Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Notices 44733

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–26756]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

August 15, 1997.

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

September 8, 1997, 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.

Cinergy Corporation (70–9071)

Cinergy Corporation (‘‘Cinergy’’), a

registered holding company, 139 East

Fourth Street, Cincinnati, Ohio 45202,

has filed a declaration under sections

6(a), 7, 12(b), 32 and 33 and rules 45

and 53 under the Act.

Cinergy proposes to issue and sell

from time to time through December 31,

2002, upon the terms and conditions

described below: (1) short-term notes

and commercial paper in an aggregate

principal amount not to exceed, together

with the then-outstanding principal

amount of certain other securities issued

by Cinergy as described below, $2

billion at any time outstanding; and (2)

up to 30 million additional shares of

Cinergy common stock, plus certain

other shares of common stock

authorized, but not issued, under a prior

Commission order, discussed below. All

Cinergy common stock authorized in

this matter may be adjusted to reflect

subsequent stock splits.

By orders dated January 11, 1995 and

March 12, 1996 (HCAR Nos. 26215 and

26488, respectively) (‘‘Orders’’), the

Commission authorized Cinergy to issue

and sell from time to time through

December 31, 1999 short-term notes

(including in connection with letter of

credit transactions) and commercial

paper in an aggregate principal amount

at any time outstanding not to exceed $1

billion. The Commission authorized

Cinergy to apply the net proceeds to

various corporate purposes including

investments in exempt wholesale

generators (‘‘EWGs’’) and foreign utility

companies (‘‘FUCOs’’), as those terms

are defined respectively in sections 32

and 33 of the Act, together with indirect

investments through one or more

special-purpose subsidiaries (‘‘Project

Parents’’ and, together with EWGs and

FUCOs, ‘‘Exempt Entities’’), provided

that Cinergy’s ‘‘aggregate investment’’

did not exceed 50% of Cinergy’s

‘‘consolidated retained earnings,’’ each

as defined in rule 53(a)(1) under the Act

(‘‘50% Investment Limitation’’). At May

31, 1997 Cinergy had issued and

outstanding a total of $524 million in

short-term notes and commercial paper,

consisting entirely of notes evidencing

short-term bank loans. Cinergy proposes

that the Orders be superseded by the

proposed transactions effective

immediately upon the date of the

Commission’s order in this filing.

By order dated May 30, 1997 (HCAR

No. 26723) (‘‘May Order’’), the

Commission, among other things,

authorized Cinergy from time to time

through December 31, 2002, subject to

the $1 billion debt limitation prescribed

in the Orders, to guarantee the debt or

other obligations of various existing

subsidiaries and of companies whose

securities Cinergy or any of its

subsidiaries acquires under rule 58

under the Act. At July 1, 1997, Cinergy

had issued $5 million in guarantees

under the May Order.

By order dated November 18, 1994

(HCAR No. 26159) (‘‘November Order’’),

the Commission authorized Cinergy to

issue and sell up to eight million shares

of its common stock, $.01 par value per

share (‘‘Common Stock’’), from time to

time through December 31, 1995: (1)

Through solicitation of proposals from

underwriters or dealers; (2) through

underwriters or dealers on a negotiated

basis; (3) directly to a limited number of

purchasers or to a single purchaser; and/

or (4) through agents on a negotiated

basis. Under the November Order, on

December 19, 1994 Cinergy publicly

issued and sold 7.089 million shares of

Common Stock and contributed the net

proceeds thereof to the equity capital of

Cinergy’s utility subsidiary, PSI Energy,

Inc. By supplemental order dated

February 23, 1996 (HCAR No. 26477)

(‘‘February Order’’), the Commission

authorized Cinergy to issue and sell the

remaining shares of Common Stock

(‘‘Remaining Shares’’). In addition,

Cinergy was authorized to issue some or

all of the Remaining Shares to Cinergy

system employees, including officer

employees, as awards. The February

Order authorized Cinergy to apply the

proceeds from the sales of the

Remaining Shares to various corporate

purposes including investments in

EWGs and FUCOs, subject to the 50%

Investment Limitation. Of the eight

million shares originally authorized for

issuance under the November Order,

there was a balance of 867,385

Remaining Shares at July 1, 1997.

Cinergy has pending a proposal

docketed in S.E.C. File No. 70–8993

(HCAR No. 26714; May 2, 1997) to issue

and sell from time to time through

December 31, 2002 unsecured debt

securities in one or more series bearing

maturities from two to 40 years

(‘‘Debentures’’) in an aggregate principal

amount not to exceed $400 million at

any time outstanding, subject to the $1

billion debt limitation contained in the

Orders. Net proceeds from the issue and

sale of the Debentures would be applied

to refinance short-term debt incurred by

Cinergy to finance its 1996 acquisition

of a 50% ownership interest in

Midlands Electricity plc, a U.K. FUCO,

and to refinance outstanding

Debentures.

