As filed with the Securities and Exchange Commission on March 10, 1995
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
_______________________________________________
CINergy Corp.,
CINergy Services, Inc.,
The Cincinnati Gas & Electric Co.,
The Union Light, Heat and Power Co.,
The West Harrison Gas and Electric Co.,
Lawrenceburg Gas Co.,
Miami Power Corp.,
Tri-State Improvement Co.,
KO Transmission Co.,
CINergy Investments, Inc.,
CG&E Resource Marketing, Inc.,
Enertech Associates International, Inc.,
Beheer- En Belegginsmaatschappij Bruwabel B.V.,
Power International s.r.o. and
Power Development s.r.o.
139 East Fourth Street
Cincinnati, Ohio 45202
PSI Energy, Inc.,
Wholesale Power Services, Inc.,
PSI Recycling, Inc. and
Power Equipment Supply Co.
1000 East Main Street
Plainfield, Indiana 46168
(Names of companies filing this statement and
addresses of principal executive offices)
_______________________________________________
CINergy Corp.
(Name of top registered holding company parent)
________________________________________________
William L. Sheafer
Treasurer
CINergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
(Name and address of agent for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application-Declaration to:
Cheryl M. Foley
Vice President, General Counsel and Corporate Secretary
CINergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
M. Douglas Dunn William T. Baker, Jr.
Milbank, Tweed, Hadley & McCloy Reid & Priest
One Chase Manhattan Plaza 40 West 57th Street
New York, New York 10005 New York, New York 10019
<PAGE>
Item 1. Description of Proposed Transactions.
In this Application-Declaration, CINergy Corp. ("CINergy"), a
Delaware corporation and a registered holding company under the Public
Utility Holding Company Act of 1935, as amended (the "Act"), and certain of
its subsidiary companies/1/ seek authorization through May 31, 1997 (i) to
incur short-term borrowings, (ii) to issue notes and/or commercial paper,
(iii) to make capital contributions, and (iv) to establish and utilize a
system of money pools to coordinate and provide for the short-term cash
requirements of the Applicants, all as provided herein.
By order dated January 11, 1995 in File No. 70-8521, Rel. No. 35-
26215 (the "January 1995 Order"), the Commission authorized CINergy through
January 31, 1997 to incur short-term indebtedness through bank borrowings,
to issue notes and commercial paper, and to obtain letters of credit, all
in an aggregate amount of up to $375 million. In this Application-
Declaration, CINergy requests authorization to use the proceeds of such
borrowings and sales of commercial paper, and any funds available for
general corporate purposes (including any funds that may be available for
general corporate purposes pursuant to the Commission's order dated
November 18, 1994 in File No. 70-8477, Rel. No. 35-26159) to loan funds to
the other Applicants when required through the money pools described
herein, and to make capital contributions and loans to certain of the
Applicants as described in Item 1.B.2. In addition, in connection with
bank borrowings by the other Applicants as described in Item 1.A.3.b. and
Item 1.B.4., CINergy requests authorization herein through May 31, 1997 to
issue guarantees and, pursuant to the January 1995 Order, to obtain letters
of credit.
Description of the Parties
CINergy is a Delaware corporation and a holding company for CG&E,
PSI Energy and a number of other companies. CG&E and its subsidiaries
ULH&P, Lawrenceburg and West Harrison are primarily engaged in providing
electric and/or gas service in the southwestern portion of Ohio and
adjacent areas in Kentucky and Indiana. The area served with electricity,
gas, or both covers approximately 3,000 square miles, has an estimated
population of approximately 1.8 million, and includes the cities of
Cincinnati and Middletown in Ohio, Covington and Newport in Kentucky, and
Lawrenceburg in Indiana. Miami is an Indiana corporation and a subsidiary
of CG&E. Miami owns a 138 kV transmission line running from the Miami Fort
Power Station to a point near Madison, Indiana. PSI Energy is engaged in
the production, transmission, distribution and sale of electric energy in
north central, central, and southern Indiana. It serves a population of
approximately 1.9 million in 69 of the 92 counties in Indiana, including
the cities of Terre Haute, Kokomo, Columbus, Lafayette, Bloomington and New
Albany.
CINergy Services is a subsidiary service company for the CINergy
system, and provides CG&E, PSI Energy and the other companies of the
CINergy system with a variety of administrative, management and support
services. Tri-State is a subsidiary of CG&E and is devoted to acquiring
and holding property in Ohio, Kentucky and Indiana for substations,
electric and gas rights of way, office space and other uses in the utility
operations of CG&E and its utility subsidiaries. KO is a subsidiary of
CG&E and was formed to acquire an interest in an interstate natural gas
pipeline to which CG&E is entitled as a result of a settlement with the
Columbia gas system. Subject to approval and jurisdiction of the Federal
Energy Regulatory Commission ("FERC"), KO will be engaged in the
transportation of natural gas in interstate commerce between Kentucky and
Ohio.
CINergy Investments is a subsidiary of CINergy and serves as a
holding company for certain non-utility businesses of CINergy, including
Wholesale Power, Recycling, Equipment, Resource Marketing, Enertech, and
subsidiaries thereof.
Wholesale Power was formed to engage in the business of brokering
power, emission allowances, electricity futures, and related products and
services and to provide consulting services in the wholesale power-related
markets. Wholesale Power also has applied to the FERC for a marketing
license to provide electric merchant service. In addition, Wholesale
Power, through a division, The International Power Exchange, markets and
maintains the services of an "electronic bulletin board" for the bulk power
market. Recycling recycles paper, metal and other materials from Energy,
its largest single supplier, CG&E and other companies. Equipment was
formed to sell equipment and parts from a cancelled generating plant, the
Marble Hill nuclear project. Equipment now also buys equipment for resale,
brokers equipment, and sells equipment on consignment for others.
Resource Marketing was formed to hold a one-third general
partnership interest in Energy Partners, a gas marketing partnership with
Public Service Electric & Gas Company. Resource Marketing was formed to
compete with traditional regulated local distribution companies by offering
"merchant service" (i.e., acquiring natural gas and selling it to
customers) and to broker gas to industrial and large commercial customers,
with the initial aim of recapturing former customers of CG&E's gas utility
business.
Enertech was formed as a vehicle for CG&E to offer utility
management consulting services and to pursue investment opportunities in
energy-related areas, including demand-side management services,
consulting, energy and fuel brokering, engineering services, and
construction and/or operation of generation, co-generation and independent
power production facilities. Enertech and its subsidiaries have a regional
and international consulting services practice in Ohio, Kentucky, Indiana
and a number of foreign countries, including the Czech Republic and certain
countries that were formerly part of the Soviet Union, including
Kazakhstan. Enertech has one direct subsidiary, Bruwabel, and two indirect
subsidiaries, Power Development and Power International, which were
organized to facilitate operations in the Czech Republic and the
tax-efficient treatment of earnings from those operations. Bruwabel is
organized under Dutch law, while Power International and Power Development
are organized under Czech law.
Additional information about the Applicants and their businesses
is set forth in the Form U-1 Application-Declaration, as amended, of
CINergy in File No. 70-8427, and the exhibits thereto (the "CINergy Merger
U-1").
A. CINergy Utility Companies and Certain Non-Utility Companies
1. Borrowing Authority
Authorization is requested through May 31, 1997 for CG&E, PSI
Energy, ULH&P, Lawrenceburg, West Harrison, Miami, CINergy Services, KO and
Tri-State (i) to incur short-term borrowings and to issue notes in
connection therewith, and (ii) together with CINergy, to establish and
utilize a money pool (the "Utility Money Pool") to coordinate and provide
for certain of their short-term cash and working capital requirements.
Authorization is also requested through May 31, 1997 for CG&E and PSI
Energy to issue commercial paper.
Under the authority requested herein (and, in the case of
CINergy, the authority granted pursuant to the January 1995 Order), the
aggregate principal amount of short-term borrowings, notes and/or
commercial paper outstanding for CINergy, CINergy Services, CG&E, PSI
Energy, ULH&P, Lawrenceburg, West Harrison, Miami, KO and Tri-State at any
one time will not exceed the following amounts:
Company Aggregate amount
CINergy $375,000,000
CINergy Services 100,000,000
PSI Energy 400,000,000
CG&E 400,000,000
ULH&P 35,000,000
West Harrison 200,000
Lawrenceburg 3,000,000
Miami 100,000
KO 2,000,000
Tri-State 40,000,000
The Amended Articles of Incorporation of CG&E limit the issuance
of any unsecured indebtedness by CG&E to no more than 20% of the total
principal amount of all bonds and other securities representing secured
indebtedness issued by CG&E, plus the capital and surplus of CG&E then on
its books. This limitation is not expected to interfere with any presently
anticipated requirements for unsecured debt during the period covered by
this Application. The charters of the other Applicants do not contain
limits on outstanding amounts of unsecured debt.
2. Use of Proceeds
Proceeds of any short-term borrowings by CG&E, PSI Energy, ULH&P,
Lawrenceburg, West Harrison, Miami, CINergy Services, KO and Tri-State and
sales of commercial paper by CG&E and PSI Energy may be used by each such
company (i) for the interim financing of its construction and capital
expenditure programs; (ii) for its working capital needs; (iii) for the
repayment, redemption or refinancing of its debt and preferred stock;
(iv) to meet unexpected contingencies, payment and timing differences, and
cash requirements, to cover inter-company balances, and for other lawful
general corporate purposes; (v) to loan to other participants in the
Utility Money Pool described in Item 1.A.5 below; and (vi) in the case of
borrowings by CINergy Services, for other lawful purposes in connection
with the performance by CINergy Services of its functions as a subsidiary
service company under the Act, including the purposes specified in the
CINergy Merger U-1.
In addition, proceeds of borrowings, and other available funds,
may be used (i) by CG&E to make capital contributions to Tri-State and KO
for the purpose of settling inter-company open-account balances and
indebtedness to CG&E and to provide Tri-State and KO with working capital
for their activities in support of CG&E's operations, and (ii) by CG&E and
its utility subsidiaries to make loans and open-account advances to one
another in connection with services, goods and construction provided to one
another, as set forth in Item 3.B of the CINergy Merger U-1. Applicants'
inter-company loan and open-account balances will be set forth in
Exhibit 13 hereto.
The Applicants' estimated construction and capital expenditures
for the years 1995-1996 are as follows:
($ Millions)
1995 1996 Total
PSI Energy 164 171 335
CG&E 127 175 302
ULH&P 15 19 34
Total 306 365 671
These estimates are subject to change due to numerous factors, including
the rate of load growth, escalation of construction costs, changes in
environmental and other regulation, delays from regulatory hearings and the
adequacy of rate relief. In addition, the borrowing levels set forth in
Item 1.A.1 above include a safety margin required because of the inherent
nature of projections and such factors as possible timing differences in
the sale of long-term securities which may be used to refund short-term
debt, fluctuations in operating expenses, daily fluctuations of short-term
cash requirements and resulting borrowing levels, changes in weather which
affect income, escalation and timing of construction expenditures and other
similar unpredictable events.
3. Bank Borrowings
a. Existing bank facilities
CINergy's existing formal lines of credit are embodied in a
revolving credit agreement dated September 27, 1994 with Barclays Bank PLC,
New York branch, and other banks. The banks under such credit agreement
have currently committed to lend CINergy up to $100 million at any one time
outstanding. At December 31, 1994, $75 million in borrowings were
outstanding thereunder. For further information with respect to these
borrowings, reference is made to the January 1995 Order.
PSI Energy has formal bank facilities with commitments
aggregating $230 million, under which $120.5 million in borrowings were
outstanding at December 31, 1994. PSI Energy's formal lines of credit are
embodied in 13 agreements with 12 banks (Exhibits 1.19-1.31 hereto),
subject in each case to annual one-year extensions at the request of PSI
Energy and with the consent of the respective banks. The credit lines are
unsecured and provide for maturities of one year and one day for any
borrowings by PSI Energy thereunder, with interest rate options at or below
prime rate.
Currently, CG&E has lines of credit with 12 banks with
commitments aggregating $82 million (Exhibits 1.1-1.12 hereto). These
lines of credit are maintained by compensating balances and/or fees. At
year-end 1994, no borrowings were outstanding under any of these lines of
credit. As of March 1, 1995, CG&E terminated a $200 million revolving
credit facility with a consortium of banks. CG&E has no outstanding
borrowings under that facility.
ULH&P has formal bank lines of credit with four banks with
commitments aggregating $30 million (Exhibit
s 1.13-1.16 hereto), under which $14.5 million in borrowings were
outstanding as of December 31, 1994. Lawrenceburg has a formal line of
credit with one bank, with a commitment of $400,000 (Exhibit 1.17 hereto).
Lawrenceburg had no borrowings outstanding under this facility at year-end
1994. As of December 31, 1994, CINergy Services, West Harrison, Miami, KO
and Tri-State had no committed lines of credit.
Certain of the Applicants also have informal arrangements for
short-term borrowings with various banks on an "as offered" basis, also
known as uncommitted lines of credit. Since interest rates on these
borrowings, when and if such borrowings are available, generally are below
the prevailing prime rate, it is intended that these informal arrangements
will continue to be utilized.
b. Additional bank borrowings
To provide flexibility to meet their cash needs, authorization is
requested through May 31, 1997 for CG&E, PSI Energy, ULH&P and Lawrenceburg
to borrow from banks pursuant to the existing formal and informal lines of
credit described above (and any increases therein that may be negotiated)
and for CG&E, PSI Energy, ULH&P, Lawrenceburg, West Harrison, Miami,
CINergy Services, KO and Tri-State to borrow from banks pursuant to new
credit facilities (formal or informal) that may be arranged from time to
time, and for CINergy to issue guarantees and provide letters of credit in
connection with such borrowings. All such borrowings and related CINergy
guarantees and letters of credit would be made on or before May 31, 1997
and would be subject to the limitations on aggregate principal amount set
forth in Item 1.A.1. In no event will the aggregate amount of such
borrowings exceed the Applicants' total borrowing authority under
applicable orders of the Commission.
