Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54143

1WRI has entered into an Agreement and Plan of

Merger dated February 17, 1997 with Kansas City

Power & Light Company (‘‘KCPL’’), a public utility

company which operates as an electric utility

company in Kansas and Missouri (‘‘KCPL Merger

Agreement’’). The KCPL Merger Agreement calls for

KCPL to be acquired by WRI, after which, WRI

would claim, or seek an order from the Commission

granting, an exemption under Section 3(a).

2 KGE has obtained no-action assurance from the

Commission regarding its ownership interest in

Wolf Creek. SEC No-Action Letter (June 26, 1995).

3Westar Capital’s subsidiaries and affiliates are:

(i) Hanover Compressor Company (offers

compression services to the natural gas industry),

(ii) Westar Financial Services, Inc. (funds activities

of other WRI subsidiaries), (iii) Wing Columbia,

L.L.C. (invests in power generation projects in

Columbia, South America), (iv) WestSec, Inc.

Continued

procedures established thereunder by

the Board of Trustees of the Trust.

Applicants submit that Owner interests

after the Substitution, in practical

economic terms, will not differ in any

measurable way from such interests

immediately prior to the Substitution. In

each case, Applicants assert that the

consideration to be received and paid is,

therefore, reasonable and fair.

9. Applicants assert that the

investment objectives of each of the

Substituted Funds are sufficiently

similar to the investment objectives of

the Replaced Funds. In this regard, the

Substitutions are consistent with

Commission precedent pursuant to

Section 17 of the 1940 Act. Applicants

also assert that the Substitutions are

consistent with the general purposes of

the 1940 Act, as enunciated in the

Findings and Declaration of Policy in

Section 1 of the 1940 Act. The proposed

transactions do not present any of the

issues or abuses that the 1940 Act is

designed to prevent.

10. Section 6(c) of the 1940 Act

provides that the Commission may grant

an order exempting persons and

transactions from any provision or

provisions of the 1940 Act as may be

necessary or appropriate in the public

interest and consistent with the

protection of investors and the purposes

fairly intended by the policies and

provisions of the 1940 Act. Applicants

submit that the proposed transactions

will be effected in a manner consistent

with the public interest and the

protection of investors, as required by

Section 6(c) of the 1940 Act. Owners

will be fully informed of the terms of

Substitutions through the prospectus

supplements and the Notice, and will

have an opportunity to reallocate

investments prior to and following the

Substitutions.

Conclusion

Applicants assert that, for the reasons

summarized above, the requested order

approving the Substitutions and related

transactions involving in-kind

redemptions and the combination of

certain separate account sub-accounts

should be granted.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–27545 Filed 10–16–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–26764]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

October 10, 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

October 31, 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.

Western Resources, Inc. (70–9097)

Western Resources, Inc. (‘‘WRI’’),

located at 818 Kansas Avenue, Topeka,

Kansas 66612, a Kansas public utility

holding company exempt under section

3(a) pursuant to rule 2 from all

provisions of the Act except section

9(a)(2), has filed an application under

sections 9(a)(2) and 10 of the Act in

connection with a proposed sale of its

gas utility operations.

WRI, itself a public utility company,

is engaged through its Kansas Power &

Light Company division in the

generation, purchase, transmission,

distribution and sale of electric energy

in Kansas and the transportation and

sale of natural gas predominantly in

Kansas, with some small operations in

Oklahoma. WRI provides retail electric

service to approximately 329,000

customers in Kansas and northeastern

Oklahoma. WRI also provides wholesale

electric generation and transmission

services to numerous municipal

customers in Kansas, and, through

interchange agreements, to surrounding

integrated systems. WRI provides

natural gas service to approximately

648,000 retail customers in Kansas and

northeastern Oklahoma. WRI is

regulated as a public utility with respect

to retail electric and gas rates and other

matters by the Kansas Corporation

Commission (‘‘KCC’’) and with respect

to retail gas rates and other matters by

the Oklahoma Corporation Commission

(‘‘OCC’’). WRI is also subject to the

jurisdiction of the Federal Energy

Regulatory Commission, including

jurisdiction with respect to rates for

sales of electricity for resale.

