File No. 70-8733
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
APPLICATION OR DECLARATION
on
FORM U-1
under
The Public Utility Holding Company Act of 1935
THE SOUTHERN COMPANY SOUTHERN ELECTRIC MOBILE ENERGY SERVICES
270 Peachtree Street, INTERNATIONAL, INC. HOLDINGS, INC.
N.W. 900 Ashwood Parkway 900 Ashwood Parkway
Atlanta, Georgia 30303 Suite 500 Suite 450
Atlanta, Georgia Atlanta, Georgia 30338
30338
SOUTHERN ELECTRIC SEI HOLDINGS, INC. SEI EUROPE, INC.
WHOLESALE GENERATORS, 900 Ashwood Parkway 900 Ashwood Parkway
INC. Suite 500 Suite 500
900 Ashwood Parkway Atlanta, Georgia Atlanta, Georgia 30338
Suite 500 30338
Atlanta, Georgia 30338
SEI NEWCO 1, INC.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia
30338
(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 Thomas G. Boren, President
The Southern Company Southern Electric
270 Peachtree Street, N.W. International, Inc.
Atlanta, Georgia 30303 900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
(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 Thomas G. Boren, President
Financial Vice-President Southern Electric
The Southern Company International, Inc.
270 Peachtree Street, N.W. 900 Ashwood Parkway
Atlanta, Georgia 30303 Suite 500
Atlanta, Georgia 30338
John D. McLanahan, Esq.
Troutman Sanders LLP
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
<PAGE>
The Application or Declaration in this proceeding, as
heretofore amended and restated, is hereby further amended and
restated in its entirety to read as follows:
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"). Since 1987, its
wholly-owned subsidiary, Southern Electric International, Inc.
("Southern Electric"), has engaged in the business of developing
and rendering administrative, operational, construction and other
services to independent power projects and foreign utility
systems, including "qualifying facilities" ("QFs"), as defined
under the Public Utility Regulatory Policies Act of 1978, as
amended ("PURPA"), "exempt wholesale generators" ("EWGs") and
"foreign utility companies" ("FUCOs"), as defined under Sections
32 and 33 of the Act, respectively, and other power projects
which constitute a part of Southern's integrated electric utility
system (collectively, "Projects").1
Southern directly, or indirectly through one or more
intermediate subsidiaries, including subsidiaries referred to as
"Project Parents,"2 now holds investments in domestic EWGs in
Virginia and Hawaii, and in foreign EWGs and FUCOs in England,
Argentina, Chile, Trinidad and Tobago and The Bahamas. Southern
1 See File No. 70-7932, Holding Co. Act Rel. No. 26212,
dated December 30, 1994 (the "December 1994 Order").
2 See File No. 70-8421, Holding Co. Act Rel. Nos. 26096 and
26338, dated August 3, 1994 and July 25, 1995, respectively.
2
<PAGE>
also owns, indirectly, all of the equity interests in a non-
exempt Project in Alabama. At December 31, 1995, Southern's
committed equity investment in all such Projects, including
amounts represented by contingent equity funding arrangements,
reimbursement arrangements, guaranties and the like, was
approximately $1.313 billion, of which approximately $1.230
billion represents Southern's "aggregate investment" (as defined
in Rule 53(a)) in EWGs and FUCOs.
Appended as Exhibit H-1 hereto is an organizational chart
showing at September 30, 1995 Southern's ownership interests in
Southern Electric and in all Projects and Project Parents.
Southern has initiated steps to consolidate its direct and
indirect ownership interests in all EWGs and FUCOs (collectively,
"Exempt Projects") and Project Parents under SEI Holdings, Inc.
(hereinafter referred to as "Holdings"). Holdings, a Delaware
corporation and a Project Parent within the meaning given in File
No. 70-8421, was organized to facilitate Southern's acquisition
and ownership of an interest in Hidroelectrica Alicura S.A., a
FUCO which owns and operates a generating station in Argentina.
1.2 Purpose of Proposed Reorganization. The primary
objective for the reorganization of Southern's ownership
interests in Projects is to facilitate Holdings' access to
external sources of debt and equity capital. Other benefits will
include simplifying the capital structure of Southern's project
portfolio by eliminating unnecessary subsidiaries, making the
overall project ownership structure more tax efficient, and
3
<PAGE>
reducing administrative costs, such as the costs of accounting,
book keeping, and tax-return preparation.
Specifically, Southern envisions that Holdings or
subsidiaries of Holdings may from time to time issue equity
and/or debt securities to third persons, i.e., investors and
lenders other than Southern. This would enable Holdings to
finance at least a portion of its future investments in Projects
with equity and debt provided by others, thereby reducing the
financing pressures on Southern itself. In this connection,
Holdings intends to segregate its domestic and foreign Project
interests in order to facilitate the attraction of investors who
have elected to target a specific market segment (e.g., European
or South American projects). Further, some potential investors
(e.g., insurance companies) may be subject to legal restrictions
on permitted investments in non-U.S. entities or projects.
1.3 Description of Interim Reorganization. In the initial
steps of this restructuring (herein referred to as the "Interim
Reorganization"), Southern has contributed to Holdings all of the
outstanding stock of Southern Electric Wholesale Generators, Inc.
("SEWG"), an EWG that directly and indirectly holds Southern's
ownership interests in other domestic EWGs;3 and all of the
outstanding stock of all of its directly owned Project Parents.
3 Southern Electric Wholesale Generators, Inc., a Delaware
corporation, directly and indirectly through other EWGs holds
Southern's investments in "eligible facilities" in Virginia and
Hawaii and in Southern Energy Marketing, Inc., a power marketer
that has been designated as an EWG by the Federal Energy
Regulatory Commission.
4
<PAGE>
These transactions have not affected Holdings' status as a
Project Parent within the meaning given in File No. 70-8421. In
addition, Holdings has formed SEI Newco 1, Inc., a Delaware
corporation (and itself a Project Parent), and has or will
transfer to it, by contribution or merger, its interests in the
Exempt Projects and other Project Parents that it owns, other
than Southern Electric, Inc.; and SEI Newco 1, Inc., in turn,
intends to transfer to Southern Electric International Europe,
Inc., a Project Parent which holds Southern's interest in a FUCO
in England, its interests in all such Exempt Projects and Project
Parents, except for Southern Electric International Trinidad
Holdings, Inc. and Power Generation Company of Trinidad and
Tobago, Ltd. (both of which are EWGs).4
The various steps in the Interim Reorganization, as
described above, only involve adjustments in Southern's ownership
of Exempt Projects (i.e., EWGs and FUCOs) and Project Parents.
These steps have been and will be carried out in reliance upon
Southern's current authorization in File No. 70-8421, under which
Southern is authorized to organize and acquire the securities of
Project Parents, whether before or after the acquisition of an
Exempt Project, in order to hold the securities, directly or
indirectly, of one or more Exempt Projects. Southern's
4 The separation of the foreign Exempt Project holdings
beneath SEI Newco 1, Inc. is intended to enable Southern at some
future time to de-consolidate for tax purposes some, but not all,
of its foreign Exempt Projects through an adjustment in its
ownership interest in Southern Electric International Europe,
Inc. No such plan to do so exists at this time.
5
<PAGE>
"aggregate investment," as defined in Rule 53(a), in all Exempt
Projects and Project Parents will be unchanged as a result of the
Interim Reorganization.
Appended as Exhibit H-2 hereto is an organizational chart
showing Southern's anticipated direct and indirect ownership of
Southern Electric and of Exempt Projects and Project Parents
currently owned following the Interim Reorganization. Not all
steps in the Interim Reorganization have been carried out, and
the organizational structure depicted may be subject to some
modification.
