As filed with the Securities and Exchange Commission on May 19, 1995.
File No. 70-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
SIGCORP, INC.
20 N.W. Fourth Street
Evansville, Indiana 47741-0001
(Name of company filing this statement and address
of principal executive office)
A.E. GOEBEL
Southern Indiana Gas and Electric Company
20 N.W. Fourth Street
Evansville, Indiana 47741-0001
(Name and address of agent for service)
Copies to:
John H. Byington, Jr., Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
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ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION
A. PROPOSED ACQUISITION OF SECURITIES
Pursuant to Sections 9(a)(2) and 10 of the Public Utility Holding Company
Act of 1935 (the "Act"), SIGCORP, Inc. ("Holding Company") hereby requests the
Securities and Exchange Commission (the "Commission") to issue an order
approving its acquisition of all of the outstanding shares of common stock of
Southern Indiana Gas and Electric Company ("SIGECO") and, through such
acquisition, its indirect acquisition of SIGECO's ownership of 33% of the
outstanding capital stock of Community Natural Gas Company, Inc. ("Community")
and 100% of the outstanding capital stock of Lincoln Natural Gas Company
("Lincoln"). Holding Company also requests the Commission to grant it an
exemption under Section 3(a)(1) of the Act from all provisions of the Act,
except Section 9(a)(2) thereof, following the proposed acquisition of
securities.
Holding Company's proposed acquisition of the common stock of SIGECO and,
indirectly, the common stock of Community and Lincoln (the "Acquisition") is
part of a planned corporate restructuring in which Holding Company will become a
holding company over SIGECO, an Indiana electric and gas utility company and a
holding company that is currently exempt from registration under Sections
3(a)(1) and 3(a)(2) of the Act. The proposed restructuring is intended to permit
Holding Company to participate in independent power projects, energy marketing
activities and other non-regulated and/or non-utility businesses in a timely
manner without the need for prior regulatory approvals, to increase financial
flexibility, to enhance managerial accountability for separate business
activities, and to protect SIGECO and its ratepayers from the risks and costs of
non-utility projects.
Holding Company, which is a wholly-owned subsidiary of SIGECO, is
incorporated under Indiana law and presently does not conduct any business.
Holding Company does not own any utility assets. SIGECO is an "electric utility
company" as defined in Section 2(a)(3) of the Act, and SIGECO, Lincoln and
Community are each "gas utility companies" and "public-utility companies" as
defined in Sections 2(a)(4) and 2(a)(5), respectively, of the Act.
The Acquisition will be accomplished through an exchange (the "Exchange")
of each outstanding share of common stock of SIGECO for one share of common
stock of Holding Company pursuant to the Agreement and Plan of Exchange, dated
as of January 13, 1995 (the "Agreement"), between Holding Company and SIGECO. As
a result of the Exchange, each share of common stock of SIGECO will
automatically be exchanged with, and without action on the part of the holder
thereof will thereafter represent, one share of common stock of Holding Company.
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Thereafter, SIGECO will continue to carry on its present utility business as a
wholly-owned subsidiary of Holding Company.
Holding Company is not currently a "holding company" under the Act because
it does not own, control or hold with the power to vote ten percent or more of
the voting securities of a "public-utility company" as defined under Section 2
(a) of the Act. Holding Company believes that following the consummation of the
Exchange, it will be a public utility holding company entitled to an exemption
under Section 3(a)(1) of the Act from all of the provisions of the Act (except
for Section 9(a)(2) thereof) because it and each of its public utility
subsidiaries from which it will derive a material part of its income will be
predominantly intrastate in character and are incorporated in, and will carry on
their businesses substantially within, the State of Indiana.
B. PARTIES TO THE TRANSACTION
1. GENERAL DESCRIPTION
Holding Company was incorporated under the laws of the State of Indiana on
October 19, 1994 and is presently a wholly-owned inactive subsidiary of SIGECO.
Holding Company does not own any significant assets or engage in any business
and is not currently a "holding company" under the Act. Its principal executive
offices are located at 20 N.W. Fourth Street, Evansville, Indiana 47741-0001.
SIGECO was incorporated under the laws of the State of Indiana on June 10,
1912. It is a public utility holding company which is exempt from regulation by
the Commission under the Act (except for Section 9(a)(2) thereof) by reason of
the annual exemption statements filed by it under Rule 2 under the Act. See
SIGECO's Form U-3A-2, "Statement by Holding Company Claiming Exemption under
Regulation 250.2 from the Provisions of the Public Utility Holding Company Act
of 1935," dated February 24, 1995, incorporated by reference as Exhibit G-1.
SIGECO owns all of the outstanding capital stock of Lincoln, an Indiana
corporation that owns and operates a gas distribution system in the City of
Rockport, Spencer County, Indiana, and surrounding territory. Lincoln serves
approximately 1,300 customers in Spencer County in southwestern Indiana
contiguous to the eastern boundary of SIGECO's gas territory and within SIGECO's
electric service area, and owns, operates, maintains and manages plant,
property, equipment and facilities used and useful for the transmission,
transportation, distribution and sale of natural gas to the public. As of
December 31, 1994, Lincoln represented approximately .29% of SIGECO's
consolidated operating revenues, 0% of consolidated net income, .06% of
consolidated net utility plant, and .08% of consolidated total assets. In
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addition, SIGECO owns 33% of the outstanding capital stock of Community, an
Indiana corporation that owns and operates a small gas distribution system in
southwestern Indiana, and 1.5% of the outstanding capital stock of Ohio Valley
Electric Corporation ("OVEC"), an Ohio corporation formed in the early 1950's to
supply electric power and energy to the Federal government's gaseous diffusion
plant near Portsmouth, Ohio. OVEC owns all of the capital stock of
Indiana-Kentucky Electric Corporation, an Indiana corporation formed for the
same purpose.
SIGECO also engages in certain non-utility businesses through the following
wholly-owned subsidiaries, each of which is an Indiana corporation:
(1) Southern Indiana Properties, Inc. ("SIPI") was formed by SIGECO to
conduct non-utility investment activities while segregating such activities from
SIGECO's regulated utility business. SIPI's investment activities consist
principally of the investments in partnerships (primarily real estate),
leveraged leases, and marketable securities.
(2) Energy Systems Group, Inc. ("ESGI") was formed in March 1994 and works
with industrial, commercial and governmental customers of SIGECO to install
controls and equipment to help them use energy more efficiently.
(3) Southern Indiana Minerals, Inc. ("SIMI") was formed to process and
market coal combustion by-products at SIGECO's power plants, which includes flue
gas desulfurization sludge and coal ash.
(4) SIGECO also has a recently formed and presently inactive subsidiary
called Southern Indiana Network Communications, Inc.("SINC"). SINC is an Indiana
corporation and will be used as a vehicle for investments that are not within
the scope of the activities of SIPI, ESGI or SIMI.
2. UTILITY OPERATIONS
SIGECO is engaged in the generation, transmission, distribution and sale of
electric energy and the purchase of natural gas and its transportation,
distribution and sale in a service area which covers ten counties in
southwestern Indiana. Its principal executive offices are located at 20 N.W.
Fourth Street, Evansville, Indiana 47741-0001.
