File No. 70-8867
SECURITIES AND EXCHANGE COMMISSION
450 FIFTH STREET, N.W.
WASHINGTON, D.C. 20549
__________________________________________
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM U-1 APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
Cinergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
(Name of company filing this statement
and address of principal executive offices)
Cinergy Corp.
(Name of top registered holding company parent)
William L. Sheafer
Vice President and Treasurer
Cinergy Corp.
(address above)
(Name and address of agent of service)
Applicant requests that the Commission direct all notices, orders and
communications in this matter to:
George Dwight II
Senior Counsel
Cinergy Corp
(address above)
513-287-2643
513-287-3810 (fax)
[email protected]<PAGE>
Item 1. Description of Proposed Transactions
A. Requested Authorization
By order dated August 28, 1996, HCAR No. 26562 ("1996 Order"), the
Commission authorized Cinergy Corp. ("Cinergy"), a Delaware corporation and
registered holding company under the Public Utility Holding Company Act of
1935 ("Act"), to acquire, from time to time through December 31, 2002
("Authorization Period"), up to a 20% limited partnership interest in Nth
Power Technologies Fund I, L.P. ("Fund"), a California limited partnership
formed to invest in privately-held energy technology companies, for a total
investment of $10 million ("Original Investment Cap").
In connection with a recent default by one of the Fund's limited
partners, Cinergy now proposes to acquire a portion of the defaulted
party's limited partnership interest, representing a capital commitment of
$4,000,000, for a total additional investment of $3,303,000. Upon
consummation of the proposed transactions, and over the term of the
Authorization Period, Cinergy would hold not more than a 26.5% limited
partnership interest in the Fund based on a total cash investment not to
exceed $13,303,000 ("Proposed Investment Cap").
Except to replace the Original Investment Cap with the Proposed
Investment Cap, Cinergy seeks no modifications to the terms and conditions
of the 1996 Order. There has been no change in the investment objectives
of the Fund or in the terms of the Fund's limited partnership agreement.
Cinergy will not seek recovery through higher rates to utility customers to
compensate it for any losses or inadequate returns it may incur from
investments in the Fund, including the proposed incremental investment.
As a condition to acquiring the additional partnership interest,
Cinergy must receive Commission authorization by not later than December
15, 1998.
B. Further Information
Pursuant to the 1996 Order, and the Fund's Limited Partnership
Agreement dated as of November 22, 1996 ("Partnership Agreement"), Cinergy
committed to contribute up to $10 million to the Fund as a limited partner.
Six other limited partner investors agreed to contribute a total of $40
million. In addition, the Partnership Agreement requires the Fund's
general partner to contribute capital equal to 1% of the total amount
contributed by the limited partners./1/ Pursuant to capital calls in 1996,
1997 and April 1998, Cinergy contributed a total of approximately $3
million to the Fund and the other six limited partners a total of $12.5
million. In addition, another capital call was made in July 1998, of which
Cinergy's share was $500,000. The Fund's general partner has invested the
proceeds of the capital calls, net of certain fees and expenses (e.g.,
management fee and reimbursement of expenses incurred in organizing the
Fund), in acquisitions of securities of portfolio companies./2/
In response to the April 1998 capital call, one of the limited
partners defaulted on, and failed to cure, its obligation to contribute a
pro rata amount. In accordance with applicable provisions of the
Partnership Agreement, and negotiations between the Fund's limited
partners and the defaulting partner, Cinergy and two other
limited partners have committed to purchase the bulk of the defaulted
partner's limited partnership interest, subject to certain conditions. One
is that Cinergy secure Commission authorization for its purchase not later
than December 15, 1998, shortly after which a closing ("Closing") would
occur at which (i) Cinergy and the other purchasing limited partners would
acquire their respective portions of the defaulted partner's limited
partnership interest and (ii) the defaulting partner would be released from
all of its obligations and liabilities under the Partnership Agreement and
would exit the Fund.
The portion of the defaulting partner's limited partnership
interest to be purchased by Cinergy is represented by a capital commitment
of $4,000,000, of which $800,000 was contributed by the defaulting partner
prior to the April 1998 call and $3,200,000 remains to be contributed,
consisting of amounts in arrears and future contributions.
With respect to the $800,000 previously contributed, the net
proceeds of which have been invested in portfolio securities, Cinergy will
be required to make a cash payment at Closing to the defaulting partner of
$103,000 (equivalent to a discount of approximately 87%).