In the future, to the extent possible, Southern intends to
structure investments in any additional foreign Projects as
direct or indirect subsidiaries of SEI Newco 1, Inc. (hereafter
referred to as "International Holdings"), and investments in any
additional domestic Projects as direct or indirect subsidiaries
of SEWG (hereafter referred to as "Domestic Holdings").
1.4 Description of Final Reorganization. Subject to
receipt of an order approving the Application or Declaration in
this proceeding, Southern proposes to take several additional
steps designed to consolidate its ownership of all current
Projects, Project Parents and activities and functions related
thereto under Holdings. Specifically, Southern requests approval
to contribute the common stock of Southern Electric to Holdings
such that Southern Electric will be a first-tier subsidiary of
Holdings (along with Domestic Holdings and International
Holdings). Southern Electric will continue to engage in those
6
<PAGE>
activities authorized under the December 1994 Order (viz.
preliminary project development activities and the sale of
operating, construction, project management, administrative and
other similar services to associate Projects and to non-
associates, including non-associate utilities and independent
power projects).
In connection with the foregoing, Southern Electric also
requests authority to sell to International Holdings (or to
subsidiaries thereof) the securities of two existing wholly-owned
subsidiaries of Southern Electric whose operations are limited to
the conduct of preliminary project development activities in
foreign countries.5 The sales price for the shares of these two
companies will be equal to Southern Electric's investment in
them, which is currently less than $50,000 in the aggregate. In
addition, following the contribution of the common stock of
Southern Electric to Holdings, Southern Electric proposes to
distribute to Holdings all of the common shares of SEI Operadora
de Argentina S.A., a wholly-owned subsidiary and a FUCO, and
Holdings proposes to concurrently contribute such shares to
International Holdings.
Currently, Southern's sole non-exempt Project is Mobile
Energy Services Company, L.L.C. ("MESC"), which Southern holds
5 These subsidiaries, which were organized in accordance
with Southern Electric's authorization under the December 1994
Order, are Southern Electric International-Asia, Inc., which
maintains Southern Electric's Hong Kong office, and Southern
Electric International GmbH, which maintains Southern Electric's
Vienna office.
7
<PAGE>
through a wholly-owned subsidiary, Mobile Energy Services
Holdings, Inc. ("Mobile Energy").6 Southern will continue to
hold all of the issued and outstanding common stock of Mobile
Energy as a first-tier subsidiary company. However, Southern
desires to direct some or all of the distributable cash flow and
income from Mobile Energy to support the operations of and future
financing by Holdings and/or Domestic Holdings. To achieve this
objective, Southern and Mobile Energy request approval for a
recapitalization of Mobile Energy under Alabama law pursuant to
which Southern would receive, as a distribution in respect of the
currently issued and outstanding common stock of Mobile Energy,7
all of the authorized shares of a new class of non-voting
preferred stock. The recapitalization of Mobile Energy would not
require Southern to make, or result in, any additional investment
by Southern in Mobile Energy. A copy of Mobile Energy's Amended
and Restated Articles of Incorporation designating the new class
of preferred stock is filed herewith as Exhibit A.
The preferred stock of Mobile Energy will not be entitled to
any vote on any matter except for (i) such matters as require a
6 See File No. 70-8505, Holding Co. Act Rel. Nos. 26185 and
26330, dated December 13, 1994 and July 13, 1995, respectively.
Through Mobile Energy, a statutory "holding company," Southern
holds 99% of the equity ownership interests in MESC, an Alabama
limited liability company. MESC owns a dedicated, inside-the-
fence, industrial cogeneration complex in Mobile, Alabama. The
remaining 1% equity ownership interest in MESC is, and will
continue to be, held by Southern Electric.
7 Mobile Energy has authorized and issued 1000 shares of
common stock, par value $1.00 per share. It currently has no
other authorized class of stock.
8
<PAGE>
vote of preferred stockholders under Alabama law, and (ii) any
subsequent amendments to the articles of incorporation of Mobile
Energy that would affect the priorities of the holders of such
shares to dividends and to distributions upon liquidation of
Mobile Energy.
Concurrently with its receipt of Mobile Energy's preferred
stock, Southern requests approval to transfer such stock to
Holdings as a contribution to the capital of Holdings; and
Holdings, in turn, proposes to transfer such preferred stock to
Domestic Holdings as a contribution to the capital of that
company. Except as described above, the shares of common and
preferred stock of Mobile Energy will not be issued or sold to
any third person without receipt of a further order of this
Commission.
1.5 Authorization of Future Project Activities and
Investments. In the future, Southern contemplates that it will
make investments in additional Projects through Holdings (or
subsidiaries of Holdings) and that Holdings and its subsidiaries
(principally Southern Electric) will conduct all other related
project activities, including but not limited to project
marketing and development, asset administration, and rendering of
operations and maintenance, construction and other similar types
of services to both associate Projects and to non-associates.
Any investment in an Exempt Project (i.e., an EWG or FUCO) would
be made in accordance with and subject to such limitations as may
9
<PAGE>
be imposed under Section 32 or 33, as the case may be, and all
applicable rules of the Commission, including Rule 53.
(a) Acquisition of Certain "Energy-Related" Companies.
Holdings requests authority herein to acquire, directly or
indirectly through subsidiaries, in one or more transactions from
time to time through December 31, 2000, the securities of or
other interests in any one or more companies that derive or will
derive substantially all of their revenues from the ownership
and/or operation of any one or more of the following categories
of energy-related facilities or businesses (hereafter referred to
as "Energy-Related Companies"): (i) "qualifying facilities," as
defined under the Public Utility Regulatory Policies Act of 1978,
as amended; (ii) the production, conversion, and distribution of
steam; and (iii) the brokering and marketing of electric energy
within the area covered by the Southeastern Electric Reliability
Council.8 Holdings may also acquire interests in other
8 Holdings proposes to limit the electricity marketing and
brokering activities of any such Energy-Related Company to
transactions in which the buyer or seller, or both the buyer and
seller, are located within SERC pending the Commission's
consideration of proposed Rule 58, which may broaden, or
eliminate, any such geographic restriction on such non-utility
business activities. See Holding Co. Act Rel. No. 26313, dated
June 20, 1995. Any electricity purchase from a source outside
SERC for sale or delivery to a customer inside SERC, and any
electricity purchase from a source inside SERC for sale or
delivery to a customer outside SERC, would directly or indirectly
benefit Southern's integrated utility system, which comprises a
large segment of SERC, and its customers, in that it would have
the effect of reducing on-system demand for electricity, reduce
the cost of electricity for utility customers inside SERC, and
promote exports from SERC of capacity and energy associated with
generating facilities that may be surplus to the current needs of
any member utility of SERC. The Commission has recognized that
these and other benefits may be derived as a result of marketing
10
<PAGE>
categories of "energy-related" businesses to the extent that any
such acquisition may be exempted under a rule of general
applicability hereafter adopted by the Commission.9
(b) Investments by Southern in Holdings. Southern proposes
to make additional investments in Holdings from time to time in
order to finance the business of Holdings and its subsidiaries,
including direct or indirect investments by Holdings in Southern
Electric and in one or more Projects or Energy-Related Companies.
Such additional investments in Holdings shall be made in
accordance with Rules 52 and 45(b)(4), as applicable, provided
that: (i) any investment in Holdings made for the purpose of
enabling Holdings to acquire directly or indirectly the
securities of or other interest in any Exempt Project shall be
subject to the limitations of Rule 53 and any other applicable
rules; and (ii) any additional investment in Holdings made for
the purpose of enabling Holdings to acquire directly or
indirectly the securities of or other interest in any Energy-
Related Company shall not exceed $300 million at any time
outstanding or such greater amount as may be permitted under any
and brokering transactions between a subsidiary of a registered
holding company and non-associate companies where such
transactions are confined generally to the regional power market
of which the registered holding company's utility system is a
part. See Northeast Utilities Service Co., et al., Holding Co.