Electric service is supplied directly to Evansville and 74 other cities,
towns and communities, and adjacent rural areas. Wholesale electric service is
supplied to an additional nine communities. At December 31, 1994, SIGECO
supplied electric service to 118,992 customers, including 104,049 residential,
14,741 commercial, 179 industrial, 19 public street and highway lighting and
four municipal customers. SIGECO's installed generating capacity as of December
31, 1994 was rated at 1,238,000 kilowatts (Kw). Coal-fired generating units
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provide 1,023,000 Kw of capacity and gas or oil-fired turbines used for peaking
or emergency conditions provide 215,000 Kw. In addition, SIGECO has
interconnections with Louisville Gas and Electric Company, PSI Resources,
Indianapolis Power & Light Company, Hoosier Energy Rural Electric Cooperative,
Inc., Big Rivers Electric Corporation, Wabash Valley Power Association and the
City of Jasper, providing an ability to simultaneously interchange approximately
750,000 Kw.
At December 31, 1994, the SIGECO supplied natural gas service to 102,929
customers, including 93,719 residential, 8,980 commercial, 226 industrial and
four public authority customers, in Evansville and 64 other nearby communities
and their environs through 2,644 miles of gas transmission and distribution
lines. SIGECO owns and operates three underground gas storage fields with an
estimated ready delivery from storage of 3.9 million Dth of gas. It is estimated
that approximately 119,000 Dth of gas per day can be withdrawn from the three
storage fields during peak demand periods on the system.
The principal industries served by SIGECO include polycarbonate resin
(Lexan) and plastic products, aluminum smelting and recycling, aluminum sheet
products, appliance manufacturing, pharmaceutical and nutritional products,
automotive glass, gasoline and oil products, and coal mining.
The only property SIGECO owns outside of Indiana is approximately eight
miles of 138,000 volt electric transmission line which is located in Kentucky
and which interconnects with Louisville Gas and Electric Company's transmission
system at Cloverport, Kentucky. The original cost of that property is less than
$425,000. SIGECO does not distribute any electric energy in Kentucky.
For the twelve months ended December 31, 1994, approximately 79.1% of
SIGECO's total utility operating revenues were derived from its electric
operations and approximately 20.9% from its gas operations.
SIGECO is subject to regulation by the Indiana Utility Regulatory
Commission (the "IURC") under the Indiana Public Service Commission Act, as
amended (the "Indiana Act") with respect to its retail gas and electric rates,
services, accounts, depreciation, issuance of securities, acquisitions and sale
of utility properties or securities, and in other respects. Similarly, Lincoln
and Community are subject to regulation by the IURC with respect to their gas
rates and charges, terms of service, accounting matters, issuance of securities
and other operational matters.
In addition, SIGECO is subject to regulation by the Federal Energy
Regulatory Commission ("FERC") under the Federal Power Act with respect to
certain matters, including rates for its sales for resale, classification of
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accounts, interconnection agreements with other utilities and the acquisition
and sale of certain utility properties. The jurisdiction of the FERC does not
extend to the issuance of securities by SIGECO since it is a public utility
organized and operating in the State of Indiana, under the laws of which its
security issuances are regulated by the IURC.
3. NON-UTILITY INTERESTS
Following the Exchange, the consolidated assets of Holding Company will
include interests in non-utility businesses. Each such interest is currently
owned or held by SIGECO. See page 3, supra. All such interests are functionally
related and reasonably incidental to SIGECO's public utility operations.
Following the restructuring, the IURC will have jurisdication over Holding
Company and its non-utility affiliates to the extent of (i) access to all
accounts and records of joint or general expenses, any portion of which may be
applicable to transactions with SIGECO or other utility companies, and (ii)
authority to require the submission to it by Holding Company and such
non-utility subsidiaries of such reports as the IURC shall prescribe.
C. THE PROPOSED TRANSACTION
As previously stated, Holding Company and SIGECO have entered into the
Agreement, a copy of which is filed herewith as Exhibit B, whereby each share of
common stock of SIGECO issued and outstanding immediately prior to the Exchange
will be exchanged for one share of common stock of Holding Company. As a result
of the Exchange, therefore, SIGECO will become a wholly-owned subsidiary of
Holding Company, and all of the common stock of Holding Company outstanding
immediately after the Exchange will be owned by the holders of common stock of
SIGECO outstanding immediately prior to the Exchange. In addition, as soon as
practicable following the consummation of the Exchange, SIGECO will transfer its
common stock holdings in SIPI, SIMI, ESGI and SINC to Holding Company.
Effectuation of the Exchange will have no significant effect on the holders of
SIGECO common stock. Their interest and investment in the business of SIGECO and
its subsidiaries will be changed only in form and not in substance.
The outstanding preferred stock and debt of SIGECO will not be exchanged or
changed in connection with the Exchange, and Holding Company will thus have no
outstanding securities other than common stock immediately following the
Exchange. Holders of SIGECO preferred stock and debt securities will continue as
security holders of SIGECO.
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Consummation of the transactions contemplated by the Agreement is subject
to, among other conditions, the approval of the Commission under Sections
9(a)(2) and 10 of the Act.
The Agreement was approved at the regular annual meeting of SIGECO
shareholders held on March 28, 1995. Approval of the Agreement required the
affirmative vote of the holders of a majority of the outstanding shares of
common stock of SIGECO, voting separately as a single class, and the holders of
a majority of the outstanding shares of common stock of SIGECO and SIGECO's
Preferred Stock, $100 par value per share, taken together, in accordance with
the Articles of Incorporation of SIGECO and Chapter 40 of the Indiana Business
Corporation Law (the "Indiana BCL"). Attached hereto as Exhibit I-1 is an
extract from the minutes of the Annual Meeting of Shareholders of SIGECO, held
in the City of Evansville, Indiana, on March 28, 1995, certified by the
Secretary of SIGECO, evidencing the resolution adopted and the vote taken at
such meeting.
Holding Company and SIGECO filed with the Commission on January 20, 1995 a
Registration Statement on Form S-4 (File No. 33-57381) (the "Registration
Statement"), as amended by Amendment No. 1 thereto filed February 21, 1995
("Amendment No. 1"), under the Securities Act of 1933, as amended (the "1933
Act"), for the purpose of registering the 15,754,826 shares of common stock of
Holding Company to be issued in connection with the Exchange and for the purpose
of complying with the requirements of the Securities Exchange Act of 1934 (the
"1934 Act") in connection with the solicitation of proxies of SIGECO's
shareholders for the annual meeting held March 28, 1995 at which the Exchange
Agreement was to be voted upon. The Registration Statement, Amendment No. 1 and
the final Prospectus/Proxy Statement are included as Exhibits C-1, C-2 and C-3
respectively, to this Application. A copy of the Prospectus/Proxy Statement was
furnished to each SIGECO shareholder whose proxy was solicited in connection
with the vote on the Agreement.
Following the Exchange, all outstanding common stock of Holding Company
will be owned by the former SIGECO common shareholders and the shares of Holding
Company presently held by SIGECO will be canceled. The common stock of SIGECO
will thereafter cease to be listed on the New York Stock Exchange. Holding
Company is applying to have its common stock listed on that exchange instead.
Following the Exchange, Holding Company will be required to file reports with
the Commission pursuant to Section 13(a) of the 1934 Act.