WRI has one utility subsidiary,

Kansas Gas and Electric Company

(‘‘KGE’’).1 KGE provides retail electric

service to approximately 277,000

residential, commercial and industrial

customers in Kansas and wholesale

electric generation and transmission

services to numerous municipal

customers in Kansas and, through

interchange agreements, to surrounding

integrated systems. KGE does not own

or operate any gas properties. KGE has

one active subsidiary, Wolf Creek

Nuclear Operating Corporation (‘‘Wolf

Creek’’), a Delaware Corporation which

is 47% owned by KGE and operates the

Wolf Creek Generating Station on behalf

of the plant’s owners, including KGE.2

KGE is regulated as a public utility

company with respect to retail electric

rates and other matters by the KCC. It is

also regulated by the Nuclear Regulatory

Commission under the Atomic Energy

Act of 1954, as amended, in connection

with its ownership interest in Wolf

Creek.

WRI also has numerous direct and

indirect non-utility subsidiaries,

including (1) Westar Capital, Inc.

(‘‘Westar Capital’’), a Kansas corporation

that is holding company for certain of

WRI’s non-regulated activities,3 (2)
54144 Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices

(engaged in the business of monitored home and

business security systems), (v) Westar Limited

Partners, Inc. (‘‘Westar Limited’’) (participates in

limited partnerships and investments related to the

business of WRI), (vi) Valence, L.L.C. (develops,

manufactures, produces and distributes electronic

parts, equipment and products), (vii) Thunderbird

Limited, III, L.P. (a low income housing project in

which Westar Limited is an 82% limited partner),

(viii) Thunderbird Montery, L.P. (a low income

housing project in which Westar Limited is a 99%

limited partner), and (ix) Oakwood Manor, L.P. (a

low income housing project in which Westar

Limited is a 99% limited partner).

4Westar Energy’s subsidiaries are: (i) Westar

Energy Investments, Inc. (holds investments of

Westar Energy), (ii) Westar Gas Marketing, Inc.

(‘‘Westar Gas Marketing’’) (arranges natural gas

purchasing, transportation and delivery for natural

gas users), (iii) Westar Gas Company (gathers and

processes natural gas in Oklahoma and Kansas), (iv)

Indian Basin Venture I and II (collectively, Indian

Basin Ventures) (operates a gas processing plant in

New Mexico), (v) Westar Electric Marketing, Inc.

(arranges electric marketing and brokering for

commercial and industrial customers on a

wholesale level), and (vi) Westar Business Services,

Inc. (provides energy related services to commercial

and industrial customers).

5MCMC has a subsidiary, Market Center

Gathering, Inc., which facilitates the operation of

gas gathering systems.

6WAI has been formed initially as a whollyowned subsidiary of WRI.

7As noted above, MCMC provides natural gas

transportation, wheeling, parking, balancing and

storage services to natural gas producers and Westar

Gas Marketing arranges natural gas purchasing,

transportation and delivery for natural gas users.

8Applicant states that transfer of the WRI Gas

Business to New ONEOK will improve the

efficiency of WRI’s gas utility operations, will be in

the public interest and the interests of investors and

consumers and will not be detrimental to the proper

functioning of the resulting holding company

system.

9Pursuant to a Registration Rights Agreement to

be entered into by WRI and New ONEOK upon

closing of the Transactions, the outstanding shares

of ONEOK common stock (‘‘ONEOK Common

Stock’’) will be converted on a one-for-one basis

into the right to receive shares of New ONEOK

common stock (‘‘New ONEOK Common Stock’’).

Each share of New ONEOK Common Stock will be

issued together with the corresponding number of

associated rights to purchase one one-hundredths of

a share of Series C Preferred Stock of New ONEOK.

10Only one of the two directors may be an officer,

director or employee of WRI or its subsidiaries. The

two directors to be designated by WRI approximate

the number of directors it could elect in ordinary

circumstances, based on its 9.9% common equity

interest, if cumulative voting applied. No board

member designated by WRI will serve on the New

ONEOK board nominating committee, or chair any

other committee of New ONEOK’s board.

11Under certain circumstances, following the

occurrence of a ‘‘Regulatory Change,’’ WRI has the

right to designate additional directors providing for

aggregate representation of up to one-third of the

New ONEOK Board.