Act Rel. No. 26359, dated August 18, 1995.
9 Specifically, proposed Rule 58, supra n. 8, if adopted,
would conditionally exempt from the pre-approval requirements of
Sections 9(a) and 10 of the Act acquisitions of the securities of
certain other categories of "energy-related companies."
11
<PAGE>
rule of general applicability that the Commission may hereafter
adopt.
Holdings will use the proceeds of any additional financing
by Southern (including the proceeds of borrowings from lenders
other than Southern that are guaranteed by Southern, as described
below), together with other internally generated funds and the
proceeds of the sale of any securities issued to investors other
than Southern or any associate company, to make investments in
Projects and Energy-Related Companies, to make additional
investments in Southern Electric, and to finance the costs of any
other authorized or permitted activity.
Holdings, Domestic Holdings, International Holdings and any
Intermediate Subsidiary (as defined in paragraph (c), below)
further propose to guaranty in one or more transactions from time
to time through December 31, 2000, the securities of any other
direct or indirect subsidiary thereof in an aggregate principal
amount at any time outstanding not to exceed $1.2 billion,
provided that the issue and sale of any such securities are
exempt from the declaration requirements of Section 6(a) of the
Act, and provided further that any guaranty outstanding on
December 31, 2000, shall remain in effect until it expires in
accordance with its terms. Guaranties of securities may take the
form of direct guaranties of securities issued by any such direct
or indirect subsidiary, stand-by equity funding commitments,
obligations under capital maintenance agreements or under
12
<PAGE>
reimbursement agreements in respect of bank letters of credit, or
other similar financial instruments or undertakings.
(c) Acquisition of Intermediate Subsidiaries. Holdings,
Domestic Holdings and International Holdings further request
authority to make investments from time to time through December
31, 2000, in Projects and Energy-Related Companies directly or
indirectly through one or more subsidiaries (hereinafter referred
to as "Intermediate Subsidiaries") that are organized exclusively
for that purpose; provided, however, that such subsidiaries may
also provide project development and management services to
Projects or Energy-Related Companies held by them. Any direct or
indirect investment in an Intermediate Subsidiary organized to
acquire or hold an Exempt Project will be treated for purposes of
Rule 53 as if it were an investment in such Exempt Project; and
any direct or indirect investment in an Intermediate Subsidiary
organized to acquire and hold the securities of any Energy-
Related Company will be treated as if it were an investment in
such Energy-Related Company.
(d) Acquisition of Certain Other Special Purpose
Subsidiaries. Holdings, Domestic Holdings and International
Holdings also request approval to acquire from time to time
through December 31, 2000, directly or indirectly, the securities
of or other interest in one or more subsidiaries ("Special
Purpose Subsidiaries") organized exclusively for the purpose of
engaging in any of the activities that Southern Electric is
currently authorized to engage in under the terms of the December
13
<PAGE>
1994 Order, including preliminary project development and
marketing, project management and administration, and rendering
services to both associate Projects and Energy-Related Companies
and to non-associates. Southern envisions, for example, that
Special Purpose Subsidiaries will be needed in order to establish
and manage foreign project development offices, and to provide
operations and maintenance, construction or asset management
services, whether to an associate Project or Energy-Related
Company or to a non-associate company. Creating separate
subsidiaries for such purposes serves to isolate the risks of one
activity from others, and may be necessary to satisfy the
requirements of applicable foreign or U.S. laws.
(e) Financial Guaranties by Southern. Southern requests
authority to guaranty in one or more transactions from time to
time through December 31, 2000, the securities of Holdings or any
direct or indirect subsidiary of Holdings in an aggregate
principal amount at any one time outstanding not to exceed the
$1.2 billion (the "Financial Guaranties"). Financial Guaranties
may take the form of direct guaranties of securities issued by
Holdings or any subsidiary, stand-by equity funding commitments,
obligations under capital maintenance agreements or under
reimbursement agreements in respect of bank letters of credit, or
other similar financial instruments or undertakings.
Any Financial Guaranty issued by Southern with respect to
securities of any Intermediate Subsidiary organized to acquire
and hold the securities of any Exempt Project will be treated for
14
<PAGE>
purposes of Rule 53 as if it were a guaranty of the securities of
such Exempt Project. Thus, the aggregate outstanding principal
amount of Financial Guaranties issued for such purpose, when
added to Southern's "aggregate investment" at any time in all
Exempt Projects, shall not exceed 50% of Southern's "consolidated
retained earnings," or such greater percentage of Southern's
"consolidated retained earnings" as the Commission may allow in
any subsequent proceeding, including without limitation, File No.
70-8725. Similarly, any Financial Guaranties issued by Southern
with respect to securities of an Intermediate Subsidiary
organized to acquire and hold the securities of any Energy-
Related Company shall be counted against the investment
limitation in all such entities set forth above in Item 1.5(a).
It is proposed that any Financial Guaranty outstanding on
December 31, 2000, shall remain in effect until it expires in
accordance with its terms.
(f) Pledge of Securities of Holdings or Subsidiaries.
Finally, in connection with any sale of debt securities by
Holdings or any subsidiary of Holdings, it may be necessary for
Southern, as the sole stockholder of Holdings, or Holdings,
Domestic Holdings, International Holdings or any Intermediate
Subsidiary, as the stockholder of any of their respective
subsidiaries, to provide collateral security to the purchaser of
such debt securities by pledging the shares of Holdings (if
Holdings is the issuer) or of any direct or indirect subsidiary
of Holdings (if a subsidiary of Holdings is the issuer).
15
<PAGE>
Similarly, it may be necessary for Domestic Holdings to pledge
the preferred shares of Mobile Energy to secure borrowings from
third-party lenders. To the extent required, Southern, Holdings,
Domestic Holdings, International Holdings and any Intermediate
Subsidiary request approval to enter into stock pledge agreements
from time to time through December 31, 2000, as collateral
security for any such securities issuances, provided that the
term of any such stock pledge in effect on December 31, 2000
shall expire or terminate in accordance with its terms.
1.6 Relationship to other Authorizations. Upon issuance of
the Commission's order approving this Application or Declaration,
Southern will relinquish its authorization in File No. 70-8421
(concerning "Project Parents"), but without prejudice to any
transaction that has been consummated in reliance upon the
authority granted by the Commission in that proceeding. The term
"Intermediate Subsidiary," as defined herein, is broader than,
i.e., it subsumes, the term "Project Parent," as defined in File
No. 70-8421. For the same reason, upon the effective date of the
order approving this Application or Declaration, Southern will
also relinquish its authority in File No. 70-8277 to guaranty the
securities of Exempt Projects issued to third-parties. (All
other approvals granted in File No. 70-8277 shall remain
unaffected).
Finally, Southern understands that the issuance and sale of
securities by a non-utility subsidiary of a registered holding
company (which would include Holdings, Domestic Holdings,
16
<PAGE>
International Holdings and any Intermediate Subsidiary) in order
to finance the authorized business of such subsidiary is
conditionally exempt from Sections 6(a) and 7 of the Act pursuant
to Rule 52, as recently amended, and that cash capital
contributions and open account advances to such subsidiaries are
exempt from Section 12(b) and Rule 45(a) thereunder pursuant to
Rule 45(b), also as recently amended.10 Southern and such non-
utility subsidiaries state that they will rely upon the
exemptions under Rules 45(b) and 52, as in effect or as they may
be further amended, to the extent applicable.