Such borrowings may be evidenced by promissory notes, which are
expected to be in substantially the form filed herewith as Exhibit 2. Each
of such notes (a) would be for the principal amount to be borrowed at the
time (if a "transactional" note) or for the principal amount outstanding
from time to time (if a "grid" note) from the lending bank and be payable
to the order of such bank, (b) would be issued on or before May 31, 1997
and would mature on a date no later than one year (or, in the case of up to
$200 million in borrowings by PSI Energy, no later than 24 months) from the
date of issuance, (c) would bear interest at a rate no higher than the
effective cost of money for unsecured prime commercial bank loans
prevailing on the date of such borrowing, and (d) would be subject to
prepayment at the option of borrower, or under certain circumstances with
the consent of the lending bank, in whole at any time or in part from time
to time, without premium or penalty. Amounts outstanding under formal
lines of credit typically would become due immediately upon an event of
default, including non-payment, default under other agreements governing
indebtedness, bankruptcy, or insolvency. Short-term notes may be issued on
either a "grid" note basis or a transactional basis, under similar terms
and conditions. Ordinarily, short-term grid notes are issued to a lending
institution before the first borrowing under such note. The holder of the
notes maintains the record of borrowings and repayments without the
necessity of issuing additional notes. The actual terms of the notes may
vary from the terms described in Item 1.A.1 above to reflect customary
terms or particular lending practices and policies of different lending
institutions, but otherwise are expected to be substantially similar.
Compensation arrangements under lines of credit would be on a
compensating balance and/or fee basis. In general, fees range from 5 basis
points to 20 basis points per annum on the commitment, and balance
arrangements require average balances of 5% to 10% of the amount of the
commitment.
Subject to the limitations on aggregate outstanding principal
amount set forth in Item 1.A.1 above, authorization is also sought for
CG&E, PSI Energy, ULH&P, Lawrenceburg, West Harrison, Miami, CINergy
Services, KO and Tri-State to borrow funds managed by the trust departments
of banks if such borrowings would result in an estimated cost of money
equal to or less than that available from the sale of commercial paper or
other bank borrowings. Each such borrowing would be evidenced by notes
payable on demand.
4. Commercial Paper
The short-term borrowing needs of PSI Energy and CG&E have been
met in part with the sale of commercial paper through commercial paper
dealers (the "Dealers"). At any given time, PSI Energy and CG&E may be
able to issue commercial paper at a lower cost than that applicable to
short-term bank borrowings. Accordingly, to provide financing flexibility,
CG&E and PSI Energy request authority through May 31, 1997 to issue and
sell commercial paper, to one or more Dealers, subject to the limitations
on aggregate outstanding principal amount stated in Item 1.A.1 above.
There is no affiliation between CG&E or PSI Energy, or any of
their subsidiaries, on the one hand, and any Dealer or any of its
affiliates, on the other hand. The proceeds from the sale of commercial
paper will be added to the seller's treasury funds and will be used for the
purposes set forth in Item 1.A.2 above, including, without limitation, for
the purpose of loans by the seller through the Utility Money Pool in the
manner described in Item 1.A.5 below.
The commercial paper which CG&E and PSI Energy propose to issue
to Dealers will be in the form of book-entry unsecured promissory notes (in
substantially the form filed herewith as Exhibit 3), with varying
denominations of no less than $25,000 each. Such notes will be issued and
sold by CG&E and PSI Energy directly to Dealers at market rates. No
commission or fee will be payable in connection with the issuance and sale
of the commercial paper. The purchasing Dealer, however, will reoffer such
notes at a rate less than the rate to the issuer and, as principal, will
reoffer such notes in such a manner as not to constitute a public offering
under the Securities Act of 1933.
CG&E and PSI Energy also request authorization to sell commercial
paper directly to certain financial institutions. Sales of commercial
paper directly to such institutions will be undertaken only if the
resulting cost of money is equal to or less than that available from
Dealer-placed notes. The terms of any such notes would be similar to those
of Dealer-placed notes.
Maturities: The commercial paper issued by CG&E and PSI Energy
will have varying maturities of no more than 270 days from date of issue
and will be issued and sold by CG&E and PSI Energy from time to time
through May 31, 1997. No such note will have a maturity date more than 270
days after May 31, 1997. Subject to such limitations, sales of commercial
paper (and the bank borrowings described in Item 1.A.3) ordinarily will be
structured to mature at such time as excess funds are expected to become
available for loans through the money pool described in Item 1.A.5 below.
Upon the availability of any such excess funds, external borrowings would
be retired and loans refinanced to the extent such funds became available.
5. Utility Money Pool
To coordinate and provide for their short-term cash and working
capital requirements, CINergy, CG&E, PSI Energy, ULH&P, Lawrenceburg,
Miami, West Harrison, CINergy Services, KO and Tri-State propose to
establish and utilize a money pool (the "Utility Money Pool") and to issue
and acquire promissory notes in connection therewith. The proposed terms
of the Utility Money Pool are summarized below and will be memorialized in
a definitive form of agreement to be filed as Exhibit 5.
Under the proposed terms of the Utility Money Pool, short-term
funds would be available from the following sources for short-term loans to
CG&E, PSI Energy, ULH&P, Lawrenceburg, Miami, West Harrison, CINergy
Services, KO and Tri-State from time to time: (1) surplus funds in the
treasuries of Utility Money Pool participants other than CINergy, (2)
surplus funds in the treasury of CINergy, and (3) proceeds from bank
borrowings by Utility Money Pool participants or the sale of commercial
paper by CINergy, CG&E and PSI Energy for loan to the Utility Money Pool
("External Funds"), in each case to the extent permitted by applicable laws
and regulatory orders. Funds would be made available from such sources in
such order as CINergy Services, as administrator of the Utility Money Pool,
may determine would result in a lower cost of borrowing, consistent with
the individual borrowing needs and financial standing of the companies
providing funds to the pool. The determination of whether a Utility Money
Pool participant at any time has surplus funds to lend to the Utility Money
Pool or shall lend funds to the Utility Money Pool would be made by such
participant's chief financial officer or treasurer, or by a designee
thereof, on the basis of cash flow projections and other relevant factors,
in such participant's sole discretion. Companies that borrow would borrow
pro rata from each company that lends, in the proportion that the total
amount loaned by each such lending company bears to the total amount then
loaned through the Utility Money Pool. On any day when more than one fund
source (e.g., surplus treasury funds of CINergy and other Utility Money
Pool participants ("Internal Funds") and External Funds), with different
rates of interest, is used to fund loans through the Utility Money Pool,
each borrower would borrow pro rata from each such fund source in the
Utility Money Pool in the same proportion that the amount of funds provided
by that fund source bears to the total amount of short-term funds available
to the Utility Money Pool.
Borrowings from the Utility Money Pool would require
authorization by the borrower's chief financial officer or treasurer, or by
a designee thereof. No party would be required to effect a borrowing
through the Utility Money Pool if it is determined that it could (and had
authority to) effect a borrowing at lower cost directly from banks or
through the sale of its own commercial paper. No loans through the Utility
Money Pool would be made to, and no borrowings through the Utility Money
Pool would be made by, CINergy.
Certain Costs: The cost of compensating balances and fees paid
to banks to maintain credit lines by Utility Money Pool participants
lending External Funds to the Utility Money Pool would initially be paid by
the participant maintaining such line. A portion of such costs would
periodically be allocated to the companies borrowing such External Funds
through the Utility Money Pool on a fair and equitable basis.
Interest Rate on Loans: If only Internal Funds comprise the
funds available in the Utility Money Pool, the interest rate applicable to
loans of such Internal Funds would be the CD yield equivalent of the 30-day
Federal Reserve "AA" Industrial Commercial Paper Composite Rate (or if no
such Composite Rate is established for that day, then the applicable rate
would be the Composite Rate for the next preceding day for which such
Composite Rate was established).
If only External Funds comprise the funds available in the
Utility Money Pool, the interest rate applicable to loans of such External
Funds would be equal to the lending company's cost for such External Funds
(or, if more than one Utility Money Pool participant had made available
External Funds on such day, the applicable interest rate would be a
composite rate equal to the weighted average of the cost incurred by the
respective Utility Money Pool participants for such External Funds).
In cases where both Internal Funds and External Funds are
concurrently borrowed through the Utility Money Pool, the rate applicable
to all loans comprised of such "blended" funds would be a composite rate
equal to the weighted average of (a) the cost of all Internal Funds
contributed by Utility Money Pool participants (as determined pursuant to
the second preceding paragraph above) and (b) the cost of all such External
Funds (as determined pursuant to the immediately preceding paragraph
above). In circumstances where Internal Funds and External Funds are
available for loans through the Utility Money Pool, loans may be made
exclusively from Internal Funds or External Funds, rather than from a
"blend" of such funds, to the extent it is expected that such loans would
result in a lower cost of borrowing.
Investment of Surplus Funds: Funds not required by the Utility
Money Pool to make loans (with the exception of funds required to satisfy
the Utility Money Pool's liquidity requirements) would ordinarily be
invested in one or more short-term investments, including: (i) interest-
bearing accounts with banks; (ii) obligations issued or guaranteed by the
U.S. government and/or its agencies and instrumentalities, including
obligations under repurchase agreements; (iii) obligations issued or
guaranteed by any state or political subdivision thereof, provided that
such obligations are rated not less than A by a nationally recognized
rating agency; (iv) commercial paper rated not less than A-1 or P-1 or
their equivalent by a nationally recognized rating agency; (v) money market
funds; (vi) bank certificates of deposit, (vii) Eurodollar funds; and
(viii) such other investments as are permitted by Section 9(c) of the Act
and Rule 40 thereunder.
Allocation of Interest Income and Investment Earnings: The
interest income and investment income earned on loans and investments of
surplus funds would be allocated among the participants in the Utility
Money Pool in accordance with the proportion each participant's
contribution of funds bears to the total amount of funds in the Utility
Money Pool and the cost of funds provided to the Utility Money Pool by such
participant.
Repayment. Each Applicant receiving a loan through the Utility
Money Pool would be required to repay the principal amount of such loan,
together with all interest accrued thereon, on demand and in any event not
later than one year after the date of such loan. All loans made through
the Utility Money Pool could be prepaid by the borrower without premium or
penalty.
Form of Loans to Applicants: Loans through the Utility Money
Pool would ordinarily be made pursuant to open-account advances, repayable
upon demand and in any event not later than one year from the date of such
advance. Under the authorization requested herein, all loans through the
Utility Money Pool would be made on or before May 31, 1997. Each lender
would at all times be entitled to receive upon demand one or more
promissory notes evidencing any and all loans by such lender. Such notes
would be substantially in the form filed as Exhibit 4, would be dated as of
the date of the initial borrowing (and in any event not later than May 31,
1997), would mature on demand, or on a date agreed by the parties (but in
any case not later than one year after the date of the applicable
borrowing), and would be prepayable in whole at any time or in part from
time to time, without premium or penalty. Interest would be accrued by
each borrower monthly.
B. Certain Other Non-Utility Companies
1. Borrowing Authority
Authorization is requested through May 31, 1997 for Enertech,
Bruwabel, Power International, Power Development, Recycling, Equipment and
Wholesale Power (the "Designated Non-Utility Companies"), Resource
Marketing, and CINergy Investments (i) to incur short-term borrowings (any
or all of which borrowings may be guaranteed or supported by letters of
credit arranged by CINergy) and to issue notes in connection therewith, and
(ii) together with CINergy, to establish and utilize a money pool (the
"Non-Utility Money Pool"), to be administered by CINergy Services, to
coordinate and provide for certain short-term cash and working capital
requirements of CINergy Investments, the Designated Non-Utility Companies
and Resource Marketing. Under the authority requested herein, the
aggregate principal amount of short-term borrowings and notes outstanding
at any one time for the Designated Non-Utility Companies, CINergy
Investments and Resource Marketing will not exceed the amounts set forth
below, plus such additional amounts as may be authorized from time to time
by the Commission.
Company Aggregate amount
CINergy Investments $ 22,000,000
Enertech 6,750,000
Bruwabel, Power
International &
Power Development 4,000,000
Recycling 4,400,000
Equipment 1,100,000
Wholesale Power 1,200,000
Resource Marketing 2,000,000
Pursuant to the authority requested hereby, borrowings will not exceed
those levels permitted from time to time by the borrowing company's
charter. At present, the charters of the above companies do not contain
limits on outstanding amounts of unsecured debt.
2. Use of Proceeds.
Consistent with the Commission's Order dated October 21, 1994 in
File No. 70-8427, in which the Commission reserved jurisdiction over the
retainability of the non-utility businesses of the CINergy system,
borrowings by Resource Marketing and the Designated Non-Utility Companies
will be used (a) to provide working capital to continue to operate such
companies' businesses as described in the CINergy Merger U-1 and to fund
commitments existing as of the registration of CINergy as a holding company
under the Act on October 25, 1994, (b) to repay and refinance indebtedness,
(c) to loan to other participants in the Non-Utility Money Pool described
in Item 1.B.3 below, and (d) in the case of Resource Marketing, for the
additional purposes of making loans and capital contributions to Energy
Partners.
Because certain of the Designated Non-Utility Companies and
Resource Marketing have heretofore been net borrowers from their corporate
parents, it has been the practice of such corporate parents to advance
funds to such companies in the form of inter-company loans and open-account
advances and periodically to forgive such indebtedness, thereby making
capital contributions in the amount forgiven. Applicants' inter-company
loan and open-account balances as of December 31, 1994, together with cash-
flow projections and a summary of projected funding needs for CINergy
Investments, Resource Marketing, and the Designated Non-Utility Companies
for the period through May 31, 1997, will be included in Exhibit 13 hereto.
Because certain of the Designated Non-Utility Companies and
Resource Marketing may remain net borrowers during the period covered by
this Application-Declaration, authorization is requested for CINergy from
time to time through May 31, 1997 to make capital contributions and loans
(in the form of open-account advances, repayable on demand, or otherwise
through the Non-Utility Money Pool described in Item 1.B.3 below) to
CINergy Investments and the Designated Non-Utility Companies, and for
CINergy Investments and the Designated Non-Utility Companies to make
corresponding capital contributions and loans (in the form of open-account
advances, repayable on demand, or otherwise through the Non-Utility Money
Pool) to their subsidiary companies; provided, that the aggregate amount of
all borrowings by, and capital contributions to, a company shall not exceed
its aggregate borrowing limit set forth in Item 1.B.1 above.