With respect to the remaining capital commitment of $3.2 million, a
portion of that amount - $600,000 - represents the defaulted capital called
in April and the capital called for payment in July. Accordingly, at
Closing, in addition to the $103,000 cash payment to the defaulted partner,
Cinergy will be required to make a $600,000 cash payment to the Fund to
satisfy these obligations in arrears.
Cinergy will discharge the remaining commitment of $2,600,000
through capital contributions as and when called pursuant to the
Partnership Agreement. Limited partners are not required to contribute
more than 35% of their committed capital in any calendar year.
Upon consummation of the Closing, and for the duration of the
Authorization Period, Cinergy's aggregate limited partnership interest will
not exceed 26.5% of all the limited partnership interests in the Fund./3/
Cinergy's investment in the Fund, over the term of the Authorization
Period, will not exceed $13,303,000 (including the proposed $103,000
payment to the defaulted partner).
To finance the additional investment in the Fund, Cinergy plans to
borrow funds under an existing bank credit facility pursuant to HCAR No.
26819, dated January 20, 1998.
Item 2. Fees, Commissions and Expenses
The fees, commissions and expenses that have been or will be incurred,
directly or indirectly, by Cinergy or any of its associate companies in
connection with the proposed transactions are not expected to exceed
approximately $3,000, representing fees and expenses of Thelen, Reid &
Priest.
Item 3. Applicable Statutory Provisions
Sections 9(a) and 10 and rules 51 and 54 are or may be applicable
to the proposed transactions.
Rule 54 provides that in determining whether to approve the issue
or sale of a security by a registered holding company for purposes other
than the acquisition of an exempt wholesale generator ("EWG") or foreign
utility company ("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 a FUCO upon the registered holding
company system if the conditions of rule 53(a), (b) and (c) are satisfied.
At March 31, 1998, Cinergy met all the requirements of rule 53(a),
other than clause (1) (limiting "aggregate investment" to 50% of
"consolidated retained earnings"). At that date, Cinergy's consolidated
retained earnings were approximately $977 million and its aggregate
investment approximately $546 million (or about 56% of consolidated
retained earnings). That level of aggregate investment (i.e., above 50%
but not in excess of 100% of consolidated retained earnings) is
specifically permitted by HCAR No. 26848, dated March 23, 1998 ("100%
Order"), wherein the Commission found that Cinergy satisfied the applicable
standards of rule 53(c) (i.e., clauses (1) and (2)).
Pursuant to the 100% Order, Cinergy is required to file quarterly
reports with the Commission and its state utility regulators ("Rule 53(c)
Reports") setting forth specified financial information bearing on and
intended as a vehicle for those regulators to monitor Cinergy's investments
in EWGs and FUCOs and Cinergy's overall financial condition. The required
information (in each case as of the end of the preceding calendar quarter)
consists of Cinergy's aggregate investment in EWGs and FUCOs, a statement
of Cinergy's aggregate investment as a percentage of various benchmarks
(consolidated capitalization, net utility plant, consolidated assets,
market value of common equity), consolidated capitalization ratio,
market-to-book ratio, an analysis of growth in consolidated retained
earnings, and a
statement of revenues and net income of each EWG and FUCO.
The proposed transactions - Cinergy's acquisition of up to an
additional 6.5% limited partnership interest in the Fund, to be financed by
external borrowings of approximately $3.3 million - are immaterial for
purposes of both the Commission's analysis in the 100% Order and the
monitoring data required to be supplied in the Rule 53(c) Reports.
With respect to the remaining conditions of rule 54, Cinergy has
complied and will continue to comply with the record-keeping requirements
of rule 53(a)(2), the limitation under rule 53(a)(3) on the use of
operating company personnel in rendering services to EWGs and FUCOs, and
the
requirements of rule 53(a)(4) concerning submission of specified filings
under the Act to retail rate regulatory agencies. In addition, none of the
conditions in rule 53(b) has occurred.
Item 4. Regulatory Approval
No state or federal regulatory agency other than the Commission under
the Act has jurisdiction over the proposed transactions.
Item 5. Procedure
As noted earlier, as a condition to its acquisition of the
additional limited partnership interest, Cinergy must receive Commission
authorization by not later than December 15, 1998.
Accordingly, Cinergy requests that the Commission issue and publish
as soon as practicable the requisite notice under Rule 23 with respect to
the filing of this application, and that the Commission issue an order
granting the authority requested herein as soon as practicable after
expiration of the public notice period, but in any case prior to December
15,
1998.
