Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices 62375

substitutions retain for Contract owners

the investment flexibility which is a

central feature of the Contracts. All

Contract owners will be permitted to

allocate purchase payments to and

transfer contract values or accumulation

values among and between the same

number of investment subdivisions or

sub-accounts as they could before the

proposed substitutions.

5. Applicants also request an order

pursuant to Section 17(b) of the 1940

Act exempting them and GEIF, GNA

Trust and VIT from the provisions of

Section 17(a) to the extent necessary to

permit GNA to carry out certain of the

substitutions of securities by redeeming

securities issued by GNA Trust and VIT

in-kind and using the redemption

proceeds to purchase securities issued

by GEIF. Section 17(a)(1) of the 1940

Act, in relevant part, prohibits any

affiliated person of a registered

investment company, or any affiliated

person of such person, acting as

principals, from knowingly selling any

security or other property to that

company. Section 17(a)(2) of the 1940

Act generally prohibits the persons

described above, acting as principal,

from knowingly purchasing any security

or other property from the registered

investment company.

6. Section 2(a)(3) of the 1940 Act

defines the term ‘‘affiliated person of

another person’’ in relevant part as:

(A) any person directly, or indirectly

owning, controlling, or holding with power

to vote, 5 per centum or more of the

outstanding voting securities of such other

person; (B) any person 5 per centum or more

of whose outstanding voting securities are

directly or indirectly owned, controlled, or

held with power to vote, by such person; (C)

any person directly or indirectly controlling,

controlled by, or under common control

with, such other person.

7. Applicants have concluded, as

more fully described in the application,

that GEIF, GNA Trust and VIT and the

Funds of each may be affiliated persons

of each other or affiliated persons of

affiliated persons of each other. Each

also may be an affiliated person of GNA

or an affiliated person of an affiliated

person of GNA. The proposed

substitutions by GNA, which may entail

the indirect purchase of shares of GEIF

Funds with portfolio securities of GNA

Trust and VIT Funds and the indirect

sale of portfolio securities of such Funds

for shares of GEIF Funds, therefore may

also entail the purchase or sale of such

securities by each of the Funds

involved, acting as principal, to one of

the other Funds and therefore may be in

contravention of Section 17(a). In

addition, the participation of GNA in

such purchase and sale transactions

could be viewed as entailing the

purchase of such securities from Funds

of GNA Trust and VIT and the sale of

such securities to Funds of GEIF by

GNA, acting as principal, and therefore

may be in contravention of Section

17(a).

8. Section 17(b) of the 1940 Act

provides that the Commission may,

upon application, grant an order

exempting any transaction from the

prohibitions of Section 17(a) if the

evidence establishes that: (a) 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; (b) 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 (c) the proposed

transaction is consistent with the

general purposes of the 1940 Act.

9. Applicants submit that the terms of

the proposed substitutions by GNA,

including the consideration to be paid

and received, are reasonable and fair

and do not involve overreaching on the

part of any person concerned.

Applicants state that the transactions

will not cause owners’ interests under a

Contract to be diluted. Applicants also

state that the transactions will conform

with all but one of the conditions

enumerated in Rule 17a–7. The

proposed transactions will take place at

relative net asset value with no change

in the amount of any Contract owner’s

contract or accumulation value or death

benefit or in the dollar value of his or

her investment in any of the Accounts.

Even though GNA, GEIF, GNA Trust

and VIT may not rely on Rule 17a–7,

Applicants believe that the Rule’s

conditions outline the type of

safeguards that result in transactions

that are fair and reasonable to registered

investment company participants and

preclude overreaching in connection

with an investment company by its

affiliated persons. Each transaction will

be effected based upon (1) the

independent market price of the

portfolio securities valued as specified

in paragraph (b) of Rule 17a–7, and (2)

the net asset value per share of each

Fund involved valued in accordance

with the procedures disclosed in the

respective management company’s

registration statement and as required

by Rule 22c–1 under the 1940 Act.

10. Applicants also submit that the

proposed substitutions by GNA are

consistent with the policies of (1) GEIF

and of its Income Fund, Premier Growth

Fund, Value Equity Fund, International

Equity Fund, U.S. Equity Fund and

Money Market Fund; (2) GNA Trust and

its Adjustable Rate Portfolio,

Government Portfolio, Growth Portfolio

and Value Portfolio; and (3) VIT and its

Fixed Income Portfolio, International

Equity Portfolio, U.S. Equity Portfolio,

and Money Market Portfolio as recited

in the current registration statements

and reports filed under the 1940 Act.

11. Applicants submit that the

proposed substitutions are consistent

with the general purposes of the 1940

Act. The proposed transactions do not

present any of the conditions or abuses

that the 1940 Act was designed to

prevent.

Conclusion

Applicants assert that, for the reasons

summarized above, the terms of the

proposed substitutions and related

transactions meet the standards set forth

in Sections 26(b) and 17(b) of the 1940

Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30572 Filed 11–20–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–26778]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

November 14, 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

December 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
62376 Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices

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.

GPU, Inc., et al. (70–7926)

GPU, Inc. (‘‘GPU’’), 100 Interpace

Parkway, Parsippany, New Jersey 07054,

a registered holding company, and

Jersey Central Power & Light Company

(‘‘JCP&L’’), Metropolitan Edison

Company (‘‘Met-Ed’’), and Pennsylvania

Electric Company (‘‘Penelec’’), 2800

Pottsville Pike, Reading, Pennsylvania

19640, each an electric public utility

subsidiary of GPU, have filed a posteffective amendment to their declaration

under sections 6(a), 7, 32 and 33 of the

Act and rules 53 and 54 under the Act.