The "effective time" of the Exchange will be the date of filing of the
Articles of Share Exchange with the Indiana Secretary of State pursuant to the
Indiana BCL. Holding Company and SIGECO expect to consummate the Exchange as
soon as possible after all regulatory approvals and other conditions precedent
contained in the Agreement have been fulfilled or waived.
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Holding Company and SIGECO will file a joint petition with FERC requesting
authority for the Exchange under Section 203 of the Federal Power Act, a copy of
which will be filed as Exhibit D-1 hereto. A copy of the FERC Order will be
filed as Exhibit D-2 when issued.
D. REASONS FOR AND ANTICIPATED
EFFECT OF THE PROPOSED TRANSACTION
The primary purposes of forming a holding company are (1) to further
strengthen the organization by establishing a more appropriate corporate
structure for the pursuit of unregulated non-utility business activities and (2)
to provide a structure which may be required to segregate the generation
function of SIGECO from the remainder of its electric utility business should
the corporation decide such segregation is the best approach to anticipated
future competition in the electric utility industry. Increased flexibility as a
result of the reorganization will enhance long-term earnings potential.
As more fully discussed below, deregulation and competition are reshaping
the utility marketplace and changing the nature of the electric and gas utility
businesses. After extensive investigation and analysis, SIGECO has determined
that the holding company structure offers the best means of positioning the
organization for future changes and opportunities and will enable the
organization to take advantage of emerging business opportunities to the benefit
of both shareholders and customers.
The primary focus of Holding Company will be maintaining the strength of
its core business -- serving SIGECO's electric and gas customers. Participation
in other opportunities is expected to be closely related to the energy business.
Through its non-regulated subsidiaries, Holding Company will be in a position to
quickly take advantage of increasing opportunities in non-utility activities.
The proposed restructuring will permit affiliates of SIGECO to take
advantage of competitive non-utility business activities. The holding company
system structure is designed to insulate SIGECO's utility business from the
risks of the non- utility affiliates, and should increase the energy-related
expertise, knowledge and skills of utility employees.
With the holding company structure, the shareholder funds which are not
currently required for investment in utility facilities may be redeployed by
Holding Company to non-regulated subsidiaries or investment portfolios providing
opportunities for increased earnings. Holding Company will be able to take
advantage of these investment opportunities more quickly than could the utility.
One area of such investment may include activities to stimulate a faster pace of
economic growth in the utility's service area. This should benefit shareholders
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through earnings potential of the investment and increased utility earnings
resulting from greater sales brought on by economic growth.
The holding company structure will provide a clear separation of the
utility from non-regulated businesses and investments. Any non-regulated
investments will be organized as separate subsidiaries of Holding Company. Any
benefits or detriments that result from the business conducted through such
subsidiaries are expected to flow primarily to the common shareholders of
Holding Company.
E. ADDITIONAL INFORMATION
No associate company or affiliate of SIGECO or Holding Company, or any
affiliate of any such associate company, has any direct or indirect material
interest in the proposed transaction, except as stated herein. SIGECO's
directors and officers as a group own less than one percent of the outstanding
shares of common stock of SIGECO.
ITEM 2. FEES, COMMISSIONS AND EXPENSES
The fees, commissions and expenses to be paid or incurred by Holding
Company and SIGECO in connection with the restructuring, including the
solicitation of proxies, 1933 Act registration and other related matters are
estimated as follows:
<TABLE>
<S> <C>
Commission filing fee relating to Application on
Form U-1 (actual)............................................................ $ 2,000
Commission filing fee relating to the Registration
Statement on Form S-4 (actual)............................................... 149,060
New York Stock Exchange Listing Fee (actual)................................. 5,300
Auditors' Fees
Arthur Andersen LLP................................................. 5,000
Legal Fees
Bamberger Foreman Oswald & Hahn...................................... 10,000
Winthrop, Stimson, Putnam & Roberts.................................. 150,000
Printing...................................................................... 80,000
Stock Certificates............................................................ 16,000
Miscellaneous................................................................. 10,000
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Total................................................................$427,360
========
</TABLE>
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ITEM 3. APPLICABLE STATUTORY PROVISIONS
A. STATUTORY PROVISIONS APPLICABLE TO PROPOSED TRANSACTION
It is believed that Sections 9(a) and 10 of the Act are applicable to the
proposed transactions. To the extent that the proposed transactions are
considered by the Commission to require authorization, approval or exemption
under any section of the Act or provision of the rules or regulations thereunder
other than those specifically referred to herein, request for such
authorization, approval or exemption is hereby made.
SIGECO, Lincoln and Community are "public-utility companies" as defined in
Section 2(a)(5) of the Act. Because Holding Company would, as a result of the
Acquisition, directly or indirectly own, control or hold with power to vote 10%
or more of the outstanding voting securities of each of three public- utility
companies, the Acquisition is subject to Section 9(a)(2) and must therefore meet
the standards of Section 10 of the Act. The relevant statutory standards to be
satisfied are set forth under Sections 10(b), 10(c) and 10(f) of the Act.
As a result of the Acquisition, Holding Company will become a "holding
company " within the meaning of Section 2(a)(7) of the Act. Since all of its
utility subsidiaries will be intrastate in character and will carry on their
business in Indiana, their state of incorporation, Holding Company hereby
requests that the Commission find and conclude under Section 3(a)(1) of the Act
that Holding Company will be exempt from all of the provisions of the Act,
except for Section 9(a)(2) thereof, following the Acquisition.
B. AFFILIATED PUBLIC UTILITY COMPANIES
Holding Company is presently a wholly-owned subsidiary of SIGECO and an
affiliate of Lincoln and Community, all of which are public-utility companies.
Following the Acquisition, Holding Company will be the parent company of SIGECO,
which will continue to own all of the capital stock of Lincoln and 33% of the
capital stock of Community and will remain a holding company that is exempt from
registration under Section 3(a)(1) and (2) of the Act. Although it is not
germane for the purposes of this application, SIGECO will continue to own 1.5%
of the capital stock of OVEC.
C. COMPLIANCE WITH APPLICABLE STATUTORY STANDARDS
1. SECTION 10(B)
Under Section 10(b), the Commission shall approve the Acquisition unless it
finds that:
(1) such acquisition will tend towards interlocking relations
or the concentration of control of public-utility companies, of a kind
or to an extent detrimental to the public interest or the interest of
investors or consumers;
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(2) in case of the acquisition of securities or utility assets,
the consideration, including all fees, commissions, and other
remuneration, to whomsoever paid, to be given, directly or indirectly,
in connection with such acquisition is not reasonable or does not bear
a fair relation to the sums invested in or the earning capacity of the
utility assets to be acquired or the utility assets underlying the
securities to be acquired; or
(3) such acquisition will unduly complicate the capital structure of
the holding-company system of the applicant or will be detrimental to the
public interest or the interest of investors or consumers or the proper
functioning of such holding-company system.
(a) Section 10(b)(1) - Detrimental "Interlocking Relations" or
"Concentration of Control"
The proposed restructuring will not tend towards "interlocking relations .