Applicant waives a recommended decision by a hearing officer or other
responsible officer of the Commission; consents that the Staff of the
Division of Investment Management may assist in the preparation of the
Commission's order; and requests that there be no waiting period between
the
issuance of the Commission's order and its effectiveness.
Item 6. Exhibits and Financial Statements
(a) Exhibits:
A Not applicable
B Partnership Agreement and related Subscription Agreement
(incorporated by reference from Exhibits B-1 and B-2 filed with Amendment
No. 2 to Cinergy's original application in File No. 70-8867).
C Not applicable
D Not applicable
E Not applicable
F-1 Preliminary opinion of counsel (to be filed by
amendment)
G Form of Federal Register notice
(b) Financial Statements:
FS-1 Cinergy Pro Forma Consolidated Financial Statements,
dated June 30, 1998 (to be filed by amendment)
FS-2 Cinergy Pro Forma Financial Statements, dated June 30,
1998 (to be filed by amendment)
FS-3 Cinergy Consolidated Financial Data Schedule (to be
included
as part of electronic submission only)
FS-4 Cinergy Financial Data Schedule (to be included as part
of
electronic submission only)
Item 7. Information as to Environmental Effects
(a) The Commission's action in this matter will not constitute
major federal action significantly affecting the quality of the human
environment.
(b) No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed transactions.
PAGE
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SIGNATURE
Pursuant to the requirements of the Act, the undersigned company
has duly caused this statement to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: July 31, 1998
CINERGY CORP.
By: /S/William L. Sheafer
Vice President and Treasurer
ENDNOTES
/1/ For the sake of simplicity, the general partner's capital contributions
have been excluded from the calculations setting forth the size of the Fund
and Cinergy's ownership interest.
/2/ As of June 30, 1998, capital contributed to the Fund had been invested
in seven portfolio companies engaged in developing and commercializing
various energy-related products or services, viz., automated meter reading
system, microturbine generator, power quality remediation device for
industrial sites, low-cost photovoltaic system, computer networking device
that
communicates over existing power lines, energy-efficient lighting system
for office/commercial use, and industrial powders that produce stronger and
longer-lived materials.
/3/ In the second quarter of 1998, a new limited partner joined the Fund
with a capital commitment of $5 million. Taking into account that
commitment combined with the capital commitments of the remaining limited
partners
(as adjusted by the post-default arrangement described in the text), the
total limited partner commitments to the Fund, as in effect at the Closing,
will be a minimum of $52.75 million - in which case Cinergy's share at
Closing will be equivalent to a 26.5% limited partnership interest - and
(in the event the other two limited partners exercise their right to
acquire further portions of the defaulted limited partner's interest) a
maximum of $55 million - in which case Cinergy's share at Closing will be
equivalent to a 25.5% limited partnership interest.
Exhibit G
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- _____________)
Cinergy Corp., a registered holding company ("Cinergy"), at 139
East Fourth Street, Cincinnati, Ohio 45202, has filed a post-effective
amendment to its application under sections 9(a) and 10 of the Act and
rules 51 and 54 thereunder.
By order dated August 28, 1996, HCAR No. 26562 ("1996 Order"), the
Commission authorized Cinergy to acquire, from time to time through
December 31, 2002 ("Authorization Period"), up to a 20% limited partnership
interest in Nth Power Technologies Fund I, L.P. ("Fund"), a California
limited partnership formed to invest in privately-held energy technology
companies, for a total investment of $10 million ("Original Investment
Cap").
In connection with a recent default by one of the Fund's limited
partners, Cinergy now proposes to acquire, on or before December 15, 1998,
a portion of the defaulted party's limited partnership interest,
representing a capital commitment of $4,000,000, for a total additional
investment
of $3,303,000. Upon consummation of the proposed transactions, and over
the term of the Authorization Period, Cinergy would hold not more than a
26.5% limited partnership interest in the Fund based on a total cash
investment not to exceed $13,303,000 ("Proposed Investment Cap").
To finance the additional investment in the Fund, Cinergy plans to
borrow funds under an existing bank credit facility pursuant to HCAR No.
26819, dated January 20, 1998.
Except to replace the Original Investment Cap with the Proposed
Investment Cap, Cinergy seeks no modifications to the terms and conditions
of the 1996 Order. Cinergy states that there has been no change in the
investment objectives of the Fund or in the terms of the Fund's limited
partnership agreement. Cinergy represents that it will not seek recovery
through higher rates to utility customers to compensate it for any losses
or inadequate returns it may incur from investments in the Fund, including
the proposed incremental investment.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
