File No. 70-8309
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Amendment No. 1
to
FORM U-1
APPLICATION OR DECLARATION
under
The Public Utility Holding Company Act of 1935
THE SOUTHERN COMPANY
64 Perimeter Center East
Atlanta, Georgia 30346
(Name of company or companies filing this statement
and addresses of principal executive offices)
THE SOUTHERN COMPANY
(Name of top registered holding company parent of
each applicant or declarant)
Tommy Chisholm, Secretary
The Southern Company
64 Perimeter Center East
Atlanta, Georgia 30346
(Names and addresses of agents for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to the above agents for service and to:
W. L. Westbrook, Financial Vice President John F. Young, Vice President
The Southern Company Southern Company Services, Inc.
64 Perimeter Center East One Wall Street, 42nd Floor
Atlanta, Georgia 30346 New York, New York 10005
John D. McLanahan, Esq.
Troutman Sanders
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
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The Application or Declaration filed in this proceeding is hereby
amended by deleting Item 1 in its entirety and substituting the
following revised Item 1 therefor:
Item 1. Description of Proposed Transactions.
1.1 Summary. The Southern Company ("Southern"), a
registered holding company under the Public Utility Holding
Company Act of 1935, as amended (the "Act"), proposes to issue
and sell from time to time, prior to April 1, 1996, short-term
and/or term loan notes to lenders and commercial paper to dealers
in an aggregate principal amount at any one time outstanding of
up to $500 million. At June 30, 1993, the maximum aggregate
principal amount of notes that may be issued pursuant to the
exemption from the provisions of Section 6(a) of the Act afforded
by the first sentence of Section 6(b) was $79,778,000.
1.2 Committed Revolving Credit Facilities. Southern
and two of its subsidiaries, Alabama Power Company and Georgia
Power Company, have separate commitments with each of several
banks providing for revolving loans on a short-term or term-loan
basis in aggregate amounts of up to $400 million outstanding at
any time, of which $100 million, or 25% of the facilities, is
currently available to Southern. Southern also has revolving
credit commitments for short-term borrowings with three
additional banks aggregating $30 million.
The commitment of each bank under the revolving credit
facilities is evidenced by a separate agreement ("Agreement")
substantially in the form to be filed as Exhibit A-1 hereto.
Each short-term borrowing by Southern thereunder will be
evidenced by a promissory note, substantially in the form of
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Schedule A to the Agreement, to be dated the date of the initial
borrowing, with the date and amount of each short-term borrowing
thereafter to be recorded on a "grid" attached to the note. Each
borrowing under a short-term note will mature not more than 360
days after the date of borrowing. Such short-term borrowings
will be renewable at maturity and, under certain of the
Agreements, may be converted to term loans at Southern's option.
Under the term-loan option, borrowings would be repaid in 12
equal quarterly installments, beginning after the termination
date in effect at the time of the borrowing, or at an earlier
date at Southern's option. Southern states that the term loan
option feature provides Southern with the certainty of a
continuing source of debt financing in the event of unforeseen
developments affecting Southern's credit standing and/or the
existence of other conditions affecting the availability of
short-term credit on commercially reasonable terms. Among other
benefits, Southern would have the flexibility to defer sales of
common stock for periods of up to three years if, in Southern's
judgment, market conditions for sales of its common stock were
unfavorable.
Under each Agreement, Southern is obligated to pay a
commitment fee based upon the unused portion of the bank's
commitment. The total fee will be determined by multiplying the
unused portion of the bank's commitment by up to 1/5 of one
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percent. Compensating balances may be used in lieu of fees to
compensate certain of the banks.
The committed interest rate options available under
each Agreement will be (a) the bank's floating prime rate ("Base
Borrowing"), (b) the bank's certificate of deposit rate adjusted
for Federal Reserve Board reserve requirements imposed upon the
bank ("CD Borrowing") plus up to 3/4 of 1%, and (c) LIBOR
adjusted for Federal Reserve Board reserve requirements imposed
upon the bank ("Eurodollar Borrowing") plus up to 5/8 of 1%. In
addition, under each Agreement, subject to the further agreement
of Southern and each bank, Southern may borrow at negotiated
rates that are lower than the bank's committed rates.