. . of public-utility companies, of a kind or to an extent detrimental to the
public interest or the interest of investors or consumers." The restructuring
involves only the formation of a holding company over SIGECO and its
subsidiaries. The relationship between SIGECO and its subsidiaries will not be
changed (except that the stock of SIGECO'S current non-utility subsidiaries
(SIPI, ESGI, SIMI and SINC) will be transferred to Holding Company by SIGECO
following the Acquisition), and SIGECO, Community and Lincoln will each continue
their utility operations in essentially the same manner as prior to the
restructuring.
As in the case of virtually every transaction subject to Section 9(a)(2),
there will be certain common directors and officers of Holding Company and its
public utility subsidiaries. These "interlocking" relations are not "of a kind
or to an extent detrimental to the public interest or the interest of investors
or consumers," since such relationships normally exist in public utility holding
company systems among affiliated and associated companies. See CIPSCO, Inc.,
Holding Co. Act Release No. 25152, 47 SEC Docket 174, 178 (1990). By approving
the Exchange Agreement, the shareholders of SIGECO have ratified the election of
the current directors of SIGECO to serve as the directors of Holding Company as
of the effective time of the Exchange. Information concerning the persons
designated to be such directors of Holding Company as well as the persons
designated to be officers of Holding Company are set forth in Exhibit C-3.
Similarly, the restructuring will not tend toward any "concentration of
control of public-utility companies" that is detrimental to the public interest,
consumers, or investors. The proposed restructuring will not involve the
acquisition of any utility assets not already owned, either directly or
indirectly through Community or Lincoln, by SIGECO and "will therefore have no
effect on the concentration of control of public-utility companies." Wisconsin
Energy Corp., Holding Co. Act Release No. 24267, 37 SEC Docket 296, 300 (1986).
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(b) Section 10(b)(2) - Fairness of Consideration and Fees
Section 10(b)(2), as applied to this transaction, provides that the
Commission shall approve the transaction unless it finds that the consideration
paid to the shareholders of SIGECO is not reasonable or does not bear a fair
relation to the investment in and earning capacity of the utility assets
underlying the common stock of SIGECO. As previously explained, the proposed
restructuring involves the exchange of each share of common stock of SIGECO for
one share of common stock of Holding Company. Because the proportion of each
shareholder's ownership in the enterprise will be unchanged, the consideration
is fair and reasonable. Wisconsin Energy Corp., supra, 37 SEC Docket at 300.
An estimate of the fees and expenses to be paid in connection with the
proposed restructuring is set forth in Item 2 above. The estimated amounts to be
paid are fees required to be paid to governmental bodies and stock exchanges,
expenses incurred to obtain essential shareholder approvals, fees for necessary
professional services, and other expenses incurred or to be incurred in
connection with carrying out the proposed restructuring. Holding Company
believes that such fees and expenses are reasonable and customary for a
transaction of this kind and are not material when measured against SIGECO's
consolidated book value or the earning capacity of its assets. The standards of
Section 10(b)(2) are thus satisfied.
(c) Section 10(b)(3) - Complication of Capital Structure
The acquisition by Holding Company of the common stock of SIGECO will
neither "unduly complicate the capital structure" of the SIGECO holding company
system nor "be detrimental to the public interest or the interest of investors
or consumers or the proper functioning of the resulting holding company system."
In fact, the structure of the holding company system resulting from the proposed
restructuring will not be more complicated than it is currently, save for the
interposition of Holding Company as an ownership entity between SIGECO and its
current shareholders. The proposed restructuring will not involve the creation
of any ownership interests other than those which are necessary to maintain the
basic corporate relationships of the holding company system to be established.
The existing holders of SIGECO's common stock will retain control of the system
by becoming the shareholders of Holding Company.
Holding Company will acquire, by operation of law, all of the common stock
of SIGECO outstanding at the effective time of the Acquisition. There will be no
minority common stock interest in SIGECO, and the existing senior debt and
senior equity securities of SIGECO will be unaffected. The Commission has
previously determined that similar proposed restructurings would not unduly
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complicate the applicant's corporate capital structures. See, e.g., CIPSCO,
Inc., supra, 47 SEC Docket at 178; Wisconsin Energy Corp., supra, 37 SEC Docket
at 300.
As noted above, the components of SIGECO's capital structure will be
unchanged by the proposed restructuring. In the future, SIGECO intends to
maintain an uncomplicated capital structure that will include a balance of debt
and equity that is appropriate in light of the overall risk characteristics of
its business and other relevant considerations. To ensure that SIGECO maintains
its status as a financially viable company and manages its capital structure in
a responsible manner, the IURC will continue to set SIGECO's rates based on a
balanced capital structure and to oversee the issuance of long-term and equity
securities in accordance with the Indiana Act.
2. SECTION 10(C)
Section 10(c) of the Act provides that the Commission shall not approve:
(1) an acquisition of securities or utility assets, or of any
other interest, which is unlawful under the provisions of Section 8 or is
detrimental to the carrying out of the provisions of Section 11; or
(2) the acquisition of securities or utility assets of a
public-utility or holding company unless the Commission finds that such
acquisition will serve the public interest by tending towards the
economical and the efficient development of an integrated public-utility
system . . . .
(a) Section 10(c)(1) - Significant Benefits
Consistent with the standards set forth in Section 10(c)(1) of the Act, the
proposed acquisition of securities will not be unlawful under the provisions of
Section 8 of the Act inasmuch as Section 8 applies only to registered holding
companies and, in any case, Indiana law does not prohibit, or require approval
or authorization of, the ownership or operation by a single company of the
utility assets of electric and gas utilities serving substantially the same
territory. Neither will the proposed acquisition of securities be detrimental to
the carrying out of Section 11 of the Act (which also applies, by its terms,
only to registered holding companies). Section 11(b)(2) requires the Commission
to find that "the corporate structure . . . of any company in the
holding-company system does not unduly or unnecessarily complicate the structure
. . . of such holding- company system." The Commission has construed this
requirement, in the context of a proposed formation of a new holding company
over an existing public utility, to mean that the structural change must result
in "significant benefits" to the holding company system. CIPSCO Inc., supra, 47
SEC Docket at 178.
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As the Commission has noted, "specific dollar forecasts of future savings
are not necessarily required; a demonstrated potential for economies will
suffice even when these are not precisely quantifiable." KU Energy Corp.,
Holding Co. Act Release No. 35-25409, 50 SEC Docket 294, 296 n.15 (1991), citing
American Electric Power Co., 46 SEC Docket 1299, 1322 (1978).
1. THE HOLDING COMPANY STRUCTURE WILL PERMIT SIGECO AFFILIATES TO COMPETE
WITH OTHER NON-REGULATED COMPANIES IN PROVIDING SERVICES RELATED TO
SIGECO'S CORE ENERGY BUSINESS
The proposed restructuring will permit SIGECO affiliates to quickly take
advantage of and engage in unregulated non-utility businesses, increasing the
ability of the system to compete with other unregulated companies in providing
energy-related services.
