File No. 70-9731
SECURITIES AND EXCHANGE COMMISSION
450 FIFTH STREET
WASHINGTON, D.C. 20549
__________________________________________
AMENDMENT NO. 1 TO FORM U-1 APPLICATION-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 offices)
Cinergy Corp.
(Name of top registered holding company)
William J. Grealis George Dwight II
Vice President/Chief Strategic Officer Senior Counsel
Cinergy Corp. Cinergy Corp.
139 East Fourth Street, 29AT2 139 East Fourth Street, 25AT2
Cincinnati, Ohio 45202 Cincinnati, Ohio 45202
William C. Weeden
Skadden, Arps, Slate, Meagher & Flom, LLP
1440 New York Avenue, N. W.
Washington, DC 20005
(Name and address of agents for service)
Item 3 is hereby amended and restated in its entirety to read as follows.
The Application-Declaration in this proceeding is not otherwise amended in
any respect.
Item 3. Applicable Statutory Provisions
Sections 6(a), 7, 9(a), 10 and 12(c) of the Act and Rules 42 and 54
thereunder 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 (as defined in section 32 of
the Act, "EWG") or a foreign utility company (as defined in section 33 of
the Act, "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 if paragraphs (a), (b) and (c) of Rule 53 are satisfied.
Cinergy currently does not meet the conditions of Rule 53(a). As of
June 30, 2000, Cinergy's "aggregate investment," as defined in Rule
53(a)(1), in EWGs and FUCOs was approximately $721.9 million. This amount
is equal to approximately 66% of Cinergy's average "consolidated retained
earnings," also as defined in Rule 53(a)(1), for the four quarters ended
June 30, 2000, of approximately $1092.6 million, which exceeds the 50%
"safe harbor" limitation contained in the rule.
By order dated March 23, 1998 (HCAR No. 26848) ("1998 Order"), the
Commission authorized Cinergy to increase its aggregate investment in EWGs
and FUCOs to an amount equal to 100% of Cinergy's average "consolidated
retained earnings." And by order dated June 23, 2000 (HCAR No. 27190)
("2000 Order"), the Commission granted Cinergy additional authorization to
invest in EWGs and FUCOs beyond that granted in the 1998 Order -
specifically, $1 billion in addition to Cinergy's aggregate investment at
the date of such order. Although Cinergy's aggregate investment at June
30, 2000 exceeds the 50% "safe harbor" limitation, this investment is below
the limitation authorized by the 1998 and 2000 Orders.
With respect to capitalization, there has been no material adverse
impact on Cinergy's consolidated capitalization resulting from Cinergy's
investments in EWGs and FUCOs. As of September 30, 1997, the most recent
period for which financial statement information was evaluated in the 1998
Order, Cinergy's consolidated capitalization consisted of 44.1% equity and
55.9% debt. As of June 30, 2000, Cinergy's consolidated capitalization
consisted of 42.4 % equity and 57.6% debt. These ratios are within
acceptable ranges, as is shown by the fact that at June 30, 2000 Cinergy's
senior unsecured debt was rated "investment grade" by all the major rating
agencies. The impact of the proposed transactions upon Cinergy's
consolidated capitalization is immaterial.
With respect to earnings, Cinergy's interests in EWGs and FUCOs have
made consistent and significant contributions to Cinergy's consolidated
retained earnings, as reflected in the quarterly certificates filed by
Cinergy in Docket No. 70-9011. Although Cinergy's consolidated earnings
for the year ended December 31, 1997 were negatively affected by Cinergy's
50% ownership interest in Midlands Electricity plc ("Midlands"), a FUCO,
this was solely as a result of the imposition by the United Kingdom of a
one-time, non-recurring windfall tax. Significantly, this tax did not
affect earnings from ongoing operations, and therefore would not have any
negative impact on earnings in future periods. In July 1999, Cinergy sold
all of its ownership in Midlands, realizing a substantial profit.
Cinergy satisfies all of the other conditions of paragraphs (a) and
(b) of Rule 53. With reference to Rule 53(a)(2), Cinergy maintains books
and records in conformity with, and otherwise adheres to, the requirements
thereof. With reference to Rule 53(a)(3), no more than 2% of the employees
of Cinergy's domestic public utility companies render services, at any one
time, directly or indirectly, to EWGs or FUCOs in which Cinergy directly or
indirectly holds an interest. With reference to Rule 53(a)(4), Cinergy
will concurrently provide a copy of this application to each regulator
referred to therein, and will otherwise comply with the requirements
thereof concerning the furnishing of information. With reference to Rule
53(b), none of the circumstances enumerated in subparagraphs (1), (2) and
(3) thereunder have occurred. Finally, Rule 53(c) by its terms is
inapplicable since the proposed transactions do not involve the issue or
sale of a security to finance the acquisition of an EWG or FUCO.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned company has duly caused this Amendment to
Application-Declaration on Form U-1 to be signed on its behalf by the
officer indicated below.
Dated: October 2, 2000
Cinergy Corp.
By: /s/Wendy L. Aumiller
Assistant Treasurer
