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File No. 70-8519
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 5 TO
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
___________________________________________
TRANSOK, INC.
TRANSOK ACQUISITION COMPANY
TRANSOK GAS TRANSMISSION COMPANY
TRANSOK GAS GATHERING COMPANY
P.O. Box 3008
Tulsa, Oklahoma 74101
(Name of companies filing this statement and
address of principal executive offices)
___________________________________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
___________________________________________
Stephen J. McDonnell, Treasurer
Central and South West Corporation
P.O. Box 660164
Dallas, Texas 75202
A. Dean Fuller, President
Transok, Inc.
P.O. Box 3008
Tulsa, Oklahoma 74101
Joris M. Hogan
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
Transok, Inc. ("Transok"), an Oklahoma corporation, is
a wholly owned non-utility subsidiary of Central and South West
Corporation ("CSW"), a Delaware corporation and a registered
holding company under the Public Utility Holding Company Act of
1935, as amended (the "Act"). CSW has four principal electric
operating utility subsidiaries: Central Power and Light Company
("CPL"), Public Service Company of Oklahoma ("PSO"), Southwestern
Electric Power Company ("SWEPCO") and West Texas Utilities
Company ("WTU") (collectively, the "Operating Companies").
Transok, located in Tulsa, Oklahoma, is an intrastate
natural gas transmission, gathering, storage, processing and
marketing company. In addition to providing natural gas services
in support of the fuel requirements of CPL, SWEPCO and WTU,
Transok provides PSO with gas transportation services for all its
gas requirements and gas storage to balance its daily gas use and
administers all its gas supply contracts. As reported in the
Certificate of Notification for the year ended December 31, 1994
filed with the Commission by Transok, in 1994 Transok derived
$430,963,000 of revenues from other companies in the CSW system
and $309,609,000 of revenues from non-associated companies.
Transok's pipeline systems are located in Oklahoma, Texas and
Louisiana. Transok also owns and operates seven gas processing
plants, gas compression systems used in transmission and storage
operations, and an underground gas storage reservoir in Oklahoma.
Transok Acquisition Company ("TAC"), a Delaware
corporation, is a wholly and directly owned non-utility
subsidiary of Transok. Transok Gas Transmission Company
("Transmission") and Transok Gas Gathering Company ("Gathering")
are Delaware corporations and wholly and directly owned non-
utility subsidiaries of TAC. Transok, TAC, Transmission and
Gathering (the "Applicant Companies") hereby file this Amendment
No. 5 to the Form U-1 Application-Declaration in this File No.
70-8519 for the purposes of amending Items 3 and 6 and re-filing
Exhibit 7, so that the Application-Declaration reads in its
entirety as follows.
Item 1. Description of Proposed Transactions
(A) The Mergers
The Applicant Companies hereby request authority to
simplify their corporate structure by combining TAC,
Transmission and Gathering into Transok by means of the merger
transactions described below (the "Mergers"). The Mergers would
simplify the corporate structure of Transok by eliminating one of
its first-tier subsidiaries and two of its second-tier
subsidiaries. Set forth in Exhibits 5 and 6 are diagrams of the
current and proposed Transok corporate structures.
By order dated September 26, 1991, the Commission
authorized Transok's acquisition of the natural gas gathering,
transmission and marketing business of TEX/CON Oil and Gas
Company ("TEX/CON"), a wholly owned subsidiary of BP Exploration,
Inc. (HCAR No. 25385, File No. 70-7872, the "TEX/CON Order").
Transok acquired the natural gas gathering, transmission and
marketing business ("GTM Business") of TEX/CON for the primary
purpose of improving Transok's ability to provide the Operating
Companies with a reliable and economical source of natural gas
for their electric power generation needs. TEX/CON's GTM
Business: (i) provided gathering and transportation services
through interests in three major regional natural gas pipeline
systems; (ii) marketed natural gas, through its own and other
pipeline systems, to markets across the United States; and
(iii) through its interests in gas processing plants, processed
volumes of natural gas and extracted natural gas liquids,
marketing the gas and liquids to a variety of customers.