Authority is also requested through May 31, 1997 (i) for CINergy
and CINergy Investments from time to time to make capital contributions and
loans (in the form of open-account advances, repayable on demand, or
otherwise through the Non-Utility Money Pool) to Resource Marketing, and
(ii) for Resource Marketing from time to time to make capital contributions
and loans (in the form of open-account advances, repayable on demand) to
Energy Partners, to provide for working capital needs, repayment or
refinancing of debt, unexpected contingencies, payment and timing
differences, cash requirements and other general business purposes of
Energy Partners./2/ Energy Partners would not participate directly in any
money pool hereunder, but would be able to borrow and receive capital
contributions from Resource Marketing, subject to the limit set forth in
Item 1.B.1 above with respect to Resource Marketing.
3. Terms of Non-Utility Money Pool
To coordinate and provide for short-term cash and working capital
requirements of Resource Marketing and the Designated Non-Utility
Companies, CINergy, CINergy Services, Resource Marketing and the Designated
Non-Utility Companies propose to establish a Non-Utility Money Pool, with
terms similar to those governing the Utility Money Pool. Under the
proposed arrangements governing the Non-Utility Money Pool, short-term
funds will be available from the following sources for use by the
respective participants from time to time: (1) surplus funds in the
treasuries of Resource Marketing and the Designated Non-Utility Companies,
(2) surplus funds in the treasury of CINergy, and (3) proceeds from the
sale by CINergy of commercial paper and bank borrowings by CINergy,
Resource Marketing and the Designated Non-Utility Companies ("External
Sources"), in each case to the extent permitted by applicable laws and
regulatory orders. Funds will be made available from such sources in such
order as CINergy Services, as administrator of the Non-Utility Money Pool,
may determine would result in a lower cost of borrowing from the Non-
Utility Money Pool, consistent with the borrowing needs and financial
standing of the companies providing funds to the pool. The determination
of whether a Non-Utility Money Pool participant at any time has surplus
funds to lend to the Non-Utility Money Pool or shall lend funds to the Non-
Utility Money Pool will be made by an appropriate officer of such
participant, or by a designee thereof, on the basis of cash flow
projections and other relevant factors, in such participant's sole
discretion. Companies that borrow will borrow pro rata from each company
that lends, in the proportion that the total amount loaned by each such
lending company bears to the total amount then loaned through the Non-
Utility Money Pool. On any day when more than one fund source (e.g.,
surplus treasury funds of CINergy and other Non-Utility Money Pool
participants ("Internal Sources") and External Sources), with different
rates of interest, is used to fund loans through the Non-Utility Money
Pool, each borrower will borrow pro rata from each such fund source in the
Non-Utility Money Pool in the same proportion that the amount of funds
provided by that fund source bears to the total amount of short-term funds
available to the Non-Utility Money Pool.
Loans through the Non-Utility Money Pool will be made only from
funds provided by CINergy, CINergy Investments, Resource Marketing or other
Designated Non-Utility Companies, and no loan will be made to CINergy,
CINergy Investments, Resource Marketing, Energy Partners or any Designated
Non-Utility Company by the Utility Money Pool or by any public utility
company in the CINergy system. In addition, no loans through the Non-
Utility Money Pool will be made to, and no borrowings through the Non-
Utility Money Pool will be made by, CINergy.
Borrowings from the Non-Utility Money Pool will be authorized by
an appropriate officer of the borrower or by a designee thereof. No party
shall be required to effect a borrowing through the Non-Utility Money Pool
if it determines that it can (and is authorized to) effect a borrowing at
lower cost directly from a bank.
Certain Costs: The cost of compensating balances and fees paid
to banks to maintain credit lines by Non-Utility Money Pool participants
lending funds from External Sources to the Non-Utility Money Pool would
initially be paid by the participant maintaining such line. A portion of
such costs would periodically be allocated to the companies borrowing funds
from such External Sources through the Non-Utility Money Pool on a fair and
equitable basis.
Interest Rate on Loans: If only funds from Internal Sources
comprise the funds available in the Non-Utility Money Pool, the interest
rate applicable to loans of such funds from Internal Sources would be the
CD yield equivalent of the 30-day Federal Reserve "AA" Industrial
Commercial Paper Composite Rate (or if no such Composite Rate were
established for that day, then the applicable rate would be the Composite
Rate for the next preceding day for which such Composite Rate was
established).
If only funds from External Sources comprise the funds available
in the Utility Money Pool, the interest rate applicable to loans of such
funds from External Sources would be equal to the lending company's cost
for such funds from External Sources (or, if more than one Non-Utility
Money Pool participant had made available funds from External Sources on
such day, the applicable interest rate would be a composite rate equal to
the weighted average of the cost incurred by the respective Non-Utility
Money Pool participants for funds from such External Sources).
In cases where both funds from Internal Sources and External
Sources are concurrently borrowed through the Non-Utility Money Pool, the
rate applicable to all loans comprised of such "blended" funds would be a
composite rate equal to the weighted average of (a) the cost of all funds
contributed by Non-Utility Money Pool participants from Internal Sources
(as determined pursuant to the second preceding paragraph above) and (b)
the cost of all funds from External Sources (as determined pursuant to the
immediately preceding paragraph above). In circumstances where funds from
both Internal Sources and External Sources are available for loans through
the Non-Utility Money Pool, loans may be made exclusively with funds from
Internal Sources or External Sources, rather than from a "blend" of such
funds, to the extent it is expected that such loans would result in a lower
cost of borrowing.
Investment of Surplus Funds: As in the case of the Utility Money
Pool, funds not required by the Non-Utility Money Pool to make loans (with
the exception of funds required to satisfy the Non-Utility Money Pool's
liquidity requirements) will ordinarily be invested in one or more short-
term investments, including: (i) interest-bearing accounts with banks;
(ii) obligations issued or guaranteed by the U.S. government and/or its
agencies and instrumentalities, including obligations under repurchase
agreements; (iii) obligations issued or guaranteed by any state or
political subdivision thereof, provided that such obligations are rated not
less than A by a nationally recognized rating agency; (iv) commercial paper
rated not less than A-1 or P-1 or their equivalent by a nationally
recognized rating agency; (v) money market funds; (vi) bank certificates of
deposit, (vii) Eurodollar funds, and (viii) such other investments as are
permitted by Section 9(c) of the Act and Rule 40 thereunder.
Surplus funds of the Utility Money Pool and the Non-Utility Money
Pool may be combined in common short-term investments, but separate records
of such funds shall be maintained by CINergy Services as administrator of
the pools, and interest thereon shall be separately allocated, on a daily
basis, to each money pool in accordance with the proportion that the amount
of each money pool's surplus funds bears to the total amount of surplus
funds available for investment from both money pools.
Allocation of Interest Income and Investment Earnings: The
interest income and other investment income earned on loans and investment
of surplus funds will be allocated among the participants in the Non-
Utility Money Pool in accordance with the proportion each participant's
contribution of funds bears to the total amount of funds in the Non-Utility
Money Pool and the cost of any funds provided to the Non-Utility Money Pool
by such participant from External Sources.
Repayment. Each Applicant receiving a loan through the Non-
Utility Money Pool will be required to repay the principal amount of such
loan, together with all interest accrued thereon, on demand and in any
event not later than one year after the date of such loan. All loans made
through the Non-Utility Money Pool may be prepaid by the borrower without
premium or penalty.
Form of Loans to Applicants: As with the Utility Money Pool,
loans through the Non-Utility Money Pool will ordinarily be made pursuant
to open-account advances, repayable on demand but in any event not more
than one year after the date of the advance. Under the authorization
requested herein, all loans through the Non-Utility Money Pool will be made
on or before May 31, 1997. Each lender will at all times be entitled to
receive upon demand one or more promissory notes evidencing any and all
loans by such lender. Such notes will be substantially in the form filed
as Exhibit 4, will be dated as of the date of the initial borrowing (and in
any event not later than May 31, 1997), will mature on demand, or on a date
agreed to by the parties to the transaction (but in any case not later than
one year after the date of the applicable borrowing), and will be
prepayable in whole at any time or in part from time to time, without
premium or penalty. Interest will be accrued monthly.
The foregoing terms will be reflected in an agreement to be
signed by the participants in the Non-Utility Money Pool, the form of which
is filed as Exhibit 6 hereto.
4. Bank Borrowings
Enertech has a $1,000,000 bank line of credit, which is embodied
in an agreement to be filed as Exhibit 1.18 hereto. Enertech proposes to
maintain such line of credit to provide financing flexibility and an
independent source of funds, outside the money pool system.
To provide additional flexibility, it is proposed that CINergy
Investments, Resource Marketing, and the Designated Non-Utility Companies
also have authority to borrow under bank facilities, and for CINergy to
provide guaranties and obtain letters of credit in connection therewith.
Borrowings under such facilities would be evidenced by promissory notes
with terms substantially similar to those described in Item 1.A.3.b above
(but could bear interest at a rate of up to prime plus 2%) and would be
subject to compensation arrangements similar to those described therein.
5. Continued Reservation of Jurisdiction
CINergy requests that the Commission continue to reserve
jurisdiction over the retention of certain non-utility businesses of the
Applicants herein, in accordance with the Commission's October 21, 1994
Order in File No. 70-8427.
C. Administration of Money Pools
Operation of the Utility and Non-Utility Money Pools, including
record keeping and coordination of loans, will be handled by CINergy
Services under the authority of the appropriate officers of the Applicants.
CINergy Services will administer the Utility and Non-Utility Money Pools on
an "at cost" basis and will maintain separate records for each money pool.
D. Reporting
CINergy Services, on behalf of the Applicants, will file periodic
reports with the Commission pursuant to Rule 24 under the Act setting forth
(i) each Applicant's maximum principal amount of short-term borrowings
outstanding, (ii) the average rate for each money pool over the period, and
(iii) the maximum amount outstanding during the period for each source of
outside borrowings.
E. Statement Pursuant to Rule 54
Applicants do not intend at present to use the borrowings
proposed herein to finance the acquisition of an exempt wholesale generator
("EWG") or a foreign utility company ("FUCO"). If the Applicants'
intention changes, an amended Application-Declaration will be filed
requesting authorization for such use.
Under Rule 54, in determining whether to approve the issuance or
sale of a security by a registered holding company for purposes other than
the acquisition of an EWG or 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 FUCO upon the registered
holding company system, if the conditions set forth in 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) exists or, as a result thereof, will exist. The following
discussion assumes the CINergy system's existence for the dates and periods
in question.
Three CINergy system companies are EWGs or FUCOs. PSI Argentina,
Inc. ("PSI Argentina") and its subsidiary, Costanera Power Corp.
("Costanera"), were determined to be EWGs by the Federal Energy Regulatory
Commission ("FERC") in Costanera Power Corp., 61 FERC Par. 61,335 (1992),
and PSI Argentina, Inc., 68 FERC Par. 61,286 (1994). PSI Energy Argentina
("Energy Argentina") is a FUCO and has filed a Notification of FUCO status
on Form U-57. In addition to these investments, CINergy owns a number of
other companies formed to hold investments in FUCOs and/or EWGs (CGE ECK,
Inc., PSI T&D International, Inc., PSI Yacyreta, Inc., and E P EDEGEL,
Inc.), and is seeking authorization to retain certain other companies
(including PSI Power Resource Development, Inc., PSI Power Resource
Operations, Inc., PSI International, Inc., and PSI Sunnyside, Inc.) and to
form additional companies to facilitate FUCO and EWG investments. Because
none of these other companies presently owns any EWG or FUCO, they are not
included in the calculations below.
Rule 53(a)(1): The average of CINergy's pro forma consolidated
retained earnings for the four consecutive quarters ended December 31, 1994
was $929 million, and CINergy's aggregate investment in EWGs and FUCOs at
December 31, 1994 was approximately $20 million, or approximately 2% of
consolidated retained earnings.
Rule 53(a)(2): CINergy will maintain books and records enabling
it to identify investments in and earnings from each EWG and FUCO in which
it directly or indirectly holds an interest. At present, CINergy does not
hold any interest in a domestic EWG; Rule 53(a)(2)(i) is therefore
inapplicable.
In accordance with Rule 53(a)(2)(ii), the books and records and
financial statements of each foreign EWG and FUCO which is a "majority-
owned subsidiary company" of CINergy are kept in conformity with and
prepared according to U.S. generally accepted accounting principles
("GAAP"). CINergy will provide the Commission access to such books and
records and financial statements, or copies thereof, in English, as the
Commission may request.
In accordance with Rule 53(a)(2)(iii), for each foreign EWG and
FUCO in which CINergy directly or indirectly owns 50% or less of the voting
securities, CINergy will proceed in good faith, to the extent reasonable
under the circumstances, to cause each such entity's books and records to
be kept in conformity with, and the financial statements of each such
entity to be prepared according to, GAAP. If such books and records are
maintained, or such financial statements are prepared, according to a
comprehensive body of accounting principles other than GAAP, CINergy will,
upon request of the Commission, describe and quantify each material
variation from GAAP in the accounting principles, practices and methods
used to maintain such books and records and each material variation from
GAAP in the balance sheet line items and net income reported in such
financial statements, as the case may be. In addition, CINergy will
proceed in good faith, to the extent reasonable under the circumstances, to
cause access by the Commission to such books and records and financial
statements, or copies thereof, as the Commission may request, and in any
event will make available to the Commission any such books and records that
are available to CINergy.
Rule 53(a)(3): At any one time, a maximum of approximately 25
CINergy system employees have rendered services to PSI Argentina, Costanera
and Energy Argentina. Based on current staffing levels, this represents
less than 0.3% of the approximately 8,650 full-time employees of CINergy's
domestic operating utility subsidiaries. Such services have heretofore
been rendered, in part, by employees of PSI Energy in accordance with the
Commission's order in PSI Resources, Inc. et al., Holding Co. Act Rel. No.
35-25674, 52 SEC Docket 2533, 2534-35 (Nov. 13, 1992), and by employees of
CG&E in accordance with business practices established prior to the
formation of the CINergy system and the registration of CINergy as a
holding company under the Act. Pursuant to the Commission's October 21,
1994 Order granting the CINergy Merger U-1, CINergy Services is authorized
to provide services to utility and non-utility associate companies,
including those that are EWGs or FUCOs.
