File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION-DECLARATION WITH RESPECT TO
THE FORMATION OF A JOINT VENTURE
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
EUA COGENEX CORPORATION
EUA COGENEX-CANADA, INC.
P.O. Box 2333, BOSTON, MASSACHUSETTS 02107
(Name of companies filing this statement
and address of principal executive offices)
EASTERN UTILITIES ASSOCIATES
(Name of top registered holding company parents of
applicants or declarants)
CLIFFORD J. HEBERT, JR., TREASURER
EASTERN UTILITIES ASSOCIATES
P.O. Box 2333, BOSTON, MASSACHUSETTS 02107
(Name and address of agents for service)
The Commission is requested to mail signed copies
of all orders, notices and communications to:
ARTHUR I. ANDERSON, P.C.
McDermott, Will & Emery
75 State Street
Boston, MA 02109
ITEM 1. DESCRIPTION OF THE PROPOSED TRANSACTION.
I. Overview of Application/Declaration. EUA Cogenex Corporation
("Cogenex"), a Massachusetts corporation and a wholly-owned subsidiary of
Eastern Utilities Associates ("EUA"), a Massachusetts business trust and a
registered holding company under the Public Utility Holding Company Act of
1935 (the "Act") and Cogenex's direct subsidiary, EUA Cogenex Canada, Inc.
("Cogenex-Canada," Cogenex and Cogenex-Canada are referred to together
hereinafter as the "Applicants") are filing this joint application-
declaration (the "Application") with the Securities and Exchange Commission
(the "Commission"). The Application seeks approval to the extent required
under the Act: (i) for Cogenex-Canada to form and fund a wholly-owned
subsidiary ("Newco") which will enter into a general partnership with
Monenco Agra, Inc., a Canadian business corporation ("MA") for the purpose
of providing energy conservation services; (ii) for Newco to form and fund
a general partnership with MA (the "JV ESCO"); and (iii) for the Applicants
to guarantee third-party obligations of the JV ESCO.
Cogenex-Canada and MA intend to enter into a long-term relationship to
provide energy conservation services through the JV ESCO principally for
industrial sector customers in Canada (the "Territory"). Cogenex and MA
have entered into a Letter Agreement filed herewith as Exhibit B-1 in which
they have agreed to perform initial marketing, sales, auditing, bidding,
job procurement and performance activities in preparation of forming the JV
ESCO and to develop a long-term business plan for the JV ESCO. The term of
the Letter Agreement is for one year (the "Interim Period"), unless sooner
terminated (i) by the formation of the JV ESCO; (ii) by the decision of one
or both of Cogenex-Canada and MA; (iii) by the bankruptcy or insolvency of
either party; (iv) by failure to obtain the necessary corporate and
regulatory approvals, including but not limited to, the Commission's
authorization.
II. Description of MA's and Cogenex-Canada's Businesses.
Cogenex-Canada is engaged in the business of investing in energy
conservation-related business activities: (i) employing energy efficiency
technology and equipment primarily through shared savings agreements; and
(ii) contracting to assist electric utilities in demand-side management
activities including but not limited to shared-savings energy conservation
projects and demand-side utility programs. (HCAR 35-26135, September 30,
1994).
MA's business activities include engineering, construction, technology
development and systems planning in electric generation and transmission;
food, beverage and mineral processing; pharmaceuticals and biotechnology;
transportation systems and facilities; telecommunications; and systems
technology.
III. Formation of the JV ESCO. The Applicants and MA expect that
the formation of the JV ESCO will create a more attractive provider of
energy conservation services to customers within the Territory, thereby
allowing Cogenex-Canada and MA to expand their customer bases and will
provide synergies which will enable Cogenex-Canada and MA to provide their
services in a more cost-effective and efficient manner, enhancing their
profitability. Upon receipt of the Commission's authorization, Cogenex-
Canada will form Newco and Newco will form a general partnership in Canada
with MA. Their relationship will be governed by a general partnership
agreement, a copy of which will be filed by amendment as Exhibit B-2
hereto. Generally, each of Newco and MA will be a 50% partner in the JV
ESCO, sharing equally in the capital contributions, allocation of profits
and losses and distributions of the JV ESCO. The JV ESCO will be governed
by a management committee comprised of one representative of each partner.
Cogenex-Canada and MA will assign all contracts and business opportunities
obtained during the Interim Period within the Territory at cost to the JV
ESCO. The Applicants and MA will also be reimbursed by the JV ESCO for
their expenses incurred during the Interim Period but not previously
reimbursed and except for products and services provided by affiliates of
the Applicants and MA which will be reimbursed at standard market rates.
Newco and MA will make capital contributions in an amount initially
expected to be approximately $1,000 each which will be used by the JV ESCO
for working capital purposes. The Applicants and MA will subcontract
personnel to the JV ESCO at cost as needed until such time, if any, as the
JV ESCO employs its own personnel.
IV. Activity During the Interim Period. During the Interim Period,
Cogenex-Canada and MA are performing initial marketing, sales, auditing,
bidding, job procurement and performance activities for energy conservation
services in the Territory. All business opportunities and contracts
derived from such activity, except for those independent, pre-existing
relationships of Cogenex-Canada and its affiliates and MA and its
affiliates, shall be subject to assignment to the JV ESCO.