TEX/CON had operated its GTM Business through assets
owned directly by TEX/CON and indirectly through its wholly owned
subsidiary, Lear Petroleum Corporation ("Lear"). Prior to the
acquisition by Transok, TEX/CON transferred all its assets
related to the GTM Business to Lear and its subsidiaries. On
September 27, 1991, Transok, through its wholly owned subsidiary
Transok Acquisition Company ("TAC"), purchased all of the
outstanding common stock of Lear from TEX/CON, thereby acquiring
the GTM Business. Effective October 25, 1991, Lear was merged
into TAC, with TAC being the surviving entity. On December 17,
1991, TAC changed the names of three of the four Lear
subsidiaries acquired from TEX/CON to Transok Gas Transmission
Company, Transok Gas Company ("Marketing") and Transok Gas
Gathering Company. On January 15, 1992, the fourth Lear
subsidiary, a company organized under the laws of the Netherlands
Antilles, was domesticated in Delaware under the name Transok Gas
Processing Company ("Processing"). Thus, Transok is the direct
and sole owner of TAC, and TAC is the direct and sole owner of
the former operating subsidiaries of Lear and TEX/CON:
Transmission, Gathering, Processing and Marketing. The gas
processing assets that Transok owned prior to the TEX/CON
acquisition were transferred to Processing on December 31, 1992.
On December 30, 1994, the Applicant Companies entered into an
Agreement and Plan of Liquidation and Merger (the "Plan of
Liquidation") pursuant to which, on that day, Transmission and
Gathering declared and paid a dividend to TAC, and TAC declared
and paid a dividend to Transok, of all the property, assets and
rights of Transmission and Gathering that were in excess of
capital and unearned surplus of Transmission, Gathering and TAC,
respectively, in compliance with Rule 46 under the Act, including
and subject to all of the liabilities and obligations related to
the property, assets and rights transferred, except the following
assets: (i) intercompany accounts receivable at least equal to
the Common Stock account of each such Company; (ii) the shares of
Common Stock of Transmission, Gathering, Processing and Marketing
held by TAC; and (iii) property, assets, rights, liabilities and
obligations of TAC not subject to the dividends from Transmission
and Gathering. The Plan of Liquidation also provided for the
Mergers, subject to the obtaining of the authority requested by
this Application-Declaration.
Transok currently has two first-tier subsidiaries, TAC
and Transok Properties, Inc. ("Properties"), a corporation that
holds a 50% interest in the partnership that owns Transok's
headquarters office building in Tulsa pursuant to authorization
from the Commission (HCAR No. 35-25704, File No. 70-8065,
December 11, 1992). Transok currently has four-second-tier
subsidiaries, Transmission, Gathering, Processing and Marketing.
After the Mergers, Transok would have no second-tier subsidiaries
and three first-tier subsidiaries, Processing, Marketing and
Properties. The Mergers would be accomplished by (i) the merger
of TAC into Transok, with Transok being the surviving
corporation, and (ii) the subsequent mergers of Transmission and
Gathering into Transok, with Transok being the surviving
corporation. The first merger would result in all subsidiaries
of Transok being first-tier subsidiaries, by operation of law and
without action on the part of any such subsidiaries. Those
subsidiaries would be Transmission, Gathering, Processing,
Marketing and Properties. The second merger would result in the
elimination of Transmission and Gathering as subsidiaries. As a
result of the Mergers, Transok would acquire all of the assets
and assume all of the liabilities of TAC, Transmission and
Gathering. Each outstanding share of capital stock of Transok
would remain unchanged, with the same rights, privileges and
preferences as before the Mergers. Each outstanding share of
TAC, Transmission and Gathering would be cancelled and
extinguished. The current Transok corporate structure is shown
in Exhibit 5, and the proposed Transok corporate structure after
the Mergers is shown in Exhibit 6.
