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
55442 Federal Register / Vol. 62, No. 206 / Friday, October 24, 1997 / Notices

1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78(b)(5).

Corporation, a registered holding

company, has filed a post-effective

amendment to its declaration under

sections 6(a) and 7 of the Act and rule

54 thereunder.

By order dated October 7, 1992

(HCAR No. 25649) (‘‘Order’’), WTU was

authorized, among other things, to issue

and sell up to an aggregate principal

amount of $150 million of First

Mortgage Bonds (‘‘Bonds’’), in one or

more series, from time to time through

December 31, 1994. WTU was

authorized to use the proceeds from the

sale of Bonds (1) to redeem all or a

portion of its then outstanding $75

million, 87⁄8% First Mortgage Bonds,

Series N, due May 1, 2016 (‘‘Series N

Bonds’’), (2) to purchase, through a

tender offer, all or a portion of its then

outstanding $65 million, 91⁄4% first

mortgage bonds, Series O, due

December 1, 2019 (‘‘Series O Bonds’’),

and (3) to repay outstanding short-term

borrowings or for other general

corporate purposes. In October 1992,

WTU issued $75 million of Bonds

pursuant to the Order. The net proceeds

from the sale of the Bonds were used to

redeem the Series N Bonds.

By order dated December 19, 1994

(HCAR No. 26194) (‘‘First Supplemental

Order’’), the Commission extended from

December 31, 1994 to December 31,

1996, the authorization to issue and sell

the remaining $75 million of Bonds.

In March 1995, WTU issued $40

million of Bonds pursuant to the Order

and the First Supplemental Order. The

newt proceeds were used to repay a

portion of WTU’s short-term debt and to

reimburse WTU’s treasury for

reacquiring approximately $10 million

of its Series O Bonds.

By order dated July 26, 1995 (HCAR

No. 26340) (‘‘Second Supplemental

Order’’), the Commission granted WTU

authority to issue and sell, through

December 31, 1997, up to an additional

$95 million of first mortgage bonds

which, together with the remaining $35

million authorized to be issued and sold

pursuant to the Order and the First

Supplemental Order, would authorize

WTU to issue and sell up to an

additional aggregate principal amount of

$130 million of first mortgage bonds

(collectively, ‘‘New Bonds’’), which may

have maturities not less than two nor

more than 40 years.

As stated in the Second Supplemental

Order, the proceeds from the sale of the

New Bonds will be used to (1) redeem

all or a portion of WTU’s outstanding

$55.203 million, Series O Bonds and/or

(2) to repay a portion of WTU’s shortterm debt, to provide working capital

and for other general corporate

purposes.

WTU now proposes that the

Commission extend its authority to

issue the New Bonds, pursuant to the

terms and conditions set forth in the

Order, the First Supplemental Order

and the Second Supplemental Order,

through December 31, 2002.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–28175 Filed 10–23–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39253; File No. SR–Amex–

97–35]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by American

Stock Exchange, Inc. Relating to

Amendments to Rule 120 (Units of

Trading)

October 17, 1997.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934,1 notice

is hereby given that on October 1, 1997,

the American Stock Exchange, Inc.

(‘‘Amex’’ or ‘‘Exchange’’) filed with the

Securities and Exchange Commission

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the selfregulatory organization. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Amex proposes to amend

Exchange Rule 120 to provide for a unit

of trading in bonds other than $1,000 in

par value. The text of the proposed rule

change is available at the Office of the

Secretary, the Amex and the

Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

self-regulatory organization included

statements concerning the purpose of

and basis for the proposed rule change

and discussed any comments it received

on the proposed rule change. The text

of these statements may be examined at

the places specified in Item IV below.

The self-regulatory organization has

prepared summaries, set forth in

sections A, B, and C below, of the most

significant aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

(1) Purpose

Amex Rule 120 provides for a unit of

trading in bonds of $1,000 in par value,

except for U.S. Government issues, for

which the unit of trading is the

minimum denomination in which such

securities are issued. Rule 120 also

provides that a unit of trading in stocks

is 100 shares, unless the Exchange fixes

a lesser amount.

There are instances where bond

issuers and broker-dealers underwriting

bond issuances desire an exchangelisting of bonds with a unit of trading

greater than $1,000 in par value. For

example, an issuer or underwriter may

prefer a unit of trading of $100,000 or

$250,000 in par value per trading unit

in specific cases. Such issuances, which

currently trade on the New York Stock

Exchange, can be expected to appeal

primarily to institutional investors and

to trade infrequently.

The Amex believes it is appropriate

and competitively desirable to clarify its

authority to allow listing and trading of

such issues. Rule 120, therefore, is

proposed to be amended in a manner

similar to NYSE Rule 55 to specifically

provide that a unit of trading of other

than $1,000 in par value may be

designated by the Exchange for specific

issues of bonds denominated in U.S.

dollars for foreign currencies.

(2) Statutory Basis

The proposed rule change is

consistent with Section 6(b) of the Act

in general and furthers the objectives of

Section 6(b)(5) 2 in particular in that it

is designed to remove impediments to

and perfect the mechanism of a free and

open market, to promote just and

equitable principles of trade and, in

general, to protect investors and the

public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose a

burden on competition.