File No. 70-8845
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
____________________________
AMENDMENT NO. 1
to
DECLARATION
Under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________
Entergy Power, Inc. Entergy Corporation
900 South Shackleford Road 639 Loyola Avenue
Little Rock, AR 72211 New Orleans, LA 70113
(Names of companies filing this statement
and addresses of principal executive offices)
____________________________
Entergy Corporation
(Name of top registered holding company parent of
each applicant or declarant)
____________________________
Terry L. Ogletree Gerald D. McInvale
President Executive Vice President
Entergy Power, Inc. Chief Financial Officer
900 South Shackleford Road Entergy Corporation
Little Rock, AR 72211 639 Loyola Avenue
New Orleans, LA 70113
(Names and addresses of agents for service)
____________________________
The Commission is also requested to send copies
of any communications in connection with this matter to:
Frederick F. Nugent, Esq. Laurence M. Hamric, Esq.
General Counsel General Attorney
Entergy Enterprises, Inc. Entergy Services, Inc.
900 South Shackleford Road 639 Loyola Avenue
Little Rock, AR 72211 New Orleans, LA 70113
Thomas C. Havens, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
<PAGE>
Item 1. Description of Proposed Transaction.
Item 1 of the Declaration in this File is hereby amended and
restated to read in its entirety as follows:
"Entergy Power, Inc. ("EPI"), a Delaware corporation, is a
wholly-owned subsidiary of Entergy Corporation ("Entergy"), a
registered holding company under the Public Utility Holding
Company Act of 1935, as amended (the "Act"). EPI and Entergy
(the "Declarants") hereby request the approval of the Securities
and Exchange Commission (the "Commission") under Section 12(c) of
the Act and Rule 46 promulgated by the Commission thereunder for
EPI to make payments to Entergy from time to time during the
period through December 31, 1998 out of EPI's unearned surplus,
as more fully described below.
A. Background.
Pursuant to Commission order dated August 27, 1990 (the
"1990 Order")<FN1>, EPI was formed to participate as a supplier of
electricity at wholesale to non-associate companies in bulk power
markets. In accordance with the 1990 Order, EPI acquired the
ownership interests of its associate company, Arkansas Power &
Light Company, in (1) Unit 2 of the Independence Steam Electric
Generating Station, and (2) Unit 2 of the Ritchie Steam Electric
Generating Station, representing an aggregate of 809 MW of
generating capacity (the "Transferred Capacity"). Entergy
financed EPI's acquisition of the Transferred Capacity and
related facilities and EPI's ongoing capital requirements through
a series of loans in an aggregate amount of approximately $237
million.
For various reasons, EPI until recently had experienced
difficulty in marketing the Transferred Capacity to third
parties. Due to adverse market conditions, the high debt service
requirements associated with EPI's leveraged capital structure
and other factors, EPI incurred losses from operations for each
of the years 1990 through 1995.<FN2> However, EPI has entered into
several additional intermediate- and long-term contracts for the
sale of capacity and energy from the Transferred Capacity, all of
which are now generating revenue. EPI currently has
approximately 500 MW of capacity under contract for terms longer
than one year, including the following:
(1) Alabama Municipal Electric Authority -- 30 MW through
June 1996, increasing to 50 MW through 2005.
(2) Associated Electric Cooperative, Inc. -- 200 MW from
January 1996, increasing to 300 MW in 2000 through May 2010.
(3) East Texas Electric Cooperative, Inc. -- 40 MW through
2009.
(4) Municipal Energy Agency of Mississippi -- 23 MW to May
2010.
(5) Northeast Texas Electric Cooperative, Inc. -- 36 MW
through 2017.
(6) Oglethorpe Power Cooperative -- 100 MW to June 30,
2002.
(7) Tallahassee Electric Department -- 25 MW from March 9,
1996 through March 2002.
As a result of EPI's increased revenues from these contracts
and numerous short-term capacity and energy sales EPI is
presently making in spot markets, EPI projects that it will be
profitable in 1996 and for the foreseeable future. Reference is
hereby made to Exhibit G-2 hereto for further information with
respect to EPI's projected results of operations for the years
1996 through 2000.