By order dated October 26, 1994

(HCAR No. 26150) (‘‘Order’’) and

supplemental order dated July 17, 1996

(HCAR No. 26544) (‘‘Supplemental

Order’’), the Commission, among other

things, authorized, through December

31, 1997: (1) GPU, JCP&L, Met-Ed, and

Penelec (‘‘Declarants’’) to issue, sell and

renew their respective unsecured

promissory notes (‘‘Unsecured

Promissory Notes’’), maturing not more

than nine months after issuance, to

various commercial banks under loan

participation arrangements and informal

lines of credit (‘‘Lines of Credit’’) in

amounts up to the limitations on shortterm indebtedness contained in their

respective charters (‘‘Charter Limits’’)

and, in the case of GPU, up to $250

million; (2) JCP&L, Met-Ed and Penelec

to issue and sell their unsecured shortterm promissory notes as commercial

paper (‘‘Commercial Paper’’) in amounts

up to their Charter Limits; and (3) the

Declarants to issue, sell and renew

unsecured promissory notes to lenders

other than commercial banks, insurance

companies or similar institutions

(‘‘Other Short-Term Debt’’) in amounts

up to their Charter Limits and, in the

case of GPU, up to $250 million.

Borrowings under Lines of Credit,

Commercial Paper and Other ShortTerm Debt are collectively referred to as

‘‘Short-Term Borrowings.’’

Declarants request that the period

during which they may issue, sell and

renew Short-Term Borrowings be

extended to December 31, 2000. In all

other respects, the transactions remain

as described in the Order and the

Supplemental Order.

The proceeds from the borrowings

will be used by the Declarants to finance

their businesses, including, in the case

of GPU, to finance the acquisition of

exempt wholesale generators, as defined

in section 32 of the Act, and foreign

utility companies, as defined in section

33 of the Act.

Central and South West Corporation, et

al. (70–9107)

Central and South West Corporation

(‘‘CSW’’), 1616 Woodall Rodgers

Freeway, Dallas, Texas 75202, a

registered holding company, and its

electric public-utility subsidiary

companies, Central Power and Light

Company (‘‘CPL’’), 539 North

Carancahua Street, Corpus Christi,

Texas 78401–2802, Public Service

Company of Oklahoma (‘‘PSO’’), 212

East Sixth Street, Tulsa, Oklahoma

74119–1212, Southwestern Electric

Power Company (‘‘SWEPCO’’), 428

Travis Street, Shreveport, Louisiana

71156–0001, and West Texas Utilities

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

Abilene, Texas 79601–5820, and Central

and South West Services, Inc. (‘‘CSW

Services’’), 1616 Woodall Rodgers

Freeway, Dallas, Texas 75202, a service

company subsidiary of CSW (all

companies collectively, ‘‘Applicants’’)

have filed an application-declaration

(‘‘Application’’) under sections 6(a), 7,

9(a), 10, 12(b) and 12(e) of the Act and

rules 43, 45, 54, 62 and 65 under the

Act.

The Applicants seek authorization to

engage in various financing and related

transactions (‘‘Financing Plan’’),

effective through December 31, 2002

(‘‘Authorization Period’’). As described

more fully below, the Applicants seek

authority for: (i) External financings by

CPL, PSO, SWEPCO, WTU and CSW

Services (‘‘Subsidiaries’’) and CSW; (ii)

CSW to acquire common stock from the

Subsidiaries; (iii) the Subsidiaries to

repurchase their common stock from

CSW; (iv) credit enhancement for their

securities, including guarantees; (v) the

Subsidiaries to guarantee the securities

of their subsidiary financing entities;

(vi) CSW and the Subsidiaries to

repurchase their securities by means of

tender offers; (vii) the issuance of other

types of securities not exempt under

rules 45 and 52; (viii) the Subsidiaries

to organize new entities for facilitating

certain types of financings and for the

financing entities to issue securities to

third parties; and (ix) increasing their

authorized capital, amending their

articles of incorporation, and soliciting

proxies through a proxy statement

requesting shareholder approval of any

amendment to their articles of

incorporation, subject to a reservation of

jurisdiction pending completion of the

record. The Applicants request

authority to engage in financing

transactions for which the specific terms

and conditions are not currently known,

subject to certain conditions concerning

the financial condition of the

Applicants.

Financings by each Applicant will be

subject to the following limitations: (i)

The issuance of common stock by CSW

will not exceed $250 million; (ii)

external financings by the Subsidiaries,

other than the refunding of outstanding

securities which will not be limited,

will not exceed the following amounts—

(a) CPL–$500 million, (b) PSO–$250

million, (c) SWEPCO–$300 million, (d)

WTU–$150 million, and (e) CSW

Services–$100 million; (iii) the issuance

of common stock by the Subsidiaries to

CSW will not exceed the following

amounts—(a) CPO–$200 million, (b)

PSO–$100 million, (c) SWEPCO–$100

million, and (d) WTU–$50 million; (iv)

repurchases by the Subsidiaries of their

common stock from CSW will not

exceed the following amounts—(a) CPL–

$1 billion, (b) PSO–$150 million, (c)

SWEPCO–$200 million, and (d) WTU–

$100 million; and (v) credit

enhancement and guarantees will only

be provided in connection with a

financing that satisfies the requirements

set forth in an order authorizing this

Application.

1. External Financings by CSW

CSW requests authorization to issue

common stock, including issuances of

common stock upon the exercise of

convertible debt or pursuant to rights,

options, warrants and similar securities.

CSW also requests authorization to

purchase common stock from the

Subsidiaries and to sell common stock

back to the Subsidiaries. The only

financing authority requested by CSW

in the Application is to issue common

stock.