Rule 53(a)(4): CINergy is simultaneously submitting a copy of
this Application-Declaration, and will submit copies of any Rule 24
certificates required hereunder, as well as a copy of Item 9 of CINergy's
Form U5S and Exhibits H and I thereto, to each of the public service
commissions having jurisdiction over the retail rates of CINergy's
operating utility subsidiaries at the time such documents are filed with
the Commission.
Rule 53(b): The provisions of Rule 53(a) are not made
inapplicable to the authorizations herein requested by reason of the
provisions of Rule 53(b).
Rule 53(b)(1): Neither CINergy nor any subsidiary of CINergy is
the subject of any pending bankruptcy or similar proceeding.
Rule 53(b)(2): CINergy's total capital invested in utility
operations as of December 31, 1994 totaled approximately $5.9 billion,
consisting of approximately $2.8 billion in long-term and $208 million in
short-term debt of CG&E, PSI Energy and the utility subsidiaries of CG&E,
$478 million in preferred stock of CG&E and PSI Energy, and $2.4 billion in
common equity of CG&E, PSI Energy and the utility subsidiaries of CG&E.
CINergy's aggregate present investment in EWGs and FUCOs (approximately $20
million) represents less than 0.4% of CINergy's total capital invested in
utility operations. Together with the $95 million in additional investment
authority CINergy currently expects to request in a separate application,
CINergy's aggregate investment authority for EWGs and FUCOs ($115,000,000)
would represent less than 2% of CINergy's total capital invested in utility
operations. Average consolidated retained earnings for the four quarters
ended December 31, 1994 equaled $929 million, versus $1,053 million for the
four quarters ended December 31, 1993, a difference of approximately $124
million or 12%.
Rule 53(b)(3): For the 12 months ended December 31, 1994,
CINergy had net income of approximately $175,000 attributable to its direct
or indirect investments in EWGs and FUCOs.
Rule 53(c). Inasmuch as Rule 53(c) applies only if an applicant
is unable to satisfy the requirements of Rules 53(a) and (b), it is
inapplicable here.
Item 2. Fees, Commissions and Expenses.
An estimate of the fees and expenses to be paid or incurred by
the Applicants in connection with the proposed transactions is set forth
below:
Amount
Holding Company Act filing fee . . . . . $ 2,000*
Rating agency fees for commercial
paper (annual) . . . . . . . . . . . . . **
Counsel fees . . . . . . . . . . . . . . 50,000
Miscellaneous and incidental expenses
including travel, telephone and
postage. . . . . . . . . . . . . . . . . 3,000
Total. . . . . . . . . . . . . . . . . . $ **
_______________
*Actual amount.
**To be added by amendment.
Fees with respect to bank borrowings are set forth in Item 1. In
addition to the foregoing fees, CINergy Services will provide certain
services in connection with the application, consisting primarily of
treasury and legal services.
Item 3. Applicable Statutory Provisions.
Sections 6, 7, 9(a), 10, 12(b), 12(f) and 13 of the Act and Rules
40, 43, 45, 53, 54 and 80-95 thereunder are or may be applicable to one or
more of the proposed transactions. To the extent any other sections of the
Act and the Commission's rules thereunder may be applicable to the proposed
transactions, the Applicants hereby request appropriate orders thereunder.
Item 4. Regulatory Approval.
Pursuant to Ohio Code Sec. 4905.401, approval of the Public
Utilities Commission of Ohio ("PUCO") is not required for "[t]he issue,
renewal, or assumption of liability on . . . notes, or other evidences of
indebtedness [payable at periods of not more than twelve months] which have
been, or are the subject of an order of the [Commission] under the [Act]."
Accordingly, PUCO approval is not required for the CG&E borrowings or
commercial paper issuances proposed herein. With respect to CG&E's
existing borrowing arrangements, all requisite approvals of the PUCO have
been obtained. By order of the PUCO dated June 9, 1994 in Case No. 94-811-
GE-AIS (Exhibit 7 hereto), CG&E is authorized to incur short-term
indebtedness and issue promissory notes and/or commercial paper in an
aggregate amount of up to $200,000,000 through June 30, 1995. CG&E shall
not incur short-term indebtedness and issue promissory notes and/or
commercial paper in an aggregate amount in excess of $200,000,000 without
having received authorization from the PUCO for any such amounts in excess
of $200,000,000.
By order of the Indiana Utility Regulatory Commission ("IURC")
dated September 9, 1992 in Case No. 39438 (Exhibit 8 hereto), PSI Energy is
authorized to effect borrowings of not less than 12 months nor more than 24
months in an aggregate amount of up to $200,000,000. The IURC order has no
stated expiration date. The IURC order does not allow the use of such
borrowings by PSI Energy for purposes of making loans to the Utility Money
Pool. IURC authorization is not required for borrowings of 12 months or
less and is therefore not required for the other borrowings by PSI Energy,
the issuance of commercial paper by PSI Energy, or any of the borrowings by
West Harrison, Lawrenceburg and Miami, proposed herein.
Pursuant to an Order issued on October 25, 1994 in FERC Docket
No. ES94-43-000 (Exhibit 9 hereto), ULH&P presently has all necessary
authority from the FERC to issue up to $35,000,000 of unsecured promissory
notes through December 31, 1996. No additional authorization from the
Kentucky Public Service Commission ("KPSC") is required under Kentucky law
for the ULH&P borrowings proposed herein.
Pursuant to the terms of certain settlement agreements,
commitments and orders relating to the mergers that resulted in the
formation of the CINergy system, CINergy is required to submit certain
proposed inter-affiliate agreements subject to the Commission's
jurisdiction to the IURC and the PUCO for their review (over a period of up
to 60 days) before filing such agreements with the Commission. During such
review period the applicable state commission may (among other things)
reject, disapprove or find unreasonable the proposed inter-affiliate
agreement, as more fully described in Item 3.B of the CINergy Merger U-1.
Except as described above, no state or federal regulatory
authority, other than the Commission under the Act, has jurisdiction over
any of the proposed transactions, and no other state or federal
authorizations are required for the transactions described herein.
Item 5. Procedure.
It is requested that the Commission issue and publish no later
than March 17, 1995, the requisite notice under Rule 23 with respect to the
filing of this Application-Declaration, such notice to specify a date not
later than April 11, 1995 as the date after which an order granting and
permitting this Application-Declaration to become effective may be entered
by the Commission and that the Commission enter not later than April 12,
1995, an appropriate order granting and permitting this Application-
Declaration 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 1.1 - Letter agreement between CG&E and Star Bank and
Grid Note ($5,000,000) (to be filed by
amendment).
Exhibit 1.2 - Letter agreement between CG&E and The Fifth Third
Bank and Promissory Note ($15,000,000) (to be
filed by amendment).
Exhibit 1.3 - Letter agreement between CG&E and PNC Bank, Ohio,
N.A., and Amended and Restated Grid Note
($10,000,000) (to be filed by amendment).
Exhibit 1.4 - Letter agreement between CG&E and The Provident
Bank ($5,000,000) (to be filed by amendment).
Exhibit 1.5 - Letter agreement between CG&E and The First
National Bank of Southwestern Ohio ($1,000,000)
(to be filed by amendment).
Exhibit 1.6 - Letter agreement between CG&E and National City
Bank, Kentucky, and Master Promissory Note in
favor of First National Bank of Louisville
($5,000,000) (to be filed by amendment).
Exhibit 1.7 - Letter agreement between CG&E and NBD Bank, N.A.
($5,000,000) (to be filed by amendment).
Exhibit 1.8 - Letter agreement between CG&E and Society National
Bank and Master Promissory Note ($6,000,000) (to
be filed by amendment).
Exhibit 1.9 - Letter agreement between CG&E and The Bank of New
York ($10,000,000) (to be filed by amendment).
Exhibit 1.10 - Letter agreement between CG&E and Citibank
($10,000,000) (to be filed by amendment).
Exhibit 1.11 - Letter agreement between CG&E and The Toronto-
Dominion Bank and Note in favor of TD (Texas),
Inc. ($5,000,000) (to be filed by amendment).
Exhibit 1.12 - Letter agreement between CG&E and Union Bank of
Switzerland, Chicago Branch, and Promissory Note
($5,000,000) (to be filed by amendment).
Exhibit 1.13 - Letter agreement between ULH&P and Star Bank and
Grid Note ($7,500,000) (to be filed by amendment).
Exhibit 1.14 - Letter agreement between ULH&P and The Fifth Third
Bank and Promissory Note ($7,500,000) (to be filed
by amendment).
Exhibit 1.15 - Letter agreement between ULH&P and Central Trust
Company and Amended and Restated Grid Note in
favor of PNC Bank, Ohio, National Association
($7,500,000) (to be filed by amendment).
Exhibit 1.16 - Letter agreement between ULH&P and National City
Bank, Kentucky, and Master Promissory Note in
favor of First National Bank of Louisville
($7,500,000) (to be filed by amendment).
Exhibit 1.17 - Letter agreement between The Lawrenceburg Gas
Company and Star Bank N.A., Indiana ($400,000) (to
be filed by amendment).
Exhibit 1.18 - Revolving Note between Enertech Associates
International Inc. and The Fifth Third Bank
($1,000,000) (to be filed by amendment).
Exhibit 1.19 - Letter agreement between PSI Energy and Bank One,
Indianapolis, N.A. and Master Note ($5,000,000)
(to be filed by amendment).
Exhibit 1.20 - Committed Line of Credit Agreement between PSI
Energy and Barclays Bank PLC and Grid Note of same
date ($15,000,000) (to be filed by amendment).
Exhibit 1.21 - Letter agreement between PSI Energy and Canadian
Imperial Bank of Commerce and Master Note
($30,000,000) (to be filed by amendment).
Exhibit 1.22 - Letter agreement between PSI Energy and The Chase
Manhattan Bank, N.A., Promissory Note, and
amendment letters ($30,000,000) (to be filed by
amendment).
Exhibit 1.23 - Letter agreement between PSI Energy and Citibank,
N.A. and Master Note ($15,000,000) (to be filed by
amendment).
Exhibit 1.24 - Amended and Restated Revolving Note by PSI Energy
in favor of The Fifth Third Bank ($15,000,000) (to
be filed by amendment).
Exhibit 1.25 - Letter agreement dated between PSI Energy and The
First National Bank of Chicago and Master Note
($15,000,000) (to be filed by amendment).
Exhibit 1.26 - Letter agreement between PSI Energy and Bank of
Montreal and Unsecured Note ($27,000,000) (to be
filed by amendment).
Exhibit 1.27 - Letter agreement between PSI Energy and NBD Bank,
N.A., and Renewal Master Note ($5,000,000) (to be
filed by amendment).
Exhibit 1.28 - Letter agreement between PSI Energy and National
City Bank, Indiana, and Commercial Time Note
($3,000,000) (to be filed by amendment).
Exhibit 1.29 - Letter agreement between PSI Energy and The
Mitsubishi Bank, Ltd., Chicago Branch, and Master
Note ($40,000,000) (to be filed by amendment).
Exhibit 1.30 - Revolving Credit Agreement between PSI Energy and
Swiss Bank Corporation, New York Branch,
Promissory Note, and Amendment No. 2 ($15,000,000)
(to be filed by amendment).
Exhibit 1.31 - Letter Agreement between PSI Energy and The Chase
Manhattan Bank, N.A., and Master Note
($15,000,000) (to be filed by amendment).
Exhibit 2 - Form of note to evidence borrowings from banks.
Exhibit 3 - Form of commercial paper note.
Exhibit 4 - Form of note to be executed by borrowing
Applicants to lending Applicants.
Exhibit 5 - Form of Utility Money Pool Agreement (to be filed
by amendment).
Exhibit 6 - Form of Non-Utility Money Pool Agreement.
Exhibit 7 - PUCO Order dated June 9, 1994 (Case No. 94-811-GE-
AIS) (to be filed by amendment).
Exhibit 8 - IURC Order dated September 9, 1992 (Case No.
39438) (to be filed by amendment).
Exhibit 9 - FERC Order issued October 26, 1994 (Docket No.
ES94-43-000) (to be filed by amendment).
Exhibit 10 - Preliminary opinion of counsel.
Exhibit 11 - Final or "past tense" opinion of counsel (to be
filed with certificate of notification).
Exhibit 12 - Proposed notice of proceeding.
Exhibit 13 - Cash-flow prejections and inter-company loans and
open account balances (to be filed by amendment).
Exhibit 14 - Financial statements of Applicants (to be filed by
amendment).
Item 7. Information as to Environmental Effects.
The proposed transactions do not involve major federal action
having a significant effect on the human environment. To the best of the
Applicants' knowledge no federal agency has prepared or is preparing an
environmental impact statement with respect to the proposed transactions.
<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 companies have duly caused
this document to be signed on their behalf by the undersigned thereunto
duly authorized.
Dated: March 10, 1995
CINergy CORP.
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
PSI ENERGY, INC.
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
THE CINCINNATI GAS & ELECTRIC
COMPANY
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
THE UNION LIGHT, HEAT AND POWER CO.
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
THE WEST HARRISON GAS AND ELECTRIC CO.
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
LAWRENCEBURG GAS CO.
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
MIAMI POWER CORPORATION
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
CINergy SERVICES, INC.
By /s/ J. Wayne Leonard
J. Wayne Leonard
Group Vice President and
Chief Financial Officer
CINergy INVESTMENTS, INC.
By /s/ William J. Grealis
William J. Grealis
President
KO TRANSMISSION CO.
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
TRI-STATE IMPROVEMENT CO.
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
PSI RECYCLING, INC.
By /s/ M. Stephen Harkness
M. Stephen Harkness
Treasurer
CG&E RESOURCE MARKETING, INC.
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
WHOLESALE POWER SERVICES, INC.
By /s/ M. Stephen Harkness
M. Stephen Harkness
Treasurer
POWER EQUIPMENT SUPPLY CO.
By /s/ M. Stephen Harkness
M. Stephen Harkness
Treasurer
BEHEER- EN BELEGGINSMAATSCHAPPIJ
BRUWABEL, B.V.
By /s/ Robert van Beeman
Robert van Beeman
Managing Director
By /s/ Johan Lont
Johan Lont
Managing Director
ENERTECH ASSOCIATES
INTERNATIONAL, INC.
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
POWER INTERNATIONAL, s.r.o.