B. Proposed Transaction.
As of December 31, 1995, EPI had cash and cash equivalents
of approximately $63,021,300. The cash equivalents of EPI
include temporary cash investments of $59,225,000, which derive
from capital contributions made by Entergy to EPI in July and
December 1995.<FN3> These liquid assets are far in excess of any
foreseeable capital needs of EPI, particularly in view of EPI's
expected future profitability. Therefore, EPI proposes to return
all or most of these assets to Entergy, its sole shareholder, in
the form of one or more cash payments out of EPI's unearned
surplus.<FN4> EPI proposes to make such payments to Entergy from
time to time during the period through December 31, 1998 in an
aggregate amount not to exceed $55 million. Entergy would apply
such funds to general corporate purposes.
The Declarants represent that, upon effecting any of the
proposed payments to Entergy, EPI's equity capital will not fall
below 30% of its total capitalization. The Declarants further
represent that EPI's cash position after any such payments will
be sufficient to allow EPI to continue to meet its projected
capital requirements and other obligations. Therefore, the
proposed payments will not be detrimental to the financial
integrity or working capital of EPI. The proposed payments are
also in the best interests of Entergy, EPI's sole shareholder.
Reference is hereby made to the Financial Statements filed
herewith, including the pro forma journal entries, for further
information with respect to the anticipated pro forma effects of
the proposed transaction.
The Declarants hereby represent that, pursuant to Rule 54
under the Act, all of the criteria of Rule 53(a) and (b) are
satisfied. In this connection, in compliance with Rule 53,
Entergy provides the following information:
(1) Entergy's aggregate investment (as defined in Rule 53)
in "exempt wholesale generators" ("EWGs") and "foreign utility
companies" ("FUCOs") was approximately 13.01% of Entergy's
consolidated retained earnings at December 31, 1995.
(2) Entergy maintains books and records to identify
investments in and earnings from any EWG or FUCO in which it
directly or indirectly holds an interest.
(3) For each FUCO or foreign EWG that is a majority-owned
subsidiary company (as defined in Rule 53) of Entergy, and for
each United States EWG in which Entergy directly or indirectly
holds an interest, the books and records shall be kept, and
financial statements shall be prepared, in accordance with
generally accepted accounting principles ("GAAP"), and Entergy
undertakes to provide the Commission access to such books and
records and financial statements (in English) as the Commission
may request.
(4) For each FUCO or foreign EWG in which Entergy directly
or indirectly owns 50% or less of the voting securities, Entergy
will proceed in good faith, to the extent reasonable under the
circumstances, to cause the books and records to be kept, and
financial statements to be prepared, in accordance with GAAP, and
to cause the Commission to have access to such books and records
and financial statements (in English) as the Commission may
request. In any event, Entergy will make available to the
Commission any books and records of such entity that are
available to Entergy. If such books and records and financial
statements are maintained according to a comprehensive body of
accounting principles other than GAAP, Entergy will, upon
request, describe and quantify each material variation from GAAP.
(5) Less than 2% of the employees of Entergy's domestic
public-utility company subsidiaries render or will render
services, at any one time, directly or indirectly, to EWGs or
FUCOs in which Entergy has a direct or indirect interest.
(6) Entergy has submitted a copy of this Declaration on
Form U-1 to the Federal Energy Regulatory Commission and to each
public service commission having jurisdiction over the retail
rates of Entergy's public utility subsidiaries.
(7) Neither Entergy nor any subsidiary company thereof has
been the subject of a bankruptcy or similar proceeding.
(8) Entergy's average consolidated retained earnings for
the four most recent quarterly periods have not decreased by 10%
from the average for the previous four quarterly periods.
(9) Entergy's reported operating losses for the year 1995
attributable to its direct or indirect EWG and FUCO investments
were less than 0.75% of consolidated retained earnings at
December 31, 1995."
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses expected to be paid or
incurred, directly or indirectly, in connection with the
transaction described herein are estimated to be approximately
$12,000, including the filing fee of the Commission of $2,000,
and fees and expenses of counsel of approximately $10,000.