Southern will borrow from these banks under the option
available which results in the lowest effective cost at the time
of borrowing for the period the funds are required.
Assuming the prevailing interest rates detailed in the
following table, a three percent (3%) reserve requirement, no
compensating balances, a three month borrowing and full
utilization of the commitment, the maximum effective cost
incurred under each bank commitment would be as follows:
Prime (%) CD (%) Libor (%)
Prevailing Rate 6.00 3.58 3.44
Effective Cost 6.00 4.44 4.07
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Base Borrowings generally will be prepayable at any
time, without premium or penalty. In connection with CD
Borrowings and Eurodollar Borrowings, advances generally will be
prepayable only at the end of each interest period with respect
thereto. In connection with borrowings at negotiated rates,
Southern may agree that such borrowings are not prepayable prior
to maturity.
Southern may at any time without penalty terminate or
reduce the commitment of any bank, provided that no bank's
commitment may be so reduced to an amount less than the principal
amount of borrowings outstanding to such bank at the time of the
termination or reduction.
Southern proposes that it may effect borrowings
pursuant to authority granted hereunder under the above-described
existing facilities or under facilities that may hereafter be
arranged on terms no less favorable to Southern than those
described in Item 1.3 below.
1.3 Other Borrowing Arrangements. Southern also
proposes to effect borrowings from certain banks or other lending
institutions up to such amounts as will be indicated on the list
of such institutions to be filed by amendment, provided that the
aggregate borrowings by Southern under its existing facilities,
as described in Item 1.2, above, and under any such additional
facilities that may be hereafter arranged, together with the
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aggregate amount of commercial paper at any time issued and
outstanding, will not exceed $500 million. Such institutional
borrowings will be evidenced by notes to be dated as of the date
of such borrowings and to mature in not more than three years
after the date of issue, or by "grid" notes evidencing all
outstanding borrowings from each lender to be dated as of the
date of the initial borrowings and to mature in not more than
three years after the date of issue. Southern proposes that it
may provide that any note evidencing such borrowings may not be
prepayable, or that it may be prepaid with payment of a premium
that is not in excess of the stated interest rate on the note to
be prepaid, which premium, in the case of a note having a
maturity of more than one year, would generally thereafter
decline to the date of the note's final maturity. Copies of the
form of note applicable to this paragraph will be filed by
amendment as Exhibit A-2.
Borrowings from the listed institutions will be at the
lender's prevailing rate offered to corporate borrowers of
similar quality, which will not exceed the prime rate or
(i) LIBOR plus up to 3/4 of 1%, (ii) the lender's certificate of
deposit rate plus up to 1%, or (iii) a rate not to exceed the
prime rate to be established by bids obtained from the lenders
prior to a proposed borrowing.
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Southern may pay a commitment fee based upon the unused
portion of each lender's commitment. The total fee is determined
by multiplying the unused portion of the lender's commitment by
up to 1/2 of one percent. Compensating balances may be used in
lieu of fees to compensate certain of the lenders.
A list of the proposed lending institutions, setting
forth the maximum amount to be borrowed from each will be filed
by amendment as Exhibit A-3 hereto. Borrowings pursuant to the
authority hereby sought will be effected among the listed
institutions up to the respective principal amounts so listed.
In connection with borrowings in excess of such listed amounts or
from any lender not listed therein, a revised list in each case
will be filed pursuant to Rule 24.
