CERTIFICATE OF NOTIFICATION
Filed by
THE SOUTHERN COMPANY
Pursuant to Rule 24(c)(3)(i) of the Public Utility Holding
Company Act of 1935, as amended, in the matter of File No. 70-
8421.
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1. Filed herewith is the following exhibit:
Exhibit A - Letter of Troutman Sanders LLP dated
August 30, 1995.
Dated: August 31, 1995 THE SOUTHERN COMPANY
By /s/Tommy Chisholm
Tommy Chisholm
Secretary
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EXHIBIT A
Troutman Sanders LLP
600 Peachtree Street - Suite 5200
Atlanta, GA 30308
404-885-3000
August 30, 1995
Martha C. Baker, Assistant Director
Robert P. Wason, Chief Financial Analyst
Division of Investment Management
Office of Public Utility Regulation
450 5th Street, N.W. - 10th Floor
Washington, D.C. 20549
RE: The Southern Company - Investments in Certain Non-
Utility Subsidiaries (File No. 70-8421)
Ladies and Gentlemen:
By order dated August 3, 1994 (Holding Company Act Release
No. 26096) (the "Original Order") in the above-referenced
proceeding, The Southern Company ("Southern") was authorized to
make investments in one or more companies (referred to therein as
"Project Parents") organized exclusively for the purpose of
acquiring and holding, directly or indirectly, the securities of
one or more "foreign utility companies" ("FUCOs") and "exempt
wholesale generators" ("EWGs"), as defined under the Public
Utility Holding Company Act, as amended (the "Act"). The
Original Order was amended and extended by further order dated
July 25, 1995 (Holding Company Act Release No. 26338) (the
"Amended Order").
Under the terms of the Commission's orders, Project Parents
are also authorized to issue and sell, in one or more
transactions, equity securities and debt securities (herein
referred to as "Nonrecourse Debt") to persons other than Southern
(and with respect to which there is no recourse to Southern)
exclusively for the purpose of financing and refinancing
investments in FUCOs and EWGs. Under the Amended Order, the
aggregate amount of Nonrecourse Debt at any time outstanding may
not exceed $1 billion. The Amended Order states that such
authorization shall remain in effect until the earlier of
December 31, 1997, and "the effective date of any rule of general
applicability adopted by the Commission exempting such
transactions from the application requirements of the Act."
It is our view that new Rule 52(b), which became effective
June 28, 1995, would now exempt a Project Parent from the
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Martha C. Baker, Assistant Director
Robert P. Wason, Chief Financial Analyst
August 30, 1995
Page 2
application requirements of Sections 6 and 7 of the Act with
respect to the issuance and sale of Nonrecourse Debt, as well as
equity securities of the type specified in the rule, to persons
other than Southern or any other associate company (other than
any other Project Parent). In this regard, we believe that Rule
52(b) is a "rule of general applicability" which (to the extent
that the requirements thereof are met) supersedes that portion of
the Commission's orders in this proceeding relating to the
issuance and sale by Project Parents of Nonrecourse Debt and
specified types of equity securities to nonassociate companies.
Rule 52(b) provides, with certain exceptions that are not
relevant here, that any non-utility subsidiary of a registered
holding company may issue and sell specified types of securities
without the need to seek approval under Section 7 of the Act if
the issue and sale of such securities "are solely for the purpose
of financing the existing business of such subsidiary company."1
A Project Parent, as defined in the Original Order, is a non-
utility subsidiary company that is "engaged directly or
indirectly, and exclusively, in the business of owning and
holding the securities" of FUCOs, as well as EWGs, which are
themselves non-utilities. (Emphasis added). As described in the
Original Order, these entities may be organized prior to or at
the time of making an exempt acquisition of an EWG or FUCO, or
subsequent to an acquisition. In any case, it is clear that the
"business" of a Project Parent is the acquisition, ownership, and
holding of securities of FUCOs, as well as EWGs, and that such
entities have no other "business," as such. Thus, we think it is
a reasonable construction of Rule 52(b) that Nonrecourse Debt and
certain types of equity securities issued by Project Parents to
nonassociates, whether to finance or refinance an acquisition of
a FUCO or EWG, are securities issued "solely for the purpose of
financing the existing business" of such subsidiary companies.
On a related matter, Rule 52(c) specifies the filing of a
certificate of notification on Form U-6B-2 within 10 days after
the sale of any securities under Rule 52. Southern is currently
filing certificates of notification under Rule 24 in this
proceeding on a quarterly basis. Such certificates combine
various items of information relating to investments in and
securities sales by Project Parents. Rather than report the
issue and sale of securities by Project Parents to nonassociate
companies separately, Southern proposes to continue to file such
information as a part of the Rule 24 certificates in this
proceeding. Unless I hear otherwise, I will assume that this is
1 The rule exempts the issue and sale of "any common stock,
preferred stock,bond, note or other form of indebtedness . . .."
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Martha C. Baker, Assistant Director
Robert P. Wason, Chief Financial Analyst
August 30, 1995
Page 3
acceptable to you.
Although no formal response to this letter is requested, if
you have any questions or concerns regarding the foregoing,
please feel free to call me or Andrew MacDonald at 404-885-3000.
You may include this letter in the Commission's files in the
above-referenced proceeding.
Sincerely yours,
/s/John D. McLanahan
John D. McLanahan
cc: Larry Westbrook - Southern Company
Ray Hill - Southern Electric
William Maner - Southern Electric
James Ward - Southern Electric
Chuck Rawlins - Southern Company Services
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