CSW seeks authority to issue common

stock in any of the following ways: (i)

Through underwriters or dealers; (ii)

directly to a limited number of

purchasers or to a single purchaser, or

(iii) through agents or dealers. If

underwriters are used in the sale of the

securities, these securities will be

acquired by the underwriters for their

own account and may be resold from

time to time in one or more transactions,

including negotiated transactions, at a

fixed public offering price or at varying

prices determined at the time of sale.

The securities may be offered to the

public either through underwriting

syndicates (which may be represented

by managing underwriters) or directly

by one or more underwriters acting

alone. The securities may be sold

directly by CSW or through agents
Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices 62377

designated from time to time. If dealers

are used in the sale of any securities,

these securities will be sold to the

dealers as principal. Any dealers may

then resell these securities to the public

at varying prices to be determined by

the dealer at the time of resale.

If the common stock is being sold by

CSW in an underwritten offering, CSW

may grant the underwriters a ‘‘green

shoe’’ option permitting the purchase

from CSW of additional equity

securities (an additional 15% under

present guidelines) at the same price as

the original equity securities then being

offered, solely for the purpose of

covering over-allotments.

2. External Financing by the

Subsidiaries

The Subsidiaries seek authority to

obtain funds externally through: sales

for preferred stock, including the sale of

tax-advantaged preferred securities;

short-term debt financing; long-term

debt financing, such as first mortgage

bonds, pollution control revenue bonds,

notes (secured and unsecured) and

debentures; medium-term notes; other

forms of indebtedness; and borrowings

under credit agreements (‘‘Credit

Agreements’’). The Subsidiaries also

request authorization to issue common

stock to CSW.

The Subsidiaries propose to borrow

from banks or other lending institutions

from time to time through the end of the

Authorization Period. The borrowings

will be evidenced by promissory notes

issued to the lender, to be dated as of

the date of the first borrowing, with

each borrowing maturing in not more

than 50 years. Notes may or many not

be prepayable, in whole or in part, with

or without a premium in the event of

prepayment.

The Subsidiaries seek authority to

issue external financing in any of the

following ways: (i) Through

underwriters or dealers; (ii) directly to

a limited number of purchasers or to a

single purchaser, or (iii) through agents

or dealers. If underwriters are used in

the sale of the securities, these securities

will be acquired by the underwriters for

their own account and may be resold

from time to time in one or more

transactions, including negotiated

transactions, at a fixed public offering

price or at varying prices determined at

the time of sale. The securities may be

offered to the public either through

underwriting syndicates (which may be

represented by managing underwriters)

or directly by one or more underwriters

acting, alone. The securities may be sold

directly by the Subsidiaries or through

agents designated from time to time. If

dealers are used in the sale of any

securities, these securities will be sold

to the dealers as principal. Any dealers

may then resell these securities to the

public at varying prices to be

determined by the dealer at the time of

resale.

If debt securities are being sold, they

may be sold under ‘‘delayed delivery

contracts’’ which permit the

underwriters to locate buyers who will

agree to buy the debt at the same price

but at a later date than the date of the

closing of the sale to the underwriters.

Debt securities may also be sold through

the use of medium-term note and

similar programs, including in

transactions covered by the rule 144A

under the Securities Act of 1933.

Pollution control revenue bonds may be

sold either currently or in forward

refunding where the price of the

securities is established currently for

delivery at a future date.

3. Acquisition of Securities

CSW requests authorization to

purchase common stock from the

Subsidiaries. In addition, the

Subsidiaries request authorization to

repurchase their common stock from

CSW.

4. Credit Enhancement

Applicants may obtain credit

enhancement for the securities covered

by this Application, which could

include insurance, a letter of credit or a

liquidity facility. The Applicants

anticipate they may be required to

provide credit enhancement if they were

to issue floating rate securities, whereas

credit enhancement would be a purely

economic decision for fixed rate

securities. The Applicants anticipate

that even though they would be

required to pay a premium or fee to

obtain the credit enhancement, they

would realize a net benefit through a

reduced interest rate on the new

securities. Applicants will obtain credit

enhancement only if it is economically

beneficial to do so.

If insurance is obtained, the

Applicants may be required to enter into

an agreement with the insurer and an

escrow agent under which the

Applicants would be obligated to make

payments of certain amounts into an

escrow fund upon a failure to maintain

certain financial ratios and on the

occurrence of certain other events.

Amounts held in an escrow fund would

be payable to the insurer as an

indemnity for any amounts paid by the

insurer for principal or interest on the

new securities.

5. Financing Entities

The Subsidiaries seek authority to

organize new corporations, trusts,

partnership or other entities to be

created for the purpose of facilitating

certain types of financing such as the

issuance of tax advantaged preferred

securities. The financing entities may

issue these securities to third parties. In

addition, authority is requested for (i)

the Subsidiaries’ issuance of debentures

or other evidences of indebtedness to a

financing entity in return for the

proceeds of the financing and (ii) the

acquisition by a Subsidiary of voting

interests or equity securities issued by

the financing entity to establish the

Subsidiary’s ownership of the financing

entity (the equity portion of the entity

generally being created through a capital

contribution or the purchase of equity

securities, such as shares of stock or

partnership interests, involving an

amount usually ranging from 1 to 25

percent of the capitalization of the

financing entity). The Subsidiaries also

request authorization to enter into

expense agreements with their

respective financing entities, under

which they would agree to pay all

expenses of the financing entity.

6. Guarantees

Aside from any guaranty provided by

any instrument acquired and/or issued

for credit enhancement, the Subsidiaries

may also guarantee (i) payment of

interest, dividends or distributions on

the securities issued by their subsidiary

financing entities if and to the extent

these financing entities declare

dividends or distributions or pay

interest out of funds legally available

therefor; (ii) payments to the holders of

the securities issued by financing

entities of amounts due upon

liquidation of these financing entities or

redemption of their securities; and (iii)

certain additional amounts that may be

payable on these securities.

