File No. 70-8309
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Amendment No.4
(Post-Effective 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 D. McLanahan, Esq.
The Southern Company Troutman Sanders
64 Perimeter Center East 600 Peachtree Street, N.E.
Atlanta, Georgia 30346 Suite 5200
Atlanta, Georgia 30308-2216
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Item 1. Description of Proposed Transactions.
1.1 Background. The Southern Company ("Southern") is
a registered holding company under the Public Utility Holding
Company Act of 1935, as amended (the "Act"). By order dated
March 15, 1994 (HCAR No. 26004) (the "1994 Order"), Southern was
authorized 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. Under the 1994 Order,
Southern is authorized to use the net proceeds from such
borrowings and/or commercial paper sales, together with other
available funds, to make additional investments in subsidiaries,
including investments of up to $500 million in one or more
"exempt wholesale generators" ("EWGs") and "foreign utility
companies" ("FUCOs"), as defined in Sections 32 and 33,
respectively, and investments in other subsidiaries to the extent
authorized by the Commission in separate proceedings or in
accordance with such exemptions as may exist under the Act and
the rules and regulations thereunder.1
1 Southern is currently authorized to make investments in
Southern Company Services, Inc. (File No. 70-8203), Southern
Electric International, Inc. (File No. 70-7932), The Southern
Development and Investment Group, Inc. (File Nos. 70-8173 and 70-
8563), Southern Electric Railroad Company (File No. 70-7911),
Southern Communications Services, Inc. (File No. 70-8233),
Southern Nuclear Operating Company, Inc. (File No. 70-8567), and
Mobile Energy Services Company, Inc. (File 70-8505), each of
which is a wholly-owned subsidiary of Southern. In addition,
Southern is authorized to make indirect investments in EWGs and
FUCOs through so-called "Project Parents." (File No. 70-8421).
Southern does not currently have authority to make additional
investments in its operating utility subsidiaries.
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At April 30, 1995, 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 $166,367,000.
1.2 Increase in Borrowings/Commercial Paper Sales.
Southern now requests authority to issue and sell, from time to
time prior to April 1, 1997, 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 $1 billion. Such
notes and commercial paper would be sold subject to all other
terms and conditions set forth in the 1994 Order, except that
Southern is proposing herein that notes issued to banks may have
maturities of up to seven (7) years from the date of issuance.
Southern's recent experience in connection with making
investments in EWGs and FUCOs suggests the need for greater
flexibility to make fixed-rate loans to such subsidiaries having
maturities of up to seven (7) years. In many cases, the revenues
of such subsidiaries are fixed under long-term power sales
agreements with third parties. As a consequence, these
subsidiaries usually cannot assume any significant risk of
adverse interest rate movements, and therefore generally pursue
financing strategies primarily involving fixed-rate indebtedness.
Where a portion of that indebtedness is provided by Southern in
the form of downstream loans, it is prudent to match the maturity
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of Southern's external borrowings with the maturity of such
downstream loans. Otherwise, risks to the project subsidiary
associated with adverse interest rate movements are merely
transferred to Southern.
1.3 Use of Proceeds of Borrowings/Commercial Paper Sales.
Southern also requests authority to utilize up to $1 billion of
the proceeds from borrowings and/or commercial paper sales to
make investments from time to time in one or more EWGs or FUCOs
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 potential direct or indirect investments by
Southern in such entities;2 provided that, the sum of (i) the
proceeds of short-term and term loan borrowings and/or commercial
paper sales at any time invested by Southern in EWGs and FUCOs,
as authorized herein, (ii) the net proceeds of sales of new
common stock used for the purpose of acquiring the securities of
or other interest in any such entities, as authorized in File
Nos. 70-8277 and 70-8435, and (iii) the principal amount of
securities of any EWGs or FUCOs at any time outstanding in
respect of which Southern has provided a guarantee, as authorized
2 Investments in such entities may also be made indirectly
through special purpose subsidiaries, referred to as "Project
Parents," in accordance with Southern's authorization in File No.
