File No. 70-8961
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Amendment No. 1
to
FORM U-1
APPLICATION OR DECLARATION
under
The Public Utility Holding Company Act of 1935
THE SOUTHERN COMPANY
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
(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
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to the above agent for service and to:
W. L. Westbrook
Financial Vice President
The Southern Company
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
John D. McLanahan Walter M. Beale, Jr.
Troutman Sanders LLP Balch & Bingham LLP
600 Peachtree Street, N.E., Suite 5200 1901 Sixth Avenue North, Suite 2600
Atlanta, Georgia 30308-2216 Birmingham, Alabama 35203
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INFORMATION REQUIRED
The statement on Form U-1 as initially filed in this proceeding is
hereby amended and restated in its entirety as follows:
Item 1. Description of Proposed Transactions.
1.1 Southern Company Services, Inc. ("Services") is a wholly-owned
subsidiary of The Southern Company ("Southern"), a registered holding company
under the Public Utility Holding Company Act of 1935, as amended (the "Act").
Services provides certain services for Southern and its associate companies in
the Southern electric system pursuant to authorization of the Commission.
Southern proposes that, from time to time on or before December 31, 2003, it may
guarantee indebtedness incurred by Services in an aggregate principal amount up
to $200,000,000 at any time outstanding pursuant to one or more of the methods
of borrowing described hereinafter.
1.2 Services may issue and sell new notes (the "Proposed Notes") to a
lender or lenders other than Southern. The Proposed Notes would be issued
pursuant to an agreement or agreements with such lender or lenders and may be
guaranteed by Southern as to principal, premium, if any, and interest. Southern
hereby requests authority for such guarantee. The Proposed Notes may have terms
of up to 30 years, contain sinking funds and bear interest at a rate or rates
not to exceed 3 1/2 percentage points per annum over the rate for United States
Treasury securities of corresponding maturity at the time the lender or lenders
commit to purchase the particular issue. Services may engage an agent to place
the Proposed Notes for a commission not in excess of 1/2 of 1% of the principal
amount borrowed.
1.3 Services also may effect short-term or term-loan borrowings under
one or more revolving credit commitment agreements. Short-term borrowings under
such agreement or agreements would have a maximum maturity of one year; term
loans would have maturities up to 10 years. It is expected that the borrowings
would be evidenced by a "grid" promissory note to be dated the date of the
initial borrowing and the date of each borrowing thereafter when a "grid"
short-term or term-loan note, as the case may be, is not outstanding.
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Such borrowings would bear interest at rates to be negotiated
with the lending bank or banks. Borrowings under the proposed revolving credit
commitment agreements would be at rates per annum not in excess of (a) the
lender's prime or base ("Prime") rate plus 1%; (b) the lender's certificate of
deposit ("CD") rate plus 1 3/4%; and (c) the lender's LIBOR plus 2%. Services
also may negotiate separate rates for particular borrowings, an option Services
would pursue only if the resulting rates are considered more favorable than
those otherwise available under the commitments. In addition, it is expected
that Services will be obligated to pay a commitment fee not in excess of 1/2 of
1% per annum of the unused portion of each lending bank's commitment.
1.4 Services also may effect borrowings from certain banks and other
institutions. Such institutional borrowings will be evidenced by notes to be
dated as of the date of such borrowings and to mature in not more than 10 years
after the date of borrowing, or by "grid" notes evidencing all outstanding
borrowings from each lender to be dated as of the date of the initial borrowing
and to mature in not more than 10 years after the date of borrowing. Generally,
borrowings will be prepayable in whole, or in part, without penalty or premium,
and will be at rates per annum not in excess of the Prime rate, the CD rate plus
1%, and LIBOR plus 1%. Services also may negotiate separate rates for, and/or
agree not to prepay, particular borrowings if it is considered more favorable to
Services. Compensation for the credit facilities, not to exceed 1/2 of 1% per
annum of the amount of the facilities, is expected to be provided by balances or
comparable fees in lieu of balances.
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1.5 The net proceeds realized by Services from borrowings guaranteed
by Southern pursuant to authorization granted hereunder will be used to fund the
general requirements of Services' business, including the possible refunding of
outstanding indebtedness. The proceeds will be used in the routine course of
business for funding required capital expenditures, computer equipment, software
and office equipment and maintaining an adequate working capital level. None of
the proceeds from any borrowings or from the sale of any of the Notes proposed
to be guaranteed by Southern herein will be used by Southern or any subsidiary
company thereof for the acquisition of an interest in an EWG or a FUCO (each as
defined in Item 3.2 hereof). Services will not use the proceeds of borrowings
guaranteed by Southern as authorized hereunder to refund outstanding
indebtedness unless the estimated present value savings derived from the net
difference between interest payments on a new issue of comparable securities and
those securities refunded is on an after tax basis greater than the estimated
present value of all redemption, tendering and issuing costs, assuming an
appropriate discount rate. Such discount rate is based on the estimated
after-tax interest rate on securities issued for refunding purposes.