Many utility companies are becoming increasingly adversely affected as a
result of competition from non-utility entities which seek to provide energy
services to users of large quantities of electricity. Such competition results
from, among other things: (i) cogeneration facilities developed under the Public
Utility Regulatory Policies Act of 1978 producing electricity which may be used
by the cogenerator or qualifying local electric utilities; (ii) exempt wholesale
generators developed under the Energy Policy Act of 1992 to sell electricity
wholesale to electric utilities; (iii) generation facilities devoted to large
single users; (iv) increased use of natural gas and other energy forms by former
electric customers; (v) state and federal retail wheeling initiatives and
orders; and (vi) unregulated energy services provided to users of large
quantities of electricity by independent entities or affiliates of utility
companies. Any one of these competitive factors has the potential to reduce the
quantity, or change the use of, electricity sold by a utility such as SIGECO,
thereby reducing revenues and profits.
Given the increasingly competitive nature of the electricity industry, it
is likely that there will be an ever-increasing number of opportunities for
SIGECO affiliates to invest in non-utility ventures and to provide services
related to SIGECO's core energy business. At the same time, SIGECO is faced with
the prospect of revenue losses if its affiliates are unable to quickly take
advantage of such opportunities. Absent the flexibility to respond to the
changing marketplace that a holding company structure would afford, SIGECO would
be placed at a competitive disadvantage with potentially adverse consequences.
In fact, SIGECO is currently aware that several of its industrial customers are
exploring the possibilities for installing cogeneration facilities at their
facilities. Without the flexibility that would result from the proposed holding
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company structure, SIGECO would be hard pressed to provide the cogeneration
services sought by such customers at a competitive price. SIGECO could also
likely lose the load and revenues associated with such customers, receiving
nothing in return. As even more industrial customers decide to explore such
options, the potential for adverse consequences increases unless SIGECO and its
affiliates are able to compete effectively.
In these circumstances, a holding company structure would permit SIGECO
affiliates to pursue non-utility investments that would complement the SIGECO
utility business, thereby benefiting not only SIGECO, but its ratepayers and
businesses in its service area. Ratepayers would benefit to the extent that such
investments help mitigate or avoid decreased utility sales of electricity and
permit more economic and efficient use of SIGECO's current capacity. On the
other hand, if SIGECO affiliates are unable to compete effectively to retain
existing customers for SIGECO, the remaining ratepayers could face rate
increases to offset revenue losses to SIGECO. In short, SIGECO's ability to meet
the generating and energy services needs of existing and potential customers
through the establishment of non-utility affiliates is important for both
shareholders and ratepayers alike.
2. SIGECO'S SERVICE AREA WOULD BENEFIT FROM SERVICES THAT HOLDING COMPANY
SYSTEM COULD PROVIDE.
The people who live and work in SIGECO's service area, and the businesses
that operate there, would benefit if, by virtue of the fact that SIGECO and its
non-utility affiliates could meet all or most of their energy needs cost
effectively, new businesses, especially large wholesale and industrial concerns,
were attracted to the area. In addition, existing wholesale and industrial
customers may be dissuaded from relocating out of the same territory for the
same reason. Many other diversified public utility holding companies currently
offer a range of energy-related services through unregulated affiliates. Without
the ability to offer similar services competitively, any SIGECO efforts to
attract new customers and retain old ones in its service territory would be
severely hampered. Although impossible to quantify, economic growth in SIGECO's
service area will tend to be promoted through the formation of a holding company
structure.
3. THE HOLDING COMPANY SYSTEM MAY ALSO ENHANCE SHAREHOLDER VALUE.
SIGECO anticipates that the ability of its affiliates to invest in
non-utility businesses afforded by the holding company structure will also
enhance shareholder value. To begin with, the activities of SIGECO's non-utility
subsidiaries are expected to provide a positive contribution to the total
earnings of the holding company system. SIGECO expects that its new unregulated
affiliates will concentrate on energy-related products and services which relate
to SIGECO's core business strengths and therefore present the best opportunity
for success.
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Non-utility affiliates may also benefit shareholders of Holding Company
through the resulting diversification. Any risks to the utility business which
arise from increasing competition may be offset by opportunities available to
the non-utility affiliates of Holding Company. Any profits from the activities
of the non-utility affiliates are expected to flow directly to shareholders of
Holding Company.
4. THE PROPOSED HOLDING COMPANY STRUCTURE WILL PERMIT INCREASED FINANCIAL
FLEXIBILITY FOR THE HOLDING COMPANY SYSTEM.
The proposed restructuring will permit increased financial flexibility for
the holding company system. Also, the holding company structure offers SIGECO
the flexibility to adjust its capital ratios from time to time through dividends
to, or equity investments from, Holding Company. As a result, the revenue
requirements of the utility may tend to be more stable than otherwise.
Further, a stronger capital structure is likely to increase general
financial flexibility and promote a stable financial environment for the
utility. This greater financial flexibility "allows the utility to take
advantage of lower-cost financing opportunities that might not otherwise be
available." CIPSCO, Inc., supra, 47 SEC Docket at 179.
Finally, SIGECO anticipates that its relationship with Holding Company
would allow the use of cost-effective, project- specific financing techniques.
Unregulated affiliates of SIGECO could thus obtain capital for their own
projects without affecting SIGECO's capital structure and without obtaining any
capital from SIGECO. Managerial accountability for separate business activities
will be enhanced as well.
5. THE PROPOSED RESTRUCTURING WILL SEPARATE UTILITY AND NON-UTILITY
BUSINESSES.
The proposed restructuring will separate utility and non-utility businesses
in a manner that will protect the interests of utility ratepayers and security
holders. The holding company structure will insulate SIGECO's customers and
security holders from the risks of non-utility activities by placing the
non-utility businesses into separate corporations that will be subsidiaries of
Holding Company. Liabilities incurred by those subsidiaries would not constitute
liabilities of SIGECO.
The value to SIGECO's ratepayers and security holders of this separation of
utility and non-utility businesses is another important benefit that, although
still difficult to quantify at this point, should occur.
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Furthermore, the energy-related expertise, knowledge and skills of utility
employees should increase as a result of the change in structure as
participation in non-utility opportunities is expected to be primarily in
energy-related fields.
In cases involving similar corporate reorganizations, the Commission has
held that the existence of the kinds of potential benefits outlined above
satisfies the statutory standard of Section 10(c)(1). See, e.g., PP&L Resources,
Inc., Holding Co. Act Release No. 35-26248, 58 SEC Docket 2634 (1995); WPS
Resources Corporation, Holding Co. Act Release No. 35-26101, 57 SEC Docket 940
(1994); Unicom Corporation, Holding Co. Act Release No. 35-26090, 57 SEC Docket
660 (1994); KU Energy Corp., Holding Co. Act Release No. 35-25409, 50 SEC Docket
294 (1991); CIPSCO, Inc., Holding Co. Act Release No. 35-25152, 47 SEC Docket
174 (1990); WPL Holdings, Inc., Holding Co. Act Release No. 35- 25377, 49 SEC
Docket 1255 (1991); Wisconsin Energy Corp., Holding Co. Act Release No.
35-24267, 37 SEC Docket 296 (1986).
(b) Section 10(c)(2) - Economies and Efficiencies of an Integrated System
Section 10(c)(2) of the Act provides that the Commission shall not approve
the acquisition of securities of a public utility unless the Commission finds
that "such acquisition will serve the public interest by tending towards the
economical and the efficient development of an integrated public-utility system
. . . ." In this case, the acquisition is beneficial to all the parties
involved, as well as to investors and the public.
i. Economies and Efficiencies
The new holding company structure will tend to produce a number of
economies and efficiencies. First and foremost, the new structure will permit a
more efficient way to take advantage of competitive opportunities in the
electric power industry. Over the next ten years, independent power producers
are expected to account for half of the estimated 100,000 MW of additional
capacity necessary to meet the demand for electric energy in the United States.
