File No. 70-8277
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 13
(Post-Effective Amendment No. 7)
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 of the statement on Form U-1 in this proceeding as
previously amended is hereby amended by adding the following thereto:
"Southern is currently authorized to issue and sell up to 25
million additional shares of its authorized but unissued common stock, par value
$5 per share, as such number may be adjusted for any share split or distribution
hereafter authorized by the Commission, in one or more transactions from time to
time not later than September 30, 2004. (See HCAR No. 35-27119, dated December
22, 1999.) Southern now requests that such authority be increased from 25
million additional shares to 35 million additional shares."
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).
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Southern currently meets all of the conditions of Rule 53(a), except for
clause (1). At June 30, 2000, Southern's "aggregate investment," as defined in
Rule 53(a)(1), in EWGs and FUCOs was approximately $2.746 billion, or about
63.84% of Southern's "consolidated retained earnings," also as defined in Rule
53(a)(1), for the four quarters ended June 30, 2000 ($4.302 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 No. 26501, dated April 1, 1996 (the "Rule 53(c) Order"); and
Holding Company Act Release No. 26646, dated January 15, 1997 (order denying
request for reconsideration and motion to stay).
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 action requested in the instant filing 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
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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 June 30, 2000 was 39.8% equity, 60.2% debt
including all non-recourse debt, and 54.3% equity and 45.7% debt excluding all
non-recourse debt. On a pro forma basis, taking into consideration the
transactions contemplated hereby, such ratios are 42.1% and 57.9%, respectively,
for equity and debt. The common equity component of Southern's pro forma
consolidated capitalization represents 33.2% of total capitalization at June 30,
2000.
Since the date of the Rule 53(c) Order, there has been a reduction in
Southern's consolidated equity capitalization ratio; however, it remains within
acceptable ranges and limits of rating agencies for strong investment grade
corporate credit ratings. In addition, the affiliated operating companies, which
have a significant influence on the Southern corporate rating, continue to show
strong financial statistics as measured by the rating agencies. The following
table presents the senior secured ratings history for each as rated by S&P,
Moody's and Fitch:
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<TABLE>
<CAPTION>
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
Company Agency 1995 1996 1997 1998 19991
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alabama S&P A+ A+ A+ A+ A+
Moody's A1 A1 A1 A1 A1
Fitch A+ AA- AA- AA- AA-
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
Georgia S&P A+ A+ A+ A+ A+
Moody's A1 A1 A1 A1 A1
Fitch AA- AA- AA- AA- AA-
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
Gulf S&P A+ A+ AA- AA- AA-
Moody's A1 A1 A1 A1 A1
Fitch A+ AA- AA- AA- AA-
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
Mississippi S&P A+ A+ AA- AA- AA-
Moody's Aa3 Aa3 Aa3 Aa3 Aa3
Fitch AA- AA- AA- AA- AA-
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
Savannah S&P A+ A+ AA- AA- AA-
Moody's A1 A1 A1 A1 A1
Fitch Not rated Not rated Not rated Not rated Not rated
-------------------- --------------------- ------------- ------------- -------------- ------------- -------------
</TABLE>
Southern's consolidated retained earnings grew on average approximately
5.9% per year over the last five years. Excluding the $111 million one-time
windfall profits tax imposed on SWEB in 1997, the $221 million write down of
assets in 1998, the $69 million write down of the Mobile Energy investment in
1999 and the $78 million gain on the sale of the SWEB supply business in 1999,
the average growth would be 7.4%. In 1999, consolidated retained earnings
increased $354 million, or 9.1%. Southern's interests in EWGs and FUCOs have
made a positive contribution to earnings over the four calendar years ending
after 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
an adverse impact on Southern's financial integrity.
___________________________
1 In April 2000, Moody's and Duff & Phelps (now known as Fitch) reaffirmed their
ratings; however, S&P placed the ratings of Southern and its affiliates on
credit watch with negative implications.
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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: September 29, 2000 THE SOUTHERN COMPANY
By: /s/Tommy Chisholm
--------------------------------
Tommy Chisholm, Secretary