Cinergy also has pending a proposal

docketed in S.E.C. File No. 70–9011

(HCAR No. 26698; March 28, 1997

(‘‘100% Application’’) under which

Cinergy seeks to apply the net proceeds

of certain financing transactions

consisting of those authorized in the

May Order, the February Order and the

Orders (to be superseded, as to the

February Order and the Orders upon

issuance of the Commission’s order in

the instant matter) to investments in

Exempt Entities, provided that Cinergy’s

‘‘aggregate investment’’ will not exceed

100% of Cinergy’s ‘‘consolidated

retained earnings.’’

Regarding the short-term notes,

Cinergy proposes to make short-term

borrowings from banks or other lending

institutions from time to time through

December 31, 2002, provided that the

aggregate principal amount of such

borrowings, together with the aggregate

amount of any outstanding commercial

paper, short-term notes in connection

with letter of credit transactions,

guarantees pursuant to the May Order

and Debentures issued or sold by
44734 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Notices

Cinergy, will not exceed $2 billion at

any time outstanding (‘‘Debt Cap’’).

The borrowings will be evidenced by:

(1) Transactional promissory notes to be

dated the date of the borrowings and

maturing in not more than one year; (2)

grid promissory notes evidencing all

outstanding borrowings, dated as of the

date of the first borrowing, with each

borrowing maturing in not more than

one year. Any note may or may not be

prepayable, in whole or in part, with or

without a premium in the event of

prepayment. The amount of any

premium payable by Cinergy would not

exceed an amount equivalent to the

present value of the stated interest

payable on the note in the event the

note had not been prepaid, plus accrued

interest to the date of prepayment.

Borrowings will be priced at the

lender’s prevailing rate offered to

corporate borrowers of similar credit

quality, which will not exceed the

greater of: (1) The London Interbank

Offered Rate plus 200 basis points; or (2)

a negotiated rate which would not

exceed the lender’s prime rate plus 200

basis points. Cinergy may pay

commitment fees based upon the

unused portion of a lender’s

commitment. The fees would not exceed

the amount determined by multiplying

the unused portion of the lender’s

commitment by 3/4 of 1%.

In addition to the borrowings, Cinergy

requests authority to issue short-term

notes, with maturities of no more than

one year, in connection with letter of

credit transactions providing credit

support for Cinergy subsidiary

companies other than Exempt Entities.

In such a transaction, Cinergy expects to

issue an unsecured demand promissory

note to the letter of credit bank

evidencing Cinergy’s reimbursement

obligation for drawings under the letter

of credit. Each letter of credit would

have a stated expiration date not later

than one year from the date of issuance.

Cinergy would be required to repay on

demand amounts drawn under the letter

of credit. Interest on unreimbursed

amounts would accrue at an annual rate

not to exceed the prime rate offered by

the letter of credit bank plus 400 basis

points. Cinergy may also be required to

pay fees aggregating not more than 1%

of the face amount of the letter of credit.

Cinergy proposes from time to time

through December 31, 2002 to issue and

sell commercial paper to one or more

dealers, or directly to financial

institutions if the resulting cost of

money is equal to or less than that

available from dealer-placed

commercial paper, in an aggregate

principal amount, which, together with

the aggregate amount of any outstanding

short-term notes, guarantees pursuant to

the May Order and Debentures issued or

sold by Cinergy, will not exceed the

Debt Cap.

Cinergy proposes to issue and sell the

commercial paper at market rates with

varying maturities not to exceed 270

days. The commercial paper will be in

the form of book-entry unsecured

promissory notes with varying

denominations of not less than $25,000

each. Any associated fees will not

exceed 1⁄10 of 1% multiplied by the

principal amount of the commercial

paper. In commercial paper sales

effected on a discount basis, there will

be no commission or fee. However, the

purchasing dealer will re-offer the

commercial paper at a rate less than the

rate to Cinergy. The discount rate to

dealers will not exceed the maximum

discount rate per annum prevailing at

the date of issuance for commercial

paper of comparable quality and the

same maturity. The purchasing dealer

will re-offer the commercial paper in

such a manner as not to constitute a

public offering within the meaning of

the Securities Act of 1993.