To compete in that market, Holding Company, through one or more of its proposed
non-utility subsidiaries, intends to invest in both new independent power
projects and those that are under construction or already in operation,
including cogeneration facilities anticipated to be constructed at the site of
present SIGECO customers.
Without the regulatory delay and uncertainties that are anticipated would
be involved in the establishment of non-utility cogeneration and energy
marketing businesses by SIGECO, more timely action can be taken to meet
competition on a "level playing field" to the benefit of ratepayers and
shareholders.
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In addition, the holding company structure is intended to produce
efficiencies and economies through the use of skills and technologies learned
and developed in the highly efficient independent power market to improve the
operation of SIGECO's generating facilities. Such skills and technology will
help SIGECO maintain competitive efficiency levels at its power plants.
Experience and information gained in the independent power market should
allow SIGECO to function more successfully in an increasingly competitive
environment, enhance SIGECO's financial strength, and provide new opportunities
for the development and application of employees' skills. In turn, one would
expect a positive impact on total earnings and shareholder value.
Although much of the anticipated benefits are not yet susceptible of
quantification, one area in which SIGECO expects savings from the proposed
restructuring is in the area of regulatory expense. Without a holding company
structure, SIGECO would be required to seek IURC approval whenever it desired to
invest funds in certain energy-related diversified activities. Based upon its
experiences with the regulatory process, SIGECO anticipates that the employee
time and regulatory expense for outside consultants involved in obtaining such
approvals would be significant. As an example, in 1989 SIGECO petitioned for a
certificate of need under Indiana law to construct and install an 80 megawatt
combustion turbine at one of its generating facilities. The process of securing
such regulatory approval in that case took approximately ten months and cost
nearly a quarter of a million dollars. Because SIGECO is a utility company, some
investments it proposes to make would require obtaining similar approval and,
therefore, making similar expenditures of time and money, expenditures which a
non-utility generator would not face.
As the Commission has found in a number of analogous cases, a holding
company structure would also permit adjustments of a utility's capital ratios to
appropriate levels through dividends to, or equity investments from, the holding
company. WPL Holdings, Inc., supra, 49 SEC Docket at 1257. In the future, SIGECO
would be able to reduce its common equity ratio by declaring a dividend on its
common stock payable to Holding Company, without affecting the dividend rate on
publicly-held Holding Company common stock, if desirable. Retention of earnings
in Holding Company would permit later utilization of resources to provide funds
for capital investment in utility and non-utility assets and to increase the
level of SIGECO's common equity, if deemed advisable. Thus, Holding Company will
be able to more efficiently manage and allocate its earnings from utility
operations subject, of course, to IURC oversight of the balance of equity and
debt in SIGECO's capital structure.
This ability to adjust the components of SIGECO's capital structure also
"increases general financial flexibility, which allows the utility to take
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advantage of lower-cost financing opportunities that might not otherwise be
available." CIPSCO, Inc., supra, 47 SEC Docket at 179. The flexibility
associated with a balanced capital structure permits the issuance of various
types of securities under any conditions and thus increases the potential for
cost reduction. For instance, the ability to reduce SIGECO's debt ratio would
increase the chances of maintaining its high quality debt ratings and would
further improve SIGECO's ability to raise low cost capital. As the Commission
has noted in similar circumstances, "Lower-cost financing can enhance efficient
utility operations and benefit ratepayers and senior security holders." KU
Energy Corp., supra, 50 SEC Docket at 296.
The restructuring should also help to broaden the holding company system's
financial base and its investment appeal by reducing the system's dependence on
its utility operations. This diversity should also increase financing
alternatives, since financing may be tailored to the specific needs and
circumstances of the individual utility and non-utility businesses. Economies
and efficiencies in financing should result.
The holding company structure will tend to insulate SIGECO's customers and
security holders from the risks of independent power projects, energy marketing
activities and other non-utility businesses by placing the non-utility
businesses into separate corporations that will be subsidiaries of Holding
Company. Liabilities incurred by these subsidiaries would not constitute
liabilities of Holding Company's utility subsidiaries, including SIGECO, and
SIGECO's ability to raise new preferred stock and debt capital should be
unaffected by any poor performance of any of these businesses. This reduced
exposure to risk should enable SIGECO to raise new preferred and debt capital at
a lower cost than might be possible if non-utility businesses were direct
subsidiaries of SIGECO. As the Commission has stated in similar circumstances,
"The insulation of the utility businesses . . . from any risks of
diversification and the resulting lower costs should tend toward more efficient
and economical operation of the utility businesses. . . ." CIPSCO, Inc., supra,
47 SEC Docket at 180. Additionally, the benefits from the change in corporate
structure that, as set forth above, satisfy Section 10(c)(1) of the Act are also
"significant benefits" that satisfy the standards of Section 10(c)(2). See WPL
Holdings, Inc., supra, 49 SEC Docket at 1260-61. As the Commission has noted,
"some overlap of the analyses under Sections 10(c)(1) and 10(c)(2) is
inevitable." Id. at 1260.
The holding company structure also promises to produce efficiencies and
economies through the development of SIGECO's service area. The non-utility
businesses in which the subsidiaries of Holding Company may become engaged will
likely be located in SIGECO's service area. Moreover, such new ventures could
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generate increased utility sales and thus a more economical and efficient
utilization of SIGECO's current capacity. CIPSCO, Inc., supra, 47 SEC Docket at
179.
The Commission has noted in analogous cases that these kinds of financial
and organizational advantages will suffice to satisfy Section 10(c)(2). WPL
Holdings, Inc., supra, 49 SEC Docket at 1257-58. Moreover, a Commission finding
of "efficiencies and economies" may be based "on the potential for economies
presented by the acquisition even where these are not precisely quantifiable."
American Electric Power Co., supra, 46 SEC Docket at 1322. In this case, it is
clear that the proposed restructuring promises to provide significant financial
and organizational advantages and that the substantial potential economies and
efficiencies meet the standard of Section 10(c)(2) of the Act.
b. Integration
On the basis of the statutory definitions contained in Section 2(a)(29),
the Commission has established certain standards that must be met before the
Commission will find that an integrated public-utility system will result from a
proposed acquisition of securities. For an electric utility these are:
(1) the utility assets to be are physically interconnected or capable of
physical interconnection and under normal conditions may be operated as
a single interconnected and coordinated system;
(2) the operations of the system are confined to a single area or region,
that is not so large as to impair the advantages of localized
management, efficient operation, and the effectiveness of regulation.
For a gas utility the standards are:
(1) the companies are so located and related that substantial economies may
be effected by being operated as a single coordinated system;
(2) the operations of the system are confined to a single area or region,
that is not so large as to impair the advantages of localized
management, efficient operation, and the effectiveness of regulation.
SIGECO's electric and gas utility systems are presently "integrated" within
the meaning of Section 2(a)(29) of the Act and will remain so after the
restructuring.
