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File No. 70-9763
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO THE
FORM U-1
DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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Powergen plc
Powergen UK plc
Powergen US Holdings Limited
53 New Broad Street
London EC2M 1SL
United Kingdom
(Name of company filing this statement and
address of principal executive offices)
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Powergen plc
(Name of top registered holding company
parent of each declarant)
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David Jackson Joseph B. Frumkin
Company Secretary Sullivan & Cromwell
and General Counsel 125 Broad Street
Powergen plc New York, New York 10004
53 New Broad Street Telephone: 212-558-4000
London EC2M 1JJ Facsimile: 212-558-3588
United Kingdom
Telephone: 011-44-171-826-2742
Facsimile: 011-44-171-826-2716 Steven J. Agresta
Richard T. Miller
Sara C. Weinberg
Swidler Berlin Shereff
Friedman, LLP
3000 K Street, NW, Suite 300
Washington, DC 20007-5116
Telephone: 202-424-7500
Facsimile: 202-424-7643
Peter D. Clarke
Debra J. Schnebel
Gardner, Carton & Douglas
321 North Clark Street
Suite 3400
Chicago, Illinois 60610
Telephone: 312-245-8685
Facsimile: 312-644-3381
(Names and addresses of agents for service)
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Certain Defined Terms
1. "Declarants" means Powergen, Powergen UK, and US Holdings.
2. "Powergen" means Powergen plc.
3. "Powergen UK" means Powergen UK plc or Powergen Group Holdings, if
applicable.
4. "US Holdings" means Powergen US Holdings Limited.
5. "Intermediate Companies" means each of the companies in the chain of
ownership between Powergen and LG&E Energy Corp.
6. "Powergen System" means Powergen and each of its direct and indirect
subsidiary companies.
7. "LG&E Energy Group" means LG&E Energy Corp. and each of its direct and
indirect subsidiary companies.
This amendment no. 1 to File No. 70-9763 restates the Form U-1 in its
entirety, with the only changes to the original filing being the statement of
fees and expenses and the filing of Exhibits G-1.1 and G-1.2, the preliminary
opinions of counsel.
ITEM 1. DESCRIPTION OF THE PROPOSED TRANSACTIONS
This Declaration (the "Declaration") seeks approval for intercompany loans
within the pro forma Powergen System. By separate application-declaration under
file number 70-9671, Powergen proposes to acquire LG&E Energy Corp., a Kentucky
public-utility holding company, pursuant to which all of the companies
comprising the LG&E Energy Group will become indirect subsidiaries of Powergen
("the Merger"). Following consummation of the Merger, Powergen and each of the
Intermediate Companies propose to register with the Securities and Exchange
Commission (the "Commission") as holding companies under Section 5 of the Public
Utility Holding Company Act of 1935, as amended (the "Act" or the "1935 Act").
The LG&E Energy Group will become part of Powergen's registered system.
Powergen presently intends to finance the acquisition of LG&E Energy
principally from borrowings under a fully committed bank facility that Powergen
and US Holdings established on February 27, 2000, initially underwritten by five
internationally recognized banks and later syndicated among a wider group of
internationally recognized banks (the "Credit Facility"). The Credit Facility
provides for up to $4.0 billion in borrowings by Powergen, US Holdings and other
wholly-owned subsidiaries of US Holdings as approved in writing by the banks,
and guaranteed by Powergen or US Holdings./1/ The Credit Facility, which is
filed as Exhibit B-3 to file number 70-9671, has a final maturity of 5 years
from the date of signing. Each of the banks is a sophisticated commercial lender
and the Credit Facility was negotiated at arm's length. The Credit Facility was
established both to fund the acquisition and, if necessary, to provide funding
and accommodate working capital needs of the Intermediate Companies and the LG&E
Energy Group.
Borrowings under the Credit Facility could be reduced by, among other
things, application of available cash or the proceeds of assets sales by
Powergen UK and its subsidiaries, or by the issuance of debt securities or other
instruments by Powergen or its subsidiaries prior to, at or after the Merger.
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/1/ Although the Credit Facility permits other borrowers, Declarants intend for
US Holdings to be the only borrower under the Credit Facility, with a guarantee
from Powergen.
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Powergen has announced an intention to explore the sale of certain of its
UK generating assets and other assets located outside the UK and US. The
relevant net proceeds from the sales of these assets may be used to repay
acquisition indebtedness./2/ The Credit Facility (Clause 7.5) generally requires
that at least 50% of these proceeds in excess of $100 million be applied to
repay amounts owing under the Credit Facility.