7. Refinanancings/Tender Offers

In connection with any refinancing by

CSW or a Subsidiary under an order in

this filing, CSW and the Subsidiaries

may determine to acquire outstanding

securities (‘‘Outstanding Securities’’)

through tender offers to the holders of

the Outstanding Securities. Tender

offers may be conditioned upon receipt

of a certain percentage of the

Outstanding Securities. The tender offer

price would be based on a number of

factors, including the coupon rate of the

Outstanding Securities, the date of

expiration of the refunding protection of

the Outstanding Securities, the date of

expiration of the refunding protection of
62378 Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices

1Holding Co. Act Release Nos. 26703 (Apr. 10,

1997), 26548 (July 30, 1996), 26531 (June 12, 1996),

26390 (Oct. 13, 1995), 26340 (July 26, 1995), 26309

(June 15, 1995), 26045 (May 2, 1994), 26019 (Apr.

6, 1994), and 25928 (Nov. 19, 1993).

the Outstanding Securities, the

redemption price on the expiration date

and the then current market rates for

similar securities, all of which are

relevant to the decision of an informed

holder as to whether to hold or sell

Outstanding Securities. Holders of

Outstanding Securities may be offered a

fixed price for their Outstanding

Securities, or the tender offer may be a

‘‘fixed spread’’ offer where the

Applicants will offer a price based upon

a fixed spread over comparable U.S.

Treasury securities. Any tender offer

will be conducted in accordance with

standard market practice, i.e., the length

of time the offer will be held open, the

method of solicitation, etc., at the time

of the tender offer.

The Applicants would, in connection

with any tender offer, retain one or more

investment banking firms experienced

in these matters to act as tender agent

and dealer-manager. The dealermanager will act as the Applicants’

agent in disseminating the tender offer

and receiving responses thereto. As a

dealer-manager, the investment banking

firm will not itself become obligated to

purchase or sell any of the Outstanding

Securities. The dealer-manager’s fee will

be determined following negotiation

and investigation of fees in similar

transactions and will include reasonable

out-of-pocket expenses and attorney’s

fees. It is expected that the Applicants

will be required, as is customary, to

indemnify the dealer-manager for

certain liabilities. The Applicants may

also retain a depositary to hold the

tendered Outstanding Securities

pending the purchase thereof and/or an

information agent to assist in the tender

offer.

8. Other Securities

The Applicants also propose to issue

other types of securities within the

parameters of this Application during

the period ending December 31, 2002.

The Applicants request that the

Commission reserve jurisdiction over

the issuance of additional types of

securities. The Applicants also

undertake to file a post-effective

amendment in this proceeding which

will describe the general terms of each

security and request a supplemental

order of the Commission authorizing

their issuance. The Applicants request

that each supplemental order be issued

by the Commission without further

public notice.

9. Charter Amendments

The Applicants propose that they be

allowed to (i) increase their authorized

capital as deemed necessary and

appropriate by CSW for proper

corporate purposes, (ii) amend their

articles of incorporation, and (iii) solicit

proxies through a proxy statement, filed

under and meeting the standards of the

Securities Exchange Act of 1934,

requesting shareholder approval of any

amendment to their articles of

incorporation.

Proxy solicitation material relating to

amendments to the articles of

incorporation will meet the

requirements of Schedule 14A under the

Securities Exchange Act of 1934, and

will, to the extent required, be reviewed

for compliance with this regulation by

the Commission before the proxy

material is sent to shareholders. The

Applicants request reservation of

jurisdiction over any order to solicit

proxies and the implementation of

amendments to the articles of

incorporation pending completion of

the record. The Applicants further

request that any supplemental order

authorizing amendments to the articles

of incorporation be issued by the

Commission without further public

notice.

The authorization requested by the

Applicants will be subject to the

following conditions: (i) For financings

at the Subsidiary level only, the

Subsidiaries seeking to issue securities

or enter into Credit Agreements will

maintain long-term debt ratings which

are investment grade as established by

a nationally recognized statistical rating

organization (as this term is used in rule

15c3–1(c)(2)(vi)(F) under the 1934 Act);

(ii) the effective cost of money on debt

securities will not exceed the greater of

(a) 300 basis points over comparable

term U.S. Treasury securities, or (b) a

gross spread over comparable term U.S.

Treasury securities which is consistent

with comparable investment grade

securities; (iii) the effective cost of

money for borrowings under Credit

Agreements will not exceed the greater

of (a) the prime rate plus 300 basis

points, or (b) the rate of interest for

comparable investment grade credits

prevailing in the market on the date of

borrowing; (iv) the effective cost of

money on preferred stock and other

fixed income oriented securities will not

exceed the greater of (a) 500 basis points

over 30 year term U.S. Treasury

securities, or (b) a gross spread over 30

year term U.S. Treasury securities

which is consistent with comparable

investment grade securities; (v) the

underwriting fees, commissions, or

other similar expenses paid in

connection with the issue, sale or

distribution of a security under an order

for this filing will not exceed 5% of the

principal or total amount of the

financing; (vi) the aggregate amount of

outstanding external financing, other

than the refunding of outstanding

securities which will not be limited,

will not exceed $2 billion; and (vii)

proceeds of the proposed financing may

not be used to invest in an exempt

wholesale generator, as defined under

section 32 of the Act, or a foreign utility

company, as defined under section 33 of

the Act. Any deviation from these

conditions would require further

Commission approval.