By /s/ Robert Chelberg
Robert Chelberg
Director, Central and Eastern
European Operations
POWER DEVELOPMENT, s.r.o.
By /s/ Robert Chelberg
Robert Chelberg
Director, Central and Eastern
European Operations
<PAGE>
FOOTNOTES
/1/ CINergy Services, Inc. ("CINergy Services"); PSI Energy, Inc. ("PSI
Energy"); The Cincinnati Gas & Electric Company ("CG&E"); The Union
Light, Heat and Power Co. ("ULH&P"); The West Harrison Gas and
Electric Co. ("West Harrison"); Lawrenceburg Gas Co. ("Lawrenceburg");
Miami Power Corp. ("Miami"); Tri-State Improvement Co. ("Tri-State");
KO Transmission Co. ("KO"); CINergy Investments, Inc. ("CINergy
Investments"); CG&E Resource Marketing, Inc. ("Resource Marketing");
Enertech Associates International, Inc. ("Enertech"); Beheer- En
Belegginsmaatschappij Bruwabel B.V. ("Bruwabel"); Power International
s.r.o. ("Power International"); Power Development s.r.o. ("Power
Development"); Wholesale Power Services, Inc. ("Wholesale Power"); PSI
Recycling, Inc. ("Recycling"); and Power Equipment Supply Co.
("Equipment") (collectively with CINergy, the "Applicants").
/2/ CINergy's interest in Energy Partners is a minority interest, with the
remaining majority interest held by one partner unaffiliated with
CINergy. For this and other reasons to be detailed in an amendment to
this Application-Declaration, CINergy does not "control" Energy
Partners or possess a "controlling influence" over its management or
policies, and hereby requests an order by the Commission that Energy
Partners is not a "subsidiary company" of CINergy within the meaning
of Section 2(a)(8) of the Act. CINergy therefore does not believe
that Commission authorization will be required for Energy Partners to
issue notes.
<PAGE>
EXHIBIT INDEX
Exhibit Transmission
Number Exhibit Method
1.1 Letter agreement between CG&E and Star --
Bank and Grid Note ($5,000,000) (to be
filed by amendment).
1.2 Letter agreement between CG&E and The --
Fifth Third Bank and Promissory Note
($15,000,000) (to be filed by amendment).
1.3 Letter agreement between CG&E and PNC --
Bank, Ohio, N.A., and Amended and
Restated Grid Note ($10,000,000) (to be
filed by amendment).
1.4 Letter agreement between CG&E and The --
Provident Bank ($5,000,000) (to be filed
by amendment).
1.5 Letter agreement between CG&E and The --
First National Bank of Southwestern Ohio
($1,000,000) (to be filed by amendment).
1.6 Letter agreement between CG&E and --
National City Bank, Kentucky, and Master
Promissory Note in favor of First
National Bank of Louisville ($5,000,000)
(to be filed by amendment).
1.7 Letter agreement between CG&E and NBD --
Bank, N.A. ($5,000,000) (to be filed by
amendment).
1.8 Letter agreement between CG&E and Society --
National Bank and Master Promissory Note
($6,000,000) (to be filed by amendment).
1.9 Letter agreement between CG&E and The --
Bank of New York ($10,000,000) (to be
filed by amendment).
1.10 Letter agreement between CG&E and --
Citibank ($10,000,000) (to be filed by
amendment).
1.11 Letter agreement between CG&E and The --
Toronto-Dominion Bank and Note in favor
of TD (Texas), Inc. ($5,000,000) (to be
filed by amendment).
1.12 Letter agreement between CG&E and Union --
Bank of Switzerland, Chicago Branch, and
Promissory Note ($5,000,000) (to be filed
by amendment).
1.13 Letter agreement between ULH&P and Star --
Bank and Grid Note ($7,500,000) (to be
filed by amendment).
1.14 Letter agreement between ULH&P and The --
Fifth Third Bank and Promissory Note
($7,500,000) (to be filed by amendment).
1.15 Letter agreement between ULH&P and --
Central Trust Company and Amended and
Restated Grid Note in favor of PNC Bank,
Ohio, National Association ($7,500,000)
(to be filed by amendment).
1.16 Letter agreement between ULH&P and --
National City Bank, Kentucky, and Master
Promissory Note in favor of First
National Bank of Louisville ($7,500,000)
(to be filed by amendment).
1.17 Letter agreement between The Lawrenceburg --
Gas Company and Star Bank N.A., Indiana
($400,000) (to be filed by amendment).
1.18 Revolving Note between Enertech --
Associates International Inc. and The
Fifth Third Bank ($1,000,000) (to be
filed by amendment).
1.19 Letter agreement between PSI Energy and --
Bank One, Indianapolis, N.A. and Master
Note ($5,000,000) (to be filed by
amendment).
1.20 Committed Line of Credit Agreement --
between PSI Energy and Barclays Bank PLC
and Grid Note of same date ($15,000,000)
(to be filed by amendment).
1.21 Letter agreement between PSI Energy and --
Canadian Imperial Bank of Commerce and
Master Note ($30,000,000) (to be filed by
amendment).
1.22 Letter agreement between PSI Energy and --
The Chase Manhattan Bank, N.A.,
Promissory Note, and amendment letters
($30,000,000) (to be filed by amendment).
1.23 Letter agreement between PSI Energy and --
Citibank, N.A. and Master Note
($15,000,000) (to be filed by amendment).
1.24 Amended and Restated Revolving Note by --
PSI Energy in favor of The Fifth Third
Bank ($15,000,000) (to be filed by
amendment).
1.25 Letter agreement dated between PSI Energy --
and The First National Bank of Chicago
and Master Note ($15,000,000) (to be
filed by amendment).
1.26 Letter agreement between PSI Energy and --
Bank of Montreal and Unsecured Note
($27,000,000) (to be filed by amendment).
1.27 Letter agreement between PSI Energy and --
NBD Bank, N.A., and Renewal Master Note
($5,000,000) (to be filed by amendment).
1.28 Letter agreement between PSI Energy and --
National City Bank, Indiana, and
Commercial Time Note ($3,000,000) (to be
filed by amendment).
1.29 Letter agreement between PSI Energy and --
The Mitsubishi Bank, Ltd., Chicago
Branch, and Master Note ($40,000,000) (to
be filed by amendment).
1.30 Revolving Credit Agreement between PSI --
Energy and Swiss Bank Corporation, New
York Branch, Promissory Note, and
Amendment No. 2 ($15,000,000) (to be
filed by amendment).
1.31 Letter Agreement between PSI Energy and --
The Chase Manhattan Bank, N.A., and
Master Note ($15,000,000) (to be filed
by amendment).
2 Form of note to evidence borrowings from Electronic
banks.
3 Form of commercial paper note. Electronic
4 Form of note to be executed by borrowing Electronic
Applicants to lending Applicants.
5 Form of Utility Money Pool Agreement (to --
be filed by amendment).
6 Form of Non-Utility Money Pool Agreement. Electronic
7 PUCO Order dated June 9, 1994 (Case No. --
94-811-GE-AIS) (to be filed by
amendment).
8 IURC Order dated September 9, 1992 (Case --
No. 39438) (to be filed by amendment).
9 FERC Order issued October 26, 1994 --
(Docket No. ES94-43-000) (to be filed by
amendment).
10 Preliminary opinion of counsel. Electronic
11 Final or "past tense" opinion of counsel --
(to be filed with certificate of
notification).
12 Proposed notice of proceeding. Electronic
13 Cash-flow prejections and inter-company --
loans and open account balances (to be
filed by amendment).
14 Financial statements of Applicants (to be --
filed by amendment).
EXHIBIT 2
FORM OF NOTE TO EVIDENCE
BORROWINGS FROM BANK
US $ [Amount] [Date]
FOR VALUE RECEIVED, the undersigned borrower ("Borrower"), hereby
promises to pay to the [Bank Name] ("Bank"), at the lending office of the
Bank or at such other place as the holder hereof shall designate in
accordance with the below-referenced Agreement, the unpaid principal amount
of each loan made to the Borrower by the Bank under the Agreement referred
to below in U.S. Dollars and in immediately available funds on the
respective maturity date for such loan with interest on the unpaid
principal amount of each such loan (as well as any overdue payments and
overdue interest) as specified in the Agreement [if Note is a "grid" note,
the following language will be included: and as may be set forth on the
schedule attached hereto].
The Note is expressly subject to the terms of that certain
Agreement ("Agreement") dated [Date] between the Borrower and the Bank,
which provides, among other things, for the acceleration of the maturity
hereof upon the occurrence of certain events specified therein. The
Borrower hereby waives demand, presentment for payment, notice of dishonor
or default, notice of intent to accelerate, notice of acceleration, protest
and diligence in collection.
This Note may be prepaid in whole or in part to the extent set
forth in the Agreement.
[If Note is a "grid" note, the following language will be
included: The Bank shall record on the schedule attached hereto (including
additional pages, if any) an appropriate notation evidencing the date,
amount, rate of interest and due date of each loan as well as the date and
amount of each payment by the undersigned in respect thereto. The
obligation of the Borrower to repay each loan made hereunder shall be
absolute and unconditional notwithstanding any failure of the Bank to enter
such amounts on the schedule attached hereto. In the event of a
disagreement as to the terms of a transaction, the Bank's records shall
govern, absent manifest error.]
This Note shall be governed by and construed in accordance with
the laws of the State of [State Name].
[Bank Name]
By____________________________
Title:
[Borrower Name]
By____________________________
Title:
EXHIBIT 3
FORM OF COMMERCIAL PAPER NOTE
(BOOK-ENTRY)
[THE CINCINNATI GAS & ELECTRIC CO./PSI ENERGY, INC.]
COMMERCIAL PAPER MASTER NOTE
___________________________
(Date of Issuance)
[The Cincinnati Gas & Electric Co./PSI Energy, Inc.], a corporation
organized and existing under the laws of the State of [Ohio/Indiana] (the
"Issuer"), for value received, hereby promises to pay to Cede & Co. or
registered assigns on the maturity date of each commercial paper note
identified on the records of the Issuer (which records are maintained by
Bank (the "Paying Agent")) the principal amount for each such commercial
paper note. Payment shall be made by wire transfer to the registered owner
from the Paying Agent without the necessity of presentation and surrender
of this Master Note.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS
OF THIS MASTER NOTE SET FORTH ON THE REVERSE HEREOF
This Master Note is a valid and binding obligation of the Issuer.
[THE CINCINNATI GAS & ELECTRIC CO.]
[PSI ENERGY, INC.]
By:_____________________________
(Issuer)
<PAGE>
(Reverse Side of Note)
At the request of the registered owner, [The Cincinnati Gas & Electric
Co./PSI Energy, Inc.] shall promptly issue and deliver one or more separate
note certificates evidencing each commercial paper note evidenced by this
Master Note. As of the date any such note certificate or certificates are
issued, the commercial paper notes which are evidenced thereby shall no
longer be evidenced by this Master Note.
_________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the Master Note and all rights
thereunder, hereby irrevocably constituting and appointing
_______________________________ Attorney to transfer said Master Note on
the books of the Issuer with full power of substitution in the premises.
Dated: _________________________________
(Signature)
Signature(s) Guaranteed:
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of this Master Note, in every particular, without
alteration or enlargement or any change whatsoever.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
EXHIBIT 4
FORM OF NOTE TO BE EXECUTED BY
BORROWING APPLICANT TO
LENDING APPLICANT
__________________, 19__
FOR VALUE RECEIVED, the undersigned, ____________________________
(the "Borrower"), hereby promises to pay the order of _________________
(the "Lender") at its principal office in _______________________, on
demand but in any event not later than one year after the date of such
loan, the principal sum set forth on the grid on the reverse side hereof as
"Principal Amount Outstanding". This note may be prepaid in full at any
time or in part from time to time without premium or penalty. The
Principal Amount Outstanding shall bear interest, calculated daily, at a
rate equal to [fill in rate]. Interest will be calculated on the daily
Principal Amount Outstanding as indicated on the grid on the reverse side
hereof or attached hereto.
______________________________
(Name of Borrower)
By:___________________________
<PAGE>
Principal
Loan Amount
Date (Repayment) Outstanding Rate Interest
________ _______________ _______________ ______ ________
________ _______________ _______________ ______ ________
________ _______________ _______________ ______ ________
________ _______________ _______________ ______ ________
________ _______________ _______________ ______ ________
________ _______________ _______________ ______ ________
________ _______________ _______________ ______ ________
________ _______________ _______________ ______ ________
EXHIBIT 6
Non-Utility Money Pool Agreement
This NON-UTILITY MONEY POOL AGREEMENT is made and entered into
this ___ day of _________, 1995 by and among CINergy Corp. ("CINergy"), a
Delaware corporation and a registered holding company under the Public
Utility Holding Company Act of 1935, as amended (the "Act"); CINergy
Services, Inc. ("CINergy Services"), a Delaware corporation and a
subsidiary service company of CINergy; CINergy Investments, Inc. ("CINergy
Investments"), a Delaware corporation and a subsidiary of CINergy;
Wholesale Power Services, Inc. ("PSI Wholesale"), an Indiana corporation
and a subsidiary of CINergy Investments; Enertech Associates International,
Inc. ("Enertech"), an Ohio corporation and a subsidiary of CINergy
Investments; Beheer- En Belegginsmaatschappij Bruwabel B.V. ("Bruwabel"), a
Netherlands corporation and a subsidiary of Enertech; Power International
s.r.o., a Czech limited liability company and a subsidiary of Bruwabel;
Power Development s.r.o., a Czech limited liability company and a
subsidiary of Bruwabel; PSI Recycling, Inc. ("Recycling"), an Indiana
corporation and a subsidiary of CINergy Investments; Power Equipment Supply
Co. ("Equipment"), an Indiana corporation and a subsidiary of CINergy
Investments; and CG&E Resource Marketing, Inc. ("Resource Marketing"), a
Delaware corporation and a subsidiary of CINergy Investments (each a
"Party" and collectively, the "Parties").
Recitals
The Parties from time to time have need to borrow funds on a
short-term basis. Some of the Parties from time to time have funds
available to loan on a short-term basis. The Parties desire to establish a
pool (the "Non-Utility Money Pool") to coordinate and provide for certain
of their short-term cash and working capital requirements.
