to permit any GPUI Subsidiary which is not an EWG or
FUCO to guarantee the securities or other obligations of
their direct or indirect subsidiaries (provided the issue
and sale of any such security is exempt from the requirement
of prior Commission approval under Section 6(a) of the Act
or has been otherwise authorized by the Commission) from
time to time through December 31, 2000 in an aggregate
amount not to exceed, together with the aggregate amount of
GPU International Guarantees outstanding, $150 million.
F. GPU is authorized in SEC File No. 70-8593 to
guarantee, and assume obligations of, EWGs and FUCOs and
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subsidiaries of GPU which own, directly or indirectly, interests
in EWGs or FUCOs ("Exempt Entity Project Parents"), in an
aggregate amount of up to 100% of GPU's "consolidated retained
earnings" as defined in Rule 53(a).(2)
However, since GPU International is not exclusively
engaged in activities relating to EWGs and FUCOs (e.g., it
develops and owns QFs), it is not an Exempt Entity Project Parent
and, therefore, GPU's guarantee authorization in SEC File No. 70-
8593 does not include the guarantee of obligations of GPU
International. Accordingly, GPU is requesting an extension of
the period of time in this docket during which it may issue
Guarantees of GPU International obligations.
Similarly, since GPU International is not an Exempt
Entity Project Parent, GPU International may not utilize the
Guarantee authorization which has been requested for Exempt
Entity Project Parents in Post-Effective Amendment No. 18 to SEC
File No. 70-8593. Accordingly, GPU International is requesting an
extension of the period of time in this docket during which it
may issue Guarantees.
GPU agrees that it will not enter into any Guarantee
which: (x) guarantees the securities or obligations of an EWG or
FUCO, or (y) guarantees the performance of a Guarantee executed
by GPU International or a GPUI Subsidiary of the securities or
other obligations of an EWG or FUCO, unless in any such case the
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2 HCAR No. 35-26773 (Nov. 5, 1997).
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conditions set forth in the Commission's orders in SEC File No.
70-8593 have been satisfied. Furthermore, any such Guarantee by
GPU would be included in GPU's "aggregate investment" as defined
in Rule 53(a).
G. The term of each Guarantee and any letter of
credit ("L/C") reimbursement agreement, would not exceed 35
years. Drawings under each L/C would bear interest at not more
than 5% above the prime rate as in effect from time to time, and
L/C fees would not exceed 1% annually of the face amount of the
L/C. The interest rate on GPU International indebtedness which
is guaranteed by GPU, and fees payable, would not exceed rates
and fees which are generally obtainable for indebtedness bearing
similar terms, conditions and features and which is issued by
companies of the same or reasonably comparable credit quality.
H. GPU submits that all of the criteria of Rules 53
and 54 under the Act with respect to the proposed transactions
are satisfied:
(i) The average consolidated retained earnings for GPU
and its subsidiaries, as reported for the four most recent
quarterly periods in GPU's Annual Report on Form 10-K for
the year ended December 31, 1996 and Quarterly Reports on
Form 10-Q for the quarters ended June 30, 1997, and March
31, 1997 as filed under the Securities Exchange Act of 1934,
was approximately $2,142 million. As of June 30, 1997, GPU
had invested, or committed to invest, directly or
indirectly, an aggregate of approximately $954 million in
EWGs and FUCOs. GPU's aggregate investment in EWGs and
FUCOs, pursuant to all outstanding or pending authorizations
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to make investments in EWGs or FUCOs, will not at any time
exceed the limitation imposed by the Commission in its order
dated November 5, 1997 (HCAR No. 35-26773) without further
Commission authorization.
(ii) GPU maintains books and records to identify
investments in, and earnings from, each EWG and FUCO in
which it directly or indirectly holds an interest.
(A) For each United States EWG in which GPU
directly or indirectly holds an interest:
(1) the books and records for such EWG will be
kept in conformity with United States generally accepted
accounting principles ("GAAP");
(2) the financial statements will be prepared in
accordance with the GAAP; and
(3) GPU directly or through its subsidiaries
undertakes to provide the Commission access to such books
and records and financial statements as the Commission may
request.
(B) For each FUCO or foreign EWG which is a
majority owned subsidiary of GPU:
(1) the books and records for such subsidiary
will be kept in accordance with GAAP;
(2) the financial statements for such subsidiary
will be prepared in accordance with GAAP; and
(3) GPU directly or through its subsidiaries
undertakes to provide the Commission access to such books
and records and financial statements, or copies thereof in
English, as the Commission may request.
(C) For each FUCO or foreign EWG in which GPU owns
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50% or less of the voting securities, GPU directly or
through its subsidiaries will proceed in good faith, to the
extent reasonable under the circumstances, to cause
(1) such entity to maintain books and records in
accordance with GAAP;
(2) the financial statements of such entity to be
prepared in accordance with GAAP; and
(3) access by the Commission to such books and
records and financial statements (or copies thereof) in
English as the Commission may request and, in any event, GPU
will provide the Commission on request copies of such
materials as are made available to GPU and its subsidiaries.