Southern Electric will continue to engage in those
activities currently authorized under the December 1994 Order.
However, any additional investment by Southern in Southern
Electric would be made indirectly through Holdings, as described
above. Any services rendered by any Special Purpose Subsidiary
to a Project or other associate company will be subject to all of
the terms, conditions and limitations of the December 1994 Order
as if the terms, conditions and limitations of such order
expressly applied to such Special Purpose Subsidiary. Without
limiting the foregoing, the applicants propose that any such
Special Purpose Subsidiary may provide services or sell goods to
any associate Project company at fair market prices, and
therefore request an exemption pursuant to Section 13(b) from the
requirements of Rules 90 and 91 as applicable to any such
10 See Holding Co. Act Rel. No. 26311, dated June 20, 1995.
17
<PAGE>
transactions in any case in which any of the following
circumstances shall obtain:
1. Such Project company is an Exempt Project which derives
no part of its income, directly or indirectly, from the
generation, transmission, or distribution of electric energy
for sale within the United States;
2. Such Project company is an EWG which sells electricity
at market-based rates which have been approved by the
Federal Energy Regulatory Commission ("FERC"), provided that
the purchaser thereof is not an associate public utility
company of such Special Purpose Subsidiary within the
Southern System;
3. Such Project company is a QF that sells electricity
exclusively (a) at rates negotiated at arms'-length to one
or more industrial or commercial customers purchasing such
electricity for their own use and not for resale, and/or
(ii) to an electric utility company, other than any
associate public utility company of such Special Purpose
Subsidiary within the Southern System, at the purchaser's
"avoided cost" as determined in accordance with the
regulations under PURPA; or
4. Such Project company is an EWG or QF that sells
electricity at rates based upon its cost of service, as
approved by FERC or any state public utility commission
having jurisdiction, provided that the purchaser thereof is
not an associate public utility company of such Special
Purpose Subsidiary within the Southern System.
Under the terms of the December 1994 Order, Southern is
authorized to guaranty performance by or act as indemnitor or
surety with respect to contractual obligations of Southern
Electric, any subsidiary of Southern Electric, or any Project
entity in which Southern directly or indirectly holds an
interests (collectively, "Performance Guaranties"). Southern
requests a modification of the December 1994 Order so that it is
clear that Southern may provide Performance Guaranties from time
to time through December 31, 2003, on behalf of Holdings and any
18
<PAGE>
direct or indirect subsidiary of Holdings, including Southern
Electric and any Project, Energy-Related Company, or Intermediate
Subsidiary. Any such Performance Guaranty provided on behalf of
an Intermediate Subsidiary that holds an interest in an Exempt
Project shall, for purposes of Rule 53 and the December 1994
Order, be treated as if it is a Performance Guaranty provided on
behalf of such Exempt Project.
Holdings, Domestic Holdings, International Holdings and any
Intermediate Subsidiary also propose to provide Performance
Guaranties from time to time through December 31, 2003, on behalf
of any of their respective direct or indirect subsidiaries. It
is proposed that such Performance Guaranties would count against
the limitation on the amount of Performance Guaranties that
Southern may provide under the terms of the December 1994 Order
only if, and to the extent that, the same are ultimately
supported by an agreement or undertaking of Southern itself.
1.7 Other Matters. It is proposed that the applicants file
a single consolidated quarterly report pursuant to Rule 24 on all
investments in Projects and Energy-Related Companies and other
activities of Holdings and its subsidiaries (including Southern
Electric), commencing with the quarterly report for the second
calendar quarter of 1996. Such report shall be in lieu of the
combined report currently filed in File Nos. 70-7932 and 70-8421
and shall include the following information:
1. A copy of the balance sheet and income statement
for each of Holdings, International Holdings, Domestic
Holdings, and Southern Electric;
19
<PAGE>
2. A narrative description of Southern's activities
during the quarter just ended organized by business category
(project development, project related services, Stand-by
Capacity Network (SCN) activities and other), and within
each category, a description of new developments by project
type (e.g., EWGs, FUCOs, Energy-Related Companies, etc.),
international and domestic consulting and specific types of
consulting within the international and domestic spheres,
and SCN project updates;
3. Amounts and forms of: (i) guarantees of, and
similar provisions and arrangements concerning, performance
and undertaking of other obligations by Holdings, any
subsidiary of Holdings (including Southern Electric), or any
Project entity; and (ii) indemnifications of and with
respect to persons acting as sureties on bonds or other
obligations on behalf of Holdings, any subsidiary of
Holdings (including Southern Electric), or any Project
entity which Southern has agreed to grant in the event a bid
by any of the foregoing is accepted.
4. Amounts and forms of: (i) guarantees of, and
similar provisions and arrangements concerning, performance
and undertaking of other obligations by Holdings, any
subsidiary of Holdings (including Southern Electric), or any
Project entity which Southern has granted and are currently
effective; and (ii) indemnifications of and with respect to
persons acting as sureties on bonds or other obligations on
behalf of Holdings, or any subsidiary of Holdings (including
Southern Electric), or any Project entity which Southern has
granted and are currently effective;
5. A description of services obtained from associate
companies, specifying the type of service, the number of
personnel from each associate company providing services
during the quarter and the total dollar value of such
services;
6. A description of services provided to associate
companies which identifies the recipient company, the charge
to the associate and whether the charge was computed at
cost, market or pursuant to another method, which method
shall be specified;
7. A chart, in the form of Exhibit H hereto, showing,
as of the end of such quarterly period, all associate
companies of Southern that are EWGs, FUCOs, Energy-Related
Companies, Intermediate Subsidiaries and Special Purpose
Subsidiaries, Southern's direct or indirect investment in
each such entity and the aggregate direct and indirect
investment by Southern in all such entities, and Southern's
percentage equity ownership in each such entity together
20
<PAGE>
with a statement indicating by category the type of entity
or person (i.e., domestic corporation, foreign corporation,
foreign government, or natural persons) owning the equity
interests in each such entity that are not held directly or
indirectly by Southern;
8. A description of any intellectual property provided
by Southern Electric to SCS or to any of the Operating
Companies, the cost thereof (including the cost of any
enhancements) to the company making such intellectual
property available, and, if known, the fair market value
thereof;
9. Investment made by Southern, directly or
indirectly, in any Intermediate Subsidiary or Special
Purpose Subsidiary in the previous quarter (to the extent
not included in the response to item 7, above), indicating
the amount and type of such investment and generally
identifying the facility (if any) with respect to which such
Intermediate Subsidiary or Special Purpose Subsidiary was
organized or formed; and
10. The amount, type and terms (including interest
rate and maturity and the basis for inflation adjustment in
the case of non-recourse indebtedness denominated in any
currency other than US dollars) of securities issued by
Holdings or any subsidiary of Holdings (other than an Exempt
Project) to third persons.11
In addition, Southern will file as an exhibit to its annual
report on Form U5S (or amendment thereto) a copy of the annual
report prepared by (or, if not prepared by, which contains the
financial statements of) each Exempt Project.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses paid or incurred and to
be paid or incurred in connection with the proposals contained
11 To avoid duplication and unnecessary paperwork, it is
proposed that the reporting of such information as a part of this
quarterly Rule 24 certificate shall satisfy the requirements of
Rule 52(c).
21
<PAGE>
herein are estimated not to exceed $15,000, including the
Commission's filing fee of $2,000.
Item 3. Applicable Statutory Provisions.
