55440 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Notices

or other property from such registered

investment company.

5. Applicants state that the

redemptions and purchases in-kin

involve the purchase of property from

the Current Portfolios by the Separate

Accounts, affiliated persons of those

Portfolios, and the sale of property to

the Substitute Portfolios by the Separate

Accounts, which may be considered

affiliates of the Substitute Portfolios.

Similarly, by combining two investment

divisions holding shares of the same

Substitute Portfolios into a single

investment division, the Companies,

each being the depositor for and

therefore each an affiliated person of the

respective Separate Account, could be

said to be transferring property of one

investment division to another

investment division. This transfer of

property could be said to involve

purchase and sale transactions between

the investment divisions such that an

affiliated person (the ‘‘first investment

division’’) of an investment division

(the ‘‘second investment division’’)

could be said to be selling its shares of

a Portfolio to the second investment

division in return for units of the second

investment division, which are

immediately credited to the accounts of

the contractowners participating in the

first investment division. Conversely,

the second investment division could be

said to be purchasing from the first

investment division shares of a Portfolio

owned by the first investment division.

6. Applicants request an order

pursuant to Section 17(b) of the 1940

Act exempting the in-kind redemptions

and purchases and the merger of

investment divisions from the

provisions of Section 17(a). Section

17(b) of the 1940 Act provides that the

Commission may grant an order

exempting a proposed transaction from

Section 17(a) if evidence establishes

that: (1) The terms of the proposed

transaction, including the consideration

to be paid or received, are reasonable

and fair and do not involve

overreaching on the part of any person

concerned; (2) the proposed transaction

is consistent with the policy of each

registered investment company

concerned, as recited in its registration

statement and reports filed under the

1940 Act; and (3) the proposed

transaction is consistent with the

general purposes of the 1940 Act.

7. Applicants assert that the terms of

the in-kind redemptions and purchases

are reasonable and fair and do not

involve overreaching on the part of any

person concerned and that the interests

of contractowners will not be diluted.

The in-kind redemptions and purchases

will be done at values consistent with

the policies of both the Current

Portfolios and Substitute Portfolios. The

investment advisers will review the

asset transfers to assure that the assets

meet the objectives and policies of the

Substitute Portfolios and that they are

valued under the appropriate valuation

procedures of the Current and

Substitute Portfolios.

8. Applicants represent that the

merger of investment divisions is

intended to reduce administrative costs

and thereby benefit contractowners with

assets in those investment divisions.

The purchase and sale transactions

described in the application will be

effected based on the net asset value of

the shares held in the investment

divisions and the value of the units of

the investment division involved.

Therefore, there will be no change in the

value to any contractowner.

Conclusion

Applicants assert that, for the reasons

summarized above, the requested orders

approving the Substitution and related

transactions involving in-kind

redemptions and the merger of certain

investment divisions should be granted.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–28176 Filed 10–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22860; International Series Rel

No. 1105; 812–10552]

Old Mutual South Africa Equity Trust,

et al.; Notice of Application

October 17, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application under

section 17(b) of the Investment

Company Act of 1940 (the ‘‘Act’’) for an

exemption from section 17(a) of the Act.

SUMMARY OF APPLICATION: Order

requested to permit a non-registered

investment company to sell certain

securities to a registered investment

company.

APPLICANTS: Old Mutual South Africa

Equity Trust (the ‘‘Trust’’) and Old

Mutual Global Assets Fund Limited (the

‘‘Global Fund’’).

FILING DATES: The application was filed

on March 7, 1997, and amended on

August 28, 1997.

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

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

November 12, 1997, and should be

accompanied by proof of service on

applicants, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW., Washington, DC 20549.

Applicants, 61 Front Street, Hamilton,

Bermuda, Attention: Melanie Saunders.

FOR FURTHER INFORMATION CONTACT:

Lawrence W. Pisto, Senior Counsel, at

(202) 942–0527, or Christine Y.

Greenlees, Branch Chief, at (202) 942–

0564 (Office of Investment Company

Regulation, Division of Investment

Management).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch, 450 fifth

Street, NW., Washington, D.C. 20549

(tel. (202) 942–8090).

Applicants’ Representations

1. The Trust is an open-end

management investment company

organized as a trust under

Massachusetts law and registered under

the Act. The investment objective of the

Trust is long-term total return in excess

of that of the Johannesburg Stock

Exchange (the ‘‘JSE’’) Actuaries All

Share Index through investment in

equity securities of South African

issuers that are listed on a securities

exchange. Beneficial interests in the

Trust are issued solely in a private

placement transactions to investment

companies, common or commingled

trust funds, or similar entities that are

‘‘accredited investors’’ within the

meaning of Regulation D under the

Securities Act of 1933, as well as to

certain investment funds organized

outside the United States. As of August

12, 1997, 91.96% of the voting securities

of the Trust was owned by Old Mutual

Fund Holdings (Bermuda) Limited

(‘‘Old Mutual Fund Holdings’’), a

wholly-owned subsidiary of the South

African Mutual Life Assurance Society

(‘‘Old Mutual’’).
Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Notices 55441

1Rule 17a–7 permits certain purchase and sale

transactions between an investment company and

certain of its affiliated persons provided that certain

conditions are met, including that the transaction

be effected at the current market price of the

security.