Powergen UK proposes to make available to US Holdings the relevant sales
proceeds of asset disposals and other excess capital at Powergen UK through one
or more intercompany loan(s) ("Loan" or "Loans") to US Holdings. US Holdings
will use the Loan proceeds to repay amounts owing under the Credit Facility
("Acquisition Debt"), or (to the extent permitted by the Credit Facility) to
provide capital to the LG&E Energy Group for capital expenditures and other
working capital purposes. The use of the Loans from Powergen UK to US Holdings
is the most efficient, and fastest, way to move excess funds from Powergen UK to
US Holdings. For example, U.K. companies may pay dividends only out of
"distributable reserves" (roughly comparable to retained earnings of a U.S.
company) and the payment of dividends from Powergen UK to Powergen in the
amounts likely to be generated by the announced plan of asset disposals likely
would deplete all or substantially all of Powergen UK's distributable reserves,
making it difficult for it to pay dividends to Powergen in the future. Dividend
payments in excess of distributable reserves violate U.K. law.
The Loans from Powergen UK to US Holdings will be either interest free
(where the funds are the sales proceeds of asset disposals) or at an interest
rate not greater than Powergen UK's cost of capital (where the funds originate
from loans to Powergen UK from third parties)./3/ Unless otherwise stated in
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/2/ Upon application of the proceeds to be used to repay acquisition debt at US
Holdings, it is expected that this will cause the common stock equity position
of the Powergen System to equal or exceed 30% of total capitalization at
December 31, 2001.
/3/ As of October 10, 2000, Powergen UK's long term cost of borrowing is 8.43%.
The cost of capital to US Holdings will be the lesser of Powergen UK's cost of
capital or the competitive market rate for comparable securities at the time the
loan is made.
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this Declaration, any Loan or Loans would have the designation, aggregate
principal amount, interest rate(s) or method of determining the same, terms of
payment of interest, redemption provisions, non-refunding provisions sinking
fund terms, put terms and other terms and conditions as are deemed appropriate
at the time of issuance. In addition, the Loans will be long-term (i.e., the
maturity of the Loans will not exceed 50 years) and will have no amortization
obligations. As a consequence, the financial position of US Holdings will be
improved due to the reduced level of external borrowings and interest
obligations. The capital structure and financial strength of the LG&E Energy
Group companies will not be adversely affected in any way by the Loans.
The only change to the accounts of US Holdings as a result of the proposed
Loans will be the recording on the books of US Holdings of a "Loan from Powergen
UK (interco)" in the amount of any Loans from Powergen UK and the corresponding
reduction in both the external debt of US Holdings and in ongoing interest
payments. The intercompany Loans will be cancelled in consolidation of the
accounts of Powergen, and the net effect in the financial statements of Powergen
will be a reduction in indebtedness at Powergen equal to the amounts repaid to
third parties. There would be no accounting effect from these entries on the
accounts of any other company in the Powergen registered holding company system.
This can be illustrated using a one dollar ($1.00) transaction as an
example. In the books (Balance Sheet) of Powergen UK, the sale of $1.00 of
assets will result in the value of assets reducing by $1.00, and cash increasing
by $1.00. When this cash is loaned to US Holdings, cash at Powergen UK will
reduce by $1.00, and the loan will show as an asset of $1.00.
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When the cash is received by US Holdings, it will increase cash by $1.00,
and show as a loan liability of $1.00. The cash is then applied to repay
external bank debt, causing the external debt liability in US Holdings to reduce
by $1.00, offset by a $1.00 reduction in cash.
Powergen UK may make a Loan or Loans from time to time at any time from the
date of the Commission order authorizing this Declaration to February 28,
2004./4/ The total aggregate amount of the Loans will not exceed $4 billion. To
the extent that the funds from the Loans are used to pay down the Acquisition
Debt, the amount of these funds will not count towards the external long-term
debt financing limitation as set forth in the Commission order issuing under
file number 70-9671 ("Long-Term Debt Limit")./5/ If Loan proceeds are not used
to pay down the Acquisition Debt, the amount of these proceeds will count
towards the Long-Term Debt Limit.