The applicants believe that the following proposed
transactions are or may be subject to the requirements of the
following provisions of the Act and rules thereunder:
Transaction Applicable Section or Rule
Contribution to Holdings by Sections 9(a), 10, 12(b) and
Southern of the common 12(f); Rules 43, 45 and 54
stock of Southern Electric,
and acquisition thereof by
Holdings
Amendment to the Articles Sections 6(a), 7, 9(a) and 10;
of Incorporation of Mobile Rule 54
Energy and issuance of
shares of a new class of
preferred stock of Mobile
Energy to Southern; and the
acquisition thereof by
Southern
Contribution to Holdings by Sections 9(a), 10, 12(b) and
Southern of the shares of (f); Rules 43, 45 and 54
existing, directly-owned, (Deemed to be authorized under
Project Parents, orders issued in File No. 70-
contribution of same by 8421)
Holdings to International
Holdings, and contribution
by International Holdings
of shares of certain
Project Parents and Exempt
Projects to SEI
International Europe, Inc.;
and acquisition of such
shares by Holdings, by
International Holdings, and
by SEI International
Europe, Inc.
22
<PAGE>
Transaction Applicable Section or Rule
Contribution to Holdings by Sections 9(a), 10, 12(b) and
Southern of the common (f); Rules 43, 45 and 54
stock of SEWG, and (Deemed to be authorized under
acquisition thereof by orders issued in File No. 70-
Holdings 8421)
Contribution to Holdings by Sections 9(a), 10, 12(b) and
Southern of the preferred (f); Rules 43, 45 and 54
stock of Mobile Energy, and
contribution to Domestic
Holdings of such shares by
Holdings, and the
acquisition thereof by
Holdings and Domestic
Holdings
Sale to International Sections 9(a), 10 and 12(f);
Holdings or subsidiaries Rule 43
thereof by Southern
Electric of shares of
project development
subsidiaries, and the
acquisition of such shares
by International Holdings
Acquisition by Holdings, Sections 9(a)(1) and 10; Rule
Domestic Holdings or 54
International Holdings of
securities of Energy-
Related Companies
Acquisition by Holdings, Sections 9(a)(1) and 10; Rule
Domestic Holdings or 54
International Holdings of
securities of Intermediate
Subsidiaries and of
Special Purpose
Subsidiaries
Sale of goods and services Section 13(b); Rules 90-92
to associate companies by
Special Purpose
Subsidiaries, subject to
exemption from "cost"
standard in specified cases
23
<PAGE>
Transaction Applicable Section or Rule
Issuance of the Financial Sections 6(a), 7, 12(b), 32 and
Guaranties by Southern 33; Rules 45(a), 53 and 54
Guaranties of securities of Sections 6(a), 7, 12(b), 32 and
subsidiaries by Holdings, 33; Rules 45(a), 53 and 54
Domestic Holdings,
International Holdings and
any Intermediate Subsidiary
Guaranties of Performance Section 12(b); Rule 45(a)
by Southern, Holdings, (December 1994 Order, as
Domestic Holdings, modified herein, deemed
International Holdings and applicable)
any Intermediate Subsidiary
Pledge by Southern of stock May be subject to Sections
of Holdings and by 6(a), 7, and 12(b); Rule 45(a)
Holdings, Domestic Holdings
International Holdings and
Intermediate Subsidiaries
of stock of their
respective subsidiaries
Compliance with Rules 53 and 54. 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 EWG, or to guarantee the
securities of an 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. Rule 54 provides that the Commission shall not
consider the effect of the capitalization or earnings of
subsidiaries of a registered holding company that are EWGs or
24
<PAGE>
FUCOs in determining whether to approve other transactions if
Rule 53(a), (b) and (c) are satisfied. These standards are met.
Rule 53(a)(1): At December 31, 1995, Southern had invested,
directly or indirectly, an aggregate of $1,230,274,036 in EWGs
and FUCOs (inclusive of investments on Project Parents), or
36.56% of "consolidated retained earnings" for the four
consecutive quarters ended September 30, 1995.12
Rule 53(a)(2): Southern maintains and will maintain 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
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.
12 In a separate proceeding, which addresses the standards
of Rule 53(c), Southern is seeking relief which would enable it
to finance investments in EWGs and FUCOs in an amount that is
equal to Southern's "consolidated retained earnings." (See File
No. 70-8725).
25
<PAGE>
Rule 53(a)(4): Southern has submitted a copy of the
Application or Declaration in this proceeding and each amendment
thereto, and will submit copies of any Rule 24 certificates
required hereunder, as well as a copy of Southern's Form U5S, to
each of the public service commissions having jurisdiction over
the retail rates of the Operating Companies.
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 ($3.292
billion) represented an increase of approximately $79 million in
the average consolidated retained earnings for the previous four
quarterly periods ($3.213 billion).
Rule 53(b)(3): For the year ended December 31, 1995,
Southern did not experience any losses attributable to its direct
or indirect investments in EWGs and FUCOs.
Item 4. Regulatory Approval.
The proposed transactions are not subject to the
jurisdiction of any state commission or of any federal commission
other than the Commission.
26
<PAGE>
Item 5. Procedure.
The applicants request 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. The applicants
hereby waive a recommended decision by a hearing officer or other
responsible officer of the Commission and hereby consent that the
Division of Investment Management may assist in the preparation
of the Commission's decision and/or order in the matter unless
such Division opposes the matters covered hereby.
Item 6. Exhibits and Financial Statements.
(a) Exhibits.
A - Amended and Restated Articles of
Incorporation of Mobile Energy Services
Holdings, Inc.
F - Opinion of Troutman Sanders LLP.
G - Form of Federal Register Notice. (Previously
filed).
H-1 - Organizational Chart Showing Ownership of
Southern Electric and Projects as of
September 30, 1995. ("P")
H-2 - Organizational Chart Showing Ownership of
Southern Electric and Projects Following
Interim Reorganization. ("P")
(b) Financial Statements.
Not applicable.
27
<PAGE>
Item 7. Information as to Environmental Effects.
(a) In light of the nature of the proposed transactions, as
described in Item 1 hereof, 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 companies have duly caused
this statement to be signed on their behalf by the undersigned
thereunto duly authorized.
Dated: January 29, 1996
THE SOUTHERN COMPANY
By: /s/Tommy Chisholm
Tommy Chisholm
Secretary
MOBILE ENERGY SERVICES HOLDINGS,
INC.
By: /s/Tommy Chisholm
Tommy Chisholm
Secretary
SOUTHERN ELECTRIC INTERNATIONAL,
INC.
By: /s/Tommy Chisholm
Tommy Chisholm
Vice President and Secretary
(Signatures Continued on Next Page)
28
<PAGE>
SEI HOLDINGS, INC.
By: /s/Tommy Chisholm
Tommy Chisholm
Secretary
SOUTHERN ELECTRIC WHOLESALE
GENERATORS, INC.
By: /s/Tommy Chisholm
Tommy Chisholm
Secretary
SEI EUROPE, INC.
By: /s/Tommy Chisholm
Tommy Chisholm
Secretary
SEI NEWCO 1, INC.
By: /s/Tommy Chisholm
Tommy Chisholm
Secretary
29
<PAGE>
Exhibit A
AMENDMENT TO AND RESTATEMENT OF THE
ARTICLES OF INCORPORATION
OF
MOBILE ENERGY SERVICES HOLDINGS, INC.
Pursuant to, and with the effect provided in, Sections 10-
2B-10.01 to 10-2B-10.07 of the Code of Alabama, 1975, as amended
(the "Code"), the undersigned corporation adopts the following
Amendment to and Restatement of the Articles of Incorporation:
FIRST: The name of the corporation is Mobile Energy
Services Holdings, Inc. (the "Corporation").
SECOND: The following amendment to the Corporation's
Articles of Incorporation was adopted in the manner provided by
the Code by the Corporation's sole shareholder, as of January
___, 1996:
"IV.