2. The Global Fund is a fund

organized under the laws of Bermuda

that invests in a portfolio of South

African and international securities. Old

Mutual Fund Holdings is the sole

shareholder of the Global Fund. The

Trust and the Global Fund are managed

by Old Mutual Asset Managers

(Bermuda) Limited, a wholly-owned

subsidiary of Old Mutual.

3. Persetel Holdings Limited

(‘‘Persetel’’) is a South African

corporation. Its ordinary shares are

listed on the JSE. In December of 1996

Persetel conducted a private placement

of 70.5 million of its ordinary shares for

the purpose of financing an acquisition.

On January 15, 1997 (the ‘‘Trade Date’’),

the Global Fund subscribed for a total of

2,000,000 ordinary shares of Persetel

(the ‘‘Persetel Shares’’) at U.S. $6.23 per

share, which represented a 10%

discount from the Persetel Shares’

market price on the Trade Date. On

February 3, 1997 (the ‘‘Settlement

Date’’), the Global Fund purchased the

Persetel Shares at U.S. $6.40, which

represented a 14.67% discount from the

market price (the ‘‘February Price’’).

Applicants have stated that it is

common practice in the South African

equity markets for shares to be offered

to large institutional investors at a

discount to the market price.

4. Applicants propose that the Global

Fund sell the Persetel Shares to the

Trust. The purchase price to be paid by

the Trust will be the February Price plus

carrying costs relating to the investment

(the ‘‘Purchase Price’’). These carrying

costs will reimburse the Global Fund for

its estimated cost of funds (the

overnight LIBOR plus 0.5%) from the

Settlement Date through the date on

which the Trust purchases the Persetel

Shares (the ‘‘Trust Purchase Date’’).

Applicants’ Legal Analysis

1. Section 17(a) of the Act prohibits

any affiliated person of a registered

investment company, acting as

principal, knowingly to sell or purchase

securities to or from the company.

Section 2(a)(3) of the Act defines

‘‘affiliated person’’ of another person to

include (a) any person directly or

indirectly owning, controlling, or

holding with power to vote 5% or more

of the outstanding voting securities of

the other person, (b) any person directly

or indirectly controlling, controlled by,

or under common control with the other

person, or (c) if the other person is an

investment company, any investment

adviser of that person.

2. The Trust and the Global Fund are

controlled by Old Mutual. The Trust

and the Global Fund also share a

common investment adviser. Thus, the

Trust and the Global Fund are

‘‘affiliated persons’’ within the meaning

of section 2(a)(3) of the Act. As a result,

a sale of securities by the Global Fund

to the Trust is prohibited by section

17(a) of the Act.

3. Section 17(b) of the Act provides

that the SEC may exempt a transaction

from the prohibitions of section 17(a) if

the terms of the proposed transaction,

including the consideration to be paid,

are reasonable and fair and do not

involve overreaching on the part of any

person concerned, and that the

proposed transaction is consistent with

the policy of the registered investment

company concerned and with the

general purposes of the Act.

4. Applicants submit that the

requested relief meets the standards set

forth in section 17(b). Applicants state

that the trustees of the Trust and the

Adviser have reviewed the proposed

investment in detail, taking into

consideration and nature of the

investment, the fairness of the Purchase

Price, and each of the factors set forth

in Section 17(b) of the Act. On February

14, 1997, the board of trustees of the

Trust, including a majority of the

independent trustees of the Trust,

including a majority of the independent

trustees, approved the Trust’s purchase

of the Persetel Shares.

5. In evaluating the terms of the

proposed transaction, the trustees of the

Trust also considered the fact that the

Purchase Price will include

reimbursement of an affiliated person

(i.e., the Global Fund) for its carrying

costs from the Settlement Date through

the Trust Purchase Date. Applicants

state that the trustees of the Trust

believe that it is fair for the Trust to

reimburse the Global Fund for these

amounts if it proceeds with the

proposed transaction because the Trust

will receive the benefit of the

discounted price paid by the Global

Fund for the Persetel Shares and any

appreciation in the value of the Persetel

Shares from the Settlement Date through

the Trust Purchase Date. Applicants

represent that, if the Purchase Price

exceeds the current market price of the

Persetel Shares on the Trust Purchase

Date, the Trust will cancel the proposed

transaction and not purchase the

Persetel Shares from the Global Fund.

6. Applicants state that the proposed

transaction would comply with the

requirements of rule 17a–7,1 except that

the Purchase Price will be below market

price and the Trust and the Global Fund

are not affiliated persons solely by

reason of having a common investment

adviser or investment advisers which

are affiliated persons of each other,

common directors, and/or common

officers.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–28177 Filed 11–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–26765]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

October 17, 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

November 10, 1997, to the Secretary,

Securities and Exchange Commission,

Washington, DC 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.

West Texas Utilities Company

[70–8057]

West Texas Utilities Company

(‘‘WTU’’), 301 Cypress Street, Abilene,

Texas 79601–5820, a wholly owned

electric public-utility subsidiary

company of Central and South West