12Shares of Series A Convertible Preferred Stock

are non-voting, except that they vote with the New

ONEOK Common Stock (and any other class or

series of stock which may be similarly entitled to

vote with the holders of New ONEOK Common

Stock) as a single class with respect to certain

extraordinary matters such as transactions

constituting a Change in Control (as defined in the

Shareholder Agreement) or proposed changes to

New ONEOK’s Certificate or Incorporation or ByLaws. The Series A Convertible Preferred Stock is

convertible, at the option of the holder, in whole

or in part, at any time following the occurrence of

a Regulatory Change (as defined in the Shareholder

Agreement), into New ONEOK Common Stock at

the rate of one share of New ONEOK Common

Stock for each share of Series A Convertible

Preferred Stock (as adjusted to reflect any stock

Westar Energy, Inc. (‘‘Westar Energy’’),

a Kansas corporation that provides

energy related services to large

commercial and industrial customers,4

and (3) Mid Continent Market Center,

Inc. (‘‘MCMC’’), a Kansas corporation

that offers natural gas transportation,

wheeling, parking, balancing and

storage services to natural gas

procedures.5

For the year ended December 31,

1996, WRI had consolidated operating

revenues of approximately $2,047

billion, approximately $549 million of

which was derived from the company’s

natural gas operations, approximately

$1.197 billion of which was derived

from its electric energy operations and

approximately $301 million of which

was derived from its non-utility

activities. Consolidated assets of WRI

and its subsidiaries at December 31,

1996 were approximately $6.65 billion,

approximately $4.36 billion of which

consisted of identifiable utility property,

plant and equipment. WRI’s common

stock, $5.00 par value, is listed on the

New York Stock Exchange. There were

65,220,373 shares of WRI common stock

outstanding as of July 30, 1997.

ONEOK, Inc., is a Delaware

corporation which, among other things,

operates as a gas utility company

(‘‘ONEOK’’). ONEOK has its principal

office in Tulsa, Oklahoma. It engages

through its divisions and subsidiaries in

several aspects of the energy business,

including local distribution of natural

gas. ONEOK is a gas utility company as

defined in Section 2(a)(4) of the Act and

is presently neither an associate nor an

affiliate of a public-utility holding

company. Oklahoma Natural Gas

Company, a division of ONEOK, and

two subsidiaries, ONG Transmission

Company and ONG Sayre Storage

Company comprise a fully integrated

intrastate natural gas gathering, storage,

transmission and distribution operation

that provides natural gas service to

approximately 730,000 customers,

primarily in Oklahoma. The operations

of the division and two subsidiaries are

consolidated for ratemaking purposes by

the OCC. ONEOK also engages in a

number of non-regulated energy-related

businesses, including natural gas

marketing and oil and gas exploration

and production. As of May 31, 1997,

there were 27,997,925 shares of ONEOK

common stock outstanding. For the year

ended August 31, 1996, ONEOK’s

operating revenues on a consolidated

basis were approximately $1.224 billion,

of which approximately $538 million

was attributable to regulated natural gas

distribution activities and

approximately $686 million to gas

marketing, gas processing, gas

exploration, gas production and other

operations. Consolidated assets of

ONEOK and its subsidiaries at May 31,

1997 were $1.40 billion, of which

approximately $678 million consists of

its gas distribution property, plant and

equipment.

WRI requests authorization to acquire

up to (1) 9.9% of the outstanding

common stock of WAI, Inc. (WAI), a

newly-formed Oklahoma corporation,6

and (2) shares of WAI’s non-voting

convertible preferred stock, which,

when aggregated with the common

stock, may amount to as much as 45%

of the total capital stock of WAI

(collectively, ‘‘WAI Stock’’). In return

for the WAI Stock, and pursuant to an

amended and restated agreement dated

May 19, 1997 (the ‘‘Agreement’’) among

WRI, WAI and ONEOK, WRI will

transfer all of the assets of its Kansas

and Oklahoma gas distribution

operations and all of the outstanding

capital stock of its MCMC and Westar

Gas Marketing subsidiaries 7

(collectively, the ‘‘WRI Gas Business’’)

to WAI (the ‘‘Asset Transaction’’).8

ONEOK will then merge with and into

WAI, with WAI as the surviving

corporation (the ‘‘Merger,’’ and together

with the Asset Transaction, the

‘‘Transactions’’), and WAI will be

renamed ONEOK, Inc. (‘‘New

ONEOK’’).9

Immediately following the Merger, the

New ONEOK board of directors and

management will be the same as that of

ONEOK prior to the Merger, except for

(i) the expansion of the board from 14

to 16 directors to allow the appointment

two directors designated by WRI 10 and

(ii) the appointment of five persons who

are currently officers of WRI with

respect to the WRI Gas Business

(including officers of MCMC and

Westar) as additional officers of New

ONEOK, with comparable

responsibilities.11 New ONEOK will be

subject to regulation with respect to

rates and other corporate matters by

KCC and OCC.