The Corporation shall be authorized to issue Two Thousand
(2,000) shares of capital stock of which One Thousand (1,000)
shall be shares of One Dollar ($1.00) par value common stock (the
"Common Stock") and One Thousand (1,000) shall be shares of no
par value preferred stock (the "Preferred Stock"). The shares of
Common Stock shall have unlimited voting rights. The shares of
Preferred Stock shall not be entitled to vote on any matter
except for: (i) such matters as require a vote of preferred
stockholders under Alabama law, and (ii) any subsequent amendment
to the Articles of Incorporation that would affect the priorities
of the holders of such shares to dividends and to distributions
upon liquidation of the Corporation. The Board of Directors is
hereby authorized to determine the designation and the dividend,
liquidation and other rights, preferences and limitations of such
shares of Preferred Stock."
THIRD: The Corporation had 1,000 shares of $1.00 par value
Common Stock issued and outstanding at the time of the adoption
of this amendment. Of the 1,000 shares of $1.00 par value Common
Stock issued and outstanding, 1,000 shares voted to approve, and
0 shares voted against or abstained from voting on the foregoing
amendment.
FOURTH: The Articles of Incorporation of the Corporation
are hereby restated as follows:
<PAGE>
I.
The name of the corporation is MOBILE ENERGY SERVICES
HOLDINGS, INC. (the "Corporation").
II.
The Corporation shall have perpetual duration.
III.
The nature of the business of the Corporation and its
objects, purposes and powers shall be limited to the following
activities:
(a) to acquire, finance, own, expand, improve and operate
or contract for the operation of the energy and recovery
complex and related facilities located at the pulp and
tissue mill in Mobile, Alabama owned by Scott Paper Company,
a Pennsylvania corporation ("Scott") (or any successor
thereto), and the paper mill owned by S.D. Warren Company, a
Pennsylvania corporation ("S.D. Warren") (or any successor
thereto) (the "Energy Complex");
(b) to serve as a member of and to own a majority of the
outstanding membership interests of Mobile Energy Services
Company, L.L.C., an Alabama limited liability company (the
"Company"), and to act as the sole manager thereof, provided
that the foregoing shall not be construed as restraining the
Corporation from transferring interests in the Company (i)
in an amount not to exceed one percent (1%) of the total
interests in the Company to The Southern Company, a Delaware
corporation ("Southern"), prior to the issuance of the
"Offered Securities" (as hereinafter defined) by the
Company; (ii) on commercially reasonable terms to third
parties that are not "Southern Affiliated Entities" (as
hereinafter defined), and permitting such third parties to
participate in the management of the Company, even if the
effect thereof would be to cause (A) the Corporation's
ownership interests in the Company to be reduced below a
majority of the ownership interests in the Company or (B)
one or more such third parties to acquire or share
managerial control of the Company; or (iii) to a Southern
Affiliated Entity whose Articles of Incorporation (or other
organizational documents) contain the same operative
provisions as these Articles and which undertakes, for the
benefit of the "Bondholders" (as herein defined), each of
the covenants and restrictions of the Corporation set forth
in the indenture among the Company, the Corporation, as
-2-
<PAGE>
guarantor, and First Union National Bank of Georgia ("First
Union"), as trustee (the "Indenture") relating to up to
$290,000,000 aggregate principal amount of first mortgage
bonds (the "First Mortgage Bonds"), the Amended and Restated
Lease and Agreement (the "Tax-Exempt Lease") among the
Company, the Corporation, as guarantor, and the Industrial
Development Board of the City of Mobile, Alabama (the "IDB")
entered into in connection with the issuance by the IDB, for
the benefit of the Company of $85,000,000 aggregate
principal amount of tax-exempt bonds (the "Tax-Exempt
Bonds") pursuant to the Amended and Restated Trust Indenture
between the IDB and First Union (the "Tax-Exempt Indenture")
in each case relating to compliance with and amendment of
these Articles. For purposes of these Articles, the term
"Southern Affiliated Entities" shall mean the Corporation,
Southern, Southern Electric International, Inc., a Delaware
corporation ("SEI"), the Company and any other corporation,
partnership, limited liability company or other business
entity with respect to which the Corporation, Southern, SEI,
or the Company, through ownership of voting securities, by
contract or otherwise, has the power to direct (or cause the
direction of) the management and policies of such
corporation, partnership, limited liability company or other
business entity;
(c) to enter into and perform any agreement providing for
or relating to (i) the issuance by the Company of the First
Mortgage Bonds, the issuance by the IDB of the Tax-Exempt
Bonds, and the working capital facility to be provided to
the Company by an unaffiliated third party (the "Working
Capital Facility"), and in each case to receive and dispose
of proceeds thereunder or in exchange therefor and to
provide for any refinancing or refunding of the foregoing
(the First Mortgage Bonds, the Tax-Exempt Bonds and the
Working Capital Facility are sometimes collectively referred
to as the "Offered Securities") and (ii) the issuance by the
Company of other additional indebtedness as may be
consistent with clause (g) of this Article III;
(d) to take all actions necessary to offer the First
Mortgage Bonds and the Tax-Exempt Bonds to the purchasers
thereof (the "Bondholders");
(e) to enter into and perform any agreement for or relating
to the management and administration of the activities of
the Corporation or the Company;
(f) to enter into and perform any agreements to accomplish
the purposes set forth in paragraphs (a), (b), (c), (d) or
(e) above; and
-3-
<PAGE>
(g) to engage in any lawful act or activity, and to
exercise any powers permitted to corporations organized
under the laws of the State of Alabama, that are incidental
to and necessary, suitable or convenient for the
accomplishment of the purposes set forth in (a), (b), (c),
(d), (e) or (f) above.
IV.
The Corporation shall be authorized to issue Two Thousand
(2,000) shares of capital stock of which One Thousand (1,000)
shall be shares of One Dollar ($1.00) par value common stock (the
"Common Stock") and One Thousand (1,000) shall be shares of no
par value preferred stock (the "Preferred Stock"). The shares of
Common Stock shall have unlimited voting rights. The shares of
Preferred Stock shall not be entitled to vote on any matter
except for: (i) such matters as require a vote of preferred
stockholders under Alabama law, and (ii) any subsequent amendment
to the Articles of Incorporation that would affect the priorities
of the holders of such shares to dividends and to distributions
upon liquidation of the Corporation. The Board of Directors is
hereby authorized to determine the designation and the dividend,
liquidation and other rights, preferences and limitations of such
shares of Preferred Stock.
V.
The Board of Directors of the Corporation shall have the
power to adopt, amend and repeal the By-Laws of the Corporation.
VI.
To the fullest extent that the General Corporation Law of
Alabama, as it exists on the date hereof or as it may hereafter
be amended, permits the limitation or elimination of the
liability of directors, no director of the Corporation shall be
personally liable to the Corporation or its stockholders for
monetary damages for breach of duty of care or other duty as a
director. No amendment to or repeal of this Article shall apply
to or have any effect on the liability or alleged liability of
any director of the Corporation for or with respect to any acts
or omissions of such director occurring prior to such amendment
or repeal.
-4-
<PAGE>
VII.
The initial registered office of the Corporation in the
State of Alabama shall be located at 60 Commerce Street,
Montgomery, Montgomery Co., Alabama 36104. The initial
registered agent of the Corporation at such address shall be The
Corporation Company.
VIII.
The affairs of the Corporation shall be managed by a Board
of Directors and as otherwise provided in the By-Laws of the
Corporation. The initial Board of Directors of the Corporation
shall consist of one (1)member, whose name and corresponding
mailing address is:
-5-
<PAGE>
Raymond D. Hill
c/o Southern Electric International, Inc.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
IX.