The dividends declared and paid by Transmission,
Gathering and TAC have been accounted for in accordance with
generally accepted accounting principles applicable to
liquidating dividends. The assets and liabilities of TAC,
Transmission and Gathering were transferred to Transok at their
book values. The liquidating dividends did not result in any
change in the consolidated financial statements of Transok.
Transok believes that the liquidating dividends and the
Mergers will result in several benefits and efficiencies,
including (i) a fairer valuation of the assets of Transmission
and Gathering for purposes of the Oklahoma ad valorem tax,
resulting in estimated annual tax savings of approximately
$500,000; (ii) simplified and less costly internal and external
accounting operations; (iii) reduced and less costly
administrative functions in order to meet regulatory compliance
and reporting requirements; (iv) reduced managerial and
administrative activities of the relevant businesses; and (v)
simplified and less costly contracting procedures for both
Transok and its customers.
(B) The Transfer of Gas Compression Assets
Transok also hereby requests authority to transfer
certain natural gas compression assets from Transok to
Processing. Such compression assets consist of compressors
having an aggregate undepreciated cost of approximately $92
million and ancillary measuring, regulating and other equipment,
tanks and rights-of-way having an aggregate undepreciated cost of
approximately $5 million (the "Compression Assets"). The
Compression Assets are used to compress natural gas in the course
of its gathering, transportation and storage. The transfer of
the Compression Assets from Transok to Processing would result in
their reclassification for purposes of the Oklahoma ad valorem
tax, resulting in estimated annual tax savings of between
$300,000 and $400,000. The transfer would be accounted for as a
contribution by Transok to the capital of Processing.
Item 2. Fees, Commissions and Expenses
The estimate of the fees to be paid or incurred by CSW
and Transok in connection with the transactions are as follows:
Holding Company Act Filing Fee................. $ 2,000*
Counsel Fees:
Milbank, Tweed, Hadley & McCloy........... 15,000
Miscellaneous and incidental expenses,
including travel, telephone, copying
and postage............................... 1,000
Total $18,000
____________________
* Actual amount.
Item 3. Applicable Statutory Provisions
Sections 9(a), 10 and 12(c) of the Act and Rules 23, 42
and 43 promulgated thereunder are or may be applicable to the
proposed Mergers, inasmuch as the Mergers may be considered as
involving the acquisition, retirement or redemption of securities
by the issuers thereof upon the mergers of the issuers into their
respective parent companies. Section 12(f) of the Act and Rule
45(a) thereunder are or may be applicable to the proposed
transfer of the Compression Assets, as a capital contribution,
from Transok to Processing. To the extent any other sections of
the Act or Rules thereunder may be applicable to the proposed
transactions, CSW and the Applicant Companies request appropriate
orders thereunder.
No proceeds from the transactions proposed herein will
be used by CSW or any subsidiary thereof for the direct or
indirect acquisition of an interest in an exempt wholesale
generator, as defined in Section 32 of the Act ("EWG"), or a
foreign utility company, as defined in Section 33 of the Act
("FUCO"). Rule 54 promulgated under the Act states that in
determining whether to approve the issue or sale of a security by
a registered holding company for purposes other than the
acquisition of an EWG or a FUCO, or other transactions by such
registered holding company or its subsidiaries other than with
respect to EWGs or FUCOs, the Commission shall not consider the
effect of the capitalization or earnings of any subsidiary which
is an EWG or a FUCO upon the registered holding company system if
Rule 53(a), (b) and (c) are satisfied. As set forth below, all
applicable conditions set forth in Rule 53(a) are, and, assuming
the consummation of the transactions proposed herein, will be,
satisfied and none of the conditions set forth in Rule 53(b)
exist or will exist as a result of the transactions proposed
herein.