The Applicants and MA have each committed to providing employees and
other resources as set forth in the Interim Business Plan which is attached
to the Letter Agreement. During the Interim Period, the Applicants and MA
will share the cost of their employees and support provided as set forth in
the Letter Agreement.
V. The Applicants hereby requests authorization to the extent required
under the Act (i) for Cogenex-Canada to form Newco as a new wholly-owned
Canadian subsidiary; (ii) for Cogenex-Canada to purchase stock from, and
make capital contributions, loans and open account advances to, Newco
("Investments"); (iii) if it becomes necessary in order to obtain third-
party loans or to obtain more favorable terms from third parties, for the
Applicants to guarantee the obligations of Newco or the JV ESCO; and (iv)
for Newco to enter into the general partnership agreement that will govern
the JV ESCO and for Newco thereafter to make Investments in the JV ESCO
upon such terms as it deems commercially reasonable. The aggregate amount
of any Investments in the JV ESCO together with the obligations guaranteed
for the benefit of the JV ESCO will not exceed $15,000,000. The capital
contributions by Cogenex-Canada and Newco will be exempt from the
requirement of Commission authorization pursuant to Rule 45(b)(4), and any
amount borrowed by the JV ESCO from third party lenders will be through
loans exempt from the requirement of Commission authorization by Rule
52(b). The Applicants request that any goods or services furnished by
Cogenex-Canada or any of its associate companies (other than an associate
company which is a public utility company) to the JV ESCO be furnished at
prices not to exceed market prices pursuant to an exception from the
requirements of 13(b) and Rules 90 and 91 thereunder. The JV ESCO will not
be providing goods or services to Cogenex-Canada or its associate
companies.
ITEM 2. FEES, COMMISSIONS, AND EXPENSES.
The fees, commissions and expenses of the Applicants expected to be
paid or incurred, directly or indirectly, in connection with the
transactions described will be filed by amendment.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
The sections of the Act and rules or exemptions thereunder that the
applicants believe are or may be applicable to the transactions proposed
are set forth below:
Acquisition of interest in Newco Sections 9(a) and 10.
by Cogenex-Canada and by Newco in
JV ESCO.
Provision of services Sections 12(f), 13; Rules
by Cogenex and its
associate companies to JV ESCO.
Guaranty of obligations of JV ESCO Section 12(b); Rule 45(a).
and Newco by Cogenex-Canada and Cogenex.
ITEM 4. REGULATORY APPROVALS.
No state commission and no Federal commission, other than the
Commission, has jurisdiction over the proposed transactions.
ITEM 5. PROCEDURE.
(a) In order to be in a position to carry out the proposed
transactions at the most advantageous time, the Applicant requests that the
Commission issue its order hereon on the earliest practical date.
(b) It is not considered necessary that there be a recommended
decision by a hearing officer or by any other responsible officer of the
Commission. The Office of Public Utility Regulation may assist in the
preparation of the decision of the Commission, and it is believed that a
thirty (30) day waiting period between the issuance of the order of the
Commission and the day on which the order is to become effective would not
be appropriate.
(c) The Applicants propose that the JV ESCO file reports with the
Commission pursuant to Rule 24 on a quarterly basis, beginning the first
calendar quarter after this application-declaration is granted and
permitted to become effective, on the following schedule: The quarterly
report for the first calendar quarter of each year will be filed on or
before August 15 of such year; the quarterly report for the second calendar
quarter of each year will be filed on or before November 15 of such year;
the quarterly report for the third calendar quarter of each year will be
filed on or before February 15 of the immediately succeeding calendar year;
and the quarterly report for the final calendar quarter of each year will
be filed on or before May 1 of the immediately succeeding calendar year.
Each such quarterly report will include the JV ESCO's consolidated balance
sheets, statements of income and statements of cash flows. In addition,
the JV ESCO shall file annual reports with the Commission along with the
final quarter report. Such report will be filed on the modified form U-13-
60 and shall include:
(1) A statement of estimated kilowatts saved during the past year and
cumulatively through demand-side management projects and according to the
utility sponsor (utilities which sponsor programs on behalf of their
customers).
(2) A list of new generation facilities acquired, if any, and the
applicable Federal Energy Regulatory Commission certification date and
number.
(3) A schedule of terminated and/or cancelled contracts, their value,
the amount of loss to the JV ESCO, and the reasons for the termination.
(4) A schedule of actual accounts receivable written off the books of
the JV ESCO (i.e., bad debt expense).
(5) An aging of accounts receivable for account 143 - Accounts
Receivable and account 146 - Accounts Receivable from Associate Companies.
(6) A schedule of any projects over $100,000 broken down by demand-
side management, energy management services and cogeneration, including the
investment and, based on the contract, the estimated future total project
value (net realizable value).
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS (* filed herewith)
(**confidential treatment requested)
(a) Exhibits.
Exhibit A-1 Form of Certificate of Formation of Newco (to
be filed by amendment).