70-8421. (See HCAR No. 26096, dated August 3, 1994).
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in File No. 70-8277, shall not, in the aggregate, exceed the
greater of (i) $1.072 billion, and (ii) 50% of Southern's
"consolidated retained earnings," as determined in accordance
with Rule 53(a) (hereinafter, the "Rule 53 Limitation"). The
current Rule 53 Limitation ($1.072 billion) is based on
Southern's "consolidated retained earnings" and "aggregate
investment" at March 31, 1995, as shown in Item 1.4, below.
1.4 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 any EWG, or to guarantee the
securities of any EWG, 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 proposals contained herein, 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): At March 31, 1995, Southern had
invested, directly or indirectly, an aggregate of $500.1 million
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in EWGs and FUCOs.3 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 March 31,
1995, is $3.144 billion. Accordingly, based on Southern's
"consolidated retained earnings" at March 31, 1995, the Rule 53
Limitation is currently about $1.072 billion, calculated as
follows: 50% of "consolidated retained earnings" ($1.572
billion) less "aggregate investment" at March 31, 1995 ($500.1
million) equals $1.072 billion.
Rule 53(a)(2): Southern maintains books and records
enabling it to identify investments in and earnings from each EWG
and FUCO in which it directly or indirectly holds an interest.
In addition, each domestic EWG 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 FUCO 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
3 These investments are in companies or partnerships that
are EWGs operating or constructing facilities in Hawaii,
Virginia, and Trinidad and Tobago, and in FUCOs operating in The
Grand Bahamas, Chile, and Argentina.
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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 EWGs and FUCOs. 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 EWGs
and FUCOs. In a separate proceeding (File No. 70-7932) certain
of Southern's subsidiaries have been authorized to render
services to EWGs and FUCOs indirectly through Southern Electric
International, Inc.
Rule 53(a)(4): Southern is simultaneously submitting a
copy of this Post-Effective Amendment, and will submit copies of
any Rule 24 certificates required hereunder, as well as a copy of
Southern's Form U5S, 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.
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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
($3.144 billion) represented an increase of approximately $69
million in the average consolidated retained earnings for the
previous four quarterly periods ($2.075 billion).
Rule 53(b)(3): In the previous fiscal year, Southern
did not report any operating losses attributable to its direct or
indirect investments in EWGs and FUCOs.
1.5 Retirement of Notes. Any short-term borrowings
outstanding hereunder after March 31, 1997 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 Nos. 70-8277 and 70-8435.
Item 2. Fees, Commissions and Expenses.
No additional fees, commissions and expenses not heretofore
disclosed will be paid or incurred in connection with the filing
of this Post-Effective Amendment except for legal expenses
estimated at $2000 and miscellaneous expenses estimated at $500.
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Item 3. Applicable Statutory Provisions.
Southern considers that the issuance and sale of the notes
having maturities not in excess of nine months from the date of
issuance and commercial paper are currently exempt from the
provisions of Sections 6(a) and 7 to the extent set forth above
pursuant to the first sentence of Section 6(b) and that upon the
granting of this Post-Effective Amendment will be so exempt to
the extent of the maximum aggregate principal amount of the notes
and/or commercial paper which it proposes to issue. The issuance
and sale of notes having maturities in excess of nine months are
subject to Sections 6(a) and 7 and Rule 42.
The proposed transactions will be carried out in accordance
with the procedures specified in Rule 23 and pursuant to an order
of the Commission with respect thereto.
Item 4. Regulatory Approval.
The proposed issuance and sale by Southern of its notes
and/or commercial paper is not subject to the jurisdiction of any
state commission or of any federal commission other than the
Securities and Exchange Commission.
Item 5. Procedure.
Southern requests that the Commission's order be issued as
soon as the rules allow, and that there be no thirty-day waiting
period between the issuance of the Commission's order and the
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date on which it is to become effective. Southern hereby waives
a recommended decision by a hearing officer or other responsible
officer of the Commission and hereby consents that the Division
of Investment Management may assist in the preparation of the
Commission's decision and/or order in this matter unless such
Division opposes the matters covered hereby.