In connection with the proposed

issuance and sale of short-term notes to

banks and other lending institutions and

sales of commercial paper, Cinergy

proposes to mitigate interest rate risk

through the use of various interest rate

management instruments commonly

used in today’s capital markets, such as

interest rate swaps, caps, collars, floors,

options, forwards, futures and similar

products designed to manage and

minimize interest costs. Cinergy expects

to enter into these agreements with

counterparties that are highly rated

financial institutions. The transactions

will be for fixed periods and stated

notional amounts. Fees, commissions

and annual margins in connection with

any interest rate management

agreements will not exceed 100 basis

points in respect of the principal or

notional amount of the related shortterm notes/commercial paper or interest

rate management agreement. In

addition, with respect to options,

Cinergy may pay an option fee which

would not exceed 10% of the principal

amount of the short-term note or

commercial paper covered by the

option.

Finally, Cinergy proposes to issue and

sell from time to time through December

31, 2002: (1) Up to 30 million additional

shares of Common Stock and (2) the

Remaining Shares (collectively,

including any adjustments pursuant to

subsequent stock splits, the ‘‘Additional

Shares’’). At May 31, 1997, Cinergy had

a total of 600 million shares of Common

Stock authorized for issuance, of which

157,679,129 were issued and

outstanding. Cinergy proposes to issue

and sell the Additional Shares from

time to time employing any one or more

of the following modes: (1) Through

solicitations of proposals from

underwriters or dealers; (2) through

negotiated transactions with

underwriters or dealers; (3) directly to a

limited number of purchasers or to a

single purchaser; and (4) through agents.

The price applicable to Additional

Shares sold in any such transaction will

be based on several factors, including in

particular the current market price of

the Common Stock and capital market

conditions in general at the time. Total

fees and expenses incurred by Cinergy

in connection with the issuance and

sale of the Additional Shares will not

exceed 5% of the total proceeds from

the sale of the Additional Shares. In

addition, Cinergy requests authority to

issue up to 250,000 of the Additional

Shares to Cinergy system employees,

including officers, in gift or award

transactions from time to time through

December 31, 2002.

Cinergy proposes to apply net

proceeds from the issue and sale of the

short-term notes, commercial paper and

Additional Shares to investments in

other Cinergy system companies, to

exempt acquisitions of securities of

energy-related companies pursuant to

rule 58, to repay, repurchase or

refinance outstanding securities of

Cinergy, to make loans to participating

companies in the Cinergy system money

pool, to investments in Exempt Entities,

subject to the 50% Investment

Limitation pending receipt of the

authorization requested in the 100%

Application, and to other lawful

corporate purposes.

American Electric Power Company, Inc.,

et al. (70–9077)

American Electric Power Company,

Inc. (‘‘AEP’’), a registered holding

company, and AEP Resources, Inc.

(‘‘Resources’’), its wholly owned

nonutility subsidiary company, each of

1 Riverside Plaza, Columbus, Ohio

43215, have filed a declaration under

section 12(c) of the Act and rules 46 and

54 under the Act.

By order dated December 22, 1994

(HCAR No. 26200), AEP was authorized

through December 31, 2000, among

other things, to form direct and indirect

special purpose subsidiaries (‘‘Project

Parents’’) to acquire and own or operate

‘‘exempt wholesale generators’’ and

‘‘foreign utility companies’’ (‘‘FUCOs’’),

as defined in sections 32 and 33 of the

Act, respectively.

Applicants propose that their Project

Parents declare and pay dividends to
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Notices 44735

1Namely, Yorkshire Power Group Limited

(‘‘Yorkshire Power Group’’), a U.K. company in

which Resources and a subsidiary of Public Service

Company of Colorado have respective 50%

ownership interests, and Yorkshire Holdings plc,

the actual owner of Yorkshire and a wholly owned

subsidiary of Yorkshire Power Group.

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3 ‘‘MITTS’’ and ‘‘Market Index Target-Term

Securities’’ are service marks of Merrill Lynch &

Co., Inc. (‘‘Merrill Lynch’’).

4Amendment No. 1 states that the Exchange’s

equity trading rules will apply to the trading of

indexed term notes linked to the Major 11

International Index, including Rule 411, which

requires members to use due diligence to learn

essential facts relative to every customer and to

every order or account accepted, and Rule 462,

which requires the application of equity margin

rules to the trading of indexed term notes.

Amendment No. 1 also states that the continued

listing guidelines set forth in Sections 1001 through

1003 of the Amex Company Guide will apply to the

proposed indexed term notes; that the exchange

will, prior to trading the proposed indexed term

notes, distribute an Information Circular to

members providing guidance with regard to

member firm compliance responsibilities, including

suitability recommendations, when handling

transactions in the indexed term notes, and

highlighting their special risks and characteristics;

that the Exchange will maintain the Index and it

will be the Exchange’s responsibility to determine,

if necessary, whether to replace a sub-index with

a substitute or successor index or undertake to

publish the sub-index if it ceases to be published.