1.4 Commercial Paper Sales to Dealers. Southern also
proposes that it have authority to issue and sell commercial
paper to dealers from time to time through April 1, 1996. Such
commercial paper will be in the form of promissory notes with
varying maturities not to exceed nine months. Actual maturities
will be determined by market conditions, the effective interest
costs and Southern's anticipated cash flow, including the
proceeds of other borrowings, at the time of issuance. The
commercial paper notes will be issued in denominations of not
less than $50,000 and will not by their terms be prepayable prior
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to maturity. The form of commercial paper note will be filed by
amendment as Exhibit A-4.
The commercial paper will be sold by Southern directly
to or through a dealer or dealers (the "dealer"). The discount
rate (or the interest rate in the case of interest-bearing
notes), including any commissions, will not be in excess of the
discount rate per annum (or equivalent interest rate) prevailing
at the date of issuance for commercial paper of comparable
quality of the particular maturity sold by issuers thereof to
commercial paper dealers.
No commission or fee will be payable in connection with
the issuance and sale of commercial paper, except for a
commission not to exceed 1/8 of 1% per annum payable to the
dealer in respect of commercial paper sold through the dealer as
principal. The dealer will reoffer such commercial paper at a
discount rate of up to 1/8 of 1% per annum less than the
prevailing interest rate or at an equivalent cost if sold on an
interest-bearing basis. The name or names of the commercial
paper dealers will be supplied by amendment prior to any sales of
such commercial paper.
Each certificate under Rule 24 with respect to the
issue and sale of commercial paper will include the following
information with respect to the issue and sale of such commercial
paper:
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(a) the dates and principal amounts issued; and
(b) the discount rate or interest rate, as the case
may be, of each commercial paper note and the
prime commercial bank rate at which Southern could
have obtained loans from banks at the date of
issue at least equal to the principal amount of
such commercial paper.
No dealer will have as an officer or director any
person who is also an officer or director of Southern, as the
case may be.
1.5 Relation to Other Authorizations. By order dated
March 31, 1992, Southern is currently authorized to issue notes
to banks from time to time through March 31, 1994 in aggregate
amounts of up to $500 million outstanding at any one time. (See
File No. 70-7937, HCAR No. 35-25507). At December 29, 1993,
notes in an aggregate principal amount of approximately $221.7
million were outstanding under such authorization. It is
Southern's intent that the authorization sought in this file
would supersede and replace the authorization in File No. 70-7937
effective immediately upon the date of the Commission's order
herein.
1.6 Use of Proceeds. Southern proposes to use the
net proceeds from the borrowings and/or commercial paper sales
proposed herein, together with other available funds, to make
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additional equity investments in subsidiaries, including cash
capital contributions to its operating subsidiaries, and for
other corporate purposes. See Exhibit G hereto.
Investments by Southern in subsidiaries would only be
made in accordance with existing or future authorizations in
separate proceedings, or in accordance with such exemptions as
may exist under the Act and the rules and regulations thereunder.
In that regard, Southern states that it currently has authority
to make investments only in the following wholly-owned, non-
utility, subsidiaries: Southern Company Services, Inc. (File No.
70-8203), Southern Electric International, Inc. (File No. 70-
7209), and Southern Nuclear Operating Company, Inc. (File No. 70-
8147). Southern represents that no part of the proceeds from the
borrowings and/or commercial paper sales proposed herein will be
utilized by Southern Electric International, Inc. for a purpose
that is currently permitted under HCA Release No. 35-24476 unless
such purpose would also be permitted under an order approving the
application, as filed, by Southern and Southern Electric
International, Inc. in File No. 70-7932. Southern does not
currently have authority to make additional investments in its
operating utility subsidiaries, but intends to request such
approval in a separate filing.
In separate pending filings, Southern is requesting
authority to make investments in certain existing non-utility
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subsidiaries and in certain proposed new subsidiaries.