The Applicants request authorization

to deviate from the Commission’s

Statement of Policy Regarding First

Mortgage Bonds, HCAR No. 13105 (Feb.

16, 1956), as amended by HCAR No.

16369 (May 8, 1969), and Statement of

Policy Regarding Preferred Stock, HCAR

No. 13106 (Feb. 16, 1956), as amended

by HCAR No. 16758 (June 22, 1970), as

applicable, where they apply to the

proposed financings.

The Applicants are proposing that the

authorization to engage in external

financing requested in this filing

supersede all relevant prior

authorizations (the ‘‘Prior

Authorizations’’).1 If this proposal is

approved, the Applicants would engage

in long-term financing in the context of

their needs and financial market

conditions at the time of issuance,

subject to the terms and conditions set

forth in this notice and in any order in

this file, and without reference to the

terms and restrictions set forth in the

Prior Authorizations. Any long-term

debt or other security would have the

designations, aggregate principal

amount, maturity, interest rate(s) or

methods of determining the same,

interest payment terms, redemption

provisions, non-refunding provisions,

sinking fund terms, conversion or put

terms and other terms and conditions as

the Applicants may at the time of

issuance determine, unless this

Application specifically provides

otherwise.

New England Electric System (70–9109)

New England Electric System

(‘‘NEES’’), 25 Research Drive,

Westborough, Massachusetts 01582, a

registered holding company, has filed a

declaration under sections 6(a) and 7 of

the Act and rule 54 under the Act.

NEES requests authority through

December 31, 2002 to issue short-term

notes to banks (‘‘Notes’’) and/or

commercial paper to dealers (‘‘CP’’) up
Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices 62379

2By Commission Order dated October 9, 1996

(HCAR No. 26589), NEES was authorized to issue

and sell short-term promissory notes to banks up to

a maximum aggregate principal amount outstanding

at any time not exceeding $100 million. This

borrowing authority expires October 31, 1998. The

authority requested in this filing is intended to

supersede such existing authorization.

3 1. At a periodic fixed Eurodollar rate with

maturities of 1, 2, 3 or 6 months at the then

applicable LIBOR plus a margin (based on NEES’

subsidiaries’ senior debt ratings), payable at the end

of each interest period or quarterly for interest

periods longer than 3 months.

2. At the highest of the following base rates: (a)

BankBoston base rate, (b) 1⁄2 of 1% per annum

above the latest three week moving average of

secondary market offering rates in the United States

for three-month certificates of deposit of major U.S.

money market banks adjusted to the nearest 1⁄4 of

1 percent; and (c) 1⁄2 of 1% per annum above the

federal funds rate. These would be payable

quarterly in arrears and would be calculated on the

basis of a 365/366 day year.

3. At a rate obtained through competitive bids.

NEES may request competitive bids for an aggregate

outstanding amount not to exceed $100 million.

4The annual amount of the facility fee is

determined by multiplying (i) the particular bank’s

commitment amount and (ii) the Applicable

percentage (defined below). The Applicable

Percentage varies between 0.065% and 0.200%,

depending on the lowest debt rating of NEES’

electric utility subsidiaries (Massachusetts Electric

Company, The Narragansett Electric Company, and

New England Power Company (‘‘NEP’’) senior

secured debt. If NEP does not have secured debt,

then the rating for its senior debt will apply. Based

on current ratings, the Applicable percentage would

be 0.105%.

5NEES states, however, that the effective interest

cost of such paper is based on the supply of, and

demand for, that and similar paper at the time of

sale. Specifically, NEES notes that on several

previous occasions short-term money markets have

become very volatile during brief periods of

extraordinary demand, and the interest costs of

commercial paper have exceeded bank base rates.

Because such volatile market conditions usually

exist for brief periods, it is not anticipated that any

sale of commercial paper with interest costs in

excess of bank base rates would have a significant

marginal impact on the annual interest cost of

NEES. Therefore, NEES states that while it

anticipates that the effective annual cost of

borrowing through commercial paper will not

exceed the annual base rate borrowing from

BankBoston, in order to obtain maximum flexibility

during the periods described above, it may issue

commercial paper with a maturity of not more than

90 days with an effective cost in excess of the thenexisting lending rate.

6 In addition, NYSEG has two direct nonutility

subsidiaries. These are Somerset Railroad

Corporation, which owns a rail line used to

transport coal and other materials to one of

NYSEG’s generating plants, and NGE Enterprises,

Inc. (‘‘Enterprises’’). Enterprises owns interests in

various companies engaged in power marketing,

environmental and conservation engineering and

consulting, energy-related financial services, energy

usage information services, demand-side

management services, utility-related software

development, and energy management services.

7Following the consummation of the proposed

transactions, one of NYSEG’s two direct nonutility

subsidiaries, Somerset Railroad Corporation, will be

a direct subsidiary of Genco and the other, NGE

Enterprises, Inc., will be a direct subsidiary of NGE.

to an aggregate amount of $500 million

outstanding at any one time.2

NEES proposes to enter into a credit

agreement (‘‘Credit Agreement’’) with

Merrill Lynch Capital Corporation

(‘‘MLCC’’), as arranger and syndication

agent. The Credit Agreement provides

for a revolving facility of $500 million

which reduces to $400 million after

three years and to $300 million after

four years. Under the Credit Agreement,

NEES would borrow at one of three

types of interest rates.3 Under the Credit

Agreement, NEES is required to pay a

facility fee quarterly in arrears to each

bank that makes a commitment to loan

funds to NEES.4

NEES also proposes to make

arrangements with certain banks for

short-term lines of credit, for various

purposes, to be evidenced by notes

payable maturing in less than one year

from the date of issuance, and at rates

that will not exceed on a daily basis the

greater of the bank’s base or prime

lending rate, or the rate published daily

as the high federal funds published in

the Wall Street Journal.