See letter from Claire P. McGrath, Vice-President

and Special Counsel, Amex, to Ivette Lopez,

Assistant Director, Market Supervision,

Commission, dated June 10, 1997 (‘‘Amendment

No. 1’’).

5Amendment No. 2 further clarifies Amendment

No. 1 by stating that Section 1003(b) of the

Company Guide in particular will apply to the

proposed indexed term notes. Amendment No. 2

also states that the shares of a sub-index will remain

fixed, except in the case of a significant event, such

as a split in the value of the sub-index, a change

in the method of calculation, or if the sub-index

ceases to be published. Amendment No. 2 gives an

example of what would happen to the Index

calculation if a sub-index were to split in value.

Also, if the sub-index ceases to be published, Amex

could choose to replace it with a substitute index

(another index currently being published that

correlates highly with the sub-index being replaced,

such as Amex’s Japan Index could substitute for the

Nikkei 225), a successor index (an index intended

by the publisher as a replacement to the original

sub-index), or undertake to publish the sub-index

using the same procedures last used to calculate the

sub-index prior to its discontinuance. In addition,

Amendment No. 2 states that if the marketplace for

the securities underlying any one of the sub-indices

that constitute the Major 11 International Index is

closed on any given business day, due to natural

disaster or holiday observed in the foreign country,

Amex will use the previous closing value in the

calculation. See letter from Claire P. McGrath, VicePresident and Special Counsel, Derivatives

Securities, Amex, to Ivette Lopez, Assistant

Director, Market Regulation, Commission, dated

June 27, 1997 (‘‘Amendment No. 2’’).

6Amendment No. 3 states that Amex intends to

include a heightened suitability standard in the

Information Circular it will distribute to its

membership prior to the commencement of trading

in Major 11 International Index Notes. The circular

will state that before a member, member

organization, or employee of such member

organization undertakes to recommend a

transaction in the security, such member or member

organization should make a determination that the

security is suitable for such customer and the

person making the recommendation should have a

reasonable basis for believing at the time of making

the recommendation, that the customer has such

knowledge and experience in financial matters that

they may be capable of evaluating the risks and the

special characteristics of the recommended

transaction, including those highlighted, and is

financially able to bear the risks of the

Continued

their parent companies from time to

time through December 31, 2002 out of

capital or earned surplus to the extent

permitted under applicable corporate

law. AEP and Resources request this

authorization on behalf of: (i) Certain

existing Project Parents formed in

connection with AEP’s 1997 acquisition

of a 50% ownership interest in

Yorkshire Electricity Group plc, a U.K.

regional electricity company and a

FUCO (‘‘Yorkshire’’);1 (ii) those Project

Parents formed in connection with

AEP’s 1996 acquisition of a 70%

ownership interest in Nanyang General

Light Electric Co., Ltd. (‘‘Nanyang’’), a

cooperative joint venture company

formed under the laws of the People’s

Republic of China, established to own,

construct, finance and operate a coalfired electric generating station in

Nanyang, Henan Province, China; and

(iii) other existing and all future Project

Parents formed after the date of the

issuance of an order authorizing this

proposal (collectively, ‘‘Applicable

Project Parents’’). Resources states that

it would pay any such dividend only to

the extent that the dividend is based

upon: (i) A corresponding dividend or

dividends our of capital or unearned

surplus from an Applicable Project

Parent that is a direct subsidiary of

Resources or (ii) otherwise is based

upon Resources’ direct or indirect

ownership of an Exempt Project.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–22292 Filed 8–21–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38940; International Series

Release No. 1097; File No. SR–Amex–97–

20]

Self-Regulatory Organizations; Order

Granting Approval to Proposed Rule

Change and Notice of Filing and Order

Granting Accelerated Approval to

Amendment Nos. 1, 2, and 3 to

Proposed Rule Change by the

American Exchange, Inc., Relating to

the Listing and Trading of Indexed

Term Notes

August 15, 1997.

I. Introduction

On April 30, 1997, the American

Stock Exchange, Inc. (‘‘Amex’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission

(‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

approve for listing and trading under

Section 107A of the Amex Company

Guide market index target-term

securities (‘‘MITTS’’),3 the return of

which is based in whole or in part on

changes in the value of the Major 11

International Index (‘‘the Major 11

International Index’’).

The proposed rule change, together

with the substance of the proposal, was

published for comment in Securities

Exchange Act Release No. 38665 (May

21, 1997) 62 FR 28911 (May 28, 1997).

No comment letters were received in

response to the proposal. The Exchange

subsequently filed Amendment Nos. 1,

2, and 3 to the proposed rule change on

June 11, 1997, 4 June 30, 1997, 5 and July

17, 1997,6 respectively. This order