File No. 70-8421
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C 20549
Amendment No. 3
(Post-Effective No. 1)
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:
W. L. Westbrook John D. McLanahan
Financial Vice President Troutman Sanders
The Southern Company 600 Peachtree Street, N.E.
64 Perimeter Center East Suite 5200
Atlanta, Georgia 30346 Atlanta, Georgia 30308-2216
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INFORMATION REQUIRED
Item 1. Description of Proposed Transaction.
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
August 3, 1994 (HCAR No. 26096) (the "1994 Order"), Southern was
authorized to acquire, in one or more transactions, the
securities of one or more companies organized to engage directly
or indirectly, and exclusively, in the business of owning and
holding the securities of one or more "foreign utility companies"
("FUCOs"), as defined in Section 33(a) of the Act. Such
companies (referred to as "Project Parents") may also acquire and
hold the securities of one or more "exempt wholesale generators"
("EWGs"), as defined in Section 32(a) of the Act.
Under the terms of the 1994 Order, Southern was
authorized to make direct or indirect investments in Project
Parents in an aggregate amount at any one time outstanding not to
exceed $400 million, provided, however, that any direct or
indirect investment by Southern in any Project Parent would be
consummated only if, at the time thereof, and giving effect
thereto, Southern's "aggregate investment," determined in
accordance with Rule 53(a)(1)(i), in all FUCOs, EWGs and Project
Parents would not exceed 50% of Southern's "consolidated retained
earnings," as defined in Rule 53(a)(1)(ii). The 1994 Order
includes other limitations and qualifications applicable to the
types and terms of investments by Southern in Project Parents.
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At March 31, 1995, Southern had invested approximately
$38.3 in Project Parents; and, for the four consecutive quarters
then ended, its "aggregate investment" in all EWGs, FUCOs and
Project Parents was approximately $500.1 million, or about 15.9%
of Southern's "consolidated retained earnings," determined in
accordance with Rule 53(a).
Under the 1994 Order, the Commission also gave approval
for any Project Parent to issue equity securities and debt
securities to persons other than Southern (and with respect to
which there is no recourse to Southern), including banks,
insurance companies, and other financial institutions,
exclusively for the purpose of financing (including any
refinancing of) investments in EWGs and FUCOs, subject to
specified conditions, restrictions and limitations on the terms
of such securities. Among other limitations contained in the
1994 Order, the principal amount of non-recourse debt securities
issued by Project Parents to persons other than Southern may not
exceed $800 million at any one time outstanding, of which no more
than $200 million principal amount at any time outstanding may be
denominated in (i.e., evidence borrowings in) currencies other
than U.S. dollars.1
1 The order states that, in any case in which Southern
directly or indirectly owns less than all of the equity interests
of a Project Parent, only that portion of the non-recourse
indebtedness of such Project Parent equal to Southern's equity
ownership percentage shall be included for purposes of these
limitations.
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1.2 Proposed Modifications to 1994 Order. Southern now
requests a further order of the Commission modifying the 1994
Order in the following respects:
First, Southern proposes that the authorization period
be extended one year to the earlier of (i) December 31, 1997, and
(ii) the effective date of any rule of general applicability
adopted by the Commission that would exempt the issuance of
securities by any Project Parent and the acquisition thereof by a
registered holding company from the provisions of Sections 6, 7,
9, and 10 of the Act.
Second, Southern requests authority to make direct or
indirect investments in Project Parents in an aggregate amount
which, when added to Southern's "aggregate investment" at any
point in time in all EWGs, FUCOs, and Project Parents, does not
exceed the greater of (x) $1.072 billion, and (y) 50% of
Southern's "consolidated retained earnings," 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 1.3,
below.
Third, Southern seeks authority for Project Parents to
issue debt securities to persons other than Southern (and with
respect to which there is no recourse to Southern) in an
aggregate principal amount at any time outstanding not to exceed
$1 billion, of which not more than $750 million principal amount
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at any time outstanding may be denominated in (i.e., evidence
borrowings in) currencies other than U.S. dollars.
Except as specifically noted above, no other
modifications to the terms, conditions, limitations and
restrictions set forth in the 1994 Order are proposed herein.