<PAGE>
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses paid or incurred or to be
paid or incurred in connection with the proposed transactions of this
Application or Declaration are estimated not to exceed $20,000.
Item 3. Applicable Statutory Provisions.
3.1 Southern considers that its guaranty of indebtedness incurred by
Services as described herein may be subject to Sections 6(a), 7 and 12(b) of the
Act and Rule 45 thereunder.
3.2 Rule 54 Analysis: The proposed transaction is also subject to
Rule 54, which provides that, in determining whether to approve an application
which does not relate to any "exempt wholesale generator" ("EWG") or "foreign
utility company" ("FUCO"), the Commission shall not consider the effect of the
capitalization or earnings of any such EWG or FUCO which is a subsidiary of a
registered holding company if the requirements of Rule 53(a), (b) and (c) are
satisfied.
Southern currently meets all of the conditions of Rule 53(a), except
for clause (1). At March 31, 1997, Southern's "aggregate investment," as defined
in Rule 53(a)(1), in EWGs and FUCOs is approximately $2.481 billion, or about
67.6% of Southern's "consolidated retained earnings," also as defined in Rule
53(a)(1), for the four quarters ended December 31, 1996 ($3,671 million). With
respect to Rule 53(a)(1), however, the Commission has determined that Southern's
financing of investments in EWGs and FUCOs in an amount greater than the amount
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that would otherwise be allowed by Rule 53(a)(1) would not have either of the
adverse effects set forth in Rule 53(c). See The Southern Company, Holding
Company Act Release Nos. 26501 and 26646, dated April 1, 1996 and January 15,
1997, respectively.
In addition, Southern has complied and will continue to comply with
the record-keeping requirements of Rule 53(a)(2), the limitation under Rule
53(a)(3) on the use of Operating Company personnel to render services to EWGs
and FUCOs, and the requirements of Rule 53(a)(4) concerning the submission of
copies of certain filings under the Act to retail rate regulatory commissions.
Further, none of the circumstances described in Rule 53(b) has occurred.
Moreover, even if the effect of the capitalization and earnings of
EWGs and FUCOs in which Southern has an ownership interest upon the Southern
holding company system were considered, there is no basis for the Commission to
withhold or deny approval for the proposal made in this Application-Declaration.
The action requested in the instant filing (viz. Southern's guarantee of certain
financing transactions by Services) would not, by itself, or even considered in
conjunction with the effect of the capitalization and earnings of Southern's
EWGs and FUCOs, have a material adverse effect on the financial integrity of the
Southern system, or an adverse impact on Southern's public-utility subsidiaries,
their customers, or the ability of State commissions to protect such
public-utility customers.
3.3 With respect to the financing transactions proposed hereunder,
Services hereby requests authority to file certificates of notification under
Rule 24 on a quarterly basis (within 45 days following the close of each
calendar quarter).
<PAGE>
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 Securities
and Exchange Commission.
Item 5. Procedure.
Southern requests that the Commission's order herein 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 preparation of the
Commission's decision and/or order herein, unless such Division opposes the
transactions herein proposed.
Item 6. Exhibits and Financial Statements.
(a) Exhibits.
A - None
B - None.
C - None.
D - None.
E - None.
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F - Opinion of Troutman Sanders LLP, counsel for
Southern. (To be filed by amendment.)
(b) Financial Statements.
Consolidated balance sheet of Southern and subsidiary
companies at December 31, 1996. (Designated in Southern's Form
10-K for the year ended December 31, 1996, File no. 1-3526.)
Statements of income and cash flows of Southern for the year
ended December 31, 1996. (Designated in Southern's Form 10-K
for the year ended December 31, 1996, File no. 1-3526.)
Since December 31, 1996, there have been no material changes,
not in the ordinary course of business, in the financial condition of Southern
from that set forth in or contemplated by the foregoing financial statements.
Item 7. Information as to Environmental Effects.
(a) As described in Item 1, the proposed transactions are of a
routine and strictly financial nature in the ordinary course of the business of
Services and Southern. Accordingly, the Commission's action in these matters
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 amendment to
be signed on its behalf by the undersigned thereunto duly authorized.
Dated May 9, 1997 THE SOUTHERN COMPANY
By /s/Tommy Chisholm
Tommy Chisholm
Secretary