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CAPABLE OF PHYSICAL INTERCONNECTION AND LOCATION. The SIGECO electric
utility system is "physically interconnected" within the meaning of Section
2(a)(29)(A). The gas utility system of SIGECO and Lincoln are contiguous.
SINGLE INTERCONNECTED AND COORDINATED SYSTEM. The electric generation,
transmission, and distribution system of SIGECO are operated in a manner that
satisfies the standard of economic and coordinated operations in Section
2(a)(29) of the Act as are its gas operations.
SINGLE AREA OR REGION. The "single integrated system" of SIGECO and its
subsidiaries are confined in its operations to a single area or region. This is
not expected to change as a result of the restructuring for either electric and
gas service.
LACK OF IMPAIRMENT. SIGECO's utility system will not be enlarged as a
result of the proposed restructuring and will not impair localized management,
efficient operations, or utility regulation. The "advantages of localized
management" will not be lost, since Holding Company, like SIGECO, will be
headquartered in Evansville, Indiana. Nor will "efficient operation" be
adversely affected, since no changes in operations will result from the
restructuring. Finally, the "effectiveness of regulation" will not be impaired
as SIGECO will remain subject to regulation by the IURC, which has had extensive
experience regulating the utility subsidiaries of the following holding
companies: IPALCO Enterprises Inc. (Indianapolis Power and Light Company);
American Electric Power Company (Indiana and Michigan Power Company); CINergy
Corporation (PSI Resources); Indiana Energy, Inc. (Indiana Gas Company); and
NIPSCO Industries, Inc. (Northern Indiana Public Service Company).
3. SECTION 10(f)
Section 10(f) provides that:
The Commission shall not approve any acquisition as to which an application
is made under this section unless it appears to the satisfaction of the
Commission that such State laws as may apply in respect of such acquisition
have been complied with, except where the Commission finds that compliance
with such State laws would be detrimental to the carrying out of the
provisions of section (11) . . . .
The laws of Indiana do not apply to the proposed restructuring. See Office
of Utility Consumer Counselor v. Public Service Company of Indiana, Inc., 608
N.E. 2d 1362 (Ind. Supreme Court 1993).
4. SECTION 3(a)(1).
Following the proposed Acquisition, Holding Company and its subsidiaries
will meet the requirements for an exemption under Section 3(a)(1) of the Act.
Holding Company and SIGECO, and their respective public utility company
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subsidiaries, are and will continue to be predominantly intrastate in character
and will continue to carry on their business substantially in Indiana, the state
in which they are all organized.
Holding Company believes that the proposed Acquisition and the granting of
an exemption under Section 3(a)(1) will not be detrimental in any respect to the
public interest or the interest of investors or consumers.
ITEM 4. REGULATORY APPROVAL
Under Section 203 of the Federal Power Act, FERC has jurisdiction over the
proposed restructuring. SIGECO and SIGCORP will file a joint petition with FERC
for authority to consummate the restructuring a copy of which will be filed as
Exhibit D-1 hereto. A copy of the final FERC order authorizing the proposed
transaction will be filed as Exhibit D-2 hereto upon issue. Other than such
authorization of FERC and the approval of the Commission hereunder, no other
regulatory approvals are required for the proposed transaction.
ITEM 5. PROCEDURE
The Commission is respectfully requested to issue and publish the requisite
notice under Rule 23 with respect to the filing of this Application, to provide
for the filing of comments in a timeframe that permits the Commission to enter
an order granting and permitting this application to become effective on or
before August 1, 1995. A form of notice suitable for publication in the Federal
Register is attached hereto as Exhibit H-1.
Holding Company requests that there be no 30-day waiting period between the
issuance of the Commission's order and the date on which it is to become
effective, but rather that such order become effective immediately upon the
entry thereof. Holding Company submits that a recommended decision by a hearing
or other responsible officer of the Commission is not needed with respect to the
proposed transaction and that the Division of Investment Management may assist
with 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
Financial Statements of Holding Company are not included because it has no
assets and has not engaged in any business operations.
A-1* Restated Articles of Incorporation of Holding Company. (Incorporated
by reference to Exhibit 3(a) to Amendment No. 1 to the Registration
Statement on Form S-4 (File No. 33-57381) filed by Holding Company on
February 21, 1995).
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A-2* By-laws of Holding Company. (Incorporated by reference to Exhibit 3(b)
to Amendment No. 1 to the Registration Statement on Form S-4 (File No.
33-57381) filed by Holding Company (File No. 33-57381) filed by
Holding Company on February 21, 1995).
A-3* Amended Articles of Incorporation of SIGECO as amended March 26, 1985.
(Physically filed and designated in Form 10-K for the fiscal year
1985, File No. 1-3553, as Exhibit 3-A.) Articles of Amendment of the
Amended Articles of Incorporation, dated March 24, 1987. (Physically
filed and designated in Form 10-K for the fiscal year 1987, File No.
1-3553, as Exhibit 3-A.) Articles of Amendment of the Amended
Articles of Incorporation, dated November 27, 1992. (Physically
filed and designated in Form 10-K for the fiscal year 1992, File No.
1-3553, as Exhibit 3-A.)
B-1* Agreement and Plan of Exchange, dated as of January 13, 1995.
(Incorporated by reference to Exhibit 2(a) to Amendment No. 1
to the Registration Statement on Form S-4 (File No. 33-57381) filed
by Holding Company on February 21, 1995).
C-1* Registration Statement on Form S-4 (File No. 33-57381) filed by
Holding Company on January 20, 1995. (Incorporated by reference to
such filing.)
C-2* Amendment No. 1 to the Registration Statement on Form S-4 (File No.
33-57381) filed by Holding Company on February 21, 1995.
(Incorporated by reference to such filing.)
C-3* Prospectus/Proxy Statement for Annual Meeting of Shareholders of
SIGECO held on May 28, 1995. (Included in Amendment No. 1 to the
Registration Statement on Form S-4 (File No. 33-57381) filed by
Holding Company on February 21, 1995.)
D-1 Joint Application of Holding Company and SIGECO to the Federal Energy
Regulatory Commission. (To be filed by amendment.)
D-2 Order of Federal Energy Regulatory Commission. (To be filed by
amendment.)
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E-1 Map showing properties of SIGECO. (Filed in paper form under Form SE
pursuant to Instruction E to Form U-1 Instructions to Exhibits.)
F-1 Preliminary Opinion of counsel (To be filed by amendment).
F-2 "Past-Tense" Opinion of counsel. (To be filed with Certificate of
Notification.)
G-1* SIGECO's Form U-3A-2, "Statement by Holding Company Claiming Exemption
under Regulation 250.2 from the Provisions of the Public Utility
Holding Company Act of 1935," dated February 24, 1995 (Incorporated by
reference to such filing, File No. 69-00329)
G-2* SIGECO's Consolidated Balance Sheet and Statement of Capitalization as
of December 31, 1994 and Consolidated Statements of Income and
Retained Earnings for the three years December 31, 1994. (Incorporated
by reference to SIGECO's Annual Report on Form 10-K for the year ended
December 31, 1994, File No. 1-3553)
G-3* SIGECO's Unaudited Consolidated Balance Sheet and Statement of
Capitalization as of March 31, 1995 and Unaudited Consolidated
Statements of Income and Retained Earnings for the three months
ended March 31, 1995. (Incorporated by reference to SIGECO's
Quarterly Report on Form 10-Q for the three months ended March 31,
1995, File No. 1-3553)
H-1 Proposed Notice of Application.