CSW Northwest GP, Inc., CSW Northwest LP, Inc., CSW
Development-3, Inc. and Northwest Power Company, LLC
(collectively, the "CSW EWG's"), each an indirect subsidiary of
CSW, are the only EWGs in which CSW has equity interests. CSW,
through its subsidiary CSW Energy, Inc., has invested an
aggregate of $3,500 in the CSW EWG's as of September 30, 1995, or
less than 1% of $1.83 billion, the average of CSW's consolidated
retained earnings for the four consecutive quarters ended
September 30, 1995 ("Average Retained Earnings"). Seeboard plc,
a regional electric company organized in the United Kingdom in
which CSW holds an indirect 27% equity interest, is the only FUCO
in which CSW has an equity interest. CSW, through its subsidiary
CSW International, Inc., had invested approximately $680 million
in Seeboard as of November 15, 1995, or approximately 37% of
Average Retained Earnings. CSW thus satisfies Rule 53(a)(1).
CSW will maintain and make available the books and records
required by Rule 53(a)(2). No more than 2% of the employees of
CSW's operating subsidiaries will, at any one time, directly or
indirectly, render services to an EWG or FUCO in which CSW
directly or indirectly owns an interest, satisfying
Rule 53(a)(3). And lastly, CSW will submit a copy of Item 9 and
Exhibits G and H of CSW's Form U5S to each of the public service
commissions having jurisdiction over the retail rates of CSW's
operating utility subsidiaries, satisfying Rule 53(a)(4).
None of the conditions described in Rule 53(b) exist
with respect to CSW or any of its subsidiaries, thereby
satisfying such rule and making Rule 53(c) inapplicable.
Item 4. Regulatory Filings and Approvals
No state regulatory authority and no federal regulatory
authority, other than the Commission under the Act, have
jurisdiction over the proposed transactions.
Item 5. Procedure
The Applicant Companies request that the Commission
issue and publish not later than November 18, 1994, the requisite
notice under Rule 23 with respect to the filing of this
Application-Declaration, such notice to specify a date not later
than December 9, 1994, as the date after which an order granting
and permitting this Application-Declaration to become effective
may be entered by the Commission, and that the Commission enter
not later than December 12, 1994 an appropriate order granting
and permitting this Application-Declaration to become effective.
The Applicant Companies respectfully request that
appropriate and timely action be taken by the Commission in this
matter in order to permit consummation of the Mergers on or prior
to December 30, 1994 in order to be able to realize the benefits
and efficiencies referred to above during the full 1995 year and
to have an appropriate transaction date for accounting and
regulatory compliance and reporting purposes. In any event, the
Applicant Companies request that the order granting and
permitting the Application-Declaration to become effective be
made effective by the Commission (with retroactive effect if
necessary) as of a date not later than December 30, 1994.
No recommended decision by a hearing officer or other
responsible officer of the Commission is necessary or required in
this matter. The Division of Corporate Regulation of the
Commission may assist in the preparation of the Commission's
decision on this matter. There should be no 30-day waiting
period between the issuance and the effective date of any order
issued by the Commission in this matter, and the Applicant
Companies respectfully request that any such order be made
effective immediately upon the entry thereof.
Item 6. Exhibits and Financial Statements
Exhibit 1 - Preliminary opinion of Milbank, Tweed,
Hadley & McCloy, counsel for Transok
(previously filed).
Exhibit 2 - Final or "past tense" opinion of
Milbank, Tweed, Hadley and McCloy,
counsel for Transok (to be filed with
Certificate of Notification).
Amended
Exhibit 3 - Proposed Notice of Proceeding
(previously filed).
Exhibit 4 - Balance Sheet as of September 30, 1994,
and Statement of Income for the 12
months ended September 30, 1994, of
Transok and consolidated subsidiaries
(previously filed).
Exhibit 5 - Current Corporate Structure of Transok,
Inc. System Companies (previously
filed).
Exhibit 6 - Proposed Corporate Structure of Transok,
Inc. System Companies (previously
filed).
Exhibit 7 - Agreement and Plan of Liquidation and
Merger.
