File No. 70-9631
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
GEORGIA POWER COMPANY GULF POWER COMPANY
241 Ralph McGill Boulevard, N.E. One Energy Place
Atlanta, Georgia 30308 Pensacola, Florida 32520
MISSISSIPPI POWER COMPANY SAVANNAH ELECTRIC AND POWER COMPANY
2992 West Beach 600 Bay Street East
Gulfport, Mississippi 39501 Savannah, Georgia 31401
(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
Judy M. Anderson, Vice President Warren E. Tate, Secretary
and Corporate Secretary and Treasurer
Georgia Power Company Gulf Power Company
241 Ralph McGill Boulevard, N.E. One Energy Place
Atlanta, Georgia 30308 Pensacola, Florida 32520
Michael W. Southern, Vice President, Kirby R. Willis, Vice President,
Chief Financial Officer, Secretary Treasurer and
and Treasurer Chief Financial Officer
Mississippi Power Company Savannah Electric and Power Company
2992 West Beach 600 Bay Street East
Gulfport, Mississippi 39501 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
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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.
The Southern Company ("Southern") is a registered holding
company under the Public Utility Holding Company Act of 1935, as amended (the
"Act"). Alabama Power Company ("Alabama"), Georgia Power Company ("Georgia"),
Gulf Power Company ("Gulf"), Mississippi Power Company ("Mississippi") and
Savannah Electric and Power Company ("Savannah") are wholly-owned subsidiaries
of Southern. Alabama and Georgia each owns 50% of the outstanding common stock
of Southern Electric Generating Company ("SEGCO"). Alabama, Georgia, Gulf,
Mississippi, Savannah and SEGCO are sometimes referred to herein individually as
an "Operating Company" and collectively as the "Operating Companies."
Southern proposes to organize and acquire all of the outstanding
capital stock of a new corporation (the "SPV") for the purpose of issuing its
commercial paper at the request and for the benefit of the Operating Companies
as described herein.1 It is proposed that the SPV may issue and sell such
commercial paper to or through dealers from time to time prior to June 30, 2004
in an aggregate principal amount at any one time outstanding of up to $3.5
billion (including up to $1.7 billion for Georgia, $300 million for Gulf, $350
million for Mississippi and $90 million for Savannah). Such commercial paper
will be in the form of promissory notes with varying maturities not to exceed
one year, which maturities may be subject to extension to a final maturity not
to exceed 390 days. Actual maturities will be determined by market conditions,
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1 While it is contemplated that the SPV will initially issue commercial paper
for the benefit of the Operating Companies, it is also proposed that the SPV
may, pursuant to authorization granted by the Commission in this proceeding,
issue such securities for the benefit of any other associate company that may
issue its debt securities to the SPV pursuant to Rule 52 under the Act.
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the effective interest costs and the anticipated cash flows of the respective
Operating Companies, including the proceeds of other borrowings, at the time of
issuance. The commercial paper notes will be issued in denominations of not less
than $50,000 and will not by their terms be prepayable prior to maturity. The
form of commercial paper note is filed herewith as Exhibit B-2.
The commercial paper will be sold by the SPV directly to or
through a dealer or dealers (the "dealer"). The discount rate (or the interest
rate in the case of interest-bearing notes), including any commissions, will not
be in excess of the discount rate per annum (or the equivalent interest rate)
prevailing at the date of issuance for commercial paper of comparable quality
with the same maturity sold by issuers thereof to commercial paper dealers.
No commission or fee will be payable in connection with the
issuance and sale of commercial paper, except for a commission not to exceed
1/8th of 1% per annum payable to the dealer in respect of commercial paper sold
through the dealer as principal. The dealer will reoffer such commercial paper
at a discount rate of up to 1/8th of 1% per annum less than the prevailing
interest rate to the SPV or at an equivalent cost if sold on an interest-bearing
basis.
It is proposed that the SPV will enter into a financial services
agreement with each Operating Company pursuant to which the SPV will agree to
use its reasonable best efforts to issue commercial paper in amounts and at
times as requested by such Operating Company. Each of Georgia, Gulf, Mississippi
and Savannah propose to borrow the cash proceeds of each issuance it requests
which will be evidenced by a "grid" promissory note. The terms of each such
borrowing will be identical to those of the related commercial paper issued for
its benefit.
In addition, Alabama or Georgia, or both of them jointly and severally,
may guarantee any such loan by the SPV to SEGCO. The amount of any such
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guarantees by Georgia will not exceed $150 million at any one time outstanding.
Either Alabama or Georgia also may re-lend the proceeds of any borrowing by it
from the SPV to SEGCO on the same terms.
The proceeds from the proposed borrowings by the Operating
Companies will be used for general corporate purposes, including the financing
in part of their respective construction programs. None of such proceeds will be
used by the Operating Companies, directly or indirectly, for the acquisition of
any interest in an "exempt wholesale generator" or a "foreign utility company."
With respect to the transactions for which approval is sought
herein, Georgia, Gulf, Mississippi and Savannah, for themselves and on behalf of
the SPV, hereby request authority to file certificates of notification under
Rule 24 on a quarterly basis (within 60 days following the close of each
calendar quarter).
Item 2. Fees, Commissions and Expenses.
Information as to fees and expenses to be incurred in connection
with the transactions proposed herein will be set forth in an amendment hereto.
Item 3. Applicable Statutory Provisions.