Upon consummation of the

Transactions, on a fully diluted basis,

after giving affect to the Transactions

and based on the number of shares of

ONEOK Common Stock outstanding as

of December 12, 1996, WRI will hold

2,966,702 shares of New ONEOK

Common Stock and 19,317,584 shares of

Series A Convertible Preferred Stock of

New ONEOK,12 representing up to 9.9%
Federal Register / Vol. 62, No. 200 / Friday, October 17, 1997 / Notices 54145

split or similar events). In addition, any shares of

the Series A Convertible Preferred Stock transferred

by WRI to any person other than WRI or its affiliates

is required to be converted into New ONEOK

Common Stock.

13The Shareholder Agreement terminates under

certain circumstances described in Article V of the

agreement.

14 ‘‘Voting Ownership Percentage’’ means the

Voting Power (as defined in the Shareholder

Agreement) represented by New ONEOK Common

Stock and shares of any other class of capital stock

of New ONEOK then entitled to vote in the election

of directors (not including Convertible Preferred

Stock) (’’Voting Securities’’) beneficially owned by

the person whose voting ownership percentage is

being determined.

15The Shareholder Agreement states that a

‘‘Regulatory Change’’ will be deemed to have

occurred upon the receipt by WRI of an opinion of

counsel (which counsel must be reasonably

acceptable to New ONEOK) to the effect that either

(1) the 1935 Act has been repealed, modified,

amended or otherwise changed or (2) WRI has

received an exemption, or, in the unqualified

opinion of WRI’s counsel, is entitled without any

regulatory approval to claim an exemption, or has

received an approval or no-action letter from the

Commission or its staff under the 1935 Act or has

registered under the 1935 Act, or any combination

of the foregoing, and as a consequence of (1) and/

or (2), WRI may fully and legally exercise such

rights under the Shareholder Agreement as take

effect in the period after the Regulatory Change has

occurred.

16 ‘‘Total Ownership Percentage’’ means the

Voting Power (as defined in the Shareholder

Agreement) which would be represented by the

Securities Beneficially Owned (as defined in the

Shareholder Agreement) by the Person whose Total

Ownership Percentage is being determined if all

shares of Convertible Preferred Stock (as Defined in

the Shareholder Agreement), or other Securities

convertible into Voting Securities (as defined in the

Shareholder Agreement), Beneficially Owned by

such Person were converted into shares of Common

Stock (or other Voting Security.

17The Shareholder Agreement defines

‘‘Maximum Ownership Percentage’’ as a Total

Ownership Percentage of 45%, less the Voting

Power (as defined under the Shareholder

Agreement) represented by all Voting Securities (as

defined in the Shareholder Agreement) transferred

by the Shareholder Group during the term of the

Shareholder Agreement, including the Voting

Power represented by any shares of Convertible

Preferred Stock which were converted into shares

of New ONEOK Common Stock contemporaneously

with such transfer pursuant to the terms of the

Shareholder Agreement.

18Among other things, the Shareholder

Agreement provides that, with respect to the

election of directors to New ONEOK’s board of

directors, WRI will vote all New ONEOK Common

Stock held by it in accordance with the

recommendation of New ONEOK’s nominating

committee. The New ONEOK nominating

committee recommends nominees to fill vacancies

on the board, establishes procedures to identify

potential nominees, recommends criteria for

membership on the board, and recommends the

successor chief executive officer when a vacancy

occurs. The New ONEOK By-laws provide that the

chief executive officer of New ONEOK must be

elected by the affirmative vote of 80% of the

directors of New ONEOK.