NEES also proposes to issue and sell

CP directly to one or more nationally

recognized commercial paper dealers

(‘‘CP Dealers’’) Initially the CP Dealer

will be CS First Boston Corporation

and/or Merrill Lynch Money Markets

Incorporated. NEES states that the

commercial paper so issued and sold

will be in the form of unsecured

promissory notes having varying

maturities of not in excess of 270 days,

with no payment rights until maturity.

The CP will be in denominations of not

less than $50,000, and will be at an

interest rate generally not exceeding the

base lending rate at BankBoston.5

NEES states that it may use the

proceeds from the authorized

transactions, subject to meeting margin

requirements, to facilitate a share buy

back of its subsidiaries’ shares (not to

exceed five million shares) after their

anticipated sale of their non-nuclear

generation business to U.S. Generating

Company in the near future. In addition,

NEES states that it may need to make

investments in anticipation of receipt of

the sale proceeds in order prudently to

re-deploy funds obtained through the

sale. NEES further states that it may also

need to use such proceeds to make

contributions to NEP, pending

consummation of the sale. NEES also

plans to use proceeds for other general

corporate purposes.

NGE Resources, Inc. (70–9111)

NGE Resources, Inc. (‘‘NGE’’), a New

York corporation not currently subject

to the Act, located at One Commerce

Plaza, Suite 2006A, Albany, New York

12260, has filed an application under

sections 3(a)(1), 9(a)(2) and 10 of the

Act.

NGE is a subsidiary of New York State

Electric & Gas Corporation (‘‘NYSEG’’),

a public utility company also not

currently subject to the Act. NYSEG is

engaged in generating, purchasing,

transmitting and distributing electricity,

and purchasing, transporting and

distributing natural gas in the central,

eastern and western parts of the state of

New York.6

In summary, NGE seeks authority to

acquire all of the outstanding common

stock of NYSEG and of a wholly owned

subsidiary of NYSEG (‘‘Genco’’)

organized to own all or a part of

NYSEG’s coal-fired generating assets

(‘‘Generation Assets’’). In addition, NGE

seeks an order under section 3(a)(1) of

the Act exempting NGE from all

provisions of the Act, except section

9(a)(2).

On May 20, 1996 the New York Public

Service Commission (‘‘PSC’’) issued an

order establishing certain electricity

industry restructuring goals for the state

of New York. In response, NTSEG filed

a petition on December 19, 1996 with

the PSC requesting authority to form a

holding company over NYSEG and to

separate the Generating Assets from its

other businesses regulated by the PSC.

Under a proposed plan of exchange,

all outstanding NGE common stock will

be canceled and all of the NYSEG

common stock will be exchanged on a

share-for-share basis for NGE common

stock (‘‘Share Exchange’’), subject to

appraisal rights. Each person who

owned NYSEG common stock

immediately prior to the Share

Exchange (other than those who

exercise their appraisal rights) will

immediately after the Share Exchange

own a corresponding number of shares

and percentage of the outstanding NGE

common stock. In addition, NGE will

own all of the outstanding shares of

NYSEG Common Stock.7

NGE also seeks authority to acquire

all of the outstanding common stock of

Genco, which will become an electric

utility company as a consequence of the

transfer to it of the Generation Assets by

NYSEG. NYSEG may temporarily

become a holding company under the

Act if the Generation Assets are

transferred to Genco prior to the

acquisition of Genco by NGE. In this

case, NYSEG will claim an exemption

form the Act under sections 3(a)(1) or

3(a)(2) of the Act.

The Share Exchange will not affect

shares of NYSEG’s Serial Preferred

Stock (‘‘NYSEG Preferred Stock’’),

which will remain securities of NYSEG

after the Share Exchange. Those shares

of NYSEG Preferred Stock that were
62380 Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices

issued and outstanding immediately

prior to the Share Exchange will have

the same preferences, designations,

relative rights, privileges and powers,

and will be subject to the same

restrictions, limitations and

qualifications, as were applicable prior

to the Share Exchange. Other than the

release of the Generation Assets from

the lien of NYSEG’s first mortgage bond

indenture, the proposed transactions

will not result in any change in the

outstanding indebtedness of NYSEG,

which will continue to be obligations of

NYSEG after the Share Exchange.

NGE asserts that it will satisfy the

requirements for an exemption under

section 3(a)(1). It states that it, NYSEG

and Genco are organized and carry on

their business substantially in New York

State.

Monongahela Power Company, et al.

(70–9115)

Monongahela Power Company

(‘‘Monongahela’’), 1310 Fairmont

Avenue, Fairmont, West Virginia 26554,

The Potomac Edison Company

(‘‘Potomac Edison’’), 10435 Downsville

Pike, Hagerstown, Maryland 21740, and

West Penn Power Company (‘‘West

Penn’’), 800 Cabin Hill Drive,

Greensburg, Pennsylvania 15601, each

an electric utility subsidiary of

Allegheny Energy, Inc., a registered

holding company, have filed a

declaration under sections 6(a) and 7 of

the Act and rule 54 under the Act.

Monongahela, Potomac Edison, and

West Penn (‘‘Declarants’’) propose to

enter into an agreement with The

County Commission of Pleasants

County, West Virginia (‘‘County

Commission’’) under which, through

December 31, 2002, Declarants will

issue notes to support the

contemporaneous issuance of pollution

control revenue bonds by the County

Commission.