NOW THEREFORE, in consideration of the premises, and the mutual
promises set forth herein, the Parties hereto agree as follows:
ARTICLE I
CONTRIBUTIONS AND BORROWINGS
Section 1.1 Contributions to Non-Utility Money Pool. Each Party
will determine each day, on the basis of cash flow projections and other
relevant factors, in such Party's sole discretion, the amount of funds it
has available for contribution to the Non-Utility Money Pool, and will
contribute such funds to the Non-Utility Money Pool. The determination of
whether a Party at any time has surplus funds to lend to the Non-Utility
Money Pool or shall lend funds to the Non-Utility Money Pool will be made
by an appropriate officer of such Party, or by a designee thereof, on the
basis of cash flow projections and other relevant factors, in such Party's
sole discretion. Each Party may withdraw any of its funds at any time upon
notice to CINergy Services as administrative agent of the Non-Utility Money
Pool.
Section 1.2 Rights to Borrow. Subject to the provisions of
Section 1.4(b) of this Agreement, all short-term borrowing needs of the
Parties, with the exception of CINergy, will be met by funds in the Non-
Utility Money Pool to the extent such funds are available. Each Party
(other than CINergy) shall have the right to make short-term borrowings
from the Non-Utility Money Pool from time to time, subject to the
availability of funds and the limitations and conditions set forth herein
and in the applicable orders of the Securities and Exchange Commission.
Each Party (other than CINergy) may request loans from the Non-Utility
Money Pool from time to time during the period from the date hereof until
this Agreement is terminated by written agreement of the Parties; provided,
however, that the aggregate amount of all loans requested by any Party
hereunder shall not exceed the applicable borrowing limits set forth in
applicable orders of the Securities and Exchange Commission and other
regulatory authorities, resolutions of such Party's shareholders and Board
of Directors or similar governing body, such Party's governing corporate
documents, and agreements binding upon such Party. No loans through the
Non-Utility Money Pool will be made to, and no borrowings through the Non-
Utility Money Pool will be made by, CINergy.
Section 1.3 Source of Funds. (a) Funds will be available
through the Non-Utility Money Pool from the following sources for use by
the Parties from time to time: (i) surplus funds in the treasuries of
Parties other than CINergy, (ii) surplus funds in the treasury of CINergy,
and (iii) proceeds from bank borrowings by Parties and the sale by CINergy
of commercial paper ("External Sources"), in each case to the extent
permitted by applicable laws and regulatory orders. Funds will be made
available from such sources in such order as CINergy Services, as
administrator of the Non-Utility Money Pool, may determine will result in a
lower cost of borrowing to companies borrowing from the Non-Utility Money
Pool, consistent with the individual borrowing needs and financial standing
of the Parties providing funds to the Non-Utility Money Pool.
(b) Borrowing Parties will borrow pro rata from each lending
Party in the proportion that the total amount loaned by such lending Party
bears to the total amount then loaned through the Non-Utility Money Pool.
On any day when more than one fund source (e.g., surplus treasury funds of
CINergy and other Non-Utility Money Pool participants ("Internal Sources")
and funds from External Sources), with different rates of interest, is used
to fund loans through the Non-Utility Money Pool, each borrowing Party will
borrow pro rata from each such fund source in the Non-Utility Money Pool in
the same proportion that the amount of funds provided by that fund source
bears to the total amount of short-term funds available to the Non-Utility
Money Pool.
Section 1.4 Authorization. (a) Each loan shall be authorized
by the lending Party's chief financial officer or treasurer, or by a
designee thereof.
(b) All borrowings from the Non-Utility Money Pool shall be
authorized by the borrowing Party's chief financial officer or treasurer,
or by a designee thereof. No Party shall be required to effect a borrowing
through the Non-Utility Money Pool if such Party determines that it can
(and is authorized to) effect such borrowing at lower cost directly from
banks or through the sale of its own commercial paper.
Section 1.5 Interest. Each Party receiving a loan shall accrue
interest monthly on the unpaid principal amount of such loan to the Non-
Utility Money Pool from the date of such loan until such principal amount
shall be paid in full.
(a) If only funds from Internal Sources comprise the funds
available in the Non-Utility Money Pool, the interest rate applicable to
loans of such funds from Internal Sources shall be the CD yield equivalent
of the 30-day Federal Reserve "AA" Industrial Commercial Paper Composite
Rate (or, if no such Composite Rate is established for that day, then the
applicable rate shall be the Composite Rate for the next preceding day for
which such Composite Rate was established).
(b) If only funds from External Sources comprise the funds
available in the Non-Utility Money Pool, the interest rate applicable to
loans of such funds from External Sources shall be equal to the lending
Party's cost for such funds from External Sources (or, if more than one
Party had made available funds from External Sources on such day, the
applicable interest rate shall be a composite rate, equal to the weighted
average of the cost incurred by the respective Parties for such funds from
External Sources).
(c) In cases where funds from both Internal Sources and External
Sources are concurrently borrowed through the Non-Utility Money Pool, the
rate applicable to all loans comprised of such "blended" funds shall be a
composite rate, equal to the weighted average of the (i) cost of all funds
contributed by Parties from Internal Sources (as determined pursuant to
Section 1.5(a) above) and (ii) the cost of all such funds from External
Sources (as determined pursuant to Section 1.5(b) above); provided, that in
circumstances where funds from Internal Sources and External Sources are
available for loans through the Non-Utility Money Pool, loans may be made
exclusively with funds from Internal Sources or External Sources, rather
than from a "blend" of such funds, to the extent it is expected that such
loans would result in a lower cost of borrowing.
Section 1.6 Certain Costs. The cost of compensating balances
and fees paid to banks to maintain credit lines by Parties lending funds
from External Sources to the Non-Utility Money Pool shall initially be paid
by the Party maintaining such line. A portion of such costs shall
periodically be allocated to the Parties borrowing such funds from External
Sources through the Non-Utility Money Pool on a fair and equitable basis.
Section 1.7 Repayment. Each Party receiving a loan hereunder
shall repay the principal amount of such loan, together with all interest
accrued thereon, on demand and in any event within 365 days of the date on
which such loan was made. All loans made through the Non-Utility Money
Pool may be prepaid by the borrower without premium or penalty.
Section 1.8 Form of Loans to Parties. Loans to the Parties
through the Non-Utility Money Pool will be made pursuant to open-account
advances, repayable upon demand and in any event not later than one year
after the date of the advance; provided, that each lending Party shall at
all times be entitled to receive upon demand one or more promissory notes
evidencing any and all loans by such lender. Any such note shall: (a) be
substantially in the form to be filed as Exhibit 4 to the Form U-1
Application-Declaration in File No. 70-_____, (b) be dated as of the date
of the initial borrowing, (c) mature on demand or on a date agreed to by
the parties to the transaction, but in any event not later than one year
after the date of the applicable borrowing, and (d) be prepayable in whole
at any time or in part from time to time, without premium or penalty.
ARTICLE II
OPERATION OF NON-UTILITY MONEY POOL
Section 2.1 Operation. Operation of the Non-Utility Money Pool,
including record keeping and coordination of loans, will be handled by
CINergy Services under the authority of the appropriate officers of the
Parties. CINergy Services shall be responsible for the determination of
all applicable interest rates and charges to be applied to advances
outstanding at any time hereunder, shall maintain records of all advances,
interest charges and accruals and interest and principal payments for
purposes hereof, and shall prepare periodic reports thereof for the
Parties. CINergy Services will administer the Non-Utility Money Pool on an
"at cost" basis. Separate records shall be kept by CINergy Services for
the money pool established by this agreement and any other money pool
administered by CINergy Services.
Section 2.2 Investment of Surplus Funds in the Non-Utility Money
Pool. Funds not required to meet Non-Utility Money Pool loans (with the
exception of funds required to satisfy the Non-Utility Money Pool's
liquidity requirements) will ordinarily be invested in one or more short-
term investments, including: (i) interest-bearing accounts with banks;
(ii) obligations issued or guaranteed by the U.S. government and/or its
agencies and instrumentalities, including obligations under repurchase
agreements; (iii) obligations issued or guaranteed by any state or
political subdivision thereof, provided that such obligations are rated not
less than A by a nationally recognized rating agency; (iv) commercial paper
rated not less than A-1 or P-1 or their equivalent by a nationally
recognized rating agency; (v) money market funds; (vi) bank certificates of
deposit; (vii) Eurodollar funds; and (viii) such other investments as are
permitted by Section 9(c) of the Act and Rule 40 thereunder.
Section 2.3 Allocation of Interest Income and Investment
Earnings. The interest income and other investment income earned by the
Non-Utility Money Pool on loans and on investment of surplus funds will be
allocated among the Parties in accordance with the proportion each Party's
contribution of funds in the Non-Utility Money Pool bears to the total
amount of funds in the Non-Utility Money Pool and the cost of any External
Sources provided to the Non-Utility Money Pool by such Party. Interest and
other investment earnings will be computed on a daily basis and settled
once per month.
Section 2.4 Event of Default. If any Party shall generally not
pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors, or any proceeding shall be instituted by or
against any Party seeking to adjudicate it a bankrupt or insolvent, then
the other Parties may declare the unpaid principal amount of any loans to
such Party, and all interest thereon, to be forthwith due and payable and
all such amounts shall forthwith become due and payable.
ARTICLE III
MISCELLANEOUS
Section 3.1 Amendments, Waivers. This Agreement may not be
modified or amended in any respect except in writing executed by the
Parties. No provision of this Agreement shall be deemed waived unless such
wavier is set forth in writing and executed by the Party making such
waiver.
Section 3.2 Legal Responsibility. Nothing herein contained
shall render any Party liable for the obligations of any other Party
hereunder and the rights, obligations and liabilities of the Parties are
several in accordance with their respective obligations, and not joint.
Section 3.3 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Ohio.
IN WITNESS WHEREOF, the undersigned companies have duly caused
this document to be signed on their behalf on the date first written above
by the undersigned thereunto duly authorized.
CINergy CORP.
By________________________________
Name:
Title:
CINergy SERVICES, INC.
By_________________________________
Name:
Title:
CINergy INVESTMENTS, INC.
By________________________________
Name:
Title:
WHOLESALE POWER SERVICES, INC.
By________________________________
Name:
Title:
ENERTECH ASSOCIATES
INTERNATIONAL, INC.
By________________________________
Name:
Title:
BEHEER- EN BELEGGINSMAATSCHAPPIJ
BRUWABEL, B.V.
By________________________________
Name:
Title:
By________________________________
Name:
Title:
POWER INTERNATIONAL, s.r.o.
By________________________________
Name:
Title:
POWER DEVELOPMENT, s.r.o.
By________________________________
Name:
Title:
PSI RECYCLING, INC.
By________________________________
Name:
Title:
POWER EQUIPMENT SUPPLY CO.
By________________________________
Name:
Title:
CG&E RESOURCE MARKETING, INC.
By________________________________
Name:
Title:
EXHIBIT 10
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, NY 10005
March 10, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form U-1 Application-Declaration
Dear Sirs:
We refer to the Form U-1 Application-Declaration (the
"Application-Declaration"), filed by CINergy Corp. ("CINergy"), a Delaware
corporation and a registered public utility holding company under the
Public Utility Holding Company Act of 1935, as amended (the "Act"), and
certain subsidiary companies of CINergy. Capitalized terms not defined
herein shall have the meanings ascribed to such terms in the Application-
Declaration.
In the Application-Declaration authorizations are sought for
CINergy and certain of its subsidiary companies (i) to incur short-term
borrowings, (ii) to issue notes and/or commercial paper, (iii) to make
capital contributions, issue guarantees and provide other forms of credit
support, and (iv) to establish and utilize a system of money pools to
coordinate and provide for certain short-term cash and working capital
requirements of the Applicants, all as described in the Application-
Declaration and the exhibits thereto (collectively, the "Transactions").
We have acted as special counsel for CINergy in connection with the
Transactions and, as such counsel, we are familiar with the corporate
proceedings taken and to be taken by CINergy in connection with the
Transactions as described in the Application-Declaration.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of CINergy, certificates of public
officials, certificates of officers and representatives of CINergy, and
other documents as we have deemed it necessary to require as a basis for
the opinions hereinafter expressed. In such examination we have assumed
the genuineness of all signatures and the authenticity of all documents
submitted to us as originals and the conformity with the originals of all
documents submitted to us as copies. As to various questions of fact
material to such opinions we have, when relevant facts were not
independently established, relied upon certificates by officers of CINergy
and other appropriate persons and statements contained in the Application-
Declaration.
The opinions expressed below in respect of the Transactions
described in the Application-Declaration are subject to the following
assumptions or conditions:
a. The Transactions shall have been duly authorized and approved
to the extent required by state law by the Board of Directors of
CINergy and each other Applicant.
b. The Securities and Exchange Commission shall have duly
entered an appropriate order or orders granting the Application-
Declaration and permitting the Application-Declaration to become
effective with respect to the Transactions.
c. The Transactions shall have been accomplished in accordance
with all approvals, authorizations, consents, certificates and orders
of the Federal Energy Regulatory Commission, the Indiana Utility
Regulatory Commission, the Public Utilities Commission of Ohio, and
any other applicable state commission or regulatory authority required
for the consummation of the Transactions, and all such required
approvals, authorizations, consents, certificates and orders shall
have been obtained and remain in effect.
d. The commercial paper and other notes proposed to be issued by
the Applicants to non-associate companies, and the notes proposed to
be issued by borrowing Applicants to lending Applicants, shall be
substantially in the forms attached as exhibits to the Application-
Declaration and shall be properly completed and executed and, where
required, countersigned.
e. The rates of interest on the commercial paper and notes that
are the subject of the Application-Declaration shall not exceed the
interest rates permitted by applicable state and federal law.
f. Borrowings through the Utility Money Pool and Non-Utility
Money Pool will not exceed those levels permitted from time to time by
the borrowing Applicant's Articles or Certificate of Incorporation or
other governing corporate documents and debt instruments and
agreements to which the borrowing Applicant is a party or by which its
property is bound, and applicable laws and orders of governmental and
regulatory authorities with jurisdiction over such borrowing
Applicant.
g. No act or event other than as described herein shall have
occurred subsequent to the date hereof which would change the opinions
expressed above.
h. The consummation of the Transactions shall be conducted under
our supervision, and all legal matters incident thereto shall be
satisfactory to us, including the receipt in satisfactory form of such
opinions of other counsel, qualified to practice in jurisdictions
pertaining to such transactions in which we are not admitted to
practice, as we may deem appropriate.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion that, in the
event that the proposed Transactions are consummated in accordance with the
Application-Declaration, as it may be amended, and subject to the
assumptions and conditions set forth above:
1. CINergy, CINergy Services, Inc., CINergy Investments, Inc.,
and CG&E Resource Marketing will be validly organized and duly
existing under the laws of the State of Delaware. PSI Energy, Inc.,
PSI Recycling, Inc., Power Equipment Supply Co., Wholesale Power
Services, Inc., Miami Power Corp., The West Harrison Gas and Electric
Co., and Lawrenceburg Gas Co. will be validly organized and duly
existing under the laws of the State of Indiana. The Cincinnati Gas &
Electric Co., Enertech Associates International, Inc., and Tri-State
Improvement Co. will be validly organized and duly existing under the
laws of the State of Ohio. The Union Light, Heat and Power Co. and KO
Transmission Co. will be validly organized and duly existing under the
laws of the Commonwealth of Kentucky. Power International s.r.o. and
Power Development s.r.o. will be validly organized under the laws of
the Czech Republic or a predecessor state thereto and will be duly
existing under the laws of the Czech Republic. Beheer- En
Belegginsmaatschappij Bruwabel B.V. will be validly organized and duly
existing under the laws of The Netherlands.