Specifically, in File Nos. 70-7932, 70-8173, 70-8233, and 70-
8217, Southern is proposing to make additional investments in
Southern Electric International, Inc. and The Southern
Development and Investment Group, Inc., its wholly-owned
subsidiaries, and investments in two new subsidiaries to be
called Southern Communications Services, Inc. and Southern
Enterprises, Inc. Projections of the levels of financing of the
activities of each of those subsidiaries are contained in the
relevant related file. Southern states that it will not use any
portion of the proceeds from the borrowings and/or commercial
paper sales for which authority is sought herein to make
investments in such subsidiaries, except in accordance with and
subject to any limitations contained in the Commission's orders
granting the applications in those related proceedings.
Southern also anticipates the need to utilize up to
$500 million of the proceeds from such borrowings and/or
commercial paper sales to make investments from time to time in
one or more direct or indirect subsidiaries of Southern that are
"exempt wholesale generators" or "foreign utility companies," as
defined in Sections 32 and 33 of the Act, respectively, in order
to fund, in whole or in part, investments by such subsidiaries in
facilities that such subsidiaries are permitted to acquire and
own, and to fund ongoing development costs associated with
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potential direct or indirect investments by Southern in such
entities.
In a separate pending proceeding (File No. 70-8277),
Southern is proposing to utilize up to $500 million of the
proceeds from sales of new shares of common stock to invest in
"exempt wholesale generators" and "foreign utility companies" and
to guarantee up to $500 million of securities or other financial
obligations of such entities, subject to an overall limitation of
$500 million at any time outstanding. It is Southern's intention
to integrate its use of borrowings and/or commercial paper sales,
proceeds of sales of new common stock and guarantees in
connection with making investments in "exempt wholesale
generators" and "foreign utility companies." Accordingly,
Southern states that, at any point in time, the aggregate of
outstanding borrowings and/or commercial paper sales, proceeds of
sales of new common stock used for the purpose of acquiring the
securities of or other interest in any such entities, and
guarantees of the securities of such entities, would not, in the
aggregate, exceed $500 million.
The foregoing may be illustrated as follows: if
Southern's commitment to invest in any "exempt wholesale
generator" or "foreign utility company" contemplates a delay in
funding until after completion of construction of a facility, it
may be necessary for Southern to issue a guarantee to support the
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delayed funding obligation. Southern anticipates that it would
in most cases fund its commitment from proceeds of the new common
stock or with other available funds. Upon funding, the
obligation under the guarantee would be extinguished. Similarly,
there may be instances in which, for reasons of timing or
prevailing market conditions for sales of common stock, Southern
may prefer to temporarily fund an investment in an "exempt
wholesale generator" or "foreign utility company" with proceeds
of borrowings or commercial paper sales, which would later be
repaid with the proceeds of new common stock sales or other
available funds.
1.7 Compliance with Rule 53. Under Rule
53(a), the Commission shall not make certain specified findings
under Sections 7 and 12 in connection with a proposal by a
holding company to issue securities for the purpose of acquiring
the securities of or other interest in an "exempt wholesale
generator," or to guarantee the securities of an "exempt
wholesale generator," if each of the conditions in paragraphs
(a)(1) through (a)(4) thereof are met, provided that none of the
conditions specified in paragraphs (b)(1) through (b)(3) of
Rule 53 exists. In that regard, Southern states that, giving
effect to the use of up to $500 million of proceeds of the
borrowings and/or commercial paper sales herein requested to
acquire the securities or other interests in one or more "exempt
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wholesale generators," all of the conditions set forth in Rule
53(a) are and will be satisfied and none of the conditions set
forth in Rule 53(b) exists or, as a result thereof, will exist.
Rule 53(a)(1): Assuming the full utilization of $500
million of proceeds of the new borrowings and/or commercial paper
sales to make investments in "exempt wholesale generators" and
"foreign utility companies," Southern's "aggregate investment" in
such entities will equal approximately 26.70% of "consolidated
retained earnings," as defined in Rule 53(a)(1)(ii), of Southern,
determined as follows: At September 30, 1993, Southern had
invested, directly or indirectly, an aggregate of $250.52 million
in "exempt wholesale generators" and "foreign utility
companies."1 The average of the consolidated retained earnings
of Southern reported on Form 10-K or Form 10-Q, as applicable,
for the four consecutive quarters ended September 30, 1993, is
$2.811 billion. Southern's "aggregate investment," on a pro
forma basis, expressed as a percentage of "consolidated retained
earnings," is approximately 26.70% ($250.52 million + $500
million divided by $2.811 billion).