The County Commission proposes to

issue $92.5 million aggregate principal

amount in three new series of long-term

bonds (‘‘Series D Bonds’’). The proceeds

from the Series D Bonds will be used to

refund the County Commission’s Series

A Bonds presently outstanding. The

Series A Bonds were issued for the tax

exempt financing of certain air and

water pollution control equipment and

facilities at the Declarants’ Pleasants

Power Station located in Pleasants

County, West Virginia.

The Series D Bonds will be issued

under a supplemental trust indenture

with a corporate trustee, approved by

the Declarants, and sold at a time,

interest rate, and price approved by the

Declarants. The interest rate for the

Series D Bonds will not exceed the

interest rate of the corresponding series

of Series A Bonds presently

outstanding. The Series D Bonds will

mature no later than the year 2020.

Each Declarant will deliver

concurrently with the issuance of the

Series D Bonds its non-negotiable

Pollution Control Note (‘‘Notes’’)

corresponding to the Series D Bonds in

respect of principal amount, interest

rate and redemption provisions (which

may include a special right of the holder

to require the redemption or repurchase

of the Series D Bond at stated intervals)

and having installments of principal

corresponding to any mandatory sinking

fund payments and stated maturities.

The Notes will be secured by a second

lien on the Facilities and certain other

properties, under the Deed of Trust and

Security Agreement dated November 1,

1977, as supplemented by a First

Supplement thereto dated August 1,

1978 as to West Penn and Potomac

Edison and a First Supplemental thereto

dated February 1, 1979 as to

Monongahela, delivered by the

Declarants to the trustee creating a

mortgage and security interest in the

Facilities and certain other property

(subject to the lien securing each

Declarant’s first mortgage bonds).

Payment on the Notes will be made to

the Trustee under the Third

Supplemental Indentures to be entered

into between the Declarants and the

Trustee and will be applied by the

Trustee to pay the maturing principal

and redemption price of and interest

and other costs on the Series D Bonds

as the same become due. Each Declarant

also proposes to pay any trustees’ fees

or other expenses incurred by the

County Commission.

The Columbia Gas System, Inc., et al,

(70–9129)

The Columbia Gas System, Inc.

(‘‘Columbia’’), a registered holding

company, its service company

subsidiary, Columbia Gas System

Service Corporation, its liquified natural

gas subsidiary, Columbia LNG

Corporation, its trading subsidiary,

Columbia Atlantic Trading Corporation,

Columbia’s energy services and

marketing subsidiaries, Columbia

Energy Services Corporation (‘‘Columbia

Energy’’), Columbia Assurance Agency,

Inc., Columbia Energy marketing

Corporation, Columbia Power Marketing

Corporation, and Columbia Service

Partners, Inc., all located at 12355

Sunrise Valley Drive, Suite 300, Reston,

Virginia 20191–3458; Columbia’s four

distribution subsidiaries, Columbia Gas

of Ohio, Inc., Columbia Gas of

Pennsylvania, Inc., Columbia Gas of

Kentucky, Inc., Columbia Gas of

Maryland, Inc. (collectively, ‘‘Utility

subsidiaries’’), and Columbia’s service

company subsidiary, Commonwealth

Gas Service, Inc., all located at 200 Civic

Center Drive, Columbus, Ohio 43215;

Columbia’s two transmission

subsidiaries, Columbia Gas

Transmission Corporation, located at

12801 Fairlakes Parkway, Fairfax,

Virginia 22030–0146, and Columbia

Gulf Transmission Company, located at

2603 Augusta, Suite 125, Houston,

Texas 77057; Columbia’s exploration

and production subsidiary, Columbia

Natural Resources, Inc. (‘‘CNR’’), CNR’s

subsidiaries, Alamco, Inc., AlamcoDelaware, Inc. and Hawg Hauling &

Disposal, Inc, all located at 900

Pennsylvania Avenue, Charleston, West

Virginia 25302; Columbia’s propane

distribution subsidiary, Columbia

Propane Corporation, located at 9200

Arboretum Parkway, Suite 140,

Richmond, Virginia 23236; Columbia’s

network services subsidiary, Columbia

Network Services Corporation (‘‘CNS’’)

and CNS’ subsidiary, CNS Microwave,

Inc., both located at 1600 Dublin Road,

Columbus, Ohio 43215–1082; and

Columbia’s other subsidiaries, Tristar

Ventures Corporation, Tristar Capital

Corporation, Tristar Pedrick Limited

Corporation, Tristar Pedrick General

Corporation, Tristar Binghamton

Limited Corporation, Tristar

Binghamton General Corporation,

Tristar Vineland Limited Corporation,

Tristar Vineland General Corporation,

Tristar Rumford Limited Corporation,

Tristar Georgetown Limited

Corporation, Tristar Georgetown

General Corporation, Tristar Fuel Cells

Corporation, TVC Nine Corporation,

TVC Ten Corporation and Tristar

System, Inc., all located at 205 Van

Buren, Herndon, Virginia 22070

(collectively, the ‘‘System’’), have filed

an application-declaration under

sections 6, 7, 9 and 10 of the Act and

rules 53 and 54 under the Act.

Columbia requests Commission

approval to updated and expand its

existing short-term financing authority.

By Commission order dated December

23, 1996 (HCAR No. 26634) (the

‘‘Omnibus Financing Order’’), Columbia

was authorized to engaged in a wide

range of financing transactions through

December 31, 2001, including shortterm financing in an amount not to

exceed $1 billion outstanding at any one

time, subject to certain conditions and

parameters. Columbia wishes to expand

the foregoing order and specifically

requests authorization to increase the

System’s short-term financing authority

to an amount not to exceed $2 billion

outstanding at any one time through
Federal Register / Vol. 62, No. 225 / Friday, November 21, 1997 / Notices 62381

1 15 U.S.C. 78s(b)(1) (1988).