The name and address of the Incorporator of the Corporation
are Elizabeth B. Chandler, NationsBank Plaza, 600 Peachtree
Street, N.E., Suite 5200, Atlanta, Georgia 30309-2216.
X.
The unanimous approval of the Board of Directors of the
Corporation is required: (a) to file a bankruptcy or insolvency
petition or otherwise institute insolvency proceedings under
Section 301 of the Bankruptcy Code, 11 U.S.C. sect 301, or any
successor thereto (the "Bankruptcy Code"), or any similar
statute, seeking protection of the Corporation as a debtor in
such proceedings; (b) to consent to the filing of a bankruptcy or
insolvency petition or to the institution of an insolvency
proceeding under Section 301 of the Bankruptcy Code, 11 U.S.C.
sec 301, or any successor thereto, or any similar statute seeking
protection of the Company as a debtor in such proceeding, or (c)
to amend, repeal or supersede any provision of Articles III, X,
XI, XII or XIII hereof unless, in connection with such amendment,
repeal or supersession, the Corporation receives from a
nationally recognized law firm acceptable to those rating
agencies which at the time of such opinion are rating the First
Mortgage Bonds or the Tax-Exempt Bonds a reasoned opinion to the
effect that, if Southern or SEI were to become a debtor under the
Bankruptcy Code, a federal bankruptcy court, exercising
reasonable judgment after full consideration of all relevant
circumstances, in a properly presented case, would not disregard
the separate corporate existence of the Corporation or the
Company so as to order substantive consolidation of the assets
and liabilities of the Corporation or the Company with those of
SEI or Southern.
The Board of Directors of the Corporation shall consist of a
number as determined by the By-Laws of the Corporation, provided
that one duly qualified and elected director at all times shall
constitute an "Independent Director" (as hereinafter defined).
For purposes of the foregoing, the term "Independent Director"
shall mean an individual who, at all times during such
individual's service as a director of the Corporation, is not any
of the following:
-6-
<PAGE>
(a) a person who received more than eight percent (8%) of
his or her gross income (as defined for Federal income tax
purposes) during either of the preceding two calendar years
ended December 31 from wages, dividends, distributions or
other payments received directly from the Southern
Affiliated Entities;
(b) a director, general partner, member, trustee,
beneficiary or the holder of ten percent (10%) or more of
the equity interests of any corporation, partnership,
limited liability company, trust or other entity which
received more than eight (8%) of its gross revenues during
either of the preceding two calendar years ended December 31
from wages, dividends, distributions or other payments
received from the Southern Affiliated Entities;
(c) a person who possesses equity or other interests in the
Southern Affiliated Entities, or debt of any of the Southern
Affiliated Entities, which, in the aggregate, have a fair
market value in excess of eight percent (8%) of the net
worth of such person;
(d) a person who, on such date or at any time during the
two years preceding such date, was a director of any of the
Southern Affiliated Entities (other than the Corporation) or
was an officer or employee of any of the Southern Affiliated
Entities (including the Corporation); or
(e) a parent, child, sibling or spouse of any person
described in clauses (a), (b), (c) or (d) above.
XI.
Neither the Corporation's funds nor any other assets thereof
shall be commingled with those of any other person or entity, and
the Corporation's funds shall be clearly traceable at all times
and in all transactions. The Corporation's assets shall remain
identifiably separate from those of all other entities such that
there shall be no material difficulty in segregating and
ascertaining the assets of the Corporation as distinct from those
of the other Southern Affiliated Entities or any other person or
entity. Notwithstanding the foregoing: (a) equity or other
contributions from any shareholder of the Corporation may be
received by the Corporation, deposited to the account of the
Corporation and treated as funds of the Corporation, and
(b) revenues of the Corporation or the Company may be collected
by affiliates of the Corporation and such affiliates may pay
liabilities of the Corporation or the Company, as applicable,
therewith pursuant to the "Relevant Documents" (as hereinafter
defined), so long as appropriate records are maintained by the
-7-
<PAGE>
Corporation to identify at all times funds belonging to the
Corporation or the Company, respectively. For purposes of these
Articles, the "Relevant Documents" shall mean: (1) the
Registration Statement filed on Form S-1 under the Securities Act
of 1933, as amended, and the Prospectus, each relating to the
issuance of the First Mortgage Bonds, and the Limited Offering
Memorandum issued in connection with the sale of the Tax-Exempt
Bonds; (2) the Articles of Incorporation of SEI and Southern, the
Articles of Organization of the Company, and these Articles; (3)
the By-Laws of the Corporation, SEI and Southern; (4) the
Indenture, the Tax-Exempt Indenture and the Tax-Exempt Lease
Agreement; (5) the Working Capital Facility and the Corporation's
guaranty in respect thereof; (6) those certain guaranties from
Southern or appropriate letters of credit necessary to satisfy
certain of the Company's reserve account funding requirements
under the Indenture, the Tax-Exempt Indenture, and the
"Intercreditor Agreement"(as hereinafter defined); (7) the
Intercreditor Agreement entered into by and among the
Corporation, the Company, First Union, as trustee with respect to
the First Mortgage Bonds, First Union, as trustee with respect to
the Tax-Exempt Bonds, the IDB, Banque Paribas, as Working Capital
Facility provider, and Bankers Trust Company, as Collateral Agent
(the "Intercreditor Agreement"); (8) the Asset Purchase Agreement
dated as of December 12, 1994, between Scott Paper Company
("Scott") and the Corporation; (9) the Pulp Mill Environmental
Indemnity Agreement, dated as December 12, 1994, between Scott
and the Corporation (the "Pulp Mill Environmental Indemnity
Agreement"), the Tissue Mill Environmental Indemnity Agreement,
dated as December 12, 1994, between Scott and the Corporation
(the "Tissue Mill Environmental Indemnity Agreement"), the Paper
Mill Environmental Indemnity Agreement, dated as December 12,
1994, between S.D. Warren and the Corporation, and the
Environmental Guaranty dated as of December 12, 1994, made by
Southern (together with the Pulp Mill Environmental Indemnity
Agreement and the Tissue Mill Environmental Indemnity Agreement,
the "Environmental Indemnity Agreements") in connection with the
Company's obligations under the Environmental Indemnity
Agreements; (10) the Administrative Services Agreements (the "SCS
Agreements"), pursuant to which Southern Company Services, Inc.
("SCS") will provide certain administrative services to the
Corporation and the Company, the Operations and Maintenance
Agreement, dated as of December 12, 1994 between the Corporation
and SEI and the Administrative Services Agreement dated as of
July 14, 1995 between SEI and the Corporation; (11) the agreement
between the Corporation and Southern relating to the allocation
of certain tax liabilities; (12) the Mill Owner Maintenance
Reserve Account Agreement among the Company, Southern, Scott and
S.D. Warren; and (13) the Employee Transition Agreement among
Scott, the Corporation and SEI, in each case as in effect on the
date of issuance and sale of the First Mortgage Bonds or as may
be amended, replaced or otherwise modified from time to time,
-8-
<PAGE>
provided that in connection with any such amendment, replacement
or modification, the Corporation receives from a nationally
recognized law firm acceptable to those rating agencies which at
the time of such opinion are rating the First Mortgage Bonds or
the Tax-Exempt Bonds a reasoned opinion to the effect that, if
Southern or SEI were to become a debtor under the Bankruptcy
Code, a federal bankruptcy court, exercising reasonable judgment
after full consideration of all relevant circumstances, in a
properly presented case, would not disregard the separate
corporate existence of the Company or the Corporation so as to
order substantive consolidation of the assets and liabilities of
the Company or the Corporation with those of SEI or Southern.
XII.