19Section 9(a)(2) makes it unlawful, without

approval of the Commission under Section 10, ‘‘for

any person * * * to acquire, directly or indirectly,

any security of any public utility company, if such

person is an affiliate * * * of such company and

of any other public utility or holding company, or

will by virtue of such acquisition become such an

affiliate.’’ Commission approval under Section

9(a)(2) is required because WRI (which is already

an affiliate of its subsidiary, KGE) will become an

affiliate of New ONEOK as a result of the proposed

Transactions.

of the New ONEOK Common Stock

outstanding before conversion of any of

the Series A Convertible Preferred Stock

into New ONEOK Common Stock and

up to 45% of the New ONEOK Common

Stock that would be outstanding after

conversion of all such stock. The

present shareholders of ONEOK

Common Stock will hold shares of New

ONEOK Common Stock representing at

least 90.1% of the New ONEOK

Common Stock then outstanding and

not less than 55% of the New ONEOK

Common Stock that would be

outstanding after conversion of all of the

Series A Convertible Preferred Stock to

be held by WRI.

WRI and New ONEOK will enter into

a shareholder agreement (‘‘Shareholder

Agreement’’), upon the closing of the

Transactions, which will place certain

restrictions on WRI’s actions as a New

ONEOK shareholder during the term of

the Shareholder Agreement.13 Among

other things, the Shareholder Agreement

will provide that the ‘‘Shareholder

Group’’ (defined as WRI, its affiliates,

partners and certain other persons and

groups contemplated by Section 13(d) of

the Securities Exchange Act of 1934)

will be prohibited from acquiring (1)

any Voting Securities (as defined in the

Shareholder Agreement) that would

cause the Shareholder Group to have

more than a 9.9% Voting Ownership

Percentage,14 prior to the occurrence of

a Regulatory Change (as defined in the

Shareholder Agreement),15 or (2) any

securities that would, at any time, cause

the Shareholder Group’s Total

Ownership Percentage 16 to exceed the

Maximum Ownership Percentage

specified in the Shareholder

Agreement.17 The Shareholder

Agreement gives the Shareholder Group

certain ‘‘top-up’’ and ‘‘dilutive

issuance’’ rights that enable the

Shareholder Group to ensure that the

Voting Ownership Percentage does not

fall below 9.9% and the Total

Ownership Percentage does not fall

below the Maximum Ownership

Percentage. The Shareholder Agreement

will also impose certain restrictions on

WRI’s ability to vote 18 or transfer the

securities of New ONEOK.

Applicant states that the proposed

Transactions satisfy all of the

requirements of Sections 9(a)(2) and 10

under the Act.19 In addition, WRI and

ONEOK have requested a no-action

letter from the Commission in

connection with the proposed

Transactions seeking assurances that

WRI’s ownership interest in New

ONEOK will not cause NEW ONEOK to

be deemed a ‘‘subsidiary’’ of WRI or

WRI to be deemed a ‘‘holding company’’

under the Act.

For the Commission, pursuant to delegated

authority, by the Division of Investment

Management.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–27522 Filed 10–16–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

22850; 812–10808]

Security First Trust, et al.; Notice of

Application

October 10, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under section 6(c) of the

Investment Company Act of 1940 (the

‘‘Act’’) from section 15(a) of the Act.

Summary of Application: Signet

Banking Corporation (‘‘Signet’’), parent

of Virtus Capital Management, Inc.

(‘‘Subadviser’’), has entered into an

agreement and plan of merger with First

Union Corporation (‘‘First Union’’). The

indirect change in control of the

Subadviser will result in the

assignment, and thus the termination, of

the existing subadvisory contract

between Security First Investment

Management Corporation (‘‘Adviser’’)

on behalf of Security First Trust

(‘‘Fund’’), and the Subadviser. The order

would permit the implementation,

without shareholder approval, of a new

investment subadvisory agreement for a

period of up to 120 days following the

date of the change in control of the

Subadviser (but in no event later than

April 30, 1998). The order also would

permit the Subadviser to receive all fees

earned under the new subadvisory

agreement following shareholder

approval.

Applicants: Fund, Adviser, and the

Subadviser.

Filing Dates: The application was

filed on October 7, 1997. Applicants

have agreed to file an amendment

during the notice period, the substance

of which is included in this notice.

Hearing or Notification of Hearing: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicants with a