2 17 CFR 240.19b–4.

3On November 10, 1997, the Exchange submitted

an amendment to the filing, clarifying that the

requested extension of the pilot was through

October 31, 1998. See letter from Karen Aluise,

Exchange to Mike Walinskas, Commission, dated

November 10, 1997 (‘‘Amendment No. 1’’).

4See Amendment No. 1, infra note 3.

5The pilot program has not been altered since its

initial approval by the Commission. Phone

conversation between Karen Aluise, Exchange and

Janice Mitnick, Commission on November 10, 1997.

See Release No. 34–37478 (July 25, 1996), 61 FR

40268 (August 1, 1996) (approving SR–BSE–96–8

relating to the Exchange’s MOC pilot program).

6The term ‘‘expiration days’’ refers to both: (1)

the trading day, usually the third Friday of the

month, when some stock index options, stock index

futures, and options on stock index futures expire

or settle concurrently and (2) the trading day on

which end of calendar quarter index options expire.

7See Release No. 34–37478 (July 25, 1996), 61 FR

40268 (August 1, 1996), infra note 5.

December 31, 2003. The short-term

financing could include a revolving

credit agreement, the issuance of

commercial paper, bid notes issued to

individual banks, which are participants

in the revolving credit agreement, bank

borrowing, or medium-term notes

issued under its Indenture dated

November 28, 1995, between Columbia

and marine Midland Bank, Trustee, as

amended.

Columbia and the Utility Subsidiaries

also request authorization for the Utility

Subsidiaries to issue to Columbia, and

for Columbia to acquire from the utility

Subsidiaries, short-term securities

through December 31, 2003.

The authorization Columbia requests

is subject to the general conditions for

financing contained in the Omnibus

Financing Order.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–30630 Filed 11–20–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39327; File No. SR–BSE–

97–7]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Boston Stock

Exchange, Inc. to Extend a Pilot

Program Relating to Market-On-Close

Orders

November 14, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on November

5, 1997,3 the Boston Stock Exchange,

Inc. (‘‘BSE’’ or ‘‘Exchange’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I and II below, which Items have

been prepared by the self-regulatory

organization. The Exchange has

requested accelerated approval for the

proposal, as amended. This order

approves the Exchange’s proposal, as

amended, on an accelerated basis, and

solicits comments from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange is proposing to extend

its pilot program for the handling of

Market-on-Close (‘‘MOC’’) orders

through October 31, 1998.4 The

Exchange’s pilot program procedures

mirror the procedures in place on the

primary markets, including the New

York Stock Exchange, Inc. (‘‘NYSE’’), in

order to ensure equal treatment of MOC

orders.

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 III 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

The purpose of the proposed rule

change is to extend the Exchange’s pilot

program 5 for the handling of MOC

orders on expiration days,6 nonexpiration days, and when NYSE Rule

80A is in effect. The pilot program, as

previously approved by the

Commission,7 mirrors the procedures of

the primary markets (including the

NYSE) so that the Exchange does not

become a haven for MOC orders for

pilot stocks that are prohibited on the

primary markets. In this way, all orders

sent to the Exchange will receive equal

treatment to orders sent to the primary

markets. The term ‘‘pilot stocks’’ refers

to the list of stocks designated by the

NYSE as pilot stocks for purposes of its

auxiliary closing procedures.

On non-expiration days, these

procedures include: (a) Providing a 3:50

p.m. deadline for the entry of all MOC

orders in all stocks; (b) prohibiting the

cancellation or reduction of any MOC

order in any stock after 3:50 p.m.; (c)

publishing order imbalances of 50,000

shares or more as soon as practicable

after 3:50 p.m. in the pilot stocks, stocks

being added to or dropped from an

index, and in any other stock with the

approval of a floor official; and (d)

limiting the entry of MOC orders after

3:50 p.m. to offsetting published

imbalances. With respect to item (b)

above, the Exchange will permit

cancellations of MOC orders after 3:50

p.m. in those instances where legitimate

error has been made.

If an MOC index arbitrage order to

buy (sell), to establish or increase a

position (to eliminate or reduce a

position), is entered and NYSE Rule

80A subsequently goes into effect

because of significant upward

(downward) market movement, the

MOC order must be canceled regardless

of the time NYSE Rule 80A goes into

effect. If NYSE Rule 80A goes into effect

prior to 3:50 p.m., the MOC order may

be re-entered with the instruction ‘‘buy

minus’’ (‘‘sell plus’’). If NYSE Rule 80A

goes into effect after 3:50 p.m. and there

is a published imbalance in the subject

stock, the MOC order may be re-entered

with the instruction ‘‘buy minus’’ (‘‘sell

plus’’) to offset the imbalance.

On expiration days, the pilot

procedures include: (a) Providing a 3:40

p.m. deadline for the entry of all MOC

orders in all stocks; (b) prohibiting the

cancellation or reduction of any MOC

order in any stock after 3:40 p.m.; (c)

publishing order imbalances of 50,000

shares or more as soon as practicable

after 3:40 p.m. in the pilot stocks, stocks

being added to or dropped from an

index and, upon the request of a

specialist, any other stock with the

approval of a floor official; and (d)

limiting the entry of MOC orders after

3:40 p.m. to offsetting published

imbalances. With respect to item (b)

above, the Exchange will permit

cancellations of MOC orders after 3:40

p.m. in those instances where a

legitimate error has been made.

If an MOC index arbitrage order to

buy (sell), to establish or increase a

position (to eliminate or reduce a

position), is entered and NYSE Rule

80A subsequently goes into effect

because of significant upward

(downward) market movement, the

MOC order must be canceled regardless