If and to the extent that such entity's books, records or
financial statements are not maintained in accordance with
GAAP, GPU will, upon request of the Commission, describe and
quantify each material variation therefrom as and to the
extent required by subparagraphs (a) (2) (iii) (A) and (a)
(2) (iii) (B) of Rule 53.
(iii) No more than 2% of GPU's domestic public utility
subsidiary employees will render any services, directly or
indirectly, to any EWG and FUCO in which GPU directly or
indirectly holds an interest.
(iv) Copies of this Post-Effective Amendment are being
provided to the New Jersey Board of Public Utilities and the
Pennsylvania Public Utility Commission, the only federal,
state or local regulatory agencies having jurisdiction over
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the retail rates of GPU's electric utility subsidiaries.(3) In
addition, GPU will submit to each such commission copies of any
Rule 24 certificates required hereunder, as well as a copy of
Item 9 of GPU's Form U5S and Exhibits H and I thereof (commencing
with the Form U5S to be filed for the calendar year in which the
authorization herein requested is granted).
(v) None of the provisions of paragraph (b) of Rule 53
render paragraph (a) of that Rule unavailable for the
proposed transactions.
(A) Neither GPU nor any subsidiary of GPU is the
subject of any pending bankruptcy or similar proceeding.
(B) GPU's average consolidated retained earnings
for the four most recent quarterly periods (approximately
$2,142 million) represented an increase of approximately $28
million in the average consolidated retained earnings for
the previous four quarterly periods (approximately $2,114
million).
(C) GPU did not incur operating losses from direct
or indirect investments in EWGs and FUCOs in 1996 in excess
of 5% of GPU's December 31, 1996 consolidated retained
earnings.
(vi) In accordance with Rule 54, the requirements of
Rule 53(a), (b) and (c) are fulfilled.
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3 Pennsylvania Electric Company ("Penelec") is also subject to retail
rate regulation by the New York Public Service Commission with respect
to retail service to approximately 11,300 customers in Waverly, New
York served by Waverly Electric Power & Light Company, a Penelec
subsidiary. Waverly Electric's revenues are immaterial, accounting for
less than 1% of Penelec's total operating revenues.
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I. The estimated fees, commissions and expenses to be
incurred by GPU in connection with the proposed transactions will
be filed by amendment.
J. GPU believes that Sections 6(a), 7, 9(a), 10, 12, 32,
and 33 of the Act and Rules 45, 53 and 54 are applicable to the
proposed transactions.
K. No Federal or State Commission, other than your
Commission, has jurisdiction with respect to the proposed
transactions.
L. It is requested that the Commission issue an order with
respect to the transactions proposed herein at the earliest
practicable date but, in any event, not later than December 1,
1997. It is further requested that (i) there not be a
recommended decision by an Administrative Law Judge or other
responsible officer of the Commission, (ii) the Office of Public
Utility Regulation be permitted to assist in the preparation of
the Commission's decision, and (iii) there be no waiting period
between the issuance of the Commission's order and the date on
which it is to become effective.
M. The following exhibits and financial statements are
filed in Item 6 thereof:
(a) Exhibits.
F-1 - Opinion of Berlack, Israels & Liberman LLP to be
filed by amendment.
F-2 - Opinion of Ballard Spahr Andrews & Ingersoll --
to be filed by amendment.
G - Financial Data Schedule to be filed by
amendment.
(b) Financial Statements.
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1-A - GPU and Subsidiary Companies Consolidated
Balance Sheets, actual and pro forma, as at
September 30, 1997 and Consolidated
Statements of Income and Retained Earnings,
actual and pro forma, for the twelve months
ended September 30, 1997; pro forma journal
entries to be filed by amendment.
1-B - GPU (Corporate) Balance Sheets, actual and pro
forma, as at September 30, 1997 and Statements of
Income and Retained Earnings, actual and pro
forma, for the twelve months ended September 30,
1997; pro forma journal entries to be filed by
amendment.
1-C - GPU International (Corporate) Balance Sheets,
actual and pro forma, as at September 30,
1997 and Statements of Income and Retained
Earnings, actual and pro forma, for the
twelve months ended September 30, 1997; pro
forma journal entries -- to be filed by
amendment.
2 - Reference is made to 1-A above.
4 - None, except as set forth in Notes to the
Financial Statements.
N. The proposed transaction will be carried out for the
purpose of financing GPU's and GPU International's business
activities. As such, the issuance of an order by your Commission
with respect thereto is not a major Federal action significantly
affecting the quality of the human environment.
O. No Federal agency has prepared or is preparing an
environmental impact statement with respect to the various
proposed transactions which are the subject hereof. Reference is
made to Item 4 hereof regarding regulatory approvals with respect
to the proposed transactions.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this statement to be signed on their behalf by the undersigned
thereunto duly authorized.
Dated: November 6, 1997
GPU, INC.
By:
T.G. Howson
Vice President and Treasurer
GPU INTERNATIONAL, INC.
By:
B.L. Levy
President