1.3 Compliance with Rules 53. As indicated, Southern
is herein requesting authority to make investments in Project
Parents from time to time in an aggregate amount which at no time
exceeds the Rule 53 Limitation. Under Rule 53, the Commission
shall not make certain specified findings under Sections 7 and 12
in connection with a proposal by a holding company or subsidiary
thereof 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 made 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
in EWGs and FUCOs, inclusive of indirect investments through
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Project Parents.2 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 current
Rule 53 Limitation is 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 one which is 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,
2 These investments are in EWGs operating or constructing
facilities in Hawaii, Virginia and Trinidad and Tobago, and FUCOs
operating facilities in Chile, Argentina and The Bahamas.
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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 operating utility 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.
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
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billion) represents an increase of approximately $69 million in
the average consolidated retained earnings for the previous four
quarterly periods ($3.075 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.
1.4 Source of Funds for Proposed Investments. Funds
for any direct or indirect investment by Southern in any Project
Parent (including the guaranty of any securities of any Project
Parent) will be derived from the sale of common stock and/or the
issuance of guarantees (within such limitations as are set forth
in orders issued in File Nos. 70-8277 and 70-8435 or in any
future proceedings), from bank borrowings and/or commercial paper
sales (within such limitations as are set forth in orders issued
in File No. 70-8309 or in any future proceedings), and from
available cash.
Item 2. Fees, Commissions and Expenses.
The additional fees, commissions and expenses paid or to
be incurred in connection with this Post-Effective Amendment are
estimated not to exceed $1,000.
Item 3. Applicable Statutory Provisions.
Southern considers that the issuance of securities by
any Project Parent and the direct or indirect acquisition thereof
by Southern are subject to Sections 6(a), 7, 9(a) and 10 of the
Act and Rules 42 and 53 thereunder. Sections 6(a) and 7 may also
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be applicable to the liquidation or dissolution of any Project
Parent. In addition, Section 12(b) and Rules 45 and 53
thereunder would apply to any direct or indirect cash capital
contribution or loan by Southern to any Project Parent and to the
guaranty by Southern of any security of any Project Parent.
Southern proposes to combine the information included in
Rule 24 certificates filed in accordance with the requirements of
the 1994 Order with the quarterly certificates to be filed
pursuant to Rule 24 in accordance with the Commission's order
approving the Application or Declaration of Southern and SEI in
File No. 70-7932. (See HCAR No. 26212, dated December 30, 1994).
Item 4. Regulatory Approval.
The direct or indirect acquisition by Southern of the
securities of any Project Parent and the issuance of securities
by any such Project Parent are 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 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
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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).
G-1 - Form of Federal Register Notice.
(b) Financial Statements: (Inapplicable).
Item 7. Information as to Environmental Effects.
(a) 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.
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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 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 G-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), 7,
9(a), 10, 12(b), 32 and 33 of the Act and Rules 42, 45, and 53
thereunder.
By order dated August 3, 1994 (HCAR No. 26096) (the "1994
Order"), Southern was authorized to acquire, in one or more
transactions, the securities of one or more companies (referred
to as "Project Parents") organized to engage exclusively in the
business of owning and holding the securities of one or more
"exempt wholesale generators" and "foreign utility companies."
Subject to various conditions and limitations, the 1994 Order
authorized Southern to make investments in Project Parents in an
aggregate amount not to exceed $400 million at any time
outstanding, and Project Parents to incur indebtedness for which
there is no recourse to Southern in an aggregate principal amount
not to exceed $800 million at any time outstanding.
Southern is now seeking approval to acquire the securities
of and make other investments in Project Parents in one or more
transactions through December 31, 1997, in an aggregate amount
which, when added to Southern's "aggregate investment" (as
defined in Rule 53) in all "exempt wholesale generators,"
"foreign utility companies," and Project Parents (which was
approximately $500.1 million at March 31, 1995) would not exceed
the greater of (i) $1.072 billion, and (ii) 50% of Southern's
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"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 also proposes that Project Parents may issue debt
securities to persons other than Southern (and with respect to
which there is no recourse to Southern) from time to time through
December 31, 1997, in an aggregate principal amount not to exceed
$1 billion at any time outstanding, of which not more than $750
million may be denominated in non-U.S. currencies.
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