The Corporation:
(a) shall maintain corporate records and books of account
which at all times shall be separate from those of any other
person or entity and shall be materially correct and
complete;
(b) shall conduct its own business solely in its own name
or through its authorized agents, and not in the name of any
of the other Southern Affiliated Entities, in a manner which
is not likely to mislead others as to the identity of the
legal entity with which such others are dealing, shall not
permit any person or entity to conduct any business of such
person or entity in the Corporation's name, and without
limiting the generality of the foregoing: (i) shall ensure
that all oral and written communications, including without
limitation, letters, invoices, purchase orders, contracts,
statements and applications, are and will be made solely in
the name of the entity to which they relate or in the name
of such entity's authorized agents, and (ii) shall not
refer, and shall ensure that the other Southern Affiliated
Entities do not refer, to the Corporation or the Company as
a division or department of any other entity;
(c) shall prepare financial statements separate from any
other person or entity, which shall disclose its separate
existence and the transactions contemplated by the Relevant
Documents in accordance with generally accepted accounting
principles, and shall disclose that the assets of the
Corporation are not available to any creditor of any
affiliate of the Corporation (other than as contemplated by
the Relevant Documents);
(d) except to the extent set forth in the Relevant
Documents, shall pay its liabilities out of its own funds,
-9-
<PAGE>
and, except as set forth in the Relevant Documents, shall
not permit any of the other Southern Affiliated Entities to
pay such liabilities;
(e) shall not hold out employees or officers of any of the
other Southern Affiliated Entities as employees or officers
of the Corporation, nor permit employees or officers of the
Corporation to be held out as employees or officers of any
of the other Southern Affiliated Entities; provided that
said restrictions shall not preclude a particular employee
or officer of any of the other Southern Affiliated Entities
from also holding a position as an employee or officer of
the Corporation, so long as the Corporation takes reasonably
appropriate steps to assure that unaffiliated parties
dealing with such employee or officer are able to
distinguish the particular entity which such person is
representing at any particular time;
(f) shall not guarantee or become obligated for the debts
of any of the other Southern Affiliated Entities or hold out
its credit as being available to satisfy the obligations of
any of the other Southern Affiliated Entities, other than
(i) obligations to reimburse SEI for expenses paid by SEI on
behalf of the Corporation in connection with the operation
and maintenance of the Energy Complex in accordance with the
Relevant Documents, (ii) obligations of the Company related
to the First Mortgage Bonds, the Tax-Exempt Bonds or the
Working Capital Facility, and (iii) obligations to indemnify
SEI for certain claims and losses relating to SEI's
operation and maintenance of the Energy Complex in
accordance with the Relevant Documents;
(g) shall allocate fairly and equitably any overhead for
office space shared with any of the other Southern
Affiliated Entities;
(h) shall use stationery, invoices, checks and other
business forms identifiably separate and distinct from those
of any of the other Southern Affiliated Entities. Such
items shall bear a mailing address and telephone number for
the Corporation which is different from that used by any of
the other Southern Affiliated Entities. The Corporation
further shall maintain, as its principal address and
telephone number for receipt of notices and other
communications under the Relevant Documents, a mailing
address and telephone number separate from those of any of
the other Southern Affiliated Entities;
(i) shall not pledge its funds or assets for the benefit of
any of the other Southern Affiliated Entities, except as set
forth in the Relevant Documents; and
-10-
<PAGE>
(j) at all times shall hold itself out to the public as an
entity legally separate and distinct from any of the other
Southern Affiliated Entities.
XIII.
The Corporation shall at all times maintain and observe all
corporate formalities in the conduct of its affairs and with
respect to the acquisition, ownership, encumbrance or transfer of
any material assets or the incurrence of any material
indebtedness. Such formalities shall include without limitation
the holding of appropriate periodic meetings of its Board of
Directors and shareholders in accordance with Alabama law, the
recording of minutes of such meetings and any other proceedings
of its shareholders and Board of Directors, the adoption by the
Board of Directors (and, as appropriate, the shareholders) of
resolutions to approve material actions of the Corporation and
the execution and maintenance of appropriate documentation with
respect to and in order to evidence the acquisition, ownership,
encumbrance or transfer of any material assets or the incurrence
of any material indebtedness.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
-11-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this
Amendment to and Restatement of the Articles of Incorporation to
be executed as of this ___ day of January, 1996.
MOBILE ENERGY SERVICES HOLDINGS, INC.
By:
Title:
-12-
<PAGE>
Exhibit F
Troutman Sanders LLP
600 Peachtree Street, Suite 5200
Atlanta, GA 30308
404-885-3900
January 29, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Re: The Southern Company, et al. - Application or
Declaration on Form U-1 (File No. 70-8733)
Ladies and Gentlemen:
We are familiar with the statement on Form U-1 referred to
above, as amended, and are furnishing this opinion with respect
to the transactions proposed therein, which include, among other
proposals, (i) the amendment of the articles of incorporation of
Mobile Energy Services Holdings, Inc. (formerly Mobile Energy
Services Company, Inc.) ("Mobile Energy") to create a new class
of preferred stock (the "Preferred Stock"), the issuance thereof
by Mobile Energy to The Southern Company, a Delaware corporation
("Southern"), and the contribution thereof by Southern to SEI
Holdings, Inc. ("Holdings"), which is currently a "Project
Parent" within the meaning given in File 70-8421; (ii) the
contribution by Southern of the common stock of Southern Electric
International, Inc. ("Southern Electric") to Holdings; (iii)
the sale by Southern Electric of the common stock of certain
subsidiaries to Holdings or subsidiaries of Holdings; (iv) the
acquisition by Holdings directly or indirectly through certain
other subsidiaries of the securities of or other interest in one
or more subsidiaries which derive substantially all of their
income from certain specified "energy-related" businesses; (v)
the acquisition by Holdings directly or indirectly through
certain other subsidiaries of the securities of one or more
subsidiaries organized exclusively for the purpose of acquiring
and holding the securities of one or more "exempt wholesale
generators" or "foreign utility companies," as defined in
Sections 32 and 33 of the Act; (vi) the agreement of Southern,
Holdings and certain subsidiaries of Holdings to provide
guaranties and other forms of credit support on behalf of their
respective subsidiaries; and (vii) the authorization of various
other transactions relating generally to the reorganization of
Southern's project portfolio.
We are of the opinion that Southern, Southern Electric,
Mobile Energy, Holdings, and the other named applicants are each
a validly organized and duly existing corporation under the laws
of the State of its incorporation and that, upon the issuance of
<PAGE>
Securities and Exchange Commission
January 29, 1996
Page 2
your order or orders herein, and in the event that the proposed
transactions are consummated in accordance with such statement on
Form U-1 and your order or orders:
(a) all state laws applicable to the proposed
transactions will have been complied with;
(b) the Preferred Stock will be validly issued, fully
paid and non-assessable, and the holder thereof will be
entitled to the rights and privileges appertaining thereto
set forth in Mobile Energy's articles of incorporation;
(c) the guaranties and other forms of credit support
to be provided by Southern, Holdings and certain of
Holdings' subsidiaries in respect of securities issued by
and performance obligations of their respective subsidiaries
will be legal, valid and binding obligations of such
companies; and
(d) the consummation of the transactions described
above and of the other transactions described in the
Application or Declaration in the above-referenced
proceeding, as amended, will not violate the legal rights of
the holders of any securities issued by Southern, Southern
Electric, Mobile Energy, Holdings or any associate company
of any of the foregoing.
We hereby consent to the use of this opinion in connection
with the filing of such statement on Form U-1.
Very truly yours,
/s/Troutman Sanders LLP
Troutman Sanders LLP
<PAGE>