2. All state laws applicable to the proposed Transactions will
have been complied with.
3. The lending Applicants will legally acquire any promissory
notes of the borrowing Applicants issued in connection with the
proposed Transactions.
4. The commercial paper and notes proposed to be issued by
Applicants to non-associate companies, and the notes proposed to be
issued by Applicants to other Applicants, will be valid and binding
obligations of the issuing Applicant, enforceable in accordance with
their terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and the application of
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5. The consummation of the proposed Transactions will not
violate the legal rights of the holders of any securities issued by
any Applicant.
We hereby consent to the use of this opinion as an exhibit to the
Application-Declaration. The opinions set forth herein are issued and
expressed as of the date hereof. We do not assume or undertake any
responsibility to advise you of changes in either fact or law which may
come to our attention after the date hereof.
Very truly yours,
Milbank, Tweed, Hadley & McCloy
MDD/RBW
EXHIBIT 12
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
March __, 1995
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 April 11, 1995, 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 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.
CINergy Corp. et al. (File No. 70- )
CINergy Corp.("CINergy"), 139 East Fourth Street, Cincinnati,
Ohio 45202, a Delaware corporation and a registered holding company under
the Act, and certain of its subsidiary companies -- CINergy Services, Inc.
("CINergy Services"); PSI Energy, Inc. ("PSI Energy"), The Cincinnati Gas &
Electric Company ("CG&E"), The Union Light, Heat and Power Co. ("ULH&P"),
The West Harrison Gas and Electric Co. ("West Harrison"), Lawrenceburg Gas
Co. ("Lawrenceburg"), Miami Power Corp. ("Miami"), Tri-State Improvement
Co. ("Tri-State"), KO Transmission Co. ("KO"), CINergy Investments, Inc.
("CINergy Investments"), CG&E Resource Marketing, Inc. ("Resource
Marketing"), Enertech Associates International, Inc. ("Enertech"), Beheer-
En Belegginsmaatschappij Bruwabel B.V. ("Bruwabel"), Power International
s.r.o. ("Power International"), Power Development s.r.o. ("Power
Development"), Wholesale Power Services, Inc. ("Wholesale Power"), PSI
Recycling, Inc. ("Recycling"), and Power Equipment Supply Co. ("Equipment")
(collectively with CINergy, the "Applicants") -- have filed an Application-
Declaration seeking authorization through May 31, 1997 (1) to incur short-
term borrowings, (2) to issue notes and/or (in the case of CG&E and PSI
Energy) commercial paper, (3) for certain Applicants to make capital
contributions and loans to subsidiary companies, (4) for CG&E, PSI Energy,
ULH&P, Lawrenceburg, West Harrison, Miami, KO and Tri-State, together with
CINergy and CINergy Services, to establish and utilize a "Utility Money
Pool" to coordinate and provide for their short-term cash requirements, (5)
for CINergy Investments, Resource Marketing, Enertech, Bruwabel, Power
International, Power Development, Wholesale Power, Recycling, and
Equipment, together with CINergy and CINergy Services, to establish and
utilize a "Non-Utility Money Pool" to coordinate and provide for their
short-term cash requirements, (6) for CINergy to use the proceeds of
certain previously authorized borrowings and sales of commercial paper or
common stock, and any funds available for general corporate purposes, to
loan to the other Applicants when required through the money pools
described in the Application-Declaration, and (7) for CINergy to make
capital contributions and loans to certain of the Applicants, and to issue
guarantees and to obtain letters of credit in connection with bank
borrowings by the other Applicants.
Under the authority requested in the Application-Declaration, the
aggregate principal amount of short-term borrowings, notes and/or
commercial paper outstanding would not exceed the following amounts: for
CINergy Services, $100,000,000; for PSI Energy, $400,000,000; for CG&E,
$400,000,000; for ULH&P, $35,000,000; for West Harrison, $200,000; for
Lawrenceburg, $3,000,000; for Miami, $100,000; for KO, $2,000,000; for Tri-
State, $40,000,000; for CINergy Investments, $ 22,000,000; for Enertech,
$6,750,000; for Bruwabel, Power International and Power Development,
$4,000,000; for Recycling, $4,400,000; for Equipment, $100,000; for
Wholesale Power, $1,200,000; and for Resource Marketing, $2,000,000
(Enertech, Bruwabel, Power International, Power Development, Recycling,
Equipment and Wholesale Power being collectively referred to as the
"Designated Non Utility Companies"). The aggregate principal amount of
short-term borrowings, notes and/or commercial paper outstanding for
CINergy would not exceed the amount previously authorized in File No. 70-
8521.
Proceeds of any short-term borrowings by CG&E, PSI Energy, ULH&P,
Lawrenceburg, West Harrison, Miami, CINergy Services, KO and Tri-State and
sales of commercial paper by CG&E and PSI Energy may be used by each such
company (i) for the interim financing of its construction and capital
expenditure programs; (ii) for its working capital needs; (iii) for the
repayment, redemption or refinancing of its debt and preferred stock;
(iv) to meet unexpected contingencies, payment and timing differences, and
cash requirements, to cover inter-company balances, and for other lawful
general corporate purposes; (v) to loan to other participants in the
Utility Money Pool; and (vi) in the case of borrowings by CINergy Services,
for other lawful purposes in connection with the performance by CINergy
Services of its functions as a subsidiary service company under the Act,
including the purposes specified in the Form U-1 Application-Declaration
(as amended) of CINergy in File No. 70-8427 (the "CINergy Merger U-1"). In
addition, proceeds of borrowings, and other available funds, may be used
(vi) by CG&E to make capital contributions to Tri-State and KO for the
purpose of settling inter-company open-account balances and indebtedness to
CG&E and to provide Tri-State and KO with working capital for their
activities in support of CG&E's operations, and (vii) by CG&E and its
utility subsidiaries to make loans and open-account advances to one another
in connection with services, goods and construction provided to one
another, as set forth in Item 3.B of the CINergy Merger U-1.
Proceeds of borrowings by Resource Marketing and the Designated
Non-Utility Companies would be used (a) to provide working capital to
continue to operate such companies' businesses as described in the CINergy
Merger U-1 and to fund commitments existing as of the registration of
CINergy as a holding company under the Act on October 25, 1994, (b) to
repay and refinance indebtedness, (c) to loan to other participants in the
Non-Utility Money Pool, and (d) in the case of Resource Marketing, for the
additional purposes of making loans and capital contributions to U.S.
Energy Partners, a partnership in which Resource Marketing holds an
interest.
Bank Borrowings. PSI Energy has formal bank facilities with
commitments aggregating $230 million, under which $120.5 million in
borrowings were outstanding at December 31, 1994. PSI Energy's formal
lines of credit are embodied in agreements with a number of banks. The
credit lines are unsecured and provide for maturities of one year and one
day for any borrowings by PSI Energy thereunder, with interest rate options
at or below prime rate.
Currently, CG&E has lines of credit with 12 banks with
commitments aggregating $82 million. These lines of credit are maintained
by compensating balances and/or fees. At year-end 1994, no borrowings were
outstanding under any of the CG&E bank facilities.
ULH&P has formal bank lines of credit with four banks with
commitments aggregating $30 million, under which $14.5 million in
borrowings were outstanding as of December 31, 1994. Lawrenceburg has a
formal line of credit with one bank, with a commitment of $400,000.
Lawrenceburg had no borrowings outstanding under this facility at year-end
1994. As of December 31, 1994, CINergy Services, West Harrison, Miami, KO
and Tri-State had no committed lines of credit.
Certain of the Applicants also have informal arrangements for
short-term borrowings with various banks on an "as offered" basis, also
known as uncommitted lines of credit. Since interest rates on these
borrowings, when and if such borrowings are available, generally are below
the prevailing prime rate, it is intended that these informal arrangements
will continue to be utilized.
To provide flexibility to meet their cash needs, authorization is
requested through May 31, 1997 for CG&E, PSI Energy, ULH&P and Lawrenceburg
to borrow from banks pursuant to the existing formal and informal lines of
credit described above (and any increases therein that may be negotiated)
and for CG&E, PSI Energy, ULH&P, Lawrenceburg, West Harrison, Miami,
CINergy Services, KO and Tri-State to borrow from banks pursuant to new
credit facilities (formal or informal) that may be arranged from time to
time, and for CINergy to issue guarantees and provide letters of credit in
connection with such borrowings. All such borrowings and related CINergy
guarantees and letters of credit would be made on or before May 31, 1997
and would be subject to the limitations on aggregate principal amount
described above.
Borrowings may be evidenced by promissory notes, each of which
(a) would be for the principal amount to be borrowed at the time (if a
"transactional" note) or for the principal amount outstanding from time to
time (if a "grid" note) from the lending bank and be payable to the order
of such bank, (b) would be issued on or before May 31, 1997 and would
mature on a date no later than one year (or, in the case of up to $200
million in borrowings by PSI Energy, no later than 24 months) from the date
of issuance, (c) would bear interest at a rate no higher than the effective
cost of money for unsecured prime commercial bank loans prevailing on the
date of such borrowing, and (d) would be subject to prepayment at the
option of borrower, or under certain circumstances with the consent of the
lending bank, in whole at any time or in part from time to time, without
premium or penalty. Amounts outstanding under formal lines of credit
typically would become due immediately upon an event of default, including
non-payment, default under other agreements governing indebtedness,
bankruptcy, or insolvency. Short-term notes may be issued on either a
"grid" note basis or a transactional basis, under similar terms and
conditions. The actual terms of the notes may vary from the terms
described above to reflect customary terms or particular lending practices
and policies of different lending institutions, but otherwise are expected
to be substantially similar.
Compensation arrangements under lines of credit would be on a
compensating balance and/or fee basis. In general, fees range from 5 basis
points to 20 basis points per annum on the commitment, and balance
arrangements require average balances of 5% to 10% of the amount of the
commitment.
Commercial Paper. The short-term borrowing needs of PSI Energy
and CG&E have been met in part with the sale of commercial paper through
commercial paper dealers. At any given time, PSI Energy and CG&E may be
able to issue commercial paper at a lower cost than that applicable to
short-term bank borrowings. To provide financing flexibility, CG&E and PSI
Energy request authority through May 31, 1997 to issue and sell commercial
paper, to one or more dealers, subject to the limitations on aggregate
outstanding principal amount stated above. Proceeds from the sale of
commercial paper will be added to the seller's treasury funds and will be
used for the same purposes as the borrowings described above, including,
without limitation, for the purpose of loans by the seller through the
Utility Money Pool.
The commercial paper which CG&E and PSI Energy propose to issue
to dealers will be in the form of book-entry unsecured promissory notes,
with varying denominations of no less than $25,000 each. Such notes will
be issued and sold by CG&E and PSI Energy directly to Dealers at market
rates. No commission or fee will be payable in connection with the
issuance and sale of the commercial paper. The purchasing Dealer, however,
will reoffer such notes at a rate less than the rate to the issuer and, as
principal, will reoffer such notes in such a manner as not to constitute a
public offering under the Securities Act of 1933.
CG&E and PSI Energy also request authorization to sell commercial
paper directly to certain financial institutions. Sales of commercial
paper directly to such institutions will be undertaken only if the
resulting cost of money is equal to or less than that available from
dealer-placed notes. The terms of any such notes would be similar to those
of dealer-placed notes.
The commercial paper proposed to be issued by CG&E and PSI Energy
will have varying maturities of no more than 270 days from date of issue
and will be issued and sold by CG&E and PSI Energy from time to time
through May 31, 1997. No such note will have a maturity date more than 270
days after May 31, 1997. Subject to such limitations, sales of commercial
paper (and the bank borrowings described above) ordinarily will be
structured to mature at such time as excess funds are expected to become
available for money pool loans. Upon the availability of any such excess
funds, external borrowings would be retired and loans refinanced to the
extent such funds became available.
Utility Money Pool. Under the proposed terms of the Utility
Money Pool, short-term funds would be available from the following sources
for short-term loans to CG&E, PSI Energy, ULH&P, Lawrenceburg, Miami, West
Harrison, CINergy Services, KO and Tri-State from time to time: (1)
surplus funds in the treasuries of Utility Money Pool participants other
than CINergy, (2) surplus funds in the treasury of CINergy, and (3)
proceeds from bank borrowings by Utility Money Pool participants or the
sale of commercial paper by CINergy, CG&E and PSI Energy for loan to the
Utility Money Pool ("External Funds"), in each case to the extent permitted
by applicable laws and regulatory orders. Funds would be made available
from such sources in such order as CINergy Services, as administrator of
the Utility Money Pool, may determine would result in a lower cost of
borrowing, consistent with the individual borrowing needs and financial
standing of the companies providing funds to the pool. The determination
of whether a Utility Money Pool participant at any time has surplus funds
to lend to the Utility Money Pool or shall lend funds to the Utility Money
Pool would be made by such participant's chief financial officer or
treasurer, or by a designee thereof, on the basis of cash flow projections
and other relevant factors, in such participant's sole discretion.
