File No. 70-8993
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 FIFTH STREET, N.W.
WASHINGTON, D. C. 20549
__________________________________________
AMENDMENT NO. 4 TO
FORM U-1 DECLARATION
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 office)
Cinergy Corp.
(Name of top registered holding company parent)
William L. Sheafer
Vice President & Treasurer
Cinergy Corp.
(address above)
(Name and address of agent of service)
Applicant requests that the Commission send copies of all notices, orders
and communications in connection herewith to:
George Dwight II William C. Weeden
Senior Counsel Senior Utility Analyst
Cinergy Corp. Thelen Reid & Priest LLP
(address above) Market Square
513-287-2643 701 Pennsylvania Ave., N.W.
513-287-3810 (fax) Washington, D.C.
[email protected] 202-508-4352
202-508-4321
[email protected]
The declaration on Form U-1 in this proceeding as previously amended is
hereby further amended as indicated below:
1. The text under subsection C of Item 1 ("Description of Proposed
Transactions/ Terms of Debentures") is hereby restated in its entirety to
read as follows:
Cinergy proposes to issue and sell from time to time
through December 31, 2002 up to $400 million principal
amount of Debentures in one or more series, subject to
the aggregate debt limitation specified in Item 1.D
below. The Debentures (a) will not be convertible into
any other securities of Cinergy, (b) will have maturities
ranging from two to 15 years, (c) may be subject to
optional and/or mandatory redemption, in whole or in
part, at par or at various premiums above the principal
amount thereof, and (d) may be entitled to mandatory or
optional sinking fund provisions. In addition, Cinergy
may have the right from time to time to defer the payment
of interest on the Debentures of one or more series
(which may be fixed or floating or "multi-modal"
debentures, i.e., debentures where the interest is
periodically reset, alternating between fixed and
floating interest rates for each reset period), with all
accrued and unpaid interest (together with interest
thereon) becoming due and payable at the end of each such
extension period. The Debentures will be issued under an
indenture (the "Indenture") to be entered into between
Cinergy and The Fifth Third Bank, an Ohio banking
corporation, as trustee (the "Trustee," including any
successor trustee appointed pursuant to the Indenture),
with a supplemental indenture to be executed in respect
of each separate offering of one or more series of
Debentures (each, a "Supplemental Indenture"). Forms of
Debenture, Indenture and Supplemental Indenture are filed
herewith as Exhibits A-1, A-2 and A-3 respectively.
Cinergy contemplates that the initial series of
Debentures would be issued and sold directly to one or
more purchasers in privately negotiated transactions or
to one or more investment banking or underwriting firms
or other entities who would resell the Debentures without
registration under the Securities Act in reliance upon
one or more applicable exemptions from registration
thereunder. A form of Purchase Agreement with respect to
such anticipated private offerings of Debentures through
investment banking or underwriting firms is filed
herewith as Exhibit B-1. From time to time Cinergy may
also issue and sell the Debentures of one or more series
to the public either (i) through underwriters selected by
negotiation or competitive bidding or (ii) through
selling agents acting either as agent or as principal for
resale to the public either directly or through dealers.
The maturity dates, interest rates, redemption and
sinking fund provisions, if any, with respect to the
Debentures of a particular series, as well as any
associated placement, underwriting or selling agent fees,
commissions and discounts, if any, will be established by
negotiation or competitive bidding and reflected in the
applicable Supplemental Indenture and Purchase Agreement
or underwriting agreement setting forth such terms;
provided, however, that (1) Cinergy will not issue and
sell any Debentures (a) at a price higher than 102% or
lower than 98% of the applicable principal amount thereof
or (b) at interest rates in excess of those generally
obtainable at the time of pricing or repricing of such
Debentures for securities having the same or reasonably
similar maturities and having reasonably similar terms,
conditions and features issued by utility companies or
utility holding companies of the same or reasonably
comparable credit quality; and (2) any placement,
underwriting and selling agent fees, commissions and
discounts to be paid by Cinergy in connection with the
issue and sale of any series of Debentures will not
exceed 3.5% of the aggregate principal amount thereof.
Finally, Cinergy undertakes that without further
Commission authorization it will not issue any Debentures
that are not at the time of original issuance rated at
least investment grade by a nationally recognized
statistical rating organization. In addition, Cinergy
may decide to refinance the Debentures with common stock
at a later date if it appears prudent.
2. The text under subsection H of Item 1 ("Description of Proposed
Transactions/ Rule 54 Analysis") is hereby restated in its entirety to read
as follows:
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 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, both
Cinergy's investments in EWGs and FUCOs (as defined in
the 100% Order, "Exempt Entities") and Cinergy's overall
financial condition. The required information (in each
case as of the end of the preceding calendar quarter)
includes, among other things, Cinergy's aggregate
investment in Exempt Entities, consolidated
capitalization ratios, and an analysis of growth in
consolidated retained earnings.
The proposed transactions - Cinergy's refinancing of
outstanding short-term debt with the proceeds of
Debentures - by definition have no impact on Cinergy's
consolidated capitalization ratios. As shown on Exhibit
I, at March 31, 1998, common equity, preferred stock and
debt (including long- and short-term debt) comprised
42.5%, 1.5% and 56%, respectively, of Cinergy's
consolidated capitalization. Under GAAP, Cinergy is
required to account for its investment in Midlands and
other Exempt Entities in which Cinergy's ownership
interest is greater than 20% but does not exceed 50%
under the equity method of accounting. As shown on
Exhibit I, even if the entire amount of non-recourse debt
of Exempt Entities allocable to Cinergy's ownership
interest were consolidated (i.e., $1.2 billion), common
equity would still comprise 35.6% of the overall capital
structure. Therefore, in "consider[ing] the effect of
the capitalization" of Exempt Entities upon Cinergy's
holding company system, it is apparent that there is no
adverse impact.
The same holds with respect to "the effect of the
earnings of any subsidiary which is an exempt wholesale
generator or a foreign utility company upon [Cinergy's]
holding company system." The application on which the
Commission based the 100% Order showed that Cinergy's
investments in Exempt Entities have made a positive
contribution to Cinergy's earnings. Likewise, the
initial Rule 53(c) Report filed by Cinergy (the only Rule
53(c) Report so far filed by Cinergy, given the
comparatively recent date of the 100% Order) shows that
in the period covered by the report Cinergy's Exempt
Entities have continued to contribute positively to
Cinergy's earnings.
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 Exempt Entities, 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.
3. The following exhibit is filed herewith: Exhibit I / Pro Forma
Capitalization at March 31, 1998.
<PAGE>
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:August 18, 1998
CINERGY CORP.
By: /s/William L. Sheafer
Vice President and Treasurer
