SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
In the Mater of CERTIFICATE
Cinergy Corp. et al. OF
File No. 70-8589 NOTIFICATION
(Public Utility Holding Company
Act of 1935)
With reference to the transactions (a) proposed in the
Application-Declaration on Form U-1, as amended, in the above proceeding
filed by Cinergy Corp., a registered holding company ("Cinergy"), Cinergy
Investments, Inc., Cinergy's nonutility subholding company ("Investments"),
and Cinergy Services, Inc., Cinergy's service company subsidiary ("Cinergy
Services"; and together with Cinergy and Investments, the "Applicants"),
and (b) authorized by the Commission in its orders with respect thereto
dated, respectively, March 8, 1996 (Rel. No. 35-26486) and September 21,
1995 (Rel. No. 35-26376), Services hereby notifies the Commission, on
behalf of itself and the other Applicants, as follows:
1. For the calendar quarterly period ended June 30, 1996
("Second Quarter 1996"), none of the Special Purpose
Subsidiaries/1/ issued any Recourse Debt Securities./2/
2. General description of activities of Investments and
Special Purpose Subsidiaries during the Second Quarter 1996 and
of projects in which they have an ownership interest:
(a) Investments. Investments is a direct, wholly-owned
subsidiary of Cinergy that acts as a subholding company with
respect to the Cinergy system's nonutility subsidiaries. In
that capacity, Investments continued to act as a pass-through
financing vehicle (i.e., with funds from Cinergy) for its
direct and indirect subsidiaries.
(b) PSI Energy Argentina, Inc. PSI Energy Argentina
continued to own an indirect interest in and to participate in
the operation of Edesur, S.A., an electric distribution system
serving the southern half of Buenos Aires, Argentina. PSI
Energy Argentina acquired its interest in Edesur in the
privatization of electric distribution assets in Argentina in
1992 and is an 8% shareholder in Distrilec Inversora, S.A.,
which owns 51% of the stock of Edesur. For further information
respecting PSI Energy Argentina, reference is made to the
Application and to the Form U-57 Notification of FUCO Status
filed by Cinergy in respect of PSI Energy Argentina on February
21, 1995.
(c) CGE ECK, Inc. This Special Purpose Subsidiary's only
assets consist of its 3% ownership of the outstanding capital
stock of Eck s.r.o. Eck s.r.o. is a Czech limited liability
company that owns and operates a generating facility in the
Czech Republic.
(d) Midlands Electricity plc. Midlands Electricity plc, a
corporation organized under the laws of England ("Midlands"),
is one of twelve regional electric companies in England. Among
other activities, Midlands provides retail electric service to
about 2.2 million customers in a district 100 miles northeast
of London, which includes the city of Birmingham.
(i) As previously publicly reported by Cinergy, on May
6, 1996, Cinergy and another registered holding company,
General Public Utilities Corporation ("GPU"), through indirect
wholly-owned subsidiaries, entered into an agreement ("Joint
Venture Agreement") to form and own respective 50% interests in
Avon Energy Partners Holdings ("Avon Holdings"), a corporation
organized under English law for the purpose of making an offer
to purchase outstanding capital shares of Midlands. Cinergy
acquired its 50% interest in Avon Holdings through a new,
wholly-owned subsidiary of Investments, M. E. Holdings, Inc., a
Delaware corporation.
(ii) Pursuant to the Joint Venture Agreement, on
May 7, 1996, with the approval and recommendation of the
Midlands board of directors, Avon Energy Partners plc, a
wholly-owned subsidiary of Avon Holdings ("Avon Energy"),
announced an offer ("Offer") to purchase for cash all
outstanding capital shares of Midlands for $6.60 per share, or
a total consideration expected to be approximately $2.6
billion. On June 6, 1996, Cinergy and GPU publicly announced
that as of such date Avon Energy had declared the Offer wholly
unconditional in all respects, thereby committing Avon Energy
to purchase all outstanding shares of Midlands. As of August
13, 1996, Avon had acquired 381.3 million shares of Midlands,
representing approximately 97.1% of the issued share capital of
Midlands. The remaining shares are expected to be acquired
during the third quarter of 1996.
(iii) For more information with respect to Midlands,
reference is made to Cinergy's Quarterly Report on Form 10-Q in
Commission File No. 1-11377 for the quarterly period ending
June 30, 1996 and Cinergy's Notification of Foreign Utility
Company Status on Form U-57 with respect to Midlands, filed
with the Commission on July 7, 1996. Each of M. E. Holdings,
Avon Holdings and Avon Energy is a FUCO Parent.
3. Information on intercompany service transactions involving
the Special Purpose Subsidiaries during the Second Quarter
1996:
(a) name of each associate company providing services and
associate company recipient:
(i) Cinergy Services (service provider)/PSI Energy
Argentina, Inc. (service recipient)
(b) listing of services provided:
(i) legal, financial
(c) total dollar amount of services provided per associate
company service provider:
(i) $30,000
4. The following unaudited financial statements are filed
herewith:
(a) Special Purpose Subsidiaries Financial Statements,
dated June 30, 1996
<PAGE>
S I G N A T U R E
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, as amended, the undersigned company has
duly caused this document to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 1996
CINERGY SERVICES, INC.