** Exhibit B-1 Letter Agreement between EUA Cogenex
Corporation and Monenco Agra, Inc. dated as
of January 11, 1996.
Exhibit B-2 Form of general partnership agreement.
Exhibit F-1 Opinion of McDermott, Will & Emery (to be
filed by amendment).
* Exhibit H Proposed Form of Notice.
(b) Financial Statements.
None
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned Applicants have duly caused this statement to be
signed on their behalf by the undersigned duly authorized individuals.
EUA COGENEX CORPORATION
EUA COGENEX-CANADA, INC.
By: /s/ Edward T. Liston
Edward T. Liston
Their President
Dated June 27, 1996
EXHIBIT B-1, LETTER AGREEMENT BETWEEN EUA COGENEX CORPORATION
AND MONENCO AGRA, INC.
** FILED WITH CONFIDENTIAL TREATMENT REQUEST **
Exhibit H
(PROPOSED FORM OF NOTICE)
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- , 70- )
EUA Cogenex Corporation ("Cogenex"), a wholly-owned
subsidiary of Eastern Utilities Associates, a registered holding
company, Cogenex's direct subsidiary, EUA Cogenex Canada, Inc.
("Cogenex-Canada"), (Cogenex and Cogenex-Canada together the
"Applicants") have filed an application declaration with this
Commission pursuant to Sections 9(a), 10, 12(b), 12(f) and 13 of
the Public Utility Holding Company Act of 1935 (the "Act") and
Rule 45(a) promulgated thereunder.
The Applicants hereby request authorization to the extent
required under the Act (i) for Cogenex-Canada to form Newco as a
new wholly-owned Canadian subsidiary; (ii) for Cogenex-Canada to
purchase stock from, and make capital contributions, loans and
open account advances to, Newco ("Investments"); (iii) if it
becomes necessary in order to obtain third-party loans or to
obtain more favorable terms from third parties, for the
Applicants to guarantee the obligations of Newco or the JV ESCO;
and (iv) for Newco to enter into the general partnership
agreement that will govern the JV ESCO and for Newco thereafter
to make investments in the JV ESCO upon such terms as it deems
commercially reasonable. The aggregate amount of any Investments
in the JV ESCO together with the obligations guaranteed for the
benefit of the JV ESCO will not exceed $15,000,000. The capital
contributions by Cogenex-Canada and Newco will be exempt from the
requirement of Commission authorization pursuant to Rule
45(b)(4), and any amount borrowed by the JV ESCO from third party
lenders will be through loans exempt from the requirement of
Commission authorization by Rule 52(b). The Applicants request
that any goods or services furnished by Cogenex-Canada or any of
its associate companies (other than an associate company which is
a public utility company) to the JV ESCO be furnished at prices
not to exceed market prices pursuant to an exception from the
requirements of 13(b) and Rules 90 and 91 thereunder. The JV
ESCO will not be providing goods or services to Cogenex-Canada or
its associate companies.
Cogenex-Canada and MA intend to enter into a long-term
relationship to provide energy conservation services through the
JV ESCO principally for industrial sector customers in Canada
(the "Territory"). They have entered into a Letter Agreement in
which they have agreed to perform initial marketing, sales,
auditing, bidding, job procurement and performance activities in
preparation of forming the JV ESCO and to develop a long-term
business plan for the JV ESCO.
The Applicants and MA expect that the formation of the JV
ESCO will create a more attractive provider of energy
conservation services to customers within the Territory, thereby
allowing Cogenex-Canada and MA to expand their customer bases and
will provide synergies which will enable Cogenex-Canada and MA to
provide their services in a more cost-effective and efficient
manner, enhancing their profitability.
Upon receipt of the Commission's authorization, Cogenex-
Canada will form Newco and Newco will form a general partnership
in Canada with MA. Generally, each of Newco and MA will be a 50%
partner in the JV ESCO, sharing equally in the capital
contributions, allocation of profits and losses and distributions
of the JV ESCO.
NOTICE IS FURTHER GIVEN that any interested person may, not
later than _________, 1996, request in writing that a hearing be
held on such matter, stating the nature of his interest, the
reasons for such request, and the issues of fact or law raised by
said application/declaration which he desires to controvert; or
he may request that he be notified if the Commission should order
a hearing thereon. Any such request should be addressed:
Secretary, Securities and Exchange Commission, 450 5th Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. A copy of such
request should be served personally or by mail upon the
applicant/declarant at the above-stated address and proof of
service (by affidavit or, in case of an attorney at law, by
certificate) should be filed with the request. At any time after
said date the application/declaration, as filed or as it may be
amended, may be granted and permitted to become effective as
provided in Rule 23 of the General Rules and Regulations
promulgated under the Act, or the Commission may grant exemption
from such rules as provided in Rules 20(a) and 100 thereof or
take such other action as it may deem appropriate. Persons who
request a hearing or advice as to whether a hearing is ordered
will receive any notices and orders issued in this matter,
including the date of the hearing (if ordered) and any
postponements thereof.
For the Commission, by the Division of Corporate Regulation,
pursuant to delegated authority.
Secretary