Rule 53(a)(2): Southern maintains books and records
enabling it to identify investments in and earnings from each
1 These investments were in companies or partnerships that
are "exempt wholesale generators," as defined in Section 32,
operating or constructing facilities in Hawaii and Virginia, and
in "foreign utility companies," as defined in Section 33,
operating in The Grand Bahamas and Argentina.
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"exempt wholesale generator" and "foreign utility company" in
which it directly or indirectly holds an interest. In addition,
each domestic "exempt wholesale generator" in which Southern
holds an interest maintains its books and records and prepares
its financial statements in conformity with U.S. generally
accepted accounting principles ("GAAP"). The books and records
and financial statements of each "foreign utility company" in
which Southern holds an interest (including those that are
"majority-owned subsidiaries" and those that are not) are
maintained and prepared in conformity with GAAP. All of such
books and records and financial statements will be made available
to the Commission, in English, upon request.
Rule 53(a)(3): No more than 2% of the employees of
Southern's operating utility subsidiaries will, at any one time,
directly or indirectly, render services to "exempt wholesale
generators" and "foreign utility companies." Based on current
staffing levels of Southern's domestic operating utility
subsidiaries (such companies currently employ, in the aggregate,
approximately 27,000 salaried and hourly employees), no more than
540 employees of these companies, in the aggregate, determined on
a full-time-equivalent basis, will be utilized at any one time in
rendering services directly or indirectly to "exempt wholesale
generators" and "foreign utility companies." In a separate
proceeding (File No. 70-7932) certain of Southern's subsidiaries
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are requesting authority to render services to "exempt wholesale
generators" and "foreign utility companies," as required by Rule
53(a).
Rule 53(a)(4): Southern is simultaneously submitting a
copy of this Application or Declaration, and will submit copies
of any Rule 24 certificates required hereunder, as well as a copy
of Southern's Form U5S (commencing with the Form U5S to be filed
for calendar year 1993), to the Federal Energy Regulatory
Commission and to each of the public service commissions having
jurisdiction over the retail rates of Southern's operating
utility subsidiaries.
In addition, Southern states that the provisions of
Rule 53(a) are not made inapplicable to the authorization herein
requested by reason of the provisions of Rule 53(b).
Rule 53(b)(1): Neither Southern nor any subsidiary of
Southern is the subject of any pending bankruptcy or similar
proceeding.
Rule 53(b)(2): Southern's average consolidated
retained earnings for the four most recent quarterly periods
($2.811 billion) represented an increase of approximately $242
million in the average consolidated retained earnings for the
previous four quarterly periods ($2.569 billion).
Rule 53(b)(3): For the year ended December 31, 1992,
aggregate losses attributable to Southern's direct or indirect
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investments in "exempt wholesale generators" and "foreign utility
companies" ($9,338) represented less than one one-thousandth of
1% of consolidated retained earnings ($2.721 billion).
1.8 Retirement of Notes. Any short-term borrowings
outstanding hereunder after March 31, 1996 will be retired from
internal sources of cash or the proceeds of financings heretofore
or hereafter approved in separate filings, including but not
limited to File No. 70-8277.
1.9 Filing of Certificates. With respect to short-
term or term-loan borrowings hereunder, Southern hereby requests
to file certificates of notification under Rule 24 on a quarterly
basis (by the last day of the month following the close of each
calendar quarter).
SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned company has duly
caused this statement to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 1, 1994 THE SOUTHERN COMPANY
By /s/ Tommy Chisholm
Tommy Chisholm
Secretary
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