Item 6. Exhibits and Financial Statements.
(a) Exhibits. (Supplemental List)
F-1 - Opinion of Troutman Sanders. (To be filed by
amendment).
H-1 - Form of Federal Register Notice.
(b) Financial Statements. (Updated).
Corporate balance sheet of Southern at March 31,
1995.
Corporate statement of income of Southern for the
twelve months ended March 31, 1995.
Consolidated balance sheet of Southern and its
subsidiaries at March 31, 1995. (Designated in
Southern's Form 10-Q for the quarter ended March
31, 1995, File No. 1-3526.)
Consolidated statement of income for Southern and
its subsidiaries for the twelve months ended
March 31, 1995. (Designated in Southern's Form
10-Q for the quarter ended March 31, 1995, File
No. 1-3526.)
Since March 31, 1995, there have been no material
changes, not in the ordinary course of business, in the financial
condition of Southern or of Southern and its subsidiaries
consolidated from that set forth in or contemplated by the
foregoing financial statements.
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Item 7. Information as to Environmental Effects.
(a) As described in Item 1, the proposed transactions
are of a routine and strictly financial nature in the ordinary
course of Southern's business. Accordingly, the Commission's
action in this matter will not constitute any 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.
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: June 19, 1995 THE SOUTHERN COMPANY
By /s/Tommy Chisholm
Tommy Chisholm
Secretary
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Exhibit H-1
FORM OF FEDERAL REGISTER NOTICE
The Southern Company, a registered holding company, has
filed a post-effective amendment to its application or
declaration heretofore approved pursuant to Sections 6(a), 6(b),
7, 32 and 33 of the Act and Rules 42, 53 and 54 thereunder.
By order dated March 15, 1994 (HCAR No. 26004) (the "1994
Order"), Southern was authorized to issue and sell from time to
time prior to April 1, 1996, short-term and term loan notes to
lenders and/or commercial paper to dealers in an aggregate
principal amount at any one time outstanding of $500 million, and
to use the proceeds of such borrowings or commercial paper sales
to make investments in subsidiaries, to the extent authorized to
do so in separate filings, and in subsidiaries that are "exempt
wholesale generators" and "foreign utility companies"; provided
that, at any point in time, the outstanding amount of borrowings
and/or proceeds of commercial paper sales used for such purpose,
the proceeds of sales of additional common stock used to make
such investments, and the aggregate principal amount of the
securities of such entities in respect of which Southern has
issued any guaranty may not, in the aggregate, exceed $500
million.
Southern is now seeking approval to issue and sell short-
term and term loan notes to lenders and/or commercial paper to
dealers from time to time prior to April 1, 1997, in an aggregate
principal amount at any time outstanding not to exceed $1
billion; and to use the net proceeds thereof to make investments
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in subsidiaries (to the extent authorized in separate filings)
and in "exempt wholesale generators" and "foreign utility
companies;" provided that, at any time, the net proceeds of such
borrowings and/or commercial paper sales used to make investments
in "exempt wholesale generators" and "foreign utility companies,"
plus the amount of such investments using the proceeds of
additional common stock sales and the principal amount of
outstanding securities of such entities that are guaranteed by
Southern (as authorized in separate proceedings) shall not, when
added to Southern's "aggregate investment" in all "exempt
wholesale generators" and "foreign utility companies"
(approximately $500.1 million at March 31, 1995), exceed the
greater of (i) $1.072 million, and (ii) 50% of Southern's
"consolidated retained earnings," as defined in Rule 53(a). At
March 31, 1995, 50% of Southern's "consolidated retained
earnings" was about $1.572 billion.
Southern is also proposing that term loan notes issued to
lenders may have maturities of up to seven years. Southern has
not proposed any other changes or modifications to the terms of
borrowings or commercial paper sales.
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