The acquisition by Southern of the capital stock of SPV in connection
with the organization of the SPV is subject to Sections 9(a) and 10 of the Act.
The issuance and sale by the SPV of its commercial paper are subject to Sections
6(a) and 7 of the Act, except to the extent exempted by the first sentence of
Section 6(b). The issuance by Georgia, Gulf, Mississippi and Savannah of their
respective promissory notes to the SPV is subject to Sections 6(a) and 7 of the
Act, except to the extent exempted under the first sentence of Section 6(b), and
the acquisition by the SPV of such notes of Georgia, Gulf, Mississippi and
Savannah is subject to Sections 9(a) and 10 of the Act. The guarantee by Georgia
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of any loan by the SPV to SEGCO as described herein is subject to Sections 6(a),
7 and 12(b) of the Act and Rule 45 thereunder. No authorization by the
Commission is required for any other transaction described herein; the
transactions involving Alabama and SEGCO are exempted pursuant to Rule 52 under
the Act for (1) the issuance of their notes or guarantees, as the case may be,
as described herein will be solely for the purpose of financing the respective
businesses of such public-utility subsidiary companies, (2) each such issuance
will have been authorized by the Alabama Public Service Commission, the state
commission of the state in which each company is organized and doing business,
and (3) the interest rates and maturity rates of any note issued by SEGCO to
Alabama, or by either SEGCO or Alabama to the SPV, will be designed to parallel
the effective cost of the related borrowing to the respective associate
companies.
Rule 54 Analysis: The transactions for which approval is
requested herein are 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 February 29, 2000, Southern's "aggregate investment,"
as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $2.739 billion,
or approximately 66.88% of Southern's "consolidated retained earnings," also as
defined in Rule 53(a)(1), for the year ended December 31, 1999 ($4.096 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
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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 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 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 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
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consolidated capitalization as of December 31, 1999, was 42.3% equity, 57.7%
debt including all non-recourse debt, and 56.5% equity and 43.5% debt excluding
all non-recourse debt.
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 evident 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 45.1% at December 31, 1999, which is lower than
the average for the Standard & Poor's "A" rated vertically integrated electric
utilities. At September 30, 1999, according to Standard & Poor's, the average
total debt (both long-term and short-term) for "A" rated electric utilities was
54.1% of total capitalization.
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 and the write down of
assets in 1998 and the non-recurring adjustments in 1999, the average growth
would be 7.6%. 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 in the four calendar years ending after the Rule 53(c)
order.
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Accordingly, since the date of the Rule 53(c) Order, the
capitalization and earnings attributable to Southern's investments in EWGs and
FUCOs has not had any adverse impact on Southern's financial integrity.
Item 4. Regulatory Approval.
The proposed issuance by Gulf of its promissory note to the SPV
evidencing loans by the SPV to Gulf has been or will have been expressly
authorized by the Florida Public Service Commission, which has jurisdiction over
the issuance of securities by public utility companies operating in Florida. The
transactions for which authorization is sought herein are not subject to the
jurisdiction of any other state commission or of any federal commission other
than the Securities and Exchange Commission.
Item 5. Procedure.
It is hereby requested 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 applicant-declarants 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 this matter unless such Division
opposes the matters covered hereby.
Item 6. Exhibits and Financial Statements.
(a) Exhibits
A-1 - Certificate of Incorporation of SPV. (To be filed
by amendment.)
A-2 - By-laws of SPV. (To be filed by amendment.)
B-1 - Form of Financial Services Agreement. (To be filed
by amendment.)
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B-2 - Form of commercial paper note. (To be filed by
amendment.)
F - Opinions of counsel. (To be filed by amendment.)
G - Form of Notice.
(b) Financial Statements.
Balance sheet of Georgia at December 31, 1999.
(Designated in Georgia's Form 10-K for the year
ended December 31, 1999, File No. 1-6468.)
Statement of income of Georgia for the period ended
December 31, 1999. (Designated in Georgia's Form
10-K for the year ended December 31, 1999, File No.
1-6468.)
Balance sheet of Gulf at December 31, 1999.
(Designated in Gulf's Form 10-K for the year ended
December 31, 1999, File No. 0-2429.)
Statement of income of Gulf for the period ended
December 31, 1999. (Designated in Gulf's Form 10-K
for the year ended December 31, 1999, File No.
0-2429.)
Balance sheet of Mississippi at December 31, 1999.
(Designated in Mississippi's Form 10-K for the year
ended December 31, 1999, File No. 0-6849.)
Statement of income of Mississippi for the period
ended December 31, 1999. (Designated in
Mississippi's Form 10-K for the year ended December
31, 1999, File No. 0-6849.)
Balance sheet of Savannah at December 31, 1999.
(Designated in Savannah's Form 10-K for the year
ended December 31, 1999, File No. 1-5072.)
Statement of income of Savannah for the period
ended December 31, 1999. (Designated in Savannah's
Form 10-K for the year ended December 31, 1999,
File No. 1-5072.)
Since December 31, 1999, there have been no material adverse changes,
not in the ordinary course of business, in the financial condition of Georgia,
Gulf, Mississippi or Savannah from that set forth in or contemplated by the
foregoing financial statements.
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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 Operating
Companies' businesses. Accordingly, 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.
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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: April 17, 2000 THE SOUTHERN COMPANY
By: /s/Tommy Chisholm
Tommy Chisholm
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