Companies that borrow would borrow pro rata from each company that lends,
in the proportion that the total amount loaned by each such lending company
bears to the total amount then loaned through the Utility Money Pool. On
any day when more than one fund source (e.g., surplus treasury funds of
CINergy and other Utility Money Pool participants ("Internal Funds") and
External Funds), with different rates of interest, is used to fund loans
through the Utility Money Pool, each borrower would borrow pro rata from
each such fund source in the Utility Money Pool in the same proportion that
the amount of funds provided by that fund source bears to the total amount
of short-term funds available to the Utility Money Pool.
Borrowings from the Utility Money Pool would require
authorization by the borrower's chief financial officer or treasurer, or by
a designee thereof. No party would be required to effect a borrowing
through the Utility Money Pool if it is determined that it could (and had
authority to) effect a borrowing at lower cost directly from banks or
through the sale of its own commercial paper. No loans through the Utility
Money Pool would be made to, and no borrowings through the Utility Money
Pool would be made by, CINergy.
The cost of compensating balances and fees paid to banks to
maintain credit lines by Utility Money Pool participants lending External
Funds to the Utility Money Pool would initially be paid by the participant
maintaining such line. A portion of such costs would periodically be
allocated to the companies borrowing such External Funds through the
Utility Money Pool on a fair and equitable basis.
If only Internal Funds comprise the funds available in the
Utility Money Pool, the interest rate applicable to loans of such Internal
Funds would be the CD yield equivalent of the 30-day Federal Reserve "AA"
Industrial Commercial Paper Composite Rate (or if no such Composite Rate is
established for that day, then the applicable rate would be the Composite
Rate for the next preceding day for which such Composite Rate was
established).
If only External Funds comprise the funds available in the
Utility Money Pool, the interest rate applicable to loans of such External
Funds would be equal to the lending company's cost for such External Funds
(or, if more than one Utility Money Pool particpant had made available
External Funds on such day, the applicable interest rate would be a
composite rate equal to the weighted average of the cost incurred by the
respective Utility Money Pool participants for such External Funds).
In cases where both Internal Funds and External Funds are
concurrently borrowed through the Utility Money Pool, the rate applicable
to all loans comprised of such "blended" funds would be a composite rate
equal to the weighted average of (a) the cost of all Internal Funds
contributed by Utility Money Pool participants and (b) the cost of all such
External Funds. In circumstances where Internal Funds and External Funds
are available for loans through the Utility Money Pool, loans may be made
exclusively from Internal Funds or External Funds, rather than from a
"blend" of such funds, to the extent it is expected that such loans would
result in a lower cost of borrowing.
Funds not required by the Utility Money Pool to make loans (with
the exception of funds required to satisfy the Utility Money Pool's
liquidity requirements) would ordinarily be invested in one or more short-
term investments, including: (i) interest-bearing accounts with banks;
(ii) obligations issued or guaranteed by the U.S. government and/or its
agencies and instrumentalities, including obligations under repurchase
agreements; (iii) obligations issued or guaranteed by any state or
political subdivision thereof, provided that such obligations are rated not
less than A by a nationally recognized rating agency; (iv) commercial paper
rated not less than A-1 or P-1 or their equivalent by a nationally
recognized rating agency; (v) money market funds; (vi) bank certificates of
deposit, (vii) Eurodollar funds; and (viii) such other investments as are
permitted by Section 9(c) of the Act and Rule 40 thereunder.
The interest income and investment income earned on loans and
investments of surplus funds would be allocated among the participants in
the Utility Money Pool in accordance with the proportion each participant's
contribution of funds bears to the total amount of funds in the Utility
Money Pool and the cost of funds provided to the Utility Money Pool by such
participant.
Each Applicant receiving a loan through the Utility Money Pool
would be required to repay the principal amount of such loan, together with
all interest accrued thereon, on demand and in any event not later than one
year after the date of such loan. All loans made through the Utility Money
Pool could be prepaid by the borrower without premium or penalty.
Loans through the Utility Money Pool would ordinarily be made
pursuant to open-account advances, repayable upon demand and in any event
not later than one year from the date of such advance. Under the
authorization requested herein, all loans through the Utility Money Pool
would be made on or before May 31, 1997. Each lender would at all times be
entitled to receive upon demand one or more promissory notes evidencing any
and all loans by such lender. Such notes would be dated as of the date of
the initial borrowing (and in any event not later than May 31, 1997), would
mature on demand, or on a date agreed by the parties (but in any case not
later than one year after the date of the applicable borrowing), and would
be prepayable in whole at any time or in part from time to time, without
premium or penalty. Interest would be accrued by each borrower monthly.
Capital Contributions. Because certain of the Designated Non-
Utility Companies and Resource Marketing have heretofore been net borrowers
from their corporate parents, it has been the practice of such corporate
parents to advance funds to such companies in the form of inter-company
loans and open-account advances and periodically to forgive such
indebtedness, thereby making capital contributions in the amount forgiven.
Because certain of the Designated Non-Utility Companies and
Resource Marketing may remain net borrowers during the period covered by
this Application-Declaration, authorization is requested for CINergy from
time to time through May 31, 1997 to make capital contributions and loans
(in the form of open-account advances, repayable on demand, or otherwise
through the Non-Utility Money Pool described below) to CINergy Investments
and the Designated Non-Utility Companies, and for CINergy Investments and
the Designated Non-Utility Companies to make corresponding capital
contributions and loans (in the form of open-account advances, repayable on
demand, or otherwise through the Non-Utility Money Pool) to their
subsidiary companies; provided, that the aggregate amount of all borrowings
by, and capital contributions to, a company shall not exceed its aggregate
borrowing limit.
Authority is also requested through May 31, 1997 (i) for CINergy
from time to time to make capital contributions and loans (in the form of
open-account advances, repayable on demand, or otherwise through the Non-
Utility Money Pool) to CINergy Investments and the Designated Non-Utility
Companies, (ii) for CINergy Investments and the Desginated Non-Utility
Companies to make corresponding capital contributions and loans to their
subsidiary companies, (iii) for CINergy and CINergy Investments to make
capital contributions and loans to Resource Marketing, and (iv) for
Resource Marketing to make capital contributions and loans to Energy
Partners, in each case to provide for working capital needs, repayment or
refinancing of debt, unexpected contingencies, payment and timing
differences, cash requirements and other general business purposes.
Non-Utility Money Pool. To coordinate and provide for short-term
cash and working capital requirements of Resource Marketing and the
Designated Non-Utility Companies, CINergy, CINergy Services, Resource
Marketing and the Designated Non-Utility Companies propose to establish a
Non-Utility Money Pool, with terms similar to those governing the Utility
Money Pool. Under the proposed arrangements governing the Non-Utility
Money Pool, short-term funds will be available from the following sources
for use by the respective participants from time to time: (1) surplus
funds in the treasuries of Resource Marketing and the Designated Non-
Utility Companies, (2) surplus funds in the treasury of CINergy, and (3)
proceeds from the sale by CINergy of commercial paper and bank borrowings
by CINergy, Resource Marketing and the Designated Non-Utility Companies
("External Sources"), in each case to the extent permitted by applicable
laws and regulatory orders. Funds will be made available from such sources
in such order as CINergy Services, as administrator of the Non-Utility
Money Pool, may determine would result in a lower cost of borrowing from
the Non-Utility Money Pool, consistent with the borrowing needs and
financial standing of the companies providing funds to the pool. The
determination of whether a Non-Utility Money Pool participant at any time
has surplus funds to lend to the Non-Utility Money Pool or shall lend funds
to the Non-Utility Money Pool will be made by an appropriate officer of
such participant, or by a designee thereof, on the basis of cash flow
projections and other relevant factors, in such participant's sole
discretion.
Companies that borrow will borrow pro rata from each company that
lends, in the proportion that the total amount loaned by each such lending
company bears to the total amount then loaned through the Non-Utility Money
Pool. On any day when more than one fund source (e.g., surplus treasury
funds of CINergy and other Non-Utility Money Pool participants ("Internal
Sources") and External Sources), with different rates of interest, is used
to fund loans through the Non-Utility Money Pool, each borrower will borrow
pro rata from each such fund source in the Non-Utility Money Pool in the
same proportion that the amount of funds provided by that fund source bears
to the total amount of short-term funds available to the Non-Utility Money
Pool.
Loans through the Non-Utility Money Pool will be made only from
funds provided by CINergy, CINergy Investments, Resource Marketing or other
Designated Non-Utility Companies, and no loan will be made to CINergy,
CINergy Investments, Resource Marketing, Energy Partners or any Designated
Non-Utility Company by the Utility Money Pool or by any public utility
company in the CINergy system. In addition, no loans through the Non-
Utility Money Pool will be made to, and no borrowings through the Non-
Utility Money Pool will be made by, CINergy.
Borrowings from the Non-Utility Money Pool will be authorized by
an appropriate officer of the borrower or by a designee thereof. No party
shall be required to effect a borrowing through the Non-Utility Money Pool
if it determines that it can (and is authorized to) effect a borrowing at
lower cost directly from a bank.
The cost of compensating balances and fees paid to banks to
maintain credit lines by Non-Utility Money Pool participants lending funds
from External Sources to the Non-Utility Money Pool would initially be paid
by the participant maintaining such line. A portion of such costs would
periodically be allocated to the companies borrowing funds from such
External Sources through the Non-Utility Money Pool on a fair and equitable
basis.
If only funds from Internal Sources comprise the funds available
in the Non-Utility Money Pool, the interest rate applicable to loans of
such funds from Internal Sources would be the CD yield equivalent of the
30-day Federal Reserve "AA" Industrial Commercial Paper Composite Rate (or
if no such Composite Rate were established for that day, then the
applicable rate would be the Composite Rate for the next preceding day for
which such Composite Rate was established).
If only funds from External Sources comprise the funds available
in the Utility Money Pool, the interest rate applicable to loans of such
funds from External Sources would be equal to the lending company's cost
for such funds from External Sources (or, if more than one Non-Utility
Money Pool particpant had made available funds from External Sources on
such day, the applicable interest rate would be a composite rate equal to
the weighted average of the cost incurred by the respective Non-Utility
Money Pool participants for funds from such External Sources).
In cases where both funds from Internal Sources and External
Sources are concurrently borrowed through the Non-Utility Money Pool, the
rate applicable to all loans comprised of such "blended" funds would be a
composite rate equal to the weighted average of (a) the cost of all funds
contributed by Non-Utility Money Pool participants from Internal Sources
and (b) the cost of all funds from External Sources. In circumstances
where funds from both Internal Sources and External Sources are available
for loans through the Non-Utility Money Pool, loans may be made exclusively
with funds from Internal Sources or External Sources, rather than from a
"blend" of such funds, to the extent it is expected that such loans would
result in a lower cost of borrowing.
As in the case of the Utility Money Pool, funds not required by
the Non-Utility Money Pool to make loans (with the exception of funds
required to satisfy the Non-Utility Money Pool's liquidity requirements)
will ordinarily be invested in one or more short-term investments,
including: (i) interest-bearing accounts with banks; (ii) obligations
issued or guaranteed by the U.S. government and/or its agencies and
instrumentalities, including obligations under repurchase agreements; (iii)
obligations issued or guaranteed by any state or political subdivision
thereof, provided that such obligations are rated not less than A by a
nationally recognized rating agency; (iv) commercial paper rated not less
than A-1 or P-1 or their equivalent by a nationally recognized rating
agency; (v) money market funds; (vi) bank certificates of deposit, (vii)
Eurodollar funds, and (viii) such other investments as are permitted by
Section 9(c) of the Act and Rule 40 thereunder.
Surplus funds of the Utility Money Pool and the Non-Utility Money
Pool may be combined in common short-term investments, but separate records
of such funds shall be maintained by CINergy Services as administrator of
the pools, and interest thereon shall be separately allocated, on a daily
basis, to each money pool in accordance with the proportion that the amount
of each money pool's surplus funds bears to the total amount of surplus
funds available for investment from both money pools.
The interest income and other investment income earned on loans
and investment of surplus funds will be allocated among the participants in
the Non-Utility Money Pool in accordance with the proportion each
participant's contribution of funds bears to the total amount of funds in
the Non-Utility Money Pool and the cost of any funds provided to the Non-
Utility Money Pool by such participant from External Sources.
Each Applicant receiving a loan through the Non-Utility Money
Pool will be required to repay the principal amount of such loan, together
with all interest accrued thereon, on demand and in any event not later
than one year after the date of such loan. All loans made through the Non-
Utility Money Pool may be prepaid by the borrower without premium or
penalty.
As with the Utility Money Pool, loans through the Non-Utility
Money Pool will ordinarily be made pursuant to open-account advances,
repayable on demand but in any event not more than one year after the date
of the advance. Under the authorization requested herein, all loans
through the Non-Utility Money Pool will be made on or before May 31, 1997.
Each lender will at all times be entitled to receive upon demand one or
more promissory notes evidencing any and all loans by such lender. Such
notes will be dated as of the date of the initial borrowing (and in any
event not later than May 31, 1997), will mature on demand, or on a date
agreed to by the parties to the transaction (but in any case not later than
one year after the date of the applicable borrowing), and will be
prepayable in whole at any time or in part from time to time, without
premium or penalty. Interest will be accrued monthly.
Bank Borrowings. Enertech has a $1,000,000 bank line of credit.
Enertech proposes to maintain such line of credit to provide financing
flexibility and an independent source of funds, outside the money pool
system.
To provide additional flexibility, it is proposed that CINergy
Investments, Resource Marketing, and the Designated Non-Utility Companies
also have authority to borrow under bank facilities, and for CINergy to
provide guaranties and letters of credit in connection therewith.
Borrowings under such facilities would be evidenced by promissory notes
with terms substantially similar to those described above (but could bear
interest at a rate of up to prime plus 2%) and would be subject to
compensation arrangements similar to those described therein.
Operation of the Utility and Non-Utility Money Pools, including
record keeping and coordination of loans, will be handled by CINergy
Services under the authority of the appropriate officers of the Applicants.
CINergy Services will administer the Utility and Non-Utility Money Pools on
an "at cost" basis and will maintain separate records for each money pool.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz, Secretary