Item 7. Environmental Effects
The proposed transaction does not involve major federal
action having a significant effect on the human environment. No
federal agency has prepared or is preparing an environmental
impact statement with respect to the proposed transaction.
S I G N A T U R E
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned company has duly
caused this document to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: November 28, 1995
TRANSOK, INC.
By: /s/ A. DEAN FULLER
A. Dean Fuller
President and
Chief Executive Officer
TRANSOK ACQUISITION COMPANY
By: /s/ A. DEAN FULLER
A. Dean Fuller
President and
Chief Executive Officer
TRANSOK GAS TRANSMISSION COMPANY
By: /s/ A. DEAN FULLER
A. Dean Fuller
President and
Chief Executive Officer
TRANSOK GAS GATHERING COMPANY
By: /s/ A. DEAN FULLER
A. Dean Fuller
President and
Chief Executive Officer
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
1 Preliminary opinion of Milbank,
Tweed, Hadley & McCloy, counsel
for Transok (previously filed). --
2 Final or "past tense" opinion of
Milbank, Tweed, Hadley & McCloy,
counsel for Transok (to be filed
with Certificate of Notification). --
3 Amended Proposed Notice of Proceeding
(previously filed). --
4 Balance Sheets as of September 30,
1994, and Statement of Income for
the 12 months ended September 30,
1994, of Transok and consolidated
subsidiaries (previously filed). --
5 Current Corporate Structure of
Transok, Inc. System Companies
(previously filed). --
6 Proposed Corporate Structure of
Transok, Inc. System Companies
(previously filed). --
7 Agreement and Plan of Liquidation
and Merger. Electronic
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EXHIBIT 7
AGREEMENT AND PLAN OF LIQUIDATION AND MERGER
This Agreement by and among Transok, Inc., Transok Acquisition
Company, Transok Gas Transmission Company and Transok Gas Gathering
Company is entered into effective December 30, 1994.
WHEREAS, Transok, Inc., an Oklahoma corporation ("Transok"),
owns all of the outstanding shares of Common Stock (the only class
of capital stock) of (i) Transok Gas Transmission Company, a
Delaware corporation ("Transmission"), (ii) Transok Gas Gathering
Company, a Delaware corporation ("Gathering"), (iii) Transok Gas
Company, a Delaware corporation, and (iv) Transok Gas Processing
Company, a Delaware corporation; and
WHEREAS, Transok, Acquisition, Transmission and Gathering have
determined it to be in their respective best interests that the
separate corporate existences of Acquisition, Transmission and
Gathering (the "Subsidiaries") be wound up, dissolved and
liquidated by means of (x) a dividend and distribution in kind to
their respective sole stockholder corporations of all of their
respective property, assets and rights that are in excess of
capital and unearned surplus in compliance with Rule 46 of the
Securities and Exchange Commission (the "SEC"), including all of
the liabilities and obligations of their respective Subsidiaries,
effective on the date of this Agreement and Plan of Liquidation and
Merger (the "Liquidating Dividend"), and (y) the subsequent merger
of Acquisition into Transok and then of Transmission and Gathering
into Transok, after receipt of all necessary approvals of the SEC
thereof as may be required by the Public Utility Holding Company
Act of 1935, as amended, and the rules thereunder (the "Merger").
NOW, THEREFORE, the parties hereby agree to take all action
necessary or appropriate to effect the Liquidating Dividends,
effective December 30, 1994, and the Merger as aforesaid.
IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement and Plan of Liquidation and Merger to be executed on its
behalf as of December 30, 1994.
TRANSOK, INC.
By: /s/ JACK SPINKS
Jack Spinks, Vice President
TRANSOK ACQUISITION COMPANY
By: /s/ RICHARD ZIEREN
Richard Zieren, Vice President
TRANSOK GAS TRANSMISSION COMPANY
By: /s/ E. EARL GLIMP
E. Earl Glimp, Vice President
TRANSOK GAS GATHERING COMPANY
By: /s/ E. EARL GLIMP
E. Earl Glimp, Vice President