ITEM 2. FEES, COMMISSIONS AND EXPENSES
Legal fees and expenses $2,500
Miscellaneous fees and expenses 2,500
Total $5,000
ITEM 3. APPLICABLE STATUTORY PROVISIONS
The following sections of the Act and the Commission's rules thereunder are or
may be directly or indirectly applicable to the proposed transaction:
Sections of Transactions to which section
the Act: or rule is or may be applicable:
6(a), 7 Issuances and sales of securities.
12 Loans and extensions of credit.
Rules
45 Loans and extensions of credit.
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/4/ This date, February 24, 2004, correlates directly to the Authorization
Period as requested in the Form U-1, as amended, under file number 70-9671,
which filing requests Commission authorization for, among other things, certain
financing transactions by and among the Powergen System companies.
/5/ The Form U-1, as amended, under file number 70-9671, proposes that Powergen
and US Holdings issue long-term debt through February 24, 2004 in an aggregate
amount not to exceed $6 billion.
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To the extent that other sections of the Act or the Commission's rules
thereunder are deemed applicable to the proposed transactions and other
authorizations requested herein, such sections and rules should be considered to
be set forth in this Item 3.
ITEM 4. REGULATORY APPROVALS
No state or federal commission, other than this Commission, has
jurisdiction over the transactions proposed in this Form U-1.
ITEM 5. PROCEDURE
It is submitted that a recommended decision by a hearing or other
responsible officer of the Commission is not needed for approval of the proposed
Merger and related financing. The Division of Investment Management may assist
in the preparation of the Commission's decision. There should be no waiting
period between the issuance of the Commission's order and the date on which it
is to become effective.
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ITEM 2. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
A. Exhibits
B-3 Credit Facility (incorporated by reference to File
No. 70-9671).
F-1.1 Powergen plc Corporate Chart (filed in paper format on
Form SE) (incorporated by reference to File
No. 70-9761).
F-3.1 Combined Powergen/LG&E Energy Corporate Chart (filed in
paper format on Form SE) (incorporated by reference to
File No. 70-9761).
F-3.2 Merger Structure and Description of Intermediate Companies
(incorporated by reference to File No. 70-9761).
G-1.1 Opinion of Counsel - Powergen Group.
G-1.2 Opinion of Counsel - LG&E Energy.
G-1.3 Past tense opinion of counsel (to be filed by amendment).
J-1 Proposed Form of Notice (*previously filed).
B. Financial Statements
FS-1 Powergen System Consolidated Balance Sheet as of January 2, 2000
(incorporated by reference to File No. 70-9671).
FS-2 Powergen Consolidated Profit and Loss Account as of January 2,
2000 (incorporated by reference to File No. 70-9671).
FS-3 Notes to Powergen System Consolidated Financial Statements
(incorporated by reference to File No. 70-9671).
FS-4 LG&E Energy Corp. Consolidated Balance Sheet as of December 31,
1999 (incorporated by reference to File No. 70-9671).
FS-5 LG&E Energy Corp. Consolidated Statement of Income for the twelve
months ended December 31, 1999 (incorporated by reference to File No.
70-9671).
FS-6 Notes to LG&E Energy Corp. Consolidated Financial Statements
(incorporated by reference to File No. 70-9671).
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
The proposed transactions neither involves a "major federal action" nor
"significantly affects the quality of the human environment" as those terms are
used in Section 102(2)(C) of the National Environmental Policy Act, 42 U.S.C.
Sec. 4321 et seq. Consummation of the proposed transactions will not result in
changes in the operations of LG&E Energy and its subsidiaries that would have
any impact on the environment. No federal agency is preparing an environmental
impact statement with respect to this matter.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the Declarants have duly caused this Form U-1 to be signed on their behalf
by the undersigned thereunto duly authorized.
The signature of the Declarants and of the persons on their behalf are
restricted to the information contained in this Declaration which is pertinent
to the Declaration of the respective companies.
Date: December 6, 2000
/s/ David Jackson
____________________
David Jackson
Secretary and General Counsel
Powergen plc
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the Declarants have duly caused this Form U-1 to be signed on their behalf
by the Undersigned thereunto duly authorized.
The signature of the Declarants and of the persons on their behalf are
restricted to the information contained in this Declaration which is pertinent
to the Declaration of the respective companies.
Date: December 6, 2000
/s/ John R. McCall
___________________________
John R. McCall
Executive Vice President,
General Counsel and Secretary
LG&E Energy Corp.