By:/s/William L. Sheafer
Treasurer
<PAGE>
Endnotes
/1/ As used herein, "Special Purpose Subsidiaries" refers to the following
direct or indirect subsidiaries of Cinergy that are either exempt wholesale
generators ("EWGs") or foreign utility companies ("FUCOs") or companies
organized for the exclusive purpose of acquiring and owning or holding,
directly or indirectly, interests in FUCOs (each, a "FUCO Parent"): PSI
Energy Argentina, Inc., CGE ECK, Inc., M.E. Holdings, Inc., Avon Energy
Partners Holdings, Avon Energy Partners plc, Midlands Electricity plc.
Costanera Power Corp. ("Costanera"), PSI Argentina, Inc.("PSIArg"), PSI T&D
International, Inc., PSI Yacyreta, Inc., PSI Power Resource Development,
Inc., PSI Power Resource Operations, Inc., PSI International, Inc. and PSI
Sunnyside, Inc. are all inactive Cinergy system companies formed to act as
EWGs or FUCO Parents. On April 24, 1996, Costanera and PSIArg submitted
separate letters to the Federal Energy Regulatory Commission stating that,
as a result of the sale by Costanera in November 1995 to a nonassociate
company of its interest in Central Costanera S.A., the owner of an electric
generating station in Buenos Aires, Argentina, neither company sought to
maintain its status as EWGs.
/2/ Recourse Debt Securities means any promissory note, bond or other
evidence of indebtedness issued by a Special Purpose Subsidiary to a
nonassociate company with respect to which Cinergy or Investments issues a
guarantee (including obtaining a letter of credit).
<TABLE>
<CAPTION>
CINERGY CORP.
SPECIAL PURPOSE SUBSIDIARIES
STATEMENTS OF INCOME (UNAUDITED)
QUARTER ENDED JUNE 30, 1996
PSI Energy M.E.
Argentina Argentina CGE ECK Holdings
(in thousands)
<S> <C> <C> <C> <C>
Operating Revenues $ - $ - $ - $ -
Operating Expenses
Other operation - - - -
Income Taxes - - - -
Taxes other than income taxes - - - -
- - - -
Operating Income - - - -
Other Income and Expense - Net
Income Taxes (57) (20) 4 9
Equity in Earnings of Avon Holdings - - - 2,694
Other - net 243 53 - 19
186 33 4 2,722
Income Before Interest and
Other Charges 186 33 4 2,722
Other interest - - 10 45
Net Income $ 186 $ 33 $ (6)$ 2,677
<FN>
NOTE: The following companies are inactive and thus have no activity to report;
COSTANERA POWER CORP.
PSI T&D INTERNATIONAL, INC.
PSI YACYRETA, INC.
PSI POWER RESOURCE DEVELOPMENT, INC.
PSI POWER RESOURCE OPERATIONS, INC.
PSI INTERNATIONAL, INC.
PSI SUNNYSIDE, INC.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
SPECIAL PURPOSE SUBSIDIARIES
BALANCE SHEETS (UNAUDITED)
AT JUNE 30, 1996
PSI Energy M.E.
Argentina Argentina CGE ECK Holdings
(in thousands)
ASSETS
<S> <C> <C> <C> <C>
Current Assets
Accounts receivable $ 122 $ - $ - $ 277
Accounts receivable - affiliates 17,361 64 - -
Other 135 - - -
17,618 64 - 277
Other Assets
Investment in Avon Holdings - - - 457,567
Other (37) 10,715 - 366
(37) 10,715 - 457,933
$ 17,581 $ 10,779 $ - $ 458,210
CAPITALIZATION AND LIABILITIES
Common Stock Equity
Paid-in capital $ 9,587 $ 10,704 $ - $ 444,490
Retained earnings 7,472 33 (488) 13,059
Total common stock equity 17,059 10,737 (488) 457,549
Current Liabilities
Accounts payable 66 - - -
Accounts payable - affiliates - 22 701 670
Accrued taxes 147 20 (213) (9)
213 42 488 661
Other Liabilities
Deferred income taxes 134 - - -
Other 175 - - -
309 - - -
$ 17,581 $ 10,779 $ - $ 458,210
<FN>
NOTE: The following companies are inactive and thus have no activity to report;
COSTANERA POWER CORP.
PSI T&D INTERNATIONAL, INC.
PSI YACYRETA, INC.
PSI POWER RESOURCE DEVELOPMENT, INC.
PSI POWER RESOURCE OPERATIONS, INC.
PSI INTERNATIONAL, INC.
PSI SUNNYSIDE, INC.
</TABLE>
