File No. 70-9557
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Amendment No. 2
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
ALABAMA POWER COMPANY SOUTHERN COMMUNICATIONS SERVICES, INC.
600 North 18th Street 5555 Glenridge Connector, Suite 500
Birmingham, Alabama 35291 Atlanta, Georgia 30342
GEORGIA POWER COMPANY SOUTHERN COMPANY ENERGY SOLUTIONS, INC.
241 Ralph McGill Boulevard, N.E. 241 Ralph McGill Boulevard, N.E.
Atlanta, Georgia 30308 Atlanta, Georgia 30308
GULF POWER COMPANY SOUTHERN COMPANY SERVICES, INC.
One Energy Place 241 Ralph McGill Boulevard, N.E.
Pensacola, Florida 32520 Atlanta, Georgia 30308
MISSISSIPPI POWER COMPANY SOUTHERN ENERGY RESOURCES, INC.
2992 West Beach 900 Ashwood Parkway, Suite 500
Gulfport, Mississippi 39501 Atlanta, Georgia 30338
SAVANNAH ELECTRIC AND POWER COMPANY SOUTHERN NUCLEAR OPERATING COMPANY, INC.
600 East Bay Street 40 Inverness Center Parkway
Savannah, Georgia 31401 Birmingham, Alabama 35242
(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
William E. Zales, Jr., Vice President Tommy Chisholm, Secretary
and Corporate Secretary Southern Communications Services, Inc.
Alabama Power Company 5555 Glenridge Connector, Suite 500
600 North 18th Street Atlanta, Georgia 30342
Birmingham, Alabama 35291
Judy M. Anderson, Vice President Tommy Chisholm, Secretary
and Corporate Secretary Southern Company Energy Solutions, Inc.
Georgia Power Company 241 Ralph McGill Boulevard, N.E.
241 Ralph McGill Boulevard, N.E. Atlanta, Georgia 30308
Atlanta, Georgia 30308
Warren E. Tate, Secretary Tommy Chisholm, Vice President
and Treasurer and Secretary
Gulf Power Company Southern Company Services, Inc.
One Energy Place 241 Ralph McGill Boulevard, N.E.
Pensacola, Florida 32520 Atlanta, Georgia 30308
Michael W. Southern, Vice President, Tommy Chisholm, Vice President
Chief Financial Officer, Secretary and Secretary
and Treasurer Southern Energy Resources, Inc.
2992 West Beach 900 Ashwood Parkway, Suite 500
Gulfport, Mississippi 39501 Atlanta, Georgia 30338
Kirby R. Willis, Vice President, Sherry A. Mitchell, Corporate Secretary
Treasurer and Chief Financial Officer Southern Nuclear Operating Company, Inc.
Savannah Electric and Power Company 40 Inverness Center Parkway
600 East Bay Street Birmingham, Alabama 35242
Savannah, Georgia 31401
(Names and addresses of agents for service)
The Commission is requested to mail signed copies of all
orders, notices and communications to:
W. L. Westbrook John D. McLanahan
Financial Vice President Troutman Sanders 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 2. Fees, Commissions and Expenses.
The additional fees, commissions and expenses paid or to be
incurred in connection with the issuance and sale of the Plan Stock are
estimated not to exceed $5,000, which includes the fees of counsel.
Item 3. Applicable Statutory Provisions.
(a) Southern considers that the proposed issuance and sale of
the Plan Stock are subject to the provisions of Sections 6(a), 7, 32 and 33 of
the Act and Rules 53 and 54 thereunder.
Southern considers that any purchases of Southern's common stock
by the Employing Companies pursuant to the ESOP prior to contributing such stock
to the ESOP Trust are subject to the provisions of Sections 9(a) and 10 of the
Act.
The proposed transactions will be carried out in accordance with
the procedure specified in Rule 23 and pursuant to an order of the Commission
with respect thereto.
(b) 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 Plan 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 48.6% and 51.4%, respectively,
for equity and debt. The common equity component of Southern's pro forma
consolidated capitalization represents 39.2% 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 6. Exhibits and Financial Statements.
(a) Exhibits
F- Opinion of Troutman Sanders LLP, counsel for Southern.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused this amendment
to be signed on their behalf by the undersigned thereunto duly authorized.
Dated: December 22, 1999 THE SOUTHERN COMPANY
By: /s/Tommy Chisholm
______________________________________
Tommy Chisholm
Secretary
ALABAMA POWER COMPANY
By: /s/Wayne Boston
_______________________________________
Wayne Boston
Assistant Secretary
GEORGIA POWER COMPANY
By: /s/Wayne Boston
_______________________________________
Wayne Boston
Assistant Secretary
GULF POWER COMPANY
By: /s/ Wayne Boston
________________________________________
Wayne Boston
Assistant Secretary
MISSISSIPPI POWER COMPANY
By: /s/Wayne Boston
_______________________________________
Wayne Boston
Assistant Secretary
SAVANNAH ELECTRIC AND POWER COMPANY
By: /s/Wayne Boston
_______________________________________
Wayne Boston
Assistant Secretary
SOUTHERN COMMUNICATIONS SERVICES,INC.
By: /s/Tommy Chisholm
_______________________________________
Tommy Chisholm
Secretary
SOUTHERN COMPANY ENERGY SOLUTIONS, INC.
By: /s/Tommy Chisholm
_______________________________________
Tommy Chisholm
Secretary
SOUTHERN COMPANY SERVICES, INC.
By: /s/Wayne Boston
_______________________________________
Wayne Boston
Assistant Secretary
SOUTHERN ENERGY RESOURCES, INC.
By: /s/Tommy Chisholm
_______________________________________
Tommy Chisholm
Secretary
SOUTHERN NUCLEAR OPERATING COMPANY, INC.
By: /s/Wayne Boston
_______________________________________
Wayne Boston
Assistant Secretary
Exhibit F
Troutman Sanders LLP
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308
December 22, 1999
Securities and Exchange Commission
Washington, DC 20549
RE: The Southern Company, et al.
Statement on Form U-1
File No. 70-9557
Ladies and Gentlemen:
We are familiar with the statement on Form U-1 referred to above and are
furnishing this opinion with respect to the proposed issuance and sale by The
Southern Company ("Southern") of additional shares of its common stock, par
value $5 per share, pursuant to the Southern Investment Plan, The Southern
Company Employee Savings Plan and The Southern Company Employee Stock Ownership
Plan (collectively, the "Plans"), as described in such statement on Form U-1.
We are of the opinion that Southern is a validly organized and duly
existing corporation under the laws of the State of Delaware and that, upon the
issuance of your order or orders herein and upon compliance with the applicable
provisions of the Securities Act of 1933, as amended, and the securities or
"Blue Sky" laws of any jurisdiction applicable thereto and in the event that the
proposed transactions by Southern are consummated in accordance with the terms
of the respective Plans and such order or orders:
(a) all State laws applicable to the proposed transactions by Southern
will have been complied with;
(b) the shares of common stock of Southern which are proposed to be
issued and sold pursuant to the Plans will be validly issued, fully
paid and non-assessable shares of common stock of Southern and the
holders thereof will be entitled to the rights and privileges
appertaining thereto set forth in the Certificate of Incorporation of
Southern, as amended, defining such rights and privileges; and
(c) the consummation of the proposed transactions by Southern will not
violate the legal rights of the holders of any securities issued by
Southern or any associate company thereof.
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
