File No. 70-8277
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 12
(Post-Effective Amendment No. 6)
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
(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, Esq.
Financial Vice President Troutman Sanders LLP
The Southern Company 600 Peachtree Street, N.E.
270 Peachtree Street, N.W. Suite 5200
Atlanta, Georgia 30303 Atlanta, Georgia 30308-2216
<PAGE>
INFORMATION REQUIRED
Item 1 in this proceeding as previously amended is hereby further
amended as follows:
The second paragraph of Item 1.2, Additional Common Stock., is amended
and restated to read as follows:
"The proceeds from the sale of the Additional Common Stock will be used
by Southern to acquire the securities of associate companies and interests in
other businesses, including interests in "exempt wholesale generators" ("EWGs")
and "foreign utility companies" ("FUCOs"), all in any transactions permitted
under the Act, and for other general corporate purposes. Southern does not seek
in this proceeding any increase in the amount it is permitted to invest in EWGs
and FUCOs."
Item 1.4, Compliance with Rule 53, is amended and restated to read as
follows:
"Rule 53 Analysis. The proposed transactions are subject to Rule
53, which provides that, in determining whether to approve the issue or sale of
a security for purposes of financing the acquisition of an EWG or FUCO, the
Commission shall not make certain adverse findings if the conditions set forth
in Rule 53(a)(1) through (a)(4) are met, and are not otherwise made inapplicable
by reason of the existence of any of the circumstances described in Rule 53(b).
Southern currently meets all of the criteria of Rule 53(a),
except for clause (1). At October 31, 1999, Southern's "aggregate investment,"
as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $2.969 billion,
or approximately 74.09% of Southern's "consolidated retained earnings," also as
defined in Rule 53(a)(1), for the four quarters ended September 30, 1999 ($4.008
billion). 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 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 domestic utility subsidiary 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 would be no basis for the
Commission to withhold or deny approval for the proposal made in this
Application-Declaration. The issuance of the Additional Common Stock as proposed
herein 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.
The Rule 53(c) Order was predicated, in part, upon an assessment
of Southern's overall financial condition which took into account, among other
factors, Southern's consolidated capitalization ratio and the recent growth
trend in Southern's retained earnings. As of December 31, 1995, the most recent
fiscal year preceding the Rule 53(c) Order, Southern's consolidated
capitalization consisted of 49.3% equity (including mandatorily redeemable
preferred securities) and 50.7% debt (including $1.68 billion of long-term,
non-recourse debt and short-term debt related to EWGs and FUCOs). Southern's
consolidated capitalization as of September 30, 1999, was 44.5% equity, 55.5%
debt including all non-recourse debt, and 57.1% equity and 42.9% debt excluding
all non-recourse debt. On a pro forma basis, taking into consideration the
transactions contemplated hereby, such ratios are 45.7% and 54.3%, respectively,
for equity and debt. The common equity component of Southern's pro forma
consolidated capitalization represents 35.8% of total capitalization at
September 30, 1999. Both are within accepted industry ranges and within the
limits set by independent rating agencies (such as Standard and Poor's) for "A"
rated utilities.
Thus, since the date of the Rule 53(c) Order, there has been no
material change in Southern's consolidated capitalization ratio, which remains
within acceptable ranges and limits of rating agencies as evidenced by the
continued "A" corporate credit rating of Southern. Specifically, in January 1997
Standard & Poor's assigned Southern its corporate credit rating of "A," which
was consistent with the implied corporate rating previously held by Southern.
This implied rating had been in effect since May 1995. Therefore, since the
April 1996 issue of the Rule 53(c) Order, the Southern consolidated credit
rating has remained at "A" thereby demonstrating Southern's continued strong
financial integrity. In addition, the underlying ratings of the affiliated
operating companies, which have a strong influence on the Southern corporate
rating, are all "A+" or better. As a point of reference, the percentage of debt
in the total capital structure of the Southern domestic operating utility
companies was 43.7% at September 30, 1999, which is lower than the average for
Standard & Poor's "A" rated vertically integrated utilities. At year end 1998,
according to Standard & Poor's, the average total debt (both long-term and
short-term) for "A" rated electric utilities was 50.4% of total capitalization.
Southern's consolidated retained earnings grew on average
approximately 5.5% per year over the last five years. Excluding the $111 million
one-time windfall profits tax imposed on SWEB in 1997 and the write down of
assets in 1998, the average growth would be 7.2%. In 1998, consolidated retained
earnings increased approximately $36 million, or slightly less than 1%.
Southern's interests in EWGs and FUCOs have made a positive contribution to
earnings in the three calendar years ending after the issuance of the Rule 53(c)
Order.
Accordingly, since the date of the Rule 53(c) Order, the capitalization
and earnings attributable to Southern's investments in EWGs and FUCOs have not
had any adverse impact on Southern's financial integrity."
Item 2, Fees, Commissions and Expenses, is amended and restated in its
entirety to read as follows:
"The fees, commissions and expenses paid or to be incurred in
connection with the filing of this Post-Effective Amendment are estimated not to
exceed $5,000, which includes the fees of counsel for the applicant."
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: December 15, 1999 THE SOUTHERN COMPANY
By: /s/Tommy Chisholm
Tommy Chisholm, Secretary