Item 3. Applicable Statutory Provisions.
The first sentence of Item 3 of the Declaration in this File
is hereby amended to read as follows:
"The proposed payments to Entergy by EPI out of EPI's
unearned surplus are subject to Section 12(c) of the Act and Rule
46(a) thereunder."
Item 6. Exhibits and Financial Statements.
(a) Exhibits:
F - Opinion of Frederick F. Nugent
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this amendment to be signed on their behalf by the undersigned
thereunto duly authorized.
ENTERGY CORPORATION
By: /s/ Michael G. Thompson
Michael G. Thompson
Senior Vice President,
General Counsel and Secretary
ENTERGY POWER, INC.
By: /s/ Michael G. Thompson
Michael G. Thompson
Vice President and Secretary
Dated: May 29, 1996
_______________________________
<FN1>See Holding Company Act Release ("HCAR") No. 25136.
<FN2>In order to eliminate the financial burdens of EPI's highly
leveraged capital structure, EPI sought and received an
order of the Commission in April 1995 permitting EPI to
change its capital structure from one consisting
predominantly of debt to one consisting entirely of equity.
See HCAR No. 26275 (dated April 18, 1995).
<FN3>In accordance with Rule 45(c) under the Act, Entergy
transferred these funds to EPI in order to reflect on EPI's
books tax benefits associated with net operating losses
generated by EPI and used in Entergy's consolidated Federal
income tax returns for the years 1990 through 1995.
<FN4>Pursuant to Section 170 of the Delaware General Corporation
Law ("DGCL"), the directors of EPI may declare a dividend
from "surplus". Section 154 of the DGCL defines surplus as
a corporation's assets in excess of its liabilities plus
stated capital. In this regard, as of December 31, 1995,
EPI had stated capital in the amount of $55,000, a deficit
in retained earnings of approximately $77,771,562, and other
paid-in capital of approximately $249,950,000. Therefore,
at December 31, 1995, EPI had a surplus of approximately
$172,178,438 (i.e., the excess of $224,841,651 in total
assets over $55,000 in stated capital plus $52,608,213 in
total liabilities). However, authority is requested herein
for EPI to pay up to $55 million of such surplus to Entergy.
EXHIBIT F
May 29, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: File No. 70-8845
Entergy Power, Inc.; Entergy Corporation -
Declaration with Respect to Payment of Dividends from
Unearned Surplus
Ladies and Gentlemen:
I am Assistant Secretary for Entergy Power, Inc. ("EPI") and
am familiar with the transactions described and proposed (the
"Proposed Transactions") in the Declaration on Form U-1, as
amended (the "Declaration"), filed with the Securities and
Exchange Commission (the "Commission") under the Public Utility
Holding Company Act of 1935, as amended (the "Act"), in the above-
referenced File. I have examined, among other things, the
Declaration and such other documents, certificates and corporate
records, and such matters of law, as I have deemed necessary to
form the basis of this opinion.
Based upon the foregoing, it is my opinion that:
1. All actions necessary to make valid the Proposed
Transactions will have been taken when: (i) the Declaration shall
have been permitted to become effective in accordance with the
applicable provisions of the Act; and (ii) all appropriate final
action authorizing the Proposed Transactions shall have been
taken by the Board of Directors of EPI or by a duly authorized
committee thereof.
2. When the foregoing steps have been taken, and assuming the
Proposed Transactions are consummated in accordance with the
Declaration and the related order or orders of the Commission:
(i) all state laws applicable to the Proposed Transactions will
have been complied with; (ii) EPI may lawfully make a
distribution to Entergy Corporation out of EPI's unearned surplus
as described in the Declaration; and (iii) the consummation of
the Proposed Transactions will not violate the legal rights of
the holders of any securities issued by EPI or any associate
company thereof.
I am a member of the Illinois bar and do not hold myself out
as an expert on the laws of any other state.
I hereby consent to the use of this opinion as an exhibit to
the Declaration.
Very truly yours,
/s/ Frederick F. Nugent
Frederick F. Nugent