I-1 Extract from minutes of the 1995 Annual Meeting of Shareholders of
SIGECO
* Incorporated by reference.
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
(a) The proposed transaction covered by this Application will not have any
impact on the quality of the environment because such transaction contemplates
only the exchange of SIGECO common stock for Holding Company common stock.
(b) To the best of SIGECO's and the Holding Company's knowledge, no federal
agency has prepared or is preparing an environmental impact statement with
regard to the proposed transaction covered by this Application.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned, as Applicant, has duly caused this statement to be signed
on its behalf by the undersigned thereunto duly authorized.
Date: May 19, 1995
SIGCORP, INC.
By: /s/ A.E. GOEBEL
A.E. Goebel
Secretary and Treasurer
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Exhibit H-1
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35 - ________)
Filings Under the Public Utility Holding Company Act of 1935
("Act")
May __, 1995
Notice is hereby given that the following filing(s) has/have been made with
the Commission pursuant to provisions of the Act and rules promulgated
thereunder. All interested persons are referred to the application(s) and/or
declaration(s) for complete statements of the proposed transaction(s) summarized
below. The application(s) and/or declaration(s) and any amendments thereto
is/are available for public inspection through the Commission's Office of Public
Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
June __, 1995 to the Secretary, Securities and Exchange Commission, Washington,
D.C. 20549, and serve a copy on the relevant applicant(s) and/or declarant(s) at
the address(es) specified below. Proof of service (by affidavit or, in case of
an attorney at law, by certificate) should be filed with the request. Any
request for hearing shall identify specifically the issues of fact or law that
are disputed. A person who so requests will be notified of any hearing, if
ordered, and will receive a copy of any notice or order issued in the matter.
After said date, the application(s) and/or declaration(s), as filed or as
amended, may be granted and/or permitted to become effective.
SIGCORP, Inc. (70- )
SIGCORP, Inc. ("SIGCORP"), an Indiana corporation and a wholly owned
subsidiary of Southern Indiana Gas and Electric Company ("SIGECO"), 20-24 N.W.
Fourth Street, Evansville, Indiana 47741, has filed an application under
Sections 9(a)(2) and 10 of the Act. SIGCORP proposes to acquire all of the
issued and outstanding shares of common stock of SIGECO and, indirectly through
such acquisition, SIGECO's ownership of 33% of the outstanding capital stock of
Community Natural Gas Company, Inc. ("Community") and 100% of the outstanding
capital stock of Lincoln Natural Gas Company ("Lincoln"). SIGCORP's proposed
<PAGE>
acquisition of the common stock of SIGECO and, indirectly, the common stock of
Community and Lincoln is part of a planned corporate restructuring in which
SIGCORP will become a holding company over SIGECO, an Indiana public utility
holding company exempt from registration under Sections 3(a)(1) and 3(a)(2) of
the Act pursuant to Rule 2. SIGCORP is also requesting the Commission to
grant it an exemption under Section 3(a)(1) of the Act from all provisions of
the Act, except Section 9(a)(2) thereof, following the proposed acquisition
of securities.
SIGECO is engaged in the generation, transmission, distribution and sale of
electric energy and the purchase of natural gas and its transportation,
distribution and sale in a service area which covers ten counties in
southwestern Indiana. Electric service is supplied directly to Evansville and 74
other cities, towns and communities, and adjacent rural areas. Wholesale
electric service is supplied to an additional nine communities. At December 31,
1994, SIGECO supplied electric service to 118,992 customers, including 104,049
residential, 14,741 commercial, 179 industrial, 19 public street and highway
lighting and four municipal customers. SIGECO's installed generating capacity as
of December 31, 1994 was rated at 1,238,000 kilowatts (Kw). At December 31,
1994, SIGECO supplied natural gas service to 102,929 customers, including
93,719 residential, 8,980 commercial, 226 industrial and four public authority
customers, in Evansville and 64 other nearby communities and their environs
through 2,644 miles of gas transmission and distribution lines.
SIGECO owns all of the outstanding capital stock of Lincoln, an Indiana
corporation that owns and operates a gas distribution system in the City of
Rockport, Spencer County, Indiana, and surrounding territory. Lincoln serves
approximately 1,300 customers in Spencer County in southwestern Indiana
contiguous to the eastern boundary of SIGECO's gas territory and within SIGECO's
electric service area. In addition, SIGECO owns 33% of the outstanding capital
stock of Community, an Indiana corporation that owns and operates a small gas
distribution system in southwestern Indiana.
SIGCORP is presently a wholly-owned inactive subsidiary of SIGECO. SIGCORP
does not own any significant assets or engage in any business and is not
currently subject to the Act.
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The proposed restructuring is intended to permit SIGCORP to participate in
independent power projects, energy marketing activities and other non-regulated
and/or non-utility businesses in a timely manner without the need for prior
regulatory approvals, to increase financial flexibility, to enhance managerial
accountability for separate business activities, and to protect SIGECO and its
ratepayers from the risks and costs of non-utility projects. The restructuring
will be accomplished pursuant to an Agreement and Plan of Exchange, dated as of
January 13, 1995 ("Exchange Agreement") under which each outstanding share of
common stock of SIGECO will be exchanged for and converted into one share of
SIGCORP common stock. The proposed reorganization and the Exchange Agreement
were approved by SIGECO's shareholders at their Annual Meeting held on March 28,
1995.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
Secretary
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Exhibit I-1
Extract from minutes of the Annual Meeting of Shareholders of Southern Indiana
Gas and Electric Company, held in the City of Evansville, Indiana, on March 28,
1995
* * * * * * * * * *
The Chairman then stated that consideration should be given to the approval
of corporate reorganization into a holding company structure and the approval of
the Agreement and Plan of Exchange as set forth in Exhibit A to the Proxy
Statement and as previously adopted by the Board of Directors.
Motion was made and seconded that the following resolution be adopted:
RESOLVED: That the reorganization of the corporation into a holding company
structure as detailed in, and subject to, the conditions set forth in the
Agreement and Plan of Exchange between Southern Indiana Gas and Electric Company
and SIGCORP, Inc., a copy of which agreement was attached, as Exhibit A, to the
Proxy Statement for the March 28, 1995 Annual Meeting of Shareholders of the
Company, is hereby approved.
The Chairman then instructed the Secretary to report on the number of votes
cast "for" and "against" the motion. The Secretary reported that the number of
votes cast for the motion was 12,400,133 and the number of votes against the
motion was 156,553.
The Chairman thereupon declared the resolution to be duly adopted.
* * * * * * * * * *
I, A. E. Goebel, Secretary of Southern Indiana Gas and Electric Company, do
hereby certify that the foregoing is a true and correct copy of resolutions duly
and regularly adopted at meeting of the Board of Directors of Southern Indiana
Gas and Electric Company duly called and held in the City of Evansville, Indiana
on March 28, 1995, at which a quorum was in attendance and voting throughout,
and that said resolutions have not since been rescinded but are still in force
and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Company this 19th day of May, 1995.
/s/ A. E. Goebel
Secretary
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